Vol. 84 Thursday, No. 201 October 17, 2019 Pages 55489–55858

Home , October 10, October 17, October 19

Vol. 84 Thursday, No. 201 October 17, 2019

Pages 55489–55858

OFFICE OF THE FEDERAL REGISTER

VerDate Sep 11 2014 20:51 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4710 Sfmt 4710 E:\FR\FM\17OCWS.LOC 17OCWS II Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019

The FEDERAL REGISTER (ISSN 0097–6326) is published daily, SUBSCRIPTIONS AND COPIES Monday through Friday, except official holidays, by the Office PUBLIC of the Federal Register, National Archives and Records Administration, under the Federal Register Act (44 U.S.C. Ch. 15) Subscriptions: and the regulations of the Administrative Committee of the Federal Paper or fiche 202–512–1800 Register (1 CFR Ch. I). The Superintendent of Documents, U.S. Assistance with public subscriptions 202–512–1806 Government Publishing Office, is the exclusive distributor of the official edition. Periodicals postage is paid at Washington, DC. General online information 202–512–1530; 1–888–293–6498 Single copies/back copies: The FEDERAL REGISTER provides a uniform system for making available to the public regulations and legal notices issued by Paper or fiche 202–512–1800 Federal agencies. These include Presidential proclamations and Assistance with public single copies 1–866–512–1800 Executive Orders, Federal agency documents having general (Toll-Free) applicability and legal effect, documents required to be published FEDERAL AGENCIES by act of Congress, and other Federal agency documents of public Subscriptions: interest. Assistance with Federal agency subscriptions: Documents are on file for public inspection in the Office of the Federal Register the day before they are published, unless the Email [email protected] issuing agency requests earlier filing. For a list of documents Phone 202–741–6000 currently on file for public inspection, see www.federalregister.gov. The seal of the National Archives and Records Administration The Federal Register Printing Savings Act of 2017 (Pub. L. 115- authenticates the Federal Register as the official serial publication 120) placed restrictions on distribution of official printed copies established under the Federal Register Act. Under 44 U.S.C. 1507, of the daily Federal Register to members of Congress and Federal the contents of the Federal Register shall be judicially noticed. offices. Under this Act, the Director of the Government Publishing The Federal Register is published in paper and on 24x microfiche. Office may not provide printed copies of the daily Federal Register It is also available online at no charge at www.govinfo.gov, a unless a Member or other Federal office requests a specific issue service of the U.S. Government Publishing Office. or a subscription to the print edition. For more information on how to subscribe use the following website link: https:// The online edition of the Federal Register is issued under the www.gpo.gov/frsubs. authority of the Administrative Committee of the Federal Register as the official legal equivalent of the paper and microfiche editions (44 U.S.C. 4101 and 1 CFR 5.10). It is updated by 6:00 a.m. each day the Federal Register is published and includes both text and graphics from Volume 1, 1 (March 14, 1936) forward. For more information, contact the GPO Customer Contact Center, U.S. Government Publishing Office. Phone 202-512-1800 or 866-512- 1800 (toll free). E-mail, gpocusthelp.com. The annual subscription price for the Federal Register paper edition is $860 plus postage, or $929, for a combined Federal Register, Federal Register Index and List of CFR Sections Affected (LSA) subscription; the microfiche edition of the Federal Register including the Federal Register Index and LSA is $330, plus postage. Six month subscriptions are available for one-half the annual rate. The prevailing postal rates will be applied to orders according to the delivery method requested. The price of a single copy of the daily Federal Register, including postage, is based on the number of pages: $11 for an issue containing less than 200 pages; $22 for an issue containing 200 to 400 pages; and $33 for an issue containing more than 400 pages. Single issues of the microfiche edition may be purchased for $3 per copy, including postage. Remit check or money order, made payable to the Superintendent of Documents, or charge to your GPO Deposit Account, VISA, MasterCard, American Express, or Discover. Mail to: U.S. Government Publishing Office—New Orders, P.O. Box 979050, St. Louis, MO 63197-9000; or call toll free 1-866-512-1800, DC area 202-512-1800; or go to the U.S. Government Online Bookstore site, see bookstore.gpo.gov. There are no restrictions on the republication of material appearing in the Federal Register. How To Cite This Publication: Use the volume number and the page number. Example: 84 FR 12345. Postmaster: Send address changes to the Superintendent of Documents, Federal Register, U.S. Government Publishing Office, Washington, DC 20402, along with the entire mailing label from the last issue received.

VerDate Sep 11 2014 20:51 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4710 Sfmt 4710 E:\FR\FM\17OCWS.LOC 17OCWS III

Contents Federal Register Vol. 84, No. 201

Thursday, October 17, 2019

Administrative Office of United States Courts Community Development Financial Institutions Fund See Judicial Conference of the United States NOTICES Agency Information Collection Activities; Proposals, Agricultural Marketing Service Submissions, and Approvals: NOTICES Uses of Awards Report Form, 55678–55679 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Comptroller of the Currency National Organic Program, 55540–55542 PROPOSED RULES Policy Statement on Allowance for Credit Losses, 55510– Agriculture Department 55522 See Agricultural Marketing Service NOTICES See Animal and Plant Health Inspection Service Agency Information Collection Activities; Proposals, See Forest Service Submissions, and Approvals, 55685–55686 See Natural Resources Conservation Service Policy Guidance on Credit Risk Review Systems, 55679– See Rural Housing Service 55684 NOTICES Reporting of Data on Loans to Small Businesses and Small Agency Information Collection Activities; Proposals, Farms, 55687–55690 Submissions, and Approvals, 55542–55544 Defense Department Animal and Plant Health Inspection Service NOTICES NOTICES Meetings: Determination of the Foot-and-Mouth Disease Status of Defense Health Board, 55565–55566 Singapore, 55547–55548 Membership of the Performance Review Board, 55566– Determination Regarding the Fever Tick Status of the State 55567 of Baja California, Mexico, 55546–55547 Importation Authorization: Economic Development Administration Fresh Guava from Taiwan into the Continental United NOTICES States, 55544–55546 Trade Adjustment Assistance; Determinations, 55549

Antitrust Division Education Department NOTICES NOTICES Changes under the National Cooperative Research and Agency Information Collection Activities; Proposals, Production Act: Submissions, and Approvals: 3D PDF Consortium, Inc., 55586–55587 DCIA Aging and Compliance Data Requirements for Advanced Media Workflow Association, Inc., 55585 Guaranty Agencies, 55567–55568 Consortium for Battery Innovation, 55585 Targeted Teacher Shortage Areas Data Collection, 55567 National Fire Protection Association, 55585 OpenJS Foundation, 55585–55586 Energy Department Pistoia Alliance, Inc., 55586 See Federal Energy Regulatory Commission Southwest Research Institute—Cooperative Research NOTICES Group on ROS-Industrial Consortium-Americas, Meetings: 55586 International Energy Agency, 55568–55569 Senior Executive Service Performance Review Board, Centers for Medicare & Medicaid Services 55568–55569 PROPOSED RULES Medicare Program: Environmental Protection Agency Modernizing and Clarifying the Physician Self-Referral NOTICES Regulations, 55766–55847 Acid Rain Program: Excess Emissions Penalty Inflation Adjustments, 55574 Coast Guard RULES Federal Aviation Administration Safety Zone: RULES Kanawha River, Charleston, WV, 55501–55502 Airworthiness Directives: Wando Terminal Crane Movement; Charleston, SC, Airbus SAS Airplanes, 55495–55498 55502–55504 Federal Deposit Insurance Corporation Commerce Department PROPOSED RULES See Economic Development Administration Policy Statement on Allowance for Credit Losses, 55510– See Foreign-Trade Zones Board 55522 See International Trade Administration NOTICES See National Institute of Standards and Technology Agency Information Collection Activities; Proposals, See National Oceanic and Atmospheric Administration Submissions, and Approvals, 55685–55686

VerDate Sep<11>2014 21:35 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4748 Sfmt 4748 E:\FR\FM\17OCCN.SGM 17OCCN IV Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Contents

Meetings; Sunshine Act, 55574 Geological Survey Policy Guidance on Credit Risk Review Systems, 55679– NOTICES 55684 Agency Information Collection Activities; Proposals, Reporting of Data on Loans to Small Businesses and Small Submissions, and Approvals: Farms, 55687–55690 Department of the Interior Regional Climate Adaptation Science Centers, 55581–55582 Federal Election Commission NOTICES Health and Human Services Department Meetings; Sunshine Act, 55574 See Centers for Medicare & Medicaid Services See Food and Drug Administration Federal Energy Regulatory Commission See Health Resources and Services Administration RULES See Inspector General Office, Health and Human Services Formal Requirements for Filings in Proceedings Before the Department Commission, 55498 See National Institutes of Health NOTICES See Substance Abuse and Mental Health Services Application: Administration Corpus Christi Liquefaction, LLC, 55571–55572 National Fuel Gas Supply Corp., 55572–55573 Health Resources and Services Administration Combined Filings, 55569–55570, 55573 NOTICES Environmental Assessments; Availability, etc.: Agency Information Collection Activities; Proposals, Georgia Power Co., 55573 Submissions, and Approvals: Initial Market-Based Rate Filings Including Requests for Evaluation of the Maternal and Child Health Bureau Blanket Section 204 Authorizations: Pediatric Mental Health Care Access Program and the PGR Lessee L, LLC, 55570 Maternal and Child Health Bureau Screening and TWE Bowman Solar Project, LLC, 55570–55571 Treatment for Maternal Depression and Related Behavioral Disorders Program, 55579–55580 Federal Reserve System Meetings: PROPOSED RULES Advisory Committee on Training and Primary Care Policy Statement on Allowance for Credit Losses, 55510– Medicine and Dentistry, 55578 55522 Council on Graduate Medical Education, 55577–55578 NOTICES Agency Information Collection Activities; Proposals, Homeland Security Department Submissions, and Approvals, 55685–55686 See Coast Guard Policy Guidance on Credit Risk Review Systems, 55679– 55684 Indian Affairs Bureau Reporting of Data on Loans to Small Businesses and Small RULES Farms, 55687–55690 Tribal Transportation Program, 55498–55500 NOTICES Food and Drug Administration HEARTH Act Approval of Menominee Indian Tribe of NOTICES Wisconsin Regulations, 55582–55583 Guidance: Prescription Drug User Fee Act Waivers, Reductions, and Inspector General Office, Health and Human Services Refunds for Drug and Biological Products, 55576– Department 55577 Request for Nominations: PROPOSED RULES Nonvoting Representative of the Interest of the Tobacco Medicare and State Healthcare Programs: Manufacturing Industry on the Tobacco Products Fraud and Abuse; Revisions to Safe Harbors under the Scientific Advisory Committee, 55575–55576 Anti-Kickback Statute, and Civil Monetary Penalty Voting Members on the Tobacco Products Scientific Rules Regarding Beneficiary Inducements, 55694– Advisory Committee, 55574–55575 55765

Foreign Claims Settlement Commission Interior Department NOTICES See Geological Survey Privacy Act; Systems of Records, 55587–55589 See Indian Affairs Bureau See National Park Service Foreign-Trade Zones Board NOTICES Internal Revenue Service Application for Production Authority: NOTICES Arbor Foods Inc.; Foreign-Trade Zone 8; Toledo, OH, Agency Information Collection Activities; Proposals, 55549–55550 Submissions, and Approvals: Proposed Production Activity: Form Project, 55690–55691 Steelite International USA, Inc.; Foreign-Trade Zone 33; Pittsburgh, PA, 55550–55551 International Trade Administration NOTICES Forest Service Antidumping or Countervailing Duty Investigations, Orders, PROPOSED RULES or Reviews: Special Areas, Roadless Area Conservation: Certain Magnesia Carbon Bricks from the People’s National Forest System Lands in Alaska, 55522–55529 Republic of China, 55557–55559

VerDate Sep<11>2014 21:35 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4748 Sfmt 4748 E:\FR\FM\17OCCN.SGM 17OCCN Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Contents V

Certain New Pneumatic Off-The-Road Tires from the National Institute of Standards and Technology People’s Republic of China, 55553–55554 NOTICES Finished Carbon Steel Flanges from Italy, 55551–55553 Agency Information Collection Activities; Proposals, Frozen Warmwater Shrimp from the People’s Republic of Submissions, and Approvals, 55562 China, 55555 Deprecation of the United States Survey Foot, 55562–55565 Large Power Transformers from the Republic of Korea, 55559–55561 National Institutes of Health Light-Walled Rectangular Pipe and Tube from Mexico, NOTICES 55555–55557 Meetings: Subsidy Programs Provided by Countries Exporting National Center for Advancing Translational Sciences, Softwood Lumber and Softwood Lumber Products to 55580 the United States, 55561–55562 National Eye Institute, 55580 Office of AIDS Research Advisory Council, 55580 International Trade Commission NOTICES National Oceanic and Atmospheric Administration Investigations; Determinations, Modifications, and Rulings, RULES etc.: Atlantic Highly Migratory Species: Certain Touch-Controlled Mobile Devices, Computers, Atlantic Bluefin Tuna Fisheries, 55507–55508 and Components Thereof, 55584–55585 Fisheries of the Exclusive Economic Zone Off Alaska: Certain Wireless Communication Devices, and Related Pacific Cod by Vessels using Pot Gear in the Central Components Thereof, 55583–55584 Regulatory Area of the Gulf of Alaska, 55508–55509 PROPOSED RULES Judicial Conference of the United States Endangered and Threatened Species: NOTICES Designation of Critical Habitat for the Central America, Advisory Committee on Bankruptcy Rules: Mexico, and Western North Pacific Distinct Proposed Amendments, 55540 Population Segments of Humpback Whales and Revision of Critical Habitat for the Southern Resident Justice Department Killer Whale Distinct Population Segment; Public Hearings, 55530–55531 See Antitrust Division Fisheries of the Caribbean, Gulf of Mexico, and South See Foreign Claims Settlement Commission NOTICES Atlantic: Agency Information Collection Activities; Proposals, Snapper-Grouper Fishery of the South Atlantic Region; Submissions, and Approvals, 55589–55590 Regulatory Amendment 27, 55531–55539 NOTICES Proposed Consent Decree: Requests for Nominations: CERCLA, 55589 Advisory Committee on Commercial Remote Sensing, 55565 Labor Department See Mine Safety and Health Administration National Park Service NOTICES Millennium Challenge Corporation Meetings: NOTICES Tule Springs Fossil Beds National Monument Advisory Meetings: Council, 55583 Economic Advisory Council, 55590 National Science Foundation Mine Safety and Health Administration NOTICES RULES Agency Information Collection Activities; Proposals, Examinations of Working Places in Metal and Nonmetal Submissions, and Approvals: Mines; Meetings, 55500 Grantee Reporting Requirements for Prediction of and Resilience against Extreme Events, 55592–55593 National Aeronautics and Space Administration NOTICES Natural Resources Conservation Service Meetings: NOTICES Applied Sciences Advisory Committee, 55591 Record of Decision: International Space Station Advisory Committee, 55591 Adoption of Another Agency’s Final Environmental Impact Statement to Implement the Feral Swine National Credit Union Administration Eradication and Control Pilot Program, 55548 PROPOSED RULES Policy Statement on Allowance for Credit Losses, 55510– Nuclear Regulatory Commission 55522 NOTICES NOTICES Agency Information Collection Activities; Proposals, Agency Information Collection Activities; Proposals, Submissions, and Approvals: Submissions, and Approvals: Qualifications Investigation, Professional, Technical and Supervisory Committee Audits and Verifications, 55591– Administrative Positions, 55593–55594 55592 Uniform Low-Level Radioactive Waste Manifest Policy Guidance on Credit Risk Review Systems, 55679– (Container and Waste Description) and Continuation 55684 Page, 55596–55597

VerDate Sep<11>2014 21:35 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00003 Fmt 4748 Sfmt 4748 E:\FR\FM\17OCCN.SGM 17OCCN VI Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Contents

Uniform Low-Level Radioactive Waste Manifest (Index Small Business Administration and Regional Compact Tabulation) and Continuation NOTICES Page, 55595–55596 Disaster Declaration: Uniform Low-Level Radioactive Waste Manifest Illinois, 55677–55678 (Shipping Paper) and Continuation Page, 55594– Major Disaster Declaration: 55595 South Dakota, 55677

Postal Regulatory Commission Substance Abuse and Mental Health Services NOTICES Administration Competitive Price Adjustment, 55598–55599 Mail Classification Schedule, 55597–55599 NOTICES Market Dominant Price Adjustment, 55599–55600 Certified Laboratories and Instrumented Initial Testing Facilities: List of Facilities that Meet Minimum Standards to Engage Postal Service in Urine Drug Testing for Federal Agencies, 55581 RULES Domestic Competitive Products Pricing and Mailing Transportation Department Standards Changes, 55504–55507 See Federal Aviation Administration PROPOSED RULES New Mailing Standards for Domestic Mailing Services Treasury Department Products, 55529–55530 See Community Development Financial Institutions Fund See Comptroller of the Currency Presidential Documents See Internal Revenue Service PROCLAMATIONS Special Observances: U.S.-China Economic and Security Review Commission Blind Americans Equality Day (Proc. 9950), 55493–55494 NOTICES Columbus Day (Proc. 9949), 55491–55492 Public Event, 55691 National School Lunch Week (Proc. 9948), 55489–55490 EXECUTIVE ORDERS Veterans Affairs Department Syria; Blocking Property and Suspending Entry Into U.S. of NOTICES Certain Persons (EO 13894), 55849–55855 Agency Information Collection Activities; Proposals, ADMINISTRATIVE ORDERS Colombia; Continuation of National Emergency With Submissions, and Approvals: Respect to Narcotics Traffickers (Notice of October 15, Application for Pre-Need Determination of Eligibility for 2019), 55857 Burial, 55691–55692

Rural Housing Service Separate Parts In This Issue NOTICES Agency Information Collection Activities; Proposals, Part II Submissions, and Approvals, 55548–55549 Health and Human Services Department, Centers for Medicare & Medicaid Services, 55766–55847 Securities and Exchange Commission Health and Human Services Department, Inspector General NOTICES Office, Health and Human Services Department, Agency Information Collection Activities; Proposals, 55694–55765 Submissions, and Approvals, 55600–55601, 55630– 55631, 55648–55649 Part III Self-Regulatory Organizations; Proposed Rule Changes: Presidential Documents, 55849–55855, 55857 Cboe BZX Exchange, Inc., 55608–55616 Cboe EDGA Exchange, Inc., 55638–55643 Cboe EDGX Exchange, Inc., 55616–55621, 55624–55630 Cboe Exchange, Inc., 55643–55644, 55656–55658, 55663– Reader Aids 55665, 55671–55675 Consult the Reader Aids section at the end of this issue for ICE Clear Europe Ltd., 55649–55656 phone numbers, online resources, finding aids, and notice Miami International Securities Exchange, LLC, 55658– of recently enacted public laws. 55663, 55675–55677 To subscribe to the Federal Register Table of Contents MIAX PEARL, LLC, 55601–55603 electronic mailing list, go to https://public.govdelivery.com/ Nasdaq BX, Inc., 55621–55624, 55631–55638 accounts/USGPOOFR/subscriber/new, enter your e-mail NYSE Arca, Inc., 55603–55608, 55658, 55665–55671 address, then follow the instructions to join, leave, or The Nasdaq Stock Market, LLC, 55644–55648 manage your subscription.

VerDate Sep<11>2014 21:35 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00004 Fmt 4748 Sfmt 4748 E:\FR\FM\17OCCN.SGM 17OCCN Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Contents VII

CFR PARTS AFFECTED IN THIS ISSUE

A cumulative list of the parts affected this month can be found in the Reader Aids section at the end of this issue.

3 CFR Proclamations: 9948...... 55489 9949...... 55491 9950...... 55493 Executive Orders: 13894...... 55851 Administrative Orders: Notices: Notice of October 15, 2019 ...... 55857 12 CFR Proposed Rules: 30...... 55510 208...... 55510 364...... 55510 741...... 55510 14 CFR 39...... 55495 18 CFR 385...... 55498 25 CFR 170...... 55498 30 CFR 56...... 55500 57...... 55500 33 CFR 165 (2 documents) ...... 55501, 55502 36 CFR Proposed Rules: 294...... 55522 39 CFR 111...... 55504 Proposed Rules: 111...... 55529 42 CFR Proposed Rules: 411...... 55766 1001...... 55694 1003...... 55694 50 CFR 635...... 55507 679...... 55508 Proposed Rules: 223...... 55530 224...... 55530 226...... 55530 622...... 55531

VerDate Sep 11 2014 21:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4711 Sfmt 4711 E:\FR\FM\17OCLS.LOC 17OCLS 55489

Federal Register Presidential Documents Vol. 84, No. 201

Thursday, October 17, 2019

Title 3— Proclamation 9948 of October 11, 2019

The President National School Lunch Week, 2019

By the President of the United States of America

A Proclamation During National School Lunch Week, we recognize the school lunch programs across our country that nourish our children with nutritious, American- grown food that they need to learn in the classroom and work toward bright futures. By ensuring all students have access to well-balanced meals, we can help our Nation’s youth maintain healthy lifestyles and help them achieve success in the classroom and beyond. Established in 1946, the National School Lunch Program provides low- cost or free lunches to more than 29 million children in nearly 100,000 public and residential child-care institutions across our country. Since its creation, the number of students served by the program has quadrupled, and school cafeterias now serve nearly 5 billion lunches annually. This successful Federal, State, and local partnership would not be possible without the assistance of thousands of food service professionals, school administra- tors, community members, and parents. As a nation, we are grateful for those who go above and beyond to ensure all children are able to focus on their education and development instead of worrying about their next lunch. America’s farmers, ranchers, and producers also play a role in ensuring our children’s plates are filled with healthy, domestically sourced foods. This year, my Administration awarded a record high of more than $9 million in Farm to School Program grants, increasing access to local food and strengthening links to agriculture for more than 3.2 million children in 42 States, the District of Columbia, and Puerto Rico. Through our efforts to increase the amount of local food in our country’s schools, we are promoting the success of both our farmers and ranchers and our Nation’s children. To emphasize the importance of the National School Lunch Program to our youth’s nutrition, the Congress, by joint resolution of October 9, 1962 (Public Law 87–780), has designated the week beginning on the second Sunday in October each year as ‘‘National School Lunch Week’’ and has requested the President to issue a proclamation in observance of this week. NOW, THEREFORE, I, DONALD J. TRUMP, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim October 13 through October 19, 2019, as National School Lunch Week. I call upon all Americans to join the countless individuals who administer the National School Lunch Program in activities that support and promote awareness of the health and well-being of our Nation’s children.

VerDate Sep<11>2014 15:48 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4705 Sfmt 4790 E:\FR\FM\17OCD0.SGM 17OCD0 55490 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents

IN WITNESS WHEREOF, I have hereunto set my hand this eleventh day of October, in the year of our Lord two thousand nineteen, and of the Independence of the United States of America the two hundred and forty- fourth.

[FR Doc. 2019–22797 Filed 10–16–19; 8:45 am] Billing code 3295–F0–P

VerDate Sep<11>2014 15:48 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4705 Sfmt 4790 E:\FR\FM\17OCD0.SGM 17OCD0 Trump.EPS Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents 55491 Presidential Documents

Proclamation 9949 of October 11, 2019

Columbus Day, 2019

By the President of the United States of America

A Proclamation On October 12, 1492, after a perilous, two-month journey across the treach- erous Atlantic Ocean, Christopher Columbus and his crew aboard the Nin˜ a, Pinta, and Santa Maria landed in what is today The Bahamas. This watershed voyage ushered in the Age of Exploration, changing the course of history and setting the foundation for development of our Nation. Today, we com- memorate this great explorer, whose courage, skill, and drive for discovery are at the core of the American spirit. While Columbus sailed from the port of Palos under the Spanish flag, he took pride in the fact that he was a citizen of Genoa, Italy. The celebration of Columbus Day is, therefore, an appropriate opportunity to recognize the more than 16 million Americans who claim Italian heritage and to carry forth the legacy of generations of Italian Americans who helped shape our Nation. The United States greatly values its close bond with Italy, a longstanding friend, ally, and economic partner. Our relationship, built on shared values and a commitment to furthering peace and prosperity, continues to benefit both of our nations. Columbus’s daring voyage to the New World brought two continents together, enabling a global perspective for the first time. The bold legacy of Columbus and his crew spun a thread that weaves through the extensive history of Americans who have pushed the boundaries of exploration. On Columbus Day, we draw inspiration from this intrepid pioneer’s spirit of adventure. We also affirm our commitment to continuing our quest to discover and better understand the wonders of our Nation, the world, and beyond. In commemoration of Christopher Columbus’s historic voyage, the Congress, by joint resolution of April 30, 1934, and modified in 1968 (36 U.S.C. 107), as amended, has requested the President proclaim the second Monday of October of each year as ‘‘Columbus Day.’’ NOW, THEREFORE, I, DONALD J. TRUMP, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim October 14, 2019, as Columbus Day. I call upon the people of the United States to observe this day with appropriate ceremonies and activities. I also direct that the flag of the United States be displayed on all public buildings on the appointed day in honor of our diverse history and all who have contributed to shaping this Nation.

VerDate Sep<11>2014 15:50 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4790 Sfmt 4790 E:\FR\FM\17OCD1.SGM 17OCD1 55492 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents

[FR Doc. 2019–22807 Filed 10–16–19; 8:45 am] Billing code 3295–F0–P

VerDate Sep<11>2014 15:50 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4790 Sfmt 4790 E:\FR\FM\17OCD1.SGM 17OCD1 Trump.EPS Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents 55493 Presidential Documents

Proclamation 9950 of October 11, 2019

Blind Americans Equality Day, 2019

By the President of the United States of America

A Proclamation Blind Americans Equality Day pays tribute to our fellow Americans who are blind or visually impaired for their many contributions to the strength and vitality of our Nation. We renew our steadfast commitment to ensuring their full participation in our communities, workplaces, and social life. My Administration is committed to promoting policies that foster greater liberty, prosperity, and equality. We are expanding educational, social, technological, and employment opportunities for Americans with disabilities, including blind or visually impaired individuals. We have partnered with States to promote independent living and equal employment opportunities, as well as social, cultural, and athletic activities. Additionally, the President’s National Council for the American Worker is developing a national employment strategy to ensure that we have a highly qualified and trained workforce to meet our growing economic needs. We are working to address barriers to employment, combat stigmas, and confront stereotypes that make it more difficult for blind or visually impaired individuals to find and maintain employment. My Administration is also encouraging Federal contractors to take proactive steps to recruit, hire, retain, and advance blind or visually impaired people. By joint resolution approved on October 6, 1964 (Public Law 88–628), the Congress authorized the President to designate October 15 of each year as ‘‘White Cane Safety Day’’ to recognize the contributions of Americans who are blind or have impaired vision. With the strongest economy our Nation has ever experienced, these Americans are empowered to seek new opportunities for success. Today, and every day, we will continue our efforts to ensure and champion the full and active participation of all Americans, including blind or visually impaired Americans, in every facet of our society. NOW, THEREFORE, I, DONALD J. TRUMP, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim October 15, 2019, as Blind Americans Equality Day, to celebrate and recognize the accomplishments and contributions of Americans who are blind or visually impaired. I call upon all Americans to observe this day with appropriate ceremonies and activities to reaffirm our commitment to achieving equality for all Ameri- cans.

VerDate Sep<11>2014 15:51 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4790 Sfmt 4790 E:\FR\FM\17OCD2.SGM 17OCD2 55494 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents

[FR Doc. 2019–22809 Filed 10–16–19; 8:45 am] Billing code 3295–F0–P

VerDate Sep<11>2014 15:51 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4790 Sfmt 4790 E:\FR\FM\17OCD2.SGM 17OCD2 Trump.EPS 55495

Rules and Regulations Federal Register Vol. 84, No. 201

Thursday, October 17, 2019

This section of the FEDERAL REGISTER Adenauer-Ufer 3, 50668 Cologne, 26373). The NPRM was prompted by the contains regulatory documents having general Germany; telephone +49 221 89990 FAA’s determination to add a applicability and legal effect, most of which 1000; email [email protected]; requirement to replace the TRAs, which are keyed to and codified in the Code of internet www.easa.europa.eu. You may AD 2018–26–07 specified was not Federal Regulations, which is published under find this IBR material on the EASA required at the time to provide the 50 titles pursuant to 44 U.S.C. 1510. website at https://ad.easa.europa.eu. opportunity for the public to comment The Code of Federal Regulations is sold by You may view this IBR material at the on the merits of that action. The NPRM the Superintendent of Documents. FAA, Transport Standards Branch, 2200 proposed to require actions specified in South 216th St., Des Moines, WA. For an EASA AD, which is incorporated by information on the availability of this reference. DEPARTMENT OF TRANSPORTATION material at the FAA, call 206–231–3195. This AD was prompted by reports of It is also available in the AD docket on TRAs jamming and the determination Federal Aviation Administration the internet at http:// that a one-time replacement of affected www.regulations.gov by searching for TRAs (all part numbers) is necessary. 14 CFR Part 39 and locating Docket No. FAA–2019– We are issuing this AD to address [Docket No. FAA–2019–0404; Product 0404. jamming of the TRAs, which could lead Identifier 2019–NM–007–AD; Amendment to an inadvertent thrust reverser sleeve 39–19754; AD 2019–20–01] Examining the AD Docket deployment, possibly resulting in reduced control or performance of the RIN 2120–AA64 You may examine the AD docket on the internet at http:// airplane. See the MCAI for additional Airworthiness Directives; Airbus SAS www.regulations.gov by searching for background information. Airplanes and locating Docket No. FAA–2019– Comments 0404; or in person at Docket Operations AGENCY: Federal Aviation between 9 a.m. and 5 p.m., Monday The FAA gave the public the Administration (FAA), Department of through Friday, except Federal holidays. opportunity to participate in developing Transportation (DOT). The AD docket contains this final rule, this final rule. The following presents ACTION: Final rule. the regulatory evaluation, any the comments received on the NPRM comments received, and other and the FAA’s response to each SUMMARY: The FAA is superseding information. The address for Docket comment. Airworthiness Directive (AD) 2018–26– Operations is U.S. Department of Request To Change Compliance Time 07, which applied to all Airbus SAS Transportation, Docket Operations, M– for Replacement of the TRAs Model A350–941 and –1041 airplanes. 30, West Building Ground Floor, Room AD 2018–26–07 required repetitive The Air Line Pilots Association, W12–140, 1200 New Jersey Avenue SE, International (ALPA) stated partial greasing of the thrust reverser actuators Washington, DC 20590. (TRAs), dispatch restrictions, and agreement with the NPRM, and FOR FURTHER INFORMATION CONTACT: disagreement with the compliance time maintenance procedure revisions. This Kathleen Arrigotti, Aerospace Engineer, AD requires actions specified in a for replacement of the TRAs. ALPA International Section, Transport mentioned that it had commented on European Union Aviation Safety Agency Standards Branch, FAA, 2200 South (EASA) AD, which is incorporated by AD 2018–26–07 that, based on the 216th St., Des Moines, WA 98198; required inspection intervals of the reference. This AD was prompted by the phone and fax: 206–231–3218. FAA’s determination to add a MCAI and the low time of the affected SUPPLEMENTARY INFORMATION: requirement to replace the TRAs, which U.S. fleet, the inclusion of the TRA replacement would not create an AD 2018–26–07 specified was not Discussion required at the time to provide the increased financial or undue burden. The EASA, which is the Technical ALPA stated their belief that correlating opportunity for the public to comment Agent for the Member States of the the compliance time to the effective date on the merits of that action. The FAA European Union, has issued EASA AD of the new AD instead of using the is issuing this AD to address the unsafe 2018–0234R2, dated September 17, 2019 effective date of AD 2018–26–07 is condition on these products. (‘‘EASA AD 2018–0234R2’’) (referred to inadequate. DATES: This AD is effective November after this as the Mandatory Continuing The FAA infers that the commenter is 21, 2019. Airworthiness Information, or ‘‘the requesting a change to the compliance The Director of the Federal Register MCAI’’), to correct an unsafe condition time for replacement of the TRAs. The approved the incorporation by reference for all Airbus SAS Model A350–941 and FAA disagrees with the commenter’s of a certain publication listed in this AD –1041 airplanes. request. As noted in AD 2018–26–07, as of November 21, 2019. The FAA issued a notice of proposed the FAA could not include the The Director of the Federal Register rulemaking (NPRM) to amend 14 CFR replacement in that AD because it was approved the incorporation by reference part 39 to supersede AD 2018–26–07, an immediately adopted rule and the of a certain other publication listed in Amendment 39–19538 (83 FR 67677, planned compliance time for the this AD as of January 15, 2019 (83 FR December 31, 2018) (‘‘AD 2018–26– replacement allowed enough time to 67677, December 31, 2018). 07’’). AD 2018–26–07 applied to all provide notice and opportunity for prior ADDRESSES: For the material Airbus SAS Model A350–941 and –1041 public comment on the merits of the incorporated by reference (IBR) in this airplanes. The NPRM published in the replacement. The FAA is now issuing AD, contact the EASA, Konrad- Federal Register on June 6, 2019 (84 FR this AD to require the replacement.

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 55496 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations

The only compliance time that is paragraph (h)(3) of this AD to specify The FAA also determined that these based on the effective date of this AD is that the MMEL changes specified in changes will not increase the economic specified in condition 3 in Table 3 of EASA AD 2018–0234R1 and EASA AD burden on any operator or increase the the MCAI. For airplanes with condition 2018–0234R2 are not required by this scope of this final rule. 3, the compliance time is the later of (A) AD, removed paragraph (h)(4) of this before exceeding 2,400 flight cycles; or AD, and redesignated subsequent Related IBR Material Under 1 CFR Part (B) within 250 flight cycles or 4 months, paragraphs accordingly. 51 whichever occurs first after the effective EASA AD 2018–0234R2 describes date of this AD. Because the U.S. fleet Changes to This AD is approximately two years younger Since the FAA issued the NPRM, procedures for repetitive greasing of the than the oldest airplane in the global EASA issued AD 2018–0234R2. EASA TRAs, maintenance procedure revisions, fleet and the affected U.S. airplanes AD 2018–0234R2 refines the definition and replacement of the TRAs, among have TRAs with a lower flight cycle age, of affected TRAs and introduces a other actions. we have determined the additional longer interval for repetitive greasing of This AD also requires EASA AD compliance time is appropriate and certain affected TRAs. The FAA has 2018–0234R1, which the Director of the provides an acceptable level of safety. determined that no additional work is Federal Register approved for The FAA has not changed this AD in required for airplanes on which the incorporation by reference as of January this regard. requirements specified in EASA AD 15, 2019 (83 FR 67677, December 31, 2018–0234R1, dated November 13, 2018 Request To Remove Requirement To 2018). (‘‘EASA AD 2018–0234R1’’) have been Change Master Minimum Equipment accomplished. Therefore, the agency has These documents are distinct since List (MMEL) revised all applicable sections in this EASA AD 2018–0234R2 includes Delta Air Lines (DAL) requested that final rule to also specify EASA AD updated requirements and definitions, the FAA remove the requirement to 2018–0234R2. and a longer interval for repetitive change the MMEL in paragraph (h)(4) of In addition, the FAA has revised the greasing of certain affected TRAs. This the proposed AD. DAL pointed out that terminology in paragraph (h)(1) of this material is reasonably available because the updates required by paragraph (h)(4) AD to clarify the retained requirements. the interested parties have access to it of the proposed AD have been through their normal course of business incorporated into the FAA MMEL as of Conclusion or by the means identified in the Revision 4. DAL also mentioned that the The FAA reviewed the relevant data, ADDRESSES section. FAA MMEL and the EASA MMEL are considered the comments received, and not identical. DAL stated that the FAA determined that air safety and the Interim Action MMEL is more restrictive and does not public interest require adopting this The FAA considers this AD interim allow the deactivation of both thrust final rule with the changes described action. If final action is later identified, reversers at the same time. DAL also previously and minor editorial changes. The FAA might consider further stated that the differences, combined The FAA has determined that these rulemaking then. with possible future revisions of either minor changes: the FAA MMEL or the EASA MMEL, • Are consistent with the intent that Costs of Compliance could lead to confusion. DAL also was proposed in the NPRM for pointed out that U.S. operators must addressing the unsafe condition; and The FAA estimates that this AD follow the FAA MMEL. • Do not add any additional burden affects 11 airplanes of U.S. registry. The The FAA agrees for the reasons upon the public than was already FAA estimates the following costs to provided. The FAA has revised proposed in the NPRM. comply with this AD:

ESTIMATED COSTS FOR REQUIRED ACTIONS

Parts Cost per Cost on Action Labor cost cost product U.S. operators

Retained actions from AD 2018-26-07 ...... 10 work-hours × $85 per hour = $850 ...... $0 $850 $9,350 New actions ...... 12 work-hours × $85 per hour = $1,020 ...... (*) * 1,020 * 11,220 * The FAA has received no definitive data that would enable the agency to provide parts cost estimates for the replacement specified in this AD.

Authority for This Rulemaking with promoting safe flight of civil In accordance with that order, issuance aircraft in air commerce by prescribing of ADs is normally a function of the Title 49 of the United States Code regulations for practices, methods, and specifies the FAA’s authority to issue Compliance and Airworthiness rules on aviation safety. Subtitle I, procedures the Administrator finds Division, but during this transition section 106, describes the authority of necessary for safety in air commerce. period, the Executive Director has the FAA Administrator. Subtitle VII: This regulation is within the scope of delegated the authority to issue ADs Aviation Programs, describes in more that authority because it addresses an applicable to transport category detail the scope of the Agency’s unsafe condition that is likely to exist or airplanes and associated appliances to authority. develop on products identified in this the Director of the System Oversight The FAA is issuing this rulemaking rulemaking action. Division. under the authority described in This AD is issued in accordance with Regulatory Findings Subtitle VII, Part A, Subpart III, Section authority delegated by the Executive 44701: ‘‘General requirements.’’ Under Director, Aircraft Certification Service, We determined that this AD will not that section, Congress charges the FAA as authorized by FAA Order 8000.51C. have federalism implications under

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations 55497

Executive Order 13132. This AD will deployment, possibly resulting in reduced emailed to: 9-ANM-116-AMOC-REQUESTS@ not have a substantial direct effect on control or performance of the airplane. faa.gov. Before using any approved AMOC, notify your appropriate principal inspector, the States, on the relationship between (f) Compliance the national government and the States, or lacking a principal inspector, the manager Comply with this AD within the of the local flight standards district office/ or on the distribution of power and compliance times specified, unless already certificate holding district office. responsibilities among the various done. (2) Contacting the Manufacturer: For any levels of government. (g) Requirements requirement in this AD to obtain instructions For the reasons discussed above, I from a manufacturer, the instructions must certify that this AD: Except as specified in paragraph (h) of this be accomplished using a method approved (1) Is not a ‘‘significant regulatory AD: Comply with all required actions and by the Manager, International Section, action’’ under Executive Order 12866, compliance times specified in, and in Transport Standards Branch, FAA; or EASA; (2) Will not affect intrastate aviation accordance with, the European Union or Airbus SAS’s EASA Design Organization Aviation Safety Agency (EASA) ADs Approval (DOA). If approved by the DOA, in Alaska, and specified in paragraph (g)(1) or (2) of this AD. (3) Will not have a significant the approval must include the DOA- (1) EASA AD 2018–0234R1, dated authorized signature. economic impact, positive or negative, November 13, 2018 (‘‘EASA AD 2018– on a substantial number of small entities (3) Required for Compliance (RC): For any 0234R1’’). All provisions specified in EASA service information referenced in EASA AD under the criteria of the Regulatory AD 2018–0234R1 apply in this AD. 2018–0234R1 or EASA AD 2018–0234R2 that Flexibility Act. (2) EASA AD 2018–0234R2, dated contains RC procedures and tests: Except as September 17, 2019 (‘‘EASA AD 2018– List of Subjects in 14 CFR Part 39 specified by paragraph (j)(2) of this AD, RC 0234R2’’). All provisions specified in EASA procedures and tests must be done to comply Air transportation, Aircraft, Aviation AD 2018–0234R2 apply in this AD. with this AD; any procedures or tests that are safety, Incorporation by reference, (h) Exceptions to EASA AD 2018–0234R1 not identified as RC are recommended. Those Safety. and EASA AD 2018–0234R2 procedures and tests that are not identified as RC may be deviated from using accepted Adoption of the Amendment (1) For purposes of determining compliance with the maintenance procedure methods in accordance with the operator’s Accordingly, under the authority revisions and repetitive TRA greasing maintenance or inspection program without delegated to me by the Administrator, requirements of this AD: Where EASA AD obtaining approval of an AMOC, provided the FAA amends 14 CFR part 39 as 2018–0234R1 and EASA AD 2018–0234R2 the procedures and tests identified as RC can be done and the airplane can be put back in follows: refer to the effective date of EASA AD 2018– 0234R1 (November 13, 2018), this AD an airworthy condition. Any substitutions or requires using January 15, 2019 (the effective changes to procedures or tests identified as PART 39—AIRWORTHINESS RC require approval of an AMOC. DIRECTIVES date of AD 2018–26–07). (2) For purposes of determining (k) Related Information compliance with the TRA replacement ■ 1. The authority citation for part 39 For more information about this AD, continues to read as follows: requirements of this AD: Where EASA AD 2018–0234R1 and EASA AD 2018–0234R2 contact Kathleen Arrigotti, Aerospace Authority: 49 U.S.C. 106(g), 40113, 44701. refer to their effective dates or November 13, Engineer, International Section, Transport 2018 (the effective date of EASA AD 2018– Standards Branch, FAA, 2200 South 216th § 39.13 [Amended] 0234R1), this AD requires using the effective St., Des Moines, WA 98198; phone and fax: 206–231–3218. ■ 2. The FAA amends § 39.13 by date of this AD. removing Airworthiness Directive (AD) (3) The master minimum equipment list (l) Material Incorporated by Reference 2018–26–07, Amendment 39–19538 (83 (MMEL) changes specified in paragraph (1) of EASA AD 2018–0234R1 and EASA AD 2018– (1) The Director of the Federal Register FR 67677, December 31, 2018), and 0234R2 are not required by this AD. approved the incorporation by reference adding the following new AD: (4) The ‘‘Remarks’’ sections of EASA AD (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR 2019–20–01 Airbus SAS: Amendment 39– 2018–0234R1 and EASA AD 2018–0234R2 do not apply to this AD. part 51. 19754; Docket No. FAA–2019–0404; (2) You must use this service information Product Identifier 2019–NM–007–AD. (5) Where EASA AD 2018–0234R1 and EASA AD 2018–0234R2 refer to the ‘‘the as applicable to do the actions required by (a) Effective Date MER,’’ that document is not required by this this AD, unless this AD specifies otherwise. (3) The following service information was This AD is effective November 21, 2019. AD, and it is not applicable to U.S. operators. approved for IBR on November 21, 2019. (b) Affected ADs (i) No Reporting Requirement (i) European Union Aviation Safety Agency This AD replaces AD 2018–26–07, Although the service information (EASA) AD 2018–0234R2, dated September Amendment 39–19538 (83 FR 67677, referenced in EASA AD 2018–0234R1 and 17, 2019. December 31, 2018) (‘‘AD 2018–26–07’’). EASA AD 2018–0234R2 specifies to submit (ii) [Reserved] certain information to the manufacturer, this (4) The following service information was (c) Applicability AD does not include that requirement. approved for IBR on January 15, 2019 (83 FR This AD applies to all Airbus SAS Model 67677, December 31, 2018). (j) Other FAA AD Provisions A350–941 and –1041 airplanes, certificated (i) European Aviation Safety Agency in any category. The following provisions also apply to this (EASA) AD 2018–0234R1, dated November AD: 13, 2018. (d) Subject (1) Alternative Methods of Compliance (ii) [Reserved] Air Transport Association (ATA) of (AMOCs): The Manager, International (5) For EASA ADs 2018–0234R1 and 2018– America Code 78, Engine Exhaust. Section, Transport Standards Branch, FAA, 0234R2, contact the EASA, Konrad- has the authority to approve AMOCs for this Adenauer-Ufer 3, 50668 Cologne, Germany; (e) Reason AD, if requested using the procedures found telephone +49 221 89990 6017; email ADs@ This AD was prompted by reports of thrust in 14 CFR 39.19. In accordance with 14 CFR easa.europa.eu; Internet reverser actuators (TRAs) jamming and the 39.19, send your request to your principal www.easa.europa.eu. You may find this determination that a one-time replacement of inspector or local Flight Standards District EASA AD on the EASA website at https:// affected TRAs (all part numbers) is necessary. Office, as appropriate. If sending information ad.easa.europa.eu. The FAA is issuing this AD to address directly to the International Section, send it Note 1 to paragraph (l)(5): EASA AD 2018– jamming of the TRAs, which could lead to an to the attention of the person identified in 0234R1 can be accessed in the zipped file at inadvertent thrust reverser sleeve paragraph (k) of this AD. Information may be the bottom of the web page for EASA AD

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 55498 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations

2018–0234R2. When EASA posts a revised FOR FURTHER INFORMATION CONTACT: SUMMARY: This interim final rule AD on their website, they watermark the Christopher Cook, Office of the updates the Tribal Transportation previous AD as ‘‘Revised,’’ alter the file name _ Secretary, 888 First Street NE, Program regulations to delay the by adding ‘‘ revised’’ to the end, and move Washington, DC 20426, (202) 502–8102, deadline for Tribes to comply with it into a zipped file attached at the bottom of the AD web page. [email protected]. Mark requirements to collect data on (6) You may view this material at the FAA, Hershfield, Office of the General proposed roads for the National Tribal Transport Standards Branch, 2200 South Counsel, 888 First Street NE, Transportation Facility Inventory 216th St., Des Moines, WA. For information Washington, DC 20426, (202) 502–8597, (NTTFI). on the availability of this material at the [email protected]. DATES: This rule is effective October 17, FAA, call 206–231–3195. AD 2018–0234R1 SUPPLEMENTARY INFORMATION: On August 2019. Submit comments by November and 2018–0234R2 may be found in the AD 29, 2019, the Commission issued a final docket on the internet at http:// 18, 2019. Compliance with § 170.443 for www.regulations.gov by searching for and rule in Docket No. RM19–18–000 proposed roads currently in the NTTFI locating Docket No. FAA–2019–0404. revising 18 CFR 385.2001(a) to require to remain in the inventory is required by (7) You may view this material that is that hand deliveries of filings and March 6, 2020. incorporated by reference at the National submissions other than by the United ADDRESSES: You may submit comments Archives and Records Administration States Postal Service be sent to an off- by any of the following methods: (NARA). For information on the availability site facility for security screening and • Federal rulemaking portal of this material at NARA, call 202–741–6030, processing.1 The final rule indicated www.regulations.gov. The rule is listed or go to: http://www.archives.gov/federal- that the new regulation would take under the agency name ‘‘Bureau of register/cfr/ibr-locations.html. effect 60 days after the date of Indian Affairs.’’ Issued in Des Moines, Washington, on publication in the Federal Register, • Mail, Hand Delivery, or Courier: Ms. September 3, 2019. which is November 4, 2019. Elizabeth Appel, Office of Regulatory Michael Kaszycki, After issuance of the final rule, the Affairs & Collaborative Action, U.S. Acting Manager, System Oversight Division, Commission has determined that the Department of the Interior, 1849 C Street Aircraft Certification Service. effective date for this new regulation NW, Mail Stop 4660, Washington, DC [FR Doc. 2019–22565 Filed 10–16–19; 8:45 am] should be indefinitely postponed to 20240. BILLING CODE 4910–13–P ensure that the public and the • We cannot ensure that comments Commission may make an effective received after the close of the comment transition to utilizing the off-site period (see DATES) will be included in DEPARTMENT OF ENERGY facility. A copy of this notification will the docket for this rulemaking and be published in the Federal Register considered. Comments sent to an Federal Energy Regulatory and will be prominently placed on the address other than those listed above Commission Commission’s website (http:// will not be included in the docket for www.ferc.gov) to ensure that mail this rulemaking. 18 CFR Part 385 continues to come directly to the FOR FURTHER INFORMATION CONTACT: Mr. [Docket No. RM19–18–000; Order No. 862] Commission’s headquarters during this LeRoy Gishi, Division of Transportation, period. A subsequent notification will Office of Indian Services, Bureau of Formal Requirements for Filings in be issued regarding an effective date for Indian Affairs, (202) 513–7711, Proceedings Before the Commission the final rule in Docket No. RM19–18– [email protected]. 000. SUPPLEMENTARY INFORMATION: AGENCY: Federal Energy Regulatory Dated: October 11, 2019. Commission, Department of Energy. I. Summary of Rule Nathaniel J. Davis, Sr., ACTION: Final rule; delay of effective Regulations governing the Tribal Deputy Secretary. date. Transportation Program were published [FR Doc. 2019–22664 Filed 10–16–19; 8:45 am] in 2016. See 81 FR 78456 (November 7, SUMMARY: BILLING CODE 6717–01–P The Federal Energy 2016). The regulations became effective Regulatory Commission (Commission or on December 7, 2016, except for FERC) published a final rule on § 170.443, which required Tribes’ September 4, 2019, to require that hand DEPARTMENT OF THE INTERIOR compliance at a later date: On deliveries of filings and submissions November 7, 2019. See 83 FR 8609 other than by the United States Postal Bureau of Indian Affairs (February 28, 2018). Section 170.443 Service be sent to an off-site facility for requires Tribes to collect data for security screening and processing. The 25 CFR Part 170 proposed roads to be added to, or final rule indicated that the new remain in, the NTTFI. regulation would take effect 60 days [192A2100DD/AAKC001030/ This interim final rule affects only A0A501010.999900 253G] after the date of publication in the § 170.443. The rule delays the current Federal Register, which is November 4, RIN 1076–AF50 November 7, 2019, deadline for 2019. After issuance of the final rule, compliance with that section to March the Commission has determined that the Tribal Transportation Program; Delay 6, 2020. This delay will allow the effective date for this new regulation of Compliance Date Bureau of Indian Affairs time to should be indefinitely postponed to complete the rulemaking that is AGENCY: ensure that the public and the Bureau of Indian Affairs, reexamining the need for this data Commission may make an effective Interior. collection in the NTTFI and transition to utilizing the off-site ACTION: Interim final rule. determining whether revision or facility. deletion of the data collection DATES: The effective date of the final 1 Formal Requirements for Filings in Proceedings requirements in § 170.443 is rule published on September 4, 2019 (84 Before the Commission, 84 FR 46438 (Sept. 4, appropriate. The Bureau of Indian FR 46438), is delayed indefinitely. 2019), 168 FERC ¶ 61,120 (2019). Affairs finds that there is good cause to

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations 55499

place this rule into immediate effect investment, productivity, innovation, or on an appropriate replacement or before receiving public comment and the ability of U.S.-based enterprises to deletion of regulatory requirements. without a 30-day waiting period because compete with foreign-based enterprises I. Paperwork Reduction Act the delay in the compliance deadline is because the rule addresses Tribal expected to be uncontroversial with surface transportation within the United This rule contains information both the impacted Tribes and the States. collection requirements, and the Office public, and placing into immediate of Management and Budget (OMB) has effect will eliminate potentially D. Unfunded Mandates Reform Act approved the information collections needless expenditure of resources by This rule does not impose an under the Paperwork Reduction Act Tribes. unfunded mandate on State, local, or (PRA) under OMB Control Number 1076–0161, which expires December 31, II. Procedural Requirements Tribal governments or the private sector of more than $100 million per year. The 2019. A. Regulatory Planning and Review rule does not have a significant or Please note that an agency may not (E.O. 12866 and 13563) unique effect on State, local, or Tribal sponsor or request, and an individual need not respond to, a collection of Executive Order (E.O.) 12866 provides governments or the private sector. A statement containing the information information unless it displays a valid that the Office of Information and OMB Control Number. Regulatory Affairs (OIRA) at the Office required by the Unfunded Mandates of Management and Budget (OMB) will Reform Act (2 U.S.C. 1531 et seq.) is not J. National Environmental Policy Act review all significant rules. OIRA has required. This rulemaking does not constitute a determined that this rule is not E. Takings (E.O. 12630) major Federal action significantly significant. affecting the quality of the human E.O. 13563 reaffirms the principles of This rule does not affect a taking of environment because it is of an E.O. 12866 while calling for private property or otherwise have administrative, technical, and improvements in the nation’s regulatory taking implications under E.O. 12360. A procedural nature. It is therefore subject system to promote predictability, to takings implication assessment is not to categorical exclusion, see 43 CFR reduce uncertainty, and to use the best, required. 46.210(i), and no extraordinary most innovative, and least burdensome F. Federalism (E.O. 13132) circumstances exist. See 43 CFR 46.215. tools for achieving regulatory ends. The E.O. directs agencies to consider Under the criteria in section 1 of E.O. K. Effects on the Energy Supply (E.O. regulatory approaches that reduce 13132, this rule does not have sufficient 13211) burdens and maintain flexibility and Federalism implications to warrant the This rulemaking is not a significant freedom of choice for the public where preparation of a summary impact energy action under the definition in these approaches are relevant, feasible, statement, because the rule primarily E.O. 13211. A Statement of Energy and consistent with regulatory addresses the relationship between the Effects is not required. objectives. E.O. 13563 emphasizes Federal Government and Tribes. A further that regulations must be based Federalism summary impact statement L. Clarity of This Regulation on the best available science and that is not required. We are required by Executive Orders the rulemaking process must allow for 12866 (section 1(b)(12)), and 12988 public participation and an open G. Civil Justice Reform (E.O. 12988) (section 3(b)(1)(B)), and 13563 (section exchange of ideas. We have developed This rule complies with the 1(a)), and by the Presidential this rule in a manner consistent with requirements of E.O. 12988. Memorandum of June 1, 1998, to write these requirements. Specifically, this rule: all rules in plain language. This means B. Regulatory Flexibility Act (a) Meets the criteria of section 3(a) that each rule we publish must: requiring that all regulations be (a) Be logically organized; This rule will not have a significant reviewed to eliminate errors and (b) Use the active voice to address economic effect on a substantial number ambiguity and written to minimize readers directly; of small entities under the Regulatory (c) Use common, everyday words and litigation; and Flexibility Act (5 U.S.C. 601 et seq.) clear language rather than jargon; because Tribes are not small entities (b) Meets the criteria of section 3(b)(2) (d) Be divided into short sections and under the Regulatory Flexibility Act. requiring that all regulations be written sentences; and in clear language and contain clear legal (e) Use lists and tables wherever C. Small Business Regulatory standards. possible. Enforcement Fairness Act H. Consultation With Indian Tribes If you feel that we have not met these This rule is not a major rule under 5 (E.O. 13175 and Departmental Policy) requirements, send us comments by one U.S.C. 804(2), the Small Business of the methods listed in the ADDRESSES Regulatory Enforcement Fairness Act. The Department of the Interior strives section. To better help us revise the This rule: to strengthen its government-to- rule, your comments should be as (a) Does not have an annual effect on government regulations with Indian specific as possible. For example, you the economy of $100 million or more Tribes through a commitment to should tell us the numbers of the because this rule affects only surface consultation with Indian Tribes and sections or paragraphs that you find transportation for Tribes. recognition of their right to self- unclear, which sections or sentences are (b) Will not cause a major increase in governance and Tribal sovereignty. We too long, the sections where you think costs or prices for consumers, have evaluated this rule under the lists or tables would be useful, etc. individual industries, Federal, State, or Department’s consultation policy and local government agencies, or have identified substantial direct effects M. E.O. 13771: Reducing Regulation and geographic regions because it does not on federally recognized Indian Tribes Controlling Regulatory Costs affect costs or prices. that will result from this rule. This rule This rule is not an E.O. 13771 (c) Does not have significant adverse will relieve a regulatory burden from regulatory action because this rule is not effects on competition, employment, Tribes and allow time for consultation significant under E.O. 12866.

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 55500 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations

List of Subjects in 25 CFR Part 170 Dated: September 26, 2019. ADDRESSES: Federal Register Tara Sweeney, Publications: Access rulemaking Highways and roads, Indians—lands. Assistant Secretary—Indian Affairs. documents electronically at http:// For the reasons stated in the [FR Doc. 2019–22682 Filed 10–16–19; 8:45 am] www.msha.gov/regsinfo.htm or http:// preamble, the Department of the BILLING CODE 4337–15–P www.regulations.gov [Docket Number: Interior, Bureau of Indian Affairs, MSHA–2014–0030]. amends part 170 in title 25 of the Code FOR FURTHER INFORMATION CONTACT: of Federal Regulations as follows: DEPARTMENT OF LABOR Sheila A. McConnell, Director, Office of Standards, Regulations, and Variances, PART 170—TRIBAL Mine Safety and Health Administration TRANSPORTATION PROGRAM MSHA, at [email protected] (email), 202–693–9440 (voice), or 202– 30 CFR Parts 56 and 57 ■ 1. The authority for part 170 693–9441 (fax). These are not toll-free continues to read as follows: [Docket No. MSHA–2014–0030] numbers. Authority: Pub. L. 112–141, Pub. L. 114– RIN 1219–AB92 SUPPLEMENTARY INFORMATION: 94; 5 U.S.C. 2; 23 U.S.C. 201, 202; 25 U.S.C. 2, 9. Examinations of Working Places in I. Stakeholder Meetings Metal and Nonmetal Mines ■ 2. Revise § 170.443(b) to read as MSHA will hold five public follows: AGENCY: Mine Safety and Health stakeholder meetings to inform the Administration, Labor. mining community of the requirements § 170.443 What is required to successfully ACTION: Notification of public of the Examinations of Working Places include a proposed transportation facility in stakeholder meetings. in Metal and Nonmetal Mines final rule, the NTTFI? which was effective September 30, * * * * * SUMMARY: The Mine Safety and Health 2019. At the meetings, MSHA will (b) For those proposed roads that Administration (MSHA) is announcing provide training and compliance currently exist in the NTTFI, the the dates and locations of public assistance materials to attendees. Most requirements identified above as stakeholder meetings on the Agency’s of the public meetings will begin at 9 paragraphs (a)(1) through (8) of this standards for Examinations of Working a.m. local time. The meetings in section, must be completed and Places in Metal and Nonmetal Mines. Birmingham and Bloomington will start submitted for approval to BIA and DATES: The meeting dates and locations at 1:30 p.m. local time. The following FHWA by March 6, 2020, in order to are listed in the SUPPLEMENTARY table lists the dates and start times at the remain on the inventory. INFORMATION section of this document. locations indicated:

EXAMINATIONS OF WORKING PLACES IN METAL AND NONMETAL MINES [Stakeholder meetings dates, times, and locations]

Date/time Location Contact No.

October 29, 2019, 9 a.m. Central Daylight Savings Time ...... DoubleTree by Hilton Hotel Dallas—Market Center, 2015 (214) 741–7481 Market Center Blvd., Dallas, Texas 75207. Nov. 7, 2019, 1:30 p.m. Central Standard Time ...... Renaissance Birmingham, Ross Bridge, 4000 Grand Ave., (205) 916–7677 Birmingham, Alabama 35226. November 12, 2019, 1:30 p.m. Central Standard Time ...... DoubleTree by Hilton Hotel Bloomington, 10 Brickyard Drive, (309) 664–6446 Bloomington, Illinois 61701. November 14, 2019, 9 a.m. Mountain Standard Time ...... Hilton Garden Inn, Denver Tech Center, 7675 E Union Ave., (303) 770–4200 Denver, CO 80237. November 21, 2019, 9 a.m. Eastern Standard Time ...... Hilton Garden Inn, Pittsburgh Downtown, 250 Forbes Ave- (412) 281–5557 nue, Pittsburgh, Pennsylvania 15222.

II. Background working place be conducted at least to the authorized representative of the once each shift before miners begin Secretary and miners’ representatives On September 30, 2019, MSHA working in the place; (2) that operators and provide a copy upon request (84 FR published a technical amendment, notify miners in the affected areas of 51400). Examinations of Working Places in any conditions found that may Currently, compliance assistance Metal and Nonmetal (MNM) Mines (84 adversely affect their safety or health; FR 51400). The technical amendment materials are available at https:// (3) that operators promptly initiate www.msha.gov/regulations/rulemaking/ recognized the legal effect of the D.C. corrective actions; and (4) that a record Circuit Court’s June 11, 2019, order and examinations-working-places-metal- be made of the examination. The final and-nonmetal-mines. These materials August 23, 2019, mandate that MSHA rule requires the examination record to revise 30 CFR 56.18002 and 57.18002 to include Frequently Asked Questions include: The name of the person and mine operators’ sample templates reinstate the regulatory provisions conducting the examination, the date of established by the Agency’s January 23, and checklists provided as best the examination, the location of all areas practices. 2017, final rule, Examinations of examined, a description of each Working Places in Metal and Nonmetal condition found that may adversely David G. Zatezalo, Mines (‘‘January 2017 rule’’) (82 FR affect the safety and health of miners, Assistant Secretary of Labor for Mine Safety 7680). and the date of corrective action. The and Health Administration. The reinstated January 2017 rule final rule also requires the operator to [FR Doc. 2019–22497 Filed 10–16–19; 8:45 am] requires: (1) That an examination of the make the examination record available BILLING CODE 4520–43–P

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00006 Fmt 4700 Sfmt 9990 E:\FR\FM\17OCR1.SGM 17OCR1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations 55501

DEPARTMENT OF HOMELAND ‘‘impracticable, unnecessary, or contrary A. Regulatory Planning and Review SECURITY to the public interest.’’ Under 5 U.S.C. Executive Orders 12866 and 13563 553(b)(B), the Coast Guard finds that direct agencies to assess the costs and Coast Guard good cause exists for not publishing a benefits of available regulatory notice of proposed rulemaking (NPRM) alternatives and, if regulation is 33 CFR Part 165 with respect to this rule because it is necessary, to select regulatory [Docket Number USCG–2019–0814] impracticable and contrary to the public approaches that maximize net benefits. interest. It is impracticable and contrary Executive Order 13771 directs agencies RIN 1625–AA00 to the public interest to publish an to control regulatory costs through a NPRM because we must establish the budgeting process. This rule has not Safety Zone; Kanawha River, zone by October 24, 2019, to ensure the been designated a ‘‘significant Charleston, WV safety of the public during the fireworks regulatory action,’’ under Executive display and lack sufficient time to AGENCY: Coast Guard, DHS. Order 12866. Accordingly, this rule has request comments and respond to those ACTION: Temporary final rule. not been reviewed by the Office of comments before the zone must be Management and Budget (OMB), and SUMMARY: The Coast Guard is temporary established. Under 5 U.S.C. 553(d)(3), the Coast pursuant to OMB guidance it is exempt safety zone for the navigable waters of from the requirements of Executive the Kanawha River from mile marker Guard finds that good cause exists for making this rule effective less than 30 Order 13771. (MM) 59.5 to MM 60.5. The safety zone This regulatory action determination is needed to protect personnel, vessels, days after publication in the Federal Register, Delaying the effective date of is based on size, location, and duration and the marine environment from of the safety zone. The safety zone will potential hazards resulting from a this rule would be impracticable and contrary to the public interest because impact a one-mile stretch of the fireworks display. Entry of vessels or Kanawha River for 1 hour when vessel persons into the zone is prohibited immediate action is needed to provide for public safety and mitigation of traffic is normally low. Moreover the unless specifically authorized by the Coast Guard will issue a Broadcast Captain of the Port Ohio Valley or potential hazards associated with the firework display. Notice to Mariners via VHF–FM marine designated represented. channel 16 about the zone and a Local DATES: This rule is effective from 6:15 III. Legal Authority and Need for Rule Notice to Mariners. p.m. through 7:15 p.m. on October 24, The Coast Guard is issuing this rule B. Impact on Small Entities 2019. under authority in 46 U.S.C. 70034 ADDRESSES: To view documents (previously 33 U.S.C. 1231). The The Regulatory Flexibility Act of mentioned in this preamble as being Captain of the Port Ohio Valley has 1980, 5 U.S.C. 601–612, as amended, available in the docket, go to https:// determined that potential hazards requires Federal agencies to consider www.regulations.gov, type USCG–2019– associated with University of Charleston the potential impact of regulations on 0814 in the ‘‘SEARCH’’ box and click fireworks display on October 24, 2019, small entities during rulemaking. The ‘‘SEARCH.’’ Click on Open Docket will be a safety concern for anyone from term ‘‘small entities’’ comprises small Folder on the line associated with this Mile Marker (MM) 59.5 to MM 60.5 on businesses, not-for-profit organizations rule. the Kanawha River. This rule is needed that are independently owned and FOR FURTHER INFORMATION CONTACT: If to protect personnel, vessels, and the operated and are not dominant in their you have questions on this rule, call or marine environment in the navigable fields, and governmental jurisdictions email MST3 Wesley Cornelius, MSU waters within the safety zone before, with populations of less than 50,000. Huntington, Waterways Management, during, and after the fireworks display. The Coast Guard certifies under 5 U.S.C. U.S. Coast Guard; telephone 304–733– 605(b) that this rule will not have a IV. Discussion of the Rule 0198, email Wesley.P.Cornelius@ significant economic impact on a uscg.mil. This rule establishes a safety zone substantial number of small entities. from 6:15 p.m. through 7:15 p.m. on While some owners or operators of SUPPLEMENTARY INFORMATION: October 24, 2019. The safety zone will vessels intending to transit the safety I. Table of Abbreviations cover all navigable waters on the zone may be small entities, for the Kanawha River from MM 59.5 to MM reasons stated in section V.A above, this CFR Code of Federal Regulations 60.5. The duration of the zone is rule will not have a significant DHS Department of Homeland Security economic impact on any vessel owner FR Federal Register intended to protect personnel, vessels, NPRM Notice of proposed rulemaking and the marine environment in these or operator. § Section navigable waters before, during, and Under section 213(a) of the Small U.S.C. United States Code after the fireworks display. No vessel or Business Regulatory Enforcement MM Mile Marker person will be permitted to enter the Fairness Act of 1996 (Pub. L. 104–121), safety zone without obtaining we want to assist small entities in II. Background Information and understanding this rule. If the rule Regulatory History permission from the Captain of the Port Ohio Valley or a designated would affect your small business, The Coast Guard is issuing this representative. organization, or governmental temporary rule without prior notice and jurisdiction and you have questions opportunity to comment pursuant to V. Regulatory Analyses concerning its provisions or options for authority under section 4(a) of the We developed this rule after compliance, please call or email the Administrative Procedure Act (APA) (5 considering numerous statutes and person listed in the FOR FURTHER U.S.C. 553(b)). This provision Executive orders related to rulemaking. INFORMATION CONTACT section. authorizes an agency to issue a rule Below we summarize our analyses Small businesses may send comments without prior notice and opportunity to based on a number of these statutes and on the actions of Federal employees comment when the agency for good Executive orders, and we discuss First who enforce, or otherwise determine cause finds that those procedures are Amendment rights of protestors. compliance with, Federal regulations to

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 55502 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations

the Small Business and Agriculture F. Environment means a Coast Guard Patrol Regulatory Enforcement Ombudsman We have analyzed this rule under Commander, including a Coast Guard and the Regional Small Business Department of Homeland Security coxswain, petty officer, or other officer Regulatory Fairness Boards. The Directive 023–01 and Environmental operating a Coast Guard vessel and a Ombudsman evaluates these actions Planning COMDTINST 5090.1 (series), Federal, State, and local officer annually and rates each agency’s which guide the Coast Guard in designated by or assisting the Captain of responsiveness to small business. If you complying with the National the Port Ohio Valley in the enforcement wish to comment on actions by Environmental Policy Act of 1969(42 of the safety zone. employees of the Coast Guard, call 1– U.S.C. 4321–4370f), and have (d) Regulations. Under the general 888–REG–FAIR (1–888–734–3247). The determined that this action is one of a safety zone regulations in subpart C of Coast Guard will not retaliate against category of actions that do not this part, you may not enter the safety small entities that question or complain individually or cumulatively have a zone described in paragraph (a) of this about this rule or any policy or action significant effect on the human section unless authorized by the Captain of the Coast Guard. environment. This rule involves a safety of the Port Sector Ohio Valley or a designated representative. Persons or C. Collection of Information zone lasting 1 hour that will prohibit entry into the safety zone from MM 59.5 vessels desiring to enter into or pass This rule will not call for a new to MM 60.5 on the Kanawha River It is through the zone must request collection of information under the categorically excluded from further permission from the Captain of the Port Paperwork Reduction Act of 1995 (44 review under paragraph L60(a) in Table Ohio Valley or a designated U.S.C. 3501–3520). 3–1 of U.S. Coast Guard Environmental representative. They may be contacted Planning Implementing Procedures. A on VHF–FM radio channel 16 or phone D. Federalism and Indian Tribal Record of Environmental Consideration at 1–800–253–7465. Governments supporting this determination is Dated: October 10, 2019. A rule has implications for federalism available in the docket where indicated A.M. Beach, under Executive Order 13132, under ADDRESSES. Captain, U.S. Coast Guard, Captain of the Federalism, if it has a substantial direct G. Protest Activities Port Sector Ohio Valley. effect on the States, on the relationship [FR Doc. 2019–22547 Filed 10–16–19; 8:45 am] The Coast Guard respects the First between the national government and BILLING CODE 9110–04–P the States, or on the distribution of Amendment rights of protesters. power and responsibilities among the Protesters are asked to call or email the FOR FURTHER various levels of government. We have person listed in the DEPARTMENT OF HOMELAND analyzed this rule under that Order and INFORMATION CONTACT section to SECURITY have determined that it is consistent coordinate protest activities so that your with the fundamental federalism message can be received without Coast Guard principles and preemption requirements jeopardizing the safety or security of described in Executive Order 13132. people, places or vessels. 33 CFR Part 165 Also, this rule does not have tribal List of Subjects in 33 CFR Part 165 [Docket Number USCG–2019–0741] implications under Executive Order Harbors, Marine safety, Navigation RIN 1625–AA00 13175, Consultation and Coordination (water), Reporting and recordkeeping with Indian Tribal Governments, requirements, Security measures, Safety Zone; Wando Terminal Crane because it does not have a substantial Waterways. Movement; Charleston, SC direct effect on one or more Indian For the reasons discussed in the tribes, on the relationship between the preamble, the Coast Guard amends 33 AGENCY: Coast Guard, DHS. Federal Government and Indian tribes, CFR part 165 as follows: ACTION: Temporary final rule. or on the distribution of power and responsibilities between the Federal PART 165—REGULATED NAVIGATION SUMMARY: The Coast Guard is Government and Indian tribes. If you AREAS AND LIMITED ACCESS AREAS establishing a temporary moving safety believe this rule has implications for zone in the Port of Charleston, SC federalism or Indian tribes, please call ■ 1. The authority citation for part 165 around the vessel ZHEN HUA 28. This or email the person listed in the FOR continues to read as follows: temporary safety zone is necessary to FURTHER INFORMATION CONTACT section Authority: 46 U.S.C. 70034, 70051; 33 CFR provide for the safety of waterway users above. 1.05–1, 6.04–1, 6.04–6, and 160.5; and the M/V ZHEN HUA 28 during the Department of Homeland Security Delegation vessel’s transit into the Port of E. Unfunded Mandates Reform Act No. 0170.1. Charleston, its stay at Columbus Street ■ 2. Add § 165.T08–0814 to read as The Unfunded Mandates Reform Act Terminal, and its transit to, and stay at, follows: of 1995 (2 U.S.C. 1531–1538) requires Wando Terminal. Entry of vessels or persons into this zone is prohibited Federal agencies to assess the effects of § 165.T08–0814 Safety Zone; Kanawha their discretionary regulatory actions. In River, Charleston, WV. unless specifically authorized by the Captain of the Port Charleston. particular, the Act addresses actions (a) Location. The following area is a that may result in the expenditure by a safety zone: All navigable waters on the DATES: This rule is effective on October State, local, or tribal government, in the Kanawha River from MM 59.5 to MM 16, 2019 through October 28, 2019. aggregate, or by the private sector of 60.5. ADDRESSES: To view documents $100,000,000 (adjusted for inflation) or (b) Enforcement period. This section mentioned in this preamble as being more in any one year. Though this rule will be enforced from 6:15 p.m. through available in the docket, go to https:// will not result in such an expenditure, 7:15 p.m. on October 24, 2019. www.regulations.gov, type USCG–2019– we do discuss the effects of this rule (c) Definitions. As used in this 0741 in the ‘‘SEARCH’’ box and click elsewhere in this preamble. section, designated representative ‘‘SEARCH.’’ Click on Open Docket

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations 55503

Folder on the line associated with this operations of the M/V ZHEN HUA 28 Sector Charleston COTP Zone, the rule rule. starting October 16, 2019, will be a will no longer be enforced. safety concern for anyone within a 100- FOR FURTHER INFORMATION CONTACT: If B. Impact on Small Entities you have questions on this rule, call or yard radius of the M/V ZHEN HUA 28. email Lieutenant Chad Ray, Sector Due to the size of the cranes aboard the The Regulatory Flexibility Act of Charleston Office of Waterways vessel and the vessel’s limited ability to 1980, 5 U.S.C. 601–612, as amended, Management, Coast Guard; telephone maneuver, this rule is necessary to requires Federal agencies to consider (843) 740–3184, email Chad.L.Ray@ protect persons and vessels within the the potential impact of regulations on uscg.mil. safety zone. small entities during rulemaking. The term ‘‘small entities’’ comprises small SUPPLEMENTARY INFORMATION: IV. Discussion of the Rule businesses, not-for-profit organizations I. Table of Abbreviations This rule establishes a temporary that are independently owned and moving safety zone upon the arrival of operated and are not dominant in their CFR Code of Federal Regulations the vessel ZHEN HUA 28 in the DHS Department of Homeland Security fields, and governmental jurisdictions FR Federal Register Charleston Harbor on October 16, 2019 with populations of less than 50,000. NPRM Notice of proposed rulemaking through October 28, 2019, The Coast Guard certifies under 5 U.S.C. § Section encompassing all navigable waters from 605(b) that this rule will not have a U.S.C. United States Code the surface to the sea floor within a 100- significant economic impact on a yard radius of the M/V ZHEN HUA 28 II. Background Information and substantial number of small entities. while the vessel is underway, moored, Regulatory History While some owners or operators of or anchored in the Sector Charleston vessels intending to transit the safety The Coast Guard is issuing this Captain of the Port (COTP) Zone. No zone may be small entities, for the temporary rule without prior notice and vessel or person is permitted to enter reasons stated in section V.A above, this opportunity to comment pursuant to the safety zone without first obtaining rule will not have a significant authority under section 4(a) of the permission from the COTP or a economic impact on any vessel owner Administrative Procedure Act (APA) (5 designated representative. Sector or operator. U.S.C. 553(b)). This provision Charleston may be contacted on VHF– Under section 213(a) of the Small authorizes an agency to issue a rule FM radio channel 16 or via telephone at Business Regulatory Enforcement without prior notice and opportunity to (843) 740–7050. Fairness Act of 1996 (Pub. L. 104–121), comment when the agency for good we want to assist small entities in V. Regulatory Analyses cause finds that those procedures are understanding this rule. If the rule ‘‘impracticable, unnecessary, or contrary We developed this rule after would affect your small business, to the public interest.’’ Under 5 U.S.C. considering numerous statutes and organization, or governmental 553(b)(B), the Coast Guard finds that Executive Orders related to rulemaking. jurisdiction and you have questions good cause exists for not publishing a Below we summarize our analyses concerning its provisions or options for notice of proposed rulemaking (NPRM) based on a number of these statutes and compliance, please call or email the with respect to this rule because it is Executive orders, and we discuss First person listed in the FOR FURTHER impractical. We must establish this Amendment rights of protestors. INFORMATION CONTACT section. safety zone by October 16, and lack A. Regulatory Planning and Review Small businesses may send comments sufficient time to provide a reasonable on the actions of Federal employees comment period and then consider Executive Orders 12866 and 13563 who enforce, or otherwise determine those comments before issuing the rule direct agencies to assess the costs and compliance with, Federal regulations to because the details of the event were not benefits of available regulatory the Small Business and Agriculture provided to the Coast Guard until alternatives and, if regulation is Regulatory Enforcement Ombudsman September 27, 2019. It is also contrary necessary, to select regulatory and the Regional Small Business to the public interest as it would delay approaches that maximize net benefits. Regulatory Fairness Boards. The the planning and implementation of Executive Order 13771 directs agencies Ombudsman evaluates these actions safety measures necessary to protect the to control regulatory costs through a annually and rates each agency’s public and mariners from the hazards budgeting process. This rule has not responsiveness to small business. If you associated with the transit of the M/V been designated a ‘‘significant wish to comment on actions by ZHEN HUA 28. regulatory action,’’ under Executive employees of the Coast Guard, call 1– Under 5 U.S.C. 553(d)(3), the Coast Order 12866. Accordingly, this rule has 888–REG–FAIR (1–888–734–3247). The Guard finds that good cause exists for not been reviewed by the Office of Coast Guard will not retaliate against making this rule effective less than 30 Management and Budget (OMB), and small entities that question or complain days after publication in the Federal pursuant to OMB guidance it is exempt about this rule or any policy or action Register. Delaying the effective date of from the requirements of Executive of the Coast Guard. this rule would be contrary to public Order 13771. interest because immediate action is This regulatory action determination C. Collection of Information needed to respond to the potential is based on the size, location, and This rule will not call for a new safety hazards associated with the duration of the safety zone. The size of collection of information under the transit of the M/V ZHEN HUA 28. the zone is limited to a 100-yard Paperwork Reduction Act of 1995 (44 radius—the minimum size necessary to U.S.C. 3501–3520). III. Legal Authority and Need for Rule provide adequate protection for The Coast Guard is issuing this rule personnel and vessels in the area. The D. Federalism and Indian Tribal under authority in 46 U.S.C. 70034 temporary safety zone is limited in Governments (previously 33 U.S.C. 1231). The duration as it will only be in place A rule has implications for federalism Captain of the Port (COTP) Charleston while the vessel is transiting, moored or under Executive Order 13132, has determined that potential hazards anchored within the Sector Charleston Federalism, if it has a substantial direct associated with navigation and dockside COTP Zone. Once the vessel departs the effect on the States, on the relationship

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 55504 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations

between the national government and G. Protest Activities Mariners, and on-scene designated the States, or on the distribution of The Coast Guard respects the First representatives. power and responsibilities among the Amendment rights of protesters. (d) Enforcement periods. This section various levels of government. We have Protesters are asked to call or email the is effective beginning upon the arrival of analyzed this rule under that Order and person listed in the FOR FURTHER the vessel ZHEN HUA 28 in the have determined that it is consistent INFORMATION CONTACT section to Charleston Harbor on October 16, 2019, with the fundamental federalism coordinate protest activities so that your through October 28, 2019. This rule will principles and preemption requirements message can be received without be enforced while M/V ZHEN HUA 28 described in Executive Order 13132. jeopardizing the safety or security of is underway, moored, or anchored in Also, this rule does not have tribal people, places or vessels. the Sector Charleston Captain of the implications under Executive Order Port Zone. List of Subjects in 33 CFR Part 165 13175, Consultation and Coordination Dated: October 10, 2019. with Indian Tribal Governments, Marine Safety, Navigation (water), J.W. Reed, because it does not have a substantial Reporting and recordkeeping Captain, U.S. Coast Guard, Captain of the direct effect on one or more Indian requirements, Waterways. Port Charleston. tribes, on the relationship between the For the reasons discussed in the [FR Doc. 2019–22566 Filed 10–16–19; 8:45 am] Federal Government and Indian tribes, preamble, the Coast Guard amends 33 BILLING CODE 9110–04–P or on the distribution of power and CFR part 165 as follows: responsibilities between the Federal Government and Indian tribes. If you PART 165—REGULATED NAVIGATION believe this rule has implications for AREAS AND LIMITED ACCESS AREAS POSTAL SERVICE federalism or Indian tribes, please call ■ or email the person listed in the FOR 1. The authority citation for part 165 39 CFR Part 111 FURTHER INFORMATION CONTACT section continues to read as follows: above. Authority: 46 U.S.C. 70034, 70051; 33 CFR Domestic Competitive Products 1.05–1, 6.04–1, 6.04–6, and 160.5; Pricing and Mailing Standards E. Unfunded Mandates Reform Act Department of Homeland Security Delegation Changes The Unfunded Mandates Reform Act No. 0170.1. AGENCY: Postal ServiceTM. of 1995 (2 U.S.C. 1531–1538) requires ■ 2. Add § 165.T07–0741 to read as Federal agencies to assess the effects of follows: ACTION: Final rule. their discretionary regulatory actions. In § 165.T07–0741 Safety Zone; Wando SUMMARY: The Postal Service is particular, the Act addresses actions Terminal Crane Movement; Charleston, SC. amending Mailing Standards of the that may result in the expenditure by a (a) Regulated area. The following United States Postal Service, Domestic State, local, or tribal government, in the regulated area is a moving safety zone: Mail Manual (DMM®), to reflect changes aggregate, or by the private sector of All waters of the Charleston Harbor, to prices and mailing standards for $100,000,000 (adjusted for inflation) or Cooper River, and Wando River in competitive products. more in any one year. Though this rule Charleston, SC within a 100-yard radius DATES: Effective Date: January 26, 2020. will not result in such an expenditure, around the outer most points of the FOR FURTHER INFORMATION CONTACT: Tom we do discuss the effects of this rule M/V ZHEN HUA 28 while the vessel is Foti at (202) 268–2931 or Garry elsewhere in this preamble. underway, moored or anchored. Rodriguez at (202) 268–7281. F. Environment (b) Definition. As used in this section, ‘‘designated representative’’ means SUPPLEMENTARY INFORMATION: This final We have analyzed this rule under Coast Guard Patrol Commanders, rule describes new prices and product Department of Homeland Security including Coast Guard coxswains, petty features for competitive products, by Directive 023–01 and Environmental officers, and other officers operating class of mail, established by the Planning COMDTINST 5090.1 (series), Coast Guard vessels, and Federal, state, Governors of the United States Postal ® which guide the Coast Guard in and local officers designated by or Service . New prices are available complying with the National assisting the COTP Charleston in the under Docket Number CP2020–5 on the Environmental Policy Act of 1969 (42 enforcement of the regulated areas. Postal Regulatory Commission PRC U.S.C. 4321–4370f), and have (c) Regulations. (1) Under the general website at http://www.prc.gov, and on ® determined that this action is one of a safety zone regulations in subpart C of the Postal Explorer website at http:// category of actions that do not this part, you may not enter the safety pe.usps.com. individually or cumulatively have a zone described in paragraph (a) of this The Postal Service will revise Mailing significant effect on the human section unless authorized by the COTP Standards of the United States Postal environment. This rule involves a or the COTP’s designated representative. Service, Domestic Mail Manual (DMM), temporary safety zone that will prohibit (2) To seek permission to enter the to reflect changes to prices and mailing entry within a 100-yard radius of the safety zone, contact the COTP or the standards for the following competitive vessel, M/V ZHEN HUA 28, during the COTP’s designated representative by products: vessel’s transit, mooring and anchoring telephone at (843) 740–7050 or on VHF– • Priority Mail Express®. in the Sector Charleston COTP Zone. It FM radio channel 16. Those in the • Priority Mail®. is categorically excluded from further safety zone must comply with all lawful • First-Class Package Service®. review under paragraph L60(a) in Table orders or directions given to them by the • Parcel Select®. 3–1 of U.S. Coast Guard Environmental COTP or the COTP’s designated • USPS Retail Ground®. Planning Implementing Procedures. A representative. • Extra Services. Record of Environmental Consideration (3) The Coast Guard will provide • Return Services. supporting this determination is notice of the regulated area by Marine • Mailer Services. available in the docket where indicated Safety Information Bulletin, Local • Recipient Services. under ADDRESSES. Notice to Mariners, Broadcast Notice to • Other.

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations 55505

Competitive product prices and 2.5 percent. Parcel Select Ground prices Retention and Retrieval service allows a changes are identified by product as will increase an average of 3.9 percent. customer to request that the Postal follows: The prices for Parcel Select Service retain: (1) Scan data or (2) scan Lightweight® will increase an average of and signature data for the customer’s Priority Mail Express 4.2 percent. packages beyond the Postal Service’s Prices standard data retention period, for up to USPS Retail Ground Overall, Priority Mail Express prices ten years. Premium Data Retention Overall, USPS Retail Ground prices will increase 3.5 percent. Priority Mail service is available for packages shipped will increase an average of 3.9 percent. Express will continue to offer zoned and via Priority Mail Express, Priority Mail, Flat Rate Retail, Commercial Base®, and Dimensional Weight Pricing First-Class Package Service, Parcel ® Select, and packages with Adult Commercial Plus pricing. The Postal Service is implementing Retail prices will increase an average Signature Services. For Scan and Dimensional Weight (DIM) pricing for Signature Retention on products other of 3.8 percent. The Flat Rate Envelope USPS Retail Ground parcels. Postage for price will increase to $26.35, the Legal than Priority Mail Express, the customer USPS Retail Ground parcels addressed must have purchased an underlying Flat Rate Envelope will increase to for delivery to Zones 1 through 9 and $26.50, and the Padded Flat Rate signature service, such as Signature exceeding 1 cubic foot (1,728 cubic TM Envelope will increase to $26.95. Confirmation service. Customers can inches) will be based on the actual request Premium Data Retention and Commercial Plus prices were matched weight or the dimensional weight, to the Commercial Base prices in the Retrieval service online at USPS.com or whichever is greater. through a Shipping Services File. 2016 price change and will continue to USPS Retail Ground DIM weight be matched in 2020. Commercial Base pricing will be calculated using one of Recipient Services and Commercial Plus prices will two formulas, rectangular or Post Office Box Service increase an average of 2.2 percent. nonrectangular, with a DIM divisor of Priority Mail 166. The competitive Post Office BoxTM USPS Retail Ground—Limited service prices will increase an average Prices Overland Route pricing will not be of 10.4 percent within the existing price Overall, Priority Mail prices will subject to DIM pricing. ranges. increase 4.1 percent. Priority Mail will Balloon Pricing Premium Forwarding Service continue to offer zoned and Flat Rate Retail, Commercial Base, and As a result of the implementation of Premium Forwarding Service® (PFS®) Commercial Plus pricing. DIM pricing for USPS Retail Ground prices will increase between 0.9 and 5.3 Retail prices will increase an average parcels in zones 1 through 9, the Postal percent depending on the specific price of 4.9 percent. The Flat Rate Envelope Service will eliminate balloon pricing. element. The enrollment fee paid at the price will increase to $7.75, the Legal USPS Retail Ground—Limited retail counter for PFS-Residential will Flat Rate Envelope will increase to Overland Route pricing will continue to increase to $21.90 and the PFS- $8.05, and the Padded Flat Rate be subject to balloon pricing. Residential, PFS-Commercial, and PFS- Envelope will increase to $8.40. The Extra Services Local enrollment fee paid online will Small Flat Rate Box price will increase increase to $20.10 per application. The to $8.30 and the Medium Flat Rate Adult Signature Service price of the weekly shipment charge for Boxes will increase to $15.05. The Large Adult Signature Required and Adult PFS-Residential and per container Flat Rate Box will increase to $21.10 Signature Restricted Delivery service charge for PFS-Local will increase to and the APO/FPO/DPO Large Flat Rate prices are increasing 3.9 percent. The $21.90. Box will increase to $19.60. price for Adult Signature Required will USPS Package Intercept Commercial Base prices offer lower increase to $6.65 and Adult Signature prices to customers who use authorized Restricted Delivery will increase to The USPS Package Intercept® fee will postage payment methods. Commercial $6.90. increase 3.9 percent to $14.65. Base prices will increase an average of 2.8 percent. Return Services Other The Commercial Plus price category Parcel Return Service Address Enhancement Service offers price incentives to large volume Overall, Parcel Return Service prices customers who have a customer Address Enhancement Service will increase an average of 4.9 percent. commitment agreement with USPS®. competitive product prices will increase Return Sectional Center Facility Commercial Plus prices as a whole will between 0.4 and 3.8 percent. (RSCF) prices will increase an average increase 3.0 percent. of 4.9 percent and Return Delivery Unit Small Parcel Forwarding Fee First-Class Package Service (RDU) prices will increase an average of The small parcel forwarding fee, an 4.9 percent. Prices optional service first offered in January 2019, will increase 4.9 percent to $4.75. Overall, First-Class Package Service— Mailer Services Retail prices will increase 3.9 percent. Pickup on Demand Service eVS Unmanifested Fee Overall, First-Class Package Service— The Pickup on Demand® service fee The Postal Service is introducing an Commercial prices will increase 2.2 will increase 4.3 percent to $24.00. ‘‘eVS Unmanifested’’ fee to discourage percent. unmanifested eVS eligible pieces, Premium Data Retention and Retrieval Parcel Select reduce occurrences of lower postage Services assessments, and offset additional Prices The Postal Service is introducing reconciliation, manual processes, and The prices for Parcel Select ‘‘Premium Data Retention and operational costs. The fee will apply to Destination Entry increase an average of Retrieval’’ service. Premium Data Priority Mail Express, Priority Mail,

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 55506 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations

First-Class Package Service, and Parcel [Add new section 1.4, Dimensional [Add new section 1.9, eVS Select, commercial pieces. Weight Price for Low-Density Parcels to Unmanifested Fee, to read as follows:] Zones 1–9, to read as follows:] Resources 1.9 eVS Unmanifested Fee The Postal Service provides 1.4 Dimensional Weight Price for Eligible eVS Priority Mail Express additional resources to assist customers Low-Density Parcels to Zones 1–9 pieces omitted from the eVS manifest with this price change for competitive Except for USPS Retail Ground— are subject to the eVS Unmanifested fee products. These tools include price lists, Limited Overland Routes parcels under (see Notice 123—Price List), unless the downloadable price files, and Federal 1.3, postage for parcels addressed for piece is subject to the IMpb Register Notices, which may be found delivery to Zones 1–9 and exceeding 1 noncompliance fee under 3.2. on the Postal Explorer® website at cubic foot (1,728 cubic inches) is based * * * * * http://pe.usps.com. on the actual weight or the dimensional 220 Priority Mail The Postal Service adopts the weight (as calculated in 1.4.1 or 1.4.2), following changes to Mailing Standards whichever is greater. 213 Prices and Eligibility of the United States Postal Service, 1.4.1 Determining Dimensional 1.0 Prices and Fees Domestic Mail Manual (DMM), Weight for Rectangular Parcels incorporated by reference in the Code of * * * * * Federal Regulations. See 39 CFR 111.1. Follow these steps to determine the [Add new section 1.11, eVS dimensional weight for a rectangular Unmanifested Fee, to read as follows:] List of Subjects in 39 CFR Part 111 parcel: 1.11 eVS Unmanifested Fee Administrative practice and a. Measure the length, width, and Eligible eVS Priority Mail pieces procedure, Postal Service. height in inches. Round off (see 604.7.0) omitted from the eVS manifest are each measurement to the nearest whole Accordingly, 39 CFR part 111 is subject to the eVS Unmanifested piece amended as follows: inch. b. Multiply the length by the width by fee (see Notice 123—Price List), unless the piece is subject to the IMpb PART 111—[AMENDED] the height. c. If the result exceeds 1,728 cubic noncompliance fee under 3.2. ■ 1. The authority citation for 39 CFR inches, divide the result by 166 and * * * * * part 111 continues to read as follows: round up (see 604.7.0) to the next whole 250 Parcel Select number to determine the dimensional Authority: 5 U.S.C. 552(a); 13 U.S.C. 301– 253 Prices and Eligibility 307; 18 U.S.C. 1692–1737; 39 U.S.C. 101, weight in pounds. 401, 403, 404, 414, 416, 3001–3011, 3201– d. If the dimensional weight exceeds 1.0 Prices and Fees 3219, 3403–3406, 3621, 3622, 3626, 3632, 70 pounds, the customer pays the 70- * * * * * 3633, and 5001. pound price. [Add new section 1.5, eVS ■ 2. Revise Mailing Standards of the 1.4.2 Determining Dimensional Unmanifested Fee, to read as follows:] United States Postal Service, Domestic Weight for Nonrectangular Parcels Mail Manual (DMM) as follows: 1.5 eVS Unmanifested Fee Follow these steps to determine the Eligible eVS Parcel Select pieces Mailing Standards of the United dimensional weight for a nonrectangular omitted from the eVS manifest are States Postal Service, Domestic Mail parcel: subject to the eVS Unmanifested fee (see Manual (DMM) a. Measure the length, width, and Notice 123—Price List), unless the piece * * * * * height in inches at their extreme is subject to the IMpb noncompliance dimensions. Round off (see 604.7.0) fee under 3.3. 100 Retail Mail Letters, Cards, Flats, each measurement to the nearest whole * * * * * and Parcels inch. * * * * * b. Multiply the length by the width by 280 Commercial Mail First-Class the height. Package Service—Commercial 150 Retail Mail USPS Retail Ground c. Multiply the result by an 283 Prices and Eligibility 153 Prices and Eligibility adjustment factor of 0.785. d. If the final result exceeds 1,728 1.0 Prices and Fees 1.0 Prices and Fees cubic inches, divide the result by 166 * * * * * 1.1 Price Eligibility and round up (see 604.7.0) to the next [Add new section 1.4, eVS USPS Retail Ground prices are whole number to determine the Unmanifested Piece Fee, to read as calculated based on the zone to which dimensional weight in pounds. follows:] e. If the dimensional weight exceeds the parcel is addressed and the weight 1.4 eVS Unmanifested Fee of the parcel. USPS Retail Ground prices 70 pounds, the customer pays the 70- Eligible eVS First-Class Package are available as follows: pound price. * * * * * Service-Commercial pieces omitted * * * * * from the eVS manifest are subject to the [Revise the text of item d to read as 200 Commercial Mail Letters, Flats, eVS Unmanifested fee (see Notice 123— follows:] and Parcels Price List), unless the piece is subject to d. USPS Retail Ground—Limited * * * * * the IMpb noncompliance fee under 3.4. Overland Routes parcels that weigh less * * * * * than 20 pounds but measure more than 210 Commercial Mail Priority Mail 84 inches (but not more than 108 Express 500 Additional Mailing Services inches) in combined length and girth are 213 Prices and Eligibility * * * * * charged the applicable price for a 20- pound parcel (balloon price). 1.0 Prices and Fees 507 Mailer Services * * * * * * * * * * * * * * *

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations 55507

[Add new section 11.0, Premium Data SUMMARY: NMFS closes the Atlantic periods. To date for 2019, NMFS has Retention and Retrieval Service, to read bluefin tuna (BFT) General category taken seven actions that resulted in as follows:] fishery for the October through adjustments to the Reserve category, November subquota period until the leaving 65.3 mt of quota currently 11.0 Premium Data Retention and General category reopens on December available (84 FR 3724, February 13, Retrieval Service 1, 2019. The intent of this closure is to 2019; 84 FR 6701, February 28, 2019; 84 Premium Data Retention and Retrieval prevent overharvest of the adjusted FR 35340, July 23, 2019; 84 FR 47440, service allows a customer to request that October through November subquota. September 10, 2019; 84 FR 48566, the Postal Service retain: (1) Scan data DATES: Effective 11:30 p.m., local time, September 16, 2019; and 84 FR 52806, or (2) scan and signature data for the October 13, 2019, through November 30, October 3, 2019). customer’s packages beyond the Postal 2019. Closure of the October Through Service’s standard data retention period, FOR FURTHER INFORMATION CONTACT: November 2019 General Category for up to ten years. Premium Data Sarah McLaughlin or Nicholas Fishery Retention and Retrieval service is Velseboer, 978–281–9260, or Larry NMFS previously adjusted the available for commercial packages Redd, 301–427–8503. shipped via Priority Mail Express, subquota for the October through SUPPLEMENTARY INFORMATION: Priority Mail, First-Class Package November time period to 172.2 mt (84 Regulations implemented under the Service, Parcel Select, and commercial FR 52806, October 3, 2019). Based on authority of the Atlantic Tunas packages with Adult Signature Services. the best available bluefin tuna General Convention Act (ATCA; 16 U.S.C. 971 et For Scan and Signature Retention on category landings information (i.e., seq.) and the Magnuson-Stevens Fishery products other than Priority Mail 147.5 mt landed as of October 10, 2019) Conservation and Management Act Express, the customer must have as well as average catch rates and (Magnuson-Stevens Act; 16 U.S.C. 1801 purchased an underlying signature anticipated fishing conditions, NMFS et seq.) governing the harvest of BFT by service, such as Signature Confirmation projects that the adjusted General persons and vessels subject to U.S. service (see Notice 123—Price List). category October through November jurisdiction are found at 50 CFR part Customers can request Premium Data subquota will be reached by October 13, 635. Section 635.27 subdivides the U.S. Retention and Retrieval service online at 2019, and that the fishery should be BFT quota recommended by the USPS.com or through a Shipping closed. Through this action, we are International Commission for the Services File. closing the General category bluefin Conservation of Atlantic Tunas (ICCAT) tuna fishery effective 11:30 p.m., * * * * * among the various domestic fishing October 13, 2019, through November 30, Notice 123 (Price List) categories, per the allocations 2019. Therefore, retaining, possessing, established in the 2006 Consolidated or landing large medium or giant BFT [Revise competitive prices as Highly Migratory Species Fishery by persons aboard vessels permitted in applicable.] Management Plan (2006 Consolidated the Atlantic tunas General and HMS * * * * * HMS FMP) (71 FR 58058, October 2, Charter/Headboat categories must cease Quick Service Guides (QSGs) 2006) and amendments. at 11:30 p.m. local time on October 13, NMFS is required, under regulations 2019. The General category will reopen [Revise Quick Service Guides as at § 635.28(a)(1), to file a closure notice automatically on December 1, 2019, for applicable.] for publication with the Office of the the December 2019 subquota period. * * * * * Federal Register when a BFT quota (or This action applies to those vessels We will publish an appropriate subquota) is reached or is projected to permitted in the General category, as amendment to 39 CFR part 111 to reflect be reached. On and after the effective well as to those HMS Charter/Headboat these changes. date and time of such notification, for permitted vessels with a commercial the remainder of the fishing year or for Joshua J. Hofer, sale endorsement when fishing a specified period as indicated in the commercially for BFT. For information Attorney, Federal Compliance. notification, retaining, possessing, or regarding the HMS Charter/Headboat [FR Doc. 2019–22640 Filed 10–16–19; 8:45 am] landing BFT under that quota category commercial sale endorsement, see 82 FR BILLING CODE 7710–12–P is prohibited until the opening of the 57543, December 6, 2017. The intent of subsequent quota period or until such this closure is to prevent overharvest of date as specified in the notice. the available General category October DEPARTMENT OF COMMERCE The current baseline General category through November BFT subquota. quota is 555.7 mt. See § 635.27(a). Each Fishermen may catch and release (or National Oceanic and Atmospheric of the General category time periods tag and release) BFT of all sizes, subject Administration (January, June through August, to the requirements of the catch-and- September, October through November, release and tag-and-release programs at 50 CFR Part 635 and December) is allocated a § 635.26. All BFT that are released must [Docket No. 180117042–8884–02] ‘‘subquota’’ or portion of the annual be handled in a manner that will General category quota. The baseline maximize their survival, and without RIN 0648–XT026 subquotas for each time period are as removing the fish from the water, follows: 29.5 mt for January; 277.9 mt consistent with requirements at Atlantic Highly Migratory Species; for June through August; 147.3 mt for § 635.21(a)(1). For additional Atlantic Bluefin Tuna Fisheries September; 72.2 mt for October through information on safe handling, see the AGENCY: National Marine Fisheries November; and 28.9 mt for December. ‘‘Careful Catch and Release’’ brochure Service (NMFS), National Oceanic and Any unused General category quota available at www.nmfs.noaa.gov/sfa/ Atmospheric Administration (NOAA), rolls forward within the fishing year, hms/. Commerce. which coincides with the calendar year, Although NMFS previously adjusted from one time period to the next, and the quota for the December 2019 ACTION: Temporary rule; closure. is available for use in subsequent time subquota period to 9.4 mt in an inseason

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 55508 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations

quota transfer to the January 2019 impracticable and contrary to the public GOA exclusive economic zone subquota period, NMFS would consider interest as such a delay would likely according to the Fishery Management a potential quota transfer from the result in exceedance of the General Plan for Groundfish of the Gulf of Reserve to the General category for the category October through November Alaska (FMP) prepared by the North December subquota period, prior to fishery subquota or earlier closure of the Pacific Fishery Management Council December 1, after reviewing the best fishery while fish are available on the under authority of the Magnuson- available 2019 landings information to fishing grounds. Subquota exceedance Stevens Fishery Conservation and date. may result in the need to reduce quota Management Act. Regulations governing fishing by U.S. vessels in accordance Monitoring and Reporting for the General category later in the year and thus could affect later fishing with the FMP appear at subpart H of 50 NMFS will continue to monitor the opportunities. Therefore, the AA finds CFR part 600 and 50 CFR part 679. BFT fishery closely. Dealers are required good cause under 5 U.S.C. 553(b)(B) to Regulations governing sideboard to submit landing reports within 24 waive prior notice and the opportunity protections for GOA groundfish hours of a dealer receiving BFT. Late for public comment. For all of the above fisheries appear at subpart B of 50 CFR reporting by dealers compromises reasons, there also is good cause under part 680. NMFS’ ability to timely implement 5 U.S.C. 553(d) to waive the 30-day The 2019 Pacific cod total allowable actions such as quota and retention delay in effectiveness. catch (TAC) apportioned to vessels limit adjustment, as well as closures, This action is being taken under using pot gear in the Central Regulatory and may result in enforcement actions. §§ 635.27(a)(9) and 635.28(a)(1), and is Area of the GOA is 1,583 metric tons Additionally, and separate from the exempt from review under Executive (mt), as established by the final 2019 dealer reporting requirement, General Order 12866. and 2020 harvest specifications for and HMS Charter/Headboat category groundfish of the GOA (84 FR 9416, vessel owners are required to report the Authority: 16 U.S.C. 971 et seq. and 1801 March 14, 2019). catch of all BFT retained or discarded et seq. In accordance with § 679.20(d)(1)(i), dead within 24 hours of the landing(s) Dated: October 10, 2019. the Administrator, Alaska Region, or end of each trip, by accessing Jennifer M. Wallace, NMFS (Regional Administrator) has hmspermits.noaa.gov, using the HMS Acting Director, Office of Sustainable determined that the 2019 Pacific cod Catch Reporting app, or calling (888) Fisheries, National Marine Fisheries Service. TAC apportioned to vessels using pot 872–8862 (Monday through Friday from [FR Doc. 2019–22601 Filed 10–11–19; 4:15 pm] gear in the Central Regulatory Area of 8 a.m. until 4:30 p.m.). BILLING CODE 3510–22–P the GOA will soon be reached. Depending on the level of fishing Therefore, the Regional Administrator is effort and catch rates of BFT, NMFS establishing a directed fishing may determine that additional action DEPARTMENT OF COMMERCE allowance of 1,573 mt and is setting (e.g., quota adjustment, daily retention aside the remaining 10 mt as bycatch to limit adjustment, or closure) is National Oceanic and Atmospheric support other anticipated groundfish necessary to ensure available subquotas Administration fisheries. In accordance with are not exceeded or to enhance § 679.20(d)(1)(iii), the Regional scientific data collection from, and 50 CFR Part 679 Administrator finds that this directed fishing opportunities in, all geographic [Docket No. 180831813–9170–02] fishing allowance has been reached. areas. If needed, subsequent Consequently, NMFS is prohibiting adjustments will be published in the RIN 0648–XY022 directed fishing for Pacific cod by Federal Register. In addition, fishermen vessels using pot gear in the Central may call the Atlantic Tunas Information Fisheries of the Exclusive Economic Regulatory Area of the GOA. While this Line at (978) 281–9260, or access Zone Off Alaska; Pacific Cod by closure is effective the maximum hmspermits.noaa.gov, for updates on Vessels Using Pot Gear in the Central retainable amounts at § 679.20(e) and (f) quota monitoring and inseason Regulatory Area of the Gulf of Alaska apply at any time during a trip. adjustments. AGENCY: National Marine Fisheries Classification Service (NMFS), National Oceanic and Classification This action responds to the best Atmospheric Administration (NOAA), available information recently obtained The Assistant Administrator for Commerce. NMFS (AA) finds that it is impracticable from the fishery. The Assistant and contrary to the public interest to ACTION: Temporary rule; closure. Administrator for Fisheries, NOAA provide prior notice of, and an SUMMARY: NMFS is prohibiting directed (AA), finds good cause to waive the opportunity for public comment on, this fishing for Pacific cod by vessels using requirement to provide prior notice and action for the following reasons: pot gear in the Central Regulatory Area opportunity for public comment The regulations implementing the of the Gulf of Alaska (GOA). This action pursuant to the authority set forth at 5 2006 Consolidated HMS FMP and is necessary to prevent exceeding the U.S.C. 553(b)(B) as such requirement is amendments provide for inseason quota 2019 Pacific cod total allowable catch impracticable and contrary to the public transfers and fishery closures to respond apportioned to vessels using pot gear in interest. This requirement is to the unpredictable nature of BFT the Central Regulatory Area of the GOA. impracticable and contrary to the public availability on the fishing grounds, the interest as it would prevent NMFS from migratory nature of this species, and the DATES: Effective 1200 hours, Alaska responding to the most recent fisheries regional variations in the BFT fishery. local time (A.l.t.), October 12, 2019, data in a timely fashion and would These fisheries are currently underway through 2400 hours, A.l.t., December 31, delay the directed fishing closure of and the currently available quota for the 2019. Pacific cod by vessels using pot gear in subcategory is projected to be reached FOR FURTHER INFORMATION CONTACT: Josh the Central Regulatory Area of the GOA. shortly. Affording prior notice and Keaton, 907–586–7228. NMFS was unable to publish a notice opportunity for public comment to SUPPLEMENTARY INFORMATION: NMFS providing time for public comment implement the quota transfer is manages the groundfish fishery in the because the most recent, relevant data

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 E:\FR\FM\17OCR1.SGM 17OCR1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Rules and Regulations 55509

only became available as of October 10, prior notice and opportunity for public Dated: October 11, 2019. 2019. comment. Jennifer M. Wallace, The AA also finds good cause to This action is required by § 679.20 Acting Director, Office of Sustainable waive the 30-day delay in the effective and is exempt from review under Fisheries, National Marine Fisheries Service. date of this action under 5 U.S.C. Executive Order 12866. [FR Doc. 2019–22634 Filed 10–11–19; 4:15 pm] 553(d)(3). This finding is based upon BILLING CODE 3510–22–P the reasons provided above for waiver of Authority: 16 U.S.C. 1801 et seq.

VerDate Sep<11>2014 16:10 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00015 Fmt 4700 Sfmt 9990 E:\FR\FM\17OCR1.SGM 17OCR1 55510

Proposed Rules Federal Register Vol. 84, No. 201

Thursday, October 17, 2019

This section of the FEDERAL REGISTER the Financial Accounting Standards Regulations.gov Beta: Go to https:// contains notices to the public of the proposed Board (FASB) in Accounting Standards beta.regulations.gov/ or click ‘‘Visit issuance of rules and regulations. The Update (ASU) 2016–13, Financial New Regulations.gov Site’’ from the purpose of these notices is to give interested Instruments—Credit Losses (Topic 326): Regulations.gov classic homepage. Enter persons an opportunity to participate in the Measurement of Credit Losses on ‘‘Docket ID OCC–2019–0013’’ in the rule making prior to the adoption of the final rules. Financial Instruments and subsequent Search Box and click ‘‘Search.’’ Public amendments issued since June 2016. comments can be submitted via the These updates are codified in ‘‘Comment’’ box below the displayed DEPARTMENT OF THE TREASURY Accounting Standards Codification document information or click on the (ASC) Topic 326, Financial document title and click the Office of the Comptroller of the Instruments—Credit Losses (FASB ASC ‘‘Comment’’ box on the top-left side of Currency Topic 326). the screen. For help with submitting This proposed interagency policy effective comments please click on 12 CFR Part 30 statement describes the measurement of ‘‘Commenter’s Checklist.’’ For expected credit losses under the current assistance with the Regulations.gov Beta [Docket No. ID OCC–2019–0013] expected credit losses (CECL) site please call (877) 378–5457 (toll free) methodology and the accounting for FEDERAL RESERVE SYSTEM or (703) 454–9859 Monday–Friday, 9 impairment on available-for-sale (AFS) a.m.–5 p.m. ET or email to regulations@ debt securities in accordance with FASB 12 CFR Part 208 erulemakinghelpdesk.com. ASC Topic 326; supervisory • Email: regs.comments@ [Docket No. OP–1680] expectations for designing, occ.treas.gov. documenting, and validating expected • Mail: Chief Counsel’s Office, FEDERAL DEPOSIT INSURANCE credit loss estimation processes, Attention: Comment Processing, Office CORPORATION including the internal controls over of the Comptroller of the Currency, 400 these processes; maintaining 7th Street SW, Suite 3E–218, 12 CFR Part 364 appropriate ACLs; the responsibilities of Washington, DC 20219. boards of directors and management; • RIN 3064–ZA10 Hand Delivery/Courier: 400 7th and examiner reviews of ACLs. Street SW, Suite 3E–218, Washington, NATIONAL CREDIT UNION DATES: Comments must be received by DC 20219. • ADMINISTRATION December 16, 2019. Fax: (571) 465–4326. ADDRESSES: Interested parties are Instructions: You must include 12 CFR Part 741 invited to submit written comments to ‘‘OCC’’ as the agency name and ‘‘Docket any or all of the agencies. All comments, ID OCC–2019–0013’’ in your comment. RIN 3133–AF05 which should refer to the ‘‘Proposed In general, the OCC will enter all Interagency Policy Statement on comments received into the docket and Interagency Policy Statement on Allowances for Credit Losses,’’ will be publish them on the Regulations.gov Allowances for Credit Losses shared among the agencies. website without change, including any AGENCY: Office of the Comptroller of the OCC: Commenters are encouraged to business or personal information that Currency (OCC), Treasury; Board of submit comments through the Federal you provide such as name and address Governors of the Federal Reserve eRulemaking Portal or email, if possible. information, email addresses, or phone System (Board); Federal Deposit Please use the title ‘‘Proposed numbers. Comments received, including Insurance Corporation (FDIC); and Interagency Policy Statement on attachments and other supporting National Credit Union Administration Allowances for Credit Losses’’ to materials, are part of the public record (NCUA). facilitate the organization and and subject to public disclosure. Do not distribution of the comments. You may enclose any information in your ACTION: Proposed interagency policy submit comments by any of the comment or supporting materials that statement; request for comment. following methods: you consider confidential or SUMMARY: The Office of the Comptroller • Federal eRulemaking Portal— inappropriate for public disclosure. of the Currency, the Board of Governors Regulations.gov Classic or You may review comments and other of the Federal Reserve System, the Regulation.gov Beta related materials that pertain to this Federal Deposit Insurance Corporation Regulation.gov Classic: Go to https:// notice by any of the following methods: (collectively, the banking agencies), and www.regulations.gov/. Enter ‘‘Docket ID • Viewing Comments Electronically— the National Credit Union OCC–2019–0013’’ in the Search Box and Regulations.gov Classic or Administration (collectively, the click ‘‘Search.’’ Click on ‘‘Comment Regulations.gov Beta agencies) are inviting public comment Now’’ to submit public comments. For Regulations.gov Classic: Go to https:// on a proposed interagency policy help with submitting effective www.regulations.gov/. Enter ‘‘Docket ID statement on allowances for credit comments please click on ‘‘View OCC–2019–0013’’ in the Search box and losses (ACLs). The agencies are issuing Commenter’s Checklist.’’ Click on the click ‘‘Search.’’ Click on ‘‘Open Docket this proposed interagency policy ‘‘Help’’ tab on the Regulations.gov home Folder’’ on the right side of the screen. statement in response to changes to U.S. page to get information on using Comments and supporting materials can generally accepted accounting Regulations.gov, including instructions be viewed and filtered by clicking on principles (GAAP) as promulgated by for submitting public comments. ‘‘View all documents and comments in

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55511

this docket’’ and then using the filtering generalinfo/foia/ProposedRegs.cfm as https://www.ncua.gov/regulation- tools on the left side of the screen. Click submitted, unless modified for technical supervision/rules-regulations/proposed- on the ‘‘Help’’ tab on the reasons or to remove personally pending-and-recently-final-regulations Regulations.gov home page to get identifiable information at the as submitted, except for those we cannot information on using Regulations.gov. commenter’s request. Accordingly, post for technical reasons. NCUA will The docket may be viewed after the comments will not be edited to remove not edit or remove any identifying or close of the comment period in the same any identifying or contact information. contact information from the public manner as during the comment period. Public comments may also be viewed comments submitted. You may inspect Regulations.gov Beta: Go to https:// electronically or in paper form in Room paper copies of comments in NCUA’s beta.regulations.gov/ or click ‘‘Visit 146, 1709 New York Avenue NW, law library at 1775 Duke Street, New Regulations.gov Site’’ from the Washington, DC 20006, between 9:00 Alexandria, Virginia 22314, by Regulations.gov classic homepage. Enter a.m. and 5:00 p.m. on weekdays. appointment weekdays between 9:00 ‘‘Docket ID OCC–2019–2013’’ in the FDIC: You may submit comments, a.m. and 3:00 p.m. To make an Search Box and click ‘‘Search.’’ Click on which should refer to ‘‘Proposed appointment, call (703) 518–6546 or the ‘‘Comments’’ tab. Comments can be Interagency Policy Statement on send an email to [email protected]. viewed and filtered by clicking on the Allowances for Credit Losses,’’ by any of FOR FURTHER INFORMATION CONTACT: ‘‘Sort By’’ drop-down on the right side the following methods: OCC: Amanda Freedle, Senior • of the screen or the ‘‘Refine Results’’ Agency Website: https:// Accounting Policy Advisor, Office of the options on the left side of the screen. www.fdic.gov/regulations/laws/federal/. Chief Accountant, (202) 649–6280; or Supporting Materials can be viewed by Follow the instructions for submitting Kevin Korzeniewski, Counsel, Chief clicking on the ‘‘Documents’’ tab and comments on the FDIC’s website. • Counsel’s Office, (202) 649–5490; or for filtered by clicking on the ‘‘Sort By’’ Federal eRulemaking Portal: persons who are hearing impaired, TTY, drop-down on the right side of the https://www.regulations.gov. Follow the (202) 649–5597. screen or the ‘‘Refine Results’’ options instructions for submitting comments. • BOARD: Lara Lylozian, Assistant on the left side of the screen.’’ For Email: [email protected]. Include Chief Accountant—Supervision, (202) assistance with the Regulations.gov Beta ‘‘Proposed Interagency Policy Statement 475–6656; or Kevin Chiu, Accounting site please call (877) 378–5457 (toll free) on Allowances for Credit Losses’’ in the Policy Analyst, (202) 912–4608, or (703) 454–9859 Monday–Friday, 9 subject line of the message. Division of Supervision and Regulation; • Mail: Robert E. Feldman, Executive a.m.–5 p.m. ET or email to regulations@ or David W. Alexander, Senior Counsel, Secretary, Attention: Comments, Federal erulemakinghelpdesk.com. (202) 452–2877; or Asad Kudiya, Senior Deposit Insurance Corporation, 550 17th The docket may be viewed after the Counsel, (202) 475–6358, Legal Street NW, Washington, DC 20429. close of the comment period in the same Division, Board of Governors of the • Hand Delivery: Comments may be manner as during the comment period. Federal Reserve System, 20th and C • Viewing Comments Personally: You hand delivered to the guard station at Streets NW, Washington, DC 20551. For may personally inspect comments at the the rear of the 550 17th Street Building the hearing impaired only, OCC, 400 7th Street SW, Washington, (located on F Street) on business days Telecommunication Device for the Deaf DC 20219. For security reasons, the OCC between 7:00 a.m. and 5:00 p.m. (TDD), (202) 263–4869. requires that visitors make an Public Inspection: All comments FDIC: Shannon Beattie, Chief, appointment to inspect comments. You received will be posted without change Accounting and Securities Disclosure may do so by calling (202) 649–6700 or, to https://www.fdic.gov/regulations/ Section, (202) 898–3952; or John Rieger, for persons who are deaf or hearing laws/federal/ including any personal Deputy Chief Accountant, (202) 898– impaired, TTY, (202) 649–5597. Upon information provided. Paper copies of 3602; or Andrew Overton, Examination arrival, visitors will be required to public comments may be requested from Specialist (Bank Accounting), (202) present valid government-issued photo the FDIC Public Information Center by 898–8922; Division of Risk Management identification and submit to security telephone at (877) 275–3342 or (703) Supervision; or Michael Phillips, screening in order to inspect comments. 562–2200. Counsel, (202) 898–3581, Legal Board: You may submit written NCUA: You may submit comments by Division, Federal Deposit Insurance comments, identified by Docket No. any one of the following methods Corporation, 550 17th Street NW, OP–1680, by any of the following (please send comments by one method Washington, DC 20429. methods: only): • Agency Website: http:// • Federal Rulemaking Portal: http:// NCUA: Technical information: Alison www.federalreserve.gov. Follow the www.regulations.gov. Follow the Clark, Chief Accountant, Office of instructions for submitting comments at instructions for submitting comments. Examination and Insurance, at the above http://www.federalreserve.gov/ • Email: Address to regcomments@ address or telephone (703) 518–6611 or generalinfo/foia/ProposedRegs.cfm. ncua.gov. Include ‘‘[Your name]— Legal information: Ariel Pereira, Staff • Email: regs.comments@ Comments on Proposed Interagency Attorney, Office of General Counsel, at federalreserve.gov. Include docket Policy Statement on Allowances for (703) 548–2778. number in the subject line of the Credit Losses’’ in the email subject line. SUPPLEMENTARY INFORMATION: • Fax: (703) 518–6319. Use the message. I. Background • Fax: (202) 452–3819 or 202–452– subject line described above for email. 3102. • Mail: Address to Gerard Poliquin, FASB ASC Topic 326 introduces the • Mail: Ann E. Misback, Secretary, Secretary of the Board, National Credit CECL methodology, which replaces the Board of Governors of the Federal Union Administration, 1775 Duke incurred loss methodology for financial Reserve System, 20th Street and Street, Alexandria, Virginia 22314– assets measured at amortized cost, net Constitution Avenue NW, Washington, 3428. investments in leases, and certain off- DC 20551. • Hand Delivery/Courier: Same as balance-sheet credit exposures, and All public comments will be made mail address. modifies the accounting for impairment available on the Board’s website at Public Inspection: You can view all on AFS debt securities. FASB ASC http://www.federalreserve.gov/ public comments on NCUA’s website at Topic 326 applies to all banks, savings

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55512 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

associations, credit unions, and application of FASB ASC Topic 326 is allowance estimation process, including financial institution holding companies permitted for all institutions for fiscal the need to appropriately support and (collectively, institutions), regardless of years beginning after December 15, document the institution’s allowance size, that file regulatory reports for 2018, including interim periods within estimates; the board of directors’ which the reporting requirements that fiscal year. responsibilities for overseeing conform to GAAP.1 The agencies are II. Overview of the Proposed management’s processes; and the role of maintaining conformance with GAAP Interagency Policy Statement on examiners in reviewing the and consistency with FASB ASC Topic Allowances for Credit Losses appropriateness of an institution’s ACLs 326 through their issuance of the as part of their supervisory activities. proposed Interagency Policy Statement The agencies are issuing this An attachment to the agencies’ on Allowances for Credit Losses. proposed interagency policy statement December 2006 Interagency Policy on allowances for credit losses (ACLs) For FDIC-insured institutions, the Statement on the Allowance for Loan in response to the changes in accounting banking agencies have issued guidelines and Lease Losses addresses concepts for credit losses in accordance with establishing standards for safety and and practices related to loan review FASB ASC Topic 326. The proposed soundness, including operational and systems. Rather than updating the interagency policy statement would be managerial standards that address such agencies’ guidance on loan review effective at the time of each institution’s matters as internal controls and systems as part of the proposed adoption of FASB ASC Topic 326. The information systems, an internal audit interagency policy statement on ACLs, following policy statements would no system, loan documentation, credit the agencies are currently developing longer be effective for an institution underwriting, asset quality, and separate standalone guidance on upon its adoption of FASB ASC Topic earnings and should be appropriate for supervisory expectations for effective an institution’s size and the nature, 326: The agencies’ December 2006 credit risk review. scope, and risk of its activities.2 The Interagency Policy Statement on the principles described in the proposed Allowance for Loan and Lease Losses; III. Request for Comment interagency policy statement are the banking agencies’ July 2001 Policy consistent with these guidelines. Statement on Allowance for Loan and The agencies request comments on all The effective dates of FASB ASC Lease Losses Methodologies and aspects of the proposed interagency Topic 326 vary for different institutions. Documentation for Banks and Savings policy statement, including but, not Under GAAP as currently in effect, Institutions; and the NCUA’s May 2002 limited to those set forth below. The FASB ASC Topic 326 is effective for Interpretive Ruling and Policy agencies will revise the Statement, if institutions that are public business Statement 02–3, Allowance for Loan needed and as appropriate, after entities (PBEs) and also are Securities and Lease Losses Methodologies and reviewing the comments received on the and Exchange Commission (SEC) filers, Documentation for Federally Insured proposal. as both terms are defined in GAAP, for Credit Unions (collectively, the ALLL (1) Does the proposed interagency fiscal years beginning after December policy statements). After FASB ASC policy statement clearly describe the 15, 2019, including interim periods Topic 326 is effective for all institutions, measurement of expected credit losses within those fiscal years. For the agencies will rescind the ALLL under CECL in accordance with FASB institutions that are PBEs but not SEC policy statements. ASC Topic 326? Why or why not? If not, filers, FASB ASC Topic 326 is effective This proposed interagency policy what additional information is needed? for fiscal years beginning after December statement describes the CECL What information should be omitted 15, 2020, including interim periods methodology for determining ACLs from the policy statement? within those fiscal years. For applicable to financial assets measured (2) Does the proposed interagency institutions that are not PBEs (non- at amortized cost, including loans held- policy statement clearly describe the PBEs), FASB ASC Topic 326 is effective for-investment, net investments in measurement of credit losses on for fiscal years beginning after December leases, held-to-maturity (HTM) debt impaired AFS debt securities in 15, 2021, including interim periods securities, and certain off-balance-sheet accordance with FASB ASC Topic 326? within those fiscal years.3 Early credit exposures in accordance with Why or why not? If not, what additional FASB ASC Topic 326. It also describes information is needed? What 1 See section 37(a) of the Federal Deposit the estimation of an ACL for an information should be omitted from the Insurance Act and section 202(a) of the Federal impaired AFS debt security in policy statement? Credit Union Act. Under these statutory provisions, accordance with FASB ASC Subtopic the accounting principles applicable to reports or (3) Does the proposed interagency statements required to be filed by all insured 326–30. policy statement clearly communicate depository institutions with the federal banking The proposed interagency policy supervisory expectations for designing, agencies or by all insured credit unions with assets statement also includes and updates of $10 million or more with the NCUA Board must documenting, and validating expected concepts and practices detailed in the be uniform and consistent with GAAP. credit loss estimation processes, internal existing ALLL policy statements that Furthermore, regardless of asset size, all federally controls over ACLs, and maintaining insured credit unions must comply with GAAP for remain relevant under FASB ASC Topic appropriate ACLs? certain financial reporting requirements relating to 326. These concepts and practices relate charges for loan losses. See 12 U.S.C. (4) Has the proposed interagency 1831n(a)(2)(A), 12 U.S.C. 1782(a)(6)(C), and 12 CFR to management’s responsibilities for the 702.402(d). policy statement appropriately included 2 See Appendix A to 12 CFR part 30 (OCC), dates for major accounting standards including concepts and practices detailed in the Appendix D to 12 CFR part 208 (Board), and FASB ASC Topic 326. The FASB Board decided existing ALLL policy statements that Appendix A to 12 CFR part 364 (FDIC), which were that FASB ASC Topic 326 will be effective for SEC also are relevant under FASB ASC adopted by the banking agencies pursuant to filers, excluding smaller reporting companies Topic 326? If not, what additional Section 39 of the Federal Deposit Insurance Act. (SRCs) as currently defined by the SEC, for fiscal See 12 U.S.C. 1831p–1. National credit unions years beginning after December 15, 2019, including information should also be included? should refer to Section 206(b)(1) of the Federal interim periods within those fiscal years. For all Credit Union Act (12 U.S.C. 1786) and 12 CFR other entities, the FASB Board decided that FASB IV. The Paperwork Reduction Act 741.3. ASC Topic 326 will be effective for fiscal years In accordance with the requirements 3 On July 17, 2019, the FASB Board decided to beginning after December 15, 2022, including adopt a two-bucket approach to stagger effective interim periods within those fiscal years. of the Paperwork Reduction Act of 1995

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55513

(PRA),4 the agencies may not conduct or Instruments—Credit Losses (Topic 326): FASB ASC Topic 326: The December sponsor, and the respondent is not Measurement of Credit Losses on 2006 Interagency Policy Statement on required to respond to, an information Financial Instruments, as well as the the Allowance for Loan and Lease collection unless it displays a currently amendments issued since June 2016.5 Losses; the July 2001 Policy Statement valid Office of Management and Budget These updates are codified in on Allowance for Loan and Lease Losses (OMB) control number. Accounting Standards Codification Methodologies and Documentation for The proposed interagency policy (ASC) Topic 326, Financial Banks and Savings Institutions; and the statement will not create any new or Instruments—Credit Losses (FASB ASC NCUA’s May 2002 Interpretive Ruling revise any existing collections of Topic 326). FASB ASC Topic 326 and Policy Statement 02–3, Allowance information under the PRA. Therefore, applies to all banks, savings for Loan and Lease Losses no information collection request will associations, credit unions, and Methodologies and Documentation for be submitted to the OMB for review. financial institution holding companies Federally Insured Credit Unions (collectively, institutions), regardless of (collectively, ALLL Policy Statements). V. Proposed Interagency Policy size, that file regulatory reports for After FASB ASC Topic 326 is effective Statement which the reporting requirements for all institutions, the agencies will The text of the proposed interagency conform to U.S. generally accepted rescind the ALLL Policy Statements. 6 policy statement is as follows: accounting principles (GAAP). This The principles described in this policy statement describes the Interagency Policy Statement on the policy statement are consistent with measurement of expected credit losses Allowances for Credit Losses Purpose GAAP, applicable regulatory reporting in accordance with FASB ASC Topic requirements,8 safe and sound banking The Office of the Comptroller of the 326; supervisory expectations for practices, and the agencies’ codified Currency (OCC), the Board of Governors designing, documenting, and validating guidelines establishing standards for of the Federal Reserve System (FRB), the expected credit loss estimation safety and soundness.9 The operational Federal Deposit Insurance Corporation processes, including the internal and managerial standards included in (FDIC), and the National Credit Union controls over these processes; those guidelines, which address such Administration (NCUA) (collectively, maintaining appropriate allowances for matters as internal controls and the agencies) are issuing this credit losses (ACLs); the responsibilities information systems, an internal audit Interagency Policy Statement on of boards of directors and management; system, loan documentation, credit Allowances for Credit Losses (hereafter, and examiner reviews of ACLs. underwriting, asset quality, and the policy statement) to promote This policy statement is effective at earnings, should be appropriate for an consistency in the interpretation and the time of each institution’s adoption institution’s size and the nature, scope, application of Financial Accounting of FASB ASC Topic 326.7 The following and risk of its activities. Standards Board (FASB) Accounting policy statements are no longer effective Standards Update 2016–13, Financial for an institution upon its adoption of Contents

Scope ...... 16 Measurement of ACLs for Loans, Leases, Held-to-Maturity Debt Securities, and Off-Balance-Sheet Credit Exposures ...... 19 Overview of ACLs ...... 19 Collective Evaluation of Expected Losses ...... 20 Estimation Methods for Expected Credit Losses ...... 21 Contractual Term of a Financial Asset ...... 22 Historical Loss Information ...... 23 Reasonable and Supportable Forecasts ...... 23 Reversion ...... 24 Qualitative Factor Adjustments ...... 25 Collateral-Dependent Financial Assets ...... 28 Troubled Debt Restructurings ...... 29 Purchased Credit-Deteriorated Assets ...... 30 Financial Assets Secured with Collateral Maintenance Agreements ...... 31

4 44 U.S.C. 3501–3521. of U. S. Branches and Agencies of Foreign Banks; $10 million or greater, providing that, in general, 5 The FASB issued Accounting Standards Update Supervision and Regulation (SR) Letter 95–4, the ‘‘[a]ccounting principles applicable to reports or (ASU) 2016–13 on June 16, 2016. The following Allowance for Loan and Lease Losses for U. S. statements required to be filed with the [NCUA] updates were published after the issuance of ASU Branches and Agencies of Foreign Banking Board by each insured credit union shall be 2016–13: ASU 2018–19—Codification Organizations; and SR Letter 95–42, Allowance for uniform and consistent with generally accepted Improvements to Topic 326, Financial Loan and Lease Losses for U.S. Branches and accounting principles.’’ Furthermore, regardless of Instruments—Credit Losses; ASU 2019–04— Agencies of Foreign Banking Organizations. asset size, all federally insured credit unions must Codification Improvements to Topic 326, Financial 7 The effective date for FASB ASC Topic 326 is comply with GAAP for certain financial reporting Instruments—Credit Losses, Topic 815, Derivatives based on an institution’s characteristics, including requirements relating to charges for loan losses. See and Hedging, and Topic 825, Financial an institution’s U.S. Securities and Exchange 12 CFR 702.402(d). Instruments; and ASU 2019–05—Financial Commission (SEC) filing status, as described in 9 FDIC-insured depository institutions should Instruments—Credit Losses (Topic 326): Targeted Accounting Standards Codification (ASC) 326–10– refer to the Interagency Guidelines Establishing Transition Relief. Additionally, institutions may 65–1, with early adoption permitted only as of the Standards for Safety and Soundness adopted by refer to FASB Staff Q&A-Topic 326, No. 1, Whether beginning of an institution’s fiscal year. their primary federal regulator pursuant to Section the Weighted-Average Remaining Maturity Method 8 For FDIC-insured depository institutions, 39 of the Federal Deposit Insurance Act (12 U.S.C. is an Acceptable Method to Estimate Expected Section 37(a) of the Federal Deposit Insurance Act 1831p–1) as follows: For national banks and federal Credit Losses, and FASB Staff Q&A-Topic 326, No. (12 U.SC. 1831n(a)) states that, in general, the savings associations, Appendix A to 12 CFR part 30; 2, Developing an Estimate of Expected Credit Losses accounting principles applicable to the for state member banks, Appendix D to 12 CFR part on Financial Assets. Consolidated Reports of Condition and Income (Call 208; and for state nonmember banks, state savings 6 U.S. branches and agencies of foreign banking Report) ‘‘shall be uniform and consistent with associations, and insured state-licensed branches of organizations may choose to, but are not required generally accepted accounting principles.’’ Section foreign banks, Appendix A to 12 CFR part 364. to, maintain ACLs on a branch or agency level. 202(a)(6)(C) of the Federal Credit Union Act (12 Federal credit unions should refer to Section These institutions should refer to the instructions U.S.C. 1782(a)(6)(C)) establishes the same standard 206(b)(1) of the Federal Credit Union Act (12 U.S.C. for the FFIEC 002, Report of Assets and Liabilities for federally insured credit unions with assets of 1786) and 12 CFR 741.3.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55514 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

Accrued Interest Receivable ...... 32 Financial Assets with Zero Credit Loss Expectations ...... 33 Estimated Credit Losses for Off-Balance-Sheet Credit Exposures ...... 35 Measurement of the ACL for Available-for-Sale Debt Securities ...... 36 Documentation Standards ...... 37 Analyzing and Validating the Overall Measurement of ACLs ...... 42 Responsibilities of the Board of Directors ...... 44 Responsibilities of Management ...... 45 Examiner Review of ACLs ...... 48

Scope agreements within the scope of Topic requires management to use relevant 860 on transfers and servicing; forward-looking information and This policy statement describes the • current expected credit losses (CECL) Net investments in leases expectations drawn from reasonable and methodology for determining the ACLs recognized by a lessor in accordance supportable forecasts when estimating applicable to loans held-for-investment, with Topic 842 on leases; and expected credit losses. • ACLs are evaluated as of the end of net investments in leases, and held-to- Off-balance-sheet credit exposures each reporting period. The methods maturity debt securities accounted for at including off-balance-sheet loan used to determine ACLs generally amortized cost.10 It also describes the commitments, standby letters of credit, should be applied consistently over estimation of the ACL for an available- financial guarantees not accounted for time and reflect management’s current for-sale debt security in accordance with as insurance, and other similar expectations of credit losses. Changes to FASB ASC Subtopic 326–30. This instruments except for those within the ACLs resulting from these periodic policy statement does not address or scope of Topic 815 on derivatives and evaluations are recorded through supersede existing agency requirements hedging. The CECL methodology does not increases or decreases to the related or guidance regarding appropriate due provisions for credit losses (PCLs). diligence in connection with the apply to the following financial assets: • Financial assets measured at fair When available information confirms purchase or sale of assets or determining value through net income, including that specific loans, securities, other whether assets are permissible to be those assets for which the fair value assets, or portions thereof, are purchased or held by institutions.11 option has been elected; uncollectible, these amounts should be The CECL methodology described in • Available-for-sale debt securities; 12 promptly written off 15 against the FASB ASC Topic 326 applies to • Loans held-for-sale; related ACLs. financial assets measured at amortized • Policy loan receivables of an Estimating appropriate ACLs involves cost, net investments in leases, and off- insurance entity; a high degree of management judgment balance-sheet credit exposures • Loans and receivables between and is inherently imprecise. An (collectively, financial assets) including: • entities under common control; and institution’s process for determining Financing receivables such as loans • Receivables arising from operating appropriate ACLs may result in a range held-for-investment; • leases. of estimates for expected credit losses. Overdrawn deposit accounts (i.e. An institution should support and overdrafts) that are reclassified as held- Measurement of ACLs for Loans, record its best estimate within the range for-investment loans; Leases, Held-to-Maturity Debt of expected credit losses. • Held-to-maturity debt securities; Securities, and Off-Balance-Sheet • Receivables that result from Credit Exposures Collective Evaluation of Expected Losses revenue transactions within the scope of Overview of ACLs FASB ASC Topic 326 requires Topic 606 on revenue from contracts expected losses to be evaluated on a with customers and Topic 610 on other An ACL is a valuation account that is collective, or pool, basis when financial income, which applies, for example, to deducted from, or added to, the assets share similar risk characteristics. the sale of foreclosed real estate; amortized cost basis of financial assets Financial assets may be segmented • Reinsurance recoverables that result to present the net amount expected to be based on one characteristic, or a 13 from insurance transactions within the collected over the contractual term of combination of characteristics. scope of Topic 944 on insurance; the assets. In estimating the net amount Examples of risk characteristics • Receivables related to repurchase expected to be collected, management relevant to this evaluation include, but agreements and securities lending should consider the effects of past are not limited to: events, current conditions, and • Internal or external credit scores or 10 FASB ASC Topic 326 defines the amortized reasonable and supportable forecasts on credit ratings; cost basis of an asset as the amount at which a the collectibility of the institution’s • Risk ratings or classifications; financing receivable or investment is originated or 14 • acquired, adjusted for applicable accrued interest, financial assets. FASB ASC Topic 326 Financial asset type; accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, 12 Refer to FASB ASC Subtopic 326–30, Financial of amounts previously written off or expected to be write-offs, foreign exchange, and fair value hedge Instruments—Credit Losses—Available-for-Sale written off that are included in ACLs may not accounting. Debt Securities (FASB ASC Subtopic 326–30). exceed the aggregate amounts previously written off 11 See OCC Bulletin 2012–18, Guidance on Due 13 Consistent with FASB ASC Topic 326, an or expected to be written off. In some Diligence Requirements in Determining Whether institution’s determination of the contractual term circumstances, the ACL for a specific portfolio or Securities are Eligible for Investment (for national should reflect the financial asset’s contractual life loan may be negative because the amount expected banks and federal savings associations), 12 CFR part adjusted for prepayments, renewal and extension to be collected, including expected recoveries, 1, Investment Securities (for national banks), and 12 options that are not unconditionally cancellable by exceeds the financial asset’s amortized cost basis. CFR part 160, Lending and Investment (for federal the institution, and reasonably expected troubled 15 Consistent with FASB ASC Topic 326, this savings associations). Federal credit unions should debt restructurings. For more information, see the policy statement uses the verbs ‘‘write off’’ and refer to 12 CFR part 703, Investment and Deposit ‘‘Contractual Term of a Financial Asset’’ section in ‘‘written off’’ and the noun ‘‘write-off.’’ These terms Activities. Federally insured, state-chartered credit this policy statement. are used interchangeably with ‘‘charge off,’’ unions should refer to applicable state laws and 14 Recoveries are a component of management’s ‘‘charged off,’’ and ‘‘charge-off,’’ respectively, in the regulations, as well as 12 CFR 741.219 (‘‘investment estimation of the net amount expected to be agencies’ regulations, guidance, and regulatory requirements’’). collected for a financial asset. Expected recoveries reporting instructions.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55515

• Collateral type; Contractual Term of a Financial Asset for establishing a minimum or • Size; maximum length of time for reasonable • FASB ASC Topic 326 requires an Effective interest rate; institution to measure estimated and supportable forecast period(s). • Term; Judgment is necessary in determining an • expected credit losses over the Geographical location; contractual term of its financial assets, appropriate period(s) for each • institution. Reasonable and supportable Industry of the borrower; and considering expected prepayments. • forecasts may vary by portfolio segment Vintage. Renewals, extensions, and or individual forecast input. These Other risk characteristics that may be modifications are excluded from the forecasts may include data from internal relevant for segmenting held-to-maturity contractual term of a financial asset for sources, external sources, or a debt securities include issuer, maturity, purposes of estimating the ACL unless combination of both. Management is not coupon rate, yield, payment frequency, there is a reasonable expectation of required to search for all possible source of repayment, bond payment executing a troubled debt restructuring information nor incur undue cost and structure, and embedded options. (TDR) or the renewal and extension effort to collect data for its forecasts. FASB ASC Topic 326 does not options are part of the original or However, reasonably available and prescribe a process for segmenting modified contract and are not financial assets for collective evaluation. relevant information should not be unconditionally cancellable by the ignored in assessing the collectibility of Therefore, management should exercise institution. If such renewal or extension judgment when establishing appropriate cash flows. Management should options are present, management must evaluate the appropriateness of the segments or pools. Management should evaluate the likelihood of a borrower evaluate financial asset segmentation on reasonable and supportable forecast exercising those options when period(s) each reporting period, an ongoing basis to determine whether determining the contractual term. the financial assets in the pool continue consistent with other inputs used in the to share similar risk characteristics. If a Historical Loss Information estimation of expected credit losses. Institutions may develop reasonable financial asset ceases to share risk Historical loss information generally characteristics with other assets in its and supportable forecasts by using one provides a basis for an institution’s or more economic scenarios. FASB ASC segment, it should be moved to a assessment of expected credit losses. different segment with assets sharing Topic 326 does not require the use of Historical loss information may be multiple economic scenarios, however, similar risk characteristics if such a based on internal information, external segment exists. institutions are not precluded from information, or a combination of both. considering multiple economic If a financial asset does not share Management should consider whether similar risk characteristics with other scenarios when estimating expected the historical loss information may need credit losses. assets, expected credit losses for that to be adjusted for differences in current asset should be evaluated individually. asset specific characteristics such as Reversion Individually evaluated assets should not differences in underwriting standards, When the contractual term of a be included in a collective assessment portfolio mix, or when historical asset financial asset extends beyond the of expected credit losses. terms do not reflect the contractual reasonable and supportable period, Estimation Methods for Expected Credit terms of the financial assets being FASB ASC Topic 326 requires reverting Losses evaluated as of the reporting date. to historical loss information, or an Management should then consider appropriate proxy, for those periods FASB ASC Topic 326 does not require whether further adjustments to beyond the reasonable and supportable the use of a specific loss estimation historical loss information are needed to forecast period (often referred to as the method for purposes of determining reflect the extent to which current reversion period). Management may ACLs. Various methods may be used to conditions and reasonable and revert to historical loss information for estimate the expected collectibility of supportable forecasts differ from the each individual forecast input or based financial assets, with those methods conditions that existed during the on the entire estimate of loss. generally applied consistently over historical loss period. Adjustments to FASB ASC Topic 326 does not require time. The same loss estimation method historical loss information may be the application of a specific reversion does not need to be applied to all quantitative or qualitative in nature and technique or use of a specific reversion financial assets. Management is not should reflect changes to relevant data period. Reversion to historical loss precluded from selecting a different (such as changes in unemployment information may be immediate, occur method when it determines the method rates, delinquency, or other factors on a straight-line basis, or use any will result in a better estimate of ACLs. associated with the financial assets). systematic, rational method. Management may use a loss-rate Management may apply different 16 Reasonable and Supportable Forecasts method, probability of default/loss reversion techniques depending on the given default (PD/LGD) method, roll- When estimating expected credit economic environment or the financial rate method, discounted cash flow losses, FASB ASC Topic 326 requires asset portfolio. Reversion techniques are method, a method that uses aging management to consider forward- not accounting policy elections and schedules, or another reasonable looking information that is both should be evaluated for appropriateness method to estimate expected credit reasonable and supportable and relevant each reporting period, consistent with losses. The selected method(s) should to assessing the collectibility of cash other inputs used in the estimation of be appropriate for the financial assets flows. Reasonable and supportable expected credit losses. being evaluated, consistent with the forecasts may extend over the entire FASB ASC Topic 326 does not specify institution’s size and complexity. contractual term of a financial asset or the historical loss information that is a period shorter than the contractual used in the reversion period. This 16 Various loss-rate methods may be used to term. FASB ASC Topic 326 does not historical loss information may be based estimate expected credit losses under the CECL methodology. These include the weighted-average prescribe a specific method for on long-term average losses or on losses remaining maturity (WARM) method, vintage determining reasonable and supportable that occurred during a particular analysis, and the snapshot or open pool method. forecasts nor does it include bright lines historical period(s). Management may

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55516 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

use multiple historical periods that are • The value of the underlying supportable forecasts in estimating not sequential. Management should not collateral for loans that are not expected losses. For example, if adjust historical loss information for collateral-dependent; 18 improving credit quality trends are existing economic conditions or • The institution’s lending policies evident throughout an institution’s expectations of future economic and procedures, including changes in portfolio in recent years, but conditions for periods beyond the underwriting standards and practices management’s evaluation of reasonable reasonable and supportable period. for collections, write-offs, and and supportable forecasts indicates However, management should consider recoveries; expected deterioration in credit quality whether the historical loss information • The quality of the institution’s of the institution’s financial assets may need to be adjusted for differences credit review function; during the forecast period, the ACL as in current asset specific characteristics • The experience, ability, and depth a percentage of the portfolio may such as differences in underwriting of the institution’s lending, investment, increase. standards, portfolio mix, or when collection, and other relevant Collateral-Dependent Financial Assets historical asset terms do not reflect the management and staff; contractual terms of the financial assets • The effect of other external factors FASB ASC Topic 326 describes a being evaluated as of the reporting date. such as the regulatory, legal and collateral-dependent asset as a financial technological environments; asset for which the repayment is Qualitative Factor Adjustments competition; and events such as natural expected to be provided substantially The estimation of ACLs should reflect disasters; and through the operation or sale of the consideration of all significant factors • Actual and expected changes in collateral when the borrower, based on relevant to the expected collectibility of international, national, regional, and management’s assessment, is the institution’s financial assets as of the local economic and business conditions experiencing financial difficulty as of reporting date. Management may begin and developments 19 in which the the reporting date. For regulatory the expected credit loss estimation institution operates that affect the reporting purposes, the ACL for a process by determining its historical collectibility of financial assets. collateral-dependent loan is measured loss information or obtaining reliable Management may consider the using the fair value of collateral, and relevant historical loss proxy data following additional qualitative factors regardless of whether foreclosure is for each segment of financial assets with specific to debt securities as of the probable.21 similar risk characteristics. Historical reporting date: 20 When estimating the ACL for a credit losses (or even recent trends in • The effect of recent changes in collateral-dependent loan, FASB ASC losses) generally do not, by themselves, investment strategies and policies; Topic 326 requires the fair value of form a sufficient basis to determine the • The existence and effect of loss collateral to be adjusted to consider appropriate levels for ACLs. allocation methods, the definition of estimated costs to sell if repayment or Management should consider the default, the impact of performance and satisfaction of the loan depends on the need to qualitatively adjust expected market value triggers, and credit and sale of the collateral. ACL adjustments credit loss estimates for information not liquidity enhancements associated with for estimated costs to sell are not already captured in the loss estimation debt securities; appropriate when the repayment of a process. These qualitative factor • The effect of structural collateral-dependent loan is expected adjustments may increase or decrease subordination and collateral from the operation of the collateral. management’s estimate of expected deterioration on tranche performance of The fair value of collateral securing a credit losses. Adjustments should not be debt securities; collateral-dependent loan may change made for information that has already • The quality of underwriting for any over time. If the fair value of the been considered and included in the collateral backing debt securities; and collateral as of the ACL evaluation date loss estimation process. • The effect of legal covenants has decreased since the previous ACL Management should consider the associated with debt securities. evaluation date, the ACL should be qualitative factors that are relevant to Changes in the level of an institution’s increased to reflect the additional the institution as of the reporting date, ACLs may not always be directionally deterioration in the fair value of the which may include, but are not limited consistent with changes in the level of collateral. Likewise, if the fair value of to: the collateral has increased as of the • qualitative factor adjustments due to the The nature and volume of the incorporation of reasonable and ACL evaluation date, the increase in the institution’s financial assets; fair value of the collateral is reflected • The existence, growth, and effect of Securities Held by Depository Institutions issued by through a reduction in the ACL. Any any concentrations of credit; the FDIC, Board, and OCC in October 2013. negative ACL that results is capped at • The volume and severity of past 18 See the ‘‘Collateral-Dependent Financial due financial assets, the volume of Assets’’ section of this policy statement for more 21 The agencies, at times, prescribe specific nonaccrual assets, and the volume and information on collateral-dependent loans. regulatory reporting requirements that fall within a 19 Changes in economic and business conditions range of acceptable practice under GAAP. These severity of adversely classified or graded and developments included in qualitative factor 17 specific reporting requirements, such as the assets; adjustments are limited to those that affect the requirement for institutions to apply the practical collectibility of an institution’s financial assets and expedient in ASC 326–20–35–5 for collateral- 17 For banks and savings associations, adversely are relevant to the institution’s financial asset dependent loans, regardless of whether foreclosure classified or graded loans are loans rated portfolios. For example, an economic factor for is probable, have been adopted to achieve safety ‘‘substandard’’ (or its equivalent) or worse under current or forecasted unemployment at the national and soundness and other public policy objectives the institution’s loan classification system. For or state level may indicate a strong job market based and to ensure comparability among institutions. credit unions, adversely graded loans are loans on low national or state unemployment rates, but The regulatory reporting requirement to apply the included in the more severely graded categories a local unemployment rate, which may be practical expedient for collateral-dependent under the institution’s credit grading system, i.e., significantly higher, for example, because of the financial assets is consistent with the agencies’ those loans that tend to be included in the credit actual or forecasted loss of a major local employer longstanding practice for collateral-dependent union’s ‘‘watch lists.’’ Criteria related to the may be more relevant to the collectibility of an loans, and it continues to be limited to collateral- classification of an investment security may be institution’s financial assets. dependent loans. It does not apply to other found in the interagency policy statement Uniform 20 This list is not all-inclusive and all of the financial assets such as held-to-maturity debt Agreement on the Classification and Appraisal of factors listed may not be relevant to all institutions. securities that are collateral-dependent.

VerDate Sep<11>2014 17:48 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55517

the amount previously written off. Purchased Credit-Deteriorated Assets of the collateral.24 If the fair value of the Changes in the fair value of collateral collateral is greater than the amortized FASB ASC Topic 326 introduces the described herein should be supported cost of the financial asset and concept of purchased credit-deteriorated and documented through recent management expects the borrower to (PCD) assets. PCD assets are acquired appraisals or evaluations.22 replenish collateral as needed, financial assets that, at acquisition, have management may record an ACL of zero 23 Troubled Debt Restructurings experienced more-than-insignificant for the financial asset when the deterioration in credit quality since Expected credit losses on financial collateral maintenance practical origination. FASB ASC Topic 326 does assets modified in TDRs or reasonably expedient is applied. Similarly, if the not provide a prescriptive definition of expected to be modified in TDRs fair value of the collateral is less than more-than-insignificant credit (collectively, TDRs) are estimated under the amortized cost basis of the financial deterioration. The acquiring the same CECL methodology that is asset and management expects the institution’s management should applied to other financial assets borrower to replenish collateral as establish and document a reasonable measured at amortized cost. Expected needed, the ACL is limited to the process to consistently determine what credit losses are evaluated on a difference between the fair value of the constitutes a more-than-insignificant collective basis, or, if a TDR does not collateral and the amortized cost basis deterioration in credit quality. share similar risk characteristics with of the asset as of the reporting date other financial assets, on an individual When recording the acquisition of when applying the collateral basis. PCD assets, the amount of expected maintenance practical expedient. credit losses as of the acquisition date FASB ASC Topic 326 allows an is added to the purchase price of the Accrued Interest Receivable institution to use any appropriate loss financial assets rather than recording FASB ASC Topic 326 includes estimation method to estimate ACLs for these losses through PCLs. This accrued interest receivable in the TDRs. However, there are circumstances establishes the amortized cost basis of amortized cost basis of a financial asset. when specific measurement methods the PCD assets. Any difference between As a result, accrued interest receivable are required. If a TDR, or a financial the unpaid principal balance of the PCD is included in the amounts for which asset for which a TDR is reasonably assets and the amortized cost basis of ACLs are estimated. Generally, any expected, is collateral-dependent, the the assets as of the acquisition date is accrued interest receivable that is not ACL is estimated using the fair value of the non-credit discount or premium. collectible is written off against the collateral. The initial ACL and non-credit discount related ACL. In addition, when management has a or premium determined on a collective FASB ASC Topic 326 permits a series reasonable expectation of executing a basis at that acquisition date are of independent accounting policy TDR or if a TDR has been executed, the allocated to the individual PCD assets. elections related to accrued interest expected effect of the modification (e.g., After acquisition, ACLs for PCD assets receivable that alter the accounting term extension or interest rate should be adjusted at each reporting treatment described in the preceding concession) is included in the estimate date with a corresponding debit or paragraph. These elections are made of the ACLs. Management should credit to the PCLs to reflect upon adoption of FASB ASC Topic 326 determine, support, and document how management’s current estimate of and may differ by financial asset it identifies and estimates the effect of portfolio. The available accounting expected credit losses. The non-credit 25 a reasonably expected TDR and discount recorded at acquisition will be policy elections are: • Management may elect not to estimates the related ACL. The accreted into interest income over the measure ACLs for accrued interest estimated effect of reasonably expected remaining life of the PCD assets on a receivable if uncollectible accrued TDRs may be included in an level-yield basis. institution’s qualitative factor interest is written off in a timely adjustments. Financial Assets With Collateral manner. Management should define and Maintenance Agreements document its definition of a timely 22 write-off. For more information on regulatory Institutions may have financial assets expectations related to the use of appraisals and • Management may elect to write off evaluations, see the Interagency Appraisal and that are secured by collateral (such as accrued interest receivable by either Evaluation Guidelines published on December 10, debt securities) and are subject to reversing interest income, recognizing 2010. Insured depository institutions should also collateral maintenance agreements the loss through PCLs, or through a refer to the interagency regulations on appraisals requiring the borrower to continuously adopted by their primary federal regulator as combination of both methods. follows: For national banks and federal savings replenish the amount of collateral • Management may elect to separately associations, Subpart C of 12 CFR part 34; for state securing the asset. If the fair value of the present accrued interest receivable from member banks, 12 CFR parts 208 and 225; for state collateral declines, the borrower is the associated financial asset in its nonmember banks, state savings associations, and required to provide additional collateral insured state-licensed branches of foreign banks, 12 CFR part 323; and for national credit unions, 12 as specified by the agreement. 24 For example, an institution enters into a reverse CFR part 722. FASB ASC Topic 326 includes a repurchase agreement with a collateral maintenance 23 A troubled debt restructuring is defined in ASC practical expedient for financial assets agreement. Management may not need to record the Subtopic 310–40, Receivables—Troubled Debt expected credit losses at each reporting date as long Restructurings by Creditors. The October 24, 2013, with collateral maintenance agreements as the fair value of the security collateral is greater Interagency Supervisory Guidance Addressing where the borrower is required to than the amortized cost basis of the reverse Certain Issues Related to Troubled Debt provide collateral greater than or equal repurchase agreement. Refer to ASC 326–20–55–46 Restructurings provides more information on TDRs to the amortized cost basis of the asset for more information. including, but not limited to, accrual status, 25 The accounting policy elections related to regulatory credit risk grade, classification and write- and is expected to continuously accrued interest receivable that are described in this off treatment, and capitalized costs. This replenish the collateral. In those cases, paragraph also apply to accrued interest receivable interagency supervisory guidance remains management may elect the collateral for an available-for-sale debt security that, for applicable, unless affected by FASB ASC Topic 326. maintenance practical expedient and purposes of identifying and measuring an Information on the reporting of a subsequent impairment, exclude the applicable accrued interest restructuring of a TDR may be found in the measure expected credit losses for these from both the fair value and amortized cost basis instructions for the Call Report. qualifying assets based on the fair value of the securities.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55518 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

regulatory reports and financial Estimated Credit Losses for Off-Balance- of expected cash flows with the statements, if applicable. The accrued Sheet Credit Exposures amortized cost basis of the security. An interest receivable is presented net of FASB ASC Topic 326 requires that an ACL is established, with a charge to the ACLs (if any). institution estimate expected credit PCL, to reflect the credit loss component losses for off-balance-sheet credit of the decline in fair value below Financial Assets With Zero Credit Loss amortized cost. If the fair value of the Expectations exposures within the scope of FASB ASC Topic 326 over the contractual security increases over time, any ACL There may be certain financial assets period during which the institution is that has not been written off may be for which the expectation of credit loss exposed to credit risk. The estimate of reversed through a credit to the PCL. is zero after evaluating historical loss expected credit losses should take into The ACL for an available-for-sale debt information, making necessary consideration the likelihood that security is limited by the amount that adjustments for current conditions and funding will occur as well as the the fair value is less than the amortized reasonable and supportable forecasts, amount expected to be funded over the cost, which is referred to as the fair and considering any collateral or estimated remaining contractual term of value floor. If management intends to sell an guarantee arrangements that are not the off-balance-sheet credit exposures. available-for-sale debt security or will free-standing contracts. Factors to Management should not record an more likely than not be required to sell consider when evaluating whether estimate of expected credit losses for the security before recovery of the expectations of zero credit loss are off-balance-sheet exposures that are amortized cost basis, the security’s ACL appropriate may include, but are not unconditionally cancellable by the should be written off and the amortized limited to: issuer. Management must evaluate expected cost basis of the security should be • A long history of zero credit loss; credit losses for off-balance-sheet credit written down to its fair value at the • A financial asset that is fully exposures as of each reporting date. reporting date with any incremental secured by cash or cash equivalents; While the process for estimating impairment reported in income. • expected credit losses for these A change during the reporting period High credit ratings from rating in the non-credit component of any agencies with no expected future exposures is similar to the one used for on-balance-sheet financial assets, these decline in fair value below amortized downgrade; 26 estimated credit losses are not recorded cost on an available-for-sale debt • Principal and interest payments as part of the ACLs because cash has not security is reported in other that are guaranteed by the U.S. yet been disbursed to fund the comprehensive income, net of government; contractual obligation to extend credit. applicable income taxes.29 • The issuer, guarantor, or sponsor Instead, these loss estimates are When evaluating impairment for can print its own currency and the recorded as a liability, separate and available-for-sale debt securities, currency is held by other central banks distinct from the ACLs.27 The amount management may evaluate the as reserve currency; and needed to adjust the liability for amortized cost basis including accrued interest receivable, or may evaluate the • expected credit losses on off-balance- The interest rate on the security is sheet credit exposures is reported as an accrued interest receivable separately recognized as a risk-free rate. other noninterest expense rather than from the remaining amortized cost basis. A loan that is fully secured by cash or being reported as part of the PCLs.28 If evaluated separately, accrued interest cash equivalents, such as certificates of receivable is excluded from both the fair deposit issued by the lending Measurement of the ACL for Available- value of the available-for-sale debt for-Sale Debt Securities institution, would likely have zero security and its amortized cost basis.30 FASB ASC Subtopic 326–30, credit loss expectations. Similarly, the Documentation Standards guaranteed portion of a U.S. Small Financial Instruments—Credit Losses— Business Administration (SBA) loan or Available-for-Sale Debt Securities For financial and regulatory reporting security purchased on the secondary (FASB ASC Subtopic 326–30) describes purposes, ACLs and PCLs must be market through the SBA’s fiscal and the accounting for expected credit losses determined in accordance with GAAP. transfer agent would likely have zero associated with available-for-sale debt ACLs and PCLs should be well credit loss expectations because these securities. Credit losses for available-for- documented, with clear explanations of financial assets are unconditionally sale debt securities are evaluated as of the supporting analyses and rationale. guaranteed by the U.S. government. each reporting date when the fair value Sound policies, procedures, and control Examples of held-to-maturity debt is less than amortized cost. FASB ASC systems should be appropriately securities that may result in Subtopic 326–30 requires credit losses tailored to an institution’s size and expectations of zero credit loss include to be calculated individually, rather complexity, organizational structure, U.S. Treasury securities as well as than collectively, using a discounted business environment and strategy, risk mortgage-backed securities issued and cash flow method, through which appetite, financial asset characteristics, guaranteed by the Government National management compares the present value loan administration procedures, Mortgage Association, the Federal Home 27 The ACL associated with off-balance-sheet 29 Non-credit impairment on an available-for-sale Loan Mortgage Corporation, and the credit exposures is included in the ‘‘Allowance for debt security that is not required to be recorded Federal National Mortgage Association. credit losses on off-balance-sheet credit exposures’’ through the ACL should be reported in other Assumptions related to zero credit loss in Schedule RC–G—Other Liabilities in the Call comprehensive income as described in ASC 326– expectations should be included in the Report and in the Liabilities schedule in NCUA Call 30–35–2. institution’s ACL documentation. Report Form 5300. 30 The accounting policy elections described in 28 Provisions for credit losses on off-balance-sheet the ‘‘Accrued Interest Receivable’’ section of this credit exposures are included as part of ‘‘Other policy statement apply to accrued interest 26 Management should not rely solely on credit noninterest expense’’ in Schedule RI—Income receivable recorded for an available-for-sale debt rating agencies but should also make its own Statement in the Call Report and in ‘‘Credit Loss security if an institution excludes applicable assessment based on third party research, default Expense—Off-Balance-Sheet Credit Exposures’’ in accrued interest receivable from both the fair value statistics, and other data that may indicate a decline the Statement of Income and Expense in NCUA Call and amortized cost basis of the security for in credit rating. Report Form 5300. purposes of identifying and measuring impairment.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55519

investment strategy, and management the basis for estimating expected credit • Policies and procedures for the information systems.31 Maintaining, losses and approaches for adjusting prompt write-off of financial assets, or analyzing, supporting, and documenting historical credit loss information to portions of financial assets, when appropriate ACLs and PCLs in reflect differences in asset specific available information confirms the accordance with GAAP is consistent characteristics, as well as current assets to be uncollectible, consistent with safe and sound banking practices. conditions and reasonable and with regulatory reporting requirements; The policies and procedures supportable forecasts that are different and governing an institution’s ACL from conditions existing in the • The systems of internal controls processes and the controls over these historical period(s); used to confirm that the ACL processes processes should be designed, • Processes for determining and are maintained and periodically implemented, and maintained to revising the appropriate techniques and adjusted in accordance with GAAP and reasonably estimate expected credit periods to revert to historical credit loss interagency guidelines establishing losses for financial assets and off- information when the contractual term standards for safety and soundness. balance-sheet credit exposures as of the of a financial asset or off-balance-sheet Internal control systems for the ACL reporting date. The policies and credit exposure extends beyond the estimation processes should: procedures should describe reasonable and supportable forecast • Provide reasonable assurance management’s processes for evaluating period(s); regarding the relevance, reliability, and • the credit quality and collectibility of Processes for segmenting financial integrity of data and other information financial asset portfolios, including assets for estimating expected credit used in estimating expected credit reasonable and supportable forecasts losses and periodically evaluating the losses; about changes in the credit quality of segments to determine whether the • Provide reasonable assurance of these portfolios, through a disciplined assets continue to share similar risk compliance with laws, regulations, and and consistently applied process that characteristics; • the institution’s policies and results in an appropriate estimate of the Data capture and reporting systems procedures; ACLs. Management should review and, that supply the quality and breadth of • Provide reasonable assurance that as needed, revise the institution’s ACL relevant and reliable information the institution’s financial statements are policies and procedures at least necessary, whether obtained internally prepared in accordance with GAAP, and annually, or more frequently if or externally, to support and document the institution’s regulatory reports are necessary. the estimates of appropriate ACLs for An institution’s policies and prepared in accordance with the regulatory reporting requirements and, applicable instructions; procedures for the systems, processes, if applicable, financial statement and • Include a well-defined and effective and controls necessary to maintain disclosure requirements; loan review and grading process that is appropriate ACLs should address, but • The description of the institution’s consistently applied and identifies, not be limited to: systematic and logical loss estimation • measures, monitors, and addresses asset Processes that support the process(es) for determining and quality problems in an accurate, sound determination and maintenance of consolidating expected credit losses to and timely manner. The loan review appropriate levels for ACLs that are ensure that the ACLs are recorded in process should respond to changes in based on a comprehensive, well- accordance with GAAP and regulatory internal and external factors affecting documented, and consistently applied reporting requirements. This may the level of credit risk in the portfolio; analysis of an institution’s financial include, but is not limited to: asset portfolios and off-balance-sheet Æ and Management’s judgments, • credit exposures. The analyses and loss accounting policy elections, and Include a well-defined and effective estimation processes used should application of practical expedients in process for monitoring credit quality in consider all significant factors that affect determining the amount of expected the debt securities portfolio. the credit risk and collectibility of the credit losses; Analyzing and Validating the Overall financial asset portfolios; Æ The process for determining when • Measurement of ACLs The roles, responsibilities, and a loan is collateral-dependent; segregation of duties of the institution’s Æ The process for determining the fair To ensure that ACLs are presented senior management and other personnel value of collateral, if any, used as an fairly, in accordance with GAAP and who provide input into ACL processes, input when estimating the ACL, regulatory reporting requirements, and determine ACLs, or review ACLs. These including the basis for making any are transparent for regulatory departments and individuals may adjustments to the market value examinations, management should include accounting, financial reporting, conclusion and how costs to sell, if document its measurements of the treasury, investment management, applicable, are calculated; amounts of ACLs reported in regulatory lending, special asset or problem loan Æ The process for determining when reports and financial statements, if workout teams, retail collections and a financial asset has zero credit loss applicable, for each type of financial foreclosure groups, credit review, model expectations; asset (e.g., loans, held-to-maturity debt risk management, internal audit, and Æ The process for determining securities, and available-for-sale debt others, as applicable. Individuals with expected credit losses when a financial securities) and for off-balance-sheet responsibilities related to the estimation asset has a collateral maintenance credit exposures. This documentation of ACLs should be competent and well- provision; and should include ACL calculations, trained, with the ability to escalate Æ A description of and support for qualitative adjustments, and any material issues; qualitative factors that affect adjustments to the ACLs that are • Processes for determining the collectibility of financial assets; required as part of the internal review appropriate historical period(s) to use as • Procedures for validating and and challenge process. The board of independently reviewing the loss directors, or a committee thereof, should 31 Management often documents policies, estimation process as well as any review management’s assessments of procedures, and controls related to ACLs in accounting or credit risk management policies, or changes to the process from prior and justifications for the reported a combination thereof. periods; amounts of ACLs.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55520 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

Various techniques are available to estimate expected credit losses, it is • Requiring management to assist management in analyzing and inappropriate for the board of directors periodically validate, and, when evaluating the ACLs. For example, or management to make further appropriate, revise loss estimation comparing estimates of expected credit adjustments to ACLs for the sole methods; losses to actual write-offs in aggregate, purpose of reporting ACLs that • Approving the internal and external and by portfolio, may enable correspond to a peer group median, a audit plans for the ACLs, as applicable; management to assess whether the target ratio, or a budgeted amount. and institution’s loss estimation process is After analyzing ACLs, management • Reviewing any identified audit sufficiently designed.32 Further, should periodically validate the loss findings and monitoring resolution of comparing the estimate of ACLs to estimation process, and any changes to those items. actual write-offs at the financial asset the process, to confirm that the process Responsibilities of Management portfolio level allows management to remains appropriate for the institution’s analyze changing portfolio size, complexity, and risk profile. The Management is responsible for characteristics, such as the volume of validation process should include maintaining ACLs at appropriate levels assets or increases in write-off rates, procedures for review by a party with and for documenting its analyses in which may affect future forecast appropriate knowledge, technical accordance with the concepts and adjustments. Techniques applied in expertise, and experience who is requirements set forth in GAAP, these instances do not have to be independent of the institution’s credit regulatory reporting requirements, and complex to be effective, but, if used, approval and ACL estimation processes. this policy statement. Management should be commensurate with the A party who is independent of these should evaluate the ACLs reported on institution’s size and complexity. processes could be from internal audit the balance sheet as of the end of each Ratio analysis may also be useful for staff, a risk management unit of the period (and for credit unions, prior to evaluating the overall reasonableness of institution independent of management paying dividends), and debit or credit ACLs. Ratio analysis assists in supervising these processes, or a the related PCLs to bring the ACLs to an identifying divergent or emerging trends contracted third-party. One party need appropriate level as of each reporting in the relationship of ACLs to other not perform the entire analysis as the date. The determination of the amounts factors such as adversely classified or validation may be divided among of the ACLs and the PCLs should be graded loans, past due and nonaccrual various independent parties.33 based on management’s current loans, total loans, historical gross write- judgments about the credit quality of the offs, net write-offs, and historic Responsibilities of the Board of institution’s financial assets and should delinquency and default trends for Directors consider known and expected relevant securities. The board of directors, or a committee internal and external factors that Comparing the institution’s ACLs to thereof, is responsible for overseeing significantly affect collectibility over those of peer institutions may provide management’s significant judgments reasonable and supportable forecast management with limited insight into and estimates used in determining periods for the institution’s financial management’s own ACL estimates. appropriate ACLs. Evidence of the board assets as well as appropriate reversion Management should apply caution of directors’ oversight activities is techniques applied to periods beyond when performing peer comparisons as subject to review by examiners. These the reasonable and supportable forecast there may be significant differences activities should include, but are not periods. Management’s evaluations are among peer institutions in the mix of limited to: subject to review by examiners. financial asset portfolios, reasonable • Retaining experienced and qualified In carrying out its responsibility for and supportable forecast period management to oversee all ACL and PCL maintaining appropriate ACLs, assumptions, reversion techniques, the activities; management should adopt and adhere data used for historical loss information, • Reviewing and approving the to written policies and procedures that and other factors. institution’s written loss estimation are appropriate to the institution’s size When used prudently, comparisons of policies, including any revisions and the nature, scope, and risk of its estimated expected losses to actual thereto, at least annually; lending and investing activities. These write-offs, ratio analysis, and peer • Reviewing management’s policies and procedures should address comparisons can be helpful as a assessment of the loan review system the processes and activities described in supplemental check on the and management’s conclusion and the ‘‘Documentation Standards’’ section reasonableness of management’s support for whether the system is sound of this policy statement. assumptions and analyses. Because and appropriate for the institution’s size Management fulfills other appropriate ACLs are institution- and complexity; responsibilities that aid in the specific estimates, the use of • Reviewing management’s maintenance of appropriate ACLs. comparisons does not eliminate the assessment of the effectiveness of These activities include, but are not need for a comprehensive analysis of processes and controls for monitoring limited to: • financial asset portfolios and the factors the credit quality of the investment Establishing and maintaining affecting their collectibility. portfolio; appropriate governance activities for the When an appropriate expected credit • Reviewing management’s loss estimation process(es). These loss framework has been used to assessments of and justifications for the activities may include reviewing and estimated amounts reported each period challenging the assumptions used in 32 Institutions using models in the loss estimation for the ACLs and the PCLs; estimating expected credit losses and process may incorporate a qualitative factor adjustment in the estimate of expected credit losses designing and executing effective to capture the variance between modeled credit loss 33 Engaging the institution’s external auditor to internal controls over the credit loss expectations and actual historical losses when the perform the validation process described in this estimation method(s); model is still considered predictive and fit for use. paragraph may impair the auditor’s independence • Periodically performing procedures Institutions should monitor this variance, as well as under applicable auditor independence standards that compare credit loss estimates to changes to the variance, to determine if the variance and prevent the auditor from performing an is significant or material enough to warrant further independent audit of the institution’s financial actual write-offs, at the portfolio level changes to the model. statements. and in aggregate, to confirm that

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55521

amounts recorded in the ACLs were Examiner Review of ACLs trends, credit risk review functions, risk sufficient to cover actual credit losses. Examiners are expected to assess the rating systems, credit administration This analysis supports that appropriate appropriateness of management’s loss practices, investment securities ACLs were recorded and provides estimation processes and the management practices, and related insight into the loss estimation process’s appropriateness of the institution’s ACL management information systems and ability to estimate expected credit balances as part of their supervisory reports; • Review the appropriateness and losses. This analysis is not intended to activities. The review of ACLs, reasonableness of the overall level of the reflect the accuracy of management’s including the depth of the examiner’s ACLs relative to the level of credit risk, economic forecasts; assessment, should be commensurate the complexity of the institution’s • Periodically validating the loss with the institution’s size, complexity, financial asset portfolios, and available estimation process(es), including and risk profile. As part of their information relevant to assessing changes, if any, to confirm it is supervisory activities, examiners collectibility, including consideration of appropriate for the institution; and generally assess the credit quality and current conditions and reasonable and • Engaging in sound risk management credit risk of an institution’s financial supportable forecasts. Examiners may of third-parties involved 34 in ACL asset portfolios, the adequacy of the include a quantitative analysis (e.g., estimation process(es), if applicable, to institution’s credit loss estimation using management’s results comparing ensure that the loss estimation processes processes, the adequacy of supporting expected write-offs to actual write-offs are commensurate with the level of risk, documentation, and the appropriateness as well as ratio analysis) to assess the the complexity of the third-party of the reported ACLs and PCLs in the appropriateness of the ACLs. This relationship and the institution’s institution’s regulatory reports and quantitative analysis may be used to organizational structure. financial statements, if applicable. determine the reasonableness of Examiners may consider the significant Additionally, if an institution uses management’s assumptions, valuations, factors that affect collectibility, and judgments and understand loss estimation models in determining including the value of collateral expected credit losses, management variances between actual and estimated securing financial assets and any other credit losses. Loss estimates that are should evaluate the models before they repayment sources. Supervisory are employed and modify the model consistently and materially over or activities may include evaluating under predicting actual losses may logic and assumptions, as needed, to management’s effectiveness in assessing help ensure that the resulting loss indicate a weakness in the loss credit risk for debt securities (both prior forecasting process; estimates are consistent with GAAP and to purchase and on an on-going basis). • regulatory reporting requirements.35 To Review the ACLs reported in the In reviewing the appropriateness of an institution’s regulatory reports and in demonstrate such consistency, institution’s ACLs, examiners may: any financial statements and other key management should document its • Evaluate the institution’s ACL financial reports to determine whether evaluations and conclusions regarding policies and procedures and assess the the reported amounts reconcile to the the appropriateness of estimating credit loss estimation method(s) used to arrive institution’s estimate of the ACLs. The losses with models. When used for at overall estimates of ACLs, including consolidated loss estimates determined multiple purposes within an institution, the documentation supporting the by the institution’s loss estimation models should be specifically adjusted reasonableness of management’s method(s) should be consistent with the and validated for use in ACL loss assumptions, valuations, and final ACLs reported in its regulatory estimation processes. Management judgments. Supporting activities may reports and financial statements, if should document and support any include, but, are not limited to: applicable; adjustments made to the models, the Æ Evaluating whether management • Verify that models used in the loss outputs of the models, and has appropriately considered historical estimation process, if any, are subject to compensating controls applied in loss information, current conditions, initial and ongoing validation activities. determining the estimated expected and reasonable and supportable Validation activities include evaluating credit losses. forecasts, including significant and concluding on the conceptual qualitative factors that affect the soundness of the model, including 34 Guidance on third party service providers may collectibility of the financial asset developmental evidence, performing be found in SR Letter 13–19/Consumer Affairs portfolios; ongoing monitoring activities, including Letter 13–21, Guidance on Managing Outsourcing Æ Risk (FRB); Financial Institution Letter (FIL) 44– Assessing loss estimation process verification and benchmarking, 2008, Guidance for Managing Third Party Risk techniques, including loss estimation and analyzing model output.36 (FDIC); Supervisory Letter No. 07–01, Evaluating models, if applicable, as well as the Examiners may review model validation Third Party Relationships (NCUA); and OCC incorporation of qualitative adjustments Bulletin 2013–29, Third Party Relationships: Risk findings, management’s response to Management Guidance, OCC Bulletin 2017–7, to determine whether the resulting those findings, and applicable action Third Party Relationships: Supplemental estimates of expected credit losses are in plans to remediate any concerns, if Examination Procedures, and OCC Bulletin 2017– conformity with GAAP and regulatory applicable. Examiners may also assess 21, Third Party Relationships: Frequently Asked reporting requirements; and the adequacy of the institution’s Questions to Supplement OCC Bulletin 2013–29. Æ 35 See the interagency statement titled, Evaluating the adequacy of the processes to implement changes in a Supervisory Guidance on Model Risk Management, documentation and the effectiveness of timely manner; and published by the Board in SR Letter 11–7 and OCC the controls used to support the • Review the effectiveness of the Bulletin 2011–12 on April 4, 2011. The statement measurement of the ACLs; institution’s third-party risk also addresses the incorporation of vendor products • into an institution’s model risk management Assess the effectiveness of board management framework associated with framework following the same principles relevant oversight as well as management’s the estimation of ACLs, if applicable, to to in-house models. The FDIC adopted the effectiveness in identifying, measuring, assess whether the processes are interagency statement on June 7, 2017. Institutions monitoring, and controlling credit risk. commensurate with the level of risk, the supervised by the FDIC should refer to FIL 22–2017, Adoption of Supervisory Guidance on Model Risk This may include, but is not limited to, complexity and nature of the Management, including the statement of a review of underwriting standards and applicability in the FIL. practices, portfolio composition and 36 See footnote 35.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55522 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

relationship, and the institution’s including the materiality of any errors ADDRESSES: Comments may be organizational structure. Examiners may in the reported amounts of ACLs. submitted electronically to determine whether management Dated: October 1, 2019. www.fs.usda.gov/project/ monitors material risks and deficiencies Joseph M. Otting, ?project=54511. Written comments can in third-party relationships, and takes be sent hard copy to: Alaska Roadless Comptroller of the Currency. appropriate action as needed.37 Rule, USDA Forest Service, P.O. Box When assessing the appropriateness By order of the Board of Governors of the 21628, Juneau, Alaska 99802–1628. All Federal Reserve System, October 9, 2019. of ACLs, examiners should recognize comments, including names and that the processes, loss estimation Ann E. Misback, addresses, are placed in the record and methods, and underlying assumptions Secretary of the Board. are available for public inspection and an institution uses to calculate ACLs Federal Deposit Insurance Corporation. copying. The public may inspect require the exercise of a substantial By order of the Board of Directors. comments received at www.fs.usda.gov/ degree of management judgment. Even Dated at Washington, DC, on August 20, project/?project=54511. when an institution maintains sound 2019. FOR FURTHER INFORMATION CONTACT: Ken procedures, controls, and monitoring Valerie J. Best, Tu, Interdisciplinary Team Leader, at activities, an estimate of expected credit Assistant Executive Secretary. 202–403–8991 or akroadlessrule@ losses is not a single precise amount and By the National Credit Union usda.gov. Individuals using may result in a range of acceptable Administration Board on September 3, 2019. telecommunication devices for the deaf outcomes for these estimates. This is a Gerard Poliquin, (TDD) may call the Federal Information result of the flexibility FASB ASC Topic Secretary of the Board. Relay Services at 1–800–877–8339 326 provides institutions in selecting between 8 a.m. and 8 p.m. Eastern Time, loss estimation methods and the wide [FR Doc. 2019–22655 Filed 10–16–19; 8:45 am] Monday through Friday. range of qualitative and forecasting BILLING CODE 4810–33–P; 7590–01 P; 6741–01–P; 6210–01–P factors that are considered. SUPPLEMENTARY INFORMATION: Management’s ability to estimate Background expected credit losses should improve The USDA Forest Service (hereafter over the contractual term of financial DEPARTMENT OF AGRICULTURE assets as substantive information Forest Service) manages National Forest accumulates regarding the factors Forest Service System (NFS) lands to maintain and affecting repayment prospects. enhance the quality of the environment Examiners generally should accept an 36 CFR Part 294 to meet the Nation’s current and future institution’s ACL estimates and not seek needs. Forest Service land management adjustments to the ACLs, when RIN 0596–AD37 supports recreation, water, timber, fish, management has provided adequate wildlife, wilderness, aesthetic values support for the loss estimation process Special Areas; Roadless Area and a variety of resource development employed, and the ACL balances and Conservation; National Forest System activities for current and future the assumptions used in the ACL Lands in Alaska generations. As a leader in natural resource conservation, the Forest estimates are in accordance with GAAP AGENCY: Forest Service, USDA. and regulatory reporting requirements. Service provides direction for the It is inappropriate for examiners to seek ACTION: Notice of proposed rulemaking; management and use of the Nation’s adjustments to ACLs for the sole request for comment. forests, rangeland, and aquatic ecosystems under its jurisdiction. purpose of achieving ACL levels that SUMMARY: The United States Department correspond to a peer group median, a On January 12, 2001, the USDA of Agriculture (USDA) is proposing to promulgated the Roadless Area target ratio, or a benchmark amount exempt the Tongass National Forest when management has used an Conservation Rule (hereafter 2001 from the 2001 Roadless Area Roadless Rule) (66 FR 3244), appropriate expected credit loss Conservation Rule, which prohibits tree framework to estimate expected credit establishing nationwide prohibitions on harvest and road construction/ timber harvest, road construction, and losses. reconstruction within inventoried If the examiner concludes that an road reconstruction within inventoried roadless areas with certain limited institution’s reported ACLs are not roadless areas with certain limited exceptions. In addition, the proposed appropriate or determines that its ACL exceptions. The intent of the 2001 rule would provide an administrative evaluation processes or loss estimation Roadless Rule is to provide lasting procedure for correcting and modifying method(s) are otherwise deficient, these protection for inventoried roadless areas inventoried roadless area boundaries on concerns should be noted in the report within the National Forest System in the the Chugach National Forest. The USDA of examination and communicated to context of multiple-use land the board of directors and senior invites written comments on the management. Based on the State of management.38 Additional supervisory proposed rule and the draft Alaska’s Roadless Rule Petition action may be taken based on the environmental impact statement (DEIS). (described below) and a review of magnitude of the shortcomings in ACLs, The proposed rule would not directly public comment, USDA analyzed authorize any ground-disturbing rulemaking alternatives addressing activities. Substantive comments 37 See footnote 34. whether and how the national 38 Each agency has formal and informal received during the comment period prohibitions on timber harvesting, road communication channels for sharing supervisory will be considered in developing the construction, and road reconstruction information with the board of directors and final rule and final environmental should apply on the Tongass National management depending on agency practices and the impact statement (FEIS). The final rule nature of the information being shared. These Forest. channels may include, but are not limited to, will be published in the Federal In 2001, the State of Alaska filed a institution specific supervisory letters, letters to the Register. industry, transmittal letters, visitation findings complaint challenging the USDA’s summary letters, targeted review conclusion letters, DATES: Comments must be received in promulgation of the 2001 Roadless Rule or official examination or inspection reports. writing by December 16, 2019. and its application in Alaska. State of

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55523

Alaska v. USDA, A01–039 CV (JKS) (D. On September 6, 2018, Governor Rationale for the Proposed Rule Alaska). The USDA and the State of Walker issued Administrative Order 299 The Secretary of Agriculture has Alaska reached a settlement in 2003, to establish the Alaska Roadless Rule broad authority to protect and and the USDA subsequently issued a Citizen Advisory Committee (the administer the National Forest System rule temporarily exempting the Tongass Committee) to provide an opportunity through regulation as provided by the National Forest from the 2001 Roadless for Southeast Alaskans to advise the Organic Administration Act of 1897 (the Rule. In 2011, a federal court set aside State of Alaska on the future Organic Act), the Multiple-Use the Tongass Exemption and reinstated, management of roadless areas in the Sustained Yield Act of 1960 (MUSYA), with clarifying instructions, the 2001 Tongass National Forest. The and the National Forest Management Roadless Rule on the Tongass National Committee’s report identifies that it was Act of 1976 (NFMA). These statutes Forest. The district court’s ruling was comprised of 13 members, appointed by provide the Secretary with discretion to initially reversed by a three-judge panel Governor Walker, intended to represent determine the proper uses within any of the Ninth Circuit, but was ultimately a diversity of perspectives, including area, including the appropriate resource upheld in a 6–5 en banc ruling in 2015. Alaska Native Corporations and tribes, emphasis and mix of uses. For decades, Consequently, the 2001 Roadless Rule fishing, timber, conservation, tourism, USDA has worked with States, Tribes, (as provided for in the district court’s utilities, mining, transportation, local local communities and collaborative Judgment) remains in effect in Alaska government, and the Alaska Division of groups toward land management and the Forest Service continues to Forestry. The Committee’s specific task solutions for roadless areas. Sometimes apply the 2001 Roadless Rule to both was to present a written report on the solutions have been found nationally. the Tongass and Chugach National rulemaking process to the Governor and Sometimes a state-by-state approach has Forests. State Forester, which included options Currently there are over 21.9 million been the best option. Often, the for a state-specific roadless rule. The solutions are found forest by forest, or acres of national forest in the State of Committee met for three in-person Alaska, of which approximately 14.7 even area by area. USDA remains meetings during the fall of 2018 committed to working closely with million acres (67%) are considered (October 2–3 in Juneau; October 24–26 inventoried roadless areas as defined by States, Tribes, and others toward shared in Ketchikan; and November 6–8 in stewardship of National Forest System the 2001 Roadless Rule, including both Sitka). Meetings were open to the public the Tongass and Chugach National lands and resources. and each meeting included an In selecting the proposed rule among Forests. The Tongass National Forest, in opportunity for public comment. The particular, is approximately 16.7 million the several alternatives considered, the Committee’s Report was submitted to Department has given substantial weight acres of which approximately 9.2 the Governor and State Forester in late million (55%) acres are designated to the State’s policy preferences as November 2018 and recommendations expressed in the incoming Petition. The inventoried roadless areas. This from the Committee informed the State rulemaking focuses on the Tongass State’s preference to emphasize rural of Alaska input, as a cooperating economic development opportunities is National Forest roadless areas, along agency, to the Forest Service in the with a boundary modification and consistent with the findings of the development of the alternatives. The Interagency Task Force on Agriculture correction provision that would apply to final Committee report can be found at: the Chugach National Forest. and Rural Prosperity established by http://bit.ly/akroadlessreport. Executive Order 13790 (issued Apr. 25, State of Alaska Petition Proposed Alaska Roadless Rule 2017). See Report to the President of the In January 2018, Governor Bill Walker United States from the Task Force on submitted a petition on behalf of the The proposed rule exempts the Agriculture and Rural Prosperity (Oct. State of Alaska to Secretary of Tongass National Forest from the 2001 21, 2017), https://www.usda.gov/sites/ Agriculture Sonny Perdue pursuant to Roadless Rule, is responsive to the State default/files/documents/rural- the Administrative Procedure Act. The of Alaska’s petition, and is based on prosperity-report.pdf. USDA recognizes petition requested the USDA consider Alternative 6 of the DEIS. Removing the that ensuring rural Americans can creation of a state-specific rule to regulatory designation of roadless areas achieve a high quality of life is one of exempt the Tongass National Forest on the Tongass National Forest would the foundations of prosperity. See id. at from the 2001 Roadless Rule. In June not authorize any ground disturbing 2, 21–25; see also id. at 26–29, 35–42 2018, the Secretary of Agriculture activities. Instead, the proposed rule (calls to action for supporting a rural agreed to address the State’s concerns would return decision-making authority workforce and developing the rural on roadless area management and to the Forest Service, allowing decisions economy). The State’s views on how to economic development opportunities in concerning timber harvest, road balance economic development and Southeast Alaska through a rulemaking construction, and roadless area environmental protection offer valuable process. The Secretary directed the management on the Tongass National insight when making management Forest Service to begin working with Forest to be made by local officials on decisions concerning NFS lands within representatives from the State of Alaska a case-by-case basis. Alaska. concerning a state-specific roadless rule. The 2001 Roadless Rule would The USDA is acutely aware of the On August 2, 2018, the State of Alaska remain applicable to the Chugach heightened sense of expectation and the USDA Forest Service signed a National Forest. However new concerning adjustments to memorandum of understanding administrative provisions for correcting administration and management of concerning the development of the and modifying inventoried roadless area roadless areas on the Tongass National state-specific rule. The Forest Service boundaries would be applied to the Forest. See Organized Village of Kake v. initiated its environmental analysis Chugach National Forest to allow for State of Alaska, 795 F.3d 956 (9th Cir process with the publication in the limited adjustments to remedy clerical 2015) (en banc). USDA’s consideration Federal Register of a notice of intent to errors, improvements in mapping of whether or how to apply the original prepare an environmental impact technology, conformance to statutory 2001 Roadless Rule on the Tongass statement on August 30, 2018 (83 FR changes, or incorporation of changes National Forest itself substantially 44252). due to land adjustments. evolved during the 2001 rulemaking,

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55524 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

culminating in the identification of four interests, environmental tradeoffs-), the National Defense Authorization Act for different policy preferences as described Department believes that the national Fiscal Year 2015 (Pub. L. 113–291, 128 in the 2001 final rule, including the rule’s one-size-fits-all approach to Stat. 3729, Section 3720(f)) designated alternative proposed here. See generally roadless area management is not the approximately 856,000 acres as Land 66 FR 3244, 3262–63 (Jan. 12, 2001) best approach for roadless area Use Designation (LUD) II areas, which (final 2001 Roadless Rule); see id. at management on the Tongass National are managed in a roadless state to retain 3263 (‘‘The Tongass Exempt alternative Forest. Instead, the circumstances of the their wildland character. did not apply a national prohibition to Tongass National Forest appear to be Aside from the flexibility that would the Tongass National Forest. It allowed best managed through the local be attained for timber harvest activities, road construction and reconstruction on planning processes, as is generally true the proposed exemption would allow the Tongass to continue subject to for forest management pursuant to the forest plan direction to guide other existing land management plan Organic Act, MUSYA, and NFMA. The access needs that support isolated rural prescriptions. Future proposals for road Forest Service’s 40 years of experience communities in the unique island activities in inventoried roadless areas with the forest planning system under archipelago environment of the Tongass would be considered on a case-by-case NFMA, which includes forest plans National Forest. Specifically, the basis.’’); see id. at 3266 (giving one- subject to periodic review and proposed rule would promote clarity sentence explanation for rejection of adjustment, routinely demonstrates that and remove doubt concerning standards Tongass Exempt alternative); id. at system’s capacity to provide durable for the construction of roads that may be 3254–55 (lengthier discussion). and widely accepted solutions needed for access to municipal water Similarly, the 2003 Tongass Exemption providing for balanced multiple use and and wastewater utility systems, Alaska rulemaking reflected not so much a sustained yield of the many goods and Native cultural sites, micro and small change of underlying facts or services provided by the National Forest timber sales, aquaculture facilities, and circumstance but instead reflected a System. administrative access to designated different policy perspective on the The analysis set out in the DEIS experimental forests. roadless policy question. These sorts of indicates that removal of regulatory The proposed rule is a deregulatory normative policy preferences and roadless designations and prohibitions action, consistent with the goals of judgments are inherent in the on the Tongass National Forest would Executive Order 13771, Reducing Department’s authority to manage not cause a substantial loss of roadless Regulation and Controlling Regulatory National Forest System lands and protection. The proposed rule would Costs. The proposed rule would create resources. effectively bring only 185,000 acres an incremental reduction in the cost of USDA has listened carefully to the (∼2%) out of 9.2 million designated as conducting compliance reviews of many divergent views and interests inventoried roadless areas on the permissible projects proposed in concerning the appropriate policy Tongass National Forest into the set of designated inventoried roadless areas on approach for these roadless areas, and, lands that may be considered for timber the Tongass National Forest, thus as is further explained below and in the harvest. When examined in 2016, the reducing expenditure of taxpayer DEIS, USDA has considered the factual Forest Service projected that only dollars. Though usually prompt, and normative considerations at issue in 17,000 acres of old-growth and 11,800 internal compliance reviews can take past rulemakings concerning this acres of young-growth might be months to complete. Although a few matter, including the original 2001 harvested over the next 100 years. That months may not represent a substantial Roadless Rule rulemaking, see, e.g., 66 modest addition of suitable timber lands burden, it could impact businesses FR at 3254–55, as well as more recent would allow local managers greater through additional costs, thus reducing factual and legal developments. There is flexibility in the selection and design of the attractiveness to investors. broad agreement that the circumstances future timber sale areas. This improved The overarching goal of the proposed of the Tongass National Forest are flexibility could, in turn, improve the rule is to reach a long-term, durable unique in a number of respects. The Forest Service’s ability to offer approach to roadless area management Tongass differs from other national economic timber sales that better meet that accommodates the unique forests with respect to size, percentage the needs of the timber industry and biological, social, and economic of roadless areas, amount of NFS lands contribute to rural economies. Despite situation found in and around the and dependency of 32 communities on the proposed regulatory exemption, the Tongass National Forest. The proposed federal lands, among other Alaska- and remaining 9 million acres would not be rule provides local forest managers an Tongass-specific statutory scheduled or expected to be subject to avenue for a long-term durable approach considerations (e.g., the Alaska National timber harvest activities. Of course, any for managing the Tongass National Interest Lands Conservation Act and the proposed timber harvest or road Forest, unencumbered by the 2001 Tongass Timber Reform Act). There is construction would be individually Roadless Rule, through the local forest not consensus over how to manage the reviewed and environmental impacts planning process. The existing Forest Forest given those unique features. The minimized through the protective Plan and other conservation measures key factual issues (further discussed measures set out in the Tongass Forest would continue to provide protections below and in the DEIS) are generally Plan and other conservation that allow roadless area values to well understood by a wide range of requirements. prevail on the Tongass National Forest. stakeholders; but ultimately these Notably, approximately 3.6 million 2016 Tongass National Forest Land and stakeholders’ good faith disagreements acres in key watersheds (defined in the over preferred outcomes are rooted in 2016 Forest Plan as Tongass 77 Resource Management Plan value judgments and normative Watersheds and The Nature The 2001 Roadless Rule was largely preferences. Conservancy/Audubon Conservation not operational on the Tongass until In part because of such sharply Areas) are managed for no old-growth 2011, leading to the creation of so called divided policy priorities (for example, timber harvest, thus minimizing adverse ‘‘roaded roadless’’ areas, which are areas differing value judgments and impacts to fisheries. In addition, the designated as inventoried roadless areas normative preferences concerning rural Tongass Timber Reform Act (Pub. L. by the 2001 Roadless Rule that have prosperity, competing economic 101–626, Title II, Section 201) and the been subsequently harvested and/or

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55525

roaded. The Tongass Land and Resource renewable forest resources, and other suitability would occur for other Management Plan (Forest Plan) was requirements. While projected harvest alternatives that alter the underlying amended in 2008 and again in 2016. levels are not expected to be materially assumptions of the 2016 plan’s Both amendments, particularly the 2016 different under any of the alternatives identification of suitable lands. Any amendment, substantially accelerated under consideration, the various such lands would be appropriately the Forest Service’s movement toward a alternatives considered in the DEIS for returned to the suitable timber base via timber harvest program that would the roadless rule can influence the the administrative change provision of focus on second growth harvests. While potential location or likelihood of future the planning regulations. All other estimating long-term market demand for timber harvesting. In other words, the aspects of the Tongass Forest Plan Tongass timber is inherently uncertain alternatives examine different mixes of would remain operational under the and there are differences in opinion land areas and timber restrictions that proposed rule including the goals, regarding long-term forecasts of market would incrementally increase objectives, management prescriptions, demand, the Record of Decision for the management flexibility for how the standards, guidelines, projected timber 2016 Tongass Forest Plan concluded forest plan’s timber harvest goals can be sale quantity, projected wood sale that 46 million board feet (MMBF) of achieved, but does not fundamentally quantity, and young-growth transition timber a year was reasonable, alter the plan’s underlying goals or strategy. This includes standards and conservative, and based on the best projected outcomes. guidelines for non-timber resources (for available information. Subsequent Relationship of the Proposed Rule to the example, riparian management review of the analysis completed for the Forest Plan standards and guidelines, which Forest Plan indicates that there is no provide protection for fisheries with data supporting the conclusion that The National Forest Management Act subsistence and commercial circumstances have changed or are of 1976 (NFMA) requires the Forest importance). All timber harvest, likely to change with regard to the Service to develop, maintain and, as including any timber harvesting in areas market demand for Tongass timber in appropriate, revise land and resource formerly designated as inventoried the near- or long-term future due to management plans (forest plans) for roadless areas, would be compelled to overall limited competitiveness of units of the National Forest System. adhere to these resource standards and Tongass timber in domestic and export Forest plans provide a framework for guidelines (fisheries, water quality, air, markets. Therefore, the DEIS for the integrated resource management and for recreation, etc.), thus providing proposed Alaska Roadless Rule assumes guiding project and activity decision continuation of 2016 Forest Plan making, but plans do not authorize that the harvest levels projected in the protections under all the regulatory projects or activities or commit the Tongass Forest Plan will remain the alternatives. same, and that the changes to roadless Forest Service to take action. A revised Although the Forest Service has broad area management in any Alaska Tongass Forest Plan was issued in 1997, discretion during forest plan revision to Roadless Rule will provide more and amended in 2008 and 2016. Forest modify management direction, any flexibility for those timber harvest planning is a distinct and separate change would need to be consistent opportunities. process from USDA’s various roadless The 2016 Forest Plan (https:// rulemakings. See Kootenai Tribe of with applicable law, regulation, and www.fs.usda.gov/internet/FSE_ Idaho v. Veneman, 313 F.2d 1094 (9th policies, including any final Alaska DOCUMENTS/fseprd527907.pdf) was Cir. 2002); and State of Wyoming v. Roadless Rule. Similarly, the Tongass the product of an extensive, USDA, 661 F.3d 1209 (10th Cir. 2011). Timber Reform Act directs the Forest collaborative effort with members of the All forest plans must conform to Service to seek to provide a supply of public and the Tongass Advisory existing laws and regulations as well as timber from the Tongass National Forest Committee—a committee organized new laws and regulations. See 36 CFR that meets annual market demand and under the Federal Advisory Committee 219.1(f) and 219.13(c). All of USDA’s the market demand for each planning Act. The proposed Alaska Roadless Rule previous roadless rules, national and cycle to the extent consistent with would not alter the Forest Plan’s state-specific, have directed that: (1) No providing for the multiple-use and management area designations, harvest amendment or revision of any forest sustained-yield of all renewable levels, substantive requirements (goals, plan was compelled by promulgation of resources and other applicable objectives, standards, and guidelines), such rules, (2) subsequent forest requirements, including the NFMA. The or the young-growth transition strategy, planning decisions could not revise the current Forest Plan anticipates sufficient except for the administrative changes Secretary’s regulatory instructions, and timber availability to meet projected noted below concerning suitable lands (3) line officers were to conform project demand as described in the 2016 determinations specifically issued to decisions to the prohibitions and Tongass Forest Plan Amendment Final implement the 2001 Roadless Rule. exceptions set forth in the applicable EIS and Record of Decision. In addition, Possible impacts from this rulemaking rules. The proposed rule would the 2016 Tongass Forest Plan provides are discussed in the Regulatory Impact continue this approach with one minor guidance to conduct annual monitoring Assessment and DEIS in terms of the exception. and review of current timber demand. baseline conditions described in the The proposed rule would direct the Similarly, the Tongass Timber Reform 2016 Forest Plan. Tongass Forest Supervisor to provide Act provides for protection of riparian The proposed rule does not change notice of an administrative change (36 habitats and the multiple use and the projected timber sale quantity or CFR 219.13(c)) concerning lands that sustained yield of all renewable surface timber demand projections set out in the were deemed unsuitable in the 2016 resources. Watershed protection Tongass Forest Plan. The Tongass Tongass Forest Plan (See Tongass Forest measures, such as riparian buffers and National Forest, in compliance with the Plan, Appendix A: Identification of application of watershed conservation Tongass Timber Reform Act (1990), Lands Suitable for Timber Production measures, will be provided for during seeks to provide an annual supply of and Limitations on Timber Harvest) future plan revisions or amendments in timber to meet market demand to the solely due to the application of the 2001 conformance with all applicable laws, extent consistent with providing for Roadless Rule. Similarly, an including the Clean Water Act, multiple use and sustained yield of all administrative change addressing timber Magnuson–Stevens Fishery

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55526 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

Conservation and Management Act, and Forest Plan as the Tongass 77 the 2016 Tongass Forest Plan as Scenic Alaska’s Department of Environmental Watersheds and The Nature Viewsheds, T77 Watersheds, and The Conservation Water Quality Standards. Conservancy/Audubon Conservation Nature Conservancy/Audubon Priority Areas (T77 and TNC/Audubon Alternatives Considered in Detail Conservation Priority Areas. Additional Conservation Areas). Approximately timber opportunities are provided by In addition to Alternative 6, the 90% of those 3.2 million acres fall removing approximately 376,000 acres proposed rule and preferred alternative, within roadless area boundaries of roaded roadless areas and adjacent the DEIS analyzes five other alternatives identified in Alternative 3. To provide extensions, as described in Alternative for managing roadless areas on the heightened balance and integrity of 3, from roadless classification. In Tongass National Forest. Alternative 1 is watershed protections and establish addition, timber opportunities are the no action alternative and would management continuity across these provided by managing approximately result in the continued implementation high priority watersheds, Alternative 3 749,000 acres of Timber Development of the 2001 Roadless Rule as prescribed would also include a prohibition on old- and Modified Landscape Land Use in the Alaska District Court’s growth timber harvesting on the portion Designations, as defined in the 2016 Judgement. Alternative 2 increases the of the T77 and TNC/Audubon Tongass Forest Plan, in a roadless geographic scope of roadless area Conservation Areas that extend beyond management category called Timber designation by adding an additional roadless areas boundaries established by Priority, which allows for timber 133,000 acres as Alaska Roadless Areas Alternative 3. harvest, road construction, and road while removing areas where roadless In addition to the roaded roadless and reconstruction. characteristics have already been adjacent areas being removed from the substantially altered, (commonly roadless classification system, Alternative 4 adds approximately referred to as ‘‘roaded roadless’’) approximately 828,000 acres designated 32,000 acres not included in the 2001 primarily by road development and/or as LUD II areas would be removed from roadless inventory which are designated timber harvest. the roadless classification system in as LUD II areas. These areas in addition Alternative 3 would increase the Alternative 3. LUD II areas are statutory to the LUD II areas included in the 2001 available land base from which timber land use designations managed in a roadless inventory amount to about harvest opportunities could occur by roadless state to retain their wildland 856,000 total acres that would be making timber harvest, road character as defined in the Tongass managed as roadless with regulatory construction, and road reconstruction Timber Reform Act (Pub. L. 101–626, direction mirroring the statutory permissible in areas where roadless Title II, Section 201) and the National direction. characteristics have already been Defense Authorization Act for Fiscal The remaining 7,252,000 acres of substantially altered and areas Year 2015 (Pub. L. 113–291, 128 Stat. Alaska Roadless Areas in Alternative 4 immediately adjacent to existing roads 3729, Section 3720(f)). These areas are would be managed as a roadless and past harvest areas. Adjacent areas proposed for removal from regulatory management category called Roadless are considered to be the logical roadless classification because having Priority, which is similar to the 2001 extensions of the existing road and/or two layers of protection (statutory and Roadless Rule, but less restrictive and harvest systems, which would remove regulatory direction) that are addresses Alaska-specific concerns for approximately 376,000 acres from the substantially similar but slightly infrastructure development to connect roadless classification system. The different does not make a meaningful and support local communities and adjacent areas represent the most likely difference to the level of protection access to renewable energy and leasable locations where future timber harvest provided and can create confusion for minerals. could occur and have the least land managers, stakeholder groups, and Alternative 5 maximizes the land base environmental impacts to overall the public. Removal of the LUD II areas from which timber harvest roadless characteristics while providing from regulatory roadless classification is opportunities could occur by removing for additional timber opportunities. an attempt to eliminate that confusion 2.3 million acres from roadless area Alternative 3 also establishes a while remaining consistent with the designation. Taken together, the six Community Priority category which congressionally established alternatives represent the spectrum of allows for small-scale timber harvest management regime established for the management regimes identified to the and associated road construction and LUD II areas. The statutory direction for Forest Service through public reconstruction. In addition, it allows for LUD II areas would remain in place comments, public meetings, and infrastructure development to connect regardless of which alternative is and support local communities, selected. cooperating agency input. recreation opportunities, and traditional Alternative 4 provides additional The table below displays the acreage Alaska Native cultural uses. Alternative lands from which timber harvest changes from the 2001 Roadless Rule to 3 also includes the Watershed Priority opportunities could occur while acreages that would be designated under category, applied to approximately 3.2 maintaining protections for areas each of the six alternatives displayed in million acres identified in the 2016 designated as roadless and defined in the DEIS.

Alternatives 6 1 2 3 4 5 Proposed rule

Total Roadless Acres ...... 9,200,000 9,220,000 8,103,000 8,857,000 6,905,000 0 Roadless Acres Removed ...... 0 113,000 1,202,000 375,000 2,298,000 9,200,000 Roadless Acres Added ...... 0 133,000 105,000 32,000 3,000 0 Net Acre Change ...... 0 20,000 ¥1,098,000 ¥343,000 ¥2,295,000 ¥9,200,000

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55527

Public Participation Roadless Rule will provide additional not directly subject small entities to The August 30, 2018, publication of opportunities for timber harvest and regulatory requirements. Therefore, the notice of intent initiated a 45-day road construction to occur; however, it notification to the Small Business public comment period. The Forest does not materially affect the quantity of Administration’s Chief Council for Service received about 144,000 timber expected to be harvested or the Advocacy is not required pursuant to responses (approximately 32,500 form miles of new roads constructed. As to Executive Order 13272. A number of letters, 110,000 petition signatures, and timber harvest activities, the proposed small and large entities may experience 1,400 unique letters). During the rule would increase the flexibility for time or money savings as a result of comment period, the Forest Service held land managers to locate and design flexibility provided by the proposed 17 public meetings throughout timber sales. Improved flexibility could, rule, or otherwise benefit from activities Southeast Alaska, Anchorage, and in turn, improve the Forest Service’s on National Forest System lands under Washington, DC. Public comments ability to offer economic sales that the proposed rule. The agency is received during the comment period meets timber industry needs and interested in receiving specific input and information from the public contribute to rural economies. While regarding the anticipated effects of the meetings helped inform the many factors can influence the cost of proposed rule to small businesses. timber harvest, areas along existing development of the alternatives to the Paperwork Reduction Act proposed rule. In addition, the State of roads or those using marine access Alaska and six federally-recognized facilities are typically more This proposed rule does not require tribes agreed to participate as economically efficient, followed by any additional record keeping, reporting cooperating agencies (Angoon areas where existing roads can be easily requirement, or other information Community Association, Central extended. The most expensive collection requirements as defined in 5 Council of Tlingit and Haida Indian harvesting costs are associated with CFR part 1320 that are not already Tribes of Alaska, Hoonah Indian areas without existing road or marine approved for use and, therefore, Association, Hydaburg Cooperative access facilities. Estimated harvest cost imposes no additional paperwork on the Association, Organized Village of Kake, savings (felling, yarding, loading, etc.) public. Accordingly, the review and Organized Village of Kasaan) and range from $1 to $2 million dollars per provisions of the Paperwork Reduction provided input on the DEIS, which year depending on the level of harvest Act of 1995 (44 U.S.C. 3501 et seq.) and informed the development of the (24 MMBF or one standard deviation its implementing regulations at 5 CFR alternatives. less than the average annual harvest on part 1320 do not apply. the Tongass National Forest over the last The Forest Service invites comments Regulatory Risk Assessment on all aspects of this rulemaking, 16 years or the harvest ceiling under the including the alternatives analyzed in 2016 Forest Plan of 46 MMBF). A risk assessment is only required the DEIS, the expected economic costs Cost savings from improved flexibility under 7 U.S.C. 2204e for a ‘‘major’’ and benefits, and any additional costs for timber harvest activities would proposed rule, the primary purpose of and benefits. Comments received during accrue alongside other benefits, which is to regulate issues of human the 60-day comment period on the including reduced costs for leasable health, human safety, or the proposed rule and DEIS will be mineral availability, renewable energy environment. The statute (Pub. L. 103– considered in development of a final development potential, and potential for 354, Title III, Section 304) defines development of state roads and other rule and supporting analyses. Public ‘‘major’’ as any regulation the Secretary transportation projects. Cost savings are meetings are planned to be held during of Agriculture estimates is likely to have anticipated to outweigh estimated lost the 60-day comment period and an impact on the economy of the United revenue to outfitters and guides, by a tentative public meeting locations States of $100 million or more as factor of 10 ($77,000 travel and guided include Anchorage, Angoon, Craig, measured in 1994 dollars. Economic related expenses), and across all Gustavus, Hoonah, Hydaburg, Juneau, effects of the proposed rule are industries in Southeast Alaska by a Kake, Kasaan, Ketchikan, Petersburg, estimated to be less than $100 million factor of 3 ($319,000 in total Point Baker, Sitka, Tenakee Springs, per year. expenditures across all recreation Thorne Bay, Wrangell, Yakutat, and industries in Southeast Alaska Reducing Regulation and Controlling Washington, DC. Additional including outfitters and guides) from Regulatory Costs information on meeting times and visitors potentially displaced from Executive Order 13771, Reducing specific locations will be provided annual harvest of suitable young- and Regulation and Controlling Regulatory through the project website old-growth. Expenses incurred by Costs, issued January 30, 2017, requires (www.fs.usda.gov/project/ visitors are not necessarily lost but significant new regulations shall, to the ?project=54511) and local media. subject to displacement related changes. extent permitted by law, be offset by the Regulatory Certifications While some businesses may lose elimination of existing costs associated revenue if visitors choose not to travel with at least two prior regulations. Regulatory Planning and Review to Southeast Alaska, others may see The proposed rule has been reviewed The Office of Management and Budget increases in revenue if visitors choose to in accordance with Executive Order (OMB) determined this rulemaking to be stay longer or travel to substitute sites 13771 on reducing regulation and a significant regulatory action as it may within Southeast Alaska. controlling regulatory costs and is raise novel legal or policy issues arising considered an Executive Order 13771 Regulatory Flexibility Act and out of legal mandates, the President’s deregulatory action. priorities, or the principles set forth in Consideration of Small Entities Executive Order 12866. The agency has The USDA certifies that the proposed Federalism prepared a regulatory requirements rule, if promulgated, will not have a The USDA has considered the analysis of impacts and discussion of significant economic impact on a proposed rule in context of Executive benefits and costs of the proposed rule. substantial number of small entities as Order 13132, Federalism, issued August The proposed rule exempting the determined in the Regulatory Flexibility 4, 1999. The USDA has determined that Tongass National Forest from the 2001 Analysis because the proposed rule does the proposed rule conforms with

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55528 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

Federalism principles set out in between the Federal Government and private sector. The proposed rule does Executive Order 13132; would not Indian tribes or on the distribution of not compel the expenditure of $100 impose any compliance costs on any power and responsibilities between the million or more by any State, local, or State; and would not have substantial Federal Government and Indian tribes. Tribal government, or anyone in the direct effects on States, on the The USDA’s Office of Tribal Relations private sector. Therefore, a statement relationship between the national has assessed the impact of this rule on under section 202 of the Act is not government and the State of Alaska or Indian tribes and determined that this required. any other State, nor on the distribution rule has tribal implications that require of power and responsibilities among the continued outreach efforts to determine Energy Effects various levels of government. Therefore, if tribal consultation under Executive The USDA has considered the the USDA concludes that this proposed Order 13175 is required. To date, as part proposed rule in context of Executive rule does not have Federalism of their regulatory review process noted Order 13211, Actions Concerning implications. The proposed rule is above, Forest Service detailed in their Regulations That Significantly Affect based on a petition submitted by the proposed rule various outreach efforts to Energy Supply, Distribution, or Use, State of Alaska under the American Indian and Alaska Native issued May 18, 2001. The USDA has Administrative Procedure Act (5 U.S.C. tribes, villages, and corporations determined the proposed rule does not 553(e)) and pursuant to Department of regarding the development of this constitute a significant energy action as Agriculture regulations at 7 CFR 1.28. proposed rule, and the ongoing tribal defined in Executive Order 13211. The proposed rule responds to the cooperation in this process. Therefore, a statement of energy effects State’s petition, considers public If a tribe requests consultation, Forest is not required. comment received during the Forest Service will work with the Office of E-Government Act Service’s public scoping process, and Tribal Relations to ensure meaningful considers input received from consultation is provided where changes, The USDA is committed to complying cooperating agencies. The State of additions, and modifications identified with the E-Government Act, to promote Alaska is a cooperating agency pursuant herein are not expressly mandated by the use of the internet and other to 40 CFR 1501.6 of the Council on Congress. information technologies to provide Environmental Quality regulations for increased opportunities for citizen No Takings Implications implementing the procedural provisions access to Government information and of the National Environmental Policy The USDA has considered the services, and for other purposes. proposed rule in context with the Act. List of Subject in 36 CFR Part 294 principles and criteria contained in Consultation With Indian Tribal Executive Order 12630, Governmental National Forests, Recreation areas, Governments Actions and Interference with Navigation (air), roadless area On July 30, 2018, the Forest Service Constitutionally Protected Property management. initiated government-to-government Rights, issued March 15, 1988. The For the reasons set forth in the consultation with 32 Alaska federally- USDA has determined that the proposed preamble, the USDA proposes to amend recognized tribes and 27 Alaska Native rule does not pose the risk of a taking part 294 of Title 36 of the Code of corporations, and invited them to of private property because it only Federal Regulations by adding subpart E participate as cooperating agencies applies to management of National to read as follows: during the rulemaking process. Six Forest System lands and contains tribes agreed to become a cooperating exemptions that prevent the taking of PART 294—SPECIAL AREAS agency including Angoon Community constitutionally protected private Association, Central Council Tlingit and Subpart E—Alaska Roadless Areas property. Management Haida Indian Tribes of Alaska, Hoonah Indian Association, Hydaburg Civil Justice Reform Sec. Cooperative Association, Organized The USDA reviewed the proposed 294.50 Tongass National Forest. 294.51 Chugach National Forest. Village of Kake, and Organized Village rule in context of Executive Order of Kasaan. Biweekly cooperating agency 12988. The USDA has not identified any Authority: 16 U.S.C. 472, 529, 551, 1608, meetings are occurring that include the State or local laws or regulations that 1613; 23 U.S.C. 201, 205. six cooperating agency tribal are in conflict with the proposed rule or Subpart E—Alaska Roadless Areas governments. Furthermore, additional would impede full implementation of Management government-to-government the rules. However, if the rule is consultations will occur by request of adopted, (1) all State and local laws and § 294.50 Tongass National Forest. any of the 19 tribal governments across regulations that conflict with this rule or (a) The 2001 Roadless Area Southeast Alaska. would impede full implementation of Conservation Rule (see 36 CFR part 294, The proposed rule has been reviewed this rule would be preempted; (2) no subpart B, revised as of July 1, 2001) in accordance with the requirements of retroactive effect would be given to this shall not apply to the Tongass National Executive Order 13175, Consultation rule; and (3) the proposed rule would Forest. and Coordination with Indian Tribal not require the use of administrative Governments. Executive Order 13175 proceedings before parties could file § 294.51 Chugach National Forest. requires Federal agencies to consult and suit in court. (a) Administrative correction or coordinate with tribes on a government- modification of inventoried roadless to-government basis on policies that Unfunded Mandates area designations on the Chugach have tribal implications, including Pursuant to Title II of the Unfunded National Forest may be made as follows: regulations, legislative comments or Mandates Reform Act of 1995 (2 U.S.C. (1) Administrative corrections to proposed legislation, and other policy 1531–1538), signed into law on March boundaries. The Regional Forester for statements or actions that have 22, 1995, the USDA has assessed the the Alaska Region may issue substantial direct effects on one or more effects of the proposed rule on State, administrative corrections to the Indian tribes, on the relationship local, and Tribal governments and the boundaries of an Inventoried Roadless

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55529

Area after a 30-day public notice and only, at USPS® Headquarters Library, The Postal Service is proposing to opportunity to comment period. 475 L’Enfant Plaza SW, 11th Floor change the full-service fee exemption Administrative corrections are limited North, Washington, DC 20260. These calculation to exempt annual presort to adjustments that remedy clerical records are available for review on and destination entry fees for those errors, typographical errors, mapping Monday through Friday, 9 a.m.–4 p.m., customers who enter 90 percent or more errors, improvements in mapping by calling 202–268–2906. full-service eligible volume as full- technology, conformance to statutory or FOR FURTHER INFORMATION CONTACT: service. Additionally, at least 75 percent regulatory changes, or incorporation of Jacqueline Erwin at (202) 268–2158, or of all the mailer’s volume must be full- changes due to land exchanges. Dale Kennedy at (202) 268–6592. service eligible. The new formula (2) Administrative modifications to excludes USPS Marketing Mail SUPPLEMENTARY INFORMATION: Proposed Classifications and Boundaries. The prices will be available under Docket Saturation flats (including EDDM) and Regional Forester for the Alaska Region No. R2020–1 on the Postal Regulatory EDDM letter mailings from the may issue modifications to the Commission’s website at www.prc.gov. denominator. This change would allow classifications and boundaries of an more mailers to qualify for an The Postal Service’s proposed rule Inventoried Roadless Area after a 45-day exemption from paying annual mailing includes: Changes to prices, mail public notice and opportunity to fees. classification updates, product comment period. simplification efforts, and a few minor Although exempt from the notice and Dated: October 11, 2019. revisions to the DMM. comment requirements of the Sonny Perdue, Administrative Procedure Act (5 U.S.C. Permit Simplification 553(b), (c)) regarding proposed Secretary of Agriculture. Currently, mailers are required to pay rulemaking by 39 U.S.C. 410(a), the [FR Doc. 2019–22638 Filed 10–16–19; 8:45 am] Postal Service invites public comments BILLING CODE 3411–15–P annual presort and destination entry fees for certain mailings. on the following proposed revisions to The Postal Service is proposing to Mailing Standards of the United States Postal Service, Domestic Mail Manual POSTAL SERVICE simplify permits in order to better serve customers and to utilize current and (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR 39 CFR Part 111 new technologies that have eliminated prior operational costs for permit 111.1. New Mailing Standards for Domestic creation, payment, and maintenance. We will publish an appropriate Mailing Services Products The simplification would allow auto- amendment to 39 CFR part 111 to reflect finalization for Seamless Acceptance these changes. AGENCY: Postal ServiceTM. mailings without presort fees being List of Subjects in 39 CFR Part 111 ACTION: Proposed rule. paid. The annual presort fee will be required to be paid for any mailing not Administrative practice and SUMMARY: On October 9, 2019, the Postal procedure, Postal Service. ® eligible for Seamless Acceptance. Service (USPS ) filed a notice of Accordingly, 39 CFR part 111 is P.O. Box Fee Group Reassignments mailing services price adjustments with proposed to be amended as follows: the Postal Regulatory Commission In Docket No. R2020–1, the Postal (PRC), effective January 26, 2020. This Service is proposing to reassign some PART 111—[AMENDED.] proposed rule contains the revisions to ZIP Codes to the next higher-priced fee Mailing Standards of the United States group based on market characteristics, ■ 1. The authority citation for 39 CFR Postal Service, Domestic Mail Manual part 111 continues to read as follows: ® such as occupancy and growth rates. (DMM ) that we would adopt to Consistent with this proposal, the Postal Authority: 5 U.S.C. 552(a); 13 U.S.C. 301– implement the changes coincident with Service plans to add more substantive 307; 18 U.S.C. 1692–1737; 39 U.S.C. 101, the price adjustments. standards to the authorizing language in 401, 403, 404, 414, 416, 3001–3011, 3201– DATES: Submit comments on or before DMM 508.4.4.2, specifying the basis 3219, 3403–3406, 3621, 3622, 3626, 3632, November 18, 2019. upon which such reassignments to more 3633, and 5001. ADDRESSES: Mail or deliver written appropriate fee groups might be made. ■ 2. Revise the Mailing Standards of the comments to the Manager, Product Full-Service Exemption Calculation United States Postal Service, Domestic Classification, U.S. Postal Service, 475 Change Mail Manual (DMM) as follows: L’Enfant Plaza SW, Room 4446, Washington, DC 20260–5015. If sending Currently, mailers who present Mailing Standards of the United States comments by email, include the name automation mailings of First-Class Mail Postal Service, Domestic Mail and address of the commenter and send cards, letters, and flats, USPS Marketing Manual (DMM) Mail letters and flats, or Bound Printed to [email protected], with * * * * * a subject line of ‘‘January 2020 Domestic Matter flats that contain 90 percent or Mailing Services Proposal.’’ Faxed more of their presort eligible pieces at 200 Commercial Mail comments are not accepted. full-service automation prices are * * * * * exempt from paying annual presort Confidentiality mailing or destination entry fees, as 230 First-Class Mail All submitted comments and applicable, for qualified full-service 233 Prices and Eligibility attachments are part of the public record mailings. USPS Marketing Mail and subject to disclosure. Do not Saturation and EDDM flats are eligible 1.0 Prices and Fees enclose any material in your comments for presort rates but ineligible for full- * * * * * that you consider to be confidential or service incentives. Saturation and inappropriate for public disclosure. EDDM flats are included in the 1.5 Presort Mailing Fee You may inspect and photocopy all denominator of the calculation, but not [Revise the second sentence of 1.5; to written comments, by appointment the numerator. read as follows:]

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55530 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

* * * Payment of this fee does not 5.5 Basis of Fees and Payment Mailers who present automation or apply to qualified full-service mailings * * * * * presort mailings (of First-Class Mail (under 705.23.3.1a).* * * cards, letters, and flats, USPS Marketing * * * * * 5.5.3 Fee Changes Mail letters and flats, or Bound Printed [Revise the text of 5.5.3 by adding new Matter flats) that contain 90 percent or 240 Commercial Mail USPS last sentence; to read as follows:] more full-service eligible mail as full- Marketing Mail * * * In addition, the USPS may service, and 75 percent of their total 243 Prices and Eligibility assign a fee group to a new ZIP Code, mail is eligible for full-service incentives, are eligible for the following 1.0 Prices and Fees may reassign one or more 5-digit ZIP Codes to the next higher or lower fee exception to standards: * * * * * group based on the ZIP Codes’ cost and [Revise the text of item 23.3.1a; to 1.4 Fees market characteristics, or may regroup read as follows:] 5-digit ZIP Codes. a. Annual presort mailing or 1.4.1 Presort Mailing Fee * * * * * destination entry fees, as applicable, do [Revise the second sentence of 1.4.1; not apply to mailings entered by mailers 700 Special Standards to read as follows:] who meet both the 90 percent and 75 * * * Payment of this fee does not * * * * * percent full-service thresholds, for apply to mailers who present qualified qualified full-service mailings, as 705 Advanced Preparation and specified in 23.3.1.* * * full-service mailings (under Special Postage Payment Systems 705.23.3.1a).* * * * * * * * * * * * * * * * * * Notice 123 (Price List) 22.0 Seamless Acceptance Program 260 Commercial Mail Bound Printed [Revise prices as applicable.] Matter * * * * * * * * * * 263 Prices and Eligibility 22.3 Basic Standards We will publish an appropriate amendment to 39 CFR part 111 to reflect [Revise the introductory text of 22.3, 1.0 Prices and Fees these changes. by adding new second and third * * * * * sentences to read as follows:] Joshua J. Hofer, 1.2 Presorted and Carrier Route * * * Any permits used in a Attorney, Federal Compliance. Bound Printed Matter Seamless acceptance mailing will not [FR Doc. 2019–22635 Filed 10–16–19; 8:45 am] prevent that mailing from being * * * * * BILLING CODE 7710–12–P finalized regardless of if an annual fee 1.2.5 Destination Entry Mailing Fee is due on that permit. However, the first [Revise the last sentence of 1.2.5; to time the permit is used for a non- DEPARTMENT OF COMMERCE read as follows:] seamless mailing the mailer will have to pay the permit fee if they do not meet * * * Payment of this fee does not National Oceanic and Atmospheric the requirements for a fee waiver.* * * apply to mailers who present only Administration qualified full-service flat-size mailings * * * * * 50 CFR Parts 223, 224, and 226 (under 705.23.3.1a). 23.0 Full-Service Automation Option * * * * * * * * * * [Docket No. 190925–0039 and 190829–0020] RIN 0648–BI06, 0648–BH95 500 Additional Services 23.2 General Eligibility Standards * * * * * [Revise the first sentence of the Endangered and Threatened Wildlife 508 Recipient Services introductory text of 23.2; to read as and Plants: Proposed Rule To follows:] Designate Critical Habitat for the * * * * * First-Class Mail (FCM), Periodicals, Central America, Mexico, and Western 4.0 Post Office Box Service and USPS Marketing Mail, cards (FCM North Pacific Distinct Population only), letters (except letters using Segments of Humpback Whales and * * * * * simplified address format) and flats Proposed Rule To Revise Critical 4.4 Basis of Fees and Payment meeting eligibility requirements for Habitat for the Southern Resident automation or carrier route prices * * * * * Killer Whale Distinct Population (except for USPS Marketing Mail ECR Segment, Public Hearings 4.4.2 Fee Changes saturation flats), and Bound Printed Matter presorted or carrier route AGENCY: National Marine Fisheries [Revise the second sentence of 4.4.2; barcoded flats, are potentially eligible Service (NMFS), National Oceanic and to read as follows:] for full-service incentives.* * * Atmospheric Administration (NOAA), * * * In addition, the USPS may Commerce. assign a fee group to a new ZIP Code, 23.3 Fees ACTION: Notification of public hearings. may reassign one or more 5-digit ZIP [Revise the title of 23.3.1; to read as Codes to the next higher or lower fee follows:] SUMMARY: We, NMFS, will hold five group based on the ZIP Codes’ cost and public hearings related to our proposed market characteristics, or may regroup 23.3.1 Eligibility for Exception to rule to designate critical habitat for the 5-digit ZIP Codes.* * * Payment of Annual Fees and Waiver of Western North Pacific distinct * * * * * Deposit of Permit Imprint Mail population segment (DPS), the Central Restrictions America DPS, and the Mexico DPS of 5.0 Caller Service [Revise the introductory text of 23.3.1; humpback whales (Megaptera * * * * * to read as follows:] novaeangliae) under the Endangered

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55531

Species Act (ESA). We will also hold public comment on this proposed rule the public hearings should submit a three public hearings related to our through December 18, 2019. request for reasonable accommodations proposed rule to revise the critical On October 9, 2019, we published a as soon as possible, and no later than 7 habitat designation for the Southern proposed rule to designate critical business days prior to the hearing date, Resident killer whale DPS (Orcinus habitat for the endangered Western by contacting Lisa Manning or Nancy orca) under the ESA. Three of the public North Pacific DPS, the endangered Young (see FOR FURTHER INFORMATION hearings will be joint hearings that Central America DPS, and the CONTACT). address both of these proposed rules. threatened Mexico DPS of humpback Authority: 16 U.S.C. 1531 et seq. whales under the ESA (84 FR 54354). DATES: Public hearings will be held from Dated: October 9, 2019. 4 to 7 p.m. (local time) on the following Areas proposed as critical habitat Samuel D. Rauch III, dates: November 4, 2019, in Santa Cruz, include specific marine areas located off Deputy Assistant Administrator for California; November 5, 2019, in the coasts of California, Oregon, Washington, and Alaska. Based on Regulatory Programs, National Marine Newport, Oregon; November 6, 2019, in Fisheries Service. Seattle, Washington; November 7, 2019, consideration of national security and [FR Doc. 2019–22445 Filed 10–16–19; 8:45 am] in Juneau, Alaska; and December 3, economic impacts, we are also BILLING CODE 3510–22–P 2019, in Anchorage, Alaska. proposing to exclude multiple areas from the designation for each DPS. We ADDRESSES: The November 4th hearing are soliciting comments on the proposed will be held in conference Room 188 at humpback whale critical habitat DEPARTMENT OF COMMERCE the NMFS Southwest Fisheries Science designations through December 9, 2019. Center, Santa Cruz Laboratory on the National Oceanic and Atmospheric University of California Santa Cruz’s Public Hearings Administration Coastal Science Campus, 110 McAllister Each of the public hearings will be Way, Santa Cruz, CA 95060. conducted in the same manner. The 50 CFR Part 622 The November 5th hearing will be hearings will begin with a brief [Docket No. 191004–0056] held in the Hennings Auditorium at the presentation by NMFS that gives an Hatfield Marine Science Center Visitor overview of critical habitat under the RIN 0648–BI32 Center, 2030 SE Marine Science Drive, ESA and a summary of the relevant Newport, OR 97365. Fisheries of the Caribbean, Gulf of proposed critical habitat designation(s). Mexico, and South Atlantic; Snapper- The November 6th hearing will be Following the presentation, members of held in the Alder Auditorium at the Grouper Fishery of the South Atlantic the public will have the opportunity to Region; Regulatory Amendment 27 University of Washington, 1310 NE 40th provide oral comments on the record Street, Seattle, WA 98105. (The regarding the proposed designations. AGENCY: National Marine Fisheries auditorium entrance is located on NE Members of the public will also have Service (NMFS), National Oceanic and 40th Street between Brooklyn Avenue the opportunity to submit written Atmospheric Administration (NOAA), NE and University Way NE.) comments at the hearing. Written Commerce. The November 7th hearing will be comments may also be submitted at any ACTION: Proposed rule; request for held in the Egan Lecture Hall (Room time during the relevant public comments. 112), University of Alaska Southeast, comment period via the Federal e- 11066 Auke Lake Way, Juneau, Alaska Rulemaking Portal. To do the latter, go SUMMARY: NMFS proposes to implement 99801. to www.regulations.gov; and for management measures described in The December 3rd hearing will be Southern Resident killer whale critical Vision Blueprint Commercial held in the Wilda Marston Theater in habitat search on the docket ID Regulatory Amendment 27 (Regulatory Z.J. Loussac Public Library, 3600 Denali ‘‘NOAA–NMFS–2014–0041’’; for Amendment 27) to the Fishery St., Anchorage, AK 99503. humpback whale critical habitat search Management Plan (FMP) for the FOR FURTHER INFORMATION CONTACT: Lisa on docket ID ‘‘NOAA–NMFS–2019– Snapper-Grouper Fishery of the South Manning, NMFS, Office of Protected 0066’’; click the ‘‘Comment Now!’’ icon; Atlantic Region (Snapper-Grouper Resources 301–427–8466; or Nancy then complete the required fields and FMP), as prepared and submitted by the Young, NMFS West Coast Region, 206– enter or attach your comments. Note South Atlantic Fishery Management 526–4297. that all comments received are a part of Council (Council). If implemented, this proposed rule would modify SUPPLEMENTARY INFORMATION: the public record and will generally be posted for public viewing on commercial fishing seasons, trip limits, Background www.regulations.gov without change. and minimum size limits for selected On September 19, 2019, we published All personal identifying information snapper-grouper species in the South a proposed rule to revise existing (e.g., name, address, etc.), confidential Atlantic exclusive economic zone (EEZ). critical habitat for endangered Southern business information, or otherwise The purpose of this proposed rule is to Resident killer whales (84 FR 49214) sensitive information submitted improve equitable access for under the ESA. This rule proposes to voluntarily by the commenter will be commercial fishermen in the snapper- revise the critical habitat by designating publicly accessible. NMFS will accept grouper fishery, minimize discards to six new marine areas along the U.S. anonymous comments (enter ‘‘N/A’’ in the extent practicable, and improve West Coast. The specific new areas the required fields if you wish to remain marketability within the snapper- proposed for designation extend along anonymous). Attachments to electronic grouper fishery. the U.S. West Coast from the U.S. comments will be accepted in Microsoft DATES: Written comments on the international border with Canada, south Word, Excel, or Adobe PDF file formats proposed rule must be received by to Point Sur, California. Based on only. November 18, 2019. consideration of national security ADDRESSES: You may submit comments impacts, we are proposing to exclude Reasonable Accommodations on the proposed rule, identified by from the designation one area off the People needing accommodations so ‘‘NOAA–NMFS–2019–0059,’’ by either coast of Washington. We are soliciting that they may attend and participate at of the following methods:

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55532 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

• Electronic submission: Submit all managing the snapper-grouper fishery. issued. Unless otherwise noted, all electronic comments via the Federal e- Based on that input, the Council weights in this proposed rule are Rulemaking Portal. Go to http:// developed the 2016–2020 Vision described in gutted weight. www.regulations.gov/docket?D=NOAA- Blueprint for the Snapper-Grouper Commercial Trip Limit for Blueline Fishery (Vision Blueprint). The Vision NMFS-2019-0059, click the ‘‘Comment Tilefish Now!’’ icon, complete the required Blueprint identified the goals, fields, and enter or attach your objectives, strategies, and actions that Currently, the commercial trip limit comments. support the Council’s vision for the for blueline tilefish is 300 lb (136 kg) • Mail: Submit written comments to snapper-grouper fishery and centers during the January through December Mary Vara, NMFS Southeast Regional around four goal areas: Science, fishing year. In Regulatory Amendment Office, 263 13th Avenue South, St. Management, Communication, and 27, the Council determined that Petersburg, FL 33701. Governance. In 2015, the Council management measures for blueline Instructions: Comments sent by any prioritized action items in the Vision tilefish should be more consistent with other method, to any other address or Blueprint that would be addressed snowy grouper management measures individual, or received after the end of through amendments to the Snapper- since the two species co-occur in parts the comment period, may not be Grouper FMP over the next 5 years. As of the Council’s jurisdiction. Blueline considered by NMFS. All comments part of this prioritization, the Council tilefish and snowy grouper are both received are a part of the public record chose to focus on actions that would target species for fishermen north of and will generally be posted for public address the seasonality of access to Cape Hatteras, North Carolina, but viewing on www.regulations.gov certain snapper-grouper species and access to these species in that area is without change. All personal identifying measures to lengthen fishing seasons to limited early in the fishing year (during information (e.g., name, address, etc.), better utilize existing annual catch January through May) as a result of poor confidential business information, or limits (ACLs) in the snapper-grouper weather conditions. However, blueline otherwise sensitive information fishery. To accomplish this, the Council tilefish are mostly an incidental catch submitted voluntarily by the sender will began development of two regulatory during commercial harvest of snowy be publicly accessible. NMFS will amendments to the Snapper-Grouper grouper occurring south of Cape accept anonymous comments (enter FMP to address the commercial and Hatteras, North Carolina, through ‘‘N/A’’ in required fields if you wish to recreational sectors, respectively. approximately Cape Canaveral, Florida. remain anonymous). Regulatory Amendment 27 includes South of Cape Hatteras, commercial Electronic copies of Regulatory modifications to the commercial sector fishermen targeting snowy grouper tend Amendment 27 may be obtained from management measures in the snapper- to continue fishing for blueline tilefish www.regulations.gov or the Southeast grouper fishery based on stakeholder after they have reached their snowy Regional Office website at https:// input. The purpose of Regulatory grouper trip limit and they report that www.fisheries.noaa.gov/action/ Amendment 27 is to enable equitable this practice results in increased discards of snowy grouper. Access to regulatory-amendment-27-vision- access for commercial fishermen the blueline tilefish by the commercial blueprint-commercial-measures participating in the snapper-grouper sector has been further limited over the includes an environmental assessment, fishery, and to minimize discards to the past few years, because the commercial regulatory impact review, and Initial extent practicable, while improving sector for blueline tilefish has closed Regulatory Flexibility Analysis (IRFA). marketability for some snapper-grouper species. Vision Blueprint Recreational before the end of the fishing year as a FOR FURTHER INFORMATION CONTACT: Regulatory Amendment 26 to the result of reaching the commercial quota. Mary Vara, NMFS Southeast Regional Snapper-Grouper FMP, which would This proposed rule would modify the Office, telephone: 727–824–5305, or revise recreational management 300-lb (136-kg) commercial trip limit for email: [email protected]. measures in the fishery, has been blueline tilefish throughout the South SUPPLEMENTARY INFORMATION: The submitted to NMFS by the Council, and Atlantic EEZ. During January 1 through snapper-grouper fishery in the South NMFS is developing a proposed rule. April 30 each year, the commercial trip Atlantic region is managed under the limit would be reduced to 100 lb (45 Snapper-Grouper FMP and includes Management Measures Contained in kg), and during May 1 through blueline tilefish, snowy grouper, greater This Proposed Rule December 31 each year, the commercial amberjack, red porgy, vermilion This proposed rule would modify the trip limit would continue to be 300 lb snapper, almaco jack, other jacks commercial trip limits for blueline (136 kg). The Council determined that a complex (lesser amberjack, almaco jack, tilefish, greater amberjack, red porgy, lower 100-lb (45-kg) commercial trip and banded rudderfish), queen snapper, and vermilion snapper; establish limit of blueline tilefish each year from silk snapper, blackfin snapper, and gray commercial split seasons for snowy January through April would help triggerfish, along with other snapper- grouper, greater amberjack, and red reduce snowy grouper discards by grouper species. The Snapper-Grouper porgy; and establish a commercial trip commercial fishermen operating south FMP was prepared by the Council and limit for the other jacks complex. For of Cape Hatteras, North Carolina, is implemented by NMFS through the commercial sector, this proposed because the commercial trip limit for regulations at 50 CFR part 622 under the rule would also establish a minimum blueline tilefish would be met more authority of the Magnuson-Stevens size limit for almaco jack, remove the quickly on a trip. This proposed rule Fishery Conservation and Management minimum size limits for silk snapper, would maintain the current 300-lb (136- Act (Magnuson-Stevens Act). queen snapper, and blackfin snapper, kg) trip limit for blueline tilefish from and reduce the minimum size limit for May through December when good Background gray triggerfish in the EEZ off the east weather conditions are more likely to During a series of stakeholder coast of Florida. The management allow commercial fishermen in the meetings in 2014, the Council gathered measures in this proposed rule would northern portion of the Council’s area of input from commercial fishermen apply on board a vessel for which a jurisdiction to have greater access to the throughout the South Atlantic region to Federal commercial permit for South resource and optimize their harvest develop a long-term strategic plan for Atlantic snapper-grouper has been through an extended fishing season.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55533

Commercial Split Season for Snowy Commercial Split Season and Trip Limit amberjack. During Season 1, the Grouper for Greater Amberjack commercial trip limit would be 1,200 lb (544 kg) in round or gutted weight, and During the Council’s development of Currently, the commercial ACL (equivalent to the commercial quota) for during Season 2, the commercial trip the Vision Blueprint, stakeholders limit would be 1,000 lb (454 kg) in requested that the Council address greater amberjack is 769,388 lb (348,989 kg), the fishing year is March 1 through round or gutted weight. However, regional differences in access to the the end of February, and the commercial during April each year, the commercial snapper-grouper resource, including trip limit is 1,200 lb (544 kg) and sale and purchase of greater amberjack snowy grouper, and implement applies in either round or gutted weight. would continue to be prohibited, and management approaches that would During April of each year, the the harvest and possession limit would minimize discards. Commercial continue to be one fish per person per commercial harvest and possession day or one fish per person per trip, fishermen and other stakeholders limit for greater amberjack (equivalent whichever is more restrictive. notified the Council to an increase in to a commercial trip limit) is one fish snowy grouper discards when fishermen per person per day or one fish per Commercial Split Season and Trip Limit attempt to harvest the commercial trip person per trip, whichever is more for Red Porgy limit of blueline tilefish, a co-occurring restrictive. Also during April each year, Currently, the fishing year for red species, after reaching the commercial the sale and purchase of greater trip limit for snowy grouper. In porgy is January 1 through December 31, amberjack in or from the South Atlantic and the commercial ACL (equivalent to addition, stakeholders stated the EEZ is prohibited on board a vessel for importance of snowy grouper in the the commercial quota) is 157,692 lb which a Federal commercial permit for (71,528 kg), gutted weight, or 164,000 lb commercial market during the early South Atlantic snapper-grouper has (74,389 kg), round weight. During months of the year (January through been issued. January through April each year, the April), when the harvest of shallow- During the development of Regulatory commercial sale and purchase of red water groupers is closed. Currently, the Amendment 27, the Council determined porgy is prohibited on board a vessel for fishing year for snowy grouper is that recent commercial harvests of which a Federal commercial permit for January 1 through December 31 and yellowtail snapper have influenced the South Atlantic snapper-grouper has there is a single fishing season to commercial harvest of greater been issued, and the commercial harvest harvest the commercial ACL (equivalent amberjack. In 2017 and 2018, the and possession limit for red porgy to the commercial quota) of 153,935 lb commercial sector for yellowtail (equivalent to a commercial trip limit) is (69,824 kg), gutted weight, or 181,644 lb snapper closed 2 months prior to the three fish per person per day or three (82,392 kg), round weight. end of that species’ fishing year. The fish per person per trip, whichever is After reviewing stakeholder input, the early closures of commercial yellowtail more restrictive. The commercial trip Council determined that allocating the snapper resulted in commercial limit for red porgy is 120 fish from May majority (70 percent) of the commercial fishermen in Florida targeting greater 1 through December 31. quota to a January through June fishing amberjack more heavily, leading to In the South Atlantic, red porgy season would ensure availability of earlier commercial closures of greater spawn from January through May and snowy grouper when it is most valuable amberjack and price fluctuations that spawning activity peaks from January at the market and optimize access to this affect resource users throughout the through March. The current January species for the majority of commercial South Atlantic. The Council expects through April prohibition on sale and fishermen in the South Atlantic. The that dividing the commercial quota for purchase of red porgy and restrictive Council also decided that allocating 30 South Atlantic greater amberjack harvest and possession limit percent of the commercial quota of between two seasons and reducing the encompasses the majority of the snowy grouper for a July through commercial trip limit for the latter half spawning season, and provides direct December fishing season allows for the of the fishing year would lengthen the benefits to the stock by reducing fishing incidental harvest of snowy grouper greater amberjack commercial season pressure on the spawning stock. when North Carolina commercial and allow for a more equitable However, during January through April fishermen are targeting blueline tilefish. distribution and price stability of the commercial fishermen target two co- The Council determined that the longer greater amberjack resource throughout occurring species, vermilion snapper grouper species are available in the the South Atlantic. and gray triggerfish, while reporting Regulatory Amendment 27 and this marketplace, the more this benefits discards of red porgy. Therefore, these proposed rule would specify two discards of red porgy reduce the benefits fishermen and communities in the commercial fishing seasons for greater of a spawning season closure for the South Atlantic. amberjack. The two seasons would be stock when commercial fishermen target This proposed rule would establish March 1 through August 31 (Season 1) other co-occurring species. The Council two commercial fishing seasons for and September 1 through the end of determined that a commercial trip limit snowy grouper of January 1 through February (Season 2). The commercial of 60 fish and a lower portion of the June 30 (Season 1) and July 1 through quotas would be allocated as 60 percent commercial quota during January December 31 (Season 2) within the to Season 1, 461,633 lb (209,393 kg), through April would continue to current fishing year. This proposed rule and 40 percent to Season 2, 307,755 lb constrain harvest to protect spawning would allocate the commercial quotas as (139,595 kg). Any remaining fish, while allowing commercial 70 percent to Season 1, 107,754 lb commercial quota from Season 1 would fishermen to retain a sufficient amount (48,876 kg), and 30 percent to Season 2, be added to the commercial quota in of red porgy when targeting co- 46,181 lb (20,947 kg). Any remaining Season 2. Any remaining quota from occurring species, thereby reducing commercial quota from Season 1 would Season 2 would not be carried forward discards of red porgy. be transferred to Season 2. Any into the next fishing year. Regulatory Amendment 27 and this remaining commercial quota from Additionally, Regulatory Amendment proposed rule would establish two Season 2 would not be carried forward 27 and this proposed rule would modify commercial fishing seasons for red into the next fishing year. the commercial trip limit for greater porgy. The first season would be

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55534 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

January 1 through April 30 (Season 1), ACL for vermilion snapper based on the the end of the fishing year, fishermen and the second season would be May 1 results of the latest stock assessment in told the Council that a 500-lb (227-kg) through December 31 (Season 2). The 2018. Therefore, the Council determined commercial trip limit for the other jacks current fishing year would not change. that there is no longer a need to have a complex would still allow them to make The commercial quotas would be trip limit reduction for vermilion a profitable trip, and the proposed allocated as 30 percent to Season 1, snapper. Also, as described in commercial trip limit would enable 47,308 lb (21,459 kg) gutted weight, Regulatory Amendment 27, maintaining fishermen to have the added benefit of 49,200 lb (22,317 kg), round weight; and the current commercial trip limit would an extended commercial season for the 70 percent to Season 2, 110,384 lb ensure economic profitability and other jacks complex. In addition, (50,069 kg) gutted weight, 114,800 lb efficient use of the vermilion snapper Council members noted that banded (52,072 kg), round weight. Any resource. rudderfish are commercially important remaining commercial quota from Regulatory Amendment 27 and this in the springtime, particularly in April Season 1 would be added to the proposed rule would remove the trip when the commercial harvest of greater commercial quota in Season 2. Any limit reduction for vermilion snapper amberjack is closed. Although some remaining quota from Season 2 would from both seasons but retain the 1,000 commercial trips can land over 1,000 lb not be carried forward into the next lb (454 kg) commercial trip limit. Any (454 kg) of banded rudderfish during fishing year. The proposed rule would remaining commercial quota from certain times of the year, the Council remove the current commercial sale and Season 1 would continue to be added to determined it would be more equitable purchase prohibition and the possession the commercial quota for Season 2, and for commercial fishermen, and better for limit of three fish per person per day or any remaining commercial quota from the long-term sustainability of the other three fish per person per trip, whichever Season 2 would not be carried forward jacks complex resource, to establish a is more restrictive, during January 1 into the next fishing year. 500-lb (227-kg) commercial trip limit for through April 30. Minimum Size Limit for Almaco Jack this species complex. Additionally, Regulatory Amendment 27 and this proposed rule would modify There is currently no commercial Minimum Size Limit for Queen Snapper, the commercial trip limits for red porgy minimum size limit for almaco jack. Silk Snapper, and Blackfin Snapper during the Season 1 to be 60 fish. This proposed rule would establish a Queen snapper, silk snapper, and During Season 2, the commercial trip commercial minimum size limit of 20 blackfin snapper are part of the deep- limit for red porgy would continue to be inches (50.8 cm), fork length (FL), in the water complex. Currently, the 120 fish. South Atlantic EEZ. Fishermen with commercial minimum size limit for Federal commercial permits for South queen snapper, silk snapper, and Commercial Trip Limit for Vermilion Atlantic snapper-grouper reported their blackfin snapper is 12 inches (30.5 cm) Snapper concerns to the Council about the small total length (TL), but the remaining Currently, the commercial fishing size, and resulting poor commercial species in the deep-water complex do year for vermilion snapper is from value, of some of the almaco jack being not have a specified minimum size limit January 1 through December 31. The landed. The minimum size limit for the requirement. The 12-inch (30.5-cm) TL commercial ACL (equivalent to the commercial sector of 20 inches (50.8 commercial minimum size limit was commercial quota) is divided equally cm), FL, would allow more individual implemented for queen snapper, between two commercial fishing almaco jack to reach reproductive blackfin snapper, and silk snapper early seasons as January 1 through June 30 activity before being susceptible to in the management of the snapper- (Season 1) and July 1 through December harvest, and is projected to increase the grouper fishery, before estimates of 31 (Season 2). Any remaining average size and the corresponding discard mortality were available, and commercial quota from Season 1 is average weight of fish harvested. before the creation of the various added to the commercial quota for species complexes by the Council. All of Commercial Trip Limit for the Other Season 2. Any remaining commercial the species in the deep-water complex Jacks Complex quota from Season 2 is not carried (yellowedge grouper, silk snapper, misty forward into the next fishing year. Currently, there is not a commercial grouper, queen snapper, sand tilefish, During both Season 1 and Season 2, the trip limit for species in the other jacks and blackfin snapper) are typically commercial trip limit for vermilion complex, which includes lesser associated with a high discard mortality. snapper is 1,000 lb (454 kg). amberjack, almaco jack, and banded The Council determined that removing Additionally, if NMFS estimates that 75 rudderfish. Regulatory Amendment 27 the commercial minimum size limit for percent of the vermilion snapper and this proposed rule would establish queen snapper, silk snapper, and commercial quota during either season a commercial trip limit for the other blackfin snapper would reduce discards is met or is projected to be met, NMFS jacks complex of 500 lb (227 kg). In and discard mortality for these species. will publish a notice in the Federal 2014, stakeholders told the Council that Therefore, Regulatory Amendment 27 Register to reduce the commercial trip almaco jack, which typically dominate and this proposed rule would remove limit to 500 lb (227 kg). commercial landings of species in the the commercial minimum size limit for Fishermen requested that the Council other jacks complex, are an incidental queen snapper, silk snapper, and consider reducing the commercial trip catch on trips targeting vermilion blackfin snapper. limit in Season 2, as many more snapper. The Council determined that snapper-grouper species are available commercial fishermen would benefit Minimum Size Limit for Gray Triggerfish for harvest during that time and a from being able to profit from those The current commercial minimum reduced commercial trip limit would be incidental catches of almaco jack if they size limit for gray triggerfish in the expected to extend the fishing season were to achieve a higher price per fish, South Atlantic EEZ is 14 inches (35.6 for vermilion snapper. In addition, since the market value of almaco jack cm) FL off the east coast of Florida and Abbreviated Framework Amendment 2 (and the other species in the other jacks 12 inches (30.5 cm) FL off North to the Snapper-Grouper FMP was complex) is increasing. Because the Carolina, South Carolina, and Georgia. recently implemented (84 FR 14021, commercial sector for the other jacks Regulatory Amendment 27 and this April 9, 2019) that increased the total complex has historically closed before proposed rule would reduce the

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55535

commercial minimum size limit to 12 proposed rule, if adopted, would have limit in Season 1 and Season 2 for inches (30.5 cm) FL in the EEZ off the on small entities. A description of this vermilion snapper, establish a east coast of Florida. In 2015, the 12- proposed rule, why it is being commercial minimum size limit of 20 inch (30.5-cm) FL commercial minimum considered, and the purposes of this inches (50.8 cm) FL for almaco jack, size limit was implemented for gray proposed rule are contained in the establish a commercial trip limit of 500 triggerfish in the EEZ off North Carolina, preamble and in the SUMMARY section of lb (227 kg) for the other jacks complex, South Carolina, and Georgia, and a the preamble. A copy of the full analysis remove the 12-inch (30.5-cm) TL commercial minimum size limit of 14 is available from NMFS (see commercial minimum size limit for inches (35.6 cm) FL was implemented ADDRESSES). A summary of the IRFA queen snapper, silk snapper, and in the EEZ off the east coast of Florida follows. blackfin snapper, and reduce the (80 FR 30947, June 1, 2015). This was The objective of this proposed rule is commercial minimum size limit for gray a precautionary action taken by the to improve management of the triggerfish from 14 inches (35.6 cm) to Council in response to their concerns commercial sector of the snapper- 12 inches (30.5 cm) FL in the EEZ off about the status of the South Atlantic grouper fishery to better achieve the east coast of Florida. Therefore, this gray triggerfish stock, to align Federal optimum yield, while minimizing, to proposed rule is expected to directly regulations off the east coast of Florida the extent practicable, the adverse socio- regulate businesses that are active in the with those in the Gulf of Mexico, and economic effects of regulations on commercial snapper-grouper fishing achieve consistency between state and commercial fishing entities in the South industry. Federal regulations off the east coast of Atlantic. As of August 17, 2018, the number of Florida. However, after the commercial This proposed rule, if implemented, vessels with a valid or renewable minimum size limit went into effect on would make the following changes to Federal commercial permit for South July 1, 2015, stakeholders in Florida the regulations for the commercial Atlantic snapper-grouper was 644, expressed concern to the Florida Fish snapper-grouper fishing industry in the composed of 536 transferable, unlimited and Wildlife Conservation Commission South Atlantic region. This proposed snapper-grouper permits and 108 non- (FWC) regarding increasing discards of rule would reduce the commercial trip transferable, 225-lb (102 kg) trip-limited gray triggerfish in south Florida where limit for blueline tilefish from 300 lb permits. With the exception of species- the average size of gray triggerfish is less (136 kg) to 100 lb (45 kg) from January specific trip limits, there is no aggregate than that off northeast Florida. In 1 through April 30. For snowy grouper, snapper-grouper harvest limit per trip response to that concern, the FWC this proposed rule would establish two for vessels with unlimited snapper- reduced the recreational minimum size commercial fishing seasons of January 1 grouper permits, while vessels with trip- limit of gray triggerfish in state waters through June 30 (Season 1) and July 1 limited permits cannot harvest more to 12 inches (30.5 cm) FL in 2017, and through December 31 (Season 2), rather than 225 lb (102 kg) of all snapper- requested that the Council develop than a single season within the fishing grouper species per trip. On average, consistent size limit regulations in year, allocate 70 percent of the only 584 vessels used their commercial Federal waters for gray triggerfish. commercial quota to Season 1 and 30 permits for harvesting purposes from Therefore, reducing the commercial percent to Season 2, and transfer any 2012 through 2016. Some permit minimum size limit to 12 inches (30.5 remaining commercial quota from holders retain their permits for cm) FL would make these state and Season 1 to Season 2 only. For greater speculative or other non-harvesting Federal regulations for gray triggerfish amberjack, this proposed rule would purposes. The majority of vessels consistent off the east coast of Florida, establish two commercial fishing harvest multiple snapper-grouper off the other South Atlantic states, and seasons of March 1 through August 31 species. The proposed rule will only in Federal waters throughout the (Season 1) and September 1 through the directly regulate permit holders that Council’s jurisdiction. end of February (Season 2), rather than actually use their permits for harvesting a single season within the March purposes. Therefore, it is expected that Classification through February fishing year; allocate approximately 584 vessels will be Pursuant to section 304(b)(1)(A) of the 60 percent of the commercial quota to directly regulated by this proposed rule. Magnuson-Stevens Act, the NMFS Season 1 and 40 percent to Season 2, Although NMFS started to collect Assistant Administrator has determined and add any remaining commercial ownership data for businesses that that this proposed rule is consistent quota from Season 1 to Season 2 only; possess commercial snapper-grouper with Regulatory Amendment 27, the and reduce the commercial trip limit permits in 2017, this data is currently Snapper-Grouper FMP, other provisions from 1,200 lb (545 kg) in round or incomplete and historical data is not of the Magnuson-Stevens Act, and other gutted weight to 1,000 lb (454 kg) in available. Therefore, it is not currently applicable laws, subject to further round or gutted weight for Season 2. For feasible to accurately determine consideration after public comment. red porgy, this proposed rule would affiliations between these particular This proposed rule has been remove the sale and purchase businesses. As a result of the incomplete determined to be not significant for prohibition, and the possession limit of ownership data, for purposes of this purposes of Executive Order 12866. three fish per person per day or three analysis, it is assumed each of these This rule is expected to be an Executive fish per person per trip during January vessels is independently owned by a Order 13771 deregulatory action. 1 to April 30 each year; specify two single business, which is expected to The Magnuson-Stevens Act provides commercial fishing seasons for red result in an overestimate of the actual the statutory basis for this proposed porgy of January 1 through April 30 number of businesses directly regulated rule. No duplicative, overlapping, or (Season 1) and May 1 through December by this proposed rule. Therefore, this conflicting Federal rules have been 31 (Season 2) within the fishing year; proposed rule is estimated to directly identified. allocate 30 percent of the commercial regulate 584 businesses in the NMFS prepared an initial regulatory quota to Season 1 and 70 percent to commercial snapper-grouper fishing flexibility analysis (IRFA) for this Season 2; and establish a commercial industry. proposed rule, as required by section trip limit of 60 fish in Season 1. This All monetary estimates in the 603 of the RFA, 5 U.S.C. 603. The IRFA proposed rule would also remove the in- following analysis are in 2016 dollars. describes the economic impact this season reduction of the commercial trip For vessels that were active in the

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55536 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

snapper-grouper fishing industry from For snowy grouper, the action to commercial trip limit for Season 2 is 2012 through 2016, average annual gross establish two commercial fishing 200 lb (91 kg) in round or gutted weight revenue was approximately $44,000 per seasons of January 1 through June 30 per trip, or about 17 percent of the vessel. Average annual net cash flow per (Season 1) and July 1 through December current trip limit. A 17 percent vessel was approximately $8,300 while 31 (Season 2) rather than a single season reduction is not a large reduction in net revenue from operations was within the fishing year, allocate 70 general and the reduction only applies approximately $2,000 per vessel. Net percent of the commercial quota to in Season 2. Thus, this action would be revenue from operations is the best Season 1 and 30 percent to Season 2, expected to slightly reduce these available estimate of economic profit. and to add any remaining commercial vessels’ economic profits. The Small Business Administration quota from Season 1 to Season 2 only, For red porgy, the actions to remove has established size standards for all is expected to directly regulate the sale and purchase prohibition and major industry sectors in the U.S. approximately 149 vessels. These the possession limit of three fish per including commercial fishing vessels’ average annual gross revenues person per day or three fish per person businesses. On December 29, 2015, were $85,475 per vessel from 2012 per trip during January 1 to April 30 NMFS issued a final rule establishing a through 2016. Average annual net each year, establishing two commercial small business size standard of $11 revenue from operations for these fishing seasons of January 1 through million in annual gross receipts vessels was approximately 4 percent of April 30 (Season 1) and May 1 through (revenue) for all businesses primarily their average annual gross revenue from December 31 (Season 2) within the engaged in the commercial fishing 2014 through 2016. Therefore, annual fishing year, allocate 30 percent of the industry (NAICS code 11411) for RFA net revenue from operations for these commercial quota to Season 1 and 70 compliance purposes only (80 FR vessels is estimated to be about $3,400 percent to Season 2, and establish a 81194, December 29, 2015). In addition per vessel. This action is not expected commercial trip limit of 60 fish in to this gross revenue standard, a to affect landings, annual gross revenue, Season 1 is expected to directly regulate business primarily involved in or harvesting costs, and thus economic approximately 160 vessels. These commercial fishing is classified as a profit for these vessels is not expected vessels’ average annual gross revenues small business if it is independently to change. were $73,366 per vessel from 2012 owned and operated, and is not through 2016. Average annual net For greater amberjack, the action to dominant in it field of operations revenue from operations for commercial establish two commercial fishing (including its affiliates). The maximum vessels in the snapper-grouper fishery average annual gross revenue from 2012 seasons of March 1 through August 31 was approximately 4.5 percent of their through 2016 for a single vessel in the (Season 1) and September 1 through the average annual gross revenue from 2014 commercial snapper-grouper fishing end of February (Season 2) within the through 2016. Thus, annual net revenue industry was about $1.6 million. Based fishing year, allocate 60 percent of the from operations for these vessels is on the information above, all businesses commercial quota to Season 1 and 40 estimated to be about $3,300 per vessel. directly regulated by this proposed rule percent to Season 2, add any remaining The expected increase in annual gross are determined to be small businesses commercial quota from Season 1 to revenue from this action is about $335 for the purpose of this analysis. Season 2 only, and reduce the per vessel, representing an increase of This proposed rule, if implemented, commercial trip limit from 1,200 lb (545 about 0.5 percent of average annual would be expected to directly regulate kg) in round or gutted weight to 1,000 gross revenues but a 9 percent increase the 584 active vessels with commercial lb (454 kg) in round or gutted weight for in economic profit. The decision to permits in the South Atlantic snapper- Season 2 is expected to directly regulate harvest red porgy during the months grouper fishery of the 644 vessels that approximately 263 vessels. These when sales and purchase are currently currently possess those permits. All vessels’ average annual gross revenues prohibited could lead to additional directly regulated businesses have been were $62,578 per vessel from 2012 harvesting costs, but these would be determined, for the purpose of this through 2016. Average annual net self-imposed and, assuming standard analysis, to be small entities. Based on revenue from operations for these business practices by owners of this information, the proposed rule is vessels was approximately 4 percent of commercial vessels, the additional gross expected to affect a substantial number their average annual gross revenue from revenues will exceed the additional of small businesses. 2014 through 2016. Thus, average costs (i.e., economic profit is expected to The action to reduce the commercial annual net revenue from operations for increase). Moreover, the red porgy trip limit for blueline tilefish from 300 these vessels is estimated to be about landings that would be expected during lb (136 kg) to 100 lb (45 kg) from $2,500 per vessel. This action is January through April are likely fish January 1 through April 30 is expected expected to reduce average annual gross that were previously discarded due to to directly regulate approximately 134 revenues to these vessels by about $34, the current prohibition. If these landings vessels. These vessels’ average annual which represents less than 0.1 percent are fish that were previously discarded, gross revenues were $82,411 per vessel of their average annual gross revenues, then no additional costs would be from 2012 through 2016. Average and about 11.4 percent of their average incurred and the additional gross annual net revenue from operations for annual economic profit. Although a revenue would represent additional these vessels was approximately 4 quantitative estimate cannot be economic profit to these vessels as well. percent of their average annual gross provided due to lack of data, this action The action to remove the in-season revenue from 2014 through 2016. Thus, is also expected to cause a minor commercial trip limit reduction for annual net revenue from operations increase in these vessels’ operating vermilion snapper in both seasons is (economic profit) for these vessels is costs. In general, trip limits are expected expected to directly regulate estimated to be about $3,300 per vessel. to increase costs because commercial approximately 206 vessels. These Average annual gross revenue per vessel fishing vessels must take more trips to vessels’ average annual gross revenues is expected to increase by about $13 per harvest and land the same amount of were $66,330 per vessel from 2011 year, which would result in an increase fish. The more restrictive the trip limit, through 2016. Average annual net in economic profit of about 0.4 percent the greater the expected increase in revenue from operations for these for these vessels. costs. The proposed reduction in the vessels was approximately negative 1

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55537

percent of their average annual gross percent of their average annual gross profit for these vessels is expected to be revenue from 2014 through 2016 (i.e., revenue from 2014 through 2016. Thus, reduced. these vessels have been generating average annual net revenue from The action to remove the 12-inch economic losses). Thus, annual net operations for these vessels is estimated (30.5-cm) TL commercial minimum size revenue from operations for these to be about $3,100 per vessel. Average limit for queen snapper, silk snapper, vessels is estimated to be about negative annual gross revenue per vessel is and blackfin snapper is expected to $6,600 per vessel. This action is expected to decrease by about $4 per directly regulate approximately 94 expected to result in a reduction of $42 vessel under the action, which is vessels. These vessels’ average annual in average annual gross revenue per minimal (i.e., about 0.1 percent of gross revenues were $93,154 per vessel vessel, which is a minimal change economic profit), and thus unlikely to from 2012 through 2016. Average relative to annual average gross affect these vessels’ fishing behavior. annual net revenue from operations for revenues, but would increase economic However, establishing a minimum size these vessels was approximately 4 losses by about 0.6 percent. However, limit will also lead to discarded fish. percent of their average annual gross the action is also expected to change the Thus, commercial fishing vessels would revenue from 2014 through 2016. Thus, cost of harvesting vermilion snapper. In have to exert more effort per trip or take annual net revenue from operations for general, trip limits are expected to more trips to land the same amount of these vessels is estimated to be about increase costs because commercial almaco jack, which would lead to higher $3,700 per vessel. This action is fishing vessels must take more trips to costs. The more restrictive the minimum expected to result in a minimal increase harvest and land the same amount of size limit, the greater the amount of in landings of queen snapper, silk fish. The more restrictive the trip limit, discarded fish and thus the greater the snapper, and blackfin snapper. the greater the expected increase in expected increase in costs. The increase However, commercial fishing vessels costs. Under the current regulations, the in costs per vessel could be have only harvested about 43 percent of commercial trip limit for both seasons is considerably higher than the minimal the commercial ACL for the deep-water reduced by 50 percent, from 1,000 lb increase in average annual gross complex since blueline tilefish was (454 kg) gutted weight to 500 lb (227 kg) revenue per vessel, depending on the removed from that complex. Therefore, gutted weight, when 75 percent of the amount of almaco jack that vessels are landings of queen snapper, silk snapper, commercial quota in either season is forced to discard and how much and blackfin snapper could increase harvested, which is significant. Further, additional effort they exert to maintain significantly without any concern of changes in trip limits within a fishing their landings and revenue. However, exceeding the commercial ACL for the year and particularly within a season the increase in cost may be partially deep-water complex. Further, with the can introduce inefficiencies in the offset through a higher price received elimination of the minimum size limit, production process as commercial for larger sized fish, but the extent to vessels would be able to increase their fishing vessels must adjust their which this effect will occur is unknown landings per unit of effort for these operations to account for such changes. due to lack of data on the variability of species, thereby decreasing the cost per While these inefficiencies are likely not prices across almaco jack of different pound of fish landed. Therefore, this as great when the trip limit changes are sizes. Based on this information, this action would be expected to increase known well in advance, they become action may reduce the economic profits the economic profit of these vessels to some extent. particularly acute when the owners of of these 165 vessels. The action to reduce the commercial commercial fishing vessels do not know The action to establish a commercial minimum size limit for gray triggerfish if or when the trip limit change is going trip limit of 500 lb (227 kg) for the other in the EEZ off the east coast of Florida to occur, which is the case under the jacks complex is expected to directly from 14 inches (35.6 cm) to 12 inches current regulations. Further, because at regulate approximately 210 vessels. (30.5 cm) FL is expected to directly least some owners of commercial fishing These vessels’ average annual gross regulate approximately 213 vessels. vessels would prefer to fish when the revenues were $69,363 per vessel from These vessels’ average annual gross trip limit is greater, trip limit reductions 2012 through 2016. Average annual net revenues were $65,661 per vessel from can result in mini-fishing derbies (race- revenue from operations for these 2012 through 2016. Average annual net to-fish) within a season. Splitting the vessels was approximately 4 percent of revenue from operations for these commercial quota between seasons only their average annual gross revenue from vessels was approximately 2 percent of partially mitigates this effect. Although 2014 through 2016. Therefore, annual their average annual gross revenue from models are not available to net revenue from operations for these 2014 through 2016. Thus, annual net quantitatively estimate the expected vessels is estimated to be about $2,800 revenue from operations for these changes in costs, the elimination of the per vessel. Given the proposed vessels is estimated to be about $1,300 trip limit reduction is expected to commercial minimum size limit for per vessel. This action is expected to significantly reduce these vessels’ almaco jack discussed in the previous result in an increase in annual gross harvesting costs, likely more than action, establishing a commercial trip revenue per vessel of approximately offsetting the relatively minor reduction limit for the other jacks complex is $10, which would represent an increase in gross revenue. Therefore, this action expected to result in a reduction of $28 the average vessel’s economic profit of is expected to increase economic profit in average annual gross revenue per about 0.8 percent per year. Reducing the for these vessels. vessel, or about 1 percent of the average minimum size limit for gray triggerfish The action to establish a commercial annual economic profit. However, will also allow commercial fishing minimum size limit of 20 inches (50.8 establishing a minimum size limit is vessels to harvest these species with less cm) FL for almaco jack is expected to also expected to increase costs, which effort. As such, this action would also directly regulate approximately 165 would decrease economic profit even be expected to decrease the cost per vessels. These vessels’ average annual further. The magnitude of the increase pound of harvest, though by how much gross revenues were $77,267 per vessel in costs depends on how much is unknown due to the lack of from 2012 through 2016. Average additional effort commercial vessels appropriate models. Thus, this action is annual net revenue from operations for must exert to maintain their landings expected to result in a modest increase these vessels was approximately 4 and revenues. Therefore, economic in these vessels’ economic profit.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 55538 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

Based on the information above, February 31 (Season 2) within the (i.e., they are difficult if not impossible average annual gross revenues for the March through February fishing year, to sell at a price that would not lead to 584 active commercial snapper-grouper allocate 60 percent of the commercial economic losses) and therefore would vessels is expected to increase by about ACL to Season 1 and 40 percent to likely be discarded. Thus, the status quo $33,400, or approximately $57 per Season 2, transfer any remaining quota alternative is not expected to achieve vessel, as a result of all the actions in from Season 1 to Season 2, and reduce the Council’s goals of improving the this proposed rule. This increase the commercial trip limit from 1,200 lb marketability of certain species and represents only about 0.1 percent of (545 kg) in round or gutted weight to minimizing discards. The other three these vessels’ average annual gross 1,000 lb (454 kg) in round or gutted alternatives are expected to result in revenues, but about 3 percent of their weight for Season 2. The status quo even higher discards, which is contrary average annual economic profit. alternative was not selected because it is to the Council’s goal of minimizing Harvesting costs are expected to not expected to achieve the Council’s significantly decrease for vessels goal of enabling more equitable access discards, and are also expected to harvesting vermilion snapper and to the resource for fishermen from reduce economic profits for the affected slightly decrease for vessels harvesting different areas of the South Atlantic. Six small entities more than the proposed gray triggerfish, while they are expected of the other alternatives are expected to action. to increase for vessels harvesting greater decrease economic profits for the Three alternatives, including the amberjack, almaco jack, and species in affected small entities more than the status quo, were considered for the the other jacks complex. Because of proposed action and thus were not proposed action to establish a these countervailing effects on selected. The other two alternatives are commercial trip limit of 500 lb (227 kg) harvesting costs, harvesting costs for expected to reduce economic profits less for the other jacks complex. The status many commercial snapper-grouper than the proposed action, but were not quo alternative was not selected as it is vessels will likely change little if at all. selected because they are not expected not expected to achieve the Council’s Thus, economic profit for the average to achieve the Council’s goal of enabling goal of enabling more equitable access commercial snapper-grouper vessel is more equitable access to the resource for to the resource for fishermen from expected to increase slightly or remain fishermen from different areas of the different areas of the South Atlantic. relatively the same, though some vessels South Atlantic. could experience a reduction in For red porgy, seven alternatives, The other two alternatives are expected economic profit. including the status quo, were to reduce economic profits more than Five alternatives, including the status considered for the proposed action to the proposed action and therefore were quo, were considered for the proposed remove the sale and purchase not selected. action to reduce the commercial trip prohibition and the possession limit of One alternative, the status quo, was limit for blueline tilefish from 300 lb three per person per day or three per considered for the proposed action to (136 kg) to 100 lb (45 kg) from January person per trip during January 1 to April remove the 12-inch (30.5-cm) TL 1 through April 30. The status quo 30 each year, specify two commercial commercial minimum size limit for alternative and the other four fishing seasons of January 1 through queen snapper, silk snapper, and alternatives were not selected because April 30 (Season 1) and May 1 through blackfin snapper. The status quo they are not expected to achieve the December 31 (Season 2) within the alternative was not selected because it is Council’s goal of enabling more fishing year, allocate 30 percent of the expected to result in higher discards, equitable access to the resource for commercial ACL to Season 1 and 70 which is contrary to the Council’s goal fishermen from different areas of the percent to Season 2, and establish a South Atlantic. The status quo commercial trip limit of 60 fish in of minimizing discards, and is also alternative is also not expected to Season 1. The status quo was not expected to result in lower economic increase economic profits for the selected because it is not expected to profits for the affected small entities. affected small entities. achieve the Council’s goal of enabling One alternative, the status quo, was Two alternatives, including the status more equitable access to the resource for considered for the proposed action to quo, were considered for the proposed fishermen from different areas of the reduce the commercial minimum size action to establish, for snowy grouper, South Atlantic and is not expected to limit for gray triggerfish in the EEZ off two commercial fishing seasons of increase economic profits for the the east coast of Florida from 14 inches January 1 through June 30 (Season 1) affected small entities. (35.6 cm) to 12 inches (30.5 cm) FL. The and July 1 through December 31 (Season Five alternatives, including the status status quo alternative was not selected 2) within the calendar fishing year, quo, were considered for the proposed because it is expected to result in higher allocate 70 percent of the commercial action to remove the trip limit reduction discards, which is contrary to the ACL to Season 1 and 30 percent to in both seasons for vermilion snapper. Council’s goal of minimizing discards, Season 2, and transfer any remaining None of these alternatives were selected quota from Season 1 to Season 2. The because they are expected to result in and is also expected to result lower status quo alternative and the other lower economic profits for the affected economic profits for the affected small alternative were not selected because small entities, while three of these entities. they are not expected to achieve the alternatives are also expected to result No new reporting, record-keeping, or Council’s goal of enabling more in significantly higher regulatory costs other compliance requirements are equitable access to the resource for to the government. introduced by this proposed rule. fishermen from different areas of the Four alternatives, including the status Accordingly, this proposed rule does South Atlantic. quo, were considered for the proposed not implicate the Paperwork Reduction Nine alternatives, including the status action to establish a commercial Act. quo, were considered for the proposed minimum size limit of 20 inches (50.8 action to establish, for greater cm) FL for almaco jack. The status quo List of Subjects in 50 CFR Part 622 amberjack, two commercial fishing was not selected because almaco jack seasons of March 1 through August 31 less than 20 inches (50.8 cm) FL are not Fisheries, Fishing, Grouper, Snapper, (Season 1) and September 1 through considered to be of a marketable size South Atlantic.

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55539

Dated: October 7, 2019. (iii) Any unused portion of the quota (4) Red porgy. The following Samuel D. Rauch III, specified in paragraph (a)(1)(i) of this commercial trip limits apply until the Deputy Assistant Administrator for section will be added to the quota applicable commercial quota specified Regulatory Programs, National Marine specified in paragraph (a)(1)(ii) of this in § 622.190(a)(6) is reached. See Fisheries Service. section. Any unused portion of the § 622.190(c)(1) for the limitations For the reasons set out in the quota specified in paragraph (a)(1)(ii) of regarding red porgy after the applicable preamble, 50 CFR part 622 is proposed this section, including any addition of commercial quota is reached. to be amended as follows: quota specified in paragraph (a)(1)(i) of (i) From January 1 through April 30— this section that was unused, will 60 fish. PART 622—FISHERIES OF THE become void and will not be added to (ii) From May 1 through December CARIBBEAN, GULF OF MEXICO, AND any subsequent quota. 31—120 fish. SOUTH ATLANTIC * * * * * (5) Greater amberjack. The following ■ 1. The authority citation for part 622 (3) Greater amberjack—(i) For the commercial trip limits apply until the continues to read as follows: period March 1 through August 31 each applicable commercial quota specified year—461,633 lb (209,393 kg). in § 622.190(a)(3) is reached. See Authority: 16 U.S.C. 1801 et seq. (ii) For the period September 1 § 622.190(c)(1) for the limitations § 622.184 [Amended] through the end of February each year— regarding greater amberjack after the ■ 2. In § 622.184, remove paragraph (c). 307,755 lb (139,595 kg). applicable commercial quota is reached. ■ 3. In § 622.185, revise paragraphs (iii) Any unused portion of the quota (i) From March 1 through August 31— (a)(3) and (c)(2), and add paragraph specified in paragraph (a)(3)(i) of this 1,200 lb (544 kg). (c)(6) to read as follows: section will be added to the quota (ii) From September 1 through the end specified in paragraph (a)(3)(ii) of this of February—1,000 lb (454 kg). § 622.185 Size limits. section. Any unused portion of the (6) Vermilion snapper. Until the * * * * * quota specified in paragraph (a)(3)(ii) of applicable commercial quota specified (a) * * * this section, including any addition of in § 622.190(a)(4) is reached—1,000 lb (3) Cubera, gray, and yellowtail quota specified in paragraph (a)(3)(i) of (454 kg), gutted weight. See snappers—12 inches (30.5 cm), TL. this section that was unused, will § 622.190(c)(1) for the limitations * * * * * become void and will not be added to regarding vermilion snapper after the (c) * * * any subsequent quota. applicable commercial quota is reached. (2) Gray triggerfish. (i) For a fish taken * * * * * by a person not subject to the bag limit * * * * * (6) Red porgy—(i) For the period (10) Blueline tilefish. The following specified in § 622.187(b)(8)—12 inches January 1 through April 30 each year— (30.5 cm), FL. commercial trip limits apply until the 47,308 lb (21,458 kg), gutted weight; commercial ACL specified in (ii) For a fish taken by a person that 49,200 lb (22,317 kg), round weight. is subject to the bag limit specified in § 622.193(z)(1)(i) is reached. See (ii) For the period May 1 through § 622.193(z)(1)(i) for the limitations § 622.187(b)(8)—(A) In the South December 31 each year—110,384 lb Atlantic EEZ off Florida—14 inches regarding blueline tilefish after the (50,069 kg), gutted weight; 114,800 lb commercial ACL is reached. (35.6 cm), FL. (52,072 kg), round weight. (B) In the South Atlantic EEZ off (i) From January 1 through April 30— (iii) Any unused portion of the quota North Carolina, South Carolina, and 100 lb (45 kg), gutted weight; 106 lb (48 specified in paragraph (a)(6)(i) of this Georgia—12 inches (30.5 cm), FL. kg), round weight. section will be added to the quota * * * * * specified in paragraph (a)(6)(ii) of this (ii) From May 1 through December (6) Almaco jack. For a fish taken by section. Any unused portion of the 31—300 lb (136 kg), gutted weight; 318 a person not subject to the bag limit quota specified in paragraph (a)(6)(ii) of lb (144 kg), round weight. specified in § 622.187(b)(8)—20 inches this section, including any addition of * * * * * (50.8 cm), FL. quota specified in paragraph (a)(6)(i) of (14) Other jacks complex (lesser ■ 4. In § 622.190, revise paragraphs this section that was unused, will amberjack, almaco jack, and banded (a)(1), (3), and (6) to read as follows: become void and will not be added to rudderfish). Until the commercial ACL § 622.190 Quotas. any subsequent quota. specified in § 622.193(l)(1)(i) is * * * * * * * * * * reached—500 lb (227 kg), gutted weight; (a) * * * ■ 5. In § 622.191, revise paragraphs 520 lb (236 kg), round weight. See (1) Snowy grouper—(i) For the period (a)(4) through (6), (10), and add § 622.193(l)(1)(i) for the limitations January 1 through June 30 each year— paragraph (a)(14) to read as follows: regarding the other jacks complex after 107,754 lb (48,876 kg). the commercial ACL is reached. (ii) For the period July 1 through § 622.191 Commercial trip limits. * * * * * December 31 each year—46,181 lb * * * * * [FR Doc. 2019–22197 Filed 10–16–19; 8:45 am] (20,947 kg). (a) * * * BILLING CODE 3510–22–P

VerDate Sep<11>2014 17:00 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00030 Fmt 4702 Sfmt 9990 E:\FR\FM\17OCP1.SGM 17OCP1 55540

Notices Federal Register Vol. 84, No. 201

Thursday, October 17, 2019

This section of the FEDERAL REGISTER Dated: October 11, 2019. through Friday (except official Federal contains documents other than rules or Rebecca A. Womeldorf, holidays). Persons wanting to visit the proposed rules that are applicable to the Secretary, Committee on Rules of Practice USDA South Building to view public. Notices of hearings and investigations, and Procedure, Judicial Conference of the comments received in response to this committee meetings, agency decisions and United States. notice are requested to make an rulings, delegations of authority, filing of petitions and applications and agency [FR Doc. 2019–22621 Filed 10–16–19; 8:45 am] appointment in advance by calling (202) statements of organization and functions are BILLING CODE 2210–55–P 720–3252. examples of documents appearing in this FOR FURTHER INFORMATION CONTACT: Paul section. I. Lewis, Ph.D., Director, Standards DEPARTMENT OF AGRICULTURE Division, National Organic Program, USDA–AMS, 1400 Independence Ave. JUDICIAL CONFERENCE OF THE Agricultural Marketing Service SW, Room 2642-So., Ag Stop 0268, UNITED STATES [Doc. No. AMS–NOP–19–0090; NOP–19–04] Washington, DC 20250, Telephone: (202) 720–3252, Fax: (202) 205–7808. Advisory Committee on the Federal National Organic Program: Request for SUPPLEMENTARY INFORMATION: Rules of Bankruptcy Procedure an Extension of a Currently Approved Title: National Organic Program. Information Collection OMB Number: 0581–0191. AGENCY: Advisory Committee on the Expiration Date of Approval: January Federal Rules of Bankruptcy Procedure, AGENCY: Agricultural Marketing Service, 31, 2020. Judicial Conference of the United States. USDA. Type of Request: Extension of a ACTION: Notice of proposed ACTION: Notice and request for currently approved information amendments. comments. collection. Abstract: The Organic Foods SUMMARY: In accordance with the SUMMARY: The Advisory Committee on Production Act of 1990 (OFPA) as Paperwork Reduction Act of 1995, this Bankruptcy Rules have proposed amended (7 U.S.C. 6501–6522) notice announces the Agricultural amendments to the following rules and mandates that the Secretary develop the Marketing Service’s (AMS) intention to forms: NOP to accredit eligible State program’s request approval from the Office of governing State officials or private Interim Bankruptcy Rules: 1007(b), Management and Budget, for an 1007(h), 1020, 2009, 2012(a), 2015, persons as certifying agents who would extension of the currently approved certify producers or handlers of 3010(b), 3011, and 3016; and information collection National Organic Bankruptcy Forms: 101, 201, 309E, agricultural products that have been Program (NOP) Reporting and produced using organic methods as 309E2, 309F, 309F2, 314, 315, and Recordkeeping Requirements. 425A. provided for in OFPA. The USDA DATES: Comments received by December organic regulation (7 CFR part 205): (1) DATES: All written comments and 16, 2019 will be considered. Established national standards suggestions with respect to the proposed ADDRESSES: Interested persons are governing the marketing of certain amendments may be submitted on or invited to submit written comments agricultural products as organically after the opening of the period for concerning this notice. Comments must produced products; (2) assures public comment on October 16, 2019, be sent to Valerie Frances, Agricultural consumers that organically produced but no later than November 13, 2019. Marketing Specialist, National Organic products meet a consistent standard; Program, AMS/USDA, 1400 and (3) facilitates interstate commerce ADDRESSES: The text of the proposed Independence Ave. SW, Room 2642–S., in fresh and processed food that is rules and the accompanying committee Ag Stop 0268, Washington, DC 20250– organically produced. notes, along with the related forms, are 0268 or by internet: http:// Reporting and recordkeeping are posted on the Judiciary’s website at: www.regulations.gov. Written comments essential to the integrity of the organic http://www.uscourts.gov/rules-policies/ responding to this notice should be certification system. A paper trail is a proposed-amendments-published- identified with the document number critical element in carrying out the public-comment. Written comments AMS–NOP–19–0090; NOP–19–04. It is mandate of OFPA and NOP. Reporting must be submitted electronically, USDA’s intention to have all comments and recordkeeping serve the AMS following the instructions provided on concerning this notice, including names mission, program objectives, and the website. All comments submitted and addresses when provided, management needs by providing will be posted on the website and regardless of submission procedure information on the efficiency and available to the public. used, available for viewing on the effectiveness of the program. The FOR FURTHER INFORMATION CONTACT: Regulations.gov (http:// information affects decisions because it Rebecca A. Womeldorf, Secretary, www.regulations.gov) internet site. is the basis for evaluating compliance Committee on Rules of Practice and Comments submitted in response to this with OFPA and NOP, for administering Procedure of the Judicial Conference of notice will also be available for viewing the program, for management decisions the United States, Thurgood Marshall in person at USDA–AMS, National and planning, and for establishing the Federal Judiciary Building, One Organic Program, Room 2624-South cost of the program. It supports Columbus Circle NE, Suite 7–300, Building, 1400 Independence Ave. SW, administrative and regulatory actions in Washington, DC 20544, Telephone (202) Washington, DC, from 9 a.m. to 12 noon response to noncompliance with OFPA 502–1820. and from 1:00 p.m. to 4 p.m., Monday and NOP.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55541

In general, the information collected When an entity applies for are part of a retail operation that is used by USDA, State program accreditation as a certifying agent, it processes organic products in a location governing State officials, and certifying must provide a copy of its procedures other than the premises of the retail agents. It is created and submitted by for complying with recordkeeping outlet. Based upon AMS NOP’s Organic State and foreign program officials, peer requirements (§ 205.504(b)(3)). Once Integrity Database (INTEGRITY) on review auditors, accredited certifying accredited, agents must make their August 7, 2019, there are approximately agents, organic inspectors, certified records available for inspection and 42,309 certified operations globally.2 organic producers and handlers, those copying by authorized representatives of Based on past growth of the industry, seeking accreditation or certification, the Secretary (§ 205.501(a)(9)). USDA AMS estimates the addition of 2,496 and parties interested in changing the charges certifying agents for the time new certified organic operations a year. National List of Allowed and Prohibited required to do these document reviews. In addition, AMS estimates that there Substances at sections 205.600 through Audits require less time when the are 4,866 producers exempt from 205.607. Additionally, it causes most of documents are well organized and certification, but who must still these entities to have procedures and centrally located. maintain records pursuant to section space for recordkeeping. Recordkeeping requirements for 205.101(c). USDA. USDA is the accrediting certifying agents are divided into three Administrative costs for reporting and authority. USDA accredits domestic and categories of records with varying recordkeeping vary among certified foreign certifying agents who certify retention periods: (1) Records created by operators. Factors affecting costs domestic and foreign organic producers certifying agents regarding applicants include the type and size of operation, and handlers, using information from for certification and certified operations, and the type of systems maintained. the agents documenting their business maintain 10-years, consistent with AMS believes that operations using operations and program expertise. OFPA’s requirement for maintaining all product labels containing the term USDA also permits States to establish records concerning activities of ‘‘organic’’ handle an average of 20 labels their own state organic programs after certifying agents; (2) records obtained annually. Based on INTEGRITY on the programs are approved by the from applicants for certification and August 7, 2019, there are over 18,584 Secretary, using information from the certified operations, maintain 5-years, certified organic handlers. For each States documenting their ability to the same as OFPA’s requirement for the certified handler, AMS estimates that operate such programs and showing that retention of records by certified the average annual burden to develop such programs meet the requirements of operations; and (3) records created or product labels with organic claims is OFPA and NOP. received by certifying agents regarding two hour per product label times 20 States. States may operate their own accreditation, maintain 5-years, product labels per handler. The annual organic programs. State officials obtain consistent with OFPA’s requirement for burden will be lower for smaller the Secretary’s approval of their renewal of agent’s accreditation operations and livestock feed handlers, programs by submitting information to (§ 205.510(b)). USDA documenting their ability to Organic inspectors. Inspectors, on and higher for large operations that operate such programs and showing that behalf of certifying agents, conduct on- produce a significant volume of organic such programs meet the requirements of site inspections of certified operations processed product. OFPA and NOP. The Secretary, or and operations applying for Interested parties. Any interested delegated representative, will review a certification. They report the findings party may petition the National Organic State organic program not less than once from their inspection to the certifying Standards Board (NOSB) for the purpose during each 5-year period following the agent. Inspectors are the agents of having a substance evaluated for date of the initial program approval. To themselves, employees of the agents, or recommendation to the Secretary for date, one State organic program is individual contractors. We estimate that inclusion on or deletion from the approved by USDA. about half are certifying agents or their National List. Based on the number of Certifying agents. Certifying agents are employees and half are individual petitions received in the past, AMS State, private, or foreign entities who are contractors. Individuals who apply for estimates 25 parties petitioning the accredited by USDA to certify domestic positions as inspectors submit to the NOSB to amend the National List in a and foreign producers and handlers as agents information documenting their given year. The annual burden for each organic in accordance with OFPA and qualifications to conduct such interested party to prepare a complete NOP. Each entity wanting to be an agent inspections. According to International petition is an average of 30 hours. seeks accreditation from USDA, Organic Inspectors Association (IOIA), Estimate of Burden: Public reporting submitting information documenting its there are at least 250 inspectors burden for this collection of information business operations and program currently providing services.1 is estimated to average 4.99 hours per expertise. Accredited certifying agents Producers and handlers. Producers response. determine if a producer or handler and handlers, domestic and foreign, Respondents: Producers, handlers, meets organic requirements, using apply to certifying agents for organic certifying agents, inspectors and State, detailed information from the operation certification, submit detailed Local or Tribal governments and documenting its specific practices and information documenting their specific interested parties. on-site inspection reports from organic practices, provide annual updates to Estimated Number of Respondents: inspectors. As of August 7, 2019, there continue their certification, and report 50,025. are 78 certifying agents accredited under changes in their practices. Producers Estimated Number of Responses: NOP. include farmers, livestock and poultry 1,138,229. Administrative costs for reporting, producers, and wild crop harvesters. Estimated Number of Responses per disclosure of information, and Handlers include those who transport or Respondent: 22.75. recordkeeping vary among certifying transform food and include millers, bulk Estimated Total Annual Burden on agents. Factors affecting costs include distributors, food manufacturers, Respondents: 5,667,494. the number and size of clients, the processors, or packers. Some handlers categories of certification provided, and 2 Organic Integrity Databse: https:// the type of systems maintained. 1 Not all inspectors are members of IOIA. organic.ams.usda.gov/integrity/

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55542 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Comments are invited on: (1) Whether Office of Management and Budget information collected to determine the proposed collection of information (OMB), New Executive Office Building, applicant eligibility, project feasibility, is necessary for the proper performance 725–17th Street NW, Washington, DC and the applicant’s ability to meet the of the functions of the agency, including 20502. Commenters are encouraged to grant and regulatory requirements. whether the information will have submit their comments to OMB via Failure to collect proper information practical utility; (2) the accuracy of the email to: OIRA_Submission@ could result in improper determinations agency’s estimate of the burden of the OMB.EOP.GOV or fax (202) 395–5806 of eligibility or improper use of funds. proposed collection of information and to Departmental Clearance Office, Description of Respondents: Not-for- including the validity of the USDA, OCIO, Mail Stop 7602, Profit Institutions. methodology and assumptions used; (3) Washington, DC 20250–7602. Copies of Number of Respondents: 51. ways to enhance the quality, utility, and the submission(s) may be obtained by Frequency of Responses: Reporting: clarity of the information to be calling (202) 720–8958. Annually. collected; and (4) ways to minimize the An agency may not conduct or Total Burden Hours: 1,397. burden of the collection of information sponsor a collection of information Title: 7CFR 1956–C, Debt on those who are to respond, including unless the collection of information Settlement—Community and Business the use of appropriate automated, displays a currently valid OMB control Programs. electronic, mechanical, or other number and the agency informs OMB Control Number: 0575–0124. technological collection techniques or potential persons who are to respond to Summary of Collection: The other forms of information technology. the collection of information that such Community and Direct Business All responses to this notice will be persons are not required to respond to Programs loans and grants are summarized and included in the request the collection of information unless it authorized by the Consolidated Farm for OMB approval. All comments will displays a currently valid OMB control and Rural Development Act. Rural become a matter of public record. number. Housing Service (RHS) is a credit agency for agricultural and rural Rural Housing Service Authority: 7 U.S.C. 6501–6522. development for the United States Dated: October 10, 2019. Title: 7 CFR 3570 Community Department of Agriculture and offers Bruce Summers, Facilities Technical Assistance and supervised credit to develop, improve Administrator, Agricultural Marketing Training Grant Program. and operate family farms, modest Service. OMB Control Number: 0575–0198. housing, essential community facilities, Summary of Collection: The [FR Doc. 2019–22564 Filed 10–16–19; 8:45 am] and business and industry across rural Community Facilities Technical BILLING CODE 3410–02–P America. 7 CFR 1956–C, Debt Assistance and Training (TAT) is a Settlement—Community and Business competitive grant program which the Programs provides policies and DEPARTMENT OF AGRICULTURE Rural Housing Service (RHS) procedures as well as a mechanism for administers. Section 306 of the debt settlement in connection with Submission for OMB Review; Consolidated Farm and Rural Community Facilities loans and grants, Comment Request Development Act (CONACT), 7 U.S.C. direct Business and Industry loans, 1926, was amended by Section 6006 of Indian Tribal Land Acquisition loans October 11, 2019. the Agriculture Act of 2014 (P.L. 113– and Irrigation and Drainage. The debt The Department of Agriculture has 79) to establish the Community settlement program provides the submitted the following information Facilities Technical Assistance and delinquent client with an equitable tool collection requirement(s) to OMB for Training Grant. Section 6006 authorized for the compromise, adjustment, review and clearance under the grants be made to public bodies and cancellation, or charge-off of a debt Paperwork Reduction Act of 1995, private nonprofit corporations owed to the Agency. Public Law 104–13. Comments are (including Indian Tribes) that will serve Need and Use of the Information: The requested regarding: Whether the rural areas for the purpose of enabling field offices will collect information collection of information is necessary the grantees to provide to associations from applicants, borrowers, consultants, for the proper performance of the technical assistance and training with lenders, and attorneys to determine functions of the agency, including respect to essential community facilities eligibility, financial capacity and derive whether the information will have authorized under Section 306(a)(1) of an equitable resolution. This practical utility; the accuracy of the the Consolidated Farm and Rural information collected is similar to that agency’s estimate of burden including Development Act (7 U.S.C. 1926(a)). required by a commercial lender in the validity of the methodology and Grants can be made for 100 percent of similar circumstances. Failure to collect assumptions used; ways to enhance the the cost of assistance. the information could result in Need and Use of the Information: quality, utility and clarity of the improper servicing of these loans. information to be collected; and ways to Eligible entities receive TAT grants to Description of Respondents: Not for minimize the burden of the collection of help small rural communities or areas profit institutions; Business or other for- information on those who are to identify and solve problems relating to profit; State, Local or Tribal respond, including through the use of essential community facilities. The Government. appropriate automated, electronic, grant recipients may provide technical Number of Respondents: 116. mechanical, or other technological assistance to public bodies and private Frequency of Responses: Reporting: collection techniques or other forms of nonprofit corporations. Applicants On occasion. information technology. applying for TAT grants must submit an Total Burden Hours: 1,005. Comments regarding this information application, which includes an collection received by November 18, application form, narrative proposal, Kimble Brown, 2019 will be considered. Written various other forms, certifications, and Departmental Information Collection comments should be addressed to: Desk supplemental information. The Rural Clearance Officer. Officer for Agriculture, Office of Development State Offices and the RHS [FR Doc. 2019–22694 Filed 10–16–19; 8:45 am] Information and Regulatory Affairs, National Office staff will use the BILLING CODE 3410–XV–P

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00003 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55543

DEPARTMENT OF AGRICULTURE sec. 2, The Administrator is authorized appropriate automated, electronic, and empowered to make loans in the mechanical, or other technological Submission for OMB Review; States and Territories of the United collection techniques or other forms of Comment Request States for rural electrification and the information technology. furnishing of electric energy to persons Comments regarding this information October 11, 2019. in rural areas who are not receiving collection received by November 18, The Department of Agriculture has central station service, and for the 2019 will be considered. Written submitted the following information purpose of furnishing and improving comments should be addressed to: Desk collection requirement(s) to Office of telephone service in rural areas, as Officer for Agriculture, Office of Management and Budget (OMB) for hereinafter provided; to make or cause Information and Regulatory Affairs, review and clearance under the to be made, studies, investigations, and Office of Management and Budget Paperwork Reduction Act of 1995, reports concerning the condition and (OMB), New Executive Office Building, Public Law 104–13. Comments are progress of the electrification of and the 725—17th Street NW, Washington, DC requested regarding: Whether the furnishing of adequate telephone service 20502. Commenters are encouraged to collection of information is necessary in rural areas in the several States and submit their comments to OMB via for the proper performance of the Territories; and to publish and email to: OIRA_Submission@ functions of the agency, including disseminate information with respect OMB.EOP.GOV or fax (202) 395–5806 whether the information will have thereto. and to Departmental Clearance Office, practical utility; the accuracy of the Need and Use of the Information: In USDA, OCIO, Mail Stop 7602, agency’s estimate of burden including an effort to improve customer service Washington, DC 20250–7602. Copies of the validity of the methodology and provided to RUS rural borrowers, the the submission(s) may be obtained by assumptions used; ways to enhance the Agency has proposed to revise, calling (202) 720–8958. quality, utility and clarity of the consolidate, and/or streamline its An agency may not conduct or information to be collected; ways to current contracts and contracting sponsor a collection of information minimize the burden of the collection of procedures. In this activity RUS has and unless the collection of information information on those who are to will continue to work with industry displays a currently valid OMB control respond, including through the use of groups to obtain their input as to what number and the agency informs appropriate automated, electronic, types of changes they and borrowers potential persons who are to respond to mechanical, or other technological may want to see made to the contracts. the collection of information that such collection techniques or other forms of Description of Respondents: Business persons are not required to respond to information technology. or other for-profit. the collection of information unless it Comments regarding this information Number of Respondents: 51. displays a currently valid OMB control collection received by November 18, Frequency of Responses: Reporting: number. 2019 will be considered. Written On occasion. comments should be addressed to: Desk Total Burden Hours: 161. Rural Utilities Service Officer for Agriculture, Office of Kimble Brown, Title: Special Evaluation Assistance Information and Regulatory Affairs, Departmental Information Collection for Rural Communities and Households Office of Management and Budget Clearance Officer. Program (SEARCH). (OMB), New Executive Office Building, OMB Control Number: 0572–0146. [FR Doc. 2019–22689 Filed 10–16–19; 8:45 am] 725—17th Street NW, Washington, DC Summary of Collection: The Food, 20502. Commenters are encouraged to BILLING CODE 3410–15–P Conservation and Energy Act of 2008, submit their comments to OMB via Public Law 110–234 (Farm Bill) _ email to: OIRA Submission@ DEPARTMENT OF AGRICULTURE amended Section 306(a)(2) of the OMB.EOP.GOV or fax (202) 395–5806 Consolidated Farm and Rural and to Departmental Clearance Office, Submission for OMB Review; Development Act (CONACT) (7 U.S.C. USDA, OCIO, Mail Stop 7602, Comment Request 1926(a)(2)). The amendment created a Washington, DC 20250–7602. Copies of grant program to make Special the submission(s) may be obtained by October 10, 2019. Evaluation Assistance for Rural calling (202) 720–8958. The Department of Agriculture has Communities and Households An agency may not conduct or submitted the following information (SEARCH) Program grants. sponsor a collection of information collection requirement(s) to Office of Under the SEARCH program, the unless the collection of information Management and Budget (OMB) for Secretary may make predevelopment displays a currently valid OMB control review and clearance under the and planning grants to public or quasi- number and the agency informs Paperwork Reduction Act of 1995, public agencies, organizations operated potential persons who are to respond to Public Law 104–13. Comments are on a not-for-profit basis or Indian tribes the collection of information that such requested regarding: Whether the on Federal and State reservations and persons are not required to respond to collection of information is necessary other federally recognized Indian tribes. the collection of information unless it for the proper performance of the The grant recipients use the grant funds displays a currently valid OMB control functions of the agency, including for feasibility studies, design assistance, number. whether the information will have and technical assistance for direct loans, practical utility; the accuracy of the grants and guaranteed loans, to Rural Utilities Service agency’s estimate of burden including financially distress communities in Title: New Equipment Contract (Form the validity of the methodology and rural areas with populations of 2,500 or 395) for Telecommunications and assumptions used; ways to enhance the fewer inhabitants for water and waste Broadband Borrowers. quality, utility and clarity of the disposal projects as authorized in OMB Control Number: 0572–0149. information to be collected; ways to Sections 306(a)(1), 306(a)(2) and Summary of Collection: The Rural minimize the burden of the collection of 306(a)(24) of the CONACT. Electrification Act of 1936, 7 U.S.C. 901 information on those who are to Need and Use of the Information: et seq., as amended (RE Act), in Title I, respond, including through the use of Applicants applying for SEARCH grants

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00004 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55544 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

must submit an application which SUPPLEMENTARY INFORMATION: Under the comments regarding the notice and its includes an application form, various regulations in ‘‘Subpart L—Fruits and supporting documentation. Below, we other forms, certifications, and Vegetables’’ (7 CFR 319.56–1 through discuss these comments, by topic. supplemental information. Rural Utility 319.56–12, referred to below as the Comments on the Pest Risk Assessment Service will use the information regulations), the Animal and Plant collected from applicants, borrowers, Health Inspection Service (APHIS) The PRA contained a pest list of pests and consultants to determine applicant prohibits or restricts the importation of associated with guava and known to eligibility, project feasibility, and the fruits and vegetables into the United occur in Taiwan. The PRA identified applicant’s ability to meet the grant and States from certain parts of the world to 23 2 pests as being of quarantine regulatory requirements. prevent plant pests from being significance and likely to follow the Failure to collect proper information introduced into and spread within the pathway on guava from Taiwan, and could result in improper determinations United States. therefore possible candidates for risk of eligibility, improper use of funds, or Section 319.56–4 of the regulations mitigation. hindrances in making grants authorized contains a notice-based process based CDFA stated that, in addition to the by the SEARCH program. on established performance standards 23 pests identified as being of Description of Respondents: Not-for- for authorizing the importation of fruits quarantine significance, there were profit Institutions and State, Local or and vegetables. The performance another 12 pests listed on the pest list Tribal Government. standards, known as designated that were rated as either an ‘‘A’’ pest or Number of Respondents: 111. phytosanitary measures, are listed in ‘‘B’’ pest according to CDFA’s pest Frequency of Responses: Reporting: paragraph (b) of that section. Under the rating system: Aleurodicus dispersus, On occasion. process, APHIS proposes to authorize Ceroplastes floridensis, Coccus viridis, Total Burden Hours: 3,380. the importation of a fruit or vegetable Ferrisia virgata, Kilifia acuminata, into the United States if, based on the Milviscutulus mangiferae, Paracoccus Kimble Brown, findings of a pest risk analysis, we marginatus, Planococcus minor, Departmental Information Collection determine that the measures can Pseudococcus jackbeardsleyi, Pulvinaria Clearance Officer. mitigate the plant pest risk associated psidii, Rusellapsis pustulanus, and Selenothrips rubrocinctus. Under [FR Doc. 2019–22560 Filed 10–16–19; 8:45 am] with the importation of that fruit or CDFA’s rating system, a pest given an BILLING CODE 3410–15–P vegetable. APHIS then publishes a ‘‘A’’ rating is a plant pest of known notice in the Federal Register economic importance subject to a State announcing the availability of the pest DEPARTMENT OF AGRICULTURE of California-enforced action that risk analysis that evaluates the risks involves eradication, quarantine associated with the importation of that Animal and Plant Health Inspection regulation, containment, rejection, or fruit or vegetable. Service other holding action. A pest given a ‘‘B’’ In accordance with that process, we rating is a pest of known economic published a notice 1 in the Federal [Docket No. APHIS–2018–0073] importance subject to eradication, Register on December 14, 2018 (83 FR containment, control, or other holding 64314–64315, Docket No. APHIS–2018– Decision To Authorize the Importation action at the discretion of the individual 0073), in which we announced the of Fresh Guava From Taiwan Into the county agricultural commissioner availability, for review and comment, of Continental United States within the State of California.3 The a pest risk assessment (PRA) that commenter stated that mitigations AGENCY: Animal and Plant Health evaluated the risks associated with the Inspection Service, USDA. should be developed for these pests as importation into the continental United well. ACTION: Notice. States of fresh guava fruit from Taiwan In § 319.56–4 of the regulations, and a risk management document SUMMARY: We are advising the public of paragraph (c) provides that if a fruit or (RMD) prepared to identify vegetable is not authorized importation our decision to authorize the phytosanitary measures that could be importation of fresh guava fruit from into the United States, APHIS will not applied to the commodity to mitigate authorize its importation until we Taiwan into the continental United the pest risk. States. Based on the findings of the pest examine the pest risk associated with its We solicited comments on the PRA importation and determine that the risk risk analysis, which we made available and RMD for 60 days ending on to the public to review and comment posed by each quarantine pest February 12, 2019. We received five associated with the importation of the through a previous notice, we have comments by that date. They were from concluded that the application of one or commodity can reasonably be mitigated private citizens, the California by the application of one or more more designated phytosanitary Department of Food and Agriculture measures will be sufficient to mitigate mitigation measures. Additionally, (CDFA), and the Florida Department of consistent with international standards the risks of introducing or disseminating Agriculture and Consumer Services to which the United States is a plant pests or noxious weeds via the (FDACS). signatory,4 the regulations define a importation of fresh guava fruit from One of the commenters expressed quarantine pest as: ‘‘A pest of potential Taiwan. general support for the importation of DATES: The articles covered by this guava from Taiwan into the United 2 Due to a typographical error, the PRA notification may be authorized for States, while another expressed general erroneously stated that 24 pests had been identified, importation after October 17, 2019. opposition to the importation of fruits although only 23 were listed; the RMD correctly stated that only 23 had been identified. This notice FOR FURTHER INFORMATION CONTACT: Mr. and vegetables into the United States. will use the latter number. Tony Roma´n, Senior Regulatory Policy The other three commenters provided 3 For further information, see https://ucanr.edu/ Specialist, Regulatory Coordination and sites/plantpest/Regualtory_Information/Pest_ 1 To view the notice, PRA, RMD, supporting Ratings/. Compliance, PPQ, APHIS, 4700 River documents, and the comments that we received, go 4 See https://www.ippc.int/largefiles/adopted_ Road Unit 133, Riverdale, MD 20737– to http://www.regulations.gov/ ISPMs_previousversions/en/ISPM_05_2007_En_ 1231; (301) 851–2242. #!docketDetail;D=APHIS-2018-0073. 2007-07-26.pdf.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00005 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55545

economic importance to the area importation of guavas from Taiwan into from an NPPO and consider sharing it endangered thereby and not yet present the continental United States. Therefore, with external parties when there is there, or present but not widely we have prepared an addendum to the reason to believe that the NPPO is not distributed there and being officially PRA that evaluates P. psidiicola, assigns conducting fruit cutting or is doing so controlled.’’ For purposes of an APHIS it a Medium risk rating, and determines in an ineffective manner. This is not the risk assessment, the ‘‘endangered area’’ that it is a possible candidate for risk case with Taiwan. is the geographical area of the United mitigation. We also have revised our We also note that all guava imported States into which a foreign country has RMD to include P. psidiicola as a into the United States will be subject to requested that APHIS authorize quarantine pest that could follow the additional cutting by Customs and importation of the commodity; in the pathway on the importation of guavas Border Protection in accordance with 7 case of the guava from Taiwan, this is from Taiwan into the United States. The CFR part 305 at ports of entry into the the continental United States. addendum to the PRA and the revised United States. With regard to 11 of the 12 pests cited RMD are available on Regulations.gov, We proposed that the guava would by CDFA (Aleurodicus dispersus, or by contacting the individual listed in have to be treated with cold treatment Ceroplastes floridensis, Coccus viridis, this notice under FOR FURTHER for Bactrocera spp. fruit flies, or Ferrisia virgata, Kilifia acuminata, INFORMATION CONTACT. alternatively, irradiated. Milviscutulus mangiferae, Planococcus The inclusion of P. psidiicola in the FDACS expressed concern that the minor, Pseudococcus jackbeardsleyi, RMD does not alter the mitigations of Pulvinaria psidii, Rusellapsis cold treatment would not be effectively the RMD from those we initially applied. They stated that misapplication pustulanus, and Selenothrips proposed. P. psidiicola causes corky rubrocinctus), while these pests were of cold treatment is a recurring issue, lesions on the surface on infected fruit and cited two examples that they listed in the pest list of our PRA, they that are easily detected during visual are all present in the United States and considered evidence of failure of in- inspections, and we proposed both pre- transit cold treatment and indicative of not under Federal official control, and export inspection by the national plant therefore do not meet our definition of the liabilities of cold treatment as a protection organization of Taiwan and mitigation measure: The discovery of a quarantine pest. Therefore, we do not port-of-entry inspections as components consider it necessary to develop live fruit flies on cold-treated of our systems approach for the clementines from Spain, later, mitigations for these pests, irrespective importation of guava from Taiwan. of their rating within CDFA’s system. clementines from Morocco. Because of That being said, the revised RMD does the possibility of cold treatment failure However, APHIS has developed a include one additional mitigation program, the Federally Recognized State and the high likelihood that fruit flies measure not included in the initial may become established in Florida, if Managed Phytosanitary Program RMD. We discuss this mitigation (FRSMP), to afford protections to States introduced, FDACS requested that we measure and the basis for its inclusion when commodities are determined at a prohibit the importation of guava from later in this document. port of entry to harbor a plant pest that Taiwan into the State of Florida. is not a quarantine pest but is of concern Comments on the Risk Management The detection of fruit flies on to a particular State. Information Document clementines from Spain occurred in regarding the petition process for We proposed that a portion of a 2001 and was determined to be the FRSMP is found here: https:// result of an inadequate cold treatment _ biometric sample of all consignments of www.aphis.usda.gov/plant health/ guavas from Taiwan intended for export schedule, rather than misapplication of plant_pest_info/frsmp/downloads/ an effective treatment schedule.6 It _ to the United States would have to be petition guidelines.pdf. cut open by the NPPO of Taiwan and resulted in a holistic review and With regard to the twelfth pest inspected for internally feeding revision of the manner in which APHIS mentioned by CDFA (Paracoccus quarantine pests. evaluates and approves phytosanitary marginatus), this pest was, in fact, not FDACS questioned whether the fruit treatments, and should not be included in the pest list in our PRA. We cutting would be effective. They considered indicative of current agree that P. marginatus is associated requested data from the NPPO regarding practices. with guava and known to occur on fruit, the efficacy of fruit cutting to detect Based on a site visit that APHIS but could find no evidence suggesting it quarantine pests that feed internally. conducted, the detection of fruit flies on is present in Taiwan; this is why it was The efficacy of fruit cutting as a clementines from Morocco was not included in the pest list. CDFA did means of detecting quarantine pests is determined to be the result of failure to not provide a reference regarding the long established,5 and the inspectors pre-cool the fruit adequately prior to pest’s presence in Taiwan; therefore, we who will conduct the cutting in Taiwan applying cold treatment. We also cannot evaluate their assertion. We also have been trained by the NPPO in determined that this pre-cooling failure note that P. marginatus is present in the proper fruit cutting to sample for pests. was, in turn, due to uniquely United States and not under official While we acknowledge FDACS’ inhospitable climatic conditions in the control, and thus not a quarantine pest. area of Morocco surrounding the pre- Finally, CDFA stated that Phyllostica legitimate interest in ensuring that infested guava are not imported from cooling facility, a desert where daytime psidiicola, a fungal pathogen, is present temperatures during the summer in Taiwan, not present in the Taiwan into the State of Florida, we would only request fruit-cutting data months routinely exceed 90 °F. We continental United States, and known to addressed this failure by revising the cause severe black rot in guavas. CDFA 5 For example, see: Cavey, J.F. 2003. Mitigating operational workplan that Morocco had requested that it be included in the introduction of invasive plant pests in the United entered into with APHIS to specify PRA. States. Pages 350—361(Chapter 13). In Invasive additional pre-cooling and temperature We agree that Phyllostica psidiicola is Species: Vectors and Management Strategies, G.M. present in Taiwan and not present in Ruiz and J.T. Carlton, editors. Island Press, Washington DC. See also: Gould, W.P. 1995. 6 These findings are discussed at length in a 2002 the continental United States, and have Probability of Detecting Caribbean Fruit Fly interim rule (67 FR 63529–63539, Docket No. 02– determined that it is a quarantine pest (Diptera: Tephritidae) Infestations by Fruit 071–1) that revised our phytosanitary treatment and could follow the pathway on Dissection. Florida Entomologist 78(3): 502–507. regulations based on the detection.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00006 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55546 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

reading procedures at pre-cooling • Registration of places of production Authority: 7 U.S.C. 1633, 7701–7772, and facilities.7 and packinghouses with the NPPO of 7781–7786; 21 U.S.C. 136 and 136a; 7 CFR Given Taiwan’s more temperate Taiwan; 2.22, 2.80, and 371.3. climate, we do not consider a similar • Regular inspections of places of Done in Washington, DC, this 10th day of pre-cooling failure likely to occur in production by the NPPO; October 2019. Taiwan. • Grove sanitation and trapping for Kevin Shea, Additionally, we note that cold fruit flies in places of production; Administrator, Animal and Plant Health treatment is not the only mitigation • Safeguarding and identification of Inspection Service. measure that we proposed in order to [FR Doc. 2019–22648 Filed 10–16–19; 8:45 am] address Bactrocera spp. fruit flies. We the lot throughout the growing, packing BILLING CODE 3410–34–P proposed that places of production and export process; would have to have a fruit fly trapping • Bagging of fruit intended for export; • system in place, as certified by the Phytosanitary treatment (cold DEPARTMENT OF AGRICULTURE NPPO of Taiwan; that fallen fruit would treatment or irradiation); have to be removed from places of • Pre-export inspection by the NPPO, Animal and Plant Health Inspection production to eliminate possible fruit including fruit cutting of a portion of a Service fly host material; that packinghouses biometric sample, and issuance of a [Docket No. APHIS–2018–0030] where the guava was processed for phytosanitary certificate with an consignment to the United States would additional declaration that states that Notice of a Determination Regarding have to be registered with the NPPO of the fruit have been produced in the Fever Tick Status of the State of Taiwan and determined to be pest accordance with the requirements of the Baja California, Mexico exclusionary; and that a portion of a systems approach, inspected, and found biometric sample of each consignment free of P. psidii and P. psidiicola; and AGENCY: Animal and Plant Health of guava intended for export to the • Port of entry inspections. Inspection Service, USDA. United States would have to cut open by These conditions will be listed in the ACTION: Notice. the NPPO of Taiwan and inspected for Fruits and Vegetables Import fruit fly larvae and other quarantine SUMMARY: We are advising the public Requirements database (available at pests. that we have determined that the State For the above reasons, we do not https://epermits.aphis.usda.gov/ of Baja California, Mexico is free from consider it necessary to prohibit the manual). In addition to these specific Rhipicephalus (formerly Boophilus) importation of guava from Taiwan into measures, fresh guava fruit from Taiwan spp. ticks, known as fever ticks. The the State of Florida. will be subject to the general evaluation determined that this region is A commenter suggested that the guava requirements listed in § 319.56–3 that free from fever ticks and that ruminants could be irradiated as a treatment for are applicable to the importation of all imported from the area pose a low risk fruit flies. fruits and vegetables. of exposing ruminants within the We agree, and included this treatment Paperwork Reduction Act United States. option in the RMD. DATES: This change in fever tick status Finally, following the close of the In accordance with the Paperwork will be recognized on November 18, comment period, the NPPO of Taiwan Reduction Act of 1995 (44 U.S.C. 3501 2019. informed us that, as a standard industry et seq.), the reporting and recordkeeping practice, all guava intended for export requirements included in this notice are FOR FURTHER INFORMATION CONTACT: Dr. from Taiwan for commercial sale are covered under the Office of Betzaida Lopez, Senior Staff bagged. Accordingly, the NPPO Management and Budget (OMB) control Veterinarian, Strategy and Policy, VS, indicated that they would be amenable number 0579–0049. The estimated APHIS, 4700 River Road Unit 39, to including bagging as an additional, annual burden on respondents is 1,632 Riverdale, MD 20737; (301) 851–3300. voluntarily imposed mitigation measure hours, which will be added to 0579– SUPPLEMENTARY INFORMATION: The to address the pest risk associated with 0049 in the next quarterly update. regulations in 9 CFR part 93 prohibit or the importation of guava into the E-Government Act Compliance restrict the importation of certain continental United States, with the animals, birds, and poultry into the specific logistics of this bagging The Animal and Plant Health United States to prevent the included in the operational workplan Inspection Service is committed to introduction of communicable diseases that they will enter into with APHIS. compliance with the EGovernment Act of livestock and poultry. Subpart D of This additional bagging requirement is to promote the use of the internet and part 93 (§§ 93.400 through 93.436, included in the revised RMD. other information technologies, to referred to below as the regulations) Therefore, in accordance with provide increased opportunities for governs the importation of ruminants; § 319.56–4(c)(3)(iii), we are announcing citizen access to Government within the regulations, §§ 93.424 our decision to authorize the information and services, and for other through 93.429 specifically address the importation of fresh guava fruit from purposes. For information pertinent to importation of ruminants from Mexico Taiwan into the continental United E-Government Act compliance related into the United States. States subject to the following to this notice, please contact Mr. Joseph The regulations in paragraph (b)(1) of phytosanitary measures: • Moxey, APHIS’ Information Collection § 93.427 contain conditions for the Importation in commercial Coordinator, at (301) 851–2483. importation of ruminants from regions consignments only; of Mexico that we consider free from • Development of an operational Congressional Review Act Rhipicephalus (formerly Boophilus) workplan that the NPPO of Taiwan must Pursuant to the Congressional Review spp. ticks, known as fever ticks. Regions enter into with APHIS; Act (5 U.S.C. 801 et seq.), the Office of of Mexico that we consider free from Information and Regulatory Affairs fever ticks are listed at https:// 7 See https://www.aphis.usda.gov/import_export/ plants/plant_imports/federal_order/downloads/ designated this action as not a major www.aphis.usda.gov/aphis/ourfocus/ 2018/DA-2018-01.pdf. rule, as defined by 5 U.S.C. 804(2). animalhealth/animal-and-animal-

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00007 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55547

product-import-information/animal- Information and Regulatory Affairs from regions where FMD exists to health-status-of-regions/animal-health- designated this action as not a major prevent the introduction of this disease status-of-regions. rule, as defined by 5 U.S.C. 804(2). into the United States. We consider The regulations in 9 CFR 92.2 contain Authority: 7 U.S.C. 1622 and 8301–8317; FMD to exist in all regions except those requirements for requesting the 21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 listed in accordance with paragraph (a) recognition of the animal health status CFR 2.22, 2.80, and 371.4. of that section as free of FMD. of a region or for the approval of the Section 94.11 of the regulations Done in Washington, DC, this 10th day of export of a particular type of animal or October 2019. contains requirements governing the animal product to the United States importation of meat of any ruminants or Kevin Shea, from a foreign region. If, after review swine from regions that have been and evaluation of the information Administrator, Animal and Plant Health determined to be free of FMD, but that Inspection Service. submitted in support of the request, the are subject to certain restrictions Animal and Plant Health Inspection [FR Doc. 2019–22645 Filed 10–16–19; 8:45 am] because of their proximity to or trading Service (APHIS) believes the request can BILLING CODE 3410–34–P relationships with FMD-affected be safely granted, APHIS will make its regions. Such regions are listed in accordance with paragraph (a) of that evaluation available for public comment DEPARTMENT OF AGRICULTURE through a notice published in the section. Federal Register. Following the close of Animal and Plant Health Inspection The regulations in 9 CFR part 92, the comment period, APHIS will review Service § 92.2, contain requirements for all comments received and will make a requesting the recognition of the animal final determination regarding the [Docket No. APHIS–2018–0043] health status of a region. If, after review request that will be detailed in another and evaluation of the information Notice of Determination of the Foot- notice published in the Federal submitted in support of the request, and-Mouth Disease Status of Register. APHIS believes the request can be safely Singapore In accordance with that process, granted, APHIS will indicate its intent Mexico asked APHIS to recognize the AGENCY: Animal and Plant Health and make its evaluation available for State of Baja California, Mexico as a Inspection Service, USDA. public comment through a document region free from fever ticks. In response ACTION: Notice. published in the Federal Register. to this request, we prepared an Following the close of the comment evaluation of the fever tick status of this SUMMARY: We are advising the public of period, APHIS will review all comments region. The evaluation concluded that our determination to recognize received and will make a final the State of Baja California, Mexico is Singapore as being free of foot-and- determination regarding the request that free from fever ticks, and that ruminants mouth disease (FMD). Based on our will be detailed in another document imported from the region pose a low evaluation of the FMD status of published in the Federal Register. risk of exposing ruminants within the Singapore, which we made available to In accordance with that process, United States to fever ticks. the public for review and comment Singapore requested that APHIS On March 19, 2019, we published in through a previous notice, the evaluate the FMD status of that country. the Federal Register (84 FR 10023– Administrator has determined that In response to this request, APHIS 10024, Docket No. APHIS–2018–0030) a Singapore is free of FMD. conducted a qualitative risk assessment notice 1 in which we announced the DATES: This change in Singapore’s FMD to evaluate the FMD status of Singapore. availability for review and comment of status will be recognized on November Based on the results of this evaluation, our evaluation of the fever tick status of 18, 2019. we have determined that Singapore is the State of Baja California, Mexico. We FOR FURTHER INFORMATION CONTACT: Dr. free of FMD. APHIS also determined solicited comments on the notice for 60 Roberta A. Morales, Senior Staff that the surveillance, prevention, and days ending on May 20, 2019. We Veterinarian, Regionalization Evaluation control measures implemented by received no comments on our Services, Strategy and Policy, VS, Singapore are sufficient to minimize the evaluation. APHIS, 920 Main Campus Drive, likelihood of introducing FMD into the Therefore, based on the findings of Raleigh, NC 27606; (919) 855–7735; United States via imports of species our evaluation and the absence of [email protected]. susceptible to this disease or products of comments that would lead us to those species. SUPPLEMENTARY INFORMATION: The reconsider those findings, we are Accordingly, we published a notice 1 regulations in 9 CFR part 94 (referred to announcing our determination to add in the Federal Register on March 19, below as the regulations) govern the the State of Baja California, Mexico to 2019 (84 FR 10024–10025, Docket No. importation of certain animals and the list of regions of Mexico declared APHIS–2018–0043), in which we animal products into the United States free from fever ticks. This list is announced the availability, for review to prevent the introduction of various available on the APHIS website at and comment, of a risk assessment that animal diseases, including foot-and- https://www.aphis.usda.gov/aphis/ evaluated the risk of introduction of mouth disease (FMD). The regulations ourfocus/animalhealth/animal-and- FMD into the United States through the prohibit or otherwise restrict the animal-product-import-information/ importation of animals and animal importation of live ruminants and animal-health-status-of-regions/animal- products from Singapore. swine, and products from these animals, health-status-of-regions. We solicited comments on the notice from regions where the Animal and for 60 days ending May 20, 2019. We Congressional Review Act Plant Health Inspection Service (APHIS) did not receive any comments. Pursuant to the Congressional Review considers FMD to exist. Therefore, in accordance with the Act (5 U.S.C. 801 et seq.), the Office of Within part 94, § 94.1 contains regulations, we are announcing our requirements governing the importation 1 To view the notice and the evaluation, go to of ruminants and swine from regions 1 To view the notice and supporting documents, http://www.regulations.gov/ where FMD exists and the importation go to https://www.regulations.gov/ #!docketDetail;D=APHIS-2018-0030. of the meat of any ruminants or swine docket?D=APHIS-2018-0043.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00008 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55548 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

decision to recognize Singapore as free communication should contact the DEPARTMENT OF AGRICULTURE of FMD. The list of regions recognized USDA Target Center at (202) 720–2600 as free of FMD can be found on the (voice). Rural Business-Cooperative Service APHIS website at https:// SUPPLEMENTARY INFORMATION: www.aphis.usda.gov/animalhealth/ NRCS will Notice of Request for Reinstatement of disease-status-of-regions. Copies of the adopt the FEIS titled, ‘‘Feral Swine Discontinued Collection lists are also available via postal mail, Damage Management; A National AGENCY: Rural Business-Cooperative fax, or email upon request to Approach EIS’’, prepared by APHIS Service, USDA. Regionalization Evaluation Services, under the EIS adoption provisions of Strategy and Policy, Veterinary Services, CEQ) regulations (40 CFR 1506.3). NRCS ACTION: Proposed collection; comments Animal and Plant Health Inspection is taking this action to address the requested. mandates in section 2408 of the Service, 4700 River Road Unit 39, SUMMARY: In accordance with the Riverdale, MD 20737. Agriculture Improvement Act of 2018 (2018 Farm Bill, Pub. L. 115–334) to Paperwork Reduction Act of 1995, this Congressional Review Act provide financial assistance for a Feral notice announces the Rural Business- Pursuant to the Congressional Review Swine Eradication and Control Pilot Cooperative Service’s (RBCS) intention Act (5 U.S.C. 801 et seq.), the Office of Program in collaboration with APHIS. to request an extension for a currently Information and Regulatory Affairs The purpose of the pilot program, as approved information collection in designated this action as not a major stated in the Act, is to respond to the support of the program for 7 CFR part rule, as defined by 5 U.S.C. 804(2). threat feral swine pose to agriculture, 4290, subpart A, Rural Business Investment Companies Program. Authority: 7 U.S.C. 1633, 7701–7772, native ecosystems, and human and DATES: 7781–7786, and 8301–8317; 21 U.S.C. 136 animal health. NRCS’s actions under Comments on this notice must be and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, section 2408 of the 2018 Farm Bill are received by December 16, 2019. and 371.4. narrower than the scope of the larger FOR FURTHER INFORMATION CONTACT: Done in Washington, DC, this 10th day of APHIS effort defined in the FEIS and are Thomas P. Dickson, Rural Development October 2019. limited to providing financial assistance Innovation Center—Regulatory Team 2, Kevin Shea, specifically for outreach, training, USDA, 1400 Independence Avenue SW, Administrator, Animal and Plant Health equipment, and operations for feral STOP 1522, Room 5164, South Inspection Service. swine trapping, consistent with APHIS Building, Washington, DC 20250–1522. [FR Doc. 2019–22646 Filed 10–16–19; 8:45 am] technical standards. Subsequent actions, Telephone: (202) 690–4492. Email: [email protected]. BILLING CODE 3410–34–P including disposal, are the responsibility of those carrying out the SUPPLEMENTARY INFORMATION: trapping activities, and must occur Title: Rural Business Investment DEPARTMENT OF AGRICULTURE consistent with all associated Federal, Companies Program. State, and local laws. The details on the OMB Number: 0570–0051. Natural Resources Conservation FEIS were provided in the published Type of Request: Reinstatement of a Service Notice of Intent to adopt FEIS dated on discontinued collection. [Docket ID NRCS–2019–0015] July 17, 2019 (84 FR 34118) and Abstract: RBCS administers the Rural associated Notice of Availability Business Investment Program (RBIP). Adoption of Another Agency’s Final published by the U.S. Environmental The primary objective of this program is Environmental Impact Statement To Protection Agency (84 FR 32168). Two to promote economic development and Implement the Feral Swine Eradication comments were received in response to the creation of wealth and job and Control Pilot Program these notices. The first, submitted by the opportunities in rural areas and to State Department of Land and Natural establish a developmental capital AGENCY: Natural Resources Resources, in support of the actions and program, with the mission of addressing Conservation Service (NRCS), U.S. methods defined in the FEIS and is unmet equity investment needs of small Department of Agriculture (USDA). appended to this NOA. The second, enterprises located in rural areas. RBCS ACTION: Notice of Availability for the submitted by a private citizen indicating collects information from applicants to Record of Decision (ROD). they disagreed with this use of Federal confirm eligibility for the program and funding. The Agriculture Improvement to evaluate the quality of the SUMMARY: NRCS announces the Act of 2018 left no discretion to the applications. availability of the agency’s Record of agency concerning this matter. Estimate of Burden: Public reporting Decision (ROD) to adopt the Final burden for this collection is estimated to Environmental Impact Statement (FEIS), The ROD is available by requesting a copy at the above address. average 300 hours per response. ‘‘Feral Swine Damage Management: A Estimated Number of Respondents: 2 National Approach EIS’’, prepared by Documentation developed during the agency’s review of the FEIS is on file per year. the U.S. Department of Agriculture’s Estimated Number of Responses per and may be reviewed by contacting Animal and Plant Health Inspection Respondent: 1. Martin Lowenfish at the above number. Service (APHIS), under the Estimated Number of Responses: 241. Environmental Impact Statement (EIS) No administrative action on Estimated Total Annual Burden on adoption provisions of the Council on implementation of the proposal will be Respondents: 904 hours. Environmental Quality (CEQ). taken until 30 days after the date of this Copies of this information collection FOR FURTHER INFORMATION CONTACT: publication in the Federal Register. can be obtained from Diane M. Berger, Martin Lowenfish, Branch Chief for Rural Development Innovation Center— Kevin Norton, Areawide Planning, Natural Resources Regulatory Team, (715) 619–3124. Conservation Service, at Associate Chief, Natural Resources [email protected] or (202) Conservation Service. Comments 690–4979. Persons with disabilities who [FR Doc. 2019–22652 Filed 10–16–19; 8:45 am] Comments are invited on: (a) Whether require alternative means for BILLING CODE 3410–16–P the proposed collection of information

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00009 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55549

is necessary for the proper performance Telephone: (202) 690–4492. Email: ACTION: Notice and opportunity for of the functions of the RBCS, including [email protected]. All public comment. whether the information will have responses to this notice will be practical utility; (b) the accuracy of summarized and included in the request SUMMARY: The Economic Development RBCS’s estimate of the burden to collect for OMB approval. All comments will Administration (EDA) has received the required information, including the become a matter of public record. petitions for certification of eligibility to validity of the strategy used; (c) ways to Bette Brand, apply for Trade Adjustment Assistance enhance the quality, utility, and clarity Administrator, Rural Business-Cooperative from the firms listed below. of the information to be collected; and Service. Accordingly, EDA has initiated (d) ways to minimize the burden of the [FR Doc. 2019–22622 Filed 10–16–19; 8:45 am] investigations to determine whether collection of information on those who BILLING CODE P increased imports into the United States are to respond, including through the of articles like or directly competitive use of appropriate automated, with those produced by each of the electronic, mechanical, or other DEPARTMENT OF COMMERCE firms contributed importantly to the technological collection techniques or total or partial separation of the firms’ other forms of information technology. Economic Development Administration workers, or threat thereof, and to a Comments on the paperwork burden decrease in sales or production of each Notice of Petitions by Firms for may be sent to: Thomas P. Dickson, petitioning firm. Rural Development Innovation Center— Determination of Eligibility To Apply for Trade Adjustment Assistance SUPPLEMENTARY INFORMATION: Regulatory Team 2, USDA, 1400 Independence Avenue SW, STOP 1522, AGENCY: Economic Development Room 5164, South Building, Administration, U.S. Department of Washington, DC 20250–1522. Commerce.

LIST OF PETITIONS RECEIVED BY EDA FOR CERTIFICATION OF ELIGIBILITY TO APPLY FOR TRADE ADJUSTMENT ASSISTANCE [10/1/2019 through 10/8/2019]

Date accepted for Firm name Firm address investigation Product(s)

Novel Iron Works, Inc ...... 250 Ocean Road, Green- 10/3/2019 The firm manufactures land, NH 03840. structural steel components. Jerpbak-Bayless Company ...... 34150 Solon Road, Solon, 10/4/2019 The firm manufactures OH 44139. metal parts, primarily of steel. Cider Riot, LLC ...... 807 NE Couch Street, Port- 10/8/2019 The firm manufactures hard land, OR 97232. cider.

Any party having a substantial DEPARTMENT OF COMMERCE ‘‘grandfathered’’ quantitative limit of interest in these proceedings may 37.9 million pounds of imported ‘‘ex- request a public hearing on the matter. Foreign-Trade Zones Board quota’’ sugar. Arbor also has authority to A written request for a hearing must be produce blended syrup (aka wet- submitted to the Trade Adjustment [B–63–2019] blended sugar) for export only—with no Assistance Division, Room 71030, quantitative limit on use of ex-quota Foreign-Trade Zone 8—Toledo, Ohio; sugar for that export activity. Arbor’s Economic Development Administration, Application for Production Authority; U.S. Department of Commerce, pending application seeks authorization Arbor Foods Inc. (Blended Syrup); to produce blended syrup for the U.S. Washington, DC 20230, no later than ten Toledo, Ohio (10) calendar days following publication market using up to the 37.9 million of this notice. These petitions are An application has been submitted to pounds of ex-quota sugar annually received pursuant to section 251 of the the Foreign-Trade Zones (FTZ) Board by which, as noted above, is currently limited to production of dry-blended Trade Act of 1974, as amended. the Toledo-Lucas County Port Authority, grantee of FTZ 8, requesting sugar. Please follow the requirements set production authority on behalf of Arbor On its domestic sales, production of forth in EDA’s regulations at 13 CFR Foods Inc. (Arbor), located in Toledo, blended syrup under FTZ procedures 315.9 for procedures to request a public Ohio. The application conforming to the would allow Arbor to choose the duty hearing. The Catalog of Federal requirements of the regulations of the rate during customs entry procedures Domestic Assistance official number FTZ Board (15 CFR 400.23) was that applies to blended syrup (duty rate: and title for the program under which docketed on October 10, 2019. 6.0%) for the foreign-status input these petitions are submitted is 11.313, The Arbor facility (over 40 employees, (granular sucrose, either cane or beet, Trade Adjustment Assistance for Firms. with two full-time employees for sugar duty rate: 35.74 20B5; per kg). Arbor Irette Patterson, blends) is located within Site 1 of FTZ estimates that 54% of the blended syrup 8. The facility is used for production of is comprised of the foreign-status Program Analyst. blended sugar. Arbor currently has FTZ component. Arbor would be able to [FR Doc. 2019–22605 Filed 10–16–19; 8:45 am] authority to produce dry-blended sugar avoid duty on the foreign-status BILLING CODE 3510–WH–P for the U.S. market, with a component which becomes scrap/waste.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00010 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55550 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Customs duties also could possibly be Pursuant to 15 CFR 400.14(b), FTZ display (elevated platter); stand for deferred or reduced on foreign-status activity would be limited to the specific polycarbonate juice dispenser; round production equipment. The request foreign-status materials and components grill chafer cover; coffee pot); and, indicates that the savings from FTZ and specific finished products described various wood products (juice dispenser procedures would help expand the in the submitted notification (as stand; buffet display set (primarily plant’s sugar blend operations and allow described below) and subsequently wooden with minority stainless steel Arbor to ‘‘reactivate’’ its commercial authorized by the FTZ Board. risers and glass shelves); carving board) activity. Production under FTZ procedures (duty rate ranges from duty-free to In accordance with the FTZ Board’s could exempt Steelite from customs 7.2%). Steelite would be able to avoid regulations, Juanita Chen and Elizabeth duty payments on the foreign-status duty on foreign-status components Whiteman of the FTZ Staff are components used in export production. which become scrap/waste. Customs designated examiners to evaluate and On its domestic sales, for the foreign- duties also could possibly be deferred or analyze the facts and information status materials/components noted reduced on foreign-status production presented in the application and case below, Steelite would be able to choose equipment. record and to report findings and the duty rates during customs entry The components and materials recommendations to the FTZ Board. procedures that apply to: brass faucet sourced from abroad include: various Public comment is invited from body for juice dispenser combined with aluminum components (disk for chafers interested parties. Submissions shall be shank; buffet transport cart; buffet and/or soup heaters to regulate heat; addressed to the FTZ Board’s Executive display cart; buffet display with pastry stand with shelves; plate for Secretary and sent to [email protected]. The melamine trays; carving board set with butane cooker and carving board frame; closing period for their receipt is heat lamp; chafer for use with a grill plate for induction warmer set; tray); December 16, 2019. Rebuttal comments (butane, electric, or Sterno®); chrome- base for stainless steel pastry stand; in response to material submitted plated chafer knob; coffee urn (electric buffet display cart and/or transport cart during the foregoing period may be heat); glass shelving for buffet display components (bungee strap (elastic); submitted during the subsequent 15-day with stainless steel stand; granite foam liner); burner holder for induction period to December 31, 2019. carving board with stainless steel frame; chafer; ceramic tile; chrome-plated A copy of the application will be ice box with plastic inserts; complete faucet body set for juice dispenser; available for public inspection in the induction food warming table; complete double-sided Velcro®; electric heat plate ‘‘Reading Room’’ section of the FTZ induction heating stand; polycarbonate for induction warmer; electric heater Board’s website, which is accessible via carving board with stainless steel frame; and/or heater plate for use with chafers; www.trade.gov/ftz. buffet set including wooden risers, steel electric toggle switch for heat lamp; For further information, contact stand with glass shelves, and induction electric wire; faucet nut and juicer Juanita Chen at [email protected] warmers with their parts; cast iron shank for juice dispenser; glass shelving or 202–482–1378, or Elizabeth chafer (for use with any heat source); for buffet display; granite carving board; Whiteman at elizabeth.whiteman@ various steel products (heat lamp; insulated wire nut; nut for insulated trade.gov or 202–482–0473. induction chafer; chafer with electric coffee urn; iron rod base for buffet Dated: October 10, 2019. heat; soup heater (electric heat)); various display; melamine tray; on and off plate Andrew McGilvray, stainless steel products (insulated coffee for toggle switch for heat lamp; Executive Secretary. urn; body for insulated coffee urn with porcelain pan for chafer; power cord faucet, clamp, and faucet seal washer; and plug; PVC rod; raw steel buffet [FR Doc. 2019–22659 Filed 10–16–19; 8:45 am] chafer and frame (used with electric stand; ring terminal; silicone adhesive; BILLING CODE 3510–DS–P heat and Sterno®); insulated coffee urn silicone seat cup; stem for stainless steel cover; juice dispenser cover with knob; chrome-plated faucet; strain relief fitting DEPARTMENT OF COMMERCE ice box with plastic inserts; ice cream for heat lamp; thread lock adhesive; box; insulated milk container; pastry frame for multi-use chafer stainless steel Foreign-Trade Zones Board stand with trays; circular seafood with silver plating; heat lamp light bulb; display (elevated platter); bucket; plastic cast iron chafer; various steel [B–64–2019] coated buffet riser; carving station components (base of heat lamp; handle Foreign-Trade Zone (FTZ) 33— frame; beverage tub); various for carving board set; buffet display cart Pittsburgh, Pennsylvania; Notification polycarbonate juice dispensers (with and/or transport cart and its parts of Proposed Production Activity; stainless steel frame and stand; with (divider; frame; glass trunk; shelf; ID tag; Steelite International USA, Inc. stainless steel faucet and without cover; bumper rail); electric heating food (Hospitality Industry Serveware); New with silver-plated stainless steel cover warmer; heat lamp shade; heat plate for Castle, Pennsylvania and stand; with stainless steel cover and induction warmer; induction chafer stand; with stainless steel cover and without stand; induction warmer; Steelite International USA, Inc. wood stand; with stainless steel frame); induction warmer adapter; induction (Steelite) submitted a notification of various polycarbonate juicers (with warmer stand and frame; induction proposed production activity to the FTZ stainless steel cover and stand; with warming plate; lamp socket; grill grate Board for its facility in New Castle, stainless steel frame; with stainless steel for induction warmer set; bridge for Pennsylvania. The notification frame and wood stand); various iron or buffet table; magnetic socket holder for conforming to the requirements of the steel products (portable grill; grill buffet table; adapter to convert Sterno® regulations of the FTZ Board (15 CFR cooker for use with solid fuel; Sterno® holder to electric heater holder; ring for 400.22) was received on October 3, chafer; Sterno® grill riser box; Sterno® juice dispenser faucet nuts; plastic- 2019. chafer frame; stand for portable grill coated buffet riser; warming plate for The Steelite facility is located within with aluminum plate and iron or steel induction chafer; induction heater; FTZ 33. The facility will be used for frame); various silver-plated stainless induction heater adapter; heat lamp production of tableware and serveware steel products (faucet insert set for post; induction heater carving station); for the hotel and restaurant industries. chafer; insulated urn; circular seafood various brass components (chafer knob;

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00011 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55551

juice dispenser parts (faucet adapter; serving fork; stand for chafers and/or DEPARTMENT OF COMMERCE faucet body without shank; faucet coffee towers; Sterno® chafer; tile for bonnet; faucet handle; faucet; handle; use with food cooling unit; top nest for International Trade Administration knob); foot cover-up for chafer legs; juice dispenser; top ring for juice [A–475–835] handle (for carving board set; for ice dispenser; water pan; water pan (with cream box; for insulated urn); chafer silver plating); juice dispenser cover; Finished Carbon Steel Flanges From cover knob; chafer leg; chafer side plastic-coated buffet riser; juice Italy: Preliminary Results of handle); various rubber components dispenser stand; chrome-plated parts Antidumping Duty Administrative (buffet display cart and/or transport cart (faucet handle for juice dispenser; faucet Review; 2017–2018 parts (bumper; edge; wheel (with steel set for juice dispenser; flex arms for heat connector)); bumper; edge; buffet cart lamp top; faucet body set for juice AGENCY: Enforcement and Compliance, wheel); various plastic components dispenser without shank; faucet ring for International Trade Administration, (buffet display cart and/or transport cart juice dispenser); bent pin for faucet Department of Commerce. parts (curtain divider; divider clip; lamp handle for juice dispenser; insert pan for SUMMARY: The Department of Commerce clip); ice box parts (cover; ice mold; soup heater; ice bucket; spring for (Commerce) preliminarily determines insert; pan); faucet seal washer; post for faucet; chafer (multi-use); faucet handle that finished carbon steel flanges from glass shelves; resin shelf for buffet for juice dispenser; chafer knob; juice Italy are being sold in the United States display; attaching strip for buffet cart dispenser knob; soup heater cover at less than normal value during the ® curtain; washer; buffet cart wheels); (electric heat or Sterno )); various period of review (POR). The POR is various iron or steel components (flange polycarbonate components (body for February 8, 2017 through July 31, 2018. ® Interested parties are invited to stud; Sterno chafer frame; helical juice dispenser with stainless steel comment on these preliminary results. spring clamp; insert adapter for top of shank and ice ring; body with shank and chafer (Sterno®); non-flange stud; pan ice sleeve for juice dispenser; body with DATES: Applicable October 17, 2019. head screw; adapter plate to convert stainless steel frame for juice dispenser; FOR FURTHER INFORMATION CONTACT: between quart capacity for soup heater; body with stainless steel shank and ice Edythe Artman or Brian C. Davis, AD/ Sterno® chafer cover; grill grate for use sleeve for juice dispenser; body with CVD Operations, Office VI, Enforcement with solid fuel; locknut; lockwasher; stainless steel shank for juice dispenser; and Compliance, International Trade holder for electric heater holder for carving board); various silver-plated Administration, U.S. Department of chafer; Sterno® chafer holder; Sterno® components (juice dispenser knob; ring Commerce, 1401 Constitution Avenue chafer stand; washer; water pan (for use for juice dispenser faucet nuts; juice NW, Washington, DC 20230; telephone: with Sterno® chafers); Sterno® grill riser dispenser stand); various silver-plated (202) 482–3931 or (202) 482–7924, box; thumb screw; circular heat lamp stainless steel components (juice respectively. dispenser cover; carving station frame; base; spring; screw; thumb nut for SUPPLEMENTARY INFORMATION: Sterno® chafer; nut; frame for butane knob for polycarbonate juice dispenser; grill; hex head bolt; insert pan for soup stand for polycarbonate juice dispenser; Background ® handle for carving display); and, various heater (Sterno ); portable grill stand (for These preliminary results of review wood components (juice dispenser use with fuel)); various stainless steel are issued in accordance with section stand; buffet riser; carving board) (duty components (insulated coffee urn and 751(a) of the Tariff Act of 1930, as rate ranges from duty-free to 25%). The its parts (leg stand; body; cover and amended (the Act). On October 4, 2018, request indicates that certain materials/ knob; side handle; internal shank; in accordance with section 751(a) of the components are subject to special duties stand); internal bracket and faucet; juice Act and 19 CFR 351.221(c)(1)(i), under Section 301 of the Trade Act of dispenser knob (brass-plated); knob for Commerce published the notice of 1974 (Section 301), depending on the stainless steel cover; wire rack; chafer initiation for the administrative review.1 country of origin. The applicable stand (for use with electric heat and In the Initiation Notice, Commerce ® Section 301 decisions require subject Sterno ); carving station frame; adapter stated that, where appropriate, it merchandise to be admitted to FTZs in for soup heater to convert between quart intended to select respondents based on ® privileged foreign status (19 CFR capacity (electric heat or Sterno ); bar U.S. Customs and Border Protection 146.41). spacing; bar for ice box cover; wine (CBP) data for U.S. imports during the bucket knob; beverage tub; beverage tub Public comment is invited from POR.2 After receiving no comments on (plated in another metal); buffet riser; interested parties. Submissions shall be the CBP data from parties with an carving board frame; chafer (used with addressed to the Board’s Executive administrative protective order, ® electric heat and Sterno ); chafing dish Secretary and sent to: [email protected]. The Commerce selected ASFO S.p.A. for use with grills; coffee pot; coffee urn closing period for their receipt is (ASFO) and Forgital Italy S.p.A. body; chafer cover (use with electric November 26, 2019. (Forgital) from 27 possible respondents ® ® heat and Sterno ); chafer cover (Sterno A copy of the notification will be for individual examination in this heat); faucet adapter for juice dispenser; available for public inspection in the review.3 faucet ring; food pan; frame for chafer ‘‘Reading Room’’ section of the Board’s Commerce exercised its discretion to ® used with electric heat and/or Sterno ; website, which is accessible via toll all deadlines affected by the partial frame for soup heater used with electric www.trade.gov/ftz. federal government closure from ® heat and/or Sterno ; grill chafer (used December 22, 2018 through the ® For further information, contact with electric heat and Sterno ); grill Juanita Chen at [email protected] chafer (used with electric heat and or 202–482–1378. 1 See Initiation of Antidumping and Sterno®) with glass cover; ice box; ice Countervailing Duty Administrative Reviews, 83 FR cream box and its parts (insert; cover; Dated: October 10, 2019. 50077 (October 4, 2018) (Initiation Notice). knob); insulated milk container; juice Andrew McGilvray, 2 Id. Executive Secretary. 3 See Memorandum, ‘‘Antidumping Duty dispenser feet; pastry stand; pastry tray; Administrative Review of Finished Carbon Steel post and spacers for pastry stand; round [FR Doc. 2019–22658 Filed 10–16–19; 8:45 am] Flanges from Italy: Respondent Selection,’’ dated grill chafer cover with silver plating; BILLING CODE 3510–DS–P November 16, 2018, 1–5.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00012 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55552 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

resumption of operations on January 29, margins to the respondents selected for Weighted- 2019, moving the deadline for the individual examination in this review, average preliminary results of this review to because both ASFO and Forgital Producer/exporter dumping 4 margin June 12, 2019. On June 6, 2019, we withheld necessary information that (percent) extended the time limit for completion was requested by Commerce, thereby of the preliminary results of the review significantly impeding the conduct of Metalfar Prodotti Industriali, to no later than October 10, 2019.5 For the review. Further, Commerce S.p.A ...... 204.53 a complete description of the events that preliminarily determines that both Officine Ambrogio Melesi & followed the initiation of the review, see ASFO and Forgital failed to cooperate C. S.R.L ...... 204.53 the Preliminary Decision by not acting to the best of their abilities Officine di Cortabbio s.r.l ...... 204.53 Memorandum.6 to comply with requests for information OFFICINE MECCANICHE A list of topics included in the CIOCCA S.p.A ...... 204.53 and, thus, Commerce is applying an Office SANTAFEDE ...... 204.53 Preliminary Decision Memorandum is adverse inference in selecting among the Siderforgerossi Group S.p.A 204.53 included in the Appendix to this notice. facts available, in accordance with UNIGEN Steel Engineering .. 204.53 The Preliminary Decision Memorandum section 776(b) of the Act. For a full VALVITALIA S.p.A ...... 204.53 is a public document and is on file description of the methodology electronically via Enforcement and underlying our conclusions regarding Disclosure and Public Comment Compliance’s Antidumping and the application of adverse facts available Normally, Commerce discloses the Countervailing Duty Centralized (AFA), see the Preliminary Decision calculations performed in connection Electronic Service System (ACCESS). Memorandum. ACCESS is available to registered users with preliminary results to interested Rate for Non-Selected Companies parties within five days after the date of at https://access.trade.gov and to all 8 parties in the Central Records Unit, In accordance with the U.S. Court of publication of this notice. Because located in room B8094 of the main Appeals for the Federal Circuit’s Commerce preliminarily applied total Commerce building. In addition, a decision in Albemarle Corp. v. United AFA to each of the mandatory complete version of the Preliminary States,7 we are applying to the non- respondents in this review, in Decision Memorandum can be accessed selected companies a rate based on the accordance with section 776 of the Act, directly at http://enforcement.trade.gov/ simple average of the individual rates there are no calculations to disclose. Interested parties may submit case frn/. The signed and the electronic preliminarily applied to ASFO and briefs no later than 30 days after the versions of the Preliminary Decision Forgital in this administrative review, or date of publication of this notice.9 Memorandum are identical in content. 204.53 percent. For a detailed discussion, see the Preliminary Decision Rebuttal briefs, the content of which is Scope of the Order Memorandum. limited to the issues raised in the case The products covered by the scope of briefs, must be filed within five days the order are finished carbon steel Preliminary Results of Review from the deadline date for the 10 flanges from Italy. For a complete We preliminarily determine that, for submission of case briefs. Parties who description of the scope, see the the period February 8, 2017 through submit case or rebuttal briefs in this Preliminary Decision Memorandum. July 31, 2018, the following dumping proceeding are requested to submit with margins exist: each argument: (1) A statement of the Methodology issue; (2) a brief summary of the Commerce is conducting this review Weighted- argument; and (3) a table of in accordance with section 751(a)(1)(B) average authorities.11 Case and rebuttal briefs Producer/exporter dumping should be filed using ACCESS.12 of the Act. For a full description of the margin methodology underlying the (percent) Pursuant to 19 CFR 351.310(c), preliminary results, see the Preliminary interested parties who wish to request a Decision Memorandum. ASFO S.p.A ...... 204.53 hearing must submit a written request to Forgital Italy S.p.A ...... 204.53 the Assistant Secretary for Enforcement Facts Available ASFO S.p.A.—FOMAS and Compliance, filed electronically via Pursuant to section 776(a) of the Act, Group ...... 204.53 ACCESS. An electronically filed Commerce is preliminarily relying upon Assotherm srl ...... 204.53 document must be received successfully Bifrangi S.p.A ...... 204.53 in its entirety by the Department’s facts otherwise available to assign CAT Carpenteria Metallica estimated weighted-average dumping srl ...... 204.53 electronic records system, ACCESS, by Costruzione Ricambi Ma- 5:00 p.m. Eastern Time within 30 days 4 See Memorandum to the Record from Gary chine Industriali ...... 204.53 after the date of publication of this Taverman, Deputy Assistant Secretary for Filmag Italia S.r.l ...... 204.53 notice.13 Requests should contain: (1) Antidumping and Countervailing Duty Operations, FOC Ciscato S.p.Ar ...... 204.53 performing the non-exclusive functions and duties The party’s name, address and of the Assistant Secretary for Enforcement and FOMAS ...... 204.53 telephone number; (2) the number of Compliance, ‘‘Deadlines Affected by the Partial Forgia Di Bollate S.p.A ...... 204.53 participants; and (3) a list of issues Shutdown of the Federal Government,’’ dated Forgiatura A. Vienna parties intend to discuss. Issues raised diAntonio Vienna ...... 204.53 January 28, 2019. All deadlines in this segment of in the hearing will be limited to those the proceeding have been extended by 40 days. Franchini Acciai S.p.A ...... 204.53 5 See Memorandum, ‘‘Finished Carbon Steel Galperti Forged Products ..... 204.53 raised in the respective case and Flanges from Italy: Extension of Deadline for Inox Laghi S.r.l ...... 204.53 rebuttal briefs. If a request for a hearing Preliminary Results of Antidumping Duty KIASMA SRL ...... 204.53 is made, Commerce intends to hold the Administrative Review; 2017–2018,’’ dated June 6, Iml Industria Meccanica 2019. Ligure ...... 204.53 8 See 19 CFR 351.224(b). 6 See Memorandum, ‘‘Decision Memorandum for Martin Valmore srl ...... 204.53 9 See 19 CFR 351.309(c)(1)(ii). Preliminary Results of Antidumping Duty M.E.G.A. S.p.A ...... 204.53 10 Administrative Review: Finished Carbon Steel See 19 CFR 351.309(d)(1) and (2). Flanges from Italy; 2017–2018,’’ dated concurrently 11 See 19 CFR 351.309(c)(2) and (d)(2). with, and hereby adopted by, this notice 7 See Albemarle Corp. v. United States, 821 F.3d 12 See generally 19 CFR 351.303. (Preliminary Decision Memorandum). 1345 (Fed. Cir. 2016). 13 See 19 CFR 351.310(c).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00013 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55553

hearing at the U.S. Department of producers or exporters will continue to Trade (the Court) issued a final Commerce, 1401 Constitution Avenue be the all-others rate of 79.17 percent, judgment in China Manufacturers NW, Washington, DC 20230, at a date the rate established in the investigation Alliance, LLC. and Double Coin and time to be determined.14 Parties of this proceeding.16 These cash deposit Holdings Ltd., et al. v. United States, should confirm the date, time, and requirements, when imposed, shall Consol. Court No. 15–00124; Slip Op. location of the hearing two days before remain in effect until further notice. 19–115 (CIT September 3, 2019) (China the scheduled date. Mfr. Alliance III), sustaining the Unless extended, Commerce intends Notification to Importers Department of Commerce’s (Commerce) to issue the final results of this This notice also serves as a reminder remand results for the fifth administrative review, which will to importers of their responsibility administrative review of the include the results of our analysis of all under 19 CFR 351.402(f)(2) to file a antidumping duty (AD) order on certain issues raised in the case and rebuttal certificate regarding the reimbursement new pneumatic off-the-road tires (OTR briefs, within 120 days of publication of of antidumping duties prior to tires) from the People’s Republic of these preliminary results in the Federal liquidation of the relevant entries China (China) covering the period of Register, pursuant to section during this review period. Failure to review (POR) September 1, 2012 751(a)(3)(A) of the Act. comply with this requirement could through August 31, 2013. Commerce is Assessment Rates result in Commerce’s presumption that notifying the public that the Court has reimbursement of antidumping duties made a final judgment that is not in Upon completion of the occurred and the subsequent assessment harmony with Commerce’s final results administrative review, Commerce shall of double antidumping duties. of the administrative review, and that determine, and CBP shall assess, Commerce is amending the final results Notification to Interested Parties antidumping duties on all appropriate with respect to certain exporters 15 entries covered by this review. If the We are issuing and publishing this identified herein. preliminary results are unchanged for notice in accordance with sections DATES: Applicable September 13, 2019. the final results, we will instruct CBP to 751(a)(1) and 777(i)(1) of the Act and apply an ad valorem assessment rate of FOR FURTHER INFORMATION CONTACT: sections 19 CFR 351.213(h)(1) and Keith Haynes, AD/CVD Operations 204.53 percent to all entries of subject 351.221(b)(4). merchandise during the POR which Office III, Enforcement and Compliance, were produced and/or exported by Dated: October 9, 2019. International Trade Administration, ASFO, Forgital and the aforementioned Jeffrey I. Kessler, U.S. Department of Commerce, 1401 companies which were not selected for Assistant Secretary for Enforcement and Constitution Avenue NW, Washington, individual examination. We intend to Compliance. DC, 20230; telephone: (202) 482–5139. SUPPLEMENTARY INFORMATION: issue liquidation instructions to CBP 15 Appendix days after publication of the final results Background of this review. List of Topics Discussed in the Preliminary Decision Memorandum On April 15, 2015, Commerce issued Cash Deposit Requirements I. Summary its Final Results 1 in the fifth The following cash deposit II. Background administrative review of the AD order requirements will be effective upon III. Scope of the Order on OTR tires from China. The plaintiffs publication of the final results of this IV. Application of Facts Available and Use of in this litigation, mandatory respondent Adverse Inference administrative review for all shipments Double Coin Holdings Ltd and its V. Rate for Non-Selected Companies affiliated U.S. importer China of the subject merchandise entered, or VI. Recommendation withdrawn from warehouse, for Manufacturers Alliance, LLC, and [FR Doc. 2019–22668 Filed 10–16–19; 8:45 am] consumption on or after the publication mandatory respondent Guizhou Tyre date of the final results of this BILLING CODE 3510–DS–P Co., Ltd. and Guizhou Tyre Import and administrative review, as provided by Export Co., Ltd. (collectively, GTC), timely filed complaints with the Court section 751(a)(2)(C) of the Act: (1) The DEPARTMENT OF COMMERCE cash deposit rate for ASFO, Forgital and challenging certain aspects of 2 the other companies listed above will be International Trade Administration Commerce’s Final Results. Domestic equal to the dumping margin interested parties Titan Tire Corporation established in the final results of this [A–570–912] and United Steel, Paper and Forestry, administrative review; (2) for previously Rubber, Manufacturing, Energy, Allied Certain New Pneumatic Off-The-Road reviewed or investigated companies not Industrial and Service Workers Tires from the People’s Republic of listed above, the cash deposit rate will International Union, AFL–CIO–CLC China; 2012–2013: Notice of Court continue to be the company-specific rate intervened as defendant-intervenors, but Decision Not in Harmony With Final published for the most recently withdrew from these cases on Results of Administrative Review and 3 completed segment of this proceeding in September 29, 2017. Notice of Amended Final Results of which they were reviewed; (3) if the On February 6, 2017, the Court Antidumping Duty Administrative 4 exporter is not a firm covered in this remanded Commerce’s Final Results. In Review review, a prior review, or in the 1 See Certain New Pneumatic Off-the-Road Tires investigation, but the producer is, the AGENCY: Enforcement and Compliance, from the People’s Republic of China: Final Results cash deposit rate will be the rate International Trade Administration, of Antidumping Duty Administrative Review; 2012– established for the most recently Department of Commerce. 2013, 80 FR 20197 (April 15, 2015) (Final Results) and accompanying Issues and Decision completed segment of this proceeding SUMMARY: On September 3, 2019, the for the producer of the merchandise; Memorandum (IDM). United States Court of International 2 See China Mfr. Alliance III, at 2. and (4) the cash deposit rate for all other 3 Id. 16 See Finished Carbon Steel Flanges from India 4 See China Manufacturers Alliance, LLC et al. v. 14 See 19 CFR 351.310(d). and Italy: Antidumping Duty Orders, 82 FR 40136, United States, Consol. Court No. 15–00124, Slip Op 15 See 19 CFR 351.212(b). 40138 (August 24, 2017). Continued

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00014 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55554 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

its First Remand Redetermination, without making deductions for harmony with Commerce’s Final Commerce: (1) Continued to reduce irrecoverable VAT, under respectful Results. As such, Commerce has GTC’s U.S. sales prices to account for protest, and adjusted GTC’s brokerage published this notice in fulfillment of irrecoverable value-added tax (VAT); (2) and handling and ocean freight costs for the publication requirement of Timken. determined that ‘‘Shanghai Port certain double-counted expenses.12 Surcharges,’’ but not other brokerage In light of these determinations, Amended Final Results and handling or ocean freight charges, Commerce has made changes to GTC’s Because there is now a final court were double counted and removed the margin calculation and the margin decision, Commerce is amending the charges from the international freight assigned to Double Coin.13 After Final Results with respect to the surrogate value calculation; (3) made an accounting for all such changes and inflation adjustment to domestic issues addressed in the remand mandatory respondents. The revised warehousing costs to match the redeterminations, the resulting weighted-average dumping margins for surrogate value to the POR; and (4) weighted-average dumping margin for these exporters during the period assigned Double Coin a de minimis 0.14 GTC is 4.59 percent, and the margin September 1, 2012 through August 31, percent margin instead of assigning it a assigned to Double Coin is 0.14 percent. 2013 are as follows: 105.31 percent margin as part of the On September 3, 2019, the Court China-wide entity, under respectful sustained the Second Remand Weighted- 14 average protest.5 After issuing its First Remand Redetermination. Exporter dumping Redetermination, Commerce moved for Consistent with the decision of the margin a partial voluntary remand on the issue CAFC in Timken Co. v. United States, (percent) of Double Coin’s margin in light of the 893 F.2d 337 (Fed. Cir. 1990) (Timken), Court of Appeals for the Federal as clarified by Diamond Sawblades Double Coin Holdings Ltd ...... 0.14 Circuit’s (CAFC) decision in Diamond Mfrs. Coalition v. United States, 626 Guizhou Tyre Co., Ltd./Guizhou Sawblades 2017.6 F.3d 1374 (Fed. Cir. 2010) (Diamond Tyre Export and Import Co., Ltd ...... 4.59 On January 16, 2019, the Court Sawblades), Commerce is notifying the sustained, in part, and remanded, in public that the final judgment in this part, Commerce’s First Remand case is not in harmony with Commerce’s Accordingly, Commerce will continue Redetermination and denied Final Results. Thus, Commerce is the suspension of liquidation of the Commerce’s motion for partial amending the Final Results with respect subject merchandise pending the end of voluntary remand.7 The Court sustained to the weighted-average dumping the period of appeal or, if appealed, Commerce’s determinations to make an margins for the mandatory respondents, pending a final and conclusive court inflation adjustment to domestic as listed above. decision. In the event the Court’s ruling warehousing costs and that Shanghai is not appealed or, if appealed, and Timken Notice Port Charges were double counted for upheld by the CAFC, Commerce will GTC.8 In denying Commerce’s motion In its decision in Timken, 893 F.2d at instruct U.S. Customs and Border for partial voluntary remand, the Court 341, as clarified by Diamond Sawblades, Protection (CBP) to assess antidumping found that the only rate supported by the CAFC held that, pursuant to section duties on unliquidated entries of subject the record evidence that Commerce 516A(e) of the Tariff Act of 1930, as merchandise exported by the companies could apply to Double Coin is the 0.14 amended (the Act), Commerce must identified above using the assessment percent margin applied in the First publish a notice of a court decision that rates calculated by Commerce in the Remand Redetermination.9 The Court is not ‘‘in harmony’’ with a Commerce remand redeterminations, as listed in remanded Commerce’s determinations: determination and must suspend the above table. (1) That the brokerage and handling and liquidation of entries pending a ocean freight charges other than the ‘‘conclusive’’ court decision. The Cash Deposit Requirements Shanghai Port Charges were not double Court’s September 3, 2019 judgment 10 sustaining the Second Remand Because the AD order on OTR tires counted for GTC; and (2) to continue 15 reducing GTC’s U.S. sales prices to Redetermination constitutes a final from China was revoked, Commerce account for irrecoverable VAT.11 decision of the Court that is not in will not issue cash deposit instructions In its Second Remand as a result of this Court decision. Redetermination, Commerce 12 See Final Results of Redetermination Pursuant Notification to Interested Parties recalculated GTC’s U.S. sale prices to Court Remand, Court No. 15–00124, Slip Op. 19– 7 (CIT 2019) (Second Remand Redetermination). Commerce has issued and published 13 See Memorandum, ‘‘Draft Results of 17–12 (CIT February 6, 2017) (China Mfr. Alliance Redetermination Pursuant to Second Court Remand this notice in accordance with sections I). in the 2012–2013 Antidumping Duty 516A(e), 751(a)(1), and 777(i)(1) of the 5 See Final Results of Redetermination Pursuant Administrative of Certain New Pneumatic Off-the- to Remand, Court No. 15–00124, Slip Op. 17–12 Act. Road Tires from the People’s Republic of China: (CIT 2017) (First Remand Redetermination); see Margin Calculation and Surrogate Value Dated: October 9, 2019. also Viraj Group, Ltd. v. United States, 343 F.3d Memorandum for Guizhou Tyre Co., Ltd. and 1371, 1376 (Fed. Cir. 2003). Jeffrey I. Kessler, Guizhou Tyre Import and Export Co., Ltd.,’’ dated 6 See Diamond Sawblades Mfrs. Coal. v. United March 21, 2019; see also First Remand Assistant Secretary for Enforcement and States, 866 F.3d 1304 (CAFC 2017) (Diamond Redetermination at 21; and Memorandum, ‘‘Draft Compliance. Sawblades 2017). Results of Redetermination Pursuant to Second [FR Doc. 2019–22666 Filed 10–16–19; 8:45 am] 7 See China Manufacturers Alliance, LLC et al. v. Court Remand in the 2012–2013 Antidumping Duty BILLING CODE 3510–DS–P United States, Consol. Court No. 15–00124, Slip Op Administrative Review of Certain New Pneumatic 19–7 (CIT January 16, 2019) at 42–43 (China Mfr. Off-the-Road Tires from the People’s Republic of 15 Alliance II). China: Margin Calculation and Surrogate Value See Certain New Pneumatic Off-the-Road Tires 8 Id. at 8–9. Memorandum for Guizhou Tyre Co., Ltd. and from the People’s Republic of China: Final Results 9 Id. at 41–42. Guizhou Tyre Import and Export Co., Ltd.,’’ dated of Sunset Reviews and Revocation of Antidumping 10 Id. at 25. March 21, 2019. Duty and Countervailing Duty Orders, 84 FR 20616 11 Id. at 18–19. 14 See China Mfr. Alliance III. (May 10, 2019).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00015 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55555

DEPARTMENT OF COMMERCE Partial Rescission of the Administrative reimbursement of the antidumping Review duties occurred and the subsequent International Trade Administration Pursuant to 19 CFR 351.213(d)(1), assessment of double antidumping Commerce will rescind an duties. [A–570–893] administrative review, in whole or in Notification Regarding Administrative part, if the party that requested the Frozen Warmwater Shrimp From the Protective Order review withdraws its request within 90 People’s Republic of China: Partial This notice also serves as the only days of the publication date of the Rescission of Antidumping Duty reminder to parties subject to notice of initiation of the requested Administrative Review; 2018–2019 administrative protective order (APO) of review. The petitioner timely withdrew their responsibility concerning the all of its review requests. Because AGENCY: Enforcement and Compliance, disposition of proprietary information International Trade Administration, Commerce received no other requests disclosed under APO in accordance Department of Commerce. for review for 14 of the companies for with 19 CFR 351.305(a)(3). Timely which a review was initiated, we are SUMMARY: The Department of Commerce written notification of the return or rescinding this review of shrimp from destruction of APO materials or (Commerce) is partially rescinding its China for the period February 1, 2018, administrative review of the conversion to judicial protective order is through January 31, 2019, in part, with hereby requested. Failure to comply antidumping duty order on frozen respect to these 14 entities, in warmwater shrimp (shrimp) from the with the regulations and terms of an accordance with 19 CFR 351.213(d)(1). APO is a sanctionable violation. People’s Republic of China (China) for These 14 entities are: (1) Dalian Hengtai the period of review February 1, 2018, Foods Co., Ltd.; (2) Dalian Philica Notification to Interested Parties through January 31, 2019. Supply Chain Management Co., Ltd.; (3) This notice is issued and published in DATES: Applicable October 17, 2019. Dalian Sunrise Foodstuffs Co., Ltd.; (4) accordance with sections 751 and Dongwei Aquatic Products (Zhangzhou) FOR FURTHER INFORMATION CONTACT: 777(i)(1) of the Act and 19 CFR Co., Ltd.; (5) Fujian Dongwei Food Co., 351.213(d)(4). Jasun Moy or Kabir Archuletta, AD/CVD Ltd.; (6) Fujian Hongao Trade Operations, Office V, Enforcement and Development Co.; (7) Fujian R & J Group Dated: October 10, 2019. Compliance, International Trade Ltd.; (8) Gallant Ocean Group; (9) James Maeder, Administration, Department of Guangdong Rainbow Aquatic Deputy Assistant Secretary for Antidumping Commerce, 1401 Constitution Avenue Development; (10) Penglai Yuming and Countervailing Duty Operations. NW, Washington, DC 20230; telephone: Foodstuff Co., Ltd.; (11) Rizhao Meijia [FR Doc. 2019–22665 Filed 10–16–19; 8:45 am] (202) 482–8194, or (202) 482–2593, Keyuan Foods Co. Ltd.; (12) Suizhong BILLING CODE 3510–DS–P respectively. Tieshan Food Co., Ltd.; (13) Yangjiang SUPPLEMENTARY INFORMATION: Guolian Seafood Co., Ltd.; and (14) Zhangzhou Xinhui Foods Co., Ltd. The DEPARTMENT OF COMMERCE Background instant review will continue with International Trade Administration respect to the remaining companies for On February 8, 2019, Commerce which a review was initiated. [A–201–836] published in the Federal Register a notice of ‘‘Opportunity to Request Assessment Light-Walled Rectangular Pipe and Administrative Review’’ of the Commerce will instruct U.S. Customs Tube from Mexico: Preliminary Results antidumping duty order on shrimp from and Border Protection (CBP) to assess of Antidumping Duty Administrative China for the period of review February Review and Preliminary Determination 1 antidumping duties on all appropriate 1, 2018, through January 31, 2019. entries. For the companies for which of No Shipments; 2017–2018 Pursuant to requests from interested this review is rescinded, antidumping AGENCY: Enforcement and Compliance, parties, on May 2, 2019, in accordance duties shall be assessed at rates equal to with section 751(a) of the Tariff Act of International Trade Administration, the cash deposit rate of estimated Department of Commerce. 1930, as amended (the Act), and 19 CFR antidumping duties required at the time SUMMARY: 351.221(c)(1)(i), Commerce initiated an of entry, or withdrawal from warehouse, The Department of Commerce administrative review of the for consumption, in accordance with 19 (Commerce) preliminarily determines antidumping duty order on shrimp from that producers and/or exporters subject 2 CFR 351.212(c)(1)(i). Commerce intends China with respect to 102 companies. to issue appropriate assessment to this administrative review made sales On June 10, 2019, Ad Hoc Shrimp Trade instructions to CBP 15 days after of subject merchandise at less than Action Committee (the petitioner) publication of this notice in the Federal normal value (NV) during the August 1, timely withdrew its requests for an Register. 2017 through July 31, 2018 period of administrative review of all of the review (POR). Interested parties are companies for which it had requested a Notification to Importers invited to comment on these 3 review. This notice serves as the only preliminary results of review. reminder to importers whose entries DATES: Applicable October 17, 2019. 1 See Antidumping or Countervailing Duty Order, will be liquidated as a result of this FOR FURTHER INFORMATION CONTACT: Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 84 FR 2816 rescission notice, of their responsibility Samuel Brummitt or John Conniff, AD/ (February 8, 2019). under 19 CFR 351.402(f)(2) to file a CVD Operations, Office III, Enforcement 2 See Initiation of Antidumping and certificate regarding the reimbursement and Compliance, International Trade Countervailing Duty Administrative Reviews, 84 FR of antidumping duties prior to Administration, U.S. Department of 18777 (May 2, 2019). liquidation of the relevant entries Commerce, 1401 Constitution Avenue 3 See Petitioner’s Letter, ‘‘Certain Frozen Warmwater Shrimp from the People’s Republic of during this review period. Failure to NW, Washington, DC 20230; telephone: China: Domestic Producers’ Withdrawal of Review comply with this requirement could (202) 482–7851 or (202) 482–1009, Requests,’’ dated June 10, 2019. result in the presumption that respectively.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00016 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55556 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

SUPPLEMENTARY INFORMATION: enforcement.trade.gov/frn/. The signed FASEMEX’s statement of no and the electronic versions of the shipments.8 We received no information Background Preliminary Decision Memorandum are from CBP contrary to the statements of On October 4, 2018, Commerce identical in content. A list of topics no shipments from FASEMEX. published in the Federal Register a included in the Preliminary Decision Consistent with our practice,9 we are notice of the initiation of the Memorandum is included in the not preliminarily rescinding the review administrative review of the Appendix to this notice. with respect to FASEMEX. Rather, we antidumping duty (AD) order 1 on light- Scope of the Order will complete the review for FASEMEX walled rectangular pipe and tube from and issue appropriate instructions to Mexico for 19 companies.2 The scope of this order covers certain CBP based on the final results of this On November 5, 2018, we received a welded carbon-quality light-walled steel review. timely filed certification of no pipe and tube, of rectangular (including shipments of subject merchandise from square) cross section, having a wall Preliminary Results of Review Fabricaciones y Servicios de Mexico thickness of less than 4 mm. The term 3 We preliminarily determine that, for (FASEMEX). Commerce exercised its carbon-quality steel includes both the period August 1, 2017 through July discretion to toll all deadlines affected carbon steel and alloy steel which 31, 2018, the following weighted- by the partial federal government contains only small amounts of alloying average dumping margins exist: closure from December 22, 2018 through elements. Specifically, the term carbon- the resumption of operations on January quality includes products in which Weighted- 28, 2019.4 On April 10, 2019, we further none of the elements listed below Producer/exporter average extended the time limit for completion exceeds the quantity by weight margin of the preliminary results of the review respectively indicated; 1.80 percent of (percent) to no later than October 10, 2019.5 manganese, or 2.25 percent of silicon, or For a complete description of the Aceros Cuatro Caminos S.A. 1.00 percent of copper, or 0.50 percent de C.V ...... 3.29 events that followed the initiation of the of aluminum, or 1.25 percent of Arco Metal S.A. de C.V ...... 3.29 review, see the Preliminary Decision chromium, or 0.30 percent of cobalt, or Galvak, S.A. de C.V ...... 3.29 6 Memorandum. The Preliminary 0.40 percent of lead, or 1.25 percent of Grupo Estructuras y Perfiles .... 3.29 Decision Memorandum is a public nickel, or 0.30 percent of tungsten, or Hylsa S.A. de C.V ...... 3.29 document and is on file electronically 0.10 percent of molybdenum, or 0.10 Industrias Monterrey S.A. de via Enforcement and Compliance’s percent of niobium, or 0.15 percent of C.V ...... 3.29 International de Aceros, S.A. Antidumping and Countervailing Duty vanadium, or 0.15 percent of zirconium. Centralized Electronic Service System de C.V ...... 3.29 The description of carbon-quality is Maquilacero S.A. de C.V ...... 2.48 (ACCESS). ACCESS is available to intended to identify carbon-quality registered users at https:// Nacional de Acero S.A. de C.V 3.29 products within the scope. The welded- PEASA-Productos access.trade.gov and to all parties in the carbon quality rectangular pipe and tube Especializados de Acero ...... 3.29 Central Records Unit, located in room subject to the order is currently Perfiles LM, S.A. de C.V. 10 ..... 3.29 B8094 of the main Commerce building. classified under the Harmonized Tariff Productos Laminados de In addition, a complete version of the Schedule of the United States (HTSUS) Monterrey S.A. de C.V ...... 3.29 Preliminary Decision Memorandum can subheadings 7306.61.50.00 and Regiomontana de Perfiles y be accessed directly at http:// 7306.61.70.60. This tariff classification Tubos S.A. de C.V ...... 3.80 Talleres Acero Rey S.A. de C.V 3.29 is provided for convenience and 1 Ternium Mexico S.A. de C.V .... 3.29 See Light-Walled Rectangular Pipe and Tube Customs purposes; however, the written from Mexico, the People’s Republic of China, and Tuberia Laguna, S.A. de C.V ... 3.29 the Republic of Korea: Antidumping Duty Orders; description of the scope of the order is Tuberias Aspe ...... 3.29 Light-Walled Rectangular Pipe and Tube from the dispositive. Tuberias y Derivados S.A de Republic of Korea: Notice of Amended Final C.V ...... 3.29 Determination of Sales at Less Than Fair Value, 73 Methodology FR 45403 (August 5, 2008) (Order). Commerce is conducting this review 2 See Initiation of Antidumping and Disclosure and Public Comment Countervailing Duty Administrative Reviews, 83 FR in accordance with sections 751(a)(2) of 50077 (October 4, 2018) (Initiation Notice). the Tariff Act of 1930, as amended (the We will disclose to parties to the 3 See FASEMEX’s Letter, ‘‘Case No.: A–201–836— Act). Export price was calculated in proceeding any calculations performed Light-Walled Rectangular Pipe and Tube,’’ dated accordance with section 772 of the Act. November 5, 2018 (FASEMEX No Shipments Normal value was calculated in 8 See Memorandum, ‘‘Light-walled rectangular Letter). pipe and tube from Mexico (A–201–836),’’ dated 4 See Memorandum to the Record from Gary accordance with section 773 of the Act. November 9, 2018. Taverman, Deputy Assistant Secretary for For a full description of the 9 See, e.g., Certain Frozen Warmwater Shrimp Antidumping and Countervailing Duty Operations, methodology underlying our from Thailand; Preliminary Results of Antidumping performing the non-exclusive functions and duties conclusions, see the Preliminary Duty Administrative Review, Partial Rescission of of the Assistant Secretary for Enforcement and Decision Memorandum. Review, Preliminary Determination of No Compliance, ‘‘Deadlines Affected by the Partial Shipments; 2012–2013, 79 FR 15951, 15952 (March Shutdown of the Federal Government,’’ dated Preliminary Determination of No 24, 2014), unchanged in Certain Frozen Warmwater January 28, 2019. All deadlines in this segment of Shrimp from Thailand: Final Results of the proceeding have been extended by 40 days. Shipments Antidumping Duty Administrative Review, Final 5 See Memorandum, ‘‘Light-Walled Rectangular Prior to the issuance of the Determination of No Shipments, and Partial Pipe and Tube from Mexico: Extension of Time questionnaire, FASEMEX reported that Rescission of Review; 2012–2013, 79 FR 51306 Limit for Preliminary Results of Antidumping Duty (August 28, 2014). Administrative Review; 2017–2018,’’ dated April it made no sales of subject merchandise 10 See Light-Walled Rectangular Pipe and Tube 10, 2019. during the POR.7 On November 9, 2018, from Mexico: Initiation and Expedited Preliminary 6 See Memorandum, ‘‘Decision Memorandum for we placed the U.S. Customs and Border Results of Changed Circumstances Review, 82 FR the Preliminary Results of Antidumping Duty Protection (CBP) inquiry instructions on 54322 (November 17, 2017) and accompanying Administrative Review: Light-Walled Rectangular Preliminary Decision Memorandum, unchanged in Pipe and Tube from Mexico; 2017–2018,’’ dated the record that we sent to CBP regarding Light-Walled Rectangular Pipe and Tube from concurrently with, and hereby adopted by, this Mexico: Final Results of Changed Circumstances notice (Preliminary Decision Memorandum). 7 See FASEMEX No Shipments Letter. Review, 83 FR 13475 (March 29, 2018) (Commerce

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00017 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55557

in connection with these preliminary 351.212(b)(1).18 We will instruct CBP to completed segment of this proceeding in results of review within five days after assess antidumping duties on all which they were reviewed; (3) if the the date of publication of this notice.11 appropriate entries covered by this exporter is not a firm covered in this Interested parties may submit case briefs review when the importer-specific review, a prior review, or in the not later than 30 days after the date of assessment rate calculated in the final investigation but the producer is, the publication of this notice in the Federal results of this review is not zero or de cash deposit rate will be the rate Register.12 Rebuttal briefs, limited to minimis. If a respondent’s weighted- established for the most recently issues raised in the case briefs, may be average dumping margin is zero or de completed segment of this proceeding filed not later than five days after the minimis within the meaning of 19 CFR for the producer of the merchandise; date for filing case briefs.13 Parties who 351.106(c)(1), or an importer-specific and (4) the cash deposit rate for all other submit case or rebuttal briefs in this rate is zero or de minimis, we will producers or exporters will continue to proceeding are encouraged to submit instruct CBP to liquidate the appropriate be the all-others rate of 3.76 percent. with each argument: (1) A statement of entries without regard to antidumping These cash deposit requirements, when the issue; (2) a brief summary of the duties. The final results of this review imposed, shall remain in effect until argument; and (3) a table of shall be the basis for the assessment of further notice. 14 antidumping duties on entries of authorities. Case and rebuttal briefs Notification to Importers should be filed using ACCESS.15 merchandise covered by this review where applicable. This notice also serves as a reminder Interested parties who wish to request Regarding entries of subject to importers of their responsibility a hearing must submit a written request merchandise during the period of under 19 CFR 351.402(f)(2) to file a to the Assistant Secretary for review that were produced by certificate regarding the reimbursement Enforcement and Compliance within 30 Maquilacero and Regiopytsa and for of antidumping duties prior to days of the date of publication of this which they did not know that the liquidation of the relevant entries 16 notice. Requests should contain: (1) merchandise was destined for the during this review period. Failure to The party’s name, address and United States, we will instruct CBP to comply with this requirement could telephone number; (2) the number of liquidate un-reviewed entries at the all- result in the Department’s presumption participants; and (3) a list of issues others rate of 3.76 percent, as that reimbursement of antidumping parties intend to discuss. Issues raised established in the less-than-fair-value duties occurred and the subsequent in the hearing will be limited to those investigation, if there is no rate for the assessment of double antidumping raised in the respective case and intermediate company(ies) involved in duties. rebuttal briefs. If a request for a hearing the transaction.19 For a full discussion Notification to Interested Parties is made, we intend to hold the hearing of this matter, see Assessment Policy at the U.S. Department of Commerce, Notice.20 We are issuing and publishing this 1401 Constitution Avenue NW, In accordance with 19 CFR 356.8, we notice in accordance with sections Washington, DC 20230, at a date and intend to issue liquidation instructions 751(a)(1) and 777(i)(1) of the Act and 19 time to be determined.17 Parties should to CBP on or after 41 days after CFR 351.221(b)(4). confirm by telephone the date, time, and publication of the final results of this Dated: October 10, 2019. location of the hearing two days before review. Jeffrey I. Kessler, the scheduled date. Cash Deposit Requirements Assistant Secretary for Enforcement and Unless extended, we intend to issue Compliance. the final results of this administrative The following cash deposit review, which will include the results of requirements will be effective upon Appendix—List of Topics Discussed in our analysis of all issues raised in the publication of the final results of this the Preliminary Decision Memorandum administrative review for all shipments case and rebuttal briefs, within 120 days I. Summary of publication of these preliminary of the subject merchandise entered, or II. Background withdrawn from warehouse, for results in the Federal Register, pursuant III. Scope of the Order consumption on or after the publication to section 751(a)(3)(A) of the Act. IV. Preliminary Determination of No date of the final results of this Shipments Assessment Rates administrative review, as provided by V. Companies Not Selected for Individual section 751(a)(2)(C) of the Act: (1) The Examination For any individually examined cash deposit rate for each specific VI. Discussion of the Methodology respondents whose weighted-average VII. Currency Conversion company listed above will be equal to VIII. Recommendation dumping margin is above de minimis the weighted-average dumping margin (i.e., 0.50 percent), we will calculate established in the final results of this [FR Doc. 2019–22667 Filed 10–16–19; 8:45 am] importer-specific ad valorem duty administrative review; (2) for previously BILLING CODE 3510–DS–P assessment rates based on the ratio of reviewed or investigated companies not the total amount of dumping calculated listed above, the cash deposit rate will DEPARTMENT OF COMMERCE for the importer’s examined sales to the continue to be the company-specific rate total entered value of those same sales published for the most recently International Trade Administration in accordance with 19 CFR 18 In these preliminary results, Commerce applied [C–570–955] determined that Perfiles LM, S.A. de C.V. is the the assessment rate calculation methodology successor-in-interest to Perfiles y Herrajes). adopted in Antidumping Proceedings: Calculation Certain Magnesia Carbon Bricks From of the Weighted-Average Dumping Margin and 11 See 19 CFR 351.224(b). the People’s Republic of China: Assessment Rate in Certain Antidumping 12 See 19 CFR 351.309(c)(1)(ii). Proceedings; Final Modification, 77 FR 8101 Rescission of Countervailing Duty 13 See 19 CFR 351.309(d)(1). (February 14, 2012). Administrative Review; 2017 14 See 19 CFR 351.309(c)(2) and (d)(2). 19 See Order, 73 FR at 45405. 15 AGENCY: See 19 CFR 351.303. 20 See Antidumping and Countervailing Duty Enforcement and Compliance, 16 See 19 CFR 351.310(c). Proceedings: Assessment of Antidumping Duties, 68 International Trade Administration, 17 See 19 CFR 351.310(d). FR 23954 (May 6, 2003) (Assessment Policy Notice). Department of Commerce.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00018 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55558 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

SUMMARY: The Department of Commerce China during the POR.4 On December 4, Commerce’s inquiry and confirmed that (Commerce) is rescinding the 2018, we notified interested parties that there were no shipments of magnesia administrative review of the CBP’s database, which is comprised of carbon bricks from China during the countervailing duty (CVD) order on actual U.S. entries of subject POR with respect to the Companies certain magnesia carbon bricks merchandise, indicated that there were Subject to Review.12 On September 12, (magnesia carbon bricks) from the no entries of magnesia carbon bricks 2019, Commerce issued a memorandum People’s Republic of China (China) for from China that are subject to CVD stating that it intended to rescind this the period of review January 1, 2017, duties with respect to the Companies administrative review based on the lack through December 31, 2017 (POR). Subject to Review during the POR.5 of suspended entries with respect to the DATES: Applicable October 17, 2019. Commerce solicited comments from Companies Subject to Review, and FOR FURTHER INFORMATION CONTACT: interested parties on the CBP Entry invited comments from interested 6 13 Gene H. Calvert, AD/CVD Operations, Data. On December 11, 2018 the MC parties. No interested party Office VII, Enforcement and Bricks Committee filed timely commented on Commerce’s intent to Compliance, International Trade comments on the CBP Entry Data stating rescind this administrative review. that Commerce should obtain CBP entry Administration, U.S. Department of Rescission of Review Commerce, 1401 Constitution Avenue information for ‘‘Type-1’’ entries that were imported or exported by Fedmet It is Commerce’s practice to rescind NW, Washington, DC 20230; telephone: an administrative review of a CVD (202) 482–3586. and place that information on the record as Commerce did in the most-recently order, pursuant to 19 CFR 351.213(d)(3), SUPPLEMENTARY INFORMATION: completed administrative review of when there are no reviewable entries of Background magnesia carbon bricks from China.7 On subject merchandise during the POR for December 13, 2018, Fedmet and the which liquidation is suspended.14 On September 11, 2018, Commerce Fengchi Companies each submitted Normally, upon completion of an published in the Federal Register a timely certifications of no shipments, administrative review, the suspended notice of opportunity to request an and they both requested that Commerce entries are liquidated at the assessment administrative of the CVD order on rescind the administrative review of the rate calculated for the review period.15 magnesia carbon bricks from China for respective entities.8 In its certification of Therefore, for an administrative review the POR.1 On October 1, 2018, the no shipments, Fedmet stated that it is a to be conducted, there must be a Magnesia Carbon Bricks Fair Trade U.S. importer and distributor of non- reviewable, suspended entry for which Committee (MC Bricks Committee) subject merchandise from China and an Commerce can instruct CBP to liquidate timely submitted a request to review the importer of various types of refractory at the newly calculated assessment Companies Subject to Review, in 9 rate.16 Based on our examination of the 2 bricks from non-subject sources. accordance with 19 CFR 351.213(b). No Fedmet also requested that Commerce record, we continue to find that there is other party submitted a request for an terminate this administrative review no evidence of reviewable entries, administrative review of magnesia with respect to Fedmet, arguing that the shipments, or U.S. sales of subject carbon bricks from China for the POR. MC Bricks Committee had no grounds to merchandise during the POR.17 On November 15, 2018, Commerce request an administrative review of Accordingly, in the absence of published in the Federal Register a Fedmet, and that Commerce has no suspended entries of subject notice of initiation of this administrative lawful basis to conduct this review with merchandise during the POR for this 3 review. In the Initiation Notice, we respect to Fedmet.10 administrative review, Commerce is stated that in the event we limited the On June 28, 2019, Commerce rescinding this administrative review of number of respondents for individual requested that CBP confirm whether any the CVD order on magnesia carbon examination, we intended to select shipments of magnesia carbon bricks bricks from China, pursuant to 19 CFR respondents based on U.S. Customs and from China entered the United States 351.213(d)(3). Commerce intends to Border Protection (CBP) data for U.S. during the POR with respect to the issue appropriate assessment imports of magnesia carbon bricks from Companies Subject to Review.11 On this instructions to CBP 15 days after the same day, CBP responded to 1 See Antidumping or Countervailing Duty Order, 12 See Memorandum, ‘‘Certain magnesia carbon Finding, or Suspended Investigation; Opportunity 4 Id. at the section, ‘‘Respondent Selection.’’ bricks from the People’s Republic of China (China) to Request Administrative Review, 83 FR 45888 (C–570–955),’’ dated July 2, 2019. 5 See Memorandum, ‘‘Administrative Review of (September 11, 2018). 13 the Countervailing Duty Order on Certain Magnesia See Memorandum, ‘‘Administrative Review of 2 See Letter from the MC Bricks Committee, Carbon Bricks from the People’s Republic of China; the Countervailing Duty Order on Certain Magnesia ‘‘Certain Magnesia Carbon Bricks from the People’s Carbon Bricks from the People’s Republic of China: 2017: Release of U.S. Customs and Border Republic of China: Request for Administrative Intent to Rescind the 2017 Administrative Review,’’ Protection (CBP) Data for Respondent Selection,’’ Review,’’ dated October 1, 2018. The MC Bricks dated September 12, 2019 (Intent to Rescind dated December 4, 2018 (CBP Entry Data). Committee is an ad hoc association comprised of Memorandum). 6 Id. three U.S. producers of magnesia carbon bricks: 14 See, e.g., Circular Welded Carbon Quality Steel 7 Resco Products, Inc.; Magnesita Refractories See Letter from the MC Bricks Committee, Pipe from the People’s Republic of China: Company; and HarbisonWalker International, Inc. ‘‘Certain Magnesia Carbon Bricks from the People’s Rescission of Countervailing Duty Administrative The Companies Subject to Review are: Fedmet Republic of China: Comments on CBP Data Query,’’ Review; 2017, 84 FR 14650 (April 11, 2019); Resources Corporation (Fedmet); Fengchi Imp. and dated December 11, 2018. Lightweight Thermal Paper from the People’s Exp. Co., Ltd., Fengchi Imp. and Exp. Co., Ltd. of 8 See Letter from Fedmet, ‘‘Magnesia Carbon Republic of China: Notice of Rescission of Haicheng City, Fengchi Mining Co., Ltd. of Bricks from the People’s Republic of China, Case Countervailing Duty Administrative Review; 2015, Haicheng City, and Fengchi Refractories Co., of No. C–570–955: No Shipments Certification,’’ dated 82 FR 14349 (March 20, 2017); and Lightweight Haicheng City (collectively, the Fengchi December 13, 2018 (Fedmet’s Certification of No Thermal Paper from the People’s Republic of China: Companies); Liaoning Zhongmei High Temperature Shipments); see also Letter from the Fengchi Notice of Rescission of Countervailing Duty Material Co., Ltd.; Liaoning Zhongmei Holding Co., Companies, ‘‘Magnesia Carbon Bricks from the Administrative Review, 81 FR 50683 (August 2, Ltd.; RHI Refractories Liaoning Co., Ltd.; Shenglong People’s Republic of China, Case No. C–570–955: 2016). Refractories Co., Ltd.; Yingkou Heping Samwha No Shipments Certification,’’ dated December 13, 15 See 19 CFR 351.212(b)(2). Minerals, Co., Ltd.; and Yingkou Heping Sanhua 2018. 16 See, e.g., Certain Magnesia Carbon Bricks from Materials Co., Ltd. 9 See Fedmet’s Certification of No Shipments. the People’s Republic of China: Rescission of 3 See Initiation of Antidumping and 10 Id. Countervailing Duty Administrative Review; 2016, Countervailing Duty Administrative Reviews, 83 FR 11 See CBP message no. 9179316, dated June 28, 84 FR 22437 (May 17, 2019). 57411 (November 15, 2018) (Initiation Notice). 2019. 17 See Intent to Rescind Memorandum.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00019 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55559

date of publication of this notice in the Background United States at subheadings Federal Register. Commerce initiated this review on 8504.23.0040, 8504.23.0080 and 1 8504.90.9540. This tariff classification is Administrative Protective Order October 4, 2018. We selected two mandatory respondents in this review, provided for convenience and Customs This notice serves as a reminder to Hyosung and Hyundai. On January 29, purposes; however, the written parties subject to administrative 2019, Commerce exercised its discretion description of the scope of the order is protective order (APO) of their to toll all deadlines affected by the dispositive. For a complete description responsibility concerning the partial closure of the Federal of the scope of the order, see the disposition of proprietary information Government from December 22, 2018, Preliminary Decision Memorandum. disclosed under APO in accordance through January 25, 2019.2 On Methodology with 19 CFR 351.305(a)(3). Timely September 19, 2019, we extended the written notification of return or deadline for issuing the preliminary Commerce is conducting this review destruction of APO materials or results of the review to October 9, 2019. in accordance with section 751(a)(2) of conversion to judicial protective order is For a more detailed description of the the Tariff Act of 1930, as amended (the hereby requested. Failure to comply events that followed the initiation of Act). For a full description of the with the regulations and the terms of an this review, see the Preliminary methodology underlying our APO is a sanctionable violation. Decision Memorandum, dated conclusions, see the Preliminary concurrently with these results and Decision Memorandum. We are issuing and publishing this 3 notice in accordance with sections hereby adopted by this notice. Facts Available The Preliminary Decision 751(a)(1) and 777(1) of the Act, and 19 Memorandum is a public document and Pursuant to section 776(a) of the Act, CFR 351.213(d)(4). is on file electronically via Enforcement Commerce is preliminarily relying upon Dated: October 8, 2019. and Compliance’s Antidumping and facts otherwise available to assign an James Maeder, Countervailing Duty Centralized estimated weighted-average dumping Deputy Assistant Secretary for Antidumping Electronic Service System (ACCESS). margin to Hyundai in this review. and Countervailing Duty Operations. Access to ACCESS is available to Preliminarily, Commerce finds that [FR Doc. 2019–22672 Filed 10–16–19; 8:45 am] registered users at http:// Hyundai withheld necessary information that was requested by BILLING CODE 3510–DS–P access.trade.gov and is available to all parties in the Central Records Unit, Commerce, significantly impeded the Room B8024 of the main Commerce review, and provided information that DEPARTMENT OF COMMERCE building. In addition, a complete could not be verified. Further, version of the Preliminary Decision Commerce preliminarily determines International Trade Administration Memorandum can be accessed directly that Hyundai failed to cooperate by not at http://enforcement.trade.gov/frn/ acting to the best of its ability to comply [A–580–867] index.html. A list of topics discussed in with requests for information and, thus, the Preliminary Decision Memorandum Commerce is applying adverse facts Large Power Transformers From the is attached as an Appendix to this available (AFA) to Hyundai, in Republic of Korea: Preliminary Results notice. The signed Preliminary Decision accordance with section 776(b) of the of Antidumping Duty Administrative Memorandum and the electronic Act. For a full description of the Review; 2017–2018 versions of the Preliminary Decision methodology underlying our Memorandum are identical in content. conclusions regarding the application of AGENCY: AFA, see the Preliminary Decision Enforcement and Compliance, Scope of the Order International Trade Administration, Memorandum. Department of Commerce. The scope of this order covers large liquid dielectric power transformers Rate for Non-Selected Companies SUMMARY: The Department of Commerce having a top power handling capacity In accordance with the U.S. Court of (Commerce) preliminarily determines greater than or equal to 60,000 kilovolt Appeals for the Federal Circuit’s that both Hyosung Heavy Industries amperes (60 megavolt amperes), decision in Albemarle Corp. v. United Corporation (Hyosung) and Hyundai whether assembled or unassembled, States,4 we are applying to the non- Electric & Energy Systems Co. (Hyundai) complete or incomplete. selected companies the rate made sales of subject merchandise at The merchandise subject to the order preliminarily applied to Hyosung in this less than normal value during the is currently classified in the administrative review.5 This is the only period of review (POR) August 1, 2017 Harmonized Tariff Schedule of the rate determined in this review for through July 31, 2018. Interested parties individual respondents, and thus we are are invited to comment on these 1 See Initiation of Antidumping and preliminarily applying it to the four preliminary results. Countervailing Duty Administrative Reviews, 83 FR 50077 (October 4, 2018) (Initiation Notice). non-selected companies. For a detailed DATES: Applicable October 17, 2019. 2 See Memorandum to the Record from Gary Taverman, Deputy Assistant Secretary for 4 See Albemarle Corp. v. United States, 821 F.3d FOR FURTHER INFORMATION CONTACT: Antidumping and Countervailing Duty Operations, 1345 (Fed. Cir. 2016). Joshua DeMoss or John Drury, AD/CVD performing the non-exclusive functions and duties 5 See, e.g., Certain Small Diameter Carbon and Operations, Office VI, Enforcement and of the Assistant Secretary for Enforcement and Alloy Seamless Standard, Line, and Pressure Pipe Compliance, International Trade Compliance, ‘‘Deadlines Affected by the Partial (Under 41⁄2 Inches) from Japan: Preliminary Results Shutdown of the Federal Government,’’ dated of Antidumping Duty Administrative Review and Administration, U.S. Department of January 28, 2019. All deadlines in this segment of Preliminary Determination of No Shipments; 2014– Commerce, 1401 Constitution Avenue the proceeding have been extended by 40 days. 2015, 81 FR 45124, 45124 (July 12, 2016), NW, Washington, DC 20230; telephone: 3 See Memorandum, ‘‘Decision Memorandum for unchanged in Certain Small Diameter Carbon and (202) 482–3362 or (202) 482–0195, Preliminary Results of Antidumping Duty Alloy Seamless Standard, Line, and Pressure Pipe Administrative Review: Large Power Transformers (Under 41⁄2 Inches) from Japan: Final Results of respectively. from the Republic of Korea; 2017–2018’’ Antidumping Duty Administrative Review and (Preliminary Decision Memorandum), dated Final Determination of No Shipments; 2014–2015, SUPPLEMENTARY INFORMATION: concurrently with this notice. 81 FR 80640, 80641 (November 16, 2016).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00020 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55560 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

discussion, see the Preliminary Decision on interested parties.13 Executive 19 CFR 351.106(c)(2). If the Memorandum. summaries should be limited to five respondent’s weighted-average dumping pages total, including footnotes. margin is zero or de minimis in the final Preliminary Results of Review Pursuant to 19 CFR 351.310(c), results of review, we will instruct CBP We preliminarily determine that, for interested parties who wish to request a not to assess duties on any of its entries the period August 1, 2017 through July hearing must submit a written request to in accordance with the Final 31, 2018, the following weighted- the Assistant Secretary for Enforcement Modification for Reviews, i.e., ‘‘{w}here average dumping margins exist:6 and Compliance within 30 days of the the weighted-average margin of date of publication of this notice. dumping for the exporter is determined Weighted- Requests should contain: (1) The party’s to be zero or de minimis, no average name, address and telephone number; antidumping duties will be assessed.’’ 16 Producer/exporter dumping If the preliminary results are margin (2) the number of participants; and (3) (percent) a list of issues parties intend to discuss. unchanged for the final results, we will Issues raised in the hearing will be instruct CBP to apply an ad valorem Hyosung Corporation ...... 40.73 limited to those raised in the respective assessment rate of 60.81 percent to all Hyosung Heavy Industries case and rebuttal briefs. If a request for entries of subject merchandise during Corporation ...... 40.73 a hearing is made, Commerce intends to the period of review which were Hyundai Heavy Industries hold the hearing at the U.S. Department produced and/or exported by Hyundai. Co., Ltd.7 ...... 60.81 of Commerce, 1401 Constitution Avenue Regarding entries of subject Hyundai Electric & Energy merchandise during the period of Systems Co., Ltd ...... 60.81 NW, Washington, DC 20230, at a date 14 review that were produced by Hyosung Iljin Electric Co., Ltd ...... 40.73 and time to be determined. Parties Iljin ...... 40.73 should confirm the date, time, and and Hyundai and for which they did not LSIS Co., Ltd ...... 40.73 location of the hearing two days before know that the merchandise was the scheduled date. destined for the United States, we will Disclosure and Public Comment Commerce intends to publish the final instruct CBP to liquidate un-reviewed results of this administrative review, entries at the all-others rate of 22.00 Commerce will disclose to parties to including the results of its analysis of percent, as established in the less-than- the proceeding any calculations issues raised in any case or rebuttal fair-value investigation of the order, if performed in connection with these brief, no later than 120 days after there is no rate for the intermediate preliminary results of review within five publication of these preliminary results, company(ies) involved in the days after the date of publication of this unless extended.15 transaction.17 For a full discussion of notice.8 Commerce will announce the this matter, see Assessment Policy briefing schedule to interested parties at Assessment Rates Notice.18 a later date. Interested parties may Upon completion of this We intend to issue liquidation submit case briefs on the deadline that administrative review, Commerce shall instructions to CBP 15 days after Commerce will announce.9 Rebuttal determine, and U.S. Customs and publication of the final results of this briefs, the content of which is limited to Border Protection (CBP) shall assess, review. the issues raised in the case briefs, must antidumping duties on all appropriate Cash Deposit Requirements be filed within five days from the entries. If a respondent’s weighted- deadline date for the submission of case average dumping margin is not zero or The following cash deposit briefs.10 de minimis in the final results of this requirements will be effective upon Parties who submit case or rebuttal review and the respondent reported publication of the final results of this briefs in this proceeding are requested reliable entered values, we will administrative review for all shipments to submit with each argument: (1) A calculate importer-specific ad valorem of the subject merchandise entered, or statement of the issue; (2) a brief assessment rates for the merchandise withdrawn from warehouse, for summary of the argument; and (3) a based on the ratio of the total amount of consumption on or after the publication table of authorities.11 Case and rebuttal dumping calculated for the examined date of the final results of this briefs should be filed using ACCESS.12 sales made during the period of review administrative review, as provided by Case and rebuttal briefs must be served to each importer to the total entered section 751(a)(2)(C) of the Act: (1) The value of those same sales in accordance cash deposit rate for Hyosung and Hyundai and other companies listed 6 As AFA, we preliminarily assign Hyundai a with 19 CFR 351.212(b)(1). If the dumping margin of 60.81 percent, an AFA rate used respondent has not reported reliable above will be equal to the weighted- in the previous review. See Large Power entered values, we will calculate a per- average dumping margin established in Transformers from the Republic of Korea: Final unit assessment rate for each importer the final results of this administrative Results of Antidumping Duty Administrative review; (2) for previously reviewed or Review; 2016–2017, 84 FR 16461 (April 19, 2019). by dividing the total amount of This rate achieves the purpose of applying an dumping for the examined sales made investigated companies not listed above, adverse inference, i.e., it is sufficiently adverse to during the period of review to that the cash deposit rate will continue to be ensure that the uncooperative party does not obtain the company-specific rate published for a more favorable result by failing to cooperate than importer by the total sales quantity if it had fully cooperated. According to 776(c)(2) of associated with those transactions. 16 See Antidumping Proceedings: Calculation of the Act, this rate does not require corroboration. Where an importer-specific ad valorem the Weighted-Average Dumping Margin and 7 See Large Power Transformers from the assessment rate is zero or de minimis, Assessment Rate in Certain Antidumping Republic of Korea: Notice of Final Results of we will instruct CBP to liquidate the Proceedings: Final Modification, 77 FR 8101, 8102 Antidumping Duty Changed Circumstances Review, appropriate entries without regard to (February 14, 2012) (Final Modification for 83 FR 45094 (September 5, 2018), and Reviews). accompanying Issues and Decision Memorandum. antidumping duties in accordance with 17 See Large Power Transformers from the 8 See 19 CFR 351.224(b). Republic of Korea: Antidumping Duty Order, 77 FR 9 See 19 CFR 351.309(c)(1)(ii) and (d)(1). 13 See 19 CFR 351.303(f). 53177 (August 31, 2012). 10 See 19 CFR 351.309(d)(1) and (d)(2). 14 See 19 CFR 351.310(d). 18 See Antidumping and Countervailing Duty 11 See 19 CFR 351.309(c)(2). 15 See section 751(a)(3)(A) of the Act; 19 CFR Proceedings: Assessment of Antidumping Duties, 68 12 See generally 19 CFR 351.303. 351.213(h). FR 23954 (May 6, 2003) (Assessment Policy Notice).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00021 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55561

the most recently completed segment of DEPARTMENT OF COMMERCE exported softwood lumber to the United this proceeding in which they were States during that time period in reviewed; (3) if the exporter is not a firm International Trade Administration amounts sufficient to account for at least covered in this review, a prior review, one percent of U.S. imports of softwood Subsidy Programs Provided by or in the investigation but the producer lumber products. We intend to rely on Countries Exporting Softwood Lumber is, the cash deposit rate will be the rate similar previous six-month periods to and Softwood Lumber Products to the identify the countries subject to future established for the most recently United States; Request for Comment completed segment of this proceeding reports on softwood lumber subsidies. for the producer of the merchandise; AGENCY: Enforcement and Compliance, For example, we will rely on U.S. and (4) the cash deposit rate for all other International Trade Administration, imports of softwood lumber and producers or exporters will continue to Department of Commerce. softwood lumber products during the period July 1, 2019, through December be the all-others rate of 22.00 percent, SUMMARY: The Department of Commerce 31, 2019, to select the countries subject the rate established in the investigation (Commerce) seeks public comment on 19 any subsidies, including stumpage to the next report. of this proceeding. These cash deposit Under U.S. trade law, a subsidy exists requirements, when imposed, shall subsidies, provided by certain countries exporting softwood lumber or softwood where an authority: (i) Provides a remain in effect until further notice. lumber products to the United States financial contribution; (ii) provides any Notification to Importers during the period January 1, 2019, form of income or price support within through June 30, 2019. the meaning of Article XVI of the GATT This notice also serves as a reminder DATES: Comments must be submitted 1994; or (iii) makes a payment to a to importers of their responsibility within 30 days after publication of this funding mechanism to provide a under 19 CFR 351.402(f)(2) to file a notice. financial contribution to a person, or entrusts or directs a private entity to certificate regarding the reimbursement FOR FURTHER INFORMATION CONTACT: make a financial contribution, if of antidumping duties prior to Kristen Johnson, AD/CVD Operations, providing the contribution would liquidation of the relevant entries Enforcement and Compliance, normally be vested in the government during this review period. Failure to International Trade Administration, and the practice does not differ in comply with this requirement could U.S. Department of Commerce, 1401 substance from practices normally result in Commerce’s presumption that Constitution Avenue NW. Washington, reimbursement of antidumping duties followed by governments, and a benefit DC 20230; telephone: (202) 482–4793. 1 occurred and the subsequent assessment is thereby conferred. SUPPLEMENTARY INFORMATION: Parties should include in their of double antidumping duties. Background comments: (1) The country which Notification to Interested Parties provided the subsidy; (2) the name of Pursuant to section 805 of Title VIII the subsidy program; (3) a brief We are issuing and publishing this of the Tariff Act of 1930 (the Softwood description (no more than 3–4 notice in accordance with sections Lumber Act of 2008), the Secretary of sentences) of the subsidy program; and 751(a)(1) and 777(i)(1) of the Act. Commerce is mandated to submit to the (4) the government body or authority appropriate Congressional committees a that provided the subsidy. Dated: October 9, 2019. report every 180 days on any subsidy Jeffrey I. Kessler, provided by countries exporting Submission of Comments Assistant Secretary for Enforcement and softwood lumber or softwood lumber As specified above, to be assured of Compliance. products to the United States, including consideration, comments must be stumpage subsidies. Commerce Appendix received no later than 30 days after the submitted its last subsidy report on July publication of this notice in the Federal List of Topics Discussed in the Preliminary 1, 2019. As part of its newest report, Register. All comments must be Decision Memorandum Commerce intends to include a list of submitted through the Federal I. Summary subsidy programs identified with eRulemaking Portal at http:// II. Background sufficient clarity by the public in www.regulations.gov, Docket No. ITA– III. Deadline for Submission of Updated Sales response to this notice. 2019–0007, unless the commenter does and Cost Information Request for Comments not have access to the internet. The IV. Scope of the Order materials in the docket will not be V. Discussion of the Methodology Given the large number of countries edited to remove identifying or contact VI. Affiliation that export softwood lumber and information, and Commerce cautions VII. Application of Facts Available and Use softwood lumber products to the United against including any information in an of Adverse Inference States, we are soliciting public comment electronic submission that the submitter VIII. Rate for Non-Selected Companies only on subsidies provided by countries does not want publicly disclosed. IX. Recommendation which had exports accounting for at Attachments to electronic comments [FR Doc. 2019–22669 Filed 10–16–19; 8:45 am] least one percent of total U.S. imports of will be accepted in Microsoft Word, softwood lumber by quantity, as BILLING CODE 3510–DS–P Excel, or Adobe PDF formats only. classified under Harmonized Tariff Commenters who do not have access Schedule of the United States (HTSUS) to the internet may submit the original codes 4407.1001, 4407.1100, 4407.1200, and one electronic copy of each set of 4407.1905, 4407.1906, 4407.1910, comments by mail or hand delivery/ during the period January 1, 2019, courier. through June 30, 2019. Official U.S. All comments should be addressed to import data published by the United James Maeder, Deputy Assistant 19 See Large Power Transformers from the States International Trade Commission’s Republic of Korea: Antidumping Duty Order, 77 FR DataWeb indicate that four countries 1 See section 771(5)(B) of the Tariff Act of 1930, 53177 (August 31, 2012). (Brazil, Canada, Germany, and Sweden) as amended.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00022 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55562 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Secretary for Antidumping and Affected Public: Individual or ADDRESSES: NIST and NOAA are using Countervailing Duties, at U.S. Households. the https://www.regulations.gov system Department of Commerce, Room 18022, Frequency: Annually. for the submission and posting of public 1401 Constitution Avenue NW, Respondent’s Obligation: Voluntary. comments in this proceeding. All Washington, DC 20230. This information collection request comments in response to this notice are Dated: October 9, 2019. may be viewed at reginfo.gov. Follow therefore to be submitted electronically James Maeder, the instructions to view Department of through https://www.regulations.gov, via the web form accessed by following Deputy Assistant Secretary for Antidumping Commerce collections currently under and Countervailing Duty Operations. review by OMB. the ‘‘Submit a Formal Comment’’ link Written comments and near the top right of the Federal [FR Doc. 2019–22692 Filed 10–16–19; 8:45 am] Register web page for this notice. BILLING CODE 3510–DS–P recommendations for the proposed information collection should be sent FOR FURTHER INFORMATION CONTACT: within 30 days of publication of this U.S. survey foot deprecation DEPARTMENT OF COMMERCE notice to OIRA_Submission@ resources: https://www.nist.gov/pml/us- omb.eop.gov or fax to (202) 395–5806. surveyfoot. National Institute of Standards and Information on standards Technology Sheleen Dumas, development and maintenance: Departmental Lead PRA Officer, Office of the Elizabeth Gentry, 301–975–3690, Submission for OMB Review; Chief Information Officer, Commerce [email protected]. Comment Request Department. Technical and historical information [FR Doc. 2019–22620 Filed 10–16–19; 8:45 am] on usage of the foot: Michael Dennis, The Department of Commerce will BILLING CODE 3510–13–P 240–533–9611, Michael.Dennis@ submit to the Office of Management and noaa.gov. Budget (OMB) for clearance the following proposal for collection of DEPARTMENT OF COMMERCE SUPPLEMENTARY INFORMATION: information under the provisions of the Background Paperwork Reduction Act (44 U.S.C. National Institute of Standards and Chapter 35). Technology This action is designed to establish Agency: National Institute of national uniformity in length Standards and Technology (NIST). Deprecation of the United States (U.S.) measurements based on the foot. For Title: Baldrige Performance Excellent Survey Foot more than sixty years, two nearly Program (BPEP) Team Leader Consensus identical definitions of the foot have AGENCY: The National Institute of and Team Leader Site Visit Information been in use in the U.S. for geodetic and Standards and Technology and the land surveys. A Federal Register notice Collections. National Geodetic Survey (NGS), OMB Control Number: 0693–0079. published on July 1, 1959 (24 FR 5348) National Ocean Service (NOS), National Form Number(s): None. by the National Bureau of Standards Type of Request: Extension and Oceanic and Atmospheric (renamed the National Institute of revision of a current information Administration (NOAA), Department of Standards and Technology in 1988) and collection. Commerce (DOC). the U.S. Coast and Geodetic Survey Number of Respondents: Examiner ACTION: Notice; request for comment. (reorganized as the National Geodetic Performance Assessment—40 per year; Survey under the National Oceanic and Team Leader Performance Assessment— SUMMARY: The National Institute of Atmospheric Administration in 1970) 300 per year. Standards and Technology (NIST) and refined the definition of the yard in Average Hours per Response: the National Geodetic Survey (NGS), terms of the International System of Examiner Performance Assessment—20 National Ocean Service (NOS), National Units (SI), commonly known as the minutes; Team Leader Performance Oceanic and Atmospheric metric system. The 1959 notice was Assessment—5 minutes. Administration (NOAA), are taking issued after an international agreement Burden Hours: Examiner Performance collaborative action to provide national among six nations resolved a long- Assessment—13.5 hours; Team Leader uniformity in the measurement of standing difference in the relationship Performance Assessment—25 hours. length. This notice announces a of the U.S. yard to the British yard. The Needs and Uses: The purpose of the decision to deprecate the use of the notice reported that there was a slight information is to help staff collect data ‘‘U.S. survey foot’’ on December 31, difference (2 parts per million) between on the skills of the examiners, including 2022. After that date, the ‘‘U.S. survey the 1959 definition (i.e., one yard = alumni examiners, in order to best foot’’ will be superseded by the ‘‘foot’’ 0.914 4 meter, exactly) and an 1893 manage training and selection. Because (formerly known as the ‘‘international definition (i.e., 1 yard = 3600/3937 the examiner selection is so foot’’), which is already in use meter, or approximately 0.914 401 83 competitive, examiners need to throughout the U.S. This notice meter). demonstrate competencies such as describes the plan, resources, training, The 1959 Federal Register notice then understanding the Baldrige Criteria, and other activities of NIST and NOAA adopted a revised value for the foot for team skills, and writing skills. The that will assist those affected by this use throughout the U.S., and identified program also needs to collect peer-based transition, and invites comments and it as the ‘‘international foot’’ to show information to understand an other information from land surveyors, that it corresponded with the foot in use examiner’s skill level in order to make engineers, Federal, State and local by the United Kingdom and other decisions on whether the examiner government officials, businesses, and countries. The notice defined this should be elevated to ‘‘senior examiner’’ any other member of the public engaged international foot as 0.304 8 meter (e.g., and therefore team leader. The blinded in or affected by surveying and mapping equal to 0.999 999 8 of the value for the data will be shared with the team leader operations. foot officially adopted in 1893). for improvement purposes, and for DATES: Comments and other information Additionally, to avoid disrupting the future assignments. must be received by December 2, 2019. surveying practices at the time, the

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00023 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55563

notice established an interim approach such as those involving rectangular and unnecessary costs to the users, the that permitted the limited use of the plane coordinates of SPCS 83. In these States, and professionals in the historic 1893 value of the foot cases, the difference between the two surveying, mapping, and engineering exclusively in the field of geodetic definitions can also result in large fields. No compelling justification to surveys. It was identified as the ‘‘U.S. direction and position location errors, in maintain two definitions for the foot survey foot’’ with the defined value of many cases reaching tens of feet for exists. 0.304 800 61 meter (approximately). The SPCS 83 coordinates. Notice From the Director of the 1959 notice specifically stated that the Because of this situation, there has National Institute of Standards and ‘‘U.S. survey foot’’ should be used been a long history of Technology Regarding the Deprecation ‘‘until such a time as it becomes misunderstandings and confusion over of the ‘‘U.S. Survey Foot’’ on December desirable and expedient to readjust the which definition of the foot was used to 31, 2022 basic geodetic survey networks in the carry out a specific land survey or civil United States, after which the ratio of a engineering project. There have been Under Article 1, Section 8 of the yard, equal to 0.914 4 meter, shall many instances where software or United States Constitution, Congress apply.’’ electronic surveying devices default to retains the power to ‘‘fix the Standard As announced in a Federal Register one or the other foot definitions, but of Weights and Measures.’’ Throughout notice published on March 24, 1977 (42 users incorrectly assume the actual unit that section, the words ‘‘uniform FR 15943), NOAA officially adopted the of measure in use. This ongoing throughout the United States’’ are used meter as the unit for length in the ambiguity has resulted in professional in conjunction with many of the other National Spatial Reference System liability by the inadvertent violation of duties and responsibilities that are (NSRS). However, U.S. surveying and State law, the introduction of systematic listed. The ‘‘fixing’’ or defining the mapping practitioners continued to use errors in surveying and engineering standards of weights and measures is the ‘‘U.S. survey foot,’’ including when projects, misreported position and intrinsic to ensure uniform they employed the NGS-defined State location, land sale and project delays, measurement across the U.S., as well as Plane Coordinates System of 1927 and boundary disputes, additional costs with the rest of the world. In 1866, 1983 (SPCS 27 and SPCS 83, associated with correcting unit Congress acted to make the metric respectively). Because the ‘‘international mistakes, and other unintended system of measurement (now known as foot’’ is the basis for all other length consequences. Because State the International System of Units (SI)) measurements and calibrations in the jurisdictions with different legal legal for use in the United States (15 U.S., it is no longer necessary to definitions of the foot share borders, U.S.C. 204). On May 20, 1875 the U.S. continue to maintain two unit values for mapping projects in these geographic signed the Meter Convention (known as the foot. zones may experience elevated error the ‘‘International Treaty of the Meter’’), risks as a surveyor transitions between which established the International Consequences for Surveying, Mapping, a State that uses the ‘‘U.S. survey foot’’ Bureau of Weights and Measures, an and Engineering in the United States and a State that uses the ‘‘international intergovernmental organization under Although the use of the ‘‘U.S. survey foot.’’ This risk is exacerbated when the General Conference on Weights and foot’’ was intended to be an interim professional surveyors and engineers are Measures that oversees the International measure, its use continues to be licensed to practice in multiple States Committee for Weights and Measures, prevalent in land surveying and that use different versions of the foot, which is the organization that maintains mapping in much of the U.S. Of the 50 and for large projects when the team the SI to meet the measurement needs U.S. jurisdictions that have legislated participants come from different States of the world. On April 5, 1893, the SPCS 83 (48 States plus Puerto Rico and and even different countries. In addition ‘‘Mendenhall Order,’’ issued by the U.S. Guam), the ‘‘U.S. survey foot’’ has been to the cost due to errors, there is the cost Coast and Geodetic Survey with the specified for SPCS 83 in 40 States, of inefficiency, since it is necessary to approval of the U.S. Secretary of the either through statute (28 States) or keep track of the foot version, which Treasury, determined that the U.S. Federal Register notices (12 States). Six increases with the size, duration, and Customary units of the yard and pound States have adopted the ‘‘international complexity of projects. would be defined in terms of the SI foot’’ for SPCS 83, while two States units of the meter and kilogram. The (plus Puerto Rico and Guam) have not Opportunity To Eliminate Confusion practice of defining the U.S. Customary formally designated the type of foot to Since the publication of the 1959 units of measurement in terms of the SI be used. It is important to note that State Federal Register notice, experience has continues today. legislation and Federal Register notices overwhelmingly revealed that national In 1988, Congress declared that the regarding the ‘‘U.S. survey foot’’ are uniformity cannot be ensured in this metric system was the preferred system specifically associated with SPCS 83, critical industry field when users are of measurement for trade and commerce and therefore are not applicable to the routinely confronted with two in the United States (15 U.S.C. 205b). NSRS Modernization in 2022. definitions of the foot. The best The Director of the National Institute of It is also important to note that while opportunity for eliminating the Standards and Technology is authorized the difference between the two redundancy in values for the foot will by statute ‘‘to develop, maintain, and definitions is 2 parts per million, this occur with the NOAA program to retain custody of the national standards small discrepancy accumulates over modernize the NSRS in 2022. of measurement, and provide the means large distances and can result in The only practical solution is to and methods for making measurements significant errors in surveying and civil deprecate the ‘‘U.S. survey foot’’ and to consistent with those standards’’ (15 engineering projects, regardless of the require that its use in surveying, U.S.C. 272(b)(2)), ‘‘to assure the size of the project. For example, when mapping, and engineering be compatibility of United States national a one-mile distance is surveyed, the discontinued. Allowing the continued measurement standards with those of difference is approximately 0.01 ft or use of two definitions of the foot other nations’’ (15 U.S.C. 272(b)(9)), and 0.12 in. However, the impact becomes undercuts the value and benefit of to ‘‘cooperate with the States in securing substantial when longer distance national uniformity, and allows for uniformity in weights and measures measurements or conversions are made, additional opportunities for confusion laws’’ (15 U.S.C. 272(c)(4)). Under this

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00024 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55564 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

authority, the SI is interpreted or date. The notice also prescribes the new also be avoided after December 31, 2022 modified by the Director of NIST for use unit of measurement that will be and which will be retained for historical in the United States. The SI is used accepted for use. The notice period purposes but will be deemed obsolete. exclusively to define, establish, and allows users time to make the necessary After December 31, 2022, any data maintain the U.S. national standards of changes to their measuring practices, derived from or published as a result of measurement and in securing processes, procedures, and devices. The surveying, mapping, or any other uniformity of their use in the laws of the notice period also provides an activity within the U.S. that is expressed States. opportunity for education and training in terms of feet shall only be based on ‘‘Deprecation’’ is a term widely used for all of those involved in the the ‘‘foot’’ equal to 0.304 8 meter in the field of legal metrology and other changeover and the identification of (exactly), formerly known as the measurement science fields of study. It unforeseen issues so that appropriate ‘‘international foot’’ in the 1959 Federal describes a decision to discontinue the preventive actions, exceptions, or Register notice. use of a specific measurement unit or additional requirements can be method of sale. A unit of measurement developed and implemented. After the Likewise, other measures previously (e.g., the foot or gallon) though legal, notice period ends, the deprecated based only on the ‘‘U.S. survey foot’’ may be prohibited from being used in a measurement unit is deemed obsolete, will be defined using the foot equal to specific commercial application if, for its use is to be avoided, and it is 0.304 8 meter (exactly) after December example, it has been identified as being retained for historical purposes and 31, 2022. These measures are the redundant or a source of confusion, or legacy applications only. ‘‘chain,’’ ‘‘link,’’ ‘‘rod’’ (also ‘‘pole’’ or if it could frustrate the ability of users ‘‘perch’’), ‘‘furlong,’’ and ‘‘fathom’’ for to make quantity and value Deprecation of the Survey Foot, Survey length, and the ‘‘acre’’ for area. Decimal comparisons. For example, gasoline and Mile, and Other Measures Derived SI equivalents for these measures are other engine fuels are permitted to be From the Survey Foot given in Table 1 for both the ‘‘U.S. sold from a retail service station by the On December 31, 2022, the 1893 ‘‘U.S. survey foot’’ (approximate) and the gallon but may not be sold by the fluid survey foot,’’ as defined in a 1959 ‘‘foot’’ (exact). For these measures, the pint or fluid ounce. As the situation Federal Register notice (24 FR 5348, difference between the two types of feet with multiple definitions for the foot June 30, 1959), will be deprecated as a is usually of no practical consequence. illustrates, measurement unit uniformity U.S. national standard of measurement For example, the greatest precision is only possible when a single and its use is to be avoided. The 1893 typically used for the chain in modern measurement unit definition is used for definition of the ‘‘U.S. survey foot’’ will land surveying practice is three decimal a specific application (e.g., land be retained for historic reference but places (or 0.1 link), and at that level of surveying). will be deemed obsolete. This notice significance both versions of the foot The deprecation process begins with also applies to the ‘‘U.S. survey mile’’ give the same value. Similarly, the a notice to users that a unit of measure (equal to approximately 1609.347 difference in area for 1 acre is only is to be deprecated and that use of the meters), which is based on the ‘‘U.S. 0.000 004 acre (0.17 ft2) for the two foot unit is to be avoided after a specific survey foot,’’ the use of which should versions.

TABLE 1—APPROXIMATE DECIMAL SI EQUIVALENTS FOR MEASURES COMMONLY GIVEN IN ‘‘U.S. SURVEY FEET’’ AND EXACT EQUIVALENTS FOR THE ‘‘FOOT’’ THAT WILL BE ADOPTED AFTER DECEMBER 31, 2022 IN NIST SP 811, THE NIST GUIDE FOR THE USE OF THE INTERNATIONAL SYSTEM OF UNITS

‘‘U.S. survey foot’’ ‘‘foot’’ Unit of measure based on feet Type of quantity (approximate) (exact)

foot (ft) ...... length ...... 0.304 800 6 . . . m ...... 0.304 8 m mile (mi) ...... length ...... 1609.347 . . . m ...... 1609.344 m chain (ch) ...... length ...... 20.116 84 . . . m ...... 20.116 8 m link (li) ...... length ...... 0.201 168 4 . . . m ...... 0.201 168 m rod (rd), pole, perch ...... length ...... 5.029 21 . . . m ...... 5.029 2 m furlong (fur) ...... length ...... 201.168 4 . . . m ...... 201.168 m fathom ...... length ...... 1.828 804 . . . m ...... 1.828 8 m acre (ac) ...... area ...... 4046.872 609 9 . .. m2 ...... 4046.856 422 4 m2

In keeping with the terms of this Comments and Future Action education and training for all of those notice, the ‘‘U.S. survey foot’’ will no involved in the changeover. After the The Director of NIST and the Director public comments are evaluated, any longer be supported by NOAA in the of the National Geodetic Survey (NGS) unforeseen issues identified, and modernized NSRS after 2022, including solicit comments and suggestions from the State Plane Coordinate System of land surveyors, engineers, Federal, State appropriate solutions developed, a 2022 (SPCS2022), elevations, and all and local officials, equipment second Federal Register notice other components of the system. manufacturers, and the public at large addressing those issues will be However, the ‘‘U.S. survey foot’’ will be who are engaged in or affected by published and publicly announced in permanently maintained in NOAA surveying and mapping operations for other media as appropriate before June products and services for legacy ways that the two agencies can help 30, 2020. applications, for example the facilitate an orderly transition to a single This action is being taken in computation of SPCS coordinates in definition for the foot. Throughout the conjunction with the NGS program to States where it was specified for SPCS notice period, NGS and the NIST Office improve the National Spatial Reference 83, and for all zones of SPCS 27. of Weights and Measures will work System (NSRS), as described at https:// together to provide opportunities for geodesy.noaa.gov/datums/newdatums/

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00025 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55565

index.shtml. In 2022, NGS will replace who are knowledgeable about the must be postmarked or emailed no later the North American Datum of 1983 commercial space-based remote sensing than 30 days from the publication date (NAD 83) and the North American industry and uses of space-based remote of this notice. The full text of the Vertical Datum of 1988 (NAVD 88) with sensing data to serve on the Advisory Committee Charter and its current new geometric reference frames and a Committee on Commercial Remote membership can be viewed at the geopotential datum. The new reference Sensing (ACCRES). The Committee is Agency’s web page at: http:// frames and datum will rely primarily on comprised of leaders in the commercial www.nesdis.noaa.gov/CRSRA/ Global Navigation Satellite Systems space-based remote sensing industry, accresHome.html. (GNSS), such as the Global Positioning space-based remote sensing data users, FOR FURTHER INFORMATION CONTACT: System (GPS), as well as on a government, and academia. The Tashaun Pierre, Commercial Remote gravimetric geoid model resulting from SUPPLEMENTARY INFORMATION section of Sensing Regulatory Affairs Office, the NGS Gravity for the Redefinition of this notice provides committee and NOAA Satellite and Information the American Vertical Datum (GRAV–D) membership criteria. Services, 1335 East West Highway, Project. These new reference frames and SUPPLEMENTARY INFORMATION: ACCRES Room G101, Silver Spring, Maryland datum will be easier to access and was established by the Secretary of 20910; telephone (301) 713–7077, email maintain than NAD 83 and NAVD 88, Commerce on May 21, 2002, to advise [email protected]. which rely on physical survey marks the Secretary, through the Under that deteriorate over time. Secretary of Commerce for Oceans and Stephen M. Volz, On April 18, 2018, NGS issued a draft Atmosphere, on matters relating to the Assistant Administrator for Satellite and Federal Register notice (83 FR 17149) U.S. commercial remote sensing Information Services. for public comment on draft policy and industry and NOAA’s activities to carry [FR Doc. 2019–22660 Filed 10–16–19; 8:45 am] procedures for the State Plane out responsibilities of the Department of BILLING CODE 3510–HR–P Coordinate System of 2022 (SPCS2022), Commerce as set forth in the National which will be referenced to the 2022 and Commercial Space Programs Act of reference frames. In those draft 2010 (the Act), Title 51 U.S.C. 60101 et DEPARTMENT OF DEFENSE documents, it was specified that seq (formerly the Land Remote Sensing SPCS2022 parameters will be Policy Act of 1992, 15 U.S.C. Secs. Office of the Secretary exclusively defined using metric (SI) 5621–5625). values. However, in addition to metric Defense Health Board; Notice of Committee members serve in a values, the documents stated that output Federal Advisory Committee Meeting representative capacity for a term of two coordinates could also optionally be years and may serve additional terms, if AGENCY: provided in either ‘‘international’’ or Under Secretary of Defense for reappointed. No more than 20 ‘‘U.S. survey feet,’’ and that by default Personnel and Readiness, Department of individuals at a time may serve on the the type of foot would be the same as Defense (DoD). Committee. ACCRES will have a fairly currently used for SPCS 83. The official ACTION: Notice of Federal Advisory balanced membership consisting of version of SPCS2022 Policy, effective Committee meeting. approximately 9 to 20 members. April 23, 2019 (https:// Nominations are encouraged from all SUMMARY: The DoD is publishing this geodesy.noaa.gov/INFO/Policy/files/ interested U.S. persons and notice to announce that the following SPCS2022_Policy_NGS_2019-1214- organizations representing interests Federal Advisory Committee meeting of 01.pdf), states that NGS has not yet affected by the regulation of remote the Defense Health Board will take determined whether or what type of foot sensing. Nominees must represent place. will be supported for output coordinates stakeholders in remote sensing, space (Section II.E.1). The policy will be DATES: Open to the public Monday, commerce, space policy, or a related updated after NIST and NOAA co-issue November 4, 2019 from 7:30 a.m. to 3:00 field and be able to attend committee a Federal Register notice by June 30, p.m. meetings that are held usually two times 2020, announcing adoption of the ‘‘foot’’ ADDRESSES: The address of the open per year. Membership is voluntary, and equal to 0.304 8 meter (exactly) as the meeting is Madigan Army Medical service is without pay. Each nomination official definition for all applications in Center, 9040 Jackson Ave., Cahill that is submitted should include the the U.S. after December 31, 2022. Conference Room 2–68–4, Tacoma, WA proposed committee member’s name 98431. Registration is required. (Pre- Kevin A. Kimball, and organizational affiliation, a brief meeting screening for base access and description of the nominee’s Chief of Staff. registration required. See guidance in qualifications and interest in serving on [FR Doc. 2019–22414 Filed 10–16–19; 8:45 am] SUPPLEMENTARY INFORMATION, ‘‘meeting the Committee, a curriculum vitae or BILLING CODE 3510–13–P Accessibility.’’) resume of the nominee, and no more than three supporting letters describing FOR FURTHER INFORMATION CONTACT: DEPARTMENT OF COMMERCE the nominee’s qualifications and Captain Gregory Gorman, Medical interest in serving on the Committee. Corps, U.S. Navy, (703) 275–6060 National Oceanic and Atmospheric Self-nominations are acceptable. The (Voice), (703) 275–6064 (Facsimile), Administration following contact information should [email protected] (Email). accompany each submission: The Mailing address is 7700 Arlington Notice Requesting Nominations for the nominee’s name, address, phone Boulevard, Suite 5101, Falls Church, Advisory Committee on Commercial number, and email address. Virginia 22042. Website: http:// Remote Sensing (ACCRES) Nominations should be sent to Tahara www.health.mil/dhb. The most up-to- date changes to the meeting agenda can ACTION: Request for membership Dawkins, Director, Commercial Remote be found on the website. nominations. Sensing Regulatory Affairs Office, 1335 East West Highway, G–101, Silver SUPPLEMENTARY INFORMATION: This SUMMARY: The Department of Commerce Spring, Maryland 20910 or email meeting is being held under the is seeking highly qualified individuals [email protected]. Nominations provisions of the Federal Advisory

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00026 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55566 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Committee Act (FACA) (5 U.S.C., [email protected] or (703) Defense Agencies: Defense Advanced Appendix), the Government in the 275–6060 (voice). Research Projects Agency, Defense Sunshine Act (5 U.S.C. 552b), and 41 Special Accommodations: Individuals Commissary Agency, Defense Contract CFR 102–3.140 and 102–3.150. requiring special accommodations to Audit Agency, Defense Contract Availability of Materials for the access the public meeting should Management Agency, Defense Finance Meeting: Additional information, contact Ms. Theresa Fassig Normil at and Accounting Service, Defense Health including the agenda, will be available least five (5) business days prior to the Agency, Defense Information Systems at the DHB website, http:// meeting so that appropriate Agency, Defense Legal Services Agency, www.health.mil/dhb. A copy of the arrangements can be made. Defense Logistics Agency, Defense agenda or any updates to the agenda for Written Statements: Any member of Prisoners of War/Missing in Action the November 4, 2019, meeting will be the public wishing to provide comments Accounting Agency, Defense Security available on the DHB website. Any other to the DHB related to its current taskings Cooperation Agency, Defense Threat materials presented in the meeting may or mission may do so at any time in Reduction Agency, Missile Defense be obtained at the meeting. accordance with section 10(a)(3) of the Agency, and Pentagon Force Protection Purpose of the Meeting: The DHB Federal Advisory Committee Act, 41 Agency. The PRB shall provide fair and provides independent advice and CFR 102–3.105(j) and 102–3.140, and impartial review of Senior Executive recommendations to maximize the the procedures described in this notice. Service and Senior Professional safety and quality of, as well as access Written statements may be submitted to performance appraisals and make to, health care for DoD health care the DHB DFO, Captain Gorman, at recommendations regarding beneficiaries. The purpose of the [email protected]. performance ratings and performance meeting is to provide progress updates Supporting documentation may also be awards to the Deputy Secretary of on specific tasks before the DHB. In included, to establish the appropriate Defense. historical context and to provide any addition, the DHB will receive DATES: The board membership is necessary background information. If information briefings on current issues applicable beginning on September 13, the written statement is not received at related to military medicine. 2019. least five (5) business days prior to the Agenda: The DHB anticipates FOR FURTHER INFORMATION CONTACT: receiving progress updates from the meeting, the DFO may choose to postpone consideration of the statement Laura E. Devlin Dominguez, Assistant Neurological/Behavioral Health Director for Office of the Secretary of Subcommittee on the Examination of until the next open meeting. The DFO will review all timely submissions with Defense Senior Executive Management Mental Health Accession Screening: Office, Office of the Deputy Chief Predictive Value of Current Measures the DHB President and ensure they are provided to members of the DHB before Management Officer, Department of and Processes review and from the Defense, (703) 693–8373. Health Care Delivery Subcommittee on the meeting that is subject to this notice. After reviewing the written comments, SUPPLEMENTARY INFORMATION: The the Active Duty Women’s Health Care publication of PRB membership is Services review. The DHB also expects the President and the DFO may choose to invite the submitter to orally present required by 5 U.S.C. 4314(c)(4). In to receive overview briefings from accordance with 5 U.S.C. 4314(c)(4), the Madigan Army Medical Center, the their issue during an open portion of this meeting or at a future meeting. The following executives are appointed to Regional Health Command—Pacific, the the Office of the Secretary of Defense 62nd Medical Squadron, and the Naval DFO, in consultation with the DHB President, may allot time for members of PRB with specific PRB panel Hospital Bremerton information as well assignments being made from this as information briefings on Joint Base the public to present their issues for review and discussion by the DHB. group. Executives listed will serve a Lewis-McChord (JBLM) Behavioral one-year renewable term, beginning Health Resources and JBLM Women’s Dated: October 10, 2019. September 13, 2019. Resources. Any changes to the agenda Aaron T. Siegel, can be found at the link provided in this Alternate OSD Federal Register Liaison Office of the Secretary of Defense SUPPLEMENTARY INFORMATION section. Officer, Department of Defense. Appointing Authority—David L. Meeting Accessibility: Pursuant to 5 [FR Doc. 2019–22607 Filed 10–16–19; 8:45 am] Norquist, Deputy Secretary of Defense U.S.C. 552b and 41 CFR 102–3.140 BILLING CODE 5001–06–P Principal Executive Representative— through 102–3.165 and subject to Sajeel S. Ahmed availability of space, this meeting is Chairperson—Jeffrey R. Register open to the public. Seating is limited DEPARTMENT OF DEFENSE and is on a first-come basis. All PRB PANEL MEMBERS members of the public who wish to Office of the Secretary attend the public meeting must register ATKINSON, MICHELLE LAYCHAK, MICHAEL R. CRESSWELL by emailing their full name, rank/title, Membership of the Performance Review Board BANKS, ROXANNE J. LEIST JR, MICHAEL N. and organization/company to BLANKS, JULIE A. MACSTRAVIC, JAMES dha.ncr.dhb.mbx.defense-health- AGENCY: Office of the Secretary of A. [email protected] or by contacting Ms. BOOTH SR, WILLIAM H. MAYS, WILLIAM D. Defense (OSD), DoD. BRUHN, MICHAEL L. MEANS, LLEWELLYN Theresa Fassig Normil at (703) 275– ACTION: Notice of board membership. BUNN, BRAD METZ, DANIELLE A. 6012 no later than 12:00 p.m. on Friday, CADMAN, DAVID S. MOORE, BLAKE A. October 25, 2019. Members of the public SUMMARY: This notice announces the CANNON, MICHAEL O MOOREFIELD, FRED- ERICK D. who do not have base access will be appointment of the Department of CONDON, CHRISTINE MUIR, THOMAS M. required to provide additional Defense, Fourth Estate, Performance M. information before access to JBLM can Review Board (PRB) members, to EADY, WALTER B. MULVIHILL, KEVIN M. be arranged by the DHB staff and, when include the Office of the Secretary of GRAFF, DIANA P. O’DONNELL, CHRIS- TOPHER C. required, this information must be Defense, Joint Staff, Defense Field GUMAHAD, ARSENIO SCHLEIEN, STEVEN L. provided to the DHB Designated Federal Activities, U.S Court of Appeals for the HANDELMAN, KEN- SCHLESS, SCOTT R. Officer (DFO), Captain Gorman at Armed Forces, and the following NETH B.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00027 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55567

PRB PANEL MEMBERS—Continued activities, please contact Freddie Cross, Officers of each state provide the 202–453–7224. Secretary annually with a list of HENRY, THOMAS M. SIKORA, MELISSA A. HIGGINS, MAUREEN B. TENAGLIA, JOHN M. SUPPLEMENTARY INFORMATION: The proposed teacher shortage areas for that KADIRI, MOBOLA A. TOLLE, CYNTHIA S. Department of Education (ED), in state. KAPELLAS, CHRIS- WARK, LAWRENCE J. accordance with the Paperwork Dated: October 10, 2019. TOPHER A. KOFFSKY, PAUL S. Reduction Act of 1995 (PRA) (44 U.S.C. Kate Mullan, 3506(c)(2)(A)), provides the general PRA Coordinator, Information Collection public and Federal agencies with an Dated: October 10, 2019. Clearance Program, Information Management opportunity to comment on proposed, Branch, Office of the Chief Information Aaron T. Siegel, revised, and continuing collections of Officer. Alternate OSD Federal Register Liaison information. This helps the Department [FR Doc. 2019–22602 Filed 10–16–19; 8:45 am] Officer, Department of Defense. assess the impact of its information BILLING CODE 4000–01–P [FR Doc. 2019–22611 Filed 10–16–19; 8:45 am] collection requirements and minimize BILLING CODE 5001–06–P the public’s reporting burden. It also helps the public understand the DEPARTMENT OF EDUCATION Department’s information collection [Docket No.: ED–2019–ICCD–0132] DEPARTMENT OF EDUCATION requirements and provide the requested [Docket No. ED–2019–ICCD–0131] data in the desired format. ED is Agency Information Collection soliciting comments on the proposed Activities; Comment Request; DCIA Agency Information Collection information collection request (ICR) that Aging and Compliance Data Activities; Comment Request; is described below. The Department of Requirements for Guaranty Agencies Targeted Teacher Shortage Areas Data Education is especially interested in Collection public comment addressing the AGENCY: Federal Student Aid (FSA), following issues: (1) Is this collection Department of Education (ED). AGENCY: Office of Postsecondary necessary to the proper functions of the ACTION: Notice. Education (OPE), Department of Department; (2) will this information be SUMMARY: In accordance with the Education (ED). processed and used in a timely manner; Paperwork Reduction Act of 1995, ED is ACTION: Notice. (3) is the estimate of burden accurate; proposing a new information collection. (4) how might the Department enhance SUMMARY: In accordance with the the quality, utility, and clarity of the DATES: Interested persons are invited to Paperwork Reduction Act of 1995, ED is information to be collected; and (5) how submit comments on or before proposing a revision of an existing might the Department minimize the December 16, 2019. information collection. burden of this collection on the ADDRESSES: To access and review all the DATES: Interested persons are invited to respondents, including through the use documents related to the information submit comments on or before of information technology. Please note collection listed in this notice, please December 16, 2019. that written comments received in use http://www.regulations.gov by ADDRESSES: To access and review all the response to this notice will be searching the Docket ID number ED– documents related to the information considered public records. 2019–ICCD–0132. Comments submitted collection listed in this notice, please Title of Collection: Targeted Teacher in response to this notice should be use http://www.regulations.gov by Shortage Areas Data Collection. submitted electronically through the searching the Docket ID number ED– OMB Control Number: 1840–0595. Federal eRulemaking Portal at http:// 2019–ICCD–0131. Comments submitted Type of Review: A revision of an www.regulations.gov by selecting the in response to this notice should be existing information collection. Docket ID number or via postal mail, submitted electronically through the Respondents/Affected Public: State, commercial delivery, or hand delivery. Federal eRulemaking Portal at http:// Local, and Tribal Governments. If the regulations.gov site is not www.regulations.gov by selecting the Total Estimated Number of Annual available to the public for any reason, Docket ID number or via postal mail, Responses: 57. ED will temporarily accept comments at commercial delivery, or hand delivery. Total Estimated Number of Annual [email protected]. Please include the If the regulations.gov site is not Burden Hours: 2,793. docket ID number and the title of the available to the public for any reason, Abstract: This request is for approval information collection request when ED will temporarily accept comments at of reporting requirements that are requesting documents or submitting [email protected]. Please include the contained in the Federal Family comments. Please note that comments docket ID number and the title of the Education Loan Program (FFELP) submitted by fax or email and those information collection request when regulations (34 CFR 682.210) which submitted after the comment period will requesting documents or submitting address the targeted teacher deferment not be accepted. Written requests for comments. Please note that comments provision of the Higher Education Act of information or comments submitted by submitted by fax or email and those 1965 as amended by the Higher postal mail or delivery should be submitted after the comment period will Education Amendment of 1986, sections addressed to the Director of the not be accepted. Written requests for 427(a)(2)(C)(vi), 428(b)(1)(M)(vi), and Information Collection Clearance information or comments submitted by 428(b)(4)(A), which provide for the Division, U.S. Department of Education, postal mail or delivery should be targeted teacher deferment. 550 12th Street SW, PCP, Room 9086, addressed to the Director of the The FFELP (34 CFR 682.210(q)), Paul Washington, DC 20202–0023. Information Collection Clearance Douglas Teacher Scholarship Program FOR FURTHER INFORMATION CONTACT: For Division, U.S. Department of Education, (34 CFR 653.50(a)), TEACH Grant specific questions related to collection 550 12th Street SW, PCP, Room 9086, Program, and Federal Perkins Loan activities, please contact Beth Washington, DC 20202–0023. Program (34 CFR 674.53(c)) regulations Grebeldinger, 202–377–4018. FOR FURTHER INFORMATION CONTACT: For contain information collection SUPPLEMENTARY INFORMATION: The specific questions related to collection requirements. The Chief State School Department of Education (ED), in

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00028 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55568 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

accordance with the Paperwork (the Requirements). The Department SUMMARY: The Industry Advisory Board Reduction Act of 1995 (PRA) (44 U.S.C. plans to issue the Requirements to the (IAB) to the International Energy 3506(c)(2)(A)), provides the general GAs by April 1, 2020 for Agency (IEA) will meet on October 22– public and Federal agencies with an implementation by the first quarter of 23, 2019, at the IEA Headquarters, Room opportunity to comment on proposed, FY 2021. 1, 9 rue de la Fe´de´ration, 75015 Paris, revised, and continuing collections of Dated: October 11, 2019. France, in connection with a joint information. This helps the Department Kate Mullan, meeting of the IEA’s Standing Group on assess the impact of its information Emergency Questions (SEQ) which is collection requirements and minimize PRA Coordinator, Information Collection Clearance Program, Information Management scheduled at the same time. the public’s reporting burden. It also Branch, Office of the Chief Information DATES: October 22–23, 2019. helps the public understand the Officer. ADDRESS: IEA Headquarters, Room 1, 9 Department’s information collection [FR Doc. 2019–22628 Filed 10–16–19; 8:45 am] rue de la Fe´de´ration, 75015 Paris, requirements and provide the requested BILLING CODE 4000–01–P France. data in the desired format. ED is soliciting comments on the proposed FOR FURTHER INFORMATION CONTACT: information collection request (ICR) that Thomas Reilly, Assistant General DEPARTMENT OF ENERGY is described below. The Department of Counsel for International and National Education is especially interested in Senior Executive Service Performance Security Programs, Department of public comment addressing the Review Board Energy, 1000 Independence Avenue following issues: (1) Is this collection SW, Washington, DC 20585, 202–586– necessary to the proper functions of the AGENCY: Department of Energy. 5000. Department; (2) will this information be ACTION: Designation of Performance SUPPLEMENTARY INFORMATION: In processed and used in a timely manner; Review Board Standing Register. accordance with section 252(c)(1)(A)(i) (3) is the estimate of burden accurate; of the Energy Policy and Conservation SUMMARY: (4) how might the Department enhance This notice provides the Act (42 U.S.C. 6272(c)(1)(A)(i)) (EPCA), the quality, utility, and clarity of the Performance Review Board Standing the following notice of meetings is information to be collected; and (5) how Register for the Department of Energy. provided: might the Department minimize the This listing supersedes all previously A meeting of the Industry Advisory burden of this collection on the published lists of PRB members. Board (IAB) to the International Energy respondents, including through the use DATES: This appointment is effective as Agency (IEA) will be held at the IEA of information technology. Please note of September 30, 2019. Headquarters, Room 1, 9 rue de la that written comments received in SUPPLEMENTARY INFORMATION: Fe´de´ration, 75015 Paris, France, response to this notice will be Carter, Brian commencing at 9:30 a.m. on October 22, considered public records. Dehaven, Darrel 2019. The purpose of this notice is to Title of Collection: DCIA Aging and Isom, Pamela permit attendance by representatives of Compliance Data Requirements for Johnson Jr., Thomas U.S. company members of the IAB at a Guaranty Agencies. Kim, Dong meeting of the IEA’s Standing Group on OMB Control Number: 1845–NEW. Kremer, Kevin Emergency Questions (SEQ), which is Type of Review: A new information Lee, Terri scheduled to be held at the same collection. Lippold, David location and time. The IAB will also Respondents/Affected Public: Private Livengood, Joanna Sector; State, Local, and Tribal hold a preparatory meeting among Lushetsky, John company representatives at the same Governments. Marlay, Robert Total Estimated Number of Annual location at 8:30 a.m. on October 22, Moore, Johnny 2019. The agenda for this preparatory Responses: 550. Moreno, Francisco Total Estimated Number of Annual meeting is to review the agenda for the O’Konski, Peter Burden Hours: 1,430. SEQ meeting. Abstract: The Department is required Rasar, Kimberly The agenda of the meeting is under Reilly, Thomas to report to the U.S. Department of the the control of the SEQ and the SOM. It Satyapal, Sunita Treasury (Treasury) the status and is expected that the SEQ will adopt the Srinivasan, Nanda condition of its non-tax debt portfolio in following agenda: Tyner, Teresa accordance with the requirements of the Closed SEQ Session—IEA Member Welling, David Craig Debt Collection Improvement Act of Countries Only 1996 (DCIA) and the Digital Signed in Washington, DC, on October 2, 1. Adoption of the Agenda Accountability and Transparency Act of 2019. 2. Approval of the Summary Record 2014 (DATA Act). Erin S. Moore, of the 158th Meeting The Department is unable to prepare Director, Office of Corporate Executive 3. Status of Compliance with IEP an accurate and compliant Treasury Management, Office of the Chief Human Agreement Stockholding Report based on the data it currently Capital Officer. Obligations receives from its GAs. The new [FR Doc. 2019–22680 Filed 10–16–19; 8:45 am] 4. Update on the Ministerial Mandate guidance will require the GAs to: Age BILLING CODE 6450–01–P 5. Update on Accession process of debt according to DCIA; report the Lithuania eligibility of DCIA-aged debt for referral Open SEQ Session—open to to the Treasury Offset Program (TOP); DEPARTMENT OF ENERGY Association Countries and report compliance with Form 1099– 6. Mid-term Review of Sweden C reporting. International Energy Agency Meetings 7. Gas Security 2019 The new reporting requirements are AGENCY: Department of Energy. 8. Industry Advisory Board Update titled DCIA Aging and Compliance Data 9. Emergency Response Review— ACTION: Notice of meetings. Requirements for Guaranty Agencies Luxembourg

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00029 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55569

10. Mid-term Review of Switzerland Congress, the IEA, and the European Comments Due: 5 p.m. ET 10/30/19. 11. Outreach Commission; and invitees of the IAB, Docket Numbers: ER20–67–000. 12. ERE 10 Notice the SEQ, the SOM, or the IEA. Applicants: Evergy Kansas Central, 13. Oral Reports by Administrations Signed in Washington, DC, October 10, Inc. 14. Any Other Business 2019. Description: § 205(d) Rate Filing: Schedule of SEQ & SOM Meetings in Thomas Reilly, Notice of Succession, Market Based Rate 2020: Assistant General Counsel for International Tariff to be effective 12/9/2019. —24–26 March 2020 and National Security Programs. Filed Date: 10/10/19. —23–25 June 2020 [FR Doc. 2019–22661 Filed 10–16–19; 8:45 am] Accession Number: 20191010–5000. —17–19 November 2020 BILLING CODE 6450–01–P Comments Due: 5 p.m. ET 10/31/19. A meeting of the Industry Advisory Docket Numbers: ER20–68–000. Board (IAB) to the International Energy Applicants: Evergy Generating, Inc. Agency (IEA) will be held at the DEPARTMENT OF ENERGY Description: § 205(d) Rate Filing: International Energy Agency, 9 rue de la Notice of Succession, Purchase Power Fe´de´ration, 75015 Paris, France, on Senior Executive Service Performance Agreement to be effective 12/9/2019. October 23, 2019, commencing at 09:30 Review Board Filed Date: 10/10/19. a.m. The purpose of this notice is to Accession Number: 20191010–5001. AGENCY: Department of Energy. permit attendance by representatives of Comments Due: 5 p.m. ET 10/31/19. U.S. company members of the IAB at a ACTION: Designation of Performance Docket Numbers: ER20–69–000. joint meeting of the IEA’s Standing Review Board Chair. Applicants: Silver Lake Solar, LLC. Group on Emergency Questions (SEQ) Description: Petition for Limited and the IEA’s Standing Group on the Oil SUMMARY: This notice provides the Performance Review Board Chair Waiver of Silver Lake Solar, LLC. Market (SOM), which is scheduled to be Filed Date: 10/9/19. held at the same location and time. designee for the Department of Energy. This listing supersedes all previously Accession Number: 20191009–5185. The agenda of the SEQ meeting is Comments Due: 5 p.m. ET 10/23/19. under the control of the SEQ. It is published lists of Performance Review expected that the SEQ will adopt the Board Chair. Docket Numbers: ER20–70–000. following agenda: DATES: This appointment is effective as Applicants: Alabama Power Introduction of September 30, 2019. Company. 1. Adoption of the Agenda Dennis M. Miotla Description: § 205(d) Rate Filing: Charlton Solar Energy Center (Charlton 2. Approval of Summary Record of 26 Signed in Washington, DC, on October 2, June 2019 2019. Solar) LGIA Filing to be effective 9/26/ 2019. 3. Reports on Recent Oil Market and Erin S. Moore, Policy Developments in IEA Filed Date: 10/10/19. Director, Office of Corporate Executive Accession Number: 20191010–5038. Countries Management, Office of the Chief Human Comments Due: 5 p.m. ET 10/31/19. 4. Update on the Current Oil Market Capital Officer. Situation: followed by Q&A [FR Doc. 2019–22662 Filed 10–16–19; 8:45 am] Docket Numbers: ER20–71–000. Applicants: Coachella Hills Wind, 5. Presentation: ‘‘Perspective from the BILLING CODE 6450–01–P financial markets on recent oil price LLC. volatility’’, followed by Q&A Description: Baseline eTariff Filing: 6. Inter-active session on the DEPARTMENT OF ENERGY MBR Application to be effective 12/10/ International Maritime Organisation 2019. rules on bunker fuels—Part 1. Federal Energy Regulatory Filed Date: 10/10/19. 7. Inter-active session on the Commission Accession Number: 20191010–5039. International Maritime Organisation Comments Due: 5 p.m. ET 10/31/19. rules on bunker fuels—Part 2. Combined Notice of Filings #1 Docket Numbers: ER20–72–000. 8. TBD Take notice that the Commission Applicants: Coachella Wind Holdings, 9. Any Other Business received the following electric rate LLC. —Date of the next. SEQ/SOM meeting: filings: Description: Baseline eTariff Filing: 26 March 2020 (TBC). Location IEA, Docket Numbers: ER19–2619–001. MBR Application to be effective 12/10/ (Room 1) Applicants: Midcontinent 2019. Discussion of content of next SOM Independent System Operator, Inc. Filed Date: 10/10/19. meeting Description: Tariff Amendment: Accession Number: 20191010–5040. Close of meeting. 2019–10–10_Request for deferral of Comments Due: 5 p.m. ET 10/31/19. Concluding Remarks action on Fast AGC filing to be effective Docket Numbers: ER20–73–000. As provided in section 252(c)(1)(A)(ii) 12/31/9998. Applicants: Midcontinent of the Energy Policy and Conservation Filed Date: 10/10/19. Independent System Operator, Inc. Act (42 U.S.C. 6272(c)(1)(A)(ii)), the Accession Number: 20191010–5021. Description: § 205(d) Rate Filing: meetings of the IAB are open to Comments Due: 5 p.m. ET 10/31/19. 2019–10–11_Attachment L FTR Credit representatives of members of the IAB Docket Numbers: ER20–66–000. Filing to be effective 6/1/2020. and their counsel; representatives of Applicants: PJM Interconnection, Filed Date: 10/10/19. members of the IEA’s Standing Group L.L.C. Accession Number: 20191010–5041. on Emergency Questions and the IEA’s Description: Tariff Cancellation: Comments Due: 5 p.m. ET 10/31/19. Standing Group on the Oil Markets; Notice of Cancellation of ISA/SA No. Docket Numbers: ER20–74–000. representatives of the Departments of 3984; Queue No. R52A to be effective Applicants: Desert Hot Springs, LLC. Energy, Justice, and State, the Federal 11/11/2019. Description: Baseline eTariff Filing: Trade Commission, the General Filed Date: 10/9/19. MBR Application to be effective 12/10/ Accounting Office, Committees of Accession Number: 20191009–5168. 2019.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00030 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55570 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Filed Date: 10/10/19. Filed Date: 10/10/19. The Commission encourages Accession Number: 20191010–5042. Accession Number: 20191010–5103. electronic submission of protests and Comments Due: 5 p.m. ET 10/31/19. Comments Due: 5 p.m. ET 10/31/19. interventions in lieu of paper, using the Docket Numbers: ER20–75–000. The filings are accessible in the FERC Online links at http:// Applicants: Oasis Alta, LLC. Commission’s eLibrary system by www.ferc.gov. To facilitate electronic Description: Baseline eTariff Filing: clicking on the links or querying the service, persons with internet access MBR Application to be effective 12/10/ docket number. who will eFile a document and/or be 2019. Any person desiring to intervene or listed as a contact for an intervenor Filed Date: 10/10/19. protest in any of the above proceedings must create and validate an Accession Number: 20191010–5043. must file in accordance with Rules 211 eRegistration account using the Comments Due: 5 p.m. ET 10/31/19. and 214 of the Commission’s eRegistration link. Select the eFiling Docket Numbers: ER20–76–000. Regulations (18 CFR 385.211 and link to log on and submit the Applicants: Oasis Plains Wind, LLC. 385.214) on or before 5:00 p.m. Eastern intervention or protests. Description: Baseline eTariff Filing: time on the specified comment date. Persons unable to file electronically MBR Application to be effective 12/10/ Protests may be considered, but should submit an original and 5 copies 2019. intervention is necessary to become a of the intervention or protest to the Filed Date: 10/10/19. party to the proceeding. Federal Energy Regulatory Commission, Accession Number: 20191010–5044. eFiling is encouraged. More detailed 888 First Street NE, Washington, DC Comments Due: 5 p.m. ET 10/31/19. information relating to filing 20426. Docket Numbers: ER20–77–000. requirements, interventions, protests, The filings in the above-referenced Applicants: Painted Hills Wind service, and qualifying facilities filings proceeding are accessible in the Holdings, LLC. can be found at: http://www.ferc.gov/ Commission’s eLibrary system by Description: Baseline eTariff Filing: docs-filing/efiling/filing-req.pdf. For clicking on the appropriate link in the MBR Application to be effective 12/10/ other information, call (866) 208–3676 above list. They are also available for 2019. (toll free). For TTY, call (202) 502–8659. electronic review in the Commission’s Filed Date: 10/10/19. Dated: October 10, 2019. Public Reference Room in Washington, Accession Number: 20191010–5046. Nathaniel J. Davis, Sr., DC. There is an eSubscription link on Comments Due: 5 p.m. ET 10/31/19. Deputy Secretary. the website that enables subscribers to Docket Numbers: ER20–78–000. [FR Doc. 2019–22663 Filed 10–16–19; 8:45 am] receive email notification when a Applicants: San Jacinto Wind II, LLC. BILLING CODE 6717–01–P document is added to a subscribed Description: Baseline eTariff Filing: docket(s). For assistance with any FERC MBR Application to be effective 12/10/ Online service, please email 2019. DEPARTMENT OF ENERGY [email protected]. or call Filed Date: 10/10/19. (866) 208–3676 (toll free). For TTY, call Accession Number: 20191010–5047. Federal Energy Regulatory (202) 502–8659. Comments Due: 5 p.m. ET 10/31/19. Commission Docket Numbers: ER20–79–000. Dated: October 10, 2019. Applicants: Voyager Wind IV [Docket No. ER20–64–000] Nathaniel J. Davis, Sr., Deputy Secretary. Expansion, LLC. PGR Lessee L, LLC; Supplemental Description: Baseline eTariff Filing: Notice That Initial Market-Based Rate [FR Doc. 2019–22678 Filed 10–16–19; 8:45 am] MBR Application to be effective 12/10/ Filing Includes Request for Blanket BILLING CODE 6717–01–P 2019. Section 204 Authorization Filed Date: 10/10/19. Accession Number: 20191010–5048. This is a supplemental notice in the DEPARTMENT OF ENERGY Comments Due: 5 p.m. ET 10/31/19. above-referenced proceeding of PGR Docket Numbers: ER20–80–000. Lessee L, LLC’s application for market- Federal Energy Regulatory Applicants: Meadow Lake Wind Farm based rate authority, with an Commission VI LLC, accompanying rate tariff, noting that [Docket No. ER20–65–000] Description: Baseline eTariff Filing: such application includes a request for Reactive Power Compensation Filing to blanket authorization, under 18 CFR TWE Bowman Solar Project, LLC; be effective 12/9/2019. part 34, of future issuances of securities Supplemental Notice That Initial Filed Date: 10/10/19. and assumptions of liability. Market-Based Rate Filing Includes Accession Number: 20191010–5064. Any person desiring to intervene or to Request for Blanket Section 204 Comments Due: 5 p.m. ET 10/31/19. protest should file with the Federal Authorization Docket Numbers: ER20–81–000. Energy Regulatory Commission, 888 Applicants: Midcontinent First Street NE, Washington, DC 20426, This is a supplemental notice in the Independent System Operator, Inc. in accordance with Rules 211 and 214 above-referenced proceeding of TWE Description: § 205(d) Rate Filing: of the Commission’s Rules of Practice Bowman Solar Project, LLC’s 2019–10–10_SA 2527 ITC-Consumers and Procedure (18 CFR 385.211 and application for market-based rate Energy 4th Rev GIA (J161 J752) to be 385.214). Anyone filing a motion to authority, with an accompanying rate effective 9/25/2019. intervene or protest must serve a copy tariff, noting that such application Filed Date: 10/10/19. of that document on the Applicant. includes a request for blanket Accession Number: 20191010–5084. Notice is hereby given that the authorization, under 18 CFR part 34, of Comments Due: 5 p.m. ET 10/31/19. deadline for filing protests with regard future issuances of securities and Docket Numbers: ER20–82–000. to the applicant’s request for blanket assumptions of liability. Applicants: PacifiCorp. authorization, under 18 CFR part 34, of Any person desiring to intervene or to Description: § 205(d) Rate Filing: 3 future issuances of securities and protest should file with the Federal Phases Renewables (OR D.A.) Rev 2 to assumptions of liability, is October 30, Energy Regulatory Commission, 888 be effective 10/1/2019. 2019. First Street NE, Washington, DC 20426,

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00031 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55571

in accordance with Rules 211 and 214 No. CP19–514–000 an application obtain legal status by becoming a party of the Commission’s Rules of Practice pursuant to section 3 of the Natural Gas to the proceedings for this project and Procedure (18 CFR 385.211 and Act (NGA) requesting authorization to should, on or before the comment date 385.214). Anyone filing a motion to increase the total liquefied natural gas stated below, file with the Federal intervene or protest must serve a copy (LNG) production capacity of the Energy Regulatory Commission, 888 of that document on the Applicant. Liquefaction Project from the currently First Street NE, Washington, DC 20426, Notice is hereby given that the authorized 767 billion cubic feet per a motion to intervene in accordance deadline for filing protests with regard year (Bcf/y) to 875.16 Bcf/y, which with the requirements of the to the applicant’s request for blanket represents an increase of 108.16 Bcf/y, Commission’s Rules of Practice and authorization, under 18 CFR part 34, of in Nueces County, Texas. CCL states Procedure (18 CFR 385.214 or 385.211) future issuances of securities and that the increase is based on certain and the Regulations under the NGA (18 assumptions of liability, is October 30, enhancements during the engineering, CFR 157.10). A person obtaining party 2019. design, and construction process, as status will be placed on the service list The Commission encourages well as operational experience to date. maintained by the Secretary of the electronic submission of protests and CCL states that these enhancements do Commission and will receive copies of interventions in lieu of paper, using the not involve additional construction of all documents filed by the applicant and FERC Online links at http:// new facilities nor do they require by all other parties. A party must submit www.ferc.gov. To facilitate electronic additional LNG vessel transits beyond five copies of filings made with the service, persons with internet access those already authorized, all as more Commission and must mail a copy to who will eFile a document and/or be fully set forth in the application which the applicant and to every other party in listed as a contact for an intervenor is on file with the Commission and open the proceeding. Only parties to the must create and validate an to public inspection. proceeding can ask for court review of eRegistration account using the The filing may also be viewed on the Commission orders in the proceeding. eRegistration link. Select the eFiling web at http://www.ferc.gov using the However, a person does not have to link to log on and submit the ‘‘eLibrary’’ link. Enter the docket intervene in order to have comments intervention or protests. number excluding the last three digits in considered. The second way to Persons unable to file electronically the docket number field to access the participate is by filing with the should submit an original and 5 copies document. For assistance, please contact Secretary of the Commission, as soon as of the intervention or protest to the FERC Online Support at possible, an original and two copies of Federal Energy Regulatory Commission, [email protected] or toll comments in support of or in opposition 888 First Street NE, Washington, DC free at (866) 208–3676, or TTY, contact to this project. The Commission will 20426. (202) 502–8659. consider these comments in Any questions regarding the The filings in the above-referenced determining the appropriate action to be application should be directed to Karri proceeding are accessible in the taken, but the filing of a comment alone Mahmoud, Cheniere Energy, Inc., 700 Commission’s eLibrary system by will not serve to make the filer a party Milam Street, Suite 1900, Houston, clicking on the appropriate link in the to the proceeding. The Commission’s Texas 77002, (713) 375–5000, above list. They are also available for rules require that persons filing [email protected]; or Lisa electronic review in the Commission’s comments in opposition to the project M. Tonery, Orrick, Herrington & Public Reference Room in Washington, provide copies of their protests only to Sutcliffe LLP, 51 West 52nd Street, New the party or parties directly involved in DC. There is an eSubscription link on York, New York 10019–6142, (212) 506– the protest. the website that enables subscribers to 3710, [email protected]. Persons who wish to comment only receive email notification when a Pursuant to section 157.9 of the on the environmental review of this document is added to a subscribed Commission’s rules (18 CFR 157.9), project should submit an original and docket(s). For assistance with any FERC within 90 days of this Notice, the two copies of their comments to the Online service, please email Commission staff will either: Complete Secretary of the Commission. [email protected]. or call its environmental assessment (EA) and Environmental commenters will be (866) 208–3676 (toll free). For TTY, call place it into the Commission’s public placed on the Commission’s (202) 502–8659. record (eLibrary) for this proceeding or environmental mailing list, will receive Dated: October 10, 2019. issue a Notice of Schedule for copies of the environmental documents, Nathaniel J. Davis, Sr., Environmental Review. If a Notice of and will be notified of meetings Deputy Secretary. Schedule for Environmental Review is associated with the Commission’s [FR Doc. 2019–22675 Filed 10–16–19; 8:45 am] issued, it will indicate, among other environmental review process. milestones, the anticipated date for the BILLING CODE 6717–01–P Environmental commenters will not be Commission staff’s issuance of the final required to serve copies of filed environmental impact statement (FEIS) documents on all other parties. DEPARTMENT OF ENERGY or EA for this proposal. The filing of the However, the non-party commenters EA in the Commission’s public record will not receive copies of all documents Federal Energy Regulatory for this proceeding or the issuance of a filed by other parties or issued by the Commission Notice of Schedule will serve to notify Commission (except for the mailing of federal and state agencies of the timing environmental documents issued by the [Docket No. CP19–514–000] for the completion of all necessary Commission) and will not have the right Corpus Christi Liquefaction, LLC; reviews, and the subsequent need to to seek court review of the Notice of Application To Amend complete all federal authorizations Commission’s final order. within 90 days of the date of issuance As of the February 27, 2018 date of Take notice that on September 27, of the Commission staff’s FEIS or EA. the Commission’s order in Docket No. 2019, Corpus Christi Liquefaction, LLC There are two ways to become CP16–4–001, the Commission will (CCL), 700 Milam Street, Suite 1900, involved in the Commission’s review of apply its revised practice concerning Houston, Texas 77002, filed in Docket this project. First, any person wishing to out-of-time motions to intervene in any

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00032 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55572 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

new NGA section 3 or section 7 Order and to vacate certain participate is by filing with the proceeding.1 Persons desiring to become authorizations in that order. National Secretary of the Commission, as soon as a party to a certificate proceeding are to Fuel seeks to now abandon by sale to possible, an original and two copies of intervene in a timely manner. If seeking Catalyst Energy, Inc. its Queen Storage comments in support of or in opposition to intervene out-of-time, the movant is Field and Queen Compressor Station, to this project. The Commission will required to show good cause why the located in Forest and Warren Counties, consider these comments in time limitation should be waived, and Pennsylvania. National Fuel also seeks determining the appropriate action to be should provide justification by reference to vacate certain authorizations in the taken, but the filing of a comment alone to factors set forth in Rule 214(d)(1) of Certificate Order to reflect that it will no will not serve to make the filer a party the Commission’s Rules and longer sell a portion of Line Q, abandon to the proceeding. The Commission’s Regulations.2 the remaining portion of Line Q, and it rules require that persons filing The Commission strongly encourages will no longer proceed with comments in opposition to the project electronic filings of comments, protests construction and operation of the Line provide copies of their protests only to and interventions in lieu of paper using QP. the party or parties directly involved in the eFiling link at http://www.ferc.gov. Any questions regarding the the protest. Persons unable to file electronically amendment should be directed to Alice Persons who wish to comment only should submit original and five copies A. Curtiss, Deputy General Counsel, on the environmental review of this of the protest or intervention to the National Fuel Gas Supply Corporation, project should submit an original and Federal Energy Regulatory Commission, 6363 Main Street, Williamsville, New two copies of their comments to the 888 First Street NE, Washington, DC York 14221 at (716) 857–7075, or at Secretary of the Commission. 20426. [email protected]. Environmental commentors will be Comment Date: 5:00 p.m. Eastern Pursuant to section 157.9 of the placed on the Commission’s Time on October 31, 2019. Commission’s rules (18 CFR 157.9), environmental mailing list, will receive within 90 days of this Notice, the Dated: October 10, 2019. copies of the environmental documents, Commission staff will issue a Notice of Nathaniel J. Davis, Sr., and will be notified of meetings Schedule for Environmental Review. If Deputy Secretary. associated with the Commission’s a Notice of Schedule for Environmental environmental review process. [FR Doc. 2019–22677 Filed 10–16–19; 8:45 am] Review is issued, it will indicate, among BILLING CODE 6717–01–P other milestones, the anticipated date Environmental commentors will not be for the Commission staff’s issuance of required to serve copies of filed the environmental assessment (EA) for documents on all other parties. DEPARTMENT OF ENERGY this proposal. The issuance of a Notice However, the non-party commentors of Schedule for Environmental Review will not receive copies of all documents Federal Energy Regulatory filed by other parties or issued by the Commission will serve to notify federal and state agencies of the timing for the Commission (except for the mailing of [Docket No. CP20–2–000] completion of all necessary reviews, and environmental documents issued by the the subsequent need to complete all Commission) and will not have the right National Fuel Gas Supply Corporation; federal authorizations within 90 days of to seek court review of the Notice of Application To Amend the date of issuance of the Commission Commission’s final order. Take notice that on October 2, 2019, staff’s EA. As of the February 27, 2018 date of National Fuel Gas Supply Corporation There are two ways to become the Commission’s order in Docket No. (National Fuel), 6363 Main Street, involved in the Commission’s review of CP16–4–001, the Commission will Williamsville, New York 14221, filed in this project. First, any person wishing to apply its revised practice concerning Docket No. CP20–2–000 an application obtain legal status by becoming a party out-of-time motions to intervene in any pursuant to sections 7(b) and 7(c) of the to the proceedings for this project new NGA section 3 or section 7 1 Natural Gas Act (NGA) for authorization should, on or before the comment date proceeding. Persons desiring to become to amend its certificate of public stated below file with the Federal a party to a certificate proceeding are to convenience and necessity issued by Energy Regulatory Commission, 888 intervene in a timely manner. If seeking Commission order on September 6, 2017 First Street NE, Washington, DC 20426, to intervene out-of-time, the movant is (Certificate Order) in Docket No. CP16– a motion to intervene in accordance required to show good cause why the 28–000, all as more fully set forth in the with the requirements of the time limitation should be waived, and application which is on file with the Commission’s Rules of Practice and should provide justification by reference Commission and open to public Procedure (18 CFR 385.214 or 385.211) to factors set forth in Rule 214(d)(1) of inspection. The filing may be viewed on and the Regulations under the NGA (18 the Commission’s Rules and 2 the Commission’s website at http:// CFR 157.10). A person obtaining party Regulations. www.ferc.gov using the ‘‘eLibrary’’ link. status will be placed on the service list The Commission strongly encourages Enter the docket number excluding the maintained by the Secretary of the electronic filings of comments, protests last three digits in the docket number Commission and will receive copies of and interventions in lieu of paper using field to access the document. For all documents filed by the applicant and the eFiling link at http://www.ferc.gov. assistance, contact FERC at by all other parties. A party must submit Persons unable to file electronically [email protected] or call seven copies of filings made in the should submit an original and three toll-free, (886) 208–3676 or TYY, (202) proceeding with the Commission and copies of the protest or intervention to 502–8659. must mail a copy to the applicant and the Federal Energy regulatory Specifically, National Fuel requests to every other party. Only parties to the Commission, 888 First Street NE, authorization to amend the Certificate proceeding can ask for court review of Washington, DC 20426. Commission orders in the proceeding. 1 Tennessee Gas Pipeline Company, L.L.C., 162 However, a person does not have to 1 Tennessee Gas Pipeline Company, L.L.C., 162 FERC 61,167 at 50 (2018). intervene in order to have comments FERC 61,167 at 50 (2018). 2 18 CFR 385.214(d)(1). considered. The second way to 2 18 CFR 385.214(d)(1).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00033 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55573

Comment Date: 5:00 p.m. Eastern Filed Date: 10/9/19. application for license for the Wallace Time on October 31, 2019. Accession Number: 20191009–5048. Dam Pumped Storage Project, and has Dated: October 10, 2019. Comments Due: 5 p.m. ET 10/21/19. prepared an Environmental Assessment Nathaniel J. Davis, Sr., Docket Numbers: RP20–57–000. (EA) for the project. The project is Applicants: Iroquois Gas located on the Oconee River, in Deputy Secretary. Transmission System, L.P. Hancock, Putnam, Greene, and Morgan [FR Doc. 2019–22679 Filed 10–16–19; 8:45 am] Description: § 4(d) Rate Filing: 100919 Counties, Georgia, and it occupies 493.7 BILLING CODE 6717–01–P Negotiated Rates—Equinor Natural Gas acres of federal land administered by LLC R–7120–14 to be effective 11/1/ the U.S. Forest Service. 2019. DEPARTMENT OF ENERGY The EA contains Commission staff’s Filed Date: 10/9/19. analysis of the potential environmental Federal Energy Regulatory Accession Number: 20191009–5049. effects of the project. The EA concludes Commission Comments Due: 5 p.m. ET 10/21/19. that licensing the project, with Docket Numbers: RP20–58–000. appropriate environmental protective Combined Notice of Filings Applicants: Colorado Interstate Gas measures, would not constitute a major Company, L.L.C. federal action that would significantly Take notice that the Commission has Description: § 4(d) Rate Filing: Non affect the quality of the human received the following Natural Gas Conforming TSA Filing—Southwest environment. Pipeline Rate and Refund Report filings: Energy to Rocky Mtn Midstream to be A copy of the EA is available for effective 10/1/2019. Filings Instituting Proceedings review at the Commission in the Public Filed Date: 10/9/19. Reference Room, or may be viewed on Docket Numbers: RP20–52–000. Accession Number: 20191009–5138. the Commission’s website at http:// Applicants: Iroquois Gas Comments Due: 5 p.m. ET 10/21/19. Transmission System, L.P. www.ferc.gov, using the eLibrary link. The filings are accessible in the Description: § 4(d) Rate Filing: 100919 Enter the docket number, excluding the Commission’s eLibrary system by Negotiated Rates—Castleton last three digits in the docket number clicking on the links or querying the Commodities Merchant Trading R– field, to access the document. For docket number. 4010–10 to be effective 11/1/2019. assistance, contact FERC Online Any person desiring to intervene or Filed Date: 10/9/19. Support at FERCOnlineSupport@ protest in any of the above proceedings Accession Number: 20191009–5044. ferc.gov, (866) 208–3676 (toll free), or must file in accordance with Rules 211 Comments Due: 5 p.m. ET 10/21/19. 202–502–8659 (TTY). and 214 of the Commission’s Docket Numbers: RP20–53–000. Regulations (18 CFR 385.211 and You may also register online at http:// Applicants: Iroquois Gas 385.214) on or before 5:00 p.m. Eastern www.ferc.gov/docs-filing/ Transmission System, L.P. time on the specified comment date. esubscription.asp to be notified via Description: § 4(d) Rate Filing: 100919 Protests may be considered, but email of new filings and issuances Negotiated Rates—Castleton intervention is necessary to become a related to this or other pending projects. Commodities Merchant Trading R– party to the proceeding. For assistance, contact FERC Online 4010–11 to be effective 11/1/2019. eFiling is encouraged. More detailed Support. Filed Date: 10/9/19. information relating to filing Any comments should be filed within Accession Number: 20191009–5045. requirements, interventions, protests, 30 days from the date of this notice. Comments Due: 5 p.m. ET 10/21/19. service, and qualifying facilities filings The Commission strongly encourages Docket Numbers: RP20–54–000. can be found at: http://www.ferc.gov/ electronic filing. Please file comments Applicants: Iroquois Gas docs-filing/efiling/filing-req.pdf. For using the Commission’s eFiling system Transmission System, L.P. other information, call (866) 208–3676 at http://www.ferc.gov/docs-filing/ Description: § 4(d) Rate Filing: 100919 (toll free). For TTY, call (202) 502–8659. efiling.asp. Commenters can submit Negotiated Rates—Equinor Natural Gas Dated: October 10, 2019. brief comments up to 6,000 characters, LLC R–7120–11 to be effective 11/1/ without prior registration, using the 2019. Nathaniel J. Davis, Sr., Deputy Secretary. eComment system at http:// Filed Date: 10/9/19. www.ferc.gov/docs-filing/ [FR Doc. 2019–22670 Filed 10–16–19; 8:45 am] Accession Number: 20191009–5046. ecomment.asp. You must include your Comments Due: 5 p.m. ET 10/21/19. BILLING CODE 6717–01–P name and contact information at the end Docket Numbers: RP20–55–000. of your comments. For assistance, Applicants: Iroquois Gas DEPARTMENT OF ENERGY please contact FERC Online Support. In Transmission System, L.P. lieu of electronic filing, please send a Description: § 4(d) Rate Filing: 100919 Federal Energy Regulatory paper copy to: Secretary, Federal Energy Negotiated Rates—Equinor Natural Gas Commission Regulatory Commission, 888 First Street LLC R–7120–12 to be effective 11/1/ NE, Washington, DC 20426. The first 2019. [Project No. 2413–124] page of any filing should include docket Filed Date: 10/9/19. number P–2413–124. Accession Number: 20191009–5047. Georgia Power Company; Notice of For further information, contact Allan Comments Due: 5 p.m. ET 10/21/19. Availability of Environmental Assessment Creamer at 202–502–8365, or by email Docket Numbers: RP20–56–000. at [email protected]. Applicants: Iroquois Gas In accordance with the National Transmission System, L.P. Environmental Policy Act of 1969 and Dated: October 10, 2019. Description: § 4(d) Rate Filing: 100919 the Federal Energy Regulatory Nathaniel J. Davis, Sr., Negotiated Rates—Equinor Natural Gas Commission’s (Commission) Deputy Secretary. LLC R–7120–13 to be effective 11/1/ regulations, 18 CFR part 380, the Office [FR Doc. 2019–22674 Filed 10–16–19; 8:45 am] 2019. of Energy Projects has reviewed the BILLING CODE 6717–01–P

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00034 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55574 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

ENVIRONMENTAL PROTECTION Dated: September 25, 2019. FEDERAL ELECTION COMMISSION AGENCY Reid P. Harvey, Director, Clean Air Markets Division, Office Sunshine Act Meetings [FRL–10001–22–OAR] of Atmospheric Programs, Office of Air and Radiation. TIME AND DATE: Tuesday, October 22, 2019 at 10:00 a.m. Acid Rain Program: Excess Emissions [FR Doc. 2019–22696 Filed 10–16–19; 8:45 am] PLACE: 1050 First Street NE, Penalty Inflation Adjustments BILLING CODE 6560–50–P Washington, DC. AGENCY: Environmental Protection STATUS: This meeting will be closed to Agency (EPA). FEDERAL DEPOSIT INSURANCE the public. CORPORATION MATTERS TO BE CONSIDERED: Matters ACTION: Notice of annual adjustment concerning participation in civil actions factors. Sunshine Act Meetings or proceedings or arbitration. CONTACT PERSON FOR MORE INFORMATION: SUMMARY: The Acid Rain Program TIME AND DATE: Pursuant to the Judith Ingram, Press Officer, Telephone: requires sources that do not meet their provisions of the ‘‘Government in the (202) 694–1220. annual Acid Rain emissions limitations Sunshine Act’’ (5 U.S.C. 552b), notice is Vicktoria J. Allen, for sulfur dioxide (SO2) or nitrogen hereby given that at 10:43 p.m. on Acting Deputy Secretary of the Commission. oxides (NOX) to pay inflation-adjusted Tuesday, October 15, 2019, the Board of excess emissions penalties. This Directors of the Federal Deposit [FR Doc. 2019–22811 Filed 10–15–19; 4:15 pm] document provides notice of the annual Insurance Corporation met in closed BILLING CODE 6715–01–P adjustment factors used to calculate session to consider matters related to excess emissions penalties for the Corporation’s supervision, compliance years 2019 and 2020. corporate, and resolution activities. DEPARTMENT OF HEALTH AND PLACE: The meeting was held in the HUMAN SERVICES FOR FURTHER INFORMATION CONTACT: Board Room located on the sixth floor Jason Kuhns at (202) 564–3236 or of the FDIC Building located at 550 17th Food and Drug Administration [email protected]. Street NW, Washington, DC. [Docket No. FDA–2018–N–3263] SUPPLEMENTARY INFORMATION: The Acid STATUS: The meeting was closed to the Rain Program limits SO and NO public. Request for Nominations for Voting 2 X Members on the Tobacco Products emissions from fossil fuel-fired MATTERS TO BE CONSIDERED: In calling Scientific Advisory Committee electricity generating units. All affected the meeting, the Board determined, on sources must hold allowances sufficient motion of Director Martin J. Gruenberg, AGENCY: Food and Drug Administration, to cover their annual SO2 mass seconded by Kathleen L. Kraninger HHS. emissions, and certain coal-fired units (Director, Consumer Financial ACTION: Notice. must meet annual average NOX Protection Bureau), and concurred in by emission rate limits. Under 40 CFR 77.6, Director Joseph M. Otting (Comptroller SUMMARY: The Food and Drug any source that does not meet these of the Currency) and Chairman Jelena Administration (FDA) is requesting requirements must pay an excess McWilliams, that Corporation business nominations for members to serve on emissions penalty without demand to required its consideration of the matters the Tobacco Products Scientific the EPA Administrator. The automatic which were to be the subject of this Advisory Committee, in the Center for penalty is computed as the number of meeting on less than seven days’ notice Tobacco Products. FDA seeks to include the views of women and men, members excess tons of SO2 or NOX emitted times to the public; that no earlier notice of a per-ton penalty amount of $2,000 the meeting was practicable; that the of all racial and ethnic groups, and times an annual adjustment factor, public interest did not require individuals with and without which must be published in the Federal consideration of the matters in a disabilities on its advisory committees Register. meeting open to public observation; and and, therefore, encourages nominations that the matters could be considered in of appropriately qualified candidates The annual adjustment factor used to from these groups. compute excess emissions penalties for a closed meeting by authority of subsections (c)(4), (c)(6), (c)(8), DATES: Nominations received on or compliance year 2019 is 2.0236, before December 16, 2019 will be given resulting in an automatic penalty (c)(9)(A)(ii), and (c)(9)(B) of the ‘‘Government in the Sunshine Act’’ (5 first consideration for membership on amount of $4,047 per excess ton of SO2 the Tobacco Products Scientific or NO emitted in 2019. In accordance U.S.C. 552b(c)(4), (c)(6), (c)(8), X (c)(9)(A)(ii), and (c)(9)(B). Advisory Committee. Nominations with 40 CFR 77.6(b) and 72.2, this received after December 16, 2019 will be annual adjustment factor is determined CONTACT PERSON FOR MORE INFORMATION: Requests for further information considered for nomination to the from values of the Consumer Price committee as later vacancies occur. Index for All Urban Consumers (CPI–U) concerning the meeting may be directed ADDRESSES: All nominations for for August 1989 and August 2018. to Robert E. Feldman, Executive Secretary of the Corporation, at 202– membership should be sent The annual adjustment factor used to 898–7043. electronically by logging into the FDA compute excess emissions penalties for Advisory Nomination Portal: https:// compliance year 2020 is 2.0591, Dated at Washington, DC, on October 15, www.accessdata.fda.gov/scripts/ 2019. resulting in an automatic penalty FACTRSPortal/FACTRS/index.cfm, or Federal Deposit Insurance Corporation. amount of $4,118 per excess ton of SO2 by mail to Advisory Committee Robert E. Feldman, or NOX emitted in 2020. This annual Oversight and Management Staff, Food adjustment factor is determined from Executive Secretary. and Drug Administration, 10903 New values of the CPI–U for August 1989 and [FR Doc. 2019–22775 Filed 10–15–19; 4:15 pm] Hampshire Ave., Bldg. 32, Rm. 5103, August 2019. BILLING CODE 6714–01–P Silver Spring, MD 20993–0002.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00035 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55575

FOR FURTHER INFORMATION CONTACT: Nominations must include a current, for either the representative to serve on Regarding all nomination questions for complete re´sume´ or curriculum vitae for TPSAC or for the selection group membership, the primary contact is: each nominee, including current effective with this notice. Janice O’Connor, Office of Science, business address and/or home address, DATES: Nomination materials for Center for Tobacco Products, Food and telephone number, and email address if prospective candidates should be sent to Drug Administration, Document Control available. Nominations must also FDA by November 18, 2019. Center, 10903 New Hampshire Ave., specify the advisory committee for Concurrently, any industry organization Bldg. 71, Rm. G335, Silver Spring, MD which the nominee is recommended. interested in participating in the 20993–0002, 1–877–287–1373 (choose Nominations must also acknowledge selection of an appropriate nonvoting Option 5), email: [email protected]. that the nominee is aware of the member to represent the interests of the Information about becoming a nomination unless self-nominated. FDA tobacco manufacturing industry must member on an FDA advisory committee will ask potential candidates to provide send a letter stating that interest to FDA can also be obtained by visiting FDA’s detailed information concerning such by November 18, 2019, (see sections I website at: http://www.fda.gov/ matters related to financial holdings, and II of this document for further AdvisoryCommittees/default.htm. employment, and research grants and/or details). SUPPLEMENTARY INFORMATION: FDA is contracts to permit evaluation of requesting nomination for voting possible sources of conflicts of interest. ADDRESSES: All nominations for members on the Tobacco Products This notice is issued under the nonvoting representatives of the Scientific Advisory Committee. Federal Advisory Committee Act (5 interests of the tobacco manufacturing industry may be submitted I. General Description of the Committee U.S.C. app. 2) and 21 CFR part 14, relating to advisory committees. electronically by accessing the FDA Duties Advisory Committee Membership The Tobacco Products Scientific Dated: October 10, 2019. Nomination Portal at: https:// Advisory Committee advises the Lowell J. Schiller, www.accessdata.fda.gov/scripts/ Commissioner of Food and Drugs (the Principal Associate Commissioner for Policy. FACTRSPortal/FACTRS/index.cfm, or Commissioner) or designee in [FR Doc. 2019–22685 Filed 10–16–19; 8:45 am] by mail to Advisory Committee discharging responsibilities related to BILLING CODE 4164–01–P Oversight and Management Staff, Food the regulation of tobacco products. The and Drug Administration, 10903 New committee reviews and evaluates safety, Hampshire Ave., Bldg. 32, Rm. 5103, dependence, or health issues relating to DEPARTMENT OF HEALTH AND Silver Spring, MD 20993–0002. tobacco products and provides HUMAN SERVICES All statements of interest from appropriate advice, information, and industry organizations interested in recommendations to the Commissioner. Food and Drug Administration participating in the selection process of II. Criteria for Voting Members [Docket No. FDA–2018–N–3263] nonvoting representatives of the interests of the tobacco manufacturing The committee consists of 12 Request for Nominations of a industry nomination should be sent to members including the Chair. Members Nonvoting Representative of the Janice O’Connor (see FOR FURTHER and the Chair are selected by the Interest of the Tobacco Manufacturing INFORMATION CONTACT). Commissioner or designee from among Industry on the Tobacco Products FOR FURTHER INFORMATION CONTACT: individuals knowledgeable in the fields Scientific Advisory Committee of medicine, medical ethics, science, or Janice O’Connor, Office of Science, technology involving the manufacture, AGENCY: Food and Drug Administration, Center for Tobacco Products, Food and evaluation, or use of tobacco products. HHS. Drug Administration, Document Control Center, 10903 New Hampshire Ave., Almost all non-Federal members of this ACTION: Notice. committee serve as Special Government Bldg. 71, Rm. G335, Silver Spring, MD Employees. The committee includes SUMMARY: The Food and Drug 20993–0002, 1–877–287–1373 (choose nine technically qualified voting Administration (FDA or Agency) is Option 5), email: [email protected]. members, selected by the Commissioner requesting nominations for a nonvoting Information about becoming a or designee. The nine voting members representative of the interests of the member of an FDA advisory committee include seven members who are tobacco manufacturing industry to serve can also be obtained by visiting FDA’s physicians, dentists, scientists, or on the Tobacco Products Scientific website at: http://www.fda.gov/ healthcare professionals practicing in Advisory Committee (TPSAC), in the AdvisoryCommittees/default.htm. the areas of oncology, pulmonology, Center for Tobacco Products. FDA seeks SUPPLEMENTARY INFORMATION: FDA is cardiology, toxicology, pharmacology, to include the views of women and requesting nominations for a nonvoting addiction, or any other relevant men, members of all racial and ethnic representative of the interests of the specialty. The nine voting members also groups, and individuals with and tobacco manufacturing industry on the include one member who is an officer without disabilities on its advisory Tobacco Products Scientific Advisory or employee of a State or local committees and, therefore encourages Committee (TPSAC). government or of the Federal nominations of appropriately qualified candidates from these groups. A I. General Description of the Committee Government, and one member who is a Duties representative of the general public. nominee may either be self-nominated Members will be invited to serve for or nominated by an organization. The TPSAC advises the Commissioner terms of up to 4 years. In addition, FDA is requesting that of Food and Drugs (the Commissioner) any industry organizations interested in or designee in discharging III. Nomination Procedures participating in the selection of a responsibilities related to the regulation Any interested person may nominate nonvoting representative of the interests of tobacco products. The TPSAC one or more qualified individuals for of the tobacco manufacturing industry reviews and evaluates safety, membership on the advisory committee. to serve on the TPSAC notify FDA in dependence, or health issues relating to Self-nominations are also accepted. writing. Nominations will be accepted tobacco products and provides

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00036 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55576 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

appropriate advice, information, and This notice is issued under the comments, that information will be recommendations to the Commissioner. Federal Advisory Committee Act (5 posted on https://www.regulations.gov. U.S.C. app. 2) and 21 CFR part 14, • If you want to submit a comment II. Nomination Procedure relating to advisory committees. with confidential information that you Individuals may self-nominate and/or Dated: October 10, 2019. do not wish to be made available to the an organization may nominate one or public, submit the comment as a more individuals to serve as a nonvoting Lowell J. Schiller, written/paper submission and in the representative of the interests of the Principal Associate Commissioner for Policy. manner detailed (see ‘‘Written/Paper tobacco manufacturing industry. [FR Doc. 2019–22683 Filed 10–16–19; 8:45 am] Submissions’’ and ‘‘Instructions’’). Nominations must include a current BILLING CODE 4164–01–P re´sume´ or curriculum vitae for each Written/Paper Submissions nominee, including current business Submit written/paper submissions as address and/or home address, telephone DEPARTMENT OF HEALTH AND follows: number, and email address, if available. HUMAN SERVICES • Mail/Hand delivery/Courier (for Nominations must specify the advisory written/paper submissions): Dockets committee for which the nominee is Food and Drug Administration Management Staff (HFA–305), Food and recommended. Nominations must also [Docket No. FDA–2011–D–0108] Drug Administration, 5630 Fishers acknowledge that the nominee is aware Lane, Rm. 1061, Rockville, MD 20852. of the nomination unless self- Prescription Drug User Fee Act • For written/paper comments nominated. The nomination should be Waivers, Reductions, and Refunds for submitted to the Dockets Management sent to the FDA Advisory Committee Drug and Biological Products; Staff, FDA will post your comment, as Membership Nomination Portal (see Guidance for Industry; Availability well as any attachments, except for ADDRESSES) within 30 days of information submitted, marked and AGENCY: Food and Drug Administration, publication of this document (see identified, as confidential, if submitted HHS. DATES). FDA will forward all as detailed in ‘‘Instructions.’’ nominations to the organizations ACTION: Notice of availability. Instructions: All submissions received expressing interest in participating in must include the Docket No. FDA– SUMMARY: The Food and Drug 2011–D–0108 for ‘‘Prescription Drug the selection process. (Persons who Administration (FDA or Agency) is nominate themselves as nonvoting User Fee Act Waivers, Reductions, and announcing the availability of a final industry representatives will not Refunds for Drug and Biological guidance for industry entitled participate in the selection process.) Products.’’ Received comments will be ‘‘Prescription Drug User Fee Act placed in the docket and, except for III. Selection Procedure Waivers, Reductions, and Refunds for those submitted as ‘‘Confidential The Agency is also seeking names of Drug and Biological Products.’’ This Submissions,’’ publicly viewable at organizations to participate in the guidance provides recommendations to https://www.regulations.gov or at the selection of the nonvoting applicants planning to request a waiver Dockets Management Staff between 9 representative of the interests of the or reduction in user fees. This guidance a.m. and 4 p.m., Monday through tobacco manufacturing industry. Any finalizes the draft guidance for industry Friday. industry organization interested in of the same title issued in June 2018. • Confidential Submissions—To participating in the selection of an DATES: The announcement of the submit a comment with confidential appropriate nonvoting member to guidance is published in the Federal information that you do not wish to be represent industry interests should send Register on October 17, 2019. made publicly available, submit your a letter stating that interest to the FDA ADDRESSES: You may submit submit comments only as a written/paper contact (see FOR FURTHER INFORMATION either electronic or written comments submission. You should submit two CONTACT) within 30 days of publication on Agency guidances at any time as copies total. One copy will include the of this document (see DATES). Within the follows: information you claim to be confidential subsequent 30 days, FDA will send a with a heading or cover note that states letter to each organization that has Electronic Submissions ‘‘THIS DOCUMENT CONTAINS expressed an interest in participating in Submit electronic comments in the CONFIDENTIAL INFORMATION.’’ The the selection group, attaching a following way: Agency will review this copy, including complete list of all organizations • Federal eRulemaking Portal: the claimed confidential information, in participating in selection; and a list of https://www.regulations.gov. Follow the its consideration of comments. The all non-voting nominees along with instructions for submitting comments. second copy, which will have the their current re´sume´s. The letter will Comments submitted electronically, claimed confidential information also state that it is the responsibility of including attachments, to https:// redacted/blacked out, will be available the interested organizations on the www.regulations.gov will be posted to for public viewing and posted on selection group to confer with one the docket unchanged. Because your https://www.regulations.gov. Submit another and to select a candidate and an comment will be made public, you are both copies to the Dockets Management alternative as backup, within 60 days solely responsible for ensuring that your Staff. If you do not wish your name and after the receipt of the FDA letter, to comment does not include any contact information to be made publicly serve as the nonvoting member to confidential information that you or a available, you can provide this represent industry interests for the third party may not wish to be posted, information on the cover sheet and not TPSAC. The interested organizations are such as medical information, your or in the body of your comments and you not bound by the list of nominees in anyone else’s Social Security number, or must identify this information as selecting a candidate. However, if no confidential business information, such ‘‘confidential.’’ Any information marked individual is selected within 60 days, as a manufacturing process. Please note as ‘‘confidential’’ will not be disclosed the Commissioner will select the that if you include your name, contact except in accordance with 21 CFR 10.20 nonvoting member to represent industry information, or other information that and other applicable disclosure law. For interests. identifies you in the body of your more information about FDA’s posting

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00037 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55577

of comments to public dockets, see 80 the types of waivers, reductions, and DEPARTMENT OF HEALTH AND FR 56469, September 18, 2015, or access refunds permitted under the user fee HUMAN SERVICES the information at: https://www.gpo.gov/ provisions of the FD&C Act and the fdsys/pkg/FR-2015-09-18/pdf/2015- procedures for submitting requests for Health Resources and Services 23389.pdf. waivers, reductions, refunds, as well as Administration Docket: For access to the docket to requests for reconsiderations or appeals. read background documents or the The guidance also provides additional Meeting of the Council on Graduate electronic and written/paper comments clarification on certain issues such as Medical Education received, go to https:// user fee exemptions for orphan drugs AGENCY: Health Resources and Services www.regulations.gov and insert the and FDA’s current thinking on Administration (HRSA), Department of docket number, found in brackets in the considerations relevant to eligibility for Health and Human Services (HHS). heading of this document, into the user fee waivers, reductions, and ACTION: Notice. ‘‘Search’’ box and follow the prompts refunds under the applicable statutory and/or go to the Dockets Management provisions. SUMMARY: In accordance with the Staff, 5630 Fishers Lane, Rm. 1061, This guidance is being issued Federal Advisory Committee Act, this Rockville, MD 20852. consistent with FDA’s good guidance notice announces that the Council on You may submit comments on any practices regulation (21 CFR 10.115). Graduate Medical Education (COGME or guidance at any time (see 21 CFR The guidance represents the current Council) will hold public meetings for 10.115(g)(5)). thinking of FDA on ‘‘Prescription Drug the 2020 calendar year (CY). Submit written requests for single User Fee Act Waivers, Reductions, and Information about COGME, agendas, copies of the guidance to the Division of Refunds for Drug and Biological and materials for these meetings can be Drug Information, Center for Drug Products.’’ It does not establish any found on the COGME website at https:// Evaluation and Research, Food and rights for any person and is not binding www.hrsa.gov/advisory-committees/ Drug Administration, 10001 New on FDA or the public. You can use an graduate-medical-edu/index.html. Hampshire Ave., Hillandale Building, alternative approach if it satisfies the DATES: April 28–29, 2020, 8:30 a.m.– 4th Floor, Silver Spring, MD 20993– requirements of the applicable statutes 5:00 p.m. Eastern Time (ET) and 8:30 0002; or to the Office of and regulations. a.m.–2:00 p.m. ET; July 17, 2020, 10:00 Communication, Outreach and This guidance is not subject to a.m.–5:00 p.m. ET; December 8–9, 2020, Development, Center for Biologics Executive Order 12866. 8:30 a.m.–5:00 p.m. ET and 8:30 a.m.– 2:00 p.m. Evaluation and Research (CBER), Food II. Paperwork Reduction Act of 1995 and Drug Administration, 10903 New ADDRESSES: The meetings scheduled on Hampshire Ave., Bldg. 71, Rm. 3128, This guidance refers to previously April 28–29, 2020, and December 8–9, Silver Spring, MD 20993–0002. Send approved collections of information 2020, will be held in-person at 5600 one self-addressed adhesive label to found in FDA regulations. These Fishers Lane, Room 5E29, Rockville, assist the office in processing your collections of information are subject to Maryland 20857. The meeting requests. See the SUPPLEMENTARY review by the Office of Management and scheduled on July 17, 2020, will be held INFORMATION section for electronic Budget (OMB) under the Paperwork by teleconference/Adobe Connect access to the guidance document. Reduction Act of 1995 (44 U.S.C. 3501– webinar. Instructions for joining the 3520). The collection of information of FOR FURTHER INFORMATION CONTACT: meetings either in person or remotely this guidance has been approved under Keith Verrett, Division of User Fee will be posted on the COGME website OMB control number 0910–0693. The Management and Budget Formulation, 30 business days before the date of the collection of information associated Center for Drug Evaluation and meeting. For meeting information with Form FDA 3397 has been approved Research, Food and Drug updates, go to the COGME website under OMB control number 0910–0297. Administration, 10001 New Hampshire meeting page at https://www.hrsa.gov/ The collections of information Ave., Hillandale Bldg., Rm. 2179, Silver advisory-committees/graduate-medical- associated with new drug applications Spring, MD 20993, 301–796–7900, edu/meetings/index.html. or biologics license applications have [email protected]; or FOR FURTHER INFORMATION CONTACT: been approved under OMB control Stephen Ripley, Center for Biologics Kennita Carter, MD, Senior Advisor and numbers 0910–0001 and 0910–0338, Evaluation and Research, Food and Designated Federal Official (DFO), respectively. See section X of the Drug Administration, 10903 New Division of Medicine and Dentistry, guidance document. Hampshire Ave. Bldg. 71, Rm. 7301, Bureau of Health Workforce (BHW), Silver Spring, MD 20993–0002, 240– III. Electronic Access HRSA, 5600 Fishers Lane, 15N116, 402–7911. Persons with access to the internet Rockville, Maryland 20857; 301–945– SUPPLEMENTARY INFORMATION: may obtain the guidance at either 9505; or [email protected]. SUPPLEMENTARY INFORMATION: COGME I. Background https://www.fda.gov/vaccines-blood- biologics/guidance-compliance- makes recommendations to the FDA is announcing the availability of regulatory-information-biologics/ Secretary of HHS (Secretary) and a guidance for industry entitled biologics-guidances, https:// Congress on policy, program ‘‘Prescription Drug User Fee Act www.fda.gov/drugs/guidance- development, and other matters of Waivers, Reductions, and Refunds for compliance-regulatory-information/ significance as specified by section 762 Drug and Biological Products.’’ This guidances-drugs, or https:// of Title VII of the Public Health Service guidance provides recommendations to www.regulations.gov. (PHS) Act. Issues addressed by COGME applicants regarding requests for include the supply and distribution of waivers, reductions, or refunds of user Dated: October 10, 2019. the physician workforce in the United fees assessed under sections 735 and Lowell J. Schiller, States, including any projected 736 of the Federal Food, Drug, and Principal Associate Commissioner for Policy. shortages or excesses; foreign medical Cosmetic Act (FD&C Act) (21 U.S.C. [FR Doc. 2019–22690 Filed 10–16–19; 8:45 am] school graduates; the nature and 379g and 379h). This guidance describes BILLING CODE 4164–01–P financing of undergraduate and graduate

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00038 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55578 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

medical education; appropriation levels DEPARTMENT OF HEALTH AND findings and recommendations made by for certain programs under Title VII of HUMAN SERVICES the committee concerning the activities the PHS Act and deficiencies in under Section 747, as well as training databases of the supply and distribution Health Resources and Services programs in oral health and dentistry. of the physician workforce and Administration The annual report is submitted to the postgraduate programs for training Secretary as well as the Chairman and Meeting of the Advisory Committee on physicians. COGME submits reports to ranking members of the Senate Training and Primary Care Medicine Committee on Health, Education, Labor the Secretary of HHS, the Senate and Dentistry Committee on Health, Education, Labor and Pensions and the House of and Pensions, and the House of AGENCY: Health Resources and Services Representatives Committee on Energy Representatives Committee on Energy Administration (HRSA), Department of and Commerce. ACTPCMD develops, and Commerce. Additionally, COGME Health and Human Services (HHS). publishes, and implements performance measures and guidelines for encourages entities providing graduate ACTION: Notice. longitudinal evaluations of programs medical education to conduct activities SUMMARY: In accordance with the authorized under Title VII, Part C of the to voluntarily achieve the Federal Advisory Committee Act, this PHS Act, and recommends recommendations of the Council. notice announces that the Advisory appropriation levels for programs under Agenda items are subject to change as Committee on Training and Primary this Part. priorities dictate. During the CY 2020 Care Medicine and Dentistry During ACTPCMD’s CY 2020 COGME meetings, COGME will discuss (ACTPCMD) will hold public meetings meetings, the committee will discuss topics surrounding the rural health for the 2020 calendar year (CY). matters concerning policy, program workforce. Refer to the COGME website Information about ACTPCMD, agendas, development, and other matters of listed above for all current and updated and materials for these meetings can be significance concerning medicine and information concerning the CY 2020 found on the ACTPCMD website at dentistry activities. Agenda items are COGME meetings, including draft https://www.hrsa.gov/advisory- subject to change as priorities dictate. agendas and meeting materials that will committees/primarycare-dentist/ Refer to the ACTPCMD website listed be posted before the meeting. An agenda index.html. above for all current and updated will be posted on the website at least 14 DATES: January 8–9, 2020, 8:30 a.m.– information concerning the CY 2020 calendar days before the meeting. 5:00 p.m. Eastern Time (ET) and 8:30 meetings, including draft agendas and a.m.–2:00 p.m. ET; and August 4, 2020, meeting materials that will be posted Members of the public will have the before the meeting. An agenda will be opportunity to provide comments. 10:00 a.m.–5:00 p.m. ET. ADDRESSES: The meeting scheduled on posted on the website at least 14 Public participants may submit written calendar days before each meeting. statements in advance of the scheduled January 8–9, 2020, will be held in- Members of the public will have the meetings. Oral comments will be person at 5600 Fishers Lane, Room 5E29, Rockville, Maryland 20857. The opportunity to provide comments. honored in the order they are requested Public participants may submit written and may be limited as time allows. meeting scheduled on August 4, 2020, will be held by teleconference/Adobe statements in advance of the scheduled Requests to submit a written statement Connect webinar. Instructions for meetings. Oral comments will be or make oral comments to the COGME joining the meetings either in person or honored in the order they are requested should be sent to Kennita Carter using remotely will be posted on the and may be limited as time allows. the contact information above at least 5 ACTPCMD website 30 business days Requests to submit a written statement business days before the meeting dates. before the date of the meeting. For or make oral comments to the Individuals who need special meeting information updates, go to the ACTPCMD should be sent to Kennita assistance or another reasonable ACTPCMD website meeting page at Carter using the contact information accommodation should notify Dr. https://www.hrsa.gov/advisory- above at least 5 business days before the Kennita Carter using the contact committees/primarycare-dentist/ meeting dates. information listed above at least 10 meetings.html. Individuals who need special assistance or another reasonable business days before the meeting they FOR FURTHER INFORMATION CONTACT: accommodation should notify Kennita wish to attend. Since all in person Kennita Carter, MD, Designated Federal Carter using the contact information meetings occur in a federal government Official (DFO) Division of Medicine and listed above at least 10 business days building, attendees must go through a Dentistry, Bureau of Health Workforce before the meeting they wish to attend. security check to enter the building. (BHW), HRSA, 5600 Fishers Lane, Since all in-person meetings occur in a Non-U.S. Citizen attendees must notify 15N116, Rockville, Maryland 20857; federal government building, attendees HRSA of their planned attendance at 301–945–9505; or BHWACTPCMD@ must go through a security check to least 20 business days prior to the hrsa.gov. enter the building. Non-U.S. Citizen meeting in order to facilitate their entry SUPPLEMENTARY INFORMATION: attendees must notify HRSA of their into the building. All attendees are ACTPCMD provides advice and planned attendance at least 20 business required to present government-issued recommendations to the Secretary of days prior to the meeting in order to identification prior to entry. HHS (Secretary) on policy, program facilitate their entry into the building. development, and other matters of Maria G. Button, All attendees are required to present significance concerning the activities government-issued identification prior Director, Executive Secretariat. under Section 747 of Title VII of the to entry. [FR Doc. 2019–22649 Filed 10–16–19; 8:45 am] Public Health Service (PHS) Act, as it BILLING CODE 4165–15–P existed upon the enactment of Section Maria G. Button, 749 of the PHS Act in 1998. ACTPCMD Director, Executive Secretariat. prepares an annual report describing the [FR Doc. 2019–22650 Filed 10–16–19; 8:45 am] activities of the committee, including BILLING CODE 4165–15–P

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00039 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55579

DEPARTMENT OF HEALTH AND Bureau Pediatric Mental Health Care measure whether and to what extent HUMAN SERVICES Access Program and the Maternal and awardee programs are associated with Child Health Bureau Screening and changes in these key awardee outcomes. Health Resources and Services Treatment for Maternal Depression and The evaluation will also examine Administration Related Behavioral Disorders Program, changes over time, within a state and/ OMB No. 0906–xxxx—New. or across the PMCHA and MDRBD Agency Information Collection Abstract: HRSA’s Maternal and Child programs, with regard to (1) enrolled Activities: Proposed Collection: Public providers/practices related to screening, Comment Request; Information Health Bureau Pediatric Mental Health Care Access (PMHCA) and Maternal referral, and care coordination for Collection Request Title: Evaluation of behavioral health conditions; (2) the Maternal and Child Health Bureau Depression and Related Behavioral Disorders (MDRBD) programs aim to provision of behavioral health services Pediatric Mental Health Care Access for mental health conditions in primary (PMHCA) Program and the Maternal increase identification of behavioral care settings by enrolled health care and Child Health Bureau Screening health conditions by screening specified providers; (3) use of consultative and Treatment for Maternal Depression populations (e.g., children, adolescents, services; and (4) facilitation of access to and Related Behavioral Disorders young adults, and pregnant and behavioral health services for mental Program, OMB No. 0906–xxxx, New postpartum women, especially those living in rural, isolated, and health conditions. AGENCY: Health Resources and Services underserved areas); providing clinical Likely Respondents: Both HCP and Administration (HRSA), Department of behavioral health consultation; care Practice-Level Survey responses will be Health and Human Services. coordination support (e.g., collected from health care providers and ACTION: Notice. communication/collaboration, accessing practices that are participating in the resources, referral services) and training PMCHA and MDRBD programs. Likely SUMMARY: In compliance with the to health care providers; and increasing respondents include: requirement of the Paperwork access to clinical interventions • Reduction Act of 1995 for opportunity HCP Surveys: Physicians, nurse including by telehealth. Provider practitioners, physician assistants, for public comment on proposed data education and training will support the collection projects, HRSA announces nurse midwives (for MDBRD), other knowledge and skills acquisition health care professionals (e.g., plans to submit an Information needed to accomplish this goal. PMHCA Collection Request (ICR), described behavioral health providers, case program is authorized by the Public coordinators, nurses, social workers) below, to the Office of Management and Health Service Act, § 330M (42 U.S.C. • Practice-Level Surveys: Practice Budget (OMB). Prior to submitting the 254c–19), as amended. The MDRBD managers (e.g., office managers, office ICR to OMB, HRSA seeks comments program is authorized by the Public leadership, nurse champions) from the public regarding the burden Health Service Act, § 317L–1 (42 U.S.C. estimate, below, or any other aspect of • 247b–13a), as amended. In order to Program Implementation Surveys and the ICR. evaluate progress made toward the Semi-Structured Interviews: PMHCA DATES: Comments on this ICR should be programs’ goals, this data collection will and MDRBD cooperative agreement- received no later than December 16, use four instruments: Health Care funded Project Directors/Principal 2019. Provider (HCP) Survey, Practice-Level Investigators ADDRESSES: Submit your comments to Survey, Program Implementation Burden Statement: Burden in this [email protected] or mail the HRSA Survey, and Program Implementation context means the time expended by Information Collection Clearance Semi-Structured Interview. persons to generate, maintain, retain, Officer, Room 14N136B, 5600 Fishers Need and Proposed Use of the disclose or provide the information Lane, Rockville, Maryland 20857. Information: This information is needed requested. This includes the time FOR FURTHER INFORMATION CONTACT: To to evaluate the PMHCA and MDRBD needed to review instructions; to request more information on the Programs by providing HRSA with the develop, acquire, install, and utilize proposed project or to obtain a copy of necessary information to guide future technology and systems for the purpose the data collection plans and draft policy decisions regarding increasing of collecting, validating, and verifying instruments, email [email protected] health care providers capacity to information, processing and or call Lisa Wright-Solomon, the HRSA address patient’s behavioral health and maintaining information, and disclosing Information Collection Clearance Officer access to behavioral health services. and providing information; to train at (301) 443–1984. Specifically, data collected for the personnel and to be able to respond to SUPPLEMENTARY INFORMATION: When evaluation will be used to study the a collection of information; to search submitting comments or requesting efforts of awardee programs to achieve data sources; to complete and review information, please include the key awardee outcomes (e.g., increase in the collection of information; and to information request collection title for access to behavioral health services; transmit or otherwise disclose the reference. providers trained; available community- information. The total annual burden Information Collection Request Title: based resources, including counselors or hours estimated for this ICR are Evaluation of Maternal and Child Health family service providers) and to summarized in the table below.

TOTAL ESTIMATED ANNUALIZED BURDEN HOURS

Average Number of Number of Total burden per Tota Form name respondents responses per responses response burden respondent (in hours) hours

Health Care Provider Survey ...... 13,035 3 39,105 0.17 6,648 Practice-Level Survey ...... 4,165 3 12,495 0.25 3,124 Program Implementation Survey ...... 28 3 84 0.50 42

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00040 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55580 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

TOTAL ESTIMATED ANNUALIZED BURDEN HOURS—Continued

Average Number of Number of Total burden per Tota Form name respondents responses per responses response burden respondent (in hours) hours

Program Implementation Semi-Structured Interview ...... 28 1 28 1.00 28

Total ...... 17,256 ...... 51,712 ...... 9,842

HRSA specifically requests comments Contact Person: Jing Chen, Ph.D., Scientific DEPARTMENT OF HEALTH AND on (1) the necessity and utility of the Review Officer, Office of Scientific Review, HUMAN SERVICES proposed information collection for the National Center for Advancing Translational proper performance of the agency’s Sciences (NCATS), National Institutes of National Institutes of Health functions, (2) the accuracy of the Health, 6701 Democracy Blvd., Democracy 1, estimated burden, (3) ways to enhance Room 1080, Bethesda, MD 20892–4874, National Eye Institute; Notice of Closed the quality, utility, and clarity of the [email protected]. Meeting information to be collected, and (4) the (Catalogue of Federal Domestic Assistance use of automated collection techniques Program Nos. 93.859, Pharmacology, Pursuant to section 10(d) of the or other forms of information Physiology, and Biological Chemistry Federal Advisory Committee Act, as technology to minimize the information Research; 93.350, B—Cooperative amended, notice is hereby given of the collection burden. Agreements; 93.859, Biomedical Research following meeting. and Research Training, National Institutes of Maria G. Button, The meeting will be closed to the Health, HHS) Director, Executive Secretariat. public in accordance with the [FR Doc. 2019–22636 Filed 10–16–19; 8:45 am] Dated: October 10, 2019. provisions set forth in sections BILLING CODE 4165–15–P Melanie J. Pantoja, 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Program Analyst, Office of Federal Advisory as amended. The grant applications and Committee Policy. the discussions could disclose DEPARTMENT OF HEALTH AND [FR Doc. 2019–22572 Filed 10–16–19; 8:45 am] confidential trade secrets or commercial HUMAN SERVICES property such as patentable material, BILLING CODE 4140–01–P and personal information concerning National Institutes of Health individuals associated with the grant National Center for Advancing DEPARTMENT OF HEALTH AND applications, the disclosure of which Translational Sciences; Notice of HUMAN SERVICES would constitute a clearly unwarranted Closed Meeting invasion of personal privacy. National Institutes of Health Name of Committee: National Eye Institute Pursuant to section 10(d) of the Special Emphasis Panel; NEI Genetic Office of the Director, National Federal Advisory Committee Act, as Epidemiology and Secondary Data Analysis Institutes of Health; Amended Notice amended, notice is hereby given of the Applications. of Meeting following meeting. Date: November 4–5, 2019. Time: 8:00 a.m. to 5:00 p.m. The meeting will be closed to the Notice is hereby given of a change in public in accordance with the Agenda: To review and evaluate grant the meeting of the Office of AIDS provisions set forth in sections applications. Research Advisory Council, November 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Place: National Eye Institute, National 7, 2019 from 8:30 a.m. to 4:30 p.m., as amended. The grant applications and Institutes of Health, 6700 B Rockledge Drive, the discussions could disclose National Institutes of Health, 5601 Suite 3400, Bethesda, MD 20892 (Virtual confidential trade secrets or commercial Fishers Lane, Room 1D13, Rockville, Meeting). property such as patentable material, MD 20852 which was published in the Contact Person: Brian Hoshaw, Ph.D., and personal information concerning Federal Register on February 15, 2019, Acting Review Chief, National Eye Institute, individuals associated with the grant 84 FR 4495. National Institutes of Health, Division of applications, the disclosure of which This meeting notice is amended to Extramural Research, 6700 B Rockledge would constitute a clearly unwarranted change the meeting date from November Drive, Suite 3400, Rockville, MD 20892, (301) invasion of personal privacy. 7, 2019 to October 28, 2019 at the 451–2020, [email protected]. Name of Committee: National Center for National Institutes of Health, 5601 (Catalogue of Federal Domestic Assistance Advancing Translational Sciences Special Fishers Lane, Room 1D13, Rockville, Program Nos. 93.867, Vision Research, Emphasis Panel; Platform Delivery MD 20852. The meeting is open to the National Institutes of Health, HHS) Technologies for Nucleic Acid Therapeutics. public. Date: November 13–14, 2019. Dated: October 10, 2019. Time: 8:30 a.m. to 5:00 p.m. Dated: October 10, 2019. Miguelina Perez, Agenda: To review and evaluate grant Tyeshia M. Roberson, Program Analyst, Office of Federal Advisory applications. Program Analyst, Office of Federal Advisory Committee Policy. Place: National Institutes of Health, One Committee Policy. [FR Doc. 2019–22573 Filed 10–16–19; 8:45 am] Democracy Plaza, 6701 Democracy Boulevard, Bethesda, MD 20892, (Virtual [FR Doc. 2019–22571 Filed 10–16–19; 8:45 am] BILLING CODE 4140–01–P Meeting). BILLING CODE 4140–01–P

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00041 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55581

DEPARTMENT OF HEALTH AND Science Center, by email at dbeard@ Type of Review: Extension of a HUMAN SERVICES usgs.gov, or by telephone at 703–648– currently approved collection. 5212. Respondents/Affected Public: Substance Abuse and Mental Health SUPPLEMENTARY INFORMATION: In Institutions that are expected to propose Services Administration accordance with the Paperwork to serve as CASC host or partner Current List of HHS-Certified Reduction Act of 1995, we provide the institutions include state, local Laboratories and Instrumented Initial general public and other Federal government, and tribal entities, Testing Facilities Which Meet Minimum agencies with an opportunity to including academic institutions. Standards To Engage in Urine Drug comment on new, proposed, revised, Existing host institutions are state Testing for Federal Agencies and continuing collections of academic institutions. information. This helps us assess the Total Estimated Number of Annual Correction impact of our information collection Respondents: The USGS expects to In notice document 2019–21176, requirements and minimize the public’s request proposals for a maximum of beginning on page 52117 in the issue of reporting burden. It also helps the three CASCs in any year, and to receive Tuesday, October 1, 2019, make the public understand our information an average of 5 proposals per CASC- following corrections: collection requirements and provide the request, for a total of 15 proposals in 1. On page 52117, in the third requested data in the desired format. any single year. The USGS expects to column, on the second line, ‘‘Quiver We are soliciting comments on the enter into hosting agreements with a Road, Leone, KS’’ should read ‘‘Quivira proposed ICR that is described below. minimum of eight CASC host Road, Lenexa, KS’’. We are especially interested in public institutions. 2. On the same page, in the same comment addressing the following Total Estimated Number of Annual column, on the eighth line, ‘‘Desert Ox’’ issues: (1) Is the collection necessary to Responses: The USGS would request should read ‘‘Desert Tox’’. the proper functions of the USGS; (2) quarterly financial statements and 3. On the same page, in the same will this information be processed and annual progress reports covering host column, on the eleventh line, used in a timely manner; (3) is the agreements from eight institutions. In ‘‘Drug,Scan’’ should read ‘‘DrugScan’’. estimate of burden accurate; (4) how addition, the USGS expects to have in might the USGS enhance the quality, [FR Doc. C1–2019–21176 Filed 10–16–19; 8:45 am] place approximately 40 cooperative utility, and clarity of the information to BILLING CODE 1505–01–D agreements per year addressing specific be collected; and (5) how might the research projects funded under these USGS minimize the burden of this hosting agreements. Each of these 40 collection on the respondents, including DEPARTMENT OF THE INTERIOR agreements requires quarterly financial through the use of information statements and one annual progress Geological Survey technology. report. Comments that you submit in [GX19 EN05ESB0500; OMB Control Number response to this notice are a matter of Estimated Completion Time per 1028–0096/Renewal] public record. We will include or Response: Each proposal for CASC summarize each comment in our request hosting is expected to take 200 hours to Agency Information Collection to OMB to approve this ICR. Before complete. The time required to Activities: Request for Comments; including your address, phone number, complete quarterly and annual reports Department of the Interior Regional email address, or other personal for any specific host cooperative Climate Adaptation Science Centers identifying information in your agreement or research project agreement is expected to total 2.5 hours per report. AGENCY: U.S. Geological Survey, comment, you should be aware that Interior. your entire comment—including your Total Estimated Number of Annual Burden Hours: A maximum of 3120 ACTION: Notice of Information personal identifying information—may hours in years when proposals are Collection; request for comment. be made publicly available at any time. While you may ask us in your comment requested, and 120 hours in those years SUMMARY: In accordance with the to withhold your personal identifying with only quarterly and annual Paperwork Reduction Act of 1995, we, information from public review, we reporting. the U.S. Geological Survey (USGS) are cannot guarantee that we will be able to Respondent’s Obligation: Required to proposing to renew an information do so. Obtain or Retain a Benefit. collection. Abstract: The U.S. Geological Survey Frequency of Collection: Information (USGS) manages eight Department of DATES: Interested persons are invited to will be collected one time every five the Interior (DOI) Regional Climate submit comments on or before years (approximately) for each CASC, to Adaptation Science Centers (CASCs). December 16, 2019. enable re-competition of CASC hosting Each CASC involves a cooperative ADDRESSES: Send your comments on agreements. In addition, host agreement with a host institution. The institutions are required to fill four this information collection request (ICR) host institution agreements are by mail to U.S. Geological Survey, quarterly financial statements and one periodically re-competed, requiring annual progress report. Information Collections Officer, 12201 collection of information from potential Sunrise Valley Drive MS 159, Reston, host institutions. In addition, this Total Estimated Annual Nonhour _ VA 20192; or by email to gs-info information collection addresses Burden Cost: There are no ‘‘non-hour [email protected]. Please reference quarterly and annual reporting required cost’’ burdens associated with this OMB Control Number 1028–0096 in the of host institutions. collection of information. subject line of your comments. Title of Collection: Department of the An agency may not conduct or FOR FURTHER INFORMATION CONTACT: To Interior Regional Climate Adaptation sponsor and a person is not required to request additional information about Science Centers. respond to a collection of information this ICR, contact Doug Beard, Chief of OMB Control Number: 1028–0096. unless it displays a currently valid OMB the USGS National Climate Adaptation Form Number: N/A. control number.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00042 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55582 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

The authority for this action is the (Department) leasing regulations at 25 surface leasing regulations, 77 FR at Paperwork Reduction Act of 1995 (44 CFR part 162 and provide for an 72447–48, as supplemented by the U.S.C. 3501 et seq). environmental review process that analysis below. meets requirements set forth in the The strong Federal and Tribal Thomas Beard, HEARTH Act. This notice announces interests against State and local taxation Chief, National Climate Adaptation Science that the Secretary, through the Assistant of improvements, leaseholds, and Center. Secretary—Indian Affairs, has approved activities on land leased under the [FR Doc. 2019–22610 Filed 10–16–19; 8:45 am] the Tribal regulations for the Department’s leasing regulations apply BILLING CODE 4338–11–P Menominee Indian Tribe of Wisconsin. equally to improvements, leaseholds, and activities on land leased pursuant to II. Federal Preemption of State and Tribal leasing regulations approved DEPARTMENT OF THE INTERIOR Local Taxes under the HEARTH Act. Congress’s The Department’s regulations overarching intent was to ‘‘allow Tribes Bureau of Indian Affairs governing the surface leasing of trust to exercise greater control over their [190A2100DD/AAKC001030/ and restricted Indian lands specify that, own land, support self-determination, A0A501010.999900] subject to applicable Federal law, and eliminate bureaucratic delays that permanent improvements on leased stand in the way of homeownership and HEARTH Act Approval of Menominee land, leasehold or possessory interests, economic development in Tribal Indian Tribe of Wisconsin Regulations and activities under the lease are not communities.’’ 158 Cong. Rec. H. 2682 subject to State and local taxation and AGENCY: Bureau of Indian Affairs, (May 15, 2012). The HEARTH Act was Interior. may be subject to taxation by the Indian intended to afford Tribes ‘‘flexibility to Tribe with jurisdiction. See 25 CFR adapt lease terms to suit [their] business ACTION: Notice. 162.017. As explained further in the and cultural needs’’ and to ‘‘enable SUMMARY: On July 25, 2019, the Bureau preamble to the final regulations, the [Tribes] to approve leases quickly and of Indian Affairs (BIA) approved the Federal government has a strong interest efficiently.’’ Id. at 5–6. Menominee Indian Tribe of Wisconsin in promoting economic development, Assessment of State and local taxes (Tribe) Leasing Regulations under the self-determination, and Tribal would obstruct these express Federal Helping Expedite and Advance sovereignty. 77 FR 72440, 72447–48 policies supporting Tribal economic Responsible Tribal Homeownership Act (December 5, 2012). The principles development and self-determination, of 2012 (HEARTH Act). With this supporting the Federal preemption of and also threaten substantial Tribal approval, the Tribe is authorized to State law in the field of Indian leasing interests in effective Tribal government, enter into agricultural, residential, and the taxation of lease-related economic self-sufficiency, and territorial business, and other authorized purposes interests and activities applies with autonomy. See Michigan v. Bay Mills leases without further BIA approval. equal force to leases entered into under Indian Community, 134 S. Ct. 2024, Tribal leasing regulations approved by 2043 (2014) (Sotomayor, J., concurring) FOR FURTHER INFORMATION CONTACT: Ms. the Federal government pursuant to the (determining that ‘‘[a] key goal of the Sharlene Round Face, Bureau of Indian HEARTH Act. Federal Government is to render Tribes Affairs, Division of Real Estate Services, Section 5 of the Indian Reorganization more self-sufficient, and better 1849 C Street NW, MS 4624–MIB, Act, 25 U.S.C. 5108, preempts State and positioned to fund their own sovereign Washington, DC at (505) 563–3132. local taxation of permanent functions, rather than relying on Federal SUPPLEMENTARY INFORMATION: improvements on trust land. funding’’). The additional costs of State Confederated Tribes of the Chehalis I. Summary of the HEARTH Act and local taxation have a chilling effect Reservation v. Thurston County, 724 on potential lessees, as well as on a tribe The HEARTH Act makes a voluntary, F.3d 1153, 1157 (9th Cir. 2013) (citing that, as a result, might refrain from alternative land leasing process Mescalero Apache Tribe v. Jones, 411 exercising its own sovereign right to available to Tribes, by amending the U.S. 145 (1973)). Similarly, section 5108 impose a Tribal tax to support its Indian Long-Term Leasing Act of 1955, preempts State taxation of rent infrastructure needs. See id. at 2043–44 25 U.S.C. 415. The HEARTH Act payments by a lessee for leased trust (finding that State and local taxes authorizes Tribes to negotiate and enter lands, because ‘‘tax on the payment of greatly discourage Tribes from raising into agricultural and business leases of rent is indistinguishable from an tax revenue from the same sources Tribal trust lands with a primary term impermissible tax on the land.’’ See because the imposition of double of 25 years, and up to two renewal terms Seminole Tribe of Florida v. Stranburg, taxation would impede Tribal economic of 25 years each, without the approval No. 14–14524, *13–*17, n.8 (11th Cir. growth). of the Secretary of the Interior 2015). In addition, as explained in the Similar to BIA’s surface leasing (Secretary). The HEARTH Act also preamble to the revised leasing regulations, Tribal regulations under the authorizes Tribes to enter into leases for regulations at 25 CFR part 162, Federal HEARTH Act pervasively cover all residential, recreational, religious or courts have applied a balancing test to aspects of leasing. See 25 U.S.C. educational purposes for a primary term determine whether State and local 415(h)(3)(B)(i) (requiring Tribal of up to 75 years without the approval taxation of non-Indians on the regulations be consistent with BIA of the Secretary. Participating Tribes reservation is preempted. White surface leasing regulations). develop Tribal leasing regulations, Mountain Apache Tribe v. Bracker, 448 Furthermore, the Federal government including an environmental review U.S. 136, 143 (1980). The Bracker remains involved in the Tribal land process, and then must obtain the balancing test, which is conducted leasing process by approving the Tribal Secretary’s approval of those regulations against a backdrop of ‘‘traditional leasing regulations in the first instance prior to entering into leases. The notions of Indian self- government,’’ and providing technical assistance, HEARTH Act requires the Secretary to requires a particularized examination of upon request by a tribe, for the approve Tribal regulations if the Tribal the relevant State, Federal, and Tribal development of an environmental regulations are consistent with the interests. We hereby adopt the Bracker review process. The Secretary also Department of the Interior’s analysis from the preamble to the retains authority to take any necessary

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00043 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55583

actions to remedy violations of a lease Committee Act (5 U.S.C. Appendix 1– by reason of infringement of certain or of the Tribal regulations, including 16). The purpose of the Council is to claims of U.S. Patent No. 10,136,179 terminating the lease or rescinding advise the Secretary of the Interior with (‘‘the ’179 patent’’) and U.S. Patent No. approval of the Tribal regulations and respect to the preparation and 10,104,425 (‘‘the ’425 patent’’). The reassuming lease approval implementation of the management complaint further alleges that an responsibilities. Moreover, the Secretary plan. industry in the United States exists as continues to review, approve, and Purpose of the Meeting: The Council required by the applicable Federal monitor individual Indian land leases agenda will include the status of the Statute. and other types of leases not covered park’s Foundation Document and The complainant requests that the under the Tribal regulations according General Management Plan, the Desert Commission institute an investigation to the Part 162 regulations. National Wildlife Refuge Visitor Center and, after the investigation, issue a Accordingly, the Federal and Tribal exhibit installation, Project CARE, limited exclusion order and a cease and interests weigh heavily in favor of subcommittee projects, and a desist orders. preemption of State and local taxes on presentation by the Las Vegas Wash ADDRESSES: The complaint, except for lease-related activities and interests, Coordination Committee. any confidential information contained regardless of whether the lease is The meeting is open to the public. therein, is available for inspection governed by Tribal leasing regulations Interested persons may make oral/ during official business hours (8:45 a.m. or Part 162. Improvements, activities, written presentations to the Council to 5:15 p.m.) in the Office of the and leasehold or possessory interests during the business meeting or file Secretary, U.S. International Trade may be subject to taxation by the written statements. Such requests Commission, 500 E Street SW, Room Menominee Indian Tribe of Wisconsin. should be made to the Superintendent 112, Washington, DC 20436, telephone Dated: July 25, 2019. prior to the meeting. (202) 205–2000. Hearing impaired Tara Sweeney, Public Disclosure of Comments: individuals are advised that information Assistant Secretary—Indian Affairs. Before including your address, phone on this matter can be obtained by number, email address, or other contacting the Commission’s TDD [FR Doc. 2019–22681 Filed 10–16–19; 8:45 am] personal identifying information in your terminal on (202) 205–1810. Persons BILLING CODE 4337–15–P comment, you should be aware that with mobility impairments who will your entire comment—including your need special assistance in gaining access DEPARTMENT OF THE INTERIOR personal identifying information—may to the Commission should contact the be made publicly available at any time. Office of the Secretary at (202) 205– National Park Service While you can ask us in your comment 2000. General information concerning to withhold your personal identifying the Commission may also be obtained [NPS–PWRO–TUSK–28830; PPPWTUSK00, information from public review, we by accessing its internet server at PPMPSPD1Z.YM0000] cannot guarantee that we will be able to https://www.usitc.gov. The public Tule Springs Fossil Beds National do so. record for this investigation may be Monument Advisory Council Notice of Authority: 5 U.S.C. Appendix 2. viewed on the Commission’s electronic Public Meeting docket (EDIS) at https://edis.usitc.gov. Michael Shelton, FOR FURTHER INFORMATION CONTACT: AGENCY: National Park Service, Interior. Program Analyst, Office of Policy. Pathenia M. Proctor, The Office of ACTION: Meeting notice. [FR Doc. 2019–22657 Filed 10–16–19; 8:45 am] Unfair Import Investigations, U.S. BILLING CODE 4312–52–P International Trade Commission, SUMMARY: In accordance with the telephone (202) 205–2560. Federal Advisory Committee Act of 1972, the National Park Service is SUPPLEMENTARY INFORMATION: hereby giving notice that the Tule INTERNATIONAL TRADE Authority: The authority for institution of Springs Fossil Beds National Monument COMMISSION this investigation is contained in section 337 Advisory Council (Council) will meet as of the Tariff Act of 1930, as amended, 19 [Investigation No. 337–TA–1180] U.S.C. 1337, and in section 210.10 of the indicated below. Commission’s Rules of Practice and DATES: The meeting will be held on Institution of Investigation Procedure, 19 CFR 210.10 (2019). Monday, November 4, 2019, at 5:00 p.m. AGENCY: U.S. International Trade Scope of Investigation: Having (PACIFIC). Commission. considered the complaint, the U.S. ADDRESSES: The meeting will be held at ACTION: Notice. International Trade Commission, on the Federal Interagency Office Building, October 9, 2019, Ordered That— 4701 N Torrey Pines Road, Las Vegas, SUMMARY: Notice is hereby given that a (1) Pursuant to subsection (b) of Nevada 89130–2301. complaint was filed with the U.S. section 337 of the Tariff Act of 1930, as FOR FURTHER INFORMATION CONTACT: International Trade Commission on amended, an investigation be instituted Further information concerning the August 9, 2019, under section 337 of the to determine whether there is a meeting may be obtained from Diane Tariff Act of 1930, as amended, on violation of subsection (a)(1)(B) of Keith, Superintendent, Tule Springs behalf of Innovation Sciences LLC of section 337 in the importation into the Fossil Beds National Monument, 601 Plano, Texas. A supplement to the United States, the sale for importation, Nevada Way, Boulder City, Nevada complaint was filed on August 26, 2019. or the sale within the United States after 89005, via telephone at (702) 515–5462, The complaint alleges violations of importation of certain products or email at [email protected]. section 337 based upon the importation identified in paragraph (2) by reason of SUPPLEMENTARY INFORMATION: The into the United States, the sale for infringement of one or more of claims Council was established pursuant to importation, and the sale within the 1–3, 5, 6, 9, 11, 12, and 14–18 of the Section 3092(a)(6) of Public Law 113– United States after importation of ’179 patent and claims 14–18 and 45– 291 and in accordance with the certain wireless communication 48 of the ’425 patent; and whether an provisions of the Federal Advisory devices, and related components thereof industry in the United States exists as

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00044 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55584 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

required by subsection (a)(2) of section complaint and the notice of International Trade Commission, 500 E 337; investigation will not be granted unless Street SW, Washington, DC 20436, (2) Pursuant to section 210.10(b)(1) of good cause therefor is shown. telephone 202–205–2000. General the Commission’s Rules of Practice and Failure of a respondent to file a timely information concerning the Commission Procedure, 19 CFR 210.10(b)(1), the response to each allegation in the may also be obtained by accessing its plain language description of the complaint and in this notice may be internet server at https://www.usitc.gov. accused products or category of accused deemed to constitute a waiver of the The public record for this investigation products, which defines the scope of the right to appear and contest the may be viewed on the Commission’s investigation, is ‘‘smart cellular phones, allegations of the complaint and this electronic docket (‘‘EDIS’’) at https:// smart thermostats, and smart home notice, and to authorize the edis.usitc.gov. Hearing-impaired control and monitoring systems with administrative law judge and the persons are advised that information on their associated wireless security Commission, without further notice to this matter can be obtained by sensors (door and window, smoke and the respondent, to find the facts to be as contacting the Commission’s TDD fire, motion and sound, leak and freeze), alleged in the complaint and this notice terminal, telephone 202–205–1810. wireless controllers (door locks, and to enter an initial determination lighting, home appliances), and smart and a final determination containing SUPPLEMENTARY INFORMATION: The video cameras (indoor and outdoor such findings, and may result in the Commission instituted this investigation cameras, doorbell cameras), which may issuance of an exclusion order or a cease on June 24, 2019, based on a complaint be configured to serve as (or with) smart and desist order or both directed against filed by Neodron Ltd. of Dublin, Ireland hubs for communicating with, the respondent. (‘‘Neodron’’). 84 FR 29545 (June 24, monitoring, and/or controlling such 2019). The complaint, as amended, By order of the Commission. alleges violations of section 337 of the wireless smart devices, systems, and/or Issued: October 10, 2019. appliances in the home or office, and Tariff Act of 1930, as amended, 19 Lisa Barton, can control the communication of U.S.C. 1337 (‘‘section 337’’), based upon signals/content between those wireless Secretary to the Commission. the importation into the United States, smart devices, systems, and/or [FR Doc. 2019–22606 Filed 10–16–19; 8:45 am] the sale for importation, and the sale appliances’’; BILLING CODE 7020–02–P within the United States after (3) For the purpose of the importation of certain touch-controlled investigation so instituted, the following mobile devices, computers, and are hereby named as parties upon which INTERNATIONAL TRADE components thereof by reason of this notice of investigation shall be COMMISSION infringement of certain claims of U.S. served: [Investigation No. 337–TA–1162] Patent Nos. 8,432,173; 8,791,910; (a) The complainant is: 9,024,790; and 9,372,580. Id. The Innovation Sciences LLC, 5800 Legacy Certain Touch-Controlled Mobile amended complaint further alleges that Circle, Suite 311, Plano, TX 75024. Devices, Computers, and Components an industry in the United States exists (b) The respondents are the following Thereof; Commission Determination as required by section 337. Id. The entities alleged to be in violation of Not To Review an Initial Determination notice of investigation named as section 337, and are the parties upon Amending the Complaint and Notice of respondents Amazon.com, Inc. of which the complaint is to be served: Investigation To Substitute Seattle, Washington; Dell Technologies Resideo Technologies, Inc., 901 East Respondents Dell Inc. and Dell Inc. of Round Rock, Texas; HP Inc. of Sixth Street, Austin, TX 78702. Products LP for Respondent Dell Palo Alto, California; Lenovo Group Ltd. HTC Corporation, 23 Xinghua Road, Technologies Inc. of Beijing, China; Lenovo (United Tayouan, 330, Republic of China, States) Inc. of Morrisville, North Taiwan. AGENCY: U.S. International Trade Carolina; Microsoft Corporation of HTC America, Inc., 308 Occidental Commission. Redmond, Washington; Motorola Avenue S., Suite 300, Seattle, WA ACTION: Notice. Mobility LLC of Chicago, Illinois; 98104. Samsung Electronics Co., Ltd. of Suwon, SUMMARY: Notice is hereby given that (c) The Office of Unfair Import South Korea; and Samsung Electronics the U.S. International Trade Investigations, U.S. International Trade America, Inc. of Ridgefield Park, New Commission (‘‘Commission’’) has Commission, 500 E Street SW, Suite Jersey. Id. The Office of Unfair Import determined not to review an initial 401, Washington, DC 20436; and Investigations was not named as a party determination (‘‘ID’’) (Order No. 12) that (4) For the investigation so instituted, to the investigation. Id. the Chief Administrative Law Judge, grants an unopposed motion to amend U.S. International Trade Commission, the complaint and notice of On September 23, 2019, Neodron filed shall designate the presiding investigation to substitute new an unopposed motion seeking leave to Administrative Law Judge. respondents Dell Inc. and Dell Products amend the complaint and notice of Responses to the complaint and the LP for original respondent Dell investigation to substitute new notice of investigation must be Technologies Inc. in the above- respondents Dell Inc. and Dell Products submitted by the named respondents in identified investigation. LP, both of Round Rock, Texas, for accordance with section 210.13 of the FOR FURTHER INFORMATION CONTACT: Ron original respondent Dell Technologies Commission’s Rules of Practice and Traud, Office of the General Counsel, Inc. Procedure, 19 CFR 210.13. Pursuant to U.S. International Trade Commission, On September 25, 2019, the ALJ 19 CFR 201.16(e) and 210.13(a), such 500 E Street SW, Washington, DC issued Order No. 12, the subject ID, responses will be considered by the 20436, telephone 202–205–3427. Copies which grants the motion. The ID finds Commission if received not later than 20 of non-confidential documents filed in that Neodron’s motion complies with 19 days after the date of service by the connection with this investigation are or CFR 210.14(b)(1) and that granting the Commission of the complaint and the will be available for inspection during motion will not prejudice the public notice of investigation. Extensions of official business hours (8:45 a.m. to 5:15 interest or the rights of the parties. No time for submitting responses to the p.m.) in the Office of the Secretary, U.S. petitions for review were filed.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00045 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55585

The Commission has determined not DEPARTMENT OF JUSTICE DEPARTMENT OF JUSTICE to review the subject ID. Antitrust Division The authority for the Commission’s Antitrust Division determination is contained in section Notice Pursuant to the National Notice Pursuant to the National 337 of the Tariff Act of 1930, as Cooperative Research and Production Cooperative Research and Production amended (19 U.S.C. 1337), and in part Act of 1993—Advanced Media Act of 1993—National Fire Protection 210 of the Commission’s Rules of Association Practice and Procedure (19 CFR part Workflow Association, Inc. 210). Notice is hereby given that, on Notice is hereby given that, on September 6, 2019, pursuant to Section By order of the Commission. September 13, 2019, pursuant to Section 6(a) of the National Cooperative Issued: October 11, 2019. 6(a) of the National Cooperative Research and Production Act of 1993, Lisa Barton, Research and Production Act of 1993, 15 U.S.C. 4301 et seq. (‘‘the Act’’), Secretary to the Commission. 15 U.S.C. 4301 et seq. (‘‘the Act’’), National Fire Protection Association [FR Doc. 2019–22647 Filed 10–16–19; 8:45 am] Advanced Media Workflow Association, (‘‘NFPA’’) has filed written notifications BILLING CODE 7020–02–P Inc. has filed written notifications simultaneously with the Attorney simultaneously with the Attorney General and the Federal Trade General and the Federal Trade Commission disclosing additions or Commission disclosing changes in its changes to its standards development DEPARTMENT OF JUSTICE membership. The notifications were activities. The notifications were filed filed for the purpose of extending the for the purpose of extending the Act’s Antitrust Division Act’s provisions limiting the recovery of provisions limiting the recovery of antitrust plaintiffs to actual damages antitrust plaintiffs to actual damages Notice Pursuant to the National under specified circumstances. under specified circumstances. Cooperative Research and Production Specifically, NFPA has provided an Specifically, Etere Pte Ltd, Singapore, Act of 1993—Consortium for Battery updated and current list of its standards Innovation SINGAPORE; Tamura Corporation, development activities, related technical Tokyo, JAPAN; and Phillip Nguyen committee and conformity assessment Notice is hereby given that, on (individual member), Folsom, CA, have activities. Information concerning NFPA September 13, 2019, pursuant to Section been added as parties to this venture. regulations, technical committees, 6(a) of the National Cooperative Also, Signiant, Lexington, MA; TVNZ, current standards, standards Research and Production Act of 1993, Auckland, NEW ZEALAND; and development and conformity 15 U.S.C. 4301 et seq. (‘‘the Act’’), Telestream, LLC, Nevada City, CA, have assessment activities are publicly Consortium for Battery Innovation withdrawn as parties to this venture. available at nfpa.org. (‘‘CBI’’) has filed written notifications On September 20, 2004, NFPA filed simultaneously with the Attorney No other changes have been made in its original notification pursuant to General and the Federal Trade either the membership or planned Section 6(a) of the Act. The Department Commission disclosing changes in its activity of the group research project. of Justice published a notice in the membership. The notifications were Membership in this group research Federal Register pursuant to Section filed for the purpose of extending the project remains open, and Advanced 6(b) of the Act on October 21, 2004 (69 Act’s provisions limiting the recovery of Media Workflow Association, Inc. FR 61869). antitrust plaintiffs to actual damages intends to file additional written The last notification was filed with under specified circumstances. notifications disclosing all changes in the Department on June 20, 2019. A Specifically, Abertax Technologies LTD, membership. notice was published in the Federal Paola, MALTA; Ahlstrom-Munksjo¨o, On March 28, 2000, Advanced Media Register pursuant to Section 6(b) of the Mathi, ITALY; Gridtential Energy, Santa Workflow Association, Inc. filed its Act on July 17, 2019 (84 FR 34200). Clara, CA; and Wirtz Manufacturing Co. original notification pursuant to Section Suzanne Morris, Inc., Port Huron, MI, have been added 6(a) of the Act. The Department of Chief, Premerger and Division Statistics Unit, as parties to this venture. Justice published a notice in the Federal Antitrust Division. No other changes have been made in Register pursuant to Section 6(b) of the [FR Doc. 2019–22617 Filed 10–16–19; 8:45 am] either the membership or planned Act on June 29, 2000 (65 FR 40127). BILLING CODE 4410–11–P activity of the group research project. The last notification was filed with Membership in this group research project remains open, and CBI intends the Department on June 21, 2019. A DEPARTMENT OF JUSTICE to file additional written notifications notice was published in the Federal disclosing all changes in membership. Register pursuant to Section 6(b) of the Antitrust Division Act on July 17, 2019 (84 FR 34200). On May 24, 2019, CBI filed its original Notice Pursuant to the National notification pursuant to Section 6(a) of Suzanne Morris, Cooperative Research and Production the Act. The Department of Justice Chief, Premerger and Division Statistics Unit, Act of 1993—OpenJS Foundation published a notice in the Federal Antitrust Division. Register pursuant to Section 6(b) of the [FR Doc. 2019–22614 Filed 10–16–19; 8:45 am] Notice is hereby given that, on Act on June 21, 2019 (84 FR 29241). September 19, 2019, pursuant to Section BILLING CODE 4410–11–P 6(a) of the National Cooperative Suzanne Morris, Research and Production Act of 1993, Chief, Premerger and Division Statistics Unit, 15 U.S.C. 4301 et seq. (‘‘the Act’’), Antitrust Division. OpenJS Foundation (‘‘OpenJS [FR Doc. 2019–22618 Filed 10–16–19; 8:45 am] Foundation’’) has filed written BILLING CODE 4410–11–P notifications simultaneously with the

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00046 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55586 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Attorney General and the Federal Trade Innsbruck, AUSTRIA; Action Duchenne, and Siemens Energy, Inc., Orlando, FL, Commission disclosing changes in its London, UNITED KINGDOM; have been added as parties to this membership. The notifications were Collaborative Drug Discovery Inc., venture. filed for the purpose of extending the Burlingame, CA; Scinapsis Analytics No other changes have been made in Act’s provisions limiting the recovery of Inc. d/b/a BenchSci, Toronto, CANADA; either the membership or planned antitrust plaintiffs to actual damages and Revathi Nathaniel (individual activity of the group research project. under specified circumstances. member), Dallas, TX, have been added Membership in this group research Specifically, Vincit California, Inc., San as parties to this venture. project remains open, and RIC-Americas Francisco, CA, has been added as a Also, Transformative AI Limited, intends to file additional written party to this venture. London, UNITED KINGDOM; notifications disclosing all changes in Also, XNSIO, Bengaluru, INDIA, has Data2Discovery, Bloomington, IN; and membership. withdrawn as a party to this venture. Digipharm, Zug, SWITZERLAND, have On April 30, 2014, RIC-Americas filed No other changes have been made in withdrawn as parties to this venture. its original notification pursuant to either the membership or planned No other changes have been made in Section 6(a) of the Act. The Department activity of the group research project. either the membership or planned of Justice published a notice in the Membership in this group research activity of the group research project. Federal Register pursuant to Section project remains open, and OpenJS Membership in this group research 6(b) of the Act on June 9, 2014 (79 FR Foundation intends to file additional project remains open, and Pistoia 32999). written notifications disclosing all Alliance, Inc. intends to file additional The last notification was filed with changes in membership. written notifications disclosing all the Department on August 1, 2019. A On August 17, 2015, OpenJS changes in membership. notice was published in the Federal Foundation filed its original notification On May 28, 2009, Pistoia Alliance, Register pursuant to Section 6(b) of the pursuant to Section 6(a) of the Act. The Inc. filed its original notification Act on September 4, 2019 (84 FR Department of Justice published a notice pursuant to Section 6(a) of the Act. The 46565). in the Federal Register pursuant to Department of Justice published a notice Suzanne Morris, Section 6(b) of the Act on September 28, in the Federal Register pursuant to 2015 (80 FR 58297). Section 6(b) of the Act on July 15, 2009 Chief, Premerger and Division Statistics Unit Antitrust Division. The last notification was filed with (74 FR 34364). the Department on July 12, 2019. A The last notification was filed with [FR Doc. 2019–22609 Filed 10–16–19; 8:45 am] notice was published in the Federal the Department on June 26, 2019. A BILLING CODE 4410–11–P Register pursuant to Section 6(b) of the notice was published in the Federal Act on August 1, 2019 (84 FR 37680). Register pursuant to Section 6(b) of the DEPARTMENT OF JUSTICE Act on July 17, 2019 (84 FR 34201). Suzanne Morris, Chief, Premerger and Division Statistics Unit, Suzanne Morris, Antitrust Division Antitrust Division. Chief, Premerger and Division Statistics Unit, Notice Pursuant to the National [FR Doc. 2019–22616 Filed 10–16–19; 8:45 am] Antitrust Division. Cooperative Research and Production [FR Doc. 2019–22608 Filed 10–16–19; 8:45 am] BILLING CODE 4410–11–P Act of 1993—3D PDF Consortium, Inc. BILLING CODE 4410–11–P Notice is hereby given that, on DEPARTMENT OF JUSTICE September 6, 2019, pursuant to Section DEPARTMENT OF JUSTICE 6(a) of the National Cooperative Antitrust Division Research and Production Act of 1993, Antitrust Division Notice Pursuant to the National 15 U.S.C. 4301 et seq., (‘‘the Act’’), 3D Cooperative Research and Production Notice Pursuant to the National PDF Consortium, Inc. (‘‘3D PDF’’) has Act of 1993—Pistoia Alliance, Inc. Cooperative Research and Production filed written notifications Act of 1993—Cooperative Research simultaneously with the Attorney Notice is hereby given that, on Group on ROS-Industrial Consortium General and the Federal Trade September 10, 2019, pursuant to Section Americas Commission disclosing changes in its 6(a) of the National Cooperative membership. The notifications were Research and Production Act of 1993, Notice is hereby given that, on filed for the purpose of extending the 15 U.S.C. 4301 et seq., (‘‘the Act’’), September 10, 2019, pursuant to Section Act’s provisions limiting the recovery of Pistoia Alliance, Inc. has filed written 6(a) of the National Cooperative antitrust plaintiffs to actual damages notifications simultaneously with the Research and Production Act of 1993, under specified circumstances. Attorney General and the Federal Trade 15 U.S.C. 4301 et seq. (‘‘the Act’’), Specifically, Jean-Franc¸ois Blanchette Commission disclosing changes in its Southwest Research Institute— (individual member), Los Angeles, CA; membership. The notifications were Cooperative Research Group on ROS- and KOM Software, Ottawa, CANADA, filed for the purpose of extending the Industrial Consortium-Americas (‘‘RIC- have been added as parties to this Act’s provisions limiting the recovery of Americas’’) has filed written venture. antitrust plaintiffs to actual damages notifications simultaneously with the No other changes have been made in under specified circumstances. Attorney General and the Federal Trade either the membership or planned Specifically, Rainer Fuchs (individual Commission disclosing changes in its activity of the group research project. member), Sudbury, MA; Cambridge membership. The notifications were Membership in this group research Quantum Computing Limited, London, filed for the purpose of extending the project remains open, and 3D PDF UNITED KINGDOM; David Dorsett Act’s provisions limiting the recovery of intends to file additional written (individual member), Pennington, NJ; antitrust plaintiffs to actual damages notifications disclosing all changes in PERCAYAI LLC, St. Louis, MO; Zapata under specified circumstances. membership. Computing Inc., Cambridge, MA; Specifically, Advanced Robotics for On March 27, 2012, 3D PDF filed its Thomas Liener (individual member), Manufacturing (ARM), Pittsburgh, PA, original notification pursuant to Section

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55587

6(a) of the Act. The Department of SUPPLEMENTARY INFORMATION: The Prisoners of War (Vietnam); FCSC–19 Justice published a notice in the Federal Foreign Claims Settlement Commission Soviet Union, Claims Against; FCSC–25 Register pursuant to Section 6(b) of the of the United States (Commission) is Egypt, Claims Against; FCSC–26 Act on April 20, 2012 (77 FR 23754). authorized, pursuant to 22 U.S.C. 1621 Albania, Claims Against; FCSC–27 The last notification was filed with et. seq., 50 U.S.C. 1701 note and 50 Germany, Holocaust Survivors’ Claims the Department on July 3, 2019. A U.S.C. App. 2004 and 2005, to Against; FCSC–28 Iraq, Registration of notice was published in the Federal adjudicate claims to determine the Potential Claims Against; FCSC–29 Register pursuant to Section 6(b) of the eligibility of individuals for and the Libya, Claims Against; FCSC–29 Claims Act on August 1, 2019 (84 FR 37681). appropriate amount of compensation. of less than $250,000 Against Iran; The system of records covered by this FCSC–30 Iraq, Claims Against; FCSC–31 Suzanne Morris, notice is necessary for the Commission’s Claims Referred by the Department of Chief, Premerger and Division Statistics Unit, adjudication of claims pursuant to its State; FCSC–32 Claims Arising under Antitrust Division. authority under the aforementioned the Guam World War II Loyalty [FR Doc. 2019–22615 Filed 10–16–19; 8:45 am] statutes. These records shall form the Recognition Act. This system will BILLING CODE 4410–11–P basis upon which the Commission will enable the Commission to carry out its determine an individual’s eligibility for statutory responsibility to determine the and amount of compensation. validity and amount of claims DEPARTMENT OF JUSTICE In accordance with 5 U.S.C. 552a(r), authorized to be adjudicated pursuant to Foreign Claims Settlement the Commission has provided a report pursuant to 22 U.S.C. 1621 et. seq., 50 Commission to OMB and the Congress on the new U.S.C. 1701 note and 50 U.S.C. App. system of records. 2004 and 2005. Privacy Act of 1974; System of Dated: October 10, 2019. CATEGORIES OF INDIVIDUALS COVERED BY THE Records Jeremy R. LaFrancois, SYSTEM: AGENCY: Foreign Claims Settlement Chief Administrative Counsel. Individuals who file claims pursuant Commission of the United States, SYSTEM NAME AND NUMBER: to a duly authorized Commission claims Department of Justice. program. Claims Received and Adjudicated by ACTION: Notice of a new system of the Foreign Claims Settlement CATEGORIES OF RECORDS IN THE SYSTEM: records. Commission JUSTICE/FCSC–33. Claim information, including name SUMMARY: Pursuant to the Privacy Act of SECURITY CLASSIFICATION: and address of claimant and 1974, the Foreign Claims Settlement Unclassified. representative, if any; date and place of Commission of the United States birth or naturalization; nature of claim; (Commission), Department of Justice, SYSTEM LOCATION: description of loss or injury including proposes to establish a new system of Offices of the Foreign Claims medical records; and other evidence records to enable the Commission to Settlement Commission, 441 G Street establishing entitlement to carry out its statutory responsibility to NW Room 6330, Washington, DC 20579 compensation. receive, examine, adjudicate and render and Washington National Records RECORD SOURCE CATEGORIES: final decisions with respect to claims for Center, 4205 Suitland Road, compensation of individuals. The Washington, DC 20409. The primary document source is the system will include documentation claimant upon whom the record is provided by the claimants as well as SYSTEM MANAGER(S): maintained. The collection may also background material that will assist the Chief Administrative Counsel, include documents obtained from legal Commission in the processing of their Foreign Claims Settlement Commission, databases (e.g., Westlaw and/or Lexis), claims. The system will also include the 441 G Street NW Room 6330, Congressional records, and the records final decision of the Commission Washington, DC 20579. Telephone: of other Federal agencies (e.g., the regarding each claim. (202) 616–6975. Fax: (202) 616–6993. Social Security Agency, Department of DATES: In accordance with 5 U.S.C. Email [email protected]. State, etc.) 552a(e)(4) and (11), this system of AUTHORITY FOR MAINTENANCE OF THE SYSTEM: ROUTINE USES OF RECORDS MAINTAINED IN THE records notice is effective upon Authority to establish and maintain SYSTEM, INCLUDING CATEGORIES OF USERS AND publication, with the exception of the PURPOSES OF SUCH USES: this system is contained in 5 U.S.C. 301 routine uses that are subject to a 30-day In addition to those disclosures period in which to comment, described and 44 U.S.C. 3101, which authorize the Chairman of the Commission to create generally permitted under 5 U.S.C. below. Therefore, please submit any 552a(b), all or a portion of the records comments by November 18, 2019. and maintain federal records of agency activities, and is further described in 22 contained in this system of records may ADDRESSES: The public is invited to U.S.C. 1622e, which vests all non- be disclosed as a routine use pursuant submit any comments via email at adjudicatory functions, powers and to 5 U.S.C. 552a(b)(3) under the [email protected] or by mail to the duties in the Chairman of the circumstances or for the purposes Foreign Claims Settlement Commission, Commission. described below, to the extent such 441 G Street NW, Room 6330, disclosures are compatible with the Washington, DC 20579. PURPOSE(S) OF THE SYSTEM: purposes for which the information was FOR FURTHER INFORMATION CONTACT: This system shall consolidate the collected. Jeremy LaFrancois, Chief following Systems of Records: FCSC–1 a. Upon the issuance of a final Administrative Counsel, Foreign Claims Indexes of Claimants (Alphabetical); decision awarding compensation, the Settlement Commission, U.S. FCSC–3 Certifications of Awards; Commission will certify its decision and Department of Justice, 441 G Street NW, FCSC–4 China, Claims Against; FCSC– other necessary personal information to Room 6330, Washington, DC 20579, or 5 Civilian Internees (Vietnam); FCSC–8 the Department of the Treasury in order by telephone at (202) 616–6975. Cuba, Claims Against; FCSC–17 to process payment of the claim.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00048 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55588 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

b. To contractors, grantees, experts, national security; and (3) the disclosure RECORD ACCESS PROCEDURES: consultants, students, and others made to such agencies, entities, and The Commission’s record access performing or working on a contract, persons is reasonably necessary to assist procedures are set forth in 45 CFR service, grant, cooperative agreement, or in connection with the Commission’s 503.5. That section provides that (a) other assignment for the federal efforts to respond to the suspected or Any individual requesting access to a government, when necessary to confirmed breach or to prevent, record or information on himself or accomplish a Commission function minimize, or remedy such harm; herself in person must appear at the related to this system of records; i. To another Federal agency or offices of the Foreign Claims Settlement c. To a Member of Congress or staff Federal entity, when the Commission Commission, 441 G Street NW Room acting upon the Member’s behalf when determines that information from this 6330, Washington, DC, between the the Member or staff requests the system of records is reasonably hours of 9 a.m. and 5:00 p.m., Monday information on behalf of, and at the necessary to assist the recipient agency through Friday, and (1) Provide request of, the individual who is the or entity in (1) responding to a information sufficient to identify the subject of the record; suspected or confirmed breach or (2) record, e.g., the individual’s own name, d. Where a record, either alone or in preventing, minimizing, or remedying claim and decision number, date and conjunction with other information, the risk of harm to individuals, the place of birth, etc.; (2) Provide indicates a violation or potential recipient agency or entity (including its identification sufficient to verify the violation of law—criminal, civil, or information systems, programs, and individual’s identity, e.g., driver’s regulatory in nature—the relevant operations), the Federal Government, or license, Medicare card, or other records may be referred to the national security, resulting from a government issued identification; and appropriate federal, state, local, suspected or confirmed breach; (3) Any individual requesting access to territorial, tribal, or foreign law records or information pertaining to j. To such recipients and under such enforcement authority or other himself or herself may be accompanied circumstances and procedures as are appropriate entity charged with the by a person of the individual’s own mandated by federal statute or treaty. responsibility for investigating or choosing while reviewing the records or prosecuting such violation or charged POLICIES AND PRACTICES FOR STORAGE OF information. If an individual elects to be with enforcing or implementing such RECORDS: so accompanied, advance notification of law; the election will be required along with Paper records maintained in file e. In an appropriate proceeding before a written statement authorizing folders at the Commission’s office and the Commission, or before a court, grand disclosure and discussion of the record the National Records Center. Electronic jury, or administrative or adjudicative in the presence of the accompanying records are located on the Department of body, when the Department of Justice person at any time, including the time Justice Servers. and/or the Commission determines that access is granted. (b) Any individual the records are arguably relevant to the POLICIES AND PRACTICES FOR RETRIEVAL OF making a request for access to records or proceeding; or in an appropriate RECORDS: information pertaining to himself or proceeding before an administrative or herself by mail must address the request adjudicative body when the adjudicator Records maintained in this system of to the Privacy Officer, Foreign Claims determines the records to be relevant to records will be retrieved by claim Settlement Commission, 441 G Street the proceeding; number and/or decision number. An NW Room 6330, Washington, DC 20579, f. To a former employee of the alphabetical index may be used by the and must provide information Commission for purposes of: Commission for identification of a claim acceptable to the Commission to verify Responding to an official inquiry by a by claimants’ name. the individual’s identity. (c) Responses federal, state, or local government entity to requests under this section normally or professional licensing authority, in POLICIES AND PRACTICES FOR RETENTION AND DISPOSAL OF RECORDS: will be made within ten (10) days of accordance with applicable Commission receipt (excluding Saturdays, Sundays, regulations; or facilitating Records are maintained under 5 and legal holidays). If it is not possible communications with a former U.S.C. 301. The Commission maintains to respond to requests within that employee that may be necessary for record schedules with the National period, an acknowledgment will be sent personnel-related or other official Archives and Records Administration to the individual within ten (10) days of purposes where the Commission for each authorized claims program. receipt of the request (excluding requires information and/or Saturdays, Sundays, and legal holidays). consultation from the former employee ADMINISTRATIVE, TECHNICAL, AND PHYSICAL SAFEGUARDS: regarding a matter within that person’s CONTESTING RECORD PROCEDURES: former area of responsibility; Paper records are under security (a) Any individual may request g. To the National Archives and safeguards at both the Commission’s amendment of a record pertaining to Records Administration for purposes of office and the National Records Center. himself or herself according to the records management inspections Such safeguards include storage in a procedure in paragraph (b) of this conducted under the authority of 44 central location within a limited access section, except in the case of records U.S.C. 2904 and 2906; building and a further limited access described under paragraph (d) of this h. To appropriate agencies, entities, suite. Accordingly, access is limited to section. (b) After inspection by an and persons when (1) the Commission Commission and Record Center individual of a record pertaining to suspects or has confirmed that there has employees and contractors with himself or herself, the individual may been a breach of the system of records; appropriate security clearances. The file a written request, presented in (2) the Commission has determined that electronic records are safeguarded by person or by mail, with the as a result of the suspected or confirmed the DOJ JCON security procedures. Administrative Officer, for an breach there is a risk of harm to the Access to the Commission’s data amendment to a record. The request individuals, the Commission (including requires a password and is limited to must specify the particular portions of its information systems, programs, and Commission employees and contractors the record to be amended, the desired operations), the Federal Government, or with appropriate security clearances. amendments and the reasons therefor.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00049 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55589

(c) Not later than ten (10) days acceptable to the Commission to verify Resources Division, and should refer to (excluding Saturdays, Sundays, and the individual’s identity. (c) Responses United States v. Textron Inc., and legal holidays) after the receipt of a to requests under this section normally Whittaker Corporation, D.J. Ref. No. 90– request made in accordance with this will be made within ten (10) days of 11–2–07237/12. All comments must be section to amend a record in whole or receipt (excluding Saturdays, Sundays, submitted no later than thirty (30) days in part, the Administrative Officer will: and legal holidays). If it is not possible after the publication date of this notice. (1) Make any correction of any portion to respond to requests within that Comments may be submitted either by of the record which the individual period, an acknowledgment will be sent email or by mail: believes is not accurate, relevant, timely to the individual within ten (10) days of or complete and thereafter inform the receipt of the request (excluding To submit Send them to: individual of such correction; or (2) Saturdays, Sundays, and legal holidays). comments: Inform the individual, by certified mail EXEMPTIONS CLAIMED FOR THE SYSTEM: By email ...... pubcomment-ees.enrd@ return receipt requested, of the refusal None. usdoj.gov. to amend the record, setting forth the By mail ...... Assistant Attorney General, reasons therefor, and notify the HISTORY: U.S. DOJ—ENRD, P.O. individual of the right to appeal that None. Box 7611, Washington, DC determination as provided under 45 20044–7611. CFR 503.8. (d) The provisions for [FR Doc. 2019–22496 Filed 10–16–19; 8:45 am] amending records do not apply to BILLING CODE 4410–BA–P During the public comment period, evidence presented in the course of the consent decree may be examined Commission proceedings in the DEPARTMENT OF JUSTICE and downloaded at this Justice adjudication of claims, nor do they Department website: http:// permit collateral attack upon what has Notice of Lodging of Proposed www.usdoj.gov/enrd/Consent_ already been subject to final agency Consent Decree Under the Decrees.html. We will provide a paper action in the adjudication of claims in Comprehensive Environmental copy of the consent decree upon written programs previously completed by the Response, Compensation and Liability request and payment of reproduction Commission pursuant to statutory time Act costs. Please mail your request and limitations. payment to: Consent Decree Library, On October 9, 2019, the Department U.S. DOJ—ENRD, P.O. Box 7611, NOTIFICATION PROCEDURES: of Justice lodged a proposed consent Washington, DC 20044–7611. The Commission’s notification decree with the United States District Please enclose a check or money order procedures are set forth in 45 CFR Court for the District of Massachusetts for $121.25 (25 cents per page 503.5. That section provides that (a) in United States v. Textron Inc., and reproduction cost) payable to the United Any individual requesting access to a Whittaker Corporation, Civil Action No. States Treasury. For a copy without the record or information on himself or 19–cv–12097–RGS. exhibits, the cost is $12.50. herself in person must appear at the The proposed consent decree would offices of the Foreign Claims Settlement resolve the claims of the United States Jeffrey Sands, Commission, 441 G Street NW Room for injunctive relief and recovery of Assistant Section Chief, Environmental 6330, Washington, DC, between the response costs against the defendants Enforcement Section, Environment and hours of 9 a.m. and 5:00 p.m., Monday under sections 106 and 107 of the Natural Resources Division. through Friday, and (1) Provide Comprehensive Environmental [FR Doc. 2019–22637 Filed 10–16–19; 8:45 am] information sufficient to identify the Response, Compensation, and Liability BILLING CODE 4410–15–P record, e.g., the individual’s own name, Act (‘‘CERCLA’’) relating to the Nuclear claim and decision number, date and Metals, Inc. Superfund Site in Concord, place of birth, etc.; (2) Provide Massachusetts. DEPARTMENT OF JUSTICE identification sufficient to verify the The consent decree requires the [OMB Number 1110–New] individual’s identity, e.g., driver’s settling defendants, Textron Inc. and license, Medicare card, or other Whittaker Corporation, to pay Agency Information Collection government issued identification; and approximately $8,000 toward the United Activities; Proposed eCollection (3) Any individual requesting access to States Environmental Protection eComments Requested; New records or information pertaining to Agency’s (‘‘EPA’s’’) past response costs, Collection himself or herself may be accompanied contribute approximately $2 million by a person of the individual’s own into a trust account, and perform the AGENCY: Federal Bureau of Investigation choosing while reviewing the records or remedial action for this Site using funds (FBI), Department of Justice. information. If an individual elects to be from the trust account. The consent ACTION: 30-Day Notice. so accompanied, advance notification of decree also requires the settling federal SUMMARY: the election will be required along with agencies, the U.S. Army and the U.S. The Department of Justice, a written statement authorizing Department of Energy, to pay Federal Bureau of Investigation, is disclosure and discussion of the record approximately $390,000 toward EPA’s submitting the following information in the presence of the accompanying past response costs and contribute collection request to the Office of person at any time, including the time approximately $101 million into the Management and Budget (OMB) for access is granted. (b) Any individual trust account to be used by the settling review and approval in accordance with making a request for access to records or defendants to perform the remedial the Paperwork Reduction Act of 1995. information pertaining to himself or action for this Site. DATES: The Department of Justice herself by mail must address the request The publication of this notice opens encourages public comment and will to the Privacy Officer, Foreign Claims a period for public comment on the accept input until November 18, 2019. Settlement Commission, 441 G Street consent decree. Comments should be FOR FURTHER INFORMATION CONTACT: If NW Room 6330, Washington, DC 20579, addressed to the Assistant Attorney you have additional comments and must provide information General, Environment and Natural especially on the estimated public

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55590 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

burden or associated response time, years will be asked to complete a brief Evaluation, and senior MCC leadership suggestions, or need a copy of the voluntary survey recalling their regarding relevant trends in proposed information collection experience and preparation tactics for development economics, applied instrument with instructions or the application process. This economic and evaluation methods, additional information, please contact information is being collected by the poverty analytics, as well as modeling, Tonya Odom, Federal Bureau of Federal Bureau of Investigation for the measuring, and evaluating development Investigation, 935 Pennsylvania Ave purpose of improving the ease of the interventions. In doing so, an NW, Washington, DC 20535, 202–324– application process, eliminating any overarching purpose of the MCC 3000, [email protected]. Written systematic barriers to success for Economic Advisory Council is to comments and/or suggestions can also applicants, and better understanding sharpen MCC’s analytical methods and be sent to the Office of Management and how to recruit and retain qualified capacity in support of continuing applicants. Budget, Office of Information and development effectiveness. It also serves Regulatory Affairs, Attention 5. An estimate of the total number of as a sounding board and reference group Department of Justice Desk Officer, respondents and the amount of time for assessing and advising on strategic Washington, DC 20503 or sent to OIRA_ estimated for an average respondent to [email protected]. respond: We estimate roughly 40,000 policy innovations and methodological directions in MCC. SUPPLEMENTARY INFORMATION: Written individuals have applied to the Special comments and suggestions from the Agent position at the FBI in the DATES: Friday, November 1st, 2019, public and affected agencies concerning previous 3 years, we will solicit this from 9:00 a.m.–2:00 p.m. EDT which the proposed collection of information entire population to participate in the includes a break for lunch. are encouraged. Your comments should voluntary survey though it is unlikely address one or more of the following all 40,000 WILL respond. The survey ADDRESSES: The meeting will be held at four points: will take approximately 10 minutes to the Millennium Challenge Corporation, ➢ Evaluate whether the proposed complete. 1099 14th St. NW, Suite 700 collection of information is necessary 6. An estimate of the total public Washington, DC 20005. burden (in hours) associated with the for the proper performance of the FOR FURTHER INFORMATION CONTACT: functions of the FBI, including whether collection: 6,667 total hours of public burden, 10 minutes per survey for Brian Epley, 202.772.6515 the information will have practical [email protected] or visit utility; 40,000 respondents. ➢ If additional information is required www.mcc.gov/about/org-unit/economic- Evaluate the accuracy of the advisory-council. agency’s estimate of the burden of the contact: Melody Braswell, Department proposed collection of information, Clearance Officer, United States SUPPLEMENTARY INFORMATION: Department of Justice, Justice including the validity of the Agenda. During this meeting of the methodology and assumptions used; Management Division, Policy and ➢ Planning Staff, Two Constitution MCC Economic Advisory Council, Evaluate whether and if so how the members will be provided an overview quality, utility, and clarity of the Square, 145 N Street NE, 3E.405A, of MCC’s work and the context and information to be collected can be Washington, DC 20530. function of the MCC Economic Advisory enhanced; and Dated: October 11, 2019. Council within MCC’s mission, ➢ Minimize the burden of the Melody Braswell, including amendments to the bylaws for collection of information on those who Department Clearance Officer for PRA, U.S. are to respond, including through the Department of Justice. the MCC Economic Advisory Council and a determination of a chairperson. use of appropriate automated, [FR Doc. 2019–22631 Filed 10–16–19; 8:45 am] The MCC Economic Advisory Council electronic, mechanical, or other BILLING CODE 4410–02–P technological collection techniques or will also discuss issues related to MCC’s other forms of information technology, core functions, including the following topics: (i) Balancing cost-recovery and e.g., permitting electronic submission of MILLENNIUM CHALLENGE social objectives with user charges and responses. CORPORATION Overview of this Information tariff policy; (ii) improving early Collection: [MCC FR 19–09] beneficiary analysis to inform 1. Type of Information Collection: investment decision-making; and (iii) New Collection. Notice of Open Meeting opportunities and challenges in MCC’s 2. The Title of the Form/Collection: AGENCY: Millennium Challenge use of results-based financing. FBI Special Agent Application Process Corporation. Public Participation: The meeting will Review Form. ACTION: Notice. be open to the public. Members of the 3. The agency form number, if any, public may file written statement(s) and the applicable component of the SUMMARY: In accordance with the before or after the meeting. If you plan Department sponsoring the collection: requirements of the Federal Advisory to attend, please submit your name and ‘‘There is no agency form number for Committee Act, the Millennium affiliation no later than Wednesday, this collection.’’ The applicable Challenge Corporation (MCC) Economic October 30, 2019 to MCCEACouncil@ component within the Department of Advisory Council was established as a mcc.gov to be placed on an attendee list. Justice is the Federal Bureau of discretionary advisory committee on Investigation (FBI). October 5, 2018. The MCC Economic Dated: October 11, 2019. 4. Affected public who will be asked Advisory Council serves MCC in an Jeanne M. Hauch, or required to respond, as well as a brief advisory capacity only and provides VP/General Counsel and Corporate Secretary. abstract: Individuals; Anyone who has advice and guidance to MCC [FR Doc. 2019–22671 Filed 10–16–19; 8:45 am] filled out any part of the FBI Special economists, evaluators, leadership of Agent Application in the previous three the Department of Policy and BILLING CODE 9211–03–P

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55591

NATIONAL AERONAUTICS AND card holders) are requested to submit —Earth Science and Applied Sciences SPACE ADMINISTRATION their name and affiliation at least three Program Updates working days prior to the meeting to Mr. —Private Sector and Applications [Notice: (19–068)] Finley. —Applications Guidebook —Technical Content Strategy NASA International Space Station It is imperative that the meeting be Advisory Committee; Meeting held on this date to accommodate the The agenda will be posted on the scheduling priorities of the key Applied Sciences Advisory Committee AGENCY: National Aeronautics and participants. web page: https://science.nasa.gov/ Space Administration (NASA). Patricia Rausch, science-committee/subcommittees/nac- ACTION: Notice of meeting. earth-science-subcommittee/advisory- Advisory Committee Management Officer, groups SUMMARY: In accordance with the National Aeronautics and Space Administration. It is imperative that the meeting be Federal Advisory Committee Act, as held on this date to accommodate the [FR Doc. 2019–22688 Filed 10–16–19; 8:45 am] amended, the National Aeronautics and scheduling priorities of the key Space Administration announces a BILLING CODE 7510–13–P participants. meeting of the NASA International Space Station (ISS) Advisory Patricia Rausch, Committee. The purpose of the meeting NATIONAL AERONAUTICS AND Advisory Committee Management Officer, is to review all aspects related to the SPACE ADMINISTRATION National Aeronautics and Space safety and operational readiness of the [Notice: (19–069)] Administration. ISS, and to assess the possibilities for [FR Doc. 2019–22693 Filed 10–16–19; 8:45 am] using the ISS for future space NASA Applied Sciences Advisory BILLING CODE 7510–13–P exploration. Committee; Meeting DATES: Monday, November 18, 2019, AGENCY: National Aeronautics and 11:00 a.m.–12:00 p.m., Eastern Time. Space Administration. NATIONAL CREDIT UNION ADMINISTRATION ADDRESSES: NASA Headquarters, ACTION: ACTION: Notice of meeting. Glennan Conference Room (1Q39), 300 Agency Information Collection E Street SW, Washington, DC 20546. SUMMARY: In accordance with the Federal Advisory Committee Act, as Activities: Proposed Collection; Note: 1Q39 is located on the first floor Comment Request; Supervisory of NASA Headquarters. amended, the National Aeronautics and Space Administration (NASA) Committee Audits and Verifications FOR FURTHER INFORMATION CONTACT: Mr. Patrick Finley, Office of International announces a meeting of the Applied AGENCY: National Credit Union and Interagency Relations, (202) 358– Sciences Advisory Committee. This Administration (NCUA). 5684, NASA Headquarters, Washington, Committee reports to the Director, Earth ACTION: Notice and request for comment. DC 20546–0001. Science Division, Science Mission Directorate, NASA Headquarters. The SUMMARY: The National Credit Union SUPPLEMENTARY INFORMATION: This meeting will be held for the purpose of Administration (NCUA), as part of a meeting will be open to the public up soliciting, from the scientific continuing effort to reduce paperwork to the seating capacity of the room. This community and other persons, scientific and respondent burden, invites the meeting is also accessible via and technical information relevant to general public and other Federal teleconference. To participate program planning. agencies to comment on the following telephonically, please contact Mr. DATES: extension of a currently approved Finley (202) 358–5684; before 4:30 p.m., Tuesday, November 12, 2019, collection, as required by the Paperwork Eastern Time, November 14, 2019. You 11:00 a.m.–2:00 p.m.; and Friday, Reduction Act of 1995. will need to provide your name, November 15, 2019, 2:00 p.m.–4:00 affiliation, and phone number. p.m., Eastern Time. DATES: Written comments should be Attendees will be requested to sign a FOR FURTHER INFORMATION CONTACT: Ms. received on or before November 18, register and to comply with NASA KarShelia Henderson, Science Mission 2019 to be assured of consideration. security requirements, including the Directorate, NASA Headquarters, ADDRESSES: Send comments regarding presentation of a valid picture ID to Washington, DC 20546, (202) 358–2355, the burden estimate, or any other aspect Security before access to NASA fax (202) 358–2779, or khenderson@ of this information collection, including Headquarters. Foreign nationals nasa.gov. suggestions for reducing the burden, to attending this meeting will be required SUPPLEMENTARY INFORMATION: The (1) Office of Information and Regulatory to provide a copy of their passport and meeting will be available telephonically Affairs, Office of Management and visa in addition to providing the and by WebEx. You must use a touch- Budget, Attention: Desk Officer for following information no less than 10 tone phone to participate in this NCUA, New Executive Office Building, working days prior to the meeting: Full meeting. Any interested person may dial Room 10235, Washington, DC 20503, or _ name; gender; date/place of birth; the USA toll free conference call email at OIRA Submission@ citizenship; visa information (number, number 1–888–946–9423, passcode OMB.EOP.gov and (2) NCUA PRA type, expiration date); passport 4935973, to participate in this meeting Clearance Officer, 1775 Duke Street, information (number, country, by telephone on both days. The WebEx Suite 5080, Alexandria, VA 22314, or expiration date); employer/affiliation link is https:// email at [email protected]. information (name of institution, nasaenterprise.webex.com/; the meeting FOR FURTHER INFORMATION CONTACT: address, country, telephone); title/ number on November 12 is 908 667 679, Copies of the submission may be position of attendee; and home address password is 2Tn4Svh?, and the meeting obtained by contacting Mackie Malaka to Mr. Finley via email at number on November 15 is 904 495 351, at (703) 548–2704, emailing [email protected] or by password is Kq2prmN$. [email protected], or viewing telephone at (202) 358–5684. U.S. The agenda for the meeting includes the entire information collection request citizens and permanent residents (green the following topics: at www.reginfo.gov.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55592 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

SUPPLEMENTARY INFORMATION: NATIONAL SCIENCE FOUNDATION OMB Number: 3145–0244. OMB Number: 3133–0059. Expiration Date of Approval: January Title: Supervisory Committee Audits Agency Information Collection 31, 2020. and Verifications. Activities: Comment Request; Grantee Type of Request: Intent to seek Type of Review: Revision of a Reporting Requirements for Prediction approval to renew an information currently approved collection. of and Resilience Against Extreme collection. Proposed Project: NSF and the Abstract: Title 12 CFR part 715 Events (PREEVENTS) Directorate for Geosciences (GEO) have prescribes the responsibilities of the AGENCY: National Science Foundation. long supported basic research in supervisory committee to obtain an ACTION: Notice. scientific and engineering disciplines audit of the credit union and necessary to understand natural hazards verification of member accounts as SUMMARY: The National Science and extreme events. The Prediction of outlined in Section 115 of the Federal Foundation (NSF) is announcing plans and Resilience against Extreme Events Credit Union Act, 12 U.S.C. 1761d. A to renew this collection. In accordance (PREEVENTS) program is one element supervisory committee audit is required with the requirements of the Paperwork of the NSF-wide Risk and Resilience at least once every calendar year Reduction Act of 1995, we are providing activity, which has the overarching goal covering the period since the last audit opportunity for public comment on this of improving predictability and risk and to conduct a verification of action. After obtaining and considering assessment, and increasing resilience, in members’ accounts not less frequently public comment, NSF will prepare the order to reduce the impact of extreme than once every two years. The submission requesting Office of events on our life, society, and information is used by both the credit Management and Budget (OMB) economy. PREEVENTS provides an union and the NCUA to ensure through clearance of this collection for no longer additional mechanism to support audit testing that the credit union’s than 3 years. research and related activities that will assets, liabilities, equity, income, and COMMENTS: Comments are invited on (a) improve our understanding of the expenses exist, are properly valued, whether the proposed collection of fundamental processes underlying controlled and meet ownership, information is necessary for the proper natural hazards and extreme events in disclosure and classification performance of the functions of the the geosciences. requirements of sound financial Agency, including whether the PREEVENTS is intended to encourage reporting. A written report on the audit information shall have practical utility; new scientific directions in the domains must be made to the board of directors (b) the accuracy of the Agency’s of natural hazards and extreme events. and, if requested, NCUA. Working estimate of the burden of the proposed PREEVENTS will consider proposals for papers must be maintained and made collection of information; (c) ways to conferences that will foster available to NCUA. Independence enhance the quality, utility, and clarity development of interdisciplinary or requirements must be met; standards of the information on respondents, multidisciplinary communities required governing verifications and the methods including through the use of automated to address complex questions used to verify member’s passbooks and collection techniques or other forms of surrounding natural hazards and accounts are set forth. Section 741.202 information technology; and (d) ways to extreme events. Such proposals are makes these requirements applicable to minimize the burden of the collection of called PREEVENTS Track 1 proposals. federally insured state-chartered credit information on those who are to In addition to standard NSF annual unions. respond, including through the use of and final report requirements, PIs for all Affected Public: Private Sector: appropriate automated, electronic, PREEVENTS Track 1 awards will be Businesses or other for-profits. mechanical, or other technological required to submit to NSF a public Estimated No. of Respondents: 5,308. collection techniques or other forms of report that summarizes the conference Estimated Annual Frequency: 4.16. information technology. activities, attendance, and outcomes; Estimated Total Annual Responses: DATES: Written comments on this notice describes scientific and/or technical 22,086. must be received by December 16, 2019 challenges that remain to be overcome Estimated Average Hours: 0.57. to be assured consideration. Comments in the areas discussed during the Estimated Total Annual Burden received after that date will be conference; and identifies specific next Hours: 12,549. considered to the extent practicable. steps to advance knowledge in the areas Reason for Change: Adjustments are Send comments to address below. of natural hazards and extreme events due to the decline in the number of that were considered during the FOR FURTHER INFORMATION CONTACT: FICUs due to industry consolidation conference. These reports will be made Suzanne H. Plimpton, Reports Clearance from mergers and liquidations; the time publicly available via the NSF website, Officer, National Science Foundation, per response was reduced to remove the and are intended to foster nascent 2415 Eisenhower Avenue, Suite regulatory burden reported under the interdisciplinary or multidisciplinary W18200, Alexandria, Virginia 22314; PRA to only reflect the information communities and to enable growth of telephone (703) 292–7556; or send email collection burden associated with a new scientific directions. to [email protected]. Individuals who recordkeeping requirement, and capture Use of the Information: NSF will use use a telecommunications device for the a disclosure requirement not previously the information to understand and deaf (TDD) may call the Federal reported. evaluate the outcomes of the conference, Information Relay Service (FIRS) at 1– By Gerard Poliquin, Secretary of the to foster growth of new scientific 800–877–8339, which is accessible 24 Board, the National Credit Union communities, and to evaluate the hours a day, 7 days a week, 365 days a Administration, on October 11, 2019. progress of the PREEVENTS program. year (including Federal holidays). Estimate of Burden: 40 hours per Dated: October 11, 2019. SUPPLEMENTARY INFORMATION: award for 5–10 conference awards for a Mackie I. Malaka, Title of Collection: Grantee Reporting total of 200–400 hours. NCUA PRA Clearance Officer. Requirements for Prediction of and Respondents: Universities and [FR Doc. 2019–22686 Filed 10–16–19; 8:45 am] Resilience against Extreme Events Colleges; Non-profit, non-academic BILLING CODE 7535–01–P (PREEVENTS). organizations; For-profit organizations;

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55593

NSF-funded Federally Funded Research Information Officer, U.S. Nuclear want to be publicly disclosed in your and Development Centers (FFRDCs). Regulatory Commission, Washington, comment submission. The NRC will Estimated Number of Responses per DC 20555–0001; telephone: 301–415– post all comment submissions at https:// Report: One from each five to ten Track 2084; email: Infocollects.Resource@ www.regulations.gov/ as well as enter 1 awardees. nrc.gov. the comment submissions into ADAMS, Dated: October 10, 2019. SUPPLEMENTARY INFORMATION: and the NRC does not routinely edit Suzanne H. Plimpton, comment submissions to remove I. Obtaining Information and identifying or contact information. Reports Clearance Officer, National Science Submitting Comments If you are requesting or aggregating Foundation. A. Obtaining Information comments from other persons for [FR Doc. 2019–22604 Filed 10–16–19; 8:45 am] submission to the NRC, then you should BILLING CODE 7555–01–P Please refer to Docket ID NRC–2019– inform those persons not to include 0104 when contacting the NRC about identifying or contact information that the availability of information for this they do not want to be publicly NUCLEAR REGULATORY action. You may obtain publicly- disclosed in their comment submission. COMMISSION available information related to this Your request should state that the NRC action by any of the following methods: [NRC–2019–0104] • does not routinely edit comment Federal Rulemaking Website: Go to submissions to remove such information Information Collection: NRC Form 212, https://www.regulations.gov/ and search before making the comment Qualifications Investigation, for Docket ID NRC–2019–0104. A copy submissions available to the public or Professional, Technical and of the collection of information and entering the comment into ADAMS. Administrative Positions related instructions may be obtained without charge by accessing Docket ID II. Background AGENCY: Nuclear Regulatory NRC–2019–0104 on this website. In accordance with the Paperwork • Commission. NRC’s Agencywide Documents Reduction Act of 1995 (44 U.S.C. ACTION: Renewal of existing information Access and Management System Chapter 35), the NRC is requesting collection; request for comment. (ADAMS): You may obtain publicly- public comment on its intention to available documents online in the request the OMB’s approval for the SUMMARY: The U.S. Nuclear Regulatory ADAMS Public Documents collection at information collection summarized Commission (NRC) invites public https://www.nrc.gov/reading-rm/ below. comment on the renewal of Office of adams.html. To begin the search, select 1. The title of the information Management and Budget (OMB) ‘‘Begin Web-based ADAMS Search.’’ For collection: NRC Form 212, approval for an existing collection of problems with ADAMS, please contact ‘‘Qualifications Investigation, information. The information collection the NRC’s Public Document Room (PDR) Professional, Technical and is entitled, NRC Form 212, reference staff at 1–800–397–4209, 301– Administrative Positions.’’ ‘‘Qualifications Investigation, 415–4737, or by email to pdr.resource@ 2. OMB approval number: 3150–0033. Professional, Technical and nrc.gov. A copy of the collection of 3. Type of submission: Extension. Administrative Positions.’’ information and related instructions 4. The form number, if applicable: DATES: Submit comments by December may be obtained without charge by NRC Form 212. 16, 2019. Comments received after this accessing ADAMS Package Accession 5. How often the collection is required date will be considered if it is practical ML19186A402. The supporting or requested: On occasion. The forms to do so, but the Commission is able to statement is available in ADAMS under are collected for every new hire to the ensure consideration only for comments Accession ML19283B472. NRC. • received on or before this date. NRC’s PDR: You may examine and 6. Who will be required or asked to purchase copies of public documents at respond: Former employers, ADDRESSES: You may submit comments the NRC’s PDR, Room O1–F21, One supervisors, and other references by any of the following methods: White Flint North, 11555 Rockville indicated on job applications are asked • Federal Rulemaking Website: Go to Pike, Rockville, Maryland 20852. to complete the NRC Form 212. https://www.regulations.gov/ and search • NRC’s Clearance Officer: A copy of 7. The estimated number of annual for Docket ID NRC–2019–0104. Address the collection of information and related responses: 500. questions about NRC docket IDs to Anne instructions may be obtained without 8. The estimated number of annual Frost; telephone: 301–287–9232; email: charge by contacting NRC’s Clearance respondents: 500. [email protected]. For technical Officer, David Cullison, Office of the 9. The estimated number of hours questions, contact the individual listed Chief Information Officer, U.S. Nuclear needed annually to comply with the FOR FURTHER INFORMATION in the Regulatory Commission, Washington, information collection requirement or CONTACT section of this document. request: 250 hours. • DC 20555–0001; telephone: 301–415– Mail comments to: David Cullison, 2084; email: Infocollects.Resource@ 10. Abstract: Information requested Office of the Chief Information Officer, nrc.gov. on NRC Form 212, ‘‘Qualifications Mail Stop: T6–A10M, U.S. Nuclear Investigation, Professional, Technical, Regulatory Commission, Washington, B. Submitting Comments and Administrative Positions’’ is used to DC 20555–0001. Please include Docket ID NRC–2019– determine the qualifications and For additional direction on obtaining 0104 in the subject line of your suitability of external applicants for information and submitting comments, comment submission, in order to ensure employment with the NRC. The see ‘‘Obtaining Information and that the NRC is able to make your completed form may be used to Submitting Comments’’ in the comment submission available to the examine, rate and/or assess the SUPPLEMENTARY INFORMATION section of public in this docket. prospective employee’s qualifications. this document. The NRC cautions you not to include The information regarding the FOR FURTHER INFORMATION CONTACT: identifying or contact information in qualifications of applicants for David Cullison, Office of the Chief comment submissions that you do not employment is reviewed by professional

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55594 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

personnel of the Office of the Chief (3150–0164), Attn: Desk Officer for the want to be publicly disclosed in your Human Capital Officer, in conjunction Nuclear Regulatory Commission, 725 comment submission. All comment with other information in the NRC files, 17th Street NW, Washington, DC 20503; submissions are posted at https:// to determine the qualifications of the email: [email protected]. www.regulations.gov/ and entered into applicant for appointment to the FOR FURTHER INFORMATION CONTACT: ADAMS. Comment submissions are not position under consideration. David Cullison, NRC Clearance Officer, routinely edited to remove identifying or contact information. III. Specific Requests for Comments U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: If you are requesting or aggregating The NRC is seeking comments that 301–415–2084; email: comments from other persons for address the following questions: [email protected]. submission to the OMB, then you 1. Is the proposed collection of SUPPLEMENTARY INFORMATION: should inform those persons not to information necessary for the NRC to include identifying or contact properly perform its functions? Does the I. Obtaining Information and information that they do not want to be information have practical utility? Submitting Comments publicly disclosed in their comment 2. Is the estimate of the burden of the A. Obtaining Information submission. Your request should state information collection accurate? that comment submissions are not 3. Is there a way to enhance the Please refer to Docket ID NRC–2018– routinely edited to remove such quality, utility, and clarity of the 0233 when contacting the NRC about information before making the comment information to be collected? the availability of information for this submissions available to the public or 4. How can the burden of the action. You may obtain publicly- entering the comment into ADAMS. information collection on respondents available information related to this be minimized, including the use of action by any of the following methods: II. Background • automated collection techniques or Federal Rulemaking Website: Go to Under the provisions of the other forms of information technology? https://www.regulations.gov/ and search Paperwork Reduction Act of 1995 (44 for Docket ID NRC–2018–0233. A copy U.S.C. Chapter 35), the NRC recently Dated at Rockville, Maryland, this 11th day of the collection of information and of October, 2019. submitted a request for renewal of an related instructions may be obtained existing collection of information to For the Nuclear Regulatory Commission. without charge by accessing Docket ID David C. Cullison, OMB for review entitled, ‘‘NRC Forms NRC–2018–0233 on this website. 540 and 540A, Uniform Low-Level NRC Clearance Officer, Office of the Chief • NRC’s Agencywide Documents Radioactive Waste Manifest (Shipping Information Officer. Access and Management System Paper) and Continuation Page.’’ The [FR Doc. 2019–22691 Filed 10–16–19; 8:45 am] (ADAMS): You may obtain publicly- NRC hereby informs potential BILLING CODE 7590–01–P available documents online in the respondents that an agency may not ADAMS Public Documents collection at conduct or sponsor, and that a person is https://www.nrc.gov/reading-rm/ not required to respond to, a collection NUCLEAR REGULATORY adams.html. To begin the search, select of information unless it displays a COMMISSION ‘‘Begin Web-based ADAMS Search.’’ For currently valid OMB control number. problems with ADAMS, please contact [NRC–2018–0233] The NRC published a Federal the NRC’s Public Document Room (PDR) Register notice with a 60-day comment Information Collection: NRC Forms 540 reference staff at 1–800–397–4209, 301– period on this information collection on and 540A, Uniform Low-Level 415–4737, or by email to pdr.resource@ July 3, 2019 (84 FR 31927). Radioactive Waste Manifest (Shipping nrc.gov. A copy of NRC Forms 540 and Paper) and Continuation Page 540A and related instructions may be 1. The title of the information obtained without charge by accessing collection: ‘‘NRC Forms 540 and 540A, AGENCY: Nuclear Regulatory ADAMS Accession Nos. ML18313A144, Uniform Low-Level Radioactive Waste Commission. ML18313A145, and ML071870172, Manifest (Shipping Paper) and ACTION: Notice of submission to the respectively. The supporting statement Continuation Page.’’ Office of Management and Budget; is available in ADAMS under Accession 2. OMB approval number: 3150–0164. request for comment. No. ML19233A065. 3. Type of submission: Extension. • NRC’s PDR: You may examine and 4. The form number if applicable: SUMMARY: The U.S. Nuclear Regulatory purchase copies of public documents at NRC Forms 540 and 540A. Commission (NRC) has recently the NRC’s PDR, Room O1–F21, One 5. How often the collection is required submitted a request for renewal of an White Flint North, 11555 Rockville or requested: Forms are used by existing collection of information to the Pike, Rockville, Maryland 20852. shippers when radioactive waste is Office of Management and Budget • NRC’s Clearance Officer: A copy of shipped. Quarterly or less frequent (OMB) for review. The information the collection of information and related reporting is made to Agreement States collection is entitled, ‘‘NRC Forms 540 instructions may be obtained without depending on specific license and 540A, Uniform Low-Level charge by contacting the NRC’s conditions. No reporting is made to the Radioactive Waste Manifest (Shipping Clearance Officer, David Cullison, NRC. Paper) and Continuation Page.’’ Office of the Chief Information Officer, 6. Who will be required or asked to DATES: Submit comments by November U.S. Nuclear Regulatory Commission, respond: All NRC or Agreement State 18, 2019. Comments received after this Washington, DC 20555–0001; telephone: low-level waste facilities licensed date will be considered if it is practical 301–415–2084; email: pursuant to part 61 of title 10 of the to do so, but the Commission is able to [email protected]. Code of Federal Regulations (10 CFR) or ensure consideration only for comments equivalent Agreement State regulations. received on or before this date. B. Submitting Comments All generators, collectors, and ADDRESSES: Submit comments directly The NRC cautions you not to include processors of low-level waste intended to the OMB reviewer at: OMB Office of identifying or contact information in for disposal at a low-level waste facility Information and Regulatory Affairs comment submissions that you do not must complete the appropriate forms.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55595

7. The estimated number of annual and 542A, Uniform Low-Level instructions may be obtained without responses: 5,740. Radioactive Waste Manifest (Index and charge by contacting the NRC’s 8. The estimated number of annual Regional Compact Tabulation) and Clearance Officer, David Cullison, respondents: 220. Continuation Page.’’ Office of the Chief Information Officer, Note that the NRC does not collect or DATES: Submit comments by November U.S. Nuclear Regulatory Commission, retain data on manifest forms and the 18, 2019. Comments received after this Washington, DC 20555–0001; telephone: forms are not sent to or received by the date will be considered if it is practical 301–415–2084; email: NRC. The estimates provided in items to do so, but the Commission is able to [email protected]. seven and eight above are from the ensure consideration only for comments B. Submitting Comments previous form renewal Notice. The NRC received on or before this date. did not receive any public comment on ADDRESSES: Submit comments directly The NRC cautions you not to include the previous renewal suggesting that to the OMB reviewer at: OMB Office of identifying or contact information in these estimates should be revised. Information and Regulatory Affairs comment submissions that you do not 9. An estimate of the total number of (3150–0165), Attn: Desk Officer for the want to be publicly disclosed in your hours needed annually to comply with Nuclear Regulatory Commission, 725 comment submission. All comment the information collection requirement 17th Street NW, Washington, DC 20503; submissions are posted at https:// or request: 4,305. email: [email protected]. www.regulations.gov/ and entered into 10. Abstract: NRC Forms 540 and FOR FURTHER INFORMATION CONTACT: ADAMS. Comment submissions are not 540A provide a set of standardized David Cullison, NRC Clearance Officer, routinely edited to remove identifying forms to meet Department of U.S. Nuclear Regulatory Commission, or contact information. Transportation (DOT), NRC, and State Washington, DC 20555–0001; telephone: If you are requesting or aggregating requirements. The forms were 301–415–2084; email: comments from other persons for developed by the NRC at the request of [email protected]. submission to the OMB, then you should inform those persons not to low-level waste industry groups. The SUPPLEMENTARY INFORMATION: forms provide uniformity and efficiency include identifying or contact in the collection of information I. Obtaining Information and information that they do not want to be contained in manifests which are Submitting Comments publicly disclosed in their comment submission. Your request should state required to control transfers of low-level A. Obtaining Information radioactive waste intended for disposal that comment submissions are not at a land disposal facility. The NRC Please refer to Docket ID NRC–2018– routinely edited to remove such Form 540 contains information needed 0235 when contacting the NRC about information before making the comment the availability of information for this to satisfy DOT shipping paper submissions available to the public or action. You may obtain publicly- requirements in 49 CFR part 172, and entering the comment into ADAMS. available information related to this the waste tracking requirements of the action by any of the following methods: II. Background NRC in 10 CFR part 20. • Federal Rulemaking Website: Go to Under the provisions of the Dated at Rockville, Maryland, this 11th day https://www.regulations.gov/ and search Paperwork Reduction Act of 1995 (44 of October, 2019. for Docket ID NRC–2018–0235. A copy U.S.C. Chapter 35), the NRC recently For the Nuclear Regulatory Commission. of the collection of information and submitted a request for renewal of an David C. Cullison, related instructions may be obtained existing collection of information to NRC Clearance Officer, Office of the Chief without charge by accessing Docket ID OMB for review entitled, ‘‘NRC Forms Information Officer. NRC–2018–0235 on this website. 542 and 542A, Uniform Low-Level • [FR Doc. 2019–22633 Filed 10–16–19; 8:45 am] NRC’s Agencywide Documents Radioactive Waste Manifest (Index and BILLING CODE 7590–01–P Access and Management System Regional Compact Tabulation) and (ADAMS): You may obtain publicly- Continuation Page.’’ The NRC hereby available documents online in the informs potential respondents that an NUCLEAR REGULATORY ADAMS Public Documents collection at agency may not conduct or sponsor, and COMMISSION https://www.nrc.gov/reading-rm/ that a person is not required to respond adams.html. To begin the search, select [NRC–2018–0235] to, a collection of information unless it ‘‘Begin Web-based ADAMS Search.’’ For displays a currently valid OMB control Information Collection: NRC Forms 542 problems with ADAMS, please contact number. and 542A, Uniform Low-Level the NRC’s Public Document Room (PDR) The NRC published a Federal Radioactive Waste Manifest (Index and reference staff at 1–800–397–4209, 301– Register notice with a 60-day comment Regional Compact Tabulation) and 415–4737, or by email to pdr.resource@ period on this information collection on Continuation Page nrc.gov. A copy of NRC Forms 542 and July 3, 2019 (84 FR 31930). 542A and related instructions may be 1. The title of the information AGENCY: Nuclear Regulatory obtained without charge by accessing collection: ‘‘NRC Forms 542 and 542A, Commission. ADAMS Accession No. ML18313A148, Uniform Low-Level Radioactive Waste ACTION: Notice of submission to the ML18313A149, and ML071870172, Manifest (Index and Regional Compact Office of Management and Budget; respectively. The supporting statement Tabulation) and Continuation Page.’’ request for comment. is available in ADAMS under Accession 2. OMB approval number: 3150–0165. No. ML19240A377. 3. Type of submission: Extension. SUMMARY: The U.S. Nuclear Regulatory • NRC’s PDR: You may examine and 4. The form number if applicable: Commission (NRC) has recently purchase copies of public documents at NRC Forms 542 and 542A. submitted a request for renewal of an the NRC’s PDR, Room O1–F21, One 5. How often the collection is required existing collection of information to the White Flint North, 11555 Rockville or requested: Forms are used by Office of Management and Budget Pike, Rockville, Maryland 20852. shippers when radioactive waste is (OMB) for review. The information • NRC’s Clearance Officer: A copy of shipped. Quarterly or less frequent collection is entitled, ‘‘NRC Forms 542 the collection of information and related reporting is made to Agreement States

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55596 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

depending on specific license For the Nuclear Regulatory Commission. of the collection of information and conditions. No reporting is made to the David C. Cullison, related instructions may be obtained NRC. NRC Clearance Officer, Office of the Chief without charge by accessing Docket ID 6. Who will be required or asked to Information Officer. NRC–2018–0234 on this website. • NRC’s Agencywide Documents respond: All NRC or Agreement State [FR Doc. 2019–22632 Filed 10–16–19; 8:45 am] BILLING CODE 7590–01–P Access and Management System low-level waste facilities licensed (ADAMS): You may obtain publicly- pursuant to part 61 of title 10 of the available documents online in the Code of Federal Regulations (10 CFR) or NUCLEAR REGULATORY ADAMS Public Documents collection at equivalent Agreement State regulations. COMMISSION https://www.nrc.gov/reading-rm/ All generators, collectors, and adams.html. To begin the search, select processors of low-level waste intended [NRC–2018–0234] ‘‘Begin Web-based ADAMS Search.’’ For for disposal at a low-level waste facility Information Collection: NRC Forms 541 problems with ADAMS, please contact must complete the appropriate forms. and 541A, Uniform Low-Level the NRC’s Public Document Room (PDR) 7. The estimated number of annual Radioactive Waste Manifest (Container reference staff at 1–800–397–4209, 301– responses: 756. and Waste Description) and 415–4737, or by email to pdr.resource@ Continuation Page nrc.gov. A copy of NRC Forms 541 and 8. The estimated number of annual 541A and related instructions may be respondents: 22. AGENCY: Nuclear Regulatory obtained without charge by accessing Note that the NRC does not collect or Commission. ADAMS Accession Nos. ML18313A146, retain data on manifest forms and the ACTION: Notice of submission to the ML18313A147, and ML071870172, forms are not sent to or received by the Office of Management and Budget; respectively. The supporting statement NRC. The estimates provided in items request for comment. is available in ADAMS under Accession seven and eight above are from the No. ML19240B715. SUMMARY: The U.S. Nuclear Regulatory • previous form renewal Notice. The NRC NRC’s PDR: You may examine and Commission (NRC) has recently did not receive any public comment on purchase copies of public documents at submitted a request for renewal of an the NRC’s PDR, Room O1–F21, One the previous renewal suggesting that existing collection of information to the these estimates should be revised. White Flint North, 11555 Rockville Office of Management and Budget Pike, Rockville, Maryland 20852. 9. An estimate of the total number of (OMB) for review. The information • NRC’s Clearance Officer: A copy of hours needed annually to comply with collection is entitled, ‘‘NRC Forms 541 the collection of information and related the information collection requirement and 541A, Uniform Low-Level instructions may be obtained without or request: 567. Radioactive Waste Manifest (Container charge by contacting the NRC’s 10. Abstract: NRC Forms 542 and and Waste Description) and Clearance Officer, David Cullison, 542A, provide a set of standardized Continuation Page.’’ Office of the Chief Information Officer, forms to meet Department of DATES: Submit comments by November U.S. Nuclear Regulatory Commission, Transportation, NRC, and State 18, 2019. Comments received after this Washington, DC 20555–0001; telephone: requirements. The forms were date will be considered if it is practical 301–415–2084; email: to do so, but the Commission is able to developed by NRC at the request of low- [email protected]. ensure consideration only for comments level waste industry groups. The forms B. Submitting Comments received on or before this date. provide uniformity and efficiency in the ADDRESSES: Submit comments directly The NRC cautions you not to include collection of information contained in to the OMB reviewer at: OMB Office of identifying or contact information in manifests which are required to control Information and Regulatory Affairs comment submissions that you do not transfers of low-level radioactive waste (3150–0166), Attn: Desk Officer for the want to be publicly disclosed in your intended for disposal at a land disposal Nuclear Regulatory Commission, 725 comment submission. All comment facility. The NRC Form 542, completed 17th Street NW, Washington, DC 20503; submissions are posted at https:// by waste collectors or processors, email: [email protected]. www.regulations.gov/ and entered into contains information which facilitates FOR FURTHER INFORMATION CONTACT: ADAMS. Comment submissions are not tracking the identity of the waste David Cullison, NRC Clearance Officer, routinely edited to remove identifying generator. That tracking becomes more U.S. Nuclear Regulatory Commission, or contact information. If you are requesting or aggregating complicated when the waste forms, Washington, DC 20555–0001; telephone: comments from other persons for dimensions, or packaging are changed 301–415–2084; email: submission to the OMB, then you by the waste processor. Each container [email protected]. should inform those persons not to of waste shipped from a waste processor SUPPLEMENTARY INFORMATION: may contain waste from several include identifying or contact different generators. The information I. Obtaining Information and information that they do not want to be provided on the NRC Form 542 permits Submitting Comments publicly disclosed in their comment submission. Your request should state the States and Compacts to know the A. Obtaining Information that comment submissions are not original generators of low-level waste, as Please refer to Docket ID NRC–2018– routinely edited to remove such authorized by the Low-Level 0234 when contacting the NRC about information before making the comment Radioactive Waste Policy Amendments the availability of information for this submissions available to the public or Act of 1985, so they can ensure that action. You may obtain publicly- entering the comment into ADAMS. waste is disposed of in the appropriate available information related to this Compact. action by any of the following methods: II. Background • Dated at Rockville, Maryland, this 11th day Federal Rulemaking Website: Go to Under the provisions of the of October, 2019. https://www.regulations.gov/ and search Paperwork Reduction Act of 1995 (44 for Docket ID NRC–2018–0234. A copy U.S.C. Chapter 35), the NRC recently

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55597

submitted a request for renewal of an in the collection of information Service seeks to make changes to existing collection of information to contained in manifests which are Priority Mail Express International OMB for review entitled, ‘‘NRC Forms required to control transfers of low-level (PMEI) product descriptions in the Mail 541 and 541A, Uniform Low-Level radioactive waste intended for disposal Classification Schedule (MCS). Notice at Radioactive Waste Manifest (Container at a land disposal facility. The NRC 1. The changes are intended to take and Waste Description) and Form 541 contains information needed effect on January 26, 2020. Id. Continuation Page.’’ The NRC hereby by disposal site facilities to safely II. Summary of Changes informs potential respondents that an dispose of low-level waste and agency may not conduct or sponsor, and information to meet NRC and State The Postal Service states that ‘‘[t]he that a person is not required to respond requirements regulating these activities. purpose of these minor modifications is to, a collection of information unless it Dated at Rockville, Maryland, this 11th day to establish changes to PMEI relating to displays a currently valid OMB control of October, 2019. the list of destination countries offered number. For the Nuclear Regulatory Commission. at a discount at retail, as provided in The NRC published a Federal David C. Cullison, section 2305.6 of the MCS.’’ Id. The Register notice with a 60-day comment Postal Service avers that the proposed period on this information collection on NRC Clearance Officer, Office of the Chief Information Officer. changes satisfy the requirements of 39 July 3, 2019 (84 FR 31931). CFR 3020.90 because the changes [FR Doc. 2019–22630 Filed 10–16–19; 8:45 am] 1. The title of the information should result in a more accurate collection: ‘‘NRC Forms 541 and 541A, BILLING CODE 7590–01–P representation of the Postal Service’s Uniform Low-Level Radioactive Waste offerings by informing postal retail Manifest (Container and Waste customers of the destinations and Description) and Continuation Page.’’ POSTAL REGULATORY COMMISSION weight steps eligible for the PMEI 2. OMB approval number: 3150–0166. [Docket No. MC2020–8; Order No. 5271] discount, the Notice is filed no later 3. Type of submission: Extension. than 15 days prior to the intended 4. The form number if applicable: Mail Classification Schedule effective date, and the changes merely NRC Forms 541 and 541A. revise the MCS without otherwise 5. How often the collection is required AGENCY: Postal Regulatory Commission. changing product offerings, or the prices or requested: Forms are used by ACTION: Notice. or price groups. Id. at 1–2. The Postal shippers when radioactive waste is Service also asserts that the proposed shipped. Quarterly or less frequent SUMMARY: The Commission is changes do not significantly change the reporting is made to Agreement States acknowledging a recent Postal Service user experience for any product and that depending on specific license filing concerning changes to the Priority there is no evidence that the changes conditions. No reporting is made to the Mail Express International (PMEI) will significantly impact competitors. NRC. product description in the Mail 6. Who will be required or asked to Classification Schedule. This document Id. at 2. respond: All NRC or Agreement State informs the public of the filing, invites III. Notice of Commission Action low-level waste facilities licensed public comment, and takes other pursuant to part 61 of title 10 of the administrative steps. Pursuant to 39 CFR 3020.91, the Code of Federal Regulations (10 CFR) or DATES: Comments are due: November 7, Commission has posted the Notice on equivalent Agreement State regulations. 2019. its website and invites comments on whether the Postal Service’s filings are All generators, collectors, and ADDRESSES: Submit comments consistent with 39 CFR part 3020, processors of low-level waste intended electronically via the Commission’s subpart E. Comments are due no later for disposal at a low-level waste facility Filing Online system at http:// than November 7, 2019. The filing can must complete the appropriate forms. www.prc.gov. Those who cannot submit be accessed via the Commission’s 7. The estimated number of annual comments electronically should contact website (http://www.prc.gov). responses: 5,600. the person identified in the FOR FURTHER 8. The estimated number of annual INFORMATION CONTACT section by The Commission appoints Katrina R. respondents: 220. telephone for advice on filing Martinez to represent the interests of the Note that the NRC does not collect or alternatives. general public (Public Representative) retain data on manifest forms and the in this docket. forms are not sent to or received by the FOR FURTHER INFORMATION CONTACT: NRC. The estimates provided in items David A. Trissell, General Counsel, at IV. Ordering Paragraphs seven and eight above are from the 202–789–6820. It is ordered: SUPPLEMENTARY INFORMATION: previous form renewal Notice. The NRC 1. The Commission establishes Docket did not receive any public comment on Table of Contents No. MC2020–8 to consider matters the previous renewal suggesting that raised by the Notice. these estimates should be revised. I. Introduction 9. An estimate of the total number of II. Summary of Changes 2. Comments by interested persons hours needed annually to comply with III. Notice of Commission Action are due by November 7, 2019. the information collection requirement IV. Ordering Paragraphs 3. Pursuant to 39 U.S.C. 505, Katrina or request: 18,480. I. Introduction R. Martinez is appointed to serve as an 10. Abstract: NRC Forms 541 and officer of the Commission (Public On October 9, 2019, the Postal Service 541A provide a set of standardized Representative) to represent the filed a notice of changes to product forms to meet Department of interests of the general public in this descriptions pursuant to Commission Transportation, NRC, and State proceeding. rule 39 CFR 3020.90.1 The Postal requirements. The forms were 4. The Commission directs the developed by the NRC at the request of 1 Notice of United States Postal Service of Filing Secretary of the Commission to arrange low-level waste industry groups. The Minor Changes to a Product Description, October 9, for prompt publication of this notice in forms provide uniformity and efficiency 2019 (Notice). the Federal Register.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55598 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

By the Commission. prices are in accordance with 39 U.S.C. TABLE I–1—PROPOSED PRICE Darcie S. Tokioka, 3632 and 3633 and 39 CFR 3015.2.2 The CHANGES—Continued Acting Secretary. Governors’ Decision provides an [FR Doc. 2019–22576 Filed 10–16–19; 8:45 am] analysis of the competitive products’ Average price Product name increase BILLING CODE 7710–FW–P price changes intended to demonstrate that the changes comply with 39 U.S.C. (percent) 3633 and 39 CFR part 3015. Governors’ Commercial ...... 2.2 POSTAL REGULATORY COMMISSION Decision No. 19–3 at 1. The attachment Retail Ground ...... 3.9 to the Governors’ Decision sets forth the [Docket No. CP2020–5; Order No. 5272] price changes and includes draft Mail Domestic Extra Services Competitive Price Adjustment Classification Schedule (MCS) language for competitive products of general Premium Forwarding Service AGENCY: Postal Regulatory Commission. applicability. Enrollment Fee ...... 0.9–5.3 Adult Signature Service: ACTION: Notice. The Governors’ Decision includes two additional attachments: Basic ...... 3.9 Person-Specific ...... 3.6 SUMMARY: • A partially redacted table showing The Commission is Address Enhancement Serv- recognizing a recently filed Postal FY 2020 projected volumes, revenues, ices ...... 0.4–3.8 Service document with the Commission attributable costs, contribution, and cost Competitive Post Office Box 10.4 concerning changes in rates of general coverage for each product, assuming Package Intercept Service ... 3.9 applicability for competitive products. implementation of the new prices on The changes are scheduled to take effect January 26, 2020. International Competitive Products January 26, 2020. This notice informs • A partially redacted table showing the public of the filing, invites public FY 2020 projected volumes, revenues, Global Express Guaranteed 0.0 attributable costs, contribution, and cost Priority Mail Express Inter- comment, and takes other national ...... 2.0 administrative steps. coverage for each product, assuming a Priority Mail International ...... 6.0 DATES: Comments are due: October 25, hypothetical implementation of the new International Priority Airmail 5.9 2019. prices on October 1, 2019. International Priority Air- The Notice also includes an mail M-Bags ...... 5.9 ADDRESSES: Submit comments application for non-public treatment of International Surface Air Lift 5.9 electronically via the Commission’s the attributable costs, contribution, and International Surface Air Filing Online system at http:// cost coverage data in the unredacted Lift M-Bags ...... 5.9 www.prc.gov. Those who cannot submit version of the annex to the Governors’ Airmail M-Bags ...... 6.0 comments electronically should contact Decision, as well as the supporting First-Class Package Inter- FOR FURTHER national Service ...... 9.9 the person identified in the materials for the data. Notice at 1–2. INFORMATION CONTACT section by Planned price adjustments. The telephone for advice on filing International Ancillary Services and Special Governors’ Decision includes an Services alternatives. overview of the Postal Service’s planned FOR FURTHER INFORMATION CONTACT: price changes, which is summarized in International Ancillary Serv- David A. Trissell, General Counsel, at the table below. ices ...... 2.7 202–789–6820. Source: See Governors’ Decision No. 19–3 SUPPLEMENTARY INFORMATION: TABLE I–1—PROPOSED PRICE at 2–6 (showing percentage increases for CHANGES products other than Adult Signature Service Table of Contents and new prices for Adult Signature Service); Average price Mail Classification Schedule section 2645.1.2 I. Introduction and Overview (showing existing prices for Adult Signature II. Initial Administrative Actions Product name increase (percent) Service). III. Ordering Paragraphs II. Initial Administrative Actions I. Introduction and Overview Domestic Competitive Products The Commission establishes Docket On October 9, 2019, the Postal Service Priority Mail Express ...... 3.5 No. CP2020–5 to consider the Postal filed notice with the Commission Retail ...... 3.8 Service’s Notice. Interested persons may Commercial Base ...... 2.2 concerning changes in rates of general express views and offer comments on applicability for competitive products.1 Commercial Plus ...... 2.2 Priority Mail ...... 4.1 whether the planned changes are The Postal Service represents that, as consistent with 39 U.S.C. 3632, 3633, required by 39 CFR 3015.2(b), the Retail ...... 4.9 Commercial Base ...... 2.8 and 3642, 39 CFR part 3015, and 39 CFR Notice includes an explanation and Commercial Plus ...... 3.0 3020 subparts B and E. Comments are justification for the changes, the Parcel Select: due no later than October 25, 2019. For effective date, and a schedule of the Traditional ...... 2.5 specific details of the planned price changed rates. See Notice at 1. The Lightweight ...... 4.2 changes, interested persons are changes are scheduled to take effect on Parcel Return Service ...... 4.9 encouraged to review the Notice, which January 26, 2020. Id. Return Sectional Center Facility ...... 4.9 is available on the Commission’s Attached to the Notice is Governors’ website at www.prc.gov. Decision No. 19–3, which states the new Return Delivery Unit ...... 4.9 First-Class Package Service 2.6 Pursuant to 39 U.S.C. 505, Curtis E. Retail ...... 3.9 1 United States Postal Service Notice of Changes Kidd is appointed to serve as Public in Rates of General Applicability for Competitive Representative to represent the interests Products, October 9, 2019 (Notice). Pursuant to 39 2 Notice, Decision of the Governors of the United of the general public in this docket. U.S.C. 3632(b)(2), the Postal Service is obligated to States Postal Service on Changes in Rates of General publish the Governors’ Decision and record of Applicability for Competitive Products (Governors’ III. Ordering Paragraphs proceedings in the Federal Register at least 30 days Decision No. 19–3), at 1 (Governors’ Decision No. before the effective date of the new rates. 19–3). It is ordered:

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55599

1. The Commission establishes Docket 3020.90.1 The Postal Service seeks to 2. Comments by interested persons No. CP2020–5 to provide interested make changes in the Mail Classification are due by November 7, 2019. persons an opportunity to express views Schedule (MCS) governing International 3. Pursuant to 39 U.S.C. 505, Katrina and offer comments on whether the Mail. Notice at 1. The changes are R. Martinez is appointed to serve as an planned changes are consistent with 39 intended to take effect on January 26, officer of the Commission (Public U.S.C. 3632, 3633, and 3642, 39 CFR 2020, simultaneously with the Representative) to represent the part 3015, and 39 CFR 3020 subparts B implementation of the planned market interests of the general public in this and E. dominant price changes filed in Docket proceeding. 2. Comments are due no later than No. R2020–1 2 and the planned 4. The Commission directs the October 25, 2019. competitive price changes filed in Secretary of the Commission to arrange 3. Pursuant to 39 U.S.C. 505, the Docket No. CP2020–5.3 Notice at 1. for prompt publication of this notice in Commission appoints Curtis E. Kidd to the Federal Register. II. Summary of Changes serve as an officer of the Commission By the Commission. The Postal Service states that ‘‘[t]he (Public Representative) to represent the Darcie S. Tokioka, interests of the general public in this purpose of these minor modifications is Acting Secretary. docket. to make changes to the country price list 4. The Secretary shall arrange for for international mail . . . in order to [FR Doc. 2019–22577 Filed 10–16–19; 8:45 am] publication of this order in the Federal conform to official sources and improve BILLING CODE 7710–FW–P Register. the accuracy of the product descriptions in the MCS.’’ Id. The Postal Service By the Commission. avers that the proposed changes satisfy POSTAL REGULATORY COMMISSION Darcie S. Tokioka, the requirements of 39 CFR 3020.90 [Docket No. R2020–1; Order No. 5273] Acting Secretary. because the changes should result in a [FR Doc. 2019–22587 Filed 10–16–19; 8:45 am] more accurate representation of the Market Dominant Price Adjustment BILLING CODE 7710–FW–P Postal Service’s current offerings and AGENCY: should allow mailers to more precisely Postal Regulatory Commission. locate pertinent information, the Notice ACTION: Notice. POSTAL REGULATORY COMMISSION is filed more than 15 days prior to the SUMMARY: The Commission is noticing a [Docket No. MC2020–7; Order No. 5270] intended effective date, and the changes recently filed Postal Service notice of merely make revisions concerning one inflation-based rate adjustments Mail Classification Schedule possible destination for certain products affecting market dominant domestic and listed in the MCS without otherwise international products and services, AGENCY: Postal Regulatory Commission. changing those products or their prices ACTION: Notice. along with temporary mailing or price groups. Id. at 1–2. The Postal promotions and numerous proposed Service also asserts that the proposed SUMMARY: The Commission is classification changes. The adjustments changes do not significantly change the acknowledging a recent Postal Service and other changes are scheduled to take user experience for any product and that filing concerning classification changes effect January 26, 2020. This notice there is no evidence that the changes to the Mail Classification Schedule informs the public of the filing, invites will significantly impact competitors. related to International Mail. This public comment, and takes other Id. at 2. document informs the public of the administrative steps. filing, invites public comment, and III. Notice of Commission Action DATES: Comments are due: October 29, takes other administrative steps. Pursuant to 39 CFR 3020.91, the 2019. DATES: Comments are due: November 7, Commission has posted the Notice on ADDRESSES: Submit comments 2019. its website and invites comments on electronically via the Commission’s ADDRESSES: Submit comments whether the Postal Service’s filings are Filing Online system at http:// electronically via the Commission’s consistent with 39 CFR part 3020, www.prc.gov. Those who cannot submit Filing Online system at http:// subpart E. Comments are due no later comments electronically should contact www.prc.gov. Those who cannot submit than November 7, 2019. The filing can the person identified in the FOR FURTHER comments electronically should contact be accessed via the Commission’s INFORMATION CONTACT section by the person identified in the FOR FURTHER website (http://www.prc.gov). telephone for advice on filing INFORMATION CONTACT section by The Commission appoints Katrina R. alternatives. Martinez to represent the interests of the telephone for advice on filing FOR FURTHER INFORMATION CONTACT: general public (Public Representative) alternatives. David A. Trissell, General Counsel, at in this docket. FOR FURTHER INFORMATION CONTACT: 202–789–6820. David A. Trissell, General Counsel, at IV. Ordering Paragraphs SUPPLEMENTARY INFORMATION: 202–789–6820. It is ordered: Table of Contents SUPPLEMENTARY INFORMATION: 1. The Commission establishes Docket No. MC2020–7 to consider matters I. Introduction and Overview Table of Contents raised by the Notice. II. Initial Administrative Actions I. Introduction III. Ordering Paragraphs II. Summary of Changes 1 Notice of United States Postal Service of Minor I. Introduction and Overview III. Notice of Commission Action Classification Changes, October 9, 2019 (Notice). IV. Ordering Paragraphs 2 Docket No. R2020–1, United States Postal On October 9, 2019, the Postal Service Service Notice of Market-Dominant Price Change, filed a notice of inflation-based price I. Introduction October 9, 2019. adjustments affecting market dominant 3 On October 9, 2019, the Postal Service Docket No. CP2020–5, United States Postal domestic and international products Service Notice of Changes in Rates of General filed a notice of classification changes Applicability for Competitive Products, October 9, and services, along with temporary pursuant to Commission rule 39 CFR 2019. mailing promotions and numerous

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55600 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

proposed classification changes to the identifies the impact on the MCS in Pursuant to 39 U.S.C. 505, the Mail Classification Schedule (MCS).1 Attachment A. Id. at 37–39; id. Commission appoints Anne C. The intended effective date is January Attachment A. O’Connor to represent the interests of 26, 2020. Notice at 1. The Notice, which Calendar year 2020 promotions. The the general public (Public was filed pursuant to 39 U.S.C. 3622 Postal Service seeks approval for the Representative) in this proceeding. and 39 CFR part 3010, triggers a notice- following six promotions for the and-comment proceeding.2 indicated periods: III. Ordering Paragraphs Contents of filing. The Postal Service’s Tactile, Sensory and Interactive It is ordered: filing consists of the Notice, which the Mailpiece Engagement Promotion 1. The Commission establishes Docket Postal Service represents addresses the (February 1–July 31, 2020); No. R2020–1 to consider the planned data and information required under 39 • Emerging and Advanced price adjustments for market dominant CFR 3010.12; four attachments Technology Promotion (March 1– postal products and services, as well as (Attachments A–D) to the Notice; and August 31, 2020); the related classification changes, • seven sets of workpapers filed as library Earned Value Reply Mail Promotion identified in the Postal Service’s (April 1–June 30, 2020); references. • October 9, 2019 Notice. Attachment A presents the proposed Personalized Color Transpromo 2. Comments on the planned price price and related product description Promotion (July 1–December 31, 2020); adjustments and related classification • Mobile Shopping Promotion changes to the MCS. Notice, Attachment changes are due no later than October (August 1–December 31, 2020); and A. Attachments B and C address • 29, 2019. workshare discounts and the price cap Informed Delivery Promotion (September 1–November 30, 2020). 3. Pursuant to 39 U.S.C. 505, Anne C. calculation, respectively. Id. O’Connor is appointed to serve as an Id. Attachment D. Attachments B and C. Attachment D officer of the Commission (Public presents the promotions schedule. Id. II. Initial Administrative Actions Representative) to represent the Attachment D. interests of the general public in this Several library references present Pursuant to 39 CFR 3010.11(a), the Commission establishes Docket No. proceeding. supporting financial documentation for R2020–1 to consider the planned price 4. The Commission directs the the five classes of mail. Notice at 4–5 adjustments for market dominant postal Secretary of the Commission to arrange nn.9–11. The Postal Service filed one products and services, as well as the for prompt publication of this notice in library reference pertaining to the two related classification changes, identified the Federal Register. international mail products within First- in the Notice. The Commission invites Class Mail (Outbound Single-Piece By the Commission. comments from interested persons on First-Class Mail International and Darcie S. Tokioka, whether the Postal Service’s filing is Inbound Letter Post) under seal and Acting Secretary. consistent with the applicable statutory applied for non-public treatment of [FR Doc. 2019–22651 Filed 10–16–19; 8:45 am] and regulatory requirements, including 3 BILLING CODE 7710–FW–P those materials. 39 U.S.C. 3622 and 39 CFR part 3010. Planned price adjustments. The Postal The Commission further notes that any Service’s planned percentage changes issues specifically related to Docket No. by class are, on average, as follows: R2019–1 First-Class Mail rates and the SECURITIES AND EXCHANGE COMMISSION Planned price Carlson decision will be addressed in a Market dominant class adjustment separate order in Docket No. R2019–1 [SEC File No. 270–601, OMB Control No. (%) and will not be adjudicated as part of 3235–0673] the instant proceeding. Comments are First-Class Mail ...... 1.919 due no later than October 29, 2019.4 Submission for OMB Review; USPS Marketing Mail ...... 1.891 The public portions of the Postal Comment Request Periodicals ...... 1.900 Service’s filing are available for review Package Services ...... 1.892 Upon Written Request, Copies Available Special Services ...... 1.905 on the Commission’s website (http:// www.prc.gov). Comments and other From: Securities and Exchange Commission, Office of FOIA Services, Id. at 4. material filed in this proceeding will be available for review on the 100 F Street NE, Washington, DC Price adjustments for products within 20549–2736. classes vary from the average. See, e.g., Commission’s website, unless the id. at 7, 22 (Table 5 showing range for information contained therein is subject Extension: Rule 15c3–5. First-Class Mail products and Table 7 to an application for non-public Notice is hereby given that, pursuant showing range for USPS Marketing Mail treatment. The Commission’s rules on to the Paperwork Reduction Act of 1995 products). Most of the planned non-public materials (including access (‘‘PRA’’) (44 U.S.C. 3501 et seq.) adjustments entail increases to market to documents filed under seal) appear in (‘‘PRA’’), the Securities and Exchange dominant rates and fees; however, in a 39 CFR part 3007. Commission (‘‘Commission’’) has few instances, the Postal Service submitted to the Office of Management proposes either no adjustment or a 4 The Commission is mindful of the Comments on Procedure of the National Postal Policy Council, the and Budget (‘‘OMB’’) a request for decrease. See id. at 7. Greeting Card Association, and the Major Mailers approval of extension of the previously Proposed classification changes. The Association, October 10, 2019 and the United States approved collection of information Postal Service proposes numerous Postal Service Response to Procedural Schedule provided for in Rule 15c3–5 (17 CFR classification changes in its Notice and Comments, October 10, 2019. The Commission continues to use the 20-day comment period as set 240.15c3–5) under the Securities forth in 39 CFR 3010.11(a)(5); however, the Exchange Act of 1934 (15 U.S.C. 78a et 1 United States Postal Service Notice of Market- Commission notes that in order to sufficiently seq.) (‘‘Exchange Act’’). Dominant Price Change, October 9, 2019 (Notice). address the issues identified in the Carlson Rule 15c3–5 under the Exchange Act 2 This is a Type 1–B proceeding. See 39 CFR part decision, its determination may exceed the 14-day 3010, subparts A–C for additional information. deadline set forth in 39 CFR 3010.11(d). See Carlson requires brokers or dealers with access 3 See USPS Notice of Filing USPS–LR–R2020–1/ v. Postal Regulatory Commission, No. 18–1328, slip to trading directly on an exchange or NP1, October 9, 2019, Attachment 1. op. (D.C. Cir. Sept. 13, 2019). alternative trading system (‘‘ATS’’),

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55601

including those providing sponsored or An agency may not conduct or The text of the proposed rule change direct market access to customers or sponsor, and a person is not required to is available on the Exchange’s website at other persons, to implement risk respond to, a collection of information http://www.miaxoptions.com/rule- management controls and supervisory under the PRA unless it displays a filings/pearl at MIAX PEARL’s principal procedures reasonably designed to currently valid OMB control number. office, and at the Commission’s Public manage the financial, regulatory, and The public may view background Reference Room. other risks of this business activity. documentation for this information II. Self-Regulatory Organization’s The rule requires brokers or dealers to collection at the following website: Statement of the Purpose of, and establish, document, and maintain www.reginfo.gov. Comments should be Statutory Basis for, the Proposed Rule certain risk management controls and directed to: (i) Desk Officer for the Change supervisory procedures as well as Securities and Exchange Commission, regularly review such controls and Office of Information and Regulatory In its filing with the Commission, the procedures, and document the review, Affairs, Office of Management and Exchange included statements and remediate issues discovered to Budget, Room 10102, New Executive concerning the purpose of and basis for assure overall effectiveness of such Office Building, Washington, DC 20503, the proposed rule change and discussed controls and procedures. Each such or by sending an email to: any comments it received on the broker or dealer is required to preserve [email protected]; and (ii) proposed rule change. The text of these a copy of its supervisory procedures and Charles Riddle, Acting Director/Chief statements may be examined at the a written description of its risk Information Officer, Securities and places specified in Item IV below. The management controls as part of its books Exchange Commission, c/o Candace Exchange has prepared summaries, set and records in a manner consistent with Kenner, 100 F Street NE, Washington, forth in sections A, B, and C below, of Rule 17a–4(e)(7) under the Exchange DC 20549, or by sending an email to: the most significant aspects of such statements. Act. Such regular review is required to [email protected]. Comments must be conducted in accordance with be submitted to OMB within 30 days of A. Self-Regulatory Organization’s written procedures and is required to be this notice. Statement of the Purpose of, and documented. The broker or dealer is Dated: October 10, 2019. Statutory Basis for, the Proposed Rule required to preserve a copy of such Jill M. Peterson, Change written procedures, and documentation Assistant Secretary. 1. Purpose of each such review, as part of its books and records in a manner consistent with [FR Doc. 2019–22580 Filed 10–16–19; 8:45 am] The Exchange proposes to amend Rule 17a–4(e)(7) under the Exchange BILLING CODE 8011–01–P Exchange Rule 519, MIAX PEARL Order Act, and Rule 17a–4(b) under the Monitor (‘‘MOM’’) to remove a term in Exchange Act, respectively. the Exchange’s rule which creates an SECURITIES AND EXCHANGE ambiguity concerning the application of In addition, the Chief Executive COMMISSION Officer (or equivalent officer) is required the rule. Specifically, subsection (4) of to certify annually that the broker or [Release No. 34–87279; File No. SR– paragraph (a), Limit Orders to Sell, dealer’s risk management controls and PEARL–2019–28] provides that ‘‘[f]or options with a supervisory procedures comply with the National Best Bid (‘‘NBB’’) equal to or 3 rule, and that the broker-dealer Self-Regulatory Organizations; MIAX greater than $0.25 the System will conducted such review. Such PEARL, LLC; Notice of Filing and reject an incoming limit order that has certifications are required to be Immediate Effectiveness of a Proposed a limit price equal to or less than the preserved by the broker or dealer as part Rule Change To Amend Exchange NBB by the lesser of (i) $2.50, or (ii) of its books and records in a manner Rule 519, MIAX PEARL Order Monitor 50% of the NBB price.’’ The second consistent with Rule 17a–4(b) under the provision of the rule provides that, October 10, 2019. ‘‘[f]or options with an NBB of $0.25 or Exchange Act. Compliance with Rule Pursuant to the provisions of Section 15c3–5 is mandatory. less the System will accept any 19(b)(1) of the Securities Exchange Act incoming limit order.’’ Respondents consist of broker-dealers 1 of 1934 (‘‘Act’’), and Rule 19b–4 The statements an NBB ‘‘equal to or with access to trading directly on an 2 thereunder, notice is hereby given that greater than $0.25’’ and ‘‘an NBB of exchange or ATS. The Commission on October 3, 2019, MIAX PEARL, LLC $0.25 or less’’ both contemplate the NBB estimates that there are currently 570 (‘‘MIAX PEARL’’ or the ‘‘Exchange’’) being equal to $0.25. The operation of respondents. To comply with Rule filed with the Securities and Exchange the rule requires a bifurcation at $0.25 15c3–5, these respondents will spend a Commission (‘‘Commission’’) a and only one action (accepting or total of approximately 91,200 hours per proposed rule change as described in rejecting an incoming order) can occur year (160 hours per broker-dealer × 570 Items I and II below, which Items have when the NBB is equal to $0.25. The broker-dealers = 91,200 hours). At an been prepared by the Exchange. The desired behavior by the Exchange, for average internal cost per burden hour of Commission is publishing this notice to limit orders to sell, is to accept an order approximately $358.51, the resultant solicit comments on the proposed rule at any price when the NBB is equal to total related internal cost of compliance change from interested persons. $0.25 or less. Therefore the Exchange for these respondents is $32,696,340 per proposes to remove the phrase ‘‘equal to year (91,200 burden hours multiplied by I. Self-Regulatory Organization’s or’’ from the first sentence in the rule. approximately $358.51/hour). In Statement of the Terms of Substance of The new proposed rule text will addition, for hardware and software the Proposed Rule Change provide that, ‘‘[f]or options with a expenses, the Commission estimates The Exchange is filing a proposal to National Best Bid (‘‘NBB’’) greater than that the average annual external cost amend Exchange Rule 519, MIAX $0.25 the System will reject an would be approximately $20,500 per PEARL Order Monitor (‘‘MOM’’). broker-dealer, or $11,685,000 in the × 3 The term ‘‘System’’ means the automated aggregate ($20,500 per broker-dealer 1 15 U.S.C. 78s(b)(1). trading system used by the Exchange for the trading 570 brokers and dealers = $11,685,000). 2 17 CFR 240.19b–4. of securities. See Exchange Rule 100.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55602 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

incoming limit order that has a limit impediments to and helps perfect the the protection of investors or the public price equal to or less than the NBB by mechanism of a free and open market interest; (ii) impose any significant the lesser of (i) $2.50, or (ii) 50% of the and a national market system, and, in burden on competition; and (iii) become NBB price. For options with an NBB of general, protects investors and the operative for 30 days after the date of $0.25 or less the System will accept any public interest by accurately describing the filing, or such shorter time as the incoming limit order. the behavior of the Exchange’s System. Commission may designate, it has The Exchange believes its proposed The Exchange believes that the become effective pursuant to 19(b)(3)(A) change provides additional detail and proposed change promotes just and of the Act 9 and Rule 19b–4(f)(6) 10 clarity to the Exchange’s rule and equitable principles of trade and thereunder. eliminates any inadvertent ambiguity in removes impediments to and perfects A proposed rule change filed under the rule text concerning order the mechanism of a free and open Rule 19b–4(f)(6) 11 normally does not protections for incoming limit orders to market and a national market system become operative prior to 30 days after sell. and, in general, protects investors and the date of the filing. However, pursuant the public interest by providing to Rule 19b–4(f)(6)(iii),12 the 2. Statutory Basis additional detail and clarity in the Commission may designate a shorter MIAX PEARL believes that its Exchange’s rules. Further, the time if such action is consistent with proposed rule change is consistent with Exchange’s proposal provides protection of investors and the public Section 6(b) of the Act 4 in general, and transparency and clarity in the rule and interest. The Exchange has asked the furthers the objectives of Section 6(b)(5) is consistent with the Act because it Commission to waive the 30-day of the Act 5 in particular, in that it is removes impediments to and helps operative delay. The Exchange believes designed to prevent fraudulent and perfect the mechanism of a free and that waiver is consistent with the manipulative acts and practices, to open market and a national market protection of investors and the public promote just and equitable principles of system, and, in general, protects interest because it would remove any trade, to foster cooperation and investors and the public interest by ambiguity in the Exchange’s rule coordination with persons engaged in accurately describing the behavior of the concerning its handling of limit orders regulating, clearing, settling, processing Exchange’s System. In particular, the to sell. The Commission believes that information with respect to, and Exchange believes that the proposed waiver of the 30-day operative delay is facilitating transactions in, securities, to rule change will provide greater clarity consistent with the protection of remove impediments to and perfect the to Members and the public regarding the investors and the public interest mechanisms of a free and open market Exchange’s Rules, and it is in the public because the proposal does not raise any and a national market system and, in interest for rules to be accurate and new or novel issues and makes a non- general, to protect investors and the concise so as to eliminate the potential substantive change to clarify the rule public interest. for confusion. text. Accordingly, the Commission The Exchange believes its proposal designates the proposed rule change to B. Self-Regulatory Organization’s promotes just and equitable principles be operative on upon filing.13 Statement on Burden on Competition of trade, removes impediments to and At any time within 60 days of the perfects the mechanisms of a free and The Exchange does not believe that filing of the proposed rule change, the open market and a national market the proposed rule change will impose Commission summarily may system, and in general, protects any burden on competition that is not temporarily suspend such rule change if investors and the public interest by necessary or appropriate in furtherance it appears to the Commission that such providing clarity and precision in the of the purposes of the Act. The action is necessary or appropriate in the Exchange’s rule text. Additionally, the proposed rule change is designed to public interest, for the protection of proposed change is consistent with the remove an unintentional ambiguity investors, or otherwise in furtherance of current System behavior as described in introduced in a prior rule change.8 the purposes of the Act. If the the Exchange’s User Manual.6 The Exchange does not believe that Commission takes such action, the The Exchange believes that the the proposed rule change will impose Commission shall institute proceedings proposed change to the rule text any burden on inter-market competition to determine whether the proposed rule provides further clarification to as the Rules apply equally to all should be approved or disapproved. Members,7 investors, and the public, Exchange Members. The proposed rule regarding the Exchange’s handling of change is not a competitive filing and is IV. Solicitation of Comments limit orders to sell. The Exchange intended to improve the clarity and Interested persons are invited to believes it is in the interest of investors precision of the Exchange’s rule text. submit written data, views, and and the public to accurately describe the arguments concerning the foregoing, C. Self-Regulatory Organization’s behavior of the Exchange’s System in its including whether the proposed rule rules as this information may be used by Statement on Comments on the investors to make decisions concerning Proposed Rule Change Received From 9 15 U.S.C. 78s(b)(3)(A). the submission of their orders. Members, Participants, or Others 10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– Transparency and clarity are consistent Written comments were neither 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file with the Act because it removes solicited nor received. the proposed rule change at least five business days prior to the date of filing of the proposed rule 4 15 U.S.C. 78f(b). III. Date of Effectiveness of the change, or such shorter time as designated by the 5 15 U.S.C. 78f(b)(5). Proposed Rule Change and Timing for Commission. The Exchange has satisfied this 6 MIAX PEARL User’s Manual, August 2019, p 14, Commission Action requirement. https://www.miaxoptions.com/exchange- 11 17 CFR 240.19b–4(f)(6). functionality-data/pearl. Because the foregoing proposed rule 12 17 CFR 240.19b–4(f)(6). 7 The term ‘‘Member’’ means an individual or change does not: (i) Significantly affect 13 For purposes only of waiving the 30-day organization approved to exercise the trading rights operative delay, the Commission also has associated with a Trading Permit. Members are 8 See Securities Exchange Release No. 84887 considered the proposed rule’s impact on deemed ‘‘members’’ under the Exchange Act. See (December 20, 2018), 83 FR 67452 (December 28, efficiency, competition, and capital formation. See Exchange Rule 100. 2018) (SR–PEARL–2018–25). 15 U.S.C. 78c(f).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55603

change is consistent with the Act. SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s Comments may be submitted by any of COMMISSION Statement of the Purpose of, and the the following methods: Statutory Basis for, the Proposed Rule Change Electronic Comments [Release No. 34–87292; File No. SR– NYSEArca–2019–70] 1. Purpose • Use the Commission’s internet comment form (http://www.sec.gov/ Self-Regulatory Organizations; NYSE The Exchange proposes to amend the rules/sro.shtml); or Arca, Inc.; Notice of Filing and Fee Schedule to (1) modify the volume • Send an email to rule-comments@ Immediate Effectiveness of Proposed requirements applicable to ETP Holders sec.gov. Please include File Number SR– Rule Change To Amend the NYSE Arca (including Market Makers) to qualify for PEARL–2019–28 on the subject line. Equities Fees and Charges the per share credits for orders that provide displayed liquidity under the Paper Comments October 11, 2019. Step Up Tier 4,4 and (2) adopt a new • pricing tier, the Tape B Step Up Tier. Send paper comments in triplicate Pursuant to Section 19(b)(1) 1 of the to Secretary, Securities and Exchange The proposed changes respond to the Securities Exchange Act of 1934 (the current competitive environment where Commission, 100 F Street NE, ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Washington, DC 20549–1090. order flow providers have a choice of notice is hereby given that, on October where to direct liquidity-providing All submissions should refer to File 1, 2019, NYSE Arca, Inc. (‘‘NYSE Arca’’ orders by offering further incentives for Number SR–PEARL–2019–28. This file or the ‘‘Exchange’’) filed with the ETP Holders 5 to send additional number should be included on the Securities and Exchange Commission displayed liquidity to the Exchange. subject line if email is used. To help the (‘‘SEC’’ or ‘‘Commission’’) the proposed The Exchange proposes to implement Commission process and review your rule change as described in Items I, II, the fee changes effective October 1, comments more efficiently, please use and III below, which Items have been 2019. only one method. The Commission will prepared by the Exchange. The Background post all comments on the Commission’s Commission is publishing this notice to internet website (http://www.sec.gov/ solicit comments on the proposed rule The Commission has repeatedly rules/sro.shtml). Copies of the change from interested persons. expressed its preference for competition submission, all subsequent over regulatory intervention in amendments, all written statements I. Self-Regulatory Organization’s determining prices, products, and with respect to the proposed rule Statement of the Terms of Substance of services in the securities markets. In change that are filed with the the Proposed Rule Change Regulation NMS, the Commission Commission, and all written highlighted the importance of market communications relating to the The Exchange proposes to amend the forces in determining prices and SRO proposed rule change between the NYSE Arca Equities Fees and Charges revenues and, also, recognized that Commission and any person, other than (‘‘Fee Schedule’’) to (1) modify the current regulation of the market system those that may be withheld from the requirements associated with the Step ‘‘has been remarkably successful in public in accordance with the Up Tier 4, and (2) adopt a new pricing promoting market competition in its provisions of 5 U.S.C. 552, will be tier, Tape B Step Up Tier. The Exchange broader forms that are most important to available for website viewing and proposes to implement the fee changes investors and listed companies.’’ 6 printing in the Commission’s Public effective October 1, 2019. The proposed As the Commission itself recognized, Reference Room, 100 F Street NE, rule change is available on the the market for trading services in NMS Washington, DC 20549, on official Exchange’s website at www.nyse.com, at stocks has become ‘‘more fragmented business days between the hours of the principal office of the Exchange, and and competitive.’’ 7 Indeed, equity 10:00 a.m. and 3:00 p.m. Copies of the at the Commission’s Public Reference trading is currently dispersed across 13 filing also will be available for Room. exchanges,8 31 alternative trading inspection and copying at the principal systems,9 and numerous broker-dealer office of the Exchange. All comments II. Self-Regulatory Organization’s internalizers and wholesalers, all received will be posted without change. Statement of the Purpose of, and competing for order flow. Based on Persons submitting comments are Statutory Basis for, the Proposed Rule publicly-available information for cautioned that we do not redact or edit Change personal identifying information from 4 See Securities Exchange Act Release No. 85311 comment submissions. You should In its filing with the Commission, the (March 14, 2019), 84 FR 10348 (March 20, 2019) submit only information that you wish self-regulatory organization included (SR–NYSEArca–2019–10). statements concerning the purpose of, 5 All references to ETP Holders in connection to make available publicly. All with the Step Up Tier 4 and the Tape B Step Up submissions should refer to File and basis for, the proposed rule change Tier include Market Makers. Number SR–PEARL–2019–28 and and discussed any comments it received 6 See Securities Exchange Act Release No. 51808 should be submitted on or before on the proposed rule change. The text (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). November 7, 2019. of those statements may be examined at 7 See Securities Exchange Act Release No. 51808, 84 FR 5202, 5253 (February 20, 2019) (File No. S7– For the Commission, by the Division of the places specified in Item IV below. 05–18) (Final Rule). Trading and Markets, pursuant to delegated The Exchange has prepared summaries, 8 See Cboe U.S Equities Market Volume authority.14 set forth in sections A, B, and C below, Summary, available at https://markets.cboe.com/us/ _ Jill M. Peterson, of the most significant parts of such equities/market share. See generally https:// www.sec.gov/fast-answers/ Assistant Secretary. statements. divisionsmarketregmrexchangesshtml.html. [FR Doc. 2019–22597 Filed 10–16–19; 8:45 am] 9 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/ BILLING CODE 8011–01–P 1 15 U.S.C. 78s(b)(1). AtsIssueData. A list of alternative trading systems 2 15 U.S.C. 78a. registered with the Commission is available at 14 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4. https://www.sec.gov/foia/docs/atslist.htm.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55604 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

August 2019, no single exchange has Securities when such providing volume 2019, taken as a percentage of US more than 19% market share (whether is at least 0.50% of the US Tape B CADV. including or excluding auction CADV and such volume in Tape B Currently, if an ETP Holder meets volume).10 Therefore, no exchange Securities as a percentage of US Tape B these Step Up Tier 4 qualifications, such possesses significant pricing power in CADV is an increase of 20% or more ETP Holder is eligible to earn a credit the execution of equity order flow. More over the ETP Holder’s providing ADV as of: specifically, in August 2019, the a percentage of US Tape B CADV in the • $0.0033 per share for orders that Exchange had 8.2% market share of third quarter (‘‘3Q’’) of 2019. provide displayed liquidity to the Book executed volume of equity trades in Tape A and Tape C Securities, and Step Up Tier 4 (excluding auction volume).11 • $0.0034 per share for orders that The Exchange believes that the ever- In this competitive environment, the provide displayed liquidity to the Book shifting market share among the Exchange has already established Step in Tape B Securities.13 exchanges from month to month Up Tiers 1–4, which are designed to With this proposed rule change, the demonstrates that market participants encourage ETP Holders that provide Exchange proposes to modify the can move order flow, or discontinue or displayed liquidity on the Exchange to volume requirements applicable to ETP reduce use of certain categories of increase that order flow, which would Holders to qualify for the Step Up Tier products. While it is not possible to benefit all ETP Holders by providing 4 by lowering the percentage threshold know a firm’s reason for shifting order greater execution opportunities on the that an ETP Holder must meet, from a flow, the Exchange believes that one Exchange. In order to provide an minimum of 0.70% of US CADV for the such reason is because of fee changes at incentive for ETP Holders to direct billing month to a minimum of 0.55% any of the registered exchanges or non- providing displayed order flow to the of US CADV for the billing month. exchange venues to which a firm routes Exchange, the credits increase in the Additionally, the Exchange proposes to order flow. With respect to non- various tiers based on increased levels modify the baseline month over which marketable order flow that would of volume directed to the Exchange. the minimum threshold requirement provide displayed liquidity on an must be met from January 2019 to Currently, the following credits are Exchange against which market makers September 2019. available to ETP Holders that provide can quote, ETP Holders can choose from The purpose of the proposed rule increased levels of displayed liquidity any one of the 13 currently operating change is to increase the incentive for on the Exchange: registered exchanges to route such order order flow providers to send liquidity- flow. Accordingly, competitive forces Credit for providing providing orders to the Exchange. As constrain exchange transaction fees that Tier displayed liquidity described above, ETP Holders with relate to orders that would provide liquidity-providing orders have a choice displayed liquidity on an exchange. Step Up Tier ...... $0.0030 (Tape A). of where to send those orders. The $0.0023 (Tape B). Exchange believes that, if it reduces the Proposed Rule Change $0.0031 (Tape C). requirement to qualify for a tiered The proposed rule change is designed Step Up Tier 2 ...... $0.0028 (Tape A and credit, more ETP Holders will choose to C). to be available to all ETP Holders on the route their liquidity-providing orders to Exchange and is intended to provide $0.0022 (Tape B). Step Up Tier 3 ...... $0.0025 (Tape A and the Exchange to qualify for the credit. ETP Holders an opportunity to receive C). The Exchange does not know how an enhanced rebate by executing more $0.0022 (Tape B). much order flow ETP Holders choose to of their orders on the Exchange. The Step Up Tier 4 ...... $0.0033 (Tape A and route to other exchanges or to off- Exchange currently provides credits to C). exchange venues. While the Step Up ETP Holders who submit orders that $0.0034 (Tape B). Tier 4 pricing tier is available to all ETP provide displayed liquidity on the Holders, to date, not one ETP Holder Exchange. The Exchange currently has Under the Step Up Tier 4, if an ETP has qualified for it.14 Without having a multiple levels of credits for orders that Holder increases its providing liquidity view of ETP Holders’ activity on other provide displayed liquidity that are on the Exchange by a specified markets and off-exchange venues, the based on the amount of volume of such percentage over the level that such ETP Exchange has no way of knowing orders that ETP Holders send to the Holder provided liquidity in January whether this proposed rule change Exchange. 2019, it is eligible to earn higher credits would result in any ETP Holders As described in greater detail below, for providing displayed liquidity. qualifying for the Step Up Tier 4 credit. the Exchange proposes the following Specifically, to qualify for the credits The Exchange cannot predict with change: under the Step Up Tier 4, an ETP certainty how many ETP Holders would • Modify the volume requirements Holder must directly execute providing avail themselves of this opportunity but applicable to ETP Holders to qualify for average daily volume (ADV) per month additional liquidity-providing orders the Step Up Tier 4 by lowering the that is an increase of no less than 0.70% would benefit all market participants percentage threshold that an ETP Holder of US CADV 12 for that month over the because it would provide greater must meet, and modify the baseline ETP Holder’s providing ADV in January execution opportunities on the month over which the minimum Exchange. threshold requirement must be met; and 12 The Exchange is not proposing to • US CADV means the United States A new pricing tier that provides an Consolidated Average Daily Volume for amend any of the credits payable under incremental credit between $0.0002 per transactions reported to the Consolidated Tape, the Step Up Tier 4. share and $0.0004 per share to ETP excluding odd lots through January 31, 2014 (except Holders that provide liquidity in Tape B for purposes of Lead Market Maker pricing), and excludes volume on days when the market closes 13 See Securities Exchange Act Release No. 86122 early and on the date of the annual reconstitution (June 17, 2019), 84 FR 29258 (June 21, 2019) (SR– 10 See Cboe Global Markets U.S. Equities Market of the Russell Investments Indexes. Transactions NYSEArca–2019–43). Volume Summary, available at http:// that are not reported to the Consolidated Tape are 14 As of July 24, 2019, there are 165 ETP Holders markets.cboe.com/us/equities/market_share/. not included in US CADV. See Fee Schedule, on the Exchange that could qualify for the 11 See id. footnote 3. Exchange’s Step Up pricing tiers.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55605

Tape B Step Up Tier Holder’s baseline ADV of 0.80% of Tape 6(b)(4) and (5) of the Act,18 in particular, 15 The Exchange proposes to adopt a B CADV. If instead, the same ETP because it provides for the equitable new pricing tier, Tape B Step Up Tier, Holder had providing ADV of Tape B allocation of reasonable dues, fees, and that would offer an incremental credit to CADV of 1.12% of Tape B in the billing other charges among its members, ETP Holders that qualify for the tier. As month, then that ETP Holder would issuers and other persons using its proposed, an ETP Holder that sends qualify for an incremental credit of facilities and does not unfairly orders that add liquidity in Tape B $0.0004 per share, as 1.12% is at least discriminate between customers, Securities would receive the following: 40% more than the ETP Holder’s issuers, brokers or dealers. • An incremental credit of $0.0002 baseline ADV of 0.80% of Tape B 16 The Proposed Fee Change is Reasonable per share when an ETP Holder’s CADV. As noted above, the Exchange As discussed above, the Exchange providing ADV in Tape B Securities operates in a highly fragmented and during the billing month is at least operates in a competitive environment, particularly as it relates to attracting competitive market. The Commission 0.50% of the US Tape B CADV and the has repeatedly expressed its preference ETP Holder’s providing ADV in Tape B non-marketable, providing liquidity that would be displayed on the Exchange. for competition over regulatory Securities during the billing month as a intervention in determining prices, percentage of US Tape B CADV is at Because, as proposed, the tier requires an ETP Holder to increase the volume products, and services in the securities least 20% more but less than 30% of the markets. Specifically, in Regulation ETP Holder’s providing ADV as a of its liquidity-providing orders over that ETP Holder’s 3Q 2019 baseline, the NMS, the Commission highlighted the percentage of US Tape B CADV in 3Q importance of market forces in Exchange believes that the proposed 2019; determining prices and SRO revenues • incremental credit would provide an An incremental credit of $0.0003 and, also, recognized that current incentive for ETP Holders to route per share when an ETP Holder’s regulation of the market system ‘‘has additional liquidity to the Exchange in providing ADV in Tape B Securities been remarkably successful in order to qualify for it. during the billing month is at least promoting market competition in its 0.50% of the US Tape B CADV and the The proposed rule change is designed broader forms that are most important to ETP Holder’s providing ADV in Tape B to incentivize ETP Holders to increase investors and listed companies.’’ 19 Securities during the billing month as a the orders sent to the Exchange that As the Commission itself recognized, percentage of US Tape B CADV is at would provide liquidity, which would the market for trading services in NMS least 30% more but less than 40% of the support the quality of price discovery stocks has become ‘‘more fragmented ETP Holder’s providing ADV as a and transparency on the Exchange. The and competitive.’’ 20 Indeed, equity percentage of US Tape B CADV in 3Q Exchange believes that by correlating trading is currently dispersed across 13 2019; and the level of the credits to the level of exchanges,21 31 alternative trading • An incremental credit of $0.0004 executed providing volume on the systems,22 and numerous broker-dealer per share when an ETP Holder’s Exchange, the Exchange’s fee structure internalizers and wholesalers, all providing ADV in Tape B Securities would incentivize ETP Holders to competing for order flow. Based on during the billing month is at least submit more displayed, liquidity- publicly-available information, no 0.50% of the US Tape B CADV and the providing orders to the Exchange that single exchange has more than 19% ETP Holder’s providing ADV in Tape B are likely to be executed (i.e., are not market share (whether including or Securities during the billing month as a orders that are intended to be displayed, excluding auction volume).23 Therefore, percentage of US Tape B CADV is at but are priced such that they are not no exchange possesses significant least 40% more than the ETP Holder’s likely to be executed), thereby pricing power in the execution of equity providing ADV as a percentage of US increasing the potential for incoming order flow. More specifically, as noted Tape B CADV in 3Q 2019. marketable orders submitted to the earlier, the Exchange averaged less than The proposed incremental credit Exchange to receive an execution. 9% market share of executed volume of would be payable in addition to the ETP The proposed changes are not equity trades (excluding auction Holder’s Tiered or Basic Rate credit(s); otherwise intended to address any other volume) for August 2019. provided, however, that such combined issues, and the Exchange is not aware of The Exchange believes that the ever- credit(s) in Tape B Securities shall not any significant problems that market shifting market share among the exceed $0.0032 per share. participants would have in complying exchanges from month to month For example, assume an ETP Holder with the proposed changes. demonstrates that market participants has providing ADV of 0.80% of Tape B can shift order flow, or discontinue to CADV in Tape B securities in the 2. Statutory Basis reduce use of certain categories of baseline period of third quarter of 2019. The Exchange believes that the Further assume that the same ETP proposed rule change is consistent with 18 15 U.S.C. 78f(b)(4) and (5). Holder has providing ADV of 0.96% of Section 6(b) of the Act,17 in general, and 19 See Securities Exchange Act Release No. 51808 Tape B in the billing month, which is (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). furthers the objectives of Sections 20 See Securities Exchange Act Release No. 51808, at least 20% more but less than 30% of 84 FR 5202, 5253 (February 20, 2019) (File No. S7– the ETP Holder’s baseline ADV of 15 The ETP Holder would also qualify for the 05–18) (Final rule). 0.80% of Tape B CADV. Therefore, the existing Tape B Tier 2 credit of $0.0028 by meeting 21 See Cboe Global Markets, U.S Equities Market ETP Holder in the above example would the 1.0% of the US Tape B CADV requirement, for Volume Summary, available at https:// _ qualify to receive an incremental credit a total credit of $0.0031 per share ($0.0028 per markets.cboe.com/us/equities/market share/. share Tape B Tier 2 credit plus the proposed 22 See FINRA ATS Transparency Data, available of $0.0002 per share. If instead, the $0.0003 per share Tape B Step Up Tier credit). at https://otctransparency.finra.org/ same ETP Holder had providing ADV of 16 The ETP Holder would also qualify for the otctransparency/AtsIssueData. A list of alternative Tape B CADV of 1.04% of Tape B in the existing Tape B Tier 2 credit of $0.0028 by meeting trading systems registered with the Commission is billing month, then that ETP Holder the 1.0% of the US Tape B CADV requirement, for available at https://www.sec.gov/foia/docs/ a total credit of $0.0032 per share ($0.0028 per atslist.htm. would qualify for an incremental credit share Tape B Tier 2 credit plus the proposed 23 See Cboe Global Markets U.S. Equities Market of $0.0003 per share, as 1.04% is at least $0.0004 per share Tape B Step Up Tier credit). Volume Summary, available at http:// 30% more but less than 40% of the ETP 17 15 U.S.C. 78f(b). markets.cboe.com/us/equities/market_share/.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55606 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

products, in response to fee changes. The Exchange believes the proposed currently operates, the proposed rule With respect to non-marketable order Tape B Step Up Tier would provide an change is a reasonable attempt to which provide liquidity on an incentive for ETP Holders to route increase liquidity on the Exchange and Exchange, ETP Holders can choose from additional liquidity-providing orders to improve the Exchange’s market share any one of the 13 currently operating the Exchange in Tape B Securities. As relative to its competitors. registered exchanges to route such order noted above, the Exchange operates in a The Proposed Fee Change is an flow. Accordingly, competitive forces highly competitive environment, Equitable Allocation of Fees and Credits reasonably constrain exchange particularly for attracting order flow that transaction fees that relate to orders that provides displayed liquidity on an The Exchange believes its proposal would provide displayed liquidity on an exchange. The Exchange believes it is equitably allocates its fees among its exchange. Stated otherwise, changes to reasonable to provide a higher credit for market participants. exchange transaction fees can have a orders that provide additional liquidity. First, the Exchange is not proposing to direct effect on the ability of an Similarly, the Exchange believes that it adjust the amount of the Step Up Tier exchange to compete for order flow. is reasonable to provide an incremental 4 credits, which will remain at the Given this competitive environment, credit to ETP Holders that meet the current level for all ETP Holders. the proposal represents a reasonable requirements of the Tape B Step Up Tier Rather, the proposal would continue to attempt to attract additional order flow that add additional liquidity in Tape B encourage ETP Holders to send orders that add liquidity to the Exchange, to the Exchange. Securities on the Exchange. thereby contributing to robust levels of The Exchange believes the proposed Since the proposed Tape B Step Up liquidity, which benefits all market change to lower the volume Tier would be new with a requirement participants. The Exchange believes requirements under the Step Up Tier 4 for increased providing volume over the that, for the reasons discussed above, is reasonable because it would allow baseline month, no ETP Holder lowering the requirements would make ETP Holders an additional opportunity currently qualifies for the proposed it easier for liquidity providers to to meet the requirement of the pricing pricing tier. The Exchange believes that qualify for the Step Up Tier 4 credit, a number of ETP Holders could qualify tier to receive per share credits payable thereby encouraging submission of for the proposed higher credit but under the Step Up Tier 4, thereby additional liquidity to the Exchange. without a view of ETP Holder activity encouraging the submission of The proposed change will thereby on other exchanges and off-exchange additional liquidity to a national encourage the submission of additional venues, the Exchange has no way of securities exchange. Submission of liquidity to a national securities knowing whether the proposed rule additional liquidity to the Exchange exchange, thus promoting price change would result in any ETP Holder would promote price discovery and discovery and transparency and transparency and enhance order qualifying for the tier. The Exchange enhancing order execution execution opportunities for ETP Holders believes the proposed higher credit is opportunities for ETP Holders from the from the substantial amounts of reasonable as it would provide an substantial amounts of liquidity present liquidity present on the Exchange. All additional incentive for ETP Holders to on the Exchange. All ETP Holders ETP Holders would benefit from the direct their order flow to the Exchange would benefit from the greater amounts greater amounts of liquidity that will be and provide meaningful added levels of of liquidity that will be present on the present on the Exchange, which would liquidity in order to qualify for the Exchange, which would provide greater provide greater execution opportunities. higher credit, thereby contributing to execution opportunities. The Exchange believes that the depth and market quality on the As noted above, no ETP Holder proposed change to modify the baseline Exchange. currently qualifies for the Step Up Tier month from January 2019 to September The Exchange notes that volume- 4 pricing tier. Without having a view of 2019 is reasonable given the trend of based incentives and discounts have ETP Holders’ activity on other markets recent trading on the Exchange. The been widely adopted by exchanges,25 and off-exchange venues, the Exchange Exchange’s market share in January including the Exchange,26 and are has no way of knowing whether this 2019, the original baseline month reasonable, equitable and non- proposed rule change would result in adopted under the Step Up Tier 4, was discriminatory because they are open to any ETP Holders qualifying for this tier. 9.0%, and has declined to 8.2% in all ETP Holders on an equal basis and However, the Exchange believes the August 2019.24 The Exchange believes provide additional credits that are proposed lower volume requirements modifying the baseline month would reasonably related to the value to an would provide an incentive for ETP allow ETP Holders to more easily exchange’s market quality and Holders to continue to submit liquidity- qualify for the pricing tier as it would associated higher levels of market providing order flow, which would need to submit lesser number of orders activity. promote price discovery and increase to qualify for the tier. On the backdrop of the competitive execution opportunities for all ETP Because no ETP Holder to date has environment in which the Exchange Holders. The proposed change will qualified for the Step Up Tier 4, the thereby encourage the submission of 25 Exchange believes the proposed lower See e.g., Cboe BZX U.S. Equities Exchange additional liquidity to a national (‘‘BZX’’) Fee Schedule, Footnote 1, Add Volume volume requirements are reasonable as Tiers which provide enhanced rebates between securities exchange, thus promoting they would provide an additional $0.0025 and $0.0032 per share for displayed orders price discovery and transparency and incentive for ETP Holders to qualify for where BZX members meet certain volume enhancing order execution this established tier and direct their thresholds. opportunities for ETP Holders from the order flow to the Exchange and provide 26 See e.g., Fee Schedule, Step Up Tier, Step Up Tier 2, Step Up Tier 3 and Step Up Tier 4, which substantial amounts of liquidity present meaningful added levels of displayed provide enhanced rebates between $0.0025 and on the Exchange, which would benefit liquidity, thereby contributing to the $0.0033 per share in Tape A Securities, between all market participants on the Exchange. depth and market quality on the $0.0022 and $0.0034 per share in Tape B Securities, Finally, the Exchange believes that Exchange. and between $0.0025 and $0.0033 per share in Tape C Securities for orders that provide displayed the proposed Tape B Step Up Tier is liquidity where ETP Holders meet certain volume equitable because the magnitude of the 24 See id. thresholds. additional credit is not unreasonably

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55607

high relative to credits paid by other Exchange and benefiting investors Exchange believes it is not unfairly exchanges for orders that provide generally. As to those market discriminatory to provide an additional additional step up liquidity.27 The participants that do not presently incremental credit to ETP Holders that Exchange believes the proposed rule qualify for the adding liquidity credits, satisfy the Tape B Step Up Tier change would improve market quality the proposal will not adversely impact requirements and add liquidity in Tape for all market participants on the their existing pricing or their ability to B Securities. Further, the Exchange Exchange and, as a consequence, attract qualify for other credits provided by the believes the proposed Tape B Step Up more liquidity to the Exchange, thereby Exchange. Tier credit would incentivize ETP improving market-wide quality and The Proposed Fee Change Is Not Holders that meet the current tiered price discovery. Unfairly Discriminatory requirements to send more orders to the Since the proposed Tape B Step Up Exchange to qualify for higher credits. Tier would be new, no ETP Holder The Exchange believes that the The Exchange also believes that the currently qualifies for it. The Exchange proposal is not unfairly discriminatory. proposed change is not unfairly believes that at least seven ETP Holders In the prevailing competitive discriminatory because it is reasonably could qualify for the proposed higher environment, ETP Holders are free to related to the value to the Exchange’s credit, but without a view of ETP Holder disfavor the Exchange’s pricing if they market quality associated with higher activity on other exchanges and off- believe that alternatives offer them volume. exchange venues, the Exchange has no better value. Finally, the submission of orders to way of knowing whether this proposed The proposal to lower the volume the Exchange is optional for ETP rule change would result in any ETP requirement under Step Up Tier 4 Holders in that they could choose Holder qualifying for the tier. The neither targets or will it have a disparate whether to submit orders to the Exchange believes the proposed higher impact on any particular category of Exchange and, if they do, the extent of credit is reasonable as it would provide market participant. The proposal does its activity in this regard. The Exchange an additional incentive for ETP Holders not permit unfair discrimination believes that it is subject to significant to direct their order flow to the because the lower threshold would be competitive forces, as described below Exchange and provide meaningful applied to all similarly situated ETP in the Exchange’s statement regarding Holders, who would all be eligible for added levels of liquidity in order to the burden on competition. qualify for the higher credit, thereby the same credit on an equal basis. For the foregoing reasons, the contributing to depth and market Accordingly, no ETP Holder already Exchange believes that the proposal is quality on the Exchange. operating on the Exchange would be consistent with the Act. The Exchange believes the proposed disadvantaged by this allocation of fees. rule change would improve market The Exchange believes it is not B. Self-Regulatory Organization’s quality for all market participants on the unfairly discriminatory to adopt lower Statement on Burden on Competition Exchange and, as a consequence, attract volume requirements for ETP Holders to In accordance with Section 6(b)(8) of more liquidity to the Exchange thereby qualify for the Step Up Tier 4 pricing the Act,28 the Exchange believes that the improving market-wide quality. The tier as the proposed change would apply proposed rule change would not impose on an equal basis to all ETP Holders that proposal neither targets nor will it have any burden on competition that is not add liquidity by meeting the lower a disparate impact on any particular necessary or appropriate in furtherance volume requirements. Further, the category of market participant. ETP of the purposes of the Act. Instead, as Exchange believes the proposed lower Holders that currently qualify for credits discussed above, the Exchange believes volume requirements would incentivize associated with Step Up pricing tiers on that the proposed changes would ETP Holders to execute more of their the Exchange will continue to receive encourage the submission of additional liquidity-providers orders on the credits when they provide liquidity to liquidity to a public exchange, thereby Exchange to qualify for the increased the Exchange. The Exchange believes promoting market depth, price credits payable under Step Up Tier 4. that recalibrating the requirements for discovery and transparency and The Exchange also believes that the providing liquidity will continue to enhancing order execution proposed change is not unfairly attract order flow and liquidity to the opportunities for ETP Holders. As a discriminatory because it is reasonably Exchange for the benefit of investors result, the Exchange believes that the related to the value of the Exchange’s generally. proposed change furthers the Since no ETP Holder presently market quality associated with higher Commission’s goal in adopting qualifies for the credits associated with volume. The proposed lower volume Regulation NMS of fostering integrated Step Up Tier 4, the proposal will not requirements would apply equally to all competition among orders, which adversely impact their existing pricing ETP Holders as each would be required promotes ‘‘more efficient pricing of or their ability to qualify for other to execute providing volume in Tapes individual stocks for all types of orders, credits provided by the Exchange. With A, B and C Securities during the billing large and small.’’ 29 the proposed new Tape B Step Up Tier, month that is at least 0.55% of US Intramarket Competition. The all ETP Holders would be eligible to CADV over its providing ADV in proposed change is designed to attract qualify for the higher credit if they September 2019, taken as a percentage additional order flow to the Exchange. increase their Adding ADV over their of US CADV, regardless of whether an The Exchange believes that the own baseline of order flow. The ETP Holder currently meets the proposed lower volume requirements Exchange believes that offering a higher requirement of another pricing tier. would continue to incentivize market step up credit for providing liquidity if The Exchange believes it is not participants to direct providing the step up requirements for Tape B unfairly discriminatory to provide a displayed order flow to the Exchange. securities are met, will continue to higher per share step up credit, as the Greater liquidity benefits all market attract order flow and liquidity to the proposed credit would be provided on Exchange, thereby providing additional an equal basis to all ETP Holders that 28 15 U.S.C. 78f(b)(8). price improvement opportunities on the add liquidity by meeting the new 29 See Securities Exchange Act Release No. 51808, proposed Tape B Step Up Tier’s 70 FR 37495, 37498–99 (June 29, 2005) (S7–10–04) 27 See note 25, supra. requirements. For the same reason, the (Final Rule).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55608 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

participants on the Exchange by action is necessary or appropriate in the comment submissions. You should providing more trading opportunities public interest, for the protection of submit only information that you wish and encourages ETP Holders, to send investors, or otherwise in furtherance of to make available publicly. All orders, thereby contributing to robust the purposes of the Act. If the submissions should refer to File levels of liquidity, which benefits all Commission takes such action, the Number SR–NYSEArca–2019–70, and market participants. The proposed Commission shall institute proceedings should be submitted on or before volume requirements would be under Section 19(b)(2)(B) 32 of the Act to November 7, 2019. applicable to all similarly-situated determine whether the proposed rule For the Commission, by the Division of market participants, and, as such, the change should be approved or Trading and Markets, pursuant to delegated proposed change would not impose a disapproved. authority.33 disparate burden on competition among IV. Solicitation of Comments Jill M. Peterson, market participants on the Exchange. Assistant Secretary. Intermarket Competition. The Interested persons are invited to [FR Doc. 2019–22700 Filed 10–16–19; 8:45 am] Exchange operates in a highly submit written data, views, and competitive market in which market arguments concerning the foregoing, BILLING CODE 8011–01–P participants can readily choose to send including whether the proposed rule their orders to other exchange and off- change is consistent with the Act. Comments may be submitted by any of SECURITIES AND EXCHANGE exchange venues if they deem fee levels COMMISSION at those other venues to be more the following methods: favorable. As noted, the Exchange’s Electronic Comments [Release No. 34–87286; File No. SR– market share of intraday trading (i.e., CboeBZX–2019–076] • Use the Commission’s internet excluding auctions) was 8.2% in August comment form (http://www.sec.gov/ 2019. In such an environment, the Self-Regulatory Organizations; Cboe rules/sro.shtml); or BZX Exchange, Inc.; Notice of Filing of Exchange must continually adjust its • Send an email to rule-comments@ fees and rebates to remain competitive a Proposed Rule Change, as Modified sec.gov. Please include File Number SR– by Amendment No. 1, To List and with other exchanges and with off- NYSEArca–2019–70 on the subject line. exchange venues. Because competitors Trade Shares of the Clearbridge Small are free to modify their own fees and Paper Comments Cap Value ETF Under Currently Proposed Rule 14.11(k) credits in response, and because market • Send paper comments in triplicate participants may readily adjust their to Secretary, Securities and Exchange October 10, 2019. order routing practices, the Exchange Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the does not believe its proposed fee change Washington, DC 20549–1090. Securities Exchange Act of 1934 (the can impose any burden on intermarket All submissions should refer to File ‘‘Act’’),1 and Rule 19b–4 thereunder,2 competition. Number SR–NYSEArca-2019–70. This notice is hereby given that on The Exchange believes that the file number should be included on the proposed change could promote September 26, 2019, Cboe BZX subject line if email is used. To help the Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) competition between the Exchange and Commission process and review your other execution venues, including those filed with the Securities and Exchange comments more efficiently, please use Commission (‘‘Commission’’) a that currently offer similar order types only one method. The Commission will and comparable transaction pricing, by proposed rule change, and on October 9, post all comments on the Commission’s 2019, the Exchange filed Amendment encouraging additional orders to be sent internet website (http://www.sec.gov/ to the Exchange for execution. No. 1 to the proposed rule change, rules/sro.shtml). Copies of the which amended and replaced the C. Self-Regulatory Organization’s submission, all subsequent proposed rule change in its entirety. The Statement on Comments on the amendments, all written statements proposed rule change, as modified by Proposed Rule Change Received From with respect to the proposed rule Amendment No. 1, is described in Items Members, Participants, or Others change that are filed with the I, II, and III below, which Items have No written comments were solicited Commission, and all written been prepared by the Exchange. The or received with respect to the proposed communications relating to the Commission is publishing this notice to rule change. proposed rule change between the solicit comments on the proposed rule Commission and any person, other than change, as modified by Amendment No. III. Date of Effectiveness of the those that may be withheld from the 1, from interested persons. Proposed Rule Change and Timing for public in accordance with the Commission Action provisions of 5 U.S.C. 552, will be I. Self-Regulatory Organization’s Statement of the Terms of Substance of The foregoing rule change is effective available for website viewing and the Proposed Rule Change upon filing pursuant to Section printing in the Commission’s Public 19(b)(3)(A) 30 of the Act and Reference Room, 100 F Street NE, The Exchange proposes a rule change subparagraph (f)(2) of Rule 19b–4 31 Washington, DC 20549 on official to list and trade shares of the thereunder, because it establishes a due, business days between the hours of Clearbridge Small Cap Value ETF under fee, or other charge imposed by the 10:00 a.m. and 3:00 p.m. Copies of the currently proposed Rule 14.11(k). Exchange. filing also will be available for The text of the proposed rule change At any time within 60 days of the inspection and copying at the principal is also available on the Exchange’s filing of such proposed rule change, the offices of the Exchange. All comments website (http://markets.cboe.com/us/ Commission summarily may received will be posted without change. equities/regulation/rule_filings/bzx/), at temporarily suspend such rule change if Persons submitting comments are the Exchange’s Office of the Secretary, it appears to the Commission that such cautioned that we do not redact or edit personal identifying information from 33 17 CFR 200.30–3(a)(12). 30 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). 31 17 CFR 240.19b-4(f)(2). 32 15 U.S.C. 78s(b)(2)(B). 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55609

and at the Commission’s Public Managed Portfolio Shares on the will erect and maintain a ‘‘fire wall’’ Reference Room. Exchange. As such, the Exchange is between the investment adviser and submitting this proposal in order to list personnel of the broker-dealer or broker- II. Self-Regulatory Organization’s and trade shares of the Clearbridge dealer affiliate, as applicable, with Statement of the Purpose of, and Small Cap Value Fund (the ‘‘Fund’’) respect to access to information Statutory Basis for, the Proposed Rule under proposed Rule 14.11(k). concerning the composition and/or Change changes to such Investment Company Description of the Fund and the Trust In its filing with the Commission, the portfolio and/or Creation Basket.6 Any Exchange included statements The shares of the Fund (the ‘‘Shares’’) person related to the investment adviser concerning the purpose of and basis for will be issued by Precidian ETF Trust II or Investment Company who makes the proposed rule change and discussed (the ‘‘Trust’’), a statutory trust organized decisions pertaining to the Investment any comments it received on the under the laws of the State of Delaware Company’s portfolio composition or has proposed rule change. The text of these and registered with the Commission as access to information regarding the statements may be examined at the an open-end management investment Investment Company’s portfolio places specified in Item IV below. The company.4 The investment adviser to composition, Creation Basket, or Exchange has prepared summaries, set the Trust will be Precidian Funds LLC changes thereto, must be subject to forth in sections A, B, and C below, of (the ‘‘Adviser’’). The Sub-Adviser to the procedures designed to prevent the use the most significant aspects of such Fund will be ClearBridge Investments, and dissemination of material statements. LLC (the ‘‘Sub-Adviser’’ or nonpublic information regarding the ‘‘ClearBridge’’). Legg Mason Investor A. Self-Regulatory Organization’s applicable Investment Company Services, LLC (the ‘‘Distributor’’) will 7 Statement of the Purpose of, and portfolio or Creation Basket. Proposed serve as the distributor of the Fund’s Statutory Basis for, the Proposed Rule Rule 14.11(k)(2)(D) is similar to Rule Shares. All statements and Change 14.11(c)(5)(A)(i), related to Index Fund representations made in this filing Shares, except that proposed Rule 1. Purpose regarding the description of the 14.11(k)(2)(D) relates to the This Amendment No. 1 to SR– portfolio or reference assets, limitations establishment of a ‘‘fire wall’’ between CboeBZX–2019–076 amends and on portfolio holdings or reference assets, the investment adviser and the broker- replaces in its entirety the proposal as dissemination and availability of the dealer as applicable to an Investment originally submitted on September 26, Verified Intraday Indicative Value Company’s portfolio and Creation 2019. The Exchange submits this (‘‘VIIV’’),5 reference assets, and intraday Basket, not an underlying benchmark Amendment No. 1 in order to clarify indicative values, and the applicability index, as is the case with index-based certain points and add additional details of Exchange rules shall constitute funds. Proposed Rule 14.11(k)(2)(D) is to the proposal. continued listing requirements for also similar to Rule 14.11(i)(7), related The Exchange has submitted a listing the Shares on the Exchange, as proposal and two subsequent provided under proposed Rule 14.11(a). 6 Proposed Rule 14.11(k)(3)(E) defines the term amendments to add new Rule 14.11(k) Proposed Rule 14.11(k)(2)(D) provides ‘‘Creation Basket’’ as on any given business day the that if the investment adviser to the names and quantities of the specified instruments for the purpose of permitting the listing that are required for an AP Representative to and trading of Managed Portfolio Investment Company issuing Managed deposit in-kind on behalf of an Authorized Shares, which are securities issued by Portfolio Shares is registered as a Participant in exchange for a Creation Unit and the an actively managed open-end broker-dealer or is affiliated with a names and quantities of the specified instruments 3 that will be transferred in-kind to an AP management investment company. broker-dealer, such investment adviser Representative on behalf of an Authorized Proposed Rule 14.11(k)(2)(A) would Participant in exchange for a Redemption Unit, require the Exchange to file separate 4 The Trust is registered under the 1940 Act. The which will be identical and will be transmitted to proposals under Section 19(b) of the Act Trust plans to file a registration statement on Form each AP Representative before the commencement N–1A relating to the Fund (the ‘‘Registration of trading. before listing and trading any series of Statement’’). An order granting exemptive relief to 7 An investment adviser to an open-end fund is the Trust was issued on May 20, 2019 (File No. required to be registered under the Investment 3 As proposed, the term ‘‘Managed Portfolio 812–14405) (the ‘‘Exemptive Order’’). Investments Advisers Act of 1940 (the ‘‘Advisers Act’’). As a Share’’ means a security that (a) represents an made by the Fund will comply with the conditions result, the Adviser, the Sub-Adviser, and their interest in an investment company registered under set forth in the Exemptive Order. The description respective related personnel will be subject to the the Investment Company Act of 1940 (‘‘Investment of the operation of the Trust and the Fund herein provisions of Rule 204A–1 under the Advisers Act Company’’) organized as an open-end management is based, in part, on the Exemptive Order. The relating to codes of ethics. This Rule requires investment company, that invests in a portfolio of Exemptive Order specifically notes that ‘‘granting investment advisers to adopt a code of ethics that securities selected by the Investment Company’s the requested exemptions is appropriate in and reflects the fiduciary nature of the relationship to investment adviser consistent with the Investment consistent with the public interest and consistent clients as well as compliance with other applicable Company’s investment objectives and policies; (b) with the protection of investors and the purposes securities laws. Accordingly, procedures designed is issued in a Creation Unit, or multiples thereof, fairly intended by the policy and provisions of the to prevent the communication and misuse of non- in return for a designated portfolio of instruments Act. It is further found that the terms of the public information by an investment adviser must (and/or an amount of cash) with a value equal to proposed transactions, including the consideration be consistent with Rule 204A–1 under the Advisers the next determined net asset value and delivered to be paid or received, are reasonable and fair and Act. In addition, Rule 206(4)–7 under the Advisers to the Authorized Participant (as defined in the do not involve overreaching on the part of any Act makes it unlawful for an investment adviser to Investment Company’s Form N–1A filed with the person concerned, and that the proposed provide investment advice to clients unless such SEC) through a Confidential Account; (c) when transactions are consistent with the policy of each investment adviser has (i) adopted and aggregated into a Redemption Unit, or multiples registered investment company concerned and with implemented written policies and procedures thereof, may be redeemed for a designated portfolio the general purposes of the Act.’’ See Investment reasonably designed to prevent violations, by the of instruments (and/or an amount of cash) with a Company Act Release Nos. 33440 and 33477. investment adviser and its supervised persons, of value equal to the next determined net asset value 5 Proposed Rule 14.11(k)(3)(B) defines the term the Advisers Act and the Commission rules adopted delivered to the Confidential Account for the VIIV as the indicative value of a Managed Portfolio thereunder; (ii) implemented, at a minimum, an benefit of the Authorized Participant; and (d) the Share based on all of the holdings of a series of annual review regarding the adequacy of the portfolio holdings for which are disclosed within at Managed Portfolio Shares as of the close of business policies and procedures established pursuant to least 60 days following the end of every calendar on the prior business day and, for corporate actions, subparagraph (i) above and the effectiveness of their quarter. See Securities Exchange Act Release No. based on the applicable holdings as of the opening implementation; and (iii) designated an individual 86157 (June 19, 2019), 84 FR 29892 (June 25, 2019) of business on the current business day, priced and (who is a supervised person) responsible for and 87062 (September 23, 2019) (SR–CboeBZX– disseminated in one second intervals during administering the policies and procedures adopted 2019–047) (the ‘‘Proposal’’). Regular Trading Hours by the Reporting Authority. under subparagraph (i) above.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55610 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

to Managed Fund Shares, except that Description of the Fund Portfolio Shares, the Exchange believes proposed Rule 14.11(k)(2)(D) relates to Clearbridge Small Cap Value ETF that the overarching policy issues the establishment of a ‘‘fire wall’’ related to liquidity, market cap, between the investment adviser and the The Fund seeks long-term capital diversity, and concentration of portfolio broker-dealer as applicable to an growth. Under Normal Market holdings that Rule 14.11(i)(4)(C) is 8 Investment Company’s portfolio and Conditions the Fund will invest at intended to address are equally Creation Basket, and not just the least 80% of its net assets, plus applicable to series of Managed underlying portfolio, as is the case with borrowings for investment purposes, in Portfolio Shares. U.S. exchange-listed common stocks Managed Fund Shares. The Adviser is Investment Restrictions not registered as a broker-dealer or and other equity securities of small affiliated with a broker-dealer. The Sub- capitalization U.S. companies or in The Fund may hold up to an aggregate Adviser is not registered as a broker- other U.S. exchange-listed investments amount of 15% of its net assets in dealer, but is affiliated with a broker- with similar economic characteristics, illiquid assets.10 Illiquid securities and dealer and has implemented and will including only the following U.S. other illiquid assets include those maintain a ‘‘fire wall’’ with respect to exchange-listed securities: Common subject to contractual or other such broker-dealer regarding access to stocks, preferred securities, securities of restrictions on resale and other information concerning the composition other investment companies and of real instruments or assets that lack readily and/or changes to the Fund’s portfolio estate investment companies (‘‘REITs’’), available markets as determined in and Creation Basket. and warrants and rights. The portfolio accordance with Commission staff managers use quantitative parameters to 11 In the event (a) the Adviser or Sub- guidance. The Fund will monitor its select a universe of smaller capitalized Adviser becomes registered as a broker- portfolio liquidity on an ongoing basis companies that fit the Fund’s general dealer or becomes newly affiliated with to determine whether, in light of current investment criteria. In selecting circumstances, an adequate level of a broker-dealer, or (b) any new adviser individual securities from within this liquidity is being maintained, and will or sub-adviser is a registered broker- range, the portfolio managers look for consider taking appropriate steps in dealer or becomes affiliated with a ‘‘value’’ attributes, such as low stock order to maintain adequate liquidity. In broker-dealer, it will implement and price relative to earnings, book value any event, the Fund will not purchase maintain a fire wall with respect to its and cash flow and high return on any securities that are illiquid relevant personnel or its broker-dealer invested capital. The portfolio managers investments at the time of purchase. affiliate regarding access to information also use quantitative methods to According to the Registration concerning the composition and/or identify catalysts and trends that might Statement, the Fund will seek to qualify changes to the portfolio and the influence the Fund’s industry or sector for treatment as a Regulated Investment Creation Basket, and will be subject to focus, or the portfolio managers’ Company (‘‘RIC’’) under the Internal procedures designed to prevent the use individual security selection. Revenue Code.12 and dissemination of material non- In addition, the Fund may also invest The Shares of the Fund will conform public information regarding such up to 20% of its net assets, plus to the initial and continued listing portfolio or Creation Basket. borrowings for investment purposes, in criteria under proposed Rule 14.11(k). Further, proposed Rule 14.11(k)(2)(E) common stocks, preferred securities, The Fund’s holdings will be limited to requires that any person or entity, and warrants and rights of U.S. and consistent with what is permissible including an AP Representative, exchange-listed companies with larger under the Exemptive Order and custodian, pricing verification agent, market capitalizations, U.S. ETFs,9 U.S. described herein. reporting authority, distributor, or exchange-listed ADRs, U.S. exchange- The Fund’s investments will be administrator, who has access to listed equity futures contracts, and U.S. consistent with its investment objective information regarding the Investment exchange-listed equity index futures Company’s portfolio composition, the contracts. The Fund may also hold cash 10 See Rule 22e–4(b)(1)(iv), which prohibits a Creation Basket, or changes thereto, without limitation. fund from acquiring any illiquid investment if, immediately after the acquisition, the fund would must be subject to procedures designed The Exchange notes that the Fund’s have invested more than 15% of its net assets in to prevent the use and dissemination of holdings will meet the generic listing illiquid investments that are assets. See Investment material nonpublic information standards applicable to series of Company Act Release No. 32315 (Oct. 13, 2016), 81 regarding the applicable Investment Managed Fund Shares under Rule FR 82142 (Nov. 18, 2016) (adopting Rule 22e–4 under the 1940 Act). Prior to the adoption of Rule Company portfolio or Creation Basket. 14.11(i)(4)(C). While such standards do 22e–4 in 2016, the Commission had long-standing Moreover, if any such person or entity not apply directly to series of Managed guidelines that required open-end funds to hold no is registered as a broker-dealer or more than 15% of their net assets in illiquid affiliated with a broker-dealer, such 8 Proposed Rule 14.11(k)(3)(I) defines the term securities and other illiquid assets. See Investment Company Act Release No. 28193 (March 11, 2008), person or entity will erect and maintain ‘‘Normal Market Conditions’’ as including, but not limited to, the absence of trading halts in the 73 FR 14618 (March 18, 2008), FN 34. See also a ‘‘fire wall’’ between the person or applicable financial markets generally; operational Investment Company Act Release Nos. 5847 entity and the broker-dealer with issues (e.g., systems failure) causing dissemination (October 21, 1969), 35 FR 19989 (December 31, respect to access to information of inaccurate market information; or force majeure 1970) (Statement Regarding ‘‘Restricted Securities’’); and 18612 (March 12, 1992), 57 FR concerning the composition and/or type events such as natural or manmade disaster, act of God, armed conflict, act of terrorism, riot or 9828 (March 20, 1992) (Revisions of Guidelines to changes to such Investment Company labor disruption or any similar intervening Form N–1A). portfolio or Creation Basket. circumstance. 11 A fund’s portfolio security is illiquid if it The portfolio for the Fund will consist 9 For purposes of describing the holdings of the cannot be disposed of in the ordinary course of business within seven days at approximately the primarily of U.S. exchange-listed equity Fund, ETFs include Portfolio Depository Receipts (as described in Rule 14.11(b)); Index Fund Shares value ascribed to it by the fund. See Investment securities and shares issued by other (as described in Rule 14.11(c)); and Managed Fund Company Act Release Nos. 14983 (March 12, 1986), U.S. exchange-listed ETFs. All Shares (as described in Rule 14.11(i)). The ETFs in 51 FR 9773 (March 21, 1986) (adopting exchange-listed equity securities in which the Fund may invest all will be listed and amendments to Rule 2a–7 under the 1940 Act); and traded on U.S. national securities exchanges. While 17452 (April 23, 1990), 55 FR 17933 (April 30, which the Fund will invest will be the Fund may invest in inverse ETFs, the Fund will 1990) (adopting Rule 144A under the Securities Act listed and traded on U.S. national not invest in leveraged (e.g., 2X, –2X, 3X or –3X) of 1933). securities exchanges. ETFs. 12 26 U.S.C. 851.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55611

and will not be used to enhance disclosing the identity of such securities Representative to purchase the Creation leverage. While the Fund may invest in to the AP. Basket. The AP Representative would inverse ETFs, the Fund will not invest Each AP Representative will be given, then purchase the necessary securities in leveraged (e.g., 2X, –2X, 3X or –3X) before the commencement of trading in the Confidential Account. In ETFs. each Business Day (defined below), the purchasing the necessary securities, the Creation Basket for that day. This Creations and Redemptions of Shares AP Representative will use methods, information will permit an AP that has such as breaking the transaction into Creations and redemptions of the established a Confidential Account with multiple transactions and transacting in Shares will occur as described in the an AP Representative, to instruct the AP multiple marketplaces, to avoid Proposal. More specifically, in Representative to buy and sell positions revealing the composition of the connection with the creation and in the portfolio securities to permit Creation Basket. Once the Creation redemption of Creation Units 13 and creation and redemption of Creation Basket has been acquired in the Redemption Units,14 the delivery or Units and Redemption Units. Shares of Confidential Account, the AP receipt of any portfolio securities in- the Fund will be issued and redeemed Representative would contribute the kind will be required to be effected in Creation Units and Redemption Units Creation Basket in-kind to the Fund. through a separate confidential of 5,000 or more Shares. The Fund will The Distributor will furnish brokerage account (a ‘‘Confidential offer and redeem Creation Units and acknowledgements to those placing 15 Account’’). Authorized Participants Redemption Units on a continuous basis such orders that the orders have been (as defined in the Fund’s Registration at the net asset value (the ‘‘NAV’’) per accepted, but the Distributor may reject Statement, ‘‘AP’’) will sign an agreement share next determined after receipt of an any order which is not submitted in 16 with an AP Representative order in proper form. The NAV per proper form, as described in the Fund’s establishing the Confidential Account share of the Fund will be determined as prospectus or Statement of Additional for the benefit of the AP. AP of the close of regular trading on the Information (‘‘SAI’’). The NAV of the Representatives will be broker-dealers. Exchange on each day that the Exchange Fund is expected to be determined once An AP must be a Depository Trust is open (a ‘‘Business Day’’). The Fund each Business Day at a time determined Company (‘‘DTC’’) Participant that has will sell and redeem Creation Units and by the Trust’s Board of Trustees executed a ‘‘Participant Agreement’’ Redemption Units only on Business (‘‘Board’’), currently anticipated to be as with the Distributor with respect to the Days. The Adviser anticipates that the of the close of the regular trading creation and redemption of Creation initial price of a share will range from session on the Exchange (ordinarily 4:00 Units and Redemption Units and $20 to $60, and that the price of a p.m. E.T.) (the ‘‘Valuation Time’’). The formed a Confidential Account for its Creation Unit will be at least $100,000. Fund will establish a cut-off time benefit in accordance with the terms of To keep costs low and permit the (‘‘Order Cut-Off Time’’) for purchase the Participant Agreement. For purposes Fund to be as fully invested as possible, orders in proper form. Such Order Cut- of creations or redemptions, all Shares will be purchased and redeemed Off Time will be provided in the transactions will be effected through the in Creation Units and Redemption Units Registration Statement. To initiate a respective AP’s Confidential Account, and generally on an in-kind basis. purchase of Shares, an AP must submit for the benefit of the AP without Accordingly, except where the purchase to the Distributor an irrevocable order to or redemption will include cash under purchase such Shares after the most 13 Proposed Rule 14.11(k)(3)(F) defines the term the circumstances described in the ‘‘Creation Unit’’ as a specified minimum number of recent prior Valuation Time. All orders Managed Portfolio Shares issued by an Investment Registration Statement, APs will be to purchase Creation Units must be Company at the request of an Authorized required to purchase Creation Units by received by the Distributor no later than Participant in return for a designated portfolio of making an in-kind deposit of specified the Order Cut-Off Time in each case on instruments and/or cash. instruments (‘‘Deposit Instruments’’), 14 Proposed Rule 14.11(k)(3)(G) defines the term the date such order is placed ‘‘Redemption Unit’’ as a specified minimum and APs redeeming their Shares will (‘‘Transmittal Date’’) for the AP to number of Managed Portfolio Shares that may be receive an in-kind transfer of specified receive the NAV per share determined redeemed to an Investment Company at the request instruments (‘‘Redemption on the Transmittal Date.18 of an Authorized Participant in return for a Instruments’’) through the AP portfolio of instruments and/or cash. Purchases of Shares will be settled in- 15 Proposed Rule 14.11(k)(3)(D) defines the term Representative in their Confidential kind and/or cash for an amount equal to 17 ‘‘Confidential Account’’ as an account owned by an Account. the applicable NAV per share purchased Authorized Participant and held with an AP plus applicable ‘‘Transaction Fees,’’ as Representative on behalf of the Authorized Placement of Purchase Orders discussed below. While the Fund will Participant. The account will be established and The Fund will issue Shares through generally receive securities in-kind, the governed by contractual agreement between the AP the Distributor on a continuous basis at Representative and the Authorized Participant Adviser may determine from time to NAV. The Exchange represents that the solely for the purposes of creation and redemption, time that it is not in the Fund’s best while keeping confidential the Creation Basket issuance of Shares will operate in a interests to receive securities in-kind, constituents of each series of Managed Portfolio manner similar to that of other ETFs. Shares, including from the Authorized Participant. but rather to receive cash. The books and records of the Confidential Account The Fund will issue Shares only at the will be maintained by the AP Representative on NAV per share next determined after an Authorized Participant Redemption behalf of the Authorized Participant. order in proper form is received. The Shares may be redeemed to the 16 Proposed Rule 14.11(k)(3)(C) defines the term In the case of a creation, the AP Fund in Redemption Unit size or ‘‘AP Representative’’ as an unaffiliated broker- would enter an irrevocable creation multiples thereof as described below. dealer with which an Authorized Participant has order with the Fund and direct the AP signed an agreement to establish a Confidential Redemption orders of Redemption Units Account for the benefit of such Authorized must be placed by an AP (‘‘AP Participant that will deliver or receive all 17 The Fund must comply with the federal consideration to or from the Investment Company securities laws in accepting Deposit Instruments Redemption Order’’). The Fund will in a creation or redemption. An AP Representative and satisfying redemptions with Redemption will be restricted from disclosing the Creation Instruments, including that the Deposit Instruments 18 To the extent that the Fund allows creations or Basket. Each AP shall enter into its own separate and Redemption Instruments are sold in redemptions to be conducted in cash, such Confidential Account agreement (‘‘Confidential transactions that would be exempt from registration transactions will be effected in the same manner for Account Agreement’’) with an AP Representative. under the 1933 Act. all APs.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55612 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

establish in its Registration Statement connection with rebalancing or discount of the market closing price or an Order Cut-Off Time for redemption transitioning a portfolio in line with its Bid/Ask Price against the NAV, and (2) orders of Redemption Units in proper investment objective, or if there is data in chart format displaying the form. Redemption Units of the Fund substantially more creation than frequency distribution of discounts and will be redeemable at their NAV per redemption activity during the period premiums of the daily Bid/Ask Price share next determined after receipt of a immediately preceding a redemption against the NAV, within appropriate request for redemption by the Trust in request, or as necessary or appropriate ranges, for each of the four previous the manner specified below before the in accordance with applicable laws and calendar quarters. The website and Order Cut-Off Time. To initiate an AP regulations.20 information will be publicly available at Redemption Order, an AP must submit no charge. Net Asset Value to the Distributor an irrevocable order to The Trust’s SAI and the Fund’s redeem such Redemption Unit after the The NAV per share of the Fund will shareholder reports will be available most recent prior Valuation Time, but be computed by dividing the value of free upon request from the Trust. These not later than the Order Cut-Off Time. the net assets of the Fund (i.e., the value documents and forms may be viewed In the case of a redemption, the AP of its total assets less total liabilities) by on-screen or downloaded from the would enter into an irrevocable the total number of Shares of the Fund Commission’s website at www.sec.gov. redemption order, and then outstanding, rounded to the nearest Information regarding market price immediately instruct the AP cent. Expenses and fees, including, and trading volume of the Shares will be Representative to sell the Creation without limitation, the management, continually available on a real-time Basket that it will receive in the administration and distribution fees, basis throughout the day on brokers’ redemption. As with the purchase of will be accrued daily and taken into computer screens and other electronic securities, the AP Representative will account for purposes of determining services. Quotation and last sale use methods, such as breaking the NAV. Interest and investment income information for the Shares will be transaction into multiple transactions on the Trust’s assets accrue daily and available via the Consolidated Tape and transacting in multiple will be included in the Fund’s total Association (‘‘CTA’’) high-speed line. In marketplaces, to avoid revealing the assets. The NAV per share for the Fund addition, the VIIV, as defined in composition of the Creation Basket. will be calculated by the Fund’s proposed Rule 14.11(k)(3)(B) and as Consistent with the provisions of administrator and determined as of the described further below, will be widely Section 22(e) of the 1940 Act and Rule close of the regular trading session on disseminated by the Reporting 22e–2 thereunder, the right to redeem the Exchange (ordinarily 4:00 p.m., E.T.) Authority 22 and/or one or more major will not be suspended, nor payment on each day that the Exchange is open. market data vendors in one-second upon redemption delayed, except for: Shares of U.S. exchange-listed equity intervals during Regular Trading Hours. (1) Any period during which the securities, including common stocks, Dissemination of the VIIV Exchange is closed other than preferred securities, securities of other customary weekend and holiday investment companies and of REITs, With respect to trading of the Shares, closings, (2) any period during which and warrants and rights, as well as the ability of market participants to buy trading on the Exchange is restricted, (3) ETFs, exchange-listed ADRs, and U.S. and sell Shares at prices near the VIIV any period during which an emergency exchange-listed futures will be valued at is dependent upon their assessment that exists as a result of which disposal by market value, which will generally be the VIIV is a reliable, indicative real- the Fund of securities owned by it is not determined using the last reported time value for the Fund’s underlying reasonably practicable or it is not official closing or last trading price on holdings. Market participants are reasonably practicable for the Fund to the exchange or market on which the expected to accept the VIIV as a reliable, determine its NAV, and (4) for such securities are primarily traded at the indicative real-time value because (1) other periods as the Commission may by time of valuation. the VIIV will be calculated and disseminated based on the Fund’s actual order permit for the protection of Availability of Information shareholders. portfolio holdings, (2) the securities in Redemptions will occur primarily in- The Fund’s website which the Fund plans to invest are kind, although redemption payments (www.PrecidianFunds.com), which will generally highly liquid and actively may also be made partly or wholly in be publicly available prior to the listing traded and therefore generally have cash.19 The Participant Agreement and trading of Shares, will include a accurate real time pricing available, and signed by each AP will require form of the prospectus for the Fund that (3) market participants will have a daily establishment of a Confidential Account may be downloaded. The Fund’s opportunity to evaluate whether the to receive distributions of securities in- website will include additional VIIV at or near the close of trading is kind upon redemption. Each AP will be quantitative information updated on a indeed predictive of the actual NAV. required to open a Confidential Account daily basis, including, for the Fund, (1) The VIIV for the Fund will be with an AP Representative in order to the prior Business Day’s NAV, market facilitate orderly processing of closing price or mid-point of the bid/ask 22 Proposed Rule 14.11(k)(3)(H) defines the term spread at the time of calculation of such ‘‘Reporting Authority’’ in respect of a particular redemptions. While the Fund will 21 series of Managed Portfolio Shares means the generally distribute securities in-kind, NAV (the ‘‘Bid/Ask Price’’), and a calculation of the premium and Exchange, the exchange that lists a particular series the Adviser may determine from time to of Managed Portfolio Shares (if the Exchange is time that it is not in the Fund’s best trading such series pursuant to unlisted trading 20 To the extent that the Fund allows creations or privileges), an institution, or a reporting service interests to distribute securities in-kind, redemptions to be conducted in cash, such designated by the Investment Company as the but rather to sell securities and/or transactions will be effected in the same manner for official source for calculating and reporting distribute cash. For example, the all APs. information relating to such series, including, the Adviser may distribute cash to facilitate 21 The Bid/Ask Price of the Fund will be net asset value, the Verified Intraday Indicative determined using the mid-point between the Value, or other information relating to the issuance, orderly portfolio management in current NBB and NBO as of the time of calculation redemption or trading of Managed Portfolio Shares. of the Fund’s NAV. The records relating to Bid/Ask A series of Managed Portfolio Shares may have 19 The value of any positions not susceptible to Prices will be retained by the Fund and its service more than one Reporting Authority, each having in-kind settlement may be paid in cash. providers. different functions.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55613

disseminated by the Reporting the Exchange that it will provide the derivative products, including Managed Authority and/or one or more major Exchange with prompt notification Portfolio Shares. As part of these market data vendors in one-second upon the existence of any such surveillance procedures and consistent intervals during Regular Trading Hours. condition or set of conditions. with proposed Rule 14.11(k)(2)(C), the If the Adviser determines that a Proposed Rule 14.11(k)(4)(B)(iii)(b) Adviser will upon request make portfolio security does not have a provides that, if the Exchange becomes available to the Exchange and/or readily available market quotation, that aware that: (i) The Fund’s VIIV is not FINRA, on behalf of the Exchange, the fact will be disclosed as soon as being calculated or disseminated in one daily portfolio holdings of the Fund. practicable on the Fund’s website, second intervals, as required; (ii) the The issuer has represented to the including the identity and weighting of Fund’s NAV is not disseminated to all Exchange that it will advise the that security in the Fund’s portfolio, and market participants at the same time; Exchange of any failure by the Fund to the impact of that security on VIIV (iii) the Fund’s holdings are not made comply with the continued listing calculation, including the price for that available on at least a quarterly basis as requirements, and, pursuant to its security being used for the calculation required under the 1940 Act; or (iv) obligations under Section 19(g)(1) of the of that day’s VIIV. such holdings are not made available to Exchange Act, the Exchange will surveil all market participants at the same time, for compliance with the continued Trading Halts it will halt trading in such series until listing requirements. If the Fund is not With respect to trading halts, the such time as the VIIV, the NAV, or the in compliance with the applicable Exchange may consider all relevant holdings are available to all market listing requirements, the Exchange will factors in exercising its discretion to participants as required. commence delisting procedures under halt or suspend trading in the Shares of Exchange Rule 14.12. the Fund. The Exchange will halt Trading Rules The Exchange or FINRA, on behalf of trading in the Shares under the The Exchange deems the Shares to be the Exchange, or both, will conditions specified in BZX Rule 11.18. equity securities, thus rendering trading communicate as needed regarding Trading may be halted because of in the Shares subject to the Exchange’s trading in the Shares, underlying equity market conditions or for reasons that, in existing rules governing the trading of securities and U.S. exchange-listed the view of the Exchange, make trading equity securities. Shares will trade on futures with other markets and other in the Shares inadvisable, including the Exchange only during Regular entities that are members of the whether unusual conditions or Trading Hours as provided in proposed Intermarket Surveillance Group (‘‘ISG’’), circumstances detrimental to the Rule 14.11(k)(2)(B). As provided in BZX and the Exchange or FINRA, on behalf maintenance of a fair and orderly Rule 11.11(a), the minimum price of the Exchange, or both, may obtain market are present. Trading in the variation for quoting and entry of orders trading information regarding trading Shares also will be subject to proposed in securities traded on the Exchange is such securities from such markets and Rule 14.11(k)(4)(B)(iii)(a) and (b) in the $0.01, with the exception of securities other entities. In addition, the Exchange Proposal, which set forth circumstances that are priced less than $1.00, for may obtain information regarding under which trading in the Shares of the which the minimum price variation for trading in the Shares, underlying equity Fund will be halted. order entry is $0.0001. securities and U.S. exchange-listed Specifically, Proposed Rule The Shares will conform to the initial futures from markets and other entities 14.11(k)(4)(B)(iii)(a) provides that, upon and continued listing criteria under that are members of ISG or with which notification to the Exchange by the Rule 14.11(k) as well as all terms in the the Exchange has in place a Investment Company or its agent of the Exemptive Order. The Exchange comprehensive surveillance sharing existence of any condition or set of represents that, for initial and/or agreement.25 conditions specified in any currently continued listing, the Fund will be in In addition, the Exchange also has a applicable exemptive order or no-action compliance with Rule 10A–3 under the general policy prohibiting the relief granted by the Commission or Act.24 A minimum of 100,000 Shares of distribution of material, non-public Commission staff that would require the the Fund will be outstanding at the information by its employees. Investment Company’s investment commencement of trading on the Information Circular adviser to request that the Exchange halt Exchange. The Exchange will obtain a trading in the Managed Portfolio Shares, representation from the issuer of the Prior to the commencement of the Exchange shall halt trading in the Shares of the Fund that the NAV per trading, the Exchange will inform its Managed Portfolio Shares as soon as share of the Fund will be calculated members in an Information Circular practicable. Such halt in trading shall daily and will be made available to all (‘‘Circular’’) of the special continue until the Investment Company market participants at the same time. characteristics and risks associated with or its agent notifies the Exchange that trading the Shares. Specifically, the Surveillance the condition or conditions necessary Circular will discuss the following: (1) for the resumption of trading have been The Exchange believes that its The procedures for purchases and met.23 The Adviser has represented to surveillance procedures are adequate to redemptions of Shares; (2) BZX Rule properly monitor the trading of the 3.7, which imposes suitability 23 As provided in the Exemptive Order, such Shares on the Exchange during all obligations on Exchange members with conditions would exist where either: (i) The trading sessions and to deter and detect respect to recommending transactions in intraday indicative values calculated by the pricing violations of Exchange rules and the the Shares to customers; (3) how verification agent(s) differ by more than 25 basis points for 60 seconds in connection with pricing of applicable federal securities laws. information regarding the VIIV is the Verified Intraday Indicative Value; or (ii) Trading of the Shares through the disseminated; (4) the requirement that holdings representing 10% or more of the Fund’s Exchange will be subject to the members deliver a prospectus to portfolio have become subject to a trading halt or Exchange’s surveillance procedures for investors purchasing newly issued otherwise do not have readily available market quotations. The Exchange shall halt trading in the Shares prior to or concurrently with the Shares as soon as practicable after receipt of Adviser or its agent notifies the Exchange that these notification of the existence of such conditions. conditions no longer exist. 25 For a list of the current members of ISG, see Such halt in trading shall continue until the 24 See 17 CFR 240.10A–3. www.isgportal.org.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55614 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

confirmation of a transaction; (5) trading the Commission or if the Exchange is The Exchange further believes that the information; and (6) that the portfolio aware that the Investment Company is proposed rules are designed to prevent holdings will be disclosed within at not in compliance with the conditions fraudulent and manipulative acts and least 60 days following the end of every of any exemptive order or no-action practices related to the listing and calendar quarter. relief granted by the Commission to the trading of Managed Portfolio Shares In addition, the Circular will Investment Company with respect to the because they provide meaningful reference that the Fund is subject to Fund; (e) if any of the continued listing requirements about both the data that various fees and expenses described in requirements set forth in Rule 14.11(k) will be made publicly available about the Registration Statement. The Circular are not continuously maintained; (f) if the Shares as well as the information will discuss any exemptive, no-action, any of the applicable Continued Listing that will only be available to certain and interpretive relief granted by the Representations for the issue of parties and the controls on such Commission from any rules under the Managed Fund Shares are not information. Specifically, the Exchange Act. The Circular will also disclose that continuously met; or (g) if such other believes that the requirements related to the NAV for the Shares will be event shall occur or condition exists information protection enumerated calculated after 4:00 p.m., E.T. each which, in the opinion of the Exchange, under proposed Rule 14.11(k)(2)(E) 28 trading day. makes further dealings on the Exchange will act as a strong safeguard against 2. Statutory Basis inadvisable. misuse and improper dissemination of The Adviser is not registered as a information related to the Fund’s The Exchange believes that this broker-dealer or affiliated with a broker- portfolio composition, the Creation proposal is consistent with Section 6(b) dealer. The Sub-Adviser is not Basket, or changes thereto. The of the Act 26 in general and Section registered as a broker-dealer, but is requirement that any person or entity 6(b)(5) of the Act 27 in particular in that affiliated with a broker-dealer and has implement procedures to prevent the it is designed to prevent fraudulent and implemented and will maintain a ‘‘fire use and dissemination of material manipulative acts and practices, to wall’’ with respect to such broker-dealer nonpublic information regarding the promote just and equitable principles of regarding access to information portfolio or Creation Basket will act to trade, to remove impediments to and concerning the composition and/or prevent any individual or entity from perfect the mechanism of a free and changes to the Fund’s portfolio and sharing such information externally and open market and a national market Creation Basket. the internal ‘‘fire wall’’ requirements system, and, in general, to protect In the event (a) the Adviser or Sub- applicable where an entity is a investors and the public interest. Adviser becomes registered as a broker- registered broker-dealer or affiliated The Exchange believes that, to the dealer or becomes newly affiliated with with a broker-dealer will act to make extent that the Proposal and, thus a broker-dealer, or (b) any new adviser sure that no entity will be able to misuse proposed Rule 14.11(k), is approved by or sub-adviser is a registered broker- the data for their own purposes. As the Commission, this proposed rule dealer or becomes affiliated with a such, the Exchange believes that this change is designed to prevent broker-dealer, it will implement and proposal is designed to prevent fraudulent and manipulative acts and maintain a fire wall with respect to its fraudulent and manipulative acts and practices in that the Fund would meet relevant personnel or its broker-dealer practices. each of the rules relating to listing and affiliate regarding access to information The Exchange further believes that the trading of Managed Portfolio Shares concerning the composition and/or proposal is designed to prevent and, to the extent that the Fund is not changes to the portfolio and Creation fraudulent and manipulative acts and in compliance with such rules, the Basket, and will be subject to practices related to the listing and Exchange would either prevent the procedures designed to prevent the use trading of Managed Portfolio Shares and Fund from listing and trading if it and dissemination of material non- to promote just and equitable principles hadn’t started trading on the Exchange public information regarding such of trade and to protect investors and the or would commence delisting portfolio or Creation Basket. public interest in that the Exchange procedures under Exchange Rule 14.12. Further, proposed Rule 14.11(k)(2)(E) would halt trading under certain More specifically, the Exchange will requires that any person or entity, circumstances under which trading in consider the suspension of trading in, including an AP Representative, the Shares may be inadvisable. and will commence delisting custodian, pricing verification agent, Specifically, trading in the Shares will proceedings under Rule 14.12 for, the reporting authority, distributor, or be subject to proposed Rule Fund under any of the following administrator, who has access to 14.11(k)(4)(B)(iii)(a), which provides circumstances: (a) If, following the information regarding the Investment that, upon notification to the Exchange initial twelve-month period after Company’s portfolio composition, the by the Investment Company or its agent commencement of trading on the Creation Basket, or changes thereto, Exchange of the Fund, there are fewer must be subject to procedures designed 28 As described above, proposed Rule than 50 beneficial holders of the Fund; to prevent the use and dissemination of 14.11(k)(2)(E) provides that any person or entity, (b) if the value of the VIIV is no longer material nonpublic information including an AP Representative, custodian, pricing calculated or available to all market regarding the applicable Investment verification agent, reporting authority, distributor, or administrator, who has access to information participants at the same time; (c) if the Company portfolio or Creation Basket. regarding the Investment Company’s portfolio holdings of a series of the Fund are not Moreover, if any such person or entity composition, the Creation Basket, or changes made available on a quarterly basis as is registered as a broker-dealer or thereto, must be subject to procedures designed to required under the 1940 Act or are not affiliated with a broker-dealer, such prevent the use and dissemination of material nonpublic information regarding the applicable made available to all market person or entity will erect and maintain Investment Company portfolio or Creation Basket. participants at the same time; (d) if the a ‘‘fire wall’’ between the person or Moreover, if any such person or entity is registered Investment Company issuing the Fund entity and the broker-dealer with as a broker-dealer or affiliated with a broker-dealer, has failed to file any filings required by respect to access to information such person or entity will erect and maintain a ‘‘fire wall’’ between the person or entity and the broker- concerning the composition and/or dealer with respect to access to information 26 15 U.S.C. 78f. changes to such Investment Company concerning the composition and/or changes to such 27 15 U.S.C. 78f(b)(5). portfolio or Creation Basket. Investment Company portfolio or Creation Basket.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55615

of the existence of any condition or set other investment companies and of of trade and to protect investors and the of conditions specified in any currently REITs, and warrants and rights. All public interest in that the Exchange will applicable exemptive order or no-action equity securities in which the Fund will obtain a representation that the NAV per relief granted by the Commission or invest will be listed and traded on U.S. share of the Fund will be calculated Commission staff that would require the national securities exchanges. Price daily and that the NAV will be made Investment Company’s investment information for the U.S. exchange-listed available to all market participants at adviser to request that the Exchange halt equity securities held by the Fund will the same time. Investors can also obtain trading in the Managed Portfolio Shares, be available through major market data the Fund’s SAI, shareholder reports, the Exchange shall halt trading in the vendors or securities exchanges listing Form N–CEN, Form N–CSR, and Form Managed Portfolio Shares as soon as and trading such securities. Price N–PORT. The Fund’s SAI and practicable. Such halt in trading shall information for any other U.S. shareholder reports will be available continue until the Investment Company exchange-listed instruments held by the free upon request from the applicable or its agent notifies the Exchange that Fund will be available through major fund, and those documents and the the condition or conditions necessary market data vendors or exchanges Form N–CSR and Form N–PORT may be for the resumption of trading have been listing and trading such instruments. viewed on-screen or downloaded from met.29 The Adviser has represented to The Fund’s investments will be the Commission’s website. In addition, the Exchange that it will provide the consistent with its investment objective with respect to the Fund, a large amount Exchange with prompt notification and will not be used to enhance of information will be publicly available upon the existence of any such leverage. The Fund will not invest in regarding the Fund and the Shares, condition or set of conditions. Trading non-U.S. exchange-listed securities. All thereby promoting market transparency. in the Shares will also be subject to futures held by the Fund will be listed Quotation and last sale information for proposed Rule 14.11(k)(4)(B)(iii)(b), on U.S. futures exchanges. The the Shares will be available via the CTA which provides that, if the Exchange Exchange or FINRA, on behalf of the high-speed line. Information regarding becomes aware that: (i) The Fund’ VIIV Exchange, or both, will communicate as the VIIV will be widely disseminated is not being calculated or disseminated needed regarding trading in the Shares, every second throughout Regular in one second intervals, as required; (ii) underlying equity securities and U.S. Trading Hours by the Reporting the Fund’s NAV is not disseminated to exchange-listed futures with other Authority and/or one or more major all market participants at the same time; markets and other entities that are market data vendors. The website for (iii) the Fund’s holdings are not made members of the ISG, and the Exchange the Fund will include a prospectus for available on at least a quarterly basis as or FINRA, on behalf of the Exchange, or the Fund that may be downloaded, and required under the 1940 Act; or (iv) both, may obtain trading information additional data relating to NAV and such holdings are not made available to regarding trading such securities from other applicable quantitative all market participants at the same time, such markets and other entities. In information, updated on a daily basis. it will halt trading in such series until addition, the Exchange may obtain Moreover, prior to the commencement such time as the VIIV, the NAV, or the information regarding trading in the of trading, the Exchange will inform its holdings are available to all market Shares, underlying equity securities, members in a Circular of the special participants as required. and U.S. exchange-listed futures from characteristics and risks associated with With respect to the proposed listing markets and other entities that are trading the Shares. The Exchange will and trading of Shares of the Fund, the members of ISG or with which the halt trading in the Shares under the Exchange believes that the proposed Exchange has in place a comprehensive conditions specified in BZX Rule 11.18 rule change is designed to prevent surveillance sharing agreement. or for reasons that, in the view of the fraudulent and manipulative acts and With respect to trading of the Shares, Exchange, make trading in the Shares practices in that the Shares will be the ability of market participants to buy inadvisable. Trading in the Shares will listed and traded on the Exchange and sell Shares at prices near the VIIV be subject to proposed Rule pursuant to the initial and continued is dependent upon their assessment that 14.11(k)(4)(B)(iii)(a) and (b), which set listing criteria in Rule 14.11(k). The the VIIV is a reliable, indicative real- forth circumstances under which Shares Fund will invest at least 80% of its net time value for the Fund’s underlying of the Fund will be halted. assets, plus borrowings for investment holdings. Market participants are In addition, as noted above, investors purposes, in common stocks and other expected to accept the VIIV as a reliable, will have ready access to the VIIV, and equity securities of small capitalization indicative real-time value because (1) quotation and last sale information for U.S. companies or in other U.S. the VIIV will be calculated and the Shares. The Shares will conform to exchange-listed investments with disseminated based on the Fund’s actual the initial and continued listing criteria similar economic characteristics, portfolio holdings, (2) the securities in under proposed Rule 14.11(k). The including only the following U.S. which the Fund plans to invest are Fund’s holdings will be limited to and exchange-listed securities: Common generally highly liquid and actively consistent with what is permissible stocks, preferred securities, securities of traded and therefore generally have under the Exemptive Order and accurate real time pricing available, and described herein. The Fund’s 29 As provided in the Exemptive Order, such (3) market participants will have a daily investments will be consistent with its conditions would exist where either: (i) The opportunity to evaluate whether the investment objective and will not be intraday indicative values calculated by the pricing verification agent(s) differ by more than 25 basis VIIV at or near the close of trading is used to enhance leverage. While the points for 60 seconds in connection with pricing of indeed predictive of the actual NAV.30 Fund may invest in inverse ETFs, the the Verified Intraday Indicative Value; or (ii) The proposed rule change is designed Fund will not invest in leveraged (e.g., holdings representing 10% or more of the Fund’s to promote just and equitable principles 2X, –2X, 3X or –3X) ETFs. portfolio have become subject to a trading halt or otherwise do not have readily available market The proposed rule change is designed quotations. The Exchange shall halt trading in the 30 The statements in the Statutory Basis section of to perfect the mechanism of a free and Shares as soon as practicable after receipt of this filing relating to pricing efficiency, arbitrage, open market and, in general, to protect notification of the existence of such conditions. and activities of market participants, including investors and the public interest in that Such halt in trading shall continue until the market makers and APs, are based on statements in Adviser or its agent notifies the Exchange that these the Exemptive Order, representations by Precidian, it will facilitate the listing and trading conditions no longer exist. and review by the Exchange. of an actively-managed exchange-traded

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55616 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

product that will enhance competition may be submitted by any of the SECURITIES AND EXCHANGE among market participants, to the following methods: COMMISSION benefit of investors and the marketplace. Electronic Comments As noted above, the Exchange has in [Release No. 34–87293; File No. SR– place surveillance procedures relating to • Use the Commission’s internet CboeEDGX–2019–060] trading in the Shares and may obtain comment form (http://www.sec.gov/ information via ISG from other rules/sro.shtml); or Self-Regulatory Organizations; Cboe exchanges that are members of ISG or • Send an email to rule-comments@ EDGX Exchange, Inc.; Notice of Filing with which the Exchange has entered and Immediate Effectiveness of a into a comprehensive surveillance sec.gov. Please include File Number SR– CboeBZX–2019–076 on the subject line. Proposed Rule Change To Amend the sharing agreement. In addition, as noted Fee Schedule To Institute a Derived above, investors will have ready access Paper Comments Data API Service to information regarding the VIIV and quotation and last sale information for • Send paper comments in triplicate October 11, 2019. to Secretary, Securities and Exchange the Shares. Pursuant to Section 19(b)(1) of the Commission, 100 F Street NE, For the above reasons, the Exchange Securities Exchange Act of 1934 Washington, DC 20549–1090. believes that the proposed rule change (‘‘Act’’),1 and Rule 19b–4 thereunder,2 is consistent with the requirements of All submissions should refer to File notice is hereby given that on October Section 6(b)(5) of the Act. Number SR–CboeBZX–2019–076. This 1, 2019, Cboe EDGX Exchange, Inc. B. Self-Regulatory Organization’s file number should be included on the (‘‘Exchange’’ or ‘‘EDGX’’) filed with the Statement on Burden on Competition subject line if email is used. To help the Securities and Exchange Commission Commission process and review your (‘‘Commission’’) the proposed rule The Exchange does not believe that comments more efficiently, please use change as described in Items I, II, and the proposed rule change will impose only one method. The Commission will III below, which Items have been any burden on competition that is not post all comments on the Commission’s prepared by the Exchange. The necessary or appropriate in furtherance internet website (http://www.sec.gov/ Commission is publishing this notice to of the purpose of the Act. The Exchange rules/sro.shtml). Copies of the solicit comments on the proposed rule notes that the proposed rule change, submission, all subsequent change from interested persons. rather will facilitate the listing and amendments, all written statements I. Self-Regulatory Organization’s trading of actively-managed exchange- with respect to the proposed rule Statement of the Terms of Substance of traded products that will enhance change that are filed with the the Proposed Rule Change competition among both market Commission, and all written participants and listing venues, to the communications relating to the Cboe EDGX Exchange, Inc. (‘‘EDGX’’ benefit of investors and the marketplace. proposed rule change between the or the ‘‘Exchange’’) is filing with the C. Self-Regulatory Organization’s Commission and any person, other than Securities and Exchange Commission Statement on Comments on the those that may be withheld from the (the ‘‘Commission’’) a proposed rule Proposed Rule Change Received From public in accordance with the change to amend the fee schedule to Members, Participants, or Others provisions of 5 U.S.C. 552, will be institute a Derived Data API Service. available for website viewing and The text of the proposed rule change is The Exchange has neither solicited printing in the Commission’s Public attached as Exhibit 5 [sic]. nor received written comments on the Reference Room, 100 F Street NE, proposed rule change. Washington, DC 20549 on official The text of the proposed rule change is also available on the Exchange’s III. Date of Effectiveness of the business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the website (http://markets.cboe.com/us/ Proposed Rule Change and Timing for options/regulation/rule_filings/edgx/), Commission Action filing also will be available for inspection and copying at the principal at the Exchange’s Office of the Within 45 days of the date of office of the Exchange. All comments Secretary, and at the Commission’s publication of this notice in the Federal received will be posted without change. Public Reference Room. Register or within such longer period Persons submitting comments are II. Self-Regulatory Organization’s up to 90 days (i) as the Commission may cautioned that we do not redact or edit Statement of the Purpose of, and designate if it finds such longer period personal identifying information from Statutory Basis for, the Proposed Rule to be appropriate and publishes its comment submissions. You should Change reasons for so finding or (ii) as to which submit only information that you wish the Exchange consents, the Commission to make available publicly. All In its filing with the Commission, the will: submissions should refer to File Exchange included statements A. By order approve or disapprove Number SR–CboeBZX–2019–076 and concerning the purpose of and basis for such proposed rule change, or should be submitted on or before the proposed rule change and discussed B. institute proceedings to determine November 7, 2019. any comments it received on the whether the proposed rule change proposed rule change. The text of these For the Commission, by the Division of statements may be examined at the should be disapproved. Trading and Markets, pursuant to delegated places specified in Item IV below. The IV. Solicitation of Comments authority.31 Exchange has prepared summaries, set Jill M. Peterson, Interested persons are invited to forth in sections A, B, and C below, of submit written data, views, and Assistant Secretary. the most significant aspects of such arguments concerning the foregoing, [FR Doc. 2019–22600 Filed 10–16–19; 8:45 am] statements. including whether the proposed rule BILLING CODE 8011–01–P change, as modified by Amendment No. 1 15 U.S.C. 78s(b)(1). 1, is consistent with the Act. Comments 31 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55617

A. Self-Regulatory Organization’s would ultimately support that goal, and introduction of the White Label Service Statement of the Purpose of, and indeed would foster additional Program, Distributors have encouraged Statutory Basis for, the Proposed Rule competition in the market for U.S. the Exchange to offer a Program for API Change equity market data. Services that would provide greater flexibility and control to end clients 1. Purpose Derived Data who have already developed The purpose of the proposed rule ‘‘Derived Data’’ is pricing data or applications and tools for servicing their change is to implement a pricing other data that (i) is created in whole or customers. Unlike the White Label structure that would reduce fees in part from Exchange Data, (ii) is not Service, where the Distributor is charged to Distributors that distribute an index or financial product, and (iii) responsible for developing an ‘‘off-the- Derived Data through an Application cannot be readily reverse-engineered to shelf’’ technology platform that is Programming Interface (‘‘API’’)—i.e., the recreate Exchange Data or used to create standard and not designed specifically Derived Data API Service (the other data that is a reasonable facsimile for a particular client, the API Service ‘‘Program’’). The Exchange initially filed or substitute for Exchange Data. The allows Distributors to use Exchange to introduce the Program on August 1, Exchange currently offers a Derived market data to create financial 2019 (‘‘Initial Proposal’’) based on Data White Label Service Program that instruments, such as contracts for customer demand, and in order to be allows Distributors to benefit from difference, that are then offered via API able to decrease the cost of Derived Data discounted fees when distributing to end clients that can use that to Distributors that wish to distribute Derived Data taken from EDGX Top, information in one or more of their own Derived Data through an API Service.3 which is a proprietary data product that customized applications based on their The Initial Proposal was published in provides top of book quotations and specific business needs and the needs of the Federal Register on August 20, execution information for all equity their downstream users. The API 2019,4 and the Commission received no securities traded on the Exchange.7 The Service would therefore offer significant commenter letters on the proposal. The current program is limited to the advantages over the White Label Service Program remained in effect until the fee distribution of Derived Data to Program, and would provide another change was temporarily suspended subscribers within a White Label alternative pricing option that pursuant to a suspension order (the Service which is a type of hosted Distributors can choose to utilize (or ‘‘Suspension Order’’).5 The Suspension display solution in which a Distributor not) in their efforts to obtain high Order also instituted proceedings to hosts, maintains, and controls a website quality and cost effective access to top determine whether to approve or or platform on behalf of a third-party of book U.S. equities data to create disapprove the Initial Proposal.6 entity. Derived Data. The Exchange continues to believe When the Exchange filed to introduce With the implementation of the API that it is in the best interest of its the White Label Service Program, a Service Program, the Exchange would customers and investors to permit the number of Distributors contacted the continue to offer the current White distribution of Derived Data through an Exchange to inquire about offering a Label Service Platform, thereby ensuring API Service at a lower cost, and is similar program for API Services due to that Distributors that prefer the design therefore filing again to reduce the fees demand for such products from their or cost structure of that offering can charged to Distributors that offer an API end clients. The Derived Data API continue to reap the benefits of that Service. By reducing its pricing, the Service would supplement the current program. Offering additional programs Exchange hopes to be able to better Derived Data White Label Service for Derived Data based on customer compete with top of book market data Program by offering discounted fees for demand and the ways in which Derived products offered by other national Distributors that make Derived Data Data is currently being utilized securities exchanges and the securities available through an API, thereby enhances customer choice, and provides information processors (‘‘SIPs’’). For the allowing Distributors to benefit from alternatives to the market that would reasons expressed both in this filing and reduced fees when distributing Derived otherwise not be available to the Initial Proposal, the Exchange Data to subscribers that establish their Distributors and their end clients. believes that the Program is pro- own platforms rather than relying on a competitive, and otherwise consistent hosted display solution. In turn, the Current Fee Structure with the Exchange Act. In sum, the Exchange believes that the Program The Exchange currently charges a fee Exchange remains committed to would allow Distributors to reach a of $1,500 per month for external competing for business by offering both broader customer base that includes end distribution of EDGX Top. In addition, high quality and cost effective data. clients that desire more flexibility and external distributors of EDGX Top are Continued operation of the Program control over how Derived Data is used, charged a fee of $4 per month for each furthering both the distribution and cost Professional User and $0.10 per month 3 An ‘‘API Service’’ is a type of data feed effectiveness of Exchange market data, for each Non-Professional User. The distribution in which a Distributor delivers an API and allowing the Exchange to compete Exchange also offers special pricing for or similar distribution mechanism to a third-party entity for use within one or more platforms. The for business that may otherwise go to its Derived Data provided through a White service allows Distributors to provide Derived Data competitors. Label Service, as mentioned above. This to a third-party entity for use within one or more Although White Label Service service allows Distributors to make downstream platforms that are operated and Platforms are valuable to certain end Derived Data available on a platform maintained by the third-party entity. The clients that may not have the technology Distributor maintains control of the entitlements, that is branded with a third-party brand, but does not maintain technical control of the usage or resources to build their own or co-branded with a third party and a or the display. applications to display Derived Data, Distributor.8 The White Label Service 4 See Securities Exchange Act Release No. 86644 such products offer only an ‘‘off-the- Program can be used for a number of (August 13, 2019), 84 FR 42971 (August 19, 2019) shelf’’ solution, as the platform is different purposes, including the (SR–CboeEDGX–2019–049). ultimately designed and controlled by 5 See Securities Exchange Act Release No. 87144 display of information or data, or the (September 27, 2019) (SR–CboeEDGX–2019–049) the Distributor. Thus, subsequent to the (Federal Register publication pending). 8 The Distributor maintains control of the 6 Id. 7 See Rule 13.8(c). application’s data, entitlements and display.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55618 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

creation of derivative instruments, application, website, terminal) without reliable, and low cost data to a wide primarily contracts for difference,9 but incurring additional External Subscriber range of investors and market is unavailable to Distributors that make fees. That is, the fees would be charged participants. In fact, Regulation NMS such information available through an per API Service, and not based in any requires all U.S. equities exchanges to API. Such Distributors are not eligible way on the number of applications used provide their best bids and offers, and for discounted Derived Data pricing by the end client to serve their executed transactions, to the two today, and are instead liable for the fees downstream users. By contrast, under registered SIPs for dissemination to the normally applicable for the distribution the White Label Service, end clients are public. Top of book data is therefore of EDGX Top, as listed at the beginning generally limited to a single platform widely available to investors today at a of this paragraph. managed by the Distributor, rather than relatively modest cost. National uncontrolled access to an API, and securities exchanges may also Discounted Fees for Derived Data API would be subject to the full External disseminate their own top of book data, Service Subscriber fee for access to that single but no rule or regulation of the As proposed, a Distributor that platform without the ability to offer Commission requires market provides a Derived Data API Service for additional platforms for the same fee. participants to purchase top of book Derived Data taken from EDGX Top The Exchange would continue to data from an exchange. would be liable for the following fees charge a monthly Professional User fee In an effort to widen distribution to instead of the fees normally applicable of $4 per month for each Professional market participants that use equities for the distribution of EDGX Top. User that accesses Derived Data through market data to compute pricing for Instead of the regular fee for external an API Service. The current Non- certain derivatives instruments, national distribution, Distributors would be Professional User fee of $0.10 per month securities exchanges including the charged a tiered External Subscriber Fee would be eliminated when participating Exchange, its affiliate, Cboe BZX based on the number of API Service in the Derived Data API Service, further Exchange Inc., and The Nasdaq Stock Platforms (i.e., ‘‘External Subscribers’’) reducing costs for Distributors that Market LLC (‘‘Nasdaq’’) offer discounted that receive Derived Data from the provide access to such data to pricing for Derived Data that is created Distributor through a Derived Data API downstream investors. using their top of book products. The Service. Program would therefore compete with Financial Product Distribution Program As proposed, Distributors would similar products offered by other continue to be charged a fee of $1,500 With the proposed introduction of the national securities exchanges that offer per month for each External Subscriber Derived Data API Service, the Exchange discounted fees to market participants if the Distributor makes Derived Data would bring together the Derived Data that purchase Derived Data. Derived available to 1–5 External Subscribers. White Label Service and Derived Data Data is largely used to create derivative Distributors that make Derived Data API Service under the common heading instruments, such as contracts for available to additional External ‘‘Financial Product Distribution difference, rather than to trade equity Subscribers would benefit from Program.’’ The Financial Product securities, and is often purchased by discounted pricing based on the number Distribution Program would encompass market data customers outside of the of External Subscribers. Specifically, the both of these products. U.S. where such derivative instruments external distribution fee would be Similar to the Derived Data White are more commonly offered. As a result, lowered by 16.67% to $1,250 per month Label Service, the Derived Data API customers that purchase top of book for each External Subscriber if the Service would be entirely optional, in data to create Derived Data do not need Distributor makes Derived Data that it applies only to Distributors that a consolidated quotation, and typically available to 6–20 External Subscribers, opt to use Derived Data from EDGX Top only purchase top of book data to create and further lowered another 16.67% to to create an API Service, as described Derived Data from one source. $1,000 per month for each External herein. It does not impact or raise the Customers therefore choose where to Subscriber if the Distributor makes cost of any other Exchange product, nor obtain top of book data to create Derived Derived Data available to 21 or more does it affect the cost of EDGX Top, Data based on two factors: (1) Data External Subscribers. except in instances where Derived Data quality, i.e., how much the quoted As is the case under the Derived Data is made available on an API Service. A prices reflect the overall market for White Label Service, the External Distributor that provides a White Label particular securities, and (2) the cost of Subscriber Fee would be non- Service or API Service for Derived Data obtaining that data. The Program would progressive and based on the number of taken from EDGX Top would be liable allow the Exchange to better compete on External Subscribers that receive for the fees associated with the White the second of these factors by reducing Derived Data from the Distributor. For Label Service or API Service instead of the cost of market data charged to example, a Distributor providing the fees normally applicable for the Distributors that offer an API Service. Derived Data based on EDGX Top to six distribution of EDGX Top. A Distributor As explained, the Exchange filed the External Subscribers that are API that provides a White Label Service or Initial Proposal to introduce the Service Platforms would be charged a API Service for EDGX Top data that is Program in August in order to provide monthly fee of $7,500 (i.e., 6 External not Derived Data or distributes Derived an attractive pricing option to Subscribers × $1,250 each). The Derived Data through a platform other than a Distributors that wish to provide Data API Service, however, would allow White Label Service or API Service Derived Data through an API Service end clients to, at their discretion, choose would be liable for the fees normally rather than a White Label Service due to to use Derived Data in one or more applicable for the distribution of EDGX the advantages of this form of customized applications (e.g., mobile Top. distribution, including more flexibility and control for end clients. Although 9 A contract for difference is an agreement to Market Background that filing was suspended by the exchange the difference between the current value The market for top of book data is Commission, the Exchange believes that of an asset and its future value. If the price increases, the seller pays the buyer the amount of highly competitive as national securities the experience of its affiliates in offering the increase. If the price decreases, the buyer pays exchanges compete both with each other a similar Program reflect the the seller the amount of the decrease. and with the SIPs to provide efficient, competitive nature of the market for the

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55619

creation and distribution of Derived the availability to brokers, dealers, and of this rule filing are constrained by Data.10 Specifically, after Cboe BZX investors of information with respect to competition, and it is this competition Exchange, Inc. (‘‘BZX’’) initially quotations for and transactions in that is driving the proposed fee change. reduced the fees charged for API securities. In addition, the proposed Indeed, the Program is designed to Services under its initial proposal to rule change is consistent with Rule 603 allow the Exchange to compete more introduce an API Service, it successfully of Regulation NMS,15 which provides effectively for market data distributors onboarded one new customer that that any national securities exchange that purchase market information to switched from a competitor product that distributes information with respect offer Derived Data to investors. The offered by Nasdaq due to the attractive to quotations for or transactions in an existence of alternatives to the Program pricing.11 The Exchange has also been NMS stock do so on terms that are not ensures that the Exchange cannot set discussing the Program with a handful unreasonably discriminatory. unreasonable or unfairly discriminatory of additional prospective clients that are In adopting Regulation NMS, the fees, as subscribers are free to elect such interested in offering API Services. Commission granted SROs and broker- alternatives. That is, the Exchange Without the proposed pricing discounts, dealers increased authority and competes with other exchanges that the Exchange believes that prospective flexibility to offer new and unique provide similar market data products customers may not be interested in market data to the public. It was and pricing programs. Expanding the purchasing top of book data from the believed that this authority would availability of diverse competitive Exchange, and would instead continue expand the amount of data available to products actually promotes additional purchasing such data from other consumers, and also spur innovation competition as it ensures that national securities exchanges or the and competition for the provision of alternative products from different SIPs, potentially at a higher cost than market data. The Exchange believes that sources are readily available to would be available pursuant to the the proposed fee change would further Distributors and the broader market. Program. Continued operation of the broaden the availability of U.S. equity The Exchange therefore believes that Program would therefore serve to both market data to investors, consistent with introduction of pricing programs such reduce fees for customers and to provide the principles of Regulation NMS. as the Derived Data API Service are not alternatives to data and pricing offered The Exchange operates in a highly only constrained by competition but by competitors. Ultimately, the competitive environment. Indeed, there also ensure continued competition that Exchange believes that it is critical that are thirteen registered national acts as a constraint on the pricing of it be allowed to compete by offering securities exchanges that trade U.S. services provided by other national attractive pricing to customers as equities and offer associated top of book securities exchanges and the SIPs. increasing the availability of such market data products to their customers. Derived Data is primarily purchased products ensures continued competition The national securities exchanges also for the creation of certain derivative with alternative offerings. Such compete with the SIPs for market data instruments rather than for the trading competition may be constrained when customers. The Commission has of U.S. equity securities. As a result, competitors are impeded from offering repeatedly expressed its preference for Distributors of Derived Data do not need alternative and cost effective solutions competition over regulatory a consolidated view of the market across to customers. intervention in determining prices, multiple exchanges, and generally purchase such data from a single 2. Statutory Basis products, and services in the securities markets. Specifically, in Regulation exchange. If a competing exchange were The Exchange believes that the NMS, the Commission highlighted the to charge less for a similar product than proposed rule change is consistent with importance of market forces in the Exchange charges under the 12 the objectives of Section 6 of the Act, determining prices and SRO revenues proposed fee structure, prospective in general, and furthers the objectives of and, also, recognized that current subscribers may choose not subscribe to, 13 Section 6(b)(4), in particular, as it is regulation of the market system ‘‘has or cease subscribing to, the Program. designed to provide for the equitable been remarkably successful in The Exchange believes that lowering the allocation of reasonable dues, fees and promoting market competition in its cost of accessing Derived Data may other charges among its members and broader forms that are most important to make the Exchange’s market other recipients of Exchange data. investors and listed companies.’’ 16 The information more attractive, and The Exchange also believes that the proposed fee change is a result of the encourage additional Distributors to proposed rule change is consistent with competitive environment, as the subscribe to EDGX Top market data 14 Section 11(A) of the Act. Specifically, Exchange seeks to amend its fees to instead of competitor products. Indeed, the Exchange’s affiliate, BZX, the proposed rule change supports (i) attract additional subscribers for one of has already successfully onboarded one fair competition among brokers and its proprietary top of book data offerings new Distributor that has decided to dealers, among exchange markets, and through the introduction of a Derived purchase top of book data from that between exchange markets and markets Data API Service. other than exchange markets, and (ii) The Exchange believes that it is exchange to create Derived Data rather than purchasing top of book data from reasonable to introduce reduced fees for 10 a competitor exchange, and the On August 1, 2019 both the Exchange and BZX the use of Derived Data on API Services filed to introduce API Services for Derived Data. Exchange is in discussions with a as the proposed fee reduction would The BZX filing was also suspended by the handful of other Distributors that are Commission but remained in effect prior to being facilitate cost effective access to market interested in procuring market data from suspended. See Securities Exchange Act Release information that is used primarily to the Exchange due to the attractive No. 87125 (September 26, 2019) (SR–CboeBZX– create certain derivative instruments 2019–070) (Federal Register publication pending). pricing offered pursuant to the Program. rather than to trade U.S. equity 11 See Cboe Innovation Spotlight, ‘‘Invast Distributors can discontinue use at any securities. The fees that are the subject Global—An alternative prime broker,’’ available at time and for any reason, including due https://markets.cboe.com/us/equities/market_data_ to an assessment of the reasonableness products/spotlight. 15 See 17 CFR 242.603. 12 15 U.S.C. 78f. 16 See Securities Exchange Act Release No. 51808 of fees charged. Further, firms have a 13 15 U.S.C. 78f(b)(4). (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) wide variety of alternative market data 14 15 U.S.C. 78k–1. (‘‘Regulation NMS Adopting Release’’). products from which to choose, such as

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55620 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

similar proprietary data products for their proprietary market data as this of the purposes of the Act. The offered by other national securities reduces costs for retail investors and Exchange operates in a highly exchanges, including those that choose makes market data more broadly competitive environment, and its ability to offer discounted fees for the available. The Exchange believes that to price these data products is distribution of Derived Data in an effort eliminating fees for Non-Professional constrained by: (i) Competition among to compete for this business. Users that access Derived Data from exchanges that offer similar data The proposed rule change would Distributors pursuant to the Program is products, and pricing options, to their provide an alternate fee structure for consistent with longstanding precedent customers; and (ii) the existence of providing EDGX Top market data to indicating that it is consistent with the inexpensive real-time consolidated data Distributors that make Derived Data Act to provide reasonable incentives to disseminated by the SIPs. Top of book available to External Subscribers via API retail investors that rely on the public data is disseminated by both the SIPs Services. As proposed, if a Distributor markets for their investment needs. and the thirteen equities exchanges. uses an API Service to distribute Further, the proposed fees will only There are therefore a number of Derived Data, the Distributor will be apply to Distributors that elect to alternative products available to market charged a fee that is tiered based on the participate in the Program by participants and investors. In this number of External Subscribers that are distributing Derived Data through an competitive environment potential provided access to that data instead of API Service. EDGX Top market data is subscribers are free to choose which the higher fee normally charged for distributed and purchased on a competing product to purchase to external distribution. The Exchange voluntary basis, in that neither the satisfy their need for market believes that this fee is equitable and Exchange nor market data distributors information. Often, the choice comes not unfairly discriminatory because the are required by any rule or regulation to down to price, as broker-dealers or Exchange will apply the same fees to make this data available. Distributors of vendors look to purchase the cheapest any similarly situated Distributors that EDGX Top are not required to top of book data product, or quality, as elect to participate in the Program based participate in the proposed Program, market participants seek to purchase on the number of External Subscribers which is merely an alternative option data that represents significant market provided access to Derived Data through being proposed by the Exchange to liquidity. In order to better compete for an API Service, with Distributors potentially lower costs for market data this segment of the market, the providing access to six or more External that is Derived Data. As previously Exchange is proposing to reduce fees Subscribers receiving a discount explained, the Exchange currently offers charged to Distributors that distribute compared to the current pricing discounted fees for Distributors that Derived Data through an API. The applicable for external distribution of distribute Derived Data on a White Exchange believes that this would EDGX Top. Label Service. Expanding the universe facilitate greater access to such data, The Exchange believes that it is of customers that can benefit from ultimately benefiting investors that are equitable and not unfairly discounted fees for distributing Derived provided access to such data. discriminatory to begin providing Data would serve to further increase the discounted rates to Distributors that accessibility of the Exchange’s market The proposed fees apply to data provide access to at least six External data products. Although the proposed derived from EDGX Top, which is Subscribers as the discounted rates are pricing for the Program differs from the subject to competition from both the designed to incentivize firms to grow pricing currently in place for the White SIPs and exchanges that offer similar the number of External Subscribers that Label Service Program, the Exchange products, including but not limited to purchase Derived Data from the believes that its pricing reflects the those that choose to provide similar Exchange. The Exchange understands relative benefits provided to Distributors pricing options for Derived Data. A that Distributors that may provide this that offer an API Service that allows end number of national securities sort of API Service typically serve a clients to offer one or more customized exchanges, including the Exchange, its relatively larger number of External applications to their customers rather affiliated Cboe U.S. equities exchanges, Subscribers, and would therefore be than simply offering a single ‘‘off-the- and Nasdaq offer pricing discounts for able to meet the proposed threshold by shelf’’ solution designed and controlled Derived Data today. These pricing providing Derived Data taken from by the Distributors. Indeed, the Program programs reduce the cost of accessing EDGX Top to those customers. The one was developed by the Exchange in top of book market information that is current subscriber to the API Service response to demand for such a product used, among other things, to create offered on the Exchange’s affiliate, BZX, for Distributors that believe that they derivative instruments rather than to intends to provide Derived Data to would be better able to serve their end trade U.S. equity securities. In order to significantly more than six External clients with an API Service. Distributors better compete for this segment of the Subscribers. that prefer the design or cost structure market, the Exchange is proposing to The Exchange would also continue to of the White Label Service Program expand the programs that it offers to charge a small fee for Professional Users would continue to be able to subscribe include a Derived Data API Service, but would eliminate Non-Professional to that offering. Based on customer allowing additional market data User fees for data provided under the feedback, however, the Exchange customers to benefit from discounted Program. The Exchange believes that it believes that the API Service Program pricing. The Exchange does not believe is equitable and not unfairly would be valuable to a number of that the proposed price reduction for discriminatory to charge a fee for Distributors that have expressed interest Derived Data offered through an API Professional Users but no fee for Non- specifically in that offering. would cause any unnecessary or Professional Users. Non-Professional inappropriate burden on intermarket Users are already subject to a heavily B. Self-Regulatory Organization’s competition as other exchanges and data discounted fee for EDGX Top market Statement on Burden on Competition vendors are free to lower their prices to data relative to Professional Users. The Exchange does not believe that better compete with the Exchange’s Differential fees for Professional and the proposed rule change would result offering. The Exchange believes that the Non-Professional Users are widely used in any burden on competition that is not proposed rule change is pro-competitive by the Exchange and other exchanges necessary or appropriate in furtherance as it seeks to offer pricing incentives to

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55621

customers to better position the amendments, all written statements solicit comments on the proposed rule Exchange as it competes to attract with respect to the proposed rule change from interested persons. additional market data subscribers. change that are filed with the I. Self-Regulatory Organization’s Commission, and all written C. Self-Regulatory Organization’s Statement of the Terms of Substance of communications relating to the Statement on Comments on the the Proposed Rule Change proposed rule change between the Proposed Rule Change Received From Commission and any person, other than The Exchange proposes to amend its Members, Participants, or Others those that may be withheld from the transaction fees at Equity 7, Section No written comments were either public in accordance with the 118(a), as described further below. solicited or received. provisions of 5 U.S.C. 552, will be While these amendments are effective upon filing, the Exchange has III. Date of Effectiveness of the available for website viewing and designated the proposed amendments to Proposed Rule Change and Timing for printing in the Commission’s Public be operative on October 1, 2019. Commission Action Reference Room, 100 F Street NE, Washington, DC 20549, on official The text of the proposed rule change The foregoing rule change has become business days between the hours of is available on the Exchange’s website at effective pursuant to Section 19(b)(3)(A) 10:00 a.m. and 3:00 p.m. Copies of the http://nasdaqbx.cchwallstreet.com/, at 17 of the Act and paragraph (f) of Rule filing also will be available for the principal office of the Exchange, and 18 19b–4 thereunder. At any time within inspection and copying at the principal at the Commission’s Public Reference 60 days of the filing of the proposed rule office of the Exchange. All comments Room. change, the Commission summarily may received will be posted without change. temporarily suspend such rule change if II. Self-Regulatory Organization’s Persons submitting comments are Statement of the Purpose of, and it appears to the Commission that such cautioned that we do not redact or edit action is necessary or appropriate in the Statutory Basis for, the Proposed Rule personal identifying information from Change public interest, for the protection of comment submissions. You should investors, or otherwise in furtherance of submit only information that you wish In its filing with the Commission, the the purposes of the Act. If the to make available publicly. All Exchange included statements Commission takes such action, the submissions should refer to File concerning the purpose of and basis for Commission will institute proceedings Number SR–CboeEDGX–2019–060 and the proposed rule change and discussed to determine whether the proposed rule should be submitted on or before any comments it received on the change should be approved or November 7, 2019. proposed rule change. The text of these disapproved. statements may be examined at the For the Commission, by the Division of places specified in Item IV below. The IV. Solicitation of Comments Trading and Markets, pursuant to delegated authority.19 Exchange has prepared summaries, set Interested persons are invited to forth in sections A, B, and C below, of Jill M. Peterson, submit written data, views, and the most significant aspects of such arguments concerning the foregoing, Assistant Secretary. statements. including whether the proposed rule [FR Doc. 2019–22698 Filed 10–16–19; 8:45 am] change is consistent with the Act. BILLING CODE 8011–01–P A. Self-Regulatory Organization’s Comments may be submitted by any of Statement of the Purpose of, and the following methods: Statutory Basis for, the Proposed Rule SECURITIES AND EXCHANGE Change Electronic Comments COMMISSION 1. Purpose • Use the Commission’s internet The Exchange operates on the ‘‘taker- comment form (http://www.sec.gov/ [Release No. 34–87271; File No. SR–BX– rules/sro.shtml); or 2019–035] maker’’ model, whereby it generally • Send an email to rule-comments@ pays credits to members that take sec.gov. Please include File Number SR– Self-Regulatory Organizations; Nasdaq liquidity and charges fees to members CboeEDGX–2019–060 on the subject BX, Inc.; Notice of Filing and that provide liquidity. Currently, the line. Immediate Effectiveness of Proposed Exchange has a schedule, at Equity 7, Rule Change To Amend Transaction Section 118(a), which consists of several Paper Comments Fees at Equity 7, Section 118(a) different credits that it provides for • Send paper comments in triplicate orders in securities priced at $1 or more to Secretary, Securities and Exchange October 10, 2019. per share that access liquidity on the Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the Exchange and several different charges Washington, DC 20549–1090. Securities Exchange Act of 1934 that it assesses for orders in such All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2 securities that add liquidity on the Number SR–CboeEDGX–2019–060. This notice is hereby given that on Exchange. file number should be included on the September 30, 2019, Nasdaq BX, Inc. Over the course of the last few subject line if email is used. To help the (‘‘BX’’ or ‘‘Exchange’’) filed with the months, the Exchange has experimented Commission process and review your Securities and Exchange Commission with various reformulations of its comments more efficiently, please use (‘‘SEC’’ or ‘‘Commission’’) the proposed pricing schedule with the purpose of only one method. The Commission will rule change as described in Items I, II, increasing activity on the Exchange, post all comments on the Commission’s and III, below, which Items have been improving market quality, and internet website (http://www.sec.gov/ prepared by the Exchange. The increasing market share.3 The Exchange rules/sro.shtml). Copies of the Commission is publishing this notice to submission, all subsequent 3 See SR–BX–2019–031(filed September 12, 2019, pending publication); Securities Exchange Act 19 17 CFR 200.30–3(a)(12). Release No. 34–86120 (June 17, 2019); 84 FR 29270 17 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). (June 21, 2019) (SR–BX–2019–026); Securities 18 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4. Continued

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55622 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

now proposes a further amendment to of the Act,6 in particular, in that it Exchange is only one of several equity its pricing schedule to support these provides for the equitable allocation of venues to which market participants efforts. reasonable dues, fees and other charges may direct their order flow, and it Specifically, the Exchange proposes to among members and issuers and other represents a small percentage of the amend one of its charges for displayed persons using any facility, and is not overall market. It is also only one of orders in securities that add liquidity to designed to permit unfair several taker-maker exchanges. the Exchange. Presently, the Exchange discrimination between customers, Competing equity exchanges offer charges $0.0012 per share executed for issuers, brokers, or dealers. The similar tiered pricing structures to that displayed orders in securities in Tape C proposal is also consistent with Section of the Exchange, including schedules of that add liquidity entered by a member 11A of the Act relating to the rebates and fees that apply based upon that: (i) Adds liquidity equal to or establishment of the national market members achieving certain volume exceeding 0.17% of total Consolidated system for securities. thresholds.9 4 Within this environment, market Volume; and (ii) adds liquidity equal The Proposal Is Reasonable to or exceeding 0.15% of total participants can freely and often do shift Consolidated Volume in securities in The Exchange’s proposed change to their order flow among the Exchange Tape C during a month. The Exchange its schedule of charges is reasonable in and competing venues in response to proposes to amend this charge by several respects. As a threshold matter, changes in their respective pricing lowering the threshold level of total the Exchange is subject to significant schedules.10 Separately, the Exchange Consolidated Volume that a member competitive forces in the market for has provided the SEC staff with must achieve in securities in Tape C equity securities transaction services multiple examples of instances where from 0.15% to 0.12% during a month. that constrain its pricing determinations pricing changes by BX and other in that market. The fact that this market exchanges have resulted in shifts in Applicability to and Impact on is competitive has long been recognized exchange market share. Within the Participants by the courts. In NetCoalition v. foregoing context, the proposal By lowering the level of total Securities and Exchange Commission, represents a reasonable attempt by the Consolidated Volume in securities in the D.C. Circuit stated as follows: ‘‘[n]o Exchange to increase its liquidity and Tape C that is necessary to qualify for one disputes that competition for order market share relative to its competitors. the $0.012 per share executed charge, flow is ‘fierce.’ . . . As the SEC The Exchange has designed its the Exchange intends to render it easier explained, ‘[i]n the U.S. national market proposal to ease its qualification for a member to qualify for this charge, system, buyers and sellers of securities, requirements for a reduced $0.0012 per which represents the lowest transaction and the broker-dealers that act as their share executed charge and to provide fee that the Exchange charges for orders order-routing agents, have a wide range increased overall incentives to members that add liquidity in securities in Tape of choices of where to route orders for to increase their liquidity adding C. The Exchange believes this change execution’; [and] ‘no exchange can activity on the Exchange in Tape C will incentivize members to increase afford to take its market share securities. An increase in liquidity their liquidity adding activity in Tape C, percentages for granted’ because ‘no adding activity on the Exchange will, in and to thereby improve the overall exchange possesses a monopoly, turn, improve the quality of the Nasdaq quality and attractiveness of the Nasdaq regulatory or otherwise, in the execution BX market and increase its BX market. of order flow from broker attractiveness to existing and Exchange members that act as net dealers’....’’7 prospective participants. Generally, the adders of liquidity to the Exchange in The Commission and the courts have proposed amended charge will be securities in Tape C will stand to benefit repeatedly expressed their preference comparable to, if not favorable to, those 11 most from the proposed change. Other for competition over regulatory that its competitors provide. members will benefit indirectly from intervention in determining prices, The Exchange notes that those any improvement in the overall quality products, and services in the securities participants that are dissatisfied with of the market that this proposal markets. In Regulation NMS, while the proposed amended charge are free to facilitates. The Exchange notes that its adopting a series of steps to improve the shift their order flow to competing proposal is not otherwise targeted at or current market model, the Commission venues that offer them lower charges or expected to be limited in its highlighted the importance of market less stringent qualification criteria. applicability to a specific segment(s) of forces in determining prices and SRO The Proposal Is an Equitable Allocation market participants nor will it apply revenues and, also, recognized that of Charges current regulation of the market system differently to different types of market The Exchange believes its proposal participants. ‘‘has been remarkably successful in promoting market competition in its will allocate its charges fairly among its 2. Statutory Basis broader forms that are most important to investors and listed companies.’’ 8 9 CBOE EDGA provides a standard charge of The Exchange believes that its $0.0030 per share executed for liquidity adders (or proposal is consistent with Section 6(b) Numerous indicia demonstrate the between $0.0022 and $0.0026 if a member qualifies of the Act,5 in general, and furthers the competitive nature of this market. For for a volume tier). NYSE National has a standard objectives of Sections 6(b)(4) and 6(b)(5) example, clear substitutes to the charge of $0.0028 per share executed for liquidity Exchange exist in the market for equity adders (and a range of charges from $0.0020– security transaction services. The $0.0026 if a member qualifies for a volume tier). Exchange Act Release No. 34–85912 (May 22, 2019); 10 The Exchange perceives no regulatory, 84 FR 24834 (May 29, 2019) (SR–BX–2019–013). structural, or cost impediments to market 4 As used in Equity 7, Section 118(a), the term 6 15 U.S.C. 78f(b)(4) and (5). participants shifting order flow away from it. In ‘‘Consolidated Volume’’ means the total 7 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. particular, the Exchange notes that these examples consolidated volume reported to all consolidated 2010) (quoting Securities Exchange Act Release No. of shifts in liquidity and market share, along with transaction reporting plans by all exchanges and 59039 (December 2, 2008), 73 FR 74770, 74782–83 many others, have occurred within the context of trade reporting facilities during a month in equity (December 9, 2008) (SR–NYSEArca–2006–21)). market participants’ existing duties of Best securities, excluding executed orders with a size of 8 Securities Exchange Act Release No. 51808 Execution and obligations under the Order less than one round lot. (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) Protection Rule under Regulation NMS. 5 15 U.S.C. 78f(b). (‘‘Regulation NMS Adopting Release’’). 11 See n.9, supra.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55623

market participants. It is equitable for the proposal effectuates. Members may industry volume for the month of July the Exchange to reduce the qualification grow or modify their businesses so that 2019. requirements for its $0.0012 per share they can receive the $0.0012 per share The Exchange intends for the executed charge for displayed orders executed charge. Moreover, members proposed change to increase member that add liquidity to the Exchange as a are free to trade on other venues to the incentives to engage in the addition of means of incentivizing liquidity adding extent they believe that the fees charged Tape C liquidity on the Exchange. This activity. An increase in overall liquidity are too high or the qualification criteria change is procompetitive and reflective addition activity on the Exchange will are not attractive. As one can observe by of the Exchange’s efforts to make it an improve the quality of the Nasdaq BX looking at any market share chart, price attractive and vibrant venue to market market and increase its attractiveness to competition between exchanges is participants. existing and prospective participants. fierce, with liquidity and market share In sum, if the change proposed herein moving freely between exchanges in is unattractive to market participants, it The Proposed Credit Is Not Unfairly reaction to fee and credit changes. The is likely that the Exchange will lose Discriminatory Exchange notes that the tier structure is market share as a result. Accordingly, The Exchange believes that the consistent with broker-dealer fee the Exchange does not believe that the proposal is not unfairly discriminatory. practices as well as the other industries, proposed change will impair the ability As an initial matter, the Exchange as described above. of members or competing order believes that nothing about its volume- execution venues to maintain their based tiered pricing model is inherently Intermarket Competition competitive standing in the financial unfair; instead, it is a rational pricing The Exchange believes that its markets. model that is well-established and proposed modification to its schedule of C. Self-Regulatory Organization’s ubiquitous in today’s economy among charges will not impose a burden on Statement on Comments on the competition because the Exchange’s firms in various industries—from co- Proposed Rule Change Received From execution services are completely branded credit cards to grocery stores to Members, Participants, or Others cellular telephone data plans—that use voluntary and subject to extensive it to reward the loyalty of their best competition both from the other 12 live No written comments were either customers that provide high levels of exchanges and from off-exchange solicited or received. business activity and incent other venues, which include 32 alternative III. Date of Effectiveness of the customers to increase the extent of their trading systems. The Exchange notes Proposed Rule Change and Timing for business activity. It is also a pricing that it operates in a highly competitive Commission Action model that the Exchange and its market in which market participants can The foregoing rule change has become competitors have long employed with readily favor competing venues if they effective pursuant to Section the assent of the Commission. It is fair deem fee levels at a particular venue to 19(b)(3)(A)(ii) of the Act.12 because it incentivizes customer activity be excessive, or rebate opportunities available at other venues to be more At any time within 60 days of the that increases liquidity, enhances price filing of the proposed rule change, the discovery, and improves the overall favorable. In such an environment, the Exchange must continually adjust its Commission summarily may quality of the equity markets. temporarily suspend such rule change if The Exchange intends for the fees to remain competitive with other it appears to the Commission that such proposal to attract more liquidity to the exchanges and with alternative trading action is: (i) Necessary or appropriate in market, improving market wide quality systems that have been exempted from the public interest; (ii) for the protection and price discovery. Although net compliance with the statutory standards applicable to exchanges. Because of investors; or (iii) otherwise in adders of liquidity in Tape C will furtherance of the purposes of the Act. benefit most from the proposal, this competitors are free to modify their own fees in response, and because market If the Commission takes such action, the result is fair insofar as increased activity Commission shall institute proceedings in securities in Tape C will help to participants may readily adjust their order routing practices, the Exchange to determine whether the proposed rule improve market quality and the should be approved or disapproved. attractiveness of the Nasdaq BX market believes that the degree to which fee to all existing and prospective changes in this market may impose any IV. Solicitation of Comments participants. Moreover, any participant burden on competition is extremely Interested persons are invited to that does not find the qualifying criteria limited. submit written data, views, and The proposed amended schedule of for the amended charge to be arguments concerning the foregoing, charges is reflective of this competition sufficiently is attractive is free to shift including whether the proposed rule because, as a threshold issue, the its order flow to a competing venue. change is consistent with the Act. Exchange is a relatively small market so Comments may be submitted by any of B. Self-Regulatory Organization’s its ability to burden intermarket the following methods: Statement on Burden on Competition competition is limited. In this regard, The Exchange does not believe that even the largest U.S. equities exchange Electronic Comments the proposed rule change will impose by volume only has 17–18% market • Use the Commission’s internet any burden on competition not share, which in most markets could comment form (http://www.sec.gov/ necessary or appropriate in furtherance hardly be categorized as having enough rules/sro.shtml); or of the purposes of the Act. market power to burden competition. • Send an email to rule-comments@ Moreover, as noted above, price Intramarket Competition sec.gov. Please include File Number SR– competition between exchanges is BX–2019–035 on the subject line. The Exchange does not believe that its fierce, with liquidity and market share proposal will place any category of moving freely between exchanges in Paper Comments Exchange participant at a competitive reaction to fee and credit changes. This • Send paper comments in triplicate disadvantage. As noted above, all is in addition to free flow of order flow to Secretary, Securities and Exchange members of the Exchange will benefit to and among off-exchange venues from any increase in market activity that which comprised more than 37% of 12 15 U.S.C. 78s(b)(3)(A)(ii).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55624 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Commission, 100 F Street NE, SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s Washington, DC 20549–1090. COMMISSION Statement of the Purpose of, and Statutory Basis for, the Proposed Rule All submissions should refer to File Change Number SR–BX–2019–035. This file [Release No. 34–87295; File No. SR– number should be included on the CboeEDGX–2019–059] 1. Purpose subject line if email is used. To help the Self-Regulatory Organizations; Cboe The purpose of the proposed rule Commission process and review your EDGX Exchange, Inc.; Notice of Filing change is to introduce a pricing program comments more efficiently, please use and Immediate Effectiveness of a that would allow small retail brokers only one method. The Commission will Proposed Rule Change To Introduce a that purchase top of book market data post all comments on the Commission’s Small Retail Broker Distribution from the Exchange to benefit from internet website (http://www.sec.gov/ Program discounted fees for access to such rules/sro.shtml). Copies of the market data. The Small Retail Broker submission, all subsequent October 11, 2019. Distribution Program (the ‘‘Program’’) would reduce the distribution and amendments, all written statements Pursuant to Section 19(b)(1) of the with respect to the proposed rule consolidation fees paid by small broker- Securities Exchange Act of 1934 dealers that operate a retail business. In change that are filed with the 1 2 (‘‘Act’’), and Rule 19b–4 thereunder, turn, the Program may increase retail Commission, and all written notice is hereby given that on October investor access to real-time U.S. equity communications relating to the 1, 2019, Cboe EDGX Exchange, Inc. quote and trade information, and allow proposed rule change between the (‘‘Exchange’’ or ‘‘EDGX’’) filed with the the Exchange to better compete for this Commission and any person, other than Securities and Exchange Commission business with competitors that offer those that may be withheld from the (‘‘Commission’’) the proposed rule similar optional products. The Exchange public in accordance with the change as described in Items I, II, and initially filed to introduce the Program provisions of 5 U.S.C. 552, will be III below, which Items have been on August 1, 2019 (‘‘Initial Proposal’’) to available for website viewing and prepared by the Exchange. The further ensure that retail investors printing in the Commission’s Public Commission is publishing this notice to served by smaller firms have cost Reference Room, 100 F Street NE, solicit comments on the proposed rule effective access to its market data Washington, DC 20549, on official change from interested persons. products, and as part of its ongoing business days between the hours of I. Self-Regulatory Organization’s efforts to improve the retail investor 10:00 a.m. and 3:00 p.m. Copies of the Statement of the Terms of Substance of experience in the public markets. The filing also will be available for the Proposed Rule Change Initial Proposal was published in the inspection and copying at the principal Federal Register on August 20, 2019,3 office of the Exchange. All comments Cboe EDGX Exchange, Inc. (‘‘EDGX’’ and the Commission received no received will be posted without change. or the ‘‘Exchange’’) is filing with the commenter letters on the proposal. The Persons submitting comments are Securities and Exchange Commission Program remained in effect until the fee cautioned that we do not redact or edit (the ‘‘Commission’’) a proposed rule change was temporarily suspended personal identifying information from change to introduce a Small Retail pursuant to a suspension order (the 4 comment submissions. You should Broker Distribution Program. The text of ‘‘Suspension Order’’). The Suspension submit only information that you wish the proposed changes to the fee Order also instituted proceedings to determine whether to approve or to make available publicly. All schedule are enclosed as Exhibit 5. [sic] disapprove the Initial Proposal.5 submissions should refer to File The text of the proposed rule change Number SR–BX–2019–035 and should is also available on the Exchange’s Current Fees be submitted on or before November 7, website (http://markets.cboe.com/us/ _ Today, the Exchange offers two top of 2019. options/regulation/rule filings/edgx/), book data feeds that provide real-time at the Exchange’s Office of the For the Commission, by the Division of U.S. equity quote and trade information Secretary, and at the Commission’s to investors. First, the Exchange offers Trading and Markets, pursuant to delegated Public Reference Room. authority.13 the EDGX Top Feed, which is an Jill M. Peterson, II. Self-Regulatory Organization’s uncompressed data feed that offers top of book quotations and execution Assistant Secretary. Statement of the Purpose of, and Statutory Basis for, the Proposed Rule information based on equity orders [FR Doc. 2019–22589 Filed 10–16–19; 8:45 am] Change entered into the System. The fee for BILLING CODE 8011–01–P external distribution of EDGX Top data In its filing with the Commission, the is $1,500 per month, and external Exchange included statements distributors are also liable for a fee of $4 concerning the purpose of and basis for per month for each Professional User, the proposed rule change and discussed and $0.10 per month for each Non- any comments it received on the Professional User. proposed rule change. The text of these Second, the Exchange offers the Cboe statements may be examined at the One Summary Feed, which offers places specified in Item IV below. The similar information based on equity Exchange has prepared summaries, set forth in sections A, B, and C below, of 3 See Securities Exchange Act Release No. 86678 the most significant aspects of such (August 14, 2019), 84 FR 43246 (August 20, 2019) statements. (SR–CboeEDGX–2019–048). 4 See Securities Exchange Act Release No. 87172 (September 30, 2019) (SR–CboeEDGX–2019–048) 1 15 U.S.C. 78s(b)(1). (Federal Register publication pending). 13 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. 5 Id.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55625

orders submitted to the Exchange and These proposed requirements for per month. Finally, the Data its affiliated equities exchanges—i.e., participating in the Program are Consolidation Fee charged for the Cboe Cboe EDGA Exchange, Inc., Cboe BZX designed to ensure that the benefits One Summary Feed would be lowered Exchange, Inc., and Cboe BYX provided by the Program inure to the by 65% from the current $1,000 per Exchange, Inc. Specifically, the Cboe benefit of small retail brokers that month to $350 per month. User fees for One Summary Feed is a data feed that provide EDGX Equities Exchange Data any Professional or Non-Professional contains the aggregate best bid and offer to a limited number of subscribers. As Users that access EDGX Top or Cboe of all displayed orders for securities explained later in this filing, One Summary Feed data from a traded on the Exchange and its affiliated distributors that provide EDGX distributor that participates in the exchanges. The Cboe One Summary Exchange Data to a larger number of Program would remain at their current Feed also contains the individual last subscribers can benefit from the current levels as the current subscriber charges sale information for the Exchange and pricing structure through scale, due to are already among the most competitive each of its affiliated exchanges, and subscriber fees that are significantly in the industry.9 consolidated volume for all listed equity lower than those charged by the The Exchange believes that these fees, securities. The fee for external Exchange’s competitors, and an which represent a significant cost distribution of the Cboe One Summary Enterprise license that caps the total savings for small retail brokers, would Feed is $5,000 per month, and external fees to be paid by firms that distribute help ensure that retail investors distributors are also liable for a Data market data to a sizeable customer base. continue to have fair and efficient Consolidation Fee of $1,000 per month, The Exchange believes that offering access to U.S. equity market data. While and User fees equal to $10 per month for similarly attractive pricing to small retail investors normally pay a fixed each Professional User, and $0.25 per retail brokers, including regional firms commission when buying or selling month for each Non-Professional User.6 both inside and outside of the U.S. that equities, and do not typically pay may not have the same established separate fees for market data, the Small Retail Broker Eligibility client base as the larger retail brokers, Requirements Exchange believes that the proposed would make the Exchange’s data a more reduction in fees would make the competitive alternative for those firms, The Exchange proposes to introduce a Exchange’s data more competitive with and would help ensure that such Program that would reduce costs for other available alternatives, and may information is widely available to a small retail brokers that provide top of encourage retail brokers to make such larger number of retail investors book data to their clients. In order to be data more readily available to their globally. The Program would also be approved for the Small Retail Broker clients. In sum, the Exchange believes available to retail brokers more Distribution Program, Distributors that the proposed fee reductions may generally, regardless of size, that wish to would have to provide either the EDGX facilitate more cost effective access to trial the Exchange’s top of book Top Feed or Cboe One Summary Feed top of book data that is purchased on a products with a limited number of (‘‘EDGX Equities Exchange Data’’) to a voluntary basis by retail brokers and subscribers before potentially expanding limited number of clients with which provided to their retail investor clients. distribution to additional clients, the firm has established a brokerage potentially further increasing the Market Background relationship, and would have to provide accessibility of the Exchange’s market such data primarily to Non-Professional data to retail investors. The Program The market for top of book data is Data Users. Specifically, distributors would be exclusive to the Exchange’s highly competitive as national securities would have to attest that they meet the top of book offerings as retail investors exchanges compete both with each other following criteria: (1) Distributor is a typically do not need or use depth of and with the securities information broker-dealer distributing EDGX book data to facilitate their equity processors (‘‘SIPs’’) to provide efficient, Equities Exchange Data to Non- investments, and their brokers typically reliable, and low cost data to a wide Professional Data Users with whom the do purchase such market data on their range of investors and market broker-dealer has a brokerage behalf. participants. In fact, Regulation NMS relationship; (2) More than 50% of the requires all U.S. equities exchanges to Distributor’s total Data User population Discounted Fees provide their best bids and offers, and must consist of Non-Professional Data Distributors that participate in the executed transactions, to the two Users, inclusive of those not receiving Program would be liable for lower registered SIPs for dissemination to the EDGX Equities Exchange Data; and (3) distribution fees for access to the EDGX public. Top of book data is therefore Distributor distributes EDGX Equities Top Feed, and lower distribution and widely available to investors today at a Exchange Data to no more than 5,000 consolidation fees for access to the Cboe relatively modest cost. National Non-Professional Data Users.7 One Summary Data Feed.8 First, the securities exchanges may also distribution fee charged for EDGX Top disseminate their own top of book data, 6 The Exchange also offers an Enterprise license would be lowered by 50% from the but no rule or regulation of the for the EDGX Top and Cboe One Summary Feeds. current $1,500 per month to $750 per Commission requires market An Enterprise license permits distribution to an month for distributors that meet the participants to purchase top of book unlimited number of Professional and Non- 10 Professional Users, keeping costs down for firms requirements of the Program. Second, data from an exchange. The EDGX Top that provide access to a large number of subscribers. the distribution fee charged to these An Enterprise license is $15,000 per month for the distributors for the Cboe One Summary 9 By comparison, The Nasdaq Stock Market LLC EDGX Top Feed, and $50,000 per month for the Feed would be lowered by 30% from (‘‘Nasdaq’’) charges a subscriber fee for Nasdaq Cboe One Summary Feed. Basic that adds up to $26 per month for 7 Distributors would have to meet these the current $5,000 per month to $3,500 Professional Subscribers and $1 per month for Non- requirements for whichever product they would Professional Subscribers (Tapes A, B, and C). See like to distribute pursuant to the Program. For 8 New external distributors of the EDGX Top Feed Nasdaq Equity Rules, Equity 7, Pricing Schedule, example, a distributor that distributes Cboe One or Cboe One Summary Feed are not currently Section 147(b)(1). Summary Feed data pursuant to the Program, charged external distributor fees for their first 10 By contrast, Rule 603(c) of Regulation NMS (the would be limited to distributing the Cboe One month of service. This would continue to be the ‘‘Vendor Display Rule’’) effectively requires that SIP Summary Feed to no more than 5,000 Non- case for external distributors that participate in the data or some other consolidated display be utilized Professional Data Users. Program. Continued

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55626 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Feed and Cboe One Summary Feed higher cost than would be available The Exchange operates in a highly therefore compete with the SIP and with pursuant to the Program. The Program competitive environment. Indeed, there similar products offered by other has therefore already been successful in are thirteen registered national national securities exchanges that offer increasing competition for such market securities exchanges that trade U.S. their own competing top of book data, and continued operation of the equities and offer associated top of book products. In fact, there are ten Program would serve to both reduce fees market data products to their customers. competing top of book products offered for such customers and to provide The national securities exchanges also by other national securities exchanges alternatives to data and pricing offered compete with the SIPs for market data today, not counting products offered by by competitors. Ultimately, the customers. The Commission has the Exchange’s affiliates.11 Exchange believes that it is critical that repeatedly expressed its preference for The purpose of the proposed rule it be allowed to compete by offering competition over regulatory change is to further increase the attractive pricing to customers as intervention in determining prices, competitiveness of the Exchange’s top of increasing the availability of such products, and services in the securities book market data products compared to products ensures continued competition markets. Specifically, in Regulation competitor offerings that may currently with alternative offerings. Such NMS, the Commission highlighted the be cheaper for firms with a limited competition may be constrained when importance of market forces in subscriber base that do not yet have the competitors are impeded from offering determining prices and SRO revenues scale to take advantage of the lower alternative and cost effective solutions and, also, recognized that current subscriber fees offered by the Exchange. to customers. regulation of the market system ‘‘has In turn, the Exchange believes that this been remarkably successful in change may benefit market participants 2. Statutory Basis promoting market competition in its and investors by spurring additional The Exchange believes that the broader forms that are most important to competition and increasing the proposed rule change is consistent with investors and listed companies.’’ 17 The accessibility of the Exchange’s top of the objectives of Section 6 of the Act,13 proposed fee change is a result of the book data. in general, and furthers the objectives of competitive environment, as the As explained, the Exchange filed the Section 6(b)(4),14 in particular, as it is Exchange seeks to amend its fees to Initial Proposal to introduce the designed to provide for the equitable attract additional subscribers for its Program in August in order to provide allocation of reasonable dues, fees and proprietary top of book data offerings. an attractive pricing option for small other charges among its members and The proposed fee change would retail brokers. Although that filing was other recipients of Exchange data. reduce fees charged to small retail ultimately suspended by the The Exchange also believes that the brokers that provide access to two top Commission, the Exchange believes that proposed rule change is consistent with of book data products: The EDGX Top its experience in offering the Program Section 11(A) of the Act.15 Specifically, Feed and the Cboe One Summary Feed. while it was in effect reflect the the proposed rule change supports (i) The EDGX Top Feed provides top of competitive nature of the market for the fair competition among brokers and book quotations and transactions creation and distribution of top of book dealers, among exchange markets, and executed on the Exchange, and provides data. Specifically, after the Exchange between exchange markets and markets a valuable window into the market for initially reduced the fees charged to other than exchange markets, and (ii) securities traded on a market that small retail brokers under the Initial the availability to brokers, dealers, and accounts for about 5% of U.S. equity Proposal, it successfully onboarded one investors of information with respect to market volume today.18 The Cboe One new customer due to the attractive quotations for and transactions in Summary Feed is a competitively-priced pricing, and is currently in the process securities. In addition, the proposed alternative to top of book data of onboarding another customer.12 rule change is consistent with Rule 603 disseminated by SIPs, or similar data These customers are now able to offer of Regulation NMS,16 which provides disseminated by other national high quality and cost effective data to that any national securities exchange securities exchanges.19 It provides their retail investor clients. The that distributes information with respect subscribers with consolidated top of Exchange has also been discussing the to quotations for or transactions in an book quotes and trades from four Cboe Program with a handful of additional NMS stock do so on terms that are not U.S. equities markets, which together prospective clients that are interested in unreasonably discriminatory. account for about 17% of consolidated providing top of book data to retail In adopting Regulation NMS, the U.S. equities trading volume.20 investors. Without the proposed pricing Commission granted SROs and broker- Together, these products are purchased discounts, the Exchange believes that dealers increased authority and by a wide variety of market participants those customers and prospective flexibility to offer new and unique and vendors, including data platforms, customers may not be interested in market data to the public. It was websites, fintech firms, buy-side purchasing top of book data from the believed that this authority would investors, retail brokers, regional banks, Exchange, and would instead purchase expand the amount of data available to and securities firms inside and outside such data from other national securities consumers, and also spur innovation of the U.S. that desire low cost, high exchanges or the SIPs, potentially at a and competition for the provision of quality, real-time U.S. equity market market data. The Exchange believes that data. By providing lower cost access to in any context in which a trading or order-routing the proposed fee change would further U.S. equity market data, the EDGX Top decision can be implemented. and Cboe One Summary Feeds benefit a 11 Competing top of book products include, broaden the availability of U.S. equity Nasdaq Basic, BX Basic, PSX Basic, NYSE BQT, market data to investors, and in NYSE BBO/Trades, NYSE Arca BBO/Trades, NYSE particular retail investors, consistent 17 See Securities Exchange Act Release No. 51808 American BBO/Trades, NYSE Chicago BBO/Trades, with the principles of Regulation NMS. (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) and IEX TOPS. (‘‘Regulation NMS Adopting Release’’). 12 See e.g., Cboe Innovation Spotlight, ‘‘dough— 18 See https://markets.cboe.com/us/equities/ 13 _ The commission-free online broker with premium 15 U.S.C. 78f. market share/. content and insights,’’ available at https:// 14 15 U.S.C. 78f(b)(4). 19 See e.g., supra note 9 (discussing Nasdaq markets.cboe.com/us/equities/market_data_ 15 15 U.S.C. 78k–1. Basic). products/spotlight/. 16 See 17 CFR 242.603. 20 Id.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55627

wide range of investors that participate book data from a competitor exchange, data to a sizeable number of in the national market system. Reducing and is in the process of onboarding Professional or Non-Professional Users. fees for broker-dealers that represent another new Distributor. In addition, the Distributors with a smaller user base, retail investors and that may have more Exchange is in discussions with a however, may choose to use competitor limited resources than some of their handful of other Distributors that are products that have a lower distribution larger competitors would further interested in procuring market data from fee and higher subscriber fees. The increase access to such data and the Exchange due to the attractive Program would help the Exchange facilitate a competitive market for U.S. pricing offered pursuant to the Program. compete for this segment of the market, equity securities, consistent with the Distributors can discontinue use at any and may broaden the reach of the goals of the Act. time and for any reason, including due Exchange’s data products by providing While the Exchange is not required to to an assessment of the reasonableness an additional low cost alternative to make any data, including top of book of fees charged. Further, firms have a competitor products for small retail data, available through its proprietary wide variety of alternative market data brokers. While such firms may already market data platform, the Exchange products from which to choose, such as utilize similar market data products believes that making such data available similar proprietary data products from other sources, the Exchange increases investor choice, and offered by other national securities believes that offering its own data to contributes to a fair and competitive exchanges. Making the Exchange’s top small retail brokers at lower distribution market. Specifically, making such data of book data available at a lower cost, and data consolidation costs has the publicly available through proprietary ultimately serves the interests of retail potential to increase choice for market data feeds allows investors to choose investors that rely on the public participants, and ultimately increase the alternative, potentially less costly, markets. The Exchange understands that data available to retail investors when market data based on their business the Commission is interested in coupled with the Exchange’s lower needs. While some market participants ensuring that retail investors are subscriber fees. that desire a consolidated display appropriately served in the U.S. equities The Exchange also believes that the choose the SIP for their top of book data market. The Exchange agrees that it is proposed fees are equitable and not needs, and in some cases are effectively important to ensure that our markets unfairly discriminatory as the proposed required to do so under the Vendor continue to serve the needs of ordinary fee structure is designed to decrease the Display Rule, others may prefer to investors, and the Program is consistent price and increase the availability of purchase data directly from one or more with this goal. national securities exchanges. For The Exchange believes that the U.S. equities market data to retail example, a buy-side investor may proposed fees are reasonable as they investors. The Program is designed to choose to purchase the Cboe One represent a significant cost reduction for reduce the cost of top of book market Summary Feed, or a similar product smaller, primarily regional, retail data for broker-dealers that provide such from another exchange, in order to brokers that provide top of book data data to Non-Professional Data User perform investment analysis. The Cboe from EDGX and its affiliated equities clients that make up the majority of the One Summary Feed represents quotes exchanges to their retail investor clients. distributor’s total subscriber population. from four highly liquid equities markets. The market for top of book data is While there is no ‘‘exact science’’ to As a result, the Cboe One Summary intensely competitive due to the choosing one eligibility threshold Feed is within 1% of the national best availability of substitutable products compared to another, the Exchange bid and offer approximately 98% of the that can be purchased either from other believes that having more Non- time,21 and therefore serves as a national securities exchanges, or from Professional Data Users than valuable reference for investors that do registered SIPs that make such top of Professional Data User across a firm’s not require a consolidated display that book data publicly available to investors entire business, i.e., not limited contains quotations for all U.S. equities at a modest cost. The proposed fee exclusively to Data Users that are exchanges. Making alternative products reduction is being made to make the provided access to the Exchange’s data available to market participants Exchange’s fees more competitive with products, is indicative of a broker-dealer ultimately ensures increased such offerings for this segment of market that is primarily and actively engaged in competition in the marketplace, and participants, thereby increasing the the business of serving retail investors. constrains the ability of exchanges to availability of the Exchange’s data This understanding is confirmed by the charge supracompetitive fees. In the products, and expanding the options current customers that participate in or event that a market participant views available to firms making data are soon to participate in the Program, one exchanges top of book data fees as purchasing decisions based on their each of which are focused on providing more or less attractive than the business needs. The Exchange believes trading services to ordinary investors. competition they can and frequently do that this is consistent with the As such, the Program would be broadly switch between competing products. In principles enshrined in Regulation NMS available to a wide range of retail fact, the competiveness of the market for to ‘‘promote the wide availability of brokers that either purchase the Cboe such top of book data products is one market data and to allocate revenues to One Summary Feed today, or that may of the primary factors animating this SROs that produce the most useful data choose to switch from competing proposed rule change, which is for investors.’’ 22 products due to the potential cost designed to allow the Exchange to Today, the Exchange’s top of book savings. In addition to the subscribers further compete for this business. market data products are among the that are participating and are soon to Indeed, the Exchange has already most competitively priced in the participate in the Program, dozens of successfully onboarded one new industry due to modest subscriber fees, distributors that currently purchase top Distributor that has decided to purchase and a lower Enterprise cap, both of of book data from one of the four Cboe Cboe One Summary Data from the which keep fees at a relatively modest U.S. equities exchanges, and many more Exchange rather than purchasing top of level for larger firms that provide market prospective customers, could benefit from the Program. Each of these current 21 See https://markets.cboe.com/us/equities/ 22 See Regulation NMS Adopting Release, supra or prospective retail broker customers market_data_services/cboe_one/. note 17, at 37503. would receive the same benefits in

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55628 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

terms of reduced distribution and 5,000 Non-Professional Data Users, the Professional Users. Further, EDGX Top consolidation fees based on the product Exchange does not believe that this Data, which is already subject to a lower that they purchase from the Exchange. limitation makes the fees inequitable, distribution fee than Nasdaq Basic, The Commission has long stressed the unfairly discriminatory, or otherwise would become even more cost effective. need to ensure that the equities markets contrary to the purposes of the Act. After 5,000 Non-Professional Users the are structured in a way that meets the Large broker-dealers and/or vendors that firm would no longer be eligible for the needs of ordinary investors. For distribute the Exchange’s data products Small Retail Broker Distribution example, the Commission’s strategic to a sizeable number of investors benefit Program but would already enjoy plan for fiscal years 2018–2022 touts from the current fee structure, which significant cost savings compared to ‘‘focus on the long-term interests of our includes lower subscriber fees and Nasdaq Basic under the current pricing Main Street investors’’ as the Enterprise licenses. Due to lower structure. The Exchange therefore Commission’s number one strategic subscriber fees, distributors that provide believes that the Program would allow goal.23 The Program would be EDGX Equities Exchange Data to more the Exchange to better compete with consistent with the Commission’s stated than 5,000 Non-Professional Data Users competitors for smaller firms that goal of improving the retail investor already enjoy cost savings compared to currently pay a lower fee under, for competitor products. The Program experience in the public markets. example, the Nasdaq Basic pricing would therefore ensure that small retail Furthermore, national securities model, while also ensuring that larger brokers that distribute top of book data exchanges commonly charge reduced firms continue to receive attractive to their retail investor customers could fees and offer market structure benefits pricing that is already cheaper than top to retail investors, and the Commission also benefit from reduced pricing, and would aid in increasing the of book data offered by the main has consistently held that such competitor product. The Exchange incentives are consistent with the Act. competitiveness of the Exchange’s data products for this key segment of the believes this supplemental information The Exchange believes that the Program further validates its assessment that the is consistent with longstanding market. The table below illustrates the impact proposed fee reduction is reasonable, precedent indicating that it is consistent equitable, and not unfairly with the Act to provide reasonable of the proposed pricing on firms that qualify for the Program, both compared discriminatory. Without the proposed incentives to retail investors that rely on fee reduction, small retail brokers that the public markets for their investment to the Exchange’s current pricing, and compared to the fees charged for a would otherwise qualify for the reduced needs. fees proposed would be subject to either In addition, while the Program would competitor product, i.e., Nasdaq Basic. As shown, Cboe One Summary Feed higher fees for accessing Exchange top be effectively limited to smaller firms of book data, or may switch to that distribute data to no more than Data provided pursuant to the Program would be cheaper than Nasdaq Basic for competitor offerings that are also less firms with more than 1,200 Non- cost effective, but at current fees levels, 23 See U.S. Securities and Exchange Commission, cheaper than the current Cboe One Strategic Plan, Fiscal Years 2018–2022, available at Professional Users, and the benefits of https://www.sec.gov/files/SEC_Strategic_Plan_ the pricing structure would continue to Summary fee. FY18-FY22_FINAL_0.pdf. scale up to firms with 5,000 Non- BILLING CODE 8011–01–P

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55629

BILLING CODE 8011–01–C free to choose which competing product with the Exchange’s offering. Indeed, as B. Self-Regulatory Organization’s to purchase to satisfy their need for explained in the basis section of this Statement on Burden on Competition market information. Often, the choice proposed rule change, the Exchange’s comes down to price, as broker-dealers decision to lower its distribution and The Exchange does not believe that or vendors look to purchase the consolidation fees for small retail the proposed rule change would result cheapest top of book data product, or brokers is itself a competitive response in any burden on competition that is not quality, as market participants seek to to different fee structures available on necessary or appropriate in furtherance purchase data that represents significant competing markets. The Exchange of the purposes of the Act. The market liquidity. In order to better therefore believes that the proposed rule Exchange operates in a highly compete for this segment of the market, change is pro-competitive as it seeks to competitive environment, and its ability the Exchange is proposing to reduce the offer pricing incentives to customers to to price these data products is cost of top of book data provided by better position the Exchange as it constrained by: (i) Competition among small retail brokers to their retail competes to attract additional market exchanges that offer similar data investor clients. The Exchange believes data subscribers. The Exchange also products to their customers; and (ii) the that this would facilitate greater access believes that the proposed reduction in existence of inexpensive real-time to such data, ultimately benefiting the fees for small retail brokers would not consolidated data disseminated by the retail investors that are provided access cause any unnecessary or inappropriate SIPs. Top of book data is disseminated to such market data. burden on intramarket competition. by both the SIPs and the thirteen The Exchange does not believe that Although the proposed fee discount equities exchanges. There are therefore this price reduction would cause any would be largely limited to small retail a number of alternative products unnecessary or inappropriate burden on broker subscribers, larger broker-dealers available to market participants and intermarket competition as other and vendors can already purchase top of investors. In this competitive exchanges and data vendors are free to book data from the Exchange at prices environment potential subscribers are lower their prices to better compete that represent a significant cost savings

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 EN17OC19.000 55630 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

when compared to competitor products Commission, 100 F Street NE, Notice is hereby given that pursuant that combine higher subscriber fees with Washington, DC 20549–1090. to the Paperwork Reduction Act of 1995 lower fees for distribution. In light of All submissions should refer to File (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the the benefits already provided to this Number SR-CboeEDGX–2019–059. This Securities and Exchange Commission group of subscribers, the Exchange file number should be included on the (‘‘Commission’’) has submitted to the believes that additional discounts to subject line if email is used. To help the Office of Management and Budget small retail brokers would increase Commission process and review your (‘‘OMB’’) a request for approval of rather than decrease competition among comments more efficiently, please use extension of the previously approved broker-dealers that participate on the only one method. The Commission will collection of information provided for in Exchange. Furthermore, as discussed post all comments on the Commission’s rules 13n–4(b)(9), (b)(10) and (d) under earlier in this proposed rule change, the internet website (http://www.sec.gov/ the Securities Exchange Act of 1934 (15 Exchange believes that offering pricing rules/sro.shtml). Copies of the U.S.C. 78a et seq.). benefits to brokers that represent retail submission, all subsequent Rules 13n–4(b)(9), (b)(10) and (d) investors facilitates the Commission’s amendments, all written statements implement Exchange Act sections mission of protecting ordinary investors, with respect to the proposed rule 13(n)(5)(G) and (H), which conditionally and is therefore consistent with the Act. change that are filed with the require security-based swap data C. Self-Regulatory Organization’s Commission, and all written repositories (SDRs) registered with the Statement on Comments on the communications relating to the SEC to make security-based swap data Proposed Rule Change Received From proposed rule change between the available to certain regulators and other Members, Participants, or Others Commission and any person, other than authorities. The rules in part would those that may be withheld from the condition this access to data on the No written comments were either public in accordance with the regulators and other authorities entering solicited or received. provisions of 5 U.S.C. 552, will be into memoranda of understanding or III. Date of Effectiveness of the available for website viewing and other arrangements with the Proposed Rule Change and Timing for printing in the Commission’s Public Commission to address the Commission Action Reference Room, 100 F Street NE, confidentiality of the data made Washington, DC 20549, on official available. The rules further would The foregoing rule change has become business days between the hours of require SDRs to create and maintain effective pursuant to Section 19(b)(3)(A) 10:00 a.m. and 3:00 p.m. Copies of the records regarding such data access. In 24 of the Act and paragraph (f) of Rule filing also will be available for addition, certain regulators or other 25 19b–4 thereunder. At any time within inspection and copying at the principal authorities that are not otherwise 60 days of the filing of the proposed rule office of the Exchange. All comments designated by statute or rule may submit change, the Commission summarily may received will be posted without change. applications to the Commission temporarily suspend such rule change if Persons submitting comments are requesting that they be deemed eligible it appears to the Commission that such cautioned that we do not redact or edit to access the relevant security-based action is necessary or appropriate in the personal identifying information from swap data. public interest, for the protection of comment submissions. You should Implementation of the statutory data investors, or otherwise in furtherance of submit only information that you wish access provisions—including the the purposes of the Act. If the to make available publicly. All confidentiality condition and the Commission takes such action, the submissions should refer to File Commission’s authority to designate Commission will institute proceedings Number SR-CboeEDGX–2019–059 and entities to access such information— to determine whether the proposed rule should be submitted on or before will facilitate regulatory oversight of the change should be approved or November 7, 2019. security-based swap market and its disapproved. For the Commission, by the Division of participants, including oversight of IV. Solicitation of Comments Trading and Markets, pursuant to delegated systemic and other risks associated with 26 the market. Implementation also will Interested persons are invited to authority. promote compliance with applicable submit written data, views, and Jill M. Peterson, laws and regulations, including but not arguments concerning the foregoing, Assistant Secretary. limited to compliance with the including whether the proposed rule [FR Doc. 2019–22702 Filed 10–16–19; 8:45 am] antifraud provisions of the federal change is consistent with the Act. BILLING CODE 8011–01–P securities laws. Comments may be submitted by any of Commission Staff estimates that the the following methods: SECURITIES AND EXCHANGE total annual burden associated with Electronic Comments COMMISSION Rules 13n–4(b)(9), (b)(10) and (d) is • Use the Commission’s internet 35,700 hours and $400,000, calculated comment form (http://www.sec.gov/ Submission for OMB Review; as follows: rules/sro.shtml); or Comment Request Commission staff estimates a total of 30 regulators or other authorities will • Send an email to rule-comments@ Upon Written Request, Copies Available enter into confidentiality arrangements sec.gov. Please include File Number SR– From: Securities and Exchange with the Commission to obtain access to CboeEDGX–2019–059 on the subject Commission, Office of FOIA Services, security-based swap data pursuant to line. 100 F Street NE, Washington, DC these provisions. On average, each of Paper Comments 20549–2736 Extension: those recipients of data is expected to • Send paper comments in triplicate Rules 13n–4(b)(9), (b)(10) and (d), SEC File expend 500 hours in connection with to Secretary, Securities and Exchange No. 270–793, OMB Control No. 3235– negotiating these MOUs or other 0738 arrangements, for a one-time aggregate 24 15 U.S.C. 78s(b)(3)(A). burden of 15,000 hours, with no 25 17 CFR 240.19b–4(f). 26 17 CFR 200.30–3(a)(12). associated ongoing burdens. This

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55631

equates to 5,000 hours per year when collection at the following website: Requirements.’’ The Exchange proposes annualized over three years. www.reginfo.gov. Comments should be to relocate certain current rules to new Commission staff estimates that a total directed to: (i) Desk Officer for the Rules Chapter VI, Section 22, titled of 21 regulators or other authorities (that Securities and Exchange Commission, ‘‘Kill Switch’’ and 23, titled ‘‘Detection otherwise are not identified by statute or Office of Information and Regulatory of Loss of Communication.’’ the rules as being eligible for access) Affairs, Office of Management and The text of the proposed rule change may request that the Commission Budget, Room 10102, New Executive is available on the Exchange’s website at determine that they be able to access Office Building, Washington, DC 20503, http://nasdaqbx.cchwallstreet.com/, at such security-based swap data. On or by sending an email to: the principal office of the Exchange, and average, each of those entities is [email protected]; and (ii) at the Commission’s Public Reference expected to expend 40 hours in Charles Riddle, Acting Director/Chief Room. connection with such requests, for a Information Officer, Securities and II. Self-Regulatory Organization’s one-time aggregate burden of 840 hours, Exchange Commission, c/o Candace Statement of the Purpose of, and with no associated ongoing burdens. Kenner, 100 F Street NE, Washington, Statutory Basis for, the Proposed Rule This equates to 280 hours per year when DC 20549, or by sending an email to: Change annualized over three years. [email protected]. Comments must Commission staff also estimates that a be submitted to OMB within 30 days of In its filing with the Commission, the total of 10 SDRs may be expected to this notice. Exchange included statements incur systems-related costs associated Dated: October 10, 2019. concerning the purpose of and basis for with setting up access to security-based the proposed rule change and discussed Jill M. Peterson, swap data for regulators and other any comments it received on the authorities. On average, each of those Assistant Secretary. proposed rule change. The text of these entities is expected to expend 7,800 [FR Doc. 2019–22579 Filed 10–16–19; 8:45 am] statements may be examined at the hours in connection with providing BILLING CODE 8011–01–P places specified in Item IV below. The such connectivity, for a one-time Exchange has prepared summaries, set aggregate burden of 78,000 hours, with forth in sections A, B, and C below, of no associated no ongoing burdens SECURITIES AND EXCHANGE the most significant aspects of such associated with this requirement. This COMMISSION statements. equates to 26,000 hours when [Release No. 34–87270; File No. SR–BX– A. Self-Regulatory Organization’s annualized over three years. 2019–033] In addition, Commission staff Statement of the Purpose of, and estimates that a total of 10 SDRs may Self-Regulatory Organizations; Nasdaq Statutory Basis for, the Proposed Rule incur costs associated with notifying the BX, Inc.; Notice of Filing and Change Commission when the SDR receives the Immediate Effectiveness of Proposed 1. Purpose first request for security-based swap Rule Change To Amend BX Rules at data from a particular entity. On Chapter VI, Section 6 The Exchange proposes to amend average, each of those SDRs is expected Chapter VI, Section 6, ‘‘Acceptance of to expend 150 hours in connection with October 10, 2019. Quotes and Orders,’’ Chapter VI, Section this notice requirement (based on each Pursuant to Section 19(b)(1) of the 7, ‘‘Entry and Display Orders,’’ Chapter SDR providing 300 notices, at half-hour Securities Exchange Act of 1934 VI, Section 10, ‘‘Book Processing,’’ per notice), for a one-time aggregate (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Chapter VI, Section 21, ‘‘Order and burden of 1,500 hours, with no notice is hereby given that on October Quote Protocols,’’ Chapter VII, Section associated ongoing burdens. This 8, 2019, Nasdaq BX, Inc. (‘‘BX’’ or 5, ‘‘Obligations of Market Makers,’’ and equates to 500 hours per year when ‘‘Exchange’’) filed with the Securities Chapter VII, Section 12, ‘‘Order annualized over three years. and Exchange Commission Exposure Requirements.’’ The Exchange Commission staff estimates that a total (‘‘Commission’’) the proposed rule proposes to relocate certain current of 10 SDRs may incur costs associated change as described in Items I and II, rules to new Rules Chapter VI, Section with the requirement that they maintain below, which Items have been prepared 22, titled ‘‘Kill Switch’’ and 23, titled records of all information related to by the Exchange. The Commission is ‘‘Detection of Loss of Communication.’’ initial and subsequent requests for data publishing this notice to solicit Each rule change will be discussed in access. On average, compliance with comments on the proposed rule change greater detail below. this provision is expected to require 360 from interested persons. Chapter VI, Section 6, Acceptance of hours initially and 280 hours annually Quotes and Orders per SDR, for a total burden of 3,600 I. Self-Regulatory Organization’s hours initially and 2,800 hours annually Statement of the Terms of Substance of Currently, Chapter VI, Section 6 is across ten SDRs. This equates to 4,000 the Proposed Rule Change titled ‘‘Acceptance of Quotes and hours per year when annualized over The Exchange proposes to amend BX Orders.’’ The Exchange proposes to three years. Commission staff further Rules at Chapter VI, Section 6, retitle Chapter VI, Section 6 as ‘‘Entry estimates that those SDRs each will ‘‘Acceptance of Quotes and Orders,’’ and Display of Quotes.’’ The Exchange require $40,000 annually in connection Chapter VI, Section 7, ‘‘Entry and proposes to add an (a) before the first with that requirement, for a total cost of Display Orders,’’ Chapter VI, Section 10, paragraph. The Exchange is removing $400,000 annually across ten SDRs. ‘‘Book Processing,’’ Chapter VI, Section references to orders in this Rule because An agency may not conduct or 21, ‘‘Order and Quote Protocols,’’ it also proposes to adopt a new Chapter sponsor, and a person is not required to Chapter VII, Section 5, ‘‘Obligations of VI, Section 7, titled ‘‘Entry and Display respond to, a collection of information Market Makers,’’ and Chapter VII, of Orders’’ to describe requirements for under the PRA unless it displays a Section 12, ‘‘Order Exposure order entry. currently valid OMB control number. The Exchange proposes to add a new The public may view background 1 15 U.S.C. 78s(b)(1). section (b) to Chapter VI, Section 6 to documentation for this information 2 17 CFR 240.19b–4. describe the current requirements and

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55632 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

conditions for submitting quotes. These by way of notification from another a price that would lock or cross another requirements reflect the current System market that its quotes are not firm or are market. If, at the time of entry, a quote operation today. The Exchange proposes unreliable; administrative message from would cause a locked or crossed market to memorialize the various requirements the Option Price Reporting Authority violation or would cause a trade- for the submission of quotes into the (‘‘OPRA’’); quotes received from another through, violation, it will be re-priced to System for greater transparency. The market designated as ‘‘not firm’’ using the current national best offer (for bids) Exchange proposes to provide at the appropriate indicator; and/or or the current national best bid (for proposed Chapter VI, Section 6(b), telephonic or electronic inquiry to, and offers) and displayed at one minimum ‘‘Quotes are subject to the following verification from, another market that its price variance above (for offers) or requirements and conditions:’’. The quotes are not firm. The Exchange shall below (for bids) the national best price. Exchange proposes to add at Chapter VI, maintain a record of each instance in Today, quotations may not be Section 6(b)(1) that ‘‘Market Makers may which another exchange’s quotes are executed against prices that trade- generate and submit option quotations.’’ excluded from the Exchange’s through an away market as provided for Current Chapter VII, Section 6 makes calculation of NBBO, and shall notify in the Options Order Protection and clear that Market Makers may submit such other exchange that its quotes have Locked/Crossed Market Plan which is quotes,3 however the Exchange been so excluded. Where quotes in also described within Chapter XII, proposes to create a list of rules related options on another market or markets Options Order Protection and Locked to quote submission within this rule for previously subject to relief from the firm and Crossed Market Rules. Also, ease of reference. The Exchange quote requirement set forth in the Quote quotations may not lock or cross an proposes to provide at proposed Chapter Rule are no longer subject to such relief, away market. The repricing is provided VI, Section 6(b)(2) that ‘‘The System such quotations will be included in the for today within BX Chapter VI, Section shall time-stamp a quote which shall calculation of NBBO for such options. 7(b)(3)(C).6 By stating this limitation in determine the time ranking of the quote Such determination may be made by the rule, Market Makers will have for purposes of processing the quote.’’ way of notification from another market greater clarity as to this limitation. The Exchange notes that all quotes that its quotes are firm; administrative Further, the Exchange is making clear today are time-stamped for purposes of message from OPRA; and/or telephonic that a quote that would cause a locked processing quotes. Proposed Rule or electronic inquiry to, and verification or crossed market violation or would Chapter VI, Section 6(b)(3) states that from, another market that its quotes are cause a trade-through violation will be ‘‘Market Makers may enter bids and/or firm. re-priced. The Exchange would display offers in the form of a two-sided quote. BX Chapter VI, Section 6(b)(5) the quote at one minimum price Only one quote may be submitted at a describes Firm Quote for purposes of variation (‘‘MPV’’) above (for offers) or time for an option series.’’ The quote submission. The Exchange below (for bids) the national best price. Exchange believes that this information proposes to memorialize within its Repricing quotes is consistent with the will provide Market Makers with Rules the requirement for the Act because the Exchange is not information on submitting a quote. The dissemination of quotations pursuant to permitted to lock or cross an away 5 Exchange notes that bid or offer may be Reg NMS. The Exchange is proposing market’s quote or order. The Exchange a ‘‘0,’’ however a price is required to be to add the above rule text to provide reprices the quotes one MPV inferior to entered for both the bid and offer to be context as to this restriction for cause the displayed price to reflect the entered into the System. Further, the submitting quotes. The Exchange available market on BX. Exchange proposes at Chapter VI, proposes to make clear the manner in Finally, the Exchange proposes at Section 6(b)(4) to provide clarity for which quote relief will occur. Chapter VI, Section 6(b)(7) to provide, entering quotes and proposes to specify, Specifically, this proposed rule text ‘‘Quotes submitted to the System are ‘‘The System accepts quotes beginning indicates the manner in which a subject to the following: Minimum at a time specified by the Exchange and determination for quote relief is made. increments provided for in Chapter VI, communicated on the Exchange’s Further, the rule notes the Exchange Section 5 and risk protections provided 4 website.’’ The Exchange believes that shall maintain a record of each instance for in Chapter VI, Section 18.’’ The this information will bring greater in which another exchange’s quotes are Exchange is noting herein the manner in transparency to the Rulebook with excluded from the Exchange’s which a quote may be rejected by the respect to limitations for submitting calculation of NBBO, and shall notify System to provide market participants quotations into the System. such other exchange that its quotes have with expectations as to the interplay The Exchange proposes a provision been so excluded. Also, when relief is among the various BX Rules. regarding firm quote within proposed no longer available, such quotations will Specifically, if the Market Maker does Rule Chapter VI, Section 6(b)(5): be included in the calculation of NBBO not submit a quotation compliant with Firm Quote. When quotes in options for such options. The Exchange notes Chapter VI, Section 5, the quote will not on another market or markets are subject how the determination is made that be accepted by the System because to relief from the firm quote requirement relief is no longer available. The market participants are required to set forth in the SEC Quote Rule, orders proposed rule text adds greater context abide by Chapter VI, Section 5 which and quotes will receive an automatic to the manner in which Firm Quote describes the increments with which execution at or better than the NBBO relief is applied. This rule text options series are to be quoted. Chapter based on the best bid or offer in markets represents the current practice. VI, Section 18 provides a list of all whose quotes are not subject to such Similarly, the Exchange proposes to protections applicable to quotes that relief. Such determination may be made provide the following proposed new may be rejected. The Exchange believes Chapter VI, Section 6(b)(6): that this rule will provide Options 3 Chapter VII, Section 6(b) provides, ‘‘A Market Trade-Through Compliance and Maker that enters a bid (offer) in a series of an Locked or Crossed Markets. A quote will Participants with requirements and option in which he is registered on BX Options not be executed at a price that trades must enter an offer (bid).’’ 6 An order that is designated by a member as non- 4 The system settings page is located: http:// through another market or displayed at routable will be re-priced in order to comply with www.nasdaqtrader.com/content/technicalsupport/ applicable Trade-Through and Locked and Crossed BXOptions_SystemSettings.pdf. 5 17 CFR 242.602. Markets restrictions.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55633

conditions for submitting quotations away market. Also, quotations may not VI, Section 6(e), related to Detection of and provide transparency as to lock or cross an away market. The Loss of Communication, to new Chapter limitations that cause a quote to be repricing of quotations is consistent VI, Section 23. The Exchange believes rejected. with the Act because repricing prevents that these two topics should be in The Exchange proposes to provide at the Exchange from disseminating a price separate rules for ease of locating those Chapter VI, Section 6(c), ‘‘Quotes will which locks or crosses another market. rules. be displayed in the System as described BX is required to avoid displaying a The Exchange is not proposing to in Chapter VI, Section 19.’’ Chapter VI, quotation that would lock or cross a amend the Kill Switch or Detection of Section 19, titled ‘‘Data Fees and Trade quotation of another market center at Loss of Communication rules; this rule Information’’ provides for the available the time it is displayed. Preventing change is non-substantive. The feeds that Options Participants may inferior prices from displaying perfects Exchange proposes to update internal access on the Exchange. This list the mechanism of a free and open cross-references. represents the available data feeds and market and a national market system, Chapter VI, Section 7, Entry and Display the content of those data feeds which and, in general to protect investors and Orders are offered today by BX. the public interest. The amendments to BX Chapter VI, The Exchange proposes to delete the The Exchange proposes to amend Section 6 create a list of all the rule text at Chapter VI, Section 6(a)(1) Chapter VI, Section 7 titled ‘‘Entry and requirements and conditions for and (2), which states: Display Orders.’’ The Exchange submitting quotes on BX within one (a) General—A System order is an proposes to retitle this rule, ‘‘Entry and rule is consistent with the Act because order that is entered into the System for Display of Orders.’’ Similar to Chapter it will provide greater transparency to display and/or execution as appropriate. VI, Section 6 for quotes, the Exchange market participants of the applicable Such orders are executable against proposes this new rule to describe the requirements. Further, this proposal marketable contra-side orders in the current requirements and conditions for will make the current rule clear and System. entering orders. The Exchange notes understandable for market participants (1) All System Orders shall indicate that the requirements provided for thereby protecting investors and the whether they are a call or put and buy within this rule represent the current general public. The Exchange notes that or sell and a price, if any. Systems practice. The purpose of Chapter VI, while some of these requirements Orders can be designated as Immediate Section 7 is to memorialize this appear in other rules, for ease of or Cancel (‘‘IOC’’), Good-till-Cancelled information within a single rule. reference the requirements are located (‘‘GTC’’), Day (‘‘DAY’’) or WAIT. Any of The Exchange proposes to amend within a single rule with this proposal. the foregoing may also be designated as Chapter VI, Section 7(a) to remove the The proposal reflects the Exchange’s a Directed Order. title, ‘‘Entry of Orders- ’’. The Exchange current practice with respect to quoting (2) A System order may also be proposes to memorialize the manner in designated as a Limit Order, a Minimum requirements. This proposal will which orders may be submitted to the Quantity Order, a Market Order, or an conform this Rule to other Nasdaq System to add more detail to its rules. All-or-None Order. Any of the foregoing affiliated markets filing similar rules.7 The Exchange proposes to amend may also be designated as a Directed The Exchange’s proposal is intended to Chapter VI, Section 7(a)(1) to remove Order. and unnecessary ‘‘a’’ and also to remove provide greater information with respect The Exchange notes that all order the sentence which provides, ‘‘Each to Firm Quote within new BX Chapter types listed in Chapter VI, Section 1(e) order shall indicate the amount of VI, Section 6(b)(5) and regarding trade- may be entered on BX. All order types Reserve Size (if applicable).’’ No order through and locked and crossed markets are executable against marketable type on BX has a Reserve Size.8 BX no Section 6(b)(6). The addition of this rule contra-side orders in the System. The longer has any order types with non- text is consistent with the Act because System will not permit an order to displayed interest; previously, BX the Exchange is adding detail regarding execute that is not marketable. BX has offered Discretionary Orders and the method in which quotes which are described in this proposal that it would Reserve Orders on BX, but both have firm or locked and crossed will be not trade-through an away market. All been eliminated. The Exchange handled in the System. The Time in Force designations noted in proposes to adopt a new Chapter VI, notifications for Firm Quote are made Chapter VI, Section 1(g) are available to Section 7(a)(2) which provides, ‘‘The clear with the proposed rule text. The market participants entering orders on System accepts orders beginning at a Exchange believes that it is consistent BX. The Exchange believes that the time specified by the Exchange and with the Act to specify when quotes are information provided in Chapter VI, communicated on the Exchange’s firm and the handling of such quotes by Section 6(a)(1) and (2) is also covered website.’’ 9 The Exchange proposes to the System for the protection of within Chapter VI, Section 1 and renumber current Chapter VI, Section investors and the general public. The therefore proposes to delete this rule 7(a)(2) as (a)(3). The Exchange proposes clarity is designed to promote just and text. equitable principles of trade by The Exchange proposes to relocate to renumber current Chapter VI, Section notifying all participants engaged in Chapter VI, Section 6(a)(3), relating to 7(a)(3) as (a)(4) and amend the rule market making of potential outcomes. zero-bid, and 6(b), relating to routing, which provides, ‘‘Orders can be entered Today, quotations may not be executed into Chapter VI, Section 10(5) and (6). into the System (or previously entered against at prices that trade-through an The Exchange believes that this orders cancelled) from the time prior to information should be described within market open specified by the Exchange 7 Nasdaq Phlx, Nasdaq ISE, LLC, Nasdaq GEMX, on its website until market close’’ to LLC and Nasdaq MRX, LLC have similar rules. See the rule describing allocation. Chapter VI, Section 6(c), which is reserved, is ‘‘Orders submitted to the System are Securities Exchange Act Release Nos. 86286 (July 2, subject to minimum increments 2019), 84 FR 32794 (July 9, 2019) (SR–Phlx–2019– being deleted. The Exchange proposes 25); 86947 (September 12, 2019), 84 FR 49165 to relocate Chapter VI, Section 6(d), (September 18, 2019) (SR–ISE–2019–23); 87180 8 See Securities Exchange Act Release No. 65873 (October 1, 2019), 84 FR 53497 (October 7, 2019) related to the BX Options Kill Switch, (December 2, 2011), 76 FR 76786 (December 8, (SR–GEMX–2019–13) and 87182 (October 1, 2019), to new Chapter VI, Section 22. The 2011) (SR–NASDAQ–2011–164). 84 FR 53534 (October 7, 2019) (SR–MRX–2019–20). Exchange proposes to relocate Chapter 9 See note 4 above.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55634 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

provided for in Chapter VI, Section 5, MRX Options 3, Section 15(a). This (2) Best Priced Order Display—For risk protections within Chapter VI, proposed rule provides, each System Security, the aggregate size Section 18 and the restrictions of order NBBO Price Protection. Orders, other of all Orders at the best price to buy and types within Chapter VI, Section 21(b). than Intermarket Sweep Orders (as sell resident in the System will be Orders may execute at multiple prices.’’ defined in Rule Chapter XII, Section transmitted for display to the The Exchange is proposing to conform 1(9)) will not be automatically executed appropriate network processor. order entry rules across its Nasdaq by the System at prices inferior to the (3) Exceptions—The following Affiliated markets, where applicable. NBBO (as defined in Chapter XII, exceptions shall apply to the display The Exchange proposed the time during Section 1(11)). There is no NBBO price parameters set forth in paragraphs (1) which the System accepts orders within protection with respect to any other and (2) above: Chapter VI, Section 7(a)(2) and therefore market whose quotations are Non-Firm The display of orders as well as the this rule text is not necessary as the (as defined in Chapter XII, Section text relating to System Book Feed are proposed rule describes time for 1(12)). being deleted because data feeds are accepting orders elsewhere. All orders The Exchange believes that although described in other rules.11 The must adhere to other rule requirements BX Rules 10 make clear that orders may Exchange believes this information is such as minimum increments, risk not execute at prices inferior to the unnecessary as the data feeds are protection rules and order types. Similar NBBO, this rule text will provide that specific as to the content of the to the rule text for quotes, orders are limitation in this proposed list of displayed information. The Exchange is currently subject to the minimum limitations for ease of reference. The also proposing to remove the rule text increment requirements in Chapter VI, Exchange notes that this NBBO related to Best Priced Order Display as Section 5, the risk protections for orders Protection applies to orders and this information is described within which are listed within current Chapter therefore is being discussed within Chapter XII, Options Order Protection VI, Section 18 as well as the restrictions proposed Chapter VI, Section 7 which and Locked and Crossed Markets. of order types within Chapter VI, applies to all Options Participants. In Specifically, BX Chapter XII, Section Section 21(b). This rule provides a list contrast, Chapter VI, Section 6, which 1(18) which describes a Protected Bid of other requirements which may applies to quotes entered by Market and Offer and the manner in which they impact the execution of an order. Makers, describes the Firm Quote are disseminated to the OPRA Plan. The Finally, orders may execute at multiple protections and the interplay of NBBO Exchange proposes to delete Chapter VI, prices. This rule provides a list of other with respect to quotes. Trade-Through is Section 7(b)(3) as well as subsections requirements which may impact the described in both Chapter VI, Section 6 (A), which is currently reserved. Current execution of an order. and 7. BX Chapter VI, Section 7(b)(3) notes The Exchange proposes to add new The Exchange proposes to state at exceptions to the display parameters. As rule at Chapter VI, Section 7(a)(5) which Chapter VI, Section 7(c), ‘‘The System noted (A) is reserved and as mentioned states, ‘‘Nullification by Mutual automatically executes eligible orders herein (B) and (C) are relocated within Agreement. Trades may be nullified if using the Exchange’s displayed best bid Section 7. all parties participating in the trade and offer (‘‘BBO’’).’’ This rule seeks to The Exchange’s proposal to adopt a agree to the nullification. In such case, define the Exchange’s best bid and offer new Chapter VI, Section 7, ‘‘Entry and one party must notify the Exchange and as the ‘‘BBO.’’ On BX, eligible orders Display of Orders’’ and describe the the Exchange promptly will disseminate will execute at the best price available, current requirements and conditions for the nullification to OPRA. It is the BBO. The Exchange believes that entering orders, similar to proposed considered conduct inconsistent with this information will provide Options changes to Chapter VI, Section 6 for just and equitable principles of trade for Participants with additional information quotes is consistent with the Act a party to use the mutual adjustment as some markets have non-displayed because it will provide transparency as process to circumvent any applicable order types and BX has no non- to manner in which orders may be Exchange rule, the Act or any of the displayed order types. submitted to the System. The rules and regulations thereunder.’’ The The Exchange proposes to relocate BX Exchange’s new rule reflects the current rule text of new Chapter VI, Section Chapter VI, Section 7(b)(3)(C) to Chapter requirements for submitting orders into 7(a)(5) is similar to Nasdaq ISE, LLC VI, Section 7(d). the System. Similar to proposed Chapter (‘‘ISE’’), Nasdaq GEMX, LLC (‘‘GEMX’’) The Exchange proposes to add a VI, Section 6, the Exchange proposes to and Nasdaq MRX, LLC (‘‘MRX’’) sentence at Chapter VI, Section 7(e) memorialize requirements and Options 3, Section 4(b). Trades may be which provides, ‘‘Orders will be limitations within one rule for ease of nullified today by agreement of the displayed in the System as described in reference. parties. The Exchange believes that it is Chapter VI, Section 19.’’ Chapter VI, Chapter VI, Section 10, Book Processing consistent with the Act to permit parties Section 19 contains information on data As noted above, the Exchange is to agree to a nullification provided the feeds and the information that is relocating rule text from current Chapter nullification does not violate other provided. This provision is similar to VI, Section 6(a)(3) and 6(b) to Chapter exchange rules. The Exchange notes that Chapter VI, Section 6(c). VI, Section 10(5) and (6). The Exchange parties may not agree to a mutual The Exchange proposes to delete also proposes to renumber current agreement for purposes that would current Chapter VI, Section 7(b)(1)–(3) Chapter VI, Section 10(5) as ‘‘(7)’’. cause another rule to be violated. The which provides, Exchange believes that it is consistent (1) System Book Feed—displayed Chapter VI, Section 21, Order and Quote with the Act and protection of investors orders resident in the System available Protocols and general public to make clear the for execution will be displayed via the System Book Feed. The Exchange proposes to amend expected behavior with respect to Chapter VI, Section 21(a)(i)(B) to add nullifications. 10 Intermarket Sweep Orders (as defined in Rule the following sentence to Specialized The Exchange proposes to adopt new Chapter XII, Section 1(9)) will not be automatically rule text at Chapter VI, Section 7(b) is executed by the System at prices inferior to the 11 See BX Chapter VI, Section 19, ‘‘Data Feeds and similar to rule text at to ISE, GEMX and NBBO (as defined in Chapter XII, Section 1(11)). Trade Information.’’

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55635

Quote Feed (‘‘SQF’’), ‘‘Market Makers buy and sell the same options contract This phrase will make clear that the may only enter interest into SQF in their and the entry of multiple limit orders at violation is specific to this rule. assigned options series.’’ The Exchange different prices in the same options 2. Statutory Basis notes that today Market Makers may series. utilize SQF to quote only in their This Rule prohibits Public Customers The Exchange believes that its assigned options series.12 This proposed from entering limit orders into the Order proposal is consistent with Section 6(b) 16 rule text is consistent with the Act Book in the same option series in a of the Act, in general, and furthers the 17 because it will add greater clarity to the manner where the public customer is objectives of Section 6(b)(5) of the Act, current rule for the protection of effectively operating as a market maker in particular, in that it is designed to investors and the public interest. by holding itself out as willing to buy promote just and equitable principles of and sell such options contract on a trade, to remove impediments to and Chapter VII, Section 5, Obligations of perfect the mechanism of a free and Market Makers regular or continuous basis. This rule would limit the ability of Options open market and a national market The Exchange proposes to add a new Participants that are not Market Makers system, and, in general to protect Chapter VII, Section 5(d) to describe the to compete on preferential terms, investors and the public interest as manner in which Market Makers may including Public Customers who are provided for within the purpose section. enter orders on BX. There is no rule provided with certain benefits, such as Chapter VI, Section 6, Acceptance of currently describing order entry by priority of bids and offers. Restrictions Quotes and Orders Market Makers. The Exchange proposes on the entry of Professional or broker- to memorialize the current practice by The Exchange’s proposal to add a new dealer orders are not imposed because section (b) to Chapter VI, Section 6 to providing ‘‘Market Makers may enter all the same priority does not exist. As order types defined in Chapter VI, describe the current requirements and noted herein, Market Makers are conditions for submitting quotes is Section 1(e) in the options classes to required to register with the Exchange.14 which they are appointed and non- consistent with the Act. The Exchange Market Makers are afforded preferential proposes within Chapter VI, Section 6 to appointed.’’ This rule will provide pricing.15 The Exchange believes that Market Makers with information as to create a list of all the requirements and Public Customers that desire to make conditions for submitting quotes on BX the types of orders that may entered on markets on BX should register with the BX. within one rule is consistent with the Exchange. The Exchange’s proposal to Act because it will provide greater Chapter VII, Section 12, Order Exposure adopt this new rule text within Chapter transparency to market participants of Requirements VII, Section 12(b) will bring greater the applicable requirements. The The Exchange proposes to amend clarity to current limitations that exist Exchange’s proposal is intended to current Chapter VII, Section 12, titled when entering orders. Section 12 is provide greater information with respect ‘‘Order Exposure Requirements.’’ The consistent with the Act and will to Firm Quote within new Section Exchange proposes to amend the title to promote just and equitable principles of 6(b)(5) and regarding trade-through and ‘‘Limitations on Order Entry’’ to trade and remove impediments to and locked and crossed markets Section conform the rule to other Nasdaq perfect the mechanism of a free and 6(b)(6). affiliate market rules.13 open market and a national market The additional rule text is consistent The Exchange proposes to amend system because it will continue to make with the Act because it adds detail Chapter VII, Section 12(a) to add the clear the requirement to expose orders regarding the method in which orders title ‘‘Limitations on Principal as well as present more specific which are firm or locked and crossed Transactions.’’ This change is not limitations on order entry which would will be handled in the System. The substantive. The Exchange proposes to violate BX Rules. Providing members notifications for Firm Quote are made amend Chapter VII, Section 12(b) to re- with more information as to the type of clear with the proposed rule text. The number it as (1) and replace the words behavior that is violative with respect to Exchange believes that it is consistent ‘‘Section 12’’ with ‘‘This Rule.’’ The order exposure will prevent inadvertent with the Act to specify when quotes are Exchange proposes to add a new violations of Exchange rules and ensure firm and the handling of such quotes by Chapter VII, Section 12(b) similar to that orders are subject to appropriate the System for the protection of Phlx Rule 1097(a). The rule text would price discovery. investors and the general public. The provide, The Exchange proposes to amend clarity is designed to promote just and Limit Orders. Options Participants Chapter VII, Section 12(c) by adding a equitable principles of trade by shall not enter Public Customer limit new titled ‘‘Limitations on Solicitation notifying all participants engaged in orders into the System in the same Orders.’’ The Exchange also proposes to market making of potential outcomes. options series, for the account or amend the rule text to more closely Today, quotations may not be executed accounts of the same or related align with ISE, GEMX and MRX Rules against at prices that trade-through an beneficial owners, in such a manner that at Options 3, Section 22. The away market. Also, quotations may not the beneficial owner(s) effectively is amendments to the rule text is not lock or cross an away market. The operating as a market maker by holding substantive and simply reiterates the repricing of quotations is consistent itself out as willing to buy and sell such same exception for BX PRISM that is with the Act because repricing prevents options contract on a regular or currently contained within Chapter VII, the Exchange from disseminating a price continuous basis. In determining Section 12(a) for completeness. which locks or crosses another market. whether a beneficial owner effectively is The Exchange proposes to amend BX is required to avoid displaying a operating as a market maker, the Chapter VII, Section 12(d) to add rule quotation that would lock or cross a Exchange will consider, among other text that specifically notes that ‘‘for quotation of another market center at things: the simultaneous or near- purposes of violating Chapter VII, the time it is displayed. Preventing simultaneous entry of limit orders to Section 12’’ at the end of the rule text. inferior prices from displaying perfects

12 See BX Chapter VII, Section 2. 14 See BX Chapter VII, Section 2. 16 15 U.S.C. 78f(b). 13 See note 7 above. 15 See BX’s Pricing Schedule at Options 7. 17 15 U.S.C. 78f(b)(5).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55636 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

the mechanism of a free and open and (2) is covered within Chapter VI, memorialize requirements and market and a national market system, Section 1. The Exchange believes that limitations within one rule for ease of and, in general protects investors and eliminating this rule is consistent with reference. the public interest. the Act because the rule text does not The Exchange’s proposal to adopt a BX is memorializing its current add any new information. new Chapter VI, Section 7 will conform practice by reflecting the various proposed Rule to other Nasdaq affiliated requirements and limitations for quote Chapter VI, Section 7, Entry and Display markets filing similar rules.21 The entry in one rule for ease of reference Orders Exchange’s proposal to add rule text to and clarity. The Exchange proposes to Similar to Chapter VI, Section 6, describe potential violations of this rule conform this rule to similar rules across which describes requirements for will bring greater clarity to current other Nasdaq affiliated exchanges.18 quotes, the Exchange proposes to adopt limitations that exist when entering Making clear the manner in which a new Chapter VI, Section 7, ‘‘Entry and orders. Proposed Chapter VI, Section 7 Market Makers may generate and submit Display of Orders’’ and describe the is consistent with the Act because it option quotations will provide these current requirements and conditions for provides one rule for ease of reference market participants with clear guidance entering orders. The Exchange notes which lists the current limitations and within the rules. Chapter VII, Section that the requirements provided for some additional limitations. The 6(b)(1) makes clear that Market Makers within this rule represent the current Exchange believes the proposed rule may submit quotes.19 Further, Chapter practice. The purpose of Chapter VI, will promote just and equitable VI, Section 21 describes the SQF Section 7 is to memorialize this principles of trade and remove interface.20 BX proposes to clarify that information within a single rule to impediments to and perfect the only one quote may be submitted at a provide a list of other requirements mechanism of a free and open market time for a series. The Exchange believes which may impact the execution of an and a national market system because it that memorializing these restrictions order. Trades may be nullified today by will continue to make clear the will bring greater clarity to the agreement of the parties. The Exchange requirement to expose orders as well as Exchange’s rules. believes that it is consistent with the present more specific limitations on The relocations of both the Kill Act to permit parties to agree to a order entry which would violate BX Switch and Detection of Loss of nullification provided the nullification Rules. Providing members with more Communication rules is consistent with does not violate other exchange rules. information as to the type of behavior the Act because these relocations will The Exchange notes that parties may not that is violative with respect to order bring greater transparency to these agree to a mutual agreement for exposure will prevent inadvertent protection rules because they will be purposes that would cause another rule violations of Exchange rules and ensure easier to search by the title within the to be violated. The Exchange believes that orders are subject to appropriate Rulebook. The relocation of the zero-bid that it is consistent with the Act and price discovery. and routing information to Chapter VI, protection of investors and general Section 10(5) and (6) is intended to public to make clear the expected Chapter VI, Section 21, Order and Quote locate that information with rules behavior with respect to nullifications. Protocols describing allocation. Today, orders may not be executed at The Exchange’s proposal to amend The Exchange’s proposal to eliminate a price that trades through an away Chapter VI, Section 21(a)(i)(B) to make rule text within current Chapter VI, market. Also, orders may not lock or clear that Market Makers may only enter Section 6(a)(1) and (2) is consistent with cross an away market. Routable orders interest into SQF in their assigned the Act because these rules describe must comply with Trade-Through and options series is consistent with the Act. order types in general. The order types Locked and Crossed Markets Chapter VII, Section 2, Market Maker are described today within Chapter VI, restrictions. The repricing of orders is Registration, describes the manner in Section 1(e). All order types are consistent with the Act because which Market Makers are appointed in executable against marketable contra- repricing prevents the Exchange from options series. This sentence simply side orders in the System. All Time in disseminating a price which locks or provides that SQF may only be utilized Force designations noted in Chapter VI, crosses another market. BX is required for quoting in assigned options series. Section 1(g) are available to market avoiding displaying an order that would participants entering orders on BX. The lock or cross a quotation of another Chapter VII, Section 5, Obligations of Exchange believes that the information market center at the time it is displayed. Market Makers provided in Chapter VI, Section 6(a)(1) Preventing inferior prices from Memorializing information related to displaying perfects the mechanism of a order entry for Market Makers within 18 See note 7 above. free and open market and a national Chapter VII, Section 5 will bring greater 19 Chapter VII, Section 2 describes the manner in market system, and, in general to protect clarity to the Rulebook. Today, Market which Market Makers must register and Section 6(c) investors and the public interest. The provides for firm quote. Makers may enter all order types 20 Chapter VI, Section 21(a)(i)(B) provides, Exchange’s proposal to adopt a new defined in Chapter VI, Section 1(e). ‘‘Specialized Quote Feed’’ or ‘‘SQF’’ is an interface Chapter VI, Section 7, ‘‘Entry and that allows Market Makers to connect, send, and Display of Orders’’ and describe the Chapter VII, Section 12, Order Exposure receive messages related to quotes, Immediate-or- current requirements and conditions for Requirements Cancel Orders, and auction responses into and from the Exchange. Features include the following: (1) entering orders, similar to proposed The Exchange’s proposal to amend Options symbol directory messages (e.g., underlying changes to Chapter VI, Section 6 for Chapter VII, Section 12 to provide a instruments); (2) system event messages (e.g., start quotes is consistent with the Act specific rule for entering Public of trading hours messages and start of opening); (3) because it will provide transparency as Customer is consistent with the Act. trading action messages (e.g., halts and resumes); (4) execution messages; (5) quote messages; (6) to manner in which orders may be Providing market participants with clear Immediate-or-Cancel Order messages; (7) risk submitted to the System. The guidelines will protect investors and the protection triggers and purge notifications; (8) Exchange’s new rule reflects the current public interest by providing additional opening imbalance messages; (9) auction requirements for submitting orders into notifications; and (10) auction responses. The SQF notice of violative behavior when Purge Interface only receives and notifies of purge the System. Similar to proposed Chapter request from the Market Maker. VI, Section 6, the Exchange proposes to 21 See note 7 above.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55637

entering orders. The proposed rule text for ease of reference and clarity. The uniformly to all BX Options is similar to current Nasdaq Phlx LLC Exchange is also proposing to conform Participants. Rules.22 The Exchange believes that this this rule to similar rules across other C. Self-Regulatory Organization’s proposed language will provide more Nasdaq affiliated exchanges. Statement on Comments on the transparency as to the types of Chapter VI, Section 7, Entry and Display Proposed Rule Change Received From transactions that are not permitted today Orders Members, Participants, or Others on BX. With respect to limit orders, the Exchange seeks to limit the ability of The Exchange’s proposal to amend No written comments were either non-market makers to effectively make Chapter VI, Section 7, ‘‘Entry and solicited or received. markets on the Exchange using Display Orders’’ to describe the current III. Date of Effectiveness of the automated systems that place and requirements and conditions for Proposed Rule Change and Timing for cancel orders in a manner that is similar entering orders, similar to proposed Commission Action to quoting. With respect to principal changes to Chapter VI, Section 6 for transactions, the Exchange is making quotes does not create an undue burden Because the foregoing proposed rule clear that a BX Options Participant may on competition because it will apply change does not: (i) Significantly affect not take both sides of a trade (the agency uniformly to all market participants. the protection of investors or the public side and also act as principal) on an The Exchange is memorializing its interest; (ii) impose any significant execution without order exposure to current practice by reflecting the various burden on competition; and (iii) become provide the agency order the requirements and limitations for order operative for 30 days from the date on opportunity for price improvement. entry in one rule for ease of reference which it was filed, or such shorter time This rule is intended to ensure that and clarity. The Exchange is also as the Commission may designate, it has customers receive fair executions. This proposing to conform this rule to similar become effective pursuant to Section rule is consistent with the Act in that it rules across other Nasdaq affiliated 19(b)(3)(A)(iii) of the Act 23 and promotes just and equitable principles exchanges. Making clear the manner in subparagraph (f)(6) of Rule 19b–4 of trade and protects investors and the which Options Participants may thereunder.24 public interest. The Exchange’s proposal generate and submit option orders will At any time within 60 days of the to describe exposure of agency orders provide these market participants with filing of the proposed rule change, the mirrors language already contained with clear guidance within the rules. Commission summarily may Chapter VI, Section 12. The Exchange temporarily suspend such rule change if also notes that current Chapter III, Chapter VI, Section 21, Order and Quote it appears to the Commission that such Section 4(d) would apply to the types of Protocols action is necessary or appropriate in the violations noted with respect to new The Exchange proposes to amend public interest, for the protection of Chapter VII, Section 12 provisions. Chapter VI, Section 21(a)(i)(B) to make investors, or otherwise in furtherance of clear that Market Makers may only enter the purposes of the Act. If the B. Self-Regulatory Organization’s interest into SQF in their assigned Commission takes such action, the Statement on Burden on Competition options series does not impose an Commission shall institute proceedings The Exchange does not believe that undue burden on competition, rather it to determine whether the proposed rule the proposed rule change will impose makes clear that SQF may only be should be approved or disapproved. any burden on competition that is not utilized for quoting in assigned options IV. Solicitation of Comments necessary or appropriate in furtherance series. This rule is applicable to all of the purposes of the Act. The Market Makers. Interested persons are invited to Exchange notes that other options submit written data, views, and markets have similar rules with respect Chapter VII, Section 5, Obligations of arguments concerning the foregoing, to order and quote entry and the Market Makers including whether the proposed rule requirements to expose orders. The Memorializing information related to change is consistent with the Act. implementation of such rules may vary order entry for Market Makers within Comments may be submitted by any of across options markets. Despite the Chapter VII, Section 5 does not impose the following methods: variation in implementation, the an undue burden on competition. Electronic Comments Exchange does not believe this proposal Today, Market Makers may enter all • creates an undue burden on inter- order types defined in Chapter VI, Use the Commission’s internet market competition because the Section 1(e). comment form (http://www.sec.gov/ requirements for order exposure are rules/sro.shtml); or Chapter VII, Section 12, Order Exposure • Send an email to rule-comments@ consistent with respect to all markets as Requirements sec.gov. Please include File Number SR– well as the ability to submit quotes and BX–2019–033 on the subject line. orders on all options markets.’ The Exchange’s proposal to amend Chapter VII, Section 12 to provide Paper Comments Chapter VI, Section 6, Acceptance of specific rules for limitations on entering • Quotes and Orders limit orders, principal transactions and Send paper comments in triplicate to Secretary, Securities and Exchange The Exchange’s proposal to describe agency orders does not impose an Commission, 100 F Street NE, the current requirements and conditions undue burden on competition because Washington, DC 20549–1090. for submitting quotes does not impose these rules provide additional an undue burden on competition and all specificity as to the manner in which 23 15 U.S.C. 78s(b)(3)(A)(iii). Market Makers are subject to these orders may be entered on BX. The 24 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– requirements today. The Exchange is Exchange believes that this proposed 4(f)(6) requires a self-regulatory organization to give memorializing its current practice by language will provide more the Commission written notice of its intent to file reflecting the various requirements and transparency as to the types of the proposed rule change at least five business days prior to the date of filing of the proposed rule limitations for quote entry in one rule transactions that are not permitted today change, or such shorter time as designated by the on BX and would violate BX Chapter III, Commission. The Exchange has satisfied this 22 See Nasdaq Phlx LLC Rule 1097. Section 4(f). These rules will apply requirement.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55638 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2 investor access to real-time U.S. equity Number SR–BX–2019–033. This file notice is hereby given that on October quote and trade information, and allow number should be included on the 1, 2019, Cboe EDGA Exchange, Inc. the Exchange to better compete for this subject line if email is used. To help the (‘‘Exchange’’ or ‘‘EDGA’’) filed with the business with competitors that offer Commission process and review your Securities and Exchange Commission similar optional products. The Exchange comments more efficiently, please use (‘‘Commission’’) the proposed rule initially filed to introduce the Program only one method. The Commission will change as described in Items I, II, and on August 1, 2019 (‘‘Initial Proposal’’) to post all comments on the Commission’s III below, which Items have been further ensure that retail investors internet website (http://www.sec.gov/ prepared by the Exchange. The served by smaller firms have cost Commission is publishing this notice to rules/sro.shtml). Copies of the effective access to its market data solicit comments on the proposed rule submission, all subsequent products, and as part of its ongoing change from interested persons. amendments, all written statements efforts to improve the retail investor with respect to the proposed rule I. Self-Regulatory Organization’s experience in the public markets. The change that are filed with the Statement of the Terms of Substance of Initial Proposal was published in the Commission, and all written the Proposed Rule Change 3 communications relating to the Federal Register on August 20, 2019, proposed rule change between the Cboe EDGA Exchange, Inc. (‘‘EDGA’’ and the Commission received no Commission and any person, other than or the ‘‘Exchange’’) is filing with the commenter letters on the proposal. The those that may be withheld from the Securities and Exchange Commission Program remained in effect until the fee public in accordance with the (the ‘‘Commission’’) a proposed rule change was temporarily suspended provisions of 5 U.S.C. 552, will be change to introduce a Small Retail pursuant to a suspension order (the available for website viewing and Broker Distribution Program. The text of ‘‘Suspension Order’’).4 The Suspension printing in the Commission’s Public the proposed changes to the fee Order also instituted proceedings to Reference Room, 100 F Street NE, schedule are enclosed as Exhibit 5. [sic] determine whether to approve or The text of the proposed rule change Washington, DC 20549 on official disapprove the Initial Proposal.5 is also available on the Exchange’s business days between the hours of website (http://markets.cboe.com/us/ Current Fees 10:00 a.m. and 3:00 p.m. Copies of the equities/regulation/rule_filings/edga/), filing also will be available for at the Exchange’s Office of the The Cboe One Summary Feed is a top inspection and copying at the principal Secretary, and at the Commission’s of book data feed that provides real-time office of the Exchange. All comments Public Reference Room. U.S. equity quote and trade information received will be posted without change. to investors based on equity orders Persons submitting comments are II. Self-Regulatory Organization’s submitted to the Exchange and its Statement of the Purpose of, and cautioned that we do not redact or edit affiliated equities exchanges—i.e., Cboe personal identifying information from Statutory Basis for, the Proposed Rule EDGX Exchange, Inc., Cboe BZX comment submissions. You should Change Exchange, Inc., and Cboe BYX submit only information that you wish In its filing with the Commission, the Exchange, Inc. Specifically, the Cboe to make available publicly. All Exchange included statements submissions should refer to File One Summary Feed is a data feed that concerning the purpose of and basis for contains the aggregate best bid and offer Number SR–BX–2019–033 and should the proposed rule change and discussed of all displayed orders for securities be submitted on or before November 7, any comments it received on the traded on the Exchange and its affiliated 2019. proposed rule change. The text of these exchanges. The Cboe One Summary For the Commission, by the Division of statements may be examined at the Trading and Markets, pursuant to delegated places specified in Item IV below. The Feed also contains the individual last authority.25 Exchange has prepared summaries, set sale information for the Exchange and Jill M. Peterson, forth in sections A, B, and C below, of each of its affiliated exchanges, and Assistant Secretary. the most significant aspects of such consolidated volume for all listed equity securities. The fee for external [FR Doc. 2019–22588 Filed 10–16–19; 8:45 am] statements. distribution of the Cboe One Summary BILLING CODE 8011–01–P A. Self-Regulatory Organization’s Feed is $5,000 per month, and external Statement of the Purpose of, and distributors are also liable for a Data Statutory Basis for, the Proposed Rule Consolidation Fee of $1,000 per month, SECURITIES AND EXCHANGE Change COMMISSION and User fees equal to $10 per month for 1. Purpose each Professional User, and $0.25 per 6 [Release No. 34–87294; File No. SR– The purpose of the proposed rule month for each Non-Professional User. CboeEDGA–2019–015] change is to introduce a pricing program that would allow small retail brokers Self-Regulatory Organizations; Cboe that purchase top of book market data 3 See Securities Exchange Act Release No. 86676 EDGA Exchange, Inc.; Notice of Filing from the Exchange to benefit from (August 14, 2019), 84 FR 43218 (August 20, 2019) and Immediate Effectiveness of a discounted fees for access to such (SR–CboeEDGA–2019–013). Proposed Rule Change To Introduce a market data. The Small Retail Broker 4 See Securities Exchange Act Release No. 87165 (September 30, 2019) (SR–CboeEDGA–2019–013) Small Retail Broker Distribution Distribution Program (the ‘‘Program’’) (Federal Register publication pending). Program would reduce the distribution and 5 Id. consolidation fees paid by small broker- 6 The Exchange also offers an Enterprise license October 11, 2019. dealers that operate a retail business. In for the Cboe One Summary Feed at a cost of $50,000 Pursuant to Section 19(b)(1) of the turn, the Program may increase retail per month. An Enterprise license permits Securities Exchange Act of 1934 distribution to an unlimited number of Professional and Non-Professional Users, keeping costs down for 1 15 U.S.C. 78s(b)(1). firms that provide access to a large number of 25 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. subscribers.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55639

Small Retail Broker Eligibility exclusive to the Cboe One Summary and with the securities information Requirements Feed, which is a top of book offering, as processors (‘‘SIPs’’) to provide efficient, The Exchange proposes to introduce a retail investors typically do not need or reliable, and low cost data to a wide Program that would reduce costs for use depth of book data to facilitate their range of investors and market small retail brokers that provide top of equity investments, and their brokers participants. In fact, Regulation NMS book data to their clients. In order to be typically do purchase such market data requires all U.S. equities exchanges to approved for the Small Retail Broker on their behalf. provide their best bids and offers, and Distribution Program, Distributors Discounted Fees executed transactions, to the two would have to provide Cboe One registered SIPs for dissemination to the Distributors that participate in the Summary Feed Data to a limited number public. Top of book data is therefore Program would be liable for lower widely available to investors today at a of clients with which the firm has distribution and consolidation fees for established a brokerage relationship, relatively modest cost. National access to the Cboe One Summary Data securities exchanges may also and would have to provide such data 7 Feed. The distribution fee charged for disseminate their own top of book data, primarily to Non-Professional Data the Cboe One Summary Feed would be Users. Specifically, distributors would but no rule or regulation of the lowered by 30% from the current $5,000 Commission requires market have to attest that they meet the per month to $3,500 per month for following criteria: (1) Distributor is a participants to purchase top of book distributors that meet the requirements data from an exchange.9 The Cboe One broker-dealer distributing Cboe One of the Program. In addition, the Data Summary Feed Data to Non-Professional Summary Feed therefore competes with Consolidation Fee charged for the Cboe the SIP and with similar products Data Users with whom the broker-dealer One Summary Feed would be lowered has a brokerage relationship; (2) More offered by other national securities by 65% from the current $1,000 per exchanges that offer their own than 50% of the Distributor’s total Data month to $350 per month. User fees for User population must consist of Non- competing top of book products. In fact, any Professional or Non-Professional there are ten competing top of book Professional Data Users, inclusive of Users that access Cboe One Summary those not receiving Cboe One Summary products offered by other national Feed data from a distributor that securities exchanges today, not counting Feed Data; and (3) Distributor participates in the Program would distributes Cboe One Summary Feed products offered by the Exchange’s remain at their current levels as the affiliates.10 Data to no more than 5,000 Non- current subscriber charges are already Professional Data Users. The purpose of the proposed rule among the most competitive in the change is to further increase the These proposed requirements for industry.8 participating in the Program are competitiveness of the Exchange’s top of The Exchange believes that these fees, book market data products compared to designed to ensure that the benefits which represent a significant cost provided by the Program inure to the competitor offerings that may currently savings for small retail brokers, would be cheaper for firms with a limited benefit of small retail brokers that help ensure that retail investors provide Cboe One Summary Feed Data subscriber base that do not yet have the continue to have fair and efficient scale to take advantage of the lower to a limited number of subscribers. As access to U.S. equity market data. While explained later in this filing, subscriber fees offered by the Exchange. retail investors normally pay a fixed In turn, the Exchange believes that this distributors that provide EDGA commission when buying or selling Exchange Data to a larger number of change may benefit market participants equities, and do not typically pay and investors by spurring additional subscribers can benefit from the current separate fees for market data, the pricing structure through scale, due to competition and increasing the Exchange believes that the proposed accessibility of the Exchange’s top of subscriber fees that are significantly reduction in fees would make the lower than those charged by the book data. Exchange’s data more competitive with As explained, the Exchange filed the Exchange’s competitors, and an other available alternatives, and may Enterprise license that caps the total Initial Proposal to introduce the encourage retail brokers to make such Program in August in order to provide fees to be paid by firms that distribute data more readily available to their market data to a sizeable customer base. an attractive pricing option for small clients. In sum, the Exchange believes retail brokers. Although that filing was The Exchange believes that offering that the proposed fee reductions may similarly attractive pricing to small ultimately suspended by the facilitate more cost effective access to Commission, the Exchange believes that retail brokers, including regional firms top of book data that is purchased on a both inside and outside of the U.S. that its experience in offering the Program voluntary basis by retail brokers and while it was in effect reflect the may not have the same established provided to their retail investor clients. client base as the larger retail brokers, competitive nature of the market for the would make the Exchange’s data a more Market Background creation and distribution of top of book competitive alternative for those firms, The market for top of book data is data. Specifically, after the Exchange and would help ensure that such highly competitive as national securities initially reduced the fees charged to information is widely available to a exchanges compete both with each other small retail brokers under the Initial larger number of retail investors Proposal, it successfully onboarded one globally. The Program would also be 7 New external distributors of the Cboe One new customer due to the attractive available to retail brokers more Summary Feed are not currently charged external generally, regardless of size, that wish to distributor fees for their first month of service. This 9 By contrast, Rule 603(c) of Regulation NMS (the would continue to be the case for external ‘‘Vendor Display Rule’’) effectively requires that SIP trial the Cboe One Summary Feed with distributors that participate in the Program. data or some other consolidated display be utilized a limited number of subscribers before 8 By comparison, The Nasdaq Stock Market LLC in any context in which a trading or order-routing potentially expanding distribution to (‘‘Nasdaq’’) charges a subscriber fee for Nasdaq decision can be implemented. additional clients, potentially further Basic that adds up to $26 per month for 10 Competing top of book products include, Professional Subscribers and $1 per month for Non- Nasdaq Basic, BX Basic, PSX Basic, NYSE BQT, increasing the accessibility of the Professional Subscribers (Tapes A, B, and C). See NYSE BBO/Trades, NYSE Arca BBO/Trades, NYSE Exchange’s market data to retail Nasdaq Equity Rules, Equity 7, Pricing Schedule, American BBO/Trades, NYSE Chicago BBO/Trades, investors. The Program would be Section 147(b)(1). and IEX TOPS.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55640 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

pricing, and is currently in the process of Regulation NMS,15 which provides U.S. equities trading volume.18 The of onboarding another customer.11 that any national securities exchange Cboe One Summary Feed is purchased These customers are now able to offer that distributes information with respect by a wide variety of market participants high quality and cost effective data to to quotations for or transactions in an and vendors, including data platforms, their retail investor clients. The NMS stock do so on terms that are not websites, fintech firms, buy-side Exchange has also been discussing the unreasonably discriminatory. investors, retail brokers, regional banks, Program with a handful of additional In adopting Regulation NMS, the and securities firms inside and outside prospective clients that are interested in Commission granted SROs and broker- of the U.S. that desire low cost, high providing top of book data to retail dealers increased authority and quality, real-time U.S. equity market investors. Without the proposed pricing flexibility to offer new and unique data. By providing lower cost access to discounts, the Exchange believes that market data to the public. It was U.S. equity market data, the Cboe One those customers and prospective believed that this authority would Summary Feed benefits a wide range of customers may not be interested in expand the amount of data available to investors that participate in the national purchasing top of book data from the consumers, and also spur innovation market system. Reducing fees for broker- Exchange, and would instead purchase and competition for the provision of dealers that represent retail investors such data from other national securities market data. The Exchange believes that and that may have more limited exchanges or the SIPs, potentially at a the proposed fee change would further resources than some of their larger higher cost than would be available broaden the availability of U.S. equity competitors would further increase pursuant to the Program. The Program market data to investors, and in access to such data and facilitate a has therefore already been successful in particular retail investors, consistent competitive market for U.S. equity increasing competition for such market with the principles of Regulation NMS. securities, consistent with the goals of data, and continued operation of the The Exchange operates in a highly the Act. Program would serve to both reduce fees competitive environment. Indeed, there While the Exchange is not required to for such customers and to provide are thirteen registered national make any data, including top of book alternatives to data and pricing offered securities exchanges that trade U.S. data, available through its proprietary by competitors. Ultimately, the equities and offer associated top of book market data platform, the Exchange Exchange believes that it is critical that market data products to their customers. believes that making such data available it be allowed to compete by offering The national securities exchanges also increases investor choice, and attractive pricing to customers as compete with the SIPs for market data contributes to a fair and competitive increasing the availability of such customers. The Commission has market. Specifically, making such data products ensures continued competition repeatedly expressed its preference for publicly available through proprietary with alternative offerings. Such competition over regulatory data feeds allows investors to choose competition may be constrained when intervention in determining prices, alternative, potentially less costly, competitors are impeded from offering products, and services in the securities market data based on their business alternative and cost effective solutions markets. Specifically, in Regulation needs. While some market participants to customers. NMS, the Commission highlighted the that desire a consolidated display importance of market forces in choose the SIP for their top of book data 2. Statutory Basis determining prices and SRO revenues needs, and in some cases are effectively required to do so under the Vendor The Exchange believes that the and, also, recognized that current Display Rule, others may prefer to proposed rule change is consistent with regulation of the market system ‘‘has purchase data directly from one or more the objectives of Section 6 of the Act,12 been remarkably successful in national securities exchanges. For in general, and furthers the objectives of promoting market competition in its example, a buy-side investor may Section 6(b)(4),13 in particular, as it is broader forms that are most important to choose to purchase the Cboe One designed to provide for the equitable investors and listed companies.’’ 16 The Summary Feed, or a similar product allocation of reasonable dues, fees and proposed fee change is a result of the from another exchange, in order to other charges among its members and competitive environment, as the perform investment analysis. The Cboe other recipients of Exchange data. Exchange seeks to amend its fees to One Summary Feed represents quotes attract additional subscribers for its The Exchange also believes that the from four highly liquid equities markets. proprietary top of book data offerings. proposed rule change is consistent with As a result, the Cboe One Summary 14 The proposed fee change would Section 11(A) of the Act. Specifically, Feed is within 1% of the national best reduce fees charged to small retail the proposed rule change supports (i) bid and offer approximately 98% of the brokers that provide access to the Cboe fair competition among brokers and time,19 One Summary Feed. The Cboe One and therefore serves as a dealers, among exchange markets, and valuable reference for investors that do between exchange markets and markets Summary Feed is a competitively-priced alternative to top of book data not require a consolidated display that other than exchange markets, and (ii) contains quotations for all U.S. equities the availability to brokers, dealers, and disseminated by SIPs, or similar data disseminated by other national exchanges. Making alternative products investors of information with respect to available to market participants securities exchanges.17 It provides quotations for and transactions in ultimately ensures increased subscribers with consolidated top of securities. In addition, the proposed competition in the marketplace, and book quotes and trades from four Cboe rule change is consistent with Rule 603 constrains the ability of exchanges to U.S. equities markets, which together charge supracompetitive fees. In the 11 account for about 17% of consolidated See e.g., Cboe Innovation Spotlight, ‘‘dough— event that a market participant views The commission-free online broker with premium one exchanges top of book data fees as content and insights,’’ available at https:// 15 See 17 CFR 242.603. _ _ markets.cboe.com/us/equities/market data 16 See Securities Exchange Act Release No. 51808 more or less attractive than the products/spotlight/. (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 12 15 U.S.C. 78f. (‘‘Regulation NMS Adopting Release’’). 18 Id. 13 15 U.S.C. 78f(b)(4). 17 See e.g., supra note 5 (discussing Nasdaq 19 See https://markets.cboe.com/us/equities/ 14 15 U.S.C. 78k–1. Basic). market_data_services/cboe_one/.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55641

competition they can and frequently do market data and to allocate revenues to products due to the potential cost switch between competing products. In SROs that produce the most useful data savings. In addition to the subscribers fact, the competiveness of the market for for investors.’’ 20 that are participating and are soon to such top of book data products is one Today, the Cboe One Summary Feed participate in the Program, dozens of of the primary factors animating this is among the most competitively priced distributors that currently purchase top proposed rule change, which is top of book offerings in the industry due of book data from one of the four Cboe designed to allow the Exchange to to modest subscriber fees, and a lower U.S. equities exchanges, and many more further compete for this business. Enterprise cap, both of which keep fees prospective customers, could benefit Indeed, the Exchange has already at a relatively modest level for larger from the Program. Each of these current successfully onboarded one new firms that provide market data to a or prospective retail broker customers Distributor that has decided to purchase sizeable number of Professional or Non- would receive the same benefits in Cboe One Summary Data from the Professional Users. Distributors with a terms of reduced distribution and Exchange rather than purchasing top of smaller user base, however, may choose consolidation fees based on the product book data from a competitor exchange, to use competitor products that have a that they purchase from the Exchange. and is in the process of onboarding lower distribution fee and higher The Commission has long stressed the another new Distributor. In addition, the subscriber fees. The Program would need to ensure that the equities markets Exchange is in discussions with a help the Exchange compete for this are structured in a way that meets the handful of other Distributors that are segment of the market, and may broaden needs of ordinary investors. For interested in procuring market data from the reach of the Exchange’s data example, the Commission’s strategic the Exchange due to the attractive products by providing an additional low plan for fiscal years 2018–2022 touts pricing offered pursuant to the Program. cost alternative to competitor products ‘‘focus on the long-term interests of our Distributors can discontinue use at any for small retail brokers. While such Main Street investors’’ as the time and for any reason, including due firms may already utilize similar market Commission’s number one strategic to an assessment of the reasonableness data products from other sources, the goal.21 The Program would be of fees charged. Further, firms have a Exchange believes that offering its own consistent with the Commission’s stated wide variety of alternative market data data to small retail brokers at lower goal of improving the retail investor products from which to choose, such as distribution and data consolidation experience in the public markets. similar proprietary data products costs has the potential to increase Furthermore, national securities offered by other national securities choice for market participants, and exchanges commonly charge reduced exchanges. Making the Exchange’s top ultimately increase the data available to fees and offer market structure benefits of book data available at a lower cost, retail investors when coupled with the to retail investors, and the Commission ultimately serves the interests of retail Exchange’s lower subscriber fees. has consistently held that such investors that rely on the public The Exchange also believes that the incentives are consistent with the Act. markets. The Exchange understands that proposed fees are equitable and not The Exchange believes that the Program the Commission is interested in unfairly discriminatory as the proposed is consistent with longstanding ensuring that retail investors are fee structure is designed to decrease the precedent indicating that it is consistent appropriately served in the U.S. equities price and increase the availability of with the Act to provide reasonable market. The Exchange agrees that it is U.S. equities market data to retail incentives to retail investors that rely on important to ensure that our markets investors. The Program is designed to the public markets for their investment continue to serve the needs of ordinary reduce the cost of top of book market needs. investors, and the Program is consistent data for broker-dealers that provide such In addition, while the Program would with this goal. data to Non-Professional Data User be effectively limited to smaller firms The Exchange believes that the clients that make up the majority of the that distribute data to no more than proposed fees are reasonable as they distributor’s total subscriber population. 5,000 Non-Professional Data Users, the represent a significant cost reduction for While there is no ‘‘exact science’’ to Exchange does not believe that this smaller, primarily regional, retail choosing one eligibility threshold limitation makes the fees inequitable, brokers that provide top of book data compared to another, the Exchange unfairly discriminatory, or otherwise from EDGA and its affiliated equities believes that having more Non- contrary to the purposes of the Act. exchanges to their retail investor clients. Professional Data Users than Large broker-dealers and/or vendors that The market for top of book data is Professional Data User across a firm’s distribute the Exchange’s data products intensely competitive due to the entire business, i.e., not limited to a sizeable number of investors benefit availability of substitutable products exclusively to Data Users that are from the current fee structure, which that can be purchased either from other provided access to the Exchange’s data includes lower subscriber fees and national securities exchanges, or from products, is indicative of a broker-dealer Enterprise licenses. Due to lower registered SIPs that make such top of that is primarily and actively engaged in subscriber fees, distributors that provide book data publicly available to investors the business of serving retail investors. Cboe One Summary Feed Data to more at a modest cost. The proposed fee This understanding is confirmed by the reduction is being made to make the than 5,000 Non-Professional Data Users current customers that participate in or already enjoy cost savings compared to Exchange’s fees more competitive with are soon to participate in the Program, such offerings for this segment of market competitor products. The Program each of which are focused on providing would therefore ensure that small retail participants, thereby increasing the trading services to ordinary investors. availability of the Exchange’s data brokers that distribute top of book data As such, the Program would be broadly to their retail investor customers could products, and expanding the options available to a wide range of retail available to firms making data also benefit from reduced pricing, and brokers that either purchase the Cboe would aid in increasing the purchasing decisions based on their One Summary Feed today, or that may business needs. The Exchange believes choose to switch from competing 21 See U.S. Securities and Exchange Commission, that this is consistent with the Strategic Plan, Fiscal Years 2018–2022, available at principles enshrined in Regulation NMS 20 See Regulation NMS Adopting Release, supra https://www.sec.gov/files/SEC_Strategic_Plan_ to ‘‘promote the wide availability of note 12, at 37503. FY18–FY22_FINAL_0.pdf.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55642 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

competitiveness of the Exchange’s data Professional Users. After 5,000 Non- main competitor product. The Exchange products for this key segment of the Professional Users the firm would no believes this supplemental information market. longer be eligible for the Small Retail further validates its assessment that the The table below illustrates the impact Broker Distribution Program but would proposed fee reduction is reasonable, of the proposed pricing on firms that already enjoy significant cost savings equitable, and not unfairly qualify for the Program, both compared compared to Nasdaq Basic under the discriminatory. Without the proposed to the Exchange’s current pricing, and current pricing structure. The Exchange fee reduction, small retail brokers that compared to the fees charged for a therefore believes that the Program would otherwise qualify for the reduced competitor product, i.e., Nasdaq Basic. would allow the Exchange to better fees proposed would be subject to either As shown, Cboe One Summary Feed compete with competitors for smaller higher fees for accessing Exchange top Data provided pursuant to the Program firms that currently pay a lower fee of book data, or may switch to would be cheaper than Nasdaq Basic for under, for example, the Nasdaq Basic competitor offerings that are also less firms with more than 1,200 Non- pricing model, while also ensuring that cost effective, but at current fees levels, Professional Users, and the benefits of larger firms continue to receive cheaper than the current Cboe One the pricing structure would continue to attractive pricing that is already cheaper Summary fee. scale up to firms with 5,000 Non- than top of book data offered by the BILLING CODE 8011–01–P

BILLING CODE 8011–01–C in any burden on competition that is not to price these data products is B. Self-Regulatory Organization’s necessary or appropriate in furtherance constrained by: (i) Competition among Statement on Burden on Competition of the purposes of the Act. The exchanges that offer similar data Exchange operates in a highly products to their customers; and (ii) the The Exchange does not believe that competitive environment, and its ability existence of inexpensive real-time the proposed rule change would result

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 EN17OC19.001 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55643

consolidated data disseminated by the benefits to brokers that represent retail submission, all subsequent SIPs. Top of book data is disseminated investors facilitates the Commission’s amendments, all written statements by both the SIPs and the thirteen mission of protecting ordinary investors, with respect to the proposed rule equities exchanges. There are therefore and is therefore consistent with the Act. change that are filed with the a number of alternative products Commission, and all written C. Self-Regulatory Organization’s available to market participants and communications relating to the Statement on Comments on the investors. In this competitive proposed rule change between the Proposed Rule Change Received From environment potential subscribers are Commission and any person, other than Members, Participants, or Others free to choose which competing product those that may be withheld from the to purchase to satisfy their need for No written comments were either public in accordance with the market information. Often, the choice solicited or received. provisions of 5 U.S.C. 552, will be available for website viewing and comes down to price, as broker-dealers III. Date of Effectiveness of the printing in the Commission’s Public or vendors look to purchase the Proposed Rule Change and Timing for Reference Room, 100 F Street NE, cheapest top of book data product, or Commission Action quality, as market participants seek to Washington, DC 20549, on official purchase data that represents significant The foregoing rule change has become business days between the hours of market liquidity. In order to better effective pursuant to Section 19(b)(3)(A) 10:00 a.m. and 3:00 p.m. Copies of the 22 compete for this segment of the market, of the Act and paragraph (f) of Rule filing also will be available for 23 the Exchange is proposing to reduce the 19b–4 thereunder. At any time within inspection and copying at the principal cost of top of book data provided by 60 days of the filing of the proposed rule office of the Exchange. All comments small retail brokers to their retail change, the Commission summarily may received will be posted without change. investor clients. The Exchange believes temporarily suspend such rule change if Persons submitting comments are that this would facilitate greater access it appears to the Commission that such cautioned that we do not redact or edit to such data, ultimately benefiting the action is necessary or appropriate in the personal identifying information from retail investors that are provided access public interest, for the protection of comment submissions. You should to such market data. investors, or otherwise in furtherance of submit only information that you wish the purposes of the Act. If the to make available publicly. All The Exchange does not believe that Commission takes such action, the submissions should refer to File this price reduction would cause any Commission will institute proceedings Number SR–CboeEDGA–2019–015 and unnecessary or inappropriate burden on to determine whether the proposed rule should be submitted on or before intermarket competition as other change should be approved or November 7, 2019. exchanges and data vendors are free to disapproved. lower their prices to better compete For the Commission, by the Division of with the Exchange’s offering. Indeed, as IV. Solicitation of Comments Trading and Markets, pursuant to delegated authority.24 explained in the basis section of this Interested persons are invited to proposed rule change, the Exchange’s Jill M. Peterson, submit written data, views, and Assistant Secretary. decision to lower its distribution and arguments concerning the foregoing, [FR Doc. 2019–22697 Filed 10–16–19; 8:45 am] consolidation fees for small retail including whether the proposed rule brokers is itself a competitive response change is consistent with the Act. BILLING CODE 8011–01–P to different fee structures available on Comments may be submitted by any of competing markets. The Exchange the following methods: therefore believes that the proposed rule SECURITIES AND EXCHANGE change is pro-competitive as it seeks to Electronic Comments COMMISSION offer pricing incentives to customers to • Use the Commission’s internet [Release No. 34–87291; File No. SR–CBOE– better position the Exchange as it comment form (http://www.sec.gov/ 2019–049] competes to attract additional market rules/sro.shtml); or data subscribers. The Exchange also • Send an email to rule-comments@ Self-Regulatory Organizations; Cboe believes that the proposed reduction in sec.gov. Please include File Number SR– Exchange, Inc.; Notice of Designation fees for small retail brokers would not CboeEDGA–2019–015 on the subject of a Longer Period for Commission cause any unnecessary or inappropriate line. Action on a Proposed Rule Change, as burden on intramarket competition. Modified by Amendment No. 1, To Although the proposed fee discount Paper Comments Make Permanent Certain Options would be largely limited to small retail • Send paper comments in triplicate Market Rules That Are Linked to the broker subscribers, larger broker-dealers to Secretary, Securities and Exchange Equity Market Plan To Address and vendors can already purchase top of Commission, 100 F Street NE, Extraordinary Market Volatility book data from the Exchange at prices Washington, DC 20549–1090. October 11, 2019. that represent a significant cost savings All submissions should refer to File On August 21, 2019, Cboe Exchange, when compared to competitor products Number SR–CboeEDGA–2019–015. This Inc. (‘‘Exchange’’) filed with the that combine higher subscriber fees with file number should be included on the Securities and Exchange Commission lower fees for distribution. In light of subject line if email is used. To help the (‘‘Commission’’), pursuant to Section the benefits already provided to this Commission process and review your 19(b)(1) of the Securities Exchange Act group of subscribers, the Exchange comments more efficiently, please use of 1934 (‘‘Act’’) 1 and Rule 19b–4 believes that additional discounts to only one method. The Commission will thereunder,2 a proposed rule change to small retail brokers would increase post all comments on the Commission’s make permanent certain options market rather than decrease competition among internet website (http://www.sec.gov/ rules that are linked to the equity broker-dealers that participate on the rules/sro.shtml). Copies of the Exchange. Furthermore, as discussed 24 17 CFR 200.30–3(a)(12). earlier in this proposed rule change, the 22 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C.78s(b)(1). Exchange believes that offering pricing 23 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55644 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

market Plan to Address Extraordinary SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s Market Volatility. The proposed rule COMMISSION Statement of the Purpose of, and change was published for comment in Statutory Basis for, the Proposed Rule the Federal Register on August 29, [Release No. 34–87276; File No. SR– Change 3 2019. On October 10, 2019, the NASDAQ–2019–084] 1. Purpose Exchange filed Amendment No. 1 to the proposed rule change.4 The Commission Self-Regulatory Organizations; The The Exchange proposes to amend has received no comment letters on the Nasdaq Stock Market LLC; Notice of NOM’s Pricing Schedule at Options 7, proposed rule change. Filing and Immediate Effectiveness of Section 2, titled ‘‘Nasdaq Options Market—Fees and Rebates.’’ Section 19(b)(2) of the Act 5 provides a Proposed Rule Change To Amend The Nasdaq Options Market LLC Specifically, the Exchange proposes to that, within 45 days of the publication amend the Tier 5 NOM Market Maker (‘‘NOM’’) Pricing Schedule at Options 7, of notice of the filing of a proposed rule Rebate to Add Liquidity in Penny Pilot Section 2 change, or within such longer period up Options. to 90 days as the Commission may October 10, 2019. designate if it finds such longer period Description of Proposed NOM Market Maker Pricing to be appropriate and publishes its Pursuant to Section 19(b)(1) of the reasons for so finding, or as to which the Securities Exchange Act of 1934 The purpose of the proposed rule 1 2 self-regulatory organization consents, (‘‘Act’’), and Rule 19b–4 thereunder, change is to incentivize Market Makers the Commission shall either approve the notice is hereby given that on to add liquidity on the Exchange. proposed rule change, disapprove the September 27, 2019, The Nasdaq Stock Today, NOM offers Market Maker proposed rule change, or institute Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) Rebates to Add Liquidity in Penny Pilot proceedings to determine whether the filed with the Securities and Exchange Options. There are currently 6 tiers of 3 proposed rule change should be Commission (‘‘Commission’’) the Rebates to Add Liquidity. This disapproved. The 45th day after proposed rule change as described in proposal seeks to amend Tier 5 of the publication of the notice for this Items I, II, and III, below, which Items NOM Market Maker Rebates to Add Liquidity in Penny Pilot Options, which proposed rule change is October 13, have been prepared by the Exchange. currently pays a $0.40 per contract 2019. The Commission is publishing this notice to solicit comments on the rebate to a Participant that adds NOM The Commission is extending the 45- proposed rule change from interested Market Maker liquidity in Penny Pilot day time period for Commission action persons. Options and/or Non-Penny Pilot on the proposed rule change. The Options of above 0.30% of total industry Commission finds that it is appropriate I. Self-Regulatory Organization’s customer equity and ETF option ADV to designate a longer period within Statement of the Terms of Substance of contracts per day in a month and which to take action on the proposed the Proposed Rule Change qualifies for the Tier 6 Customer and/or rule change so that it has sufficient time Professional Rebate to Add Liquidity in to consider the proposed rule change, as The Exchange proposes to amend The Penny Pilot Options. modified by Amendment No. 1. Nasdaq Options Market LLC (‘‘NOM’’) The Exchange proposes to increase Accordingly, pursuant to Section Pricing Schedule at Options 7, Section the Tier 5 Market Maker Rebate to Add 19(b)(2) of the Act,6 the Commission 2, titled ‘‘Nasdaq Options Market—Fees Liquidity in Penny Pilot Options from designates October 18, 2019, as the date and Rebates.’’ $0.40 to $0.44 per contract. Further, the by which the Commission shall either The text of the proposed rule change Exchange proposes to amend the first approve or disapprove, or institute is available on the Exchange’s website at requirements to obtain a Tier 5 Market proceedings to determine whether to http://nasdaq.cchwallstreet.com/, at the Maker Rebate to Add Liquidity. The disapprove, the proposed rule change principal office of the Exchange, and at Exchange proposes to amend the current rule text to require a Participant to add (File No. SR–CBOE–2019–049), as the Commission’s Public Reference NOM Market Maker liquidity in Penny modified by Amendment No. 1. Room. Pilot Options and/or Non-Penny Pilot For the Commission, by the Division of II. Self-Regulatory Organization’s Options of above 0.40% of total industry Trading and Markets, pursuant to delegated Statement of the Purpose of, and customer equity and ETF option ADV authority.7 Statutory Basis for, the Proposed Rule contracts per day in a month This Jill M. Peterson, Change amendment increases the amount of Assistant Secretary. total industry customer equity and ETF In its filing with the Commission, the [FR Doc. 2019–22701 Filed 10–16–19; 8:45 am] options ADV contracts per day in a Exchange included statements month from 0.30% to 0.40%. In BILLING CODE 8011–01–P concerning the purpose of and basis for addition to the aforementioned the proposed rule change and discussed requirement, Tier 5 additionally any comments it received on the currently requires, as a second 3 See Securities Exchange Act Release No. 86744 proposed rule change. The text of these requirement, that a Participant qualify (August 23, 2019), 84 FR 45565. statements may be examined at the for the Tier 6 4 Customer and/or 4 In Amendment No. 1, the Exchange revised the places specified in Item IV below. The proposed rule text to reflect rule numbering and Exchange has prepared summaries, set 3 See NOM Pricing Schedule at Options 7, Section 2(1). organizational changes enacted by separate forth in sections A, B, and C below, of proposed rule changes that became effective while 4 Tier 6 of the Customer and/or Professional the instant proposal was pending before the the most significant aspects of such Rebate to Add Liquidity in Penny Pilot Options Commission. statements. requires that, ‘‘Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or 5 15 U.S.C. 78s(b)(2). Broker-Dealer liquidity in Penny Pilot Options and/ 6 Id. 1 15 U.S.C. 78s(b)(1). or Non-Penny Pilot Options above 0.80% or more 7 17 CFR 200.30–3(a)(31). 2 17 CFR 240.19b–4. of total industry customer equity and ETF option

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55645

Professional Rebate to Add Liquidity in participants with additional requirement to transact in all securities Penny Pilot Options. The Exchange opportunities to earn an increased Tier through one or more of its Nasdaq proposes to remove this requirement to 5 NOM Market Maker rebate, and will Market Center MPIDs that represent qualify for the Tier 6 Customer and/or encourage Participants to send order 0.40% or more of Consolidated Volume Professional Rebate to Add Liquidity in flow to both the options and equity (‘‘CV’’) which adds liquidity in the same Penny Pilot Options and instead markets to receive the rebate. This month on The Nasdaq Stock Market will require, as the second part of the overall proposal is designed as a means to attract greater volume to both NOM and Tier 5 requirements, that a Participant improve market quality by providing The Nasdaq Stock Market. Any NOM transact in all securities through one or Participants with an incentive to Market Maker may obtain the Tier 5 more of its Nasdaq Market Center MPIDs increase their provision of liquidity on rebate provided the qualifications are that represent 0.40% or more of the Exchange’s equity and options met. The Exchange notes that Market Consolidated Volume (‘‘CV’’) 5 which markets. Makers have certain obligations 8 on adds liquidity in the same month on The Exchange also proposes to add a NOM, unlike other market participants. The Nasdaq Stock Market.6 This new note to Options 7, Section 2 of the Market Maker are a source of liquidity. particular requirement is intended to Pricing Schedule which provides that The proposed amendments are generally incentivize Participants to transact a NOM Participants that qualify for the designed to attract additional order flow greater volume on The Nasdaq Stock Tier 5 NOM Market Maker Rebate to to the Exchange by incentivizing NOM Market in order to qualify for the Tier Add Liquidity in Penny Pilot Options Market Makers. Greater liquidity 5 rebate on NOM. As proposed, the Tier and add NOM Market Maker liquidity in benefits all market participants by 5 Market Maker Rebate to Add Liquidity Penny Pilot Options and/or Non-Penny providing more trading opportunities in Penny Pilot Options requirement Pilot Options of above 0.50% of total and attracting greater participation by would provide. industry customer equity and ETF market makers. An increase in the Participant adds NOM Market Maker option ADV contracts per day in a activity of these market participants in liquidity in Penny Pilot Options and/or month, will receive a $0.46 per contract turn facilitates tighter spreads. Non-Penny Pilot Options of above rebate to add liquidity in Penny Pilot Furthermore, the additional incentive 0.40% of total industry customer equity Options as Market Maker in lieu of the to receive an even greater Tier 5 rebate and ETF option ADV contracts per day Tier 5 rebate. The Exchange notes that of $0.46 per contract to add liquidity in in a month and transacts in all securities in comparison to proposed Tier 5 Penny Pilot Options as Market Maker, through one or more of its Nasdaq qualifications, which require 0.40% of provided the NOM Participant qualified Market Center MPIDs that represent total industry customer equity and ETF for the Tier 5 NOM Market Maker 0.40% or more of Consolidated Volume option ADV contracts per day in a Rebate to Add Liquidity in Penny Pilot (‘‘CV’’) which adds liquidity in the same month and pays a proposed $0.44 per Options and added NOM Market Maker month on The Nasdaq Stock Market. contract rebate, this incentive would liquidity in Penny Pilot Options and/or Both the requirement to add 0.40% of pay an increased rebate of $0.46 per Non-Penny Pilot Options of above total industry customer equity and ETF contract for 0.50% of total industry 0.50% of total industry customer equity option ADV contracts per day in a customer equity and ETF option ADV and ETF option ADV contracts per day month and the requirement to transact contracts per day in a month, in lieu of in a month, will further incentivize in all securities through one or more of the Tier 5 rebate. The Exchange believes NOM Market Makers to add liquidity to its Nasdaq Market Center MPIDs that that this incentive will attract additional NOM. These incentives are intended to represent 0.40% or more of liquidity to NOM to the benefit of all benefit all NOM market participants Consolidated Volume (‘‘CV’’), as market participants who may interact who will be able to interact with specified, are necessary to achieve the with that order flow. additional liquidity which this proposed increased rebate of $0.44 per incentive attracts to the Exchange. contract. This proposal would provide Applicability to and Impact on Participants 7 2. Statutory Basis ADV contracts per day in a month, or Participant The Exchange believes that increasing The Exchange believes that its adds: (1) Customer and/or Professional liquidity in the NOM Market Maker Tier 5 Rebate to proposal is consistent with Section 6(b) Penny Pilot Options and/or Non-Penny Pilot of the Act,9 in general, and furthers the Options of 0.20% or more of total industry Add Liquidity in Penny Pilot Options from $0.40 to $0.44 per contract as well objectives of Sections 6(b)(4) and 6(b)(5) customer equity and ETF option ADV contracts per 10 day in a month, and (2) has added liquidity in all as requiring a greater amount of total of the Act, in particular, in that it securities through one or more of its Nasdaq Market industry customer equity and ETF provides for the equitable allocation of Center MPIDs that represent 1.00% or more of reasonable dues, fees and other charges Consolidated Volume in a month or qualifies for options ADV contracts per day in a month (from 0.30% to 0.40%) and also among members and issuers and other MARS (defined below).’’ persons using any facility, and is not 5 Consolidated Volume shall mean the total replacing the current criteria to qualify consolidated volume reported to all consolidated for the Tier 6 Customer and/or designed to permit unfair transaction reporting plans by all exchanges and Professional Rebate to Add Liquidity in trade reporting facilities during a month in equity 8 Pursuant to Chapter VII (Market Participants), securities, excluding executed orders with a size of Penny Pilot Options with the Section 5 (Obligations of Market Makers), in less than one round lot. For purposes of calculating registering as a market maker, an Options Consolidated Volume and the extent of an equity 7 On May 21, 2019, the SEC Division of Trading Participant commits himself to various obligations. member’s trading activity, expressed as a and Markets (the ‘‘Division’’) issued fee filing Transactions of a Market Maker in its market percentage of or ratio to Consolidated Volume, the guidance titled ‘‘Staff Guidance on SRO Rule making capacity must constitute a course of date of the annual reconstitution of the Russell Filings Relating to Fees’’ (‘‘Guidance’’). Within the dealings reasonably calculated to contribute to the Investments Indexes shall be excluded from both Guidance, the Division noted, among other things, maintenance of a fair and orderly market, and total Consolidated Volume and the member’s that the purpose discussion should address ‘‘how Market Makers should not make bids or offers or trading activity. the fee may apply differently (e.g., additional cost enter into transactions that are inconsistent with 6 In calculating total volume, the Exchange would vs. additional discount) to different types of market such course of dealings. Further, all Market Makers add the Participant’s total volume transacted on participants (e.g., market makers, institutional are designated as specialists on NOM for all The Nasdaq Stock Market in a given month across brokers, retail brokers, vendors, etc.) and different purposes under the Act or rules thereunder. See its Nasdaq Market Center MPIDs which adds sizes of market participants.’’ See Guidance Chapter VII, Section 5. liquidity, and will divide this number by the total (available at https://www.sec.gov/tm/staff-guidance- 9 15 U.S.C. 78f(b). industry Consolidated Volume. sro-rule-filings-fees). 10 15 U.S.C. 78f(b)(4) and (5).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55646 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

discrimination between customers, venues in response to changes in their requirement,15 to add NOM Market issuers, brokers, or dealers. The respective pricing schedules.13 Maker liquidity, and the second proposal is also consistent with Section Within the foregoing context, the requirement,16 to transact in securities 11A of the Act relating to the proposal represents a reasonable and add liquidity on The Nasdaq Stock establishment of the national market attempt by the Exchange to increase its Market, in order to qualify for the system for securities. Moreover, the liquidity and market share relative to its proposed increased $0.44 per contract Exchange believes that its proposal competitors. The Exchange believes that Tier 5 rebate, the Exchange believes that complies with Commission guidance on its proposed rebate is a reasonable Market Makers will be incentivized to SRO fee filings that the Commission attempt to achieve this end as this direct additional order flow to NOM and Staff issued on May 21, 2019.11 rebate represents competitive pricing as The Nasdaq Stock Market and, in turn, compared to other options markets. market participants will benefit from the The Proposal Is Reasonable Market participants have a number of opportunity to interact with such order choices in deciding where to direct their flow. The Exchange’s proposed options orders. Options exchanges offer The Exchange acknowledges that the amendments to Options 7, Section 2 different markets offering incentives and proposed new criteria would require relating to the Tier 5 NOM Market rebates to market participants to lower additional volume to achieve the first Maker Rebate to Add Liquidity in Penny transaction fees. With this proposal, the requirement 17 of the Tier 5 rebate and Pilot Options are reasonable in several Exchange is attempting to attract different volume to achieve the second respects. As a threshold matter, the additional order flow to both NOM and requirement 18 of the Tier 5 rebate to Exchange is subject to significant The Nasdaq Stock Market. The qualify for the increased proposed $0.44 competitive forces in the market for Exchange may be unsuccessful in its per contract Tier 5 rebate, as compared options transaction services that initial attempt to attract order flow with to the current Tier 5 rebate constrain its pricing determinations in the proposed rebate. qualifications.19 The Exchange’s proposal offers to pay a higher Tier 5 that market. The fact that this market is NOM Market Maker Rebates competitive has long been recognized by rebate ($0.44 per contract as compared the courts. In NetCoalition v. Securities With respect to the proposed Tier 5 to the current $0.40 per contract) to NOM Market Maker rebate amendment, and Exchange Commission, the D.C. NOM Market Makers who qualify for the the Exchange believes that increasing Circuit stated as follows: ‘‘[n]o one rebate with the new requirements. The the Tier 5 Market Maker Rebate to Add disputes that competition for order flow Exchange believes that it is reasonable Liquidity in Penny Pilot Options from to create an additional opportunity for is ‘fierce.’ . . . As the SEC explained, $0.40 to $0.44 per contract while also ‘[i]n the U.S. national market system, Participants to earn the Tier 5 rebate by amending the qualifications for the Tier incentivizing Participants to transact buyers and sellers of securities, and the 5 rebate is reasonable. The Exchange greater volume on The Nasdaq Stock broker-dealers that act as their order- believes that increasing the volume Market in order to qualify for the Tier routing agents, have a wide range of requirement for NOM Market Maker 5 rebate on NOM. The Exchange notes choices of where to route orders for liquidity in Penny Pilot Options and/or that this proposal is designed as a execution’; [and] ‘no exchange can Non-Penny Pilot Options, from above means to improve market quality by afford to take its market share 0.30% to above 0.40% of total industry providing Participants with an incentive percentages for granted’ because ‘no customer equity and ETF options ADV to increase their provision of liquidity exchange possesses a monopoly, contracts per day in a month, will on the Exchange’s equity and options regulatory or otherwise, in the execution attract additional liquidity to NOM. markets. This proposal will encourage of order flow from broker Further, the proposal to amend the Participants to send order flow to both dealers’....’’12 second part of the Tier 5 rebate the options and equity markets to Numerous indicia demonstrate the requirement by eliminating the receive the Tier 5 rebate. The Exchange competitive nature of this market. For requirement that a Participant qualify believes that replacing the second example, clear substitutes to the for the Tier 6 Customer and/or requirement of the Tier 5 rebate, which Professional Rebate to Add Liquidity in Exchange exist in the market for options currently requires Participants to Penny Pilot Options 14 and instead transaction services. The Exchange is achieve the Tier 6 Customer and require a Participant transact in all one of several options venues to which Professional Rebate to Add Liquidity in securities through one or more of its market participants may direct their Nasdaq Market Center MPIDs that 15 The first requirement to qualify for the Tier 5 order flow, and it represents a small represent 0.40% or more of rebate requires a Participant to add NOM Market percentage of the overall market. Consolidated Volume (‘‘CV’’) which Maker liquidity in Penny Pilot Options and/or Non- Competing options exchanges offer adds liquidity in the same month on Penny Pilot Options of above 0.40% of total similar options functionality, with industry customer equity and ETF options ADV The Nasdaq Stock Market, will also contracts per day in a month. varying pricing schedules. Within this attract liquidity to NOM and also The 16 The second requirement to qualify for the Tier environment, market participants can Nasdaq Stock Market. Specifically, the 5 rebate requires a Participant to transact in all freely and often do shift their order flow new second requirement for the Tier 5 securities through one or more of its Nasdaq Market Center MPIDs that represent 0.40% or more of CV among the Exchange and competing rebate is intended to incentivize which adds liquidity in the same month on The Participants to transact greater volume Nasdaq Stock Market. 11 See Guidance, supra note 7. Although the on The Nasdaq Stock Market in order to 17 See note 15 above. Exchange believes that this filing complies with the qualify for the Tier 5 rebate on NOM. 18 See note 16 above. Guidance, the Exchange does not concede that the Because the Exchange requires a 19 Today, the Tier 5 NOM Market Maker Rebate standards set forth in the Guidance are consistent to Add Liquidity in Penny Pilot Options requires with the Exchange Act and reserves its right to Participant to comply with both the first a Participant to add NOM Market Maker liquidity challenge those standards through administrative in Penny Pilot Options and/or Non-Penny Pilot and judicial review, as appropriate. 13 The Exchange perceives no regulatory, Options of above 0.30% of total industry customer 12 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. structural, or cost impediments to market equity and ETF option ADV contracts per day in a Cir. 2010) (quoting Securities Exchange Act Release participants shifting order flow away from it as a month and qualifies for the Tier 6 Customer and/ No. 59039 (December 2, 2008), 73 FR 74770, 74782– result of this rule change. or Professional Rebate to Add Liquidity in Penny 83 (December 9, 2008) (SR–NYSEArca–2006–21)). 14 See note 4 above. Pilot Options.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55647

Penny Pilot Options, with the proposed $0.46 per contract rebate (in lieu of the equitable and not unfairly requirement to add liquidity to The $0.44 per contract Tier 5 rebate) to add discriminatory in light of their Nasdaq Stock Market will permit a liquidity in Penny Pilot Options as obligations. Finally, encouraging NOM greater number of market participants to Market Maker in lieu of the Tier 5 Market Makers to add greater liquidity qualify for the Tier 5 rebate. Today, rebate. The Exchange notes that in on the Exchange benefits all market NOM Market Makers also transact an comparison to the proposed Tier 5 participants in the quality of order equities business on The Nasdaq Stock qualifications, which require Participant interaction. Market. The proposed qualifications for to add NOM Market Maker liquidity in The Exchange’s proposal to offer the Tier 5 rebate will incentivize those Penny Pilot Options and/or Non-Penny Participants that qualify for the Tier 5 Participants that are engaged in an Pilot Options of above 0.40% of total rebate and add NOM Market Maker equities business to add a greater industry customer equity and ETF liquidity in Penny Pilot Options and/or amount of liquidity both on NOM and option ADV contracts per day in a Non-Penny Pilot Options of above The Nasdaq Stock Market. Furthermore, month, and pays a proposed $0.44 per 0.50% of total industry customer equity the concept of linking an incentive on contract rebate, this additional incentive and ETF option ADV contracts per day NOM to activity on The Nasdaq Stock would pay an increased rebate of $0.46 in a month, a rebate of $0.46 per Market exists today. The Exchange per contract to add liquidity in Penny contract to add liquidity in Penny Pilot currently offers rebates on NOM that Pilot Options as Market Maker, Options as Market Maker is reasonable. relate to activity on The Nasdaq Stock provided the Participants adds liquidity This additional incentive will further Market.20 Similarly, The Nasdaq Stock in Penny Pilot Options and/or Non- incentivize NOM Market Makers to add Market offers credits that are based on Penny Pilot Options of above 0.50% of liquidity to NOM and The Nasdaq Stock activity on NOM.21 As such, the total industry customer equity and ETF Market to achieve the greater rebate. The Exchange believes that the volume option ADV contracts per day in a incentive is intended to benefit all NOM requirement to transact in all securities month. The Exchange believes that this market participants who will be able to through one or more of the Participant’s incentive will attract additional interact with additional liquidity which Nasdaq Market Center MPIDs that liquidity to NOM. this incentive attracts to the Exchange. The Exchange’s proposal to increase represent 0.40% or more of The Exchange’s proposal to offer the Tier 5 NOM Market Maker Rebate to Consolidated Volume (‘‘CV’’) which Participants that qualify for the Tier 5 Add Liquidity in Penny Pilot Options adds liquidity in the same month on rebate and add NOM Market Maker from $0.40 to $0.44 per contract while The Nasdaq Stock Market is reasonable liquidity in Penny Pilot Options and/or also amending the qualifications for the because the Exchange already offers Non-Penny Pilot Options of above Tier 5 rebate is equitable and not rebates based on similar volume 0.50% of total industry customer equity 22 unfairly discriminatory. All eligible requirements. and ETF option ADV contracts per day Further, the Exchange proposes to add Participants that qualify for the Tier 5 in a month, a rebate of $0.46 per a new note to Options 7, Section 2 of the rebate will uniformly receive the rebate. contract to add liquidity in Penny Pilot Pricing Schedule which provides that The Exchange believes that the NOM Participants that qualify for the proposed volume requirements to Options as Market Maker is equitable Tier 5 NOM Market Maker Rebate to qualify for the Tier 5 rebate are and not unfairly discriminatory. As Add Liquidity in Penny Pilot Options, proportionate to the amount of the noted above, NOM Market Makers add value through continuous quoting and as proposed herein, and add NOM increased Tier 5 rebate of $0.44 per 25 Market Maker liquidity in Penny Pilot contract and equitably reflect the the commitment of capital. Because Options and/or Non-Penny Pilot purpose of the rebate, which is to NOM Market Makers have these Options of above 0.50% of total industry incentivize Participants to transact obligations to the market and regulatory customer equity and ETF option ADV greater volume on both the Exchange’s requirements that normally do not apply contracts per day in a month, will equity and options markets. In addition, to other market participants, the receive an increased Tier 5 rebate of the Exchange believes that it is equitable Exchange believes that offering these and not unfairly discriminatory to offer rebates to only NOM Market Makers is 20 For example, the Tier 3 NOM Market Maker this rebate to NOM Participants that equitable and not unfairly Rebate to Add Liquidity requires: Participant: (a) transact as NOM Market Makers and discriminatory in light of their Adds NOM Market Maker liquidity in Penny Pilot also transact on The Nasdaq Stock obligations. Finally, encouraging NOM Options and/or Non-Penny Pilot Options above Market Makers to add greater liquidity 0.20% to 0.60% of total industry customer equity Market. Any NOM Participant may trade and ETF option ADV contracts per day in a month: on The Nasdaq Stock Market because benefits all market participants, on both Or (b)(1) transacts in all securities through one or they are approved members.23 NOM and The Nasdaq Stock Market, in more of its Nasdaq Market Center MPIDs that the quality of order interaction. represent 0.70% or more of Consolidated Volume Furthermore, unlike other market (‘‘CV’’) which adds liquidity in the same month on participants, NOM Market Makers add B. Self-Regulatory Organization’s The Nasdaq Stock Market, (2) transacts in Tape B value through continuous quoting and Statement on Burden on Competition securities through one or more of its Nasdaq Market the commitment of capital.24 Because Center MPIDs that represent 0.18% or more of CV NOM Market Makers have these The Exchange does not believe that which adds liquidity in the same month on The the proposed rule change will impose Nasdaq Stock Market, and (3) executes greater than obligations to the market and regulatory 0.01% of CV via Market-on- Close/Limit-on-Close requirements that normally do not apply any burden on competition not (‘‘MOC/LOC’’) volume within The Nasdaq Stock to other market participants, the necessary or appropriate in furtherance Market Closing Cross in the same month. See Exchange believes that offering these of the purposes of the Act. Greater Options 7, Section 2(1). liquidity benefits all market participants 21 For example, Nasdaq offers a credit of $0.0029 rebates to only NOM Market Makers is per share if the member adds Customer, by providing more trading opportunities Professional, Firm, Non-NOM Market Maker and/or 23 Although a NOM Participant may incur and attracting greater participation by Broker-Dealer liquidity in Penny Pilot Options and/ additional labor and/or costs to establish Market Makers. An increase in the or Non- Penny Pilot Options of 1.15% or more of connectivity to The Nasdaq Stock Market, there are activity of these market participants in total industry ADV in the customer clearing range no additional membership fees for NOM for Equity and ETF option contracts per day in a Participants that want to transact on The Nasdaq turn facilitates tighter spreads. month on NOM. See Equity 7, Section 118(a)(1). Stock Market. 22 Id. 24 See note 8 above. 25 See note 8 above.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55648 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Inter-Market Competition Options of above 0.50% of total industry Paper Comments The proposed amendments to the Tier customer equity and ETF option ADV • Send paper comments in triplicate 5 NOM Market Maker Rebate to Add contracts per day in a month will to Secretary, Securities and Exchange Liquidity in Penny Pilot Options do not further incentivize Market Makers to Commission, 100 F Street NE, impose an undue burden on inter- direct order flow to the Exchange. Washington, DC 20549–1090. Greater liquidity benefits all market market competition. The pricing All submissions should refer to File participants by providing more trading changes proposed above are generally Number SR–NASDAQ–2019–084. This opportunities and attracting greater designed to attract additional order flow file number should be included on the participation by Market Makers. An to the Exchange, which strengthens the subject line if email is used. To help the increase in the activity of these market Exchange’s competitive position. Commission process and review your participants in turn facilitates tighter The Exchange notes that it operates in comments more efficiently, please use spreads. Overall, the Exchange believes a highly competitive market in which only one method. The Commission will that the tiered NOM Market Maker market participants can readily favor post all comments on the Commission’s Rebates to Add Liquidity in Penny Pilot competing venues if they deem fee internet website (http://www.sec.gov/ Options along with the proposed Tier 5 levels at a particular venue to be rules/sro.shtml). Copies of the increased rebate incentive will continue excessive, or rebate opportunities submission, all subsequent to reflect the progressively increasing available at other venues to be more amendments, all written statements rebate requirements offered to NOM favorable. In such an environment, the with respect to the proposed rule Market Maker to incentivize them to Exchange must continually adjust its change that are filed with the earn the highest possible rebates by fees and rebates to remain competitive Commission, and all written bringing the most order flow to the with other exchanges that have been communications relating to the Exchange. exempted from compliance with the proposed rule change between the statutory standards applicable to C. Self-Regulatory Organization’s Commission and any person, other than exchanges. Because competitors are free Statement on Comments on the those that may be withheld from the to modify their own fees and rebates in Proposed Rule Change Received From public in accordance with the response, and because market Members, Participants, or Others provisions of 5 U.S.C. 552, will be participants may readily adjust their available for website viewing and order routing practices, the Exchange No written comments were either solicited or received. printing in the Commission’s Public believes that the degree to which pricing Reference Room, 100 F Street NE, changes in this market may impose any III. Date of Effectiveness of the Washington, DC 20549, on official burden on competition is extremely Proposed Rule Change and Timing for business days between the hours of limited. Commission Action 10:00 a.m. and 3:00 p.m. Copies of the NOM is a relatively small market so The foregoing rule change has become filing also will be available for its ability to burden intermarket inspection and copying at the principal competition is limited. Moreover, as effective pursuant to Section 19(b)(3)(A)(ii) of the Act.26 office of the Exchange. All comments noted above, price competition between received will be posted without change. At any time within 60 days of the exchanges is fierce, with liquidity and Persons submitting comments are filing of the proposed rule change, the market share moving freely between cautioned that we do not redact or edit Commission summarily may exchanges in reaction to fee and credit personal identifying information from temporarily suspend such rule change if changes. comment submissions. You should it appears to the Commission that such In sum, if the changes proposed submit only information that you wish action is: (i) Necessary or appropriate in herein are unattractive to market to make available publicly. All the public interest; (ii) for the protection participants, it is likely that the submissions should refer to File of investors; or (iii) otherwise in Exchange will lose market share as a Number SR–NASDAQ–2019–084 and furtherance of the purposes of the Act. result. Accordingly, the Exchange does should be submitted on or before If the Commission takes such action, the not believe that the proposed changes November 7, 2019. will impair the ability of members or Commission shall institute proceedings For the Commission, by the Division of competing order execution venues to to determine whether the proposed rule should be approved or disapproved. Trading and Markets, pursuant to delegated maintain their competitive standing in authority.27 the financial markets. IV. Solicitation of Comments Jill M. Peterson, Intra-Market Competition Interested persons are invited to Assistant Secretary. The proposed amendments to the Tier submit written data, views, and [FR Doc. 2019–22594 Filed 10–16–19; 8:45 am] 5 NOM Market Maker Rebate to Add arguments concerning the foregoing, BILLING CODE 8011–01–P Liquidity in Penny Pilot Options do not including whether the proposed rule impose an undue burden on intra- change is consistent with the Act. market competition. Increasing the Tier Comments may be submitted by any of SECURITIES AND EXCHANGE 5 NOM Market Maker Rebate to Add the following methods: COMMISSION Liquidity in Penny Pilot Options and Electronic Comments Proposed Collection; Comment also requiring participants to add more Request volume on NOM and add liquidity on • Use the Commission’s internet The Nasdaq Stock Market will attract comment form (http://www.sec.gov/ Upon Written Request, Copies Available liquidity to the Exchange. The rules/sro.shtml); or From: Securities and Exchange additional rebate incentive that is being • Send an email to rule-comments@ Commission, Office of FOIA Services, offered to Participants that qualify for sec.gov. Please include File Number SR– 100 F Street NE, Washington, DC the Tier 5 rebate and also add NOM NASDAQ–2019–084 on the subject line. 20549–2736 Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot 26 15 U.S.C. 78s(b)(3)(A)(ii). 27 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55649

Extension: Rule 22c–1 requires a fund that uses are necessary for the proper Rule 22c–1, SEC File No. 270–793, OMB swing pricing to maintain the fund’s performance of the functions of the Control No. 3235–0734 swing policies and procedures that are Commission, including whether the Notice is hereby given that, pursuant in effect, or at any time within the past information has practical utility; (b) the to the Paperwork Reduction Act of 1995 six years were in effect, in an easily accuracy of the Commission’s estimate (44 U.S.C. 3501–3520), the Securities accessible place.4 The rule also requires of the burdens of the collection of and Exchange Commission (the a fund to retain a written copy of the information; (c) ways to enhance the ‘‘Commission’’) is soliciting comments periodic report provided to the board quality, utility, and clarity of the on the collections of information prepared by the swing pricing information collected; and (d) ways to summarized below. The Commission administrator that describes, among minimize the burden of the collection of plans to submit this existing collection other things, the swing pricing information on respondents, including of information to the Office of administrator’s review of the adequacy through the use of automated collection Management and Budget for extension of the fund’s swing pricing policies and techniques or other forms of information and approval. procedures and the effectiveness of their technology. Consideration will be given Rule 22c–1 (17 CFR 270.22c–1) under implementation, including the impact to comments and suggestions submitted the Investment Company Act of 1940 on mitigating dilution and any back- in writing within 60 days of this (15 U.S.C. 80a) (the ‘‘Investment testing performed.5 The retention of publication. Company Act’’ or ‘‘Act’’) enables a fund these records is necessary to allow the Please direct your written comments to choose to use ‘‘swing pricing’’ as a staff during examinations of funds to to Charles Riddle, Acting Director/Chief tool to mitigate shareholder dilution. determine whether a fund is in Information Officer, Securities and Rule 22c–1 is intended to promote compliance with its swing pricing Exchange Commission, C/O Candace investor protection by providing funds policies and procedures and with rule Kenner, 100 F Street NE, Washington, with an additional tool to mitigate the 22c–1. We estimate a time cost per fund DC 20549; or send an email to: PRA_ potentially dilutive effects of complex of $292.6 We estimate that the [email protected]. shareholder purchase or redemption total for recordkeeping related to swing Dated: October 10, 2019. pricing will be 20 hours, at an aggregate activity and a set of operational Jill M. Peterson, cost of $1,460, for all fund complexes standards that allow funds to gain Assistant Secretary. comfort using swing pricing as a means that we believe include funds that have of mitigating potential dilution. adopted swing pricing policies and [FR Doc. 2019–22578 Filed 10–16–19; 8:45 am] The respondents to amended rule procedures.7 BILLING CODE 8011–01–P 22c–1 are open-end management Amortized over a three-year period, investment companies (other than we believe that the hour burdens and time costs associated with rule 22c–1, SECURITIES AND EXCHANGE money market funds or exchange-traded COMMISSION funds) that engage in swing pricing. including the burden associated with Compliance with rule 22c–1(a)(3) is the requirements that funds adopt [Release No. 34–87275; File No. SR–ICEEU– mandatory for any fund that chooses to policies and procedures, obtain board 2019–020] use swing pricing to adjust its NAV in approval, and periodic review of an reliance on the rule. annual written report from the swing Self-Regulatory Organizations; ICE While we are not aware of any funds pricing administrator, and retain certain Clear Europe Limited; Notice of Filing that have engaged in swing pricing,1 we records and written reports related to and Immediate Effectiveness of are estimating for the purpose of this swing pricing, will result in an average Proposed Rule Change Relating to the analysis that 5 fund complexes have aggregate annual burden of 113.3 hours, ICE Clear Europe Clearing Rules and funds that may adopt swing pricing and average aggregate time costs of Procedures $73,803.8 policies and procedures in the future October 10, 2019. pursuant to the rule. We estimate that We request written comment on: (a) Whether the collections of information Pursuant to Section 19(b)(1) of the the total burden associated with the Securities Exchange Act of 1934 preparation and approval of swing (‘‘Act’’),1 and Rule 19b–4 thereunder,2 pricing policies and procedures by those $217,030. The hourly wages used are from SIFMA’s Management & Professional Earnings in the notice is hereby given that on fund complexes that would use swing Securities Industry 2013, modified by Commission September 30, 2019, ICE Clear Europe pricing will be 280 hours.2 We also staff to account for an 1800-hour work-year and inflation, and multiplied by 5.35 to account for Limited (‘‘ICE Clear Europe’’ or the estimate that it will cost a fund complex ‘‘Clearing House’’) filed with the $43,406 to document, review and bonuses, firm size, employee benefits, and overhead. The staff previously estimated in 2009 Securities and Exchange Commission initially approve these policies and that the average cost of board of director time was (‘‘Commission’’) the proposed rule procedures, for a total cost of $217,030.3 $4,000 per hour for the board as a whole, based on information received from funds and their counsel. changes described in Items I, II, and III below, which Items have been primarily 1 No funds have engaged in swing pricing as Adjusting for inflation, the staff estimates that the reported on Form N–CEN as of August 14, 2019. current average cost of board of director time is prepared by ICE Clear Europe. ICE Clear approximately $4,465. 2 This estimate is based on the following Europe filed the proposed rule change 4 calculation: (48 + 2 + 6) hours × 5 fund complexes See rule 22c–1(a)(3)(iii). pursuant to Section 19(b)(3)(A) of the 5 = 280 hours. See id. Act 3 and Rule 19b–4(f)(6) 4 thereunder, 3 These estimates are based on the following 6 This estimate is based on the following × such that the proposed rule change was calculations: 24 hours × $201 (hourly rate for a calculations: 2 hours $58 (hourly rate for a general × senior accountant) = $4,824; 24 hours × $463 clerk) = $116; 2 hours $88 (hourly rate for a senior immediately effective upon filing with (blended hourly rate for assistant general counsel computer operator) = $176. $116 + $176 = $292. the Commission. The Commission is ($433) and chief compliance officer ($493)) = 7 These estimates are based on the following publishing this notice to solicit $11,112; 2 hours (for a fund attorney’s time to calculations: 4 hours × 5 fund complexes = 20 prepare materials for the board’s determinations) × hours. 5 fund complexes × $292 = $1,460. 1 $340 (hourly rate for a compliance attorney) = $680; 8 These estimates are based on the following 15 U.S.C. 78s(b)(1). 6 hours × $4,465 (hourly rate for a board of 8 calculations: (280 hours (year 1) + (3 × 20 hours) 2 17 CFR 240.19b–4. directors) = $26,790; ($4,824 + $11,112 + $680 + (years 1, 2 and 3)) ÷ 3 = 113.3 hours; ($217,030 (year 3 15 U.S.C. 78s(b)(3)(A). $26,790) = $43,406; $43,406 × 5 fund complexes = 1) + (3 × $1,460) (years 1, 2 and 3)) ÷ 3 = $73,803. 4 17 CFR 240.19b–4(f)(6).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55650 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

comments on the proposed rule change Procedures, Contract Terms Procedures Specifically, ICE Endex Gas B.V. (which from interested persons. and Membership Procedures. The text of operated the spot market, and was the proposed amendments to the Rules referred to in the Rules as ‘‘ICE Endex I. Clearing Agency’s Statement of the and Procedures is attached in Exhibit 5, Continental’’) was merged into ICE Terms of Substance of the Proposed with additions underlined and deletions Endex Derivatives B.V. (which operated Rule Change in strikethrough text. The proposed the regulated market, and was referred ICE Clear Europe proposes to amend amendments are described in detail as to in the Rules as ‘‘ICE Endex’’), with its Clearing Rules (the ‘‘Rules’’) and follows. the surviving entity renamed ICE Endex Procedures to make various drafting 7 1. Removal of References to LIFFE Markets B.V. Accordingly, the defined updates, clarifications and corrections, term ‘‘ICE Endex’’ in the Rules would be including to remove obsolete The amendments would remove revised to refer to ICE Endex Markets provisions, to reflect changes to the throughout the Rules unused references B.V. As a result of the transaction, ICE names of trading venues cleared by the to the LIFFE market (and related terms Endex now operates two markets, its Clearing House and facilities and referencing LIFFE or LIFFE contracts). regulated market and the ICE Endex systems used by the Clearing House, Trading in all LIFFE contracts was Spot Market (formerly the ICE Endex and to better reflect certain current transitioned to ICE Futures Europe in Continental market). In Rule 101 the 5 6 operational practices. 2014, and LIFFE is no longer an following definitions would be revised operational exchange. The LIFFE II. Clearing Agency’s Statement of the accordingly: ‘‘Energy’’, ‘‘Energy exchange has since been de-recognized Purpose of, and Statutory Basis for, the Transaction’’, ‘‘ICE Endex’’, ‘‘ICE Endex as a recognized investment exchange Proposed Rule Change Block Transaction’’, ‘‘ICE Endex under UK law and the corporate vehicle Matched Transaction’’, ‘‘ICE Endex In its filing with the Commission, ICE has been wound up. The Rules and Rules’’ and ‘‘Market’’. In addition, the Clear Europe included statements Procedures nonetheless retain certain defined terms ‘‘ICE Endex Continental’’ concerning the purpose of and basis for outdated references to LIFFE and related and ‘‘ICE Endex Continental Rules’’ are the proposed rule change and discussed terms that would now be deleted. These to be replaced with ‘‘ICE Endex Spot any comments it received on the include the definitions of ‘‘LIFFE’’, Market’’ and ‘‘ICE Endex Spot Market proposed rule change. The text of these ‘‘LIFFE Block Contract’’, ‘‘LIFFE Block Rules’’. The definitions of ‘‘ICE Natural statements may be examined at the Trade Facility’’, ‘‘LIFFE Block Gas Continental Spot’’, ‘‘ICE Natural Gas places specified in Item IV below. ICE Transaction’’, ‘‘LIFFE Clearing Continental Spot Contract’’, ‘‘ICE Clear Europe has prepared summaries, Member’’, ‘‘LIFFE Contract’’, ‘‘LIFFE Natural Gas Continental Spot Matched set forth in sections (A), (B), and (C) Matched Contract’’, ‘‘LIFFE Matched Contract’’, ‘‘ICE Natural Gas Continental below, of the most significant aspects of Transaction’’ and ‘‘LIFFE Rules’’ in Rule Spot Matched Transaction’’ and ‘‘ICE such statements. 101 (and related uses of such definitions Natural Gas Continental Spot (A) Clearing Agency’s Statement of the throughout the Rules, including in the Transaction’’ are to be replaced with Purpose of, and Statutory Basis for, the definitions of ‘‘Financials & Softs’’, ‘‘ICE Endex Spot Market Transaction’’ Proposed Rule Change ‘‘Financials & Softs Clearing Member’’, and ‘‘ICE Endex Spot Market Contract.’’ ‘‘Financials & Softs Transaction’’ and (a) Purpose Corresponding changes would be made ‘‘Market’’). Corresponding changes have throughout the Rules and Procedures, ICE Clear Europe proposes to amend also been proposed to the Delivery including in Rules 201, 404 and 1906 its Rules and Procedures to make Procedures to remove references to and in the Delivery Procedures in various drafting updates, clarifications ‘‘LIFFE’’ and the ‘‘LIFFE Rules’’ in paragraph 5.1 and Part J. A new Rule and corrections, including to various relation to Financials & Softs Contracts 401(r) would be added to clarify that a references throughout the Rules and that are now traded on ICE Futures Contract will only arise in relation to an Procedures to the names of trading Europe. These changes have been made ICE Endex Spot Market Transaction venues for which ICE Clear Europe in paragraphs 8 and 15 of the general where the product is designated by ICE provides clearing services, to delivery provisions of the Delivery Procedures Endex Spot Market as a cleared product. facilities and information systems used and in the product-specific sections as This clarification is needed because not by the Clearing House, and to certain follows: Part O, paragraphs 1.1–1.3; Part all products traded on the ICE Endex contracts cleared by the Clearing House. O, Delivery Timetable; Part Q, Spot Market are cleared by ICE Clear Certain changes are also being made to paragraphs 1.1–1.3; Part Q, Delivery Europe; some are held on an over-the- use more generic references to trading Timetable; Part R, paragraphs 1.1–1.3; counter basis Parts 20 and 22 of the facilities and contracts to limit the need Part R, Delivery Timetable; Part T, Rules would be deleted as no longer for future changes to the ICE Clear paragraphs 1.3 and 1.11; Part U, necessary, as those Parts provided Europe Rules as a result of non- paragraphs 1.2, 1.4 and 1.5; and Part U, transitional rules relating to various ICE substantive changes to names and other Delivery Timetables. Endex contracts at the time of the corporate events. 2. Corporate Reorganization of Endex transition of these contracts to the Specifically, ICE Clear Europe Markets Clearing House from another clearing proposes to make amendments to Parts house in 2013. All affected contracts A number of changes to the Rules are 1, 2, 4, 5, 8, 9, 11, 12, 15, 16, 19, 20 and have now expired. 22 of the Rules, the Standard Terms proposed to reflect changes in the annexes contained in the Exhibits to the corporate structure of the ICE Endex 3. Removal of Unused Participating Rules, and to the Clearing Procedures, markets cleared by ICE Clear Europe. Exchange Link Provisions Finance Procedures, Delivery The Rules currently contain a number Procedures, CDS Procedures, FX 6 See Exchange Act Release No. 34–73348 (SR– ICEEU–2014–017) (Oct. 14, 2014); 79 FR 62688 of defined terms and other provisions Procedures, Business Continuity (Oct. 20, 2014); see also ICE Futures Europe’s ‘LIFFE to ICE Futures Europe Transition Notice’ 7 This merger is described in more detail in ICE 5 Capitalized terms used but not defined herein dated September 2014, available at https:// Endex Circular E16/045 of 30 November 2016, have the meaning specified in the ICE Clear Europe www.theice.com/publicdocs/circulars/14108_ available at https://www.theice.com/publicdocs/ Clearing Rules. attach.pdf. endex/circulars/E16045.pdf.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55651

relating to linkages between ICE other Exchange for which the Clearing 6. Changes to Delivery Procedures exchanges and non-ICE exchanges House provides or may provide Clearing In the Delivery Procedures, various (referred to in the Rules as services’’. These changes would drafting changes are proposed to ensure ‘‘Participating Exchanges’’), principally simplify various references throughout that the Delivery Procedures are set out in current Rule 410. Although the Rules to exchanges, trading facilities consistent with the Rules and with the such linkages at one time existed and markets generally (without need to current operational practices of ICE between LIFFE and two Japanese identify each such facility), and in Clear Europe. The proposed changes exchanges, and were briefly on-boarded particular will allow for certain would include replacing outdated by the Clearing House after the LIFFE references to ‘‘Exchange’’ to be amended references to the ‘‘Market Delivery transition in 2014, they have been to ‘‘Market’’ throughout the Rules and Settlement Price’’ (MDSP) with terminated, there are no such linkages Procedures, resulting in greater references to the ‘‘Exchange Delivery currently in effect, and none are consistency. This will also reduce Settlement Price’’ (EDSP), which is the contemplated at this time. As a result, term now used in the Rules to refer to ICE Clear Europe proposes to delete documentation risks associated with the settlement price for F&O Contracts. Rule 410. ICE Clear Europe further corporate reorganizations at exchange In addition, a small change is proposed proposes to delete references to level, as occurred for LIFFE and ICE to remove a requirement to mark Participating Exchanges, and related Endex (discussed above). The proposed delivery documentation as ‘‘urgent’’ (as terms and provisions, throughout the changes also remove the various this is not done, and is not necessary, Rules, including in Rules 102(j)(ii), references to market-specific rules (for in operational practice). A number of 106(a)(iv), 401(a)(xiv), 405(b), 408(a)(vi), example, to the rules of ICE Futures drafting improvements have also been 905(a)(iii), 905(b)(xix), 1201(f)(xii), Europe) and replace these with a more proposed to address inconsistencies and 1201(l), 1201(n), 1202(b)(ix)–(x), generic definition of ‘‘Market Rules’’ errata from previous changes to the 1202(m), 1202(n), 1202(o)(xi) (which where possible. The definition of Delivery Procedures and to align the will become 1202(m)(xi)), 1203(k), ‘‘Market Rules’’ in Rule 101 would be 1204(a)(v), 1204(j) and 1205(d). document with current operational amended to refer more generically to models, system functionality and 4. References to Delivery Facilities ‘‘the rules, regulations, procedures of, system names. The relevant changes are and agreements governing, a Market’’. The definition of ‘‘Delivery Facility’’ to be made to paragraph 2 of the general New definitions of ‘‘EFRP’’, ‘‘Energy in Rule 101 would be amended to reflect provisions of the Delivery Procedures Block Trade Facility’’, ‘‘Energy Block the full range of delivery mechanisms and to the following product-specific and providers used in connection with Transaction’’, ‘‘F&O Block Contract’’, sections: Part A, paragraphs 2.2, 7.3 and various cleared Contracts, including ‘‘F&O Block Transaction’’, F&O Matched 8; Part B, paragraphs 1.2, 5.1, 5.2 and balancing systems, gas networks, Contract’’ and ‘‘F&O Matched 5.5; Part C, paragraph 2.3; Part D, securities settlement systems, Transaction’’ would be added to remove paragraph 7.1; Part N, paragraph 2.3; custodians, vessels, terminals, ports and the need to refer to trading venue- Part O, paragraph 1.2; Part P, paragraphs emissions registries. The broader specific contracts and transactions 1.1–1.3 and Delivery Timetable; Part Q, definition reflects current practice for throughout the Rules. For example, the paragraph 1.2; Part R, paragraph 1.2; the facilities used for delivery under the definition of ‘‘F&O Matched Part T, paragraph 1.3; Part U, paragraphs diversity of contracts cleared by the Transaction’’ would cover all F&O 1.3 and 1.6; and Part BB, paragraph 1.2. Clearing House, and is intended to Transactions occurring on a Market In addition, changes to paragraph 1.2 of reduce the need to change the rules for (without need to use separate defined the general provisions of the Delivery the launch of new deliverable contracts. terms to refer to F&O Transactions Procedures are proposed to refer to the Relatedly, Rule 106(a)(xiv) would be occurring on each of ICE Endex, ICE ‘‘clearing operations department’’ of ICE amended to delete the references to Endex UK, ICE Futures Europe and ICE Clear Europe, which is the correct name obligations under the specific rules of Futures US). Similarly, the proposed of the relevant department. each particular delivery facility and ‘‘F&O Block Transaction’’ defined term In paragraph 5.4 of the general replace these with a generic reference to covers all Financials & Softs Block provisions of the Delivery Procedures, obligations under ‘‘the rules or terms of Transactions and Energy Block the words ‘‘of such Transferor/ a Delivery Facility or as [are] needed to Transactions. Corresponding changes Transferee’’ are to be added at the end comply with any obligation or to will be made to the definitions of ‘‘Basis of the last sentence to clarify that the exercise any right under these Rules’’. Trades’’, ‘‘Bclear’’, ‘‘Business Day’’, relevant form must be signed by an authorized signatory of the Transferor or This would make use of the broadened ‘‘Contract Terms’’, ‘‘EFPs’’, ‘‘EFSs’’, Transferee (as applicable). Changes are ‘‘Delivery Facility’’ definition. A similar ‘‘Financials & Softs Block Trade also proposed to paragraph 17.5 of the change is proposed to Rule 404(a)(x) to Facility’’, ‘‘Financials & Softs Block Delivery Procedures to refer more use the generic ‘‘Delivery Facility’’ Transaction’’ and ‘‘Soft Commodity defined term. generally to the provisions of ‘‘Contract EFRP’’ in Rule 101 and also at Rules Terms’’ and ‘‘Market Rules’’ that apply 5. General References to Markets 102(f), 111(c)(ii), 201(a)(ii)–(iv), following non-performance of Related to the amendments discussed 401(a)(i)–(v), 401(n), 405(b)(i), contractual obligations, rather than just above relating to LIFFE and ICE Endex, 1201(f)(x), 1202(b)(iii), 1202(h) and the ICE Futures Europe Rules (since ICE ICE Clear Europe proposes to replace 1202(m)(vi). Similar changes are also Clear Europe provides clearing services other individual references to specific proposed to paragraphs 2.4(c), 6.2(b)(iii) to various Markets). In addition, the markets for which it clears, throughout and 6.4(b) of the Clearing Procedures reference to the specific provisions of the Rules and Procedures, with the more and paragraph 1.1(c) of the Delivery the ICE Futures Rules would be updated general term ‘‘Market.’’ The definition of Procedures. It will still be necessary to to refer to the correct provisions. ‘‘Market’’ in Rule 101 would be list the Markets cleared by the Clearing Various changes have also been amended so that it covers the specified House in Rule 101; these changes proposed to the Delivery Procedures to ICE trading venues for which merely reduce the complexity of any remove references to certain products arrangements already exist ‘‘and any future changes in those Markets. that are no longer cleared by ICE Clear

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55652 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Europe following de-listings by the The changes are to be made to In addition, with respect to certain relevant exchange. These include ICE paragraph 16 of the general provisions other definitions, typographical Futures ERU Futures Contracts, ICE UK of the Delivery Procedures and to the corrections, updates to cross-references Base Electricity Futures Contracts following product-specific sections: Part to various Rules and Procedures and (EFA), ICE UK Peak Electricity Futures A, paragraph 5.3; Part B, sections 2 and corrections to alphabetical ordering Contracts (EFA), ICE Endex TTF Natural 4; Part K, section 4; Part L, section 4; would be made. Gas Working Days Next Week (WDNW) Part O, section 1 (Delivery Timetable); 8. Additional Clarifications and Updates Futures Contracts, ICE Endex GASPOOL Part P, section 1 (Delivery Timetable); Natural Gas Daily Futures Contracts, ICE Part Q, section 1 (Delivery Timetable); ICE Clear Europe is proposing to make Endex NCG Natural Gas Daily Futures Part R, sections 1 (Delivery Timetable) a number of additional clarifications, Contracts, ICE Endex ZTP Natural Gas and 2 (Delivery Documentation drafting updates and similar corrections Daily Futures Contracts and Japanese Summary); Part S, paragraph 1.1; Part T, to other provisions of the Rules. Government Bond Contracts. In paragraph 1.3; Part U, paragraphs 1.6 In Rule 102(i), a change is proposed addition, for Equity Futures/Options and 1.9; Part W, paragraph 1.8; and Part to clarify, for completeness, that social Contracts changes have been proposed X, paragraph 1.8. security contributions also fall within to reflect the fact that Turkish securities the meaning of the term ‘‘tax’’ 7. Other Updates to Definitions are not available as an underlying. In throughout the Rules. In the UK, as well the case of the ICE Futures ERU Futures as income tax, there are ‘‘national The amendments would include a insurance contributions’’ payable by Contracts, the changes proposed involve number of other drafting clarifications, not only deleting references to the employers and employees, and similar typographical corrections and drafting concepts apply in several other contracts but also removing all defined improvements to the definitions in Rule countries. This amendment would terms relating to Emission Reduction 101. In particular, the definition of ensure that all taxes would be covered Units (‘‘ERUs’’), for example ‘‘Emission ‘‘Portfolio Risk Margin’’ is being when representations and indemnities Reduction Unit’’, ‘‘ERU Contract’’, ‘‘ERU removed as unnecessary in the Rules (as exist under the rules. In several places Delivery Amount’’ and ‘‘ERU Transfer it is part of the concept of Initial throughout the Rules and Procedures, Request’’, and the instances in which Margin) and other references in the amendments are proposed to replace these appear, because such units are no Rules to Portfolio Risk Margin will be undefined terms with defined terms, for longer valid deliverables for the relevant removed or replaced with Initial greater clarity and drafting precision. In contracts. The relevant changes are to be Margin, as applicable. The definitions of this regard, a drafting change has been made to paragraphs 5.1, 6.1 and 11 of ‘‘Transferor’’ and ‘‘Transferee’’ would be proposed to Rule 106(a)(vii) to use the the general provisions of the Delivery amended to include an explicit defined term ‘‘Person’’ in place of the Procedures and to the following reference to Part 7 of the Rules and the undefined term ‘‘body’’. In Rules product-specific sections: Part A, Delivery Procedures, in order to clarify 106(e)(i) and 113(e), paragraph 6.1(i)(v) heading and preamble; Part A, that the terms are intended to refer to of the Finance Procedures and paragraphs 1.1, 2.1–2.4, 3.2, 5.1, 6.1, 8 persons nominated by Buyers or Sellers paragraph 17.6 of the Delivery and 9.1; Part F, heading and paragraphs to make or receive delivery of products Procedures, similar changes have been 1.1(j), 3.3, 3.5(a), 3.6, 6.1, 7.1 and 9.1; in the course of the delivery process proposed to use the defined term Part G, heading and paragraphs 1.1(j), under the Rules and the Delivery ‘‘Applicable Law’’ instead of undefined 2.2, 2.4–2.5, 5.2, 6.2 and 8.2; Part H, Procedures. The definition of ‘‘Person’’ terms such as ‘‘applicable law’’ or heading and paragraphs 1.1(f), 2.3, 2.5– in clauses (a) and (b) thereof would be ‘‘law’’. In the net sum calculation in 2.6, 5.2, 6.2 and 8.2; Part I, heading and revised to refer to ‘‘any similar structure Rule 906(a), the word ‘‘margin’’ in the paragraphs 1.1(n), 3.3, 3.5–3.6, 6.2, 7.2 in any other jurisdiction,’’ a clarification explanation of the variable ‘‘M’’ has and 9.2; Part V (proposed deletion); and requested by market participants to been replaced with the defined term Part Z, paragraphs 1.2 and 2.1. The table clearly cover funds and similar ‘‘Margin’’. Similarly, Rule 913(a)(xiv) is of contents is also to be updated structures that exist in civil law proposed to be amended to remove the accordingly. jurisdictions in Europe such as terms ‘‘strike price’’ and ‘‘exercise It is proposed that the Delivery Germany. The definition of ‘‘Force price’’ and replace these with the Procedures be amended to reflect the Majeure Event’’ would be amended to defined term ‘‘Strike Price.’’ In Rule current systems used by ICE Clear include a missing word to clarify the 1604(b), the lower case term ‘‘transfer’’ Europe to communicate with Clearing application of the term to Sponsored is to be replaced with the defined term Members and facilitate delivery. There Principals and ensure consistency with ‘‘Transfer,’’ which is given a particular are a number of references to obsolete other aspects of the definition. The meaning by Rule 904(a) in the context systems in the current published definition of ‘‘Future’’ would be of the default management steps that version of the Delivery Procedures. In clarified such that it does not include ICE Clear Europe is permitted to take some cases, there is no reference at all Options (which are covered by a under the Rules and Procedures. In to the appropriate system used by ICE separate defined term). The definition of paragraph 2.2(e) of the Clearing Clear Europe to communicate a ‘‘Mark-to-Market Margin’’ would be Procedures, it is proposed that particular piece of information to clarified by addition of a reference to ‘‘commodities’’ be replaced with the Clearing Members (or vice versa). The cover such margin transferred to a defined term ‘‘Deliverables’’, which is proposed changes involve removing Sponsored Principal as well as a the defined term that includes references to systems that are no longer Clearing Member. Clause (b) of the commodities in addition to other types used for the relevant purpose, for definition of ‘‘Set’’ would be amended of deliverable. In the Finance example the Universal Clearing Platform to use the defined term ‘‘Strike Price’’ Procedures, at paragraph 4.2, references (UCP), Trade Registration System (TRS) instead of an undefined term. In the to ‘‘accounts’’ are to be replaced with and Crystal, and adding new references definition of ‘‘Settlement and Notices the defined term ‘‘Nominated Bank to the current systems such as the Terms,’’ a reference to FCM/BD Clearing Accounts’’. These changes are generally Extensible Clearing System (ECS) and Members that are CDS Clearing intended to clarify the Rules but are not Managed File Transfer System (MFT). Members would be corrected. intended to change the substantive

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55653

rights or obligations of the Clearing CDS Procedures and Finance certain changes in eligible assets for House or Clearing Members. Procedures. The Capital requirements Margin and Permitted Cover and related In Rule 106(b), an amendment would themselves would not be changed. haircuts) would clarify the application be made to clarify that Clearing A clarification is proposed to Rule of this provision to all Contract types Members and Customers are deemed to 401(b) to improve the current drafting and not just F&O Contracts, consistent consent to disclosure of information by by providing that new contracts arising with existing practice. Rule 503(d) ICE Clear Europe where made pursuant at the moment that alternative delivery would be amended to clarify the to Applicable Law generally, rather than is agreed are ‘‘Contracts reversing the calculation of intra-day margin in the just pursuant to the provisions of the existing Contract or Contracts.’’ An context of certain customer positions Financial Services and Markets Act alternative delivery agreement results in carried on a gross basis. The new 2000, which may not be the only the cancellation of the existing cleared drafting clarifies that Margin is applicable law for non-UK Clearing contract through an offsetting contract. calculated based on the Open Contract Members. The change reflects current practice and Position plus ‘‘the net additional Various changes have been proposed is not intended to have any effect on the exposure relating to any Contracts held throughout the Rules and Procedures in way in which the offsetting process gross which have not been contractually order to be consistent in the use of such operates. netted or aggregated in accordance with terms as ‘‘section’’ and ‘‘paragraph,’’ In Rule 401(n), changes would be Rule 406’’. The amendment is not including to Rule 109(j), Rule 904(g), made to clarify the application of the intended to change margin calculations, Sections 3(n), 3(o), 10, 13(a) and 13(c) Rule to Customer-CM Transactions that but avoid uncertainty as to the treatment of the Standard Terms, paragraphs 2.2, arise when an F&O Contract arises of gross positions under the current 4.5 6.1(i) and 13.3 of the Finance pursuant to Rule 401. (In such case, an drafting of the Rules consistent with Procedures, paragraphs 3.1 and 10.2 of offsetting Customer-CM F&O provisions used by other ICE clearing the FX Procedures and paragraph Transaction arises simultaneously houses. 8.2(h)(ii) of the CDS Procedures. between the Customer and Clearing In Rule 803(c), drafting changes have In Rule 110(b), a drafting clarification Member.) The Customer-CM been proposed to clarify that only is proposed to highlight that this Transaction would be subject to the ‘‘Long’’ Option Contracts can be provision is also subject to Rule 110(g) same conditions as to when contracts abandoned by notice to ICE Clear (in addition to Rule 110(c)). Rule 110(g) can be voided as other contracts under Europe, consistent with the rights (which by its terms overrides Rule Part 4 of the Rules. applicable to options under the existing 110(b)) provides that ICE Clear Europe Changes are proposed to Rule Contract Terms and existing operational does not have the right to extend the 405(b)(i) to correctly refer to the processes. Minor drafting improvements time at which a payment is due to a execution venues which can submit have also been made in Rules 803(a), Clearing Member beyond the time contracts to ICE Clear Europe for 804 and 808(a). immediately prior to the clearing, namely CDS or FX trade Rules 908(b), (c) and (d) would be commencement of the daily payment execution processing platforms and revised to make certain non-substantive cycle for the relevant payment currency. venues falling within the definition of drafting clarifications. Further, in those Changes at Rule 117(a) have been ‘‘Market’’. These changes clarify that the subsections, with regard to amounts proposed to remove the words ‘‘Subject deemed representations given by falling within ‘‘N’’ (the post-default net to Rule 1518’’ and provide that any counterparties to contracts as to the sum calculation), which form the first Dispute not subject to the procedures of accuracy of transaction data equally layer of the default waterfall Part 10 of the Rules or the Complaint arise in a scenario where the transaction (subparagraph (i) in Rules 908(b), (c) Resolution Procedures shall be subject was originally executed through one of and (d)), amendments would provide to arbitration. This change is intended these alternative venues, and not solely that such amounts must be applied to reduce the risk of procedural in relation to transactions that take ‘‘subject to the restrictions set out in questions as to the dispute resolution place on Exchanges. Rule 906(c)’’. Rule 906(c) imposes process which is applicable in a given It is proposed that the word ‘‘day’’ in restrictions on the setting off of assets scenario. Rule 1518 by its terms Rule 406(a) be replaced with ‘‘Business recorded in different Customer overrides Rule 117 in the relevant Day’’ to reflect the fact that Open Accounts of a Defaulter against circumstances stated thereunder and so Contract Positions are not calculated on shortfalls on Proprietary Accounts or the deleted language is not needed. non-Business Days. Changes are other Customer Accounts of the same The words ‘‘and the deposit of proposed to refer to ‘‘Contracts that are Defaulter, promoting segregation under securities’’ and ‘‘and securities’’ are Futures’’ and ‘‘Contracts that are the European Market Infrastructure proposed to be deleted in Rule Options’’, to replace the current Regulation and U.S. laws. The proposed 202(a)(xi). This reflects current references ‘‘Futures that are F&O drafting would not affect the operation operational processes, under which Contracts’’ and ‘‘Options that are F&O of Rule 906(c), but would make the amounts transferred to and from ICE Contracts’’, which are redundant. Rules easier to follow by directing Clear Europe by Clearing Members for A minor drafting change is proposed readers to Rule 906(c) in the context of the purposes of Margin, Guaranty Fund to Rule 502(c) to clarify that the the default waterfall provisions in Rule Contributions, fees and amounts due particular set of Procedures referred to 908. Finally, changes are proposed to under contracts pursuant to a margin here are the Finance Procedures. subparagraph (iii) to clarify that this call will only be in the form of cash (and Relatedly, a clarification is proposed in layer of the waterfall would not include not securities or other financial Rule 502(d) to confirm that the ability guaranty fund contributions of a instruments). Securities may be of the Clearing House to ‘‘specify Sponsor of a Defaulter (that is a substituted for cash margin pursuant to proportions or maximum proportions of Sponsored Principal). a separate process. asset classes’’ extends to cash and Minor drafting changes have been Changes at Rule 206(a) are proposed relates solely to cash or assets ‘‘to be proposed to Rule 908(g)(i)(A)–(D) to add to include Clearing Member Capital provided as Margin.’’ the words ‘‘in question’’ after the second requirements in the Membership Changes in Rule 502(k) (which relates instance of ‘‘Defaulter’’. These changes Procedures, in addition to under the to certain considerations in making are intended to resolve any ambiguity as

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55654 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

to which guaranty fund contributions Committee’’ is to be replaced with a the fact that the London Gold Fixing has are to be used in the situation where reference to the relevant ‘‘product risk been replaced as the relevant global more than one default takes place committee,’’ which is the correct name benchmark for gold prices by the simultaneously. of the relevant committee that reviews London Bullion Market Association It is proposed that the exclusion of the policy for setting initial margin Gold Price, which is administered by ICE Clear Europe’s liability in Rule parameters. ICE Benchmark Administration Limited. 919(r) be amended to remove the References to ‘‘Buyer’s Security’’ and In the Contract Terms Procedures, the reference to requirements of ‘‘law’’ ‘‘Seller’s Security’’ in paragraphs term ‘‘Clearing Counterparty’’ (which is generally and replace this with a 4.6(c)(i) and 4.8 the Clearing Procedures not used or defined in the Rules or other reference to requirements of are to be amended to replace ‘‘Security’’ Procedures) would be changed to ‘‘Applicable Laws or this Rule 919’’. with ‘‘security’’ (reflecting that ‘‘Clearing Member’’ for consistency. The amendments also clarify that the ‘‘Security’’ is not a defined term in the In the Membership Procedures, in exclusion of liability does not apply to Rules or Procedures). Changes are also paragraph 1.3, the full name of the the extent that Rule 919 itself provides proposed to paragraphs 4.6(c) and 4.8 to relevant committee, the ‘‘Executive Risk that a particular sum is payable by ICE refer to particular items that may be Committee’’, would be used. Various Clear Europe. This is consistent with specified in the Delivery Procedures. drafting changes have also been ICE Clear Europe’s interpretation of the In paragraph 6.1(a)(i) of the Clearing proposed to the table at paragraph 4.2. existing effect of this provisions, but Procedures, an incorrect reference to These updates reflect the relevant adds clarity for users. ‘‘Proprietary Account Position’’ would defined terms used in the Rules (as An amendment is proposed to Rule be corrected. The capitalized term proposed to be amended hereby). 1103(f) to add a reference to Part 9 of the ‘‘Collateral’’ in paragraph 6.3(b) of the In addition to the foregoing, certain Rules in the provision setting out that Clearing Procedures is to be replaced corrections and updates to cross- Clearing House Contributions will be with the lower case term ‘‘collateral’’, as references and numbering, as well as used ‘‘only for the purposes of meeting there is no definition of the former term minor and non-substantive corrections shortfalls arising directly or indirect in the Rules or Procedures. It is also to capitalization and other from Defaults’’ in accordance with proposed that the word ‘‘Initial’’ be typographical corrections, have been specified provisions of the Rules and deleted before the words ‘‘Margin made throughout the Rules and existing requirements of Applicable requirement’’ in the same provision Procedures. Laws. The added reference to Part 9 is since the relevant requirement concerns appropriate as it contains the majority of all kinds of Margin (including Variation (b) Statutory Basis the provisions governing Clearing Margin or Mark-to-Market Margin). ICE Clear Europe believes that the Member defaults, after some provisions In the Finance Procedures, a new proposed amendments are consistent were moved out of Part 11 several years paragraph 1.11 is proposed to be added with the requirements of Section 17A of ago. to provide definitions for the various the Act 8 and the regulations thereunder A drafting change is proposed in Rule currencies referenced the Finance applicable to it, including the standards 1202(b)(vii) to reflect the fact that Procedures which are not defined in the under Rule 17Ad–22.9 In particular, Financials & Softs Contracts are already Rules. Related to this, the reference to Section 17A(b)(3)(F) of the Act 10 contemplated within the definition of a Canadian Dollars, Swiss Francs and requires, among other things, that the ‘‘Future’’ and accordingly the reference Swedish Kroner in paragraph 2.1 is to rules of a clearing agency be designed to to Financials & Softs Contracts can be be deleted and replaced by the words promote the prompt and accurate deleted. (‘‘Future’’ refers to ‘‘an F&O ‘‘Other currencies’’ to reflect the fact clearance and settlement of securities Contract or FX Contract’’; ‘‘F&O that a broader range of currencies are transactions and, to the extent Contracts’’ include Financials & Softs actually received as income on non-cash applicable, derivative agreements, Contracts (in addition to Energy collateral. Changes are proposed to contracts, and transactions, the Contracts).) A similar change is to be paragraph 4.1(a)(vi) to clarify that safeguarding of securities and funds in made in Rule 1202(k) to refer to Clearing Members that transfer non-cash the custody or control of the clearing ‘‘Contracts’’ rather than ‘‘Financials & assets to ICE Clear Europe as collateral agency or for which it is responsible, Softs Contracts’’ specifically (which must have an account in the currency of and the protection of investors and the would fall within the more general the income payable on the non-cash public interest. ‘‘Contracts’’ definition). asset. A non-substantive drafting The proposed amendments are In the Clearing Procedures, in clarification would be made in intended principally to update and paragraphs 2.3(b)(xxv), (xxvii), (xxxix) paragraph 4.2 to address Clearing clarify certain references in the Rules and (xli), changes are proposed to Members that act in more than one and Procedures to reflect more clearly remove references to the ‘‘Standard product category. current practices, remove outdated Omnibus Indirect Account For CDS’’ In paragraph 6.1(i) of the Finance references and provisions, simplify and and the ‘‘Standard TTFCA Omnibus Procedures, the current reference to harmonize references to the different Indirect Account For CDS’’ in account ‘‘bank holidays’’ would be amended to Markets cleared by ICE Clear Europe codes ‘‘X’’ and ‘‘Y’’. These net margin refer also to ‘‘public holidays,’’ because and to the different delivery facilities omnibus accounts for indirect clearing ‘‘bank holiday’’ is a UK-specific term used by ICE Clear Europe. The changes are not actually used for CDS Contracts. that is not necessarily used in other would also remove references to A drafting clarification would be jurisdictions. Certain other changers contracts no longer cleared, and make made in paragraph 4.2(a) of the Clearing would clarify that relevant actions must various other drafting improvements Procedures to provide that that initial be taken ‘‘by’’ a specified date, rather and modifications that would generally margin calculations will be ‘‘based on’’ than ‘‘on’’ that date. Paragraph 8.2 of the not affect the terms of contracts, or the the net positions for each Contract Set Finance Procedures would be amended rights or obligations of Clearing in a Proprietary Account. (This does not to refer to the ‘‘risk department’’, since entail any change in the way margin is ‘‘Risk’’ is an undefined term. 8 15 U.S.C. 78q–1. currently calculated.) In paragraph Changes are proposed to paragraph 9 17 CFR 240.17Ad–22. 4.2(b), the reference to the ‘‘Risk 10.9 of the Finance Procedures to reflect 10 15 U.S.C. 78q–1(b)(3)(F).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55655

Members. In ICE Clear Europe’s view, provisions and covered errors. ICE Clear that the questions were adequately these changes will generally help clarify Europe does not believe such addressed by oral explanations and and simplify the Rules and Procedures, amendments will result in material discussions with Clearing Members and and make it easier for ICE Clear Europe changes in its current operations or that no material changes to the to keep such documents up to date practices, or the rights or obligations of consulted-upon Rules were required. notwithstanding potential future Clearing Members. Such amendments ICE Clear Europe will notify the changes in the Markets cleared and will apply to all Clearing Members. ICE Commission of any further written similar events. In ICE Clear Europe’s Clear Europe does not believe such comments with respect to the proposed view, these changes are therefore amendments would in themselves rules received by ICE Clear Europe. generally consistent with the prompt materially affect the cost of, or access to and accurate clearance and settlement of clearing. Legal costs of users should be III. Date of Effectiveness of the cleared transactions. For similar reduced by correcting errors and Proposed Rule Change and Timing for reasons, the amendments will also help removing ambiguity which might Commission Action ensure that the Rules and Procedures otherwise require legal advice. As a Because the foregoing proposed rule are aligned with operational procedures result, ICE Clear Europe does not change does not: concerning the holding of funds and believe such amendments would (i) Significantly affect the protection securities, and are therefore consistent adversely affect competition among of investors or the public interest; with safeguarding of securities and Clearing Members or the market for (ii) impose any significant burden on funds in the custody or control of the clearing services generally. competition; and Clearing House or which it is (iii) become operative for 30 days (C) Clearing Agency’s Statement on responsible. Overall, in ICE Clear from the date on which it was filed, or Comments on the Proposed Rule Europe’s view, the amendments are for such shorter time as the Commission Change Received From Members, these reasons also consistent with the may designate, it has become effective protection of investors and the public Participants or Others pursuant to Section 19(b)(3)(A) of the interest, within the meaning of Section ICE Clear Europe has conducted a Act and Rule 19b–4(f)(6) thereunder. 17A(b)(3)(F) of the Act.11 public consultation on amendments to At any time within 60 days of the The proposed Rule changes are also its Rules that included the proposed filing of the proposed rule change, the consistent with the relevant rule changes set forth herein.14 It should Commission summarily may requirements of Rule 17Ad–22. In be noted that this consultation included temporarily suspend such rule change if particular, Rule 17Ad–22(e)(1) 12 not only the changes discussed herein, it appears to the Commission that such requires that each covered clearing but also a number of other changes action is necessary or appropriate in the agency establish, implement, maintain which ICE Clear Europe has addressed public interest, for the protection of and enforce written policies and in prior filings and intends to address in investors, or otherwise in furtherance of procedures reasonably designed to future filings. ICE Clear Europe received the purposes of the Act. provide for a well-founded, clear, three detailed and written responses to IV. Solicitation of Comments transparent, and enforceable legal basis the overall consultation, which for each aspect of its activities in all included four specific comments Interested persons are invited to relevant jurisdictions. As discussed relating to the amendments described in submit written data, views, and herein, the amendments are designed to this filing. It has discussed aspects of arguments concerning the foregoing, clarify, simplify and harmonize various the proposed Rule changes, as were including whether the proposed rule aspects of the Rules and Procedures, to presented in such consultation, with change, security-based swap submission be consistent with current operations, those interested Clearing Members who or advance notice is consistent with the remove outdated references, address responded. Based on feedback received Act. Comments may be submitted by changes in Markets served and delivery by ICE Clear Europe, those Clearing any of the following methods: facilities used, and similar matters. Members who responded supported all Electronic Comments Taken together, these amendments will the changes proposed herein. Clearing • enhance the clarity of the legal Members’ comments were generally Use the Commission’s internet framework provided by the Rules and concentrated on other matters arising in comment form (http://www.sec.gov/ rules/sro.shtml) or Procedures under which the Clearing the consultation which have been or • House operates, and are therefore will be addressed in other rule filings (it Send an email to rule-comments@ consistent with Rule 17Ad–22(e)(1).13 being important to stress that all sec.gov. Please include File Number SR– Clearing Member comments on the set ICEEU–2019–020 on the subject line. (B) Clearing Agency’s Statement on as a whole have been addressed to Burden on Competition Paper Comments consultation respondents’ satisfaction). • ICE Clear Europe does not believe the Send paper comments in triplicate With respect to the amendments that are to Secretary, Securities and Exchange proposed rule changes would have any subject to this filing, one Clearing impact, or impose any burden, on Commission, 100 F Street NE, Member in each case asked certain Washington, DC 20549–1090. competition not necessary or questions concerning the rationale for All submissions should refer to File appropriate in furtherance of the proposed amendments to the definition Number SR–ICEEU–2019–020. This file purpose of the Act. The amendments do of ‘‘Person’’, Rule 401(b), Rule 503(d) number should be included on the not change the legal rights of members and Rule 503(f)(i), the rationale for each subject line if email is used. To help the or users in any material way and are of which is presented above. The Commission process and review your being adopted to update and clarify rationale for these changes was clarified comments more efficiently, please use various references in the Rules and in a call with the relevant Clearing only one method. The Commission will Procedures and to remove obsolete Members. ICE Clear Europe determined post all comments on the Commission’s 11 Id. 14 ICE Clear Europe Circular C19/046 (March 8, internet website (http://www.sec.gov/ 12 17 CFR 240.17Ad–22(e)(1). 2019), available at https://www.theice.com/ rules/sro.shtml). Copies of the 13 17 CFR 240.17Ad–22(e)(1). publicdocs/clear_europe/circulars/C19046.pdf. submission, all subsequent

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55656 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

amendments, all written statements Items I and II below, which Items have BYX Exchange, Inc. (‘‘BYX’’ and, with respect to the proposed rule been prepared by the Exchange. The together with Cboe Options, C2, EDGX, change that are filed with the Exchange filed the proposal as a ‘‘non- EDGA, and BZX, the ‘‘Cboe Affiliated Commission, and all written controversial’’ proposed rule change Exchanges’’). The Cboe Affiliated communications relating to the pursuant to Section 19(b)(3)(A)(iii) of Exchanges are working to align certain proposed rule change between the the Act 3 and Rule 19b–4(f)(6) system functionality, retaining only Commission and any person, other than thereunder.4 The Commission is intended differences, between the Cboe those that may be withheld from the publishing this notice to solicit Affiliated Exchanges, in the context of a public in accordance with the comments on the proposed rule change technology migration. Cboe Options provisions of 5 U.S.C. 552, will be from interested persons. intends to migrate its trading platform to available for website viewing and the same system used by the Cboe I. Self-Regulatory Organization’s printing in the Commission’s Public Affiliated Exchanges, which the Statement of the Terms of Substance of Reference Room, 100 F Street NE, Exchange expects to complete on the Proposed Rule Change Washington, DC 20549, on official October 7, 2019. In connection with this business days between the hours of Cboe Exchange, Inc. (the ‘‘Exchange’’ technology migration, the Exchange has 10:00 a.m. and 3:00 p.m. Copies of such or ‘‘Cboe Options’’) proposes to amend a shell Rulebook that resides alongside filings will also be available for the appointment weight table in Rule its current Rulebook, which shell inspection and copying at the principal 5.50 in the shell structure for the Rulebook will contain the Rules that office of ICE Clear Europe and on ICE Exchange’s Rulebook that will become will be in place upon completion of the Clear Europe’s website at https:// effective upon the migration of the Cboe Options technology migration. www.theice.com/clear-europe/ Exchange’s trading platform to the same The Exchange proposes to amend an regulation. All comments received will system used by the Cboe Affiliated inadvertent error currently in the be posted without change. Persons Exchanges (as defined below) (‘‘shell appointment weight table in shell Rule submitting comments are cautioned that Rulebook’’). The text of the proposed 5.50(g). Currently, the appointment we do not redact or edit personal rule change is provided in Exhibit 5. weight table shows ‘‘Options on the identifying information from comment The text of the proposed rule change iPath S&P 500 VIX Short-Term Futures’’ submissions. You should submit only is also available on the Exchange’s with an appointment weight of .100 in information that you wish to make website (http://www.cboe.com/ one row of the table and ‘‘Index ETN available publicly. AboutCBOE/ (VXX)’’ with a weight of .001 in the row All submissions should refer to File CBOELegalRegulatoryHome.aspx), at directly below. The Exchange notes that Number SR–ICEEU–2019–020 and the Exchange’s Office of the Secretary, this is incorrect and should be should be submitted on or before and at the Commission’s Public displayed in a single row containing November 7, 2019. Reference Room. ‘‘Options on the iPath S&P 500 VIX For the Commission, by the Division of II. Self-Regulatory Organization’s Short-Term Futures Index ETN (VXX)’’ Trading and Markets, pursuant to delegated Statement of the Purpose of, and with a weight of .100. A formatting error authority.15 Statutory Basis for, the Proposed Rule occurred that inadvertently broke apart Jill M. Peterson, Change Options on the iPath S&P 500 VIX Assistant Secretary. Short-Term Futures Index ETN (VXX) In its filing with the Commission, the 5 [FR Doc. 2019–22593 Filed 10–16–19; 8:45 am] into two rows. Indeed, the Exchange Exchange included statements notes that neither Options on the iPath BILLING CODE 8011–01–P concerning the purpose of and basis for S&P 500 VIX Short-Term Futures, nor the proposed rule change and discussed Index ETN, are separate products on the any comments it received on the Exchange and instead, Options on the SECURITIES AND EXCHANGE proposed rule change. The text of these COMMISSION iPath S&P 500 VIX Short-Term Futures statements may be examined at the Index ETN (symbol: VXX) is, in fact, the [Release No. 34–87274; File No. SR–CBOE– places specified in Item IV below. The correct name of the product.6 Therefore, 2019–098] Exchange has prepared summaries, set the Exchange now proposes to correct forth in sections A, B, and C below, of Self-Regulatory Organizations; Cboe this in the appointment table to show the most significant aspects of such Options on the iPath S&P 500 VIX Exchange, Inc.; Notice of Filing and statements. Immediate Effectiveness of a Proposed Short-Term Futures Index ETN (VXX) Rule Change Relating To Amend the A. Self-Regulatory Organization’s with an appointment weight of .100. Appointment Weight Table in Rule 5.50 Statement of the Purpose of, and Additionally, the proposed rule change in the Shell Structure for the Statutory Basis for, the Proposed Rule also removes the rows in the Exchange’s Rulebook Change appointment table which refer to Options on the NASDAQ 100 Index October 10, 2019. 1. Purpose Pursuant to Section 19(b)(1) of the In 2016, the Exchange’s parent 5 See Securities and Exchange Act Release No. Securities Exchange Act of 1934 (the company, Cboe Global Markets, Inc. 81879 (October 16, 2017), 82 FR 48858 (October 20, 2017) (Notice of Filing and Immediate Effectiveness 1 2 ‘‘Act’’), and Rule 19b–4 thereunder, (formerly named CBOE Holdings, Inc.) of a Proposed Rule Change To List and Trade S&P notice is hereby given that on October (‘‘Cboe Global’’), which is also the Select Sector Index Options) (SR–CBOE–2017–065), 4, 2019, Cboe Exchange, Inc. (the parent company of Cboe C2 Exchange, wherein the Exhibit 5 to SR–CBOE–2017–065 it Inc. (‘‘C2’’), acquired Cboe EDGA shows, correctly, Options on the iPath S&P 500 VIX ‘‘Exchange’’ or ‘‘Cboe Options’’) filed Short-Term Futures Index ETN (VXX), as one with the Securities and Exchange Exchange, Inc. (‘‘EDGA’’), Cboe EDGX product with an appointment cost (the prior term) Commission (the ‘‘Commission’’) the Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX of .10. proposed rule change as described in Options’’), Cboe BZX Exchange, Inc. 6 See Cboe Options on Volatility-based ETPs (‘‘BZX’’ or ‘‘BZX Options’’), and Cboe (October 4, 2019), available at http:// www.cboe.com/products/options-on-single-stocks- 15 17 CFR 200.30–3(a)(12). and-exchange-traded-products/options-on- 1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78s(b)(3)(A)(iii). exchange-traded-products/cboe-options-on- 2 17 CFR 240.19b–4. 4 17 CFR 240.19b–4(f)(6). volatility-based-etps.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55657

(NDX) and Morgan Stanley Retail Index VIX Short-Term Futures Index ETN become effective pursuant to Section Options (MVR), on which the Exchange (VXX)’’ into two rows, delete references 19(b)(3)(A)(iii) of the Act 11 and is authorized to list options, but on to indexes on which the Exchange does subparagraph (f)(6) of Rule 19b–4 which the Exchange does not currently, not list (and does not intend to list) thereunder.12 and does not intend, to list options. options, and correct a cross-reference to A proposed rule change filed Because there are currently no options another rule in order to avoid potential pursuant to Rule 19b–4(f)(6) under the listed on either of these indexes, the confusion and provide market Act 13 normally does not become proposed rule change has no impact on participants with accurate rules within operative for 30 days after the date of its trading on the Exchange. The proposed the shell Rulebook upon the technology filing. However, Rule 19b–4(f)(6)(iii) 14 rule change also corrects a cross- migration on October 7, 2019. As such, permits the Commission to designate a reference in the table. The rule the proposed rule change is designed to shorter time if such action is consistent provision regarding the Exchange’s promote just and equitable principles of with the protection of investors and the ability to list SPX or VIX on a group trade, to remove impediments to and public interest. The Exchange has asked basis is in Rule 4.13 rather Rule 4.14, so perfect the mechanism of a free and the Commission to waive the five day the proposed rule change updates the open market and a national market prefiling requirement and the 30-day cross-reference accordingly.7 The system, and, in general to protect operative delay so that it may proposed changes are of a non- investors and the public interest, by implement the proposed rule change substantive nature and are only making providing market participants with rules without delay. According to the changes to correct an formatting error of the Exchange that are clear and, thus, Exchange, waiver of the prefiling that had resulted in an inaccurate row easy to understand. requirement and the operative delay within the appointment weight table will help to avoid any potential B. Self-Regulatory Organization’s confusion by providing market under shell Rule 5.50(g) and to remove Statement on Burden on Competition references to indexes on which the participants with accurate rules within Exchange does not list (and does not The Exchange does not believe that the shell Rulebook upon the technology intend to list) options. the proposed rule change will impose migration on October 7, 2019. The any burden on competition that is not Commission believes that waiver of the 2. Statutory Basis necessary or appropriate in furtherance 30-day operative delay is consistent The Exchange believes the proposed of the purposes of the Act. The with the protection of investors and the rule change is consistent with the proposed rule change is not intended as public interest because the proposed Securities Exchange Act of 1934 (the a competitive change, but rather, seeks rule change raises no new or novel ‘‘Act’’) and the rules and regulations to make non-substantive rule changes in issues. Therefore, the Commission thereunder applicable to the Exchange amending a table formatting error, hereby waives the prefiling requirement and, in particular, the requirements of remove references to certain indexes no and the operative delay and designates Section 6(b) of the Act.8 Specifically, longer applicable to trading on the the proposal operative upon filing.15 the Exchange believes the proposed rule Exchange, and correct a cross-reference At any time within 60 days of the change is consistent with the Section to shell Rule 5.50(g) in anticipation of filing of the proposed rule change, the 6(b)(5) 9 requirements that the rules of the October 7, 2019 technology Commission summarily may an exchange be designed to prevent migration. The Exchange also does not temporarily suspend such rule change if fraudulent and manipulative acts and believe that the proposed rule change it appears to the Commission that such practices, to promote just and equitable will impose any undue burden on action is necessary or appropriate in the principles of trade, to foster cooperation competition because, as stated, the public interest, for the protection of and coordination with persons engaged proposed changes will not impact investors, or otherwise in furtherance of in regulating, clearing, settling, trading on the Exchange as they are non- the purposes of the Act. If the processing information with respect to, substantive changes designed to correct Commission takes such action, the and facilitating transactions in rule formatting and provide an up-to- Commission will institute proceedings securities, to remove impediments to date list of indexes in order to alleviate to determine whether the proposed rule and perfect the mechanism of a free and any potential confusion and provide change should be approved or open market and a national market market participants with clear and disapproved. system, and, in general, to protect accurate rules. IV. Solicitation of Comments investors and the public interest. C. Self-Regulatory Organization’s Interested persons are invited to Additionally, the Exchange believes the Statement on Comments on the proposed rule change is consistent with submit written data, views, and Proposed Rule Change Received From arguments concerning the foregoing, the Section 6(b)(5) 10 requirement that Members, Participants, or Others including whether the proposed rule the rules of an exchange not be designed to permit unfair discrimination between The Exchange neither solicited nor received comments on the proposed 11 15 U.S.C. 78s(b)(3)(A)(iii). customers, issuers, brokers, or dealers. 12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– As stated, the proposed rule change rule change. 4(f)(6)(iii) requires a self-regulatory organization to makes no substantive changes to the III. Date of Effectiveness of the give the Commission written notice of its intent to rules. The proposed rule change is file the proposed rule change, along with a brief Proposed Rule Change and Timing for description and text of the proposed rule change, merely intended to correct an Commission Action at least five business days prior to the date of filing inadvertent formatting error in the of the proposed rule change, or such shorter time appointment weight table which Because the foregoing proposed rule as designated by the Commission. The Commission mistakenly broke apart the product change does not: (i) Significantly affect has waived that requirement in this case. name ‘‘Options on the iPath S&P 500 the protection of investors or the public 13 17 CFR 240.19b–4(f)(6). interest; (ii) impose any significant 14 17 CFR 240.19b–4(f)(6)(iii). 15 For purposes only of waiving the 30-day 7 burden on competition; and (iii) become See Rule 4.13(f) in the shell Rulebook. operative delay, the Commission has also 8 15 U.S.C. 78f(b). operative for 30 days from the date on considered the proposed rule’s impact on 9 15 U.S.C. 78f(b)(5). which it was filed, or such shorter time efficiency, competition, and capital formation. See 10 Id. as the Commission may designate, it has 15 U.S.C. 78c(f).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55658 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

change is consistent with the Act. SECURITIES AND EXCHANGE to Section 19(b)(2) of the Act,6 Comments may be submitted by any of COMMISSION designates November 27, 2019 as the the following methods: date by which the Commission shall [Release No. 34–87277; File No. SR– either approve or disapprove, or Electronic Comments NYSEArca–2019–60] institute proceedings to determine • Use the Commission’s internet whether to disapprove, the proposed Self-Regulatory Organizations; NYSE comment form (http://www.sec.gov/ rule change (File No. SR–NYSEArca– Arca, Inc.; Notice of Designation of a rules/sro.shtml); or 2019–60), as modified by Amendment • Longer Period for Commission Action No. 1. Send an email to rule-comments@ on a Proposed Rule Change, as sec.gov. Please include File Number SR– Modified by Amendment No. 1 Thereto, For the Commission, by the Division of CBOE–2019–098 on the subject line. To List and Trade Shares of the KFA Trading and Markets, pursuant to delegated authority.7 Paper Comments Global Carbon ETF Under NYSE Arca Rule 8.600–E Jill M. Peterson, • Send paper comments in triplicate Assistant Secretary. to Secretary, Securities and Exchange October 10, 2019. [FR Doc. 2019–22595 Filed 10–16–19; 8:45 am] Commission, 100 F Street NE, On August 14, 2019, NYSE Arca, Inc. BILLING CODE 8011–01–P Washington, DC 20549–1090. (‘‘Exchange’’) filed with the Securities All submissions should refer to File and Exchange Commission Number SR–CBOE–2019–098. This file (‘‘Commission’’), pursuant to Section SECURITIES AND EXCHANGE number should be included on the 19(b)(1) of the Securities Exchange Act COMMISSION 1 subject line if email is used. To help the of 1934 (‘‘Act’’) and Rule 19b–4 [Release No. 34–87282; File No. SR–MIAX– 2 Commission process and review your thereunder, a proposed rule change to 2019–43] comments more efficiently, please use list and trade shares of the KFA Global only one method. The Commission will Carbon ETF under NYSE Arca Rule Self-Regulatory Organizations; Miami post all comments on the Commission’s 8.600–E. The proposed rule change was International Securities Exchange LLC; internet website (http://www.sec.gov/ published for comment in the Federal Notice of Filing and Immediate 3 rules/sro.shtml). Copies of the Register on August 29, 2019. On Effectiveness of a Proposed Rule submission, all subsequent September 12, 2019, the Exchange filed Change To Amend Its Fee Schedule amendments, all written statements Amendment No. 1 to the proposed rule change, which replaced and superseded October 10, 2019. with respect to the proposed rule Pursuant to Section 19(b)(1) of the change that are filed with the the proposed rule change as originally 4 Securities Exchange Act of 1934 Commission, and all written filed. The Commission has received no comment letters on the proposed rule (‘‘Act’’),1 and Rule 19b–4 thereunder,2 communications relating to the notice is hereby given that on October proposed rule change between the change. 5 1, 2019, Miami International Securities Commission and any person, other than Section 19(b)(2) of the Act provides that within 45 days of the publication of Exchange LLC (‘‘MIAX Options’’ or those that may be withheld from the ‘‘Exchange’’) filed with the Securities public in accordance with the notice of the filing of a proposed rule change, or within such longer period up and Exchange Commission (‘‘SEC’’ or provisions of 5 U.S.C. 552, will be ‘‘Commission’’) the proposed rule available for website viewing and to 90 days as the Commission may designate if it finds such longer period change as described in Items I, II, and printing in the Commission’s Public III below, which Items have been Reference Room, 100 F Street NE, to be appropriate and publishes its reasons for so finding, or as to which the prepared by the Exchange. The Washington, DC 20549 on official Commission is publishing this notice to business days between the hours of self-regulatory organization consents, the Commission shall either approve the solicit comments on the proposed rule 10:00 a.m. and 3:00 p.m. Copies of the change from interested persons. filing also will be available for proposed rule change, disapprove the inspection and copying at the principal proposed rule change, or institute I. Self-Regulatory Organization’s office of the Exchange. All comments proceedings to determine whether the Statement of the Terms of Substance of received will be posted without change. proposed rule change should be the Proposed Rule Change disapproved. The 45th day after Persons submitting comments are The Exchange is filing a proposal to publication of the notice for this cautioned that we do not redact or edit amend the MIAX Options Fee Schedule proposed rule change is October 13, personal identifying information from (the ‘‘Fee Schedule’’) to extend the 2019. The Commission is extending this comment submissions. You should waiver period for certain non- 45-day time period. submit only information that you wish transaction fees applicable to Market The Commission finds it appropriate to make available publicly. All Makers 3 that trade solely in Proprietary to designate a longer period within submissions should refer to File Products 4 until December 31, 2019. which to take action on the proposed Number SR–CBOE–2019–098 and The text of the proposed rule change rule change so that it has sufficient time should be submitted on or before is available on the Exchange’s website at November 7, 2019. to consider the proposed rule change. Accordingly, the Commission, pursuant For the Commission, by the Division of 6 Id. Trading and Markets, pursuant to delegated 7 17 CFR 200.30–3(a)(31). 1 authority.16 15 U.S.C. 78s(b)(1). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 2 Jill M. Peterson, 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 86752 3 The term ‘‘Market Makers’’ refers to ‘‘Lead Assistant Secretary. (Aug. 23, 2019), 84 FR 45557. Market Makers’’, ‘‘Primary Lead Market Makers’’ [FR Doc. 2019–22592 Filed 10–16–19; 8:45 am] 4 Amendment No. 1 is available on the and ‘‘Registered Market Makers’’ collectively. See Commission’s website at: https://www.sec.gov/ Exchange Rule 100. BILLING CODE 8011–01–P comments/sr-nysearca-2019-60/srnysearca201960- 4 The term ‘‘Proprietary Product’’ means a class 6117868-192147.pdf. of options that is listed exclusively on the 16 17 CFR 200.30–3(a)(12). 5 15 U.S.C. 78s(b)(2). Exchange. See Exchange Rule 100.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55659

http://www.miaxoptions.com/rule- Programming Interface (‘‘API’’) Testing proposed change is to continue to filings, at MIAX’s principal office, and and Certification fees for Members, and provide an incentive for potential at the Commission’s Public Reference monthly MEI Port fees assessed to Market Makers to submit membership Room. Market Makers that trade solely in applications, which should result in Proprietary Products (including options II. Self-Regulatory Organization’s increasing potential liquidity in Statement of the Purpose of, and on SPIKES) until September 30, 2019. Proprietary Products, including options Statutory Basis for, the Proposed Rule Proposal on SPIKES. Even though the Exchange Change is proposing to extend the waiver of this The Exchange now proposes to extend particular fee for Market Makers who In its filing with the Commission, the the waiver period for the same non- will trade solely in Proprietary Products Exchange included statements transaction fees applicable to Market from September 30, 2019 until concerning the purpose of and basis for Makers that trade solely in Proprietary December 31, 2019, the overall structure the proposed rule change and discussed Products (including options on SPIKES) of the fee is outlined in the Fee any comments it received on the until December 31, 2019. In particular, proposed rule change. The text of these Schedule so that there is general the Exchange proposes to waive awareness that the Exchange intends to statements may be examined at the Membership Application fees, monthly places specified in Item IV below. The assess such a fee after December 31, Market Maker Trading Permit fees, 2019. Exchange has prepared summaries, set Member API Testing and Certification forth in sections A, B, and C below, of fees, and monthly MEI Port fees Trading Permit Fees the most significant aspects of such assessed to Market Makers that trade statements. solely in Proprietary Products The Exchange issues Trading Permits that confer the ability to transact on the A. Self-Regulatory Organization’s (including options on SPIKES) until Statement of the Purpose of, and December 31, 2019. Exchange. MIAX Trading Permits are issued to Market Makers and EEMs. Statutory Basis for, the Proposed Rule Membership Application Fees Change Members receiving Trading Permits The Exchange currently assesses during a particular calendar month are 1. Purpose Membership fees for applications of assessed monthly Trading Permit fees as Background potential Members. The Exchange set forth in the Fee Schedule. As it relates to Market Makers, MIAX On October 12, 2018, the Exchange assesses a one-time Membership currently assesses a monthly Trading received approval from the Commission Application fee on the earlier of (i) the to list and trade on the Exchange, date the applicant is certified in the Permit fee in any month the Market options on the SPIKES® Index, a new membership system, or (ii) once an Maker is certified in the membership index that measures expected 30-day application for MIAX membership is system, is credentialed to use one or volatility of the SPDR S&P 500 ETF finally denied. The one-time application more MIAX Express Interface Ports 9 Trust (commonly known and referred to fee is based upon the applicant’s status (‘‘MEI Ports’’) in the production by its ticker symbol, ‘‘SPY’’).5 The as either a Market Maker or an environment and is assigned to quote in Exchange adopted its initial SPIKES Electronic Exchange Member (‘‘EEM’’).8 one or more classes. MIAX assesses its transaction fees on February 15, 2019.6 A Market Maker is assessed a one-time Market Makers the monthly Market On May 31, 2019, the Exchange filed Membership Application fee of Maker Trading Permit fee based on the a proposal with the Commission to $3,000.00. greatest number of classes listed on amend the Fee Schedule to waive The Exchange proposes that the MIAX that the MIAX Market Maker was certain non-transaction fees applicable waiver for the one-time Membership assigned to quote in on any given day to Market Makers that trade solely in Application fee of $3,000.00 for Market within a calendar month and the Proprietary Products (including options Makers that trade solely in Proprietary applicable fee rate is the lesser of either on the SPIKES Index) until September Products (including options on SPIKES) the per class basis or percentage of total 30, 2019.7 In particular, the Exchange will be extended from September 30, national average daily volume adopted waivers for Membership 2019 until December 31, 2019, which measurements. A MIAX Market Maker Application fees, monthly Market Maker the Exchange proposes to state in the is assessed a monthly Trading Permit Trading Permit fees, Application Fee Schedule. The purpose of this Fee according to the following table:

Monthly MIAX Market Maker assignments Type of trading permit trading permit (the lesser of the applicable measurements below) W fee Per class % of national average daily volume

Market Maker (includes RMM, $7,000.00 Up to 10 Classes ...... Up to 20% of Classes by volume. LMM, PLMM). 12,000.00 Up to 40 Classes ...... Up to 35% of Classes by volume. * 17,000.00 Up to 100 Classes ...... Up to 50% of Classes by volume.

5 See Securities Exchange Act Release No. 84417 04). That filing was withdrawn and replaced with 9 Full Service MEI Ports provide Market Makers (October 12, 2018), 83 FR 52865 (October 18, 2018) (SR–MIAX–2019–11). with the ability to send Market Maker simple and (SR–MIAX–2018–14) (Order Granting Approval of a 7 See Securities Exchange Act Release No. 86109 complex quotes, eQuotes, and quote purge messages Proposed Rule Change by Miami International (June 14, 2019), 84 FR 28860 (June 20, 2019) (SR– to the MIAX System. Full Service MEI Ports are also Securities Exchange, LLC to List and Trade on the MIAX–2019–28). ® capable of receiving administrative information. Exchange Options on the SPIKES Index). 8 The term ‘‘Electronic Exchange Member’’ or Market Makers are limited to two Full Service MEI 6 See Securities Exchange Release No. 85283 ‘‘EEM’’ means the holder of a Trading Permit who Ports per matching engine. See Fee Schedule, note (March 11, 2019), 84 FR 9567 (March 15, 2019) (SR– is not a Market Maker. Electronic Exchange MIAX–2019–11). The Exchange initially filed the Members are deemed ‘‘members’’ under the 27. proposal on February 15, 2019 (SR–MIAX–2019– Exchange Act. See Exchange Rule 100.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55660 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Monthly MIAX Market Maker assignments Type of trading permit trading permit (the lesser of the applicable measurements below) W fee Per class % of national average daily volume

* 22,000.00 Over 100 Classes ...... Over 50% of Classes by volume up to all Classes listed on MIAX. W Excludes Proprietary Products. * For these Monthly MIAX Trading Permit Fee levels, if the Market Maker’s total monthly executed volume during the relevant month is less than 0.060% of the total monthly executed volume reported by OCC in the market maker account type for MIAX-listed option classes for that month, then the fee will be $15,500 instead of the fee otherwise applicable to such level.

MIAX proposes that the waiver for the user (typically an EEM or a Market requires testing and certification. API monthly Trading Permit fee for Market Maker) to submit simple and complex Testing and Certification fees will not be Makers that trade solely in Proprietary orders electronically to MIAX; (ii) the assessed in situations where the Products (including options on SPIKES) MEI Port, which enables Market Makers Exchange initiates a mandatory change will be extended from September 30, to submit simple and complex to the Exchange’s system that requires 2019 to December 31, 2019, which the electronic quotes to MIAX; (iii) the testing and certification. The Exchange Exchange proposes to state in the Fee Clearing Trade Drop Port (‘‘CTD currently assesses a Market Maker an Schedule. The purpose of this proposed Port’’),11 which provides real-time trade API Testing and Certification fee of change is to continue to provide an clearing information to the participants $2,500.00. The API Testing and incentive for Market Makers to provide to a trade on MIAX and to the Certification fees represent costs liquidity in Proprietary Products on the participants’ respective clearing firms; incurred by the Exchange as it works Exchange, which should result in and (iv) the FIX Drop Copy Port (‘‘FXD with each Member for testing and increasing potential order flow and Port’’),12 which provides a copy of real- certifying that the Member’s software volume in Proprietary Products, time trade execution, correction and systems communicate properly with including options on SPIKES. Even cancellation information through a FIX MIAX’s interfaces. though the Exchange is proposing to Port to any number of FIX Ports MIAX proposes to extend the waiver extend the waiver of this particular fee designated by an EEM to receive such of the API Testing and Certification fee for Market Makers trading solely in messages. for Market Makers that trade solely in Proprietary Products from September API Testing and Certification fees for Proprietary Products (including options 30, 2019 until December 31, 2019, the Market Makers are assessed (i) initially on SPIKES) from September 30, 2019 overall structure of the fee is outlined in per API for CTD and MEI in the month until December 31, 2019, which the the Fee Schedule so that there is general the Market Maker has been credentialed Exchange proposes to state in the Fee awareness by potential Members to use one or more ports in the Schedule. The purpose of this proposed seeking a Trading Permit on the production environment for the tested change is to continue to provide an Exchange that the Exchange intends to API and the Market Maker has been incentive for potential Market Makers to assess such a fee after December 31, assigned to quote in one or more classes, develop software applications to trade 2019. and (ii) each time a Market Maker in Proprietary Products, including The Exchange also proposes that initiates a change to its system that options on SPIKES. Even though the Market Makers who trade Proprietary Exchange is proposing to extend the Products (including options on SPIKES) Exchange Member or a Market Maker) to submit waiver of this particular fee for Market along with multi-listed classes will simple and complex orders electronically to MIAX. Makers who trade solely in Proprietary See Fee Schedule, note 24. continue to not have Proprietary Products from September 30, 2019 until 11 Clearing Trade Drop (‘‘CTD’’) provides December 31, 2019, the overall structure Products (including SPIKES) counted Exchange members with real-time clearing trade toward those Market Makers’ class updates. The updates include the Member’s of the fee is outlined in the Fee assignment count or percentage of total clearing trade messages on a low latency, real-time Schedule so that there is general national average daily volume. This basis. The trade messages are routed to a Member’s awareness that the Exchange intends to connection containing certain information. The assess such a fee after December 31, exclusion is noted with the symbol ‘‘W’’ information includes, among other things, the following the table that shows the following: (i) Trade date and time; (ii) symbol 2019. monthly Trading Permit Fees currently information; (iii) trade price/size information; (iv) MEI Port Fees assessed for Market Makers in Section Member type (for example, and without limitation, Market Maker, Electronic Exchange Member, MIAX provides four (4) Port types, 3)b) of the Fee Schedule. Broker-Dealer); (v) Exchange Member Participant including (i) the FIX Port, which Identifier (‘‘MPID’’) for each side of the transaction, API Testing and Certification Fee including Clearing Member MPID; and (vi) strategy enables the FIX Port user (typically an The Exchange assesses an API Testing specific information for complex transactions. CTD EEM or a Market Maker) to submit and Certification fee to all Members Port Fees will be assessed in any month the simple and complex orders Member is credentialed to use the CTD Port in the electronically to MIAX; (ii) the MEI depending upon the type of Member. production environment. See Fee Schedule, Section An API makes it possible for Members’ 5)d)iii. Port, which enables Market Makers to software to communicate with MIAX 12 The FIX Drop Copy Port (‘‘FXD’’) is a submit simple and complex electronic software applications, and is subject to messaging interface that will provide a copy of real- quotes to MIAX; (iii) the CTD Port, time trade execution, trade correction and trade which provides real-time trade clearing Members testing with, and certification cancellation information for simple and complex by, MIAX. The Exchange offers four orders to FIX Drop Copy Port users who subscribe information to the participants to a trade types of interfaces: (i) The Financial to the service. FIX Drop Copy Port users are those on MIAX and to the participants’ Information Exchange Port (‘‘FIX users who are designated by an EEM to receive the respective clearing firms; and (iv) the 10 information and the information is restricted for use FXD Port, which provides a copy of Port’’), which enables the FIX Port by the EEM only. FXD Port Fees will be assessed in any month the Member is credentialed to use the real-time trade execution, correction 10 A FIX Port is an interface with MIAX systems FXD Port in the production environment. See Fee and cancellation information through a that enables the Port user (typically an Electronic Schedule, Section 5)d)iv. FIX Port to any number of FIX Ports

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55661

designated by an EEM to receive such percentages set forth in the above table. MIAX Market Makers the monthly MEI messages. The class volume percentage is based on Port Fee based on the greatest number MIAX assesses monthly MEI Port Fees the total national average daily volume of classes listed on MIAX that the MIAX to Market Makers in each month the in classes listed on MIAX in the prior Market Maker was assigned to quote in Member has been credentialed to use calendar quarter. Newly listed option on any given day within a calendar the MEI Port in the production classes are excluded from the month and the applicable fee rate that environment and has been assigned to calculation of the monthly MEI Port Fee is the lesser of either the per class basis quote in at least one class. The amount until the calendar quarter following or percentage of total national average of the monthly MEI Port Fee is based their listing, at which time the newly daily volume measurement. MIAX upon the number of classes in which the listed option classes will be included in assesses MEI Port Fees on Market Market Maker was assigned to quote on both the per class count and the Makers according to the following table: any given day within the calendar percentage of total national average month, and upon the class volume daily volume. The Exchange assesses

Market Maker assignments Monthly MIAX MEI fees (the lesser of the applicable measurements below) W Per class % of national average daily volume

$5,000.00 ...... Up to 5 Classes ...... Up to 10% of Classes by volume. $10,000.00 ...... Up to 10 Classes ...... Up to 20% of Classes by volume. $14,000.00 ...... Up to 40 Classes ...... Up to 35% of Classes by volume. $17,500.00 * ...... Up to 100 Classes ...... Up to 50% of Classes by volume. $20,500.00 * ...... Over 100 Classes ...... Over 50% of Classes by volume up to all Classes listed on MIAX. W Excludes Proprietary Products. * For these Monthly MIAX MEI Fees levels, if the Market Maker’s total monthly executed volume during the relevant month is less than 0.060% of the total monthly executed volume reported by OCC in the market maker account type for MIAX-listed option classes for that month, then the fee will be $14,500 instead of the fee otherwise applicable to such level.

MIAX proposes to extend the waiver makers, who are not currently members 2. Statutory Basis of the monthly MEI Port Fee for Market of MIAX, who may be interested in The Exchange believes that its Makers that trade solely in Proprietary being a Market Maker in Proprietary proposal to amend its Fee Schedule is Products (including options on SPIKES) Products on the Exchange. The consistent with Section 6(b) of the Act 13 from September 30, 2019 until Exchange estimates that there are fewer in general, and furthers the objectives of December 31, 2019, which the Exchange than ten (10) such market participants Section 6(b)(4) of the Act 14 in proposes to state in the Fee Schedule. that could benefit from the extension of particular, in that it is an equitable The purpose of this proposal is to these fee waivers. The proposed allocation of reasonable fees and other continue to provide an incentive to extension of the fee waivers does not charges among its members and issuers Market Makers to connect to MIAX apply differently to different sizes of and other persons using its facilities. through the MEI Port such that they will market participants, however the fee The Exchange also believes the proposal be able to trade in MIAX Proprietary waivers do only apply to Market Makers furthers the objectives of Section 6(b)(5) Products. Even though the Exchange is (and not EEMs). of the Act in that it is designed to proposing to extend the waiver of this Market Makers, unlike other market promote just and equitable principles of particular fee for Market Makers trading participants, take on a number of trade, to remove impediments to and solely in Proprietary Products until obligations, including quoting perfect the mechanism of a free and September 30, 2019, the overall obligations that other market open market and a national market structure of the fee is outlined in the Fee participants do not have. Further, system, and, in general to protect Schedule so that there is general Market Makers have added market investors and the public interest and is awareness that the Exchange intends to making and regulatory requirements, not designed to permit unfair assess such a fee after December 31, which normally do not apply to other discrimination between customers, 2019. market participants. For example, issuers, brokers and dealers. The Exchange notes that for the Market Makers have obligations to The Exchange believes that the purposes of this proposed change, other maintain continuous markets, engage in proposal to extend the fee waiver period Market Makers who trade MIAX a course of dealings reasonably for certain non-transaction fees for Proprietary Products (including options calculated to contribute to the Market Makers in Proprietary Products on SPIKES) along with multi-listed maintenance of a fair and orderly is an equitable allocation of reasonable classes will continue to not have market, and to not make bids or offers fees because the proposal continues to Proprietary Products (including SPIKES) or enter into transactions that are waive non-transaction fees for a limited counted toward those Market Makers’ inconsistent with a course of dealing. period of time in order to enable the class assignment count or percentage of Accordingly, the Exchange believes it is Exchange to improve its overall total national average daily volume. reasonable and not unfairly competitiveness and strengthen its This exclusion is noted by the symbol discriminatory to continue to offer the market quality for all market ‘‘W’’ following the table that shows the fee waivers to Market Makers because participants in MIAX’s Proprietary monthly MEI Port Fees currently the Exchange is seeking additional Products, including options on SPIKES. assessed for Market Makers in Section liquidity providers for Proprietary The Exchange believe the proposed 5)d)ii) of the Fee Schedule. Products, in order to enhance liquidity extension of the fee waivers is fair and The proposed extension of the fee and spreads in Proprietary Products, waivers are targeted at market which is traditionally provided by 13 15 U.S.C. 78f(b). participants, particularly market Market Makers, as opposed to EEMs. 14 15 U.S.C. 78f(b)(4) and (5).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55662 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

equitable and not unreasonably assignment count or percentage of total Intra-Market Competition discriminatory because it applies to all national average daily volume for The Exchange believes that the market participants not currently monthly Trading Permit Fees and proposal to extend certain of the non- registered as Market Makers at the monthly MEI Port Fees in order to transaction fee waivers until December Exchange. Any market participant may incentivize existing Market Makers who 31, 2019 for Market Makers in choose to satisfy the additional currently trade in multi-listed classes to Proprietary Products would increase requirements and obligations of being a also trade in Proprietary Products, intra-market competition by Market Maker and trade solely in without incurring certain additional incentivizing new potential Market Proprietary Products in order to qualify fees. Makers to quote in Proprietary Products, for the fee waivers. The Exchange believes that the The Exchange believes that the which will enhance the quality of proposed extension of the fee waivers quoting and increase the volume of proposed extension of the fee waivers is constitutes an equitable allocation of equitable and not unfairly contracts in Proprietary Products traded reasonable fees and other charges among on MIAX. To the extent that this discriminatory for Market Makers as its members and issuers and other compared to EEMs because Market purpose is achieved, all the Exchange’s persons using its facilities. The market participants should benefit from Makers, unlike other market proposed extension of the fee waivers participants, take on a number of the improved market liquidity for the means that all prospective market Exchange’s Proprietary Products. obligations, including quoting makers that wish to become Market obligations that other market Enhanced market quality and increased Maker Members of the Exchange and transaction volume in Proprietary participants do not have. Further, quote solely in Proprietary Products Market Makers have added market Products that results from the may do so and have the above- anticipated increase in Market Maker making and regulatory requirements, mentioned fees waived until December which normally do not apply to other activity on the Exchange will benefit all 31, 2019. The proposed extension of the market participants and improve market participants. For example, fee waivers will continue to not apply Market Makers have obligations to competition on the Exchange. to potential EEMs because the Exchange maintain continuous markets, engage in The Exchange does not believe that is seeking to enhance the quality of its a course of dealings reasonably the proposed rule change will impose markets in Proprietary Products through calculated to contribute to the any burden on intra-market competition introducing more competition among maintenance of a fair and orderly that is not necessary or appropriate in Market Makers in Proprietary Products. market, and to not make bids or offers furtherance of the purposes of the Act In order to increase the competition, the or enter into transactions that are because the proposed changes for each Exchange believes that it must continue inconsistent with a course of dealing. separate type of market participant (new The Exchange believes it is reasonable to waive entry type fees for such Market Market Makers and existing Market and equitable to continue to waive the Makers. EEMs do not provide the Makers) will be assessed equally to all one-time Membership Application Fee, benefit of enhanced liquidity which is such market participants. While monthly Trading Permit Fee, API provided by Market Makers, therefore different fees are assessed to different Testing and Certification Fee, and the Exchange believes it is reasonable market participants in some monthly MEI Port Fee for Market and not unfairly discriminatory to circumstances, these different market Makers that trade solely in Proprietary continue to only offer the proposed fee participants have different obligations Products (including options on SPIKES) waivers to Market Makers (and not and different circumstances as until December 31, 2019, since the EEMs). Further, the Exchange believes it discussed above. For example, Market waiver of such fees provides incentives is reasonable and not unfairly Makers have quoting obligations that to interested market participants to discriminatory to continue to exclude other market participants (such as trade in Proprietary Products. This Proprietary Products from an existing EEMs) do not have. should result in increasing potential Market Maker’s permit fees and port Inter-Market Competition order flow and liquidity in MIAX fees, in order to incentive such Market Proprietary Products, including options Makers to quote in Proprietary Products. The Exchange does not believe that on SPIKES. The amount of a Market Maker’s permit the proposed rule change will impose The Exchange believes it is reasonable and port fee is determined by the any burden on inter-market competition and equitable to continue to waive the number of classes quoted and volume of that is not necessary or appropriate in API Testing and Certification fee the Market Maker. By excluding furtherance of the purposes of the Act assessable to Market Makers that trade Proprietary Products from such fees, the because the proposed extension of the solely in Proprietary Products Exchange is able to incentivize Market fee waivers apply only to the Exchange’s (including options on SPIKES) until Makers to quote in Proprietary Products. Proprietary Products (including options December 31, 2019, since the waiver of EEMs do not pay permit and port fees on SPIKES), which are traded such fees provides incentives to based on the classes traded or volume, exclusively on the Exchange. interested Members to develop and test so the Exchange believes it is their APIs sooner. Determining system reasonable, equitable, and not unfairly C. Self-Regulatory Organization’s operability with the Exchange’s system discriminatory to only offer the Statement on Comments on the will in turn provide MIAX with exclusion to Market Makers (and not Proposed Rule Change Received From potential order flow and liquidity EEMs). Members, Participants, or Others providers in Proprietary Products. B. Self-Regulatory Organization’s Written comments were neither The Exchange believes it is Statement on Burden on Competition solicited nor received. reasonable, equitable and not unfairly discriminatory that Market Makers who The Exchange does not believe that III. Date of Effectiveness of the trade in Proprietary Products along with the proposed rule change will impose Proposed Rule Change and Timing for multi-listed classes will continue to not any burden on competition not Commission Action have Proprietary Products counted necessary or appropriate in furtherance The foregoing rule change has become toward those Market Makers’ class of the purposes of the Act. effective pursuant to Section

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55663

19(b)(3)(A)(ii) of the Act,15 and Rule inspection and copying at the principal Section A of Chapter 4 of the shell 19b–4(f)(2) 16 thereunder. At any time offices of the Exchange. All comments structure for the Exchange’s Rulebook within 60 days of the filing of the received will be posted without change. that will become effective upon the proposed rule change, the Commission Persons submitting comments are migration of the Exchange’s trading summarily may temporarily suspend cautioned that we do not redact or edit platform to the same system used by the such rule change if it appears to the personal identifying information from Cboe Affiliated Exchanges (as defined Commission that such action is comment submissions. You should below) (‘‘shell Rulebook’’). The text of necessary or appropriate in the public submit only information that you wish the proposed rule change is provided in interest, for the protection of investors, to make available publicly. All Exhibit 5. or otherwise in furtherance of the submissions should refer to File The text of the proposed rule change purposes of the Act. If the Commission Number SR–MIAX–2019–43, and is also available on the Exchange’s takes such action, the Commission shall should be submitted on or before website (http://www.cboe.com/ institute proceedings to determine November 7, 2019. AboutCBOE/ whether the proposed rule should be For the Commission, by the Division of CBOELegalRegulatoryHome.aspx), at approved or disapproved. Trading and Markets, pursuant to delegated the Exchange’s Office of the Secretary, 17 IV. Solicitation of Comments authority. and at the Commission’s Public Jill M. Peterson, Reference Room. Interested persons are invited to Assistant Secretary. submit written data, views, and II. Self-Regulatory Organization’s [FR Doc. 2019–22599 Filed 10–16–19; 8:45 am] arguments concerning the foregoing, Statement of the Purpose of, and including whether the proposed rule BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule change is consistent with the Act. Change Comments may be submitted by any of SECURITIES AND EXCHANGE In its filing with the Commission, the the following methods: COMMISSION Exchange included statements Electronic Comments concerning the purpose of and basis for [Release No. 34–87272; File No. SR–CBOE– the proposed rule change and discussed • 2019–090] Use the Commission’s internet any comments it received on the comment form (http://www.sec.gov/ Self-Regulatory Organizations; Cboe proposed rule change. The text of these rules/sro.shtml); or statements may be examined at the • Send an email to rule-comments@ Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed places specified in Item IV below. The sec.gov. Please include File Number SR– Exchange has prepared summaries, set MIAX–2019–43 on the subject line. Rule Change Relating To Move the Rules in Chapter V of the Currently forth in sections A, B, and C below, of Paper Comments Effective Rulebook to Proposed the most significant aspects of such • Send paper comments in triplicate Section A of Chapter 4 of the Shell statements. to Secretary, Securities and Exchange Structure for the Exchange’s Rulebook A. Self-Regulatory Organization’s Commission, 100 F Street NE, That Will Become Effective Upon the Statement of the Purpose of, and Washington, DC 20549–1090. Migration of the Exchange’s Trading Statutory Basis for, the Proposed Rule All submissions should refer to File Platform Change Number SR–MIAX–2019–43. This file October 10, 2019. 1. Purpose number should be included on the Pursuant to Section 19(b)(1) of the In 2016, the Exchange’s parent subject line if email is used. To help the Securities Exchange Act of 1934 (the company, Cboe Global Markets, Inc. Commission process and review your ‘‘Act’’),1 and Rule 19b–4 thereunder,2 (formerly named CBOE Holdings, Inc.) comments more efficiently, please use notice is hereby given that on October (‘‘Cboe Global’’), which is also the only one method. The Commission will 3, 2019, Cboe Exchange, Inc. (the parent company of Cboe C2 Exchange, post all comments on the Commission’s ‘‘Exchange’’ or ‘‘Cboe Options’’) filed Inc. (‘‘C2’’), acquired Cboe EDGA internet website (http://www.sec.gov/ with the Securities and Exchange Exchange, Inc. (‘‘EDGA’’), Cboe EDGX rules/sro.shtml). Copies of the Commission (the ‘‘Commission’’) the Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX submission, all subsequent proposed rule change as described in Options’’), Cboe BZX Exchange, Inc. amendments, all written statements Items I, II, and III below, which Items (‘‘BZX’’ or ‘‘BZX Options’’), and Cboe with respect to the proposed rule have been prepared by the Exchange. BYX Exchange, Inc. (‘‘BYX’’ and, change that are filed with the The Commission is publishing this together with Cboe Options, C2, EDGX, Commission, and all written notice to solicit comments on the EDGA, and BZX, the ‘‘Cboe Affiliated communications relating to the proposed rule change from interested Exchanges’’). The Cboe Affiliated proposed rule change between the persons. Commission and any person, other than Exchanges are working to align certain those that may be withheld from the I. Self-Regulatory Organization’s system functionality, retaining only public in accordance with the Statement of the Terms of Substance of intended differences, between the Cboe provisions of 5 U.S.C. 552, will be the Proposed Rule Change Affiliated Exchanges, in the context of a available for website viewing and Cboe Exchange, Inc. (the ‘‘Exchange’’ technology migration. Cboe Options printing in the Commission’s Public or ‘‘Cboe Options’’) proposes to move intends to migrate its trading platform to Reference Room, 100 F Street NE, the Rules in Chapter V of the currently the same system used by the Cboe Washington, DC 20549 on official effective Rulebook (‘‘current Affiliated Exchanges, which the business days between the hours of Rulebook’’), which governs securities Exchange expects to complete on 10:00 a.m. and 3:00 p.m. Copies of the dealt in on the Exchange, to proposed October 7, 2019. In connection with this filing also will be available for technology migration, the Exchange has 17 17 CFR 200.30–3(a)(12). a shell Rulebook that resides alongside 15 15 U.S.C. 78s(b)(3)(A)(ii). 1 15 U.S.C. 78s(b)(1). its current Rulebook, which shell 16 17 CFR 240.19b–4(f)(2). 2 17 CFR 240.19b–4. Rulebook will contain the Rules that

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55664 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

will be in place upon completion of the proposed Section A of Chapter 4 in the the proposed rule change deletes the Cboe Options technology migration. shell Rulebook. The Exchange notes that rules from the current Rulebook. The The Exchange proposes to relocate the in addition to relocating the rules under proposed rule change relocates the rules rules in Chapter V, which govern current Chapter V to proposed Section as follows: securities dealt in on the Exchange, to A of Chapter 4 in the shell Rulebook,

Current rule Proposed rule

4.1 Designation of Underlying Securities ...... 5.1 Designation of Securities. 4.2 Rights and Obligations of Holders and Writers ...... 5.2 Rights and Obligations of Holders and Writers. 4.3 Criteria for Underlying Securities ...... 5.3 Criteria for Underlying Securities. 4.4 Withdrawal of Approval of Underlying Securities ...... 5.4 Withdrawal of Approval of Underlying Securities. 4.5 Series of Option Contracts Open for Trading ...... 5.5 Series of Option Contracts Open for Trading. 4.5(f) (Long-Term Equity Option Series (LEAPS)) ...... 5.8 Long-Term Equity Option Series (LEAPS). 4.6 Adjustments ...... 5.7 Adjustments. 4.7 Select Provisions of Options Listing Procedures Plan ...... 5.5A Select Provisions of Options Listing Procedures Plan. 4.8 Single Stock Dividend Options ...... 5.9. Single Stock Dividend Options.

The proposed changes are of a non- 6(b)(5) 5 requirements that the rules of the rules of the Exchange, which will substantive nature and will not amend an exchange be designed to prevent also result in less burdensome and more the relocated rules other than to update fraudulent and manipulative acts and efficient regulatory compliance. their rule numbers, conform paragraph practices, to promote just and equitable B. Self-Regulatory Organization’s principles of trade, to foster cooperation structure and number/lettering format to Statement on Burden on Competition that of the shell Rulebook, and make and coordination with persons engaged cross-reference changes to shell rules. in regulating, clearing, settling, The Exchange does not believe that The Exchange notes that the proposed processing information with respect to, the proposed rule change will impose change updates the heading to proposed and facilitating transactions in any burden on competition not Rule 4.1 (current Rule 5.1) from securities, to remove impediments to necessary or appropriate in furtherance ‘‘Designation of Securities’’ to and perfect the mechanism of a free and of the purposes of the Act. The ‘‘Designation of Underlying Securities’’ open market and a national market proposed rule change is not intended as which more accurately aligns with the system, and, in general, to protect a competitive change, but rather, seeks other rules under current Chapter V investors and the public interest. to make non-substantive rule changes in (proposed Section A of Chapter 4); i.e. Additionally, the Exchange believes the relocating the rules and updating cross- the heading to proposed Rule 4.3 proposed rule change is consistent with references, as well as references to (current Rule 5.3) is ‘‘Criteria for the Section 6(b)(5) 6 requirement that certain indexes, to shell rules in Underlying Securities’’ and to proposed the rules of an exchange not be designed anticipation of the October 7, 2019 Rule 4.4 (current Rule 5.4) is to permit unfair discrimination between technology migration. The Exchange ‘‘Withdrawal of Approval of Underlying customers, issuers, brokers, or dealers. also does not believe that the proposed Securities’’. Finally, the proposed rule As stated, the proposed rule change rule change will impose any undue change removes Rule 5.5.11 and .12 makes no substantive changes to the burden on competition because the which cover strike intervals for BXM rules. The proposed rule change is relocated rule text is exactly the same as option series and for Cboe S&P 500 merely intended to relocate the the Exchange’s current rules, all of Realized Volatility option series, Exchange’s rules to the shell Rulebook which have all been previously filed respectively, on which the Exchange is and update their numbers, paragraph with the Commission. authorized to list options, but on which structure, including number and C. Self-Regulatory Organization’s the Exchange does not currently, and lettering format, and cross-references, as Statement on Comments on the does not intend, to list options.3 well as delete references to indexes on Proposed Rule Change Received From Because there are currently no options which the Exchange does not list (and Members, Participants, or Others listed on any of these indexes, the does not intend to list) options, 7 to conform to the shell Rulebook as a The Exchange neither solicited nor proposed rule change has no impact on received comments on the proposed trading on the Exchange. whole in anticipation of the technology migration on October 7, 2019. As such, rule change. 2. Statutory Basis the proposed rule change is designed to III. Date of Effectiveness of the The Exchange believes the proposed promote just and equitable principles of Proposed Rule Change and Timing for rule change is consistent with the trade, to remove impediments to and Commission Action perfect the mechanism of a free and Securities Exchange Act of 1934 (the The Exchange has filed the proposed open market and a national market ‘‘Act’’) and the rules and regulations rule change pursuant to Section system, and, in general to protect thereunder applicable to the Exchange 19(b)(3)(A)(iii) of the Act 8 and Rule investors and the public interest, by and, in particular, the requirements of 19b–4(f)(6) thereunder.9 Because the 4 improving the way the Exchange’s Section 6(b) of the Act. Specifically, proposed rule change does not: (i) Rulebook is organized, making it easier the Exchange believes the proposed rule Significantly affect the protection of to read, and, particularly, helping change is consistent with the Section investors or the public interest; (ii) market participants better understand impose any significant burden on 3 The Exchange is simultaneously submitting a competition; and (iii) become operative similar rule filing regarding current Chapter XXIV 5 15 U.S.C. 78f(b)(5). (proposed shell Section B of Chapter 4), governing 6 Id. for 30 days from the date on which it index options, which proposes to remove the same 7 See supra note 3. The deletion of these indexes references under current Chapter XXIV. will conform to the other proposed Sections under 8 15 U.S.C. 78s(b)(3)(A)(iii). 4 15 U.S.C. 78f(b). Chapter 4, and thus, the shell Rulebook as a whole. 9 17 CFR 240.19b–4(f)(6).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55665

was filed, or such shorter time as the action is necessary or appropriate in the submissions should refer to File Commission may designate, if public interest, for the protection of Number SR–CBOE–2019–090, and consistent with the protection of investors, or otherwise in furtherance of should be submitted on or before investors and the public interest, the the purposes of the Act. If the November 7, 2019. proposed rule change has become Commission takes such action, the For the Commission, by the Division of effective pursuant to Section 19(b)(3)(A) Commission shall institute proceedings Trading and Markets, pursuant to delegated of the Act 10 and Rule 19b–4(f)(6) to determine whether the proposed rule authority.15 thereunder.11 change should be approved or Jill M. Peterson, A proposed rule change filed under disapproved. Assistant Secretary. Rule 19b–4(f)(6) 12 normally does not IV. Solicitation of Comments [FR Doc. 2019–22590 Filed 10–16–19; 8:45 am] become operative prior to 30 days after BILLING CODE 8011–01–P the date of the filing. However, pursuant Interested persons are invited to to Rule 19b–4(f)(6)(iii),13 the submit written data, views, and Commission may designate a shorter arguments concerning the foregoing, SECURITIES AND EXCHANGE time if such action is consistent with the including whether the proposed rule COMMISSION protection of investors and the public change is consistent with the Act. interest. The Exchange has asked the Comments may be submitted by any of [Release No. 34–87278; File No. SR– NYSEArca–2019–68] Commission to waive the 30-day the following methods: operative delay so that the proposed Electronic Comments Self-Regulatory Organizations; NYSE rule change may become operative • Use the Commission’s internet Arca, Inc.; Notice of Filing and immediately. The Exchange notes that comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed the proposed rule change is merely rules/sro.shtml); or Rule Change To Permit the Listing and relocating certain rules to its shell • Send an email to rule-comments@ Trading of Shares Under NYSE Arca rulebook—which includes sec.gov. Please include File Number SR– Rule 8.600–E of the Overlay Shares corresponding updates to rule numbers, CBOE–2019–090 on the subject line. Large Cap Equity ETF, Overlay Shares cross-references, and other references— Small Cap Equity ETF, Overlay Shares in order to conform these rules to the Paper Comments Foreign Equity ETF, Overlay Shares shell rulebook upon the technology • Send paper comments in triplicate Core Bond ETF and Overlay Shares migration explained above. The to Secretary, Securities and Exchange Municipal Bond ETF Exchange believes that the proposed Commission, 100 F Street NE, rule change will make its rules easier to Washington, DC 20549–1090. October 10, 2019. 1 read and understand for all investors. All submissions should refer to File Pursuant to Section 19(b)(1) of the The Exchange also asserts that the Number SR–CBOE–2019–090. This file Securities Exchange Act of 1934 (the 2 3 relocation of the rules explained above number should be included on the ‘‘Act’’) and Rule 19b–4 thereunder, will not impose any significant burden subject line if email is used. To help the notice is hereby given that, on on competition as the substance of the Commission process and review your September 27, 2019, NYSE Arca, Inc. rules remains unchanged. The comments more efficiently, please use (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed Commission agrees that allowing this only one method. The Commission will with the Securities and Exchange proposed rule change to become post all comments on the Commission’s Commission (the ‘‘Commission’’) the operative upon filing in order to internet website (http://www.sec.gov/ proposed rule change as described in facilitate the Exchange’s technology rules/sro.shtml). Copies of the Items I and II below, which Items have migration—without changing the submission, all subsequent been prepared by the Exchange. The substance of these Exchange Rules—is amendments, all written statements Commission is publishing this notice to consistent with the protection of with respect to the proposed rule solicit comments on the proposed rule investors and the public interest. For change that are filed with the change from interested persons. this reason, the Commission hereby Commission, and all written I. Self-Regulatory Organization’s waives the 30-day operative delay and communications relating to the Statement of the Terms of Substance of designates the proposal operative upon proposed rule change between the the Proposed Rule Change filing.14 Commission and any person, other than At any time within 60 days of the The Exchange proposes to permit the those that may be withheld from the listing and trading of shares under filing of the proposed rule change, the public in accordance with the Commission summarily may NYSE Arca Rule 8.600–E of the Overlay provisions of 5 U.S.C. 552, will be Shares Large Cap Equity ETF, Overlay temporarily suspend such rule change if available for website viewing and it appears to the Commission that such Shares Small Cap Equity ETF, Overlay printing in the Commission’s Public Shares Foreign Equity ETF, Overlay Reference Room, 100 F Street NE, 10 Shares Core Bond ETF and Overlay 15 U.S.C. 78s(b)(3)(A). Washington, DC 20549 on official 11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– Shares Municipal Bond ETF, each a 4(f)(6)(iii) requires the Exchange to give the business days between the hours of series of the Listed Funds Trust, Commission written notice of the Exchange’s intent 10:00 a.m. and 3:00 p.m. Copies of the notwithstanding that the Funds’ to file the proposed rule change, along with a brief filing also will be available for investments do not meet the description and text of the proposed rule change, inspection and copying at the principal at least five business days prior to the date of filing requirements of Commentary .01(d)(2) of the proposed rule change, or such shorter time offices of the Exchange. All comments to Rule 8.600–E. as designated by the Commission. The Commission received will be posted without change. The proposed rule change is available has waived that requirement in this case. Persons submitting comments are on the Exchange’s website at 12 17 CFR 240.19b–4(f)(6). cautioned that we do not redact or edit 13 17 CFR 240.19b–4(f)(6)(iii). personal identifying information from 15 14 For purposes only of waiving the 30-day 17 CFR 200.30–3(a)(12), (59). operative delay, the Commission has considered the comment submissions. You should 1 15 U.S.C. 78s(b)(1). proposed rule’s impact on efficiency, competition, submit only information that you wish 2 15 U.S.C. 78a. and capital formation. See 15 U.S.C. 78c(f). to make available publicly. All 3 17 CFR 240.19b–4.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55666 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

www.nyse.com, at the principal office of Liquid Strategies, LLC (the ‘‘Adviser’’) wall with respect to its relevant the Exchange, and at the Commission’s is the investment adviser to the Funds. personnel or such broker-dealer affiliate, Public Reference Room. Commentary .06 to Rule 8.600–E as applicable, regarding access to provides that, if the investment adviser information concerning the composition II. Self-Regulatory Organization’s to the investment company issuing and/or changes to the portfolio, and will Statement of the Purpose of, and Managed Fund Shares is affiliated with be subject to procedures designed to Statutory Basis for, the Proposed Rule a broker-dealer, such investment adviser prevent the use and dissemination of Change shall erect and maintain a ‘‘fire wall’’ material non-public information In its filing with the Commission, the between the investment adviser and the regarding such portfolio. self-regulatory organization included broker-dealer with respect to access to U.S. Bancorp Fund Services, LLC, statements concerning the purpose of, information concerning the composition doing business as U.S. Bank Global and basis for, the proposed rule change and/or changes to such investment Fund Services, will serve as and discussed any comments it received company portfolio.6 In addition, administrator and transfer agent for the on the proposed rule change. The text Commentary .06 further requires that Funds. Foreside Fund Services, LLC of those statements may be examined at personnel who make decisions on the will serve as the Funds’ distributor. U.S. the places specified in Item IV below. investment company’s portfolio Bank National Association is the The Exchange has prepared summaries, composition must be subject to custodian of the Trust (the set forth in sections A, B, and C below, procedures designed to prevent the use ‘‘Custodian’’). of the most significant parts of such and dissemination of material Investment Objective of the Funds statements. nonpublic information regarding the applicable investment company According to the Registration A. Self-Regulatory Organization’s Statement, the investment objective of Statement of the Purpose of, and the portfolio. The Adviser is not a registered broker-dealer, and the Adviser is not each Fund is total return. Each Fund is Statutory Basis for, the Proposed Rule an actively-managed exchange-traded Change affiliated with broker-dealers. In addition, the Adviser’s personnel who fund (‘‘ETF’’) that seeks to achieve its 1. Purpose make decisions regarding a Fund’s objective principally by (1) investing in 7 The Exchange proposes to permit the portfolio are subject to procedures one or more other ETFs that seek to listing and trading under NYSE Arca designed to prevent the use and obtain exposure to the performance of a Rule 8.600–E (‘‘Managed Fund dissemination of material nonpublic specific segment of the equity or fixed Shares’’) 4 of shares (‘‘Shares’’) of the information regarding a Fund’s income market (e.g., large cap U.S. Overlay Shares Large Cap Equity ETF, portfolio. In the event that (a) the equities or investment-grade corporate Overlay Shares Small Cap Equity ETF, Adviser becomes registered as a broker- bonds) or directly in the securities held Overlay Shares Foreign Equity ETF, dealer or newly affiliated with a broker- by such ETFs, and (2) selling and Overlay Shares Core Bond ETF and dealer, or (b) any new adviser or sub- purchasing listed put options to Overlay Shares Municipal Bond ETF adviser is a registered broker-dealer or generate income to the Fund (together, (each a ‘‘Fund’’ and, collectively, the becomes affiliated with a broker-dealer, the ‘‘Overlay Strategy’’). ‘‘Funds’’), each a series of the Listed it will implement and maintain a fire Overlay Shares Large Cap Equity ETF Funds Trust (the ‘‘Trust’’), Trust and of the Funds and Shares herein is based, According to the Registration notwithstanding that the Funds’ Statement, under normal market investments do not meet the in part, on the Registration Statement. There are no permissible holdings for the Funds that are not conditions,8 at least 80% of the Overlay requirements of Commentary .01(d)(2) described in this proposal. The Commission has Shares Large Cap Equity ETF’s net to Rule 8.600–E. issued an order granting certain exemptive relief to assets, plus borrowings for investment The Shares are offered by the Trust, the Trust under the 1940 Act. See Investment purposes, will be invested in one or which is registered with the Company Act Release No. 33596 (August 20, 2019) (order). more other ETFs that seek to obtain Commission as an open-end 6 An investment adviser to an open-end fund is exposure to equity securities of large- management investment company required to be registered under the Investment cap companies or directly in the consisting of multiple investment Advisers Act of 1940 (the ‘‘Advisers Act’’). As a securities held by such ETFs. For series.5 Each Fund is a series of the result, the Adviser and its related personnel are subject to the provisions of Rule 204A–1 under the purposes of the foregoing, the Overlay Trust. Advisers Act relating to codes of ethics. This Rule Shares Large Cap Equity ETF defines requires investment advisers to adopt a code of ‘‘large-cap companies’’ as those within 4 A Managed Fund Share is a security that ethics that reflects the fiduciary nature of the represents an interest in an investment company relationship to clients as well as compliance with the range of capitalizations of the S&P registered under the Investment Company Act of other applicable securities laws. Accordingly, 500 Index. The Overlay Shares Large 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as procedures designed to prevent the communication Cap Equity ETF will count investments an open-end investment company or similar entity and misuse of non-public information by an in ETFs that invest at least 80% of their that invests in a portfolio of securities selected by investment adviser must be consistent with Rule its investment adviser consistent with its 204A–1 under the Advisers Act. In addition, Rule net assets, plus borrowings for investment objectives and policies. In contrast, an 206(4)–7 under the Advisers Act makes it unlawful investment purposes, in equity open-end investment company that issues for an investment adviser to provide investment securities of large-cap companies (as Investment Company Units, listed and traded on advice to clients unless such investment adviser has defined above) as investments in ETFs the Exchange under NYSE Arca Rule 5.2–E(j)(3), (i) adopted and implemented written policies and seeks to provide investment results that correspond procedures reasonably designed to prevent generally to the price and yield performance of a violation, by the investment adviser and its 7 For purposes of this filing, the term ‘‘ETFs’’ specific foreign or domestic stock index, fixed supervised persons, of the Advisers Act and the means Investment Company Units (as described in income securities index or combination thereof. Commission rules adopted thereunder; (ii) NYSE Arca Rule 5.2–E(j)(3)); Portfolio Depositary 5 The Trust is registered under the 1940 Act. On implemented, at a minimum, an annual review Receipts (as described in NYSE Arca Rule 8.100– June 26, 2019, the Trust filed with the Securities regarding the adequacy of the policies and E); and Managed Fund Shares (as described in and Exchange Commission (‘‘SEC’’ or procedures established pursuant to subparagraph (i) NYSE Arca Rule 8.600–E). All ETFs will be listed Commission’’) its registration statement on Form N– above and the effectiveness of their and traded in the U.S. on a national securities 1A under the Securities Act of 1933 (15 U.S.C. 77a), implementation; and (iii) designated an individual exchange. The Funds will not invest in inverse or and under the 1940 Act relating to the Funds (File (who is a supervised person) responsible for leveraged (e.g., 2X, ¥2X, 3X or ¥3X) ETFs. Nos. 333–215588 and 811–23226) (‘‘Registration administering the policies and procedures adopted 8 The term ‘‘normal market conditions’’ is defined Statement’’). The description of the operation of the under subparagraph (i) above. in NYSE Arca Rule 8.600–E(c)(5).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55667

that seek to obtain exposure to equity Overlay Shares Municipal Bond ETF manner that does not comply with securities of large-cap companies. According to the Registration Commentary .01(d)(2) to Rule 8.600– E.10 Otherwise, each Fund will comply Overlay Shares Small Cap Equity ETF Statement, under normal market conditions, at least 80% of the Overlay with all other listing requirements of the According to the Registration 11 Shares Municipal Bond ETF’s net assets, Generic Listing Standards for Statement, under normal market plus borrowings for investment Managed Fund Shares on an initial and conditions, at least 80% of the Overlay 12 purposes, will be invested in one or continued listing basis. Shares Small Cap Equity ETF’s net more other ETFs that seek to obtain The market for options contracts on assets, plus borrowings for investment exposure to municipal bonds and will the S&P 500 Index (‘‘S&P 500 Index purposes, will be invested in one or 13 not hold municipal bonds directly. The Options’’) is highly liquid. In August more other ETFs that seek to obtain Overlay Shares Municipal Bond ETF 2019, approximately 1.488 million exposure to equity securities of small- will count investments in ETFs that options contracts on the S&P 500 Index cap companies or directly in the invest at least 80% of their net assets, were traded per day, which is more than securities held by such ETFs. For plus borrowings for investment $430 billion in notional volume traded purposes of the foregoing, the Overlay purposes, in municipal bonds as on a daily basis. The Exchange believes Shares Small Cap Equity ETF defines investments in municipal bonds. that the liquidity in the S&P 500 Index ‘‘small-cap companies’’ as those within Options markets mitigates the concerns the range of capitalizations of the The Overlay Strategy that Commentary .01(d)(2) to Rule Russell 2000 Index. The Overlay Shares According to the Registration 8.600–E is intended to address and that Small Cap Equity ETF will count Statement, the Overlay Strategy seeks to such liquidity would prevent the Shares investments in ETFs that invest at least generate income for a Fund by utilizing from being susceptible to manipulation. 80% of their net assets, plus borrowings a ‘‘put spread’’ consisting of the sale of In addition, the Exchange believes for investment purposes, in equity exchange-listed put options (‘‘Short that sufficient protections are in place to securities of small-cap companies (as Puts’’) on the S&P 500 Index with a defined above) as investments in equity notional value up to 100% of a Fund’s 10 Commentary .01(d)(2) to Rule 8.600–E provides securities of small-cap companies. that ‘‘the aggregate gross notional value of listed net assets and the purchase of an derivatives based on any five or fewer underlying Overlay Shares Foreign Equity ETF identical number of put options (‘‘Long reference assets shall not exceed 65% of the weight of the portfolio (including gross notional According to the Registration Puts’’) on the S&P 500 Index with a lower strike price with a notional value exposures), and the aggregate gross notional value Statement, under normal market of listed derivatives based on any single underlying conditions, at least 80% of the Overlay up to 100% of a Fund’s net assets. Each reference asset shall not exceed 30% of the weight Shares Foreign Equity ETF’s net assets, Fund will seek to generate income from of the portfolio (including gross notional exposures).’’ The Funds do not meet the generic plus borrowings for investment the sale of put options and purchase of put options with a lower strike price to listing standards because they fail to meet the purposes, will be invested in one or requirement of Commentary .01(d)(2) that prevents more other ETFs that seek to obtain hedge against a decline in the U.S. the aggregate gross notional value of listed exposure to equity securities of non-U.S. equity market. derivatives based on any single underlying The options sold and bought by each reference asset from exceeding 30% of the weight companies or directly in the securities Fund will typically have an expiration of the portfolio (including gross notional exposures) held by such ETFs. For purposes of the date within one to two weeks of their and the requirement that the aggregate gross foregoing, the Overlay Shares Foreign notional value of listed derivatives based on any purchase date, although each Fund may Equity ETF defines ‘‘securities of non- five or fewer underlying reference assets shall not sell and buy options with a longer time- exceed 65% of the weight of the portfolio U.S. companies’’ as those that are to-expiration. The strike price of the (including gross notional exposures). principally traded on a non-U.S. 11 Short Puts will be less than the value of For purposes of this proposal, the term exchange, are issued by companies ‘‘Generic Listing Standards’’ means the generic the S&P 500 Index at the time such incorporated in a non-U.S. country, or listing rules for Managed Fund Shares under options are sold, and the strike price of depositary receipts representing such Commentary .01 to Rule 8.600–E. the Long Puts will be less than the strike 12 The Exchange notes that this proposed rule securities. The Overlay Shares Foreign price of the Short Puts. The difference change is similar to previous rule changes involving Equity ETF will count investments in between such strike prices is based on Managed Fund Shares with similar exposures to a ETFs that invest at least 80% of their net single underlying reference asset. See Securities the Adviser’s judgment as to the level of assets, plus borrowings for investment Exchange Act Release No. 86773 (August 27, 2019), expected volatility in the market prior to 84 FR 46051 (September 3, 2019) (SR–CboeBZX– purposes, in securities of non-U.S. the options’ expiration. Because the 2019–077); Securities Exchange Act Release No. companies (as defined above) as Long Puts will have a lower strike price 83146 (May 1, 2018), 83 FR 20103 (May 7, 2018) investments in securities of non-U.S. (SR–CboeBZX–2018–029); Securities Exchange Act than the Short Puts, the Long Puts are companies. Release No. 80529 (April 26, 2017), 82 FR 20506 not expected to completely protect the (May 2, 2017) (SR–BatsBZX–2017–14). See also Overlay Shares Core Bond ETF Fund from a decline in the S&P 500 Securities Exchange Act Release No. 82906 (March 20, 2018), 83 FR 12992 (March 26, 2018) (SR– According to the Registration Index. CboeBZX–2017–012) (order approving the listing Statement, under normal market Each Fund may also hold cash and and trading of the LHA Market State Tactical U.S. 9 conditions, at least 80% of the Overlay cash equivalents. Equity ETF); Securities Exchange Act Release No. 83679 (July 20, 2018), 83 FR 35505 (July 26, 2018) Shares Core Bond ETF’s net assets, plus Application of Generic Listing (SR–BatsBZX–2017–72) (Notice of Filing of borrowings for investment purposes, Requirements Amendment No. 4 and Order Granting Accelerated will be invested in one or more other Approval of a Proposed Rule Change, as Modified The Exchange submits this proposal ETFs that seek to obtain exposure to by Amendment No. 4 Thereto, to List and Trade in order to list and trade Shares of each Shares of the Innovator S&P 500 Buffer ETF Series, bonds or directly in the securities held Fund and to allow each Fund to hold Innovator S&P 500 Power Buffer ETF Series, and by such ETFs. The Overlay Shares Core listed derivatives, in particular put Innovator S&P 500 Ultra Buffer ETF Series Under Bond ETF will count investments in Rule 14.11(i)). options on the S&P 500 Index, in a ETFs that invest at least 80% of their net 13 S&P 500 Index [sic] are traded on the Cboe Exchange, Inc. (‘‘Cboe Options’’). The Exchange, assets, plus borrowings for investment 9 For purposes of this filing, cash equivalents Cboe Options and all other national securities purposes, in bonds as investments in means the securities included in Commentary .01(c) exchanges are members of the Intermarket bonds. to NYSE Arca Rule 8.600–E. Surveillance Group (‘‘ISG’’).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55668 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

protect against market manipulation of All of the options contracts held by be published daily in the financial the Shares and S&P 500 Index Options the Funds will trade on Cboe Options, section of newspapers. for several reasons: (i) The diversity, a member of ISG. Quotation and last sale information liquidity, and market cap of the for the Shares and ETFs and other Availability of Information securities underlying the S&P 500 exchange traded equities will be Index; (ii) the significant liquidity in the The Funds’ website available via the Consolidated Tape market for S&P 500 Index Options; and (www.overlayshares.com) will include Association (‘‘CTA’’) high-speed line. In (iii) surveillance by the Exchange, the prospectus for each of the Funds addition, the Portfolio Indicative Value options exchanges 14 and the Financial that may be downloaded. The Funds’ (‘‘PIV’’), as defined in NYSE Arca Rule Industry Regulatory Authority website will include ticker, CUSIP and 8.600–E(c)(3), will be widely (‘‘FINRA’’) designed to detect violations exchange information, along with disseminated by one or more major of the federal securities laws and self- additional quantitative information market data vendors at least every 15 regulatory organization (‘‘SRO’’) rules. updated on a daily basis, including, for seconds during the Core Trading The Exchange has in place a each Fund: (1) The prior Business Day’s Session. surveillance program for transactions in net asset value (‘‘NAV’’) per share and The intra-day, closing and settlement ETFs to ensure the availability of the market closing price or mid-point of prices of exchange-traded options will information necessary to detect and the bid/ask spread at the time of be readily available from the Options deter potential manipulations and other calculation of such NAV per share (the Price Reporting Authority (‘‘OPRA’’), trading abuses, thereby making the ‘‘Bid/Ask Price’’),16 and a calculation of Cboe Options’ website, automated Shares less readily susceptible to the premium or discount of the market quotation systems, published or other manipulation. Further, the Exchange closing price or Bid/Ask Price against public sources, or online information believes that because the S&P 500 Index such NAV per share; and (2) a table services such as Bloomberg or Reuters. Options in each Fund’s portfolio will be showing the number of days of such Additionally, FINRA’s Trade acquired in extremely liquid and highly premium or discount for the most Reporting and Compliance Engine regulated markets,15 the Shares are less recently completed calendar year, and (‘‘TRACE’’) will be a source of price readily susceptible to manipulation. the most recently completed calendar information for certain fixed income As noted above, S&P 500 Index quarters since that year (or the life of securities to the extent transactions in Options are among the most liquid Fund, if shorter). On each business day, such securities are reported to TRACE. Price information regarding U.S. options in the world and derive their before commencement of trading in government securities and other cash value from the actively traded S&P 500 Shares in the Core Trading Session on equivalents generally may be obtained Index components. The contracts are the Exchange, each Fund will disclose from brokers and dealers who make cash-settled with no delivery of stocks on its website the Disclosed Portfolio as markets in such securities or through or ETFs, and trade in competitive defined in NYSE Arca Rule 8.600– nationally recognized pricing services auction markets with price and quote E(c)(2) that forms the basis for each through subscription agreements. transparency. The Exchange believes the Fund’s calculation of NAV at the end of the business day. Quotation and last sale information highly regulated options markets and for equity securities of non-U.S. the broad base and scope of the S&P 500 On a daily basis, the Funds will disclose the information required under companies will be available from the Index make securities that derive their exchanges on which they trade and from value from that index less susceptible to NYSE Arca Rule 8.600–E(c)(2) to the extent applicable. The website major market data vendors, as market manipulation in view of market applicable. capitalization and liquidity of the S&P information will be publicly available at 500 Index components, price and quote no charge. Trading Halts transparency, and arbitrage Investors can also obtain the Trust’s With respect to trading halts, the opportunities. Statement of Additional Information Exchange may consider all relevant The Exchange believes that the (‘‘SAI’’), the Funds’ Shareholder factors in exercising its discretion to liquidity of the markets for securities in Reports, and the Funds’ Forms N–CSR halt or suspend trading in the Shares of the S&P 500 Index and S&P 500 Index and Forms N–CEN. The Funds’ SAI and a Fund.17 Trading in Shares of each Options is sufficiently great to deter Shareholder Reports will be available Fund will be halted if the circuit breaker fraudulent or manipulative acts free upon request from the Trust, and parameters in NYSE Arca Rule 7.12–E associated with the Funds’ Shares price. those documents and the Form N–CSR, have been reached. Trading also may be Coupled with the extensive surveillance Form N–PX, Form N–PORT and Form halted because of market conditions or programs of the Exchange and other N–CEN may be viewed on-screen or for reasons that, in the view of the SROs described below, the Exchange downloaded from the Commission’s Exchange, make trading in the Shares does not believe that trading in the website at www.sec.gov. inadvisable. Trading in the Funds’ Shares would present manipulation Information regarding market price Shares also will be subject to Rule concerns. and trading volume of the Shares will be 8.600–E(d)(2)(D) (‘‘Trading Halts’’). continually available on a real-time Trading Rules 14 The Exchange and all nine U.S. options basis throughout the day on brokers’ exchanges are members of the Option Regulatory computer screens and other electronic The Exchange deems the Shares to be Surveillance Authority, which was established in services. Information regarding the equity securities, thus rendering trading 2006 to provide efficiencies in looking for insider previous day’s closing price and trading in the Shares subject to the Exchange’s trading and serves as a central organization to facilitate collaboration in insider trading volume information for the Shares will existing rules governing the trading of investigations for the U.S. options exchanges. equity securities. Shares will trade on 15 All exchange-listed securities that the Funds 16 The Bid/Ask Price of a Fund’s Shares will be the NYSE Arca Marketplace from 4 a.m. may hold will trade on a market that is a member determined using the mid-point of the highest bid to 8 p.m., E.T. in accordance with NYSE of the ISG and the Funds will not hold any non- and the lowest offer on the Exchange as of the time exchange-listed equities or options. For a list of the of calculation of the NAV. The records relating to Arca Rule 7.34–E (Early, Core, and Late current members of ISG, see www.isgportal.org. See Bid/Ask Prices will be retained by a Fund and its also note 13, supra. service providers. 17 See NYSE Arca Rule 7.12–E.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55669

Trading Sessions). The Exchange has which could be indicative of during the Early and Late Trading appropriate rules to facilitate manipulative or other violative activity. Sessions when an updated PIV will not transactions in the Shares during all When such situations are detected, be calculated or publicly disseminated; trading sessions. As provided in NYSE surveillance analysis follows and (4) how information regarding the PIV Arca Rule 7.6–E, the minimum price investigations are opened, where and the Disclosed Portfolio is variation (‘‘MPV’’) for quoting and entry appropriate, to review the behavior of disseminated; (5) the requirement that of orders in equity securities traded on all relevant parties for all relevant Equity Trading Permit Holders deliver a the NYSE Arca Marketplace is $0.01, trading violations. prospectus to investors purchasing with the exception of securities that are The Exchange or FINRA, on behalf of newly issued Shares prior to or priced less than $1.00 for which the the Exchange, or both, will concurrently with the confirmation of a MPV for order entry is $0.0001. communicate as needed regarding transaction; and (6) trading information. With the exception of the trading in the Shares, exchange-traded requirements of Commentary .01(d)(2) options and equities with other markets In addition, the Bulletin will (with respect to listed derivatives) as and other entities that are members of reference that the Funds are subject to described above, the Shares of each the ISG, and the Exchange or FINRA, on various fees and expenses described in Fund will conform to the initial and behalf of the Exchange, or both, may the Registration Statement. The Bulletin continued listing criteria under NYSE obtain trading information regarding will discuss any exemptive, no-action, Arca Rule 8.600–E. Consistent with trading in such securities and financial and interpretive relief granted by the Commentary .06 of NYSE Arca Rule instruments from such markets and Commission from any rules under the 8.600–E, the Adviser will implement other entities. The Exchange may obtain Act. The Bulletin will also disclose that and maintain, or be subject to, information regarding trading in such the NAV for the Shares will be procedures designed to prevent the use securities and financial instruments calculated after 4:00 p.m., Eastern time and dissemination of material non- from markets and other entities that are each trading day. public information regarding the actual members of ISG. In addition, the components of each Fund’s portfolio. Exchange also has a general policy 2. Statutory Basis The Exchange represents that, for initial prohibiting the distribution of material, The basis under the Act for this and continued listing, the Funds will be non-public information by its proposed rule change is the requirement 18 in compliance with Rule 10A–3 under employees. under Section 6(b)(5) 20 that an All statements and representations the Act, as provided by NYSE Arca Rule exchange have rules that are designed to 5.3–E. The Exchange will obtain a made in this filing regarding (a) the prevent fraudulent and manipulative representation from the issuer of the description of the portfolio or reference acts and practices, to promote just and Shares that the NAV per Share for each assets, (b) limitations on portfolio equitable principles of trade, to remove Fund will be calculated daily and that holdings or reference assets, or (c) the the NAV and the Disclosed Portfolio for applicability of Exchange listing rules impediments to, and perfect the each Fund will be made available to all specified in this rule filing shall mechanism of a free and open market market participants at the same time. constitute continued listing and, in general, to protect investors and requirements for listing the Shares of the public interest. Surveillance the Funds on the Exchange. The Exchange believes that the The Exchange believes that its The issuer must notify the Exchange proposed rule change is designed to surveillance procedures are adequate to of any failure by the Funds to comply prevent fraudulent and manipulative properly monitor the trading of the with the continued listing requirements, acts and practices, to promote just and Shares on the Exchange during all and, pursuant to its obligations under equitable principles of trade, to foster trading sessions and to deter and detect Section 19(g)(1) of the Act, the Exchange cooperation and coordination with violations of Exchange rules and the will monitor for compliance with the persons engaged in facilitating applicable federal securities laws. The continued listing requirements. If a transactions in securities, to remove Exchange represents that trading in the Fund is not in compliance with the impediments to and perfect the Shares will be subject to the existing applicable listing requirements, the mechanism of a free and open market trading surveillances, administered by Exchange will commence delisting and a national market system and, in FINRA on behalf of the Exchange or by procedures under NYSE Arca Rule 5.5– general, to protect investors and the regulatory staff of the Exchange, which E (m). public interest in that the Shares will are designed to detect violations of meet each of the initial and continued Exchange rules and applicable federal Information Bulletin securities laws. The Exchange Prior to the commencement of listing criteria in Commentary .01 to represents that these procedures are trading, the Exchange will inform its NYSE Arca Rule 8.600–E, with the adequate to properly monitor Exchange Equity Trading Permit Holders in an exception of Commentary .01(d)(2) to trading of the Shares in all trading Information Bulletin (‘‘Bulletin’’) of the NYSE Arca Rule 8.600–E, which sessions and to deter and detect special characteristics and risks requires that the aggregate gross violations of Exchange rules and federal associated with trading the Shares. notional value of listed derivatives securities laws applicable to trading on Specifically, the Bulletin will discuss based on any five or fewer underlying the Exchange.19 the following: (1) The procedures for reference assets shall not exceed 65% of The surveillances referred to above purchases and redemptions of Shares in the weight of the portfolio (including generally focus on detecting securities Creation Unit aggregations (and that gross notional exposures), and the trading outside their normal patterns, Shares are not individually redeemable); aggregate gross notional value of listed (2) NYSE Arca Rule 9.2–E(a), which derivatives based on any single 18 17 CFR 240.10A–3. imposes a duty of due diligence on its underlying reference asset shall not 19 FINRA conducts cross-market surveillances on Equity Trading Permit Holders to learn exceed 30% of the weight of the behalf of the Exchange pursuant to a regulatory portfolio (including gross notional services agreement. The Exchange is responsible for the essential facts relating to every FINRA’s performance under this regulatory services customer prior to trading the Shares; (3) agreement. the risks involved in trading the Shares 20 15 U.S.C. 78f(b)(5).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55670 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

exposures).21 Commentary .01(d)(2) to Shares are less readily susceptible to other applicable continued listing NYSE Arca Rule 8.600–E is intended to manipulation. requirements for Managed Fund Shares ensure that a fund is not subject to The Exchange believes that its under Rule 8.600–E, including those manipulation by virtue of significant surveillance procedures are adequate to requirements regarding the Disclosed exposure to a manipulable underlying properly monitor the trading of the Portfolio, Portfolio Indicative Value, reference asset by establishing Shares on the Exchange during all suspension of trading or removal, concentration limits among the trading sessions and to deter and detect trading halts, disclosure, and firewalls. underlying reference assets for listed violations of Exchange rules and the The Trust is required to comply with derivatives held by a particular fund. applicable federal securities laws. The Rule 10A–3 under the Act for the initial The Exchange notes that this proposed Exchange or FINRA, on behalf of the and continued listing of the Shares of rule change is similar to previous rule Exchange, or both, will communicate as each Fund. changes involving Managed Fund needed regarding trading in the Shares, For the above reasons, the Exchange Shares with similar exposures to a exchange-traded options and equities 22 believes that the proposed rule change single underlying reference asset. with other markets and other entities is consistent with the requirements of that are members of the ISG, and the The market for S&P 500 Index Section 6(b)(5) of the Act. Options is highly liquid. In August Exchange or FINRA, on behalf of the 2019, approximately 1.488 million Exchange, or both, may obtain trading B. Self-Regulatory Organization’s options contracts on the S&P 500 Index information regarding trading in such Statement on Burden on Competition were traded per day, which is more than securities and financial instruments $430 billion in notional volume traded from such markets and other entities. The Exchange does not believe that on a daily basis. The Exchange believes The Exchange may obtain information the proposed rule change will impose that the liquidity in the S&P 500 Index regarding trading in such securities and any burden on competition that is not Options markets mitigates the concerns financial instruments from markets and necessary or appropriate in furtherance that Commentary .01(d)(2) to Rule other entities that are members of ISG. of the purpose of the Act. The Exchange 8.600–E is intended to address and that In addition, the Exchange also has a notes that the proposed rule change will such liquidity would prevent the Shares general policy prohibiting the permit the listing and trading of from being susceptible to manipulation. distribution of material, non-public additional types of Managed Fund In addition, the Exchange believes information by its employees. Shares that will enhance competition that sufficient protections are in place to As noted above, S&P 500 Index among market participants, to the protect against market manipulation of Options are highly liquid and derive benefit of investors and the marketplace. the Shares and S&P 500 Index Options their value from the actively traded S&P C. Self-Regulatory Organization’s for several reasons: (i) The diversity, 500 Index components. The Exchange Statement on Comments on the liquidity, and market cap of the believes the highly regulated options Proposed Rule Change Received From securities underlying the S&P 500 markets and the broad base and scope Members, Participants, or Others Index; (ii) the significant liquidity in the of the S&P 500 Index make securities market for S&P 500 Index Options; and that derive their value from the S&P 500 No written comments were solicited (iii) surveillance by the Exchange, Index less susceptible to market or received with respect to the proposed options exchanges and FINRA designed manipulation in view of market rule change. to detect violations of the federal capitalization and liquidity of the securities laws and SRO rules. The components of the S&P 500 Index, price III. Date of Effectiveness of the Exchange has in place a surveillance and quote transparency, and arbitrage Proposed Rule Change and Timing for program for transactions in ETFs to opportunities. Commission Action ensure the availability of information The Exchange believes that the Because the foregoing proposed rule necessary to detect and deter potential liquidity of the markets for securities in change does not: (i) Significantly affect manipulations and other trading abuses, the S&P 500 Index, S&P 500 Index the protection of investors or the public thereby making the Shares less readily Options, and other related derivatives is interest; (ii) impose any significant susceptible to manipulation. Further, sufficiently great to deter fraudulent or burden on competition; and (iii) become the Exchange believes that because the manipulative acts associated with the operative for 30 days from the date on S&P 500 Index Options in each Fund’s Funds’ Shares price. The Exchange also which it was filed, or such shorter time portfolio will be acquired in extremely believes that such liquidity is sufficient as the Commission may designate, it has liquid and highly regulated markets, the to support the creation and redemption become effective pursuant to Section mechanism. Coupled with the extensive 19(b)(3)(A) of the Act 23 and Rule 19b– 21 As noted above, the Exchange is submitting this surveillance programs of the SROs 4(f)(6) thereunder.24 proposal because the Funds would not meet the described above, the Exchange does not requirements of Commentary .01(d)(2) to Rule believe that trading in the Funds’ Shares 23 8.600–E which prevents the aggregate gross notional 15 U.S.C. 78s(b)(3)(A). value of listed derivatives based on any single would present manipulation concerns. 24 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– underlying reference asset from exceeding 30% of All of the options contracts held by 4(f)(6)(iii) requires a self-regulatory organization to the weight of the portfolio (including gross notional the Funds will trade on Cboe Options, give the Commission written notice of its intent to exposures) and the aggregate gross notional value of a member of ISG. file the proposed rule change, along with a brief listed derivatives based on any five or fewer The Exchange represents that, except description and text of the proposed rule change, underlying reference assets from exceeding 65% of at least five business days prior to the date of filing the weight of the portfolio (including gross notional as described above, the Funds will meet of the proposed rule change, or such shorter time exposures). and be subject to all other requirements as designated by the Commission. The Exchange 22 See note 12, supra. of the Generic Listing Standards and has satisfied this requirement.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55671

A proposed rule change filed under including whether the proposed rule should be submitted on or before Rule 19b–4(f)(6) 25 normally does not change is consistent with the Act. November 7, 2019. become operative for 30 days after the Comments may be submitted by any of For the Commission, by the Division of date of the filing. However, pursuant to the following methods: Trading and Markets, pursuant to delegated Rule 19b–4(f)(6)(iii),26 the Commission 29 Electronic Comments authority. may designate a shorter time if such Jill M. Peterson, action is consistent with the protection • Use the Commission’s internet Assistant Secretary. of investors and the public interest. The comment form (http://www.sec.gov/ Exchange has asked the Commission to [FR Doc. 2019–22596 Filed 10–16–19; 8:45 am] rules/sro.shtml); or waive the 30-day operative delay so that BILLING CODE 8011–01–P the proposal may become operative • Send an email to rule-comments@ immediately upon filing. The Exchange sec.gov. Please include File Number SR– SECURITIES AND EXCHANGE states that the Funds currently intend to NYSEArca–2019–68 on the subject line. COMMISSION begin trading under the Generic Listing Paper Comments Standards on or about October 1, 2019, [Release No. 34–87273; File No. SR–CBOE– and waiver of the 30-day operative • Send paper comments in triplicate 2019–091] delay would allow the Funds to to: Secretary, Securities and Exchange immediately fully employ the Overlay Commission, 100 F Street NE, Self-Regulatory Organizations; Cboe Strategy. In addition, the Exchange Washington, DC 20549–1090. Exchange, Inc.; Notice of Filing and notes that the proposal would allow the Immediate Effectiveness of a Proposed Funds to hold listed derivatives based All submissions should refer to File Rule Change To Amend the Name of a on a single underlying reference asset in Number SR–NYSEArca–2019–68. This Reporting Authority for Certain a manner that is similar to previous rule file number should be included on the Indexes on Which the Exchange May changes involving Managed Fund subject line if email is used. To help the List Options Shares.27 For these reasons, the Commission process and review your Commission believes that waiver of the comments more efficiently, please use October 10, 2019. 30-day operative delay is consistent only one method. The Commission will Pursuant to Section 19(b)(1) of the with the protection of investors and the post all comments on the Commission’s Securities Exchange Act of 1934 (the public interest. Accordingly, the internet website (http://www.sec.gov/ ‘‘Act’’),1 and Rule 19b–4 thereunder,2 Commission waives the 30-day rules/sro.shtml). Copies of the notice is hereby given that on October operative delay and designates the submission, all subsequent 3, 2019, Cboe Exchange, Inc. (the proposed rule change operative upon amendments, all written statements ‘‘Exchange’’ or ‘‘Cboe Options’’) filed filing.28 with respect to the proposed rule with the Securities and Exchange At any time within 60 days of the change that are filed with the Commission (the ‘‘Commission’’) the filing of the proposed rule change, the Commission, and all written proposed rule change as described in Commission summarily may communications relating to the Items I and II below, which Items have temporarily suspend such rule change if proposed rule change between the been prepared by the Exchange. The it appears to the Commission that such Commission and any person, other than Exchange filed the proposal as a ‘‘non- action is necessary or appropriate in the those that may be withheld from the controversial’’ proposed rule change public interest, for the protection of public in accordance with the pursuant to Section 19(b)(3)(A)(iii) of 3 investors, or otherwise in furtherance of provisions of 5 U.S.C. 552, will be the Act and Rule 19b–4(f)(6) 4 the purposes of the Act. If the available for website viewing and thereunder. The Commission is Commission takes such action, the printing in the Commission’s Public publishing this notice to solicit Commission shall institute proceedings Reference Room, 100 F Street NE, comments on the proposed rule change to determine whether the proposed rule Washington, DC 20549 on official from interested persons. change should be approved or business days between the hours of disapproved. I. Self-Regulatory Organization’s 10:00 a.m. and 3:00 p.m. Copies of the Statement of the Terms of Substance of IV. Solicitation of Comments filing also will be available for the Proposed Rule Change Interested persons are invited to inspection and copying at the principal office of the Exchange. All comments The Exchange proposes to amend the submit written data, views, and name of a reporting authority for certain arguments concerning the foregoing, received will be posted without change. Persons submitting comments are indexes on which the Exchange may list options. The text of the proposed rule 25 cautioned that we do not redact or edit 17 CFR 240.19b–4(f)(6). change is provided below. 26 17 CFR 240.19b–4(f)(6)(iii). personal identifying information from 27 See supra note 12. comment submissions. You should 29 17 CFR 200.30–3(a)(12). 28 For purposes only of waiving the 30-day submit only information that you wish 1 15 U.S.C. 78s(b)(1). operative delay, the Commission has also to make available publicly. All 2 considered the proposed rule’s impact on 17 CFR 240.19b–4. submissions should refer to File 3 efficiency, competition, and capital formation. See 15 U.S.C. 78s(b)(3)(A)(iii). 15 U.S.C. 78c(f). Number SR–NYSEArca–2019–68 and 4 17 CFR 240.19b–4(f)(6).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55672 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

(additions are italicized; deletions are [bracketed]) ***** Rules of Cboe Exchange, Inc. ***** Rule 24.1. Definitions No change. ... Interpretations and Policies: .01 The reporting authorities designated by the Exchange in respect of each index underlying an index option contract traded on the Exchange are as follows: Index Reporting Authority S&P 100 ...... Standard & Poor’s. S&P 500 ...... Standard & Poor’s. Cboe Bio Tech ...... Cboe [Exchange, Inc.]Global Indices, LLC. FTSE 100 Index (1/10th) ...... FTSE International Limited. FT–SE 200 Eurotrack ...... London Stock Exchange. Russell 2000 ...... Frank Russell Co. S&P Transportation ...... Standard & Poor’s. S&P Retail ...... Standard & Poor’s. S&P Health Care ...... Standard & Poor’s. S&P Entertainment & Leisure ...... Standard & Poor’s. S&P Banking ...... Standard & Poor’s. S&P Insurance ...... Standard & Poor’s. S&P Chemical ...... Standard & Poor’s. Cboe Options Software ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Options Environmental ...... Cboe [Exchange, Inc.]Global Indices, LLC. S&P 500/Barra Growth ...... Standard & Poor’s. S&P 500/Barra Value ...... Standard & Poor’s. Nasdaq 100 ...... Nasdaq, Inc. Cboe Options Gaming ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Options Global Telecommunications ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Options Mexico ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Options Israeli ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe REIT Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Nikkei Stock Index 300 ...... Nihon Keizai Shimbun, Inc. Cboe Options Emerging Asian Markets ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Options Emerging Markets ...... Cboe [Exchange, Inc.]Global Indices, LLC. S&P SmallCap 600 Index ...... Standard & Poor’s. Cboe Options Latin 15 ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Technology Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Germany 25 Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Mexico 30 Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Options Automotive ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Internet Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Oil Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Gold Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Computer Networking Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PC Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. IPC ...... Mexican Stock Exchange. GSTI Composite Index ...... Goldman, Sachs & Co. GSTI Internet Index ...... Goldman, Sachs & Co. GSTI Software Index ...... Goldman, Sachs & Co. GSTI Semiconductor Index ...... Goldman, Sachs & Co. GSTI Hardware Index ...... Goldman, Sachs & Co. GSTI Multimedia Networking Index ...... Goldman, Sachs & Co. GSTI Services Index ...... Goldman, Sachs & Co. Morgan Stanley Multinational Company Index ...... Morgan Stanley. Reduced Value NYSE Composite Index ...... Dow Jones & Company, Inc. Dow Jones Industrial Average ...... Dow Jones & Company, Inc. Dow Jones Transportation Average ...... Dow Jones & Company, Inc. Dow Jones Utility Average ...... Dow Jones & Company, Inc. Lipper Analytical/Salomon Bros. Growth Fund Index ...... Lipper Analytical Services, Inc. Lipper Analytical/Salomon Bros. Growth & Income Fund Lipper Analytical Services, Inc. Index. Dow Jones High Yield Select 10 Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Dow Jones Equity REIT Index ...... Dow Jones & Company, Inc. Dow Jones E*Commerce Index ...... Dow Jones & Company, Inc. Cboe Euro 25 Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Asian 25 Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Russell 1000 Index ...... Frank Russell Co.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55673

Russell 1000 Growth Index ...... Frank Russell Co. Russell 1000 Value Index ...... Frank Russell Co. Russell 2000 Growth Index ...... Frank Russell Co. Russell 2000 Value Index ...... Frank Russell Co. Russell 3000 Index ...... Frank Russell Co. Russell 3000 Growth Index ...... Frank Russell Co. Russell 3000 Value Index ...... Frank Russell Co. Russell Midcap Index ...... Frank Russell Co. Russell Midcap Growth Index ...... Frank Russell Co. Russell Midcap Value Index ...... Frank Russell Co. Russell Top 200 Index ...... Frank Russell Co. Russell Top 200 Growth Index ...... Frank Russell Co. Russell Top 200 Value Index ...... Frank Russell Co. Cboe China Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Volatility Index® (VIX®) ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Nasdaq 100® Volatility Index (VXN®) ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Dow Jones Industrial Average® Volatility Index (VXD®) Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Increased-Value Volatility Index® ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Increased-Value Nasdaq 100® Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Increased-Value Dow Jones Industrial Average® Vola- Cboe [Exchange, Inc.]Global Indices, LLC. tility Index. Cboe PowerPacksSM Bank Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Biotechnology Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Gold Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Internet Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Iron & Steel Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Oil Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Oil Services Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Pharmaceuticals Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Retail Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Semiconductor Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Technology Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe PowerPacksSM Telecom Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Russell 2000 Volatility IndexSM (‘‘RVXSM’’) ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe S&P 500 Three-Month Realized Variance ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe S&P 500 Three-Month Realized Volatility ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe S&P 500 BuyWrite Index (1/10th value) ...... Cboe [Exchange, Inc.]Global Indices, LLC. S&P 500 Dividend Index ...... Standard & Poor’s .01. Cboe Gold ETF Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Equity VIX on Apple ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Equity VIX on Amazon ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Equity VIX on Goldman Sachs ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Equity VIX on Google ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Equity VIX on IBM ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Crude Oil ETF Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Emerging Markets ETF Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe China ETF Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Brazil ETF Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Gold Miners ETF Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Energy Sector ETF Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe Silver ETF Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. Cboe S&P 500 AM/PM Basis ...... Cboe [Options] Global Indices, LLC. Cboe Short-Term Volatility Index ...... Cboe [Exchange, Inc.]Global Indices, LLC. MSCI EAFE Index (EAFE) ...... MSCI Inc. MSCI Emerging Markets Index (EM) ...... MSCI Inc. FTSE China 50 Index (1/100th) ...... FTSE International Limited. FTSE Emerging Index ...... FTSE International Limited. FTSE Developed Europe Index ...... FTSE International Limited. S&P Financial Select Sector Index (IXM) ...... S&P Dow Jones Indices. S&P Energy Select Sector Index (IXE) ...... S&P Dow Jones Indices. S&P Technology Select Sector Index (IXT) ...... S&P Dow Jones Indices. S&P Health Care Select Sector Index (IXV) ...... S&P Dow Jones Indices. S&P Utilities Select Sector Index (IXU) ...... S&P Dow Jones Indices. S&P Consumer Staples Select Sector Index (IXR) ...... S&P Dow Jones Indices. S&P Industrials Select Sector Index (IXI) ...... S&P Dow Jones Indices. S&P Consumer Discretionary Select Sector Index (IXY) ...... S&P Dow Jones Indices. S&P Materials Select Sector Index (IXB) ...... S&P Dow Jones Indices. S&P Real Estate Select Sector Index (IXRE) ...... S&P Dow Jones Indices. S&P Communication Services Select Sector Index (IXC) ...... S&P Dow Jones Indices.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55674 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

*****

The text of the proposed rule change transferred its assets related to this updating its rules to reflect the current is also available on the Exchange’s index business. This transfer is expected name of a reporting authority for various website (http://www.cboe.com/ to be effective as of September 30, indexes on which the Exchange is AboutCBOE/ 2019.7 As a result, the Exchange authorized to list options. The Exchange CBOELegalRegulatoryHome.aspx), at designates Cboe Global Indices, LLC as believes this promotes transparency in the Exchange’s Office of the Secretary, the reporting authority for the indexes its Rules and may eliminate any and at the Commission’s Public on which the Exchange may list options, potential confusion among market Reference Room. and amends Rule 24.1, Interpretation participants. The proposed rule change 8 II. Self-Regulatory Organization’s and Policy .01. The Exchange has no impact on trading on the Statement of the Purpose of, and represents this will have no impact on Exchange, or on the dissemination of Statutory Basis for, the Proposed Rule the dissemination of index values for index values, but merely reflects a Change any of these indexes. Values for these change to the name of a reporting indexes will continue to be authority for various indexes on which In its filing with the Commission, the disseminated and available to market the Exchange is authorized to list Exchange included statements participants in the same manner and in options due to a recent internal concerning the purpose of and basis for the same intervals.9 reorganization and transfer of assets. the proposed rule change and discussed any comments it received on the 2. Statutory Basis B. Self-Regulatory Organization’s proposed rule change. The text of these The Exchange believes the proposed Statement on Burden on Competition statements may be examined at the rule change is consistent with the The Exchange does not believe that places specified in Item IV below. The Securities Exchange Act of 1934 (the the proposed rule change will impose Exchange has prepared summaries, set ‘‘Act’’) and the rules and regulations any burden on competition that is not forth in sections A, B, and C below, of thereunder applicable to the Exchange necessary or appropriate in furtherance the most significant aspects of such and, in particular, the requirements of of the purposes of the Act. The statements. Section 6(b) of the Act.10 Specifically, proposed rule change is not intended to A. Self-Regulatory Organization’s the Exchange believes the proposed rule be a competitive rule filing. Rather, the Statement of the Purpose of, and change is consistent with the Section proposed rule change merely reflects a Statutory Basis for, the Proposed Rule 6(b)(5) 11 requirements that the rules of change to the name of a reporting Change an exchange be designed to prevent authority for various indexes on which fraudulent and manipulative acts and the Exchange is authorized to list 1. Purpose practices, to promote just and equitable options due to a recent internal Cboe Options currently operates a principles of trade, to foster cooperation reorganization and transfer of assets. business, separate from its operation of and coordination with persons engaged The proposed rule change has no impact an options exchange, in which it in regulating, clearing, settling, on trading on the Exchange, or on the creates, administers, and distributes processing information with respect to, dissemination of index values. proprietary financial and benchmarks, and facilitating transactions in calculates index values and benchmarks securities, to remove impediments to C. Self-Regulatory Organization’s for third-party customers, and calculates and perfect the mechanism of a free and Statement on Comments on the and licenses indexes for third-party open market and a national market Proposed Rule Change Received From derivative indexes and products, among system, and, in general, to protect Members, Participants, or Others other things. Cboe Options calculates investors and the public interest. The Exchange neither solicited nor and disseminates the values of these Additionally, the Exchange believes the received comments on the proposed indexes to market participants. Pursuant proposed rule change is consistent with rule change. to the Cboe Options Rules, the Exchange the Section 6(b)(5) 12 requirement that III. Date of Effectiveness of the is also authorized to list options on the rules of an exchange not be designed Proposed Rule Change and Timing for certain of these indexes, for which Cboe to permit unfair discrimination between Commission Action Options acts as the reporting authority.5 customers, issuers, brokers, or dealers. The reporting authority in respect of a The proposed rule change removes Because the foregoing proposed rule particular index means the institution or impediments to and perfects the change does not: (i) Significantly affect reporting service designated by the mechanism of a free and open market a the protection of investors or the public Exchange as the official source for national market system, and protects interest; (ii) impose any significant calculating the level of the index from investors and the public interest, by burden on competition; and (iii) become the reporting prices of the underlying operative for 30 days from the date on securities that are the basis of the index 7 The Exchange initially filed the proposed which it was filed, or such shorter time and reporting such level.6 Recently, change to the reporting authority name on as the Commission may designate, it has September 30, 2019 (SR–CBOE–2019–074). On Cboe Options determined to conduct an October 3, 2019, the Exchange withdrew that filing become effective pursuant to Section internal reorganization, pursuant to and submitted this filing. 19(b)(3)(A) of the Act 13 and Rule 19b– which it created a new entity, called 8 The Exchange notes it currently only lists 4(f)(6) thereunder.14 Cboe Global Indices, LLC (which is a options on the Cboe Volatility Index (VIX). direct, wholly owned subsidiary of the 9 Pursuant to Rule 24.2(b)(10), (d)(8), (e)(7), and 13 15 U.S.C. 78s(b)(3)(A). (f)(11), the current value of an index must be 14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– Exchange’s parent company, Cboe disseminated at least once every 15 seconds by one Global Markets, Inc.), into which it 4(f)(6)(iii) requires a self-regulatory organization to or more major market data vendors. That will give the Commission written notice of its intent to continue to be the case. file the proposed rule change, along with a brief 5 See Rule 24.1, Interpretation and Policy .01 in 10 15 U.S.C. 78f(b). description and text of the proposed rule change, the current Rulebook. 11 15 U.S.C. 78f(b)(5). at least five business days prior to the date of filing 6 See Rule 24.1(h). 12 Id. of the proposed rule change, or such shorter time

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55675

A proposed rule change filed • Send an email to rule-comments@ SECURITIES AND EXCHANGE pursuant to Rule 19b–4(f)(6) under the sec.gov. Please include File Number SR– COMMISSION Act 15 normally does not become CBOE–2019–091 on the subject line. [Release No. 34–87280; File No. SR–MIAX– operative for 30 days after the date of its 2019–41] filing. However, Rule 19b–4(f)(6)(iii) 16 Paper Comments permits the Commission to designate a • Send paper comments in triplicate Self-Regulatory Organizations; Miami shorter time if such action is consistent to Secretary, Securities and Exchange International Securities Exchange, with the protection of investors and the Commission, 100 F Street NE, LLC; Notice of Filing and Immediate public interest. The Exchange has asked Washington, DC 20549–1090. Effectiveness of a Proposed Rule the Commission to waive the 30-day Change To Amend Exchange Rule 519, operative delay as the proposed rule All submissions should refer to File MIAX Order Monitor change only updates its rules to reflect Number SR–CBOE–2019–091. This file the current name of a reporting number should be included on the October 10, 2019. authority for various indexes on which subject line if email is used. To help the Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act the Exchange is authorized to list Commission process and review your of 1934 (‘‘Act’’),1 and Rule 19b–4 options. The Exchange believes that comments more efficiently, please use thereunder,2 notice is hereby given that waiver of the operative delay is only one method. The Commission will appropriate because, as the Exchange on October 2, 2019, Miami International post all comments on the Commission’s Securities Exchange, LLC (‘‘MIAX discussed above, its proposal does not internet website (http://www.sec.gov/ make any substantive changes to the Options’’ or the ‘‘Exchange’’) filed with rules/sro.shtml). Copies of the the Securities and Exchange Exchange’s rules. The Commission submission, all subsequent believes that waiver of the 30-day Commission (‘‘Commission’’) a amendments, all written statements operative delay is consistent with the proposed rule change as described in with respect to the proposed rule protection of investors and the public Items I and II below, which Items have change that are filed with the interest because the proposal does not been prepared by the Exchange. The raise any new or novel issues and makes Commission, and all written Commission is publishing this notice to only non-substantive changes to the communications relating to the solicit comments on the proposed rule rules. Therefore, the Commission hereby proposed rule change between the change from interested persons. waives the operative delay and Commission and any person, other than I. Self-Regulatory Organization’s designates the proposal as operative those that may be withheld from the Statement of the Terms of Substance of upon filing.17 public in accordance with the the Proposed Rule Change provisions of 5 U.S.C. 552, will be At any time within 60 days of the The Exchange is filing a proposal to available for website viewing and filing of the proposed rule change, the amend Exchange Rule 519, MIAX Order printing in the Commission’s Public Commission summarily may Monitor. temporarily suspend such rule change if Reference Room, 100 F Street NE, The text of the proposed rule change it appears to the Commission that such Washington, DC 20549 on official is available on the Exchange’s website at action is necessary or appropriate in the business days between the hours of http://www.miaxoptions.com/rule- public interest, for the protection of 10:00 a.m. and 3:00 p.m. Copies of the filings/ at MIAX Options’ principal investors, or otherwise in furtherance of filing also will be available for office, and at the Commission’s Public the purposes of the Act. If the inspection and copying at the principal Reference Room. Commission takes such action, the office of the Exchange. All comments II. Self-Regulatory Organization’s Commission will institute proceedings received will be posted without change. Statement of the Purpose of, and to determine whether the proposed rule Persons submitting comments are change should be approved or Statutory Basis for, the Proposed Rule cautioned that we do not redact or edit Change disapproved. personal identifying information from In its filing with the Commission, the IV. Solicitation of Comments comment submissions. You should submit only information that you wish Exchange included statements Interested persons are invited to to make available publicly. All concerning the purpose of and basis for submit written data, views, and submissions should refer to File the proposed rule change and discussed any comments it received on the arguments concerning the foregoing, Number SR–CBOE–2019–091 and proposed rule change. The text of these including whether the proposed rule should be submitted on or before statements may be examined at the change is consistent with the Act. November 7, 2019. Comments may be submitted by any of places specified in Item IV below. The the following methods: For the Commission, by the Division of Exchange has prepared summaries, set Trading and Markets, pursuant to delegated forth in sections A, B, and C below, of Electronic Comments authority.18 the most significant aspects of such • Use the Commission’s internet Jill M. Peterson, statements. comment form (http://www.sec.gov/ Assistant Secretary. A. Self-Regulatory Organization’s rules/sro.shtml); or [FR Doc. 2019–22591 Filed 10–16–19; 8:45 am] Statement of the Purpose of, and BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule as designated by the Commission. The Exchange Change has satisfied this requirement. 15 17 CFR 240.19b–4(f)(6). 1. Purpose 16 17 CFR 240.19b–4(f)(6)(iii). The Exchange proposes to amend 17 For purposes only of waiving the 30-day Exchange Rule 519, MIAX Order operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 1 15 U.S.C. 78s(b)(1). 15 U.S.C. 78c(f). 18 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55676 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Monitor (‘‘MOM’’) to remove a term in and open market and a national market concise so as to eliminate the potential the Exchange’s rule which creates an system and, in general, to protect for confusion. ambiguity concerning the application of investors and the public interest. B. Self-Regulatory Organization’s the rule. Specifically, subsection (4) of The Exchange believes its proposal Statement on Burden on Competition paragraph (a), Limit Orders to Sell, promotes just and equitable principles provides that ‘‘[f]or options with a of trade, removes impediments to and The Exchange does not believe that National Best Bid (‘‘NBB’’) equal to or perfects the mechanisms of a free and the proposed rule change will impose greater than $0.25 the System 3 will open market and a national market any burden on competition that is not reject an incoming limit order that has system, and in general, protects necessary or appropriate in furtherance a limit price equal to or less than the investors and the public interest by of the purposes of the Act. The NBB by the lesser of (i) $2.50, or (ii) providing clarity and precision in the proposed rule change is designed to 50% of the NBB price.’’ The second Exchange’s rule text. Additionally, the remove an unintentional ambiguity provision of the rule provides that, proposed change is consistent with the introduced in a prior rule change.8 ‘‘[f]or options with an NBB of $0.25 or current System behavior as described in The Exchange does not believe that less the System will accept any the Exchange’s User Manual.6 the proposed rule change will impose any burden on inter-market competition incoming limit order.’’ The Exchange believes that the as the Rules apply equally to all The statements an NBB ‘‘equal to or proposed change to the rule text Exchange Members. The proposed rule greater than $0.25’’ and ‘‘an NBB of provides further clarification to change is not a competitive filing and is $0.25 or less’’ both contemplate the NBB Members,7 investors, and the public, intended to improve the clarity and being equal to $0.25. The operation of regarding the Exchange’s handling of precision of the Exchange’s rule text. the rule requires a bifurcation at $0.25 limit orders to sell. The Exchange and only one action (accepting or believes it is in the interest of investors C. Self-Regulatory Organization’s rejecting an incoming order) can occur and the public to accurately describe the Statement on Comments on the when the NBB is equal to $0.25. The behavior of the Exchange’s System in its Proposed Rule Change Received From desired behavior by the Exchange, for rules as this information may be used by Members, Participants, or Others limit orders to sell, is to accept an order investors to make decisions concerning at any price when the NBB is equal to Written comments were neither the submission of their orders. solicited nor received. $0.25 or less. Therefore the Exchange Transparency and clarity are consistent proposes to remove the phrase ‘‘equal to with the Act because it removes III. Date of Effectiveness of the or’’ from the first sentence in the rule. impediments to and helps perfect the Proposed Rule Change and Timing for The new proposed rule text will mechanism of a free and open market Commission Action provide that, ‘‘[f]or options with a and a national market system, and, in Because the foregoing proposed rule National Best Bid (‘‘NBB’’) greater than general, protects investors and the change does not: (i) Significantly affect $0.25 the System will reject an public interest by accurately describing the protection of investors or the public incoming limit order that has a limit the behavior of the Exchange’s System. interest; (ii) impose any significant price equal to or less than the NBB by The Exchange believes that the burden on competition; and (iii) become the lesser of (i) $2.50, or (ii) 50% of the proposed change promotes just and operative for 30 days after the date of NBB price. For options with an NBB of equitable principles of trade and the filing, or such shorter time as the $0.25 or less the System will accept any removes impediments to and perfects Commission may designate, it has incoming limit order. the mechanism of a free and open become effective pursuant to 19(b)(3)(A) The Exchange believes its proposed market and a national market system of the Act 9 and Rule 19b–4(f)(6) 10 change provides additional detail and and, in general, protects investors and thereunder. clarity to the Exchange’s rule and the public interest by providing A proposed rule change filed under eliminates any inadvertent ambiguity in additional detail and clarity in the Rule 19b–4(f)(6) 11 normally does not the rule text concerning order Exchange’s rules. Further, the become operative prior to 30 days after protections for incoming limit orders to Exchange’s proposal provides the date of the filing. However, pursuant sell. transparency and clarity in the rule and to Rule 19b–4(f)(6)(iii),12 the 2. Statutory Basis is consistent with the Act because it Commission may designate a shorter removes impediments to and helps MIAX believes that its proposed rule time if such action is consistent with perfect the mechanism of a free and change is consistent with Section 6(b) of protection of investors and the public open market and a national market interest. The Exchange has asked the the Act 4 in general, and furthers the system, and, in general, protects Commission to waive the 30-day objectives of Section 6(b)(5) of the Act 5 investors and the public interest by operative delay. The Exchange believes in particular, in that it is designed to accurately describing the behavior of the that waiver is consistent with the prevent fraudulent and manipulative Exchange’s System. In particular, the protection of investors and the public acts and practices, to promote just and Exchange believes that the proposed equitable principles of trade, to foster rule change will provide greater clarity 8 See Securities Exchange Release No. 86024 cooperation and coordination with to Members and the public regarding the (June 4, 2019), 84 FR 26924 (June 10, 2019) (SR– persons engaged in regulating, clearing, Exchange’s Rules, and it is in the public MIAX–2019–26). settling, processing information with 9 15 U.S.C. 78s(b)(3)(A). interest for rules to be accurate and respect to, and facilitating transactions 10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– in, securities, to remove impediments to 4(f)(6) requires a self-regulatory organization to give 6 MIAX Options User’s Manual, August 2019, p the Commission written notice of its intent to file and perfect the mechanisms of a free 38, https://www.miaxoptions.com/exchange- the proposed rule change at least five business days functionality-data. prior to the date of filing of the proposed rule 3 The term ‘‘System’’ means the automated 7 The term ‘‘Member’’ means an individual or change, or such shorter time as designated by the trading system used by the Exchange for the trading organization approved to exercise the trading rights Commission. The Exchange has satisfied this of securities. See Exchange Rule 100. associated with a Trading Permit. Members are requirement. 4 15 U.S.C. 78f(b). deemed ‘‘members’’ under the Exchange Act. See 11 17 CFR 240.19b–4(f)(6). 5 15 U.S.C. 78f(b)(5). Exchange Rule 100. 12 17 CFR 240.19b–4(f)(6).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00137 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55677

interest because it would remove any communications relating to the FOR FURTHER INFORMATION CONTACT: A. ambiguity in the Exchange’s rule proposed rule change between the Escobar, Office of Disaster Assistance, concerning its handling of limit orders Commission and any person, other than U.S. Small Business Administration, to sell. The Commission believes that those that may be withheld from the 409 3rd Street SW, Suite 6050, waiver of the 30-day operative delay is public in accordance with the Washington, DC 20416, (202) 205–6734. consistent with the protection of provisions of 5 U.S.C. 552, will be SUPPLEMENTARY INFORMATION: Notice is investors and the public interest available for website viewing and hereby given that as a result of the because the proposal does not raise any printing in the Commission’s Public President’s major disaster declaration on new or novel issues and makes a non- Reference Room, 100 F Street NE, 10/07/2019, Private Non-Profit substantive change to clarify the rule Washington, DC 20549, on official organizations that provide essential text. Accordingly, the Commission business days between the hours of services of a governmental nature may designates the proposed rule change to 10:00 a.m. and 3:00 p.m. Copies of the file disaster loan applications at the be operative on upon filing.13 filing also will be available for address listed above or other locally At any time within 60 days of the inspection and copying at the principal announced locations. filing of the proposed rule change, the office of the Exchange. All comments The following areas have been Commission summarily may received will be posted without change. determined to be adversely affected by temporarily suspend such rule change if Persons submitting comments are the disaster: it appears to the Commission that such cautioned that we do not redact or edit Primary Counties/Areas: Butte, Gregory, action is necessary or appropriate in the personal identifying information from Kingsbury, Lawrence, Meade, and public interest, for the protection of comment submissions. You should Tripp Counties and the Cheyenne investors, or otherwise in furtherance of submit only information that you wish River Tribe of the Cheyenne River the purposes of the Act. If the to make available publicly. All Sioux Reservation and the Lower Commission takes such action, the submissions should refer to File Brule Tribe of the Lower Brule Commission shall institute proceedings Number SR–MIAX–2019–41 and should Reservation. to determine whether the proposed rule be submitted on or before November 7, The Interest Rates are: should be approved or disapproved. 2019. IV. Solicitation of Comments For the Commission, by the Division of Percent Trading and Markets, pursuant to delegated Interested persons are invited to authority.14 For Physical Damage: submit written data, views, and Jill M. Peterson, Non-Profit Organizations with arguments concerning the foregoing, Assistant Secretary. Credit Available Elsewhere ... 2.750 including whether the proposed rule Non-Profit Organizations with- change is consistent with the Act. [FR Doc. 2019–22598 Filed 10–16–19; 8:45 am] out Credit Available Else- Comments may be submitted by any of BILLING CODE 8011–01–P where ...... 2.750 the following methods: For Economic Injury: Non-Profit Organizations with- Electronic Comments SMALL BUSINESS ADMINISTRATION out Credit Available Else- • where ...... 2.750 Use the Commission’s internet [Disaster Declaration #16153 and #16154; comment form (http://www.sec.gov/ SOUTH DAKOTA Disaster Number SD– The number assigned to this disaster rules/sro.shtml); or 00097] • Send an email to rule-comments@ for physical damage is 161536 and for sec.gov. Please include File Number SR– Presidential Declaration of a Major economic injury is 161540. MIAX–2019–41 on the subject line. Disaster for Public Assistance Only for (Catalog of Federal Domestic Assistance the State of South Dakota Number 59008) Paper Comments • Send paper comments in triplicate AGENCY: U.S. Small Business James Rivera, to Secretary, Securities and Exchange Administration. Associate Administrator for Disaster Commission, 100 F Street NE, ACTION: Notice. Assistance. Washington, DC 20549–1090. [FR Doc. 2019–22676 Filed 10–16–19; 8:45 am] SUMMARY: This is a Notice of the BILLING CODE 8026–03–P All submissions should refer to File Presidential declaration of a major Number SR–MIAX–2019–41. This file disaster for Public Assistance Only for number should be included on the the State of South Dakota (FEMA— SMALL BUSINESS ADMINISTRATION subject line if email is used. To help the 4467—DR), dated 10/07/2019. Commission process and review your Incident: Severe Storms, Tornadoes, [Disaster Declaration #16158 and #16159; comments more efficiently, please use and Flooding. ILLINOIS Disaster Number IL–00058] only one method. The Commission will Incident Period: 06/30/2019 through Administrative Declaration of a post all comments on the Commission’s 07/21/2019. Disaster for the State of Illinois internet website (http://www.sec.gov/ DATES: Issued on 10/07/2019. rules/sro.shtml). Copies of the Physical Loan Application Deadline AGENCY: U.S. Small Business submission, all subsequent Date: 12/06/2019. Administration. amendments, all written statements Economic Injury (EIDL) Loan ACTION: Notice. with respect to the proposed rule Application Deadline Date: 07/07/2020. change that are filed with the ADDRESSES: Submit completed loan SUMMARY: This is a notice of an Commission, and all written applications to: U.S. Small Business Administrative declaration of a disaster Administration, Processing and for the State of ILLINOIS dated 10/10/ 13 For purposes only of waiving the 30-day Disbursement Center, 14925 Kingsport 2019. operative delay, the Commission also has considered the proposed rule’s impact on Road, Fort Worth, TX 76155. Incident: Severe Storms and Flooding. efficiency, competition, and capital formation. See Incident Period: 08/12/2019 through 15 U.S.C. 78c(f). 14 17 CFR 200.30–3(a)(12). 08/13/2019.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00138 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55678 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

DATES: Issued on 10/10/2019. DEPARTMENT OF THE TREASURY program (BEA, CDFI, NACA Programs). Physical Loan Application Deadline The revised form is also consistent with Date: 12/09/2019. Community Development Financial the format of the CDFI Fund’s Annual Economic Injury (EIDL) Loan Institutions Fund Compliance report. Application Deadline Date: 07/10/2020. The Uses of Award Report Form may Agency Information Collection be obtained from the CDFI Fund’s ADDRESSES: Submit completed loan Activities; Proposed Collection: website at http://www.cdfifund.gov/bea applications to: U.S. Small Business Comment Request; Uses of Awards under How to Apply Step 4: Administration, Processing and Report Form Compliance and Reporting or http:// Disbursement Center, 14925 Kingsport www.cdfifund.gov/cdfi under How to ACTION: Notice and request for Road, Fort Worth, TX 76155. Apply Step 5: Compliance and comments. FOR FURTHER INFORMATION CONTACT: A. Reporting. Escobar, Office of Disaster Assistance, SUMMARY: The U.S. Department of the Type of Review: Revision of a U.S. Small Business Administration, Treasury, as part of its continuing effort currently approved collection. 409 3rd Street SW, Suite 6050, to reduce paperwork and respondent Description: The CDFI Fund is Washington, DC 20416, (202) 205–6734. burden, invites the general public and seeking to revise its Uses of Award SUPPLEMENTARY INFORMATION: Notice is other Federal agencies to take this Report Form to validate investments hereby given that as a result of the opportunity to comment on proposed made in Persistent Poverty Counties Administrator’s disaster declaration, information collections, as required by (PPCs) by BEA Program award applications for disaster loans may be the Paperwork Reduction Act of 1995. Recipients in compliance with the PPC filed at the address listed above or other Currently, the Community Development Congressional Mandate. The CDFI locally announced locations. Financial Institutions Fund (the CDFI Fund’s appropriation in the The following areas have been Fund), the Department of the Treasury, Consolidated Appropriations Act, 2019 determined to be adversely affected by is soliciting comments concerning the (Pub. L. 116–6), enacted February 15, the disaster: Uses of Awards Report Form, which is 2019, requires that at least 10 percent of completed by the Bank Enterprise BEA Program funds be used for Awards Primary Counties: Madison. that support investments that serve Contiguous Counties: Award Program (BEA Program) Recipients and the Community populations living in PPCs. In order to Illinois: Bond, Clinton, Jersey, meet this requirement, Applicants are Development Financial Institutions Macoupin, Montgomery, Saint required to indicate the minimum and Program (CDFI Program) and Native Clair. maximum percentage of the Estimated American CDFI Assistance Program Missouri: Saint Charles, Saint Louis, BEA Program Award the Applicant will (NACA Program) Recipients. Saint Louis City. commit to deploying in PPCs. The Interest Rates are: DATES: Written comments should be A Persistent Poverty County is any received on or before December 16, 2019 county that has had 20 percent or more Percent to be assured of consideration. of its population living in poverty over ADDRESSES: Direct all comments in the past 30 years, as measured by the For Physical Damage: writing to Mia Sowell, Associate 1990 and 2000 decennial census, and Homeowners With Credit Avail- Program Manager, Community the 2011–2015 5-year data series able Elsewhere ...... 3.500 Development Financial Institutions available from the American Homeowners Without Credit Fund, U.S. Department of the Treasury, Available Elsewhere ...... 1.750 Community Survey from the Census Businesses With Credit Avail- 1500 Pennsylvania Avenue NW, Bureau. A Recipient that made able Elsewhere ...... 8.000 Washington, DC 20220, by email to commitments to serve Persistent Poverty Businesses Without Credit [email protected], or by facsimile Counties is required to identify the Available Elsewhere ...... 4.000 to (202) 508–0083. Please note that this portion of the total award amount used Non-Profit Organizations With is not a toll free number. for BEA Qualified Activities in Credit Available Elsewhere ... 2.750 FOR FURTHER INFORMATION CONTACT: Persistent Poverty Counties. Non-Profit Organizations With- Requests for additional information The purpose of the BEA Program is to out Credit Available Else- should be directed to Mia Sowell, provide an incentive to insured where ...... 2.750 depository institutions to increase their For Economic Injury: Associate Program Manager, Businesses Small Agricultural Community Development Financial activities in the form of loans, Cooperatives Without Credit Institutions Fund, U.S. Department of investments, services, and technical Available Elsewhere ...... 4.000 the Treasury, 1500 Pennsylvania assistance within distressed Non-Profit Organizations With- Avenue NW, Washington, DC 20220, by communities and provide financial out Credit Available Else- email to [email protected], or by assistance to certified Community where ...... 2.750 phone to (202) 653–0421. Please note Development Financial Institutions that these are not toll free numbers. (CDFIs) through grants, stock purchases, The number assigned to this disaster SUPPLEMENTARY INFORMATION: loans, deposits, and other forms of for physical damage is 16158 6 and for Title: Uses of Award Report Form. financial and technical assistance. economic injury is 16159 0. OMB Number: 1559–0032. Applicants submit applications and are The States which received an EIDL There is no significant content change evaluated in accordance with statutory Declaration # are Illinois, Missouri. to the form, however the format will be and regulatory requirements (12 CFR (Catalog of Federal Domestic Assistance revised to: (1) Include a system- 1806), and requirements that are set Number 59008) generated validation data point to forth in the annual Notice of Funds capture Persistent Poverty County Availability. The CDFI Fund requires Christopher Pilkerton, investments made by BEA Program BEA Program Award Recipients to use Acting Administrator. Recipients; and (2) display a table that BEA Program Awards for BEA Program [FR Doc. 2019–22619 Filed 10–16–19; 8:45 am] describes and easily identifies which Qualified Activities, as defined in the BILLING CODE 8026–03–P data points are collected for each BEA Program regulations. Recipients are

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00139 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55679

required to report to the CDFI Fund on Frequency of Response: Annually. DEPARTMENT OF TREASURY their Qualified Activities per their Estimated Total Number of Annual Office of the Comptroller of the Award Agreements. Responses: 700. The CDFI Program was established by Currency the Community Development and Estimated Annual Time per [Docket ID OCC–2019–0018] Regulatory Improvement Act of 1994 to Respondent: 30 min. use federal resources to invest in and Estimated Total Annual Burden FEDERAL RESERVE SYSTEM build the capacity of CDFIs to serve low- Hours: 350 hours. [Docket ID OP–1679] income people and communities lacking Requests for Comments: Comments adequate access to affordable financial submitted in response to this notice will products and services. The CDFI Fund FEDERAL DEPOSIT INSURANCE be summarized and/or included in the created the Native Initiatives, which CORPORATION request for the Office of Management includes the NACA Program, to further RIN 3064–ZA09 support the creation and expansion of and Budget (OMB) approval. All Native CDFIs. Through the CDFI comments will become a matter of NATIONAL CREDIT UNION Program and NACA Program, the CDFI public record and will be published on ADMINISTRATION Fund provides: (1) Financial Assistance the CDFI Fund website at http:// RIN 3133–AF05 (FA) awards to CDFIs and Native CDFIs www.cdfifund.gov. Comments are invited on: (a) Whether the collection of that have Comprehensive Business Interagency Guidance on Credit Risk Plans for creating demonstrable information is necessary for the proper Review Systems community development impact performance of the functions of the through the deployment of credit, agency, including whether the AGENCY: Office of the Comptroller of the capital, and financial services within information shall have practical utility; Currency (OCC), Treasury; Board of Target Markets and/or Eligible (b) the accuracy of the agency’s estimate Governors of the Federal Reserve Markets; 1 and (ii) Technical Assistance of the burden of the collection of System (Board); Federal Deposit (TA) grants to CDFIs and Native CDFIs information; (c) ways to enhance the Insurance Corporation (FDIC); and and entities proposing to become CDFIs quality, utility, and clarity of the National Credit Union Administration or Native CDFIs in order to build their information collected; (d) ways to (NCUA). capacity to better address the minimize the burden of the collection of ACTION: Proposed guidance. community development and capital information on respondents, including SUMMARY: access needs of their existing or through the use of technology; and (e) The OCC, the Board, the FDIC, and the NCUA (collectively, the proposed Target Markets and/or to estimates of capital or start-up costs and agencies) are inviting comment on become certified CDFIs. CDFI Program costs of operation, maintenance, and proposed guidance for credit risk review applicants submit applications and are purchase of services to provide evaluated in accordance with statutory systems. This proposed guidance is information. and regulatory requirements (12 CFR relevant to all institutions supervised by 1805), and requirements that are set An agency may not conduct or the agencies. The proposed guidance forth in an annual Notice of Funds sponsor, and a person is not required to discusses sound management of credit Availability. NACA Program applicants respond to, a collection of information risk, a system of independent, ongoing submit applications and are evaluated unless the collection of information credit review, and appropriate in accordance with requirements that displays a valid OMB control number. communication regarding the performance of the institution’s loan are set forth in an annual Notice of Authority: 12 U.S.C. 4704, 4713; 12 CFR portfolio to its management and board Funds Availability. Recipients with FA parts 1805 and 1806. or TA awards are required to report to of directors. the CDFI Fund on the uses of those Dated: October 10, 2019. DATES: Comments must be received by funds per their Assistance Agreements. Jodie L. Harris, December 16, 2019. Affected Public: Recipients of BEA Director, Community Development Financial ADDRESSES: Interested parties are Program awards. Institutions Fund. encouraged to submit written comments Estimated Number of Respondents: [FR Doc. 2019–22574 Filed 10–16–19; 8:45 am] to any or all of the agencies listed 120. BILLING CODE 4810–70–P below. The agencies will share Frequency of Response: Once. comments with each other. Estimated Total Number of Annual Comments should be directed to: Responses: 120. OCC: You may submit comments to Estimated Annual Time per the OCC by any of the methods set forth Respondent: 1 hour. below. Commenters are encouraged to Estimated Total Annual Burden submit comments through the Federal Hours: 120 hours. eRulemaking Portal or email, if possible. Affected Public: Recipients of CDFI or Please use the title ‘‘Interagency NACA Program awards. Guidance on Credit Risk Review Estimated Number of Respondents: Systems’’ to facilitate the organization 700. and distribution of the comments. You 1 Eligible Market is defined as (i) a geographic may submit comments by any of the area meeting the requirements set forth in 12 CFR following methods: 1805.201(b)(3)(ii), or (ii) individuals that are Low- • Federal eRulemaking Portal— Income, African American, Hispanic, Native ‘‘Regulations.gov’’: Go to American, Native Hawaiians residing in Hawaii, Alaska Natives residing in Alaska, or Other Pacific www.regulations.gov. Enter ‘‘Docket ID Islanders residing in American Samoa, Guam or the OCC–2019–0018’’ in the Search Box and Northern Mariana Islands. click ‘‘Search.’’ Click on ‘‘Comment

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00140 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55680 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Now’’ to submit public comments. Click Board: When submitting comments, regulations/laws/federal/, including any on the ‘‘Help’’ tab on the please consider submitting your personal information provided. Regulations.gov home page to get comments by email or fax because paper NCUA: You may submit comments by information on using Regulations.gov, mail in the Washington, DC area and at any one of the following methods including instructions for submitting the Board may be subject to delay. (please send comments by one method public comments. You may submit comments, identified only): • Email: regs.comments@ by OP–1679, by any of the following • Federal rulemaking Portal: http:// occ.treas.gov. methods: www.regulations.gov. Follow the • Mail: Chief Counsel’s Office, Attn: • Agency website: http:// instructions for submitting comments. Comment Processing, Office of the www.federalreserve.gov. Follow the • Email: Address to regcomments@ Comptroller of the Currency, 400 7th instructions for submitting comments at ncua.gov. Include ‘‘[Your name]— Street SW, Suite 3E–218, Washington, http://www.federalreserve.gov/ Comments on ‘‘Interagency Guidance on DC 20219. generalinfo/foia/RevisedRegs.cfm. Credit Risk Review Systems’’ in the • • Hand Delivery/Courier: 400 7th Email: regs.comments@ email subject line. Street SW, Suite 3E–218, Washington, federalreserve.gov. Include docket and • Fax: (703) 518–6319. Use the DC 20219. RIN numbers in the subject line of the subject line described above for email. message. • Mail: Address to Gerard Poliquin, Instructions: You must include • ‘‘OCC’’ as the agency name and ‘‘Docket Fax: (202) 452–3819 or (202) 452– Secretary of the Board, National Credit 3102. Union Administration, 1775 Duke ID OCC–2019–0018’’ in your comment. • In general, the OCC will enter all Mail: Ann E. Misback, Secretary, Street, Alexandria, Virginia 22314– comments received into the docket and Board of Governors of the Federal 3428. publish the comments on the Reserve System, 20th Street and • Hand Delivery/Courier: Same as Regulations.gov website without Constitution Avenue NW, Washington, mail address. change, including any business or DC 20551. Public Inspection: You can view all All public comments will be made personal information provided such as public comments on NCUA’s website at available on the Board’s website at: name and address information, email https://www.ncua.gov/regulation- http://www.federalreserve.gov/ addresses, or phone numbers. supervision/rules-regulations/proposed- generalinfo/foia/RevisedRegs.cfm as Comments received, including pending-and-recently-final-regulations submitted, unless modified for technical attachments and other supporting as submitted, except for those we cannot reasons or to remove personally materials, are part of the public record post for technical reasons. NCUA will identifiable information at the and subject to public disclosure. Do not not edit or remove any identifying or commenter’s request. Accordingly, include any information in your contact information from the public comments will not be edited to remove comment or supporting materials that comments submitted. You may inspect any identifying or contact information. you consider confidential or paper copies of comments in NCUA’s Public comments may also be viewed inappropriate for public disclosure. law library at 1775 Duke Street, electronically or in paper in Room 3515, You may review comments and other Alexandria, Virginia 22314, by 1801 K Street NW (between 18th and related materials that pertain to this appointment weekdays between 9:00 19th Streets NW), between 9:00 a.m. and rulemaking action by any of the a.m. and 3:00 p.m. To make an 5:00 p.m. on weekdays. following methods: appointment, call (703) 518–6546 or • FDIC: You may submit comments, send an email to [email protected]. Viewing Comments Electronically: identified by FDIC RIN 3064–ZA09, by Go to www.regulations.gov. Enter any of the following methods: FOR FURTHER INFORMATION CONTACT: ‘‘Docket ID OCC–2019–0018’’ in the • Agency website: https:// OCC: Beth Nalyvayko, Bank Search box and click ‘‘Search.’’ Click on www.fdic.gov/regulations/laws/federal/. Examiner, or Lou Ann Francis, Director, ‘‘Open Docket Folder’’ on the right side Follow instructions for submitting Commercial Credit Risk, (202) 649– of the screen. Comments and supporting comments on the Agency website. 6670; or Kevin Korzeniewski, Counsel, materials can be viewed and filtered by • Mail: Robert E. Feldman, Executive Chief Counsel’s Office, (202) 649–5490. clicking on ‘‘View all documents and Secretary, Attention: Comments/Legal For persons who are hearing impaired, comments in this docket’’ and then ESS, Federal Deposit Insurance TTY, (202) 649–5597. using the filtering tools on the left side Corporation, 550 17th Street NW, Board: Constance Horsley, Deputy of the screen. Click on the ‘‘Help’’ tab Washington, DC 20429. Associate Director, (202) 452–5239; on the Regulations.gov home page to get • Hand Delivery/Courier: Comments Virginia Gibbs, Manager, (202) 452– information on using Regulations.gov. may be hand-delivered to the guard 2521; or Carmen Holly, Lead Financial The docket may be viewed after the station at the rear of the 550 17th Street Institution Policy Analyst (202) 973– close of the comment period in the same NW building (located on F Street) on 6122, the Division of Supervision and manner as during the comment period. business days between 7:00 a.m. and Regulation; or Alyssa O’Connor, • Viewing Comments Personally: You 5:00 p.m. Attorney, Legal Division, (202) 452– may personally inspect comments at the • Email: [email protected]. 3886, Board of Governors of the Federal OCC, 400 7th Street SW, Washington, Comments submitted must include Reserve System, 20th and C Streets NW, DC 20219. For security reasons, the OCC ‘‘FDIC’’ and ‘‘RIN 3064–ZA09’’ on the Washington, DC 20551. requires that visitors make an subject line of the message. FDIC: Thomas F. Lyons, Chief, Policy appointment to inspect comments. You • Federal eRulemaking Portal: http:// & Program Development, tlyons@ may do so by calling (202) 649–6700 or, www.regulations.gov. Follow the fdic.gov (202) 898–6850; George J. for persons who are deaf or hearing instructions for submitting comments. Small, Senior Examination Specialist, impaired, TTY, (202) 649–5597. Upon • Public Inspection: All comments Risk Management Policy, gsmall@ arrival, visitors will be required to received must include ‘‘FDIC’’ and ‘‘RIN fdic.gov (917) 320–2750, Risk present valid government-issued photo 3064–ZA09’’ for this rulemaking. All Management Supervision; Ann M. identification and submit to security comments received will be posted Adams, Senior Examination Specialist, screening in order to inspect comments. without change to http://www.fdic.gov/ Risk Management Policy,

VerDate Sep<11>2014 19:57 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55681

[email protected] (347) 751–2469, soundness standards for insured loan review, including factors such as Risk Management Supervision; or depository institutions to establish a loan size, credit information, borrower Andrew B. Williams II, Counsel, system for independent, ongoing credit relationship, concentration levels, [email protected]; (202) 898–3581, risk review, and including regular performance, and other risk indicators. Supervision and Legislation Branch, communication to its management and Further, it articulates expectations for Legal Division, Federal Deposit board of directors regarding the communicating review results. The Insurance Corporation; 550 17th Street institution’s loan portfolio proposed guidance also discusses NW, Washington, DC 20429. performance.4 This guidance is resolving risk rating differences between NCUA: Vincent H. Vieten, Senior appropriate for all institutions 5 and loan officers and credit risk review Credit Specialist (703) 518–6618; Uduak describes a broad set of practices that personnel; conducting discussions with Essien, Director (703) 518–6399, can occur either within a dedicated unit appropriate loan officers and Division of Credit Markets; or Ian or multiple units throughout an department managers; and obtaining Marenna, Associate General Counsel institution to form a credit risk review management responses for corrective (703) 518–6554, Office of General system consistent with safe-and-sound action to address credit risk review Counsel. lending practices and the Guidelines. findings. SUPPLEMENTARY INFORMATION: This guidance outlines principles for use in developing and maintaining an III. Request for Comment I. Background effective credit risk review system. The The agencies request comments on all The agencies’ current credit risk nature of credit risk review systems aspects of this proposed guidance, review guidance is contained in typically varies based on an institution’s including, but not limited to, those set Attachment 1—Loan Review Systems— size, complexity, loan types, risk profile, forth below. and risk management practices. of the Interagency Policy Statement on Question 1: To what extent does the Therefore, the proposed guidance the Allowance for Loan and Lease proposed credit review guidance reflect 1 attempts to highlight principles that can Losses (ALLL) (2006 attachment 1). The current sound practices for an be scaled to an institution’s loan agencies are proposing to update that institution’s credit risk review activities? guidance to reflect the current expected activity. What elements should be added or credit losses methodology (CECL).2 The proposed guidance incorporates removed, and why? Further, the agencies recognize that and updates the principles enumerated credit risk review systems have a in 2006 attachment 1 and reaffirms the Question 2: To what extent is the broader application in risk management key elements of an effective credit risk proposed credit review guidance programs than just providing review system, including qualifications appropriate for institutions of all asset information on the collectibility of an and independence of credit risk review sizes? What elements should be added institution’s loan portfolio for personnel; the frequency, scope and or removed for institutions of differing determining an appropriate level for the depth of reviews; and the review of sizes, and why? ACLs or Allowance for Loan and Lease findings and follow-up; communication, Question 3: What if any additional Losses (ALLL), as applicable. Therefore, and distribution of results. The factors should the agencies consider the agencies are proposing to issue proposed guidance includes updates to incorporating into the guidance to help guidance on credit risk review systems reflect current industry credit review achieve a sufficient degree of as a standalone guidance document and practices and examples of credit risk independence and why? To what extent accordingly rescind the 2006 attachment review procedures and methods to help does the approach described for small 1. The proposed guidance on credit risk ensure a proper degree of independence or rural institutions with fewer resources review will continue to be applicable to for small institutions. The proposed or employees provide for an appropriate all supervised institutions. guidance also outlines characteristics of degree of independence in the credit review function? What if any II. Overview of the Proposed an effective credit risk rating framework, Interagency Guidance on Credit Risk including the factors used to assign modifications should the agencies Review Systems ratings to promote an effective risk consider and why? review by qualified, independent IV. The Paperwork Reduction Act The proposed guidance aligns with parties. As described in the proposed the Interagency Guidelines Establishing guidance, independence from the In accordance with the requirements Standards for Safety and Soundness lending function is an important of the Paperwork Reduction Act of 1995 3 (Guidelines) which sets out safety and characteristic for personnel who assess (PRA),6 the agencies may not conduct or credit risks, develop the credit review sponsor, and the respondent is not 1 See OCC Bulletin 2006–47 (December 13, 2006); plan, and follow-up on review findings. FDIC Financial Institution Letter FIL–105–2006 required to respond to, an information (December 13, 2006); Federal Reserve Supervision The proposed guidance discusses collection unless it displays a currently and Regulation (SR) letter 06–17 (December 13, various criteria for consideration in valid Office of Management and Budget 2006); NCUA Accounting Bulletin No. 06–01 determining the scope of a risk-based (OMB) control number. (December 2006). 2 The Financial Accounting Standards Board’s The proposed guidance will not create (FASB’s) Accounting Standards Update 2016–13, Appendix A (FDIC). See Part 723 of the NCUA any new or revise any existing Financial Instruments—Credit Losses (Topic 326): Rules and Regulations. 4 collections of information under the Measurement of Credit Losses on Financial For foreign banking organization branches, Instruments and subsequent amendments issued agencies, or subsidiaries not operating under single PRA. Therefore, no information since June 2016 are codified in Accounting governance in the United States, the U.S. risk collection request will be submitted to Standards Codification (ASC) Topic 326, Financial committee would serve in the role of the board of the OMB for review. Instruments—Credit Losses (FASB ASC Topic 326). directors for purposes of this guidance. FASB ASC Topic 326 revises the accounting for the 5 For purposes of this guidance, regulated V. Proposed Guidance allowances for credit losses (ACLs) and introduces institutions are those supervised by the following CECL. The proposed guidance on CECL is agencies: The Board of Governors of the Federal The text of the proposed guidance is contained in a separate notice published in today’s Reserve System (Board), the Federal Deposit as follows: Federal Register. Insurance Corporation (FDIC), the National Credit 3 12 CFR part 30, Appendix A (OCC); 12 CFR part Union Administration (NCUA), and the Office of 6 208 Appendix D–1 (Board); and 12 CFR part 364 the Comptroller of the Currency (OCC). 44 U.S.C. 3501–3521.

VerDate Sep<11>2014 19:57 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00142 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55682 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

INTERAGENCY GUIDANCE ON officers, other officers, or directors, who their loan approval, monitoring, and CREDIT RISK REVIEW SYSTEMS are independent of the credits being risk assessment. • Provides management and the Introduction assessed. In larger or more complex institutions, a credit risk review system board of directors with an objective, The Interagency Guidelines may include components of a dedicated independent, and timely assessment of Establishing Standards for Safety and credit risk review function that are the overall quality of the loan portfolio. Soundness (Guidelines) 1 underscore the independent of the institution’s lending • Provides management with accurate critical importance of credit risk review function. A credit risk review system and timely credit quality information for and set safety and soundness standards may also include various financial and regulatory reporting for insured depository institutions to responsibilities assigned to credit purposes, including the determination establish a system for independent, underwriting, loan administration, a of appropriate ACL or ALLL, as ongoing credit risk review, and for problem loan workout group, or other applicable. appropriate communication to its organizational units of an institution. management and board of directors.2 Credit Risk Rating (or Grading) Among other responsibilities, these Framework This guidance, which aligns with the groups may administer the internal Guidelines, is appropriate for all problem loan reporting process, The foundation for any effective institutions 3 and describes a broad set maintain the integrity of the credit risk credit risk review system is accurate and of practices that can be used either rating process, confirm that timely and timely risk ratings to assess credit within a dedicated unit or across appropriate changes are made to loan quality and identify or confirm problem multiple units throughout an institution risk ratings, and support the quality of loans. An effective credit risk rating to form a credit risk review system that information used to estimate the framework includes the monitoring of is consistent with safe-and-sound Allowance for Credit Losses (ACL) or individual loans and retail portfolios, or lending practices. This guidance the Allowance for Loan and Lease segments thereof, with similar risk outlines principles that an institution Losses, (ALLL), as applicable.5 characteristics. An effective framework should consider in developing and Additionally, some or all of the credit also provides important information on maintaining an effective credit risk risk review function may be outsourced the collectibility of the portfolio for use review system. to a qualified third party. in the determination of an appropriate Overview of Credit Risk Review Regardless of the structure, an ACL or ALLL, as applicable. Further, an Systems effective credit risk review system effective framework generally places accomplishes the following objectives: primary reliance on the lending staff to The nature of credit risk review • Promptly identifies loans with assign accurate and timely risk ratings 4 systems varies based on an actual and potential credit weaknesses and identify emerging loan problems. institution’s size, complexity, loan so that timely action can be taken to However, given the importance of the types, risk profile, and risk management strengthen credit quality and minimize credit risk rating framework, the lending practices. For example, in smaller or losses. personnel’s assignment of particular risk less complex institutions, a credit risk • Appropriately validates and, if ratings is typically subject to review by review system may include qualified necessary, adjusts risk ratings, qualified and independent: (i) Peers, members of the staff, including loan especially for those loans with potential managers, or loan committee(s); (ii) part- or well-defined credit weaknesses that time or full-time employee(s); (iii) 1 12 CFR part 30, Appendix A (OCC); 12 CFR part may jeopardize repayment. internal departments staffed with credit 208 Appendix D–1 (Board); and 12 CFR part 364 • Appendix A (FDIC). Part 723 of NCUA Rules and Identifies relevant trends that affect review specialists; or (iv) external credit Regulations. the quality of the loan portfolio and review consultants. A risk rating review 2 For foreign banking organization branches, highlights segments of the loan portfolio that is independent of the lending agencies, or subsidiaries not operating under single that are potential problem areas. function and approval process can governance in the United States, the U.S. risk • Assesses the adequacy of and provide a more objective assessment of committee would serve in the role of the board of adherence to internal credit policies and directors for purposes of this guidance. credit quality.6 3 For purposes of this guidance, regulated loan administration procedures and An effective credit risk rating institutions are those supervised by the following monitors compliance with applicable framework includes the following agencies: The Board of Governors of the Federal laws and regulations. Reserve System (Board), the Federal Deposit • attributes: Evaluates the activities of lending • A formal credit risk rating system in Insurance Corporation (FDIC), the National Credit personnel, including their compliance Union Administration (NCUA), and the Office of which the ratings reflect the risk of the Comptroller of the Currency (OCC) hereafter with lending policies and the quality of default and credit losses, and for which referred to as the ‘‘agencies.’’ a written description of the credit risk 4 The credit risk review function is not intended 5 Credit risk review may be referred to as loan to be performed by an institutions’ internal audit review, credit review, asset quality review, or framework is maintained, including a function. However, as discussed in the agencies’ another name as chosen by an institution. The role March 2003 Interagency Policy Statement on the of and expectations for credit risk review as 6 Small or rural institutions that have few Internal Audit Function and its Outsourcing (2003 discussed in this document are distinct from the resources or employees may adopt modified credit policy statement), some institutions coordinate the roles and expectations for other groups within an risk review procedures and methods to achieve a internal audit function with several risk monitoring institution that are also responsible for monitoring, proper degree of independence. For example, in the functions, such as the credit risk review function. managing and reporting credit risk. Examples may review process, such an institution may use The 2003 policy statement states that coordination be those involved with lending functions, qualified members of the staff, including loan of credit risk review with the internal audit independent risk management, loan work outs, and officers, other officers, or directors, who are not function can facilitate the reporting of material risk accounting. Each institution indicates in its own involved with originating or approving the specific and control issues to the audit committee, increase policies and procedures the specific roles and credits being assessed and whose compensation is the overall effectiveness of these monitoring responsibilities of these different groups, including not influenced by the assigned risk ratings. It is functions, better utilize available resources, and separation of duties. A credit risk review unit, or appropriate to employ such modified procedures enhance the institution’s ability to comprehensively individuals serving in that role, can rely on when more robust procedures and methods are manage risk. However, an effective internal audit information provided by other units in developing impractical. Institution management should have function maintains the ability to independently its own independent assessment of credit risk in reasonable confidence that the personnel chosen audit the credit risk review function. (The NCUA loan portfolios, but should critically evaluate such will be able to conduct reviews with the needed was not an issuing agency of the 2003 policy information to maintain its own view, and not rely independence despite their position within the loan statement.) exclusively on such information. function.

VerDate Sep<11>2014 19:57 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55683

discussion of the factors used to assign committee to evidence its support of, For example, in the review process, appropriate risk ratings to individual and commitment to, maintaining an smaller institutions may use an loans and retail portfolios, or segments effective system. Effective policies independent committee of outside thereof, with similar risk include a description of the overall risk directors or qualified members of the characteristics.7 rating framework, and establish staff, including loan officers, other • Identification or grouping of loans responsibilities for loan review based on officers, or directors, who are not that warrant the special attention of the portfolio being assessed. An involved with originating or approving management or other designated ‘‘watch effective credit risk review policy the specific credits being assessed and lists’’ of loans that management is more addresses the following elements, whose compensation is not influenced closely monitoring.8 described in more detail below: The by the assigned risk ratings. Whether or • Clear explanation of why particular qualifications and independence of not the institution has a dedicated credit loans warrant the special attention of credit risk review personnel; the risk review department, it is prudent for management or have received an frequency, scope, and depth of reviews; the credit risk review function to report adverse risk rating. the review of findings and follow-up; directly to the institution’s board of • Evaluation of the effectiveness of and communication and distribution of directors or a committee thereof, approved workout plans. results. consistent with safety and soundness • A method for communicating standards. Senior management may be Qualifications of Credit Risk Review direct, periodic, and timely information responsible for appropriate Personnel to the institution’s senior management administrative functions provided such and the board of directors or appropriate An effective credit risk review an arrangement does not compromise board committee on the status of loans function is staffed with personnel who the independence of the credit risk identified as warranting special are qualified based on their level of review function. attention or adverse classification, and education, experience, and extent of The institution’s board of directors, or the actions taken by management to formal credit training. Qualified a committee thereof, may outsource the strengthen the credit quality of those personnel are knowledgeable in both credit risk review function to an loans. sound lending practices and the independent third party.11 However, the • Information on the institution’s institution’s lending guidelines for the responsibility for maintaining a sound historical loss experience for each types of loans offered by the institution. credit risk review process remains with segment of the loan portfolio.9 The level of experience and expertise the institution’s board of directors. In for all personnel involved in the credit Elements of an Effective Credit Risk any case, institution personnel who are risk review process is expected to be Review System independent from the lending function commensurate with the nature of the typically assess risks, develop the credit An effective credit risk review system risk and complexity of the portfolios. In risk review plan, and verify appropriate starts with a written credit risk review addition, qualified credit risk review follow-up of findings. Outsourcing of policy 10 that is reviewed and approved personnel possess knowledge of the credit risk review function to the at least annually by the institution’s relevant laws, regulations, and institution’s external auditor requires board of directors or appropriate board supervisory guidance. additional independence considerations.12 7 A bank or savings association may have a credit Independence of Credit Risk Review risk rating framework that differs from the Personnel Frequency of Reviews framework for loan classifications used by the An effective credit risk review system federal banking agencies. Such banks and savings An effective credit risk review system associations should maintain documentation that uses both the initial identification of provides for review and evaluation of an translates their risk ratings into the regulatory emerging problem loans by loan officers institution’s significant loans, loan classification framework used by the federal and other line staff, and an assessment products, or groups of loans at least banking agencies. This documentation will enable of loans by personnel independent of examiners to reconcile the totals for the various annually, on renewal, or more loan classifications or risk ratings under the the credit approval process. Placing frequently when internal or external institution’s system to the federal banking agencies’ primary responsibility on loan officers, factors indicate a potential for categories contained in the Uniform Agreement on risk officers, and line staff is important deteriorating credit quality or the the Classification and Appraisal of Securities Held for continuous portfolio analysis and existence of one or more other risk by Depository Institutions Attachment 1— Classification Definitions (OCC: OCC Bulletin prompt identification and reporting of factors. The credit risk review function 2013–28; Board: SR Letter 13–18; and FDIC: FIL– problem loans. Because of frequent can also provide useful continual 51–2013). The NCUA does not require credit unions contact with borrowers, loan officers feedback on the effectiveness of the to adopt a uniform regulatory classification system. and line staff can usually identify Risk rating guidance for credit unions is set forth 11 in NCUA letters to credit unions 10–CU–02, potential problems before they become For a discussion of the expectations for ‘‘Current Risks in Business Lending and Sound Risk apparent to others. However, institutions that use outside service providers, refer Management Practices,’’ issued January 2010 and to SR letter 13–19/CA letter 13–21, ‘‘Guidance on institutions should be careful to avoid Managing Outsourcing Risk,’’ issued by the Board 10–CU–03, ‘‘Concentration Risk,’’ issued March over-reliance on loan officers and line on December 5, 2013; FIL–44–2008, ‘‘Guidance for 2010. See also the Commercial and Member Managing Third-Party Risk,’’ issued by the FDIC on Business Loans section of the NCUA Examiner’s staff for identification of problem loans. June 6, 2008; and OCC Bulletin 2013–29, ‘‘Third- Guide (Commercial and Member Business Loans > An independent assessment of risk is Party Relationships: Risk Management Guidance,’’ Credit Risk Rating Systems). achieved when personnel who perform issued by the OCC on October 30, 2013. For credit 8 In addition to loans designated as ‘‘watch list,’’ the loan review do not have control over unions, refer to NCUA letters to credit unions 01– this identification typically includes loans rated the loan and are not part of, or CU–20 ‘‘Due Diligence over Third Party Service special mention, substandard, doubtful or loss. Providers,’’ issued November 2001 and 07–CU–13 9 In particular, institutions with large and influenced by individuals associated ‘‘Evaluating Third Party Relationships’’ issued complex loan portfolios typically maintain records with, the loan approval process. December 2007. of their historical loss experience for credits in each While a larger institution may 12 For further information with respect to of the categories in their risk rating framework. For establish a separate department staffed restrictions for external auditors performing banks and savings associations, these categories are with credit review specialists, cost and internal bank functions, refer to the Interagency either those used by, or those that can be translated Policy Statement on the Internal Audit Function into those used by, the federal banking agencies. volume considerations may not justify and its Outsourcing, Part III Independence of the 10 See the Guidelines. such a system in a smaller institution. Independent Public Accountant.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55684 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

lending process in order to identify any • Loans to affiliates. additional information sufficient to emerging problems. Ongoing or periodic • Loans constituting concentrations obtain the concurrence of the review of an institution’s loan portfolio of credit risk and other loans affected by independent reviewer or arbiter on the is particularly important to the common repayment factors. higher credit quality classification or estimation of ACLs or the ALLL because Depth of Transaction Reviews grade. loss expectations may change as the credit quality of a loan changes. Use of Loans selected for review are typically Communication and Distribution of key risk indicators or performance evaluated for: Results metrics by credit risk review • Credit quality, soundness of Personnel involved in the credit risk management can support adjustments to underwriting and risk identification, the frequency and scope of reviews. borrower performance, and adequacy of review process typically prepare a list of the sources of repayment. all loans reviewed, the date of review, Scope of Reviews • Validity of assumptions. and a summary analysis that Comprehensive and effective reviews • Creditworthiness of guarantors or substantiates the risk ratings assigned to cover all segments of the loan portfolio sponsors. the loans reviewed. Effective that pose significant credit risk or • Sufficiency of credit and collateral communication involves providing concentrations, and other loans that documentation. results of the credit risk reviews to the meet certain institution-specific criteria. • Proper lien perfection. board of directors or appropriate board A properly designed scope considers the • Proper approvals consistent with committee at least quarterly.14 current market conditions or other internal policies. Comprehensive reporting includes external factors that may affect a • Adherence to any loan agreement comparative trends that identify borrower’s current or future ability to covenants. significant changes in the overall quality repay the loan. Establishment of an • Compliance with internal policies of the loan portfolio, the adequacy of, appropriate review scope also helps and procedures (such as nonaccrual, and adherence to, internal policies and ensure that the sample of loans selected and classification or risk rating procedures, the quality of underwriting for review is representative of the policies), laws, and regulations. and risk identification, compliance with • portfolio as a whole and provides Quality of the information used in laws and regulations, and management’s reasonable assurance that any credit the credit loss estimation process, response to substantive criticisms or quality deterioration or unfavorable including the reasonableness of recommendations. Such comprehensive trends are identified. An effective credit assumptions used and the timeliness of reporting provides the board of directors risk review function also considers charge-offs. or appropriate board committee with industry standards for credit risk review • The accuracy of risk ratings and the insight into the portfolio and the coverage consistent with the appropriateness and timeliness of the responsiveness of management and institution’s size, complexity, loan identification of problem loans by loan facilitates timely corrective action of types, risk profile, and risk management officers. practices and helps to verify whether deficiencies. Review of Findings and Follow-Up the review scope is appropriate. The Dated: October 1, 2019 institution’s board of directors or An important activity of an effective Joseph M. Otting, appropriate board committee typically credit risk review system is the Comptroller of the Currency. approves the scope of the credit risk discussion of the review findings, review on an annual basis or whenever including all noted deficiencies, By order of the Board of Governors of the significant interim changes are made in identified weaknesses, and any existing Federal Reserve System, October 3, 2019. order to adequately assess the quality of or planned corrective actions (including Ann E. Misback, the current portfolio. An effective scope time frames for correction) with Secretary of the Board. of credit risk review is generally risk- appropriate loan officers, department Federal Deposit Insurance Corporation. managers, and senior management. An based and typically includes: Dated at Washington, DC, on September • effective system includes processes for Loans over a predetermined size. 20, 2019. • A sufficient sample of smaller all noted deficiencies and weaknesses loans, new loans, and new loan that remain unresolved beyond the Robert E. Feldman, products. scheduled time frames for correction to Executive Secretary. • Loans with higher risk indicators, be promptly reported to senior By the National Credit Union such as low credit scores, high credit management and the board of directors Administration Board on September 20, lines, or those credits approved as or appropriate board committee. 2019. exceptions to policy. It is important to resolve risk rating Gerard Poliquin, • Segments of the loan portfolio differences between loan officers and Secretary of the Board. experiencing rapid growth. loan review personnel according to a [FR Doc. 2019–22656 Filed 10–16–19; 8:45 am] • Exposures from non-lending pre-arranged process. That process may include formal appeals procedures and BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P; activities that also pose credit risk. 7535–01–P • Past due, nonaccrual, renewed, and arbitration by an independent party or restructured loans. may require default to the assigned • Loans previously adversely classification or grade that indicates 14 A board of directors or appropriate board classified and loans designated as lower credit quality. If credit risk review committee should be informed more frequently warranting the special attention of the personnel conclude that a borrower is than quarterly when material adverse trends are institution’s management.13 less creditworthy than is perceived by noted. When an institution conducts loan file • reviews less frequently than quarterly, the board or Loans to insiders or related parties. the institution, the lower credit quality appropriate board committee will typically receive classification or grade typically prevails results on other credit risk review activities 13 See footnote 8. unless internal parties identify quarterly.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00145 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55685

DEPARTMENT OF THE TREASURY SW, Suite 3E–218, Washington, DC http://www.federalreserve.gov/ 20219. generalinfo/foia/ProposedRegs.cfm. Office of the Comptroller of the • Hand Delivery/Courier: 400 7th • Email: regs.comments@ Currency Street SW, Suite 3E–218, Washington, federalreserve.gov. Include ‘‘FFIEC 102’’ DC 20219. in the subject line of the message. FEDERAL RESERVE SYSTEM Instructions: You must include • Fax: (202) 452–3819 or (202) 452– ‘‘OCC’’ as the agency name and ‘‘1557– 3102. • FEDERAL DEPOSIT INSURANCE 0325’’ in your comment. In general, the Mail: Ann E. Misback, Secretary, CORPORATION OCC will publish comments on Board of Governors of the Federal www.reginfo.gov without change, Reserve System, 20th Street and Agency Information Collection including any business or personal Constitution Avenue NW, Washington, Activities; Submission for OMB information provided, such as name and DC 20551. Review; Comment Request address information, email addresses, or All public comments are available from the Board’s website at AGENCY: Office of the Comptroller of the phone numbers. Comments received, www.federalreserve.gov/generalinfo/ Currency (OCC), Treasury; Board of including attachments and other foia/proposedregs.cfm as submitted, Governors of the Federal Reserve supporting materials, are part of the unless modified for technical reasons. System (Board); and Federal Deposit public record and subject to public Accordingly, your comments will not be Insurance Corporation (FDIC). disclosure. Do not include any information in your comment or edited to remove any identifying or ACTION: Joint notice and request for contact information. Public comments comment. supporting materials that you consider confidential or inappropriate for public may also be viewed electronically or in SUMMARY: In accordance with the disclosure. paper form in Room N146, 1709 New requirements of the Paperwork You may review comments and other York Avenue NW, Washington, DC Reduction Act of 1995 (PRA), the OCC, related materials that pertain to this 20006, between 9:00 a.m. and 5:00 p.m. the Board, and the FDIC (the agencies) information collection beginning on the on weekdays. For security reasons, the may not conduct or sponsor, and the date of publication of the second notice Board requires that visitors make an respondent is not required to respond for this collection by any of the appointment to inspect comments. You to, an information collection unless it following methods: may do so by calling (202) 452–3684. displays a currently valid Office of • Viewing Comments Electronically: Upon arrival, visitors will be required to Management and Budget (OMB) control Go to www.reginfo.gov. Click on the present valid government-issued photo number. On June 25, 2019, the agencies, ‘‘Information Collection Review’’ tab. identification and to submit to security under the auspices of the Federal Underneath the ‘‘Currently under screening in order to inspect and Financial Institutions Examination Review’’ section heading, from the drop- photocopy comments. FDIC: You may submit comments, Council (FFIEC), requested public down menu select ‘‘Department of which should refer to ‘‘FFIEC 102,’’ by comment for 60 days on a proposal to Treasury’’ and then click ‘‘submit’’. This any of the following methods: extend for three years without revision information collection can be located by • Agency Website: https:// the Market Risk Regulatory Report for searching by OMB control number www.fdic.gov/regulations/laws/federal/. Institutions Subject to the Market Risk ‘‘1557–0325’’ or ‘‘FFIEC 102’’. Upon Follow the instructions for submitting Capital Rule (FFIEC 102), which is finding the appropriate information comments on the FDIC’s website. currently an approved collection of collection, click on the related ‘‘ICR • Federal eRulemaking Portal: information for each agency. The Reference Number.’’ On the next screen, https://www.regulations.gov. Follow the comment period for the June 2019 select ‘‘View Supporting Statement and instructions for submitting comments. notice ended on August 26, 2019. As Other Documents’’ and then click on the • Email: [email protected]. described in the SUPPLEMENTARY link to any comment listed at the bottom Include ‘‘FFIEC 102’’ in the subject line INFORMATION section, no comments were of the screen. of the message. • received on the proposal; therefore, the For assistance in navigating • Mail: Manuel E. Cabeza, Counsel, FFIEC and the agencies will proceed www.reginfo.gov, please contact the Attn: Comments, Room MB–3128, with the extension of the FFIEC 102 as Regulatory Information Service Center Federal Deposit Insurance Corporation, proposed. In addition, the agencies are at (202) 482–7340. 550 17th Street NW, Washington, DC giving notice that they are sending the • Viewing Comments Personally: You 20429. collections to OMB for review. may personally inspect comments at the • Hand Delivery: Comments may be DATES: Comments must be submitted on OCC, 400 7th Street SW, Washington, hand delivered to the guard station at or before November 18, 2019. DC. For security reasons, the OCC the rear of the 550 17th Street Building ADDRESSES: Interested parties are requires that visitors make an (located on F Street) on business days invited to submit written comments to appointment to inspect comments. You between 7:00 a.m. and 5:00 p.m. any or all of the agencies. All comments, may do so by calling (202) 649–6700 or, Public Inspection: All comments which should refer to the OMB control for persons who are deaf or hearing received will be posted without change number(s), will be shared among the impaired, TTY, (202) 649–5597. Upon to https://www.fdic.gov/regulations/ agencies. arrival, visitors will be required to laws/federal/ including any personal OCC: Commenters are encouraged to present valid government-issued photo information provided. Paper copies of submit comments by email, if possible. identification and submit to security public comments may be requested from You may submit comments, which screening in order to inspect comments. the FDIC Public Information Center, should refer to ‘‘1557–0325’’ or ‘‘FFIEC Board: You may submit comments, 3501 North Fairfax Drive, Arlington, VA 102,’’ by any of the following methods: which should refer to ‘‘FFIEC 102,’’ by 22226, or by telephone at (877) 275– • Email: [email protected]. any of the following methods: 3342 or (703) 562–2200. • Mail: Chief Counsel’s Office, Office • Agency Website: http:// Additionally, commenters may send a of the Comptroller of the Currency, www.federalreserve.gov. Follow the copy of their comments to the OMB Attention: 1557–0100, 400 7th Street instructions for submitting comments at: desk officers for the agencies by mail to

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00146 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55686 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

the Office of Information and Regulatory companies, savings and loan holding Statutory Basis and Confidential Affairs, U.S. Office of Management and companies, and intermediate holding Treatment Budget, New Executive Office Building, companies. Room 10235, 725 17th Street NW, The quarterly FFIEC 102 information Estimated Average Time per collection is mandatory for market risk Washington, DC 20503; by fax to (202) Response: 12 hours per quarter. _ institutions: 12 U.S.C. 161 (national 395–6974; or by email to oira Estimated Total Annual Burden: [email protected]. banks), 12 U.S.C. 324 (state member 1,824 hours. banks), 12 U.S.C. 1844(c) (bank holding FOR FURTHER INFORMATION CONTACT: For FDIC companies), 12 U.S.C. 1467a (b) (savings further information about the and loan holding companies), 12 U.S.C. information collections discussed in OMB Number: 3064–0199. 5365 (U.S. intermediate holding this notice, please contact any of the Estimated Number of Respondents: 1 companies), 12 U.S.C. 1817 (insured agency staff whose names appear below. insured state nonmember bank and state state nonmember commercial and In addition, copies of the FFIEC 102 savings association. savings banks), and 12 U.S.C. 1464 reporting forms and instructions can be Estimated Average Time per (savings associations). The FFIEC 102 obtained at the FFIEC’s website (https:// _ _ Response: 12 hours per quarter. information collections are not given www.ffiec.gov/ffiec report forms.htm). confidential treatment. OCC: Kevin Korzeniewski, Counsel, Estimated Total Annual Burden: 48 Chief Counsel’s Office, (202) 649–5490, hours. Request for Comment or for persons who are deaf or hearing General Description of Reports The agencies invite comment on the impaired, TTY, (202) 649–5597. following topics related to these Board: Nuha Elmaghrabi, Federal The Market Risk Regulatory Report for collections of information: Reserve Board Clearance Officer, (202) Institutions Subject to the Market Risk 452–3884, Office of the Chief Data Capital Rule (FFIEC 102) is filed (a) Whether the information Officer, Board of Governors of the quarterly with the agencies and collections are necessary for the proper Federal Reserve System, 20th and C provides information for market risk performance of the agencies’ functions, Streets NW, Washington, DC 20551. institutions, defined for this purpose as including whether the information has Telecommunications Device for the Deaf those institutions that are subject to the practical utility; (TDD) users may call (202) 263–4869. market risk capital rule as incorporated (b) The accuracy of the agencies’ FDIC: Manuel E. Cabeza, Counsel, into Subpart F of the agencies’ estimates of the burden of the 1 (202) 898–3767, Legal Division, Federal regulatory capital rule (market risk information collections, including the Deposit Insurance Corporation, 550 17th institutions). Each market risk validity of the methodology and Street NW, Washington, DC 20429. institution is required to file the FFIEC assumptions used; 102 for the agencies’ use in assessing the SUPPLEMENTARY INFORMATION: On June (c) Ways to enhance the quality, reasonableness and accuracy of the 25, 2019, the agencies requested public utility, and clarity of the information to institution’s calculation of its minimum comment on a proposal to extend for be collected; capital requirements under the market three years, without revision, the FFIEC (d) Ways to minimize the burden of risk capital rule and in evaluating the 102. The comment period expired on information collections on respondents, institution’s capital in relation to its August 26, 2019 and no comments were including through the use of automated risks. Additionally, the market risk received. The FFIEC and the agencies collection techniques or other forms of information collected in the FFIEC 102: will proceed with the extension of the information technology; and (a) Permits the agencies to monitor the FFIEC 102 as proposed and the agencies market risk profile of, and evaluate the (e) Estimates of capital or start-up are sending the collections to OMB for impact and competitive implications of, costs and costs of operation, review. the market risk capital rule on maintenance, and purchase of services Report Titles: Market Risk Regulatory individual market risk institutions and to provide information. Report for Institutions Subject to the the industry as a whole; (b) provides the Comments submitted in response to Market Risk Capital Rule. most current statistical data available to this joint notice will be shared among Form Numbers: FFIEC 102. identify areas of market risk on which the agencies. All comments will become Frequency of Response: Quarterly. to focus for onsite and offsite a matter of public record. Affected Public: Business or other for examinations; (c) allows the agencies to profit. Dated: October 9, 2019. assess and monitor the levels and Theodore J. Dowd, OCC components of each reporting Deputy Chief Counsel, Office of the OMB Number: 1557–0325. institution’s risk-based capital Comptroller of the Currency. requirements for market risk and the Estimated Number of Respondents: 13 Board of Governors of the Federal Reserve national banks and federal savings adequacy of the institution’s capital System, October 9, 2019. under the market risk capital rule; and associations. Ann Misback, Estimated Average Time per (d) assists market risk institutions in validating their implementation of the Secretary of the Board. Response: 12 hours per quarter. Federal Deposit Insurance Corporation. Estimated Total Annual Burden: 624 market risk framework. hours. Dated at Washington, DC, on October 9, 1 12 CFR 3.201 (OCC); 12 CFR 217.201 (Board); 2019. Board and 12 CFR 324.201 (FDIC). The market risk capital Annmarie H. Boyd, rule generally applies to any banking institution Assistant Executive Secretary. OMB Number: 7100–0365. with aggregate trading assets and trading liabilities Estimated Number of Respondents: 38 equal to (a) 10 percent or more of quarter-end total [FR Doc. 2019–22654 Filed 10–16–19; 8:45 am] state member banks, bank holding assets or (b) $1 billion or more. BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00147 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55687

DEPARTMENT OF TREASURY document information or click on the the ‘‘Comments’’ tab. Comments can be document title and click the viewed and filtered by clicking on the Office of the Comptroller of the ‘‘Comment’’ box on the top-left side of ‘‘Sort By’’ drop-down on the right side Currency the screen. For help with submitting of the screen or the ‘‘Refine Results’’ effective comments please click on options on the left side of the screen. [Docket ID OCC–2019–0021] ‘‘Commenter’s Checklist.’’ For Supporting Materials can be viewed by FEDERAL RESERVE SYSTEM assistance with the Regulations.gov Beta clicking on the ‘‘Documents’’ tab and site please call (877) 378–5457 (toll free) filtered by clicking on the ‘‘Sort By’’ FEDERAL DEPOSIT INSURANCE or (703) 454–9859 Monday–Friday, 9 drop-down on the right side of the CORPORATION a.m.–5 p.m. ET or email to regulations@ screen or the ‘‘Refine Results’’ options erulemakinghelpdesk.com. on the left side of the screen.’’ For Reporting of Data on Loans to Small • Email: regs.comments@ assistance with the Regulations.gov Beta Businesses and Small Farms occ.treas.gov. site please call (877) 378–5457 (toll free) • Mail: Chief Counsel’s Office, or (703) 454–9859 Monday–Friday, 9 AGENCY: Office of the Comptroller of the Attention: Comment Processing, Office a.m.–5 p.m. ET or email to regulations@ Currency (OCC), Treasury; Board of of the Comptroller of the Currency, 400 erulemakinghelpdesk.com. Governors of the Federal Reserve 7th Street SW, Suite 3E–218, The docket may be viewed after the System (Board); and Federal Deposit Washington, DC 20219. close of the comment period in the same Insurance Corporation (FDIC). • Hand Delivery/Courier: 400 7th manner as during the comment period. • ACTION: Request for comment. Street SW, Suite 3E–218, Washington, Viewing Comments Personally: You DC 20219. may personally inspect comments at the SUMMARY: The OCC, the Board, and the Instructions: You must include OCC, 400 7th Street SW, Washington, FDIC (collectively, the agencies) are ‘‘OCC’’ as the agency name and ‘‘Docket DC 20219. For security reasons, the OCC requesting comment on ways to modify ID OCC–2019–0021’’ in your comment. requires that visitors make an the current requirements for reporting In general, the OCC will enter all appointment to inspect comments. You data on loans to small businesses and comments received into the docket and may do so by calling (202) 649–6700 or, small farms in the Consolidated Reports publish the comments on the for persons who are deaf or hearing of Condition and Income (Call Report) Regulations.gov website without impaired, TTY, (202) 649–5597. Upon so that the reported data better reflect change, including any business or arrival, visitors will be required to lending to these sectors of the U.S. personal information provided such as present valid government-issued photo economy. name and address information, email identification and submit to security addresses, or phone numbers. DATES: Comments must be received by screening in order to inspect comments. Comments received, including the agencies no later than December 16, Board: You may submit comments, attachments and other supporting 2019. which should refer to ‘‘Loans to Small materials, are part of the public record Businesses and Small Farms,’’ by any of ADDRESSES: Interested parties are and subject to public disclosure. Do not the following methods: invited to submit written comments to include any information in your • Agency Website: http:// any or all of the agencies. All comments, comment or supporting materials that www.federalreserve.gov. Follow the which should refer to ‘‘Loans to Small you consider confidential or instructions for submitting comments at: Businesses and Small Farms,’’ will be inappropriate for public disclosure. http://www.federalreserve.gov/ shared among the agencies. You may review comments and other generalinfo/foia/ProposedRegs.cfm. OCC: Commenters are encouraged to related materials that pertain to this • Email: regs.comments@ submit comments through the Federal request for comment by any of the federalreserve.gov. Include ‘‘Loans to eRulemaking Portal or email, if possible. following methods: Small Businesses and Small Farms’’ in You may submit comments by any of • Viewing Comments Electronically— the subject line of the message. the following methods: Regulations.gov Classic or • Fax: (202) 452–3819 or (202) 452– • Federal eRulemaking Portal— Regulations.gov Beta 3102. Regulations.gov Classic or Regulations.gov Classic: Go to https:// • Mail: Ann E. Misback, Secretary, Regulations.gov Beta www.regulations.gov/. Enter ‘‘Docket ID Board of Governors of the Federal Regulations.gov Classic: Go to https:// OCC–2019–0021’’ in the Search box and Reserve System, 20th Street and www.regulations.gov/. Enter ‘‘Docket ID click ‘‘Search.’’ Click on ‘‘Open Docket Constitution Avenue NW, Washington, OCC–2019–0021’’ in the Search Box and Folder’’ on the right side of the screen. DC 20551. click ‘‘Search.’’ Click on ‘‘Comment Comments and supporting materials can All public comments are available on Now’’ to submit public comments. For be viewed and filtered by clicking on the Board’s website at https:// help with submitting effective ‘‘View all documents and comments in www.federalreserve.gov/apps/foia/ comments please click on ‘‘View this docket’’ and then using the filtering proposedregs.aspx as submitted, unless Commenter’s Checklist.’’ Click on the tools on the left side of the screen. Click modified for technical reasons. ‘‘Help’’ tab on the Regulations.gov home on the ‘‘Help’’ tab on the Accordingly, your comments will not be page to get information on using Regulations.gov home page to get edited to remove any identifying or Regulations.gov, including instructions information on using Regulations.gov. contact information. Public comments for submitting public comments. The docket may be viewed after the may also be viewed electronically or in Regulations.gov Beta: Go to https:// close of the comment period in the same paper in Room 146, 1709 New York beta.regulations.gov/ or click ‘‘Visit manner as during the comment period. Avenue NW, Washington, DC 20006, New Regulations.gov Site’’ from the Regulations.gov Beta: Go to https:// between 9:00 a.m. and 5:00 p.m. on Regulations.gov classic homepage. Enter beta.regulations.gov/ or click ‘‘Visit weekdays. For security reasons, the ‘‘Docket ID OCC–2019–0021’’ in the New Regulations.gov Site’’ from the Board requires that visitors make an Search Box and click ‘‘Search.’’ Public Regulations.gov classic homepage. Enter appointment to inspect comments. You comments can be submitted via the ‘‘Docket ID OCC–2019–0021’’ in the may do so by calling (202) 452–3684. ‘‘Comment’’ box below the displayed Search Box and click ‘‘Search.’’ Click on Upon arrival, visitors will be required to

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00148 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55688 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

present valid government-issued photo of 1991 1 required the agencies to to farmers’’ (in domestic offices) in Call identification and to submit to security establish an annual data collection from Report Schedule RC–C, Part I, items 1.b screening in order to inspect and insured depository institutions on and 3. The agencies currently request photocopy comments. lending to small businesses and small the total number and total amount FDIC: You may submit comments, farms. The agencies implemented the outstanding for each of these four which should refer to ‘‘Loans to Small statute by introducing Schedule RC–C, categories of loans, which are stratified Businesses and Small Farms,’’ by any of Part II, to the Call Report 2 effective June into three segments based on the the following methods: 30, 1993.3 Initially, this schedule was original amounts of the loans. For loans • Agency Website: https:// completed annually as of every June 30. to small businesses, the stratifications www.fdic.gov/regulations/laws/federal/. However, to improve the agencies’ are original amounts of $100,000 or less, Follow the instructions for submitting ability to assess the availability of credit original amounts of more than $100,000 comments on the FDIC’s website. to small businesses and small farms in through $250,000, and original amounts • Federal eRulemaking Portal: the aftermath of the financial crisis, the of more than $250,000 through $1 https://www.regulations.gov. Follow the agencies changed the reporting million. For loans to small farms, the instructions for submitting comments. frequency for Schedule RC–C, Part II, stratifications are original amounts of • Email: [email protected]. from annually to quarterly beginning less than $100,000, original amounts of Include ‘‘Loans to Small Businesses and with the March 31, 2010, Call Report.4 more than $100,000 through $250,000, Small Farms’’ in the subject line of the In 2017, as part of the Federal Financial and original amounts of more than message. Institutions Examination Council’s Call $250,000 through $500,000. • Mail: Manuel E. Cabeza, Counsel, Report burden reduction initiative, the Institutions that do not hold loans Attn: Comments, Room MB–3128, agencies reduced the reporting that meet the definition of small Federal Deposit Insurance Corporation, frequency of Schedule RC–C, Part II, business or small farm loans do not 550 17th Street NW, Washington, DC from quarterly to semiannually for need to provide data in Schedule RC– 20429. institutions that file the FFIEC 051 Call C, Part II, for that particular type of loan. • Hand Delivery: Comments may be Report.5 The reporting frequency of Institutions that file the FFIEC 041 or hand delivered to the guard station at Schedule RC–C, Part II, remains the FFIEC 051 Call Report and hold the rear of the 550 17th Street Building quarterly for institutions that file the small business or small farm loans (located on F Street) on business days FFIEC 031 and the FFIEC 041 Call predominantly in original amounts of between 7:00 a.m. and 5:00 p.m. Report.6 $100,000 or less report only the total Public Inspection: All comments number of the loans in each loan B. Data Currently Collected received will be posted without change category within that particular type of to https://www.fdic.gov/regulations/ The current data collection in loan, and do not need to provide the full laws/federal/ including any personal Schedule RC–C, Part II, generally stratification. Further details about the information provided. Paper copies of requests information on (i) loans to collection of loans to small businesses public comments may be requested from small businesses, which are defined as and small farms are provided in the the FDIC Public Information Center, loans with original amounts of $1 applicable Call Report instructions 3501 North Fairfax Drive, Arlington, VA million or less that are reported as (FFIEC 031, FFIEC 041, or FFIEC 051).7 22226, or by telephone at (877) 275– ‘‘Loans secured by nonfarm C. Uses of the Data 3342 or (703) 562–2200. nonresidential properties’’ or FOR FURTHER INFORMATION CONTACT: ‘‘Commercial and industrial loans’’ (in Among the agencies, the Board is the OCC: Cady Codding, Senior Policy domestic offices) in Call Report primary user of the data collected on Accountant, Office of the Chief Schedule RC–C, Part I, items 1.e and 4; loans to small businesses and small 8 Accountant, (202) 649–5764; Kevin and (ii) loans to small farms, which are farms. Collection of these data Korzeniewski, Counsel, Chief Counsel’s defined as loans with original amounts improves the Board’s ability to monitor Office, (202) 649–5490; or for persons of $500,000 or less that are reported as credit conditions facing small who are deaf or hearing impaired, TTY, ‘‘Loans secured by farmland (including businesses and small farms and (202) 649–5597. farm residential and other significantly contributes to its ability to Board: Douglas Carpenter, Senior improvements)’’ and ‘‘Loans to finance develop policies intended to address Supervisory Financial Analyst, Division agricultural production and other loans any problems that arise in credit of Supervision and Regulation, (202) markets. The institution-level Call 1 452–2205, Board of Governors of the 12 U.S.C. 1817 note. Report data provide information that 2 The ‘‘Call Report’’ consists of the Consolidated cannot be obtained from other Federal Reserve System, 20th and C Reports of Condition and Income for a Bank with Streets NW, Washington, DC 20551. Domestic and Foreign Offices (FFIEC 031), the indicators of small business and small FDIC: Shannon Beattie, Chief, Consolidated Reports of Condition and Income for farm credit conditions. For example, Accounting and Securities Disclosure a Bank with Domestic Offices Only (FFIEC 041), during a period of credit contraction, and the Consolidated Reports of Condition and the Call Report data can be used to Section, Division of Risk Management Income for a Bank with Domestic Offices Only and Supervision, (202) 898–3952, sbeattie@ Total Assets Less than $5 Billion (FFIEC 051). U.S. identify which types of institutions are fdic.gov; or Michelle Haslett, branches and agencies of foreign banks file the reducing the volume of their loans to Examination Specialist, Division of Risk Report of Assets and Liabilities of U.S. Branches small businesses and small farms. and Agencies of Foreign Banks (FFIEC 002). The Having detailed data on the Management Supervision, (202) 898– FFIEC 002 includes Schedule C, Part II, Loans to 6923, [email protected]. Small Businesses and Small Farms, which is characteristics of affected institutions is SUPPLEMENTARY INFORMATION: collected only from insured U.S. branches of foreign crucial to building a sufficiently banks and parallels Call Report Schedule RC–C, informative picture of the strength of I. Background, Existing Collection, and Part II. 3 economic activity. Use of Data 57 FR 54235 (November 17, 1992). Monetary policymaking benefits 4 74 FR 68322 (December 23, 2009). importantly from timely information on A. History of the Data Collection 5 82 FR 2444 (January 9, 2017). 6 In the FFIEC 002, Schedule C, Part II, is Section 122 of the Federal Deposit collected annually as of June 30 from insured U.S. 7 https://www.ffiec.gov/ffiec_report_forms.htm. Insurance Corporation Improvement Act branches of foreign banks. 8 See 82 FR 2444, 2454 (January 9, 2017).

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00149 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55689

small business credit conditions and lending.9 In summarizing its findings and how institutions are using these flows. To determine how best to adjust with respect to the Call Report data on data internally, to identify which the federal funds rate over time, the loans to small businesses, the GAO options may improve the usefulness of Board must continuously assess the stated that the Call Report data collection while prospects for real economic activity and [t]he data community banks report to considering the burden impact of any inflation in coming quarters. Credit regulators do not accurately capture lending adjustments to the current reporting conditions have an important bearing on to small businesses because the data exclude requirements for Schedule RC–C, Part II. the evolution of those prospects over some loans to small businesses. Specifically, The agencies will use the feedback the definition of small business loans used received in response to this request for time, and so the Board pays close for banks’ reporting excludes loans greater attention to data from Call Reports. In comment to assess what steps they than $1 million and has not been adjusted for should take in response to the trying to understand the implications of inflation since 1992. In addition, the data aggregate credit data for the capture loans by their size rather than the recommendation from the GAO. After considering the feedback, if the agencies macroeconomic outlook, it is helpful for size of the borrowing entity, and therefore determine that a change to the existing the Board to be able to distinguish could include small loans to large businesses. These limitations hamper regulators’ and collection of small business and small between conditions facing small firms policymakers’ ability to assess actual changes farm lending data in Schedule RC–C, and those affecting other businesses for in banks’ small business lending, including Part II, is warranted, the agencies would several reasons. First, small businesses any effect of regulation. seek further comment on a specific comprise a substantial portion of the At the conclusion of this study, which proposal to revise this Call Report nonfinancial business sector, and so was published in August 2018, the GAO schedule in accordance with the their hiring and investment decisions recommended that the agencies should Paperwork Reduction Act.10 have an important influence on overall collaborate to reevaluate, and modify as B. Request for Comment real activity. Second, because small needed, the requirements for the data businesses tend to depend more heavily banks report in the Call Report to better General Questions on Data on depository institutions for external reflect lending to small businesses. 1. How do institutions internally In response to this recommendation, financing, they likely experience report on their small business and small the agencies are reviewing the data material swings in their ability to obtain farm loan portfolios? What key currently collected on small business credit relative to larger firms. Third, the indicator(s) do institutions use to define and small farm loans on Schedule RC– relative opacity of small businesses and and monitor small business and small C, Part II, in the Call Report to identify their consequent need to provide farm loan originations each quarter? Do options for improving the usefulness of collateral for loans is thought to create institutions further subcategorize these the data reported on these loans so that a ‘‘credit’’ channel for monetary policy loan portfolios based on initial loan size the data will better reflect lending to to influence real activity. Specifically, or other factors (such as the borrower’s changes in monetary policy may alter small businesses and small farms. The agencies also recognize that gross annual revenue or the borrower’s the value of assets used as collateral for institutions already have processes in number of employees)? In responding to loans, thereby affecting the ability of place that enable them to report their these questions, commenters from banks small businesses to obtain credit, small business and small farm lending and savings associations are encouraged abstracting from the effects of any data in the Call Report in accordance to describe the internal reporting changes in loan rates. Finally, the credit with the reporting instructions for practices, key indicator(s), and any conditions facing small businesses and Schedule RC–C, Part II, which generally subcategorization at their individual small farms differ substantially from have not been revised since the institution. those facing large businesses, making it implementation of Schedule RC–C, Part 2. What data do institutions regularly necessary to collect indicators that are II, in 1993. Thus, introducing revisions collect from small businesses and small specific to these borrowers. Large to the reporting requirements and the farms related to outstanding loans or businesses may access credit from a instructions for Schedule RC–C, Part II, commitments (such as gross annual number of different sources, including could affect the burden of the collection revenues or asset size)? In responding to the corporate bond market and the of small business and small farm this question, commenters from banks commercial paper market. In contrast, lending data on institutions. Certain and savings associations are encouraged small businesses and small farms rely options for revisions may change to identify the data their institution more heavily on credit provided burden in differing ways, particularly if regularly collects. through depository institutions. The the options are not aligned with how Questions Related to the Current dependence of small businesses and institutions currently identify loans to Collection small businesses and small farms and small farms on lending by depository 3. As described in Section I.B. above, then collect and report data on these institutions—particularly from smaller the agencies’ collection classifies and loans to their managements or internal institutions—highlights the importance stratifies loans as small business or purposes. The agencies are interested in of the Call Report data reported in small farm loans based on the original learning what data institutions collect Schedule RC–C, Part II. amounts of the loans. The maximum and maintain on small business and original amounts used to determine this II. Current Actions small farm loans in their loan systems classification have not changed since and other automated systems for A. GAO Report Schedule RC–C, Part II, took effect in internal purposes in addition to the data 1993. required to be reported on these loans The U.S. Government Accountability a. Should the agencies consider in Call Report Schedule RC–C, Part II, Office (GAO) reviewed the data increasing the maximum original loan collected on Call Report Schedule RC– amounts for the reporting of loans to 9 See Community Banks: Effect of Regulations on C, Part II, Loans to Small Businesses and small businesses and small farms Small Farms, as part of a study of the Small Business Lending and Institutions Appears Modest, but Lending Data Could Be Improved effect of regulations on small business (GAO–18–312). 10 44 U.S.C. chapter 35.

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00150 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55690 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

(currently $1 million and $500,000, small businesses, as a way to identify or How would lead times differ for the respectively)? If so, what would be stratify loans? 11 various options referenced above in this appropriate maximum original amounts 8. Should the agencies consider question? for each type of loan? collecting data only on new loans made Dated: October 10, 2019. during the reporting period (i.e., b. Should the agencies continue to Morris R. Morgan, originations) instead of data on total require loan stratification by original First Deputy Comptroller, Comptroller of the loan amount or just collect total loans outstanding as of the end of the reporting period regardless of when Currency. amounts for small business and small Board of Governors of the Federal Reserve farm loans without stratification? If the originated? 9. Are there other approaches the System, October 7, 2019. former and the maximum original loan Ann Misback, amounts were increased, what would be agencies should consider for the Secretary of the Board. appropriate original loan amounts for identification of, and the collection of stratification? information on, small business or small Federal Deposit Insurance Corporation. farm loans? c. Should the agencies incorporate an Dated at Washington, DC, on October 8, 2019. automatic or periodic adjustment for Questions on Potential Challenges and inflation for the maximum original loan Burden Annmarie H. Boyd, Assistant Executive Secretary. amounts going forward? 10. What provisions of the existing [FR Doc. 2019–22568 Filed 10–16–19; 8:45 am] 4. Should the agencies raise the Schedule RC–C, Part II, instructions, original amount threshold (currently including the definitions of loans to BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P $100,000) for identifying institutions small businesses and loans to small that hold small business or small farm farms, create difficulties for your DEPARTMENT OF THE TREASURY loans with original amounts institution in reporting in this schedule predominantly below that threshold that today? How might the agencies address Internal Revenue Service would not need to complete the full these issues to reduce reporting burden? stratification in Schedule RC–C, Part II? 11. What challenges or burden would Proposed Collection; Comment 5. Should the agencies exempt your institution experience under each Request for Form Project institutions that hold less than a certain of the various options to revise the AGENCY: number or total amount of small collection of small business and small Internal Revenue Service (IRS), business or small farm loans from farm loan data (i.e., raise existing Treasury. reporting data on these loans in original amount thresholds; use new ACTION: Notice and request for Schedule RC–C, Part II? If so, what indicators to identify small business and comments. would be an appropriate threshold for small farm loans outstanding as of the SUMMARY: The Internal Revenue Service, exemption and why? end of the reporting period regardless of as part of its continuing effort to reduce when the loans were acquired Questions on Alternate Approaches paperwork and respondent burden, (originated or purchased); use a invites the general public and other 6. Should the agencies consider using combination of existing or higher Federal agencies to take this other business and farm size indicators original amount thresholds and new opportunity to comment on continuing to identify or stratify loans, e.g., the indicators for identifying and stratifying information collections, as required by borrower’s gross annual revenues or loans outstanding as of the end of the the Paperwork Reduction Act of 1995. asset size, or should the agencies reporting period; collect data only on The IRS is soliciting comments combine original loan amounts with one loan originations during the reporting concerning gas guzzler tax. or more of these other indicators to period rather than total loans DATES: Written comments should be identify or stratify loans? outstanding as of the end of the received on or before December 16, 2019 reporting period)? a. Would other indicators provide a to be assured of consideration. better measure to identify small a. How would burden be affected if a ADDRESSES: Direct all written comments business and small farm loans than the revised method for identifying and to Dr. Philippe Thomas, Internal original loan amount? If so, which reporting small business and small farm Revenue Service, Room 6529, 1111 indicators? loans applies only to loans acquired after the date the revised method takes Constitution Avenue NW, Washington, b. Are such indicator data available DC 20224. back to the origination dates of existing effect and the collection of data FOR FURTHER INFORMATION CONTACT: loans? If so, are the data available in excludes loans held when the revised Requests for additional information or your institution’s automated loan method takes effect? copies of the form should be directed to systems or in manual form, e.g., in b. How would burden be affected if Kerry Dennis, at (202) 317–5751 or individual borrowers’ loan files? loans acquired after the date the revised method takes effect are reported under Internal Revenue Service, Room 6529, c. If only current indicator data are a revised method while loans held when 1111 Constitution Avenue NW, available, would the current data the revised method takes effect continue Washington, DC 20224, or through the generally be representative of what the to be reported under the existing internet, at [email protected]. indicator data would have been at Schedule RC–C, Part II, framework, i.e., SUPPLEMENTARY INFORMATION: origination? Are the current indicator only by original loan amount? Title: Gas Guzzler Tax. data available in your institution’s c. If a revised method were to be used OMB Number: 1545–0242. automated loan systems or in manual for identifying loans to be reported in Form Number: Form 6197. form? Schedule RC–C, Part II, how much lead Abstract: Internal Revenue Code 7. Should the agencies consider time would your institution need before section 4064 imposes a gas guzzler tax referencing other recognized standards you would be prepared to begin on the sale, use, or first lease by a for small business classification, such as reporting under this revised method? manufacturer or first lease by a the U.S. Small Business manufacturer or importer of Administration’s size thresholds for 11 See 13 CFR 121.201. automobiles whose fuel economy does

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices 55691

not meet certain standards for fuel U.S.-CHINA ECONOMIC AND space; Taiwan; Hong Kong; changing economy. The tax is computed on Form SECURITY REVIEW COMMISSION regional dynamics in Oceania and 6197. The IRS uses the information to Singapore; and a review of economics, verify computation of tax and Notice of Open Public Event trade, security, political, and foreign affairs developments in 2019. compliance with the law. AGENCY: U.S.-China Economic and Current Actions: There are no changes Security Review Commission. Authority: Congress created the U.S.-China Economic and Security Review Commission being made to the form at this time. ACTION: Notice of open public event. in 2000 in the National Defense Type of Review: Extension of a SUMMARY: Notice is hereby given of the Authorization Act (Pub. L. 106–398), as currently approved collection. amended by Division P of the Consolidated following open public event of the U.S.- Affected Public: Business or other for- Appropriations Resolution, 2003 (Pub. L. China Economic and Security Review 108–7), as amended by Public Law 109–108 profit organizations and individuals or Commission. (November 22, 2005), as amended by Public households. The Commission is mandated by Law 113–291 (December 19, 2014). Congress to investigate, assess, and Estimated Number of Respondents: Dated: October 11, 2019. 605. report to Congress annually on ‘‘the national security implications of the Daniel W. Peck, Estimated Time per Respondent: 7 economic relationship between the Executive Director, U.S.-China Economic and hours, 42 minutes. United States and the People’s Republic Security Review Commission. Estimated Total Annual Burden of China.’’ Pursuant to this mandate, the [FR Doc. 2019–22653 Filed 10–16–19; 8:45 am] Hours: 4,659 hours. Commission will hold a public release BILLING CODE 1137–00–P The following paragraph applies to all of its 2019 Annual Report to Congress of the collections of information covered in Washington, DC on November 14, 2019. DEPARTMENT OF VETERANS by this notice. AFFAIRS An agency may not conduct or DATES: The release is scheduled for [OMB Control No. 2900–0784] sponsor, and a person is not required to Thursday, November 14, 2019 from 10:00 a.m. to 11:00 a.m. respond to, a collection of information Agency Information Collection Activity ADDRESSES: Hart Senate Office Building, unless the collection of information Under OMB Review: Application for Room 902, Washington, DC. Please displays a valid OMB control number. Pre-Need Determination of Eligibility check the Commission’s website at Books or records relating to a collection for Burial of information must be retained as long www.uscc.gov for possible changes to the event schedule. Reservations are not as their contents may become material AGENCY: National Cemetery required to attend. in the administration of any internal Administration, Department of Veterans revenue law. Generally, tax returns and FOR FURTHER INFORMATION CONTACT: Any Affairs. tax return information are confidential, member of the public seeking further ACTION: Notice. information concerning the event as required by 26 U.S.C. 6103. should contact Leslie Tisdale Reagan, SUMMARY: In compliance with the Request for Comments: Comments 444 North Capitol Street NW, Suite 602, Paperwork Reduction Act (PRA) of submitted in response to this notice will Washington DC 20001; telephone: 202– 1995, this notice announces that the be summarized and/or included in the 624–1496, or via email at lreagan@ National Cemetery Administration request for OMB approval. All uscc.gov. Reservations are not required (NCA), Department of Veterans Affairs, comments will become a matter of to attend. will submit the collection of public record. Comments are invited on: ADA Accessibility: For questions information abstracted below to the (a) Whether the collection of about the accessibility of the event or to Office of Management and Budget information is necessary for the proper request an accommodation, please (OMB) for review and comment. The performance of the functions of the contact Leslie Tisdale Reagan at 202– PRA submission describes the nature of agency, including whether the 624–1496, or via email at lreagan@ the information collection and its information shall have practical utility; uscc.gov. Requests for an expected cost and burden and it (b) the accuracy of the agency’s estimate accommodation should be made as soon includes the actual data collection of the burden of the collection of as possible, and at least five business instrument. information; (c) ways to enhance the days prior to the event. DATES: Comments must be submitted on quality, utility, and clarity of the SUPPLEMENTARY INFORMATION: or before November 18, 2019. information to be collected; (d) ways to Topics To Be Discussed: The ADDRESSES: Submit written comments minimize the burden of the collection of Commission’s 2019 Annual Report to on the collection of information through information on respondents, including Congress addresses key findings and www.Regulations.gov, or to Office of through the use of automated collection recommendations for Congressional Information and Regulatory Affairs, techniques or other forms of information action based upon the Commission’s Office of Management and Budget, Attn: hearings, research, travel, and review of technology; and (e) estimates of capital VA Desk Officer; 725 17th St. NW, the areas designated by Congress in its or start-up costs and costs of operation, Washington, DC 20503 or sent through mandate, including focused work this maintenance, and purchase of services electronic mail to oira_submission@ year on: China’s internal and external to provide information. omb.eop.gov. Please refer to ‘‘OMB challenges; artificial intelligence, new Control No. 2900–0784’’ in any Approved: October 10, 2019. materials, and new energy; U.S. correspondence. Philippe Thomas, companies in China and Chinese FOR FURTHER INFORMATION CONTACT: Supervisor Tax Analyst. companies in the United States.; health and pharmaceuticals; China’s ambitions Cynthia Harvey-Pryor at (202) 461–5870 [FR Doc. 2019–22575 Filed 10–16–19; 8:45 am] to build a ‘‘world-class’’ military; China- or FAX (202) 501–2240. BILLING CODE 4830–01–P Russia relations; China’s ambitions in SUPPLEMENTARY INFORMATION:

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1 55692 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Notices

Authority: Public Law 104–13; 44 need for planning purposes. The data Estimated Number of Respondents: U.S.C. 3501–21. will be used for this purpose. 47,400. Title: Application for Pre-Need An agency may not conduct or Estimated Average Burden per Determination of Eligibility for Burial, sponsor, and a person is not required to Respondent: 20 minutes. VA Form 40–10007. respond to a collection of information Frequency of Response: One time. unless it displays a currently valid OMB Estimated Annual Burden: 15,800 OMB Control Number: 2900–0784. control number. The Federal Register hours. Type of Review: Revision of an Notice with a 60-day comment period By direction of the Secretary. approved collection. soliciting comments on this collection Danny S. Green, Abstract: VA Form 40–10007 is used of information was published at Vol. 84, Interim Department Clearance Officer, Office to collect information from Veterans and No. 155, Monday, August 12, 2019, of Quality, Privacy and Risk, Department of service members who wish to determine pages 39893 and 39894. Veterans Affairs. their eligibility for burial in a VA Affected Public: Individuals or [FR Doc. 2019–22687 Filed 10–16–19; 8:45 am] national cemetery prior to their time of Households. BILLING CODE 8320–01–P

VerDate Sep<11>2014 17:26 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00153 Fmt 4703 Sfmt 9990 E:\FR\FM\17OCN1.SGM 17OCN1 Vol. 84 Thursday, No. 201 October 17, 2019

Part II

Department of Health and Human Services

Office of Inspector General 42 CFR Parts 1001 and 1003

Department of Health and Human Services

Centers for Medicare & Medicaid Services 42 CFR Part 411 Medicare and State Healthcare Programs: Fraud and Abuse; Revisions To Safe Harbors Under the Anti-Kickback Statute, And Civil Monetary Penalty Rules Regarding Beneficiary Inducements; Medicare Program; Modernizing and Clarifying the Physician Self-Referral Regulations; Proposed Rules

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\17OCP2.SGM 17OCP2 55694 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

DEPARTMENT OF HEALTH AND recommendations, without unduly I. Executive Summary delaying any final rulemaking. HUMAN SERVICES A. Purpose and Need for Regulatory ADDRESSES: In commenting, please Office of Inspector General Action reference file code OIG–0936–AA10–P. The Secretary of Health and Human Because of staff and resource 42 CFR Parts 1001 and 1003 Services (the Secretary) has identified limitations, we cannot accept comments transforming our healthcare system to RIN 0936–AA10 by facsimile (fax) transmission. one that pays for value as one of the top However, you may submit comments priorities of the Department of Health Medicare and State Healthcare using one of three ways (no duplicates, Programs: Fraud and Abuse; and Human Services (the Department or please): HHS). Unlike the traditional fee-for- Revisions To Safe Harbors Under the 1. Electronically. You may submit Anti-Kickback Statute, and Civil service (FFS) payment system, which electronic comments on this regulation rewards providers for the volume of care Monetary Penalty Rules Regarding to http://www.regulations.gov. Follow Beneficiary Inducements delivered, a value-driven healthcare the ‘‘Submit a comment’’ instructions. system is one that pays for health and AGENCY: Office of Inspector General 2. By regular, express, or overnight outcomes. Delivering better value from (OIG), Department of Health and Human mail. You may send written comments our healthcare system will require the Services (HHS). to the following address: Office of transformation of established practices ACTION: Proposed rule. Inspector General, Department of Health and enhanced collaboration among and Human Services, Attention: OIG– providers and other individuals and SUMMARY: This proposed rule is being 0936–AA10–P, Room 5521, Cohen entities. The purpose of this proposed issued by the Office of Inspector General Building, 330 Independence Avenue rule is to modify existing safe harbors to (OIG) in conjunction with the SW, Washington, DC 20201. the anti-kickback statute and add new Department of Health and Human Please allow sufficient time for mailed safe harbors and a new CMP law Services’ Regulatory Sprint to comments to be received before the exception to remove potential barriers to Coordinated Care. It proposes to add, on close of the comment period. more effective coordination and a prospective basis only after a final rule 3. By hand or courier. If you prefer, management of patient care and is issued, safe harbor protections under you may deliver your written comments delivery of value-based care that the Federal anti-kickback statute for by hand or courier before the close of improves quality of care, health certain coordinated care and associated the comment period to: Office of outcomes, and efficiency. value-based arrangements between or Inspector General, Department of Health Since the enactment in 1972 of the among clinicians, providers, suppliers, and Human Services, Cohen Building, Federal anti-kickback statute, there have and others that squarely meet all safe Room 5521, 330 Independence Avenue been significant changes in the delivery harbor conditions. It also would add SW, Washington, DC 20201. of, and payment for, healthcare items protections under the anti-kickback Because access to the interior of the and services within the Medicare and statute and civil monetary penalty Medicaid programs and for non-Federal (CMP) law that prohibits inducements Cohen Building is not readily available to persons without Federal Government payors and patients. This has included offered to patients for certain patient changes to traditional FFS Medicare engagement and support arrangements identification, commenters are encouraged to schedule their delivery (i.e., Medicare Parts A and B), Medicare to improve quality of care, health Advantage, and states’ Medicaid outcomes, and efficiency of care with one of our staff members at (202) 619–0335. programs. For some time, the delivery that squarely meet all safe Department has worked to align Inspection of Public Comments: All harbor conditions. The proposed rule payment under the Medicare program comments received before the end of the would add a new safe harbor for with the quality of the care provided to comment period will be posted on donations of cybersecurity technology Federal health care program http://www.regulations.gov for public and amend the existing safe harbors for beneficiaries. Laws such as the viewing. Hard copies will also be electronic health records (EHR) Medicare Prescription Drug, available for public inspection at the arrangements, warranties, local Improvement, and Modernization Act of Office of Inspector General, Department transportation, and personal services 2003 (MMA),1 the Deficit Reduction Act of Health and Human Services, Cohen and management contracts. Further, the of 2005 (DRA),2 and the Medicare proposed rule would add a new safe Building, 330 Independence Avenue Improvements for Patients and harbor pursuant to a statutory change SW, Washington, DC 20201, Monday Providers Act of 2008 (MIPPA) 3 are set forth in the Bipartisan Budget Act of through Friday from 8:30 a.m. to 4 p.m. among statutes that guided the 2018 (Budget Act of 2018) related to To schedule an appointment to view Department’s efforts to move toward beneficiary incentives under the public comments, phone (202) 619– healthcare delivery and payment Medicare Shared Savings Program and a 0335. reform. The Patient Protection and new CMP exception for certain FOR FURTHER INFORMATION CONTACT: Affordable Care Act (ACA) 4 required or telehealth technologies offered to Jillian Sparks or Meredith Williams, encouraged significant changes to the patients receiving in-home dialysis, also (202) 619–0335. Medicare program’s payment systems pursuant to the Budget Act of 2018. SUPPLEMENTARY INFORMATION: and provided the Secretary with broad DATES: To ensure consideration, authority to test and implement models comments must be delivered to the Social Security United States Code to promote reforms, including through address provided below by 5 p.m. on Act citation citation the Center for Medicare and Medicaid December 31, 2019. The 75-day period for public comments being set forth in 1128B, 1128D, 1102, 42 U.S.C. 1320a–7b, 1 Public Law 108–173, 117 Stat. 2066. this proposed rule will serve to protect 1128A. 42 U.S.C. 1320a– 2 Public Law 109–171, 120 Stat. 4. 3 the public’s interest in this rulemaking 7d, 42 U.S.C. Public Law 110–275, 122 Stat. 2494. 1302, 42 U.S.C. 4 Public Law 111–148, 124 Stat. 119, as amended process by allowing for an opportunity 1320a.–7a. by the Health Care and Education Reconciliation for additional input and Act of 2010 (Pub. L. 111–152, 124 Stat. 1029).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55695

Innovation (the Innovation Center) • providers’ alignment on end-to-end • safe harbor protection for financial within the Centers for Medicare & treatment (i.e., coordination among arrangements with entities not Medicaid Services (CMS).5 providers along the patient’s full care participating in Innovation Center The Department has identified the journey); models, including commercial and self- broad reach of the Federal anti-kickback • incentives for providers to pay APM arrangements; statute 6 and the CMP law provision coordinate, collaborate, and provide • additional protection for patient prohibiting inducements to patients tools to be more involved in tools and supports, such as in-kind beneficiaries, the ‘‘beneficiary their own care; and items and services to support patient inducements CMP,’’ 7 as well as the • information sharing among compliance with discharge and care Federal physician self-referral law providers, facilities, and other plans, services and supports to address (sometimes known as the Stark law),8 as stakeholders in a manner that facilitates unmet social needs affecting health, and potentially inhibiting beneficial efficient care while preserving and expanded protections under the local transportation safe harbor; arrangements that would advance the protecting patient access to data. • transition to value-based care and In connection with the Regulatory enhanced safe harbor protection for improve the coordination of patient care Sprint, OIG issued a request for transfers of information technology, among providers and across care information (OIG RFI) regarding the data, and cybersecurity tools; • modifications to the current settings in both the Federal health care Federal anti-kickback statute and ‘‘patchwork’’ fraud and abuse waiver programs and commercial sectors. beneficiary inducements CMP on framework for Innovation Center models Industry stakeholders have informed the August 27, 2018.10 CMS published a and the Medicare Shared Savings Department that, because the Request for Information Regarding the Program; and consequences of potential Physician Self-Referral Law in June • a variety of protections for 11 noncompliance with the physician self- 2018 (CMS RFI). In the OIG RFI, we pharmaceutical and medical device referral law and the Federal anti- sought feedback on ways in which we manufacturer arrangements, including kickback statute could be dire, might modify or add new safe harbors broad protections for drug and medical providers, suppliers, and others may be to the Federal anti-kickback statute and device manufacturer participation in discouraged from entering into exceptions to the beneficiary value-based contracts, pricing innovative arrangements that would inducements CMP definition of arrangements, warranty arrangements, improve quality and health outcomes, ‘‘remuneration’’ to foster arrangements and APMs, as well as protection for produce health system efficiencies, and that would promote care coordination coupons and other means of direct lower costs (or slow their rate of and advance the delivery of value-based copayment assistance to Medicare Part growth). care while also protecting patients and D beneficiaries in certain situations. To address these concerns and taxpayer dollars against harms caused accelerate the transformation of the by fraud and abuse. OIG received 359 B. Summary of OIG’s Approach and healthcare system into one that better comments in response to its RFI from a Proposals pays for value and promotes care variety of individuals and organizations. These proposed regulations are coordination, HHS launched a While most commenters strongly informed by comments and other Regulatory Sprint to Coordinated Care asserted the need for regulatory reform internal and external sources of (Regulatory Sprint), led by the Deputy to the anti-kickback statute safe harbors information, as well as our experience Secretary. This Regulatory Sprint aims and exceptions to the definition of interpreting and applying the safe to remove potential regulatory barriers ‘‘remuneration’’ under the beneficiary harbors and beneficiary inducements to care coordination and value-based inducements CMP, a number of CMP exceptions to a wide variety of care created by four key healthcare laws commenters acknowledged that arrangements. In developing this and associated regulations: (i) The increased regulatory flexibility could proposed rule, OIG has followed several physician self-referral law, (ii) the create program integrity vulnerabilities guiding principles. The first guiding Federal anti-kickback statute, (iii) the or increase the risk of harms associated principle has been to design proposed Health Insurance Portability and with fraud and abuse and urged OIG to safe harbors that allow for beneficial Accountability Act of 1996 (HIPAA),9 exercise caution and include adequate innovations in healthcare delivery. The and (iv) rules under 42 CFR part 2 safeguards in any regulatory proposals. second guiding principle has been to related to substance use disorder Comments supporting regulatory reform avoid promulgating safe harbors and treatment. encompassed a number of themes, exceptions that drive such innovation to Through the Regulatory Sprint, HHS including requests for: limited channels that may not reflect aims to encourage and improve: • New safe harbors protecting up-to-date understandings in medicine, • A patient’s ability to understand financial arrangements among parties science, and technology. The third treatment plans and make empowered participating in alternative payment guiding principle has been to design decisions; models (APMs), value-based proposed safe harbors useful for a range arrangements, and care coordination of individuals and entities engaged in 5 The Innovation Center’s purpose is to test activities; the coordination and management of innovative payment and service delivery models to patient care, including large and small reduce the cost of care furnished to patients in the 10 Medicare and State Health Care Programs: practices and health systems, rural and Medicare and Medicaid programs while preserving Fraud and Abuse; Request for Information or enhancing the quality of that care. Using its urban providers and suppliers, primary Regarding the Anti-Kickback Statute and care physicians and specialists, authority in section 1115A of the Social Security Beneficiary Inducements CMP, 83 FR 43607 (Aug. Act (the Act), 42 U.S.C. 1315a, the Innovation 27, 2018), available at https://oig.hhs.gov/ providers and suppliers contracting Center is testing many healthcare delivery and authorities/docs/2018/RFI_Regarding_AKS_ with public and private payors, payment models in which providers, suppliers, and Beneficiary_Inducements_CMP.pdf. individual practitioners participate. clinically integrated networks, and 11 Medicare Program; Request for Information 6 looser affiliations of providers and 42 U.S.C. 1320a–7b(b). Regarding the Physician Self-Referral Law, 83 FR 7 42 U.S.C. 1320a–7a(a)(5). 29524 (June 25, 2018), available at https:// suppliers collaborating to coordinate 8 42 U.S.C. 1395nn. www.gpo.gov/fdsys/pkg/FR-2018-06-25/pdf/2018- care for patients across the continuum 9 Public Law 104–191, 110 Stat. 1936. 13529.pdf. of care.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55696 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

Designing proposed safe harbors with traditional FFS risks. However, value- differences in statutory structures and these principles in mind is not without based payment models could present penalties. For some arrangements, we challenges and potential pitfalls, other risks, including stinting on care believe it is appropriate for the anti- particularly with respect to ensuring (underutilization), cherry picking kickback statute, which is a criminal, sufficient safeguards against potential lucrative or adherent patients, lemon intent-based statute, to serve as abuses and harms by those who might dropping costly or noncompliant ‘‘backstop’’ protection for arrangements misuse the safe harbors. In this patients, and incentives to manipulate that might be protected by a less proposed rule, we have tried to strike or falsify data used to verify restrictive exception to the civil, strict the right balance between flexibility for performance and outcomes for payment liability physician self-referral law. For beneficial innovation and safeguards to purposes. In addition, emerging value- any final rule, we would examine our protect patients and Federal health care based payment models might present rules in combination with any rules programs. No final determination has risks not yet identified by OIG or others CMS may choose to finalize with the yet been made that the balance is correct in the healthcare industry. Many new goal of creating an overall regulatory with respect to each proposed safe models combine FFS and value-based landscape that is well-coordinated and harbor. Thus, no final determination has payment features, subjecting providers serves the intended purpose to allow for been made that the arrangements to mixed incentives and potentially beneficial innovation; that is as described in the proposals are, or posing all or some of the risks raised by streamlined as possible, consistent with should be, exempt from liability under volume- and value-based payment. We program integrity considerations; and the anti-kickback statute. To aid us in seek comments on how best to address that provides strong protections for making that determination in a final existing and emerging risks with respect patients and programs, both in terms of rule, we solicit public comments to our proposals below, individually promoting value and ensuring that the throughout this proposed rule about and collectively. Government can take action to protect whether we have achieved the proper Section C of this Executive Summary patients and address fraud or abuse. balance such that the arrangements and sections III and IV of this preamble Arrangements that might be protected described in the proposed safe harbors summarize our specific proposals. by a physician self-referral law should be protected from criminal Several proposals address particular exception, but might not be explicitly liability under the anti-kickback statute. types of value-based arrangements protected by an anti-kickback statute To this end, we caution that these designed to promote care coordination safe harbor, would not necessarily be proposed safe harbors remain subject to and allow for outcomes-based unlawful under the anti-kickback change through the rulemaking process, payments. We have included a proposed statute. They would need to be and that the types of arrangements safe harbor for arrangements that engage examined on a case-by-case basis, described in this proposed rule remain patients more actively in preventive including with respect to the intent of subject to case-by-case review under the care and adhering to treatment and care the parties. We note that OIG’s proposed anti-kickback statute, and if applicable, plans developed between them and new safe harbor for cybersecurity items the beneficiary inducements CMP, their healthcare providers. We also are and services and modifications to the including with respect to the requisite proposing a new safe harbor related to existing safe harbor for electronic health intent of the parties. The proposed safe cybersecurity tools, as well as record items and services are closely harbors, if finalized, specifically would modifications to the existing safe aligned with CMS’ proposals. address barriers to coordinated and harbors related to personal services value-based care posed by the Federal arrangements, electronic health records, C. Summary of the Major Provisions anti-kickback statute and the beneficiary warranties, and local transportation. 1. Anti-Kickback Statute and Safe Our proposals in this rulemaking inducements CMP and would have no Harbors application to any other law. In focus on ensuring protected addition, any final safe harbors would arrangements: (i) Promote coordinated As described in more detail below, we provide only prospective protection. patient care and foster improved propose to amend 42 CFR 1001.952 by OIG’s mission is to protect the quality, better health outcomes, and modifying certain existing safe harbors integrity of the Federal health care improved efficiency; and (ii) would not to the anti-kickback statute and by programs as well as the health and be misused to perpetrate fraud and adding safe harbors that would provide welfare of the people they serve. OIG abuse, including, for example, schemes new protections or codify an existing prevents and detects fraud, waste, and in which patients receive unnecessary statutory protection. Subject to abuse, and promotes economy, or substandard care or Federal health definitions and conditions set forth in effectiveness, and efficiency in HHS care programs are billed for medically the proposed regulations, these programs. Stakeholders, including unnecessary items or services. We have proposed changes include: patients, depend upon OIG to be sought to strike an effective balance • Three proposed new safe harbors thoughtful, cautious, and deliberate in among the goals of clarity, objectivity, for certain remuneration exchanged promulgating safe harbors to ensure that flexibility, safeguards (including between or among participants in a the arrangements the safe harbors accountability and transparency), and value-based arrangement (as further protect do not inappropriately increase ease of implementation. defined) that fosters better coordinated costs to the Federal health care OIG and CMS coordinated closely to and managed patient care: (i) Care programs or patients, corrupt develop our respective proposed coordination arrangements to improve practitioners’ medical judgment, or rulemakings in connection with the quality, health outcomes, and efficiency result in overutilization, inappropriate Regulatory Sprint and strove, where (1001.952(ee)); (ii) value-based patient steering, unfair competition, or appropriate, to propose consistent arrangements with substantial downside poor-quality care. These abuses are terminology for value-based financial risk (1001.952(ff)); and (iii) sometimes characterized as traditional arrangements. In many respects, OIG’s value-based arrangements with full FFS fraud and abuse risks. proposed rules for value-based financial risk (1001.952(gg)). These Model design characteristics common arrangements are different or more proposed safe harbors vary, among other to properly structured value-based restrictive than CMS’s comparable ways, by the types of remuneration payment models could curb some proposals, in recognition of the protected (in-kind or in-kind and

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55697

monetary), the level of financial risk (1001.952(hh)) and the proposed regulations, the so-called safe harbor assumed by the parties, and the types of modifications to the local transportation provisions, that would specify various safeguards included as safe harbor safe harbor (1001.952(bb)) would by payment and business practices that conditions; operation of law serve as exceptions to would not be subject to sanctions under • a proposed new safe harbor the beneficiary inducements CMP the anti-kickback statute, even though (1001.952(hh)) for certain tools and prohibition’s definition of they potentially may be capable of supports furnished under patient ‘‘remuneration.’’ inducing referrals of business for which engagement and support arrangements payment may be made under a Federal 3. Costs and Benefits to improve quality, health outcomes, health care program. and efficiency; There are no significant costs Section 205 of HIPAA established • a proposed new safe harbor associated with the proposed regulatory section 1128D of the Act (42 U.S.C. (1001.952(ii)) for certain remuneration revisions that would impose any 1320a–7d), which includes criteria for provided in connection with a CMS- mandates on State, local, or Tribal modifying and establishing safe harbors. sponsored model, which should reduce Governments or on the private sector. Specifically, section 1128D(a)(2) of the the need for OIG to issue separate and Act provides that, in modifying and II. Background distinct fraud and abuse waivers for establishing safe harbors, the Secretary new CMS-sponsored models; A. Anti-Kickback Statute and Safe may consider whether a specified • a proposed new safe harbor Harbors payment practice may result in: • (1001.952(jj)) for donations of Section 1128B(b) of the Act, (42 An increase or decrease in access to cybersecurity technology and services; U.S.C. 1320a–7b(b), the anti-kickback healthcare services; • proposed modifications to the • an increase or decrease in the statute), provides for criminal penalties existing safe harbor for electronic health quality of healthcare services; for whoever knowingly and willfully records items and services (1001.952(y)) • an increase or decrease in patient offers, pays, solicits, or receives to add protections for certain freedom of choice among healthcare remuneration to induce or reward the cybersecurity technology included as providers; referral of business reimbursable under part of an electronic health records • an increase or decrease in any of the Federal health care programs, arrangement, to update provisions competition among healthcare as defined in section 1128B(f) of the Act regarding interoperability, and to providers; (42 U.S.C. 1320a–7b(f)). The offense is remove the sunset date; • an increase or decrease in the • proposed modifications to the classified as a felony and is punishable ability of healthcare facilities to provide existing safe harbor for personal services by fines of up to $100,000 and services in medically underserved areas and management contracts (1001.952(d)) imprisonment for up to 10 years. or to medically underserved to add flexibility with respect to Violations of the anti-kickback statute populations; outcomes-based payments and part-time also may result in the imposition of • an increase or decrease in the cost arrangements; CMPs under section 1128A(a)(7) of the to Federal health care programs; • proposed modifications to the Act (42 U.S.C. 1320a–7a(a)(7)), program • an increase or decrease in the existing safe harbor for warranties exclusion under section 1128(b)(7) of potential overutilization of healthcare (1001.952(g)) to revise the definition of the Act (42 U.S.C. 1320a–7(b)(7)), and services; • ‘‘warranty’’ and provide protection for liability under the False Claims Act (31 the existence or nonexistence of any warranties for one or more items and U.S.C. 3729–33). potential financial benefit to a related services; The types of remuneration covered healthcare professional or provider, • proposed modifications to the specifically include, without limitation, which benefit may vary depending on existing safe harbor for local kickbacks, bribes, and rebates, whether whether the healthcare professional or transportation (1001.952(bb)) to expand made directly or indirectly, overtly or provider decides to order a healthcare and modify mileage limits for rural covertly, in cash or in kind. In addition, item or service or arrange for a referral areas and for transportation for prohibited conduct includes not only of healthcare items or services to a discharged patients; and the payment of remuneration intended particular practitioner or provider; or • codification of the statutory to induce or reward referrals of patients • any other factors the Secretary exception to the definition of but also the payment of remuneration deems appropriate in the interest of ‘‘remuneration’’ at section intended to induce or reward the preventing fraud and abuse in Federal 1128B(b)(3)(K) of the Act related to ACO purchasing, leasing, or ordering of, or health care programs. Beneficiary Incentive Programs for the arranging for or recommending the We have considered these factors in Medicare Shared Savings Program purchasing, leasing, or ordering of, any designing our proposals. We are (1001.952(kk)). good, facility, service, or item interested in public comments on these reimbursable by any Federal health care factors as they relate to our proposals. 2. Civil Monetary Penalty Authorities program. Properly structured and operated, we We propose to amend the definition Because of the broad reach of the believe that the arrangements we of ‘‘remuneration’’ in the CMP rules at statute, concern was expressed that propose to protect have the potential to 42 CFR 1003.110 by interpreting and some relatively innocuous business increase access to care, increase quality incorporating a new statutory exception arrangements were covered by the of care, aid in the provision of items and to the prohibition on beneficiary statute and, therefore, potentially services in underserved areas and to inducements for ‘‘telehealth subject to criminal prosecution. In underserved populations, decrease costs technologies’’ furnished to certain in- response, Congress enacted section 14 of to Federal health care programs, and home dialysis patients, pursuant to the Medicare and Medicaid Patient and decrease the potential for overutilization section 50302(c) of the Budget Act of Program Protection Act of 1987, Public of healthcare services. We are concerned 2018. Law 100–93 (section 1128B(b)(3)(E) of about reduced patient freedom of choice We further note that, if finalized, the the Act; 42 U.S.C. 1320a–7b(b)(3)(E)), among providers, potential decreases in proposed new safe harbor for patient which specifically requires the competition among health providers, engagement and support arrangements development and promulgation of and potential financial benefits to

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55698 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

healthcare professionals or providers from liability under the anti-kickback practitioner, or supplier of any item or that may vary inappropriately based on statute and the beneficiary inducements service for which payment may be their ordering decisions. We solicit CMP only; individuals and entities made, in whole or in part, by Medicare comments on whether or not our remain responsible for complying with or a State healthcare program (including proposals adequately address these or all other laws, regulations, and guidance Medicaid). Section 1128A(i)(6) of the other undesired effects; if commenters that apply to their businesses. Act, 42 U.S.C. 1320a–7a(i)(6), defines believe the proposals would not In developing our proposals, we have ‘‘remuneration’’ for purposes of the adequately address these effects, we taken into account information gleaned beneficiary inducements CMP as solicit comments on the degree to which from a variety of sources: Industry including ‘‘transfers of items or services such effects might occur and on stakeholder input, including through for free or for other than fair market additional safeguards to mitigate them. comments to the OIG RFI; learnings value.’’ Section 1128A(i)(6) of the Act In giving the Department the authority from OIG’s work (e.g., fraud and abuse also includes a number of exceptions to to protect certain arrangements and waivers for the Medicare Shared the definition of ‘‘remuneration.’’ payment practices under the anti- Savings Program and Innovation Center Pursuant to section 1128A(i)(6)(B) of kickback statute, Congress intended the models, investigative and oversight the Act, any practice permissible under safe harbor regulations to be updated work applying the fraud and abuse laws, the anti-kickback statute, whether periodically to reflect changing business and audits and evaluations of program through statutory exception or practices and technologies in the effectiveness and efficiency); expertise regulations issued by the Secretary, is healthcare industry.12 Since July 29, from CMS and other HHS agencies; and also excepted from the definition of 1991, there have been a series of final other sources, including literature on ‘‘remuneration’’ for purposes of the regulations published in the Federal care coordination and value-based beneficiary inducements CMP. Register establishing safe harbors in payments. However, no parallel exception exists in various areas.13 These safe harbor the anti-kickback statute. Thus, the B. Civil Monetary Penalty Authorities provisions have been developed ‘‘to exceptions in section 1128A(i)(6) of the limit the reach of the statute somewhat 1. Overview of OIG Civil Monetary Act apply only to the definition of by permitting certain non-abusive Penalty Authorities ‘‘remuneration’’ applicable to section arrangements, while encouraging In 1981, Congress enacted the CMP 1128A. beneficial or innocuous Relevant to this proposed rulemaking, arrangements.’’ 14 law, section 1128A of the Act, 42 U.S.C. 1320a–7a, as one of several the Budget Act of 2018 created a new Healthcare providers and others may exception to the definition of voluntarily seek to comply with final administrative remedies to combat fraud and abuse in Medicare and Medicaid. ‘‘remuneration’’ for purposes of the safe harbors so that they have the beneficiary inducements CMP. This assurance that their business practices The law authorized the Secretary to impose penalties and assessments on exception applies to ‘‘telehealth would not be subject to any anti- technologies’’ provided on or after kickback enforcement action. persons who defrauded Medicare or Medicaid or engaged in certain other January 1, 2019, by a provider of Compliance with an applicable safe services or a renal dialysis facility to an harbor insulates an individual or entity wrongful conduct. The CMP law also authorized the Secretary to exclude individual with end-stage renal disease (ESRD) who is receiving home dialysis 12 persons from Federal health care H.R. Rep. No. 100–85, Pt. 2, at 27 (1987). for which payment is being made under 13 Medicare and State Health Care Programs: programs (as defined in section 1128B(f) Fraud and Abuse; OIG Anti-Kickback Provisions, 56 of the Act, 42 U.S.C. 1320a–7b(f)) and to Medicare Part B. FR 35952 (July 29, 1991); Medicare and State Health Care Programs: Fraud and Abuse; Safe Harbors for direct the appropriate State agency to III. Provisions of the Proposed Rule: Protecting Health Plans, 61 FR 2122 (Jan. 25, 1996); exclude the person from participating in Anti-Kickback Statute Safe Harbors Federal Health Care Programs: Fraud and Abuse; any State healthcare programs (as Statutory Exception to the Anti-Kickback Statute for defined in section 1128(h) of the Act, 42 A. Value-Based Framework Shared Risk Arrangements, 64 FR 63504 (Nov. 19, This section provides background on, 1999); Medicare and State Health Care Programs: U.S.C. 1320a–7(h)). Congress later Fraud and Abuse; Clarification of the Initial OIG expanded the CMP law and the scope of and an overarching summary of, the Safe Harbor Provisions and Establishment of exclusion to apply to all Federal health framework for value-based arrangements Additional Safe Harbor Provisions Under the Anti- care programs, but the CMP applicable set forth in this proposed rulemaking; Kickback Statute, 64 FR 63518 (Nov. 19, 1999); 64 explains proposed terminology used in FR 63504 (Nov. 19, 1999); Medicare and State to beneficiary inducements remains Health Care Programs: Fraud and Abuse; limited to Medicare and State healthcare certain proposed safe harbors; and Ambulance Replenishing Safe Harbor Under the program beneficiaries. Since 1981, explains the specific safe harbor Anti-Kickback Statute, 66 FR 62979 (Dec. 4, 2001); Congress has created various other CMP proposals to protect value-based Medicare and State Health Care Programs: Fraud arrangements (as defined in proposed and Abuse; Safe Harbors for Certain Electronic authorities covering numerous types of Prescribing and Electronic Health Records fraud and abuse. paragraph 1001.952(ee)) designed to Arrangements Under the Anti-Kickback Statute, 71 foster better care at lower cost through FR 45109 (Aug. 8, 2006); Medicare and State Health 2. The Beneficiary Inducements CMP improved care coordination for patients. Care Programs: Fraud and Abuse; Safe Harbor for and the Definition of ‘‘Remuneration’’ Our proposals endeavor to remove Federally Qualified Health Centers Arrangements Under the Anti-Kickback Statute, 72 FR 56632 (Oct. Section 1128A(a)(5) of the Act, 42 real or perceived regulatory barriers to 4, 2007); Medicare and State Health Care Programs: U.S.C. 1320a–7a(a)(5), the ‘‘beneficiary promote flexible, industry-led Fraud and Abuse; Electronic Health Records Safe inducements CMP,’’ provides for the innovation in the delivery of more Harbor Under the Anti-Kickback Statute, 78 FR imposition of civil monetary penalties efficient and better coordinated 79202 (Dec. 27, 2013); and Medicare and State Health Care Programs: Fraud and Abuse; Revisions against any person who offers or healthcare. Further, consistent with to the Safe Harbors Under the Anti-Kickback Statute transfers remuneration to a Medicare or emerging understandings of the benefits and Civil Monetary Penalty Rules Regarding State healthcare program (including of better care coordination and the Beneficiary Inducements, 81 FR 88368 (Dec. 7, Medicaid) beneficiary that the increasing adoption of value-based care 2016). 14 Medicare and State Health Care Programs: benefactor knows or should know is and payment models in the healthcare Fraud and Abuse; OIG Anti-Kickback Provisions, 56 likely to influence the beneficiary’s industry, our proposals may support a FR at 35958. selection of a particular provider, more rapid transition from volume (e.g.,

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55699

FFS reimbursement for office visits, 2. Balancing Innovation With Protection risk from a payor for items and services tests, or procedures) toward value (e.g., Against Fraud and Abuse Risks furnished to patients helps mitigate paying for patient or population To remove regulatory barriers to care incentives that often drive fraud and outcomes). coordination and support value-based abuse present in traditional FFS. For the purposes of this rule, the arrangements, we are faced with the 1. Anti-Kickback Statute Implications of proposed safe harbors that require challenge of designing safe harbor Care Coordination and the Value-Based assumption of risk focus on value-based protections for emerging healthcare Framework arrangements with substantial downside arrangements. The optimal form, design, financial risk (1001.952(ff)) and value- and efficacy of such emerging Better care coordination—including based arrangements at full financial risk arrangements remain unknown or more effective transitions for patients (1001.952(gg)). While these proposed unproven. This is a key challenge of across the care continuum, less safe harbors largely focus on the duplication of items and services, and regulating during a period of innovation assumption of downside financial risk, open sharing of health data (consistent and experimentation. The challenge of we understand that participants in with privacy and security rules)—is designing appropriate safe harbors is value-based arrangements may assume integrally connected to advancing the exacerbated by: The substantial certain types of risk other than transition to a value-based healthcare variation in care coordination and downside financial risk for items and value-based arrangements contemplated system. Care coordination arrangements, services furnished to a target patient by the healthcare industry (meaning that especially when linked to appropriate population (e.g., upside risk, clinical one-size-fits-all safe harbor designs may clinical or other value-driven outcomes, risk, operational risk, contractual risk, be less than optimal), variation among or investment risk). can help improve health and the patient patient populations and provider experience of care; enable providers to We believe that our focus on characteristics, emerging health downside financial risk is appropriate participate successfully in value-based technologies and data capabilities, the care and payment models; and advance because the assumption of downside still-developing science of quality and financial risk may shift the incentives the goals of value-based care: Delivering performance measurement, and our that serve to influence those making the better health outcomes and maximizing desire not to chill beneficial innovation. referring and ordering decisions, the desirable efficiency in healthcare It is sometimes difficult to gauge fraud conduct at the center of the anti- delivery. For example, OIG’s recent and abuse risk in a rapidly evolving kickback statute. We solicit comments report entitled, ‘‘ACOs’ Strategies for environment of substantial innovation, on whether, for purposes of a final rule, Transitioning to Value-Based Care: experimentation, and deployment of other types of risk would have a Lessons From the Medicare Shared technology and digital data. In some comparable effect. We are particularly Savings Program,’’ 15 highlights the cases, innovations and the availability interested in fact patterns that illustrate tools—including care coordination of more actionable, transparent data how other types of risk would operate arrangements—that certain accountable may enhance program integrity and to change ordering or referring care organizations (ACOs) under the protect against fraud and abuse. There is behaviors of providers and suppliers Medicare Shared Savings Program have a compelling concern that uncertainty that might still be paid on an FFS basis deployed successfully to reduce costs and regulatory barriers—real or or otherwise help ensure that safe- and improve quality. Many of the perceived—could prevent the best and harbored arrangements would serve strategies discussed in this report most efficacious innovations from appropriate value-based purposes. involve care coordination, care emerging and being tested in the Remuneration has at least two management, and patient engagement, marketplace. Our goal is to craft safe dimensions relevant to this proposed harbors that, if finalized, would protect including: engaging beneficiaries to rulemaking: (i) Payments by payors; and arrangements that promote value, while (ii) remuneration exchanged between improve their own health, managing also protecting against fraud, abuse and clinicians, providers, suppliers, and beneficiaries with costly or complex associated harms. Over time, we expect others. Payor payments that drive care needs to improve their health that best practices in care coordination toward value include capitated outcomes, addressing behavioral health and value-based payment will emerge. payments and global budgets at one end needs and social determinants of health, of the ‘‘value-based payments’’ 3. Overview of Proposed Safe Harbors and using technology to increase spectrum; shared savings and bundled information sharing among providers.16 We are proposing safe harbors for payment mechanisms in the middle; Because care coordination often value-based arrangements, with greater and bonuses and reductions applied to involves arrangements between flexibilities available to parties as they FFS payments at the other end of the providers that refer Federal health care assume more downside financial risk for spectrum. Examples of remuneration program patients to one another and an the cost and quality of care. This exchanged among clinicians, providers, exchange of remuneration, the anti- ‘‘tiered’’ structure is intended to support suppliers, and others include sharing kickback statute may be implicated. the transformation of industry payment staff, such as care coordinators, or Moreover, providing patients with systems and takes into account that technology, such as data analytics tools, arrangements involving higher levels of remuneration to engage and support to improve quality or efficiency or to downside risk curb, at least to some them in achieving better health achieve other performance or outcomes degree, FFS incentives to order targets, whether set by payors or among outcomes may implicate both the anti- medically unnecessary or overly costly themselves. In some cases, these parties kickback statute and the beneficiary items and services. We propose these also may have value-based payment inducements CMP. safe harbors, recognizing that the arrangements among themselves, such transition from an FFS to a value-based as gainsharing or shared savings 15 OIG, ACOs’ Strategies for Transitioning to care and payment system will take time. agreements. Value-Based Care: Lessons From the Medicare Shared Savings Program (July 2019), available at Where parties may have both FFS and We are proposing a suite of safe https://oig.hhs.gov/oei/reports/oei-02-15-00451.pdf. value-based payment incentives, we harbors that, if finalized, would address 16 Id. believe assuming downside financial a variety of scenarios. Collectively, we

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55700 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

believe these proposed safe harbors, in each proposed safe harbor are discussed individuals and entities that can engage combination with existing safe harbors, in detail below. in protected arrangements, provided all would provide pathways for protection As always, all safe harbor conditions conditions of a specific safe harbor are for most beneficial care coordination would need to be precisely met for safe squarely met. and value-based care and payment harbor protections to apply. Many Generally speaking, when read arrangements. In crafting these safe value-based arrangements and activities together, the proposed terminology and harbors, we have endeavored to be may qualify for existing safe harbor safe harbors are intended to protect care agnostic with respect to the composition protections, including under the coordination and support value-based of the value-based enterprise (VBE), a employees safe harbor (1001.952(i)), the arrangements where, as a threshold concept and defined term described EHR items and services safe harbor matter, the arrangements are under the further below, and scope of protected (1001.952(y)), the personal services and auspices of a VBE (of any size, and as value-based arrangements to allow for management contracts safe harbor further defined in proposed paragraph innovation and experimentation in the (1001.952(d)), the local transportation 1001.952(ee)) that is essentially a healthcare marketplace and to foster a safe harbor (1001.952(bb)), and the network of participants (such as level playing field for those seeking safe several safe harbors pertaining to health clinicians, providers, or suppliers) that harbor protection, whether they are plans and managed care organizations has agreed to collaborate to, for large health systems or individual set forth at 1001.952(l), (m), (t), and (u). example: (i) Put the patient at the center practitioners. The proposed safe harbors Many others may not raise anti-kickback of care through improved care would cover value-based arrangements issues at all if they do not relate to coordination, (ii) increase efficiencies in involving both publicly and privately Federal health care program the delivery of care, and (iii) improve insured patients. beneficiaries or are not tied in any way quality of care and health outcomes for The first proposed safe harbor, at to the volume or value of Federal health patients or populations. The VBE has 1001.952(ee), covers care coordination care program business. (Likewise, with value-based purposes and its arrangements to improve quality, health respect to compliance with the participants enter into value-based outcomes, and efficiency (‘‘care beneficiary inducements CMP, patient arrangements for value-based activities coordination arrangements’’ safe engagement and support arrangements to further those purposes. harbor). It covers certain in-kind and activities may fit in existing Wherever possible and appropriate, it remuneration, including services and exceptions to the CMP law, may be is our intent to align our proposed infrastructure. The second proposed within applicable nominal value limits, value-based terminology with those that safe harbor, at 1001.952(ff), with greater or may not raise concerns under that CMS proposes in its notice of proposed flexibility, covers certain in-kind and statute if they do not relate to Medicare rulemaking regarding the physician self- monetary arrangements where the VBE or Medicaid patients or are not likely to referral law, ‘‘Modernizing and is at substantial downside financial risk influence the selection of providers, Clarifying the Physician Self-Referral from a payor (as defined). The third practitioners, or suppliers.) Regulations.’’ Because of the close proposed safe harbor, at 1001.952(gg), is In the next section, we describe the nexus between the value-based for in-kind and monetary arrangements proposed definitions for several key terminology in our proposed rule and where the VBE is at full downside terms used in the proposed safe harbors CMS’s proposed terminology, we may financial risk from a payor and allows for value-based arrangements at also consider for purposes of making for even more flexibility. In addition, we proposed paragraphs 1001.952(ee), (ff), determinations for a final rule propose to protect certain outcomes- and (gg) for care coordination comments submitted about value-based based compensation (regardless of arrangements, value-based arrangements terminology in response to CMS’s whether it meets the criteria for with substantial downside financial proposed rule. substantial downside financial risk) risk, and value-based arrangements at We use the term ‘‘value-based’’ in our under the rubric of ‘‘outcomes-based full financial risk, respectively. We then proposed terminology in a non- payments’’ through proposed describe each proposed safe harbor in technical way to signal value produced modifications to the personal services detail. Related proposed modifications through improved care coordination, and management contracts safe harbor to the personal services and improved health outcomes, lower costs at 1001.952(d), as discussed in the management contracts safe harbor or reduced growth of costs for patients section III.J. below. (1001.952(d)) for outcomes-based and payors, and improved efficiencies We are mindful of the role patient payments (where there is no substantial in the delivery of care. We recognize engagement can play in improved downside financial risk) are described at that our use of the words ‘‘value’’ and coordination of patient care and health section III.J. The patient engagement ‘‘value-based’’ here do not necessarily outcomes. Thus, we are proposing a safe and support safe harbor is described at capture all dimensions of value in harbor at 1001.952(hh) for arrangements section III.F. The proposed safe harbor healthcare. We solicit comments on our for patient engagement and support to for CMS-sponsored models, including approach, as well as comments on improve quality, health outcomes, and Innovation Center models, is described whether we should define ‘‘value’’ efficiency (the ‘‘patient engagement and at section III.G. specifically in the final rule, and if so, support’’ safe harbor). We are further how best to define ‘‘value’’ as it pertains B. Proposed Value-Based Terminology proposing a separate safe harbor at to care coordination and value-based (1001.952(ee)) 1001.952(ii) for care delivery and payment. For example, we are payment arrangements as well as We propose definitions for key terms considering for the final rule whether beneficiary incentives pursuant to in paragraph 1001.952(ee). These terms ‘‘value’’ should be defined with certain CMS-sponsored models, are used consistently in several reference to financial arrangements including Innovation Center models. proposed safe harbors. The proposed under advanced APMs (whether HHS or This proposed safe harbor would defined terms are intended to work in other payor models). largely, if not entirely, replace OIG’s conjunction with one another to current model-by-model fraud and describe the universe of value-based 1. Value-Based Enterprise (VBE) abuse waiver process for CMS- arrangements potentially eligible for We propose to use the term ‘‘value- sponsored models. The requirements of proposed safe harbor protection and of based enterprise’’ to describe the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55701

network of individuals and entities that would serve as the ‘‘gatekeeper’’ to the the quality, integrity, privacy, and collaborate together to achieve one or VBE, with a process and criteria to security of data related to the more value-based purposes (as defined ensure that those admitted to the VBE arrangement (such as outcomes, quality, in proposed paragraph 1001.952(ee)). As after its formation as VBE participants and payment data). To facilitate defined in this rulemaking, and as a have a legitimate role in the VBE and in effective oversight, we are considering general matter, the VBE would delineate VBE arrangements and that VBE for the final rule whether VBEs should the universe of individuals and entities participants are not participants in be required to implement reporting participating in arrangements eligible name only. In addition to ensuring requirements for their VBE participants for safe harbor protection, if all safe operational and financial oversight, we or mechanisms for obtaining access to, harbor conditions are fully met. The believe the accountable body or and verifying, VBE participant data VBE also would be accountable for responsible person would be positioned concerning performance under any ensuring that such protected to identify program integrity issues and value-based arrangement. arrangements are conducted under the to initiate action to address them, as We welcome comments on this auspices of the VBE. necessary and appropriate. We are approach or any different or additional considering for the final rule, and solicit actions that may help ensure effective a. Two or More VBE Participants comment on, whether the VBE or its ongoing oversight. First, we propose that VBE would participants should be required to have We intend for VBEs to implement the mean two or more VBE participants (as a compliance program that covers at criterion regarding the accountable body defined in proposed paragraph least those value-based arrangements for or responsible person in a manner that 1001.952(ee)) that are collaborating to which safe harbor protection is sought is tailored to the complexity and achieve at least one value-based and whether the accountable body or sophistication of the VBE. For example, purpose. VBEs may take many different person should have responsibility for a VBE involving two physician practices forms, and we intend for the definition the compliance program. with a single value-based arrangement of ‘‘VBE’’ to be flexible. For example, a The arrangements that would be could designate one of the physician VBE could be as small as two individual protected by these proposed safe practices (or its compliance physician practices collaborating to harbors would not have the benefit of professional) as the individual coordinate care for shared patients. The programmatic oversight comparable to responsible for this oversight. Where the same term also could cover a formal or CMS-sponsored models. Accordingly, VBE is larger and involves numerous informal network of hospital systems, we view this accountability criterion as sophisticated entities, it might be post-acute care providers, and physician important to ensure that arrangements advisable and a best practice to create a practices. An accountable care operate for their designated value-based separate governing body to serve as the organization or health system comprised purpose(s) and as a key safeguard to accountable body, overseeing the VBE. of hospitals and physician practices, for ensure that value-based arrangements The proposed definition of ‘‘VBE’’ example, could also constitute a VBE. are aligned with at least one value-based does not require the VBE’s accountable purpose and not misused for purposes body or responsible person to be b. Party to a Value-Based Arrangement that raise program integrity concerns independent of the interests of Second, we propose that each VBE (e.g., arrangements that encourage individual VBE participants (which participant in the VBE must be a party providers to steer patients in ways that would preclude a VBE participant from to a value-based arrangement (as are not in the patients’ best interests or acting as the accountable body or defined below) with at least one other stint on medically necessary care). responsible person) or to have a distinct VBE participant from the same VBE. In The oversight role may include, duty of loyalty to the VBE. However, to the case of a VBE comprised of two VBE depending on the applicable proposed provide further assurances that a VBE’s participants, the two VBE participants safe harbor at 42 CFR 1001.952(ee), (ff), accountable body or responsible person would need to be engaged in a value- and (gg) and how the applicable VBE is acting in furtherance of the VBE’s based arrangement with each other. We effectuates safe harbor requirements, value-based purpose(s) and not any one intend for this criterion to ensure that monitoring whether VBE participants VBE participant’s individual interests, parties qualifying as part of a VBE are are performing under their value-based we are considering for the final rule contributing to a value-based arrangements in a manner that furthers imposing a standard requiring either arrangement. Consistent with our the coordination and management of independence or a duty of loyalty as a intention to provide flexibility for care for the target patient population. criterion of this definition or as a safe innovation, VBE participants could We are considering for the final rule a harbor requirement. We solicit engage in one or multiple value-based requirement that all VBE participants comments on the benefits, burdens, and arrangements, so long as all of the value- affirmatively recognize the oversight challenges of this approach. based arrangements further the value- role of the accountable body or d. Governing Document based purpose(s) of the VBE. responsible person and explicitly agree to cooperate with its oversight efforts Fourth, we propose that each VBE c. Accountable Body (e.g., by requiring the inclusion of a must have a governing document that Third, we propose that the VBE must statement to this effect in the applicable describes the VBE and how the VBE have an accountable body (such as a written agreement). participants intend to achieve its value- board of directors or other governing We also are considering for the final based purpose(s). The intent of this body) or person (which, depending on rule whether the accountable body or requirement is to provide transparency the size and scope of the VBE, may be responsible person (or some other party regarding the structure of the VBE, the an entity, such as a hospital or or parties to value-based arrangements VBE’s value-based purpose(s), and the physician practice that is among the addressed by the proposed safe harbors) VBE participants’ roadmap for achieving VBE participants, or an individual) should have more specific oversight such purpose(s). This document may responsible for financial and operational responsibilities, such as oversight include any other terms the VBE oversight of the VBE. As part of its related to utilization of items and participants deem important. The oversight role, we expect that the services, cost, quality of care, patient governing document need not be formal accountable body or responsible person experience, adoption of technology, and bylaws or in another specific format.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55702 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

Written documentation recording the 1001.952(ee)). That is, the value-based We are considering for the final rule terms of a value-based arrangement may arrangement, and its value-based and solicit comments on limiting the serve as the required VBE governing activities, must be tailored to meet the definition of ‘‘target patient population’’ document, provided it describes the needs of a defined patient population. to patients with a chronic condition, or enterprise and how the parties intend to This element further ties the value- alternatively, limiting any or all of the achieve its value-based purpose(s). based arrangement to care coordination proposed safe harbors that use the target patient population definition to value- e. VBE’s Assumption of Downside of patients and value-based goals. We based arrangements for patients with a Financial Risk note that the definition of ‘‘value-based arrangement’’ is broad enough to cover chronic condition. We might effectuate Lastly, we note that two of our commercial and private insurer this approach through changes to the proposed safe harbors require that a arrangements. scope of the target patient population VBE has assumed downside financial definition or other definitions, risk from a payor. We anticipate that 3. Target Patient Population including value-based activity, value- VBEs could contract with payors and We propose to define ‘‘target patient based arrangement, and value-based other entities in a variety of ways. For population’’ as ‘‘an identified patient purpose. example, a VBE comprised of a large population selected by the VBE or its This alternative proposal is in number of VBE participants across a VBE participants using legitimate and recognition that patients with chronic range of healthcare settings might create verifiable criteria that: (A) Are set out in conditions may be more susceptible to a standalone legal entity that enters into writing in advance of the comorbidities, requiring care across the contracts directly with payors on the commencement of the value-based health spectrum, and thus most likely to VBE participants’ behalf. Alternatively, arrangement; and (B) further the value- benefit from the care coordination one VBE participant might contract with based enterprise’s value-based central to this proposed rule. To the payors on behalf of other VBE purpose(s).’’ Our intent in defining this extent we include such a limitation in participants within the VBE. In the term is to protect value-based the final rule, either by definition or latter example, the VBE would still be arrangements that serve an identifiable through a safe harbor requirement, we required to be at risk, but it would be patient population for whom the value- are considering how to define ‘‘chronic through one of its VBE participants based activities likely would improve condition,’’ and whether OIG should rather than through a contract directly health outcomes or lower costs (or cross-reference other Medicare or with the payor. both). By using the terms ‘‘legitimate Medicaid program guidelines or rules 2. Value-Based Arrangement and verifiable,’’ we seek to ensure the related to chronic conditions. In target patient population selection particular, we are considering and seek The proposed safe harbors at 42 CFR comment on defining ‘‘chronic 1001.952(ee), (ff), and (gg) would protect process is transparent and that VBE participants select their target patient condition’’ as the list of 15 Special remuneration paid or exchanged Needs Plans (SNP)-specific chronic population in an objective manner pursuant to a ‘‘value-based conditions developed by the SNP based on criteria that further the arrangement’’ if all conditions are met. Chronic Condition Panel, as may be applicable value-based arrangement’s We propose to define a value-based modified from time to time.17 As new value-based purpose(s). If VBE arrangement as ‘‘an arrangement for the chronic conditions are identified, and as participants selectively include patients provision of at least one value-based existing conditions benefit from life- in a target patient population for activity for a target patient population prolonging technological advances, we purposes inconsistent with the between or among: (A) The value-based are mindful that any definition of objectives of a properly structured enterprise and one or more of its VBE ‘‘chronic condition’’ might need value-based arrangement (e.g., cherry participants; or (B) VBE participants in flexibility to expand to remain picking or lemon dropping patients), we the same value-based enterprise.’’ We appropriately inclusive and consistent intend for these requirements to ensure would not consider such a selection with clinical understandings. that each value-based arrangement is process to be based on ‘‘legitimate and As an additional alternative, we are aligned with the VBE’s value-based verifiable criteria that further the value- considering for purposes of the final purpose(s) and subject to its financial based enterprise’s value-based rule, and solicit comments on, limiting and operational oversight. Our proposed purpose(s).’’ the definition of ‘‘target patient definition is intended to capture This proposed definition is not population’’ to patients with a shared arrangements for care coordination and limited to Federal health care program disease state that would benefit from certain other value-based activities beneficiaries. For example, VBE care coordination. among VBE participants within the participants seeking to enhance access We seek comment on how best to same VBE. to, and usage of, primary care services address the need for flexibility in any Addressing each requirement of the for patients concentrated in a certain final rule, especially should we limit a definition in turn, we first propose to geographic region might base the target final safe harbor to patients with a require that the value-based patient population on ZIP Code or chronic condition or shared disease arrangement include at least one value- county of residence. If a value-based state. Moreover, we are interested in based activity (as defined in proposed arrangement is focused on enhancing feedback on impacts of such limitations paragraph 1001.952(ee)) to be care coordination for patients with a on the ability of VBE participants to undertaken by the parties. We would chronic disease, the target patient provide better coordinated care for other expect that many value-based population might be patients with that categories of patients, including patients arrangements would be comprised of disease (e.g., congestive heart failure). discharged from hospitals following multiple value-based activities. VBE participants might also, for acute care, patients requiring maternal Second, we propose that the value- example, use data to identify a target based arrangement’s value-based patient population at increased risk of 17 CMS, Chronic Condition Special Need Plans activities must be undertaken with developing a chronic disease for (C–SNP), List of Chronic Conditions, https:// www.cms.gov/Medicare/Health-Plans/ respect to a target patient population (as improved care coordination under a SpecialNeedsPlans/Chronic-Condition-Special- defined in proposed paragraph value-based arrangement. Need-Plans-C-SNP.html#s1.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55703

care, patients needing preventive care, activities set forth in the value-based Century Cures Act and the Office of the and patients with mental health arrangement are expected to further the National Coordinator for Health conditions. value-based purpose of the arrangement. Information Technology (ONC), HHS Additionally, we solicit comments on While this standard would not require Notice of Proposed Rulemaking ‘‘21st whether we should replace ‘‘legitimate that the value-based purpose actually be Century Cures Act: Interoperability, and verifiable’’ in this proposed achieved, we are considering whether to Information Blocking, and the ONC definition with language that would require in the final rule that the VBE Health IT Certification Program,’’ to the require VBE participants to have more participants entering into the value- extent such definition and exceptions parameters and structure with respect to based arrangement engage in an are finalized. their selection of the target patient evidence-based process to design value- 5. VBE Participant population and are considering whether based activities that they believe will use of the term ‘‘evidence-based’’ would reach such a goal. Our proposed We propose to define ‘‘VBE achieve this goal. (Our proposed interpretation of ‘‘evidence-based’’ for participant’’ as ‘‘an individual or entity interpretation of ‘‘evidence-based’’ is purposes of this proposed rule is that engages in at least one value-based addressed below in our discussion of addressed below in our discussion of activity as part of a value-based the proposed safe harbor for care the proposed care coordination enterprise.’’ Depending upon the terms coordination arrangements.) arrangements safe harbor. and requirements of the value-based Last, we are considering for the final With this definition, we acknowledge arrangement (and the conditions of the rule, and seek comments on, whether that a ‘‘value-based activity’’ may relevant safe harbor), ‘‘engaging in’’ a and if so how, parties other than VBE encompass not only affirmative actions value-based activity may be, for participants should or could be taken by VBE participants (e.g., example, (i) performing an action to involved in selecting the target patient providing care coordinators to help achieve certain quality or outcome population. For example, we are patients with complex needs navigate metrics and the providing or receiving considering for the final rule the role of the transition from a hospital to their of payment for such achievement, or (ii) payors in identifying or selecting the homes) but also instances of inaction coordinating care to achieve better target patient population or establishing (e.g., refraining from ordering certain outcomes or efficiencies (e.g., sharing outcome measures with respect to a items or services in accordance with a staff or infrastructure to improve the value-based arrangement. While payors medically appropriate care protocol that discharge planning and care follow-up might not be parties to a value-based reduces the number of required steps in process between two VBE participants). arrangement, we believe many care a given procedure). Under no Subject to the limitations proposed coordination and other value-based circumstances would simply making a below, such term would broadly include arrangements may be entered into in referral constitute a ‘‘value-based clinicians, providers, and suppliers, as order to achieve performance or activity.’’ well as other individuals and entities. outcome goals set by payors. We seek Lastly, we are considering for the final Potential VBE participants could be, by feedback on the potential benefit, rule expressly excluding from the way of example only, physician including any reduced program integrity definition of ‘‘value-based activity’’ any practices, hospitals, payors, post-acute risks, of allowing or requiring payors to activity that results in information providers, pharmacies, chronic care and select either or both the target patient blocking. Similar to the concerns disease management companies, and population and relevant outcome articulated in the section detailing our social services organizations. Given that measures and targets (for purposes of proposed modifications to the electronic our proposed definition may encompass the definitions, safe harbors, or both). If health records safe harbor, we seek to non-traditional healthcare entities, and there would be benefit in doing so, we preclude from protection under our our experience with respect to financial seek feedback on how best to implement proposed safe harbors at 42 CFR arrangements between such entities and such a permission or requirement. We 1001.952(ee), (ff), and (gg) any providers and suppliers is limited, we also seek feedback on whether, for arrangement that may, on its face, meet are considering for the final rule, and purposes of the final rule, we should our definition of ‘‘value-based activity’’ solicit comments on, any fraud and treat as a favorable factor that a value- but that ultimately is used to engage in abuse risks that financial arrangements based arrangement (or outcomes-based practices of information blocking (e.g., with these entities may present and payment arrangement) aligns its target the donation of health information what, if any, additional safeguards we patient population or its outcome technology that may facilitate care may need to place around these entities’ measures and targets with payor-driven coordination across providers participation in value-based incentives. participating in the VBE, but also arrangements under the proposed safe prevents or unreasonably interferes with harbors. 4. Value-Based Activity the exchange of electronic health For purposes of these safe harbors, we information with other providers in a. Entities Not Included as VBE propose that the term ‘‘value-based order to lock-in referrals between such Participants activity’’ would mean ‘‘any of the providers). Information blocking The ‘‘VBE participant’’ definition following activities, provided that the practices that may affect value-based expressly excludes pharmaceutical activity is reasonably designed to activities include, but are not limited to, manufacturers; manufacturers, achieve at least one value-based purpose (i) locking electronic health information distributors, or suppliers of durable of the value-based enterprise: (A) the into the VBE or keeping it only between medical equipment, prosthetics, provision of an item or service; (B) the VBE participants, or (ii) preventing orthotics or supplies (DMEPOS); and taking of an action; or (C) the refraining referrals or other electronic health laboratories. On the basis of our from taking an action.’’ ‘‘Value-based information from leaving the VBE or historical enforcement and oversight activity’’ does not include the making of being transmitted from a VBE experience, we are concerned that some a referral. participant to another healthcare companies within these types of We are considering for the final rule provider. This exclusion would be entities, which are heavily dependent whether to interpret ‘‘reasonably based on the definition and exceptions upon practitioner prescriptions and designed’’ to mean that the value-based for ‘‘information blocking’’ in the 21st referrals, might misuse the proposed

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55704 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

safe harbors primarily as a means of proposed safe harbor for outcomes- personal services and management offering remuneration to practitioners based compensation under the personal contracts safe harbor that would be and patients to market their products, services and management contracts safe available, including greater flexibility rather than as a means to create value harbor should be included in the for part-time arrangements and for patients and payors by improving definition of ‘‘VBE participant’’ and arrangements in which the aggregate the coordination and management of potentially protected by the applicable compensation is not known in advance. patient care, reducing inefficiencies, or safe harbors. We are interested in These entities also would be eligible lowering health care costs. For example, comments with examples of how and under the proposed safe harbors for we are concerned that these entities the extent to which the entities we cybersecurity items and services and for might create arrangements styled as propose to exclude participate in the CMS-sponsored models, as well as for value-based arrangements that serve to coordination and management of care the proposed modifications to the tether clinicians or patients to the use of for patients and whether and how they warranties safe harbor. Further, we a particular product (e.g., a drug or may be involved in providing beneficial solicit comments on potential revisions implantable device, such as a device health technology, including digital to the reporting requirements in the with a mechanical or physical effect on technology, used to coordinate and warranties safe harbor that could the body) when a different product manage care and improve health accommodate outcomes-based warranty could be more clinically effective for the outcomes. We also are considering and arrangements that excluded patient. Moreover, pharmaceutical are interested in comments on manufacturers and suppliers may want manufacturers, and manufacturers, additional safeguards we could include to undertake. Lastly, we note that distributors, and suppliers of DMEPOS, in the safe harbors to: (i) Prevent pharmaceutical manufacturers or other and laboratories are less likely to be on abusive marketing practices with entities we propose to exclude from the the front line of care coordination and respect to the items and services these definition of ‘‘VBE participant’’ may use treatment decisions in the same way as entities (or other entities, not excluded the OIG’s advisory opinion process for other types of proposed VBE entities, from the proposed definition of ‘‘VBE value-based or other arrangements they such as hospitals, physicians, and participant’’) sell to patients, payors, may want to undertake. remote monitoring companies that and providers (e.g., practices that We are considering for the final rule, provide care coordination and include payments to physicians, and seek comments on, whether we management tools and services directly hospitals, or patients to reward them for should exclude other entities from the to patients. We solicit comments on ordering the entity’s products); (ii) definition of ‘‘VBE participant.’’ For whether this assumption is correct, protect clinical decision-making about example, we are considering excluding along with examples of the specific products that are in the patient’s best pharmacies (including compounding roles played by these entities in medical interests and patient freedom of pharmacies) from the definition of ‘‘VBE coordinating and managing care for choice; and (iii) reduce the risk of participant.’’ We acknowledge that some patients. inappropriate cost-shifting to Federal pharmacies (and pharmacists) have the We note that we received comments health care programs and inappropriate in response to the OIG RFI from potential to contribute to the type of increased costs to Federal health care beneficial value-based arrangements this pharmaceutical manufacturers seeking programs. We are considering whether safe harbor protection for a variety of rulemaking is designed to foster (e.g., to include a safeguard, in the applicable through medication adherence programs emerging outcomes-based and value- proposed safe harbors, that would based contracting practices for their or educational services for patients with preclude protection for value-based pharmaceutical products, as well as diabetes). However, pharmacies, like the arrangements and outcomes-based related patient medication adherence entities we propose to exclude from the payments that include exclusivity and similar programs. We also definition of ‘‘VBE participant,’’ requirements, such as a requirement acknowledge that some pharmaceutical primarily provide items, and we are that the VBE participant is the exclusive manufacturers may help facilitate care concerned that their participation in provider of care coordination items or coordination and management of care value-based arrangements may not services or the exclusive provider of a through, for example, data analytics further the care coordination purposes reimbursable item or service. We are associated with their pharmaceutical of this rulemaking. We seek comments further considering whether to impose products furnished to purchasers of on beneficial arrangements pharmacies their products. These kinds of certain heightened standards and may want to undertake under the new manufacturer arrangements raise conditions on certain entities that value-based framework and any different program integrity issues from would receive safe harbor protection, safeguards we could implement in the those addressed in this rulemaking and such as enhanced monitoring, reporting, final rule if we were to allow such would likely require different or data submission requirements or entities to participate in value-based safeguards. We are considering some or all of the conditions presented arrangements eligible for safe harbor pharmaceutical manufacturers’ role in in the discussion of proposed protection. We are further considering coordination and management of care 1001.952(ee) below. for the final rule whether specific types and may address it in future While pharmaceutical manufacturers of pharmacies, such as compounding rulemaking. We may also consider and other listed entities would not be pharmacies, should be excluded as VBE specifically tailored safe harbor eligible for protection under the participants even if others, such as retail protection for value-based contracting proposed safe harbors for value-based and community pharmacies, are and outcomes-based contracting for the arrangements, patient engagement and included. In particular, we are purchase of pharmaceutical products support, and revisions related to concerned that pharmacies that (and potentially other types of products) outcomes-based payments included in specialize in compounding in future rulemaking. the personal services and management pharmaceuticals may pose a heightened We are considering for the final rule contracts safe harbor, other elements of risk of fraud and abuse, as evidenced by whether some or all of the entities we this proposed rule would be available to our enforcement experience, and would propose to exclude from the definition them. As explained below, we propose not play a direct role in patient care of a ‘‘VBE participant’’ and from the certain other modifications to the coordination.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55705

We also are considering for the final We are further aware that mobile To address these concerns, we are rule excluding pharmacy benefits health and digital health technology considering for the final rule the managers (PBMs), wholesalers, and companies may be newer entrants to the exclusion of some or all device distributors from the definition of ‘‘VBE healthcare marketplace or they may be manufacturers under the definition of participant’’ for reasons comparable to existing companies. In some cases, they ‘‘VBE participant’’ and from protection those for excluding pharmaceutical are existing healthcare companies that under the various proposed safe manufacturers.18 We may further have developed new lines of business in harbors, including the exclusion from consider the role of these entities in care digital health technology. For example, participation in outcomes-based coordination and management in future in some cases, they are companies that payment arrangements under proposed rulemaking. We are aware that PBMs are have historically manufactured medical 1001.952(d)(2) and (3). As with increasingly providing services related devices reimbursed by Federal health pharmaceutical manufacturers, it is not to the coordination of care for patients. care programs and have developed clear that all device manufacturers play We are interested in comments with digital technologies that are used in a comparable role in the coordination examples demonstrating how PBMs conjunction with medical devices, such and management of patient care as those engage in care coordination and as pacemakers. It is our understanding entities proposed to come within the management with healthcare providers that, depending on the company’s definition of a VBE participant. We and suppliers, as well as insights into business model, what is included as solicit comments about this assumption the risks and benefits of including PBMs part of the Food and Drug and the roles that traditional device as VBE participants eligible to enter into Administration (FDA)-approved device, manufacturers play in care coordination value-based arrangements that could and payor coverage determinations, the and management. Also, as with issues qualify for safe harbor protection if all digital technologies and associated raised by arrangements involving conditions are satisfied. functionalities may be included as part pharmaceutical manufacturers, we are considering future safe harbor b. Health Technology Companies of the customer’s cost of the medical device, or they may be part of a separate rulemaking to address specifically We are mindful that a growing services arrangement. tailored protection for value-based and number of companies are providing These technologies hold promise for outcomes-based contracting for device mobile health and digital technologies improving care coordination and health manufacturers. This proposed rule to physicians, hospitals, patients, and outcomes through monitoring of real- focuses primarily on arrangements to others for the coordination and time patient data and detection and coordinate and manage the care of management of patients and their prevention of health problems. We are patients, and does not, for example, healthcare, and such companies are concerned, however, and solicit public address purchase and sale arrangements eligible to be VBE participants under the comments, about the risk that some for covered items and services. We may proposed definition. These companies companies that manufacture medical take up the issue of purchase and sale provide a range of services such as devices covered by Federal health care arrangements, including consideration remote monitoring, predictive analytics, programs, particularly implantable of modifications to the discount safe data analytics, care consultations, devices used in a hospital or ambulatory harbor or additional modifications to patient portals, and telehealth and other surgical center setting, might misuse the warranties safe harbor, in future communications that may be used by value-based arrangements to disguise rulemaking. providers, clinicians, payors, patients, improper payments for care We recognize that defining a universe and others to coordinate and manage coordination intended as kickbacks to of device manufacturers that would be care, improve the quality and safety of purchase the medical devices they excluded would present difficulties, and care, and increase efficiency. These manufacture. This concern arises from we are interested in public feedback on companies also furnish a variety of historical law enforcement experience, the following issues. First, there is no devices, technologies, software, and including large False Claims Act specific definition of a device applications that support their services, settlements involving kickbacks paid to manufacturer or medical device are used by customers to coordinate and physicians, hospitals, and ambulatory manufacturer in the Medicare program. monitor patient care and health surgery centers to market various As explained below, in the absence of outcomes (for individuals and medical devices, such as devices used a Medicare definition, we are populations), or are used directly by for invasive procedures; in some cases, considering several other approaches. patients and their caregivers to monitor these schemes resulted in patients Second, any definition of the term their health, manage treatment, and getting medically unnecessary surgeries. ‘‘device manufacturer’’ may be so broad communicate and access patient OIG also has longstanding anti-kickback as to sweep in virtually any kind of medical information. For example, we concerns about physician-owned device or health technology, including are aware of companies that provide distributorships because the financial the kinds of digital and remote monitoring technology that may support diabetes management services, incentives physician-owned and improve care coordination. leveraging devices that can be worn or distributorships offer to their physician- Relatedly, given that many companies attached to the body to monitor blood owners may induce the physicians both pursue multiple lines of business and sugar levels and transmit that data, to perform more procedures (or more that digital technologies are being through an application to a cloud extensive procedures) than are integrated into traditional medical storage service, for review by patients medically necessary and to use the devices, it may not be possible to and the clinicians managing the devices the physician-owned distinguish clearly a traditional medical patients’ diabetes care. distributorships sell in lieu of other, device manufacturer from a health potentially more clinically appropriate, 18 Note that, should we adopt, as discussed 19 technology company. below, the definition of ‘‘applicable manufacturer’’ devices. OIG is considering for the final rule, set forth in 42 CFR 403.902, such definition would and seeks comments regarding, whether include distributors and wholesalers (which 19 OIG, Special Fraud Alert: Physician-Owned include re-packagers, re-labelers, and kit Entities (Mar. 26, 2013), available at https:// to define medical device manufacturers assemblers) that hold title to a covered drug, device, oig.hhs.gov/fraud/docs/alertsandbulletins/2013/ using CMS’s definition of ‘‘applicable biological, or medical supply. POD_Special_Fraud_Alert.pdf. manufacturer’’ in 42 CFR 403.902,

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55706 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

which relates to the ‘‘Sunshine’’ reduce the risk of inappropriate cost- based on enforcement experience, provisions of the ACA (section 6002 of shifting or inappropriately increasing CMS’s experience administering the ACA, which added section 1128G to costs to Federal health care programs. provider enrollment, claims analysis, the Act). We also are considering, and We are considering whether to include and other data sources. We are seek comment on, whether any a safeguard in the final rule that would interested in feedback on which kinds definition of ‘‘device manufacturer’’ preclude protection for value-based of products or arrangements, if any, should include an entity that arrangements that include exclusivity should be excluded from safe harbor manufacturers any item that requires requirements, such as a requirement protection based on heightened fraud premarket approval by, or premarket that the VBE participant is the exclusive risk and examples of such arrangements. notification to, the FDA or that is provider of care coordination items or As another alternative to finalizing classified by the FDA as a medical services or the exclusive provider of a specific exclusions in the definition of device. We are further considering reimbursable item or service. We are ‘‘VBE participant,’’ we are considering whether we could define a device furthering considering whether excluding entities under the proposed manufacturer, in whole or in part, with heightened standards and conditions paragraphs (ee), (ff), (gg), and (hh). respect to whether the item it could include enhanced monitoring, These paragraphs could each include a manufactures is eligible for separate or reporting, or data submission condition excluding certain specified bundled payment from a Federal health requirements or some or all of the entities from protection under the safe care program or other payor or is used conditions presented in the proposed harbor. Specifically, we would consider in a test that is eligible for separate or rule’s discussion of proposed excluding from each of these safe bundled payment from a Federal health 1001.952(ee). harbors one or more of the following care program or other payor. We are entities: Pharmaceutical manufacturers; c. Alternatives to ‘‘VBE Participant’’ manufacturers, distributors, or suppliers considering whether the definition of a Exclusion List device manufacturer should include of DMEPOS; laboratories; pharmacies distributors or wholesalers when they We are interested in comments on (including compounding pharmacies or are distributing or selling devices whether, instead of excluding broad only compounding pharmacies); device manufactured by a device manufacturer. categories of entities from the definition manufacturers; PBMs; pharmaceutical With respect to these proposed of ‘‘VBE participant,’’ we should wholesalers; and pharmaceutical definitional approaches, we solicit distinguish among entities that would distributors. If we include safe harbor- be included or excluded from the public comments on whether the specific conditions excluding certain definition on the basis of factors such as proposals would be too broad or too specified entities from protection under product type, company structure, narrow, including whether they would each of (ee), (ff), (gg), and (hh), the heightened fraud risk, or other features. have the effect of excluding from the entities excluded from each safe harbor We solicit similar input with respect to safe harbors companies that develop could differ. exclusions from the proposed revisions We also solicit public comment on and provide digital or other health to the personal services and how best to treat hospitals, health technologies for care coordination and management contracts safe harbor systems, and other types of entities that patient engagement. We are interested related to outcomes-based payments. we have not proposed to exclude under in other recommended definitions that Making distinctions by product or the definition of ‘‘VBE participant’’ would exclude medical device arrangement type might alleviate some when they own or operate an entity that manufacturers without limiting of the difficulty presented by the we propose to exclude, such as a beneficial digital technologies, or increasing integration of healthcare DMEPOS supplier or laboratory. For recommended factors that we should company business lines and the example, we are considering for the consider if we were to craft a definition movement of traditional healthcare final rule whether the exclusion should of ‘‘device manufacturer’’ or ‘‘medical companies into digital health apply only to independent or free- device manufacturer.’’ technology. In this regard, we are standing DMEPOS suppliers and Finally, apart from excluding device considering for the final rule whether to laboratories and to DMEPOS suppliers manufacturers, we are considering, and address program integrity concerns and laboratories owned or operated in solicit comments on, whether to include regarding potentially abusive drug, whole or part by another entity additional safeguards in the final safe device, DMEPOS, and laboratory excluded as a VBE participant. For the harbors to mitigate risks of abuse. These arrangements by regulating the type of final rule, we are considering, and safeguards might apply specifically to items, goods, or services that can be solicit comments on, how best to treat arrangements involving VBE included in an arrangement eligible for health systems and others that may be participants that are health technology safe harbor protection (under any of the entering into the device or technology companies or device manufacturers or proposed safe harbors) rather than development arenas. more broadly to all VBE participants. regulating the types of entities included Specifically, as stated above, we are and excluded. For example, we might 6. Value-Based Purpose considering and are interested in include arrangements involving the use We propose to define a ‘‘value-based comments on safeguards that (i) prevent of mobile or digital technology to purpose’’ as: (i) Coordinating and abusive marketing practices with coordinate care or achieve outcomes- managing the care of a target patient respect to the items and services these based payments but exclude population; (ii) improving the quality of the companies sell to patients, payors, arrangements for the sale or distribution care for a target patient population; (iii) and providers (e.g., practices that of implantable medical devices (e.g., appropriately reducing the costs to, or include payments to physicians, devices with a mechanical or physical growth in expenditures of, payors hospitals, or patients to reward them for effect on the body) or durable medical without reducing the quality of care for ordering the company’s products); (ii) equipment. In determining for a final a target patient population; or (iv) protect independent clinical decision rule which products or arrangements transitioning from healthcare delivery making about products that are in the would be included and excluded from and payment mechanisms based on the patient’s best medical interests and safe harbor protection, we would take volume of items and services provided patient freedom of choice; and (iii) into account any heightened fraud risk to mechanisms based on the quality of

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55707

care and control of costs of care for a population.’’ 20 For example, such health care program reimbursement target patient population. With respect coordination might occur between payment systems. to purpose (iii), we are considering hospitals and post-acute care providers, We are considering for the final rule, whether appropriately reducing the between specialists and primary care and solicit comments on, ways in which costs to, or growth in expenditures of, physicians, or between hospitals or we could revise the definition of the payors should be a value-based purpose physician practices and patients. ‘‘coordination and management of care’’ only when there is improvement in Coordinating and managing care could or additional elements we could include patient quality of care or the parties are include using care managers, providing in the definition to protect against maintaining an improved level of care. care or medication management, fraudulent and abusive practices that parties attempt to characterize as the We intend for this definition to creating a patient-centered medical home, helping with transitions of care, coordination and management of patient include infrastructure investment and sharing and using health data to care. operations necessary to redesign care improve outcomes, or sharing One approach we are considering for delivery to better coordinate care for accountability for the care of a patient the final rule to address these concerns patients across settings, including across a continuum of care.21 would be to preclude some or all technology, data analytics, and training. Importantly, our proposed definition of protection under the proposed safe For example, this could include ‘‘coordination and management of care’’ harbors for arrangements between investing in application programming relates only to the application of the entities that have common ownership. interface (API) technology that proposed safe harbor regulations. We might do this through refinements to facilitates the exchange of data between Although other laws and regulations, the definition of ‘‘value-based VBE participants regarding the target including the physician self-referral law arrangement’’ or by adding restrictions patient population. and associated regulations, may utilize to one or more of the proposed safe Each of our proposed safe harbors at the same or similar terminology, the harbors at paragraphs (ee), (ff), (gg), or 1001.952(ee), (ff), and (gg) requires that definition and interpretations proposed (hh). We recognize that while this the protected arrangement include here would not affect CMS’s (or any approach might protect against abusive value-based activities that directly other governmental agency’s) cycling of patients for financial gain further the first of the four value-based interpretation or ability to interpret such among entities with common purposes: The coordination and term. ownership, it might also preclude management of care for the target Through the proposed definition of protection for care coordination patient population. We are considering ‘‘coordination and management of arrangements among entities in for the final rule, and seek comments care,’’ we seek to distinguish between integrated health systems that could on, whether we should include other referral arrangements, which would not otherwise qualify for proposed safe objectives in the definition of ‘‘value- be protected, and legitimate care harbor protection. We solicit comments based purpose’’ to reflect our goal of coordination arrangements, which on this potential exclusion, and promoting care coordination and the naturally involve referrals across specifically, how best to (i) define shift toward value-based care and provider settings but include beneficial ‘‘common ownership’’; and (ii) whether any other or different objectives activities beyond the mere referral of a appropriately demarcate beneficial should be prerequisites to protection patient or ordering of an item or service. versus problematic financial under our proposed safe harbors. We We are particularly concerned about arrangements between commonly also are considering for the final rule, distinguishing between coordinating owned entities. We are interested in and solicit comments on, whether, and managing patient care transitions feedback on the extent to which instead of requiring that some value- for the purpose of improving the quality integrated health systems believe they based activities directly further the of patient care or appropriately reducing need new safe harbor protection for care coordination and management of care, costs, on one hand, and churning coordination arrangements in light of we require only that value-based patients through care settings to currently available protections. activities be directly connected to, or be capitalize on a reimbursement scheme We would not consider the provision reasonably designed to achieve, any of or otherwise generate revenue, on the of billing or administrative services to the value-based purposes. other. For example, the coordination be the management of patient care for and management of care of a target purposes of this proposed rulemaking; We propose that the first value-based patient population would not include we would consider the sharing or use of purpose in the definition is the cycling patients through skilled nursing health information technology and data coordination and management of care facilities (SNFs) and assisted living to identify a target patient population, for a target patient population. This facilities for the purpose of maximizing coordinate care, or measure outcomes to purpose may include taking significant revenue under any applicable Federal fit our definition. steps to prepare or position oneself to We solicit comments on the unique coordinate and manage the care of 20 See, e.g., Agency for Healthcare Research and intersection between cybersecurity and patients effectively. We propose to Quality, Care Coordination Measures Atlas 6 (2014) the coordination and management of define ‘‘coordination and management (citing K. McDonald et al., Closing the Quality Gap: care, and specifically, whether of care’’ and ‘‘coordinating and A Critical Analysis of Quality Improvement Strategies (2007)), https://www.ahrq.gov/sites/ remuneration in the form of managing care’’ synonymously to mean, default/files/publications/files/ccm_atlas.pdf. cybersecurity items or services could for purposes of the anti-kickback statute 21 See, e.g., NEJM Catalyst, What is Care ever meet definition of the safe harbors, the deliberate organization Coordination? (Jan. 1, 2018), https:// ‘‘coordination and management of care’’ of patient care activities and sharing of catalyst.nejm.org/what-is-care-coordination/ (providing examples and noting that ‘‘[c]are for a target patient population. For information between two or more VBE coordination synchronizes the delivery of a example, we solicit feedback on participants or VBE participants and patient’s health care from multiple providers and whether we should consider patients, tailored to improving the specialists. The goals of coordinated care are to cybersecurity items or services to only health outcomes of the target patient improve health outcomes by ensuring that care from disparate providers is not delivered in silos, and to meet this defined term when such population, in order to achieve safer and help reduce health care costs by eliminating remuneration is donated and used in more effective care for the target patient redundant tests and procedures.’’). conjunction with health information

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55708 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

technology that meets this definition of (ii), as well as the proposed must be grounded in legitimate, ‘‘coordination and management of modifications to the personal services verifiable data or other information, care.’’ As entities engage in care and management safe harbor at whether the information is internal to coordination, increased connectivity 1001.952(d) for outcomes-based one or more of the VBE participants or and information exchanges may further payment arrangements.) from a credible external source, such as the need for donating or sharing Under this proposal, each offer of a medical journal, social sciences cybersecurity technology or services to remuneration must be analyzed journal, scientific study, an established ensure that appropriate cybersecurity separately for compliance with the safe industry quality standards organization, safeguards are used to address the harbor. For example, in a value-based or results of a payor- or a CMS- cybersecurity risks arising from arrangement between a hospital and a sponsored model or quality program. connections among the entities engaged SNF, the hospital might provide a For example, a specific evidence-based, in care coordination. We recognize the behavioral health nurse to follow valid outcome measure in the context of patient safety risks and risk of harm designated inpatients with mental a hospital’s provision of a care attributed to cybersecurity health disorders in the event of coordinator to a SNF could be an vulnerabilities and threats.22 We also discharge to the SNF. In turn, the SNF increase in the target patient solicit comments on whether parties might provide certain staff to assist the population’s average mobility functional should simply seek protection for hospital in coordinating designated score by a certain percentage over the cybersecurity items or services under patients’ care through the discharge course of a year, contributing to earlier, the proposed cybersecurity safe harbor planning process or might provide office medically appropriate discharges of at 1001.952(jj) explained below. space for the behavioral health nurse. patients to their homes and fewer In addition to undertaking value- The hospital’s offer of the behavioral readmissions to acute care. We do not based activities that are directly health nurse to the SNF must be consider measures related to patient connected to the coordination and analyzed separately from the SNF’s offer satisfaction or convenience (e.g., management of care for the target of certain staff members or office space timeliness of appointments) to be valid patient population, our proposed to the hospital. outcome measures for purposes of this definition of ‘‘value-based purpose’’ This proposed safe harbor does not proposed requirement because we are recognizes that a VBE could have require parties to bear or assume concerned that such measures may not additional value-based purposes and downside financial risk. We are reflect actual improvement in the qualify under the value-based concerned that the offer or provision of quality of patient care, health outcomes, framework, namely to: (i) Improve the remuneration under value-based or efficiency in the delivery of care. We quality of care for a target patient arrangements could present solicit comments on whether there are opportunities for the types of fraud and population; (ii) appropriately reduce the categories of evidence-based outcomes abuse traditionally seen in the FFS costs to, or growth in expenditures of, measures in the areas of patient system, particularly where the parties payors without reducing the quality of satisfaction or convenience that we offering or receiving the remuneration care for a target patient population; and should permit in the final rule because have not assumed downside financial (iii) transition from healthcare delivery they reflect quality or efficiency of care. risk for the care of the target patient and payment mechanisms based on the Any identified evidence-based, valid population. For this reason and to volume of items and services provided outcome measures against which the ensure that the safe harbored recipient of remuneration will be to mechanisms based on the quality of arrangements operate to achieve their measured should not simply reflect the care and control of costs. value-based purposes, we propose the status quo. Consequently, we are C. Care Coordination Arrangements to conditions and safeguards described considering for the final rule an express Improve Quality, Health Outcomes, and below. requirement that outcome measures be Efficiency Safe Harbor (42 CFR designed to drive meaningful 1. Outcome Measures 1001.952(ee)) improvements in quality, health We propose to require that parties to The first proposed safe harbor for outcomes, or efficiencies in care a value-based arrangement establish one delivery. We intend to provide value-based arrangements would protect or more specific evidence-based, valid certain care coordination arrangements. flexibility given the range of outcome measures against which the arrangements that may be covered by Numerous commenters to the OIG RFI recipient of remuneration will be the proposed safe harbor. For example, noted that individuals and entities may measured, and which the parties an outcome measure may drive promote value-based care and facilitate reasonably anticipate will advance the meaningful improvements if it drives care coordination even when assuming coordination and management of care of improvements that are measurable or no financial risk. We agree. This the target patient population. We intend that are more than nominal in nature. proposed safe harbor would protect in- for the outcome measures to serve as Additionally, we are considering for the kind remuneration exchanged between benchmarks for assessing the recipient’s final rule, and solicit comment on, qualifying VBE participants with value- performance under the value-based whether the outcome measures based arrangements that squarely satisfy arrangement and advancement toward requirement should be broader or all of the proposed safe harbor’s achieving the coordination and narrower than the standard we are requirements. (Certain monetary management of care for the target proposing. remuneration associated with care patient population. Accordingly, we We also are considering for the final coordination or other value-based expect such outcome measures to have rule, and solicit comments on, whether activities may be protected under other a close nexus to the value-based to require parties to rebase the outcome proposed safe harbors, including those activities undertaken by the parties to measures (i.e., reset the benchmark used at proposed 42 CFR 1001.952(ff), (gg), the value-based arrangement and to the to determine whether the outcome needs of the target patient population. measure was achieved) where rebasing 22 See, e.g., Health Care Industry Cybersecurity Task Force Report, available at https:// For purposes of this proposed rule, is feasible. We are considering whether www.phe.gov/preparedness/planning/cybertf/ we would consider ‘‘evidence-based’’ to parties should rebase measures (or documents/report2017.pdf. mean the selected outcome measures determine whether rebasing is feasible)

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55709

periodically or pursuant to a specified the parties must terminate the Lastly, we are considering for the final timeframe, such as at least every 1 year, arrangement within 60 days of such a rule adding the following safeguards for 3 years, or other time period. We are determination or lose safe harbor the exchange of information technology: interested in comments addressing protection thereafter. (i) The requirements set forth in whether and, if so, why the appropriate We recognize that it may be difficult paragraph (4) of the current electronic time frame for rebasing should depend for parties giving information health records items and services safe on the type of outcome measure or technology pursuant to a value-based harbor (1001.952(y)), prohibiting nature of the arrangement, and what arrangement to establish an outcome making the receipt of items or services rebasing time periods would be best for measure upon which to assess the a condition of doing business with the different types of measures or recipient’s performance that is offeror); (ii) a requirement limiting the arrangements. We are interested in ‘‘evidence-based’’ as we propose to time frame during which a recipient can feedback on whether rebasing should be interpret the term. For this reason, we receive information technology to, for tied to any relevant requirements set by are considering for the final rule example, 1, 3, or 5 years, after which payors. We further solicit comments on imposing a requirement that time the recipient would be required to whether we should specify a particular information technology meet a different pay fair market value for the continued party that should be responsible for standard than the proposed specific use of the information technology; and implementing the rebasing and which evidence-based, valid outcome (iii) a remedy for the failure to achieve party would be best positioned to do so measures standard. Specifically, we may the applicable standard, such as (e.g., the VBE or the offeror of the require an adoption and use standard discontinued use of the information remuneration). We would anticipate any (i.e., has the technology been adopted technology. rebasing requirement would align with and used in a meaningful way for the 2. Commercial Reasonableness the rebasing proposal set forth in our intended purposes, such that it We propose to require that the value- proposed modifications to the personal advances the coordination and based arrangement is commercially services and management contracts safe management of care for the target reasonable, considering both the harbor related to outcomes-based patient population), a performance arrangement itself and all value-based payments. standard (i.e., has the technology been arrangements within the VBE. By way of If parties to a value-based used to achieve a certain result, such as arrangement revise the evidence-based, example with respect to the first prong efficiencies), or a similar standard that of the commercial reasonableness valid outcome measure(s) through an serves as a benchmark for assessing a amendment during the term of the requirement, if VBE participants enter recipient’s use of remuneration without arrangement, the revised outcome into a value-based arrangement to requiring the parties to establish measure(s) would need to continue to facilitate the sharing of patient-outcome evidence-based outcome measures to incentivize the recipient of the data, it may be commercially reasonable measure performance. As part of this remuneration to make meaningful for a hospital VBE participant to donate adoption and use, performance, or improvements. Were parties technology to a group practice VBE similar standard, we are considering retrospectively to revise their outcome participant to facilitate this process. requiring parties to a value-based measures (e.g., modify the outcome However, it may not be commercially arrangement for the provision of measures and make such modifications reasonable for that same hospital VBE information technology to set forth, in a effective 6 months prior), such revisions participant to donate technology would raise questions regarding signed writing, the specific reasons for substantially more sophisticated, or whether the modified measures were which the technology is being provided, with enhanced functionality, beyond designed to obscure a lack of which would be required to directly that necessary for communicating data meaningful improvement by the relate to health outcomes, patient care on shared patients between the two recipient of the remuneration. For quality improvements, or the parties. (We note that nothing would purposes of the final rule, we are appropriate reduction in costs to, or prevent the donation of technology with considering whether to incorporate the growth in expenditures of, payors or enhanced functionality when a value- CMS Quality Payment Program patients. For example, parties giving based arrangement requires that measures into the requirement to information technology, such as capability or when technology without establish outcome measures. accessibility to a patient portal or data that functionality is not practicable.) As described below, the parties to the analytics platform, would be required to With respect to the second prong of the arrangement also must include a have health-outcome, quality-related, or commercial reasonableness assessment, description of the outcome measure(s) efficiency-related reasons, such as again by way of example, a single value- in a signed writing, and the VBE, the improving efficiencies by increasing based arrangement in which a hospital VBE’s accountable body or responsible patient access to health information. VBE participant provides a necessary person, or a VBE participant in the In addition, under an adoption and number of care coordinators for the value-based arrangement acting on the use, performance, or similar standard, target patient population to a SNF VBE VBE’s behalf must monitor and assess we may require that the parties set forth participant may be commercially the recipient’s progress toward specific, meaningful measures that reasonable. However, if a VBE includes achieving the outcome measure(s). In relate to the remuneration’s intended multiple similar value-based addition, as described below, should the purpose against which the recipient will arrangements, each of which involves VBE’s accountable body or responsible be measured. For example, under an the same hospital VBE participant person determine through monitoring or adoption and use standard, parties to a furnishing care coordinators to the same otherwise that the value-based value-based arrangement may set a SNF VBE participant for the same or a arrangement is (i) unlikely to achieve percentage adoption and use measure similar target patient population, the the evidence-based, valid outcome for a patient portal platform, pursuant to commercial reasonableness of the measure(s) or further the coordination which the recipient would be measured remuneration exchanged within the and management of care for the target by its adoption and use of the patient value-based arrangements in the patient population or (ii) has resulted in portal for a specified percentage of the aggregate may be suspect if it lacks a material deficiencies in quality of care, target patient population. legitimate business purpose.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55710 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

We are considering for the final rule 4. Limitations on Remuneration by the parties in the value-based whether to define ‘‘commercially a. In-Kind Remuneration arrangement. reasonable arrangement’’ as an We recognize that in-kind arrangement that would make We propose to protect only in-kind, remuneration exchanged for value-based commercial sense if entered into by non-monetary remuneration, provided activities may indirectly benefit patients reasonable entities of a similar type and all other conditions of the safe harbor outside of the scope of the value-based size, even without the potential for are met. (While monetary remuneration arrangement, and furthermore, that referrals. We solicit comments on the is not protected by this proposed safe parties may find it difficult to anticipate need for a definition of ‘‘commercially harbor, certain outcomes-based payment or project the scope or extent of such reasonable arrangement,’’ and if we arrangements may be protected by ‘‘spillover’’ benefits. This, in and of incorporate a definition, whether we proposed modifications to the personal itself, would not result in the loss of safe should select this particular definition services and management contracts safe harbor protection, provided the parties or an alternative definition. harbor, as subsequently addressed.) We primarily use the remuneration for its further propose that this safe harbor intended purposes (i.e., the specific 3. Writing would exclude protection for gift cards, value-based activities for which the regardless of whether they may be To promote transparency and remuneration is being provided, as set considered cash equivalents. By way of accountability, we propose a forth in the parties’ signed writing). We example, we intend for this safe harbor requirement that the value-based are mindful of the need to provide to allow a VBE participant to share a arrangement be set forth in a writing. parties with sufficient flexibility, while care coordinator with another VBE We propose that the writing be signed also minimizing the risks of potentially participant if the conditions of this safe by the parties and established in abusive arrangements that disguise harbor are met (including the proposed advance of, or contemporaneous with, remuneration unrelated to the contribution requirement). However, coordination and management of care the commencement of the value-based this safe harbor would not protect cash arrangement or any material change to for the target patient population. provided from one VBE participant to For purposes of the final rule, as an the value-based arrangement. We another to hire a care coordinator. propose that the writing state, at a alternative to the requirement that Lastly, we note that by virtue of our remuneration exchanged between VBE minimum: (i) The value-based activities exclusion of monetary remuneration, participants be used primarily to engage to be undertaken by the parties to the the proposed safe harbor would not in value-based activities, we are value-based arrangement; (ii) the term of protect an ownership or investment considering requiring that the the value-based arrangement; (iii) the interest in the VBE or any distributions remuneration exchanged be limited to target patient population; (iv) a related to an ownership or investment value-based activities that only benefit description of the remuneration; (v) the interest. In addition to our long-standing the target patient population. Under this offeror’s cost for the remuneration; (vi) view that the exchange of monetary approach, arrangements with the percentage of the offeror’s costs remuneration poses heightened and ‘‘spillover’’ benefits would not be contributed by the recipient; (vii) if different fraud and abuse risks and thus protected by the safe harbor. We solicit applicable, the frequency with which should be subject to safeguards such as comments on this alternative approach. the recipient will make payments for a fair market value requirement, we do ongoing costs; and (viii) the specific not view the offer or receipt of c. No Furnishing of Medically evidence-based, valid outcome ownership or investment interests as Unnecessary Items or Services or measures against which the recipient integral to the coordination and Reduction in Medically Necessary Items would be measured. In the final rule, we management of care for a target patient or Services would align the writing requirements in population. We propose to require that the (v) and (vi) with the requirements for remuneration exchanged not induce the b. Primarily Engaged in Value-Based the contribution requirement described parties to furnish medically unnecessary Activities below; in other words, if we were to items or services or reduce or limit change the contribution requirements, We propose to require that the medically necessary items or services we would correspondingly change the remuneration provided by, or shared furnished to any patient. Remuneration writing requirement. among, VBE participants be used that induces a provider to order or We believe that a writing, setting forth primarily to engage in value-based furnish unnecessary care is inherently the above terms in advance of, or activities that are directly connected to suspect. In addition, a reduction in contemporaneous with the the coordination and management of medically necessary services would be commencement of or any material care of the target patient population. As contrary to the goals of this rulemaking change to the value-based arrangement, set forth in proposed paragraph and, in some instances involving constitutes a key safeguard to ensure 1001.952(ee), we propose to define a hospitals and physicians, could be a that VBE participants are not using the ‘‘value-based activity’’ as ‘‘any of the violation of the CMP law provision value-based arrangement merely to following activities, provided that the relating to gainsharing arrangements at incentivize and reward referrals of activity is reasonably designed to sections 1128A(b)(1) and (2) of the Act business. We are interested in achieve at least one value-based purpose (42 U.S.C. 1320a–7a(b)(1) and (2)). comments regarding whether a of the value-based enterprise: (i) the requirement to have a single writing provision of an item or service; (ii) the d. No Remuneration From Individuals signed by all parties may be taking of an action; or (iii) the refraining or Entities Outside the Applicable VBE burdensome, especially for large-scale from taking an action.’’ In the definition We propose that this safe harbor arrangements, and whether we should of ‘‘value-based activity’’, we specify would not protect any remuneration instead permit a collection of writings that it does not include the making of funded by, or otherwise resulting from provided that every party to the a referral. We also propose to require the contributions of, an individual or arrangement has signed a writing that the value-based arrangement be set entity outside of the applicable VBE. acknowledging consent to the forth in a signed writing stating the This proposal is intended to ensure that arrangement. value-based activities to be undertaken protected arrangements are closely

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55711

related to the VBE, that VBE of patients or business not covered patient population. We are proposing a participants are committed to the VBE under the value-based arrangement recipient contribution requirement as a and striving to achieve the coordination (sometimes called ‘‘swapping’’ safeguard to help ensure that the use of and management of care of the target arrangements). any remuneration exchanged pursuant patient population, and that non-VBE This requirement would exclude safe to this safe harbor would be for the participants cannot indirectly use the harbor protection for any remuneration coordination and management of the safe harbor to protect arrangements that that is explicitly or implicitly offered, target patient population’s care. are designed to influence the referrals or paid, solicited, or received in return for, Specifically, the proposed rule would decision making of VBE participants. or to induce or reward, any referrals or condition safe harbor protection on the For example, a pharmaceutical other business generated outside of the recipient’s payment of at least 15 manufacturer could not circumvent the value-based arrangement. Under our percent of the offeror’s cost for the in- proposed exclusion of pharmaceutical proposal, VBE participants could kind remuneration. This requirement is manufacturers from the definition of encourage referrals of the target patient intended to mirror that set forth in the ‘‘VBE participant’’ by providing funds to population as part of value-based current electronic health records items a third-party entity and then directing or activities (e.g., a hospital could develop and services safe harbor, 1001.952(y). otherwise controlling any aspect of the a ‘‘preferred network’’ of post-acute care We are considering for the final rule, third-party entity’s participation as a providers that meet certain quality and solicit comments on, whether we VBE or a VBE participant. We solicit criteria). However, VBE participants should require a more specific comments on this approach and could not offer remuneration in methodology for determining value, whether there may be defined, limited connection with the preferred network such as either the fair market value of circumstances in which non-VBE to induce business or the referral of the remuneration to the recipient or the participants should be able to contribute patients that fall outside the scope of the reasonable value of the remuneration to to a value-based arrangement eligible for value-based arrangement. the recipient. If we were to require that safe harbor protection. In lieu of the proposed requirement parties assess the fair market value of As a corollary to this requirement, we that prohibits the offeror of the the remuneration to the recipient in are considering for the final rule remuneration from taking into account order to determine the required whether to require that remuneration be the volume or value of, or conditioning contribution amount(s), we would not provided directly from the offeror to the an offer of remuneration on: (i) Referrals require parties to obtain an independent recipient. This requirement would of patients that are not part of the value- fair market valuation. We are interested prohibit the involvement of individuals based arrangement’s target patient in feedback on whether the method for or entities other than the VBE or a VBE population, or (ii) business not covered determining the contribution participant in the exchange of under the value-based arrangement, we requirement should be different for remuneration under a value-based are considering for the final rule, and services than for goods. arrangement, including, potentially, solicit comments on, an alternative We believe that requiring financial third-party vendors and contractors. We requirement that would require that the participation by a recipient should: solicit comments on any practical aggregate compensation paid by the Increase the likelihood that the recipient impediments such as restriction would offeror is not determined in a manner actually would use the care create. that takes into account the volume or coordination items and services, ensure value of referrals or business generated that the remuneration is well-tailored to 5. The Offeror Does Not Take Into between the parties for which payment the recipient, and promote the Account the Volume or Value of, or may be made by a Federal health recipient’s vested interest in achieving Condition Remuneration on, Business or program. While we believe that this the intended purpose of the value-based Patients Not Covered Under the Value- condition could potentially better arrangement, namely, furthering the Based Arrangement protect against bad actors who may seek coordination and management of care of We propose a requirement that to use the care coordination the target patient population. prohibits the offeror of the remuneration arrangements safe harbor as an In proposing this contribution from taking into account the volume or affirmative defense for an unlawful requirement, we solicit feedback on the value of, or conditioning an offer of referral arrangement or to disguise proposed contribution amount, whether remuneration on: (i) Referrals of patients arrangements that result in unnecessary certain recipients, such as rural that are not part of the value-based increases in utilization and providers, small providers, Tribal arrangement’s target patient population, expenditures, we seek comments on providers, providers who serve or (ii) business not covered under the whether and to what extent this underserved populations, or critical value-based arrangement. This proposal requirement might impede to goal of access hospitals should be exempted is modeled on a similar safeguard this rulemaking, namely to remove from the contribution requirement or contained in the existing safe harbor at barriers for beneficial care coordination pay a lower contribution percentage and paragraph 1001.952(t)(1)(ii)(B), which and value-based arrangements. We are if so, why. We are considering for the provides that ‘‘neither party gives or interested in specific examples of final rule alternative contribution receives remuneration in return for or to arrangements that would be unable to amounts ranging from 5 percent to 35 induce the provision or acceptance of use this safe harbor were we to adopt percent and solicit comments on an business (other than business covered this requirement. appropriate amount (or amounts) that by the agreement) for which payment would invest recipients in using the may be made in whole or in part by a 6. Contribution Requirement remuneration they receive to advance Federal health care program on a fee-for- The goal of this proposed rulemaking the coordination and management of service or cost basis.’’ Our purpose in is to remove barriers to improved care care of the target patient population, proposing this requirement is to coordination and to promote efficient, while still allowing flexibility for parties prohibit protection for remuneration value-driven care. To this end, it is with fewer financial resources to engage offered under the guise of a value-based important that protected remuneration in value-based arrangements. We are arrangement when that remuneration be used to facilitate the coordination considering whether we should require actually is intended to induce referrals and management of care for the target different contribution amounts for

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55712 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

different types of remuneration (e.g., a 1001.952(y). We recognize that this expresses a preference for a different higher or lower contribution amount for alternative option may affect practitioner, provider, or supplier; (ii) technology and a higher or lower contribution requirements only for the patient’s payor determines the contribution amount for care technology-based remuneration that is provider, practitioner, or supplier; or coordinators or other services most likely to need upgrades, updates, (iii) such direction or restriction is arrangements). and patches to continue operating as contrary to applicable law or regulations We also are considering whether in intended. under titles XVIII and XIX of the Act. the final rule we should impose This provision is intended, in part, to different contribution requirements for 7. Requirements of a Value-Based preserve patient freedom of choice different recipients. Because a Arrangement among healthcare providers and ensure contribution requirement may impose a a. Direct Connection to the Coordination the VBE’s and VBE participants’ significant financial burden on certain and Management of Care independent medical or professional recipients, we are considering for the We propose that the value-based judgment is not unduly restricted. That final rule, and solicit comments on, arrangement has a direct connection to being said, we do not intend for this whether a lower contribution amount, the coordination and management of criterion to bar VBEs or VBE or no contribution amount, would be participants from communicating the care for the target patient population. appropriate for arrangements involving benefits of receiving care from other We interpret this requirement to mean certain providers with financial VBE participants in the VBE. that any remuneration offered pursuant constraints, such as providers in rural or underserved areas, providers serving to a value-based arrangement has a close c. No Marketing of Items or Services or underserved populations, small nexus to the coordination and Patient Recruitment Activities providers, Tribal providers, and critical management of care for the target We propose to exclude safe harbor access hospitals. patient population, as opposed to the protection for value-based arrangements For consideration of this potential VBE participants’ referral patterns and that include marketing items or services contribution requirement condition, and business generated. By way of example to patients or patient recruitment whether a lower contribution amount, only, arrangements where VBE activities. Our enforcement experience or no contribution amount, is participants offer, or are required to demonstrates that fraud schemes often appropriate for arrangements involving provide, remuneration to receive involve the purchase of beneficiaries’ such providers, we cross-reference the referrals or to be included in a medical identity or other inducements proposals discussed more fully in ‘‘preferred provider network’’ (i.e., to lure beneficiaries to obtain relation to the electronic health records ‘‘pay-to-play’’ arrangements) would not unnecessary care. This proposed safe arrangements safe harbor’s 15 percent have a direct connection to the harbor condition would protect contribution requirement. We will coordination and management of care. beneficiaries and make clear that such review and consider comments received We are considering for purposes of the coercive arrangements are not value- about those proposals in relation to our final rule, and solicit comments on, based arrangements protected by the consideration of this potential whether we should use alternative proposed safe harbor. Accordingly, the condition. Based on feedback on the language to ‘‘direct connection’’ (e.g., proposed safe harbor would offer contribution requirement in our existing ‘‘reasonably related and directly tied’’) flexibility to improve quality of care, electronic health records safe harbor, we in order to better convey the close nexus health outcomes, and efficiency while are mindful of the potential that this safe harbor requires between limiting the risk of the value-based administrative burdens of a contribution each value-based arrangement and the arrangement being used as a marketing requirement and seek comments on this coordination and management of care of or recruiting tool to generate federally issue. a target patient population. payable business for a VBE participant. We also solicit comments on how to b. No Limitation on Decision Making; Specifically, this requirement would apply the contribution requirement for Restrictions on Directing or Restricting restrict any party to a value-based ongoing costs and unexpected ‘‘add- Referrals arrangement, or such party’s agent, from ons’’ (e.g., updates or upgrades to marketing, or engaging in patient software that trigger additional costs). We propose that the value-based recruitment activities related to, any Under the proposed contribution arrangement must not limit parties’ items or services offered or provided to requirement, if the remuneration ability to make decisions in the best patients in the target patient population represents a one-time cost, the recipient interests of their patients. That is, VBEs under a value-based arrangement. would be required to make a and VBE participants to a value-based We do not intend for this limitation contribution in advance of receiving the arrangement must maintain their to prohibit a VBE participant that is a remuneration. However, for any ongoing independent, medical, or other party to a value-based arrangement from costs, the proposed rule would require professional judgment. Additionally, we educating patients in the target patient that the recipient make any are aware that some payors and others, population regarding permissible value- contributions on reasonable, regular such as employers, direct or restrict based activities. For example, if a SNF intervals, with the frequency of such where their networks or employees refer or home health agency placed a staff payments documented in writing. We patients; moreover, we are aware that member at a hospital to assist patients are considering for the final rule, and under some value-based arrangements, in the discharge planning process, and seek comment on, an alternative referrals would be directed within a in doing so, the staff member educated requirement for the recipient to make a network or continuum of preferred patients regarding care management contribution with respect to the initial providers (based on quality and other processes used by the SNF or home provision of remuneration but not with legitimate considerations). We propose health agency, this would not constitute respect to any update, upgrade, or patch that, in addition to not limiting parties’ marketing of items and services of the remuneration already provided. ability to make referral decisions in the (provided the staff member only worked This is similar to an option being patients’ best medical interests, value- with patients that had already selected considering for the electronic health based arrangements cannot direct or the SNF or home health agency and SNF records arrangements safe harbor, restrict referrals if: (i) A patient or home-health agency care was

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55713

medically appropriate for such patient). achieve the evidence-based, valid information regarding the arrangement, However, if the SNF or home health outcome measure(s), the parties such as its duration. This data could be agency placed a staff member at a terminate the arrangement within 60 used, for example, by the government hospital to market its services to days of such a determination. To the for data analysis to understand whether hospital patients, the arrangement extent the parties do not terminate an value-based arrangements are associated would not comply with this proposed arrangement within 60 days of such with increased or decreased utilization requirement. We solicit comments on determination, the parties would lose or outlier levels of utilization (taking this approach. safe harbor protection under this into account that in some value-based proposal. We solicit comments on 8. Monitoring and Assessment arrangements one would expect to see whether to adopt a longer or shorter increased utilization of some types of We propose a requirement that the timeframe for termination; our goal is a items and services and decreases in VBE, a VBE participant in the value- reasonable but also prompt termination others). Should we adopt this approach, based arrangement acting on the VBE’s of arrangements that are no longer information would be submitted in a behalf, or the VBE’s accountable body or serving the goals for which safe harbor form and manner and at times specified responsible person monitors and protection is offered. In addition, we are by the Secretary in guidance. We solicit assesses, no less frequently than considering for the final rule and seek comments on the types of data that the annually, or once during the term of the comment regarding whether, in lieu of parties availing themselves of safe value-based arrangement for the proposed termination requirement harbor protection should be required to arrangements with terms of less than 1 for the above subsections (i) through submit to the Department, potential year: (i) The coordination and (iii), the safe harbor should instead management of care for the target reporting and compliance burdens for allow for remediation—within a small and large value-based enterprises, population in the value-based reasonable timeframe—before any arrangement, (ii) any deficiencies in the and any different or additional actions required termination. that may help ensure appropriate delivery of quality care under the value- We are not proposing to define oversight. based arrangement, and (iii) progress ‘‘material deficiency in quality of care.’’ toward achieving the evidence-based, We believe that such ‘‘material 9. No Diversion, Resell, or Use for valid outcome measure(s) in the value- deficiency’’ may vary depending on the Unlawful Purposes based arrangement. We further propose nature of the VBE and the value-based to require that the party conducting arrangements of its VBE participants. We propose that the exchange of such monitoring and assessment reports Examples of a ‘‘material deficiency in remuneration under this safe harbor such monitoring and assessment to the quality of care’’ may include, but are not would not be protected if the offeror VBE’s accountable body or responsible limited to, identified instances of knows or should know that the person (if the VBE’s accountable body or potential patient harm or a pattern of remuneration is likely to be diverted, responsible person is not itself diminished quality of care. resold, or used by the recipient for an conducting the monitoring and Our proposals with respect to unlawful purpose. Here, we state assessment). Through this proposal, we monitoring and assessment stem from a expressly what is otherwise implicit in seek to ensure that the VBE’s recognition that most arrangements the design of a value-based arrangement accountable body or responsible person protected by this proposed care under this proposed safe harbor: The periodically assesses the parties’ coordination arrangements safe harbor exchange of remuneration that the performance of certain key metrics would not be subject to governmental offeror knows or should know is likely under each value-based arrangement. programmatic requirements, oversight, to be diverted, resold, or used by the We note that this proposal does not or monitoring comparable to CMS- recipient for purposes other than the mandate how this monitoring should be sponsored models. Accordingly, to aid coordination and management of care of performed. We intend for the in protecting against abusive a target patient population would not be monitoring to be tailored based on the arrangements, to further facilitate the protected. complexity and sophistication of the government’s understanding and VBE participants, the VBE, and the awareness of value-based arrangements 10. Materials and Records value-based arrangement and available and their impacts on Federal health care resources. We are considering for the program beneficiaries and expenditures, To ensure transparency, we propose a final rule, and solicit comments on, and to create incentives for VBEs to requirement that VBE participants or the whether to require that both the party exercise due diligence when VBE make available to the Secretary, offering the remuneration and its establishing them, we are considering upon request, all materials and records recipient jointly conduct monitoring for the final rule requiring VBEs to sufficient to establish compliance with and assessment responsibilities. We submit certain data to the Department the conditions of this safe harbor. We further solicit comments on the role that would identify the VBE, VBE are not proposing parameters regarding monitoring of utilization, referral participants, and value-based the creation or maintenance of patterns, and expenditure data could arrangements, as a requirement for safe documentation to allow VBE play in ensuring that the potential for harbor protection. We solicit comments participants the flexibility to determine abuses or gaming is reduced. on whether such a requirement would what constitutes best documentation The proposed rule would further present compliance or operational practices, but welcome comments on require that if the VBE’s accountable burdens for VBEs seeking the protection whether such parameters may be body or responsible person determines, of this safe harbor. needed. In particular, we seek comment through reports of monitoring and Were such a proposal finalized, regarding whether we should require, in assessment, that the value-based required data might include the the final rule, a requirement that parties arrangement (i) is unlikely to further the National Provider Identifier (NPI) maintain materials and records coordination and management of care number or other identifying information sufficient to establish compliance with for the target patient population, (ii) has of each VBE participant in the VBE, the conditions of this safe harbor for a resulted in material deficiencies in each party participating in the value- set period of time (e.g., at least 6 years quality of care, or (iii) is unlikely to based arrangement, as well as or 10 years).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55714 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

11. Possible Additional Safeguards integrity safeguards. However, fair volume or value of referrals or other a. Bona Fide Determination market value requirements and business generated between the parties). restrictions that prohibit paying d. Additional Requirements for Dialysis We are considering for the final rule remuneration based on the volume or Providers a condition that would require that, in value of referrals help ensure that advance of, or contemporaneous with, protected payments are for legitimate Dialysis providers furnish vital the commencement of the applicable purposes and are not kickbacks. We services to patients with critical and value-based arrangement, the VBE’s have endeavored to draft this safe extensive care needs. Patients with end accountable body or responsible person harbor to distinguish between beneficial stage renal disease (ESRD) stand to make two bona fide determinations with care coordination arrangements and benefit substantially from better respect to the value-based arrangement. payment-for-referral schemes that do coordinated, more efficient care as First, we are considering a condition not serve, and may be contrary to, the envisioned by this proposed rule. requiring that the accountable body or goals of coordinated care and the shift Dialysis providers play a central role in responsible person make a bona fide to value. We solicit comments from coordinating the care of individuals determination that the value-based stakeholders for safeguards that may with ESRD. However, the dialysis arrangement is directly connected to the help distinguish payments to reward or industry has unique attributes—in coordination and management of care induce referrals from remuneration particular, market dominance by a for the target patient population. provided to promote or support limited number of dialysis providers— Second, we are considering a condition legitimate care coordination activities. that may increase fraud and abuse risks requiring that the accountable body or To this end, we are considering as an attendant to financial relationships responsible person make a bona fide alternate proposal for the final rule’s between dialysis providers and others. determination that the value-based care coordination arrangements safe We are concerned that present levels of arrangement is commercially harbor: (i) Whether we should include market consolidation could impact reasonable, considering both the a fair market value requirement on any access to dialysis care, quality of care, arrangement and all value-based remuneration exchanged pursuant to a and associated health outcomes.23 In arrangements within the VBE. value-based arrangement, and (ii) addition, we are concerned that, b. Cost-Shifting Prohibition whether we should include a further or because of the aforementioned market alternate requirement prohibiting VBE dominance of a limited number of We are considering for the final rule, providers, the conduct that would be and seek comment on, a condition participants from determining the amount or nature of the remuneration protected by this proposed safe harbor prohibiting VBEs or VBE participants could lead to a decrease in competition from billing Federal health care they offer, or the VBE participants to whom they offer such remuneration, in among dialysis providers. We seek programs, other payors, or individuals comment on whether and how the for the remuneration; claiming the value a manner that takes into account the volume or value of referrals or other potential protection of financial of the remuneration as a bad debt for arrangements between dialysis payment purposes under a Federal business generated, including both business or patients that are part of the providers and others under this health care program; or otherwise proposed safe harbor could affect the shifting costs to a Federal health care value-based arrangement and those that are not. To the extent these concentration of the dialysis market, program, other payors, or individuals. access to care, quality of care, and This proposal would not exclude requirements would impede value- associated health outcomes. We are arrangements from safe harbor based and care coordination considering whether to include in the protection that involve legitimate arrangements, we are interested in final rule certain conditions specific to shifting of some costs that result from feedback on potential, alternative safe dialysis providers to further ensure that achieving care coordination goals or harbor conditions that might mitigate their care coordination arrangements other value-based purposes. For such effects. operate to improve the management and example, depending on the We are further considering for the care of patients and are not pay-for- arrangement, one might expect to see final rule whether we could best achieve referral schemes. These conditions increases in primary care costs or costs the goals of this rulemaking through a could include enhanced monitoring, for care furnished in home and safe harbor design that requires value- reporting, or data submission community settings paired with based arrangements to be fair market requirements or some of the conditions reductions in unnecessary value but that does not prohibit discussed in sections a., b., and c. hospitalizations, duplicative testing, determining the amount or nature of the directly above, including fair market and emergency room visits; one also remuneration on the volume or value of value requirements and restrictions that might see increases in remote referrals or other business generated. prohibit paying remuneration based on monitoring or care management This approach would recognize the anti- the volume or value of referrals. services. kickback statute compliance challenge that the restriction on the volume or 12. Example of a Value-Based c. Fair Market Value Requirement and value of referrals or other business Arrangement Analyzed Under the Restriction on Remuneration Tied to the generated poses for arrangements that Proposed Care Coordination Volume or Value of Referrals inherently reflect the volume of patients Arrangements Safe Harbor Commenters to the OIG RFI pointed to for whom care is coordinated or the fair market value requirements and value of services offered under a value- The following example demonstrates restrictions on remuneration based on based arrangement. In addition, or as an how parties might analyze the proposed the volume or value of business in alternative, we are considering a care coordination arrangements safe existing safe harbors as barriers to restriction that would prohibit harbor’s various requirements with arrangements that facilitate coordinated remuneration based directly on the 23 volume or value of business generated See Kevin F. Erickson et al., Consolidation in and value-based care, so we have crafted the Dialysis Industry, Patient Choice, and Local this proposed safe harbor without them, between the parties (thus permitting Market Competition, 28 Clinical J. of the American relying instead upon other program remuneration based indirectly on the Society of Nephrology 3 (Mar. 7, 2017).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55715

respect to the following fact pattern: To include: (i) The term of the value-based provider, practitioner, or supplier; or coordinate care between an acute care arrangement; (ii) the value-based (iii) such direction or restriction is hospital and a SNF for mental health activities to be undertaken; (iii) the contrary to applicable law or regulations patients, the hospital and SNF enter into target patient population; (iv) a under titles XVIII and XIX of the Act. a care coordination arrangement under description of the remuneration (e.g., For example, the hospital could not which the hospital engages in the value- the assignment of a full-time nurse to require physicians on its medical staff to based activity of providing a behavioral the SNF and the cost of the nurse’s refer patients in the target patient health nurse for to the SNF to follow services to the offeror); (v) the offeror’s population to the SNF if a patient designated inpatients with certain cost of the remuneration; (vi) the expresses a preference for a different mental health disorders for a 1-year time percentage of the offeror’s cost facility or if the patient’s payor does not period, who comprise the target patient contributed by the recipient; (vii) if cover services at the SNF. population, following discharge from applicable, the frequency of the Eighth, the arrangement must not the hospital and during admission to recipient’s contribution payments for include marketing to patients of items or and while receiving care at the SNF. In ongoing costs; and (viii) set forth the services or engaging in patient this example, both the hospital and the specific, evidence-based valid outcome recruitment activities. SNF stand to benefit from this measure(s) against which the SNF Ninth, the VBE (or alternatively, the arrangement because they participate in would be measured. SNF or hospital acting on the VBE’s a value-based payment arrangement that Fourth, the remuneration must: (i) Be behalf), or the VBE’s accountable body offers them shared savings payments for in-kind; (ii) be used primarily to engage or responsible person must monitor and improved quality and patient outcomes in one or more value-based activities assess at least annually (or once during and reduced emergency room visits. The that have a direct connection to the the agreement’s term if the agreement is hospital and SNF are the only VBE coordination and management of care for less than a year): (i) The participants in a VBE that is designed to for the target patient population; and coordination and management of care of accomplish the value-based purpose of (iii) not induce VBE participants to the target patient population; (ii) any coordinating and managing the care of furnish medically unnecessary items or deficiencies in the delivery of quality patients with mental health disorders services or reduce or limit medically care under the value-based arrangement; (namely, by improving the quality of necessary items and services furnished and (iii) progress toward achieving the care they receive during the care to any patient. In addition, the hospital evidence-based, valid outcome transition process from acute care to could not provide the nurse to the SNF measure(s) in the value-based skilled nursing care and during their if any part of the cost of the nurse would arrangement. If, through monitoring and SNF stay). be funded by, or otherwise result from assessment, the VBE’s accountable body This proposed arrangement would the contributions of, an individual or or responsible person determines that implicate the anti-kickback statute, entity outside of the VBE, such as a the value-based arrangement is: (i) Is because the hospital would be providing pharmaceutical or medical device unlikely to further the coordination and the SNF with remuneration (the manufacturer. management of care for the target behavioral health nurse services) and Fifth, the hospital’s provision of the patient population, (ii) has resulted in the SNF could refer Medicare, nurse to the SNF must not take into material deficiencies in quality of care, Medicaid, or other Federal health care account the volume or value of, or or (iii) is unlikely to achieve the program patients to the hospital. Safe condition the remuneration on, referrals evidence-based, valid outcome harbor protection is afforded only to of patients who are not part of the target measure(s), the parties terminate the those arrangements that precisely meet patient population and business not arrangement within 60 days of such a all of a safe harbor’s conditions. covered under the value-based determination. Consequently, the hospital and SNF arrangement. Tenth, the hospital does not, and might engage in the following analysis Sixth, the SNF must pay for at least should not, know that the behavioral to determine whether their proposed 15 percent of the hospital’s cost of the nurse’s services are likely to be arrangement satisfies the proposed care care coordination services provided by ‘‘diverted’’ by the SNF (e.g., used by the coordination arrangements safe harbor’s the nurse over the arrangement’s one- SNF to perform tasks unrelated to the requirements. year term. Assuming the nurse provides care coordination and management of First, the hospital and SNF must periodic services throughout the year, the target patient population) or used for establish specific evidence-based, valid the SNF must pay its required an unlawful purpose (e.g., the provision outcome measures against which the contribution amount at reasonable, of medically unnecessary services). SNF will be measured throughout the regular intervals, such as on a monthly Finally, the VBE participants must arrangement, and which the parties basis. provide documentation, such as the reasonably anticipate will advance the Seventh, the value-based arrangement signed writing, to the Secretary, upon coordination and management of care must be directly connected to the request, showing that the parties for the target patient population. coordination and management of care of complied with the safe harbor Second, the parties must ensure that the target patient population. In provisions. devoting one full-time nurse to oversee addition, the value-based arrangement these patients would be commercially must not place any limitation on the 13. Alternative Regulatory Structure reasonable, considering both the VBE participants’ ability to make This proposed rule provides arrangement itself and all value-based decisions in the best interest of their protections for certain care coordination arrangements in the VBE. patients. Further, if the value-based and value-based arrangements through a Third, the hospital and SNF must arrangement restricts or directs referrals, combination of proposed revisions to execute a signed writing documenting the value-based arrangement may not the personal services and management the terms of the value-based require referrals to a particular provider, contracts safe harbor at 1001.952(d), the arrangement prior to, or practitioner, or supplier: (i) If a patient proposed care coordination contemporaneous with, its expresses a preference for a different arrangements safe harbor at commencement or any material changes practitioner, provider, or supplier; (ii) if 1001.952(ee), the proposed substantial to the arrangement. The writing must the patient’s payor determines the downside financial risk safe harbor at

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55716 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

1001.952(ff), and the full downside current proposal to add new protections equivalent to the protection collectively financial risk safe harbor at for outcomes-based payments at proposed under paragraphs 1001.952(gg). As an alternative to this proposed new paragraph 1001.952(d)(2). 1001.952(ee) and (ff); and (ii) how suite of protections, we are considering Third, for parties that meet the parties would determine that a payment for the final rule a different regulatory requirements of the value-based for quality outcomes is consistent with structure and approach to protect care framework and also assume substantial fair market value. As with the second coordination and other value-based downside financial risk (as defined in tier described above, to ensure that arrangements that are not at full proposed 1001.952(ff)), we would protected arrangements meet their financial risk (as defined at proposed provide increased flexibility under the value-based purposes, we might 1001.952(gg)) and are not part of a CMS- personal services and management incorporate additional accountability sponsored model (as defined at contracts safe harbor for their and transparency requirements, such as proposed 1001.952(ii)). For this arrangements by removing the those proposed for new safe harbor alternate approach, we would rely requirements that the aggregate 1001.952(ee). solely on the personal services and compensation: (i) Be set in advance (but We are also interested in comments management contracts safe harbor at requiring that the compensation regarding any special problems a fair paragraph 1001.952(d) as a platform to methodology be set in advance); (ii) not market value requirement would pose create tiered protection for value-based be determined in a manner that takes for providers in rural or underserved arrangements, each step of which would into account the volume or value of any areas, providers serving underserved remove additional conditions of referrals; and (iii) be consistent with fair populations, or others. With respect to paragraph 1001.952(d) to allow greater market value in arm’s-length other proposed safe harbors where we flexibility for innovation as the transactions. This additional flexibility have indicated that we are considering arrangements become more closely would be afforded in recognition of the including in the final rule a restriction aligned with value-based purposes (as parties’ assumption of downside related to the volume or value of defined in proposed paragraph financial risk. referrals and other business generated or 1001.952(ee)) and the parties take on With respect to the volume or value a requirement for fair market value, we more downside financial risk. requirement, we are considering for the will consider comments to this First, as proposed and described in final rule several alternative ways we alternative regulatory structure our proposed modifications to the might remove it in the second and third addressing how these criteria would personal services and management steps of this approach. We might operate in connection with value-based contracts safe harbor, we would remove remove it entirely or remove it in part arrangements. the requirement that aggregate by retaining a requirement that the D. Value-Based Arrangements With compensation under service compensation not relate directly to the Substantial Downside Financial Risk arrangements be set forth in advance, volume or value of referrals or other (1001.952(ff)) substituting a requirement that the business generated between the parties methodology for determining the (allowing for indirect correlations). With We are proposing a new safe harbor compensation be set in advance. This respect to a fair market value for certain value-based arrangements would offer broader protection for requirement, we might remove it involving VBEs that assume substantial certain outcomes-based payment entirely; remove it only for monetary downside financial risk (as defined in arrangements that are fair market value remuneration or only for in-kind the proposed regulation) from a payor. and do not take into account the volume remuneration; or remove it where the We propose to incorporate the or value of referrals or other business. non-fair market value arrangement definitions of ‘‘coordination and Protected arrangements would not be primarily benefits the offeror of the management of care,’’ ‘‘target patient required to meet the proposed definition remuneration, with such benefit population,’’ ‘‘value-based activity,’’ of ‘‘value-based arrangement.’’ independent of any increase in the ‘‘value-based arrangement,’’ ‘‘value- Second, for value-based arrangements volume or value of referrals (e.g., a based enterprise,’’ ‘‘value-based that meet applicable requirements of the hospital offering care managers to a purpose,’’ and ‘‘VBE participant’’ found VBE framework previously outlined post-acute care facility to better in proposed paragraph 1001.952(ee). (e.g., the parties to the arrangement are coordinate care and prevent avoidable This safe harbor, which would protect VBE participants in a VBE), we would readmissions for which the hospital both monetary and in-kind provide additional flexibility under the might be penalized). We might also remuneration, would offer greater personal services and management permit a broader set of free or below fair flexibility than the safe harbor for care contracts safe harbor by removing the market value arrangements for providers coordination arrangements in requirements that the aggregate coordinating care in rural or recognition of the VBE’s assumption of compensation: (i) Be set in advance (but underserved areas or providers serving substantial downside financial risk. It requiring that the compensation underserved populations. could apply, for example, to an methodology be set in advance); and (ii) We are cognizant that this alternative arrangement between an accountable not be determined in a manner that approach may present operational care organization that is a VBE and a takes into account the volume or value challenges for parties, particularly with network provider to share savings and of referrals. We may also incorporate respect to determining fair market value losses earned or owed by the safeguards from our proposed care for value-based arrangements. Moreover, accountable care organization, or coordination arrangements safe harbor we solicit comments on this approach as between a VBE that has contracted with (e.g., the monitoring requirement). To a whole and, in particular, on the a payor for an episodic payment and a ensure that protected arrangements meet following: (i) How to include in any safe hospital and post-acute care provider their value-based purposes, we might harbor finalized consistent with this that would be coordinating care for incorporate additional accountability approach protection for the exchange of patients under the episodic payment. and transparency requirements, such as information technology and However, as proposed, this safe harbor those proposed for new safe harbor infrastructure that might not be part of would apply only to the exchange of 1001.952(ee). We envision this a personal services or management remuneration between VBEs that have framework would be similar to our contract, with a scope of protection assumed substantial downside financial

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55717

risk and VBE participants that substantial downside financial risk from the extent such data is unavailable, meaningfully share in the VBE’s a payor for providing or arranging for evidence-based, comparable downside financial risk (as further the provision of items and services for expenditures; described below). a target patient population. The VBE can (iii) A prospectively paid population- In other words, where a VBE assume this risk directly if the VBE is based payment for a defined subset of participant agrees to spread the VBE’s an entity or through a VBE participant the total cost of care of a target patient financial risk and coordinate care, acting as an agent of, and accountable population, where such payment is additional safe harbor flexibility would to, the VBE. (We note, to the extent a determined based upon a review of be available. For the same reasons VBE participant wholly assumes risk on historical expenditures, or to the extent articulated in our discussion of the care behalf of the VBE, it may act in both its such data is unavailable, evidence- coordination arrangements safe harbor, capacity as a VBE participant and an based, comparable expenditures; or we propose that this safe harbor would agent of the VBE.) (iv) A partial capitated payment from not protect an ownership or investment To balance the need to protect start- the payor for a set of items and services interest in the VBE or any distributions up arrangements while also limiting for the target patient population where related to an ownership or investment potential program integrity risks, this such capitated payment reflects a interest. We solicit comments on this safe harbor would protect arrangements discount equal to at least 60 percent of approach and, in particular, whether between the VBE and the VBE the total expected FFS payments based this proposal presents any operational participant during the 6 months prior to on historical expenditures, or to the challenges with respect to the creation the date by which the VBE must assume extent such data is unavailable, of a VBE as a separate legal entity. We substantial downside financial risk (as evidence-based, comparable are considering for the final rule defined below). We solicit comments on expenditures of the VBE participants to whether this safe harbor should protect whether 6 months is a sufficient the value-based arrangements.25 ownership or investment interests with timeframe, and if not, what longer or We are soliciting comments on this respect to VBEs that must contract with shorter timeframe would be appropriate. proposed definition of ‘‘substantial a payor on behalf of VBE participants For purposes of this safe harbor, we downside financial risk,’’ including for purposes of value-based are proposing specific methodologies whether: (i) These benchmarks should arrangements with substantial downside that would qualify as substantial be higher or lower to ensure appropriate financial risk. downside financial risk. Under any of incentives; (ii) there are other Additionally, for the same reasons our proposed methodologies, the VBE methodologies not captured by this list articulated in our discussion of the care would assume risk from a payor for the that should qualify as substantial coordination arrangements safe harbor, provision of items and services to a downside financial risk, such as those we propose that this safe harbor would target patient population for the entire listed under 42 CFR not protect any remuneration funded by, term of the value-based arrangement. 1001.952(u)(1)(i)(C); and (iii) some or all or otherwise resulting from Our intent is for such risk to be of a of these benchmarks should be omitted contributions by, an individual or entity degree likely to ensure that the value- from this rule or modified to better outside of the applicable VBE. based arrangements of the VBE are capture true assumption of substantial We are considering for the final rule designed to appropriately reduce (or downside financial risk for items and whether, and if so, how, to extend this slow the growth of) costs, improve services furnished to patients. With safe harbor to remuneration that passes efficiencies, or improve health outcomes respect to (i) through (iii), we are from one VBE participant to another for the target patient population (and are considering and solicit comments on (without the risk-bearing VBE being not likely to increase over- or under- whether the requirement to compare party to the arrangement) when the VBE utilization or costs to payors or losses to, or determine payments based has assumed substantial downside patients). We propose that a VBE would on, historical expenditures or evidence- financial risk from a payor. We are be at substantial downside financial risk based, comparable expenditures and concerned that under many such if it is subject to risk pursuant to one of whether additional means to establish a downstream arrangements, the VBE the following methods, drawn from the baseline against which to measure participant receiving the remuneration Department’s experience: 24 losses or payments is feasible for new or may have assumed little or no financial (i) Shared savings with a repayment small VBEs or whether new or small risk and may be billing for his or her obligation to the payor of at least 40 VBEs should be allowed additional services on an FFS basis, thus retaining percent of any shared losses, where loss means to establish a baseline, such as FFS incentives with respect to ordering is determined based upon a comparison or arranging for items and services for allowing new or small VBEs to establish of costs to historical expenditures, or to such baselines after a reasonable period patients. We note the proposed care the extent such data is unavailable, coordination arrangements safe harbor, of operation, such as 1 year. We also evidence-based, comparable solicit comments on whether the with its additional safeguards, may be expenditures; available for such arrangements, where assumption of substantial downside (ii) A repayment obligation to the financial risk by the VBE as they involve only in-kind remuneration, payor under an episodic or bundled and the personal services and contemplated here, in combination with payment arrangement of at least 20 the safeguards proposed for this safe management safe harbor’s proposed percent of any total loss, where loss is modifications for outcomes-based harbor, results in meaningful determined based upon a comparison of protections that will ensure that the payments may be available for monetary costs to historical expenditures, or to remuneration. 25 To afford VBE participants flexibility, we are This proposed safe harbor would 24 For clarity, we note that we would not consider not prescribing how parties may determine the protect remuneration exchanged a prospective payment system for acute inpatient basis for shared savings, shared losses, population- between a VBE and a VBE participant hospitals, home health agencies, hospice, outpatient based payments, or partial capitation payments. pursuant to a value-based arrangement hospitals, inpatient psychiatric facilities, inpatient However, we expect any such approach will reflect rehabilitation facilities, long-term-care hospitals, a legitimate compensation methodology, not one if several standards are met. First, the and SNFs, or other like payment methodologies to that simply manipulates numbers to artificially VBE must have assumed, or be meet any of the prongs of our proposed definition inflate savings or decrease losses, as may be contractually obligated to assume, of ‘‘substantial downside financial risk.’’ applicable.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55718 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

benefits of the arrangements that would requirements of the physician self- (2) direct or restrict referrals to a be protected by this safe harbor referral law’s regulatory exception for particular provider, practitioner, or outweigh any risk of misuse of the safe value-based arrangements with supplier if: harbor to protect fraudulent or abusive meaningful downside financial risk at (A) A patient expresses a preference arrangements. section 411.357(aa)(2). for a different practitioner, provider, or Lastly, we are considering for the final Under (i), the proposed percentage of supplier; rule, and seek comment regarding, the VBE’s substantial downside (B) the patient’s payor determines the whether we should include advanced financial risk in which the VBE provider, practitioner, or supplier; or APMs and other payor advanced APMs, participant must share is based on the (C) such direction or restriction is as both terms are defined at 42 CFR 8-percent nominal risk standard under contrary to applicable law or regulations 414.1305, in the definition of the CMS regulation governing advanced under titles XVIII and XIX of the Act; ‘‘substantial downside financial risk.’’ APM and other payor advanced APM (iv) the value-based arrangement does Specifically, we seek comment on the criteria at 42 CFR 414.1415 and not include marketing to patients of following: (i) If advanced APM 414.1420, respectively. We solicit items or services or engaging in patient participants would likely rely on this comments on additional or alternative, recruitment activities; and safe harbor versus the CMS-sponsored specific thresholds we could include in (v) the VBE or its VBE participants model arrangements safe harbor; and if the final rule to help ensure that the maintain documentation sufficient to so, what barriers, if any, our proposed VBE participant is meaningfully demonstrate compliance with the safe definition of ‘‘substantial financial risk’’ engaged with the VBE in delivering harbor’s conditions and make such and ‘‘meaningfully share’’ (as outlined value through its ordering and referring records available to the Secretary upon in further detail below) may pose; and decisions, as well as data to support request. (ii) whether our current definition of suggestions. Note that we are considering, and ‘‘substantial financial risk’’ is too To protect against risks of stinting on seek comment regarding whether we narrow, such that we have excluded care, we further propose that the should include in the final rule, a advanced APMs or other payor remuneration must not induce condition regarding the maintenance of advanced APMs that encourage limitations on, or reductions of, materials and records sufficient to participants to meaningfully assume medically necessary items or services establish compliance with the downside financial risk. furnished to any patient. We are conditions of this safe harbor for a set This safe harbor proposes to protect considering for the final rule additional period of time (e.g., at least 6 years or remuneration from a VBE to a VBE conditions to safeguard against risks of 10 years). participant pursuant to a value-based cherry picking or lemon dropping of In addition to the foregoing standard, arrangement. As a condition of this safe patients, which could affect the quality under this proposed safe harbor, the harbor, the terms of the value-based of care patients receive. In addition, we remuneration must be used primarily to arrangement require the VBE participant are considering and solicit comments on engage in value-based activities that are to meaningfully share in the VBE’s whether to include a length-of-time directly connected to the items and substantial downside financial risk for requirement (e.g., 1 year) for the VBE to services for which the VBE is at providing or arranging for items and be at substantial downside financial risk substantial downside financial risk. For services for the target patient to avoid gaming (as highlighted in our example, a VBE is at substantial population. This condition is intended subsequent discussion of this issue in downside financial risk through an to ensure that VBE participants ordering the full financial risk safe harbor). agreement with a payor to assume a or arranging for items and services for We are proposing to include the percentage of shared losses for items patients (in other words, those making following conditions similar to certain and services provided in connection care decisions) closely share the VBE’s conditions we are proposing for the care with hip replacements to the target goals and share in accountability if coordination arrangements safe harbor patient population. Remuneration those goals are not achieved. and would interpret these conditions, provided by the VBE to a VBE For purposes of this condition, we where applicable, as described participant would be protected under propose that a VBE participant previously in the discussion of the care this proposed safe harbor only if the ‘‘meaningfully shares’’ in the VBE’s coordination arrangements safe harbor: VBE participant primarily uses the substantial downside financial risk if (i) The value-based arrangement must remuneration to engage in value-based the value-based arrangement contains be set forth in a writing that contains, activities that have a direct connection one of the following: (i) A risk-sharing among other information, a description to the items and services provided to payment pursuant to which the VBE of the nature and extent of the VBE’s patients in the target patient population participant is at risk for 8 percent of the substantial downside financial risk for undergoing hip replacement surgery amount for which the VBE is at risk the target patient population and a (i.e., the items and services for which under its agreement with the applicable description of the manner in which the the VBE is at substantial downside payor (e.g., an 8-percent withhold, recipient meaningfully shares in the financial risk). Thus, while the VBE recoupment payment, or shared losses VBE’s substantial downside financial could give the VBE participant money payment); (ii) a partial or full capitated risk; that it uses to hire a staff member who payment or similar payment (ii) the VBE or VBE participant primarily coordinates patients’ methodology (excluding the prospective offering the remuneration does not take transitions between care settings after payment systems for acute inpatient into account the volume or value of, or undergoing hip replacement surgery, the hospitals, home health agencies, condition the remuneration on, referrals VBE could not give the VBE participant hospice, outpatient hospitals, inpatient of patients outside of the target patient money that it uses to hire a staff member psychiatric facilities, inpatient population or business not covered who coordinates transitions between rehabilitation facilities, long-term care under the value-based arrangement; care settings for patient undergoing an hospitals, and SNFs or other like (iii) the value-based arrangement does array of surgical procedures. In payment methodologies); or (iii) in the not: (1) Place any limitation on VBE addition, we propose that the case of a VBE participant that is a participants’ ability to make decisions remuneration exchanged must be physician, a payment that meets the in the best interest of their patients, or directly connected to one or more of the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55719

VBE’s value-based purposes, at least one shifting costs to a Federal health care a separate legal entity. We are of which must be the coordination and program, other payors, or individuals. considering for the final rule whether management of care for the target Through the substantial downside we should protect ownership or patient population. financial risk safe harbor, we seek to investment interests with respect to We believe these safeguards are provide more flexibility for entities that VBEs that must contract with a payor on necessary to ensure transparency and assume a substantial amount of behalf of VBE participants for purposes accountability, as well as to reduce the financial risk such that the risk of value-based arrangements with full potential for protected arrangements to incentivizes a shift from volume-based financial risk. be used to pay for referrals unrelated to decision making to value-based decision We also propose, for the same reasons coordinating care and improving health making. By allowing parties this discussed previously with respect to the outcomes and value for programs and enhanced flexibility in exchange for care coordination arrangements safe patients. For example, as with other safe assuming risk with respect to only a harbor, that this safe harbor would not harbors proposed in this rulemaking, we subset of items and services furnished to protect any remuneration funded by, or do not intend to protect arrangements a target patient population, we are otherwise resulting from contributions nominally characterized as a care mindful of the potential for parties to by, an individual or entity outside of the coordination or value-based assume financial risk for such a narrow applicable VBE. arrangement but that in reality are subset of items and services that the We propose that a VBE would be at schemes intended merely to buy or sell offeror’s risk does not equate to ‘‘full financial risk’’ for the cost of care referrals. To further protect against such substantial downside financial risk. We of a target patient population if the VBE arrangements, we are considering solicit comments on safeguards against is financially responsible for the cost of including in the final rule a commercial this risk and the overall approach we all items and services covered by the applicable payor for each patient in the reasonableness requirement and a have taken with respect to the target patient population and is monitoring standard, each of which substantial downside financial risk safe prospectively paid by the applicable would be similar to those included in harbor. payor. By ‘‘prospective,’’ we mean the our proposed care coordination E. Value-Based Arrangements With Full anticipated cost of all items and services arrangements safe harbor at Financial Risk (1001.952(gg)) covered by the applicable payor for the 1001.952(ee). In addition, to heighten We propose to protect certain target patient population, has been transparency of any value-based arrangements (including in-kind and determined and paid in advance (as arrangements and to ensure that the monetary remuneration) involving VBEs opposed to billing under the otherwise value-based arrangement is known by that have assumed ‘‘full financial risk,’’ applicable payment systems and and closely related to the VBE itself, we as that term is defined in the proposed undergoing a retrospective are considering for the final rule regulation, for a target patient reconciliation after items and services whether to require that, in advance of, population. Because we recognize that have been furnished). or contemporaneous with, the VBEs that have assumed full financial By way of example, a VBE would be commencement of the applicable value- risk present fewer traditional FFS fraud at ‘‘full financial risk’’ if it received a based arrangement, the VBE’s and abuse risks, this proposed safe prospective, capitated payment for all accountable body or responsible person harbor would include more flexible items and services covered by Medicare make a bona fide determination that the conditions than the proposed care Parts A and B for a target patient value-based arrangement is directly coordination arrangements and population. Similarly, we would connected to a value-based purpose, at substantial downside financial risk safe consider a VBE that contracts with a least one of which must be the harbors, which we believe would reduce Medicaid managed care organization coordination and management of care burden for the VBE and its VBE and receives a fixed per-patient per- for the target patient population. participants. We intend for the safe month amount to be at full financial risk As discussed previously, we remain harbor to offer this category of VBEs the if the fixed amount covered the cost of aware that the arrangements protected greatest ability to innovate with respect all Medicaid-covered items and services by the proposed substantial downside to coordinated care arrangements in furnished to the target patient financial risk safe harbor would not be light of their assumption of the highest population. subject to programmatic requirements, level of risk contemplated in this In contrast, our proposal would not oversight, or monitoring comparable to proposed rulemaking. We propose to protect an entity that receives a partial CMS-sponsored models. Accordingly, incorporate the definitions of capitated payment, be it either: (i) A we are considering for the final rule ‘‘coordination and management of capitated payment that covers a limited including a requirement to submit care,’’ ‘‘target patient population,’’ set of items or services or (ii) a payment information to the Department about the ‘‘value-based activity,’’ ‘‘value-based arrangement where an entity receives a VBE, VBE participants, and the value- arrangement,’’ ‘‘value-based enterprise,’’ combination of reduced FFS and based arrangement similar to the ‘‘value-based purpose,’’ and ‘‘VBE capitation payments for a defined set of requirement we are considering for the participant’’ found in proposed items or services. For example, a care coordination safe harbor at paragraph 1001.952(ee). For the same hospital that participates in a bundled 1001.952(ee). As discussed in the care reasons discussed previously with payment program for patients who coordination arrangements safe harbor respect to the care coordination receive knee replacements, and that section, we also are considering for the arrangements safe harbor, we propose receives an episodic payment to cover final rule a condition prohibiting VBEs that this safe harbor would not protect all costs associated with the knee or VBE participants from billing Federal an ownership or investment interest in replacement surgeries and follow-up health care programs, other payors, or the VBE or any distributions related to care for 90 days, would not be eligible individuals for remuneration exchanged an ownership or investment interest. We for protection under this safe harbor. pursuant to the safe harbor; claiming the solicit comments on this approach and, The hospital is at full financial risk for value of the remuneration as a bad debt in particular, whether this proposal the knee surgeries and related services for payment purposes under a Federal presents any operational challenges but not for the patients’ total cost of health care program; or otherwise with respect to the creation of a VBE as care. We note that other proposals in

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55720 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

this rulemaking may be available for for arrangements involving parties that ‘items or services’ for purposes of this such arrangements. have not yet assumed the risk that section.’’ We note that our proposed definition operates as a prerequisite and key If the VBE participant is permitted to of ‘‘full financial risk’’ would not safeguard for this safe harbor. To seek additional payment for items or prohibit a VBE from entering into balance the need to protect start-up services furnished to the target patient arrangements—like global risk arrangements with our program integrity population from a payor, the safe harbor adjustments, risk corridors, reinsurance, concerns, the safe harbor would protect would not protect the value-based or stop loss agreements—to protect arrangements between the VBE and the arrangement. For example, protection against catastrophic losses. We VBE participant only during the 6 under the safe harbor would not extend emphasize that it is our intent for such months prior to the date by which the to payment made by a VBE to a VBE arrangements to be limited to VBE must assume full financial risk. We participant for telehealth services catastrophic losses; a VBE may not use solicit comments on whether 6 months furnished to the target patient risk corridors or other like arrangements is a sufficient timeframe, and if not, population if the VBE participant could as a mechanism to shift an amount of what an appropriate timeframe might also claim separate payment for such financial risk that does not meet the be. We could include a longer or shorter services from a payor. Value-based spirit of this safe harbor. Similarly, we timeframe in the final rule. arrangements that permit VBE note that our proposed definition of We propose writing requirements in participants to claim separate payment ‘‘full financial risk’’ would not prohibit this safe harbor that are designed to from a payor are not ‘‘full risk.’’ Such a VBE from conducting a ‘‘back-end’’ promote transparency and arrangements potentially involve mixed reconciliation, with resulting payment accountability. First, we propose that financial incentives for providers, and adjustments due to quality or financial the VBE have a signed writing with a parties would need to seek protection performance metrics, provided again, payor that specifies the target patient for such arrangements under one of the that the reconciliation is not used as a population and contains terms sufficient other proposed safe harbors. This mechanism to shift material financial to demonstrate that the VBE is at full requirement would permit VBE risk back to the contracting payor. financial risk for the target patient participants to bill a payor but not claim We also are considering other ways to population for at least 1 year. Our intent payment (e.g., through a ‘‘no-pay define ‘‘full financial risk’’ in the final in proposing a length-of-time claim’’) if required by a payor, including rule. For example, we are considering requirement is to minimize gaming Medicare. for purposes of the final rule including opportunities that could arise if the VBE We also propose requirements related an actuarial equivalence standard assumes full financial risk for a short to the remuneration. First, we propose similar to that used in the Medicare Part time period in order to take advantage that remuneration exchanged must: (i) D context, and we request comments on of the proposed safe harbor’s flexibility Be used primarily to engage in the the use of this potential standard. In but without meaningfully committing to value-based activities set forth in the addition, we seek comments about other the transition to full financial risk. parties’ signed writing; (ii) is directly situations that stakeholders believe Second, we propose that the parties set connected to one or more of the VBE’s should qualify as a VBE assuming ‘‘full forth the material terms of the value- value-based purpose(s), at least one of financial risk.’’ We request that based arrangement in a signed writing, which must be the coordination and commenters provide specific examples including the value-based activities to management of care for the target of arrangements that they believe be undertaken by the parties, and that patient population; and (iii) not induce constitute ‘‘full financial risk’’ but that the arrangement must be for a period of the VBE or VBE participants to reduce would not be covered by the definition at least 1 year. or limit medically necessary items or proposed above. We propose that the term of the value- services furnished to any patient. We We propose to require that the VBE based arrangement must be for a period propose to interpret these conditions assume full financial risk either directly, of at least 1 year to ensure that the VBE consistent with the similar conditions in or through a VBE participant with the participant is committed to coordinating the proposed care coordination legal authority to obligate the VBE. We care for the target patient population of arrangements safe harbor at note, to the extent a VBE participant the VBE that has taken on full financial 1001.952(ee). wholly assumes risk on behalf of the risk. Second, we propose to require that VBE, it may act in both its capacity as We propose that the VBE participant the VBE and VBE participant must not a VBE participant and an agent of the cannot claim additional or separate take into account the volume or value VBE. payment in any form directly or of, or condition the remuneration In addition, we propose that this safe indirectly from a payor for items or exchanged on: (i) Referrals of patients harbor would cover both value-based services covered under the value-based who are not part of the target patient arrangements between a VBE and a VBE arrangement. For purposes of this safe population or (ii) business not covered participant where the VBE has assumed harbor, we propose that the phrase under the value-based arrangement. full financial risk as of the date the VBE ‘‘items or services’’ would have the This requirement would preclude and VBE participant enter into the meaning set forth in paragraph protection under the safe harbor for value-based arrangement, as well as 1001.952(t)(2)(iv), which defines ‘‘items remuneration that is part of a broader value-based arrangements between a and services’’ as: ‘‘Health care items, ‘‘swapping’’ arrangement to steer VBE and a VBE participant where the devices, supplies or services or those patients outside of the target patient VBE is contractually obligated to services reasonably related to the population to the party offering the assume such risk but has not yet done provision of health care items, devices, remuneration. We solicit comments on so. We are mindful that a VBE that is supplies or services including, but not this condition and any additional contractually obligated to take on full limited to, non-emergency safeguards that we should include in financial risk may need lead time to transportation, patient education, this safe harbor to mitigate the risk of develop and implement arrangements in attendant services, social services (e.g., problematic swapping arrangements in anticipation of taking on full financial case management), utilization review order to prevent the safe harbor from risk. However, we also are concerned and quality assurance. Marketing and being used to protect payments for about providing safe harbor protection other pre-enrollment activities are not referrals that are not part of the value-

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55721

based arrangement. We would have 10 years). We would interpret these should limit protection to arrangements significant concerns with a VBE requirements as described with respect between VBE participants that are part participant entering into a purported to the care coordination arrangements of the same VBE, or we should extend value-based arrangement in which it safe harbor and would include them in protection to arrangements between: (i) offers the VBE a reduced rate for this safe harbor for the reasons A VBE participant and a downstream patients in the target patient population articulated there. contractor, (ii) arrangements between in exchange for gaining access to that In addition, we note that, as proposed, two downstream contractors, or (iii) VBE’s other patients. this safe harbor would apply only to both. We request that any comments We propose to require that the VBE remuneration exchanged between a VBE include specific examples of provide or arrange for: (i) An and a VBE participant pursuant to a downstream arrangements that may not operational utilization review program value-based arrangement. The proposed be protected under existing safe harbors and (ii) a quality assurance program that full financial risk safe harbor would not or any of the safe harbors proposed protect against underutilization and protect remuneration exchanged under this rulemaking but warrant specify patient goals, including between or among VBE participants that protection under this proposed safe measurable outcomes, where are part of the same VBE, remuneration harbor because of the level of risk appropriate. These conditions mirror exchanged between a VBE participant assumed by the VBE. those found in the existing safe harbor and a downstream contractor, or at paragraph 1001.952(u), which were remuneration between two downstream F. Arrangements for Patient Engagement derived from the then-current regulatory contractors. However, nothing prevents and Support To Improve Quality, requirements for plans operating under these parties from turning to other Health Outcomes, and Efficiency section 1876 of the Act. We are available safe harbors for protection. (1001.952(hh)) considering for the final rule whether We are considering for the final rule We propose to establish a new safe there may be other ways to frame this and solicit comments on whether to harbor at proposed paragraph requirement that meet the spirit of the extend this safe harbor to remuneration 1001.952(hh) to protect certain conditions in paragraph 1001.952(u) but that passes from a VBE participant to a arrangements for patient engagement are updated to reflect the utilization downstream contractor (which also tools and supports to improve quality, review and quality assurance could be, but may not be required to be, health outcomes, and efficiency mechanisms in place today. a VBE participant). While we recognize furnished by VBE participants, as Like the proposed care coordination that increased flexibility at the VBE defined in proposed paragraph arrangements and substantial downside participant level may foster innovation, 1001.952(ee), to specified patients. This financial risk safe harbors and for the we are concerned that these safe harbor, hereinafter the ‘‘patient reasons explained in connection with downstream arrangements present engagement and support safe harbor,’’ is those proposals, we are considering for higher risks of fraud and abuse because intended to remove barriers presented the final rule requiring the submission the VBE participants and downstream by the anti-kickback statute and the to the Department of information about contractors exchanging the beneficiary inducements CMP 26 to VBEs, VBE participants, and value- remuneration may have assumed little providers offering patients beneficial based arrangements for safe harbor or no financial risk. As such, they may tools and supports to improve quality, protection. We welcome comments on continue to be subject to the potential health outcomes, and efficiency, by this. As discussed in the care risks inherent in any FFS financial promoting patient engagement with coordination arrangements safe harbor arrangements, namely, incentives to their care and adherence to care section, we also are considering for the order medically unnecessary or overly protocols. Commenters to the OIG RFI final rule a condition prohibiting VBEs costly items and services. For these overwhelmingly supported such a safe or VBE participants from billing Federal reasons, we are considering for the final harbor, with appropriate safeguards. health care programs, other payors, or rule, and solicit comments on, the Achieving well-coordinated care and individuals for remuneration exchanged following: improving value require patients to pursuant to the safe harbor; claiming the • In addition to the safeguards actively participate and engage in their value of the remuneration as a bad debt proposed in paragraph 1001.952(gg), preventive care, treatment, and general for payment purposes under a Federal whether additional safeguards could be health. To prevent illness or disease or health care program; or otherwise implemented under the full financial to manage a disease or condition shifting costs to a Federal health care risk safe harbor (or a different proposed effectively, patients must be involved in program, other payors, or individuals. safe harbor) to ensure that legitimate their healthcare and be empowered to We also propose requirements that (i) arrangements between VBE participants make informed healthcare-related the value-based arrangement does not and downstream contractors that decisions. Appropriate patient include marketing to patients of items or advance the value-based purpose(s) of engagement tools and supports can services or engaging in patient the VBE are protected. foster successful behavior modifications recruitment activities; and (ii) the VBE • For purposes of protecting that improve health, ensure that patients or its VBE participants maintain downstream arrangements, whether we receive the medically necessary care documentation sufficient to demonstrate should incorporate some of the and other nonclinical, but health- compliance with the safe harbor’s safeguards proposed in the safe harbor related, items and services they need, conditions and make such records for care coordination arrangements or and improve adherence to an available to the Secretary upon request. the safe harbor for parties at substantial appropriate treatment regimen. We are considering for the final rule and downside financial risk. If so, whether In some cases, improved care seek comment regarding whether we certain safeguards would best capture coordination may be facilitated through should include, in the final rule, a our need to protect against fraud and various supports, including, for condition regarding the maintenance of abuse risks with the recognition that we materials and records sufficient to do not want to impose undue burden on 26 A practice permissible under the anti-kickback establish compliance with the parties to these arrangements. statute, whether through statutory exception or • regulations issued by the Secretary, is also excepted conditions of this safe harbor for a set If we were to protect certain from the beneficiary inducements CMP. Section period of time (e.g., at least 6 years or downstream arrangements, whether we 1128A(i)(6)(B) of the Act.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55722 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

example, providing supports that aim to supports (as specified in proposed prescribe one drug over another. Such improve patients’ safety at home or paragraph 1001.952(hh)) furnished remuneration could influence a patient during care transitions (including directly by a VBE participant (as defined to request a particular drug that is more discharge from facility care to the in proposed paragraph 1001.952(ee)) to expensive or less clinically efficacious community) or that allow providers to a patient in a target patient population than other clinically equivalent drugs. communicate more efficiently and (as defined in proposed paragraph This could both improperly influence effectively with patients and their 1001.952(ee)), that are directly patient choice and increase costs to families and to monitor their patients’ connected to the coordination and Federal health care programs—two care. However, we also are cognizant of management of care (as defined in factors cited by Congress to consider the potential for improper patient proposed paragraph 1001.952(ee)), when developing safe harbors—without engagement tools and supports to result provided that all of the conditions of necessarily increasing quality. in inappropriate utilization, the steering proposed paragraph 1001.952(hh) are As noted above, we also are excluding of patients to particular providers, satisfied. manufacturers, distributors, and suppliers of DMEPOS and laboratories suppliers, or products that might not be 1. Limitations on Offerors in their best interests, increased costs to from the definition of a VBE participant. payors and patients, and anti- Under this proposal, only patient Based on long-standing enforcement competitive effects. engagement tools and supports and oversight experience, we are Depending on the facts and furnished by a VBE participant, as concerned that manufacturers, circumstances, providing patient defined in proposed paragraph distributors, and suppliers of DMEPOS engagement tools and supports may 1001.952(ee), would receive protection. and laboratories may inappropriately implicate the Federal anti-kickback Our intent in proposing to limit safe use patient engagement tools and statute and the beneficiary inducements harbor protection to VBE participants is supports to market their products or CMP. Some tools and supports may be to align the safe harbor with the value- divert patients from a more clinically protected under existing safe harbors or based framework set forth in this appropriate item or service, provider, or exceptions to the definition of proposed rulemaking. We are mindful supplier without regard to the best ‘‘remuneration’’ under the beneficiary that this approach would require the interests of the patient or to induce inducements CMP (e.g., the local offeror of the remuneration to be part of medically unnecessary demand for transportation safe harbor, 42 CFR a VBE (of any size) as defined at items and services. 1001.952(bb); the exception for proposed paragraph 1001.952(ee). We We are interested in comments on the remuneration that promotes access to are soliciting comments, including impact of any such exclusions, if care and poses a low risk of harm to illustrative fact patterns, about potential included in the final rule, for the patient patients and Federal health care patient engagement tools and supports engagement and support safe harbor in programs, 42 CFR 1003.110; and the that would improve care coordination particular and any negative impact on exception for incentives given to and health outcomes where the offeror the provision of potentially beneficial individuals to promote the delivery of does not meet the proposed definition of tools and supports. We seek comments preventive care, 42 CFR 1003.110). In a VBE participant because the offeror is regarding whether the proposed addition, for CMS-sponsored models, not part of a VBE. exclusion of these entities from the some patient engagement tools and For example, we are considering for definition of ‘‘VBE participant,’’ and the supports may qualify for protection the final rule safe harbor protection for, proposed condition at (hh)(2), limiting and seek comments regarding, a under the Medicare Shared Savings funding by and other contributions from hospital’s or physician group practice’s Program’s waiver for patient non-VBE participants, might negatively provision of patient engagement tools incentives 27 or a waiver available for impact patients’ ability to receive and supports that would advance beneficiary incentives offered under an beneficial items and services, including coordination and management of care applicable Innovation Center model.28 new technologies that may foster better for a patient and otherwise satisfy However, under certain facts and access to care and improve health conditions similar to those set forth in circumstances, no safe harbor, outcomes. the proposed safe harbor, but where As noted above, we also are exception, or waiver may be available to such hospital or physician group considering whether to exclude other protect beneficial patient engagement practice is not part of a VBE. We seek categories of suppliers and other tools and supports that implicate the comments on the fraud and abuse risks entities, including pharmacies, PBMs, anti-kickback statute, beneficiary associated with removing the wholesalers, and distributors from the inducements CMP, or both. These requirement that the offeror is a VBE definition of ‘‘VBE participant.’’ 29 We arrangements must be evaluated on a participant and what additional solicit comments on the potential case-by-case basis for compliance with safeguards would be appropriate to impact of our considered exclusion of the statutes. offset those risks. pharmacies, PBMs, wholesalers, and Under the proposed patient Pharmaceutical manufacturers, engagement and support safe harbor at distributors, if included in the final rule, distributors, and suppliers of DMEPOS, for the patient engagement and support paragraph 1001.952(hh), and laboratories are not included in the ‘‘remuneration’’ under the Federal anti- safe harbor in particular. proposed definition of ‘‘VBE We also are considering, and seek kickback statute would not include in- participant’’ in paragraph 1001.952(ee) comment on, whether this proposed safe kind patient engagement tools or for the reasons described earlier in this harbor should protect only in-kind tools preamble. In addition to the reasons for and supports furnished by VBE 27 Medicare Program; Final Waivers in Connection With the Shared Savings Program, 80 exclusion of pharmaceutical participants that assume at least some FR 66726, 66743 (Oct. 29, 2015). manufacturers in the definition of ‘‘VBE 28 See, e.g., Notice of Waivers of Certain Fraud participant’’ previously articulated, we 29 Note that, should we adopt the definition of and Abuse Laws in Connection with the Bundled believe that offers of remuneration by ‘‘applicable manufacturer’’ as set forth in in 42 CFR Payments for Care Improvement Advanced Model 403.902, such definition would include distributors (May 25, 2018), available at https://www.cms.gov/ such manufacturers to patients could and wholesalers (which include re-packagers, re- Medicare/Fraud-and-Abuse/PhysicianSelfReferral/ improperly influence the patient, as labelers, and kit assemblers) that hold title to a Downloads/BPCI-Advanced-Model-Waivers.pdf. well the patient’s clinician’s decision to covered drug, device, biological or medical supply.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55723

financial risk, so as to better align retrospectively or on a preliminary technology’’ and ‘‘patient health-related protected remuneration with value- prospective basis. monitoring tools and services’’ might include wearable monitoring devices, based purposes. In particular, if we were 3. Limitations on Type of Remuneration to limit safe harbor protection to only such as a smart watch or tracker VBE participants that assume financial The proposed safe harbor would designed to collect information and risk, we are considering, and seek protect only tools or supports, as transmit data to a patient’s physician for comments regarding, the appropriate specified in proposed 1001.952(hh), treatment or disease monitoring. We are level of financial risk to require of such furnished by a VBE participant to a considering for purposes of the final VBE participants (e.g., VBE participants patient in the target patient population. rule requiring that the VBE participant that assume at least some downside As proposed in 1001.952(hh)(3)(i), (ii) confirm that the tools and services financial risk or VBE participants that and (iii), we would limit a patient provided to a patient are not duplicative assume substantial downside financial engagement ‘‘tool or support’’ to in- of, or substantially the same as, tools risk). kind, preventive items, goods, or and services the patient already has. For services, or items, goods, or services example, we are considering whether 2. Limitations on Recipients such as health-related technology, the safe harbor should protect the patient health-related monitoring tools provision of a new cell phone or This proposed safe harbor would and services, or supports and services wireless service to a patient who needs protect patient engagement tools and designed to identify and address a an application for remote patient supports furnished to patients in a target patient’s social determinants of health, monitoring if the patient already has patient population (as defined in that have a direct connection to the these products and only needs the proposed paragraph 1001.952(ee)). We coordination and management of care of application. note that the scope of this proposed safe the target patient population. This With respect to the provision of harbor would not be limited to Federal limitation on tools or supports would supports and services designed to health care program beneficiaries in exclude gift cards, cash, and any cash identify and address social determinants recognition that the VBE or VBE equivalent (e.g., a check or pre-paid of health, many commenters to the OIG participants may define the target debit card). RFI urged us to consider ‘‘social patient population without regard to We do not propose a specific determinants of health,’’ also described payor type. We solicit comments on definition of ‘‘preventive care item or as ‘‘health-related nonmedical’’ items, whether we should instead provide safe service’’ to provide flexibility for VBE goods, and services, that address basic harbor protection for tools and supports participants that seek to furnish needs essential to patients’ health, such VBE participants furnish to a broader preventive care items and services as a as food, shelter, safety, clothing, universe of patients by, for example, means to improve patient outcomes and income, and transportation, in designing protecting patient engagement tools and better overall patient health.31 OIG is any proposed safe harbors. There is supports furnished by VBE participants mindful of the evolving nature of substantial evidence that unmet social to any patient, so long as the tools and clinical practice guidelines and needs related to these determinants of supports predominantly address needs recommendations for practices that are health, such as transportation, nutrition, of the target patient population and the categorized as ‘‘preventive care,’’ and and safe housing, play a critical role in tools and supports have a direct we intend to allow this proposed safe health outcomes and expenditures.32 connection to the coordination and harbor to protect the provision of tools These needs must be considered when management of care for the patient. and supports that a VBE participant thinking about maximizing health We recognize that some VBEs may not reasonably determines, within the outcomes and lowering healthcare costs. be able to prospectively identify the medical judgment of the applicable Evidence indicates that efforts that practitioner treating the patient, to be individual patients in the target patient target home and neighborhood-level preventive care. VBE participants would population. For example, in some factors, such as healthcare accessibility need to exercise caution in ensuring that accountable care organization (ACO) for low-income individuals, physical tools and supports for which they desire arrangements under CMS-sponsored and environmental obstructions to safe harbor protection are reasonably models, beneficiaries are assigned to the healthy living, and housing and case considered preventive care. ACO, which could be a VBE, management, can lead to improved We solicit comments on whether the 33 retrospectively or on a preliminary health outcomes for people of all ages. categories of patient engagement tools These improved health outcomes prospective basis (e.g., for agreement and supports listed above that would periods beginning on July 1, 2019, ACOs include decreased mortality, delay or receive protection (i.e., health-related prevention of preventable and chronic participating in the Medicare Shared technology, patient health-related Savings Program may select preliminary monitoring tools and services, or 32 prospective assignment with See, e.g., Michael Marmot et al., on behalf of supports and services designed to the World Health Organization and Commission on 30 retrospective reconciliation). We are identify and address a patient’s social Social Determinants of Health, Closing the gap in interested in stakeholder comments on determinants of health) are sufficiently a generation: Health equity through action on the the challenges, if any, presented by the social determinants of health, 372 Lancet 9650 flexible but also sufficiently targeted to (2008), available at https:/www.thelancet.com/ safe harbor’s protection of only patient protect against the risks of fraud and journals/lancet/issue/vol372no9650/PIIS0140- engagement tools and supports abuse associated with providing 6736(08)X6047-7; Gayle Shier et al., Strong Social furnished to patients in the target inappropriate remuneration to patients. Support Services, Such As Transportation And patient population when the VBE’s Help For Caregivers, Can Lead To Lower Health For instance, we believe ‘‘health-related Care Use And Costs, 32 Health Affairs 3 (2013), assigned beneficiaries are identified available at https://www.healthaffairs.org/doi/pdf/ 31 We do not intend to incorporate the definition 10.1377/hlthaff.2012.0170. 30 42 CFR 425.400(a)(4)(ii). We offer this as an of ‘‘preventive care’’ found in the regulations 33 See, e.g., J. Michael McGinnis, Pamela illustrative example. Participants in the Medicare interpreting the beneficiary inducements CMP, 42 Williams-Russo, and James R. Knickman, The Case Shared Savings Program and Innovation Center CFR 1003.110. Note that the definitions found at 42 For More Active Policy Attention To Health ACO models have existing fraud and abuse law CFR 1003.110 apply to part 1003, not part 1001, Promotion, 21 HEALTH AFFAIRS 2 (Mar. 2002), waivers and may not need new safe harbor where the proposed 42 CFR 1001.952(hh) would be available at https://www.healthaffairs.org/doi/ protection. located. 10.1377/hlthaff.21.2.78.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55724 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

diseases, and lowered healthcare social determinants of health. example, a physician could be utilization, indicating a higher quality of Regardless, whether a particular tool or influenced to prescribe an item or life.34 support would, in fact, be protected service, which may be free at some By addressing health disparities that under the safe harbor when offered by point, but would be covered by a third- emerge from the social determinants of a VBE participant to a patient in a target party payor (including Federal health health, some research suggests that the patient population would depend on the care programs) in the future.38 Because United States could save over $230 facts and circumstances and whether all of the risks presented by allowing safe billion in medical care costs.35 safe harbor conditions were satisfied. harbor protection for the provision of Moreover, there is research suggesting We solicit comments on whether, potentially reimbursable items and that policy interventions that focus on instead of using the proposed categories, services, including inappropriate the social determinants of health can the final rule should list specific tools seeding arrangements or the provision produce an estimated economic return and supports that could be protected of medically unnecessary or harmful of $1.02 trillion.36 under the safe harbor. We are interested items or services, we are considering, Based on the connection of social in feedback on which tools and supports and seek comment on, excluding in the determinants to healthcare outcomes should be listed and how the rule could final rule federally reimbursable items and costs, we are considering for account for emerging tools and supports and services as a protected tool or purposes of the final rule whether that improve patient engagement, care support. As discussed further below, the explicitly to include protection for tools coordination, and health outcomes. proposed patient engagement and and supports that address some social We do not intend for tools and support safe harbor would not protect determinants of health that meet all supports protected by this proposed safe cost-sharing waivers, and thus would other safe harbor conditions. While all harbor, which includes only in-kind not protect billing a Federal program social determinants have the potential items, goods, and services, to be limited while waiving the beneficiary’s share of to improve health outcomes, some to items or services covered by a Federal payment. social determinants may be more health care program (as the term of art, The in-kind requirement means that specifically aligned with preventive care ‘‘items or services,’’ when used in the the patient must receive the actual tool and the coordination and management context of the Medicare program, could or support and not funds to purchase of care for patients (e.g., transportation suggest).37 In general, the provision of to medical appointments, nutrition to covered items and services to patients the tool or support. For example, address clinical conditions, safe housing does not require safe harbor protection patients may not be given cash for patients discharged to their homes) provided that all normal billing rules reimbursements for items or goods they than others (e.g., a more general need for are followed. That said, the proposed purchase directly. While cash income through employment). We seek description of a permissible tool or reimbursements for tools and supports public input on which social support would include federally would not satisfy the in-kind determinants are most crucial to reimbursable items and services, and requirement, we would consider a improving care coordination and provided that the other requirements of voucher for a particular tool or support transitioning to value-based care and the safe harbor are satisfied, the (e.g., a meal voucher or a voucher for a payment, with respect both to needed provision of federally reimbursable taxi) to satisfy the in-kind requirement. arrangements between providers or items and services could receive safe a. Cash and Cash Equivalent Incentives others in a position to generate Federal harbor protection. health care program referrals between We seek comment on potential fraud A number of commenters responding them, and needed arrangements and abuse risks presented by including to the OIG RFI urged OIG to protect the between beneficiaries and providers or items and services that could be distribution of cash incentives to others in a position to influence the reimbursable by a Federal health care patients as a reward for engaging in selection of providers, practitioners, and program as permitted tools or supports. certain healthcare-related activities. For suppliers. We are aware of, and deeply concerned example, providers responding to the We are considering, and solicit about, fraud schemes that involve the OIG RFI stated that they would like comments on, how the final safe harbor provision of items and services, protection to provide cash rewards to should make distinctions among the including prescription opioids or other patients both for attending categories of social determinants, such drugs, that are not needed by patients or appointments (e.g., $10 for patients who as protecting some types of tools and that are harmful to them. We do not attend an initial primary care visit) and supports but not others. We are propose to protect such arrangements in for engaging in activities designed to considering for the final rule whether this rulemaking, and such arrangements promote the adoption and maintenance we should specify specific tools and would not be protected in any final rule. of healthy behaviors (e.g., a $25 check supports that would be permissible, Further, as OIG has previously stated, offered to patients who complete including whether to base such a list on we are concerned that the provision of milestones in a behavioral modification the types of tools and supports potentially reimbursable items and program related to substance use described in CMS guidance for the services, for free, could result in steering disorders). Commenters cited a number Medicare and Medicaid programs. We or unfair competition or could create a of studies in support of this are interested in illustrative examples seeding arrangement, where, for recommendation.39 and data supporting commenters’ views on this topic, including data supporting 37 While OIG’s regulations found at 42 CFR 38 Adv. Op. No. 18–14, available at https:// 1003.110 define ‘‘items and services or items or oig.hhs.gov/fraud/docs/advisoryopinions/2018/ (or not supporting) the efficacy from a services,’’ we do not cross-reference such definition AdvOpn18-14.pdf. quality, effectiveness, and cost in this proposed safe harbor, nor do we propose to 39 See, e.g., Cathy J. Bradley & David Neumark, perspective of particular types of tools limit the items, goods, and services potentially Small Cash Incentives Can Encourage Primary Care and supports related to addressing protected by this proposed safe harbor to the items Visits by Low-Income People with New Health Care and services that would satisfy the definition found Coverage, 36 Health Affairs 8 (2017), https:// at 42 CFR 1003.110. Note also that the definitions www.healthaffairs.org/doi/10.1377/ 34 Marmot, supra. found at 42 CFR 1003.110 apply to part 1003, not hlthaff.2016.1455; Scott D. Halpern, MD, Ph.D. et 35 McGinnis, supra. part 1001, where the proposed 42 CFR 1001.952(hh) al., Randomized Trial of Four Financial-Incentive 36 McGinnis, supra. would be located. Programs for Smoking Cessation, 372 New Eng. J.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55725

Commenters to the OIG RFI noted that of cash remuneration to reward patients incentives of cost-sharing or might incentives and supports in the form of for attending medically necessary allow for abusive ‘‘insurance-only cash could help improve patients’ primary care or other clinically billing’’ marketing schemes targeting adherence to treatment plans, encourage prescribed treatment visits, or for patients for unnecessary or poor-quality participation in medically necessary successful participation in a clinically items or services. care, and motivate patients to lead appropriate behavioral modification or Long-standing OIG guidance allows healthier lifestyles. In addition, substance use disorder treatment for non-routine, good-faith financial commenters to the OIG RFI posited, and program. If we were to adopt this need cost-sharing waivers,43 and several some research suggests, that patients approach, we would consider requiring safe harbors and beneficiary prefer cash to in-kind items, goods, or offerors to have an evidence-based inducements CMP exceptions already services and that cash may be more reason for using cash to influence offer protection for certain reductions, effective at maintaining patient patients’ adherence to a treatment waivers, and differentials in cost- engagement and encouraging and regimen or clinical program. (This might sharing, such as the exception for the reinforcing positive behavioral change. be the case, depending on the evidence, waiver of cost-sharing amounts found at We also have observed congressional with respect to a substance use disorder section 1128A(i)(6)(A) of the Act and 42 interest in allowing providers to offer treatment or smoking cessation CFR 1003.110. Those safe harbors and beneficiaries cash through, by way of program.) We solicit comment on exceptions remain available and example, the recent enactment of the potential criteria a party may apply to unchanged by this proposal. We also are ACO Beneficiary Incentive Program, ensure that the arrangement is evidence- proposing protection for certain cost- section 1899(m) of the Act. However, based, such as ensuring the arrangement sharing waivers or reductions under the OIG historically has had significant is supported by the Joint Commission, CMS-sponsored model patient concerns with allowing providers to the Agency for Healthcare Research and incentives safe harbor, proposed at offer cash or cash equivalents to Quality, or other independent 1001.952(ii). As noted above, many VBE patients, and our oversight and organization that develops national participants that would avail themselves enforcement experience suggests that quality standards or quality measures. of the patient engagement and support cash incentives can: (i) Result in safe harbor would not be subject to medical identity theft and misuse of b. Waiver or Reduction of Cost-Sharing programmatic requirements, oversight, patients’ Medicare numbers, (ii) lead to Obligations or monitoring comparable to CMS- inappropriate utilization (in the form of A number of the comments we sponsored models. Therefore, cost- medically unnecessary items and received in response to the OIG RFI sharing waivers or reductions offered services), and (iii) cause improper advocated broad protection from and provided under the CMS-sponsored steering (including patients selecting a potential anti-kickback statute and models may present fewer risks. provider because the provider offers the beneficiary inducements CMP liability We are aware of concerns expressed most valuable incentives and not for routinely waived or reduced cost- by some stakeholders about the because of the quality of care the sharing obligations. As an initial matter, collection of small beneficiary cost- provider furnishes). we note that the requirement for cost- sharing amounts associated with certain Notwithstanding, we are considering sharing in Medicare and Medicaid is a care coordination services, such as care for the final rule, and seek comment on, programmatic matter; cost-sharing is management and remote monitoring, whether to protect patient incentives required pursuant to statute and where the costs of collection exceed the and supports in the form of cash and regulations set forth by CMS and State amount to be collected. Stakeholders cash equivalents in certain Medicaid programs. We do not believe would like safe harbor protection for circumstances.40 If we do so, we might safe harbors to the anti-kickback statute waivers of such cost-sharing amounts. set a monetary limit on the aggregate are the right tool to obviate these We are considering for the final rule amount of remuneration provided programmatic requirements. Our whether limited safe harbor protection annually (such as up to $75 per year, or concerns regarding routine waivers of for such waivers might be appropriate, higher or lower amounts) 41 or include cost-sharing amounts are including whether such safe harbor other safeguards to prevent the misuse longstanding; 42 such routine waivers protection would be consistent with the of cash incentives to steer patients to may constitute prohibited remuneration program rules establishing such items or services to influence them to to induce referrals. Therefore, as beneficiary cost-sharing amounts. We allow others to use their personal proposed, the patient engagement and are considering for the final rule, and information to order unnecessary or support safe harbor would not protect seek comment regarding, what inappropriate items and services. the routine waiver or reduction of cost- conditions we should include in any Further, we likely would limit the use sharing obligations (including coupons safe harbor for limited cost-sharing leading to such waivers or reductions). waivers that would protect only cost- Med. 2108 (2015), https://www.nejm.org/doi/full/ We are interested in comments that sharing waivers associated with certain 10.1056/NEJMoa1414293. identify potential benefits of permitting specified services, such as care 40 OIG continues to consider items convertible to cash (such as a check) or that can be used like cash in the final rule the waiver or offset of management and remote monitoring. If (such as a general purpose debit card) to be cash cost-sharing obligations where the cost- we were to finalize such a safe harbor, equivalents. sharing waiver or offset of obligations is we likely would include conditions 41 The $75 amount parallels OIG’s 2016 ‘‘Office of part of a value-based arrangement under similar to those set forth in proposed Inspector General Policy Statement Regarding Gifts 1001.952(hh). of Nominal Value to Medicare and Medicaid our value-based framework. In addition, Beneficiaries Policy Statement,’’ which currently we solicit comments on any safeguards Finally, we are aware of interest sets the retail value of permissible ‘‘inexpensive’’ or that would mitigate concerns that among some stakeholders in offering ‘‘nominal value’’ gifts at $15 per item and $75 in routine waivers of cost-sharing amounts patients a share of savings the patients the aggregate per patient on an annual basis. See help generate for a payor. For example, OIG, Office of Inspector General Policy Statement might undermine prudent consumer Regarding Gifts of Nominal Value to Medicare and a patient who selects a clinically Medicaid Beneficiaries (Dec. 7, 2016), available at 42 See, e.g., Special Fraud Alert: Routine Waiver https://oig.hhs.gov/fraud/docs/alertsandbulletins/ of Copayments or Deductibles Under Medicare Part 43 See, e.g., OIG, Special Fraud Alert, 59 FR OIG-Policy-Statement-Gifts-of-Nominal-Value.pdf. B, 59 FR 65372, 65374 (Dec. 19, 1994). 65372, 65374 (Dec. 19, 1994).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55726 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

appropriate but less costly setting to that are not pre-paid debit cards,44 we or otherwise contribute to patient obtain services (e.g., home-based should include to the extent the safe engagement tools and supports services instead of a treatment in a harbor protects the provision of gift furnished by a VBE participant. We facility) might share in the savings cards. propose to interpret the requirement at 1001.952(hh)(2) to prohibit the VBE realized from the lower cost care setting. 4. Additional Proposed Conditions We believe that in many cases, this type participant from accepting or using of program would be part of a plan’s The patient engagement and support funds or free in-kind items or services benefit design. The need for new safe safe harbor would impose a number of furnished by any individual or entity conditions on the provision of protected harbor protection for this type of outside of the VBE to finance or patient engagement tools and supports. arrangement is unclear, and we solicit otherwise facilitate its patient The intent of these safeguards is to comments on this issue. engagement tools, supports, or both, balance the potential benefits of tools including both the cost of the tool or c. Gift Cards and supports with safeguards that support and any associated operating minimize the risk of harm to patients, costs incurred through the provision of OIG has never considered gift cards to payors, or both. such tool or support (e.g., staff time be in-kind items, goods, or services. The a. Furnished Directly to the Patient dedicated to ordering or distributing limitation of ‘‘tool or support’’ proposed blood pressure cuffs or technology in paragraph 1001.952(hh) would be Under the proposed condition at expenses or help desk services consistent with OIG’s position that gift 1001.952(hh)(1), the tool or support associated with a patient support). We cards are not in-kind items, goods, and must be furnished directly to the patient believe this requirement is necessary to services. OIG recognizes certain risks by a VBE participant. The reasons for reduce the likelihood of undue attendant to providing gift cards as this proposed condition are two-fold. influence that could result in patient engagement tools and supports, First, the condition would prevent inappropriate patient steering to specific some of which may make gift cards entities that are excluded from products, providers, or suppliers. indistinguishable from cash (e.g., we participating in a VBE from directly or In addition, this proposed condition recognize that consumers can sell or indirectly furnishing tools and supports would ensure that the entities we trade gift cards through gift card to patients. Second, we believe that this propose to exclude as VBE participants condition would help patients redemption sites, which could result in would not indirectly furnish patient understand which entity or individual a gift card morphing into cash). Similar engagement tools and supports under is furnishing the tool or support, which to cash and cash equivalents, OIG is the safe harbor. For example, a could aid patients in deciding whether concerned that tools and supports in the pharmaceutical manufacturer, to participate in the program or form of gift cards could induce patients manufacturer, distributor, or supplier of treatment regimen offered. We are DMEPOS, or laboratory could not to seek medically unnecessary items considering for the final rule and seek and services—leading to inappropriate circumvent the proposed exclusion from comment on whether we should include the definition of ‘‘VBE participant’’ by utilization—and could result in a condition in the final safe harbor that providing funds to a third-party entity providers improperly steering patients would require the VBE participant to and then directing or otherwise through offering valuable incentives in provide any patient receiving a patient controlling any aspect of the third-party the form of gift cards. engagement tool or support a written entity’s provision of patient engagement Nevertheless, because gift cards may notice describing: (i) The VBE tools and supports as a VBE participant. be effective at promoting behavioral participant that is giving the patient the Further, this proposed condition would change, OIG is considering whether to tool or support; (ii) what the prohibit a non-VBE participant’s include protection for gift cards in remuneration is; and (iii) the purpose of, contribution of in-kind items and limited circumstances, for example, or reason for, the remuneration. We services for a VBE participant to provide where they are provided to patients solicit comments on whether we should to patients as tools or supports. By way with certain conditions, such as expressly permit the VBE participant to of example, a pharmaceutical substance use disorders and behavioral furnish the tool or support through manufacturer’s provision of free product health conditions, as part of an someone acting on the VBE participant’s to a VBE participant (e.g., a physician) evidence-based treatment program, for behalf and under the VBE participant’s for the VBE participant’s distribution to the purpose of effecting behavioral direction (e.g., a physician practice that patients as free product samples would change. OIG seeks comments on the provides the tool or support through an not be protected by this proposed safe potential inclusion of gift cards in individual member of the practice or harbor.45 We solicit comments on this limited circumstances such as these and nurse employed by the practice). We approach and whether there may be requests citations to any recent studies also seek comments on the applicability defined, limited circumstances in which assessing the positive or negative effects of the proposed safe harbor to potential non-VBE participants should be able to of gift card incentives on promoting arrangements by which a VBE contribute or otherwise participate in behavioral change. OIG also solicits participant orders or arranges for the the provision of tools and supports comments on whether and how delivery of a tool or support from an eligible for safe harbor protection. We note that this proposed safe including gift cards as allowable ‘‘tools independent third party. harbor does not address, or otherwise or supports’’ in the circumstances b. Funding Limitations described above would raise the risk of Under the proposed condition at 45 For further information regarding the Federal fraud and abuse and specifically 1001.952(hh)(2), we limit who can fund anti-kickback statute and beneficiary inducements whether it would present any anti- CMP implications of free product samples, see e.g., OIG, Compliance Program Guidance for competitive effects, particularly for 44 OIG recognizes that gift cards can take a Pharmaceutical Manufacturers, 68 FR 23731, 23739 smaller providers and suppliers. OIG number of forms, including tangible gift cards, (May 5, 2003); Adv. Op. No. 08–04, available at also is considering and seeks comment electronic gift cards, and the replenishment of https://oig.hhs.gov/fraud/docs/advisoryopinions/ on what additional safeguards, such as funds available, through a smartphone application, 2008/AdvOpn08-04.pdf; Adv. Op. No. 15–11, to purchase items, goods, or services at a particular available at https://oig.hhs.gov/fraud/docs/ limiting protection for gift cards to those entity. advisoryopinions/2015/AdvOpn15-11.pdf.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55727

prohibit, arrangements between VBE We believe that this requirement or her chosen healthcare providers in participants and others (including effectively balances the goals of patient developing plans for treatment and care. vendors and manufacturers) for the engagement tools and supports, such as We are considering and solicit purchase and sale of tools and supports patient compliance with a plan of care comment on, whether we should that the VBE participant would furnish and adherence to behavior include as a safeguard a requirement under the safe harbor. Such modifications to improve overall health, that the patient’s licensed healthcare arrangements must be assessed on a with the risk that VBE participants provider certify in writing, under 18 case-by-case basis for compliance with could use extravagant tools or supports U.S.C. 1001 and 1519, that the the Federal anti-kickback statute and to steer beneficiaries or incentivize particular item or service is any other applicable law. unnecessary or inappropriate care. recommended solely to treat a Consistent with our goals of fostering documented chronic condition of a c. Prohibition on Marketing and Patient flexibility, adaptability, and innovation, patient in a target patient population. Recruitment we are not further describing specific We solicit comments on how providers Under the proposed condition at patient engagement tools and supports would most efficiently meet such a 1001.952(hh)(3)(iii), the remuneration that would be considered to have a requirement and whether and how must not include any in-kind item, direct connection to the coordination providers should be required to make good, or service used for patient and management of care for the patient. the certification available. recruitment or marketing of items or We are considering for the final rule and For all types of remuneration services to patients. We do not intend to solicit comments on whether we should contemplated under this proposed safe protect tools or supports that serve require a ‘‘reasonable connection’’ harbor, we are considering for the final solely as patient recruitment incentives. rather than a ‘‘direct connection.’’ rule and seek comment on whether we Similarly, we do not intend to protect As an alternative or in addition to this should impose further limitations on the tools or supports offered to patients approach, we are considering whether, nature of remuneration furnished or where the party knows or should know to heighten transparency of patient other conditions to safeguard against the that the patient would not use the item engagement tools and supports and to risks associated with fraud and abuse. as intended under the arrangement and ensure that qualifying patient For example, we are considering for the would instead resell the item. engagement tools and supports are final rule and seek comment on some or We seek comments on this proposed known by and closely related to the VBE all of the following additional condition, and in particular, any itself, we should require the VBE to safeguards: benefits of permitting in the final rule make a bona fide determination that the • A requirement that VBE some targeted marketing or similar VBE participant’s arrangement to participants furnishing patient outreach to the target patient population provide tools and supports to patients is engagement tools and supports for the purposes of engaging them in directly connected to the coordination demonstrate and document the desired evidence-based prevention or wellness and management of care for the patient, adherence to a treatment regimen, activities, or in improving population as that term is used in the proposed adherence to a drug regimen, adherence health outcomes, particularly for VBEs 1001.952(ee). We solicit comments on to a follow-up care plan, management of or VBE participants at financial risk for this approach. a disease or condition, improvement in the health outcomes of the target patient Lastly, we are considering for the final measurable health outcomes, or patient population. As with our proposal at rule, and solicit comment on, whether safety; and paragraph 1001.952(ee), we also are we should require that patient • a monitoring requirement to ensure interested in comments on how best to engagement tools and supports be that the patient engagement tools and preclude marketing of reimbursable directly connected to any of the four supports do not result in diminished items and services and patient value-based purposes, as opposed to quality of care or patient harm. recruitment while still permitting requiring a direct connection In addition, we seek specific beneficial educational efforts and specifically to the coordination and examples of any other types of activities that promote patient management of the patient’s care. remuneration that stakeholders believe awareness of care coordination activities should be covered (or should not be and available tools and supports. e. Medical Necessity covered) by this proposed safe harbor Under the proposed condition at and why, as well as input on whether d. Direct Connection 1001.052(hh)(3)(iv), the tool or support we can better define categories of Under the proposed condition at furnished to the patient must not result remuneration, and any limitations or 1001.952(hh)(3)(i), the tool or support in medically unnecessary or safeguards necessary to protect against furnished to the patient must have a inappropriate items or services fraud and abuse risks specific to such ‘‘direct connection’’ to the coordination reimbursed in whole or in party by a examples or categories. and management of care for the patient. Federal health care program. We believe g. Advancement of Specified Goals We interpret ‘‘direct connection’’ to that this is an important protection for mean that the VBE has a good faith patient safety and quality of care. Under the proposed condition at expectation that the tool or support will 1001.952(hh)(3)(vii), the incentives and further the VBE’s coordination and f. Nature of the Remuneration supports must advance specifically management of care for the patient, as Under the proposed conditions at enumerated goals, namely: Adherence that concept is described in the 1001.952(hh)(3)(vi), the tool or support to a treatment regimen as determined by proposed conditions at 1001.952(ee). must be recommended by the patient’s the patient’s licensed healthcare Where a direct connection exists, it licensed healthcare provider. This provider; adherence to a drug regimen should not be difficult for the VBE and condition seeks not only to ensure that as determined by the patient’s licensed the VBE participant providing the the remuneration is focused specifically healthcare provider; adherence to a patient engagement tool or support to on patient care, but also underscore the follow-up care plan established by the clearly articulate the nexus between the importance of quality of care, the patient’s licensed healthcare provider; tool or support and a care coordination healthcare provider’s medical judgment, management of a disease or condition as and management purpose of the VBE. and the patient’s relationship with his directed by the patient’s licensed

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55728 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

healthcare provider; improvement in indirectly through their caregivers or $100, $200, $1,000, $1,500, or another evidence-based measurable health family members or others acting on amount that would be of sufficient outcomes for a patient or the target patients’ behalf if the remuneration magnitude to protect the most beneficial patient population; ensuring patient otherwise satisfies the conditions of the arrangements while also preventing the safety; or some combination of the safe harbor. Specifically, if a patient is most abusive ones). For purposes of above.46 We are not proposing to specify unable to care for herself or himself and measuring retail value, we propose that which tools and supports would another person (e.g., a family member or such value be measured at the time the advance the named goals to provide other caregiver) has legal authority or patient engagement tool or support is flexibility for VBE participants and the patient’s consent to act on the provided, and we are considering for the promote innovation. We intend for this patient’s behalf, then remuneration final rule whether to interpret ‘‘retail proposed condition to protect a range of furnished to that person, on the value’’ to mean the fair market value to tools and supports. For example, an patient’s behalf and for the patient’s the recipient or commercial value to the item, such as a smart pill bottle, that benefit, would be protected if all recipient. We also solicit comments on dispenses medications at preset times conditions of the safe harbor are met. the proposed requirement applying the for a patient could meet this condition For example, if the patient is a child cap to individual VBE participants and because it is a tool that enables the suffering from asthma, the child’s parent whether the requirement should instead patient to access the right medication at or guardian may accept in-kind apply the annual cap to the VBE as a the appropriate dosage and time. remuneration, such as a new air purifier whole. Under this alternative, we are Offering a parking voucher or providing for the child’s bedroom, on the child’s considering whether only one VBE free childcare during medical behalf without violating this participant within a VBE could offer appointments also could satisfy this requirement. remuneration to a patient during the condition because these supports would i. Monetary Cap year. If we limited the cap to the VBE allow a patient to comply with his or instead of a VBE participant, we are her treatment regimen. Conversely, Under the proposed condition at interested in comments regarding how offering a patient movie tickets to 1001.952(hh)(5), the aggregate retail this might negatively impact reward compliance with a treatment value of patient engagement tools and opportunities for patients and providers regimen would not satisfy this supports furnished by a VBE participant or create burdensome tracking and condition. to a patient could not exceed $500 on recordkeeping obligations for a VBE or While we are concerned about the an annual basis, with certain limited VBE participants. We also solicit exceptions. With this condition, we potential for abuse when patients are comments on whether we should apply have attempted to strike the right offered rewards to induce them to the annual cap on a value-based balance between flexibility for receive items or services, we also are arrangement basis; in other words, beneficial patient tools and supports aware that, in some circumstances, under each value-based arrangement, a and a bright-line limit on the amount of patients, or persons at risk of becoming patient could receive aggregate protected remuneration to protect patients with more serious conditions, remuneration up to the cap (whether patients from being improperly might be offered tools or supports that from one or more VBE participants in influenced by valuable gifts; to protect result in lower healthcare costs (without the arrangement). We are interested in the Federal health care programs from compromising quality) or that promote comments about any negative impacts patient wellness and healthcare. potential abuse through overutilization and inappropriate utilization due to or burdens from this approach. h. No Diversion or Resell such gifts; and to allow for innovation We propose that the cap could be Under the proposed condition at and beneficial arrangements that benefit exceeded for certain patients who lack 1001.952(hh)(4), this safe harbor would patients and payors. As noted elsewhere financial resources. Specifically, the not protect the provision of a tool or in this preamble, our enforcement proposed condition at 1001.952(hh)(5) support if the offeror of the experience shows that incentives provides that the aggregate retail value remuneration knows or should know offered to beneficiaries can be used to of patient engagement tools or supports that the tool or support is likely to be coerce them into obtaining unnecessary furnished to a patient by a VBE diverted, sold, or utilized by the patient services or harmful care, and this risk participant may exceed $500 per year if other than for the express purpose for may be heightened when the value of the patient engagement tools and which the patient engagement tool or remuneration is high or unlimited. supports are furnished to a patient support is provided. This proposed However, we are unsure whether a based on a good faith, individualized condition is designed to prevent VBE monetary cap would present a barrier to determination of the patient’s financial participants from providing tools and achieving the intended benefits for need. OIG has existing guidance related supports to patients if they likely would patients envisioned by this proposed to individualized, good faith divert or sell or otherwise use for safe harbor. In lieu of a monetary cap, determinations of financial need in the purposes other than the coordination we are considering for the final rule, context of cost-sharing waivers, and and management of care and the goals and seek comments on, whether other accounting for financial need generally outlined in (hh)(3)(vi). We seek combinations of safeguards proposed in aligns with an existing exception under comments on this approach. this rule would offer meaningful the CMP. We are not specifying any Notwithstanding the foregoing, for the protection against fraud and abuse particular method of determining purposes of this safe harbor, we would involving patients and programs, while financial need because we believe what not consider a tool or support to be still achieving the policy goal of constitutes ‘‘financial need’’ varies diverted if it is furnished to patients promoting value-based care. depending on the circumstances. We solicit comments on whether this However, it would be important for VBE 46 We note here that the word ‘‘drug’’ is proposed monetary limit of $500 is participants to make determinations of synonymous with and inclusive of ‘‘medication,’’ appropriate, whether $500 per year is financial need on a good faith, neither of which terms we are defining for purposes individualized, case-by-case basis in of this proposed safe harbor. Similarly, ‘‘followup too low or too high, and if so, what care plan’’ would include so-called ‘‘discharge other figures are more appropriate and accordance with a reasonable set of plans.’’ the reasons for such other figures (e.g., income and resource guidelines

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55729

uniformly applied in all cases. The purposes of the proposed patient limit certain VBE participants’ ability to guidelines would need to be based on engagement and support safe harbor, we offer tools and supports due to the objective criteria and appropriate for the are considering and seek comment on potential cost of furnishing the tool or applicable locality. A patient’s medical additional potential safeguards for the support to an entire target patient costs and liabilities could be taken into final rule. We are considering and seek population rather than a smaller subset account, among other factors, as part of comment on the possible safeguards of the target patient population. the determination. We seek comments outlined below for this proposed safe Similarly, we are interested in on this approach as applied to the harbor because many VBE participants comments explaining why offering proposed safe harbor as well as whether that would avail themselves of the remuneration to a smaller subset of a we should include a cap but not allow proposed patient engagement and target patient population instead of to for the cap to be exceeded. support safe harbor would not be the entire target population would be We seek comments regarding whether subject to governmental programmatic appropriate and not increase the risk of the monetary limit imposed at requirements, oversight, or monitoring fraud and abuse, such as the targeting of 1001.952(hh)(5) is necessary and comparable to CMS-sponsored models particularly lucrative patients to receive appropriate, or if alternatives that better (addressed in the proposed safe harbor tools and supports (cherry picking) or protect patients and payors exist, such at 1001.952(ii)). failure to provide tools and supports to as a limitation on the frequency of such high-cost patients (lemon dropping). remuneration (e.g., a one-time provision a. Prohibition on Cost-Shifting of remuneration, once per year, or once We are considering for the final rule, c. Monitoring Effectiveness per month), or a per-occurrence and seek comment on, a condition We are considering adding a limitation, in place of, or in addition to, prohibiting VBE participants from condition to the final rule that would an aggregate limit. If a per occurrence billing Federal health care programs, require VBE participants to use limitation is desirable, we seek feedback other payors, or individuals for the tool ‘‘reasonable efforts’’ to monitor the on its amount standing alone and in or support; claiming the value of the effectiveness of the tool or support in relation to an aggregate cap (e.g., if the tool or support as a bad debt for achieving the intended coordination aggregate cap were to be $500 per year, payment purposes under a Federal and management of care for the patient should the per occurrence cap be $100, health care program; or otherwise and would require the VBE or the VBE $200, or some higher or lower figure). shifting the burden of the value of the participant to have policies and We seek comments about, and tool or support onto a Federal health procedures in place to address any supporting data for selecting, cap care program, other payors, or identified material deficiencies. We amounts. Finally, we seek comments individuals. This requirement, if believe that including such a condition regarding how we should treat ongoing included in any final rule, would be in the safe harbor would help ensure costs associated with tools and supports designed to protect against tools and that the tools and supports VBE (such as batteries, maintenance costs, or supports resulting in inappropriately participants furnish to patients achieve upgrades). increased costs to Federal health care the stated purpose(s), and in turn, could programs, other payors, and patients. help prevent VBE participants from j. Materials and Records We are considering, and seek comments offering patients engagement tools and Under the proposed condition at on, prohibiting both: (1) Directly billing supports that induce them to seek more, 1001.952(hh)(6), the VBE or a VBE any third party, including patients, for potentially unnecessary, care. We solicit participant would be required to make the patient engagement tool or support comments on whether we should available to the Secretary, upon request, or any operational costs attendant to the include such a monitoring provision all materials and records sufficient to provision of the patient engagement and, if so, any anticipated burdens and establish compliance with the tools and supports; and (2) claiming the ways OIG could minimize any burden. conditions of this safe harbor. We are cost of the patient engagement tool or We would apply a facts and not proposing particular parameters support and any operational costs circumstances analysis to the regarding the creation or maintenance of attendant to the provision of patient ‘‘reasonable efforts’’ employed by documentation to allow individuals and engagement tools and supports as bad parties under this condition, using an entities the flexibility to determine what debt for payment purposes under objective standard of reasonableness. constitutes best documentation Medicare or a State healthcare program. We solicit comments on this approach. practices but welcome comments on b. Consistent Provision of Patient d. Retrieval of Items and Goods whether particular parameters are Incentives needed. In particular, we are We are considering for the final rule considering for the final rule and seek We are considering for the final rule, and seek comment on a condition that comment regarding whether we should and seek comment on, whether to would require offerors to engage in include, in the final rule, a requirement require VBE participants to provide the reasonable efforts to retrieve an item or that VBE participants retain materials same patient engagement tools or good furnished as a tool or support in and records sufficient to establish supports to an entire target patient certain circumstances. For example, we compliance with the conditions of this population or otherwise consistently are considering requiring that the offeror safe harbor for a set period of time (e.g., offer tools and supports to all patients make reasonable efforts to retrieve the at least 6 years or 10 years). Were an satisfying specified, uniform criteria. patient engagement tool or support (if it entity to be under investigation and We believe that including such a is an item or good) when the patient is assert this safe harbor as a defense, it condition in the safe harbor would no longer in the target patient would need to be able to demonstrate protect against a VBE participant population, the VBE no longer exists, or compliance with each condition of the targeting certain patients to receive tools the offeror is no longer a VBE safe harbor. and supports based on, for example, the participant. This would prevent the safe patient’s insurance status. We solicit harbor from being misused to protect 5. Potential Safeguards comments on this issue. In particular, inducements to beneficiaries that do not In addition to the proposed we are interested in understanding promote value. If we were to include conditions set forth above, for the whether this proposed safeguard would such a requirement, we are considering

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55730 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

setting a minimum value for the item or apply only to: (i) Arrangements under other sections of the Act with good above which offerors would be described by the models and (ii) model statutory authority to waive the fraud required to make reasonable retrieval participants and other specified and abuse laws. efforts (e.g., $100, $200, $500 or a higher individuals and entities. Further, any By proposing this safe harbor, we aim or lower amount). We believe such a protection furnished by the waivers is to simplify application of the anti- provision would reduce the burden limited in duration. kickback statute and CMP authorities for associated with retrieval efforts. We also Commenters to the OIG RFI generally individuals and entities that participate are interested in comments regarding asked us to simplify and standardize our in CMS-sponsored models in a manner whether any retrieval requirement approach to protecting CMS-sponsored that is consistent with CMS’s authorities should be limited to tools and supports model arrangements under the anti- to operate and test new models and to that are practicable to recover, such as kickback statute and beneficiary reduce the need to issue model-by- those which are not fixtures or were for inducements CMP. Waivers issued to model waivers of fraud and abuse laws. short-term use or an otherwise date are tailored to the particular CMS As with fraud and abuse waivers, our temporary benefit, and where harm to model and CMS’s design for the model, goal is to accommodate CMS’s testing the patient or disproportionate expense pursuant to the waiver authorities. and operation of innovative, value- to the VBE participant would not result. Commenters requested that OIG based care delivery and payment promulgate regulatory protections that models that CMS has determined could e. Advertising would provide uniformity and improve quality of care, reduce growth We are considering for the final rule predictability for parties participating in in costs, or both, while also including and seek comment on a condition that CMS models. program integrity protections against would require that the VBE participant We propose to create a new antifraud and abuse. To the extent that an does not publicly advertise the patient kickback statute safe harbor at 42 CFR arrangement under a CMS-sponsored engagement tool or support (to patients 1001.952(ii) to: (i) Permit remuneration model implicates the anti-kickback or others who are potential referral between and among parties to statute or beneficiary inducements CMP, sources). This would prohibit arrangements (e.g., distribution of parties within CMS-sponsored models advertising in the media or posting capitated payments, shared savings or for which we have issued fraud and information for public display or on losses distributions) under a model or abuse waivers may continue to use websites about the availability of free other initiative being tested or expanded applicable CMS-sponsored model items or services, similar to the local by the Innovation Center under section waivers to protect their arrangements or transportation safe harbor, 42 CFR 1115A of the Act and the Medicare may choose to structure arrangements to 1001.952(bb). Such prohibition on Shared Savings Program under section comply with this new safe harbor or any public advertising would inhibit the use 1899 of the Act (collectively, ‘‘CMS- other applicable anti-kickback statute of patient engagement tools and sponsored models’’) and (ii) permit safe harbor or CMP exception. supports as a marketing tool, thus remuneration in the form of incentives The degree of flexibility offered by keeping the focus of the safe harbor on and supports provided by CMS model this proposed safe harbor recognizes improving care coordination and participants and their agents under a CMS’s ability to oversee and monitor management of patients’ care. We solicit CMS-sponsored model to patients CMS-sponsored models and initiatives comments on this potential safeguard. covered by the CMS-sponsored model. and to embed program integrity In particular, we are interested in The objective of the proposed safe protections in such models and comments on whether this condition harbor is to standardize and simplify initiatives in ways that do not would impose a barrier to the success of anti-kickback statute compliance for necessarily apply to arrangements care coordination and value-based CMS-sponsored model participants in outside the models. For this reason, this arrangements by restricting information models for which CMS has determined proposal does not extend to commercial available to patients about options for participants should have the protection and private insurance arrangements that receiving better coordinated care. that would be afforded by this safe may operate alongside, but outside, a harbor 49 (rather than requiring CMS-sponsored model. However, G. CMS-Sponsored Model Arrangements participants to comply with the law as nothing in this proposed safe harbor and CMS-Sponsored Model Patient it would exist without this safe harbor) would prevent commercial and private Incentives (1001.952(ii)) by applying uniform conditions across insurers from implementing OIG and CMS have jointly issued all models or initiatives sponsored by arrangements that cover both public and fraud and abuse waivers of certain CMS. private patients; such arrangements provisions of the Federal anti-kickback This proposal focuses on models could be structured to satisfy other statute, the physician self-referral law under sections 1115A and 1899 of the proposed safe harbor protections that do and, for OIG only, certain CMP law Act; we are considering for the final not distinguish between public and authorities for numerous payment rule, and solicit comments on, private patient populations. models established and tested by CMS broadening the scope of this safe harbor We are proposing a number of under section 1115A(d)(1) of the Act to protect remuneration between and definitions for purposes of this safe (pertaining to models tested by the among parties to arrangements under harbor. We propose to define a ‘‘CMS- Innovation Center) 47 and section 1899 CMS initiatives that are authorized sponsored model party’’ as a CMS- of the Act (pertaining to the Medicare sponsored model participant or another Shared Savings Program).48 Waivers formation of accountable care organizations that are individual or entity that the CMS- accountable for a Medicare patient population, sponsored model’s participation coordinate items and services under Parts A and B, 47 See, e.g., CMS, Fraud and Abuse Waivers for and encourage investment in infrastructure and documentation specifies may enter into Select CMS Models and Programs, available at redesigned care processes for high-quality and a CMS-sponsored model arrangement. https://www.cms.gov/Medicare/Fraud-and-Abuse/ efficient service delivery). We propose to define ‘‘participation PhysicianSelfReferral/Fraud-and-Abuse- 49 For example, CMS might specify in a documentation’’ for purposes of this Waivers.html. participation agreement whether or not this safe 48 See, e.g., 76 FR 67992 at 67992 (Nov. 2, 2011); harbor would apply to any arrangement under the safe harbor as the participation 80 FR 66726 at 66726 (Oct. 29, 2015) (Medicare CMS-sponsored model or to particular types of agreement, cooperative agreement, Shared Savings Program is designed to promote the arrangements under the CMS-sponsored model. regulations, or model-specific

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55731

addendum to an existing contract with patient is in a CMS-sponsored model at a CMS-sponsored model to certain CMS that: (i) Is currently in effect, and any given point in time. We are providers or entities (e.g., certain CMS- (ii) specifies the terms of a CMS- considering for the final rule and solicit sponsored models may exclude sponsored model. comments on extending the definition pharmaceutical manufacturers from We propose to define a ‘‘CMS- of ‘‘CMS-sponsored model incentive’’ to participating in a CMS-sponsored model sponsored model participant’’ as an include patients beyond those under a or participating in arrangements under individual or entity that is subject to, CMS-sponsored model or, in the the CMS-sponsored model). CMS has and is operating under, participation alternative, defining ‘‘CMS-sponsored discretion to determine the scope of documentation with CMS to participate model patient’’ such that a CMS- entities, arrangements, or incentives that in a CMS-sponsored model. We propose sponsored model participant could may be protected under this safe harbor to define a ‘‘CMS-sponsored model provide incentives to any patient (or any on a model-by-model basis. Unlike the arrangement’’ as a financial arrangement beneficiary) that meets the other proposed safe harbors at 42 CFR between or among CMS-sponsored conditions of the safe harbor. 1001.952(ee), (ff), (gg) and (hh), which model parties to engage in activities As proposed, this safe harbor would propose to exclude pharmaceutical under the CMS-sponsored model and provide CMS-sponsored model parties manufacturers; manufacturers, that is consistent with, and is not a type an additional pathway to protection distributors, and suppliers of DMEPOS; of arrangement prohibited by, the from sanctions under the anti-kickback and laboratories from arrangements and participation documentation. Finally, statute and the beneficiary inducements tools and supports that would receive we propose to define a ‘‘CMS-sponsored CMP. An arrangement needs to meet the protection under the safe harbors, this model patient incentive’’ as requirements of only one safe harbor to proposed safe harbor would not exclude remuneration that is not of a type ensure immunity from criminal and any entities from potential protection prohibited by the participation civil prosecution under the statute. For under the safe harbor. We do not documentation and is furnished example, CMS-sponsored model parties propose any such exclusions to allow: consistent with the CMS-sponsored would be able to choose to structure an (i) The Innovation Center the discretion model by a CMS-sponsored model arrangement to comply with the to determine the scope of the models it participant (or by an agent of the CMS- conditions of this proposed safe harbor, wishes to test and expand and (ii) CMS sponsored model participant under the the proposed value-based arrangements the discretion to determine how to CMS-sponsored model participant’s safe harbors (paragraphs (ee), (ff), and implement the Medicare Shared Savings direction and control) directly to a (gg)), the patient engagement and Program. In addition, OIG notes that patient under the CMS-sponsored support safe harbor (paragraph (hh)), CMS-sponsored models include model. any other applicable existing safe programmatic rules, monitoring, and We would expect CMS to notify CMS- harbors or exceptions, or fraud and oversight not present in value-based sponsored model participants, through abuse waivers issued for the CMS- arrangements and the provision of participation documentation, or other sponsored model. However, to ensure patient tools and supports outside of public means as determined by CMS, protection, an arrangement must meet such models, which may mitigate some when CMS-sponsored model all conditions of a particular safe harbor of the fraud and abuse risks presented participants may use this safe harbor or waiver. We note that depending on by the inclusion of pharmaceutical under a CMS-sponsored model. For the facts and circumstances, an manufacturers; manufacturers, example, CMS may specify the types of arrangement may comply with fraud distributors, and suppliers of DMEPOS; CMS-sponsored model patient and abuse laws absent specific safe and laboratories in such models. incentives that a CMS-sponsored model harbor or waiver protection. participant may provide under the CMS- a. Conditions for CMS-Sponsored Model sponsored model within a CMS- 1. Proposed Conditions for CMS- Arrangements sponsored model participation Sponsored Model Arrangements and Proposed paragraph (ii)(1) sets forth agreement. The CMS-sponsored model CMS-Sponsored Model Patient the terms for protection of certain participant also must satisfy certain Incentives remuneration between or among CMS- programmatic requirements imposed by We are proposing below important sponsored model parties under a CMS- CMS in connection with the use of this safeguards to ensure that arrangements sponsored model arrangement in a safe harbor. CMS also may require CMS- protected by this proposed safe harbor model for which CMS has determined sponsored model participants to operate as intended by the CMS- that the safe harbor is available. disclose to CMS when they use this safe sponsored models, and the CMS- We propose six conditions parties harbor under a CMS-sponsored model sponsored models are not undermined would need to meet to receive safe as a condition of participation in the by arrangements that might lead to harbor protection. The first condition CMS-sponsored model. If this safe stinting on medically necessary care or would require that CMS-sponsored harbor is finalized and CMS determines induce inappropriate utilization. These model participants reasonably that it be made available for a CMS- safeguards are necessary to ensure that determine that the CMS-sponsored sponsored model, the safe harbor would a CMS-sponsored model party’s model arrangement will advance one or not be available to protect any financial arrangements and patient more goals of the CMS-sponsored remuneration that does not satisfy incentives are consistent with the model. We intend to interpret program requirements as may be quality, care coordination, and cost- ‘‘reasonably determine’’ to mean that imposed by CMS on CMS-sponsored reduction goals of a CMS-sponsored the activities set forth in the written model participants. model and can be readily overseen by agreement are fairly and verifiably We solicit comments on these CMS and OIG. anticipated to achieve at least one or definitions. In particular, we solicit As a threshold matter, CMS would more goals of the CMS-sponsored comments regarding the scope of the determine whether the safe harbor model. For example, CMS-sponsored definition of ‘‘CMS-sponsored model protection would be available for model parties may wish to create an patient incentive,’’ recognizing that a arrangements or patient incentives implementation protocol explaining the CMS-sponsored model participant may under the particular CMS-sponsored activities and evidence-based processes not always know whether a particular model. CMS may limit participation in or guidance relied upon to develop and

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55732 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

implement an arrangement that would CMS-sponsored model would have safe harbor.50 Similarly, some CMS- advance a goal of a CMS-sponsored flexibility to determine what type of sponsored models might have their own model through the CMS-sponsored documentation would best memorialize requirements for giving patient model arrangement. the arrangement such that they could incentives, and this proposed safe The safe harbor would be flexible to demonstrate safe harbor compliance to harbor would not obviate those permit parties to pursue a wide array of the Secretary or OIG upon request. programmatic requirements. For activities under the CMS-sponsored Nothing in this proposed condition example, in making incentive payments model; however, the arrangement must would change or alter any requirements to an assigned Medicare beneficiary be consistent with the purposes of the related to documentation (or any other under the ACO Beneficiary Incentive CMS-sponsored model. As stated above, model feature) imposed by CMS as part Program, ACOs are expected to satisfy CMS determines the scope of its models of its model. the programmatic requirements and what is being tested. As we propose Finally, we propose to include a governing such incentive payments at to reflect in the definition of ‘‘CMS- condition requiring CMS-sponsored section 1899(m) of the Act and 42 CFR sponsored model arrangement,’’ if an model participants to satisfy such other 425.304(c); if this safe harbor is arrangement is a type of arrangement programmatic requirements as may be finalized and CMS determines that it be prohibited by the participation imposed by CMS in connection with the made available for the ACO Beneficiary documentation, then it does not qualify use of this safe harbor. Because CMS has Incentive Program, the safe harbor as a CMS-sponsored model authority to test and design models, it would not be available for any incentive arrangement. If an arrangement does not payment that does not satisfy such can also create programmatic qualify as a CMS-sponsored model programmatic requirements. requirements integral to testing and arrangement, then it would not be Depending on the goals set forth by protected by this safe harbor even if the monitoring its model design for CMS- CMS for the CMS-sponsored model, we CMS-sponsored model parties sponsored model participants. We are would expect a CMS-sponsored model determined that it would advance a proposing this condition to ensure that participant would use this safe harbor to purpose of the CMS-sponsored model. parties comply with any additional provide its patients with free or below- In the second proposed condition, we programmatic requirements as may be fair-market-value incentives that specify that the exchange of value must imposed by CMS related to the advance the goals of the CMS-sponsored not induce CMS-sponsored model arrangements for which they might seek model, such as preventive care, parties or other providers or suppliers to safe harbor protection. We would expect adherence to a treatment regimen, or furnish medically unnecessary items or CMS to set forth these requirements management of a disease or condition. reduce or limit medically necessary within the CMS-sponsored model’s The proposed protection would cover a items or services furnished to CMS- participation documentation or broad range of incentives, such as, sponsored model patients. We believe otherwise make such requirements transportation, nutrition support, home that this is an important protection for publicly available. monitoring technology, and gift cards, patient safety and quality of care, and it b. Conditions for CMS-Sponsored Model as determined by CMS through the would be consistent with every CMS- Patient Incentives CMS-sponsored model’s design. Certain sponsored model. CMS-sponsored models or future In the third proposed condition, we With respect to patient incentives, the models might permit waivers of cost- are incorporating a key safeguard that proposed safe harbor would apply to sharing amounts (for example, we have consistently utilized in our certain incentives offered by a CMS- copayments and deductibles) or cash fraud and abuse waivers to prohibit sponsored model participant or by an incentives to certain patients to promote remuneration that is explicitly or agent of the CMS-sponsored model certain clinical goals of a CMS- implicitly offered, paid, solicited, or participant under the CMS-sponsored sponsored model. All of these patient received in return for, or to induce or model participant’s direction and incentives, when determined by CMS to reward, any referrals or other business control directly to a patient receiving be appropriate for the CMS-sponsored generated outside of the CMS-sponsored healthcare items and services under the model design and not prohibited by the model. CMS-sponsored model that will advance participation documentation, could fit The fourth condition would require one or more goals of the CMS-sponsored within the proposed safe harbor, CMS-sponsored model parties, in model. provided that the arrangement advance of, or contemporaneously with CMS would determine whether the otherwise complies with all safe harbor the commencement of, the CMS- safe harbor protection would be conditions. We are proposing safeguards sponsored model arrangement, to set available for the particular CMS- specific to the protected patient forth the terms of the CMS-sponsored sponsored model. As stated above, CMS incentives. model arrangement in a signed writing. has discretion to determine which Under the proposed condition at The fifth condition would require entities may avail themselves of this paragraph (ii)(2)(i), the CMS-sponsored parties to the CMS-sponsored model safe harbor or to determine the types of model participant must reasonably arrangement to make available to the patient incentives CMS-sponsored determine that the patient incentive the Secretary materials and records model parties may provide on a model- CMS-sponsored model participant sufficient to establish whether the by-model basis. We would expect CMS furnishes to its patients under the CMS- remuneration was exchanged between sponsored model will advance one or to notify CMS-sponsored model the parties in a manner that meets the more goals of the CMS-sponsored participants of the scope of permissible conditions of this safe harbor. We are model. As stated above, we would patient incentives within its not proposing particular parameters expect CMS to notify CMS-sponsored participation documentation or to make regarding documentation, but rather such determination publicly available. specifying only that the writing must 50 Unlike the patient engagement and support safe describe the activities to be undertaken If CMS determines a type of incentive harbor proposed at 1001.952(hh), under the CMS- is prohibited, then it would not qualify sponsored model patient incentives safe harbor, by the CMS-sponsored model parties CMS would determine the types of patient and the nature of the remuneration to be as a CMS-sponsored model patient incentives CMS-sponsored model parties may exchanged. Therefore, parties under a incentive for purposes of this proposed provide on a model-by-model basis.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55733

model participants, through sponsored model in connection with the until the last payment or exchange of participation documentation, or other use of this safe harbor. anything of value made by a CMS- means as determined by CMS, when sponsored model party under a CMS- c. Duration of Protection CMS-sponsored model participants may sponsored model occurs, even if the use this safe harbor under a CMS- Under our proposal, as reflected in model has otherwise terminated. We sponsored model and the types of the defined terms, the duration of safe solicit comments on whether the final patient incentives they may offer. CMS- harbor protection aligns with the rule should allow safe harbor protection sponsored model participants may look duration of the participation for one or a combination of the above to their participation documentation for documentation under a CMS-sponsored options. potential descriptions or guidance on model. For example, the proposed Similarly, we solicit comments on patient incentives that would be definition of ‘‘CMS-sponsored model whether under the final rule a CMS- consistent with the goals of the CMS- arrangement’’ specifies that the sponsored model participant should be sponsored model. For example, the protected arrangement is to ‘‘engage in able to continue to provide the participation documentation might activities under the CMS-sponsored outstanding portion of any service to a specify that any incentives furnished model.’’ Similarly, the proposed patient if the service was initiated must be preventive care items or definition of ‘‘participation before its participation documentation services or must advance one or more documentation’’ specifies that it is terminated or expired. If we provide clinical goals for patients under the ‘‘currently in effect.’’ The CMS- additional time under the final rule, we CMS-sponsored model by engaging him sponsored models, and arrangements are interested in including conditions to or her in better managing his or her own between parties operating under CMS- prevent gaming of the length of time health. sponsored models, have various terms, remuneration is provided after a CMS- some of which are described in a CMS- Under the second proposed condition, sponsored model participant has been sponsored model’s participation we propose to require that the patient terminated from a model (or the model documentation. In order to meet the incentive have a direct connection to has terminated) to protect beneficiaries conditions set forth in the proposed safe the patient’s healthcare. We believe this from improper inducements unrelated harbor, the CMS-sponsored model condition to be consistent with the to a CMS-sponsored model. We note arrangement or a CMS-sponsored model design of all CMS models and initiatives that, under our proposal, patients would patient incentive must begin and end contemplated as part of this safe harbor. be able to retain any incentives received while the parties are operating under an This condition is consistent with prior to the termination or expiration of existing CMS-sponsored model. the participation documentation. requirements we have imposed The safe harbor would protect previously within our fraud and abuse arrangements during the period under H. Cybersecurity Technology and waivers for a number of CMS-sponsored which a CMS-sponsored model Related Services (1001.952(jj)) models. For the same reasons described participant participates in the CMS- We propose a safe harbor to protect further in our discussion of the sponsored model but would not extend donations of certain cybersecurity proposed patient engagement and to protect remuneration exchanged after technology and related services with support safe harbor at proposed participation in the CMS-sponsored appropriate safeguards. We believe this paragraph 1001.952(hh), we propose model ends. In some cases, certain proposed safe harbor could help that this requirement would warrant a activities associated with a CMS- improve the cybersecurity posture of the dual consideration: Whether a direct sponsored model may extend beyond healthcare industry by removing a real connection exists from a healthcare the last performance period during or perceived barrier that would allow perspective and whether a direct which a CMS-sponsored model parties to address the growing threat of connection exists from a financial participant provides services under the cyberattacks that infiltrate data systems perspective. CMS-sponsored model. For example, and corrupt or prevent access to health We are not proposing specific the participation documentation might records and other information essential documentation under the third provide for a certain period of time after to the delivery of healthcare. condition for patient incentives offered a termination date or after the end of the In recent years we have received by CMS-sponsored model participants; performance period to conduct numerous comments and suggestions however, CMS-sponsored model reconciliation or make final payment to urging the creation of a safe harbor to participants must maintain providers (e.g., a shared savings protect donations of cybersecurity documentation sufficient to establish distribution). This safe harbor would technology and services.51 The whether the patient incentive was protect the last payment or exchange of digitization of the healthcare delivery distributed in a manner that meets the value made by or received by a CMS- system and related rules designed to conditions of the safe harbor. Under this sponsored model party following the increase interoperability and data proposed condition, CMS-sponsored final performance period that the CMS- sharing in the delivery of healthcare model participants would have sponsored model participant that is a create numerous targets for cyberattacks. flexibility to determine what type of party to the arrangement participates in The healthcare industry and the documentation would best establish the CMS-sponsored model. We are technology used to deliver healthcare whether the CMS-sponsored model considering each of the following have been described as an patient incentive was distributed options for 1001.952(ii) and may interconnected ‘‘ecosystem’’ where the appropriately. finalize one or a combination of these ‘‘weakest link’’ in the system can Finally, as described above, if this options: (i) Terminating protection after compromise the entire system.52 Given safe harbor is finalized and CMS the end of the performance period or determines that it would be available for within a certain time period after the 51 See, e.g., OIG, Semiannual Report to Congress, a particular CMS-sponsored model, the end of a performance period; (ii) Apr. 1, 2018–Sept. 30, 2018, at 84. safe harbor would not protect terminating protection upon termination 52 See, e.g., Health Care Industry Cybersecurity Task Force, Report on Improving Cybersecurity in remuneration that does not satisfy such of the CMS-sponsored model the Health Care Industry, June 2017 (HCIC Task programmatic requirements as may be participation documentation or within a Force Report), available at https://www.phe.gov/ imposed by CMS under the CMS- certain period of time after that; and (iii) Continued

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55734 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

the prevalence of protected electronic a template for a new statutory as much consistency as possible health information and other personally exception.56 between our proposed safe harbor and identifiable information stored within However, in general, any donation of CMS’s proposed exception, despite the these systems, as well as the processing valuable technology or services to differences in the respective underlying and transmission of this information physicians or other sources of Federal statutes. Because of the close nexus and other critical information within a health care program referrals can pose between this proposed rule and CMS’s given provider’s systems as well as risks of fraud or abuse that may increase proposed rule, we may consider and across the healthcare industry, the risks as the value of the donated technology take additional actions based on associated with cyberattacks may be or services increases. In some respects, comments submitted in response to most immediate for the ‘‘weak links’’ the fraud and abuse risks posed by the CMS’s proposed rule in addition to but have implications for the entire donation of cybersecurity technology or those submitted in response to this healthcare system. services to physicians or other rulemaking, if warranted. healthcare providers or suppliers are In response to the OIG RFI, we similar to the risks associated with the We propose to protect nonmonetary received overwhelming support for a provision of electronic health records remuneration in the form of certain cybersecurity technology donation safe technology because, like electronic types of cybersecurity technology and harbor. Many commenters highlighted health records technology, cybersecurity services. Specifically, as explained the increasing prevalence of technology is inherently valuable to below, we propose to define cyberattacks and other threats. recipients in terms of actual cost, ‘‘cybersecurity’’ to mean ‘‘the process of Commenters noted that cyberattacks avoided overhead, and administrative protecting information by preventing, pose a fundamental risk to the expenses. Additionally, the types of detecting, and responding to healthcare ecosystem and that data cybersecurity technology and services cyberattacks.’’ We propose to include breaches can result in patient harm as are highly variable; their costs and value within the scope of covered technology, well as high costs to the healthcare also vary greatly. For example, ‘‘any software or other types of industry. Moreover, disclosures of PHI cybersecurity technology or services information technology, other than through a data breach can result in may consist only of anti-virus software hardware.’’ In an effort to foster identity fraud. for a single workstation in a physician’s beneficial cybersecurity donation Relatedly, protecting Department office or it may include incident arrangements without permitting data, systems, and beneficiaries from response services for several primary arrangements that negatively impact cybersecurity threats, and otherwise and specialty group practices. Further, beneficiaries of Federal health care securing the exchange and use of health adding robust cybersecurity technology programs, this safe harbor would information technology and data, are and services may provide recipients a impose a number of conditions on challenges that OIG has identified in the valuable shield from liability for fines, cybersecurity donations, as set forth Department’s annual Top Management ransom, and litigation risk given the below. Most notably, the first proposed prevalence of cybersecurity threats to and Performance Challenges for the last condition of the safe harbor requires the healthcare providers and breaches donation to be necessary and used decade.53 involving protected health information predominantly to implement and The Health Care Industry and electronic health records. Finally, maintain effective cybersecurity. Cybersecurity (HCIC) Task Force, responses to the OIG RFI indicate that We also have included an alternative created by the Cybersecurity the cost, or value, of cybersecurity proposal for an additional, optional Information Sharing Act of 2015 technology and services has increased condition to this proposed safe harbor. (CISA),54 was established in March 2016 dramatically, to the point where some The optional condition imposes an and is comprised of government and providers and suppliers are unable to additional safeguard that parties can private sector experts. The HCIC Task adequately invest in cybersecurity satisfy in exchange for protecting certain Force produced its HCIC Task Force measures. cybersecurity hardware. Report in June 2017.55 The HCIC Task We believe that this proposed safe Force recommended, among other harbor would (i) minimize the risks 1. Definitions things, that Congress ‘‘evaluate an inherent in any type of valuable amendment to [the physician self- remuneration between referral sources We propose two definitions at referral law and the anti-kickback and (ii) remove an actual or perceived 1001.952(jj)(6): ‘‘cybersecurity’’ and statute] specifically for cybersecurity barrier that will allow the healthcare ‘‘technology.’’ These definitions are software that would allow healthcare industry to take additional action to integral to understanding the conditions organizations the ability to assist mitigate the risks posed by of the safe harbor, so we first elaborate physicians in the acquisition of this cybersecurity threats. Specifically, we on the definitions. For purposes of this technology, through either donation or believe this proposed safe harbor would safe harbor, we propose to define the subsidy’’ and noted that the regulatory promote increased security for terms ‘‘cybersecurity’’ and ‘‘technology’’ exception to the physician self-referral interconnected and interoperable as follows: law and the safe harbor for electronic healthcare information technology • ‘‘Cybersecurity’’ means the process health records technology could serve as systems without protecting of protecting information by preventing, arrangements that either serve as detecting, and responding to preparedness/planning/cybertf/documents/ marketing platforms or inappropriately cyberattacks. influence clinical decision-making. report2017.pdf. • ‘‘Technology’’ means any software 53 See, e.g., OIG, 2018 Top Management & This proposed safe harbor would Performance Challenges Facing HHS, available at protect certain cybersecurity donations. or other types of information https://oig.hhs.gov/reports-and-publications/top- CMS is proposing a similar exception to technology, other than hardware. challenges/2018/. the physician self-referral law. We This proposed definition of 54 Public Law 114–113, 129 Stat. 2242. 55 HCIC Task Force Report, available at https:// coordinated closely with CMS to ensure ‘‘cybersecurity’’ is derived from the www.phe.gov/preparedness/planning/cybertf/ National Institute for Standards and documents/report2017.pdf. 56 Id. at 27. Technology (NIST) ‘‘Framework for

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55735

Improving Critical Infrastructure.’’ 57 We As we describe below, however, we into account the volume or value of intend for the definition to be broad and are not proposing a requirement for referrals or other business generated. propose to rely on a definition in a NIST recipients to contribute a portion of the First, at 1001.952(jj)(1), we propose to framework that does not apply directly donor’s costs. Consistent with the HCIC limit safe harbor protection to donated to the healthcare industry but applies Task Force Report, we recognize that technology and services that are generally to any United States critical many providers do not have adequate necessary and used predominantly to infrastructure. Our goal is to broadly resources to significantly invest in the implement and maintain effective define cybersecurity and avoid cybersecurity items and services cybersecurity. The goal of this condition unintentionally limiting donations by protected by this proposed safe harbor. is to ensure that donations are being relying on a narrow definition or a Consequently, we believe that omitting made for the purposes of addressing definition that might become obsolete a contribution requirement may allow legitimate cybersecurity needs of donors over time. We solicit comment on this providers with limited resources to and recipients. Explained differently, approach and whether a definition receive protected cybersecurity the core function of the donated tailored to the healthcare industry donations while also using their own technology or service must be to protect would be more appropriate. resources to invest in other technology information by preventing, detecting, Similarly, the proposed definition of not protected by the safe harbor, such as and responding to cyberattacks. Our ‘‘technology’’ is broad, but for the updating legacy hardware that may pose intent is to protect a wide range of exclusion of hardware. The intent of the a cybersecurity risk, or simply investing technology and services that are safe harbor is to be agnostic to specific in their own computers, phones, and specifically donated for the purpose of, types of non-hardware cybersecurity other hardware that are core to their and are necessary for, ensuring that technology. We intend for this safe businesses, notwithstanding their donors and recipients have effective harbor to be broad enough to include relationship with a donor who cybersecurity. cybersecurity software and other contributes cybersecurity technology. As stated previously, our intent is to information technology (e.g., an We solicit comments on excluding be technology agnostic, including as to Application Programming Interface donations of hardware from this safe the types and versions of software that (API), which is neither software nor a harbor and the omission of a can receive protection. By way of service as those terms are generally contribution requirement, and in example, the types of technology used) that is available now and particular, any specific cybersecurity protected by this safe harbor may technology that may become available risks or limitations that would result include, but are not limited to, software as the industry continues to develop. from such exclusion and omission. that provides malware prevention, The proposed definition of We are considering for the final rule software security measures to protect ‘‘technology’’ excludes hardware under adding limited protection for specific endpoints that allow for network access this new safe harbor. While we hardware that is necessary for control, business continuity software recognize that effective cybersecurity cybersecurity, is stand-alone (i.e., is not that mitigates the effect of cyberattacks, may require hardware that meets certain integrated within multifunctional data protection and encryption, and standards (e.g., encrypted endpoints, equipment), and serves only email traffic filtering. We believe these updated servers), we remain concerned cybersecurity purposes (e.g., a two- examples are indicative of the types of that donations of valuable, factor authentication dongle), and solicit technology that are necessary and used multifunctional hardware pose a higher comments on what types of hardware predominantly for effective risk of constituting a disguised payment might qualify and whether we should cybersecurity. We also do not for referrals. Consistent with the protect them under this safe harbor. distinguish between cloud-based proposed condition at 1001.952(jj)(1), Finally, we note that this proposed software or software that must be we believe that donations with multiple safe harbor only protects cybersecurity installed locally. We solicit comments uses outside of cybersecurity present a technology and services as defined. It on the proposed breadth of protected greater risk that the donation is being does not extend to other types of technology as well as whether we made to influence referrals. Hardware is cybersecurity measures outside of should expressly include other most likely to be multifunctional and, as technology or services. For example, technology or categories of technology a result, would not be necessary and this safe harbor would not protect in this safe harbor. used predominantly to implement and donations of installation, improvement, Similarly, we propose to protect a maintain effective cybersecurity. For or repair of infrastructure related to broad range of services. Such services example, the safe harbor would not physical safeguards, even if they could could include, for example: • protect a laptop computer or tablet used improve cybersecurity (e.g., upgraded Any services associated with in the general course by a physician to wiring or installing high security doors). developing, installing, and updating Donations of infrastructure upgrades are cybersecurity software; enter patient visit information into an • electronic health record and respond to extremely valuable and have multiple any kind of cybersecurity training emails. However, it would protect benefits in addition to cybersecurity, services, such as training recipients on encryption software for a laptop. This together which pose an increased risk how to use the cybersecurity also is consistent with a similar that one purpose of the donation is to technology, how to prevent, detect, and exclusion of hardware in the electronic pay for or influence referrals. respond to cyber threats, and how to troubleshoot problems with the health record donation safe harbor at 2. Conditions on Donation and cybersecurity technology (e.g., ‘‘help 1001.952(y), which identifies a similar Protected Donors rationale for excluding hardware from desk’’ services specific to cybersecurity); To be protected non-monetary • any kind of cybersecurity services protection.58 We solicit comments on remuneration, donations of for business continuity and data this approach. cybersecurity technology and services recovery services to ensure the must meet five conditions in recipient’s operations can continue 57 Appendix B, Version 1.1 (Apr. 16, 2018) available at https://nvlpubs.nist.gov/nistpubs/ 1001.952(jj)(1)–(5). The first two during and after a cyberattack; CSWP/NIST.CSWP.04162018.pdf. conditions relate to the purpose of the • any kind of ‘‘cybersecurity as a 58 71 FR 45110, 45120 (Aug. 8, 2006). donation and prohibit donors taking service’’ model that relies on a third-

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55736 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

party service provider to manage, one developed or endorsed by NIST, technology or services, or the amount or monitor, or operate cybersecurity of a another American National Standards nature of the technology or services to recipient; Institute-accredited standards body, or be donated. In addition, we propose that • any services associated with an international voluntary standards donors do not condition the donation of performing a cybersecurity risk body such as the International technology or services, or the amount or assessment or analysis, vulnerability Organization for Standardization. Any nature of the technology or services to analysis, or penetration test; or such provision would not require be donated, on future referrals. In other • any services associated with sharing compliance with a particular framework words, we propose that a donor cannot information about known cyber threats, or set of standards, but rather would require, explicitly or implicitly, that a and assisting recipients responding to provide an option for donors to recipient either refer to the donor or threats or attacks on their systems. demonstrate that the donation is recommend the donor’s business as a We believe these types of services are necessary and predominantly used to condition of receiving a cybersecurity indicative of the types of services that implement and maintain effective donation. We understand that the are necessary and used predominantly cybersecurity. We believe such a purpose of donating cybersecurity for effective cybersecurity. We solicit provision may provide some assurance technology and services is to guard comments on the proposed breadth of to donors and recipients about how to against threats that come from protected services as well as whether we demonstrate that donations are interconnected systems, and we should expressly include other services necessary and predominantly used to understand and expect that a donor or categories of services in this safe implement and maintain effective would provide the cybersecurity harbor. We note, in addition, that the cybersecurity. If we were to finalize this technology and services only to donation of services must be non- deeming provision, we would add a individuals and entities that connect to monetary. For example, donating the sentence to 1001.952(jj)(1) that would its systems, which includes those that time of a consultant to implement a deem a donation to meet this condition refer to it (or that receive referrals from cybersecurity program could be if the parties demonstrate that the it). However, this condition would protected, but if an entity were to donation furthers a recipient’s ability to restrict a donor from conditioning the experience a cyberattack that involved comply with a written cybersecurity donation on referrals or other business ransomware, payment of the ransom program that reasonably conforms to a generated.59 amount on behalf of a recipient or widely recognized cybersecurity This proposed condition would not paying the recipient the ransom amount framework or set of standards. We require a donor to donate cybersecurity would not be protected. solicit comments on incorporating this technology and services to every We do not intend to protect donations proposed deeming provision in individual or entity that connects to its of technology or services that have 1001.952(jj)(1). system. Donors would be able to use multiple, general uses outside of Regarding this proposed deeming selective criteria for choosing recipients, cybersecurity. As explained in our provision, we also solicit comments on provided that neither a recipient’s discussion of the definition of how donors and recipients could eligibility, nor the amount or nature of ‘‘hardware’’ above, we remain practically demonstrate that a donation the cybersecurity technology or services concerned that donations of valuable furthers a recipient’s ability to comply donated, is determined in a manner that multi-use technology or services pose a with a written cybersecurity program directly takes into account the volume higher risk of constituting a disguised that reasonably conforms to a widely or value of referrals or other business payment for, or otherwise influencing, recognized cybersecurity framework or generated between the parties. For referrals. Similarly, we do not intend to set of standards. We are not proposing example, a donor could perform a risk protect donations of technology or to condition protection on assessment of a potential recipient (or services that are otherwise used in the demonstrating compliance with a require a potential recipient to provide normal course of the recipient’s specific framework or set of standards, the donor with a risk assessment) before business (e.g., general help desk services but we seek to provide a practical determining whether to make a related to use of a practice’s information method that allows parties to donation, or the scope of a donation. technology). We solicit comment on this demonstrate that a donation meets the Similarly, for example, if a donor is a approach and whether this proposed potential deeming provision we are hospital, the hospital might choose to condition unintentionally limits the considering for 1001.952(jj)(1). limit donations to physicians who are donation of cybersecurity technology Understanding that our intent is not on the hospital’s medical staff. and services that are vital to improving to incorporate a specific framework or Additionally, selective criteria might be the cybersecurity posture of the set of standards, we seek comments on based on the type of connection healthcare industry. whether there are other ways that between a donor and recipient, such as For the purposes of meeting the parties could reliably demonstrate that a a simple read-only connection to a proposed condition at 1001.952(jj)(1), donation meets the potential properly implemented, standards-based we are considering for the final rule, cybersecurity deeming provision in API that enables only the secure and seek comment on, whether to add 1001.952(jj)(1). For instance, we are transmission of a copy of the patient’s a deeming provision that would allow interested in comments regarding record at the patient’s request to the donors or recipients to demonstrate that whether parties could demonstrate that recipient. That type of connection poses donations are necessary and a donation meets the cybersecurity less risk to a donor’s systems than a predominantly used to implement and deeming provision through connection that allows for information maintain effective cybersecurity. This documentation, certifications, or other to be written directly into the donor’s deeming provision would allow donors methods not prescribed by regulation. systems. Thus, a donor contemplating Second, at 1001.952(jj)(2), we propose and recipients to demonstrate that the allowing a higher-risk connection (such to require that donors do not directly donation furthers a recipient’s ability to as a bi-directional read-write comply with a written cybersecurity take into account the volume or value of program that reasonably conforms to a referrals or other business between the 59 We note that, if a system is only as strong as widely recognized cybersecurity parties when determining the eligibility its weakest link, then even a very low-referring framework or set of standards, such as of a potential recipient for the entity poses a cybersecurity risk.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55737

connection) to a potential recipient’s to secure additional referrals from the protection that we believe are critical to systems could develop selective criteria recipient or otherwise influence guarding against fraud and abuse. In the based on that difference in risk of the referrals or other business generated. case of cybersecurity, we do not believe connection. We solicit comments on We are concerned that technology a specified recipient contribution to the this condition. donations risk referral sources becoming cost is necessary or practical. We We have declined to propose a list of beholden to the donors, and therefore recognize that the level of services for selection criteria which, if met, would we are considering narrowing the scope each recipient might vary, and might be be deemed not to directly take into of protected donors as we have done in higher or lower each year, each month, account the volume or value of referrals other safe harbors. We solicit comments or even each week. Similarly, donors or other business generated between the on whether particular types of may aggregate the cost of certain parties, as we did in the electronic individuals and entities should be services across all recipients, such as health records safe harbor at excluded from donating cybersecurity cybersecurity patches and updates, on a 1001.952(y)(5). We do not believe technology and services, and if so, why. regular basis, which may result in a donations of cybersecurity technology Specifically, in past rulemakings we contribution requirement becoming a and services present the same types of have distinguished between individuals barrier to widespread, low-cost risks as donations of electronic health and entities with direct and primary improvements in cybersecurity because records software and information patient care relationships that have a of the practical challenges in collecting technology. Primarily, cybersecurity central role in the healthcare delivery a contribution from recipients. For donations are further removed from the infrastructure such as hospitals and instance, attempting to quantify the volume and value of referrals than physician practices, and providers and value of a frequent cybersecurity scans electronic health record donations. suppliers of ancillary services such as included in a vendor’s suite of services Cybersecurity donations, if legitimate, pharmaceutical, device, and DMEPOS as part of a cybersecurity donation, are more likely to be based on manufacturers, and other manufacturers across dozens of recipient practices, and considerations such as security risks or vendors that indirectly furnish items determining the pro rata share each and are less likely to be based on and services used in the care of practice must contribute based on the considerations that are closely related to patients.60 We seek comments as to size of the practice as well as the the volume and value of referrals or whether our historical enforcement relative size of the donation made to other business generated (e.g., the total concerns and other considerations each practice, might become number of prescriptions written by the regarding direct and indirect patient unworkable for many donors. recipient). Therefore, we do not believe care are present for purposes of Importantly, we note that our that cybersecurity donations need a cybersecurity donations. proposal to omit a contribution similar list of selection criteria to ensure requirement as a condition of the safe 3. Conditions for Recipients that parties can meet the volume or harbor does not prohibit donors from value condition at 1001.952(jj)(2). In proposed 1001.952(jj)(3), similar to requiring a contribution. Donors are free Nonetheless, we are considering the condition at (jj)(2) on donors to require recipients to contribute to the whether to add such a list in the final discussed previously, this proposed cost, so long as the determination of a rule and whether the list should be condition would require that neither a contribution requirement does not take based on the permitted conduct at potential recipient, nor a potential into account the volume or value of 1001.952(y)(5)(i)–(vii). We solicit recipient’s practice (or any affiliated referrals between the parties. For comments on this approach and any individual or entity), can demand, example, if a donor gave a full suite of other conditions or permitted conduct explicitly or implicitly, a donation of cybersecurity technology and services we should enumerate in this safe cybersecurity technology and services as for free to a high-referring practice but harbor, with respect to determinations a condition of doing business or required a low-referring practice to related to cybersecurity donations. continuing to do business with the contribute 20 percent of the cost, then Related to these two conditions, we donor. the donor could violate the conditions do not propose to restrict the types of We do not propose a recipient at proposed paragraphs (jj)(2)(i) and (ii). individuals and entities that may donate contribution requirement as part of this In addition, we do not intend for this cybersecurity donations under this safe safe harbor. As we explain above, with safe harbor to require that donations be harbor. Although donating cybersecurity this proposed safe harbor we seek to solely between two parties. For technology and services would relieve a remove a barrier to donations that example, two hospitals and a large recipient of a cost that it otherwise improve cybersecurity throughout the multi-specialty physician practice might would incur, the fraud and abuse risks healthcare industry in response to the agree to jointly subsidize cybersecurity associated with cybersecurity are critical cybersecurity issues identified technology and services for smaller different than donations of other in the HCIC Task Force Report and physician practices in their area. valuable technology, such as electronic elsewhere. We propose to include only We do not propose to impose health records items and services. We those conditions for safe harbor restrictions on the type of individual or generally view donating cybersecurity entity that can receive donations of technology and services to be a self- 60 See OIG, Final Rule: Safe Harbors for Certain cybersecurity technology or related protective measure because a Electronic Prescribing and Electronic Health Records Arrangements Under the Anti-Kickback services. We note that, because we do cybersecurity breach in the donor’s Statute, 71 FR 45110, 45128 (Aug. 8, 2006) not propose to restrict the scope of system can have a devastating impact on (excluding pharmaceutical, device, DMEPOS protected recipients under this safe the donor and anyone who maintains a manufacturers, or other entities that indirectly harbor, we believe patients would be connection to the donor’s systems. furnish items and services used in the care of patients both because ‘‘[our] enforcement included as protected recipients. Meanwhile, electronic health record experience demonstrates that unscrupulous Donations to patients, just like other donations facilitate the exchange of manufacturers have offered remuneration in the recipients, would only be protected if clinical information between the form of free goods and services to induce referrals they precisely met all conditions of the of their products’’ and because they lack ‘‘a direct recipient referral source and the donor and central patient care role that justifies safe safe harbor. As discussed previously, and, thus, present a greater risk that one harbor protection for the provision of electronic donations of multifunctional technology purpose of the donation is for the donor health records technology’’). or services would not be protected

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55738 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

because all cybersecurity donations report, donations of cybersecurity degree of harm and likelihood of harm must be necessary and used technology or services to other occurring.62 predominately to implement and individuals or entities could not be Risk assessments are a key component maintain effective cybersecurity. included as an administrative expense to developing effective organization- We anticipate that donations to on the hospital’s cost report. wide risk management for information patients would be more limited than security. We believe that risk donations to healthcare providers and 6. Alternative Proposed Condition for assessments conducted consistent with suppliers (e.g., anti-malware tools). Protection of Cybersecurity Hardware industry standards would provide a However, we solicit comments on what We also propose and solicit comments reasonable basis for donors to identify types of cybersecurity technology or on an alternative approach that would risks and threats to their organizational services a donor might anticipate giving add an additional, optional safeguard to information security that need to be to a patient, whether we would need the proposed cybersecurity safe harbor. mitigated by donating cybersecurity additional or different safeguards when This alternative approach would protect hardware to other entities. Additionally, a patient is the recipient, and whether cybersecurity hardware donations if the donations that are made in response to patients should be protected recipients parties choose to meet an additional risk assessments are likely to meet the at all under the safe harbor. More condition, along with the other five purpose of this safe harbor that specifically, we solicit comments on conditions proposed at 1001.952(jj)(1)– donations are necessary and used whether we should include additional (5). Under this alternative proposal, a predominantly to implement and conditions for donations of protected donation could also include maintain effective cybersecurity. Under cybersecurity technology services to cybersecurity hardware that a donor has this proposal, a donor would perform or patient recipients that are similar to the determined is reasonably necessary have an existing risk assessment for its beneficiary inducements CMP’s based on a risk assessment of its own own organization, and would require a exceptions under 42 CFR 1003.110. For organization and that of the potential potential recipient to have, perform, or example, we are considering whether recipient. obtain a risk assessment, that would cybersecurity technology or service The goal of this alternate proposal is provide a reasonable basis to determine donations to patients should not be to provide donors and recipients more that the donated cybersecurity hardware offered as part of any advertisement or flexibility regarding the types of is needed to address a risk or threat solicitation or not be tied to the cybersecurity donations that are identified by a risk assessment. provision of other items or services protected, while also adding an Consistent with the HCIC Task Force reimbursed in whole or in part by the additional safeguard to further ensure Report and comments we received in Medicare program under Title VIII or a that the donation is necessary and used response to the OIG RFI, we recognize State health care program (as defined in predominantly to implement and that ‘‘[m]any organizations cannot afford section 1128(h) of the Act). maintain effective cybersecurity. to retain in-house information security personnel, or designate an information 4. Written Agreement We believe this alternative proposal builds on existing legal requirements technology (IT) staff member with At 1001.952(jj)(4), we propose to and best practices related to information cybersecurity as a collateral duty.’’ require that the donor and recipient security generally and the healthcare Understanding that resource constraint, enter into a signed, written agreement. industry more specifically. For example, one goal of this safe harbor is to increase While we do not interpret this condition the HHS Office for Civil Rights the avenues available for all healthcare to require every item of cybersecurity explained that conducting a risk organizations to improve their technology and every potential service analysis is the first step in identifying cybersecurity practices. We believe to be specified in the agreement, we and implementing safeguards that protecting a cybersecurity hardware propose that the written agreement must donation based on the risk assessment comply with and carry out the standards include a general description of the of a recipient would further the goal of and implementation specifications in cybersecurity technology and services to increasing the avenues available to the HIPAA Security Rule.61 More be provided over the term of the improve cybersecurity for all healthcare generally, NIST Special Publication agreement and a reasonable estimate of entities, regardless of their available 800–30, which does not directly apply the value of the donation. In addition, resources. to the healthcare industry, but to the extent the parties share any We recognize that a potential represents industry standards for financial responsibility for the cost of recipient with limited resources and information security practices, explains the cybersecurity technology and cybersecurity experience may not be that the purpose of a risk assessment is services, those financial terms, able to conduct or pay for its own risk to inform decision makers and support including the amount of the assessment. As noted above, one risk responses by identifying: (i) contribution, must be memorialized in cybersecurity service that would be a Relevant threats to organizations or the written agreement. We solicit protected donation under the proposed threats directed through organizations comments on the conditions proposed safe harbor is a risk assessment. Under against other organizations; (ii) here, as well as whether additional or the alternative proposal, donors could vulnerabilities both internal and different terms should be required in a then make additional cybersecurity external to organizations; (iii) impact written agreement. hardware donations that are reasonably (i.e., harm) to organizations that may based on the risk assessments of the 5. Prohibition on Cost Shifting occur given the potential for threats donor and recipients. At 1001.952(jj)(5), we propose to exploiting vulnerabilities; and (iv) We recognize that risk assessment prohibit donors from shifting the costs likelihood that harm will occur. The practices vary across the healthcare of any cybersecurity donations to end result is a determination of risk, industry and may be depend on the size Federal health care programs. For which is typically a function of the example, under this proposed 62 NIST Special Publication 800–30 Revision 1, 61 condition, while a hospital’s own HIPAA for Professionals, Guidance on Risk Guide for Conducting Risk Assessments (Sept. Analysis (Mar. 2017), available at https:// 2012), available at https://nvlpubs.nist.gov/ cybersecurity costs could be an www.hhs.gov/hipaa/for-professionals/security/ nistpubs/legacy/sp/nistspecialpublication800- administrative expense on its cost guidance/guidance-risk-analysis/index.html. 30r1.pdf.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55739

and sophistication of any provider or ‘‘small provider of services or small is a difficult task. We solicit comment entity. We solicit comments on this supplier’’ as set forth in the on whether the proposed safe harbor alternative proposal to understand requirements related to the electronic establishes the right balance and if not, whether entities that are potential submission of Medicare claims at 42 request comments that recommend donors or recipients already conduct CFR 424.32. We also are considering for specific changes to do so. Commenters risk assessments that would provide a the final rule and solicit comments on should consider the safe harbor in its reasonable basis to determine that a whether other subsets of potential entirety, including the proposed cybersecurity hardware donation is recipients, for example critical access conditions, optional deeming provision, reasonable and necessary. We would hospitals, should be exempted from the alternate condition, and definitions propose to define ‘‘risk assessment’’ 15-percent contribution requirement when commenting on this issue. We are based on NIST Special Publication 800– because it would impose a significant especially interested in comments from 30 and solicit comment on whether that financial burden on the recipient. healthcare providers because they both definition is sufficient for this Additionally, if a contribution bear the cybersecurity risks and likely cybersecurity donation safe harbor. requirement is included in the final have relevant compliance experience Additionally, we solicit comments on rule, we are considering exempting with other safe harbors. whether this proposal should contributions for the upgrades, updates, To facilitate specific comments on incorporate specific standards or or patches of remuneration that was this issue, we ask the following requirements, such as NIST Special previously donated. Based on our questions: Does the proposed condition Publication 800–30. experience with the electronic health at 1001.952(jj)(1) permit the donation of We are considering for the final rule, records arrangements safe harbor, we the right types of cybersecurity and seek comment on, adding recognize the practical challenges in technology and services that could safeguards to this alternate proposal. For collecting contributions from recipients meaningfully improve the cybersecurity instance, we are considering limiting for minor upgrades, updates, and posture of the healthcare industry while the additional cybersecurity hardware patches that are necessary to keep the also ensuring that the donated permitted under the alternative proposal donated technology compliant with new technology and services do not pose to certain kinds of hardware. We are security policies. undue risk of improperly influencing interested in comments, particularly If we were to finalize this alternate referrals? If not, what other standard or from providers, that explain what types proposal, we would modify the limitation would be appropriate to of hardware would be necessary for proposed safe harbor by adding new strike the right balance between effective cybersecurity under this conditions and a definition in the safe cybersecurity risks and program alternate proposal. We note that because harbor. Primarily, we would add a new integrity risks? Does excluding this alternate proposal builds upon the condition that would require a donor to hardware from the definition of proposed conditions at proposed perform or have an existing risk ‘‘technology’’ further our aim of 1001.952(jj)(1)–(5), multifunctional assessment for its own organization, and balancing cybersecurity risks with the hardware still would be prohibited require a potential recipient to have, program integrity risks? If not, what because it would not be necessary and perform, or obtain a risk assessment, other conditions should we impose to predominantly used to implement and that provides a reasonable basis to limit the value of remuneration maintain effective cybersecurity, as determine that the donated protected by the proposed safe harbor, required under proposed 1001.952(jj)(1). cybersecurity hardware is needed to so it does not improperly influence If the donation includes hardware, we address a risk or threat identified by the referrals? For example, should the safe are also considering requiring a donor’s and recipient’s risk assessments. harbor impose a monetary value limit contribution from the recipient, similar We also would add definitions of on the total amount of donations that a to the electronic health records safe hardware and risk assessment in donor can make to a recipient or should harbor at 1001.952(y)(11), and we are proposed 1001.952(jj)(6). the safe harbor require the recipient to considering requiring the contribution contribute to the costs of a donation 7. Solicitation of Comments amount to be 15 percent. We are once the value has exceeded certain interested in comments on this The goal of the proposed safe harbor monetary thresholds? approach, and whether we should is to help improve the cybersecurity I. Electronic Health Records consider other contribution amounts posture of the healthcare industry by (1001.952(y)) instead, such as 5 percent, or 20 or 30 removing a real or perceived barrier. To percent. achieve this goal, we must appropriately On August 8, 2006, we published a If we add this contribution balance the risk of cybersecurity threats final rule (the 2006 Final EHR Safe requirement, we are considering against risks associated with permitting Harbor Rule) that, among other things, excepting small and rural practices, and parties to donate valuable technology finalized a safe harbor (the EHR safe we are interested in comments on this and services. In doing so, we recognize harbor) at 42 CFR 1001.952(y) protecting approach. Relatedly, we solicit that cyberattacks are ubiquitous, certain arrangements involving the comments on how ‘‘small or rural dynamic, potentially funded by nation- donation of interoperable electronic practices’’ should be defined. For states or well-funded criminal health records software or information example, we solicit comments on enterprises, and can have consequences technology and training services. The whether ‘‘rural practices’’ should be to beneficiary health, safety, and privacy EHR safe harbor was initially scheduled defined as those located in rural areas, that are difficult to mitigate. To help to sunset on December 31, 2013. as defined in the safe harbor for local improve the cybersecurity hygiene of On December 27, 2013, we published transportation at 42 CFR 1001.952(bb). the healthcare industry without a final rule (the 2013 Final EHR Safe We also solicit comments on whether comprising program integrity, it is Harbor Rule) modifying the EHR safe ‘‘small practices’’ should be defined as important that we strike the right harbor by, among other things, those in medically underserved areas, as balance. extending the expiration date of the safe designated by the Secretary under We drafted the proposed safe harbor harbor to December 31, 2021; excluding section 330(b)(3) of the Public Health with this aim in mind, but we recognize laboratory companies from the types of Service Act, or defined similarly to a that appropriately balancing these risks entities that may donate electronic

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55740 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

health records items and services under interoperable condition in with protections for privacy).65 Since the safe harbor; and updating the 1001.952(y)(2) by deeming software to that time, significant legislative, provision under which electronic health be interoperable if it is certified under regulatory, policy, and other Federal records software is deemed the certification program. In the 2013 Government action defined this problem interoperable. Final EHR Safe Harbor Rule we further (now commonly referred to as The present proposed rule sets forth modified the deeming provision to ‘‘information blocking’’) and established certain proposed changes to the EHR reflect developments in the certification penalties for certain types of individuals safe harbor. CMS is proposing almost program and track ONC’s anticipated and entities that engage in information identical changes to the physician self- regulatory cycle. By relying on the blocking. Most notably, the 21st Century referral law electronic health records certification program and related Cures Act added section 3022 of the exception elsewhere in this issue of the updates of criteria and standards, we PHSA, known as ‘‘the information Federal Register. We attempted to stated that the deeming provision would blocking provision,’’ which defines ensure as much consistency as possible meet ‘‘our objective of ensuring that conduct by healthcare providers, health between our proposed safe harbor software is certified to the current IT developers of certified health IT, changes and CMS’s proposed exception required standard of interoperability exchanges, and networks that changes, despite the differences in the when it is donated.’’ 64 We propose to constitutes information blocking. respective underlying statutes. Because retain this general construct for the Section 3022(a)(1) of the PHSA defines of the close nexus between this updated safe harbor. However, we ‘‘information blocking’’ in broad terms, proposed rule and CMS’s proposed rule, propose two textual clarifications to this while section 3022(a)(3) authorizes and we may consider comments submitted provision. Current language specifies charges the Secretary to identify in response to CMS’s proposed rule and that the software is ‘‘deemed to be reasonable and necessary activities that take additional actions when crafting interoperable if, on the date it is do not constitute information blocking. our final rule. provided to the recipient, it has been The ONC NPRM would implement the 1. Interoperability certified by a certifying body . . . .’’ We statutory definition of ‘‘information propose to modify this language to blocking,’’ define certain terms related The conditions at 1001.952(y)(2) and clarify that, on the date the software is to the statutory definition of (y)(3) require donated items and provided, it ‘‘is’’ certified. In other ‘‘information blocking,’’ and proposes services to be interoperable and prohibit words, the certification must be current seven exceptions to the information the donor (or someone acting on the 66 as of the date of the donation, as blocking definition. donor’s behalf) from taking action to opposed to the software having been We propose modifications to limit the interoperability of the donated certified at some point in the past but 1001.952(y)(3) to recognize these item or service. We are proposing no longer maintaining certification on significant updates since the 2013 Final changes that impact 42 CFR the date of the donation. We also EHR Safe Harbor Rule. Specifically, we 1001.952(y)(2) and (3) based on the 21st propose to remove reference to propose aligning the condition at Century Cures Act (Cures Act) and the ‘‘editions’’ of certification criteria to 1001.952(y)(3) with the proposed Office of the National Coordinator for align with proposed changes to the information blocking definition and Health Information Technology (ONC), certification program. We solicit related exceptions in 45 CFR part 171. HHS Notice of Proposed Rulemaking comments on these clarifications. We note that the EHR safe harbor ‘‘21st Century Cures Act: conditions, while not using the term Interoperability, Information Blocking, As we describe in more detail below, ‘‘information blocking,’’ already include and the ONC Health IT Certification however, we are updating the definition concepts similar to those found in the Program’’ (ONC NPRM) that proposes to of ‘‘interoperable.’’ Although this 21st Century Cures Act’s prohibition on implement key provisions in Title IV of revised definition would not require a information blocking. For example, we the Cures Act.63 Among other things, textual change to this paragraph (y)(2), were concerned about donors (or those the ONC NPRM proposes conditions the revision would impact the deeming on the donor’s behalf) taking steps to and maintenance of certification provision, and we solicit comments limit the interoperability of donated requirements for health information regarding this update. software to lock in or steer referrals, technology (health IT) developers under 3. Information Blocking which is prohibited by the anti-kickback the ONC Health IT Certification Program statute.67 These proposed modifications (certification program) and reasonable The current condition at are not intended to change the purpose and necessary activities that do not 1001.952(y)(3) prohibits the donor (or of this condition, but instead further our constitute information blocking for any person on the donor’s behalf) from longstanding goal of preventing abusive purposes of section 3022(a)(1) of the taking any action to limit or restrict the arrangements that lead to information Public Health Service Act (PHSA). use, compatibility, or interoperability of blocking and referral lock-in through These proposed changes, if finalized, the items or services with other updated understandings of those affect the EHR safe harbor conditions at electronic prescribing or electronic concepts established in the 21st Century 1001.952(y)(2), which is known as the health records systems (including, but Cures Act.68 ‘‘deeming provision,’’ and not limited to, health information 1001.952(y)(3) related to interoperability technology applications, products, or 65 78 FR 79213 (Dec. 27, 2013). and ‘‘data lock-in.’’ services). As explained in the 2006 66 84 FR at 7602–05. Final EHR Safe Harbor Rule and 67 See Implementation of the 21st Century Cures 2. Deeming reaffirmed in the 2013 Final EHR Safe Act: Achieving the Promise of Health Information Technology Before the S. Comm. On Health, The deeming provision provides Harbor Rule, 1001.952(y)(3) has been Education, Labor, & Pensions, 115th Cong. 1 (2017) certainty to parties seeking protection of designed to: (i) Prevent the misuse of (statement of James Cannatti, Senior Counselor for the EHR safe harbor by providing an the safe harbor that results in data and Health Information Technology HHS OIG). optional method of ensuring that referral lock-in and (ii) encourage the 68 We recognize that the ONC NPRM is not a final free exchange of data (in accordance rule and is subject to change. However, we base our donated items or services meet the proposal on both the statutory language and the language in ONC’s proposed rule for purposes of 63 84 FR 7424 (Mar. 4, 2019). 64 78 FR 79201, 79204 (Dec. 27, 2013). soliciting public input on our proposals.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55741

We note that health plans, which are software and services have always been alone cybersecurity safe harbor, we protected donors under the EHR safe protected under this safe harbor,71 and solicit comments on whether it harbor, may not be subject to the to more broadly protect the donation of necessary to modify the EHR safe harbor information blocking provisions of the software and services related to to expressly include cybersecurity. 21st Century Cures Act or the ONC cybersecurity. Currently, the safe harbor 5. The Sunset Provision NPRM. Nevertheless, health plans that protects electronic health records seek the protection of this safe harbor do software or information technology and The EHR safe harbor originally was so voluntarily. We note that the training services necessary and used scheduled to sunset on December 31, definition of ‘‘information blocking’’ at predominantly to create, maintain, 2013. In adopting this condition of the PHSA section 3022(a)(1) applies a transmit, or receive electronic health EHR safe harbor, we acknowledged in different knowledge standard to health records. We propose to modify this the 2006 Final EHR Safe Harbor Rule IT developers of certified health IT, language to include certain ‘‘that the need for a safe harbor for health information networks, and health cybersecurity software and services that donations of electronic health records information exchanges than it does to ‘‘protect’’ electronic health records. technology should diminish healthcare providers. A healthcare In the 2006 Final EHR Safe Harbor substantially over time as the use of provider engages in a practice of Rule, we emphasized the requirement such technology becomes a standard information blocking if such a provider that software, information technology, and expected part of medical practice.’’ ‘‘knows that such practice is and training services donated must be In the 2013 notice of proposed unreasonable and is likely to interfere ‘‘closely related to electronic health rulemaking for an amendment to the with, prevent, or materially discourage records’’ and that the ‘‘electronic health EHR safe harbor (2013 Proposed Rule), access, exchange, or use of electronic records functions must be we acknowledged that while electronic health information.’’ 69 The EHR safe predominant.’’ We stated that ‘‘[t]he health record technology adoption had harbor primarily applies to healthcare core functionality of the technology risen dramatically, use of such providers due to the limitations on the must be the creation, maintenance, technology had not yet been universally types of donors permitted under transmission, or receipt of individual adopted nation-wide. Because 1001.952(y)(1). Therefore, most donors patients’ electronic health records,’’ but, continued electronic health record under the EHR safe harbor would be recognizing that the electronic health technology adoption remained an subject to the information blocking records software is commonly integrated important Departmental goal, we knowledge standard at section with other features, we also stated that solicited comments regarding an 3022(a)(1)(B)(ii) of the PHSA. Rather arrangements in which the software extension of the safe harbor. In response than have different conditions for package included other functionality to those comments, in the 2013 Final healthcare providers and health plans, related to the care and treatment of EHR Safe Harbor Rule we extended the we believe it is reasonable to have one individual patients would be protected. sunset date of the safe harbor to condition that applies the same Under our proposal, the same criteria December 31, 2021, a date that information blocking knowledge would apply to cybersecurity software corresponds to the end of the electronic standard to all parties who voluntarily and services: The predominant purpose health record Medicaid incentives. We use the safe harbor to protect donations of the software or service must be stated our continued belief that as of EHR items and services. For purposes cybersecurity associated with the progress on this goal is achieved, the of donations under this safe harbor, we electronic health records. need for a safe harbor for donations propose to apply the knowledge We note that we also are proposing a should continue to diminish over time. standard articulated in the PHSA at new safe harbor specifically to protect Since publication of the 2013 Final EHR section 3022(a)(1)(B)(ii) as applicable to donations of cybersecurity technology Safe Harbor Rule, however, numerous both providers and health plans, and we and related services. As proposed, the commenters have urged us to extend or seek comments on this approach. cybersecurity safe harbor is broader and make permanent the safe harbor at 42 Additionally, the current condition at includes fewer conditions than the EHR CFR 1001.952(y). Specifically, 1001.952(y)(3), as adopted in the 2006 safe harbor. However, we are proposing commenters have suggested this Final EHR Safe Harbor Rule 70 was to expand the EHR safe harbor to modification in response to OIG’s intended to prevent donors, including expressly include cybersecurity annual Solicitation of New Safe Harbors health plans, from donating EHR software and services so that it is clear and Special Fraud Alerts, and also in software and then engaging in practices that an entity donating electronic health response to the OIG RFI and the CMS of information blocking that would limit records software and providing training RFI. the interoperability of the donated and other related services may also While we acknowledge that items, notwithstanding that we did not donate related cybersecurity software widespread adoption of electronic use that exact terminology. As a result, and services to protect the electronic health record technology, though not we do not believe this proposed health records. For clarity, we also universal, largely has been achieved, we modification places any additional propose to incorporate a definition of no longer believe that once this goal is burden on health plans that voluntarily ‘‘cybersecurity’’ in this safe harbor that achieved the need for a safe harbor for seek to protect donations. We solicit mirrors the definition we propose in the donations of such technology will comments on aligning the condition at stand-alone cybersecurity safe harbor. A diminish over time or completely 1001.952(y)(3) with the proposed party seeking safe harbor protection disappear. New entrants into medical information blocking definition in 45 needs to comply with the requirements practice, coupled with aging EHR CFR part 171. of only one safe harbor. We solicit technology at existing practices and the comments on this approach. In emergence of new and better 4. Cybersecurity particular, with the addition of a stand- technology, necessitate the availability We propose to amend the safe harbor of this safe harbor to achieve the to clarify that certain cybersecurity 71 For instance, a secure log-in or encrypted Department’s policy objectives. Our access mechanism included with an EHR system or experience indicates that the continued EHR software suite would be cybersecurity features 69 PHSA § 3022(a)(1)(B)(ii). of the EHR that are protected under the existing availability of the safe harbor plays a 70 71 FR 45136. EHR safe harbor. part in achieving the Department’s goal

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55742 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

of promoting electronic health records throughout the Cures Act and that is safe harbor and the final information technology adoption by providing central to the definition of blocking regulations. certainty with respect to the cost of ‘‘interoperability’’ at PHSA § 3000(9) We believe the statutory definition of electronic health records items and and the information blocking provision ‘‘interoperability’’ includes similar services for recipients, and by at PHSA § 3022. Additionally, the ONC concepts to the existing definition of encouraging adoption by physicians NPRM proposes a definition of ‘‘interoperable’’ in the note to paragraph who are new entrants into medical ‘‘electronic health information.’’ 72 We (y) (e.g., the ability to securely exchange practice or have postponed adoption have based the proposed modifications, data across different systems or based on financial concerns regarding in part, on ONC’s proposed definition of technology). Two new concepts in the the ongoing costs of maintaining and ‘‘electronic health information’’ to statutory definition are included in the supporting an electronic health records reflect more modern terminology used proposed modification: (i) Interoperable system. Ongoing protection of electronic to describe the type of information that means the ability to exchange electronic health record items and services is part of an electronic health record. health information ‘‘without special donations would further new We solicit comments on this updated effort on the part of the user’’ and (ii) Department priorities and policies by definition. interoperable expressly does not mean allowing donors and recipients to In the note to paragraph (y) under information blocking.74 As a practical ensure new technology is adopted that, 1001.952, the existing definition of matter, we believe these two concepts for example, may improve the ‘‘interoperable’’ means ‘‘able to are not substantively different from the interoperability of electronic health communicate and exchange data existing definition and only reflect an information. accurately, effectively, securely, and updated understanding of We are proposing to eliminate the consistently with different information interoperability and related sunset provision at 42 CFR technology systems, software terminology. We solicit comments on 1001.952(y)(13). As an alternative to this applications, and networks, in various the proposed definition that would align proposed elimination of the sunset settings, and exchange data such that the definition of ‘‘interoperable’’ with provision, we are considering an the clinical or operational purpose and the statutory definition of extension of the sunset date for the final meaning of the data are preserved and ‘‘interoperability.’’ rule. We seek comment on whether we unaltered.’’ As explained in the 2006 We also are considering linking the should select a later sunset date instead Final EHR Safe Harbor Rule, this definition of ‘‘interoperable’’ with the of making the safe harbor permanent, definition was based on 44 U.S.C. proposed definition of and if so, what that date should be. 3601(6) (pertaining to the management ‘‘interoperability’’ at 45 CFR 170.102 in and promotion of electronic the ONC NPRM 75 if that proposed 6. Definitions Government services) and several definition is finalized. We note that We are proposing to modify the comments we received in response to ONC’s proposed regulatory definition of definitions of ‘‘interoperable’’ and the proposed rule that referenced ‘‘interoperability’’ matches the statutory ‘‘electronic health record.’’ In the 2006 emerging industry definitions and definition. However, linking the ONC Final EHR Safe Harbor Rule, we standards related to interoperability.73 regulatory definition of finalized these definitions based on We propose to update the definition ‘‘interoperability’’ may allow for then-current terminology, the emerging of the term ‘‘interoperable’’ to align with additional, future updates to be adopted standards for electronic health records, the statutory definition of by reference in the EHR safe harbor. We and other resources cited by ‘‘interoperability’’ added by the Cures solicit comments on this proposal. commenters. The following proposed Act to Section 3000(9) of the PHSA and In the alternative, we are considering modifications to these definitions are as proposed in the ONC NPRM. We revising our regulations to eliminate the largely based on terms and provisions in propose modifications to match the term ‘‘interoperable’’ and instead the Cures Act that update or supersede statutory definition and the ONC NPRM incorporate the term ‘‘interoperability’’ terminology we used in the 2006 Final definition of ‘‘interoperability.’’ and define this term by reference to EHR Safe Harbor Rule. Consistent with PHSA § 3000(9), we section 3000(9) of the PHSA and In the current note to paragraph (y) propose to define ‘‘interoperable’’ to proposed in 45 CFR part 170. Under this under 1001.952, ‘‘electronic health mean able to: ‘‘(i) securely exchange alternative proposal, we would revise record’’ is defined as ‘‘a repository of data with, and use data from other § 1001.952(y)(2) to require donations of consumer health status information in health information technology without software to meet interoperability computer processable form used for special effort on the part of the user; (ii) standards established under Title XXX clinical diagnosis and treatment for a allow for complete access, exchange, of the PHSA and its implementing broad array of clinical conditions.’’ We and use of all electronically accessible regulations. Software would be deemed propose to modify the definition of health information for authorized use to meet interoperability standards if, on ‘‘electronic health record’’ to mean: ‘‘a under applicable State or Federal law; the date it is provided to the recipient, repository of electronic health and (iii) does not constitute information it is certified by a certifying body information that: (A) is transmitted by blocking as defined in 45 CFR part 171.’’ authorized by ONC to health or maintained in electronic media; and The only difference between the information technology certification (B) relates to the past, present, or future statutory definition of ‘‘interoperability’’ criteria identified in 45 CFR part 170. health or condition of an individual or and the definition in the ONC NPRM is We seek comment regarding whether the provision of healthcare to an the reference to the regulatory definition using terminology identical to the PHSA individual.’’ of ‘‘information blocking’’ in 45 CFR and proposed ONC regulations would The proposed revision to the part 171, which we propose to adopt. facilitate compliance with the definition of ‘‘electronic health record’’ We will work closely with ONC as they requirements of the EHR safe harbor and is not intended to substantively change finalize the information blocking rule to reduce any regulatory burden resulting the scope of protection. We are ensure definitions align across the EHR from the differences in the agencies’ proposing these modifications to this definition to reflect the term ‘‘electronic 72 84 FR 7424, 7513 (Mar. 4, 2019). 74 PHSA § 3000(9); 42 U.S.C. 300jj(9). health information’’ that is used 73 71 FR 45110, 45126 (August 8, 2006). 75 84 FR 7424, 7589 (Mar. 4, 2019).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55743

different terminology related to the should eliminate or reduce the 15- b. Replacement Technology singular concept of interoperability. percent contribution requirement as In the 2013 Final EHR Safe Harbor Finally, for ease of reference, we applied to a specific subset of recipients Rule, we highlighted one commenter’s propose to amend the safe harbor by such as small or rural practices. In assertion that ‘‘the prohibition on moving the undesignated definitions set particular, we solicit comments on how donating equivalent technology forth in the note to paragraph (y) to a ‘‘small or rural practices’’ should be currently included in the safe harbor new paragraph (y)(14). defined. For example, we solicit locks physician practices into a vendor, 7. Additional Proposals and comments on whether ‘‘rural practices’’ even if they are dissatisfied with the Considerations should be defined as those located in technology, because the recipient must rural areas, as defined in the safe harbor choose between paying the full amount a. 15-Percent Recipient Contribution for local transportation at 42 CFR for a new system and continuing to pay In the 2006 Final EHR Safe Harbor 1001.952(bb). We also solicit comments 15 percent of the cost of the substandard Rule, we agreed with a number of on whether ‘‘small practices’’ should be system.’’ The same commenter asserted commenters who suggested that cost defined as those in medically that ‘‘the cost difference between these sharing is an appropriate method to underserved areas, as designated by the two options is too high and effectively address some of the fraud and abuse Secretary under section 330(b)(3) of the locks physician practices into electronic risks inherent in unlimited donations of Public Health Service Act, or defined health record technology vendors.’’ In technology. Accordingly, we similarly to a ‘‘small provider of the 2013 Final EHR Safe Harbor Rule, incorporated a requirement into 42 CFR services or small supplier’’ as set forth we responded that ‘‘we continue to 1001.952(y) that the recipient pays 15 in the requirements related to the believe that items and services are not percent of the donor’s cost of the electronic submission of Medicare ‘‘necessary’’ if the recipient already technology. We noted in the 2006 Final claims at 42 CFR 424.32. We also are possesses the equivalent items or EHR Safe Harbor Rule that ‘‘the 15 considering for the final rule and solicit services. We noted that providing percent cost sharing requirement is high comments on whether other subsets of equivalent items and services confers enough to encourage prudent and robust potential recipients, for example critical independent value on the recipient and electronic health records arrangements, access hospitals, should be exempted noted our expectation that ‘‘physicians without imposing a prohibitive financial from the 15-percent contribution would not select or continue to use a burden on recipients.’’ Moreover, we substandard system if it posed a threat because it would impose a significant stated, ‘‘this approach requires to patient safety.’’ financial burden on the recipient. recipients to contribute toward the We appreciate that advancements in benefits they may experience from the Second, and in the alternative, we are electronic health records technology are adoption of interoperable electronic considering reducing or eliminating the continuous, rapid, and sometimes health records (for example, a decrease 15-percent contribution requirement in prohibitively expensive for the in practice expenses or access to this safe harbor for all recipients. We purchaser of such technology, and that incentive payments related to the solicit comments regarding the impact in some situations, replacement adoption of health information this might have on the use and adoption technology is appropriate. We are technology).’’ of electronic health records technology, proposing to delete the condition that We are aware that the 15-percent and any attendant risks of fraud and prohibits the donation of equivalent contribution requirement has proven abuse. We are interested in specific items or services at current burdensome to some recipients and may examples of the prohibitive costs 1001.952(y)(7) to allow donations of act as a barrier to adoption of electronic associated with the 15-percent replacement electronic health records health records technology. We contribution requirement, both for the technology. We specifically seek understand that this burden may be initial donation of electronic health comment as to whether deleting this particularly acute for small and rural records technology, and subsequent condition is necessary, and in what practices that cannot afford the upgrades and updates to the technology. situations replacement technology contribution. We also recognize that would be appropriate. We further solicit Finally, if we retain a 15-percent applying the 15-percent contribution comment as to how we might safeguard contribution requirement or reduce that requirement to upgrades and updates to against situations where donors contribution requirement for some or all electronic health record technology is inappropriately offer, or recipients recipients, we are considering restrictive and cumbersome and inappropriately solicit, unnecessary modifying or eliminating the similarly may act as a barrier. technology instead of upgrading their We are not proposing specific contribution requirement for updates to existing technology for appropriate amendments to the 15-percent previously donated EHR software or reasons. contribution requirement at this time, technology. We solicit comments on this and we are considering retaining this approach as well as what such a c. Protected Donors requirement without change in the final modification should entail. For We are considering expanding the rule. However, we also are considering example, we are considering requiring a group of entities that may be protected and solicit comments on the three contribution for the initial investment donors under the EHR safe harbor, for alternatives to the existing requirement only, as well as any ‘‘new’’ modules, but purposes of the final rule. As as outlined below. We solicit comment not requiring a contribution for any background, in the preamble to the 2006 on each of the alternatives as separate update of the software already Final EHR Safe Harbor Rule for the EHR proposed modifications to the purchased. We solicit comments on safe harbor, we were mindful that broad contribution requirement. these alternatives, or another similar safe harbor protection would First, for purposes of the final rule, we alternative that would still involve some significantly further the important are considering eliminating or reducing contribution but could reduce the public policy goal of promoting the percentage contribution required for uncertainty and administrative burden electronic health records, and thus small or rural practices. We specifically associated with assessing a contribution concluded that the safe harbor should seek comment on whether and how we for each update. protect any donor that is an individual

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55744 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

or entity that provides patients with would avail themselves of a broadening opportunity to provide financial healthcare items or services covered by of the protected donors. In addition, we incentives in exchange for referrals. a Federal health care program and specifically solicit comments regarding To provide the healthcare industry submits claims or requests for payment the removal of this restriction and enhanced flexibility to undertake for those items or services (directly or whether and how removal would innovative arrangements, we are pursuant to reassignment) to Medicare, impact the widespread adoption of proposing to revise the safe harbor to Medicaid, or other Federal health care electronic health records technology as remove the requirement at 42 CFR programs (and otherwise meets the safe well as comments regarding any 1001.952(d)(5) that the ‘‘aggregate’’ harbor conditions).76 Notwithstanding attendant risks of fraud and abuse. amount of compensation paid over the this conclusion, we indicated that ‘‘[w]e term of the agreement must be set forth remain concerned about the potential J. Personal Services and Management in advance. To mitigate the risk of for abuse by laboratories, durable Contracts and Outcomes-Based parties to the agreement periodically medical equipment suppliers, and Payment Arrangements (1001.952(d)) adjusting the compensation to reward others’’ and noted that ‘‘[w]e intend to referrals or unnecessary utilization, the We propose to modify the existing monitor the situation. If abuses occur, proposed modification to the safe harbor we may revisit our determination.’’ 77 safe harbor for personal services and would require the parties to an In the 2013 Final EHR Safe Harbor management contracts at 42 CFR arrangement to determine the Rule, we finalized a proposal to remove 1001.952(d) to: (i) Substitute, for the arrangement’s compensation laboratory companies from the scope of requirement that aggregate methodology in advance of the initial protected donors under the safe harbor compensation under these agreements payment under the arrangement. In to address, among other things, be set in advance, a requirement that the addition, under (d)(1) of our proposal, potential abuse identified by some of methodology for determining the safe harbor would continue to the commenters involving potential compensation be set in advance; (ii) require that the compensation reflect recipients conditioning referrals for eliminate the requirement that, if an fair market value, be commercially laboratory services on the receipt of, or agreement provides for the services of reasonable, and not take into account redirecting referrals for laboratory an agent on a periodic, sporadic or part- the volume or value of referrals or services following, donations from time basis, the contract must specify the business otherwise generated between laboratory companies, and general schedule, length, and the exact charge the parties. misuse of donations by donors to secure for such intervals; (iii) create a new We anticipate this proposal would referrals. paragraph (d)(2) to protect certain more closely align this safe harbor with We remain concerned about the outcomes-based payments, as defined the personal service arrangements potential for fraud and abuse by certain below; and (iv) to make certain exception to the physician self-referral donors that we articulated in the 2006 technical changes. These proposals seek law, 42 CFR 411.357(d). Final EHR Safe Harbor Rule and the to modernize the safe harbor and 2. Elimination of Requirement To 2013 Final EHR Safe Harbor Rule. respond to comments in response to the Specify Schedule of Part-Time However, in light of the Department’s RFI that existing safe harbor Arrangements continued objective to advance the requirements present barriers to certain adoption of electronic health records care coordination and value-based We propose to eliminate the technology, particularly as related to the arrangements. requirements set forth at 42 CFR Regulatory Sprint, and in response to 1001.952(d)(3) relating to agreements for certain comments received to the OIG 1. Elimination of Requirement To Set services provided on a periodic, RFI, we are considering expanding the Aggregate Compensation in Advance sporadic, or part-time basis. This scope of protected donors by paragraph of the safe harbor requires The existing safe harbor for personal eliminating or revising the requirement contracts that provide for services on services and management contracts in 42 CFR 1001.952(y)(1)(i) that such a basis to specify ‘‘exactly the protected donors be limited to those requires that such agreements be for a schedule of such intervals, their precise who ‘‘submit[ ] claims or requests for term of at least 1 year, and that the length, and the exact charge for such payment, either directly or through aggregate compensation be set in intervals.’’ Removing this requirement reassignment, to the Federal health care advance. In addition, the compensation would afford parties additional program.’’ If we were to revise rather must be consistent with fair market flexibility in designing bona fide than eliminate the restriction, we are value in arm’s-length transactions. business arrangements, including care considering broadening it in the final Consistent with our existing safe harbor, coordination and quality-based rule to entities with indirect compensation under personal services arrangements, where parties provide responsibility for patient care. This and management contracts may not be legitimate services as needed. expansion would protect as donors, for determined in a manner that takes into The existing safe harbor requires part- example, entities like health systems or account the volume or value of any time contractual arrangements between accountable care organizations that referrals or business otherwise healthcare providers to specify their neither are health plans nor submit generated between the parties for which timing or duration because of our claims for payment. Certain commenters payment may be made in whole or in concern that such arrangements are to the OIG RFI also recommended part under Medicare, Medicaid or other especially vulnerable to abuse. permitting any risk-bearing entity that Federal health care programs. Also, the Specifically, part-time arrangements participates in an Advanced APM entity aggregate services performed under the could be readily modified based on under the Medicare Quality Payment agreement must not exceed those which changing referral patterns between the Program (QPP) to be a donor. We are are reasonably necessary to accomplish parties. However, we believe that interested in understanding other types the commercially reasonable business existing safeguards under (d)(1) of our of entities and potential donors who purpose of the services.78 The purpose proposal would provide sufficient of these requirements is to limit the safeguards against the manipulation of 76 71 FR 45127. these arrangements to reward referrals, 77 Id. at 45128. 78 42 CFR 1001.952(d)(4), (5) and (7). namely: The term of the arrangement

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55745

must be not less than 1 year; the payments, gainsharing payments, pay- • ‘‘Pay-for-performance arrangement’’ compensation terms must reflect fair for-performance payments, or episodic could be defined to mean a payment market value, be commercially or bundled payments. We are from a principal to an agent (or a payor reasonable, and not take into account considering and solicit comments on to a principal) for the achievement of a the volume or value of any referrals or whether, if we take this approach, we legitimate cost, quality, or operational business otherwise generated between should further define specific types of performance metric (e.g., bonus the parties; and the methodology for payment arrangements that would payment) on behalf of the principal for determining compensation must be set qualify for this safe harbor in the final a specified patient population. in advance. rule. To the extent we further define We anticipate such outcomes-based As with our first proposal, we such arrangements, we are considering payment arrangements would largely anticipate this proposal would more basing potential definitions on mirror, in concept, similar arrangements closely align this safe harbor with the arrangements defined in various used in various Innovation Center personal service arrangements exception Innovation Center models and the models and the Medicare Shared to the physician self-referral law, 42 Medicare Shared Savings Program. Such Savings Program and would, more CFR 411.357(d). terms might include: specifically, encompass examples like • the following: (i) An ACO makes a 3. Proposal To Protect Outcomes-Based ‘‘Shared savings payment’’ could be ‘‘shared savings’’ payment to its member Payments defined to mean a payment from a payor to a principal or the downstream physicians, with such payments We propose to protect outcomes- payment by the principal to the agent of representing a percentage of payor based payment arrangements in certain a share of payor savings realized from savings generated by the ACO as a result circumstances under proposed new the agent’s activities for a specified of its members’ efforts to reduce total paragraph (d)(2) and (d)(3). Our patient population. Shared savings patient care costs and improve quality; proposal is in response to the evolution payments encourage the use of the (ii) where an ACO incurs financial loss of new payment models, such as shared lowest cost service for the patient and is obligated to pay money to its savings, shared losses, episodic population to achieve certain desired payor, a hospital makes ‘‘shared losses’’ payments, gainsharing, and pay-for- health outcomes. payments to the ACO, representing an performance, and recognizes that such • ‘‘Shared losses payment’’ could be agreed upon percentage of the ACO’s arrangements may facilitate care defined to mean a payment from a loss; and (iii) a hospital and group of coordination, encourage provider physicians and post-acute care principal to a payor or from a engagement across care settings, and providers agree collectively to be paid downstream agent to a principal to promote the shift to value. by a payor for an episode of care (e.g., repay the payor for a portion of the inpatient stay and 90 days post- a. Outcomes-Based Payments payor’s losses incurred with respect to discharge) and share among themselves a specific patient population under a We propose to define ‘‘outcomes- the savings or losses generated against a shared savings arrangement when a based payment’’ as payments from a benchmark. In some cases involving principal’s expenditures for the patient principal to an agent that: (i) Reward the reconciliation, the hospital might be population for the applicable agent for improving (or maintaining responsible for sharing any savings performance period exceed specific improvement in) patient or population among its partners; in others, the health by achieving one or more performance benchmarks. • hospital might be responsible for paying outcome measures that effectively and ‘‘Gainsharing payment’’ could be its partners for the services they furnish efficiently coordinate care across care defined to mean a payment from a the patients under the episode. settings; or (ii) achieve one or more principal to an agent to incentivize the As noted previously, our proposed outcome measures that appropriately agent to appropriately reduce healthcare definition of ‘‘outcomes-based reduce payor costs while improving, or costs (other than solely the principal’s payment’’ excludes arrangements that maintaining the improved, quality of internal costs) for a specified patient relate solely to achievement of internal care for patients. population while achieving certain cost savings for the principal. For We further propose that such outcome measures in accordance with a example, outcomes-based payment payments would exclude any payments principal’s arrangement with a payor. arrangements would not include made, directly or indirectly, by a • ‘‘Episodic or bundled payment’’ arrangements that involve sharing in pharmaceutical manufacturer; a could be defined to mean a payment financial risk or gain only as it relates manufacturer, distributor, or supplier of from a payor to a principal or from a to the prospective payment systems for DMEPOS; or a laboratory. Such principal to a downstream agent for an acute inpatient hospitals, home health payments would also exclude any episode of care across care settings for agencies, hospice, outpatient hospitals, payment that relates solely to the a specified patient population. This inpatient psychiatric facilities, inpatient achievement of internal cost savings for could include a retrospective bundled rehabilitation facilities, long-term care the principal. We solicit comments on payment arrangement where actual hospitals, or SNFs. Although potential alternative definitions of the healthcare expenditures of the payor arrangements reimbursed by Federal term ‘‘outcomes-based payment’’ that and principal for the patient population health care programs under the would be consistent with the goals are reconciled against a target price for prospective payment systems may described in the preceding paragraphs an episode of care and a portion of such create internal cost savings for a of this preamble section. For example, payment to the principal may be made provider, the savings under the we are considering for the final rule to the agent or a prospectively arrangement would not accrue to the defining the term by reference to determined bundled payment from the payor. specific types of payments, such as payor to the principal or a portion of Thus, and for example, this safe those described as examples of such payment to the principal made to harbor would not protect an outcomes- outcomes-based payments below. the agent that encompasses all based payment arrangement between a Examples of outcomes-based payment healthcare services furnished by the hospital and physician group, where the arrangements could include shared principal and agent for the patient parties share financial risk or gain only savings payments, shared losses population during the episode of care. with respect to items or services

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55746 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

reimbursed to the hospital under the arrangements, there may not be a direct This proposed safe harbor requires Medicare prospective payment system correlation between the level or value of satisfaction of an outcome measure to for acute inpatient hospitals. However, services provided by a particular receive an outcomes-based payment, an outcomes-based payment recipient of payments and that party’s whereas the care coordination arrangement that involves a hospital share of savings or outcomes-based arrangements safe harbor requires and physician group sharing financial payments (e.g., shared savings payments monitoring and assessment related to risk or gain realized across care settings may be distributed on a basis unrelated such outcome measures; and the would be protected (e.g., for a patient’s to actual services provided). While the achievement of outcomes measures is inpatient stay and the 60-day post- two requirements described do not not a prerequisite to the provision or use discharge period), provided all safe expressly require that the outcomes- of in-kind remuneration under the harbor requirements were met. based payment arrangement include the proposed safe harbor at paragraph (ee). provision of services (merely that the Such differences are deliberate and due b. Entities Not Included parties collaborate, and to the extent the to the variations in type and scope of Based on our enforcement and parties’ arrangement includes services, potential remuneration that could be oversight experience and as explained that they be documented), we anticipate exchanged under the respective safe with respect to a similar exclusion in that many arrangements would include harbors. the definition of VBE participant in this a service component. For the proposed outcomes-based proposed rule, we are proposing to payment arrangements amendments to exclude pharmaceutical manufacturers; d. Safe Harbor Conditions the safe harbor, outcome measures must manufacturers, distributors, and Our proposal for outcomes-based relate to improving quality of patient suppliers of DMEPOS; and laboratories payment arrangements includes safe care; appropriately and materially from the proposed safe harbor for harbor conditions, some of which mirror reducing costs to, or growth in outcomes-based payments. As stated program integrity safeguards set forth in expenditures of, payors while previously, we are concerned that these the existing personal services and improving, or maintaining the improved types of entities, which are heavily management contracts safe harbor and quality of care for patients; or both. As dependent upon practitioner some of which are new safeguards an additional safeguard, parties must prescriptions and referrals, might use specific to outcomes-based payment select outcome measures based upon outcomes-based payments primarily to arrangements. As detailed below, our clinical evidence or credible medical market their products to providers and proposed safe harbor conditions are support. patients. based on our experience with these Any outcome measures established As with the proposed definition of a types of arrangements through the pursuant to the parties’ arrangement VBE participant, we are also considering advisory opinion process and the must be measurable and valid, and such for the final safe harbor at development of waivers for CMS measures must promote improved 1001.952(d)(2) excluding pharmacies models. quality or efficiencies in the delivery of (including compounding pharmacies), care, or appropriate cost reduction. PBMs, wholesalers, and distributors. We e. Goal of the Outcomes-Based Payment Measures that simply seek to reward the solicit comments about these proposed Arrangement status quo would not meet this exclusions, as well as illustrative As stated above, all outcomes-based requirement. In some circumstances, we examples of beneficial or problematic payments must be made between or acknowledge that payment for the outcomes-based payment arrangements among parties that are collaborating to maintenance of high quality may be low that might be excluded or included if measurably improve quality of patient risk (e.g., where an established ACO that we finalize some or all of these care (or maintain improvement); has made demonstrable quality exclusions. appropriately and materially reduce improvements over the course of several We also are considering whether to costs to, or growth in expenditures of, years seeks to reward its members to more specifically target the final safe payors while improving or maintaining maintain such improvements). We harbor on outcomes-based payment the improved quality of care; or both. solicit comments on whether, and if so arrangements that further value-based We propose to limit safe harbor how, we should protect such care or care coordination by limiting protection to outcomes-based payment arrangements in the final rule without protection for outcomes-based payment arrangements that foster these two goals protecting arrangements that may be arrangements to VBE participants, as because we believe that such disguised payments for referrals. We are that term is defined in (ee)(12)(vi) of this arrangements may best facilitate care concerned that arrangements that proposed rule. coordination, encourage provider reward the status quo are more likely to engagement across care settings, and be mere payments for referrals. c. Collaboration and Outcomes-Based promote the shift to value. Because we believe the provision of Payments monetary remuneration presents a As proposed, under the safe harbor f. Outcome Measures higher risk of fraud and abuse than the conditions, all outcomes-based We propose to require the parties to provision of in-kind remuneration, we payments must be made between or an arrangement to establish one or more are considering for the final rule, and among parties that are collaborating to specific evidence-based, valid outcome solicit comments on, whether to impose measurably improve quality of patient measures that the agent must satisfy to a different, potentially stricter standard care appropriately and materially receive the outcomes-based monetary for outcome measures in this proposed reduce costs while maintaining quality, remuneration. This requirement largely safe harbor than in the proposed care or both. Moreover, if specific services mirrors the outcome-measure coordination arrangements safe harbor are to be performed, the agreement must requirement in the proposed care at paragraph (ee). To mitigate this risk, specify all of the services the parties coordination arrangements safe harbor we propose to require the parties to perform (or refrain from performing) to at paragraph (ee), and we refer readers regularly monitor and assess the agent’s qualify for the outcomes-based to the discussion of this requirement in performance on each outcome measure payments. We are mindful that with the preamble above. That being said, we under the agreement. This condition is some value-based payment note certain key differences, such as: similar to the assessment and

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55747

monitoring requirements in the care g. Methodology separately from other compensation or coordination arrangements safe harbor To increase transparency of outcomes- whether to substitute the fair market at paragraph (ee). For example, regularly based payment arrangements, we value requirement with a different monitoring and assessing the agent’s propose that the methodology for safeguard that would help ensure that performance could include: (i) determining the aggregate compensation payments are for legitimate Determining whether the arrangement (including any outcomes-based participation in arrangements that drive has measurably improved quality of payments) paid between or among the value-based care and are not merely patient care, (ii) evaluating any parties over the term of the agreement disguised payments for referrals). deficiencies in the delivery of quality is: Set in advance; commercially ii. Volume or Value of Referrals care, and (iii) measuring the agent’s reasonable; consistent with fair market satisfaction of the specific, evidence- value; and not determined in a manner We propose to require that the based, valid outcome measure(s) in the that directly takes into account the compensation methodology for outcomes-based arrangement. volume or value of any referrals or determining the outcomes-based We recognize that outcomes-based business otherwise generated between payment not be determined in a manner payment arrangements may vary in the parties for which payment may be that directly takes into account the structure and strive to provide made in whole or in part by a Federal volume or value of referrals or other flexibility for parties to design health care program. We view these business generated between the parties. We recognize that to incentivize care arrangements to achieve appropriate conditions as essential safeguards to coordination and appropriate behavioral quality of patient care as well as ensuring any outcomes-based payment changes through outcomes-based appropriate efficiency and cost savings arrangement is not a vehicle to reward payments, parties may need to establish goals. However, we are proposing to referrals and generate revenue but rather payment methodologies that at least include an express requirement that reflects a deliberate, collaborative effort indirectly take into account the volume parties rebase the benchmark or by the parties to the arrangement to or value of referrals or other business outcome measure for outcomes-based realize improved outcomes, cost savings generated between the parties. We payments periodically in outcomes- to payors, or both. believe it should be possible to structure based payment arrangements where Because our proposed set-in-advance payments so that they do not directly rebasing is feasible under paragraph and commercially reasonable requirements are consistent with our take into account the volume or value of (d)(2)(vii)(B). By ‘‘rebasing’’ we mean referrals of other business. resetting the benchmark used to existing personal services arrangement determine whether payments will be and management contracts safe harbor h. Writing and Monitoring made to take into account (as proposed to be amended with respect to the set-in-advance We propose that the outcomes-based improvements already achieved. We payment be made between or among anticipate periodic ‘‘rebasing’’ will requirement), we do not address these requirements here in further detail. We parties that are collaborating, pursuant prevent parties from inappropriately to a written agreement signed by the carrying over savings from previous discuss our proposed fair market value and volume or value conditions below. parties in advance of, or performance periods or from receiving contemporaneous with, the payments that do not reflect legitimate i. Fair Market Value commencement of the terms of the achievement of outcomes. We propose that the methodology for outcomes-based payment arrangement. This proposed requirement is determining the aggregate compensation We further propose that the written intended to address a concern that (including any outcomes-based agreement specify all of the services the ‘‘evergreen’’ outcomes-based payment payments) paid between or among the parties would perform for the term of arrangements, in which outcome parties over the term of the agreement the agreement. As detailed in the above measures are not properly monitored or be consistent with fair market value. We section, while this does not mandate assessed, could be used as a vehicle to acknowledge our proposed aggregate that parties to an outcomes-based reward referrals well after the desired fair market value requirement may pose payment arrangement include services, provider behavior change or savings challenges to the extent there are not if services are furnished pursuant to the benchmark has been met. Such industry standards yet developed to parties’ arrangement, such services must perpetual arrangements might also fail determine fair market value for some be documented in writing. to meet the proposed requirement that outcomes-based payment arrangements We further propose to require that the the measures be evidence-based. We are in the value-based care arena and written agreement include the outcome considering for the final rule, and solicit because we understand that some of the measure(s), the evidence-based data or comments on, whether a specific outcomes-based payment arrangements information upon which the parties timeframe within a specified we propose to protect do not necessarily relied to select the outcome measure(s), performance period under the correlate payments with actual services and the schedule for the parties to arrangement (e.g., 3 years) or a shorter performed (and in some cases, reward regularly monitor and assess the (e.g., 1-year) or longer (e.g., 5-year) not performing services). outcome measure(s). In addition to the timeframe is appropriate and realistic Nonetheless, we anticipate the writing requirements set forth in for requiring parties to rebase the industry will evolve and adapt to assess (d)(2)(viii), parties may consider benchmarks for outcomes-based fair market value for value-driven documenting and retaining such payments. We solicit comments on the outcomes-based payment arrangements, documentation necessary to definition of ‘‘rebase’’ and when and even where the provision of traditional demonstrate compliance with each how frequently rebasing would be services may be a less prominent prong of this safe harbor. For example, necessary and appropriate to ensure that component. We solicit comments on the parties may document payments outcomes-based payments are based on this approach. We are considering for made pursuant to the outcomes-based valid, measurable outcomes, reducing the final rule whether we should take a payment arrangement and data showing the risk that the payments would be different approach (including whether the agent’s achievement of the outcome mere payments for referrals. to value outcomes-based payments measure(s).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55748 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

i. Impact on Patient Quality of Care section’’ to ‘‘paragraphs (g)(1) and (g)(2) access to a wound specialist and an Properly structured and operated, of this section.’’ For ease of reference, online wound documentation system, outcomes-based payments hold the we propose to amend the safe harbor by that the requestor made available to 82 potential to improve the delivery of moving the undesignated definition at buyers of its products. the end of the safe harbor to a new care; however, when improperly a. Inclusion of Services in Bundled structured and operated, they hold the paragraph (g)(7). Warranties potential to incentivize behavior 1. Bundled Warranties We are proposing to protect warranty harmful to patients, such as stinting on The warranties safe harbor protects arrangements that apply to one or more care (underutilization), cherry picking remuneration consisting of ‘‘any items and services (provided the lucrative or adherent patients, or lemon payment or exchange of anything of warranty covers at least one item). This dropping costly or noncompliant value under a warranty provided by a modification would allow patients.79 Accordingly, we are manufacturer or supplier of an item to manufacturers and suppliers to warrant proposing to require that the agreement the buyer (such as a health care provider that certain services, in combination neither limits any party’s ability to make or beneficiary) of the item,’’ as long as with one or more items, will result in a medically appropriate decisions for the buyer and seller comply with the specified level of performance.83 We are patients, nor induces the reduction of safe harbor’s requirements.80 We mindful that the provision of certain medically necessary services. confirmed in Advisory Opinion No. 18– warranted services, such as medication j. Additional Safeguards 10 that this safe harbor applies only to adherence services by manufacturers We propose that the term of the warranties for a single item and not to and suppliers, could increase the risk of 81 agreement is not less than 1 year and bundled items. We received patient harm and inappropriate that the services performed under the comments in response to the OIG RFI utilization because manufacturers and agreement do not involve the counseling requesting revisions to the warranties many suppliers do not necessarily have or promotion of a business arrangement safe harbor to protect warranty direct patient care responsibilities and or other activity that violates any State arrangements that pertain to bundled thus may not have the same patient or Federal law. These conditions are items and services. Commenters safety considerations that physicians identical to those included in the suggested that such revisions would and providers with direct patient care personal services and management promote beneficial and innovative responsibilities have. Using medication contracts safe harbor. arrangements. Based on these adherence services offered by drug comments, other input OIG has manufacturers as an example, we are k. Technical Modifications received, and our own consideration of concerned that manufacturers may Due to the proposed additions of the potential benefits of expanding the promote patients’ adherence to paragraphs (d)(2) and (d)(3), setting warranties safe harbor to foster value, forth provisions on outcomes-based we propose to revise the safe harbor to 82 Adv. Op. No. 01–08, available at https:// protect bundled warranties for one or www.oig.hhs.gov/fraud/docs/advisoryopinions/ payments and definitions, we propose 2001/ao01-08.pdf. OIG acknowledged that the to move the existing personal services more items and related services, when arrangement at issue in advisory opinion number and management contracts provisions, certain conditions are met. This 01–08 implicated the anti-kickback statute and did as proposed to be amended in this modification would allow not fit in the warranties safe harbor but approved manufacturers and suppliers to warrant the arrangement on the basis that it presented a rulemaking, to a new paragraph (d)(1). sufficiently low risk of fraud and abuse under the that a bundle of items or one or more K. Warranties (1001.952(g)) anti-kickback statute. items in combination with related 83 We clarify that our proposed changes would In an effort to update the existing safe services, such as product support not protect free or reduced-price items or services harbor for warranties at 42 CFR services, will meet a specified level of that sellers provide either as part of a bundled warranty agreement or ancillary to a warranty 1001.952(g) and to promote higher value performance under a warranty agreement. Whether a seller’s provision of free or items covered by warranties, we agreement. reduced-price items or services in connection with propose to modify the safe harbor to: (i) We believe this proposed a warranty arrangement would implicate and Protect warranties for one or more items modification could promote beneficial potentially violate the anti-kickback statute would arrangements between sellers and depend on whether other safe harbor protection and related services upon certain exists for the arrangement, and if not, whether those conditions; (ii) exclude beneficiaries buyers by allowing them to enter into items or services have independent value to a buyer from the reporting requirements warranty arrangements conditioned on other than for purposes of determining whether the applicable to buyers; and (iii) define the collective value of the warranted terms of a warranty have been met. For example, items and related services. We also laboratory testing required for patient care may be ‘‘warranty’’ directly and not by necessary to determine if a warranted outcome was reference to 15 U.S.C. 2301(6). We also believe this proposed modification achieved, but the laboratory test would have propose to make a technical correction could enhance the use and utility of independent value to the buyer. A seller’s provision to paragraph (3)(i) to change the text warranted items by protecting of laboratory testing for free or at a reduced charge warranties that encompass services, as part of a warranty agreement would implicate the from ‘‘paragraphs (a)(1) and (a)(2) of this anti-kickback statute. Additionally, the provision of such as support and educational medication adherence services for free or below fair 79 We note that section 1128A(b)(1) of the Act (the services. For example, this proposed market value would implicate the anti-kickback ‘‘Gainsharing CMP’’) prohibits a hospital from modification would protect statute. In contrast, if sellers provide items and knowingly making payments, directly or indirectly, arrangements such as the one at issue in services with no independent value to a buyer, to a physician to induce the physician to reduce or other than to determine whether the conditions of limit medically necessary services to Medicare or Advisory Opinion No. 01–08, where the a warranty have been satisfied, the items and Medicaid beneficiaries who are under the requestor operated a warranty program services may not constitute remuneration under the physician’s direct care. Hospitals that make (and covering wound care products and anti-kickback statute, and thus, may not implicate physicians who receive) payments prohibited by certain related support services, such as the statute. See OIG Compliance Program Guidance this provision are liable for civil money penalties for Pharmaceutical Manufacturers, 68 FR 23731, for each patient for which the prohibited payment 23735 (May 5, 2003), for a discussion of was made. However, our proposed condition is in 80 42 CFR 1001.952(g). pharmaceutical manufacturers’ provision of limited recognition that other parties, besides hospitals and 81 Adv. Op. No. 18–10, available at https:// support services tailored to the manufacturers’ physicians, may seek protection under this safe www.oig.hhs.gov/fraud/docs/advisoryopinions/ products that may not implicate the anti-kickback harbor. 2018/AdvOpn18-10.pdf. statute.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55749

prescribed medications, even when a safe harbor protection for warranties to contain their costs because the patient is experiencing harmful side applying only to services if sufficient providers would receive reimbursement effects, or the medication is not safeguards exist to mitigate these risks, for each discrete item and service they achieving the purpose for which it was and we are soliciting comments on the order, regardless of whether those items prescribed. Because manufacturers have potential fraud and abuse risks that may and services present the best value. financial incentives for patients to use arise if we expand the safe harbor to Without cost-containment incentives, and reorder their medications but do not include services-only warranties and providers may order devices or drugs have the medical expertise the potential safeguards to mitigate these subject to a bundled warranty, prescribing physicians have to risks. regardless of whether lower-cost, determine whether continued use of b. Conditions on Bundled Warranties equally effective devices or drugs are medications is clinically appropriate for available, because providers would be a specific patient, medication adherence We propose to impose the following reimbursed separately for each item and services offered by manufacturers, such conditions on bundled warranty reimbursable service and could be as phone or message communications arrangements: (i) All federally eligible to receive the full cost of the directing patients to take their reimbursable items and services subject separately billed items and reimbursable medications, could result in patient to bundled warranty arrangements must services in the bundle if even one item harm or inappropriate utilization of be reimbursed by the same Federal or reimbursable service fails to perform drugs. health care program and in the same as expected. We are considering safeguards we payment; (ii) a manufacturer or supplier We believe these risks are mitigated must not pay any individual (other than could include in the final rule to protect when bundled warranties apply only to a beneficiary) or entity for any medical, against these risks, such as a safeguard federally reimbursable items and surgical, or hospital expense incurred that would prohibit direct patient services that are reimbursed by the same by a beneficiary other than for the cost outreach by a seller offering a warranty Federal health care program payment, of the items and services subject to the but that would allow the seller to pay such as under an MS–DRG payment. warranty; and (iii) manufacturers and an independent intermediary to perform However, we are aware that bundled suppliers cannot condition bundled services that require direct patient warranties could result in barriers to warranties on the exclusive use of one outreach, as long as compensation for entry for certain manufacturers and or more items or services or impose the patient outreach services is not tied suppliers that cannot offer bundled minimum-purchase requirements of any to the volume or value of any warranted warranties, and we are considering for item used by the patient. items or services. We believe these the final rule, and solicit comments on, Our proposed expansion of this safe requirements would promote beneficial additional safeguards we should include harbor does not protect warranties arrangements while protecting covering only services. We believe beneficiaries and the Federal health care to limit the potential anti-competitive warranties for services that are not tied programs from harmful practices, such effects that bundled warranties may to one or more related items could as inappropriate utilization and product have in the drug and device markets. present heightened fraud and abuse steering, as explained below. Additionally, we solicit specific risks. Manufacturers and suppliers examples where the protections we c. Requirement for Federally could warrant that services will achieve propose would not be sufficient to Reimbursable Items and Services certain clinical goals and offer protect against anti-competitive Subject to Bundled Warranty remuneration to induce referrals from conduct. Arrangements To Be Reimbursed by the referral sources under the guise of We recognize that the proposed Same Federal Health Care Program and warranty remedies. The services requirement above might inhibit in the Same Payment manufacturers and suppliers may offer warranties conditioned on the collective could take many different forms, and it Under a new paragraph (5), we performance of warranted items across a may be difficult to verify whether propose to require that all federally patient population (population-based services, which can more subjective in reimbursable items and services subject warranties) because these items would nature than items, failed to achieve the to the bundled warranty be reimbursed not be reimbursed in the same payment. clinical goals established by a warranty by the same Federal health care program We are considering whether, and if so, arrangement. Additionally, because the and in the same payment. This how, we might craft the safe harbor to services subject to a warranty may not requirement would be satisfied when allow for population-based warranties be federally reimbursable, it may be federally reimbursable items and without creating risks of increased costs difficult to determine whether the services subject to a bundled warranty to the Federal health care programs, as services being warranted are bona fide are reimbursed by, for example, the described above. For example, we are services or sham services offered as part same Part A Medicare Severity- considering for the final rule whether of a warranty agreement and designed to Diagnosis Related Group (MS–DRG) we could require that all items and transfer remuneration to referral sources payment, the same Medicare Part B services be reimbursed according to the upon the failure of such services to ambulatory payment classification same payment methodology, but not achieve the warranted result. If payment, or the same Medicaid necessarily the same payment, to allow physicians, for example, could warrant managed care payment. Allowing sellers for population-based warranties. We that their services will achieve certain to bundle items and services reimbursed solicit comments on this approach and clinical results, the potential to receive by different Federal health care program the potential benefits and fraud and money as a warranty remedy may payments could create incentives for abuse risks it may present. We note that induce patients to select physicians overutilization or inappropriate retrospective reconciliation payments, offering warranties over other utilization of items and services such as those often used under the physicians, particularly where the included in the bundle. Unlike bundled Innovation Center payment models, clinical results being warranted are not payments, such as MS–DRG payments, would not constitute one payment, as easily achievable, regardless of which payments that reimburse providers required under our proposal, when the physician a patient selects. We are separately for each item and service reconciliation payments are paid to one considering for the final rule extending they order do not incentivize providers entity but are not direct payment for

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55750 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

items and services provided only by that under the safe harbor to better facilitate warranty arrangements conditioned on entity. warranties tied to clinical outcomes. We clinical outcome guarantees, provided In addition, we are considering for the understand that delayed reporting may the warranty arrangements meet all the final rule, and seek comments on, be necessary when, for example, the safe harbor’s requirements. whether we should include any efficacy of a drug therapy may not be L. Local Transportation (1001.952(bb)) exceptions to the requirement that all known for several years after the initial federally reimbursable items and purchase. We are considering ways in Increasingly, experts are recognizing services subject to a bundled warranty which we could modify the reporting the important role transportation plays be paid by the same payment, such as requirements under the safe harbor to in patient access to care, quality of care, when bundled items are reimbursed accommodate outcomes-based warranty healthcare outcomes, and effective according to the same payment under arrangements while protecting the coordination of care for patients, the Medicare program but are Government’s interest in having an particularly for patients who lack their reimbursed separately under Medicaid. accurate and timely report of any price own transportation or who live in For example, in Advisory Opinion No. reductions a seller offers a buyer under ‘‘transportation deserts.’’ As part of this 18–10, we noted that the items subject a warranty arrangement protected by the rulemaking, we are revisiting certain to the requestor’s warranty program safe harbor. We also propose to provisions of the existing safe harbor for were reimbursable under the same MS– expressly exclude beneficiaries from the local transportation at 42 CFR DRG payment but potentially were reporting requirement applicable to 1001.952(bb) and, as described above, separately reimbursable under certain other buyers since beneficiaries do not proposing new safe harbor protection states’ Medicaid programs. We report costs to the Government. for certain patient engagement tools and encourage commenters to provide supports. The proposed patient specific examples where an exception 4. Definition of ‘‘Warranty’’ engagement and support safe harbor may be needed. We propose to define ‘‘warranty’’ would include transportation services directly and not by reference to 15 for patients that meet the proposed safe 2. Capped Amount of Warranty U.S.C. 2301(6). The Magnuson-Moss Act harbor requirements. Remedies; Prohibition on Exclusivity enacted 15 U.S.C. 2301, which in We propose to modify the existing and Minimum-Purchase Requirements paragraph (6) defines ‘‘written safe harbor for local transportation at 42 We propose to modify paragraph (4) warranty’’ in connection with the sale of CFR 1001.952(bb) to: (i) Expand the of the safe harbor by limiting the a ‘‘consumer product.’’ However, courts distance which residents of rural areas remuneration a manufacturer or have held that an item regulated under may be transported; and (ii) remove any supplier may pay to any individual the Federal Food, Drug, and Cosmetic mileage limit on transportation of a (other than a beneficiary) or entity for Act is not a ‘‘consumer product’’ for patient from a healthcare facility from any medical, surgical, or hospital purposes of the Magnuson-Moss Act.84 which the patient has been discharged expense incurred by a beneficiary to the The reference to 15 U.S.C. 2301(6) in the to the patient’s residence. cost of the items and services subject to definition of ‘‘warranty’’ therefore For purposes of clarification, we also the warranty. We view this limitation as creates unintentional ambiguity as to provide guidance on the application of an important protection against whether the safe harbor covers the safe harbor to transportation through manufacturers and suppliers providing warranties for drugs and devices ride-sharing services. We are not excessive remuneration to induce regulated under the Federal Food, Drug, proposing to amend the safe harbor to further business. In a new paragraph (6), and Cosmetic Act. We propose revisions explicitly include such services, we also propose to prohibit to the definition of ‘‘warranty’’ to clarify because we believe that nothing in the manufacturers and suppliers from that the warranties safe harbor applies existing language excludes them from conditioning warranties on the to FDA-regulated drugs and devices. protection. exclusive use of one or more items or We propose a definition for Finally, for ease of reference, we services and from imposing minimum- ‘‘warranty’’ that largely models the propose to amend the safe harbor by purchase requirements of any items or definition in 15 U.S.C. 2301(6) but moving the undesignated definitions set services. We view such steering replaces references to a ‘‘product,’’ forth in the note to paragraph (bb) to a practices as highly problematic and where applicable, with ‘‘item or bundle new paragraph (bb)(3). solicit comments on the prevalence of of items, or services in combination 1. Expansion of Mileage Limit for these practices in warranty with one or more related items,’’ to Patients Residing in Rural Areas arrangements. We also solicit comments allow for single-item and bundled on the effectiveness of the proposed warranties. Additionally, the proposed The safe harbor provides that safeguards in preventing or mitigating definition substitutes references to the transportation is protected if provided fraud and abuse risks, as well as ‘‘material’’ of a product with ‘‘quality’’ ‘‘[w]ithin 25 miles of the health care additional safeguards we could impose. to reflect the inclusion of warranted provider or supplier to or from which services in addition to items. The the patient would be transported, or 3. Reporting Requirements proposed definition of ‘‘warranty’’ within 50 miles if the patient resides in Stakeholders have expressed concern continues to include a ‘‘written a rural area, as defined in this paragraph that the reporting requirements under affirmation of fact or written promise (bb).’’ 85 In response to the OIG RFI, the safe harbor may not allow for [that] affirms or promises that [items some commenters stated that the 50- outcomes-based warranty arrangements and services] . . . will meet a specified mile limit for residents of rural areas is in which buyers could receive return level of performance over a specified insufficient, as many rural residents payments from manufacturers over period of time.’’ We interpret this need to travel more than 50 miles to several years if a therapy does not meet provision to provide protection for obtain medically necessary services. clinical outcomes at designated points Accordingly, we are proposing to in time. We solicit comments on any 84 See, e.g., Kanter v. Warner-Lambert Co., 99 Cal. increase the limit on transportation of burden the current reporting App. 4th 780, 798 (2002); Goldsmith v. Mentor Corp., 913 F. Supp. 56, 63 (D.N.H. 1995); Kemp v. residents of rural communities to 75 requirements impose and the need for Pfizer, Inc., 835 F. Supp. 1015, 1024–25 (E.D. Mich. more flexible reporting requirements 1993). 85 42 CFR 1001.952(bb)(1)(iv)(B).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55751

miles, but we solicit comments on of the patient’s choice, including to locations that do not relate to a whether an increase to 75 miles is another healthcare facility. We are particular patient’s medical care. We sufficient. We urge commenters to soliciting comment on the fraud and also stated that we would consider in a provide data or other evidence to abuse risks that may arise from future rulemaking whether permitting support the most appropriate distance permitting transportation to another transportation to non-medical services for the purposes of this rulemaking. We healthcare facility. In addition, we are that are part of care coordination request that commenters provide considering for the final rule whether, arrangements or are related to specific information, if available, about and under what circumstances, improving healthcare would be the patients within the commenters’ transportation home or to another appropriate.86 communities or service areas who facility should be protected when a In response to the OIG RFI, we cannot obtain care within the existing patient has not been admitted to an received comments suggesting that the distance limits. We also seek comments inpatient facility. For example, we are local transportation safe harbor should on how an entity would provide soliciting comments on whether protect transportation for non-medical transportation over distances in excess transportation should be protected after purposes that may nevertheless improve of 50 miles (e.g., by shuttle, as defined a patient has been seen in the or maintain health. Such transportation in the existing safe harbor), ride-sharing emergency room, under observation might be to food stores or food banks, programs, reimbursement of mileage, status at a hospital for an extended social services facilities (such as to reimbursement of bus or taxi fare, or period, but not admitted, or after a apply for food stamps or housing other means. Such information will procedure at an ambulatory surgery assistance), exercise facilities, or assist us in determining whether an center (ASC). If transportation is chronic disease support groups, for increased distance limit is necessary protected under these circumstances, example. In many cases, such and practical and whether it is likely to we welcome comments on what transportation might help address both be subject to abuse. While the current limitations should be imposed (e.g., patients’ health outcomes as well as safe harbor does not require any observation status at a hospital for at social determinants of health, such as showing of need on the part of patients, least 24 hours, or a procedure at an ASC transportation, nutrition, and housing. we solicit comments on whether the or medical condition evaluated or We are considering including non- final rule should protect transportation treated at an emergency department that medical purposes in the final safe in excess of the current limits only results in a patient being unable to harbor, and we seek comments on where there is a demonstration of travel home safely unaccompanied). whether and how the safe harbor could financial, medical, or transportation The safe harbor does not require an be expanded in this manner to foster need. We also solicit comments on what entity to offer transportation to patients, innovative arrangements that are likely safeguards would be necessary to and an entity may impose its own to improve health outcomes and address prevent abuse of an expansion of these mileage limits on any transportation non-medical needs that significantly limits for rural or other patients. offer, as long as it imposes such limits influence those outcomes, without consistently and makes the creating an unacceptable risk of fraud 2. Elimination of Distance Limit on transportation available without regard and abuse, such as inducing Transportation of Discharged Patients to the volume or value of Federal health beneficiaries to receive unnecessary Comments on the OIG RFI and other care program business. For example, the healthcare items and services. We are information raise concerns about entity sponsoring the transportation considering whether such expansion of patients discharged from healthcare cannot offer the transportation only to the safe harbor should be limited to facilities who do not have a ride home. facilities affiliated with it. certain beneficiary populations, such as In some cases, these patients have been As with our proposal to increase the chronically ill patients, or to patients brought to the facility from a great mileage limit for transportation of rural who are being discharged from a distance. Some patients in behavioral patients, we solicit comments on hospital or other facility. Responses to health facilities are brought to the whether transportation of discharged this solicitation of comments will facility over long distances by law patients, if in excess of otherwise inform our consideration of potentially enforcement personnel. Commenters applicable safe harbor mileage limits, extending this safe harbor in the final urged that the local transportation safe should be limited to patients with rule to include these arrangements or harbor be expanded to protect facilities demonstrated need (either financial potentially protecting arrangements in that want to provide safe transportation need or transportation need), and if so, the patient engagement and support safe home. what standards should apply to such harbor, if finalized. We agree that transportation home demonstration of need. Finally, we Elsewhere in this rulemaking, we are after discharge from an inpatient facility solicit comments on whether, if this proposing a new safe harbor for patient does not pose the same level of risk of proposal to eliminate any mileage limit engagement tools and supports provided inducing patient referrals as for discharged patients is adopted, there by VBE participants, which could transportation to the facility. remains a need to increase the distance include transportation for health- Accordingly, we are proposing to limit for transportation of patients who related, non-medical purposes. The eliminate any distance limit on reside in rural areas. protection of this safe harbor would not transportation of a patient who has been be available outside the context of a discharged from a facility after 3. Local Transportation for Health- VBE, however, since the proposed safe admission as an inpatient, regardless of Related, Non-Medical Purposes harbor limits protection to patient whether the patient resides in an urban In the preamble to the final rule engagement tools and supports or rural area, if the transportation is to establishing the local transportation safe furnished by VBE participants. We refer the patient’s residence, another harbor, we declined to extend safe commenters to the standards and residence of the patient’s choice (such harbor protection to transportation for safeguards proposed for the separate as the residence of a friend or relative purposes other than to obtain medically safe harbor for patient engagement tools who is caring for the patient post- necessary items or services, although we and supports (proposed at discharge). We are also considering noted that a shuttle service protected by protecting transportation to any location the safe harbor could make stops at 86 See 81 FR 88368, 88384 (Dec. 7, 2016).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55752 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

1001.952(hh)), and we solicit comments their facilities. It cannot, however, patient population, fosters coordination on whether these standards and advertise that it provides free or of items and services under Medicare safeguards are also appropriate for the discounted transportation to a particular Parts A and B, encourages investment in local transportation safe harbor, to the healthcare provider or group of infrastructure and redesigned care extent that were to apply to providers. Such customer-specific processes for high-quality and efficient transportation for non-medical advertising is within the control of the healthcare service delivery, and purposes. In addition, we seek customer to prohibit, and therefore promotes higher value care. The comments on whether an extension of would be imputed to the customer (i.e., Medicare Shared Savings Program is a the local transportation safe harbor in the entity paying for the transportation, voluntary program that encourages this manner is needed or appropriate, if regardless of whether that entity pays groups of doctors, hospitals, and other the proposed separate safe harbor for for the advertising), thus disqualifying healthcare providers to come together as patient engagement and support offered the arrangement from safe harbor an ACO to lower growth in expenditures by VBE participants is adopted protection. and improve quality. An ACO agrees to (proposed 1001.952(hh)). To the extent that the ride-sharing be held accountable for the quality, cost, 4. Use of Ride-Sharing Services service provides services other than and experience of care of an assigned transportation for the purpose of Medicare FFS beneficiary population. We are aware that some entities are obtaining medical care, such services ACOs that successfully meet quality and providing transportation for medical would not be protected by the safe savings requirements share a percentage items and services through the use of harbor. Like a taxi driver, a ride-share of the achieved savings with Medicare. ride-sharing services. As we understand driver could assist a patient in getting Section 1899(m)(1)(A) of the Act, as the use of these services, a hospital, for from a residence into a vehicle and from added by section 50341 of the Budget example, could arrange with a ride- a vehicle into a medical provider’s Act of 2018,89 permits ACOs under sharing service to provide rides for its facility, and this could include assisting certain two-sided models to operate patients, for which the hospital would the patient with a wheelchair, oxygen CMS-approved beneficiary incentive be billed. We are aware that some equipment, or the like. This would be programs to provide incentive payments members of the public may be uncertain considered part of the transportation to assigned beneficiaries who receive about the application of the safe harbor service. In addition, a ride-sharing qualifying primary care services. in these circumstances. driver, taxi driver, or shuttle could, for According to CMS, and as intended by In the preamble to the final rule example, provide the patient with section 1899(m)(1)(A) of the Act, the establishing the local transportation safe transportation from a physician’s office beneficiary incentive programs will harbor, we noted the possibility that or hospital to a pharmacy, for the encourage beneficiaries assigned to patient transportation would be purpose of obtaining a prescription (a certain ACOs to obtain medically provided via taxi.87 Although we did medically necessary item) before taking necessary primary care services while not explicitly refer to ride-sharing the patient home. As noted in the requiring such ACOs to comply with services, we see no difference between preamble to the 2016 final rule program integrity and other these services and taxis, for purposes of establishing this safe harbor, a shuttle requirements.90 CMS, in a final rule the safe harbor. We believe that nothing establishing regulations governing ACO in the language of the safe harbor could also include a food store among 88 Beneficiary Incentive Programs states precludes their use. (By the same logic, its stops. However, transportation to a that the agency ‘‘believe[s] that such the safe harbor does not preclude food store or any other location not for amendments will empower individuals transportation via self-driving cars or the purpose of obtaining medically necessary items or services, when and caregivers in care delivery.’’ 91 other similar technology that serve as a Specifically, the Budget Act of 2018 taxi service, should they become provided on a patient-specific basis (i.e., added section 1899(m)(1)(A) of the Act, available.) We invite any commenters not by a shuttle), is not protected by this which allows ACOs to apply to operate who disagree to provide comments safe harbor. Such transportation may be an ACO Beneficiary Incentive Program. explaining the possible basis for the protected by the proposed safe harbor The Budget Act of 2018 also added a exclusion of ride-sharing programs from for value-based arrangements, as new subsection (m)(2) to section 1899 of protection from the existing safe harbor. discussed elsewhere in this proposed the Act, which provides clarification If we find such comments persuasive, rule. regarding the general features, we will consider an amendment to the Finally, we note that, as with all safe implementation, duration, and scope of safe harbor to explicitly protect harbors, the local transportation safe approved ACO Beneficiary Incentive transportation through ride-sharing harbor applies only to the Federal anti- Programs. In addition, the Budget Act of programs. kickback statute (and the beneficiary 2018 added section 1899(b)(2)(I) of the We note, however, that the same safe inducements CMP). Providers of Act, which requires ACOs that seek to harbor requirements that apply to other transportation remain subject to all operate a beneficiary incentive program forms of transportation also apply to other federal, state and local laws and to apply to operate the program at such transportation provided by ride-sharing regulations that may be applicable to time, in such manner, and with such services. These include the requirement their activities and arrangements. information as the Secretary may that the availability of free or M. ACO Beneficiary Incentive Program require.92 discounted transportation not be advertised. A taxi company, ride- 1. Overview of Medicare Shared Savings 89 Public Law 115–123, 132 Stat. 64. sharing service, or other provider of Program and Provisions of the Budget Act of 2018 for ACO Beneficiary 90 Medicare Program; Medicare Shared Savings transportation could advertise that it Program; Accountable Care Organizations— provides transportation to medical Incentive Programs Pathways to Success and Extreme and appointments and suggest contacting Section 1899 of the Act established Uncontrollable Circumstances Policies for Performance Year 2017, 83 FR 67816, 67823 (Dec. medical providers to determine if free or the Medicare Shared Savings Program, 31, 2018). discounted transportation is available to which promotes accountability for a 91 Id. at 67980. 92 For additional background information on 87 81 FR at 88387. 88 81 FR 88384. section 1899(m) and 1899(b)(2)(I), see Medicare

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55753

In order to implement the changes set exception to the definition of that were enacted in the Budget Act of forth in section 1899(b)(2) and (m) of the ‘‘remuneration’’ under the Federal anti- 2018. This proposed rule would add an Act, CMS added regulation text at 42 kickback statute. In other words, we exception for the provision of certain CFR 425.304(c) that allows ACOs believe that for an incentive payment to telehealth technologies related to in- participating under certain two-sided satisfy the ACO Beneficiary Incentive home dialysis services to the definition models to establish CMS-approved Program statutory exception, and the of ‘‘remuneration’’ applicable to the beneficiary incentive programs to corresponding safe harbor proposed at beneficiary inducements CMP, which provide incentive payments to assigned paragraph 1001.952(kk), all of the prohibits offering inducements to beneficiaries who receive qualifying requirements enumerated at section Medicare or Medicaid beneficiaries that services. 1899(m)—related both to ACO the offeror knows or should know are Beneficiary Incentive Programs and 2. ACO Beneficiary Incentives Program likely to influence the selection of incentive payments made pursuant to Statutory Exception and Proposed Safe particular providers, practitioners or such programs—must, and would be Harbor (1001.952(kk)) suppliers. required to, be satisfied. Section 50341(b) of the Budget Act of While section 1899(m) of the Act also A. Statutory Exception for Telehealth 2018, which added section includes a provision that states, ‘‘[t]he Technologies for In-Home Dialysis 1128B(b)(3)(K) of the Act, states that Secretary shall permit such an ACO to ‘‘illegal remuneration’’ under the anti- establish such a program at the As part of the Creating High-Quality kickback statute does not include ‘‘. . . Secretary’s discretion and subject to Results and Outcomes Necessary to an incentive payment made to a such requirements, including program Improve Chronic Care Act of 2018, Medicare fee-for-service beneficiary by integrity requirements, as the Secretary section 50302 of the Budget Act of 2018 an ACO under an ACO Beneficiary determines necessary,’’ 93 we do not amends section 1881(b)(3) of the Act to Incentive Program established under interpret the statutory exception found permit an individual with ESRD subsection (m) of section 1899, if the at section 1128B(b)(3)(K) of the Act to receiving home dialysis to elect to payment is made in accordance with the require satisfaction of any requirements receive their monthly ESRD-related requirements of such subsection and found outside of section 1899(m) (e.g., clinical assessments via telehealth, if meets such other conditions as the the regulatory requirements established certain other conditions are met.95 Secretary may establish.’’ by CMS implementing the ACO Section 50302(c) of the Budget Act of We propose to codify the statutory Beneficiary Incentive Program, found at 2018 creates a new exception to the exception to the definition of 42 CFR 425.304(c)).94 In other words, definition of ‘‘remuneration’’ in the ‘‘remuneration’’ at section OIG interprets the statutory exception beneficiary inducements CMP. 1128B(b)(3)(K) of the Act in our found at section 1128B(b)(3)(K) of the Specifically, section 50302(c) of the regulations at proposed paragraph Act and would interpret the Budget Act of 2018 adds the following 1001.952(kk). We propose to adopt corresponding safe harbor proposed at exception as new section 1128A(i)(6)(J) regulatory language nearly identical to paragraph 1001.952(kk), to require that of the Act: the statutory language, with two the incentive payment is made in exceptions. First, the text of the accordance with the requirements found The provision of telehealth proposed safe harbor would make it in section 1899(m) of the Act. technologies (as defined by the clear that an ACO may furnish incentive Given the requirements imposed on Secretary) on or after January 1, 2019, by payments only to assigned beneficiaries. ACO Beneficiary Incentive Programs a provider of services or a renal dialysis Second, the safe harbor would modify and incentive payments made pursuant facility (as such terms are defined for the statutory language stating, ‘‘if the to an ACO Beneficiary Incentive purposes of title XVIII) to an individual payment is made in accordance with the Program, found in section 1899(m), at with end stage renal disease who is requirements of such subsection,’’ to ‘‘if this time, we do not believe it is receiving home dialysis for which the incentive payment is made in necessary to create additional payment is being made under part B of accordance with the requirements found conditions under the proposed ACO such title, if: in such subsection.’’ Note that we do Beneficiary Incentives Program safe not propose the establishment of any harbor, paragraph 1001.952(kk). 95 Section 50302(b) of the Budget Act of 2018 additional safe harbor conditions that made additional changes related to the provision of However, we are considering and seek telehealth services to ESRD patients, such as the incentive payments made by an ACO to comment on whether OIG should inclusion of a renal dialysis facility and the home an assigned beneficiary under an ACO include additional conditions in this of an individual as telehealth originating sites but Beneficiary Incentive Program safe harbor. only for the purposes of the monthly ESRD-related established under section 1899(m) of the clinical assessments furnished through telehealth Act must satisfy. IV. Provisions of the Proposed Rule: provided under section 1881(b)(3)(B) of the Act. For Beneficiary Inducements CMP additional information, see Medicare Program; The ACO Beneficiary Incentive Revisions to Payment Policies Under the Physician Program statutory exception, found at Exception Fee Schedule and Other Revisions to Part B for CY section 1128B(b)(3)(K) of the Act, This proposed rule would amend 42 2019; Medicare Shared Savings Program requires that ‘‘the payment is made in Requirements; Quality Payment Program; Medicaid CFR 1003.110 by codifying amendments Promoting Interoperability Program; Quality accordance with the requirements of Payment Program-Extreme and Uncontrollable [section 1899(m)].’’ We read this 93 Section 1899(m)(1)(A) of the Act. Circumstance Policy for the 2019 MIPS Payment provision to broadly incorporate all of 94 CMS, in the final rule establishing the ACO Year; Provisions From the Medicare Shared Savings the requirements found in section Beneficiary Incentive Program, determined that the Program-Accountable Care Organizations-Pathways 1899(m) as requirements of the ACO ACO Beneficiary Incentive Program required to Success; and Expanding the Use of Telehealth additional program integrity safeguards. CMS Services for the Treatment of Opioid Use Disorder Beneficiary Incentive Program statutory included several requirements at 42 CFR 425.304(c) Under the Substance Use-Disorder Prevention That to help mitigate the program integrity risks Promotes Opioid Recovery and Treatment Program; Medicare Shared Savings Program; associated with ACO Beneficiary Incentive (SUPPORT) for Patients and Communities Act 83 Accountable Care Organizations—Pathways to Programs. Under 42 CFR 425.304(c)(4)(iv), for FR 59452, 59495 (Nov. 23, 2018), available at Success and Extreme and Uncontrollable example, ACOs are prohibited from offering an https://www.govinfo.gov/content/pkg/FR-2018-11- Circumstances Policies for Performance Year 2017, incentive payment as part of an advertisement or 23/pdf/2018-24170.pdf. See also 42 CFR 410.78, 83 FR 67816 (Dec. 31, 2018). solicitation to beneficiaries. 414.65.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55754 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

(i) The telehealth technologies are not in-home dialysis care, furnished by their considering for the final rule and seek offered as part of any advertisement or physician. comments on whether the exception solicitation; The first criterion included in the should protect telehealth technologies (ii) the telehealth technologies are statutory exception provides that that provide the beneficiary with no provided for the purpose of furnishing protected items or services may not be more than a de minimis benefit for any telehealth services related to the offered as part of any advertisement or purpose other than furnishing telehealth individual’s end stage renal disease; and solicitation. We are including this services related to the individual’s (iii) the provision of the telehealth requirement in our proposed regulation ESRD. We also are considering for the technologies meets any other at proposed condition (ii). As we have final rule and seek comments on requirements set forth in regulations said in other rulemakings, we propose another standard that would protect promulgated by the Secretary. that stakeholders interpret the terms telehealth technologies only when This exception would be available ‘‘advertisement’’ and ‘‘solicitation’’ furnished predominantly for the consistent with their common usage in purpose of furnishing telehealth only for telehealth technologies, as 96 defined below, furnished by a provider the healthcare industry. services related to the individual’s The second criterion included in the of services or a renal dialysis facility to ESRD. statutory exception requires the patients with ESRD who receive in- We propose to interpret ‘‘telehealth telehealth technologies to be provided home dialysis that is payable by services related to the individual’s end for the purpose of furnishing telehealth Medicare Part B. We propose to stage renal disease’’ to mean only those services related to the individual’s interpret this exception, in our proposed telehealth services paid for by Medicare ESRD. At proposed condition (iii), we condition (i), to require that the Part B. CMS maintains a list of services propose to interpret ‘‘for the purpose of telehealth technologies be furnished to payable under the Medicare Physician furnishing telehealth services related to Fee Schedule when furnished via the individual by the provider of the individual’s end stage renal disease’’ telehealth. We solicit comments on this services or the renal dialysis facility (as to mean that the technology contributes interpretation. those terms are defined in title XVIII of substantially to the provision of the Act) that is currently providing the telehealth services related to the The statutory exception’s third in-home dialysis, telehealth visits, or individual’s ESRD, is not of excessive criterion allows the Secretary to develop other ESRD care to the patient. The value, and is not duplicative of additional requirements not specified in underlying intent of this proposed technology that the beneficiary already the statutory exception and requires the condition (i) is to prevent arrangements owns if that technology is adequate for Secretary to define ‘‘telehealth where providers and suppliers offer the telehealth purposes. We would technologies.’’ Below we propose a telehealth technologies to patients with consider technology to be of excessive definition of ‘‘telehealth technologies’’ whom they do not have a prior clinical value if the retail value of the and further enumerate requirements relationship in an attempt to steer technology is substantially more than is under the new exception to the patients to a particular provider or required for the telehealth purpose. For definition of ‘‘remuneration’’ for the supplier. We seek comment on this example, if a readily available $300 beneficiary inducements CMP. proposed condition (i), and in smartphone would adequately run the B. Additional Proposed Conditions for particular, any challenges this condition telehealth technology, the safe harbor the Telehealth Technologies Exception would create. In addition, while we are would not protect a donation of a $600 aware of the increasing proliferation of smartphone. To ensure that this Under proposed condition (iv), a telehealth services, and the likely desire proposed safe harbor protects the person must not bill Federal health care of other healthcare industry provision of telehealth technologies ‘‘for programs, other payors, or individuals stakeholders to furnish telehealth the purpose of furnishing telehealth for the telehealth technologies, claim technologies to patients receiving services related to the individual’s end the value of the item or service as a bad telehealth services, the statutory stage renal disease’’ and not to induce debt for payment purposes under a exception, and therefore, this proposal, referrals, we are also considering for the Federal health care program, or is limited to a subset of patients final rule, and seek comment on, a otherwise shift the burden of the value receiving in-home dialysis and certain, condition that would require the of the telehealth technologies onto a enumerated providers in the statutory provider or facility to retain ownership Federal health care program, other exception. We further note that the of any hardware and make reasonable payors, or individuals. This proposed provision of telehealth technologies efforts to retrieve the hardware once the requirement is designed to protect might qualify for protection under other beneficiary no longer needs it for the against the telehealth technologies existing or proposed exceptions or safe permitted telehealth purposes (such that resulting in inappropriately increased harbors, including the proposed safe the hardware is loaned to the costs to Federal health care programs, harbor for patient engagement and beneficiary). other payors, and patients. In this support, paragraph 1001.952(hh). That We remain concerned that the requirement, we propose to prohibit being said, we seek comment on provision of telehealth technology with claiming the cost of the telehealth whether we should, for purposes of the substantial independent value to the technologies and any operational costs final rule, interpret the statutory beneficiary might serve to induce the attendant to providing telehealth exception to apply not only to the beneficiary to choose a particular technologies as bad debt for payment ‘‘provider of services or the renal provider or facility. We are considering, purposes under Medicare or a State dialysis facility (as those terms are and solicit comments about, whether healthcare program or otherwise shifting defined in tile XVIII of the Act),’’ but the final rule should interpret ‘‘for the the burden of the cost of the telehealth also suppliers, as defined in title XVIII purpose of furnishing telehealth technologies and any operational costs of the Act. We solicit comments on this services related to the individual’s end attendant to the provision of patient issue, in recognition of the underlying stage renal disease’’ in a more restrictive incentives to Medicare, a State congressional intent and policy goals set manner. For example, we are healthcare program, other payors, or forth in Section 50302(b) of the Budget individuals. We seek comments on this Act of 2018: Expanding patient access to 96 See, e.g., 81 FR 88368, 88373 (Dec. 7, 2016). proposed condition.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55755

C. Defining Telehealth Technologies 42 CFR 410.78(a)(3), should be excluded incentives due to the potential cost of We propose to define ‘‘telehealth from our definition of ‘‘telehealth furnishing the incentive to all qualifying technologies’’ for the purposes of the technologies.’’ We are also considering patients rather than a smaller subset. definition of the term ‘‘remuneration’’ as for the final rule, and seek comment on, Similarly, we are interested in why set forth in 42 CFR 1003.110 and the whether to define ‘‘telehealth offering remuneration to a smaller telehealth technologies exception to technologies’’ to include technologies subset of qualifying patients might be section 50302(c) of the Budget Act of such as software, a webcam, data plan, appropriate and not increase the risk of 2018. In proposing such definition, we or broadband internet access that fraud and abuse. facilitates the telehealth encounter. This consulted with CMS and solicited 2. Necessary Technology might include, for example, software comments in the OIG RFI regarding how For purposes of the final rule, we are OIG should define ‘‘telehealth that allows a patient to use his or her existing smartphone, tablet, or computer considering allowing a person to furnish technologies’’ and if the definition telehealth technologies under the safe should include ‘‘services.’’ Based on the to receive telehealth consultations. We are interested in comments on whether harbor only after making a good faith collective input we received, we determination that the individual to propose to adopt, as part of our and how broadening the exception to include these kinds of technologies whom the technology is furnished does definition of ‘‘telehealth technologies,’’ not already have the necessary the definition of ‘‘interactive might impact access to medically necessary care for beneficiaries. We are telehealth technology, and that such telecommunications system’’ found at technology is necessary for the 42 CFR 410.78. Under 42 CFR 410.78, further interested in comments on whether such broadening would create telehealth services provided. For Medicare Part B pays for covered instance, if an application on a patient’s telehealth services included on the an undue risk of remuneration that would inappropriately steer existing phone would be sufficient, but telehealth list when furnished using an the patient is furnished a new tablet, ‘‘interactive telecommunications beneficiaries to particular providers or suppliers to obtain federally this would be considered duplicative or system’’ if certain conditions are met. 42 unnecessary. Should the recipient CFR 410.78(a)(3) defines an ‘‘interactive reimbursable items and services, and whether there would be limitations or already possess technology that allows telecommunications system’’ to mean the telehealth visit to occur, we are ‘‘multimedia communications conditions on the provision of telehealth technologies that we could concerned that a person may furnish equipment that includes, at a minimum, additional valuable or duplicative audio and video equipment permitting include in an exception to curb potential abuses, such as a limitation on technology for inappropriate purposes two-way, real-time interactive (e.g., to induce a patient to select a communication between the patient and the value of the remuneration (e.g., a cap on the retail value of the telehealth particular provider for in-home dialysis, distant site physician or practitioner. or to seek other items and services from Telephones, facsimile machines, and technologies furnished, such as $100, $200, $500, or another amount that that provider). We seek comment on this electronic mail systems do not meet the potential safeguard. We also are definition of an interactive would be of sufficient magnitude to protect the most beneficial arrangements considering, and seek comment telecommunications system.’’ regarding, a condition in the final rule For the purposes of this exception, we while also preventing the most abusive ones). that would require the person who propose to define ‘‘telehealth furnishes the telehealth technologies to technologies’’ as the following: D. Other Potential Safeguards take reasonable steps to limit the use of ‘‘multimedia communications the telehealth technologies by the equipment that includes, at a minimum, 1. Consistent Provision of Telehealth Technologies individual to the telehealth services audio and video equipment permitting described on the Medicare telehealth two-way, real-time interactive In addition to the proposed list. communication between the patient and conditions set forth above, we are distant site physician or practitioner considering for the final rule and seek 3. Notice to Patients used in the diagnosis, intervention or comment on whether, as a condition of One commenter to the OIG RFI noted ongoing care management—paid for by safe harbor protection, parties should be that patients may be confused by the Medicare Part B—between a patient and prohibited from discriminating in the technology, or the reason they are the remote healthcare provider. offering of telehealth technologies. Such receiving a piece of technology, and Telephones, facsimile machines, and a safe harbor condition would require unaware of costs associated with electronic mail systems do not meet the providers and renal dialysis facilities to telehealth visits. We are considering definition of ‘telehealth technologies.’ ’’ provide the same telehealth adding in the final rule a condition that For the purposes of our definition of technologies to any Medicare Part B requires providers or facilities to ‘‘telehealth technologies,’’ smart phones eligible patient receiving in-home provide a written explanation of the that allow for two-way, real-time dialysis, or to otherwise consistently reason for the technology and any interactive communication through offer telehealth technologies to all potential ‘‘hidden’’ costs associated secure, video conferencing applications patients satisfying specified, uniform with the telehealth services to any would not be considered ‘‘telephones.’’ criteria. This potential condition could patient who elects to receive telehealth We solicit comments this definition, reduce the likelihood that telehealth technology. We solicit comments on and are interested in comments that technologies would be offered these perceived risks to patients, and explain whether, and why, this selectively based on whether the patient whether to include a written notice definition would be too narrow, or too generates other billable business for the requirement in the final rule, and if so, broad, and elaborate upon any attendant provider or facility. We solicit what that notice should state. risks of fraud and abuse associated with comments on this issue. In particular, the adoption of this definition. We also we are interested in understanding 4. Patient Freedom of Choice solicit comments on whether whether this proposed safeguard would We also are considering finalizing a ‘‘[t]elephones, facsimile machines, and limit providers of services’ or renal condition that is designed to preserve electronic mail systems,’’ as used in in dialysis facilities’ ability to offer patient freedom of choice among

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55756 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

healthcare providers and the manner in by these proposed revisions. The a regulatory impact analysis if a rule which he or she receives dialysis changes to the safe harbors and CMP under Titles XVIII or XIX or section B services under arrangements that would exceptions would allow providers to of Title XI of the Act may have a use the proposed exception. In enter into certain beneficial significant impact on the operations of particular, we are considering a arrangements. In doing so, this a substantial number of small rural condition in the exception that would regulation would impose no hospitals. For the reasons stated above, require offerors of telehealth requirements on any party. Providers we do not believe that any provisions or technologies to advise patients when would be allowed to voluntarily seek to changes finalized here would have a they receive such technology that they comply with these provisions so that significant impact on the operations of retain the freedom to choose any they would have assurance that rural hospitals. Thus, an analysis under provider or supplier of dialysis services participating in certain arrangements section 1102(b) of the Act is not and to receive dialysis in any would not subject them to liability required for this rulemaking. appropriate setting. We are also under the anti-kickback statute and the concerned that some patients may be beneficiary inducements CMP. These C. Unfunded Mandates Reform Act persuaded to opt for telehealth visits safe harbors and exceptions facilitate Section 202 of the Unfunded due to the generous telehealth providers’ ability to provide important Mandates Reform Act of 1995, Public technologies and services being offered, healthcare and related services to Law 104–4, also requires that agencies rather than clinical appropriateness. We communities in need. We believe that assess anticipated costs and benefits solicit comments on including this the aggregate economic impact of the before issuing any rule that may result potential safeguard, and whether adding changes to these regulations would be in expenditures in any one year by freedom of choice language to a patient minimal and would have no effect on State, local, or Tribal Governments, in notification would reduce this concern. the economy or on Federal or State the aggregate, or by the private sector, of expenditures. Accordingly, we believe $100 million, adjusted for inflation. We 5. Materials and Records Requirement that the likely aggregate economic effect believe that no significant costs would The proposed exception would not of these regulations would be be associated with these proposed include a materials and records or other significantly less than $100 million. revisions that would impose any documentation requirement given the However, this rule is considered mandates on State, local, or Tribal somewhat narrow scope of the significant under Executive Order Governments or the private sector that remuneration that would be excepted 12866. Notwithstanding our would result in an expenditure of $154 from the definition of ‘‘remuneration’’ determination that the aggregate million (after adjustment for inflation) and consistent with other exceptions to economic impact of the changes to these in any given year. the definition of ‘‘remuneration’’ set regulations would be minimal and forth in 42 CFR 1003.110. We solicit would have no effect on the economy or D. Executive Order 13132 comments on this approach and any on Federal or State expenditures, we Executive Order 13132 establishes fraud and abuse risks presented by not solicit comments on whether certain requirements that an agency including a condition related to stakeholders believe there would be must meet when it promulgates a rule materials and records. increases or decreases in utilization or that imposes substantial direct costs savings or expenses to the requirements or costs on State and local V. Regulatory Impact Statement Government as a result of this proposed Governments, preempts State law, or As set forth below, we have examined rule. We are interested in potential otherwise has Federalism implications. the impact of this proposed rule as behavioral changes as well. In reviewing this rule under the required by Executive Order 12866, the threshold criteria of Executive Order B. Regulatory Flexibility Act Regulatory Flexibility Act (RFA) of 13132, we have determined that this 1980, the Unfunded Mandates Reform The RFA and the Small Business proposed rule would not significantly Act of 1995, Executive Order 13132, and Regulatory Enforcement and Fairness affect the rights, roles, and Executive Order 13771. We provide Act of 1996, which amended the RFA, responsibilities of State or local additional supporting analyses in require agencies to analyze options for Governments. sections F, G, and H. regulatory relief of small businesses. For purposes of the RFA, small entities E. Executive Order 13771 A. Executive Order 12866 include small businesses, nonprofit Executive Order 13771 (January 30, Executive Order 12866 directs organizations, and Government 2017) requires that the costs associated agencies to assess all costs and benefits agencies. Most providers are considered with significant new regulations ‘‘to the of available regulatory alternatives and small entities by having revenues of $7 extent permitted by law, be offset by the if regulations are necessary, to select million to $35.5 million or less in any elimination of existing costs associated regulatory approaches that maximize one year. For purposes of the RFA, most with at least two prior regulations.’’ net benefits (including potential physicians and suppliers are considered This proposed rule has been designated economic, environmental, public health small entities. We estimate the changes a significant regulatory action as defined and safety effects; distributive impacts; to the CMP exceptions and the anti- by Executive Order 12866 but imposes and equity). A regulatory impact kickback statute safe harbors would not no more than de minimis costs. The analysis must be prepared for major significantly affect small providers, as designation of this rule, if finalized, will rules with economically significant these changes would not impose any be informed by public comments effects (i.e., $100 million or more in any requirement on any party. As a result, received; however, this proposed rule, if given year). This proposed rule would we have concluded that this proposed finalized as proposed, would be neither codify a new CMP exception and rule likely will not have a significant a regulatory nor a deregulatory action implement new or revised anti-kickback impact on a substantial number of small under Executive Order 13771. statute safe harbors. The vast majority of providers and that a regulatory providers and Federal health care flexibility analysis is not required for F. Statement of Need programs would be minimally impacted this rulemaking. In addition, section The Department has identified the from an economic perspective, if at all, 1102(b) of the Act requires us to prepare broad reach of the Federal anti-kickback

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55757

statute and beneficiary inducements It is difficult to gauge the effects of equipment and supplies merchant CMP as potentially inhibiting beneficial this regulatory action in a rapidly wholesaler firms; 482,522 ambulatory arrangements that would advance the evolving and diverse healthcare healthcare service firms; 3,293 hospital ability of providers, suppliers, and ecosystem of substantial innovation, firms; and 9,153 nursing care facility others to transition more effectively and experimentation, and deployment of firms operating in the US in 2015.97 We efficiently to value-based care and to technology and digital data. For request public comment on the entities better coordinate care among providers, example, it is difficult to gauge affected by the rule. suppliers, and others in both the Federal reductions in wasteful healthcare We anticipate that a growing health care programs and commercial spending and improved health proportion of such providers and sectors. Industry stakeholders have outcomes as a result of new suppliers would be interested in informed us that, because the arrangements made possible by this reviewing and using these voluntary consequences of potential proposed rule. It is also difficult to rules over time. Because compliance noncompliance with the Federal anti- quantify savings or losses that could with safe harbors and CMP exceptions kickback statute and beneficiary occur as a result of new fraudulent or is voluntary and an arrangement need inducements CMP could be significant, abusive conduct that could increase not fit in a safe harbor or exception to providers, suppliers, and others may be costs or lead to poor outcomes as a be legal, we anticipate that not all discouraged from entering into result of new arrangements. In some providers and suppliers would review innovative arrangements that could cases, innovations and the availability the new regulations and use them. We improve quality outcomes, produce of more actionable, transparent data estimate that 5 percent of affected health system efficiencies, and lower may enhance program integrity and entities that would be eligible to use the healthcare costs (or slow their rate of protect against fraud and abuse, proposed rules may be interested in growth). To the extent providers are reducing costs and increasing benefits. exploring value-based arrangements discouraged from entering into these There is a compelling concern that made possible by the rule in each of the innovative arrangements, patient care uncertainty and regulatory barriers first 10 years following publication of may not be provided as efficiently as under current regulations could prevent the final rule, leading those entities to possible. In addition, the potential the best and most efficacious review the rule. We estimate that consequences of noncompliance with innovations from emerging and being reviewing the final rule will require an these statutes may impede the ability of tested in the marketplace. Our goal is to average of one hour of time each from providers, suppliers, and others, finalize safe harbors that protect a compliance officer and a lawyer. To including small providers and suppliers arrangements that foster beneficial estimate the costs associated with this or those serving rural or medically arrangements and promote value, while review, we use a 2018 wage rate of underserved populations, to raise also protecting programs and $34.86 for compliance officers and capital to invest in the transition to beneficiaries against harms cause by $69.34 for lawyers from the Bureau of 98 value-based care or to obtain fraud and abuse. Labor Statistics, and we double those wages to account for overhead and infrastructure necessary to coordinate G. Anticipated Effects patient care, including technology. This benefits. As a result, we estimate total This proposed rule would add a new unnecessarily slows the transition regulatory review costs of $5.2 million CMP exception and anti-kickback in each of the first 10 years following toward more efficient patient care. This statute safe harbors and modify existing proposed rule attempts to address these finalization of the rule. We note that anti-kickback statute safe harbors. these costs are divided among concerns by removing unnecessary Specifically, we propose to add several impediments to the transformation of approximately 25,000 entities each year, new safe harbor protections for certain and therefore should be considered de the healthcare system into one that value-based arrangements, including better pays for and delivers value. minimis from the perspective of affected care coordination arrangements, entities. We seek public comment on To remove regulatory barriers to care arrangements with varying levels of these assumptions. coordination and support value-based downside financial risk, as well as The Department does not collect data arrangements, we faced the challenge of outcomes-based payment arrangements, regarding the number of providers, designing safe harbor protections for and protection for certain remuneration suppliers, and other individuals and emerging healthcare arrangements, the provided to Federal health care program entities that have entered into an optimal form, design, and efficacy of beneficiaries in the form of incentives arrangement that meets an existing safe which remain unknown or unproven. and supports. harbor. Compliance with safe harbors is These arrangements will be driven by We anticipate that the proposed rule voluntary, and generally the question the determinations and experiences of a would have potential relevance to the whether an arrangement complies with wide range of providers, suppliers, and majority of the types of providers and a safe harbor arises in the context of a others as they innovate in delivering suppliers participating in Federal health defense raised by a defendant in an value-based care. This challenge is care programs and others in commercial enforcement matter. Therefore, we further complicated by the substantial sectors, as well as the Federal health cannot quantify with certainty the variation in care coordination and care programs and Federal health care number of arrangements or number of value-based arrangements contemplated program beneficiaries. We note that healthcare providers, suppliers, and by the healthcare industry and others certain categories of providers, others who may avail themselves of (meaning that one-size-fits-all safe suppliers, and others are not eligible to these protections. For this reason, it is harbor designs may not be optimal), use the proposed rule: Pharmaceutical variation among patient populations manufacturers; manufacturers, 97 U.S. Census Bureau, 2015 SUSB Annual Data and provider characteristics, emerging distributors, and suppliers of DMEPOS; Tables by Establishment Industry, https:// health technologies and data and laboratories. To estimate the www.census.gov/data/tables/2015/econ/susb/2015- capabilities, the still-developing science number of providers and suppliers susb-annual.html. 98 U.S. Department of Labor, Bureau of Labor of quality and performance affected by this rule, we use US Census Statistics, May 2018 National Occupational measurement, and our desire not to chill data. According to the US Census, there Employment and Wage Estimates United States, beneficial innovations. were 7,370 medical, dental, and hospital https://www.bls.gov/oes/2018/may/oes_nat.htm.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55758 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

difficult, if not impossible, to assess the the sunset date. The EHR safe harbor uniform requirements under the anti- costs and benefits of these proposals, would continue to be available to health kickback statute and beneficiary and to estimate changes in the number plans and any individuals or entities, inducements CMP for those models that of arrangements that meet new or other than laboratories, that provide qualify, further reducing burden on existing safe harbors. We seek public services covered by, and submit claims entities, such as hospitals and physician comment on the effect of this rule on or requests for payment to, a Federal practices, that participate in multiple changes in the number of agreements or health care program. We would expect models that currently have different arrangements that meet new or existing the same entities that are currently conditions for each waiver. We seek safe harbors. using the EHR safe harbor to continue public comment on the extent to which Many affected providers and to use the safe harbor with minimal, if these provisions will affect these suppliers currently incur costs related to any, additional regulatory review or models. structuring arrangements to comply compliance costs above current levels. Finally, the proposed rule would add with existing fraud and abuse laws. We seek public comment on these a new safe harbor related to beneficiary While these proposals may not result in assumptions. incentives under the Medicare Shared a reduction in compliance-related costs, We propose to modify the existing Savings Program and a new CMP we do not expect this rulemaking to local transportation safe harbor slightly exception for certain telehealth increase total incremental costs. Rather, to expand mileage limits for rural areas technologies offered to patients we expect that providers and suppliers and for transportation for discharged receiving in-home dialysis, pursuant to interested in taking advantage of these patients. This would primarily expand the Budget Act of 2018. Although we new arrangements in order to more protection under the AKS for hospitals cannot calculate the number of ACOs efficiently deliver care will shift and physician practices in rural areas and their participants who would enter resources currently devoted to voluntarily to transport patients to into arrangements that may qualify for complying with existing requirements to necessary medical appointments or to protection under this safe harbor, we create and analyze new arrangements their homes following a hospital stay. believe that this regulatory action would under these proposals. By way of We anticipate no incremental regulatory not create incremental costs for ACOs example only, should a hospital expend costs to hospitals or others from the because it would reduce the amount of resources to review—from a Federal proposed rule, which changes only the compliance resources ACOs currently anti-kickback statute perspective—a distance traveled and no other use to provide beneficiary incentives. financial arrangement with a skilled regulatory requirements. This safe For example, we believe this action nursing facility, any newly promulgated harbor would continue to be available would reduce time, effort, and financial or revised safe harbors would be only to established patients and eligible resources ACOs typically would incur unlikely to change the amount of entities, which do not include to provide these beneficiary incentives resources necessary to conduct such a individuals or entities (or family under the applicable fraud and abuse review. As another example, should a members or others acting on their waivers. We believe that the proposed hospital already document—by a behalf) that primarily supply healthcare telehealth technologies exception would written agreement—any financial items. reduce barriers to the use of in-home arrangement with a skilled nursing Further, the proposed rule would add dialysis and could encourage increased facility, any newly promulgated or a new safe harbor to protect certain use of home dialysis for beneficiaries. revised safe harbors would be unlikely arrangements and patient incentives This could result in increased use of in- to change the amount of resources provided by and among parties home dialysis for patients who would necessary to enter into that written participating in CMS-sponsored models. benefit relative to other treatment agreement. We seek public comment on CMS and OIG collectively, and OIG options. Ultimately, this could result in these assumptions. individually, have issued fraud and improved quality of care for We also propose to add or revise safe abuse waivers for 14 of these models. beneficiaries with end-stage renal harbor protections under the Federal This proposed safe harbor would reduce disease and overall cost savings to anti-kickback statute for donations of the need for issuance of waivers, saving Federal health care programs because cybersecurity technology, EHR OIG 1,040 employee hours per year. dialysis providers will have certainty arrangements, warranties, and local We expect that CMS, including the that their arrangements will not result in transportation. The new proposed safe Innovation Center, will continue to test CMP liability. This will also reduce harbor for cybersecurity technology and these models and others in the future. burden by eliminating unnecessary related services would be available to The purpose of this safe harbor is to travel costs for patients where in-home any provider, supplier, or other streamline participation in existing and dialysis is more appropriate. We do not individual or entity. We expect broad future CMS-sponsored models to reduce anticipate that this proposed rule will use of this proposed safe harbor, with complexity and the administrative add any incremental costs to the reduced costs for smaller and less well- burden on participants that seek regulatory costs dialysis providers equipped providers and overall savings protection under the fraud and abuse already incur to comply with the new for the national health system in laws while participating in a CMS- program rules under the Budget Act of reduced costs from cyberattacks, sponsored model. Although we cannot 2018 because our requirements closely ransomware, and similar threats. calculate the number of arrangements track CMS program rules. We seek Proposed modifications to the EHR safe that CMS-sponsored model participants public comment on the proposed rule’s harbor are modest and would clarify and CMS-sponsored model parties effects on in-home dialysis. that protection for certain cybersecurity would undertake in the future, we Given the information we have, technology is included as part of an expect this proposal would reduce the including comments we received from electronic health records arrangement, burden of documentation and the time, the OIG RFI, we believe these proposals update provisions regarding effort, and financial resources necessary present the best approach to removing interoperability to align with newer to implement CMS-sponsored model potential barriers to designing care CMS and ONC standards in a manner arrangements and to provide CMS- coordination and other value-based that is not expected to increase costs as sponsored model patient incentives. arrangements that result in greater a result of this rulemaking and remove The proposal also would result in efficiency and improved care outcomes,

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55759

while minimizing the potential for the (ee), (ff), (gg), and (hh), but we ■ g. Revising paragraphs (bb)(1)(iv)(B) costs associated with fraud, waste, and concluded that the fraud and abuse risks and (bb)(2)(iii); abuse. We believe that the proposed rule of protecting arrangements without the ■ h. Designating the note to paragraph would, on average, result in a net guardrails created by the value-based (bb) as paragraph (bb)(3) and revising it; benefit to the healthcare industry, framework were too high. We believe ■ i. Adding reserved paragraphs (cc) beneficiaries, and Federal health care these risks are significant because our and (dd); and programs and could alleviate the proposed safe harbors in (ee) and (hh) ■ j. Adding paragraphs (ee), (ff), (gg), concerns expressed above. We believe could potentially protect arrangements (hh), (ii), (jj), and (kk). there would be no incremental costs to under which providers and suppliers The revisions and additions read as providers and suppliers that already are paid on a fee-for-service basis by follows: spend resources reviewing arrangements Medicare, which rewards the volume of § 1001.952 Exceptions. for compliance with fraud and abuse services performed and items furnished. * * * * * laws. Moreover, by adding flexibility to VI. Paperwork Reduction Act (d) Personal services and engage in certain innovative business management contracts and outcomes- This document does not impose arrangements without risk of liability based payment arrangements. under the statutes, we believe that these information collection and (1) As used in section 1128B of the proposed regulations reduce the recordkeeping requirements. Act, ‘‘remuneration’’ does not include stringency of the existing regulatory Consequently, it need not be reviewed any payment made by a principal to an scheme as it would otherwise apply to by the Office of Management and agent as compensation for the services certain value-based arrangements; in Budget under the authority of the of the agent, as long as all of the addition, by offering new pathways to Paperwork Reduction Act of 1995. following standards are met: protect value-based arrangements, the List of Subjects (i) The agency agreement is set out in proposed regulations would reduce writing and signed by the parties. inefficient behaviors, particularly 42 CFR Part 1001 (ii) The agency agreement covers all of industry behaviors that drive volume- Administrative practice and the services the agent provides to the based healthcare. procedure, Fraud, Grant programs— principal for the term of the agreement We would benefit from public input health, Health facilities, Health and specifies the services to be provided and information during the comment professions, Maternal and child health, by the agent. period regarding whether these Medicaid, Medicare, Social Security. (iii) The term of the agreement is not proposals likely would have a net less than 1 year. benefit on the industry and whether 42 CFR Part 1003 (iv) The methodology for determining different or modified proposals would Fraud, Grant programs—health, the compensation paid to the agent over better facilitate the goals outlined in this Health facilities, Health professions, the term of the agreement is set in proposed rule. Medicaid, Reporting and recordkeeping. advance, is consistent with fair market H. Alternatives Considered For the reasons set forth in the value in arm’s-length transactions and is not determined in a manner that takes We carefully considered the option of preamble, the Office of Inspector General, Department of Health and into account the volume or value of any not pursuing regulatory action. referrals or business otherwise However, based on comments to the Human Services, proposes to amend 42 CFR parts 1001 and 1003 as follows: generated between the parties for which OIG RFI, responses to OIG’s annual payment may be made in whole or in Solicitation of New Safe Harbors and PART 1001—PROGRAM INTEGRITY— part under Medicare, Medicaid, or other Special Fraud Alerts, and other industry MEDICARE AND STATE HEALTH Federal health care programs. feedback, we believe a need for CARE PROGRAMS (v) The services performed under the regulatory reform exists in order to agreement do not involve the counseling provide stakeholders with the flexibility ■ 1. The authority citation for part 1001 or promotion of a business arrangement necessary for innovative care delivery continues to read as follows: or other activity that violates any State and payment redesign. or Federal law. We also considered several other Authority: 42 U.S.C. 1302, 1320a–7, 1320a–7a, 1320a–7b, 1320a–7d, 1395u(j), (vi) The aggregate services contracted alternative approaches to the proposed 1395u(k), 1395w–104(e)(6), 1395y(d), for do not exceed those which are safe harbors, revisions to safe harbors, 1395y(e), 1395cc(b)(2)(D), (E) and (F), and reasonably necessary to accomplish the and proposed exception as explained in 1395hh; and sec. 2455, Pub. L. 103–355, 108 commercially reasonable business great detail in the preceding preamble. Stat. 3327 (31 U.S.C. 6101 note). purpose of the services. For example, our proposals endeavor to ■ 2. Section 1001.952 is amended by: (2) As used in section 1128B of the distinguish between beneficial care ■ a. Revising paragraphs (d), (g) Act, ‘‘remuneration’’ does not include coordination arrangements and introductory text, (g)(1), (g)(3)(i), and any outcomes-based payment as long as payment-for-referral schemes that do (g)(4); all of the standards in paragraphs not serve, and may be contrary to, the ■ b. Adding paragraphs (g)(5) and (6) (d)(2)(i) through (ix) of this section are goals of coordinated care and the shift before the undesignated text at the end met: to value. We considered, and would of paragraph (g); (i) The outcomes-based payment is benefit from public comment on, the ■ c. Designating the undesignated text at made between or among parties that are benefits of our proposals and efficient the end of paragraph (g) as paragraph collaborating to: ways we may distinguish payments to (g)(7) and revising it; (A) Measurably improve (or maintain reward or induce referrals from ■ d. Revising paragraph (y) introductory improvement in) quality of patient care; remuneration provided to promote or text, the second sentence of paragraph or support legitimate care coordination (y)(2), and paragraph (y)(3); (B) Appropriately and materially activities. ■ e. Removing and reserving paragraphs reduce costs to, or growth in We also considered not using the (y)(7) and (13); expenditures of, payors while value-based terms, definitions, and ■ f. Designating the note to paragraph improving, or maintaining the framework for proposed safe harbors (y) as paragraph (y)(14) and revising it; improved, quality of care for patients.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55760 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

(ii) To receive an outcomes-based correct identified material performance submitted to the buyer and inform the payment, the agent satisfies one or more failures or material deficiencies in buyer of its obligations under specific evidence-based, valid outcome quality of care resulting from the paragraphs (g)(1) and (2) of this section. measures that are: outcomes-based payment arrangement. * * * * * (A) Related to: (3) For purposes of this paragraph (d): (4) The manufacturer or supplier must (1) Measurably improving, or (i) An agent of a principal is any not pay any remuneration to any maintaining the improved, quality of person, other than a bona fide employee individual (other than a beneficiary) or patient care; of the principal, who has an agreement entity for any medical, surgical, or (2) Appropriately and materially to perform services for, or on behalf of, hospital expense incurred by a reducing costs to, or growth in the principal. beneficiary other than for the cost of the expenditures of, payors while (ii) Outcomes-based payments are items and services subject to the improving, or maintaining the improved limited to payments from a principal to warranty. quality of care for patients; or an agent that: (5) If a manufacturer or supplier offers (3) Both; and (A) Reward the agent for improving a warranty for more than one item or (B) Selected based upon clinical (or maintaining improvement in) patient one or more items and related services, evidence or credible medical support. or population health by achieving one the federally reimbursable items and (iii) The methodology for determining or more outcome measures that services subject to the warranty must be the aggregate compensation (including effectively and efficiently coordinate reimbursed by the same Federal health any outcomes-based payments) paid care across care settings; or care program and in the same Federal between or among the parties over the (B) Achieve one or more outcome health care program payment. term of the agreement is: Set in advance; measures that appropriately reduce (6) The manufacturer or supplier must commercially reasonable; consistent payor costs while improving, or not condition a warranty on a buyer’s with fair market value; and not maintaining the improved quality of exclusive use of, or a minimum determined in a manner that directly care for patients. purchase of, any of the manufacturer’s takes into account the volume or value (iii) Outcomes-based payments or supplier’s items or services. of any referrals or business otherwise exclude any payments: (7) For purposes of this paragraph (g), generated between the parties for which (A) Made, directly or indirectly, by a the term warranty means: payment may be made in whole or in pharmaceutical manufacturer; a (i) Any written affirmation of fact or part by a Federal health care program. manufacturer, distributor, or supplier of written promise made in connection (iv) The agreement neither limits any durable medical equipment, prosthetics, with the sale of an item or bundle of party’s ability to make decisions in their orthotics, or supplies; or a laboratory; or items, or services in combination with patients’ best interest nor induces any (B) That relate solely to the one or more related items, by a party to reduce or limit medically achievement of internal cost savings for manufacturer or supplier to a buyer, necessary items or services. the principal. which affirmation of fact or written (v) The term of the agreement is not promise relates to the nature of the * * * * * less than 1 year. quality or workmanship and affirms or (vi) The services performed under the (g) Warranties. As used in section promises that such quality or agreement do not involve the counseling 1128B of the Act, ‘‘remuneration’’ does workmanship is defect free or will meet or promotion of a business arrangement not include any payment or exchange of a specified level of performance over a or other activity that violates any State anything of value under a warranty specified period of time; or Federal law. provided by a manufacturer or supplier (ii) Any undertaking in writing in (vii) For each outcome measure under of one or more items and services connection with the sale by a the agreement, the parties: (provided the warranty covers at least manufacturer or supplier of an item or (A) Regularly monitor and assess the one item) to the buyer (such as a bundle of items, or services in agent’s performance, including the healthcare provider or beneficiary) of combination with one or more related impact of the outcomes-based payment the items and services, as long as the items, to refund, repair, replace, or take arrangement on patient quality of care; buyer complies with all of the following other remedial action with respect to and standards in paragraphs (g)(1) and (2) of such item or bundle of items in the (B) Periodically rebase during the this section and the manufacturer or event that such item or bundle of items, term of the agreement, to the extent supplier complies with all of the or services in combination with one or applicable. following standards in paragraphs (g)(3) more related items, fails to meet the (viii) The parties set forth in a signed through (6) of this section: specifications set forth in the writing, in advance of, or (1) The buyer (unless the buyer is a undertaking, which written affirmation, contemporaneous with, the Federal health care program beneficiary) promise, or undertaking becomes part of commencement of the terms of the must fully and accurately report any the basis of the bargain between a seller outcomes-based payment arrangement. price reduction of an item or service and a buyer for purposes other than The writing states, at a minimum: The (including a free item or service) that resell of such item or bundle of items; services to be performed by the parties was obtained as part of the warranty, in or for the term of the agreement; the the applicable cost reporting mechanism (iii) A manufacturer’s or supplier’s outcome measure(s) the agent must or claim for payment filed with the agreement to replace another satisfy to receive an outcomes-based Department or a State agency. manufacturer’s or supplier’s defective payment; the clinical evidence or * * * * * item or bundle of items (which is credible medical support relied upon by (3) * * * covered by an agreement made in the parties to select the outcome (i) The manufacturer or supplier must accordance with this paragraph (g)), on measure(s); and the schedule for the fully and accurately report any price terms equal to the agreement that it parties to regularly monitor and assess reduction of an item or service replaces. the outcome measure(s). (including free items and services) that * * * * * (ix) The principal has policies and the buyer obtained as part of the (y) Electronic health records items procedures to promptly address and warranty on the invoice or statement and services. As used in section 1128B

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55761

of the Act, ‘‘remuneration’’ does not the patient would be transported, or (1) The VBE participants establish one include nonmonetary remuneration within 75 miles if the patient resides in or more specific evidence-based, valid (consisting of items and services in the a rural area, as defined in this paragraph outcome measures against which the form of software or information (bb), except that, if the patient is being recipient will be measured and which technology and training services, discharged from an inpatient facility the parties reasonably anticipate will including certain cybersecurity software and transported to the patient’s advance the coordination and and services) necessary and used residence, or another residence of the management of care of the target patient predominantly to create, maintain, patient’s choice, the mileage limits in population. transmit, receive, or protect electronic this paragraph (bb)(1)(iv)(B) shall not (2) The value-based arrangement is health records, if all of the conditions in apply; and commercially reasonable, considering paragraphs (y)(1) through (13) of this * * * * * both the arrangement itself and all section are met: (2) * * * value-based arrangements within the * * * * * (iii) The eligible entity makes the VBE. (2) * * * For purposes of this shuttle service available only within the (3) In advance of, or contemporaneous paragraph (y)(2), software is deemed to eligible entity’s local area, meaning with, the commencement of the value- be interoperable if, on the date it is there are no more than 25 miles from based arrangement or any material provided to the recipient, it is certified any stop on the route to any stop at a change to the value-based arrangement, by a certifying body authorized by the location where healthcare items or the offeror of the remuneration and any National Coordinator for Health services are provided, except that if a recipient(s) of such remuneration have Information Technology to electronic stop on the route is in a rural area, the set forth the terms of the value-based health record certification criteria distance may be up to 75 miles between arrangement in a signed writing. The identified in 45 CFR part 170. that stop and any providers or suppliers writing states, at a minimum: (3) The donor (or any person on the on the route; (i) The value-based activities to be donor’s behalf) does not engage in a undertaken by the parties to the value- * * * * * practice constituting information based arrangement; (3) For purposes of this paragraph blocking, as defined in 45 CFR part 171, (ii) The term of the value-based (bb), the following definitions apply: in connection with the donated items or arrangement; (i) An eligible entity is any individual services. (iii) The target patient population; or entity, except for individuals or (iv) A description of the * * * * * entities (or family members or others (7) [Reserved] remuneration; acting on their behalf) that primarily (v) The offeror’s cost for the * * * * * supply healthcare items; (13) [Reserved] remuneration; (ii) An established patient is a person (vi) The percentage of the offeror’s * * * * * who has selected and initiated contact cost contributed by the recipient; (14) For purposes of this paragraph to schedule an appointment with a (vii) If applicable, the frequency of the (y), the following definitions apply: provider or supplier, or who previously recipient’s contribution payments for (i) Cybersecurity means the process of has attended an appointment with the protecting information by preventing, ongoing costs; and provider or supplier; (viii) The specific evidence-based, detecting, and responding to (iii) A shuttle service is a vehicle that cyberattacks; valid outcome measure(s) against which runs on a set route, on a set schedule; the recipient will be measured. (ii) Health plan shall have the (iv) A rural area is an area that is not meaning set forth at § 1001.952(l)(2); (4) The remuneration exchanged: an urban area, as defined in paragraph (i) Is in-kind; (iii) Interoperable shall mean able to: (bb)(3)(v) of this section; and (A) Securely exchange data with, and (ii) Is used primarily to engage in (v) An urban area is: use data from other health information value-based activities that are directly (A) A Metropolitan Statistical Area technology without special effort on the connected to the coordination and (MSA) or New England County part of the user; management of care for the target (B) Allow for complete access, Metropolitan Area (NECMA), as defined patient population; exchange, and use of all electronically by the Executive Office of Management (iii) Does not induce VBE participants accessible health information for and Budget; or to furnish medically unnecessary items authorized use under applicable State or (B) The following New England or services or reduce or limit medically Federal law; and counties, which are deemed to be parts necessary items or services furnished to (C) Does not constitute information of urban areas under section 601(g) of any patient; and blocking as defined in 45 CFR part 171; the Social Security Amendments of (iv) Is not funded by, and does not and 1983 (Pub. L. 98–21, 42 U.S.C. 1395ww otherwise result from the contributions (iv) Electronic health record shall (note)): Litchfield County, Connecticut; of, any individual or entity outside of mean a repository of electronic health York County, Maine; Sagadahoc County, the applicable VBE. information that: Maine; Merrimack County, New (5) The offeror of the remuneration (A) Is transmitted by or maintained in Hampshire; and Newport County, does not take into account the volume electronic media; and Rhode Island. or value of, or condition the (B) Relates to the past, present, or (cc)–(dd) [Reserved] remuneration on: future health or condition of an (ee) Care coordination arrangements (i) Referrals of patients who are not individual or the provision of healthcare to improve quality, health outcomes, part of the target patient population; or to an individual. and efficiency. As used in section 1128B (ii) Business not covered under the * * * * * of the Act, ‘‘remuneration’’ does not value-based arrangement. (bb) * * * include the exchange of anything of (6) The recipient pays at least 15 (1) * * * value pursuant to a value-based percent of the offeror’s cost for the in- (iv) * * * arrangement if all of the standards in kind remuneration. If a one-time cost, (B) Within 25 miles of the healthcare paragraphs (ee)(1) through (12) of this the recipient makes such contribution in provider or supplier to or from which section are met: advance of receiving the in-kind

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00069 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55762 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

remuneration. If an ongoing cost, the (12) For purposes of this paragraph manufacturer, distributor, or supplier of recipient makes such contribution at (ee), the following definitions apply: durable medical equipment, prosthetics, reasonable, regular intervals. (i) Coordination and management of orthotics, or supplies; or a laboratory. (7) The value-based arrangement: care (or coordinating and managing (vii) Value-based purpose means: (i) Is directly connected to the care) means, for purposes of the anti- (A) Coordinating and managing the coordination and management of care of kickback statute safe harbors at care of a target patient population; the target patient population; § 1001.952, the deliberate organization (B) Improving the quality of care for (ii) Does not place any limitation on of patient care activities and sharing of a target patient population; VBE participants’ ability to make information between two or more VBE (C) Appropriately reducing the costs decisions in the best interest of their participants or VBE participants and to, or growth in expenditures of, payors patients; patients, tailored to improving the without reducing the quality of care for (iii) Does not direct or restrict referrals health outcomes of the target patient a target patient population; or to a particular provider, practitioner, or population, in order to achieve safer and (D) Transitioning from healthcare supplier if: more effective care for the target patient delivery and payment mechanisms (A) A patient expresses a preference population. for a different practitioner, provider, or based on the volume of items and (ii) Target patient population means services provided to mechanisms based supplier; an identified patient population (B) The patient’s payor determines the on the quality of care and control of selected by the VBE or its VBE provider, practitioner, or supplier; or costs of care for a target patient (C) Such direction or restriction is participants using legitimate and population. contrary to applicable law or regulations verifiable criteria that: (ff) Value-based arrangements with (A) Are set out in writing in advance under titles XVIII and XIX of the Act; substantial downside financial risk. As and of the commencement of the value- used in section 1128B of the Act, (iv) Does not include marketing to based arrangement; and ‘‘remuneration’’ does not include the patients of items or services or engaging (B) Further the value-based exchange of payments or anything of in patient recruitment activities. enterprise’s value-based purpose(s). value between a VBE and a VBE (8) The VBE, a VBE participant in the (iii) Value-based activity participant pursuant to a value-based value-based arrangement acting on the (A) Means any of the following arrangement if all of the standards in VBE’s behalf, or the VBE’s accountable activities, provided that the activity is paragraphs (ff)(1) through (8) of this body or responsible person monitors reasonably designed to achieve at least section are met: and assesses, and reports such one value-based purpose of the value- (1) The VBE (directly or through a monitoring and assessment to the VBE’s based enterprise: VBE participant acting on the VBE’s (1) The provision of an item or accountable body or responsible person behalf) has assumed (or is contractually service; as applicable, no less frequently than obligated to assume in the next 6 (2) The taking of an action; or annually or at least once during the term months) substantial downside financial (3) The refraining from taking an of the value-based arrangement for risk (as defined in this paragraph (ff)) arrangements with terms of less than 1 action. (B) Does not include the making of a from a payor for providing or arranging year: for the provision of items and services (i) The coordination and management referral. (iv) Value-based arrangement means for a target patient population. of care for the target population in the (2) Under the value-based value-based arrangement; an arrangement for the provision of at least one value-based activity for a target arrangement, the VBE participant (ii) Any deficiencies in the delivery of meaningfully shares in the VBE’s quality care under the value-based patient population between or among: (A) The value-based enterprise and substantial downside financial risk for arrangement; and providing or arranging for the provision (iii) Progress toward achieving the one or more of its VBE participants; or (B) VBE participants in the same of items and services for the target evidence-based, valid outcome patient population. For purposes of this measure(s) in the value-based value-based enterprise. paragraph (ff), a VBE participant arrangement. (v) Value-based enterprise or VBE meaningfully shares in the VBE’s (9) The parties terminate the means two or more VBE participants: arrangement within 60 days if the VBE’s (A) Collaborating to achieve at least substantial downside financial risk if accountable body or responsible person one value-based purpose; the value-based arrangement provides determines that the value-based (B) Each of which is a party to a that the VBE participant is subject to arrangement: value-based arrangement with the other risk under one of the following three (i) Is unlikely to further the or at least one other VBE participant in methodologies: coordination and management of care the value-based enterprise; (i) A risk-sharing payment pursuant to for the target patient population; (C) That have an accountable body or which the VBE participant is at risk for (ii) Has resulted in material person responsible for financial and 8 percent of the amount for which the deficiencies in quality of care; or operational oversight of the value-based VBE is at risk under its agreement with (iii) Is unlikely to achieve the enterprise; and the applicable payor; evidence-based, valid outcome (D) That have a governing document (ii) A partial or full capitation measure(s). that describes the value-based enterprise payment or similar payment (10) The offeror does not, and should and how the VBE participants intend to methodology, excluding the Medicare not, know that the remuneration is achieve its value-based purpose(s). inpatient prospective payment system likely to be diverted, resold, or used by (vi) Value-based enterprise or other like payment methodology; or the recipient for an unlawful purpose. participant or VBE participant means an (iii) In the case of a VBE participant (11) The VBE or VBE participant individual or entity that engages in at that is a physician, a payment that makes available to the Secretary, upon least one value-based activity as part of meets the requirements of the regulatory request, all materials and records a value-based enterprise. VBE exception for value-based arrangements sufficient to establish compliance with participant does not include a with meaningful downside financial the conditions of this paragraph (ee). pharmaceutical manufacturer; a risk at § 411.357(aa)(2) of this title.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55763

(3) The remuneration provided by, or (C) Such direction or restriction is (1) The VBE (directly or through a shared among, the VBE and VBE contrary to applicable law or regulations VBE participant acting on behalf of the participant: under titles XVIII and XIX of the Act; or VBE) has assumed (or is contractually (i) Is used primarily to engage in (iii) Include marketing to patients of obligated to assume in the next 6 value-based activities that are directly items or services or engaging in patient months) full financial risk from a payor connected to the items and services for recruitment activities. and has a signed writing with the payor which the VBE is at substantial (7) The VBE or VBE participant makes that specifies the target patient downside financial risk and that are set available to the Secretary, upon request, population and contains terms forth in writing pursuant to all materials and records sufficient to evidencing that the VBE is at full paragraph(ff)(4) of this section; establish compliance with the financial risk for that population for a (ii) Is directly connected to one or conditions of this paragraph (ff). period of at least 1 year. more of the VBE’s value-based purposes, (8) For purposes of this paragraph (ff), (2) The value-based arrangement is set at least one of which must be the the following definitions apply: out in a writing signed by the parties coordination and management of care (i) Substantial downside financial risk that specifies the material terms of the for the target patient population; means risk, for the entire term of the value-based arrangement, including the (iii) Does not induce VBE participants value-based arrangement, in the form of: value-based activities to be undertaken (A) Shared savings with a repayment to reduce or limit medically necessary by the parties, and is for a period of at obligation to the payor of at least 40 items or services furnished to any least 1 year. percent of any shared losses, where loss patient; (3) The VBE participant does not is determined based upon a comparison (iv) Does not include the offer or claim payment in any form directly or of costs to historical expenditures, or to receipt of an ownership or investment indirectly from a payor for items or the extent such data is unavailable, interest in an entity or any distributions services covered under the value-based evidence-based, comparable related to such ownership or investment arrangement. expenditures; interest; and (4) The remuneration exchanged (B) A repayment obligation to the between the VBE and a VBE participant: (v) Is not funded by, and does not payor under an episodic or bundled otherwise result from the contributions (i) Is used primarily to engage in the payment arrangement of at least 20 value-based activities set forth in of, any individual or entity outside of percent of any total loss, where loss is the VBE. writing pursuant to paragraph (gg)(2) of determined based upon a comparison of this section; (4) In advance of, or contemporaneous costs to historical expenditures, or to with, the commencement of the value- (ii) Is directly connected to one or the extent such data is unavailable, more of the VBE’s value-based purposes, based arrangement or any material evidence-based, comparable change to the value-based arrangement, at least one of which must be the expenditures; coordination and management of care the VBE and VBE participant set forth (C) A prospectively paid population- in a signed writing the terms of the for the target patient population; based payment for a defined subset of (iii) Does not induce the VBE or VBE value-based arrangement. The writing the total cost of care of a target patient states all material terms of the value- participants to reduce or limit medically population, where such payment is necessary items or services furnished to based arrangement, including: A determined based upon a review of description of the nature and extent of any patient; historical expenditures, or to the extent (iv) Does not include the offer or the VBE’s substantial downside such data is unavailable, evidence- receipt of an ownership or investment financial risk for the target patient based, comparable expenditures; or interest in an entity or any distributions population; a description of the manner (D) A partial capitated payment from related to such ownership or investment in which the recipient meaningfully the payor for a set of items and services interest; and shares in the VBE’s substantial for the target patient population, where (v) Is not funded by, and does not downside financial risk; the value-based such capitated payment reflects a otherwise result from the contributions activities; the target patient population; discount equal to at least 60 percent of of, any individual or entity outside of and the type and the offeror’s cost of the the total expected fee-for-service the VBE. remuneration. payments based on historical (5) The VBE or VBE participant does (5) The VBE or VBE participant expenditures, or to the extent such data not take into account the volume or offering the remuneration does not take is unavailable, evidence-based, value of, or condition the remuneration into account the volume or value of, or comparable expenditures of the VBE on: condition the remuneration on: participants to the value-based (i) Referrals of patients who are not (i) Referrals of patients who are not arrangement. part of the target patient population; or part of the target patient population; or (ii) Coordination and management of (ii) Business not covered under the (ii) Business not covered under the care, target patient population, value- value-based arrangement. value-based arrangement. based activity, value-based (6) The VBE provides or arranges for: (6) The value-based arrangement does arrangement, value-based enterprise, (i) An operational utilization review not: value-based purpose, and VBE program; and (i) Place any limitation on VBE participant shall have the meaning set (ii) A quality assurance program that participants’ ability to make decisions forth in paragraph (ee) of this section. protects against underutilization and in the best interest of their patients; (gg) Value-based arrangements with specifies patient goals, including (ii) Direct or restrict referrals to a full financial risk. As used in section measurable outcomes, where particular provider, practitioner, or 1128B of the Act, ‘‘remuneration’’ does appropriate. supplier if: not include the exchange of payments or (7) The value-based arrangement does (A) A patient expresses a preference anything of value between the VBE and not include marketing to patients of for a different practitioner, provider, or a VBE participant pursuant to a value- items or services or engaging in patient supplier; based arrangement if all of the standards recruitment activities. (B) The patient’s payor determines the in paragraphs (gg)(1) through (8) of this (8) The VBE or VBE participant makes provider, practitioner, or supplier; or section are met: available to the Secretary, upon request,

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55764 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

all materials and records sufficient to (B) Adherence to a drug regimen induce or reward, any Federal health establish compliance with the determined by the patient’s licensed care program referrals or other Federal conditions of this paragraph (gg). healthcare provider. health care program business generated (9) For purposes of this paragraph (C) Adherence to a follow-up care outside of the CMS-sponsored model; (gg), the following definitions apply: plan established by the patient’s (iv) The CMS-sponsored model (i) Full financial risk means the VBE licensed healthcare provider. parties, in advance of, or is financially responsible for the cost of (D) Management of a disease or contemporaneous with the all items and services covered by the condition as directed by the patient’s commencement of, the CMS-sponsored applicable payor for each patient in the licensed healthcare provider. model arrangement, set forth the terms target patient population and is (E) Improvement in measurable of the CMS-sponsored model prospectively paid by the applicable evidence-based health outcomes for the arrangement in a signed writing. The payor; patient or for the target patient writing must specify, at a minimum, the (ii) Items and services shall have the population. activities to be undertaken by the CMS- meaning set forth in § 1001.952(t)(2)(iv); (F) Ensuring patient safety. sponsored model parties and the nature and (4) The offeror does not, and should of the remuneration to be exchanged (iii) Coordination and management of not, know that the remuneration is under the CMS-sponsored model care, target patient population, value- likely to be diverted, sold, or utilized by arrangement; based activity, value-based the patient other than for the express (v) The parties to the CMS-sponsored arrangement, value-based enterprise, purpose for which the patient model arrangement make available to value-based purpose, and VBE engagement tool or support is provided. the Secretary, upon request, all participant shall have the meaning set (5) The aggregate retail value of materials and records sufficient to forth in paragraph (ee) of this section. patient engagement tools and supports establish whether the remuneration was (hh) Arrangements for patient furnished to a patient by a VBE exchanged in a manner that meets the engagement and support to improve participant on an annual basis does not conditions of this safe harbor; and quality, health outcomes, and efficiency. exceed $500 unless such patient (vi) The CMS-sponsored model As used in section 1128B of the Act, engagement tools and supports are parties satisfy such programmatic ‘‘remuneration’’ does not include a furnished to patients based on a good requirements as may be imposed by patient engagement tool or support faith, individualized determination of CMS in connection with the use of this furnished by a VBE participant to a the patient’s financial need. safe harbor. patient in a target patient population if (6) The VBE participant makes (2) As used in section 1128B of the all of the conditions in paragraphs available to the Secretary, upon request, Act, ‘‘remuneration’’ does not include a (hh)(1) through (6) of this section are all materials and records sufficient to CMS-sponsored model patient incentive met: establish that the patient engagement under a model for which CMS has (1) The patient engagement tool or tool or support was distributed in a determined that this safe harbor is support is furnished directly to the manner that meets the conditions of this available, if all of the conditions of patient by a VBE participant. paragraph (hh). paragraph (ii)(2)(i) through (v) are met of (2) No individual or entity outside of (7) For purposes of this paragraph the applicable VBE funds or otherwise this section: (hh), coordination and management of (i) The CMS-sponsored model contributes to the provision of the care, target patient population, value- participant reasonably determines that patient engagement tool or support. based purpose, VBE, and VBE (3) The patient engagement tool or the CMS-sponsored model patient participant shall have the meaning set support: incentive will advance one or more forth in paragraph (ee) of this section. (i) Is an in-kind preventive item, good, goals of the CMS-sponsored model; (ii) CMS-sponsored model or service, or an in-kind item, good, or (ii) The CMS-sponsored model patient arrangements and CMS-sponsored service such as health-related incentive has a direct connection to the model patient incentives. technology, patient health-related patient’s healthcare; (1) As used in section 1128B of the monitoring tools and services, or (iii) The CMS-sponsored model Act, ‘‘remuneration’’ does not include supports and services designed to participant makes available to the an exchange of anything of value identify and address a patient’s social Secretary, upon request, all materials between or among CMS-sponsored determinants of health; and records sufficient to establish (ii) That has a direct connection to the model parties under a CMS-sponsored whether the CMS-sponsored model coordination and management of care of model arrangement in a model for patient incentive was distributed in a the target patient population; which CMS has determined that this manner that meets the conditions of this (iii) Does not include any gift card, safe harbor is available if all of the paragraph; and cash, or cash equivalent; following conditions are met: (iv) The CMS-sponsored model (iv) Does not include any in-kind (i) The CMS-sponsored model parties participant satisfies such programmatic item, good, or service used for patient reasonably determine that the CMS- requirements as may be imposed by recruitment or marketing of items or sponsored model arrangement will CMS in connection with the use of this services to patients; advance one or more goals of the CMS- safe harbor. (v) Does not result in medically sponsored model; (v) For purposes of this paragraph unnecessary or inappropriate items or (ii) The exchange of value does not (ii)(2), a patient may retain any services reimbursed in whole or in part induce CMS-sponsored model parties or incentives received prior to the by a Federal health care program; other providers or suppliers to furnish termination or expiration of the (vi) Is recommended by the patient’s medically unnecessary items or services participation documentation of the licensed healthcare provider; and or reduce or limit medically necessary CMS-sponsored model participant. (vii) Advances one or more of the items or services furnished to any (3) For purposes of this paragraph (ii), following goals: patient; the following definitions apply: (A) Adherence to a treatment regimen (iii) The CMS-sponsored model (i) CMS-sponsored model means: determined by the patient’s licensed parties do not offer, pay, solicit, or (A) A model being tested under healthcare provider. receive remuneration in return for, or to section 1115A(b) of the Act or a model

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55765

expanded under section 1115A(c) of the nature of the technology or services to renal disease who is receiving home Act; or be donated, on future referrals. dialysis for which payment is being (B) The Medicare shared savings (3) Neither the recipient nor the made under part B of such title, if— program under section 1899 of the Act; recipient’s practice (or any affiliated (i) The telehealth technologies are (ii) CMS-sponsored model individual or entity) makes the receipt furnished to the individual by the arrangement means an arrangement of technology or services, or the amount provider of services or the renal dialysis between or among CMS-sponsored or nature of the technology or services, facility that is currently providing the model parties to engage in activities a condition of doing business with the under the CMS-sponsored model and donor. in-home dialysis, telehealth visits, or that is consistent with, and is not a type (4) The arrangement is set forth in a other end stage renal disease care to the of arrangement prohibited by, the written agreement that: patient; participation documentation; (i) Is signed by the parties; (ii) The telehealth technologies are (iii) CMS-sponsored model (ii) Describes the technology and not offered as part of any advertisement participant means an individual or services being provided and the amount or solicitation; entity that is subject to, and is operating of the recipient’s contribution, if any; (iii) The telehealth technologies under, participation documentation and with CMS to participate in a CMS- contribute substantially to the provision (5) The donor does not shift the costs sponsored model; of telehealth services related to the of the technology or services to any (iv) CMS-sponsored model party individual’s end stage renal disease, is Federal health care program. means: not of excessive value, and is not (6) For purposes of this paragraph (jj) (A) A CMS-sponsored model duplicative of technology that the the following definitions apply: participant; or beneficiary already owns if that (B) Other individual or entity who the (i) Cybersecurity means the process of technology is adequate for the telehealth protecting information by preventing, participation documentation specifies purposes; and may enter into a CMS-sponsored model detecting, and responding to (iv) The provider of services or a renal arrangement; cyberattacks. (v) CMS-sponsored model patient (ii) Technology means any software or dialysis facility does not bill Federal incentive means remuneration not of a other types of information technology, health care programs, other payors, or type prohibited by the participation other than hardware. individuals for the telehealth documentation and is furnished (kk) ACO Beneficiary Incentive technologies, claim the value of the consistent with the CMS-sponsored Program. As used in section 1128B of telehealth technologies as a bad debt for model by a CMS-sponsored model the Act, ‘‘remuneration’’ does not payment purposes under a Federal participant (or by an agent of the CMS- include an incentive payment made by health care program, or otherwise shift sponsored model participant under the an ACO to an assigned beneficiary the burden of the value of the telehealth CMS-sponsored model participant’s under a beneficiary incentive program technologies onto a Federal health care direction and control) directly to a established under section 1899(m) of the program, other payors, or individuals. patient under the CMS-sponsored Act, as amended by Congress from time * * * * * model; and to time, if the incentive payment is (vi) Participation documentation made in accordance with the Telehealth technologies, for purposes means the participation agreement, requirements found in such subsection. of the definition of the term cooperative agreement, regulations, or ‘‘remuneration’’ as set forth in this model-specific addendum to an existing PART 1003—CIVIL MONEY section and the telehealth technologies contract with CMS that: PENALTIES, ASSESSMENTS AND exception to section 50302(c) of the (A) Is currently in effect, and EXCLUSIONS Bipartisan Budget Act of 2018, which adds an exception as new section (B) Specifies the terms of a CMS- ■ 3. The authority citation for part 1003 1128A(i)(6)(J) of the Act, means sponsored model. continues to read as follows: (jj) Cybersecurity technology and multimedia communications equipment related services. As used in section Authority: 42 U.S.C. 262a, 1302, 1320–7, that includes, at a minimum, audio and 1128B of the Act, ‘‘remuneration’’ does 1320a–7a, 1320b–10, 1395u(j), 1395u(k), video equipment permitting two-way, not include nonmonetary remuneration 1395cc(j), 1395w–141(i)(3), 1395dd(d)(1), 1395mm, 1395nn(g), 1395ss(d), 1396b(m), real-time interactive communication (consisting of certain types of 11131(c), and 11137(b)(2). between the patient and distant site cybersecurity technology and services), physician or practitioner used in the if all of the conditions in paragraphs ■ 4. Section 1003.110 is amended by diagnosis, intervention, or ongoing care (jj)(1) through (5) of this section are met: adding paragraph (10) to the definition management—paid for by Medicare Part (1) The technology and services are of ‘‘remuneration’’ and adding in B—between a patient and the remote necessary and used predominantly to alphabetical order a definition for healthcare provider. Telephones, implement and maintain effective ‘‘telehealth technologies’’ to read as facsimile machines, and electronic mail follows: cybersecurity. systems are not telehealth technologies. (2) The donor does not: § 1003.110 Definitions. (i) Directly take into account the * * * * * volume or value of referrals or other * * * * * Dated: September 30, 2019. Remuneration *** business generated between the parties Alex M. Azar II, when determining the eligibility of a * * * * * Secretary. potential recipient for the technology or (10) The provision of telehealth services, or the amount or nature of the technologies by a provider of services or Joanne M. Chiedi, technology or services to be donated; or a renal dialysis facility (as such terms Acting Inspector General. (ii) Condition the donation of are defined for purposes of title XVIII of [FR Doc. 2019–22027 Filed 10–9–19; 4:15 pm] technology or services, or the amount or the Act) to an individual with end stage BILLING CODE 4152–04–P

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55766 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

DEPARTMENT OF HEALTH AND Health and Human Services, Attention: the Centers for Medicare & Medicaid HUMAN SERVICES CMS–1720–P, P.O. Box 8013, Baltimore, Services, 7500 Security Boulevard, MD 21244–1850. Please allow sufficient Baltimore, Maryland 21244, Monday Centers for Medicare & Medicaid time for mailed comments to be through Friday of each week from 8:30 Services received before the close of the a.m. to 4 p.m. To schedule an comment period. appointment to view public comments, 42 CFR Part 411 3. By express or overnight mail. You phone 1–800–743–3951. may send written comments to the [CMS–1720–P] Acronyms following address ONLY: Centers for RIN 0938–AT64 Medicare & Medicaid Services, In addition, because of the many Department of Health and Human organizations and terms to which we Medicare Program; Modernizing and Services, Attention: CMS–1720–P, Mail refer by acronym in this proposed rule, Clarifying the Physician Self-Referral Stop C4–26–05, 7500 Security we are listing these acronyms and their Regulations Boulevard, Baltimore, MD 21244–1850. corresponding terms in alphabetical AGENCY: Centers for Medicare & 4. By hand or courier. Alternatively, order below: Medicaid Services (CMS), HHS. you may deliver (by hand or courier) ACO Accountable care organization ACTION: Proposed rule. your written comments ONLY to the API Application programming interface following addresses prior to the close of ASC Ambulatory surgical center SUMMARY: This proposed rule would the comment period: CEC Comprehensive ESRD Care Model address any undue regulatory impact a. For delivery in Washington, DC— CFR Code of Federal Regulations and burden of the physician self-referral Centers for Medicare & Medicaid CHIP Children’s Health Insurance Program law. This proposed rule is being issued CISA Cybersecurity Information Sharing Services, Department of Health and Act of 2015 (Pub. L. 114–113, enacted on in conjunction with the Centers for Human Services, Room 445–G, Hubert December 18, 2015) Medicare & Medicaid Services’ (CMS) H. Humphrey Building, 200 CJR Comprehensive Care for Joint Patients over Paperwork initiative and Independence Avenue SW, Washington, Replacement Model the Department of Health and Human DC 20201. CMP Civil monetary penalty Services’ (the Department or HHS) (Because access to the interior of the CMS RFI Request for Information Regarding Regulatory Sprint to Coordinated Care. Hubert H. Humphrey Building is not the Physician Self-Referral Law (83 FR This proposed rule proposes exceptions readily available to persons without 29524) to the physician self-referral law for Federal government identification, CY Calendar year DHS Designated health services certain value-based compensation commenters are encouraged to leave DMEPOS Durable medical equipment, arrangements between or among their comments in the CMS drop slots prosthetics, orthotics & supplies physicians, providers, and suppliers. It located in the main lobby of the DRA Deficit Reduction Act of 2005 (Pub. L. would also create a new exception for building. A stamp-in clock is available 109–171, enacted on February 8, 2006) certain arrangements under which a for persons wishing to retain a proof of DRG Diagnosis-related group physician receives limited remuneration filing by stamping in and retaining an EHR Electronic health records for items or services actually provided extra copy of the comments being filed.) EKG Electrocardiogram by the physician; create a new exception b. For delivery in Baltimore, MD— EMTALA Emergency Medical Treatment for donations of cybersecurity Centers for Medicare & Medicaid and Labor Act (Pub. L. 99–272, enacted on April 7, 1986) technology and related services; and Services, Department of Health and ERISA Employee Retirement Income amend the existing exception for Human Services, 7500 Security Security Act of 1974 (Pub. L. 93–406, electronic health records (EHR) items Boulevard, Baltimore, MD 21244–1850. enacted on September 2, 1974) and services. This proposed rule also For information on viewing public ESOP Employee stock ownership plan provides critically necessary guidance comments, see the beginning of the ESRD End-stage renal disease for physicians and health care providers SUPPLEMENTARY INFORMATION section. FFS Fee-for-service and suppliers whose financial FOR FURTHER INFORMATION CONTACT: Lisa FQHC Federally qualified health center relationships are governed by the O. Wilson, (410) 786–8852. Matthew FR Federal Register physician self-referral statute and FY Fiscal year Edgar, (410) 786–0698. HCIC Health care industry cybersecurity regulations. SUPPLEMENTARY INFORMATION: HHS [Department of] Health and Human DATES: To be assured consideration, Inspection of Public Comments: All Services comments must be received at one of comments received before the close of HIPAA Health Insurance Portability and the addresses provided below, no later the comment period are available for Accountability Act of 1996 (Pub. L. 104– than 5 p.m. on December 31, 2019. viewing by the public, including any 191, enacted August 21, 1996) personally identifiable or confidential IPA Independent practice association ADDRESSES: In commenting, please refer IPPS Acute Care Hospital Inpatient to file code CMS–1720–P. Because of business information that is included in Prospective Payment System staff and resource limitations, we cannot a comment. We post all comments IRS Internal Revenue Service accept comments by facsimile (FAX) received before the close of the IT Information technology transmission. You may submit comment period on the following MA Medicare Advantage comments in one of four ways (please website as soon as possible after they MIPPA Medicare Improvements for Patients choose only one of the ways listed): have been received: http:// and Providers Act (Pub. L. 110–275, 1. Electronically. You may submit www.regulations.gov. Follow the search enacted on July 15, 2008) electronic comments on this regulation instructions on that website to view MMA Medicare Prescription Drug, to http://www.regulations.gov. Follow public comments. Improvement and Modernization Act of 2003 (Pub. L. 108–173, enacted on the ‘‘Submit a comment’’ instructions. Comments received timely will also December 8, 2003) 2. By regular mail. You may mail be available for public inspection as NIST National Institute of Standards and written comments to the following they are received, generally beginning Technology address ONLY: Centers for Medicare & approximately 3 weeks after publication NPP Nonphysician practitioner Medicaid Services, Department of of a document, at the headquarters of NPRM Notice of proposed rulemaking

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55767

OBRA 89 Omnibus Budget Reconciliation referrals for all designated health Care Act’s revisions to section 1877 of Act of 1989 (Pub. L. 101–239, enacted on services) (63 FR 1659) (the 1998 the Act. On November 16, 2015, in the December 19, 1989) proposed rule). We finalized the CY 2016 PFS final rule, we issued OBRA 90 Omnibus Budget Reconciliation proposals from the 1992 proposed rule Act of 1990 (Pub. L. 101–508, enacted on regulations to reduce burden and November 5, 1990) in 1995 (60 FR 41914) (the 1995 final facilitate compliance (80 FR 71300 OBRA 93 Omnibus Budget Reconciliation rule), and issued final rules following through 71341). In that rulemaking, we Act of 1993 (Pub. L. 103–66, enacted on the 1998 proposed rule in three stages. established two new exceptions, August 10, 1993) The first final rulemaking (Phase I) was clarified certain provisions of the OCM Oncology Care Model published in the Federal Register on physician self-referral regulations, OIG [HHS] Office of Inspector General January 4, 2001 as a final rule with updated regulations to reflect changes in OMB Office of Management and Budget comment period (66 FR 856). The terminology, and revised definitions ONC Office of the National Coordinator for second final rulemaking (Phase II) was Health Information Technology related to physician-owned hospitals. OPPS Hospital Outpatient Prospective published in the Federal Register on On November 15, 2016, we included in Payment System March 26, 2004 as an interim final rule the CY 2017 PFS final rule, at PFS Physician Fee Schedule with comment period (69 FR 16054). § 411.357(a)(5)(ii)(B), (b)(4)(ii)(B), PHI Protected health information Due to a printing error, a portion of the (l)(3)(ii), and (p)(1)(ii)(B), requirements PHSA Public Health Service Act (Pub. L. Phase II preamble was omitted from the identical to regulations that have been 178–410, enacted on July 1, 1944) March 26, 2004 Federal Register in effect since October 1, 2009 that the PPS Prospective payment system publication. That portion of the rental charges for the lease of office RFI Request for information preamble, which addressed reporting space or equipment are not determined RHC Rural health clinic requirements and sanctions, was RVU Relative value unit using a formula based on per-unit of SNF Skilled nursing facility published on April 6, 2004 (69 FR service rental charges, to the extent that SRDP CMS Voluntary Physician Self- 17933). The third final rulemaking such charges reflect services provided to Referral Disclosure Protocol (Phase III) was published in the Federal patients referred by the lessor to the Register on September 5, 2007 as a final lessee (81 FR 80534). I. Background rule (72 FR 51012). On November 23, 2018, in our most A. Statutory and Regulatory History In addition to Phase I, Phase II, and recent update, the CY 2019 PFS final Phase III, we issued final regulations on rule (83 FR 59715 through 59717), we Section 1877 of the Social Security August 19, 2008 in the Fiscal Year (FY) Act (the Act), also known as the incorporated into our regulations 2009 Inpatient Prospective Payment provisions at sections 1877(h)(1)(D) and physician self-referral law: (1) Prohibits System final rule with comment period a physician from making referrals for (E) of the Act that were added by section (73 FR 48434) (the FY 2009 IPPS final 50404 of the Bipartisan Budget Act of certain designated health services rule). That rulemaking made various payable by Medicare to an entity with 2018 (Pub. L. 115–123). Specifically, we revisions to the physician self-referral codified in regulations our longstanding which he or she (or an immediate family regulations, including: (1) Revisions to member) has a financial relationship, policy that the writing requirement in the ‘‘stand in the shoes’’ provisions; (2) various compensation arrangement unless an exception applies; and (2) establishment of provisions regarding prohibits the entity from filing claims exceptions in § 411.357 can be satisfied the period of disallowance and by a collection of documents, including with Medicare (or billing another temporary noncompliance with individual, entity, or third party payer) contemporaneous documents signature requirements; (3) prohibitions evidencing the course of conduct for those referred services. A financial on per unit of service (‘‘per-click’’) and relationship is an ownership or between the parties. We also amended percentage-based compensation the special rule for temporary investment interest in the entity or a formulas for determining the rental compensation arrangement with the noncompliance with signature charges for office space and equipment requirements at § 411.353(g), removing entity. The statute establishes a number lease arrangements; and (4) expansion of of specific exceptions and grants the the limitation on the use of the rule to the definition of ‘‘entity.’’ once every 3 years with respect to the Secretary of the Department of Health After passage of the Patient Protection same physician and making other and Human Services (the Secretary) the and Affordable Care Act of 2010 (Pub. changes to conform the regulatory authority to create regulatory exceptions L. 111–148) (Affordable Care Act), we provision to section 1877(h)(1)(E) of the for financial relationships that do not issued final regulations on November pose a risk of program or patient abuse. 29, 2010 in the Calendar Year (CY) 2011 Act. Section 1903(s) of the Act extends Physician Fee Schedule (PFS) final rule B. Health Care Delivery and Payment aspects of the physician self-referral with comment period that codified a Reform: Transition to Value-Based Care prohibitions to Medicaid. For additional disclosure requirement established by information about section 1903(s) of the the Affordable Care Act for the in-office 1. The Regulatory Sprint to Coordinated Act, see 66 FR 857 through 858. ancillary services exception (75 FR Care This rulemaking follows a history of 73443). We also issued final regulations The Department has identified the rulemakings related to the physician on November 24, 2010 in the CY 2011 broad reach of the physician self-referral self-referral law. The following Outpatient Prospective Payment System law, as well as the Federal anti-kickback discussion provides a chronology of our (OPPS) final rule with comment period statute and beneficiary inducements more significant and comprehensive (75 FR 71800), on November 30, 2011 in civil monetary penalty (CMP) law, rulemakings; it is not an exhaustive list the CY 2012 OPPS final rule with sections 1128B(b) and 1128A(a)(5) of the of all rulemakings related to the comment period (76 FR 74122), and on Act, respectively, as potentially physician self-referral law. After the November 10, 2014 in the CY 2015 inhibiting beneficial arrangements that passage of section 1877 of the Act, we OPPS final rule with comment period would advance the transition to value- proposed rulemakings in 1992 (related (79 FR 66987) that established or based care and the coordination of care only to referrals for clinical laboratory revised certain regulatory provisions among providers in both the Federal services) (57 FR 8588) (the 1992 concerning physician-owned hospitals and commercial sectors. Industry proposed rule) and 1998 (addressing to codify and interpret the Affordable stakeholders have informed us that,

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55768 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

because the consequences of 2. Policy Considerations and Other needed or steered to less convenient, noncompliance with the physician self- Information Relevant to the lower quality, or more expensive health referral law (and the anti-kickback Development of This Proposed Rule care providers because the patient’s statute) are so dire, providers, suppliers, a. Medicare Payment Was Volume- physician can improve his or her and physicians may be discouraged Based When the Physician Self-Referral financial standing through those from entering into innovative Statute Was Enacted referrals. This statutory structure was arrangements that would improve designed for and made sense in quality outcomes, produce health When the physician self-referral Medicare’s then largely volume-based system efficiencies, and lower costs (or statute was enacted in 1989, under reimbursement system. slow their rate of growth). To address traditional fee-for-service (FFS) Medicare (that is, Parts A and B), the b. The Medicare Shared Savings these concerns, and to help accelerate Program, the Center for Medicare and the transformation of the health care vast majority of covered services were paid based on volume. Although some Medicaid Innovation, and Medicare’s system into one that better pays for Transition to Value-Based Payment value and promotes care coordination, services were ‘‘bundled’’ into a single HHS launched a Regulatory Sprint to payment, such as inpatient hospital Since the enactment of the physician Coordinated Care (the Regulatory services that were paid on the basis of self-referral statute in 1989, significant Sprint), led by the Deputy Secretary of the diagnosis-related group (DRG) that changes in the delivery of health care HHS. This Regulatory Sprint aims to corresponded to the patient’s diagnosis services and the payment for such and the services provided (known as the remove potential regulatory barriers to services have occurred, both within the Hospital Inpatient Prospective Payment care coordination and value-based care Medicare and Medicaid programs and System, or IPPS), in general, Medicare created by four key Federal health care for non-Federal payors and patients. For made a payment each time a provider or laws and associated regulations: (1) The some time, we have engaged in efforts supplier furnished a service to a physician self-referral law; (2) the anti- to align payment under the Medicare beneficiary. Thus, the more services a kickback statute; (3) the Health program with the quality of the care provider or supplier furnished, the more Insurance Portability and provided to our beneficiaries. Laws such Medicare payments it would receive. Accountability Act of 1996 (Pub. L. as the Medicare Prescription Drug, Importantly, these bundled payments 104–191) (HIPAA); and (4) the rules Improvement, and Modernization Act of typically covered services furnished by under 42 CFR part 2 related to opioid 2003 (Pub. L. 108–173) (MMA), the a single provider or supplier, directly or Deficit Reduction Act of 2005 (Pub. L. and substance use disorder treatment. by contract; payments were not bundled 109–171) (DRA), and the Medicare Through the Regulatory Sprint, HHS across multiple providers, each billing Improvements for Patients and aims to encourage and improve— independently. This volume-based Providers Act of 2008 (Pub. L. 110–275) • A patient’s ability to understand reimbursement system continues to (MIPPA) guided our early efforts to treatment plans and make empowered apply under traditional Medicare to move toward health care delivery and decisions; both services paid under a prospective payment reform. More recently, the • Providers’ alignment on an end-to- payment system (PPS) and services paid Affordable Care Act required significant end treatment approach (that is, under a retrospective FFS system. changes to the Medicare program’s coordination among providers along the As described in this proposed rule, payment systems and provides the patient’s full care journey); the physician self-referral statute was Secretary with broad authority to test enacted to address concerns that arose • Incentives for providers to innovative payment and service in Medicare’s volume-based coordinate, collaborate, and provide delivery models. reimbursement system where the more patients with tools to be more involved; Section 3022 of the Affordable Care designated health services that a and Act established the Medicare Shared physician ordered, the more payments • Savings Program (Shared Savings Information-sharing among Medicare would make to the entity that Program). The Congress created the providers, facilities, and other furnished the designated health Shared Savings Program to promote stakeholders in a manner that facilitates services. If the referring physician had accountability for a patient population efficient care while preserving and an ownership or investment interest in and coordinate items and services under protecting patient access to data. the entity furnishing the designated Medicare Parts A and B and encourage The Department believes that the health services, he or she could increase investment in infrastructure and realization of these goals would the entity’s revenue by referring patients redesigned care processes for high- meaningfully improve the quality of for more or higher value services, quality and efficient service delivery. In care received by all American patients. potentially increasing the profit essence, the Shared Savings Program As part of the Regulatory Sprint, CMS, distributions tied to the physician’s would facilitate coordination among the HHS Office of Inspector General ownership interest. Similarly, a providers to improve the quality of care (OIG), and the HHS Office for Civil physician who had a service or other for Medicare FFS beneficiaries and Rights (OCR) each issued requests for compensation arrangement with an reduce unnecessary costs. Physicians, information to solicit comments that entity might increase his or her hospitals, and other eligible providers may help to inform the Department’s aggregate compensation if he or she and suppliers may participate in the approach to achieving the goals of the made referrals that resulted in more Shared Savings Program by creating or Regulatory Sprint (83 FR 29524, 83 FR Medicare payments to the entity. The participating in an accountable care 43607, and 83 FR 64302, respectively). physician self-referral statute was organization (ACO) that agrees to be We discuss our request for information enacted to combat the potential that held accountable for the quality, cost, (the CMS RFI) in this section of this financial self-interest would affect a and experience of care of an assigned proposed rule, including the specific physician’s medical decision making Medicare FFS beneficiary population. information we requested from and ensure that patients have options ACOs that successfully meet quality and commenters, and how we used the for quality care. The law’s prohibitions savings requirements share a percentage information shared by commenters to were intended to prevent a patient from of the achieved savings with Medicare. inform this proposed rulemaking. being referred for services that are not Since enactment, we have issued

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55769

numerous regulations to implement and initiatives targeted to the Medicaid and practice level. Aligned financial update the Shared Savings Program. CHIP population and to Medicare- incentives that result from engaging In keeping with the Secretary’s vision Medicaid (dual eligible) enrollees, and multiple payors leverage the for achieving value-based is focused on other initiatives to opportunity to transform care for transformation by pioneering bold new accelerate the development and testing oncology patients across a broader payment models, we recently finalized of new payment and service delivery population. Other payors benefit from changes to the Shared Savings Program models, as well as to speed the adoption savings, better outcomes for their that allow us to take an important step of best practices. We describe a few enrollees, and greater information forward in how Medicare pays for value. representative Innovation Center models around care quality. Participating In the December 31, 2018, final rule in this section of the proposed rule. payors have the flexibility to design entitled ‘‘Medicare Shared Savings The Innovation Center recently their own payment incentives to Program; Accountable Care released financial and quality results for support their enrollees while aligning Organizations—Pathways to Success’’ the second year of another of its ACO with the Innovation Center’s specific (the 2018 Shared Savings Program final models, the Next Generation ACO goals for OCM of care improvement and rule) (83 FR 67816), we recognized model, which requires participants to efficiency. Shared Savings Program ACOs as an assume the highest level of risk out of In addition to the Innovation Center’s important innovation for moving our all CMS ACO programs and models, and overarching goal of reduced program payment systems away from paying for in exchange for this level of risk, expenditures while preserving or volume and toward paying for value and rewards participants with greater enhancing quality of care, like OCM, the outcomes, as ACOs are held accountable regulatory flexibility. The Next goal of the CJR Model is to transform for the total cost of care and quality Generation ACO model actuarial results care delivery with the result of better outcomes for the assigned beneficiary show that net savings to the Medicare and more efficient care for patients patient populations they serve. We Trust Funds from the model in 2017 undergoing the most common inpatient made significant design changes to the were more than $164 million across 44 surgeries for Medicare beneficiaries: Hip Shared Savings Program that are ACOs. The model is also showing strong and knee replacements (also called intended to put the program on a path performance on quality metrics. See lower extremity joint replacements). toward achieving a more measurable https://www.cms.gov/newsroom/press- This model tests bundled payment and move to value, demonstrate savings to releases/cms-finalizes-pathways- quality measurement for an episode of the Medicare program, and promote a success-overhaul-medicares-national- care associated with hip and knee competitive and accountable aco-program. replacements to encourage hospitals, marketplace (83 FR 68050). Specifically, The Innovation Center is also testing physicians, and post-acute care we finalized a significant redesign of the several episode-based payment models, providers to work together to improve participation options available under including the Oncology Care Model the quality and coordination of care the Shared Savings Program to (OCM) and the Comprehensive Care for from the initial hospitalization through encourage ACOs to transition to two- Joint Replacement (CJR) Model. The recovery. sided risk models (in which they may goal of OCM is to utilize appropriately For more information about the share in savings and are accountable for aligned financial incentives to enable Innovation Center’s innovative health repaying shared losses), increase savings improved care coordination, care payment and service delivery and mitigate losses for the Medicare appropriateness of care, and access to models, see https://innovation.cms Trust Funds, and increase program care for beneficiaries undergoing .gov/. Importantly, the Congress granted integrity. For more information about chemotherapy. Under this model, the Secretary broad authority to waive the Shared Savings Program, see http:// physician practices have entered into provisions of section 1877 of the Act www.cms.gov/Medicare/Medicare-Fee- payment arrangements that include and certain other Federal fraud and for-Service-Payment/sharedsavings financial and performance abuse laws when he determines it is program/index.html. accountability for episodes of care necessary to implement the Shared Section 1115A of the Act, as added by surrounding chemotherapy Savings Program (see section 1899(f) of section 3021 of the Affordable Care Act, administration to cancer patients. The the Act) or test models under the established the Center for Medicare and OCM encourages participating practices Innovation Center’s authority (see Medicaid Innovation (the Innovation to improve care and lower costs through section 1115A(d)(1) of the Act). For Center) within CMS. The purpose of the an episode-based payment model that more information about waivers issued Innovation Center is to test innovative financially incentivizes high-quality, using these authorities and guidance payment and service delivery models to coordinated care. The practices documents related to specific waivers, reduce expenditures for the care participating in OCM have committed to see https://www.cms.gov/Medicare/ furnished to patients in the Medicare providing enhanced services to Fraud-and-Abuse/ and Medicaid programs and the Medicare beneficiaries such as care PhysicianSelfReferral/Fraud-and- Children’s Health Insurance Program coordination, navigation, and national Abuse-Waivers.html. (CHIP) while preserving or enhancing treatment guidelines for care. The OCM the quality of that care. Using its provides an incentive to participating c. Commercial Payor and Provider- authority in section 1115A of the Act, physician practices to comprehensively Driven Activity the Innovation Center has tested and appropriately address the complex Although payments directly from a numerous health care delivery and care needs of the beneficiary population payor to a physician generally do not payment models in which providers, receiving chemotherapy treatment and implicate the physician self-referral law suppliers, and individual practitioners heighten their focus on furnishing unless the payor is itself an entity that participate. Most Innovation Center services that specifically improve the furnishes designated health services, models generally fall into three patient experience or health outcomes. remuneration between physicians and categories: Accountable care models, Fourteen commercial payors are other health care providers that provide episode-based payment models, and participating in OCM in alignment with care to a payor’s enrolled patients (or primary care transformation models. Medicare to create broader incentives subscribers) likely does implicate the The Innovation Center also tests for care transformation at the physician physician self-referral law. Commercial

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55770 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

payors and health care providers have ICC_eligibility_12-14.pdf.) This type of care system into one that pays for value. implemented and continue to develop care coordination is similar to the goals Dramatically different from the system numerous innovative health care set forth in CMS’ ACO programs and that existed when the physician self- payment and care delivery models that models, as well as our Bundled referral statute was enacted, a value- do not include or specifically relate to Payments for Care Improvement driven health care system pays for CMS. Even though the physicians and initiatives. health and outcomes rather than health care providers who participate in In response to the CMS RFI sickness and procedures. We believe these initiatives do not necessarily mentioned in section I.B.1. of this that a successful value-based system provide designated health services proposed rule and in more detail in requires integration and coordination payable by Medicare as part of the section I.B.2.d. of this proposed rule, among physicians and other health care initiatives, financial relationships commenters shared information providers and suppliers. The Secretary between them may nonetheless regarding alternative payment models has laid out four areas of emphasis for implicate the physician self-referral law, and other innovative programs building a system that delivers value: which, in turn, may restrict referrals of sponsored by commercial payors. One maximizing the promise of health Medicare patients. In considering the commenter described its value-based information technology (IT), improving policies proposed in this proposed rule, contracting with physicians and health transparency in price and quality, we examined the value-based care care providers as a move away from pioneering bold new models in delivery and payment models traditional volume-driven practices. Medicare and Medicaid, and removing developed by commercial payors, as This payor reimburses physicians for government burdens that impede care well as those developed directly by care coordination activities with coordination. This proposed rule health care providers, to better incentive payments to facilitate better focuses primarily on the final two areas understand the need for exceptions to care; shares savings with physicians of emphasis for value-based the physician self-referral law that where their efforts helped achieve the transformation—pioneering new models would permit financial relationships cost savings; pays bundled rates for in Medicare and Medicaid and among health care providers who surgical procedures performed in removing regulatory barriers that provide services to patients outside the ambulatory surgical centers (ASCs); and impede care coordination. Medicare program. makes incentive payments to encourage As the Secretary and the CMS is aware of developments by the use of certain sites of service for Administrator of CMS (the payors, including the development of particular cases. This commenter also value-based care delivery and payment noted that pharmaceutical Administrator) have made clear, we are initiatives, that are intended to achieve manufacturers and other service well aware of the burden that the same population health goals as providers are part of its value-based regulations, including the physician ACOs: Better health, affordability, and models. According to this commenter, self-referral regulations, place on health experience. The approach of these its efforts will help align financial care professionals and organizations, payment initiatives is to reward health incentives with patient health outcomes especially with respect to care care professionals for value rather than and help prepare physicians and other coordination. In 2017, through the volume and promote higher quality of providers to deliver care that improves annual payment rules, CMS requested care and lower total medical costs. CMS patient outcomes but at lower cost, all comments on improvements that could is aware of numerous initiative while assuming greater financial risk. be made to the health care delivery arrangements with primary care Other commenters described the system that would reduce unnecessary physician groups in over 30 states. One breadth of their involvement in value- burdens for clinicians, other providers, particular program encompassed more based health care delivery and payment. and patients and their families. In than 2 million commercial subscribers One of these commenters noted that 61 response, commenters shared and more than 140,000 primary care million (60 percent) of its subscribers information regarding the barriers to physicians and specialists. The have access to value-based providers participation in health care delivery and initiative expanded on prior initiatives and, in 2017, its value-based payment reform efforts, both public and involving large physician groups and reimbursement accounted for 31 percent private, as well as the burdens of integrated delivery systems, which of total claims spending. Another compliance with the physician self- showed successes, including better- commenter stated that it has 1,000 referral statute and regulations as they than-market quality performance, and ACOs, with 15 million subscribers who exist today. As a result of our review of total medical cost; 50 percent fewer access care from over 110,000 these comments, and with a goal of unnecessary emergency room visits; physicians and 1,100 hospitals reducing regulatory burden and better compliance with diabetes participating in this value-based care dismantling barriers to value-based care measures; and closure of 21 percent program. These commenters stressed transformation while also protecting the more gaps in care. that their achievements in programs integrity of the Medicare program, on Also of note, another payor has where the physician self-referral law is June 25, 2018, we published in the developed plans that promote care not implicated or does not impose an Federal Register a Request for coordination measures by providing absolute prohibition on physician Information Regarding the Physician financial incentives to their hospital referrals could be expanded to benefit Self-Referral Law (as noted previously, networks for reaching Integrated Care the Medicare program and its the CMS RFI) seeking recommendations Certification from The Joint beneficiaries with meaningful reform of and input from the public on how to Commission. This payor’s initiative was the physician self-referral regulations. address any undue impact and burden developed to evaluate the ability of of the physician self-referral statute and identified health care settings to provide d. Request for Information Regarding the regulations (83 FR 29524). In the CMS collaborative, coordinated services. The Physician Self-Referral Law (CMS– RFI, we stated that we are particularly certification is a 3-year recognition of an 1720–NC) interested in input on issues that organization’s ability to provide As described previously, the Secretary include the structure of arrangements clinically integrated care. (See https:// identified four priorities for HHS, the between parties that participate in www.jointcommission.org/assets/1/18/ first of which is transforming our health alternative payment models or other

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55771

novel financial arrangements, the need that value-based payment systems drive the regulatory exceptions that for revisions or additions to exceptions industry consolidation and reduce stakeholders, including CMS RFI to the physician self-referral regulations, competition. Finally, a few commenters commenters, have identified as adding and terminology related to alternative provided feedback on issues that were unnecessary complexity without payment models and the physician self- not covered by the CMS RFI, such as increasing safeguards for program referral statute and regulations in requests to eliminate or keep the integrity. In this proposed rule, we are general (83 FR 29525). statutory restrictions for physician- proposing to delete certain requirements We received approximately 375 owned hospitals and requests to in our regulatory exceptions that may be comments in response to the CMS RFI. eliminate, expand, or limit the scope unnecessary at this time. We are also A wide range of stakeholders, including and availability of the in-office ancillary proposing to revise existing exceptions physicians and associations services exception. or propose new exceptions for representing physicians, hospitals and nonabusive arrangements that we C. Application and Scope of the associations representing hospitals, identified through our administration of Physician Self-Referral Law—Generally integrated health care delivery systems, the SRDP and the CMS RFI comments, non-Federal payors, individuals, rural Our intent in interpreting and and for which there is currently no stakeholders, and other components of implementing section 1877 of the Act applicable exception to the physician the health care industry submitted has always been ‘‘to interpret the self-referral law’s referral and billing comments. Commenters indicated that [referral and billing] prohibitions prohibitions. In sections II.D. and E. of they appreciated the opportunity to narrowly and the exceptions broadly, to this proposed rule, we describe our submit feedback and recognized that the the extent consistent with statutory specific proposals. health care system is moving away from language and intent,’’ and we have not paying based on volume and toward vacillated from this position (66 FR D. Purpose of the Proposed Rule payments based on value. Although 860). Our 1998 proposed rule was In 2017, CMS launched the Patients most commenters believed that changes informed by our review of the legislative over Paperwork initiative, a cross- to the physician self-referral regulations history of section 1877 of the Act, cutting, collaborative process that are needed to support the move to a consultation with our law enforcement evaluates and streamlines regulations value-based payment system, many partners about their experience with a goal to reduce unnecessary recognized that the potential for implementing and enforcing the Federal burden, increase efficiencies, and program integrity vulnerability or other fraud and abuse laws, and empirical improve the beneficiary experience. abuses continues to be a significant studies of physicians’ referral patterns This effort emphasizes a commitment to threat that CMS should not ignore. We and practices, which concluded that a removing regulatory obstacles to received comments on most of the physician’s financial relationship with providers spending time with patients. issues for which we requested an entity can affect a physician’s Reducing unnecessary burden generally information. We appreciate the detailed medical decision-making and lead to is a shared goal of the Patients over comments submitted, and found them overutilization. At the time of our Paperwork initiative and the Regulatory extremely informative and helpful in earliest rulemakings, we did not have as Sprint. The Regulatory Sprint is focused developing our proposals. much experience in administering the specifically on identifying regulatory Comments fell within five general physician self-referral law or working requirements or prohibitions that may themes. First, commenters requested with our law enforcement partners on act as barriers to coordinated care, new exceptions to the physician self- investigations and actions involving assessing whether those regulatory referral law to protect a variety of violations of the physician self-referral provisions are unnecessary obstacles to compensation arrangements between law. Thus, despite our stated intention coordinated care, and issuing guidance and among parties in CMS-sponsored to interpret the law’s prohibitions or revising regulations to address such alternative payment models and also narrowly and the exceptions broadly, obstacles and, as appropriate, those models that are sponsored by we proceeded with great caution when encouraging and incentivizing other payors. Commenters also designing exceptions. coordinated care. As requested by the requested protection for care Over the past decade, in particular, Administrator and the Deputy Secretary, coordination arrangements. Generally, we have vastly expanded our knowledge we reexamined the physician self- commenters recognized the need for of the aspects of financial relationships referral statute and our regulations in appropriate safeguards. Second, that result in Medicare program or order to identify ways to address any commenters requested a new exception patient abuse. Our administration of the undue impact and burden of the law. to permit entities to donate CMS Voluntary Self-Referral Disclosure Informed by the responses to the CMS cybersecurity technology and services to Protocol (SRDP), which has received RFI and our own experience in physicians. Third, commenters over 1,100 submissions since its administering the physician self-referral provided helpful feedback on inception in 2010, has provided us law, we are proposing numerous terminology and concepts critical to the insight into thousands of financial revisions to modernize and clarify the physician self-referral law, such as relationships—most of which were physician self-referral regulations. commercial reasonableness, fair market compensation arrangements—that ran The proposals set forth in section II.A. value, and compensation that ‘‘takes afoul of the physician self-referral law of this proposed rule are intended to into account’’ the volume or value of but posed no real risk of Medicare alleviate the undue impact of the referrals and is ‘‘set in advance.’’ program or patient abuse. We made physician self-referral statute and Fourth, some commenters expressed revisions to our regulations and shared regulations on parties that participate in concerns that new exceptions or easing policy clarifications in the CY 2016 and alternative payment models and other current restrictions could exacerbate 2019 PFS rulemakings to address many novel financial arrangements and to overutilization and other harms. For issues related to the documentation facilitate care coordination among such example, some commenters indicated requirements in the statutory and parties. As part of the Regulatory Sprint, that financial gain should never be regulatory exceptions to the physician OIG is concurrently developing permitted to influence medical decision self-referral law, but we have not, to proposals under the anti-kickback making, and some expressed concern date, addressed other requirements in statute and CMP law to address similar

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00079 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55772 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

concerns. Because many of the throughout the health care industry that is, if the conditions of the waiver compensation arrangements between regarding the urgent need for a or exception are met, the arrangement parties that participate in alternative movement away from legacy systems will be outside the ambit of the payment models and other novel that pay for care on a FFS basis. physician self-referral law’s financial arrangements implicate both Identifying and dismantling regulatory prohibitions.) Commenters urged us to the physician self-referral law and the barriers to value-based care exercise our authority to the broadest anti-kickback statute, we coordinated transformation is a critical step in this extent possible and focus on how the closely with OIG in developing some of movement. We are aware of the effect physician self-referral law should apply the proposals in this proposed rule. the physician self-referral law may have to the emerging models likely to Where appropriate, our aim is to on parties participating or considering dominate in the near future and beyond. promote alignment across our agencies’ participation in integrated care delivery Commenters also urged us not to limit proposed rules to ease the compliance models, alternative payment models, the application of new policies to burden on the regulated industry. In and arrangements to incent Medicare-sponsored models and some cases, CMS’ proposals may be improvements in outcomes and payment methodologies. We intend for different in application or potentially reductions in cost, and we share the our proposals to facilitate an evolving more restrictive than OIG’s comparable optimism of commenters that the health care delivery system, and proposals, in recognition of the changes to the physician self-referral endeavor here to strike the appropriate differences in statutory structures, regulations proposed here will unlock balance between ensuring program authorities, and penalties. In other innovation and enable HHS to realize its integrity and designing policies that will cases, OIG’s proposals may be more goal of transforming the health care stand the test of time. restrictive. For some arrangements, it system into one that pays for value. A few commenters stressed that a may be appropriate for the anti-kickback The health care landscape when the multi-faceted approach that establishes statute, which is an intent-based physician self-referral law was enacted multiple new exceptions would only criminal law, to serve as ‘‘backstop’’ bears little resemblance to the landscape add more burden and complexity to the protection for arrangements that might of today. As some CMS RFI commenters law. These commenters requested that be protected by an exception to the highlighted, the physician self-referral we establish a single exception, similar strict liability physician self-referral law was enacted at a time when the to the Shared Savings Program law. Given the close nexus between our goals of the various components of the Participation Waiver (80 FR 66726), that proposals and OIG’s proposals, we health care system were not merely would apply to any compensation encourage stakeholders to review and unaligned but often in conflict, with arrangement, regardless of the type of submit comments on both proposed each component competing for a bigger arrangement, payment model, or level of rules. However, we may consider share of the health care dollar without risk undertaken by the parties to the comments received only by OIG on its regard to the inefficiencies that resulted arrangement. Although we appreciate proposed rule if the comments address for the system as a whole—in other the commenters’ concerns about issues relevant to our proposals. words, a volume-based system. complexity, we are cognizant of the Our proposals that do not directly According to several commenters, the need to ensure the integrity of the address value-based arrangements are current physician self-referral Medicare program and believe that the set forth in sections II.B., C., D., and E. regulations—intended to combat approach advocated by the commenters of this proposed rule and seek to overutilization in a volume-based would not adequately protect the balance genuine program integrity world—are outmoded because, by their program and its beneficiaries. We concerns against the considerable nature, integrated care models protect believe that the proposals described in burden of the physician self-referral against overutilization by aligning this section of the rule achieve the right law’s billing and claims submission clinical and economic performance as balance between ensuring program prohibitions by reassessing the the benchmarks for value. And, in integrity, making compliance with the appropriate scope of the statute’s reach; general, the greater the economic risk physician self-referral law readily establishing exceptions for common that providers assume, the greater the achievable, and providing the flexibility nonabusive compensation arrangements economic disincentive to overutilize required by participants in value-based between physicians and the entities to services. According to more than one of health care delivery and payment which they refer Medicare beneficiaries these commenters, the current systems. As noted previously, in for designated health services; and prohibitions are even antithetical to the developing the proposed exceptions, providing critically necessary guidance stated goals of policy makers both in the definitions, and related policies, we for physicians and health care providers Congress and within HHS for health coordinated closely with OIG. Where and suppliers whose financial care delivery and payment reform. possible and feasible, we have aligned relationships are governed by the Although we agree in concept, we with OIG’s proposals to ease the physician self-referral statute and continue to operate substantially in a compliance burden on the regulated regulations. volume-based payment system. Thus, industry. we must proceed with caution, even as 2. Proposed Definitions and Exceptions II. Provisions of the Proposed we propose the significant changes Regulations outlined in this proposed rule. We are proposing at § 411.357(aa) new A. Facilitating the Transition to Value- The vast majority of CMS RFI exceptions to the physician self-referral Based Care and Fostering Care commenters requested that CMS revise law for compensation arrangements that Coordination existing exceptions or develop one or satisfy specified requirements based on more new exceptions to the physician the characteristics of the arrangement 1. Background self-referral law to address the concerns and the level of financial risk Transforming our health care system noted previously. (We consider undertaken by the parties to the into one that pays for value is one of the commenters’ requests for ‘‘waivers’’ of arrangement or the value-based Secretary’s priorities. Based on the the physician self-referral law’s enterprise of which they are comments to the CMS RFI, it is clear prohibitions to be requests for new participants. The exceptions would that there is broad consensus exceptions, as they have the same result; apply regardless of whether the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55773

arrangement relates to care furnished to is a party to a value-based arrangement entity to a downstream physician who Medicare beneficiaries, non-Medicare with the other or at least one other VBE joined with other providers and patients, or a combination of both. participant in the value-based suppliers to achieve the savings Although we believe that revisions to enterprise; (3) that have an accountable represents the physician’s agreed upon the physician self-referral regulations body or person responsible for financial share of such savings rather than a are crucial to facilitating the transition and operational oversight of the value- payment for specific items or services to a value-based health care delivery based enterprise; and (4) that have a furnished by the physician to the entity and payment system, nothing in our governing document that describes the (or on the entity’s behalf). And, when proposals is intended to suggest that value-based enterprise and how the VBE payments are made to encourage a many value-based arrangements, such as participants intend to achieve its value- physician to adhere to a redesigned care pay-for-performance arrangements or based purpose(s). protocol, such payments are made, in certain risk-sharing arrangements, do • Value-based purpose would mean: part, in consideration of the physician not satisfy the requirements of existing (1) Coordinating and managing the care refraining from following his or her past exceptions to the physician self-referral of a target patient population; (2) patient care practices rather than for law. improving the quality of care for a target direct patient care items or services For purposes of applying the patient population; (3) appropriately furnished by the physician. On the other proposed exceptions, we are proposing reducing the costs to, or growth in hand, the act of referring patients for new definitions at § 411.351 for the expenditures of, payors without designated health services is itself not a following terms: Value-based activity; reducing the quality of care for a target value-based activity. As a general value-based arrangement; value-based patient population; or (4) transitioning matter, referrals are not items or services enterprise; value-based purpose; VBE from health care delivery and payment for which a physician may be participant; and target patient mechanisms based on the volume of compensated under the physician self- population. The definitions are essential items and services provided to referral law, and payments for referrals to the application of the exceptions. The mechanisms based on the quality of care are antithetical to the purpose of the proposed exceptions apply only to and control of costs of care for a target statute (69 FR 16096). We discuss this compensation arrangements that qualify patient population. in further detail in section II.D.2.c. of as value-based arrangements. Thus, the • VBE participant would mean an this proposed rule. exceptions may be accessed only by individual or entity that engages in at Value-based activities must be those parties that qualify as VBE least one value-based activity as part of reasonably designed to achieve at least participants in the same value-based a value-based enterprise. one value-based purpose of the value- • enterprise. We intend for the definitions Target patient population would based enterprise. For example, if the and exceptions together to create the set mean an identified patient population value-based purpose of the enterprise is of requirements for protection from the selected by a value-based enterprise or to coordinate and manage the care of physician self-referral law’s referral and its VBE participants based on legitimate patients who undergo lower extremity claims submission prohibitions. and verifiable criteria that are set out in joint replacement procedures, a value- To facilitate readers’ review of our writing in advance of the based arrangement might require proposals, we discuss the proposed commencement of the value-based routine post-discharge meetings definitions first. arrangement and further the value-based between a hospital and the physician enterprise’s value-based purpose(s). primarily responsible for the care of the a. Proposed Definitions The activities that serve as the basis patient following discharge from the The proposed ‘‘value-based’’ for the compensation arrangements are hospital. However, if the value-based definitions are interconnected and, for key to qualifying as a value-based purpose of the enterprise is to reduce the best understanding, should be read arrangement to which the proposed costs to, or growth in expenditures of, together. For purposes of applying the exceptions at § 411.357(aa) would payors while improving or maintaining proposed exceptions at § 411.357(aa), apply. We are proposing to identify the improved quality of care for the we are proposing the following these activities as ‘‘value-based target patient population, providing definitions at § 411.351: activities’’ and propose at § 411.351 to patient care services (the purported • Value-based activity would mean define ‘‘value-based activity’’ to include value-based activity) without any of the following activities, provided the provision of an item, the provision monitoring their utilization would not that the activity is reasonably designed of a service, the taking of an action, or appear to be reasonably designed to to achieve at least one value-based the refraining from taking an action, achieve that purpose. purpose of the value-based enterprise: provided that the value-based activity is The definition of ‘‘value-based (1) The provision of an item or service; reasonably designed to achieve at least arrangement’’ is key to our proposals (2) the taking of an action; or (3) the one value-based purpose of the value- aimed at facilitating the transition to refraining from taking an action. The based enterprise of which the parties are value-based care and fostering care making of a referral is not a value-based participants. Sometimes value-based coordination, as the proposed activity. activities are easily identifiable as the exceptions apply only to arrangements • Value-based arrangement would provision of items or services to a that qualify as value-based mean an arrangement for the provision patient; other times, identifying a arrangements. Under our proposal, an of at least one value-based activity for a specific activity responsible for an arrangement between a value-based target patient population between or outcome in a value-based health care enterprise and one or more of its VBE among: (1) The value-based enterprise system can be difficult. We appreciate participants (if the enterprise is an and one or more of its VBE participants; that remuneration paid in furtherance of ‘‘entity’’ as defined at § 411.351 and the or (2) VBE participants in the same the objectives of a value-based health VBE participants are physicians), or value-based enterprise. care system does not always involve between VBE participants in the same • Value-based enterprise would mean one-to-one payments for items or value-based enterprise, for the provision two or more VBE participants: (1) services provided by a party to an of at least one value-based activity for a Collaborating to achieve at least one arrangement. For example, a shared target patient population would qualify value-based purpose; (2) each of which savings payment distributed by an as a value-based arrangement. Because

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55774 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

our proposed exceptions at the same value-based enterprise. We arrangement that is designated as being § 411.357(aa) would apply only to intend the definition of ‘‘value-based responsible for the financial and compensation arrangements (as defined enterprise’’ to include only organized operational oversight of the arrangement at § 411.354(c)), the value-based groups of health care providers, between the parties (if the ‘‘enterprise’’ arrangement must be a compensation suppliers, and other components of the is a network consisting of just the two arrangement and not another type of health care system collaborating to parties). Finally, the network must have financial relationship to which the achieve the goals of a value-based health a governing document that describes the physician self-referral law applies. care system. An ‘‘enterprise’’ may be a network (that is, the value-based Effectively, the parties to a value-based distinct legal entity—such as an ACO— enterprise) and how the VBE arrangement would be an entity with a formal governing body, operating participants intend to achieve its value- furnishing designated health services agreement or bylaws, and the ability to based purpose(s). Implicit in this and a physician; otherwise, the receive payment on behalf of its definition is that the value-based physician self-referral law’s prohibitions affiliated health care providers. An enterprise must have at least one value- would not be implicated. We discuss ‘‘enterprise’’ may also consist only of based purpose. the other terminology used in the the two parties to a value-based Also critical to qualifying as a value- proposed definition of ‘‘value-based arrangement with the written based arrangement is the purpose of the arrangement’’ in this section of the documentation recording the arrangement. As noted previously, only proposed rule. arrangement serving as the required arrangements reasonably designed to Patient care coordination and governing document that describes the achieve at least one value-based purpose management are the foundation of a enterprise and how the parties intend to may potentially qualify as a value-based value-based health care delivery system. achieve its value-based purpose(s). (We arrangement to which the exceptions Reform of the delivery of health care note, as described below, that a value- proposed at § 411.357(aa) would apply. through better care coordination— based arrangement need not be reduced Our proposed definition of ‘‘value-based including more efficient transitions for to writing to satisfy the requirements of purpose’’ identifies four core goals patients moving between and across the exceptions proposed at related to a target patient population. care settings and providers,1 reduction § 411.357(aa)(1) and (2).) Whatever its These are: coordinating and managing of orders for duplicative items and size and structure, a value-based the care of the target patient population; services, and open sharing of medical enterprise is essentially a network of improving the quality of care for the records and other important health data participants (such as clinicians, target patient population; appropriately across care settings and among a providers, and suppliers) that have reducing the costs to, or the growth in patient’s providers (consistent with agreed to collaborate with regard to a privacy and security rules)—is expenditures of, payors without target patient population to put the reducing the quality of care for the integrally connected to reforming health patient at the center of care through care care payment systems to shift from target patient population; and coordination, increase efficiencies in the transitioning from health care delivery volume-driven to value-driven payment delivery of care, and improve outcomes models. We expect that most value- and payment mechanisms based on the for patients. We have proposed our volume of items and services provided based arrangements would involve definition of ‘‘value-based enterprise’’ in activities that coordinate and manage to mechanisms based on the quality of terms of the functions of the enterprise care and control of costs of care for the the care of a target patient population, as it is not our intention to dictate or but have not proposed to limit the target patient population. One or more limit the appropriate legal structures for universe of compensation arrangements of these purposes must anchor every qualifying as a value-based enterprise. that would qualify as value-based compensation arrangement that arrangements to those arrangements To qualify as a value-based enterprise, qualifies as a value-based arrangement specifically for the coordination and among other things, each participant in to which our proposed new exceptions management of patient care. We seek the network, whom we refer to as VBE would apply. Some of these goals are comment regarding whether this participants, must be a party to at least recognizable as part of the successor approach—designed to provide needed one value-based arrangement with at frameworks to the ‘‘triple aim’’ that are flexibility for parties participating in least one other participant in the integral to CMS’ value-based programs alternative payment models (including network or with the value-based and our larger quality strategy to reform those sponsored by CMS) to succeed in enterprise (if the enterprise is an how health care is delivered and the transition to value-based payment— ‘‘entity’’ as defined at § 411.351). (If the reimbursed. Although we expect that poses a risk of program or patient abuse network is comprised of only two VBE stakeholders will be familiar with these that should be addressed through a participants, they must have at least one concepts, we seek comment regarding revised definition of ‘‘value-based value-based arrangement with each whether additional interpretation is arrangement’’ that requires care other in order for the network to qualify necessary. Specifically, with respect to coordination and management in order as a value-based enterprise.) We the value-based purpose of to qualify as a value-based arrangement. describe the proposed definition of VBE appropriately reducing the costs to, or The exceptions proposed at participant in more detail in this section the growth in expenditures of, payors § 411.357(aa) apply only to value-based of the proposed rule. In addition, the without reducing the quality of care for arrangements, which, as described network seeking to qualify as a value- the target patient population, we are previously, must be between a value- based enterprise must have an considering whether to require that the based enterprise and one or more of its accountable body or person that is purpose of the value-based enterprise is VBE participants or between parties in responsible for the financial and to improve quality or maintain the operational oversight of the enterprise. already-improved quality of care for the 1 For purposes of this section, the term This may be the governing board, a target patient population (in addition to ‘‘providers’’ includes both providers and suppliers committee of the governing board, or a appropriately reducing the costs to or as those terms are defined in 42 CFR 400.202, as the growth of expenditures of payors). well as other components of the health care system. corporate officer of the legal entity that The term is used generically unless otherwise is the value-based enterprise, or this That is, the value-based purpose noted. may be the party to a value-based identified at proposed § 411.351

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00082 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55775

(definition of value-based purpose, qualifies as ‘‘transitioning from health may be intended to improperly paragraph (3)) would state: care delivery and payment mechanisms influence or capture referrals without Appropriately reducing the costs to, or based on the volume of items and contributing to the better coordination the growth in expenditures of, payors services provided to mechanisms based of care for patients. (See the 2013 EHR while improving or maintaining the on the quality of care and control of final rule (78 FR 78751), issued on improved quality of care for the target costs of care for the target patient December 27, 2013, for a discussion of patient population. If we adopt such a population,’’ it may be difficult to know our concerns regarding the donation of policy, a value-based enterprise could whether the underlying purpose of an EHR items and services by laboratories not select this value-based purpose until arrangement qualifies as a value-based (78 FR 78757 through 78762).) We are after it has already achieved some purpose that triggers the availability of considering whether to also exclude improvement in the quality of care for the proposed new exceptions at laboratories and DMEPOS suppliers the target patient population that is the § 411.357(aa). We seek comment with from the definition of VBE participant subject of the value-based arrangement. respect to this concern and the proposed or, in the alternative, whether to include We seek comment regarding this definition of value-based purpose in the exceptions at § 411.357(aa), if proposal. generally. We believe that reducing finalized, a requirement that the We are seeking comment whether it is costs to patients is a laudable objective arrangement is not between a physician desirable or necessary to express in of a value-based arrangement when the (or immediate family member of a regulation text what is meant by reduction in costs relates to services that physician) and a laboratory or DMEPOS ‘‘coordinating and managing care’’ and, are unnecessary for the patient and does supplier. In particular, it is not clear to if so, whether ‘‘coordinating and not inappropriately shift costs to the us that laboratories and DMEPOS managing care’’ should be defined to payor or another participant in the suppliers have the direct patient mean the deliberate organization of health care system. Due to our concerns contacts that would justify their patient care activities and sharing of about gaming and the inappropriate inclusion as parties working under a information between two or more VBE shifting of costs, we did not propose to protected value-based arrangement to participants, tailored to improving the include the reduction of costs to achieve the type of patient-centered care patients as a value-based purpose. We health outcomes of the target patient that is a core tenet of care coordination seek comment on this policy population, in order to achieve safer and and a value-based health care system. determination. more effective care for the target patient We solicit public comment on the role As noted previously, we proposed to laboratories and DMEPOS suppliers population. We note that this would define VBE participant (that is, a align closely with the definition of play in care coordination for patients participant in a value-based enterprise) and value-based delivery and payment ‘‘coordinating and managing care’’ to mean an individual or entity that under consideration by OIG. We also models. We are interested in learning engages in at least one value-based more about how laboratories or seek comment regarding permissible activity as part of a value-based ways to determine whether quality of DMEPOS suppliers may be important or enterprise, as described in this section necessary to foster care coordination for care has improved, a methodology for II.A.2.a. We note that the word ‘‘entity,’’ determining whether costs are reduced patients, as well as roles they may play as used in the proposed definition of that raise an undue risk of program or or expenditure growth has been ‘‘VBE participant,’’ is not limited to stopped, or what parties must do to patient abuse. We note that, regardless non-natural persons that qualify as of whether we exclude these suppliers show they are transitioning from health ‘‘entities’’ as defined at current (or any other providers or suppliers) care delivery and payment mechanisms § 411.351. Our proposed definition of from the definition of ‘‘VBE based on the volume of items and ‘‘VBE participant’’ is intended to align participant,’’ they may nevertheless be services provided to mechanisms based with the definition under consideration part of a value-based enterprise. on the quality of care and control of by OIG. We seek comment regarding costs of care. The transitioning from whether the use of the word ‘‘entity’’ in Due to our (and our law enforcement volume-based to value-based health care this definition would cause confusion partners’) ongoing program integrity delivery and payment mechanisms is due to the fact that the universe of non- concerns with certain other components the fourth goal identified in our natural persons (that is, entities) that of the health care system and to proposed definition of value-based could qualify as VBE participants is maintain consistency with policies purpose. We interpret ‘‘transitioning greater than the universe of non-natural under consideration by OIG, we are also from health care delivery and payment persons that qualify as ‘‘entities’’ as considering whether to exclude the mechanisms based on the volume of defined at current § 411.351 and, if so, following providers, suppliers, and items and services provided to alternatives for defining ‘‘VBE other persons from the definition of mechanisms based on the quality of care participant’’ for purposes of section ‘‘VBE participant’’: Pharmaceutical and control of costs of care for the target 1877 of the Act and the physician self- manufacturers; manufacturers and patient population’’ as a category that referral regulations. distributors of DMEPOS; pharmacy includes the integration of VBE Based on the experience of our law benefit managers (PBMs); wholesalers; participants in team-based coordinated enforcement partners, including their and distributors. We believe that care models; establishing the oversight experience, we are also aligning our policies, if finalized, would infrastructure necessary to provide concerned about protecting potentially minimize complexity for parties whose patient-centered coordinated care; and abusive arrangements between certain arrangements implicate both the accepting (or preparing to accept) types of entities that furnish designated physician self-referral law and the anti- increased levels of financial risk from health services for purposes of the kickback statute. The exclusion from the payors or other VBE participants in physician self-referral law. Specifically, definition of ‘‘VBE participant’’ would, value-based arrangements. We are we are concerned about compensation in operation, serve to exclude a cognizant that this goal may lack the arrangements between physicians and compensation arrangement between a precision desired in the physician self- laboratories or suppliers of durable physician and the party that is not a referral regulations. Specifically, medical equipment, prosthetics, VBE participant from the application of without clear boundaries as to what orthotics, and supplies (DMEPOS) that the proposed exceptions for value-based

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00083 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55776 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

arrangements. Therefore, in the patients with newly diagnosed type 2 which remains unknown or unproven. alternative, we are considering whether diabetes), geographic characteristics (for This is a fundamental challenge of to include in the exceptions at example, all patients in an identified regulating during a period of innovation § 411.357(aa) for value-based county or set of zip codes), payor status and experimentation. In addition, the arrangements, if finalized, a requirement (for example, all patients with a health care industry is experiencing that the arrangement is not between a particular health insurance plan or very rapid change, and there is a lack of physician (or immediate family member payor), or other defining characteristics. predictability of desired future of a physician) and a: Pharmaceutical Selecting a target patient population arrangements. Matters are further manufacturer; manufacturer or consisting of only lucrative or adherent complicated by the substantial variation distributor of DMEPOS; pharmacy patients (cherry-picking) and avoiding in care coordination and value-based benefit manager; wholesaler; or costly or noncompliant patients (lemon- arrangements contemplated by the distributor. We note that pharmacy dropping) would not be permissible health care industry, variation among benefit managers, manufacturers, and under most circumstances, as we would patient populations and providers, distributors usually are not entities not consider the selection criteria to be emerging health technologies and data furnishing designated health services for legitimate (even if verifiable). Generally capabilities, and our desire not to chill purposes of the physician self-referral speaking, choosing a target patient beneficial innovations. Thus, the one- law and, for the most part, serve only as population in a manner driven size-fits-all approach to protection from persons in unbroken chains of financial primarily by a profit motive or purely the physician self-referral law’s relationships that may establish an financial concerns would not be prohibitions that was recommended by indirect ownership or investment legitimate. We seek comment regarding many commenters may be less than interest or an indirect compensation the requirement that selection criteria be optimal. arrangement under the regulations at legitimate and verifiable, as well as any The design and structure of our § 411.354(b) and (c). Finally, even if we additional or substitute criteria that we proposed exceptions are intended to exclude pharmaceutical manufacturers, might include in the definition of target further several complementary goals. manufacturers and distributors of patient population. We also seek First, we have endeavored to remove DMEPOS, pharmacy benefit managers, comment on additional selection criteria regulatory barriers, real or perceived, to wholesalers, distributors, or other that should or should not be considered create space and flexibility for industry- parties from the definition of ‘‘VBE ‘‘legitimate and verifiable’’ and on led innovation in the delivery of better participant,’’ no person, whether or not whether we should specify in regulation and more efficient coordinated health a provider or supplier in the Medicare text a non-exhaustive list of selection care for patients and improved health program, would be precluded from criteria that would or would not be outcomes. Second, consistent with the participating in and contributing to a ‘‘legitimate and verifiable.’’ Secretary’s priorities, the historical trend toward improving health care value-based enterprise. We seek b. Proposed Exceptions comment on which persons and entities through better care coordination, and The physician self-referral law (along should qualify as VBE participants; our the increasing adoption of value-based with other Federal fraud and abuse alternative proposals regarding models in the health care industry, we laws) provides critical protection protection for arrangements involving are proposing a set of exceptions that, as against a range of troubling patient and physicians (or their immediate family a whole, may create additional program abuses that may result from incentives for the industry to move members) and the specified persons or volume-driven, FFS payment. These away from volume-based health care organizations; and, in particular, abuses include unnecessary utilization, delivery and payment and toward whether other providers or suppliers, increased costs to payors and patients, population health and other non-FFS such as health technology companies, inappropriate steering of patients, payment models. In this regard, our should be excluded from the definition corruption of medical decision making, proposed exception structure of VBE participant or the application of and competition based on buying incorporates additional flexibilities for the proposed exceptions due to similar referrals instead of delivering quality, compensation arrangements between program integrity concerns. We note convenient care. While value-based parties that have increased their that we intend to align our policies with payment models hold promise for participation in mature value-based policies under consideration by OIG addressing these abuses, they may pose payment models and their assumption where possible and appropriate, and risks of their own, including risks of of downside financial risk under such will consider comments submitted to stinting on care (underutilization), models. As discussed in more detail in OIG regarding its proposed definition of cherry-picking, lemon-dropping, and this section of the proposed rule, our ‘‘VBE participant’’ as we develop manipulation or falsification of data expectation is that meaningful policies in any final rule. used to verify outcomes. Moreover, assumption of downside financial risk We are proposing to define the target during the transformation to value- would not only serve the overall patient population for which VBE based payment, many new delivery and transformation of industry payment participants undertake value-based payment models include both FFS and systems, but could also curb, at least to activities to mean the identified patient value-based payment mechanisms in the some degree, FFS incentives to order population selected by a value-based same model, subjecting providers to medically unnecessary or overly costly enterprise or its VBE participants using mixed incentives, and presenting the items and services, key patient and legitimate and verifiable criteria that are possibility of arrangements that pose program harms addressed by the set out in writing in advance of the both traditional FFS risk and emerging physician self-referral law (and other commencement of the value-based value-based payment risks. Federal fraud and abuse laws). arrangement and further the value-based In removing regulatory barriers to As described in this proposed rule enterprise’s value-based purpose(s). innovative care coordination and value- and in the CMS RFI, the current Legitimate and verifiable criteria may based arrangements, we are faced with exceptions to the physician self-referral include medical or health the challenge of designing protection for law include requirements that may characteristics (for example, patients emerging health care arrangements, the create significant challenges for parties undergoing knee replacement surgery or optimal form, design, and efficacy of that wish to develop novel financial

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55777

arrangements to facilitate their law enforcement and judicial activity the value-based activities provided successful participation in health care related to these requirements, and our under the arrangement. We are also delivery and payment reform efforts. own observations from our work interested in comments regarding Most of the commonly relied upon (including our work on fraud and abuse whether we should include a exceptions to the physician self-referral waivers for CMS accountable care and requirement that the value-based law include requirements related to other models). We are concerned that arrangement is commercially reasonable compensation that may be difficult to the inclusion of such requirements in as defined in our alternative proposals satisfy where the arrangement is the exceptions for value-based described in section II.B.2. of this designed to foster the behavior shaping arrangements proposed at § 411.357(aa) proposed rule. necessary for the provision of high- would conflict with our goal of Because the proposed exceptions for quality patient care that is not addressing regulatory barriers to value- value-based arrangements do not reimbursed on a traditional FFS basis. based care transformation. As one include a requirement that the Requirements that compensation be set commenter stated, these requirements remuneration is not determined in any in advance, fair market value, and not simply may not be suited to the manner that takes into account the take into account the volume or value of collaborative models that reward value volume or value of referrals, the special a physician’s referrals or the other and outcomes. rule at current § 411.354(d)(4) would not business generated between the parties We note that two of the exceptions for apply to arrangements protected under may inhibit the innovation necessary to value-based arrangements that we are the exceptions. (See section II.B. of this proposed rule for a more fulsome achieve well-coordinated care that proposing are available to protect discussion of the history of the special results in better health outcomes and arrangements even when payments from rule at § 411.354(d)(4).) This special rule reduced expenditures (or reduced the payor are made on a FFS basis. Even permits the entity of which the growth in expenditures). For example, so, we are not proposing to require that physician is a bona fide employee, depending on their structure, remuneration is consistent with fair independent contractor, or party to a arrangements for the distribution of market value and not determined in any managed care contract to direct the shared savings or repayment of shared manner that takes into account the physician’s referrals to a particular losses, gainsharing arrangements, and volume or value of a physician’s provider, practitioner, or supplier, pay-for-performance arrangements that referrals or the other business generated provide for payments to refrain from provided that the compensation by the physician for the entity. Instead, arrangement meets specified conditions ordering unnecessary care, among we are proposing a carefully woven others, may be unable to satisfy the designed to preserve the physician’s fabric of safeguards, including judgment as to the patient’s best requirements of an existing exception to requirements incorporated through the the physician self-referral law. medical interests, avoid interfering in an applicable value-based definitions. We insurer’s operations, and, importantly, According to one commenter, a typical believe that the disincentives for shared savings payment inherently takes protect patient choice. overutilization, stinting on patient care, The right to freedom of choice of into account the volume or value of and other harms the physician self- providers is expressed and reinforced in referrals for hospital services and other referral law was intended to address almost every aspect of the Medicare designated health services, but does so that are built into the proposed value- program. We believe that a patient’s by creating an inverse correlation based definitions will operate in tandem control over who provides his or her between the volume or value of referrals with the requirements included in the care directly contributes to improved and the amount of the shared savings proposed exceptions and be sufficient to health outcomes and patient payment. As another commenter protect against program and patient satisfaction, enhanced quality of care suggested, many stakeholders simply do abuse. This is especially true where full and efficiency in the delivery of care, not possess a degree of risk tolerance or meaningful downside financial risk is increased competition among providers, sufficient to participate in new models assumed. We are, however, including in and reduced medical costs, all of which of health care delivery and payment if two of the proposed exceptions for are aims of the Medicare program. they have to apply the requirements of value-based arrangements that the Protection of patient choice is especially the existing exceptions to their financial methodology used to determine the critical in the context of referrals made arrangements, even when such amount of the remuneration—but not by a physician to an entity with which arrangements do not have the the actual amount of the remuneration the physician has a financial characteristics that the physician self- itself—is set in advance of the relationship, as the physician’s financial referral law was intended to constrain. undertaking of value-based activities for self-interest may impact, if not infringe Thus, rather than being a check on bad which the remuneration is provided. We on, a patient’s right to control who actors, in the context of value-based care seek comment on our approach. We are furnishes his or her care. For this models, the physician self-referral law especially interested in comments reason, we are proposing to make may actually be having a chilling effect regarding whether the safeguards compliance with § 411.354(d)(4)(iv) a on models and arrangements designed provided by the combination of the requirement of the exceptions that apply to ‘‘bend the cost curve and improve proposed definitions and the to employment arrangements, personal quality of care to patients.’’ requirements of the proposed service arrangements, or managed care We have carefully considered the exceptions would be adequate to protect contracts that purport to restrict or CMS RFI comments and anecdotal against program or patient abuse and, if direct physician referrals, including the information shared by stakeholders not, whether it would be appropriate or proposed exceptions at § 411.357(aa) for regarding the impact of the specific necessary to include requirements in value-based arrangements. (We are not requirements that compensation be set any final exceptions that remuneration: proposing to include this requirement in in advance, fair market value, and not (1) Not take into account the volume or the exception for group practice determined in any manner that takes value of a physician’s referrals or the arrangements with a hospital at into account the volume or value of a other business generated by the § 411.357(g) because the statute does not physician’s referrals or the other physician for the entity; and (2) is authorize the Secretary to impose business generated between the parties, consistent with the fair market value of additional requirements by regulation

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00085 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55778 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

beyond those included in the statute at physician self-referral law would requirements integrated in the proposed section 1877(e)(7) of the Act.) As improve consumers’ confidence in their definitions used to apply the exceptions described in section II.B. of this physicians and the health care system only to compensation arrangements that proposed rule, we are also proposing generally. In other words, the legislation qualify as ‘‘value-based arrangements;’’ clarifying revisions to current was proposed (and the law ultimately and (2) the disincentives to perpetrate § 411.354(d)(4). In the alternative, rather enacted) to counter the effects of the harms the physician self-referral law than reference § 411.354(d)(4)(iv), we physician decision making driven by was intended to deter that are intrinsic are proposing to include at § 411.357(aa) financial self-interest—overutilization of in the assumption of substantial a separate requirement applicable health care services, the suppression of downside financial risk and meaningful specifically to value-based arrangements patient choice, and the impact on the participation in value-based health care to ensure that, regardless of the nature medical marketplace. delivery and payment models. of the value-based arrangement and its As discussed previously in this Specifically, at proposed value-based purpose(s), the regulation proposed rule, in 1989 and 1993, the § 411.357(aa)(1), we are proposing an adequately protects a patient’s choice of vast majority of Medicare services were exception that would apply to a value- health care provider, the physician’s reimbursed based on volume under a based arrangement where a value-based medical judgment, and the ability of retrospective FFS system. The statutory enterprise has, during the entire term of health insurers to efficiently provide exceptions to the physician self-referral the arrangement, assumed full financial care to their members. We seek law’s referral and billing prohibitions risk from a payor for patient care comment on the best approach to were developed during this time of FFS, services for a target patient population. address our concerns. volume-based payment, with conditions At proposed § 411.357(aa)(2), we are Finally, we have endeavored to be as which, if met, would allow the proposing an exception that would neutral as possible with respect to the physician’s ownership or investment apply to a value-based arrangement types of value-based enterprises and interest or compensation arrangement to under which the physician is at value-based arrangements the proposed proceed without triggering the ban on meaningful downside financial risk for exceptions would cover in order to the physician’s referrals or the entity’s failure to achieve the value-based allow for innovation and claims submission. We believe that the purposes of the value-based enterprise experimentation in the health care exceptions in section 1877 of the Act during the entire term of the marketplace and so that compliance indicate the Congress’ stance on what arrangement. Finally, at proposed with the physician self-referral law is safeguards are necessary to protect § 411.357(aa)(3), we are proposing an not the driver of innovation or the against program or patient abuse in a exception that would apply to any barrier to innovation. One CMS RFI system where Medicare payment is value-based arrangement, provided that commenter asserted that, in their available for each service referred by a the arrangement satisfies specified current state, the physician self-referral physician and furnished by a provider requirements. The proposed exceptions regulations discourage the development or supplier. To date, the exceptions for include fewer requirements where a and adoption of rewards that encourage compensation arrangements issued value-based enterprise has assumed full change on a broad scale, across all under section 1877(b)(4) of the Act, financial risk for the cost of the target patient populations and payor types, which grants the Secretary authority to patient population’s health care (that is, and over indefinite periods of time. It is establish exceptions for financial the value-based enterprise and its VBE for this reason also that we are not relationships that the Secretary participants receive no FFS payments in proposing to limit the exceptions to determines do not pose a risk of addition to the capitated payments or CMS-sponsored models or establish program or patient abuse, have generally global budget payment made to the separate exceptions with different followed the blueprint established by value-based enterprise from the payor), criteria for arrangements that exist the Congress for compensation with the requirements increasing and outside of CMS-sponsored models. arrangements that exist in a FFS system. When the physician self-referral law Value-based health care delivery and changing as the level of financial risk in was expanded in 1993 to apply to payment shifts the paradigm of our the value-based arrangement designated health services beyond the analysis under section 1877(b)(4) of the diminishes. clinical laboratory services to which the Act. When no longer operating in a The exceptions proposed at original 1989 law applied, according to volume-based system, or operating in a § 411.357(aa) and described in detail in the sponsor of the legislation, the system that reduces the amount of FFS this section of the proposed rule would Honorable Fortney ‘‘Pete’’ Stark, the payment by combining it with some be applicable to the compensation physician self-referral law was intended level of value-based payment, we arrangements between parties in a CMS- to address physician referrals that drive believe that our exceptions need fewer sponsored model, program, or other up health care costs and result in ‘‘traditional’’ requirements to ensure the initiative (provided that the unnecessary utilization of services. (See arrangements they protect do not pose a compensation arrangement at issue Opening Statement of the Honorable risk of program or patient abuse. This is qualifies as ‘‘value-based arrangement’’), Pete Stark, Physician Ownership and because a value-based health care and we believe that compensation Referral Arrangements and H.R. 345, delivery and payment system itself arrangements between parties in a CMS- ‘‘The Comprehensive Physician provides safeguards against harms such sponsored model, program, or other Ownership and Referral Act of 1993,’’ as overutilization, care stinting, patient initiative can be structured to satisfy the House of Representatives, Committee on steering, and negative impacts on the requirements of at least one of the Ways and Means, Subcommittee on medical marketplace. Using the proposed exceptions at § 411.357(aa). Health, April 20, 1993, p. 144.) Mr. Secretary’s authority under section We intend that this suite of value-based Stark went on to emphasize the 1877(b)(4) of the Act, we are proposing exceptions, if finalized, would eliminate importance of a physician’s ability to three exceptions for compensation the need for any new waivers of section offer patients neutral advice about arrangements that we believe do not 1877 of the Act for value-based whether or not services are necessary, pose a risk of program or patient abuse arrangements. (We note that, even if the which services are preferable, and who when considered in concert with: (1) proposed exceptions are finalized, should provide them. He noted that the The program integrity and other parties may elect to use the waivers

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55779

applicable to the CMS-sponsored § 411.357(n) for risk-sharing considered to be at full financial risk if models, programs, or initiatives in arrangements. However, see section it is responsible for the cost of only a which they participate.) Even so, we are II.D.13. of this proposed rule for our defined set of patient care services for interested in learning whether proposal to update the exception at a target patient population and whether stakeholders view our proposals as § 411.355(c) to eliminate an out-of-date we should require a minimum period of leaving gaps in protection from the reference. Many commenters discussed time during which the value-based physician self-referral law’s prohibitions the difficulty specialty physicians have enterprise is at full financial risk (for for certain arrangements that are in participating in alternative payment example, 1 year). permissible under a CMS-sponsored models, especially advanced alternative Full financial risk may take the form model, program, or other initiative. We payment models, and requested that we of capitation payments (that is, a are soliciting comments regarding the deem certain financial relationships to predetermined payment per patient per structure and scope of our proposed qualify as alternative payment models. month or other period of time) or global exceptions; specific compensation Our proposals do not turn on whether budget payment from a payor that arrangements that are permissible under the parties to an arrangement are compensates the value-based enterprise a CMS-sponsored model, program, or participating in alternative payment for providing all patient care items and other initiative but might not be able to models or whether arrangements services for a target patient population satisfy the requirements of one of the themselves qualify as alternative for a predetermined period of time. The proposed value-based exceptions; and payment models. We believe that the proposed exception would not prohibit suggested modifications to our approach discussed in this proposed other approaches to full financial risk, proposals that would bridge any rule, under which the proposed and we seek comment regarding other perceived or actual gaps in the exceptions are available for types of full financial risk payment protection of the exceptions at proposed compensation arrangements designed to models that may exist currently or that § 411.357(aa)(1), (2) and (3). We are also achieve the value-based purpose(s) of an stakeholders anticipate as the transition interested in comments that address enterprise consisting of at least the to a value-based health care delivery what safeguards would be appropriate physician and the entity to which he or and payment system progresses. As to include in such a ‘‘gap-filler’’ she refers designated health services, is described elsewhere in this section, a exception in order to protect against the better approach. Physician self- value-based enterprise need not be a program or patient abuse. We remind referral law policy is not the appropriate separate legal entity with the power to potential commenters that an exception place to define or identify alternative contract on its own. Rather, networks of issued using the authority at section payment models. Our focus here is to physicians, entities furnishing 1877(b)(4) of the Act may protect only remove the regulatory barriers that designated health services, and other those financial relationships that the inhibit the transformation to value- components of the health care system Secretary determines do not pose a risk based care. collaborating to achieve the goals of a of program or patient abuse. value-based health care system, We are mindful that value-based (1) Full Financial Risk (Proposed organized with legal formality or not, enterprises and parties to value-based § 411.357(aa)(1)) may qualify as a value-based enterprise. arrangements may assume other types of We are proposing at § 411.357(aa)(1) A value-based enterprise may assume risk, including operational risk, an exception to the physician self- legal obligations in any number of ways. contractual risk, and investment risk. referral law (the ‘‘full financial risk For example, all VBE participants in a For example, the adopter of EHR exception’’) that would apply to value- value-based enterprise could each sign technology and the developer of a based arrangements between VBE the contract for the value-based medical office building assume business participants in a value-based enterprise enterprise to assume full financial risk risk that the investment in the EHR that has assumed ‘‘full financial risk’’ from a payor. Or, the VBE participants technology and the buildout of office for the cost of all patient care items and in a value-based enterprise could have space, respectively, does not result in services covered by the applicable payor contractual arrangements among profit. For our purposes, we are focused for each patient in the target patient themselves that assign risk jointly and on the financial risk because we believe population for a specified period of severally. Or, similar to physicians in an such risk can directly influence the time; that is, the value-based enterprise independent practice association (IPA), incentives physicians and other is financially responsible (or is VBE participants could vest the providers have to order items and contractually obligated to be financially authority to bind all VBE participants in services for patients, the conduct at the responsible within the 6 months the value-based enterprise with a core of the physician self-referral law following the commencement date of designated person who contracts for the (and other Federal fraud and abuse the value-based arrangement) on a assumption of full financial risk on laws). We are not persuaded other types prospective basis for the cost of all behalf of the value-based enterprise and of risk would operate similarly to patient care items and services covered its VBE participants. We do not purport counter volume-based payment by the applicable payor for each patient to prescribe in this proposal a specific incentives; however, we solicit in the target patient population for a manner for the assumption of full comments on this issue. specified period of time. For Medicare financial risk. Several CMS RFI commenters beneficiaries, we would interpret this The financial risk must be requested that we keep in place existing requirement to mean that the value- prospective; that is, the contract exceptions that may protect certain based enterprise, at a minimum, is between the value-based enterprise and value-based arrangements, regardless of responsible for all items and services the payor may not allow for any any proposed new exceptions and covered under Parts A and B. We seek additional payment to compensate for policies. We are not at this time comments regarding the proposed costs incurred by the value-based proposing any substantive changes to definition of ‘‘full financial risk’’ enterprise in providing specific patient the exception at § 411.355(c) for services described here and in proposed care items and services to the target furnished by an organization (or its § 411.357(aa)(1)(viii). Specifically, we patient population, nor may any VBE contractors or subcontractors) to seek comment regarding whether a participant claim payment from the enrollees or the exception at value-based enterprise should be payor for such items or services. Our

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00087 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55780 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

proposed definition of ‘‘full financial to the arrangement seek protection. The a VBE participant. We would not risk’’ would not prohibit a payor from proposed exception would not protect interpret the requirement at proposed making payments to a value-based arrangements that begin at some point § 411.357(aa)(1)(ii) as mandating a one- enterprise to offset losses incurred by during a period when the safeguards to-one payment for an item or service the enterprise above those prospectively intrinsic to full-risk value-based (or other value-based activity). agreed to by the parties. The payment of payment are in place, but that continue Gainsharing payments, shared savings shared savings or other incentive into a timeframe when such safeguards distributions, and similar payments may payments for achieving quality, no longer exist. However, one or both of result from value-based activities performance, or other benchmarks also the other proposed exceptions at undertaken by the recipient of the would not be prohibited. We are § 411.357(aa) may be available to protect payment for patients in the target proposing to also protect value-based value-based arrangements that exist patient population. We believe that the arrangements entered into in during a period when the value-based requirement that the remuneration is for preparation for the implementation of enterprise is not at full financial risk for or results from value-based activities the value-based enterprise’s full the cost of all patient care items and undertaken by the recipient of the financial risk payor contract where such services covered by the applicable payor remuneration for patients in the target arrangements begin after the value- for each patient in the target patient patient population adequately addresses based enterprise is contractually population. this issue; however, we are considering obligated to assume full financial risk As described throughout this whether to require that the for the cost of patient care items and proposed rule, we believe that well- remuneration also or instead relates to services for the target patient population coordinated and managed patient care is the value-based purpose(s) of the value- but prior to the date the provision of the cornerstone of a value-based health based enterprise or value-based patient care items and services under care system. We are soliciting comments arrangement. Also, we intend for this to the contract begin. We are proposing to regarding whether it is necessary to be an objective standard; that is, the limit this period to the 6 months prior include in the full financial risk remuneration must, in fact, be for or to the effective date of the full financial exception, as well as the other result from value-based activities risk payor contract. In other words, the exceptions for value-based arrangements undertaken by the recipient of the value-based enterprise must be at full at § 411.357(aa), a requirement that the remuneration for patients in the target financial risk within the 6 months parties to a value-based arrangement patient population. The proposed following the commencement of the engage in value-based activities that exception, therefore, would not protect value-based arrangement. We seek include, at a minimum, the coordination payments for referrals or any other comment whether this is a sufficient and management of the care of the target actions or business unrelated to the period of time for parties to construct patient population or that the value- target patient population, such as arrangements and begin preparations for based arrangement be reasonably general marketing or sales arrangements. the implementation of the value-based designed, at a minimum, to coordinate With respect to in-kind remuneration, enterprise’s full financial risk payor and manage the care of the target patient essentially, the remuneration must be contract. population. We believe that such a necessary and not simply duplicate We believe that full financial risk is requirement would be the most direct technology or other infrastructure that one defining characteristic of a mature way to further the goals of the the recipient already has. Finally, value-based payment system. When a Regulatory Sprint. On the other hand, although the remuneration must be for value-based enterprise is at full we also believe that, by their nature, or result from value-based activities financial risk for the cost of all patient arrangements that qualify as ‘‘value- undertaken by the recipient of the care services, the incentives to order based arrangements’’ would have care remuneration for patients in the target unnecessary services or steer patients to coordination and management at their patient population, parties would not be higher-cost sites of service are heart, and we question whether an prohibited from using the remuneration diminished. Even when downstream explicit requirement is necessary. for the benefit of patients who are not contractors are paid on something other Moreover, we are concerned that part of the target patient population. than a full-risk basis, the value-based requiring every value-based enterprise itself is incented to monitor arrangement to include the coordination Integrated into most of the CMS- for appropriate utilization, referral and management of care of the target sponsored models is a requirement that patterns, and quality performance, patient population could leave any remuneration between parties to an which we believe helps to reduce the beneficial value-based arrangements allowable financial arrangement is not risk of program or patient abuse. As one that do not directly coordinate or provided as an inducement to reduce or CMS RFI commenter noted, where there manage the care of the target patient limit medically necessary items or is a finite amount of payment, if costs population without access to any of the services to any patient in the assigned go up, participating providers may incur exceptions at proposed § 411.357(aa) patient population. We believe this is an direct financial losses. According to the and potentially unable to meet the important safeguard for patient safety commenter, these kinds of payment requirements of any existing exception and quality of care, regardless of limitations provide stronger and more to the physician self-referral law. whether Medicare is the ultimate payor effective guardrails against increases in We are also proposing a requirement for the services, and propose to include the volume and costs of services than that the remuneration under the value- it in the full financial risk exception by the fraud and abuse laws ever placed on based arrangement is for or results from requiring at proposed the FFS system. As a precaution, we are value-based activities undertaken by the § 411.357(aa)(1)(iii) that remuneration is including several important safeguards recipient of the remuneration for not provided as an inducement to in the proposed exception. patients in the target patient population. reduce or limit medically necessary One requirement of the proposed We recognize that payments under items or services to any patient, whether exception is that the value-based certain incentive payment in the target patient population or not. enterprise must be at full financial risk arrangements, such as gainsharing Remuneration that leads to a reduction during the entire duration of the value- arrangements, may be difficult to tie to in medically necessary services would based arrangement for which the parties specific items or services furnished by be inherently suspect and could

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00088 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55781

implicate sections 1128A(b)(1) and (2) in our existing regulations in the group health care delivery and payment. of the Act. practice rules at § 411.352(d)(2) and (i), Although we believe that our efforts In addition, we are proposing to the exception for physician recruitment described in section I.B.2. of this protect only those value-based at § 411.357(4)(iv), and the exception for proposed rule, as well as those of non- arrangements under which assistance to compensate a Federal payors and a significant remuneration is not conditioned on nonphysician practitioner at segment of the health care industry, referrals of patients who are not part of § 411.357(x)(2). We expect that parties have advanced us beyond ‘‘infancy,’’ we the target patient population or business are familiar with these requirements and acknowledge that most physicians and not covered under the value-based that the maintenance of such records is providers are not yet prepared or willing arrangement. Although this requirement part of their routine business practices. to be responsible for the total cost of is similar to the requirement that We consider the exception at patient care services for a target patient remuneration is for or results from proposed § 411.357(aa)(1) comparable, population. However, some physicians value-based activities undertaken by the in some respects, to the exception at are participating in or considering recipient of the remuneration for § 411.357(n) for risk-sharing participating in alternative payment patients in the target patient population, arrangements, which is intended to be a models that provide for potential it is intended to address a different broad exception with maximum financial gain in exchange for the concern. The exception would not flexibility, covering all risk-sharing undertaking of downside financial risk. protect arrangements where one or both compensation paid to a physician by an We believe that financial risk parties have made referrals or other entity downstream of any type of health assumed directly by a physician will business not covered by the value-based plan, insurance company, or health affect his or her practice and referral arrangement a condition of the maintenance organization (that is, any patterns in a way that curbs the remuneration. By way of example, if the ‘‘managed care organization’’) or influence of traditional FFS, volume- value-based enterprise is at full independent practice association, based payment. When that financial risk financial risk for the total cost of care for provided the arrangement relates to is tied to the failure to achieve value- all of a commercial payor’s enrollees in enrollees and meets the conditions set based purposes, we believe there is great a particular county, the exception forth in the exception (69 FR 16114). All potential for the type of behavior- would not protect a value-based downstream entities are included shaping necessary to transform our arrangement between an entity and a within the scope of the exception for health care delivery system into one that physician that are VBE participants in risk-sharing arrangements. We improves patient outcomes, eliminates the value-based enterprise if the entity endeavored to structure a similar waste and inefficiencies, and reduces required the physician to refer Medicare exception here, given the underlying costs to or the growth in expenditures patients who are not part of the target parallels between a managed care of payors. Arrangements under which a patient population for designated health organization and a value-based physician is at meaningful downside services furnished by the entity. enterprise at full financial risk for the financial risk for failure to achieve Similarly, the exception would not cost of all patient care items and predetermined cost, quality, or other protect a value-based arrangement services covered by the applicable payor performance benchmarks contain related to knee replacement services for each patient in the target patient certain inherent protections against furnished to Medicare beneficiaries if population. Although the proposed program or patient abuse. the arrangement required that the exception at § 411.357(aa)(1) is not We are proposing an exception at physician perform all his or her other limited to ‘‘risk-sharing compensation’’ § 411.357(aa)(2) that would protect orthopedic surgeries at the hospital. paid to a physician, but, rather, covers remuneration paid under a value-based (Our examples relate to value-based any type of remuneration paid under a arrangement where the physician is at arrangements between entities value-based arrangement that is for or meaningful downside financial risk for furnishing designated health services results from value-based activities failure to achieve the value-based and physicians because the physician undertaken by the recipient of the purpose(s) of the value-based enterprise self-referral law’s prohibitions would remuneration, for the reasons discussed (the ‘‘meaningful downside financial not be implicated if the arrangement throughout this section II.A. of this risk exception’’). (As noted previously, was not between an entity furnishing proposed rule, we believe that the type for purposes of our proposed designated health services and a of flexibility provided in the exception exceptions, the parties to a value-based physician (or the physician organization for risk-sharing arrangements is also arrangement would be an entity in whose shoes the physician stands warranted here. Finally, like the furnishing designated health services under § 411.354(c)(2).) exception at § 411.357(n) for risk- and a physician; otherwise, the We are also proposing requirements at sharing arrangements, there are no physician self-referral law’s prohibitions § 411.357(aa)(1)(v) and (vi) related to documentation requirements proposed would not be implicated.) Although the requiring a physician to refer to a for the full financial risk exception. physician must be at meaningful particular provider, practitioner, or Nevertheless, we believe that reducing downside financial risk for the entire supplier and price transparency. We to writing any arrangement between term of the value-based arrangement, refer to our description of these referral sources is a good business the remuneration could be paid to or requirements in sections II.B.4. and practice that allows the parties to from the physician. We seek comment II.A.2.b., of this proposed rule, monitor and confirm that the regarding whether the physician would respectively. arrangement is operating as intended. have the same incentive to modify his Finally, we are proposing to require or her practice and referral patterns in that records of the methodology for (2) Value-Based Arrangements With a manner designed to achieve the determining and the actual amount of Meaningful Downside Financial Risk to important goals described in this remuneration paid under the value- the Physician (Proposed proposed rule if the party that has based arrangement be maintained for a § 411.357(aa)(2)) assumed the meaningful downside period of at least 6 years and made A few CMS RFI commenters opined financial risk and is paying available to the Secretary upon request. that the health care industry is in the remuneration under the arrangement is Requirements similar to this are found infancy of its transition to value-based the entity furnishing designated health

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00089 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55782 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

services. We expect that, in such a case, set of patient care services for the target physician during only a short portion of the entity would be appropriately patient population. We are, however, the term of an arrangement. motivated to monitor and respond to a concerned about the potential for To buttress our oversight ability and physician’s practice and referral gaming if the parties established too that of our law enforcement partners, we patterns if such patterns could narrow a set of patient care services for are proposing at § 411.357(aa)(2)(ii) a negatively impact the entity’s financial which the physician is at meaningful requirement that the nature and extent position, but we are not convinced that downside financial risk. We are of the physician’s financial risk is set such motivation to monitor would be considering an approach that defines forth in writing. This is also, of course, sufficient to safeguard against program meaningful downside financial risk only a good business practice that allows the or patient abuse. to mean that the physician is parties to monitor their value-based For purposes of the exception, we are responsible to pay the entity no less arrangements and ensure that they are proposing to define ‘‘meaningful than 25 percent of the value of the operating as intended. For similar downside financial risk’’ to mean that remuneration the physician receives reasons, but also as a safeguard against the physician is responsible to pay the under the value-based arrangement and manipulating a value-based arrangement entity no less than 25 percent of the exclude a specific reference to total cost to reward referrals, we are proposing a value of the remuneration the physician of care. We seek comment on our requirement that the methodology used receives under the value-based approaches as to how we might to determine the amount of the arrangement. We believe that this level appropriately define meaningful remuneration is set in advance of the of financial risk is high enough to curb downside financial risk for purposes of furnishing of the items or services for the influence of traditional FFS, proposed § 411.357(aa)(2). Specifically, which the remuneration is provided. volume-based payment and achieve the we seek comment on whether the The special rule on compensation at type of behavior-shaping necessary to proposed 25 percent threshold is § 411.354(d)(1) that deems facilitate achievement of the goals set appropriate, and whether downside risk compensation to be set in advance when forth in this proposed rule. Defining for 25 percent of only a nominal amount certain conditions are met would apply. meaningful downside financial risk in of remuneration would be sufficient to However, that provision is merely a this way would establish consistency curb the influence of traditional FFS, deeming provision and parties would be with the 25 percent threshold volume-based payment. free to confirm satisfaction of the determined by the Secretary for the As we discussed previously, under proposed requirement another way. statutory and regulatory exceptions for the full financial risk exception, we are Integrated into most of the CMS- physician incentive plans at section proposing to protect value-based sponsored models is a requirement that 1877(e)(3)(B) of the Act and arrangements entered into in any remuneration between parties to an § 411.357(d)(2), respectively, which preparation for the implementation of allowable financial arrangement is not reference ‘‘substantial financial risk’’ to the value-based enterprise’s full provided as an inducement to reduce or a physician (or physician group). For financial risk payor contract where such limit medically necessary items or purposes of those exceptions, the arrangements begin after the value- services to any patient in the assigned Secretary has defined ‘‘substantial based enterprise is contractually patient population. We believe this is an financial risk’’ to mean the risk for obligated to assume full financial risk important safeguard for patient safety referral services that exceeds the risk for the cost of patient care items and and quality of care, regardless of threshold, which is currently set at 25 services for the target patient population whether Medicare is the ultimate payor percent (see § 422.208). We have but prior to the date the provision of for the services, and propose to include proposed to require that the financial patient care items and services under it in the meaningful downside financial risk be ‘‘downside’’ risk for clarity. the contract begin. We are proposing to risk exception by requiring at proposed Because we are not proposing to limit limit this period to the 6 months prior § 411.357(aa)(2)(v) that remuneration is the type of remuneration that may be to the effective date of the full financial not provided as an inducement to provided, we require the risk of risk payor contract. We seek comment reduce or limit medically necessary repayment to be for no less than 25 whether we should include an items or services to any patient, whether percent of the value of the remuneration analogous provision in the meaningful in the target patient population or not. to account for remuneration that may be downside financial risk exception and, Remuneration that leads to a reduction provided in-kind, such as infrastructure if so, whether 6 months is an in medically necessary services would or care coordination services. appropriate period of time for parties to be inherently suspect and could Meaningful downside financial risk construct arrangements and begin implicate sections 1128A(b)(1) and (2) would also include full financial risk. preparations for the physician’s of the Act. That is, for purposes of the meaningful assumption of meaningful downside For the reasons discussed in section downside financial risk exception, we financial risk. II.A.2.b.(1). of this proposed rule, we are are proposing to define ‘‘meaningful Because the exception proposed at also proposing to include in the downside financial risk’’ to also mean § 411.357(aa)(2) does not require the meaningful downside financial risk that the physician is financially type of global risk to the value-based exception requirements that the responsible to the payor or the entity on enterprise as our proposed full financial remuneration is for or results from a prospective basis for the cost of all or risk exception, we believe that value-based activities undertaken by the a defined set of items and services additional or different requirements are recipient of the remuneration for covered by the applicable payor for each necessary to protect against program or patients in the target patient population; patient in the target patient population patient abuse. We are proposing a remuneration is not provided as an for a specified period of time. Thus, a requirement at § 411.357(aa)(2)(i) that inducement to reduce or limit medically physician would be at meaningful the physician must be at meaningful necessary items or services to any downside financial risk when he or she downside financial risk for the entire patient, whether in the target patient is at ‘‘full’’ financial risk; that is, when term of the value-based arrangement. population or not; remuneration is not the physician is paid a capitated We believe this is important to curtail conditioned on referrals of patients who payment, global budget payment, or any gaming that could occur by adding are not part of the target patient some other payment for all or a defined meaningful downside financial risk to a population or business not covered

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00090 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55783

under the value-based arrangement; and We are proposing to include in the this proposed rule, we are not proposing that records of the methodology for value-based arrangement exception to include in the value-based determining and the actual amount of certain requirements that are included arrangement exception a requirement remuneration paid under the value- in the proposed meaningful downside that the remuneration is not determined based arrangement must be maintained financial risk exception, some of which in any manner that takes into account for a period of at least 6 years and made are also included in the proposed full the volume or value of a physician’s available to the Secretary upon request. financial risk exception. We would referrals or the other business generated We would interpret these requirements interpret these requirements as by the physician. The alternative as described in section II.A.2.b.(1). of described in section II.A.2.b.(1). of this proposal described here would prohibit this proposed rule and seek comments proposed rule, and include them in the remuneration that is conditioned on the as requested. We are also proposing value-based arrangement exception for volume or value of referrals of any requirements at § 411.357(aa)(2)(vii) and the same reasons articulated with patients to the entity or the volume or (viii) related to requiring a physician to respect to our other proposed value of any other business generated by refer to a particular provider, exceptions. We also seek comments as the physician for the entity. We seek practitioner, or supplier and price requested previously in sections comments regarding this alternative transparency. II.A.2.b.(1). and II.A.2.b.(2). of this proposal; the interplay of the proposed (3) Value-Based Arrangements proposed rule. These requirements are: alternative requirement with our (Proposed § 411.357(aa)(3)) The remuneration is for or results from longstanding policy that the entity of value-based activities undertaken by the which the physician is a bona fide One CMS RFI commenter stated that, recipient of the remuneration for employee or independent contractor, or because physician decisions drive the patients in the target patient population; that is a party to a managed care overwhelming majority of all health care remuneration is not provided as an contract with the physician, may direct spending and patient outcomes, it is not inducement to reduce or limit medically the physician’s referrals to a particular possible to transform health care necessary items or services to a patient provider, practitioner, or supplier, as without a strong, aligned shared in the target patient population; long as the compensation arrangement partnership between entities furnishing remuneration is not conditioned on meets specified conditions designed to designated health services and referrals of patients who are not part of preserve the physician’s judgment as to physicians. According to other the target patient population or business the patient’s best medical interests, commenters, alignment of parties’ not covered by the value-based avoid interfering in an insurer’s financial interests is key to the behavior arrangement; the methodology used to operations, and protect patient choice; shaping necessary to succeed in a value- determine the amount of the and whether including such an based payment system. Another remuneration is set in advance of the alternative requirement would impede commenter, a commercial payor, furnishing of the items or services for parties’ ability to achieve the value- asserted that permitting physicians and which the remuneration is provided; based purposes on which their value- physician groups (especially smaller and records of the methodology for based arrangement is premised if the practices that are not used to risk- determining and the actual amount of entity cannot direct referrals as sharing or are too small to absorb remuneration paid under the value- historically permitted. downside financial risk) to assume only based arrangement must be maintained upside risk—or, for that matter, no In addition, we are proposing financial risk—would encourage more for a period of at least 6 years and made additional requirements in the physicians to participate in care available to the Secretary upon request. exception proposed at § 411.357(aa)(3) coordination activities now while they We are also proposing requirements at that the value-based arrangement is set continue to build towards being able to § 411.357(aa)(2)(vii) and (viii) related to forth in writing and signed by the enter into two-sided risk-sharing requiring a physician to refer to a parties, and that the writing includes a arrangements. In consideration of these particular provider, practitioner, or description of: The value-based and similar comments, as well as our supplier and price transparency. activities to be undertaken under the belief that bold reforms to the physician Because the exception proposed at arrangement; how the value-based self-referral regulations are necessary to § 411.357(aa)(3) would be applicable activities are expected to further the foster the delivery of coordinated even to value-based arrangements where value-based purpose(s) of the value- patient care and achieve the Secretary’s neither party, but especially not the based enterprise; the target patient vision of transitioning to a truly value- physician, has undertaken any population for the arrangement; the type based health care delivery and payment downside financial risk, we believe that or nature of the remuneration; the system, we are proposing an exception safeguards beyond those included in the methodology used to determine the at § 411.357(aa)(3) for compensation proposed meaningful downside amount of the remuneration; and the arrangements that qualify as value-based financial risk exception are necessary to performance or quality standards arrangements, regardless of the level of protect against program or patient against which the recipient of the risk undertaken by the value-based abuse. Specifically, we are proposing, as remuneration will be measured, if any. enterprise or any of its VBE participants an alternative to the requirement that We believe that the documentation (the ‘‘value-based arrangement remuneration is not conditioned on requirements are self-explanatory. exception’’). As proposed, the exception referrals of patients who are not part of Although we expect that parties would would permit both monetary and the target patient population or business plan to satisfy the writing requirement nonmonetary remuneration between the not covered by the value-based in advance of the commencement of the parties. We are considering whether to arrangement, a requirement that value-based arrangement, the special limit the scope of the proposed remuneration is not conditioned on the rule at proposed § 411.354(e)(3) exception to nonmonetary remuneration volume or value of referrals of any (modified, in part, from existing only and seek comment regarding the patients to the entity or the volume or § 411.353(g)(1)(ii)) would apply. We impact such a limitation may have on value of any other business generated by highlight that we intend that the value- the transition to a value-based health the physician for the entity. We note based purpose of the arrangement must care delivery and payment system. that, as described in section II.A.2.b. of relate to the value-based enterprise as a

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00091 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55784 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

whole (which, as noted previously in exception and the burden or cost of permitted to make referrals for section II.A.2.a. of this proposed rule, including such a requirement. designated health services to the may be the two parties to the value- We expect that, as a prudent business hospital, and the hospital could submit based arrangement). The exception practice, parties would monitor their claims for such designated health would not protect a ‘‘side’’ arrangement arrangements to determine whether they services (but not the designated health between two VBE participants that is are operating as intended and serving services referred during the period of unrelated to the goals and objectives their intended purposes, regardless of noncompliance). The hospital has an (that is, the value-based purposes) of the whether the arrangements are value- obligation to ensure that the claims it value-based enterprise of which they are based, and have in place mechanisms to submits to Medicare for designated participants, even if the arrangement address identified deficiencies, as health services referred by a physician itself serves a value-based purpose, as appropriate. In fact, there is an implicit are permissible and, in fact, explicitly defined at proposed § 411.351. We seek ongoing obligation for an entity to certifies compliance with the physician comment whether we should monitor its financial relationship with a self-referral law on each claim form and specifically include this policy in the physician for compliance with an cost report it submits. We note that the proposed value-based arrangement applicable exception. arrangement described would also exception as a requirement separate In general, if a physician has a implicate the Federal anti-kickback from the writing requirement. financial relationship with an entity that statute, and the parties must also ensure does not satisfy all requirements of an In addition, we are proposing to compliance with that statute. applicable exception (after applying any With respect to arrangements that require that the performance or quality special rules), section 1877(a)(1)(A) of would qualify for protection under the standards against which the recipient of the Act prohibits the physician from exception for value-based arrangements the remuneration will be measured, if making a referral to the entity for the as proposed at § 411.357(aa)(3), there any, are objective and measurable. Such furnishing of designated health services would also exist an implicit ongoing standards must be determined for which payment may otherwise be obligation to monitor for compliance prospectively, and any changes to the made under Medicare, section with the exception. To illustrate, performance or quality standards must 1877(a)(1)(B) of the Act prohibits the assume a hospital revised its care be set forth in writing and apply only entity from presenting or causing to protocol for screening for a certain type prospectively. We recognize that present a claim under Medicare for the of cancer to incorporate newly issued performance or quality standards may designated health services furnished guidelines from a nationally recognized not be applicable to all value-based pursuant to a prohibited referral, and organization. The new guidelines, and arrangements—for example, an section 1877(g)(1) of the Act prohibits the revised protocol, no longer support arrangement under which a hospital Medicare from making payment for a a single screening modality for the provides needed infrastructure to a designated health service that is disease. Instead, the organization physician in the same value-based provided pursuant to a prohibited recommends screening by combining enterprise may not require the physician referral. Parties must ensure the two modalities to achieve more accurate to achieve specific performance or compliance of their financial results. The revised guidelines and quality goals in order to receive or keep relationship with an applicable hospital care protocol are intended to the infrastructure items or services. exception at the time the physician improve the quality of care for patients However, if the value-based makes a referral for designated health by detecting more cancers and avoiding arrangement does include performance service(s). potential unnecessary overtreatment of or quality standards that relate to the To illustrate, assume a hospital false positive results (which can be receipt of the remuneration—for donates EHR items and services to frequent for single-modality screening example, an arrangement to share the Physician A, including ongoing software for the disease). The hospital observes internal cost savings achieved if the upgrades, maintenance, and services, for that most community physicians physician meaningfully participates in which the vendor charges the hospital continue to refer patients to the hospital the hospital’s quality and outcomes monthly in advance of providing the for single-modality screening. To align improvement program and reaches or EHR items and services. The regulation referring physician practices with the exceeds predetermined benchmarks for at § 411.357(w)(4) requires that, before hospital’s revised care protocol, the his or her personal performance or the receipt of the items and services, the hospital offers to pay physicians $10 for quality measurement—such physician pays 15 percent of the donor’s each instance that they order dual- performance or quality standards must cost for the items and services. The modality screening in accordance with be determined in advance of their parties agree that Physician A will pay the revised care protocol during a 2-year implementation. The exception would 15 percent of the monthly cost of the period. The hospital expects that it not protect arrangements where the EHR items and services prior to the would take approximately 2 years to performance or quality standards are set beginning of each month. If Physician A shape physician behavior to always retrospectively. Moreover, any fails to make the July 31st payment as follow the recommended care protocol performance or qualify standards scheduled, the arrangement would no (except when not medically appropriate against which the recipient of the longer satisfy the requirements of for the particular patient). Assume that remuneration will be measured should § 411.357(w)(4), and Physician A would both single-modality and dual-modality not simply reflect the status quo. We are be prohibited from making referrals for screening are designated health services considering whether to require that designated health services to the payable by Medicare. performance or quality standards be hospital as of August 1st and the The exception at proposed designed to drive meaningful hospital would be prohibited from § 411.357(aa)(3) is applicable only to improvements in physician submitting claims to the Medicare arrangements that qualify as ‘‘value- performance, quality, health outcomes, program for any improperly referred based arrangements,’’ as proposed at or efficiencies in care delivery. We seek designated health services. If the § 411.351. The arrangement must be for comment regarding whether we should arrangement is later brought back into the provision of at least one value-based include this as a requirement of the compliance with the requirements of the activity for a target patient population proposed value-based arrangement exception, the physician would again be and must be between a value-based

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00092 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55785

enterprise and one or more of its VBE exception at proposed § 411.357(aa)(3). comment regarding whether we should participants or between VBE Absent modification of the arrangement include these as requirements of the participants in the same value-based to ensure qualification as a ‘‘value-based proposed value-based arrangement enterprise. The value-based activity arrangement’’ and compliance with the exception, how parties could monitor must be reasonably designed to achieve requirements of the exception at for achievement of value-based at least one value-based purpose of the proposed § 411.357(aa)(3), Physician B purposes, and the burden or cost of value-based enterprise that is a party to would be prohibited from making future including such a requirement. the arrangement or is the value-based referrals of any designated health Specifically, we seek comment enterprise in which the parties to the services to the hospital unless the regarding whether we should require arrangement are each VBE participants. arrangement satisfies the requirements that monitoring should occur at In this illustration, the value-based of another applicable exception to the specified intervals and, if so, what the enterprise is the hospital and identified physician self-referral law (which it intervals should be. Recognizing that community physicians. (The hospital likely would not). In addition, the cost savings, in particular, may take an and the community physicians could hospital would be prohibited from extended period of time to achieve, we also be part of a larger value-based submitting claims to Medicare for any also seek comment regarding whether to enterprise.) The target patient improperly referred designated health impose time limits with respect to a population is patients in the hospital’s services. value-based enterprise’s or VBE service area that receive screening for As described previously, parties must participant’s determination that the the particular disease. The value-based ensure the compliance of their financial value-based purpose of the enterprise activity is adherence with the hospital’s relationship with an applicable will not be achieved through the value- revised care protocol by ordering dual- exception at the time of the physician’s based activities required under the modality screening instead of single- referral for the designated health arrangement; that is, require that the modality screening. The value-based service(s). The failure to monitor for or value-based purpose must be achieved purpose of the value-based enterprise is a lack of knowledge of such compliance within a certain timeframe, such as 3 to improve the quality of care for does not nullify the prohibition. If the years and, if it is not, the value-based patients in the hospital’s service area by hospital did not monitor the purpose would be deemed not detecting more cancers and avoiding arrangement for progress toward the achievable through the value-based potential unnecessary overtreatment of value-based purpose of the value-based activities requirement under the false positive results. enterprise, Physician B’s future referrals arrangement. We also seek comment would nevertheless be prohibited due to regarding the types of monitoring At its inception, provided that an the fact that adherence to the revised arrangement between the hospital and activities that parties to value-based care protocol could not, in fact, achieve arrangements are currently performing. Physician B satisfies all requirements of the value-based purpose of the value- proposed § 411.357(aa)(3), Physician B’s based enterprise and would no longer be We are also considering whether to referrals of designated health services to a ‘‘value-based activity’’ as that term is require the recipient of any the hospital and the hospital’s defined at proposed § 411.351. In turn, nonmonetary remuneration under a submission of claims to Medicare for the the arrangement would not qualify as a value-based arrangement to contribute designated health services referred by ‘‘value-based arrangement’’ and the at least 15 percent of the donor’s cost of Physician B would not violate the exception at proposed § 411.357(aa)(3) the nonmonetary remuneration. We physician self-referral law. However, would no longer be available to protect would require that the 15 percent assume that one year into the Physician B’s referrals. contribution is made: (1) Within 90 arrangement, the hospital’s data analysis As illustrated, implicit in the calendar days of the donation of the indicates that the use of dual-modality physician self-referral law, as applied, is nonmonetary remuneration if the screening not only does not result in a requirement that one or both parties donation is a one-time cost to the donor; earlier detection of cancer, but results in monitor the compliance of their value- and (2) at reasonable, regular intervals if more false positive results, invasive based arrangement with an applicable the donation of the nonmonetary biopsies, and unnecessary treatment exception, including whether the value- remuneration is an ongoing cost to the than single-modality screening. As a based activities under the arrangement donor. As we stated with respect to the result, the hospital determines that the are furthering (or could further) the 15 percent contribution required under use of dual-modality screening, despite value-based purpose(s) of the value- the current exception at § 411.357(w) for the nationally-recognized based enterprise. Even so, as additional EHR items and services, parties should recommendations, will not achieve its program integrity safeguards, we are use a reasonable and verifiable method goal to improve the quality of care for considering whether to require that: (1) for allocating costs and are strongly patients in the hospital’s service area by The value-based enterprise or the VBE encouraged to maintain detecting more cancers and avoiding participant providing the remuneration contemporaneous and accurate potential unnecessary overtreatment of must monitor to determine whether the documentation (71 FR 45161 through false positive results. At that point, value-based activities under the 45162). Requiring financial because the value-based activities under arrangement are furthering the value- participation by a recipient of the arrangement would no longer be based purpose(s) of the value-based nonmonetary remuneration under a reasonably designed to achieve the enterprise; and (2) if the value-based value-based arrangement would help value-based purpose of improving the activities will be unable to achieve the ensure that the nonmonetary quality of care for patients in the value-based purpose(s) of the remuneration is appropriate and hospital’s service area by detecting more arrangement, the physician must cease beneficial for the achievement the cancers and avoiding potential referring designated health services to value-based purpose(s) of the value- unnecessary overtreatment of false the entity, either immediately upon the based enterprise, as well as that the positive results, the arrangement would determination that the value-based recipient will actually use the no longer qualify as a ‘‘value-based purpose(s) will not be achieved through nonmonetary remuneration. However, arrangement’’ and would no longer the value-based activities or within 60 we are concerned that such a qualify for protection under the days of such determination. We seek requirement could inhibit the adoption

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00093 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55786 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

of value-based arrangements. As overtly, covertly, in cash, or in kind. permits only the referral of and claim discussed in section II.D.11.d.(1) of this (See §§ 411.351 and 411.354(c).) In submission for the particular designated proposed rule, many commenters to the Phase I, we finalized regulations that health service that satisfied the CMS RFI expressed that the 15 percent define when an indirect compensation requirements of the exception.) For the contribution requirement under the arrangement exists between a physician reasons discussed previously in this existing exception for EHR items and and the entity to which he or she refers section II.A.2.b. of this proposed rule, it services is burdensome to some designated health services. For purposes is possible that an indirect recipients and acts as a barrier to of applying these regulations, in the FY compensation arrangement that adoption of EHR technology. We are 2008 IPPS final rule, we finalized includes a value-based arrangement in concerned that the burden of a 15 additional regulations that deem a the unbroken chain of financial percent contribution requirement would physician to stand in the shoes of his or relationships that forms the indirect prove similarly burdensome under her physician organization if the compensation arrangement could not value-based arrangements, particularly physician has an ownership or satisfy the requirements of § 411.357(p) with respect to small and rural investment interest in the physician because the compensation to the physicians, providers, and suppliers organization that is not merely a titular physician could take into account the that cannot afford the contribution. We interest. These regulations are found at volume or value of referrals or other seek comment regarding whether we § 411.354(c)(2) and (3). business generated by the physician for should include a recipient contribution Under our current regulations, if an the entity or may not be fair market requirement in the proposed value- indirect compensation arrangement value for specific items or services based arrangement exception and the exists, the exception for indirect provided by the physician to the entity. compensation arrangements at burden or cost of including such a In this section II.A.2.b. of this § 411.357(p) is available to protect the requirement. Specifically, we seek proposed rule, we are proposing compensation arrangement. If all of the comment regarding the appropriate exceptions available only to requirements of the exception are level for any required contribution (if 15 compensation arrangements that qualify satisfied, the physician would not be percent is not an appropriate level) and as value-based arrangements. Although barred from referring patients to the whether certain recipients (for example, our proposals do not limit the small or rural physicians, providers, and entity for designated health services and applicability of the exceptions to value- suppliers) should be exempt from the entity would not be barred from based arrangements directly between a compliance with the requirement. submitting claims for the referred Finally, as discussed throughout services. No other exception in physician and the entity to which he or sections I. and II.A. of this proposed § 411.357 is applicable to indirect she refers designated health services, rule, where possible and feasible, we compensation arrangements. However, the definition of ‘‘value-based aim to align our policies with those the parties may elect to protect arrangement’’ proposed at § 411.351 under consideration by OIG to ease the individual referrals of and claims for requires that the compensation compliance burden on the regulated designated health services using an arrangement is ‘‘between’’ (or ‘‘among,’’ industry by minimizing complexity for applicable exception in § 411.355 of our if there are more than two parties to the parties whose arrangements implicate regulations. arrangement) specified parties. We are both the physician self-referral law and We anticipate that an unbroken chain proposing here to identify the the anti-kickback statute. For this of financial relationships described in circumstances under which the reason, we are considering whether to current § 411.354(c)(2)(i) may include a proposed exceptions at § 411.357(aa) adopt any other requirements included value-based arrangement, as that term is would apply to an indirect in the safe harbor at proposed proposed to be defined at § 411.351. compensation arrangement that § 1001.952(ee) and not specifically Thus, an unbroken chain of financial includes a value-based arrangement in proposed in this section II.A.2.b.(3). We relationships that includes a value- the unbroken chain of financial will consider comments received by based arrangement could form an relationships described in OIG on its proposals when developing ‘‘indirect compensation arrangement’’ § 411.354(c)(2)(i). Specifically, we are any final policies for the value-based for purposes of the physician self- proposing that, when the value-based arrangement exception to the physician referral law if the circumstances arrangement is the link in the chain self-referral law. described in § 411.354(c)(2)(ii) and (iii) closest to the physician—that is, the also exist. In such an event, despite the physician is a direct party to the value- (4) Indirect Compensation existence of the value-based based arrangement—the indirect Arrangements to Which the Exceptions arrangement in the unbroken chain of compensation arrangement would at Proposed § 411.357(aa) are Applicable financial relationships, under our qualify as a ‘‘value-based arrangement’’ (Proposed § 411.354(c)(4)) current regulations, the only exception for purposes of applying the proposed The prohibitions of section 1877 of available to ensure the permissibility of exceptions at § 411.357(aa). To be clear, the Act apply if a physician (or an all the physician’s referrals to the entity the link closest to the physician may not immediate family member of a (assuming no other financial be an ownership interest; it must be a physician) has an ownership or relationships exist between the parties) compensation arrangement that meets investment interest in an entity or a would be the exception for indirect the definition of value-based compensation arrangement with an compensation arrangements at arrangement at proposed § 411.351. For entity. For purposes of the physician § 411.357(p), which includes purposes of determining whether the self-referral law, a compensation requirements not found in the proposed indirect compensation arrangement arrangement is any arrangement exceptions for value-based arrangements satisfies the requirements of an involving direct or indirect at § 411.357(aa). (If the parties elect to applicable exception at proposed remuneration between a physician (or utilize a ‘‘services’’ exception at § 411.357(aa), we would look at the an immediate family member of the § 411.355, designated health services are value-based arrangement to which the physician) and an entity, and protected only on a service-by-service physician is a party. For the reasons remuneration means any payment or basis and satisfaction of the described in section II.A.2.a. of this other benefit made directly, indirectly, requirements of an applicable exception proposed rule, we are considering

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00094 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55787

whether to exclude an unbroken chain physician receives aggregate applicable exceptions must be satisfied of financial relationships between an compensation that varies with the in order for the physician to refer entity and a physician from the volume or value of her referrals to the patients to the hospital for designated definition of ‘‘indirect value-based hospital. The unbroken chain of health services and for the hospital to arrangement’’ if the link closest to the financial relationships establishes an submit claims to Medicare for the physician (that is, the value-based indirect compensation arrangement; referred designated health services. For arrangement to which the physician is therefore, in order for the physician to purposes of determining whether the a party) is a compensation arrangement refer patients to the hospital for indirect value-based arrangement between the physician and a: designated health services and for the satisfies the requirements of an Pharmaceutical manufacturer; hospital to submit claims to Medicare applicable exception at proposed manufacturer, distributor, or supplier of for the referred designated health § 411.357(aa), we would look at the DMEPOS; laboratory; pharmacy benefit services, the indirect compensation value-based arrangement to which the manager; wholesaler; or distributor. In arrangement must satisfy the physician is a party. (The parties could the alternative, we are considering requirements of an applicable also utilize an applicable exception in whether to exclude an unbroken chain exception. Under this alternative § 411.355 to protect individual referrals of financial relationships between an proposal, if the compensation for designated health services or the entity and a physician from the arrangement between the physician exception at § 411.357(p) to protect the definition of ‘‘indirect value-based practice and the physician qualifies as indirect compensation arrangement arrangement’’ if one of these persons or a value-based arrangement (as defined at between the hospital and the physician, organizations is a party to any financial proposed § 411.351), the exceptions at but it is unlikely that all requirements relationship in the chain of financial proposed § 411.357(aa) would be of § 411.357(p) would be satisfied in this relationships. We are also considering available to protect the value-based hypothetical fact pattern.) whether to include health technology arrangement (that is, the indirect To illustrate this alternative proposal, companies in any such exclusion in compensation arrangement) between the assume the same unbroken chain of order to align our policies with policies hospital and the physician. (The parties financial relationships. The first step in under consideration by OIG where could also utilize an applicable the analysis would be to determine possible and appropriate. We seek exception in § 411.355 to protect whether the compensation arrangement comment on these approaches and their individual referrals for designated between the physician practice and the effectiveness in enhancing program health services or the exception at physician is a value-based arrangement integrity. § 411.357(p) to protect the indirect (irrespective of whether the compensation arrangement between the compensation to the physician varies Under this proposal, parties would with the volume or value of her referrals first determine if an indirect hospital and the physician, but it is unlikely that all requirements of to the hospital). If so, and the hospital compensation arrangement exists and, if has actual knowledge of the value-based it does, determine whether the § 411.357(p) would be satisfied in this hypothetical fact pattern.) arrangement, the unbroken chain of compensation arrangement to which the financial relationships would constitute physician is a direct party qualifies as In the alternative, we are proposing to an indirect value-based arrangement a value-based arrangement. If so, the define ‘‘indirect value-based that must satisfy the requirements of an exceptions at proposed § 411.357(aa) for arrangement’’ and specify in regulation applicable exception at proposed value-based arrangements would be that the exceptions proposed at § 411.357(aa) in order for the physician applicable. To illustrate, assume an § 411.357(aa) would be available to to refer patients to the hospital for unbroken chain of financial protect the arrangement. Under this designated health services and for the relationships between a hospital and a alternate proposal, an indirect value- hospital to submit claims to Medicare physician that runs: Hospital—(owned based arrangement would exist if: (1) for the referred designated health by)—parent organization—(owns)— Between the physician and the entity services. (The parties could also utilize physician practice—(employs)— there exists an unbroken chain of any an applicable exception in § 411.355 to physician. Thus, the links in the number (but not fewer than one) of protect individual referrals for unbroken chain are ownership or persons (including but not limited to designated health services.) investment interest—ownership or natural persons, corporations, and We seek comment on the best investment interest—compensation municipal organizations) that have approach to address value-based arrangement. For purposes of financial relationships (as defined at arrangements that are part of an determining whether an indirect § 411.354(a)) between them (that is, each unbroken chain of financial compensation exists between the person in the unbroken chain is linked relationships between a physician and physician and the hospital, under to the preceding person by either an an entity to which he or she refers § 411.354(c)(2)(ii), we analyze the ownership or investment interest or a patients for designated health services. compensation arrangement between the compensation arrangement); (2) the Specifically, we are interested in physician practice and the physician. financial relationship between the whether one of the approaches Assume also that the compensation paid physician and the person with which he described here is preferable. We are also to the physician under her employment or she is directly linked is a value-based soliciting comments on whether it is arrangement varies with the volume or arrangement; and (3) the entity has necessary to establish new regulations at value of her referrals to the hospital actual knowledge of the value-based all; that is, whether we should simply because she is paid a bonus for each arrangement in subparagraph (2). Under apply our existing regulations at referral for designated health services our alternative proposal, if an unbroken § 411.354(c) to determine whether an furnished by the hospital provided that chain of financial relationships between unbroken chain of financial she adheres to redesigned care protocols a physician and an entity qualifies as an relationships that includes a value- intended to further one or more value- ‘‘indirect value-based arrangement,’’ the based arrangement establishes an based purposes (as defined at proposed three exceptions proposed at indirect compensation arrangement. If § 411.351). Finally, assume that the § 411.357(aa) would be applicable and so, the parties could rely on the hospital has actual knowledge that the the requirements of at least one of the exception at current § 411.357(p) for

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00095 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55788 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

indirect compensation arrangements or their options. This commenter further all aspects of their care, including any applicable exception in § 411.355 to opined that informed patients are information about the factors that may protect individual referrals from the empowered to take charge of their affect the cost of services for which they physician to the entity and claims for health care and better assist their are referred. A patient who is made the referred designated health services. providers in fulfilling their health care aware, for example, that costs may differ needs. Several commenters shared (5) Price Transparency based on the site of service where the similar support for transparency efforts. referred services are furnished, may Price transparency is a critical Another commenter stated that become a more conscious consumer of component of a health care system that transparency of a physician’s financial health care services. Access to such pays for value and aligns with our relationships along with price and information may also spark important desire to reinforce and support patient quality of care information would be conversations between patients and freedom of choice. We believe that valuable to patients in choosing their physicians, promoting patient transparency in pricing can empower providers and care pathways. This choice and the ability of physicians and consumers of health care services to commenter maintained that these patients to make health care decisions make more informed decisions about actions would also engage patients in that are in the patient’s best interest. In their care and lower the rate of growth protecting against possible unintended conjunction with their physicians’ in health care costs. Health care consequences of value-based determination of the need for consumers today lack meaningful and arrangements. Other commenters raised recommended health care services and timely access to pricing information that concerns that information on price the urgency of that need, information on could, if available, help them choose a transparency and a physician’s financial the factors that may affect the cost of lower-cost setting or a higher-value relationships with other health care such services could ensure that patients provider. Patients are often unaware of providers, in combination with already- have the information they need to shop site-of-care cost differentials until it is required disclosures under HIPAA, and seek out high-quality care at the too late (see Aparna Higgins & German informed consent information and lowest possible cost. Veselovskiy, Does the Cite of Care forms, insurance payment authorization Change the Cost of Care, Health Affairs We seek to establish policies that forms, and other paperwork that facilitate consumers’ ability to (June 2, 2016), https:// patients receive or must complete participate actively and meaningfully in www.healthaffairs.org/do/10.1377/ would serve only to inundate patients decisions relating to their care. At the hblog20160602.055132/full/). Multiple with paperwork that they will find same time, we are cognizant that surveys and studies have revealed that confusing or simply not read. These including requirements regarding price patients want their health care providers commenters contended that, although transparency in the exceptions to the to engage in cost discussions, and one transparency is an appealing concept, physician self-referral law raises certain recent national survey found that a requiring additional disclosures would challenges for the regulated industry. majority of physicians want to have cost result in more burden than benefit. of care discussions with their patients The June 24, 2019 Executive Order on We seek comments on how to pursue (see Caroline E. Sloan, MD & Peter A. Improving Price and Quality our price transparency objectives in the Ubel, MD, The 7 Habits of Highly Transparency in American Healthcare to context of the physician self-referral Effective Cost-of-Care Conversations, Put Patients First recognizes the law, both in the context of a value-based Annals of Internal Medicine (May 7, importance of price transparency. The health care system and otherwise, and 2019), https://annals.org/aim/issue/ Executive Order directs Federal how to overcome the technical, 937992, and Let’s Talk About Money, agencies to take historic steps toward operational, legal, cultural, and other The University of Utah (2018), https:// getting patients the information they challenges to including price uofuhealth.utah.edu/value/lets-talk- need and when they need it to make transparency requirements in the about-money.php). The point of referral well-informed decisions about their physician self-referral regulations. presents an ideal opportunity to have health care. CMS has already acted on Specifically, we are interested in such cost-of-care discussions. the Executive Order through its comments regarding the availability of In the CMS RFI, we solicited proposals in the CY 2020 OPPS pricing information and out-of-pocket comment on the role of transparency in proposed rule to improve the costs to patients (including information the context of the physician self-referral availability of meaningful pricing specific to a particular patient’s law. In particular, we solicited comment information to the public. We believe insurance, such as the satisfaction of the on whether, if provided by the referring that all consumers need price and patient’s applicable deductible, physician to a beneficiary, transparency quality information in advance to make copayment, and coinsurance about a physician’s financial an informed decision when they choose obligations); the appropriate timing for relationships, price transparency, or the a good or service, including at the point the dissemination of information (that availability of other data necessary for of a referral for such goods or services. is, whether the information should be informed consumer purchasing (such as By making meaningful price and quality provided at the time of the referral, the data about quality of services provided) information more broadly available, we time the service is scheduled, or some would reduce or eliminate the harms to can protect patients and increase other time); and the burden associated the Medicare program and its competition, innovation, and value in with compliance with a requirement in beneficiaries that the physician self- the health care system. an exception to the physician self- referral law is intended to address. As discussed elsewhere in this section referral law to provide information Many commenters replied that making a of the proposed rule, we are committed about the factors that may affect the cost physician’s financial relationships and to ensuring that physician self-referral of services for which a patient is cost of care information available could law policies do not infringe on patient referred. Finally, we seek comment be useful. One commenter suggested choice and the ability of physicians and whether the inclusion of a price that providing clear and transparent patients to make health care decisions transparency requirement in a value- information was vital in the health care that are in the patient’s best interest. We based exception would provide industry where patients are often believe it is important for patients to additional protections against program vulnerable, confused, and unsure of have timely access to information about or patient abuse through the active

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00096 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55789

participation of patients in selecting one, two, or all of the following could provide clearer guidance, their health care providers and requirements: The compensation uniformly, they requested that we suppliers. arrangement itself is commercially establish bright-line, objective In furtherance of our goal of price reasonable; the amount of the regulations for each of these transparency for all patients, we are compensation is fair market value; and fundamental requirements. Our overall considering whether to include a the compensation paid under the intention in this proposed rule is to requirement related to price arrangement is not determined in a reduce the burden of compliance with transparency in every exception for manner that takes into account the the physician self-referral law, provide value-based arrangements at proposed volume or value of referrals (or, in some clarification where possible, and revise § 411.357(aa). For instance, we are cases, other business generated between regulations as necessary to achieve these considering whether to require that a the parties). These requirements are goals and the goals of the Regulatory physician provide a notice or have a presented in various ways within the Sprint. We reviewed the statute and our policy regarding the provision of a statutory and regulatory exceptions, but regulations in a fresh light, and believe public notice that alerts patients that it is clear that they are separate and that clear, bright-line rules would their out of pocket costs for items and distinct requirements, each of which enhance both stakeholder compliance services for which they are referred by must be satisfied when present in an efforts and our enforcement capability. the physician may vary based on the site exception. Nonetheless, the regulated We have endeavored here to provide the where the services are furnished and industry and its complementary parts, clarity that will benefit the regulated based on the type of insurance that they such as the health care valuation industry, CMS, and our law have. Because of limits on currently community, continue to seek additional enforcement partners. available pricing data, we believe such guidance from CMS. For example, many In developing our proposals for a requirement could be an important CMS RFI commenters shared a common guidance on the fundamental first step in breaking down barriers to belief that, if compensation is not fair terminology and requirements described cost-of-care discussions that play a market value, CMS would automatically previously, we considered three basic beneficial role in a value-based health consider it to take into account the questions— care system. The public notice provided volume or value of referrals. Or, under • Does the arrangement make sense as or reflected in the policy could be made the current definition of fair market a means to accomplish the parties’ in any form or manner that is accessible value at § 411.351, if compensation goals? to patients. For example, a notice on the takes into account the volume or value • How did the parties calculate the physician’s website, a poster on the wall of referrals, it cannot be fair market remuneration? in the physician’s office, or a notice in value. (Although this is not the case, we • Did the calculation result in a patient portal used by the physician’s note that failure to meet even a single compensation that is fair market value patients would all be acceptable. We requirement of an applicable exception for the asset, item, service, or rental expect that any notice would be written leaves a compensation arrangement property? in plain language that would be subject to the physician self-referral These questions relate, respectively, understood by the general public. We law’s referral and claims submission to the definition of commercial refer readers to the Plain Writing Act of prohibitions; failure to satisfy multiple reasonableness, the volume or value 2010 (Pub. L. 111–274, enacted on requirements of an exception does not standard and the other business October 13, 2010) for further result in ‘‘additional’’ noncompliance generated standard, and the definition information. We seek comment on with the law’s prohibitions.) We provide of fair market value. In this section of whether, if we finalize such a examples of such guidance below in the proposed rule, we provide detailed requirement, it would be helpful for sections II.B.3 and II.B.5. Moreover, descriptions of our proposed definitions CMS to provide a sample notice and, if although commercial reasonableness is and special rules. Importantly, our we provide a sample notice, whether we a core requirement of many exceptions proposals relate only to the application should deem such a notice to satisfy the to the physician self-referral law, the of section 1877 of the Act and our requirement described. We note that we only guidance we have provided to date physician self-referral regulations. would not require public notice in is in a proposed rule (63 FR 1700). False Although other laws and regulations, advance of referrals for emergency Claims Act case law has exacerbated the including the anti-kickback statute and hospital services to avoid delays in challenge of complying with these three CMP law, may utilize the same or urgently needed care. We seek comment fundamental requirements, according to similar terminology, the interpretations on other options for price transparency commenters. proposed here would not affect OIG’s requirements in the value-based Over the years, stakeholders have (or any other governmental agency’s) exceptions to the physician self-referral approached CMS with requests for interpretation or ability to interpret such law that we are proposing in this clarification on our policy with respect terms for purposes of laws or proposed rule, as well as whether we to when an arrangement is considered regulations other than the physician should consider for a future rulemaking commercially reasonable, under what self-referral law. In addition, our the inclusion of price transparency circumstances compensation is interpretation of these key terms does requirements in exceptions to the considered to take into account the not relate to and in no way binds the physician self-referral law included in volume or value of referrals or other Internal Revenue Service with respect to our existing regulations. business generated between the parties, its rulings and interpretation of the B. Fundamental Terminology and and how to determine the fair market Internal Revenue Code or State agencies Requirements value of compensation. In light of the with respect to any State law or current Regulatory Sprint, we included regulation that may utilize the same or 1. Background in the CMS RFI specific questions similar terminology. We note further As described in greater detail in this regarding these issues. A large number that, to the extent terminology is the section of the proposed rule, many of of commenters responded to these same as or similar to terminology used the statutory and regulatory exceptions specific requests. Although the in the Quality Payment Program within to the physician self-referral law include commenters suggested varying ways we the PFS, our proposals would not affect

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00097 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55790 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

or apply to the Quality Payment about our position on the nexus reasonable entity of similar type and Program. between the commercial reasonableness size and a reasonable physician of of an arrangement and its profitability. similar scope and specialty. We seek 2. Commercially Reasonable (§ 411.351) We wish to clarify that compensation comment on each of these proposed We are proposing to include at arrangements that do not result in profit definitions as well as input from § 411.351 a definition for the term for one or more of the parties may stakeholders regarding other possible ‘‘commercially reasonable.’’ As nonetheless be commercially definitions that would provide clear described previously, many of the reasonable. guidance to enable parties to structure statutory and regulatory exceptions to CMS RFI commenters shared their arrangements in a manner that the physician self-referral law include a numerous examples of compensation ensures compliance with the requirement that the compensation arrangements that they believed would requirement that their particular arrangement is commercially be commercially reasonable despite the arrangement is commercially reasonable. For example, the exception fact that the party paying the reasonable. We are also proposing to at section 1877(e)(2) of the Act for bona remuneration does not recognize an clarify in regulation text that an fide employment relationships requires equivalent or greater financial benefit arrangement may be commercially that the remuneration provided to the from the items or services purchased in reasonable even if it does not result in physician is pursuant to an arrangement the transaction, or that the party profit for one or more of the parties. that would be commercially reasonable receiving the remuneration incurs costs In developing our proposals, we (even if no referrals were made to the in furnishing the items or services that reviewed the Internal Revenue Service employer). The exception at section are greater than the amount of the (IRS) Revenue Ruling 97–21, which 1877(e)(3)(A) of the Act for personal remuneration received. Commenters considered whether a hospital violates service arrangements uses slightly also explained that, even knowing in the requirements for exemption from different language to describe this advance that an arrangement may result federal income tax as an organization general concept, and requires that the in losses to one or more parties, it may described in section 501(c)(3) of the aggregate services contracted for do not be reasonable, if not necessary, to Internal Revenue Code (Title 26 of the exceed those that are reasonable and nevertheless enter into the arrangement. United States Code) when it provides necessary for the legitimate business These commenters explained some of incentives to recruit private practice purposes of the arrangement. The the reasons why parties would enter physicians to join its medical staff or to exception at § 411.357(l) for fair market into such transactions, such as provide medical services in the value compensation, which the community need, timely access to community. The IRS identified several Secretary established in regulation using health care services, fulfillment of activities that would support a his authority at section 1877(b)(4) of the licensure or regulatory obligations, hospital’s charitable purposes, all of Act, requires that the arrangement is including those under the Emergency which were mentioned in the CMS RFI commercially reasonable (taking into Medical Treatment and Labor Act comments. As described previously, the account the nature and scope of the (EMTALA), the provision of charity arrangements identified by commenters transaction) and furthers the legitimate care, and the improvement of quality on the CMS RFI may further a legitimate business purposes of the parties. Despite and health outcomes. One commenter business purpose of the parties or make the prevalence of this requirement (in suggested that entire hospital service commercial sense as well. However, one form or another), we addressed the lines, with their needed management arrangements that, on their face, appear concept of commercial reasonableness and other physician-provided services, to further a legitimate business purpose only once—in our 1998 proposed rule— are illustrative for operating at a loss of the parties may not be commercially where we stated that we are interpreting and identified psychiatric and burn reasonable if they merely duplicate ‘‘commercially reasonable’’ to mean that units as examples of such service lines. other facially legitimate arrangements. an arrangement appears to be a sensible, According to this commenter, with For example, a hospital may enter into prudent business agreement, from the changes in reimbursement, more service an arrangement for the personal services perspective of the particular parties lines will operate at a loss in the future. of a physician to oversee its oncology involved, even in the absence of any The commenter urged that these department. If the hospital needs only potential referrals (63 FR 1700). The services are of vital need to one medical director for the oncology physician self-referral regulations communities and, unless CMS department, but later enters into a themselves lack a codified definition for addresses the definition of ‘‘commercial second arrangement with another the term commercially reasonable. reasonableness,’’ health care providers physician for oversight of the As discussed previously, we believe may be prohibited from providing these department, the second arrangement that the key question to ask when services to their communities as a result merely duplicates the already-obtained determining whether an arrangement is of a fear of violating the commercial medical directorship services and may commercially reasonable is simply reasonableness standard. We find these not be commercially reasonable. whether the arrangement makes sense as comments and the concerns they Although the evaluation of compliance a means to accomplish the parties’ highlight compelling. with the physician self-referral law goals. We continue to believe that this We are proposing two alternative always requires a review of the facts and determination should be made from the definitions for the term ‘‘commercially circumstances of the financial perspective of the particular parties reasonable.’’ First, we are proposing to relationship between the parties, the involved in the arrangement. The define ‘‘commercially reasonable’’ to commercial reasonableness of multiple determination of commercial mean that the particular arrangement arrangements for the same services is reasonableness is not one of valuation. furthers a legitimate business purpose of questionable. Nor does the determination that an the parties and is on similar terms and Also important to our consideration of arrangement is commercially reasonable conditions as like arrangements. In the the best way to define and interpret turn on whether the arrangement is alternative, we are proposing to define ‘‘commercially reasonable’’ was the profitable. It is apparent from our ‘‘commercially reasonable’’ to mean that IRS’s conclusion that a hospital may not review of the CMS RFI comments that the arrangement makes commercial engage in substantial unlawful activities there is a widespread misconception sense and is entered into by a and maintain its tax-exempt status

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00098 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55791

because the conduct of an unlawful 3. The Volume or Value Standard and In the 1998 proposed rule, we activity is inconsistent with charitable the Other Business Generated Standard discussed the volume or value standard purposes. The IRS explained that an (§ 411.354(d)(5) and (6)) as it pertains to the criteria that a organization conducts an activity that is physician practice must meet to qualify unlawful, and therefore not in Many of the exceptions at section as a ‘‘group practice’’ (63 FR 1690). We furtherance of a charitable purpose, if 1877(e) of the Act (‘‘Exceptions Relating also stated that we would apply this the organization’s property is to be used to Other Compensation Arrangements’’) interpretation of the volume or value for an objective that is in violation of the and in our regulations include a standard throughout our regulations (63 criminal law. We are similarly taking requirement that the compensation paid FR 1699). In the discussion of group the position that an activity that is in under the arrangement is not practices, we stated that we believe that violation of criminal law would not be determined in a manner that takes into the volume or value standard precludes a legitimate business purpose of the account the volume or value of referrals a group practice from paying physician parties, nor would it make commercial by the physician who is a party to the members for each referral they sense, and, therefore, would not be arrangement, and some exceptions also personally make or based on the volume commercially reasonable for purposes of include a requirement that the or value of the referred services (63 FR the physician self-referral law. We note compensation is not determined in a 1690). We went on to state that the most that the absence of a criminal violation manner that takes into account other straightforward way for a physician would not, in and of itself, establish that business generated between the parties. practice to demonstrate that it is an arrangement is commercially We refer to these as the ‘‘volume or meeting the requirements for group reasonable. We seek comment on our value standard’’ and the ‘‘other business practices would be for the practice to alternate proposals for the definition of generated standard,’’ respectively. avoid a link between physician ‘‘commercially reasonable’’ and its Throughout the regulatory history of the compensation and the volume or value interpretation, including how parties physician self-referral law, we have of any referrals, regardless of whether could determine whether an shared our interpretation of these the referrals involve Medicare or arrangement is on similar terms and standards and responded to comments Medicaid patients (63 FR 1690). conditions as like arrangements. as they arose. Despite our attempt at However, because our definition of We note that many of the exceptions establishing clear guidance regarding ‘‘referral’’ at § 411.351 includes only to the physician self-referral law require the application of the volume or value referrals for designated health services, that an arrangement is commercially standard and the other business we also noted that a physician practice reasonable ‘‘even if no referrals were generated standard, commenters to that wants to compensate its members made between the parties’’ or ‘‘even if several requests for information, on the basis of non-Medicare and non- no referrals were made to the including the CMS RFI, identified their Medicaid referrals would be required to employer.’’ The exceptions use varying lack of a clear understanding as to when separately account for revenues and phrasing to describe this requirement compensation will be considered to take distributions related to referrals for and we do not repeat each iteration into account the volume or value of designated health services for Medicare here. We are not proposing to eliminate referrals or other business generated by and Medicaid patients (63 FR 1690). this requirement from the exceptions the physician as one of the greatest risks (See section II.C. of this proposed rule where it appears. For example, under they face when structuring for a discussion of the inclusion of our first alternative proposal, an arrangements between entities Medicaid referrals in the existing employment arrangement must further a furnishing designated health services regulation and our proposed revisions to legitimate business purpose of the and the physicians who refer to them. the group practice rules.) Outside of the parties and be on similar terms and They stated that, not only do they face group practice context, these principles conditions as like arrangements, even if the risk of penalties under the physician apply generally to compensation from no referrals were made to the employer, self-referral law, but, because a violation an entity to a physician. We also as well as satisfy the other requirements of the physician self-referral law may be addressed the other business generated of the exception, in order for the the predicate for liability under the standard in the 1998 proposed rule, physician to refer patients to the Federal False Claims Act (31 U.S.C. stating that we believe that the Congress employing entity for designated health 3729 through 3733), entities are may not have wished to except services and for the employing entity to susceptible to both government and arrangements that include additional submit claims to Medicare for the whistleblower actions that can result in compensation for other business referred designated health services. significant penalties through litigation dealings and that, if a party’s Under our second alternative proposal, or settlement. Commenters and other compensation contains payment for an employment arrangement must make stakeholders have long expressed other business generated between the commercial sense and be entered into frustration that, from their perspective, parties, we would expect the parties to by a reasonable entity of similar type the guidance from CMS has been too separately determine if this extra and size and a reasonable physician of limited and left them without an payment falls within one of the similar scope and specialty, even if no objective standard against which to exceptions (63 FR 1700). referrals were made to the employer, as judge their financial relationships. Our In Phase I, we finalized our policy well as satisfy the other requirements of proposals here are intended to provide regarding the volume or value standard the exception. To emphasize, a objective tests for determining whether and the other business generated compensation arrangement must satisfy compensation takes into account the standard, responding to comments on the ‘‘even if no referrals were made’’ volume or value of referrals or the our proposals in the 1998 proposed rule. requirement if it is included as a volume or value of other business Most importantly, we revised the scope requirement of the relevant exception generated by the physician. Before of the volume or value standard to under which the parties seek protection describing our proposals, we provide a permit time-based or unit of service- from the physician self-referral law’s brief history of the guidance to date on based compensation formulas (66 FR referral and claims submission the volume or value standard and the 876). We also stated that the phrase prohibitions. other business generated standard. ‘‘does not take into account other

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00099 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55792 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

business generated between the parties’’ manner that takes into account referrals commenters share with us, by way of means that the fixed, fair market value or other business generated by the example or otherwise, compensation payment cannot take into account, or referring physician, including private formulas that do not take into account vary with, referrals of designated health pay health care business. Both special the volume or value of referrals by a services payable by Medicare or rules apply to time-based or per-unit of physician or other business generated Medicaid or any other business service-based (‘‘per-click’’) between the parties. We discussed the generated by the referring physician, compensation formulas. However, as we comments related to the inclusion of the including other Federal and private pay noted later in Phase II, the special rules volume or value standard or the other business (66 FR 877), noting that the on compensation are intended to be safe business generated standard in new phrase ‘‘generated between the parties’’ harbors, and there may be some exceptions for value-based arrangements means business generated by the situations not described in in section II.A.2.b. of this proposed rule. referring physician for purposes of the § 411.354(d)(2) or (3) where an Our discussion in this section II.B.3. of physician self-referral law (66 FR 876). arrangement does not take into account this proposed rule relates only to these We stated that section 1877 of the Act the volume or value of referrals or other standards as they apply outside of the establishes a straightforward test that business generated between the parties context of value-based arrangements; compensation should be at fair market (69 FR 16070). specifically, as they apply to the value for the work or service performed In Phase II, we clarified that definition of remuneration at section or the equipment or [office] space personally performed services are not 1877(h)(1)(C) of the Act and § 411.351 of leased—not inflated to compensate for considered other business generated by our regulations, the definition of the physician’s ability to generate other the referring physician (69 FR 16068). indirect compensation arrangement at revenue (66 FR 877). Finally, in We also stated that fixed compensation § 411.354(c)(2), the special rule on response to an inquiry about whether (that is, one lump payment or several compensation that is considered set in the compensation paid to a physician individual payments aggregated advance at § 411.354(d)(1), the special for the purchase of his or her practice together) can take into account or rules for per-unit compensation at could include the value of the otherwise reflect the volume or value of § 411.354(d)(2) and (3), the exception for physician’s referrals of designated referrals (for example, if the payment academic medical centers at health services to the practice, we stated exceeds the fair market value for the § 411.355(e)(1)(ii), and various that compensation may include the items or services provided) (69 FR exceptions for compensation value of designated health services 16059). We noted that whether the arrangements at section 1877(e) of the made by the physician to his or her compensation does, in fact, take into Act and in § 411.357 of our regulations practice if the designated health services account or otherwise reflect the volume (including the proposed exceptions for referred by the selling physician or value of referrals will require a case- limited remuneration to a physician at satisfied the requirements of an by-case determination based on the facts § 411.357(z) and cybersecurity applicable exception, such as the in- and circumstances. (We note that the technology and related services at office ancillary services exception, and language ‘‘otherwise reflects’’ was § 411.357(bb), if finalized). As discussed the purchase arrangement is not considered superfluous and removed previously, the proposed exceptions for contingent on future referrals (66 FR from our regulation text in Phase III (72 value-based arrangements do not 877). This policy would apply also to FR 51027).) include the volume or value standards To date, we have not codified any the value of the physician’s referrals of as requirements for the remuneration regulations defining or otherwise designated health services to his or her between the parties. interpreting the volume or value practice if the compensation standard or the other business generated CMS RFI commenters uniformly arrangement between the physician and standard. In this proposed rule, we are requested that we provide objective the practice satisfied the requirements proposing to do so. The proposed benchmarks for determining when of an applicable exception. special rules at § 411.354(d)(5) and (6), compensation is considered to take into Also in Phase I, we established if finalized, will supersede our previous account the volume or value of referrals special rules on compensation at guidance, including guidance with or take into account other business § 411.354(d)(2) and (3) that deem which they may be (or appear to be) generated between the parties. Many compensation not to take into account inconsistent. We note that, unless commenters stated their belief that a the volume or value of referrals or other finalized, the proposed special rules and provider’s subjective intent is business generated between the parties the policies they effect are not potentially relevant in determining if certain conditions are met (66 FR 876 applicable to the determination of whether the manner in which the through 877). These rules state that whether compensation takes into compensation was established took into compensation will be deemed not to account the volume or value of referrals account the volume or value of referrals take into account the volume or value of or the volume or value of other business or other business generated. These and referrals if the compensation is fair generated between the parties (that is, many other commenters requested that market value for services or items by the physician). the regulations make clear that the actually provided and does not vary In the CMS RFI, we solicited volume or value standard and the other during the course of the compensation comments on when, in the context of business generated standard are bright- arrangement in any manner that takes the physician self-referral law and, line, objective tests; that is, by the plain into account referrals of designated specifically, within the context of terms of an arrangement, the test is health services. Compensation will be alternative payment models and other whether the methodology used to set deemed not to take into account the novel financial arrangements, physician compensation utilizes as a volume or value of other business compensation should be considered to variable the volume or value of the generated between the parties to a ‘‘take into account the volume or value physician’s referrals or the volume or compensation arrangement if the of referrals’’ by a physician or ‘‘take into value of other business generated by the compensation is fair market value and account other business generated’’ physician. Other commenters shared does not vary during the term of the between parties to an arrangement (83 their concerns that, under the current compensation arrangement in any FR 29526). We requested that guidance and the position taken by the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00100 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55793

government in certain of its enforcement will remain in the regulatory scheme furnished by the practice (the actions, parties can never be sure that even if our proposed changes are physician’s ‘‘pool’’). If the physician’s their determination of the compensation finalized, we find it impossible to pool includes amounts collected for to be paid under an arrangement with a establish a single definition for each designated health services furnished by referring physician will be insulated standard. Therefore, instead of a the practice that he ordered but did not from scrutiny. definition at § 411.351, we are personally perform, under proposed We believe there is great value in proposing special rules for § 411.354(d)(5)(i), the physician’s having an objective test for determining compensation arrangements that will compensation would take into account whether the compensation is apply regardless of the exact language the volume or value of his referrals to determined in any manner that takes used to describe the standards. Also, the practice. Assuming the physician is into account the volume or value of because section 1877 of the Act defines paid 50 percent of the amount in his referrals or takes into account other a compensation arrangement as any pool, the mathematical formula that business generated between the parties. arrangement involving any illustrates the physician’s compensation Our proposals are intended to establish remuneration between a physician (or would be: Compensation = (.50 × such a test. We are proposing an an immediate family member of such collections from personally performed approach that, rather than deeming physician) and an entity, we believe it services) + (.50 × collections from compensation under certain is necessary that the tests address referred designated health services) + circumstances not to have been circumstances where the compensation (.50 × collections from non-designated determined in a manner that takes into is from the entity to the physician, as health services referrals). The policy account the volume or value of referrals well as where the compensation is from proposed at § 411.354(d)(5)(ii)(A) with or takes into account other business the physician to the entity. Therefore, respect to when compensation from an generated between the parties, defines we are proposing two separate special entity to a physician (or immediate exactly when compensation will be rules for the volume or value standard family member of the physician) takes considered to take into account the (proposed § 411.354(d)(5)(i) and (6)(i)) into account other business generated volume or value of referrals or take into and two special rules for the other would operate in the same manner. account other business generated business generated standard (proposed Analogously, under the policy between the parties. Under our § 411.354(d)(5)(ii) and (6)(ii)). Our proposed at § 411.354(d)(6)(i)(A), proposed approach, which we believe proposals apply only for purposes of compensation from a physician (or creates the bright-line rule sought by section 1877 of the Act and the immediate family member of the commenters and other stakeholders, physician self-referral regulations. outside of the circumstances at physician) to an entity takes into proposed § 411.354(d)(5) and (6), Under the policy proposed at account the volume or value of referrals compensation would not be considered § 411.354(d)(5)(i)(A), compensation only if the formula used to calculate the to take into account the volume or value from an entity to a physician (or compensation paid by the physician of referrals or take into account other immediate family member of the includes the physician’s referrals to the business generated between the parties, physician) takes into account the entity as a variable, resulting in an respectively. In other words, only when volume or value of referrals only if the increase or decrease in the the mathematical formula used to formula used to calculate the compensation that negatively correlates calculate the amount of the physician’s (or immediate family with the number or value of the compensation includes as a variable member’s) compensation includes the physician’s referrals to the entity. For referrals or other business generated, physician’s referrals to the entity as a example, if the physician (or immediate and the amount of the compensation variable, resulting in an increase or family member) pays less compensation correlates with the number or value of decrease in the physician’s (or as the number or value of the the physician’s referrals to or the immediate family member’s) physician’s referrals to the entity physician’s generation of other business compensation that positively correlates increase, the compensation from the for the entity, is the compensation with the number or value of the physician to the entity would negatively considered to take into account the physician’s referrals to the entity. For correlate with the number or value of volume or value of referrals or take into example, if the physician (or immediate the physician’s referrals. Unless the account the volume or value of other family member) receives additional special rule at § 411.354(d)(2) for unit- business generated. We believe our compensation as the number or value of based compensation applies and its proposed approach is consistent with the physician’s referrals to the entity requirements are met (which seems the position we articulated in Phase I increase, the physician’s (or immediate unlikely), the compensation would take where we stated that, in general, we family member’s) compensation would into account the volume or value of believe that a compensation structure positively correlate with the number or referrals. To illustrate, assume a does not directly take into account the value of the physician’s referrals. Unless physician leases medical office space volume or value of referrals if there is the special rule at § 411.354(d)(2) for from a hospital. Assume also that the no direct correlation between the total unit-based compensation applies and its rental charges are $5000 per month and amount of a physician’s compensation conditions are met, the physician’s (or the arrangement provides that the and the volume or value of the immediate family member’s) monthly rental charges will be reduced physician’s referrals of designated compensation would take into account by $5 for each diagnostic test ordered by health services (66 FR 908). the volume or value of referrals. To the physician and furnished in one of Although we are proposing illustrate, assume that a physician the hospital’s outpatient departments. nonsubstantive changes to standardize practice does not qualify as a group Under proposed § 411.354(d)(6)(i), the where possible the language used to practice under § 411.352 of the compensation (that is, the rental describe the volume or value standard physician self-referral regulations. The charges) would take into account the and the other business generated practice pays its physicians a percentage volume or value of the physician’s standard in our regulations, due to the of collections attributed to the referrals to the hospital. The varying language used throughout the physician, including personally mathematical formula that illustrates statutory scheme and the language that performed services and services the rental charges paid by the physician

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00101 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55794 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

to the hospital would be: Compensation determined in a manner that takes into seek comment on this additional = $5000¥($5 × the number of account the volume or value of referrals proposal. designated health services referrals). or the other business generated by the We are particularly interested in The policy proposed at physician for the entity. comments regarding whether this § 411.354(d)(6)(ii)(A) with respect to We note that an ‘‘if X, then Y’’ approach would achieve our goal of when compensation from a physician compensation methodology is capable establishing sufficiently objective tests (or immediate family member of the of reproduction in a mathematical for determining whether the physician) to an entity takes into formula that positively or negatively compensation is determined in any account other business generated would correlates with the number or value of manner that takes into account the operate in the same manner. the physicians’ referrals to the entity. (In volume or value of referrals or takes into We are also proposing at Boolean algebra, the formula p→q account other business generated § 411.354(d)(5)(i)(B) and (ii)(B), and at represents this type of compensation between the parties. Although our proposals would § 411.354(d)(6)(i)(B) and (ii)(B), methodology.) To illustrate, assume that establish ‘‘special rules’’ on additional policies outlining the a hospital-employed physician is paid compensation, we would interpret them narrowly-defined circumstances under on the basis of her personally performed in the same manner as definitions. That which we would consider fixed-rate professional services (in this example, is, the special rules are intended to compensation (for example, a fixed the physician is paid a predetermined define the universe of circumstances annual salary or an unvarying per-unit rate per physician work relative value under which compensation is rate of compensation) to be determined unit (wRVU)). The hospital has a considered to take into account the predetermined tiered system for in a manner that takes into account the volume or value of referrals or other volume or value of referrals or other determining physician compensation business generated by the physician. If business generated by a physician for when entering into renewal the methodology used to determine the the entity paying the compensation. employment arrangements under which physician’s compensation or the Under this approach, compensation a physician is paid $30 per wRVU if she payment from the physician does not would take into account the volume or ordered 300 or fewer outpatient fall squarely within the defined value of referrals where the parties diagnostic tests per year during the prior circumstances, the compensation would utilize a predetermined tiered approach term of employment and $35 per wRVU not take into account the volume or to compensation under which the if she ordered more than 300 outpatient value of the physician’s referrals or the volume or value of a physician’s prior diagnostic tests per year during the prior other business generated by the referrals is the basis for determining the term of employment. Because the physician, as appropriate, for purposes unvarying rate of compensation from an physician ordered 250 outpatient of applying the exceptions to the entity to a physician (or an immediate diagnostic tests per year during the prior physician self-referral law. family member of a physician) or the term of her employment, her We do not believe that it is necessary unvarying rate of compensation that a compensation for the duration of the to include the modifier ‘‘directly or physician (or an immediate family renewal arrangement is $30 per wRVU. indirectly’’ in the proposed special rules member of a physician) must pay an Even though the physician is paid an interpreting the volume or value entity over the entire duration of the unvarying rate of $30 per wRVU standard and the other business arrangement. The policy would operate regardless of whether she makes zero, generated standard or in the definitions analogously with respect to other 10, or 1,000 referrals to the entity during and exceptions where these standards business previously generated by the the term of the renewal arrangement, appear. We believe that the modifier physician for the entity. Under this her compensation would nonetheless ‘‘directly or indirectly’’ is implicit in the approach, the compensation need not be take into account the volume or value of requirements that compensation is not determined based on a mathematical her referrals and other business determined in any manner that takes formula, but there must be a generated for the entity. As another into account the volume or value of predetermined, direct positive or example, assume that a physician leases referrals or the volume or value of other negative correlation between the volume medical office space from a hospital and business generated. For this reason, and or value of the physician’s prior the rental charges are as follows: $2000 in the interest of having uniform referrals (or other business previously per month if the physician is in the top language throughout our regulations generated for the entity) and the exact 25 percent of admitting physicians at that describes the volume or value rate of compensation paid to or by the the hospital (measured by the gross standard and the other business physician (or an immediate family charges per inpatient admission); $2500 generated standard, we are proposing to member of the physician) in order for per month if the physician is in the remove the modifier from the the compensation to violate the volume second quartile of admitting physicians regulations where it appears in or value standard or the other business on the hospital’s medical staff connection with the standards and the generated standard. Put another way, (measured by the gross charges per related requirements. We also believe there must be a predetermined, direct, inpatient admission); and $3500 per that leaving the modifying language in and meaningful ‘‘if X, then Y’’ month if the physician is in the bottom the regulations might create confusion if correlation between the volume or value half of admitting physicians at the the proposed special rules interpreting of the physician’s prior referrals (or the hospital (measured by the gross charges the volume or value standard and other other business previously generated by per inpatient admission). Under our business generated standard are the physician for the entity) and the proposed additional approach to the finalized. Where the statute or prospective rate of compensation to be volume or value standard and other regulations specifically allow parties to paid over the entire duration of the business generated standard, the determine compensation in a manner arrangement for which the compensation (that is, the rental that only indirectly takes into account compensation is determined. Merely charges) would be determined in a the volume or value of referrals (for hoping for or even anticipating future manner that takes into account the value example, in the exception for EHR items referrals or other business is not enough of the physician’s referrals and other and services at § 411.357(w)(6) and the to show that compensation is business generated for the hospital. We rules for a group practice’s distribution

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00102 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55795

of profit shares and payment of July 2, 2015 opinion of the United States refer designated health services to a productivity bonuses at section Court of Appeals for the Fourth Circuit given entity, such as an employer or an 1877(h)(4)(B) of the Act and in United States ex rel. Drakeford v. affiliated entity (63 FR 1700). In Phase § 411.352(i)), our regulations include Tuomey Healthcare System, Inc., CMS I, we acknowledged that the proposed guidance regarding direct versus may no longer endorse this policy. interpretation could have had far- indirect manners of determining We believe that the proposed reaching effects, especially for managed compensation. We solicit comment on objective tests for determining when care arrangements and group practices. whether additional guidance is compensation takes into account the We determined to permit directed necessary in light of our proposed volume or value of referrals or the referrals without considering the interpretation of the volume or value volume or value of other business physician’s compensation to take into standard and the other business generated may address the CMS RFI account the volume or value of his or generated standard included in this commenters’ concerns. However, for her referrals, but only if the referral proposed rule. We note that the clarity, we reaffirm the position we took requirement does not apply if a patient proposed exception for donations of in the Phase II regulation. With respect expresses a preference for a different cybersecurity technology and related to employed physicians, a productivity provider, practitioner, or supplier; the services discussed in section II.E.2. of bonus will not take into account the patient’s insurer determines the this proposed rule would also permit volume or value of the physician’s provider, practitioner, or supplier; or certain remuneration that indirectly referrals solely because corresponding the referral is not in the patient’s best takes into account the volume or value hospital services (that is, designated medical interests in the physician’s of referrals but does not include specific health services) are billed each time the judgment. In addition, the referral deeming provisions or other guidance employed physician personally requirement must be set out in writing regarding direct versus indirect manners performs a service. We are also and signed by the parties, and the of determining remuneration. We seek clarifying that our guidance extends to compensation to the physician must be: comment in section II.E.2. regarding the compensation arrangements that do not (1) Set in advance for the term of the need for additional guidance or rely on the exception for bona fide compensation arrangement; and (2) regulation text that includes deeming employment relationships at consistent with fair market value for the provisions related to the volume or § 411.357(c), and under which a services performed. Finally, the value standard in the proposed physician is paid using a unit-based compensation arrangement must exception. compensation formula for his or her otherwise comply with an applicable personally performed services, provided Finally, a large number of the CMS exception in § 411.355 or § 411.357 (66 that the compensation meets the FR 878). RFI commenters that addressed the conditions in the special rule at volume or value and other business § 411.354(d)(2). That is, under a We continue to believe in the generated standards requested that we personal service arrangement, an entity importance of preserving patient choice, confirm, if not codify, related guidance may compensate a physician for his or protecting the physician’s professional in our Phase II regulation (69 FR 16088 her personally performed services using medical judgment, and avoiding through 16089). In Phase II, a a unit-based compensation formula— interference in the operations of a commenter presented a scenario under even when the entity bills for managed care organization. However, which a hospital employs a physician at designated health services that given our proposed interpretation of the an outpatient clinic and pays the correspond to such personally volume or value standard, we are physician for each patient seen at the performed services—and the concerned that current § 411.354(d)(4) clinic; the physician reassigns his or her compensation will not take into account may apply in fewer instances, if at all, right to payment to the hospital, and the the volume or value of the physician’s to serve these important goals. hospital bills for the Part B physician referrals if the compensation meets the Therefore, to reiterate how critical these service (with a site-of-service conditions of the special rule at protections are, we are proposing to reduction); and the hospital also bills § 411.354(d)(2) (see 69 FR 16067). include in the exceptions applicable to for the hospital outpatient services, the types of contracts or arrangements to which may include some procedures 4. Patient Choice and Directed Referrals which the special rule has historically furnished as ‘‘incident to’’ services in a (§ 411.354(d)(4)) applied an affirmative requirement that hospital setting. The Phase II When the conditions of the special the compensation arrangement meet the commenter’s concern was that the rule at existing § 411.354(d)(4) are met, conditions of the special rule at payment to the physician is inevitably compensation from a bona fide § 411.354(d)(4) (as modified in linked to a facility fee, which is a employer, under a managed care accordance with the proposal set forth designated health service (that is, a contract, or under a personal services in this section of the proposed rule). To hospital service). Accordingly, the arrangement is deemed not to take into that end, we are proposing to include in commenter wondered whether the account the volume or value of referrals, the exceptions at § 411.355(e) for payment to the physician would be even if the physician’s compensation academic medical centers, § 411.357(c) considered an improper productivity was predicated, either expressly or for bona fide employment relationships, bonus based on a referral of designated otherwise, on the physician making § 411.357(d)(1) for personal service health services (that is, the facility fee). referrals to a particular provider, arrangements, § 411.357(d)(2) for In response, we stated that the fact that practitioner, or supplier. This special physician incentive plans, § 411.357(h) corresponding hospital services are rule was established in Phase I after for group practice arrangements with a billed would not invalidate an many commenters objected to our hospital, § 411.357(l) for fair market employed physician’s personally statement in the 1998 proposed rule that value compensation, and § 411.357(p) performed work, for which the fixed payments to a physician could be for indirect compensation arrangements, physician may be paid a productivity considered to take into account the a requirement that, in addition to bonus (subject to the fair market value volume or value of referrals if a satisfying the other requirements of the requirement). The CMS RFI commenters condition or requirement for receiving exception, the relevant arrangement expressed concern that, following the the payment was that the physician must comply with the revised special

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00103 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55796 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

rule at § 411.354(d)(4). In making this intended use).’’ Finally, with respect to items or services, including personal proposal, we are relying on the the lease of office space, in particular, services, employment relationships, and authority granted to the Secretary under the statutory definition further rental arrangements. As proposed in the sections 1877(b)(4), (e)(2)(D), stipulates that fair market value also 1998 proposed rule, ‘‘general market (e)(3)(A)(vii), (e)(3)(B)(i)(II), and means that that value of the rental value’’ would mean: (e)(7)(vii) of the Act. We solicit property is ‘‘not adjusted to reflect the The price that an asset would bring, as the comment as to whether, given the additional value the prospective lessee result of bona fide bargaining between well- nature of academic medical centers, the or lessor would attribute to the informed buyers and sellers, or the proposed requirement at revised proximity or convenience to the lessor compensation that would be included in a § 411.354(d)(4) is necessary. where the lessor is a potential source of service agreement, as the result of bona fide We are also proposing to revise patient referrals to the lessee.’’ Most of bargaining between well-informed parties to § 411.354(d)(4) to eliminate certain the statutory exceptions at section the agreement, on the date of acquisition of language regarding: (1) Whether the ‘‘set 1877(e) of the Act relating to the asset or at the time of the service agreement. Usually the fair market price is in advance’’ and ‘‘fair market value’’ compensation arrangements include conditions of the special rule apply to the price at which bona fide sales have been requirements pertaining to fair market consummated for assets of like type, quality, the compensation arrangement (as value compensation, including the and quantity in a particular market at the stated in the regulation) or to the exceptions for the rental of office space, time of acquisition, or the compensation that compensation itself; and (2) when the rental of equipment, bona fide has been included in bona fide service compensation is considered fair market employment relationships, personal agreements with comparable terms at the value. Under proposed § 411.354(d)(4), service arrangements, isolated time of the agreement. we are clarifying that the physician’s transactions, and payments by a The proposed definition of ‘‘fair compensation must be set in advance. physician. Many of the regulatory market value’’ in the 1998 proposed rule Any changes to the compensation (or exceptions created using the Secretary’s did not substantively modify the the formula for determining the authority under section 1877(b)(4) of the provisions of the fair market value compensation) must also be set in Act also include requirements definition pertaining to leases in general advance (that is, made prospectively). pertaining to fair market value and office space leases in particular. In We are also clarifying that the compensation, including the exceptions Phase I, we finalized the definition of physician’s compensation must be for academic medical centers, fair ‘‘fair market value’’ from the 1998 consistent with the fair market value of market value compensation, indirect the services performed. In addition, we proposed rule with one modification (66 compensation arrangements, EHR items FR 944 through 945). The definition of are proposing to eliminate the and services, and assistance to parenthetical language in existing ‘‘fair market’’ value finalized in Phase I compensate a nonphysician clarified that a rental payment ‘‘does not § 411.354(d)(4) as it conflates the practitioner. concept of fair market value and the take into account intended use if it takes volume or value standard. As noted The term ‘‘fair market value’’ is into account costs incurred by the lessor previously, these are separate standards, defined in our regulations in § 411.351. in developing or upgrading the property and compliance with one is not In the 1992 proposed rule (57 FR 8602) or maintaining the property or its contingent on compliance with the and the 1995 final rule (60 FR 41978), improvements.’’ In Phase I we also other. We are taking the opportunity to we incorporated the statutory definition responded to commenters who also propose nonsubstantive revisions of ‘‘fair market value’’ into our requested guidance on how to for clarity. Although, as proposed, regulations without modification. In the determine fair market value in a variety revised § 411.354(d)(4) sets forth 1998 proposed rule (63 FR 1686), we of circumstances. We stated that we protections that apply to both the proposed to include in our definition of would accept any commercially compensation arrangement that ‘‘fair market value’’ a definition of reasonable method for determining fair includes a directed referral requirement ‘‘general market value,’’ to explain what market value. However, we noted that, and also specifically to the it means for a value to be ‘‘consistent in most exceptions, the fair market compensation itself, for continuity in with the general market value.’’ In an value requirement is further modified the application of the protections of the attempt to ensure consistency across our by language that precludes taking into regulation, we are proposing to leave the regulations, we proposed to adopt the account the volume or value of referrals, regulation in § 411.354(d) (special rules definition of ‘‘general market value’’ and, in some cases, other business on compensation) rather than include it from part 413 of our regulations, which generated by the referring physician. We in § 411.354(e), which includes special pertains to reasonable cost concluded that, in determining whether rules for compensation arrangements. reimbursement for end stage renal compensation is fair market value, We seek comment on this approach. disease services. In the context of requirements pertaining to the volume determining the cost incurred by a or value of referrals and other business 5. Fair Market Value (§ 411.351) present owner in acquiring an asset, generated may preclude reliance on The term ‘‘fair market value,’’ as it is § 413.134(b)(2) defined ‘‘fair market comparables that involve entities and defined at section 1877(h)(3) of the Act, value’’ as ‘‘the price that the asset would physicians in a position to refer or consists of three basic components. Fair bring by bona fide bargaining between generate business (66 FR 944). market value is defined generally as well-informed buyers and sellers at the Elsewhere in Phase I, we suggested a ‘‘the value in arms length [sic] date of acquisition. Usually the fair similar underlying connection between transactions, consistent with the general market price is the price that bona fide the fair market value requirement and market value.’’ The statutory definition sales have been consummated for assets requirements pertaining to the volume includes additional qualifications for of like type, quality, and quantity in a or value of a physician’s referrals and leases generally, providing that fair particular market at the time of other business generated (66 FR 877). In market value with respect to rentals or acquisition.’’ We modified the a discussion of the requirement that leases also means ‘‘the value of rental definition drawn from § 413.134(b)(2) to compensation not take into account property for general commercial include analogous provisions for other business generated, we stated purposes (not taking into account its determining the fair market value of any that—

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00104 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55797

[T]he additional limiting phrase ‘not taking the statute and in the context of the equipment and office space. One of the into account * * * other business generated exceptions to the physician self-referral modifications applies to leases of both between the parties’ means simply that the law (83 FR 29526). CMS RFI equipment and office space; the other fixed, fair market value payment cannot take commenters from within and outside applies only to the lease of office space. into account, or vary with, referrals of Medicare or Medicaid [designated health the health care provider community, To illustrate this more clearly in our services] or any other business generated by including independent valuators, regulations, we are proposing to modify the referring physician, including other submitted comments explaining a the definition of ‘‘fair market value’’ to Federal and private pay business. Simply variety of concerns and challenges with provide for a definition of general stated, section 1877 of the Act establishes a applying the definition of ‘‘fair market application, a definition applicable to straightforward test that compensation value’’ in our current regulations at the rental of equipment, and a definition arrangements should be at fair market value § 411.351. After carefully reviewing the applicable to the rental of office space. for the work or service performed or the CMS RFI comments and the statements equipment or space leased—not inflated to (We are proposing to use the terms compensate for the physician’s ability to in our prior rules, we undertook a fresh ‘‘rental’’ of equipment and ‘‘rental’’ of generate other revenues. review of the statutory definition of office space as those are the titles of the ‘‘fair market value’’ and the structure of statutory exceptions at section Despite our intimation in Phase I that the exceptions for various types of the concepts of fair market value and 1877(e)(1)(A) and (B) of the Act and our compensation arrangements at section regulatory exceptions at § 411.357(a) the volume and value of referrals or 1877(e) of the Act and in our regulations other business generated were and (b).) We believe that this approach in §§ 411.355 and 411.357. provides parties with ready access to the fundamentally interrelated, the As a preliminary matter and as definition of fair market value finalized definition of ‘‘fair market value,’’ with described previously in section II.B.1. of the attendant modifiers, that is in Phase I did not include any reference this proposed rule, a careful reading of to the volume or value of a physician’s applicable to the specific type of the statute shows that the fair market compensation arrangement at issue. referrals. value requirement is separate and In Phase II, we made two significant Therefore, we are proposing that, distinct from the volume or value generally, fair market value means the modifications to the definition of ‘‘fair standard and the other business market value.’’ First, we proposed value in an arm’s-length transaction generated standard. (See section II.B.3. with like parties and under like certain ‘‘safe harbors’’ for determining of this proposed rule for a detailed fair market value for hourly payments circumstances, of assets or services, discussion of the volume or value consistent with the general market value made to physicians for physician standard and the other business services (69 FR 16092 and 16107). of the subject transaction. We are also generated standard.) The volume or proposing that, with respect to the (These safe harbors were not finalized.) value and other business generated Second, and more importantly, we rental of equipment, fair market value standards do not merely serve as means the value, in an arm’s-length incorporated into the definition of ‘‘fair ‘‘limiting phrases’’ to modify the fair market value’’ a reference to the volume transaction with like parties and under market value requirement. In order to like circumstances, of rental property or value standard found in many satisfy the requirements of the exceptions to the physician self-referral for general commercial purposes (not exceptions in which these concepts taking into account its intended use), law. The Phase II definition of ‘‘fair appear, compensation must both: (1) Be market value’’ provided, in relevant consistent with the general market value fair market value for items or services of the subject transaction. And, with part, that fair market value is usually the provided; and (2) not take into account respect to the rental of office space, we price at which bona fide sales have been the volume or value of referrals (or the are proposing that fair market value consummated for assets of like type, volume or value of other business means the value in an arm’s length quality, and quantity in a particular generated by the physician, where such transaction, with like parties and under market at the time of acquisition, or the standard appears). We believe that the like circumstances, of rental property compensation that has been included in appropriate reading of the statute is that for general commercial purposes (not bona fide service agreements with the requirement that compensation does taking into account its intended use), comparable terms at the time of the not take into account the volume or without adjustment to reflect the agreement, where the price or value of referrals—which is plainly set additional value the prospective lessee compensation has not been determined out as an independent requirement of in any manner that takes into account the relevant exceptions—is not also part or lessor would attribute to the the volume or value of anticipated or of the definition of ‘‘fair market value.’’ proximity or convenience to the lessor actual referrals. We explained our view We note that the statutory definition of where the lessor is a potential source of that the determination of fair market ‘‘fair market value’’ at section 1877(h)(3) patient referrals to the lessee, and value under the physician self-referral of the Act includes no reference to the consistent with the general market value law differs in significant respects from volume or value of referrals (or other of the subject transaction. We note that standard valuation techniques and business generated between the parties). the proposed structure of the definition methodologies. In particular, we noted For these reasons, we are proposing to merely reorganizes for clarity, but does that the methodology must exclude revise the definition of ‘‘fair market not significantly differ from, the valuations where the parties to the value’’ to eliminate the connection to statutory language at section 1877(h)(3) transactions are at arm’s length but in a the volume or value standard. of the Act. We seek comment on our position to refer to one another. We In proposing revisions to the approach. made no substantive changes to the definition of ‘‘fair market value’’ at Second, we are proposing changes to definition of ‘‘fair market value’’ in § 411.351, we undertook to establish the definition of ‘‘general market value,’’ Phase III or in any of our subsequent regulations that give meaning to the currently included within the definition rulemaking. statutory language at section 1877(h)(3) of fair market value at § 411.351. The In the CMS RFI, we solicited specific of the Act. As described previously, the current definition of ‘‘fair market value’’ comments regarding possible statute states a general definition of ‘‘fair states the following, some of which approaches to modifying the definition market value’’ and then modifies that relates to fair market value and some of of ‘‘fair market value’’ consistent with definition for application to leases of which relates to the included term,

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00105 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55798 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

‘‘general market value.’’ Numerical ‘‘consistent with the general market valuation industry. Our own research references are added here for ease but value.’’ In doing so, we relied on a indicates that, in the valuation industry, do not appear in our current regulations: regulation that relates to the the term ‘‘market value’’ refers to the (1) Fair market value means the value circumstances under which an valuation of a planned transaction in arm’s-length transactions, consistent appropriate allowance for depreciation between two identified parties for with the general market value. on buildings and equipment used in identified assets or services, and (2) General market value means the furnishing patient care can be an intended to be consummated within a price that an asset would bring as the allowable cost. We see no benefit at this specified timeframe. Market value is result of bona fide bargaining between time to connect the definition of based solely on consideration of the well-informed buyers and sellers who ‘‘general market value’’ to principles of economics of the subject transaction and are not otherwise in a position to reasonable cost reimbursement for end should not include any consideration of generate business for the other party, or stage renal disease services in order to other business the parties may have the compensation that would be explain what it means for a value to be with one another. Thus, when parties to included in a service agreement as the consistent with general market value, as a potential personal service arrangement result of bona fide bargaining between required by the statute. Moreover, the determine the (general) market value of well-informed parties to the agreement definition at § 413.134(b)(2) upon which the physician’s compensation, they who are not otherwise in a position to we relied states that fair market value must not consider that the physician generate business for the other party, on (emphasis added) is defined as the price could also refer patients to the entity the date of acquisition of the asset or at that the asset would bring by bona fide when not acting as its medical director. the time of the service agreement. bargaining between well-informed We are aware that our regulatory (3) Usually, the fair market price is buyers and sellers at the date of definition is likely at odds with general the price at which bona fide sales have acquisition. The regulation goes on to valuation principles, which do not use been consummated for assets of like state that, usually the fair market price the term ‘‘general market value.’’ For type, quality, and quantity in a is the price that bona fide sales have this reason, we are proposing to particular market at the time of been consummated for assets of like establish a definition of ‘‘general market acquisition, or the compensation that type, quality, and quantity in a value’’ that is consistent with the has been included in bona fide service particular market at the time of recognized principle of ‘‘market’’ agreements with comparable terms at acquisition. This definition more closely valuation to address this discrepancy the time of the agreement, where the ties to the widely accepted IRS and ease the burden on parties price or compensation has not been definition of ‘‘fair market value,’’ 2 not attempting to ensure compliance with determined in any manner that takes general market value. Therefore, we the fair market value requirement in into account the volume or value of considered whether current § 411.351 many of the compensation exceptions to anticipated or actual referrals. includes an appropriate definition for the physician self-referral law. We are (4) With respect to rentals and leases ‘‘general market value.’’ proposing to define ‘‘general market described in § 411.357(a), (b), and (l) (as We see no indication in the legislative value’’ at § 411.351 to mean the price to equipment leases only), ‘‘fair market history or the statutory language itself that assets or services would bring as value’’ means the value of rental that the Congress intended that the the result of bona fide bargaining property for general commercial definition of ‘‘general market value’’ for between the buyer and seller in the purposes (not taking into account its purposes of the physician self-referral subject transaction on the date of law should deviate from general acquisition of the assets or at the time intended use). concepts and principles in the valuation the parties enter into the service (5) In the case of a lease of space, this community. Yet, our current definition arrangement; or, in the case of the rental value may not be adjusted to reflect the of ‘‘general market value’’ is of equipment or office space, the price additional value the prospective lessee unconnected to the recognized that rental property would bring as the or lessor would attribute to the valuation principle of ‘‘market value’’ result of bona fide bargaining between proximity or convenience to the lessor and itself may be the driver of valuation the lessor and the lessee in the subject when the lessor is a potential source of industry policy and procedure. After transaction at the time the parties enter patient referrals to the lessee. revisiting the legislative history of into the rental arrangement. We note (6) For purposes of this definition, a section 1877 of the Act and our prior that many CMS RFI commenters rental payment does not take into preamble language related to the term requested that we simply return to the account intended use if it takes into ‘‘general market value,’’ we believe that statutory language. We disagree that account costs incurred by the lessor in the Congress used the term ‘‘general would be the best approach. Generally, developing or upgrading the property or market value’’ to ensure that the fair in the absence of agency guidance, a maintaining the property or its market value of the remuneration (that reasonable interpretation of a statutory improvements. is, as described below, the hypothetical or regulatory requirement of the Items one, four, and five essentially value) is generally consistent with the physician self-referral law is satisfactory restate the language at section valuation that would result using when asserting compliance with the 1877(h)(3) of the Act, albeit with the accepted market valuation principles. requirement. We believe it is important intervening language in items two and Therefore, we equate ‘‘general market to provide guidance with respect to the three, and item six was added in Phase value’’ as that term appears in the requirement that compensation is fair I in response to a comment for the statute and our regulations with ‘‘market market value in order not to stymy our purpose of interpreting the modifier value,’’ the term uniformly used in the enforcement efforts (or those of our law ‘‘(not taking into account its intended enforcement partners). This guidance is use)’’ in item four and at section 2 Fair Market Value is defined as ‘‘the price at also crucial to support the compliance 1877(h)(3) of the Act. We stated in the which the property would change hands between efforts of the regulated industry. 1998 proposed rule that items two and a willing buyer and a willing seller when the former It is our view that the concept of fair is not under any compulsion to buy and the latter three were our attempt to give meaning is not under any compulsion to sell, both parties market value relates to the value of an to the statutory requirement that the fair having reasonable knowledge of relevant facts.’’ asset or service to hypothetical parties market value of compensation must be (IRS Rev. Ruling 59–60). in a hypothetical transaction (that is,

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00106 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55799

typical transactions for like assets or physician nationally; no local salary at 42 CFR 411.352 (83 FR 29526). In services, with like buyers and sellers, surveys are available. However, the cost response, commenters identified several and under like circumstances), while of living in the geographic location of areas where policy clarification could general market value (or market value) the hospital is very low despite its enhance certainty of compliance with relates to the value of an asset or service proximity to good schools and desirable the rules for qualifying as a group to the actual parties to a transaction that recreation opportunities. Yet, due to practice, such as the definition of is set to occur within a specified declining reimbursement rates and a ‘‘single legal entity’’ at § 411.352(a), the timeframe. Some of the CMS RFI somewhat poor payor mix, the ‘‘full range of care’’ and ‘‘substantially comments included similar information hospital’s economic position is tenuous. all’’ tests at § 411.352(c) and (d), regarding the definition of general According to a CMS RFI commenter, the respectively, and the special rules market value. Thus, under the statute, physician may request the $250,000 that regarding the distribution of profits the hypothetical value of a transaction the hypothetical physician would earn, shares and productivity bonuses at must be consistent with the value of the and the hospital may believe that it is § 411.352(i). Many commenters actual transaction transpiring between compelled to pay the physician this expressed frustration that certain the particular buyer and seller. We are amount, because our current definition methodologies that they viewed as cognizant that the hypothetical value of of ‘‘fair market value’’ does not equitable for distributing revenues a transaction may not always be recognize the appropriate definition for earned through the participation of identical to the market value of the the ‘‘general market value’’ (or market practice physicians in alternative actual transaction being considered. value) with which the physician’s payment models could prohibit a Extenuating circumstances may dictate compensation must be consistent under physician practice from qualifying as a that parties to an arm’s length the statute. In this example, the fair group practice. Although we transaction veer from values identified market value of the physician’s acknowledge the commenter’s views in salary surveys and other hypothetical compensation may be less than that clarification of many parts of the valuation data that is not specific to the $250,000 per year. group practice rules would be useful, actual parties to the subject the Finally, we are proposing to remove we are limiting our proposals to those transaction. By way of example, assume from the regulation text at § 411.351 in that relate to the main purposes of this a hospital is engaged in negotiations to the definition of ‘‘fair market value’’ the proposed rule: (1) The proposed employ an orthopedic surgeon. existing statement that, for purposes of definitions and special rules for Independent salary surveys indicate that the definition of ‘‘fair market value,’’ a ‘‘commercially reasonable’’ compensation of $450,000 per year rental payment does not take into compensation arrangements, ‘‘fair would be appropriate for an orthopedic account intended use if it takes into market value’’ compensation, and the surgeon in the geographic location of account costs incurred by the lessor in volume or value standard applicable the hospital. However, the orthopedic developing or upgrading the property or throughout the physician self-referral surgeon with whom the hospital is maintaining the property or its law and regulations; or (2) the transition negotiating is one of the top orthopedic improvements. This language was from a volume-based to a value-based surgeons in the entire country and is added to the regulation text as a result health care system. We may consider highly sought after by professional of our response in Phase I to a additional clarifications or revisions in athletes with knee injuries due to his commenter to the 1998 proposed rule, a future rulemaking. where we stated that a rental payment specialized techniques and success rate. does not violate the requirement that the 1. The ‘‘Volume or Value Standard’’ Thus, although the employee fair market value of rental property is (§ 411.352(g)) compensation of a hypothetical the value of the property for general In section II.B. of this proposed rule, orthopedic surgeon may be $450,000 per commercial purposes, not taking into we are proposing new special rules for year, this particular physician account its intended use, merely compensation that would codify in commands a significantly higher salary because it reflects any costs that were regulation our interpretation regarding and the general market value (or market incurred by the lessor in developing or when compensation will be considered value) of the transaction may, therefore, upgrading the property, or maintaining to take into account the volume or value be well above $450,000. The statute the property or its improvements, of referrals or other business generated requires that the compensation is the regardless of why the improvements (the ‘‘volume or value standard’’). In value in an arm’s length transaction, but were added (66 FR 945). That is, the connection with those proposals, we that value must also be consistent with rental payment may reflect the value of reviewed the physician self-referral the general market value (or market any similar commercial property with regulations to ensure that the volume or value) of the subject transaction. In this improvements or amenities of a similar value standard is expressed using example, compensation substantially value, regardless of why the property standardized terminology and identified above $450,000 per year may be fair was improved. We do not believe it is several occurrences of inconsistent market value. necessary to include this policy in expression of the volume or value Some CMS RFI commenters pointed regulation text. Moreover, based on standard. Although section 1877 of the out that failure to consider the general some of the comments to the CMS RFI, Act uses more than one phrase to market value (or market value) of a this regulation text appears to have describe the volume or value standard, transaction, as we have proposed to caused confusion among stakeholders. which may be one reason for variations define it here, results in hospitals and For this reason, we are proposing to in the regulation text, we believe that other entities paying more than they remove the language from the definition the references are all to the same believe appropriate for physician of ‘‘fair market value’’ at § 411.351. underlying prohibition on services. By way of example, assume a compensation that fluctuates with the hospital is engaged in negotiations to C. Group Practices (§ 411.352) volume or value of referrals or other employ a family physician. Independent In the CMS RFI, we sought specific business generated. Therefore, as noted salary surveys indicate that comments regarding whether and, if so, previously, we are proposing to make compensation of $250,000 per year what barriers exist to qualifying as a certain conforming changes throughout would be appropriate for a family ‘‘group practice’’ under the regulations our regulations to delineate the volume

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00107 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55800 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

or value standard as a prohibition on indirectly takes into account the volume suggested that this restriction compensation that ‘‘takes into account or value of his or her referrals (unless discourages physician participation in the volume or value’’ of referrals or permitted under § 411.352(i)). Our alternative payment or other value- other business generated. Because the interpretation is consistent with the based care models because physicians language in § 411.352(g) and (i) mirrors interpretation of ‘‘related to’’ set forth in cannot be suitably rewarded for their the statutory language at section Phase I. For the most part, we used the accomplishments in advancing the goals 1877(h)(4)(iv) of the Act, we are not terms ‘‘based on,’’ ‘‘related to,’’ and of the model, which is at odds with the proposing changes to the ‘‘volume or ‘‘takes into account’’ interchangeably Secretary’s vision for achieving value- value’’ regulation text in either of those when describing the final Phase I group based transformation by pioneering bold paragraphs. The terms ‘‘based on’’ and practice regulations (66 FR 908 through new payment models. Another ‘‘related to’’ would remain in the 910). commenter asserted that, because regulation text at § 411.352(g) and (i). physician decisions drive the However, we are taking the opportunity 2. Special Rules for Profit Shares and overwhelming majority of all health care to remind readers that we interpret the Productivity Bonuses (§ 411.352(i)) spending and patient outcomes, it is not requirements of § 411.352(g) and (i) to a. Distribution of Revenue Related to possible to transform health care incorporate the volume or value Participation in a Value-Based without the participation of physicians standard; that is, compensation to a Enterprise in value-based health care delivery and physician who is a member of a group We are proposing new § 411.352(i)(3) payment models with other health care practice may not take into account the to address downstream compensation providers. We share the commenters’ volume or value of the physician’s that derives from payments made to a concerns regarding physician participation in value-based health care referrals (except as provided in group practice, rather than directly to a § 411.352(i)), and profit shares and delivery and payment models and are physician in the group, that relate to the productivity bonuses paid to a also concerned that our current physician’s participation in a value- physician in the group may not be regulations could undermine the based arrangement. Certain downstream determined in any manner that takes success of the Regulatory Sprint or the distribution arrangements are currently into account the volume or value of the larger transition to a value-based health protected under waivers in the Shared physician’s referrals (except that a care system. Therefore, we are Savings Program and certain Innovation productivity bonus may directly take proposing changes to § 411.352(i) with Center models. However, outside of the into account the volume or value of the respect to the payment of profit shares. Shared Savings Program or an physician’s referrals if the referrals are For the reasons described elsewhere Innovation Center model, as the for services ‘‘incident to’’ the in this proposed rule, in the exceptions physician’s personally performed commenters correctly point out, profit for value-based arrangements at services). shares or productivity bonuses paid to proposed new § 411.357(aa), we are not Our current regulation at § 411.352(i) a physician in a group practice that proposing to prohibit remuneration that states that a physician in a group directly take into account the volume or takes into account the volume or value practice may be paid a share of overall value of his or her referrals to the group of a physician’s referrals. The proposed profits of the group practice, provided practice are strictly prohibited by the changes to § 411.352(i) are an extension that the share is not determined in any physician self-referral statute and of this policy. manner that is directly related to the regulations. Specifically, we are proposing to add volume or value of referrals by the Our current special rules for the profit regulation text at § 411.352(i)(3) (see physician. We have long interpreted ‘‘is shares and productivity bonuses paid to discussion in section II.A.2.b of this directly related to’’ the volume or value physicians in a group practice prohibit proposed rule) a deeming provision of referrals to mean ‘‘takes into account’’ calculation methodologies that directly related to the distribution of profits from the volume or value of referrals. In take into account the volume or value of designated health services that are Phase I, we discussed this provision and the recipient physician’s referrals to the directly attributable to a physician’s stated that the Congress expressly group practice. Thus, by way of participation in a value-based limited profit shares for group practice example, in a 100-physician group enterprise. Under our proposal, when members to methodologies that do not practice where only two of the such profits are distributed to the directly take into account the member’s physicians participate with a hospital in participating physician, they would be [designated health services] referrals, a commercial payor-sponsored deemed not to directly take into account and that, under the statutory scheme, alternative payment model, the profits the volume or value of the physician’s revenues generated by designated health from the designated health services referrals. In other words, a group services may be distributed to group ordered by the physicians and furnished practice could distribute directly to a practice members and physicians in the by the group practice to beneficiaries physician in the group the profits from group in accordance with methods that assigned to the model participants may designated health services furnished by indirectly take into account referrals not be allocated directly to the two the group that are derived from the (emphasis added) (66 FR 862 and 908). physicians. Commenters interpreted this physician’s participation in a value- Our current regulation at § 411.352(g) to mean that the special rules at based enterprise, including profits from states that ‘‘[n]o physician who is a § 411.352(i) would restrict the group designated health services referred by member of the group practice directly or practice to allocating alternative the physician, and such remuneration indirectly receives compensation based payment model-derived income that would be deemed not to directly take on the volume or value of his or her includes revenues from designated into account the volume or value of the referrals, except as provided in health services among all physicians in physician’s referrals. Revised § 411.352(i)’’ (emphasis added). We the group (or a component of at least § 411.352(i) would permit the 100- interpret this to mean that, in order to five physicians in the group) in order to physician group practice in the previous satisfy this requirement for qualification ensure that such income is allocated in example to distribute the profits from as a ‘‘group practice,’’ no physician who a manner that only indirectly takes into designated health services derived from is a member of the group practice account the volume or value of the two the two physicians’ participation in the receives compensation that directly or physicians’ referrals. The commenters alternative payment model directly to

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00108 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55801

those physicians. Physician #1 could things: (1) The group’s entire profits designated health services of the receive a profit distribution that derived from designated health services; practice (or a component of at least five considers his or her referrals to the and (2) the profits derived from physicians in the practice) must be group that are directly attributable to his designated health services of any aggregated and distributed, with profit or her participation in the model, and component of the group practice that shares not determined in any manner Physician #2 could receive a profit consists of at least five physicians. that directly takes into account (that is, distribution that considers his or her Although we believe our intent when in any manner that is directly related to) referrals to the group that are directly establishing this definition was clear, the volume or value of a physician’s attributable to his or her participation in stakeholders have informed us that they referrals. Under our proposal, a the model. Neither distribution would are confused about the definition. For physician practice that wishes to qualify jeopardize the group’s ability to qualify example, stakeholders have informally as a group practice could not distribute as a ‘‘group practice’’ under § 411.352. inquired whether the profits of a group profits from designated health services We seek comment regarding whether we practice that has only two, three or four on a service-by-service basis. To should permit the distribution of physicians may be distributed at all. In illustrate, suppose a physician practice ‘‘revenue’’ from designated health response to these types of inquiries, we provides both clinical laboratory services or ‘‘profits’’ from designated are proposing to revise the definition of services and diagnostic imaging health services (as proposed) in order to ‘‘overall profits’’ to state that this term services—both designated health effectuate the goals described elsewhere means the profits derived from all the services—to its patients in a location in this proposed rule. designated health services of any that qualifies as a ‘‘same building’’ component of the group that consists of b. Clarifying Revisions under § 411.351 and meets the at least five physicians, which may requirements at § 411.355(b)(2)(i). If the We are proposing to restructure and include all physicians in the group. To practice wishes to qualify as a group renumber § 411.352(i) as well as clarify further clarify this definition, we are practice, it may not distribute the profits several provisions of the regulation. We proposing regulation text at revised from clinical laboratory services to one believe that these revisions would § 411.352(i)(1)(ii) stating that, if there subset of its physicians or using a enable groups to determine with more are fewer than five physicians in the particular methodology and distribute certainty whether compensation paid to group, ‘‘overall profits’’ means the the profits from diagnostic imaging to a a physician in the group as profit shares profits derived from all the designated different subset of its physicians (or the or productivity bonuses takes into health services of the group. We believe same subset of its physicians but using account the volume or value of referrals that this more precisely states the policy a different methodology). We seek and, if it does, whether there is a direct articulated in Phase I (66 FR 909 comment on our proposal to modify the or indirect connection to the volume or through 910). renumbered regulation text at value of the physician’s referrals. Our The proposed revision at § 411.352(i)(1)(ii) to clarify the purpose in restructuring the regulation § 411.352(i)(1)(ii) includes the words guidelines for the distribution of is to more closely adhere to the ‘‘all the’’ before ‘‘designated health ‘‘overall profits’’ from designated health structure of section 1877(h)(4)(B) of the services’’ to codify in regulation our services. Act and to express in affirmative intent when finalizing the group language which profit shares and practice rules in Phase I. Stakeholders’ We are also proposing to remove the productivity bonuses are permissible; informal inquiries regarding the reference to Medicaid from the that is, permitting the payment of a permissible methods of distributing definition of overall profits. We believe profit share or productivity bonus that profits from designated health services the inclusion of this reference indirectly takes into account the volume have highlighted that the current unnecessarily complicates the or value of referrals is the affirmative regulation text may not precisely regulation. It is possible that the and more simple way of saying, as our evidence our intent. Stakeholders have reference to designated health services current regulations do, that the profit inquired whether it is permissible to payable by Medicaid is related to the share or productivity bonus is distribute profit shares of only some proposed definition of ‘‘referral’’ in the permissible but only if it does not types of designated health services 1998 proposed rule (63 FR 1692). There, directly take into account the volume or provided by a group practice, without with respect to the definition of group value of referrals. In addition, as distributing the profits from the other practice, we stated that, because of our proposed, the special rules for profit types of designated health services interpretation of what constitutes a shares and productivity bonuses would provided by the group practice. ‘‘referral,’’ an entity wishing to be follow the format of our special rules on Stakeholders also inquired whether a considered a group practice in order to compensation at § 411.354(d) and our group practice may share the profits use the in-office ancillary services special rules for compensation from each of the types of designated exception cannot compensate its arrangements at § 411.354(e). We do not health services independently; that is, members based on the volume or value intend that our proposed addition of whether it is permissible under our of referrals for designated health introductory language at § 411.352(i) current regulations to share profits from services for Medicare or Medicaid and proposed revised language at one type of designated health service patients but could do so in the case of § 411.352(i)(1) and 411.352(i)(2) would with a subset of physicians in a group other patients (63 FR 1690). However, be a substantive change to the noted practice and the profits from another when finalized, the definition of provisions, but seek comment regarding type of designated health service with a ‘‘referral’’ omitted all references to the impact of these restructuring and different (possibly overlapping) subset Medicaid. Nonetheless, the reference to rewording proposals. of physicians in the group practice. Medicaid in final § 411.352(i)(2), which We are also proposing revisions to In response to these inquiries and to was also proposed in the 1998 proposed clarify our interpretation of the overall provide a clear expression of our policy, rule (as a definition in § 411.351), was profits of a group that can be distributed we are proposing that ‘‘the profits not likewise omitted when finalized. to physicians in the group. In current derived from all the designated health Moreover, under our current definition § 411.352(i)(2), the term ‘‘overall services’’ in proposed § 411.352(i)(1)(ii) of ‘‘designated health services’’ at profits’’ is defined to mean two different would mean that the profits from all the § 411.351, ‘‘designated health services

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00109 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55802 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

payable by . . . Medicaid’’ would not attributed to services that are not § 411.352(i)(2)(ii) to state that a include any services. This is because the designated health services and would productivity bonus must be calculated definition of ‘‘designated health not be considered designated health in a reasonable and verifiable manner. services’’ includes only those services services if they were payable by To correct a misstatement about the payable in whole or in part by Medicare. Medicare. We are proposing to revise nature of § 414.22 of this chapter Although the qualifying language in this the regulation in this manner and included in existing § 411.352(i)(3)(i), definition potentially allows for a renumber current § 411.352(i)(2)(ii) to we are proposing to revise the deeming different definition ‘‘as otherwise noted § 411.352(i)(1)(iii)(B). We note that the provision related to the physician’s total in this subpart,’’ the regulations at regulation that deems a productivity patient encounters or relative value § 411.352(i)(2) do not expressly bonus not to directly take into account units to state that a productivity bonus articulate an alternative definition for the volume or value of a physician’s will be deemed not to take into account ‘‘designated health services.’’ Rather, referrals under certain circumstances the volume or value of a physician’s they simply state that the overall profits includes a provision similar to referrals if it is based on the physician’s of a group include designated health § 411.352(i)(1)(iii)(B) for overall profits. total patient encounters or the relative services payable by Medicaid. For Therefore, we are proposing value units (as described in § 414.22 of consistency with the final definitions corresponding revisions at proposed this chapter) personally performed by and regulations, we are updating the § 411.352(i)(2)(ii)(B) (renumbered from the physician. We seek comment group practice rules at § 411.352 by current § 411.352(i)(3)(ii)) that would regarding whether this provision should eliminating the references to Medicaid deem the payment of a productivity limit the methodology to physician in the definition of overall profits. bonus not to directly take into account work relative value units as defined at Proposed § 411.352(i)(1)(iii) the volume or value of a physician’s § 414.22(a) or whether any personally- articulates the general rule that overall referrals if the services on which the performed relative value units should be profits should be divided in a productivity bonus is based are not an acceptable basis for calculating a reasonable and verifiable manner that is revenues derived from designated productivity bonus that is deemed not not directly related to the volume or health services and would not be to relate directly to (that is, directly take considered designated health services if into account) the volume or value of value of the physician’s referrals of they were payable by Medicare. Finally, referrals. Finally, we are proposing to designated health services. The we are proposing to replace the term replace the term ‘‘allocated’’ with prefatory language of this subparagraph ‘‘allocated’’ with ‘‘distributed’’ at ‘‘distributed’’ at proposed (redesignated) is simply moved from existing proposed (redesignated) § 411.352(i)(2)(ii)(C) as the latter term § 411.352(i)(2) without substantive § 411.352(i)(1)(iii)(C) as the latter term reflects the actual payment of the change. Proposed § 411.352(i)(1)(iii) also reflects the actual payment of the profit productivity bonus. makes revisions to the language share. introducing the methods for distributing We are also proposing to renumber D. Recalibrating the Scope and profit shares that are deemed the regulation that lists the deeming Application of the Regulations permissible under the physician self- provisions related to the payment of As we stated previously and in our referral law (the deeming provisions) by productivity bonuses from Phase I rulemaking, our intent in substituting ‘‘and would not be § 411.352(i)(3) to § 411.352(i)(2) and are implementing section 1877 of the Act considered designated health services if proposing minor changes to the was ‘‘to interpret the [referral and they were payable by Medicare’’ for ‘‘are deeming provisions themselves. In billing] prohibitions narrowly and the not [designated health services] payable addition to the proposal removing the exceptions broadly, to the extent by any Federal health care program or language referencing Federal health care consistent with statutory language and private [payor].’’ Current programs and private payers, we are intent’’ (66 FR 860). One purpose of this § 411.352(i)(2)(ii) provides that a share proposing to update the language of proposed rule is to reexamine our of overall profits will be deemed not to existing § 411.352(i)(1) (relocated to current regulations to assess whether we directly take into account the volume or proposed § 411.352(i)(2)(i)) to remove have held true to that intention. In value of referrals if revenues derived ‘‘or both’’ as unnecessary because the doing so, we have considered our own from designated health services are word ‘‘or’’ is interpreted to mean the experience in administering the SRDP, distributed based on the distribution of conjunctive ‘‘and’’ as well as the stakeholder interactions and comments the group practice’s revenues attributed disjunctive ‘‘or.’’ Groups may continue to the CMS RFI, and our experience to services that are not designated to pay a productivity bonus based on working with our law enforcement health services payable by ‘‘any Federal services that the physician has partners. In this proposed rule, we are health care program or private payer.’’ personally performed, or services proposing revisions to, including As we noted, the definition of ‘‘incident to’’ such personally deletions of, certain requirements in our designated health services includes only performed services, or both, provided regulatory exceptions that may be those specified services that are payable that the bonus only indirectly takes into unnecessary at this time. We describe by Medicare. Thus, we believe it better account the volume or value of the our specific proposals in this section of reflects our policy that overall profits physician’s referrals (except that the the proposed rule. may be distributed based on the bonus may directly take into account 1. Decoupling the Physician Self- distribution of the group practice’s the volume or value of referrals by the Referral Law From the Federal Anti- revenues from services other than those physician if the referrals are for services in the categories of services that are ‘‘incident to’’ the physician’s personally Kickback Statute and Federal and State ‘‘designated health services’’ to deem performed services). Laws or Regulations Governing Billing the payment of a profit share not to For consistency with the regulations or Claims Submission directly take into account the volume or related to the payment of a share of Section 1877 of the Act established value of a physician’s referrals if the overall profits, we are proposing to numerous exceptions to the statute’s revenues derived from designated revise the introductory language in the referral and billing prohibitions and health services are distributed based on deeming provisions for productivity granted the Secretary authority to create the distribution of the group’s revenues bonuses at renumbered regulatory exceptions for other financial

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00110 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55803

relationships that do not pose a risk of regulatory exceptions to the physician Federal and State laws or regulations program or patient abuse. The vast self-referral law. Commenters noted that governing billing or claims submission majority of the exceptions issued using the physician self-referral law is a strict as requirements of the exceptions to the the Secretary’s authority at section liability statute and compliance with physician self-referral law. We note 1877(b)(4) of the Act to establish each element of an exception is further that the Congress did not require exceptions for financial relationships mandatory if the entity wishes to submit compliance with the anti-kickback that do not pose a risk of program or a claim for designated health services statute or any other law in existence at patient abuse (which we often call the referred by a physician with which it the time of enactment of the statute or regulatory exceptions) require that the has a financial relationship, while the its subsequent revision in order to avoid arrangement does not violate the anti- anti-kickback statute is an intent-based the law’s referral and billing kickback statute. Most of these criminal statute and compliance with a prohibitions. Therefore, we are exceptions also require that the safe harbor is not required. The proposing to remove from the arrangement does not violate any commenters asserted that the inclusion exceptions in 42 CFR part 411, subpart Federal or State law or regulation of a requirement for compliance with J the requirement that the arrangement governing billing or claims submission. the anti-kickback statute is misplaced in does not violate the anti-kickback In Phase I, we stated that the an exception to the physician self- statute or any Federal or State law requirements pertaining to the anti- referral law because it introduces an governing billing or claims submission kickback statute and billing or claims intent-based requirement into a strict wherever such requirements appear. submission are necessary in regulatory liability statute. Commenters further Specifically, we are proposing to exceptions issued under the Secretary’s noted that this requirement can make it remove the following sections from our authority at section 1877(b)(4) of the Act unreasonably difficult for entities to regulations: § 411.353(f)(1)(iii); to ensure that the excepted financial meet their burden of proof under § 411.355(b)(4)(v), (e)(1)(iv), (f)(3), (f)(4), relationships do not pose a risk of § 411.353(c)(2) that a referral for (g)(2), (g)(3), (h)(2), (h)(3), (i)(2), (i)(3), program or patient abuse (66 FR 863). designated health services does not (j)(1)(iv); § 411.357(e)(4)(vii), (j)(3), Even though we acknowledged that the violate the physician self-referral law. (k)(1)(iii), (l)(5), (m)(7), (p)(3), (r)(2)(x), physician self-referral law and the anti- Commenters also noted that the (s)(5), (t)(3)(iv), (u)(3), (w)(12), kickback statute are different statutes, requirement for compliance with the (x)(1)(viii), and (y)(8). We also propose we were concerned that, if the anti-kickback statute and the to delete the following clause from regulatory exceptions did not require requirement pertaining to Federal or § 411.357(e)(6)(i) and (n): ‘‘, Provided compliance with the anti-kickback State laws or regulations governing that the arrangement does not violate statute, unscrupulous physicians and billing or claims submission are not the anti-kickback statute (section entities could potentially protect necessary, because parties remain 1128B(b) of the Act), or any Federal or intentional unlawful and abusive subject to these laws or regulations, State law or regulation governing billing conduct by complying with the minimal regardless of whether their financial or claims submission.’’ Finally, we are requirements of a regulatory exception relationships otherwise comply with the proposing to remove the definition of created under section 1877(b)(4) of the physician self-referral law. ‘‘does not violate the anti-kickback Act. In Phase II, we stated our Based on our experience working statute’’ in § 411.351. We note that the interpretation that the statutory ‘‘no with our law enforcement partners in exceptions for referral services at risk’’ standard is not limited to risks as reviewing conduct that implicates the § 411.357(q) and obstetrical malpractice determined under the physician self- physician self-referral law and other subsidies at § 411.357(r)(1) provide that referral law (69 FR 16108). We added Federal fraud and abuse laws, it is our arrangements satisfy the requirements of that many arrangements that might belief that, when a compensation the exception if the arrangements otherwise warrant an exception under arrangement violates the intent-based comply with the requirements of certain section 1877 of the Act—a strict liability criminal anti-kickback statute, it will specified anti-kickback statute safe statute—pose some degree of risk under likely also fail to meet one or more of harbors. Our proposal would not apply the anti-kickback statute; these the more key requirements of an to or affect these provisions. arrangements cannot, therefore, be said exception to the physician self-referral to pose no risk. Similarly, we stated that law. That is, the compensation in such We emphasize that this proposal in no some arrangements that may be cases likely is not fair market value or way affects parties’ liability under the permissible under the physician self- is determined in a manner that takes anti-kickback statute. Indeed, the referral law could pose a risk of into account the volume or value of the Congress clarified when enacting violating certain laws pertaining to physician’s referrals or other business section 1877 of the Act that ‘‘any billing or claims submission. Therefore, generated for the entity. Since the Phase prohibition, exemption, or exception we concluded that the regulatory I regulation was issued, we are unaware authorized under this provision in no exceptions created under the Secretary’s of any instances of noncompliance with way alters (or reflects on) the scope and authority at section 1877(b)(4) of the Act the physician self-referral law turned application of the anti-kickback must require that the excepted financial solely on an underlying violation of the provisions in section 1128B of the relationship not violate the anti- anti-kickback statute (or any other Social Security Act’’ (H. Report 101– kickback statute or any Federal or State Federal or State law governing billing or 386, 856 (1989).) Most importantly, the law or regulation governing billing or claims submission). fact that a financial relationship claims submission. We have reconsidered our position complies with an exception to the A substantial number of CMS RFI and, based on our experience working physician self-referral law does not commenters expressed opposition to the with our law enforcement partners since entail that the financial relationship continued coupling of the physician our regulations were finalized, as well does not violate the anti-kickback self-referral law with the anti-kickback as comments received in response to the statute. (See 66 FR 879.) Similarly, statute and other billing and claims CMS RFI, we no longer believe that it compliance with the anti-kickback submission laws, explaining the is necessary or appropriate to include statute does not entail compliance with significant burden associated with the requirements pertaining to compliance the physician self-referral law. To the inclusion of these requirements in with the anti-kickback statute and extent that the financial relationship is

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00111 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55804 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

governed by other laws or regulations, by listing various categories of services designated health services finalized in our proposed action does not affect the that qualify as designated health Phase I, and we removed the exception parties’ compliance obligations under services (for example, clinical laboratory from our regulations (69 FR 16111). those other laws or regulations. services). In the 1998 proposed rule, we As finalized in Phase I, the definition Specifically, claims submitted to the stated that a designated health service of ‘‘designated health services’’ includes Medicare program must comply with all remains such ‘‘even if it is billed as only designated health services payable, laws, regulations, and other something else or is subsumed within in whole or in part, by Medicare, and requirements governing billing and another service category by being does not include services that would claims submission. bundled with other services for billing otherwise constitute designated health Although we no longer believe that purposes’’ (63 FR 1673). By way of services, but that are reimbursed by the Secretary must include a example, we stated that clinical Medicare as part of a composite rate, requirement that the financial laboratory services that are provided by except to the extent that the services are relationship does not violate the anti- a skilled nursing facility (SNF) and specifically identified in § 411.351 and kickback statute in exceptions to the reimbursed as part of the SNF are themselves payable through a physician self-referral law, we continue composite rate would remain designated composite rate. SNF services paid for to believe that the Secretary has the health services for purposes of section under the Part A composite rate (that is, authority under the statute to impose a 1877 of the Act, even though SNF the Skilled Nursing Facility Prospective requirement that the financial services are not listed as designated Payment System), for example, are not relationship not violate the anti- health services at section 1877(h)(6) of designated health services, even if the kickback or any other requirement if the the Act and Medicare would not bundle of services includes services that Secretary determines it necessary and separately pay for the clinical laboratory would otherwise be designated health appropriate to ensure that an excepted service furnished by the SNF. services, such as clinical laboratory services.3 On the other hand, although financial relationship does not pose a The now-deleted exception at home health and inpatient and risk of program or patient abuse. We § 411.355(d), which was first finalized outpatient hospital services are intend to monitor excepted financial in the 1995 final rule (60 FR 41975), reimbursed on a composite rate, they relationships, and we may propose in a served as a counterbalance to the broad remain designated health services under future rulemaking to include the interpretation of designated health the definition finalized in Phase I requirements proposed here for deletion services that was proposed in the 1998 because section 1877(h)(6) of the Act in some or all of the exceptions issued proposed rule. As finalized in the 1995 pursuant to the Secretary’s statutory explicitly lists these services as final rule (60 FR 41980), § 411.355(d) designated health services. We authority if we determine such provided that the referral prohibition in requirements are necessary or explained in Phase I that our ultimate § 411.353 did not apply to services definition of ‘‘designated health appropriate to protect against program furnished in an ambulatory surgical or patient abuse. services’’ was based on issues of center (ASC) or end-stage renal disease statutory construction (66 FR 923). In 2. Definitions (§ 411.351) (ESRD) facility, or by a hospice, if particular, commenters on the 1998 payment for those services was included a. Designated Health Services Proposed Rule asserted that the in the ASC rate, the ESRD composite proposed definition of designated health Section 1877(1)(A) of the Act provides rate, or as part of the per diem hospice services would have expanded the list that, if a physician (or an immediate charge. We explained that the of services that are considered to be family member of a physician) has a application of the composite rate designated health services beyond the financial relationship with an entity, the ‘‘constitutes a barrier to either Medicare services explicitly listed at section physician may not make a referral to the program or patient abuse because the 1877(h)(1) of the Act. For example, entity for the furnishing of a designated Medicare program will pay only a set clinical laboratory services furnished by health service for which payment may amount to the facilities irrespective of a SNF and reimbursed under the Skilled otherwise be made under Title XVIII of the number and frequency of laboratory Nursing Facility Prospective Payment the Act, unless an exception applies. tests that are ordered’’ (60 FR 41940). In System would have been considered The referral prohibition is codified in the 1998 proposed rule, we proposed an designated health services under the our regulations at § 411.353(a). In the amendment to § 411.355(d) that would proposed definition, even though SNF 1998 proposed rule (63 FR 1694), we have allowed the Secretary to except services are not included in the interpreted the phrase ‘‘designated services furnished under other payment statutory list of designated health health service for which payment rates that did not pose a risk of program services. The commenters maintained otherwise may be made’’ broadly to or patient abuse (63 FR 1666). However, that, where the Congress intended the mean ‘‘any designated health service in Phase I, instead of expanding the physician self-referral law to cover that ordinarily ‘may be’ covered under exception at § 411.354(d) to include specific services, including services that Medicare (that is, that could be a services furnished under other payment are paid on a composite rate such as covered service under Medicare in the rates, we narrowed the definition of home health services, it did so by community in which the service has designated health services (as explained explicitly listing the services at section been provided) for a Medicare-eligible in this section of the proposed rule) to individual, regardless of whether exclude certain services that are paid as 3 ESRD services are also reimbursed on a Medicare would actually pay for this part of a composite rate, and we composite rate, and thus are not considered to be particular service, at the time, for that solicited comments on whether the designated health services. In this context, we exception at § 411.355(d) was still would like to refer readers to the comment and particular individual. . . .’’ Our response section of the CY 2018 ERSD PPS Final proposed definition of the term necessary in light of the narrowed Rule, where we explained that, for purposes of the ‘‘designated health services’’ in the 1998 definition of designated health services physician self-referral law, the ‘‘composite rate’’ for proposed rule was consistent with this in Phase I (66 FR 923 through 924). We ESRD services is interpreted as the per-treatment ultimately determined in Phase II that payment amount (82 FR 50751). To the extent that broad interpretation of the referral outpatient prescription drugs are included in the prohibition. Section 1877(h)(6) of the § 411.355(d) was no longer necessary, ESRD per-treatment payment amount, they do not Act defines ‘‘designated health services’’ given the change to the definition of qualify as designated health services.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00112 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55805

1877(h)(6) of the Act. We ultimately relationship, and the hospital would not services’’ at § 411.351 does not apply to agreed with this statutory construction be prohibited from billing Medicare for outpatient hospital services. and finalized the definition of the admission. On the other hand, if the Lastly, we are aware that not all ‘‘designated health services’’ to include physician who ordered the inpatient hospitals are paid under the IPPS. We only those services paid under a hospital admission had a financial are soliciting comments as to whether composite rate that are explicitly listed relationship with the hospital that failed our proposal regarding certain hospital at section 1877(h)(1) of the Act; that is, to satisfy the requirements of an services that are not ‘‘designated health home health services and inpatient and applicable exception, § 411.353(b) services payable, in whole or in part, by outpatient hospital services. would prohibit the hospital for billing Medicare’’ should be extended to In light of our experience with the for the inpatient hospital services. analogous services provided by SRDP and our review of the comments We received several comments to our hospitals that are not paid under the to our CMS RFI, we reviewed the CMS RFI suggesting modifications IPPS, and, if so, how we should regulatory history of our definition of similar to the change we are proposing. effectuate this change in our regulation ‘‘designated health services’’ at One commenter requested that we text. In addition, we are soliciting § 411.351 to identify whether further clarify that a service is not a designated comment regarding whether we should clarification regarding what constitutes health service ‘‘for which payment extend our proposal to outpatient a designated health service is necessary. otherwise may be made’’ if the hospital services or other categories of We are proposing here to revise the physician making a referral for the designated health services and, if so, how we should effectuate this change in definition of ‘‘designated health service ‘‘has not caused the beneficiary services’’ to clarify that a service our regulation text. to be admitted, the patient has already provided by a hospital to an inpatient been admitted, and the service ordered b. Physician does not constitute a designated health by the physician is subsumed within the service payable, in whole or in part, by In the 1992 proposed rule, we stated DRG already established for the Medicare, if the furnishing of the service that, for purposes of the physician self- beneficiary.’’ Numerous other does not affect the amount of Medicare’s referral law, physicians are certain commenters requested that we modify payment to the hospital under the Acute professionals who are ‘‘legally the definition of ‘‘referral’’ to clarify that Care Hospital Inpatient Prospective authorized to practice by the State in a referral, for purposes of the physician Payment System (IPPS). which they perform their professional To illustrate, suppose that, after an self-referral law, must result in functions or actions and when they are inpatient has been admitted to a additional payments or an increase in acting within the scope of their hospital under an established diagnosis- payment. Although the change to the licenses.’’ (57 FR 8593). We included in related group (DRG), the patient’s definition of ‘‘referral’’ suggested by the the definition a doctor of medicine or attending physician requests a latter commenters would apply to osteopathy, a doctor of dental surgery or consultation with a specialist who was referrals for any category of designated dental medicine, a doctor of optometry, not responsible for the patient’s health services, the commenters and a chiropractor who meets certain admission, and the specialist orders an provided examples drawn exclusively qualifications. In Phase I, we finalized X-ray. By the time the specialist orders from the context of inpatient services. our definition of ‘‘physician’’ at the X-ray, the rate of Medicare We do not believe it is necessary to § 411.351, defining the term as ‘‘a doctor reimbursement under the IPPS has modify the definition of ‘‘referral’’ to of medicine or osteopathy, a doctor of already been established by the DRG achieve the policy goals identified by dental surgery or dental medicine, a (diagnostic imaging is bundled into the the commenters. We believe that the doctor of podiatric medicine, a doctor of payment for the inpatient admission), situation identified by the commenters, optometry, or a chiropractor, as defined and, unless the X-ray results in an where a service furnished pursuant to a at section 1861(r) of the Act.’’ (66 FR outlier payment, the hospital will not physician’s referral does not increase 955). Since Phase I, our definition of receive any additional payment for the the reimbursement received by the ‘‘physician’’ at § 411.351 has service over and above the payment rate entity, occurs primarily or exclusively consistently referred to the definition of established by the DRG. in the context of inpatient hospital ‘‘physician’’ at section 1861(r) of the Moreover, insofar as the provision of services, where the DRG is established Act. However, while the definition of the X-ray does not affect the rate of at the time of admission and physicians ‘‘physician’’ found at § 411.351 cross- payment, the physician has no financial other than the attending or admitting references section 1861(r) of the Act, the incentive to over-prescribe the service. physician may refer a patient for two definitions are not entirely As illustrated here, we do not believe services that will not result in consistent. In particular, the definition that the X-ray is a designated health additional payment to the hospital. For of ‘‘physician’’ at § 411.351 does not service that is payable, in whole or part, this reason, our proposed clarification of include all the limitations imposed by by Medicare, and our proposed the definition of ‘‘designated health the definition of ‘‘physician’’ at section definition of designated health services services’’ would apply only to inpatient 1861(r) of the Act. In order to correct at § 411.351 would exclude this service services that do not affect the Medicare this discrepancy and provide uniformity from the definition of designated health reimbursement rate under the IPPS. with regard to the definition of a services, even though it falls within a Although outpatient services are also ‘‘physician,’’ we are proposing to amend category of services that, when billed paid on a composite rate, we believe the definition of ‘‘physician’’ at separately, would be ‘‘designated health that there is typically only one ordering § 411.351. Under the proposed services.’’ Thus, assuming the specialist physician for outpatient services, and it definition, the types of practitioners had a financial relationship with the rarely happens that physicians other who qualify as ‘‘physicians’’ for hospital that failed to satisfy the than the ordering physician refer purposes of the physician self-referral requirements of an exception to the outpatients for additional outpatient law will be defined by cross-reference to physician self-referral law at the time services that would not be compensated section 1861(r) of the Act. This the X-ray was ordered, the inpatient separately under the OPPS. For this amendment will incorporate into our hospital services would not be tainted reason, our proposed modification of definition of ‘‘physician’’ at § 411.351 by the unexcepted financial the definition of ‘‘designated health the statutory limitations imposed on the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00113 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55806 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

definition of ‘‘physician’’ by section In the 1998 proposed rule we We made no changes to the definition 1861(r) of the Act. The definition at explained our interpretation of the of ‘‘remuneration’’ in Phase II and Phase § 411.351 would continue to provide phrase ‘‘used solely’’ at section III. In the CY 2016 PFS final rule, we that a physician is considered the same 1877(h)(1)(C)(ii) of the Act (66 FR 1693 clarified that the provision of an item, as his or her professional corporation for through 1694). We observed that some device, or supply that is used for one or purposes of the physician self-referral pathology laboratories had been more of the six purposes listed in the law. furnishing physicians with materials statute, and no other purpose, does not ranging from basic collection and constitute remuneration (80 FR 41918). c. Referral storage items to more specialized or In two advisory opinions issued in 2013 In Phase II, we stated that the sophisticated items, devices, or we applied the definition of exception for fair market value equipment. We clarified that, in order ‘‘remuneration’’ at § 411.351 to two compensation is not available to protect for these items and devices to meet the proposed arrangements to provide recruitment arrangements (69 FR statutory requirement, they must be certain devices to physicians free of 16096). We noted that a hospital is not used solely to collect, transport, process, charge. In CMS–AO–2013–01, we permitted to pay a physician for the or store specimens for the entity that concluded that, based on the specific benefit of receiving the physician’s provided the items and devices, or to facts certified by the requestor of the referrals, and that such payments are order or communicate the results of opinion, the provision of liquid-based antithetical to the premise of the statute. tests or procedures for such entity. We Pap smear specimen collection kits did We are taking this opportunity to provided examples of items that could not constitute remuneration, because reiterate that a physician’s referrals are meet the ‘‘used solely’’ test, including the collection kits are not surgical not items or services for which payment cups used for urine collection or vials devices, and because the devices are may be made under the physician self- used to hold and transport blood to the used solely in the collection of referral law, and that neither the entity that supplied the items or specimens. Among other things, our existing exceptions to the physician devices. We emphasized that an item or ‘‘used solely’’ analysis highlighted the self-referral law nor the proposed device would not meet the ‘‘used following facts, as certified by the exceptions in this proposed rule would solely’’ requirement if it is used for any requestor: (1) The Pap smear collection protect such payments. We are purpose besides the purposes listed in kits contain only disposable items that proposing to revise the definition of the statute. In particular, we noted that cannot be reused after a specimen is ‘‘referral’’ at § 411.351 to explicitly state certain surgical tools which can be used collected; and (2) the entity furnishing our longstanding policy that a referral is to collect or store samples, but are also the Pap smear collection kits has a not an item or service for purposes of routinely used as part of a surgical or system in place to ensure that section 1877 of the Act and the medical procedure, would not satisfy physicians receive only the quantity of physician self-referral regulations. the ‘‘used solely’’ requirement. devices necessary for their practice As finalized in Phase I, the definition needs, and to address potential d. Remuneration of ‘‘remuneration’’ included a instances of separation of the devices into their component parts for use other parenthetical stipulating that the A compensation arrangement between than to collect specimens. In contrast, in provision of surgical items, devices, and a physician (or an immediate family CMS–AO–2013–02, we concluded that, supplies would not qualify for the member of such physician) and an based on the specific facts certified by carve-out to the definition of entity furnishing designated health the requestor of the opinion, the ‘‘remuneration’’ for items, devices, or services implicates the referral and furnishing of certain disposable biopsy supplies that are used solely for the billing prohibitions of the physician brushes for use in obtaining a biopsy of purposes listed at section self-referral law. Section 1877(h)(1)(A) visible exocervical lesions constituted 1877(h)(1)(C)(ii) of the Act (66 FR 947). of the Act defines the term remuneration under the definition at ‘‘compensation arrangement’’ as any We explained that we did not believe § 411.351. arrangement involving any that the Congress intended section We noted that, as certified by the ‘‘remuneration’’ between a physician (or 1877(h)(1)(C)(ii) of the Act to allow requestor, the biopsy brush is a an immediate family member of such entities to supply physicians with disposable, single-use, cervical biopsy physician) and an entity. However, surgical items for free, noting that such device that is used to collect a specimen section 1877(h)(1)(C) of the Act items may have independent economic to be sent to a laboratory. After identifies certain types of remuneration value to physicians apart from the six reviewing FDA rules and regulations which, if provided, would not create a statutorily permitted uses. We stated our and American Medical Association compensation arrangement subject to belief that the Congress intended to guidelines, and consulting with CMS the referral and billing prohibitions of include at section 1877(h)(1)(C)(ii) of medical officers, we concluded that the the physician self-referral law. Under the Act single-use items, devices, and device is a ‘‘surgical item, device, or section 1877(h)(1)(C)(ii) of the Act, the supplies of low value that are primarily supply’’ for purposes of the physician provision of the following does not provided by laboratories to ensure self-referral law and, therefore, that the create a compensation arrangement proper collection of specimens. In this provision of the device constitutes between the parties: Items, devices, or context, we explained that reusable remuneration under § 411.351. supplies that are used solely to collect, items may have value to physicians We have further considered our transport, process, or store specimens unrelated to the collection of specimens, interpretation of section for the entity providing the items, and therefore could not meet the ‘‘used 1877(h)(1)((C)(ii) of the Act and the devices, or supplies, or to order or solely’’ requirement. Lastly, we stated analysis set forth in the 2013 advisory communicate the results of tests or that the provision of an excessive opinions, and are proposing certain procedures for such entity. Furthermore, number of collection supplies creates an modifications to the definition of under our definition of ‘‘remuneration’’ inference that the supplies are not ‘‘remuneration’’ at § 411.351. at § 411.351, the provision of such provided ‘‘solely’’ to collect, transport, Specifically, we are proposing to items, devices, or supplies is not process, or store specimens for the remove the parenthetical in the current considered to be remuneration. entity that furnished them. definition of ‘‘remuneration,’’ which

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00114 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55807

stipulates that the carve-out to the devices would not be considered requirements that the Secretary imposes definition of ‘‘remuneration’’ does not remuneration if the item, device, or by regulation as needed to protect apply to surgical items, devices, or supply in question is, in fact, only used against program or patient abuse. As supplies. We are no longer convinced for one or more of the six purposes enacted by OBRA 1989, the statutory that the mere fact that an item, device, outlined in the statute. We refer readers exception identified a one-time sale of or supply is routinely used as part of a to the guidance provided in the 1998 property as an example of an isolated surgical procedure means that the item, proposed rule and in Phase I on steps financial transaction. In OBRA 1993, the device, or supply is not used solely for that a party can take to ensure that the Congress further clarified the statutory one of the six purposes listed at section furnished items, supplies, or devices are exception by providing an additional 1877(h)(1)(C)(ii) of the Act. Rather, we used appropriately (63 FR 1694 and 66 example of an isolated transaction, believe that the relevant inquiry for FR 947 through 948, respectively). namely, a one-time sale of a practice. purposes of the physician self-referral Although we are proposing certain (See House Conference Report at H.R. law is whether the item, device, or modifications to the definition of Rep. No. 213, 103d Cong., 1st Sess. 813– supply is used solely for one or more of ‘‘remuneration,’’ our proposal would 815 (1993).) the statutory purposes, regardless of not exclude from the definition those In our 1992 proposed rule, we whether the device is also classified as items, devices, or supplies whose main proposed an exception at § 411.357(f) to a surgical device. To be clear, we function is to prevent contamination or mirror the statutory exception at section continue to believe that the Congress infection, even if the item, device, or 1877(e)(6) of the Act for certain isolated intended the carve-out at section supply could potentially be used for one financial transactions (both titled and or more of the six statutory purposes at 1877(h)(1)(C)(ii) of the Act to cover together referred to as the exception for section 1877(h)(1)(C)(ii) of the Act. In single-use items, devices, or supplies of isolated transactions) (57 FR 8588). In 4 Phase I, we made clear that, although low value that are primarily provided our proposal, we included a sterile gloves are essential to the proper by laboratories to ensure proper requirement—in addition to the collection of specimens, we believe they collection of specimens, but we are no statutory requirements—that there be no are not items, devices, or supplies that longer convinced that the mere fact that other transactions (that is, financial are used solely to collect, transport, an item, supply, or device is classified relationships) between the parties for 1 process, or store specimens (66 FR 947). as a ‘‘surgical device’’ means that it does year before and 1 year after the financial Sterile gloves are essential to the not fall within the carve-out. transaction to ensure that financial specimen collection process, but their We are also taking this opportunity to transactions excepted under section clarify the ‘‘used solely’’ requirement at primary purpose is to prevent infection or contamination. In addition, sterile 1877(e)(6) of the Act and § 411.357(f) are § 411.351. While the furnished item, truly isolated in nature (57 FR 8599). In device, or supply cannot be used for any gloves are fungible, general purpose items, and we continue to believe it the 1995 final rule, we finalized an purpose other than one or more of the exception for isolated financial six purposes listed in the statute, we would be impractical for parties to monitor the use of the gloves to ensure transactions at § 411.357(f), and we recognize that in many instances the modified the proposed 1-year item, device, or supply could that they are used solely for one or more of the purposes listed at section requirement in response to commenters theoretically be used for numerous who asserted that the requirement purposes. For example, a specimen 1877(h)(1)(C)(ii) of the Act. Likewise, although there may be certain would create substantial and lockbox could potentially be used for unnecessary problems (60 FR 41960). several purposes; it could be used to specialized equipment (including surgical tools) that may be used for one We stated that a transaction would be store unused specimen collection considered an isolated transaction for supplies or as a doorstop. However, if, or more of the purposes described in the statute, in order not to be considered purposes of § 411.357(f) if there were no during the course of the arrangement, other transactions between the parties the specimen box provided to the remuneration, the item, device, or supply must not have a primary for 6 months after the transaction, physician is not used for any of these except those transactions that are purposes and is, in fact, used only for function of preventing infection or contamination, or some other purpose specifically excepted by another one or more of the six purposes outlined provision in §§ 411.355 through in the statute and our regulations, the besides one of the six purposes listed in the statute. 411.357. We further stated that furnishing of the specimen box would individual payments between parties not be considered remuneration e. Transaction generally characterize a compensation between parties. In other words, the Section 1877(e)(6) of the Act provides arrangement; however, debt, as mere fact that an item, device, or supply that an isolated financial transaction, described in the definition of could be used for a purpose other than such as a one-time sale of property or ‘‘ownership or investment interest’’ at one or more of the permitted purposes practice, is not a compensation section 1877(a)(2) of the Act, can does not automatically mean that the arrangement for purposes of the constitute an ownership interest that furnishing of the item, device, or supply physician self-referral law if: (1) The continues to exist until the debt is paid at no cost constitutes remuneration. We amount of remuneration under the off (60 FR 41960). The 1995 final rule are proposing to add the phrase ‘‘in transaction is consistent with fair also established definitions of fact’’ to the ‘‘used solely’’ requirement market value of the transaction and is ‘‘transaction’’ and ‘‘isolated transaction’’ to clarify that an item, device, or supply not determined in a manner that takes at § 411.351. We defined a ‘‘transaction’’ can have several uses, including uses into account (directly or indirectly) the as an instance or process of two or more that are not among the six purposes volume or value of referrals by the persons doing business and an ‘‘isolated listed in the statute; however, the referring physician; (2) the transaction’’ as a transaction involving a furnishing of such items, supplies, or remuneration is pursuant to an single payment between two or more arrangement that would be persons. The regulation at § 411.351 4 See, for example, the OBRA 1993 Conference specified that a transaction involving Report, H.R. 103–213 pp. 818 through 819, which commercially reasonable even if no characterized section 1877(h)(1)(C)(ii) of the Act as referrals were made to the entity; and (3) long-term or installment payments is an ‘‘exception’’ for ‘‘certain minor remuneration.’’ the transaction meets any other not considered an isolated transaction.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00115 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55808 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

In the 1998 proposed rule, we over an extended period of time, even 1 year, and that the compensation is set proposed to revise the definition of if there is only a single payment for all in advance. We do not believe that the ‘‘transaction’’ at § 411.351 to clarify that the services. Elsewhere in this proposed Congress would impose such a transaction can involve persons or rule, we are proposing regulations that requirements for service arrangements entities, but we did not propose any will facilitate compliance with the under this exception, and then permit substantive changes to the exception at physician self-referral law in general parties to avoid these requirements as § 411.357(f) (63 FR 1669). This and the writing and signature long as the parties made one definition was finalized in Phase II, requirements in particular, including a retrospective payment for multiple with modification to permit installment 90-day period to reduce arrangements to services provided over an extended payments (and post-closing a signed writing and an exception for period of time relying on the exception adjustments) under certain limited remuneration to a physician. We for isolated transactions. circumstances (69 FR 16098). In Phase believe that these provisions, if To provide a clear expression of our II, we also responded to commenters finalized, would afford parties with policy described in this section II.D.2.d. who objected to the prohibition on other sufficient flexibility to ensure that of this proposed rule, we are proposing transactions within 6 months of the personal service arrangements comply to establish an independent definition excepted transaction. We declined to with the physician self-referral law, and of ‘‘isolated financial transaction’’ at modify the 6-month prohibition on see no reason to unduly stretch the § 411.351 and clarify that an ‘‘isolated other transactions, and we explained meaning and applicability of the financial transaction’’ does not include that the concept of an isolated exception for isolated transactions payment for multiple services provided transaction is incompatible with the beyond what was intended by the over an extended period, even if there parties routinely engaging in multiple Congress. is only one payment for such services. We are not proposing further changes to transactions in a year or during a short To illustrate the kind of transactions the definition of ‘‘transaction’’ at period of time. In Phase III, we made no that section 1877(e)(6) of the Act is § 411.351. Under our proposals, the changes to the exception at § 411.357(f), meant to exempt, the Congress provided term ‘‘transaction’’ would mean an but updated the term ‘‘isolated as examples a one-time sale of property instance or process of two or more transaction’’ at § 411.351 to refer to an and a one-time sale of a practice. In our persons doing business. We are ‘‘isolated financial transaction,’’ as that view, a one-time sale of property or a specific term is used in the statutory proposing corresponding revisions to practice is a unique, singular the exception for isolated transactions at and regulatory exceptions (72 FR transaction. It is not possible for one 51084). § 411.357(f) to reference isolated party to repeatedly offer and sell the financial transactions in order to align Through our administration of the same property or medical practice to the regulation text with the statutory SRDP, work with our law enforcement another party. In contrast, services can provisions at section 1877(e)(6). Even partners, and interactions with be provided and purchased on a though the exception at § 411.357(f) stakeholders, it has come to our repeated basis. Moreover, in a one-time applies to isolated financial attention that certain parties may sale of property or a practice, the transactions, we are not proposing to believe that CMS’ policy is that the consideration for the transaction (that is, change the title of the exception from exceptions in section 1877(e)(6) of the the transfer of ownership of the property ‘‘isolated transactions’’ to ‘‘isolated Act and § 411.357(f) for isolated or practice) is exchanged at the time financial transactions,’’ as the title of the transactions are available to protect payment is made in a single transaction statutory exception is ‘‘isolated service arrangements where a party (although § 411.357(f) permits transactions.’’ makes a single payment for multiple installment payments under certain services provided over an extended circumstances). In contrast, if a 3. Denial of Payment for Services period of time. To illustrate, assume that physician provides multiple services to Furnished Under a Prohibited Referral— a hospital makes a single payment to a an entity over an extended period of Period of Disallowance (§ 411.353(c)(1)) physician for working multiple call time, remuneration in the form of an in- In the CY 2008 PFS proposed rule, we coverage shifts over the course of a kind benefit has passed repeatedly from solicited comments on how to month (or several months) and seeks to the physician to the entity receiving the determine the period of time during utilize the exception at § 411.357(f) to service prior to the payment date. The which a physician may not make avoid qualification of the payment as a provision of remuneration in the form of referrals for designated health services financial relationship subject to the services commences a compensation to an entity and the entity may not bill physician self-referral law’s referral and arrangement at the time the services are Medicare for the referred designated billing prohibitions. That is, the parties provided, and the compensation health services when a financial wish to consider the single payment for arrangement must satisfy the relationship between the parties failed multiple services an ‘‘isolated financial requirements of an applicable exception to satisfy the requirements of any transaction.’’ We have observed that at that time if the physician makes applicable exception (72 FR 38183). We parties turn to the exception for isolated referrals for designated health services referred to this time period as the transactions to protect single payments and the entity wishes to bill Medicare ‘‘period of disallowance.’’ We stated for multiple services when they for such services. The exception for that, as a general matter, the period of discover, typically after the services isolated transactions is not available to disallowance under the physician self- have been provided, that they failed to retroactively cure noncompliance with referral law should begin on the date set forth the service arrangement in the physician self-referral law. Finally, when a financial relationship fails to writing, and thus cannot rely on the we note that the Congress created an satisfy the requirements of any exceptions for personal service exception for personal service applicable exception and end on the arrangements or fair market value arrangements at section 1877(e)(3) of the date that the financial relationship ends compensation. In fact, it is our policy Act and required, among other things, or is brought back into compliance (that that the exception for isolated that the arrangement is set out in is, satisfies all requirements of an transactions is not available to except writing and signed by the parties, that applicable exception). We noted, payments for multiple services provided the term of the arrangement is at least however, that it is not always clear

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00116 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55809

when a financial relationship has by-case basis. Lastly, we recognized that has ended is to follow the steps outlined ended. By way of example, we stated noncompliance may also arise for other in § 411.353(c)(1). Moreover, it has that, if a physician paid less than fair reasons related to compensation, such become clear that the steps outlined at market value for the rental of office as payments that take into account the § 411.353(c)(1)(ii) and (iii) are not space, the below market rental volume or value of a physician’s always as practical or clear cut as we payments may have been in exchange referrals, but we did not propose any originally envisioned. Often when there for future or anticipated referrals, so it rules on how to determine the period of is an allegation of excess or insufficient is not clear if the financial relationship disallowance in such cases. In the FY compensation paid under an ended on the date that the lease expires. 2009 IPPS final rule, we finalized arrangement, there is a dispute between We sought comments on whether we § 411.353(c)(1) as proposed, without the parties as to what the proper amount should employ a case-by-case method substantive modifications (73 FR 48700 of compensation should have been for determining when a financial through 48705). We emphasized once under the arrangement. To settle the relationship ends or if we should, to the again that the rule only prescribed an dispute, the parties may need to litigate extent practicable, create a provision outside date for the period of the matter. It is not clear under that would deem certain kinds of disallowance, and that the rule did not § 411.353(c)(1)(ii) and (iii) at what point financial relationships to last a prevent parties from arguing that the in the litigation, if any, the period of prescribed period of time for purposes period of disallowance ended earlier disallowance should end. In addition, in of determining the period of than the outside date prescribed by the some cases, the cost of litigating the disallowance. Assuming we were to rule, on the theory that the financial matter may far outweigh the amount in prescribe a determinate amount of time relationship ended prior to this date. We dispute, making litigation highly for the period of disallowance in certain made it clear in response to commenters impractical. Thus, in practice, the circumstances, we sought comments on that the period of disallowance as provisions at § 411.353(c)(1)(ii) and (iii) whether the period of disallowance prescribed by § 411.353(c)(1) was not often do not provide the clear, bright- could be terminated if parties returned intended to extend the period of line method for determining the end of or repaid the value of any problematic disallowance beyond the end of a the period of disallowance that we compensation under an arrangement. financial relationship. Rather, the rule originally intended, and parties must was merely intended to give parties In the FY 2009 IPPS proposed rule, continue to rely on a case-by-case clear guidance on steps that could be we proposed provisions pertaining to analysis to determine when the period taken to ensure that the period of the period of disallowance at of disallowance has ended. For these disallowance had ended. In addition, § 411.353(c)(1) (73 FR 23690 through reasons, we are deleting the period of we explained the application of the 23692). Under that proposal, the period disallowance rules at § 411.353(c)(1) in rules regarding excess and insufficient of disallowance would begin when the their entirety. compensation at § 411.353(c)(1)(ii) and financial relationship failed to satisfy We continue to agree with the general (iii). the requirements of any applicable In light of our experience principle stated in the CY 2008 PFS exception. Where the noncompliance is administering the SRDP and stakeholder proposed rule that the period of unrelated to the payment of feedback we have received over the disallowance under the physician self- compensation, the period of years, we are proposing to delete the referral law should begin on the date disallowance would be deemed to end rules on the period of disallowance at when a financial relationship fails to no later than the date that the financial § 411.353(c)(1) in their entirety because satisfy all requirements of any relationship satisfies all requirements of we believe that, although the rules were applicable exception and end on the an applicable exception. On the other initially intended merely to establish an date that the financial relationship ends hand, where the noncompliance is outside, bright-line limit for the period or satisfies all requirements of an related to the payment of excess or of disallowance, the rules, in applicable exception. We are aware that insufficient compensation, the proposed application, appear to be overly the payment of excess or insufficient rule provided that the period of prescriptive and impractical. We compensation can complicate the disallowance would be deemed to end emphasize that our current rulemaking question of when a financial no later than the date on which the is in no way meant to undermine parties relationship has ended or been brought excess compensation was repaid or the who have relied on § 411.353(c)(1)(ii) or back into compliance for purposes of additional required compensation was (iii) in the past to establish that the the physician self-referral law. As a paid, and the arrangement satisfied all period of disallowance has ended. general matter, we agree with the FY the elements of an applicable exception. Throughout our rulemaking on the 2009 IPPS final rule that one way to We emphasized that the proposal only period of disallowance, we establish that the period of disallowance prescribed an outside limit on the acknowledged that there are no definite has ended in such circumstances is to period of disallowance. We rules for establishing in each and every follow the steps prescribed in acknowledged that, in certain cases, a case when a financial relationship has § 411.353(c)(1)(ii) or (iii); for example, financial relationship may end before ended, and that the analysis typically recover any excess compensation and the excess compensation has been must proceed on a case-by-case basis, bring the financial relationship back returned or the insufficient taking into account the unique facts and into compliance with an applicable compensation paid in full, and that the circumstances of each financial exception. However, we note that, since period of disallowance in such cases relationship. The period of disallowance the publication of the FY 2009 IPPS would end when the financial rules were meant to provide certainty in final rule, stakeholders have questioned relationship ended. However, we did the face of this complexity, and to whether our preamble guidance was not issue any rules or guidance on prescribe definite, practical steps that a intended to state that administrative or determining when a financial party could take to establish that the other operational failures during the relationship has ended in such cases, period of disallowance had ended. course of an arrangement, such as the and we stated that the period of However, we are concerned that parties erroneous payment of ‘‘excess’’ disallowance would have to be may believe that the only way to compensation or the erroneous failure to determined in such instances on a case- establish that the period of disallowance pay the full amount of compensation

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00117 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55810 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

due during the timeframes established possible for us to provide definitive physician actually received, as opposed under the terms of an arrangement, rules that would be valid in all cases. to the amount stipulated in the written would necessarily result in For purposes of this analysis, assume agreement—exceeded fair market value noncompliance with the physician self- there is a 1-year arrangement beginning for the services actually provided. referral law. Through submissions to the January 1 for personal services between Assuming that the actual amount paid SRDP and other interactions with an entity and a physician; the did not exceed fair market value and stakeholders, we are aware of questions arrangement is memorialized at the was not determined in a manner that regarding whether administrative errors, outset in a written agreement between took into account the volume or value such as invoicing for the wrong amount the parties; the amount of compensation of the physician’s referrals or other of rental charges (that is, an amount provided for in the writing does not business generated, then the potential other than the amount specified in the exceed fair market value; and the noncompliance may relate primarily to written lease arrangement) or the arrangement otherwise fully complies the failure to properly document the payment of compensation above what is with the requirements of an applicable actual arrangement in writing (assuming called for under a personal service exception. Assume further that the the arrangement otherwise satisfied the arrangement due to a typographical entity provides compensation to the requirements of an applicable error entered into an accounting system, physician in months 1 through 6 in an exception). Various provisions in this create the type of ‘‘excess amount other than what is stipulated in proposed rule and in our current compensation’’ or ‘‘insufficient the written agreement, and the parties regulations may offer parties a means of compensation’’ described in our discover the payment discrepancy in limiting the scope of potential preamble guidance and the period of early July. For purposes of this noncompliance in such circumstances. disallowance rules. This was never our illustration, assume that a hospital pays For example, the parties could rely on intent. However, the failure to remedy a physician $150 per hour for medical the proposed special rule for writing such operational inconsistencies could director services when the written and signature requirements at result in a distinct basis for agreement between the parties identifies § 411.354(e)(3), coupled with the noncompliance with the physician self- $140 per hour as the physician’s rate of clarification of the writing requirement referral law. pay. If the $150 per hour payment is due at § 411.354(e)(2), to establish that the to an administrative or other operational The effect of deleting the period of actual amount of compensation error—that is, the discrepancy was disallowance rules would not be to provided under the arrangement was set unintended—the parties may, while the forth in writing within 90 days of the permit parties to a financial relationship arrangement is ongoing during the term to make referrals for designated health commencement of the arrangement via initially anticipated (in this example, a collection of documents, including services and to bill Medicare for the during the year of the arrangement), services when that financial documents evidencing the course of correct the error by collecting the conduct between the parties. In relationship does not satisfy all overage (or making up the requirements of an applicable addition, the proposed exception for underpayment, if that is the case). We limited remuneration to a physician exception. It is a fundamental principle expect entities and the physicians who of the physician self-referral law that a may also be available to protect some or refer designated health services to them all of the payments made during months physician may not make a referral for to operate effective compliance designated health services to an entity 1 through 6. In this manner, depending programs that identify these types of on the facts and circumstances, the with which he or she has a financial errors and rectify them promptly. parties may be able to establish that the relationship, and the entity may not bill However, if the parties fail to identify arrangement complied with the Medicare for the services, if the the error during the term of the physician self-referral law for some or financial relationship between the arrangement as anticipated (that is, the all of months 1 through 6 of the parties does not satisfy all the ‘‘live’’ or ongoing arrangement), they arrangement. requirements of an applicable cannot simply ‘‘unring the bell’’ by exception. Nothing in this proposed rule correcting it at some date after the In certain instances, the failure to affects the billing and referral termination of the arrangement. Rather, collect money that is legally owed under prohibitions at § 411.353(a) and (b). Our the failure to timely identify and rectify an arrangement may potentially give intent in deleting § 411.353(c)(1) is the error through an effective rise to a secondary financial merely to no longer prescribe the compliance program would expose the relationship between the parties. In particular steps or manner for bringing parties to the referral and billing such circumstances, the parties may the period of noncompliance to a close. prohibitions of the physician self- conclude that the only means to remedy At the same time, we are taking this referral law during the entirety of the the noncompliance with the physician opportunity to provide general guidance arrangement. self-referral law is to recoup the amount on how to remedy compensation In analyzing the compensation owed under the arrangement. This issue problems that occur during the course of arrangement in this example—assuming is especially acute if the actual amount an arrangement and, when a remedy is that the operational error was not timely of compensation paid under the not available, how to determine when discovered and rectified—as we would arrangement for months 1 through 6 was the period of disallowance ends. with any financial relationship under not consistent with fair market value or Consistent with our intent in deleting the physician self-referral law, we took into account the volume or value the period of disallowance rules at consider the actual arrangement of referrals. In such circumstances, § 411.353(c)(1), we emphasize that the between the parties, which does not parties cannot establish compliance by analysis to determine when a financial always coincide with the terms showing that the actual amount of relationship has ended is dependent in described in the written documentation. compensation was documented in each case on the unique facts and Thus, to properly characterize the various writings, because the circumstances of the financial potential noncompliance, it is important compensation itself is the reason for the relationship, including the operation of to determine whether the actual amount potential noncompliance. Nevertheless, the financial relationship as negotiated of compensation paid under the depending on the facts and between the parties, and it is not arrangement—that is, the amount the circumstances, the parties may be able

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00118 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55811

to remedy the noncompliance. provisions at § 411.354(c) (73 FR 48693 or investment interest is titular is Returning to the previous example, if through 48699). Under the rules determined by whether the physician the entity discovers the payment errors finalized in the FY 2009 IPPS final rule, has any right to the financial benefits during the course of the arrangement, for purposes of determining whether a through ownership or investment (73 FR corrects the errors going forward, and compensation arrangement between an 48694). We believe that proposed collects any amount to which it is entity and a physician organization is § 411.354(b)(3)(vi) would afford legally entitled as a result of the deemed to be a compensation providers and suppliers with greater erroneous payments during months 1 arrangement between the entity and the flexibility and certainty under our through 6, then the arrangement may physicians associated with the regulations, especially in states where comply with the physician self-referral organization, a physician whose the corporate practice of medicine is law for its duration, including months 1 ownership or investment interest in the prohibited. For the reasons similar to through 6. The relevant inquiry is physician organization is merely titular those stated in CMS–AO–2005–08–01, whether the payment errors during in nature is not required to stand in the namely that a physician with a titular months 1 through 6 gave rise to a shoes of the physician organization (73 ownership in an entity does not have a secondary financial relationship (for FR 48694). We explained that an right to the distribution of profits or the example, an interest free loan) which ownership or investment interest is proceeds of sale and, therefore, does not must satisfy the requirements of an considered to be ‘‘titular’’ if the have a financial incentive to make applicable exception, or, on the other physician is not able or entitled to referrals to the entity in which the hand, whether the payment errors arose receive any of the financial benefits of titular ownership or investment interest from operational or administrative ownership or investment, including, but exists, we believe that our proposed problems that were detected and not limited to, the distribution of interpretation and revised definition of corrected during the course of the profits, dividends, proceeds of sale, or ‘‘ownership or investment interest’’ arrangement as part of a normal similar returns on investment (73 FR does not pose a risk of program or business practice. In this context, we are 48694). The concept of titular patient abuse. taking this opportunity to clarify ownership or investment interests set b. Employee Stock Ownership Program statements in the FY 2009 IPPS final forth in the FY 2009 IPPS final rule rule regarding whether parties can ‘‘turn applied only to the stand in the shoes We stated in the preamble of the 1998 proposed rule that an interest in an back the clock’’ or retroactively ‘‘cure’’ rules at § 411.354(c) pertaining to entity arising through a retirement fund noncompliance. We believe that parties compensation arrangements. Because constitutes an ownership or investment who detect and correct administrative or we were responding to a comment to the interest in the entity for purposes of operational errors or discrepancies 1998 proposed rule (and the Phase I section 1877 of the Act (63 FR 1708). during the course of the arrangement are comments thereafter) regarding the Our interpretation was based on the not necessarily ‘‘turning back the clock’’ application of the exceptions for premise that a retirement interest in an to address past noncompliance. Rather, compensation arrangements, we did not entity creates a financial incentive to it is a normal business practice, and a propose to extend the concept of titular make referrals to the entity. In Phase I, key element of an effective compliance ownership or investment interests to the we reconsidered the issue and withdrew provisions at § 411.354(b) pertaining to program, to actively monitor active the statement regarding retirement ongoing, live financial relationships, ownership or investment interests, interests made in the 1998 proposed and to correct problems that such although we had previously concluded rule (66 FR 870). As finalized in Phase monitoring uncovers. An entity that in a 2005 Advisory Opinion (CMS–AO– I, § 411.354(b)(3)(i) excluded an interest detects a problem in an active financial 2005–08–01) that, for purposes of in a retirement plan from the definition relationship and corrects the problem section 1877(a) of the Act, physician- of ‘‘ownership or investment interest.’’ while the financial relationship is still shareholders of a group practice who We stated that retirement contributions, active is addressing a current problem did not receive any of the purchase and including contributions from an and is not ‘‘turning back the clock’’ to ownership rights or financial risks and employer, would instead be considered fix past noncompliance. On the other benefits typically associated with stock to be part of an employee’s overall hand, once a financial relationship has ownership would not be considered to compensation. ended, we believe that parties cannot have an ownership or investment We made no changes to retroactively ‘‘cure’’ previous interest in the group practice. § 411.354(b)(3)(i) in Phase II. However, noncompliance by recovering or We are now proposing to extend the after publishing Phase II, we received a repaying problematic compensation. Of concept of titular ownership or comment stating that, contrary to our course, to the extent that the financial investment interests to our rules intent, some physicians were using their relationship has ended, the period of governing ownership or investment retirement plans to purchase or invest in disallowance has ended as well. We interests at § 411.354(b). In particular, other entities (that is, entities other than believe this policy encourages active, under proposed § 411.354(b)(3)(vi), the entity that sponsored the retirement ongoing review of arrangements for ownership and investment interests plan) to which the physicians were compliance with the physician self- would not include titular ownership or making referrals for designated health referral law. investment interests. Consistent with services. We made no changes to 4. Ownership or Investment Interests the FY 2009 IPPS final rule, a ‘‘titular § 411.354(b)(3)(i) in Phase III, but (§ 411.354(b)) ownership or investment interest’’ proposed in the CY 2008 PFS proposed would be an interest that excludes the rule to address the potential abuse a. Titular Ownership or Investment ability or right to receive the financial described by the commenter to Phase II Interest (§ 411.354(b)(3)(vi)) benefits of ownership or investment, (72 FR 38183). After reviewing the In the FY 2009 IPPS final rule, we including, but not limited to, the comments received in response to that introduced the concept of titular distribution of profits, dividends, proposal, in the FY 2009 IPPS final rule, ownership or investment interests in the proceeds of sale, or similar returns on we finalized changes to context of our rulemaking pertaining the investment. As noted in the FY 2009 § 411.354(b)(3)(i) that restricted the physician ‘‘stand in the shoes’’ IPPS final rule, whether an ownership retirement interest carve-out to an

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00119 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55812 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

interest in an entity that arises from a interest under § 411.354(b)(3)(i), because proposed § 411.354(b)(3)(vii) is not retirement plan offered by the entity to the physician is employed by the restricted to an interest in an entity that the physician (or an immediate family holding company, the holding company both employs the physician and member) through the physician’s (or sponsors the retirement plan, and the sponsors the retirement plan. immediate family member’s) physician’s ownership interest in the To illustrate our proposal, assume employment with that entity (73 FR holding company arises through the that a holding company is owned by its 48737 through 48738). Under the retirement plan sponsored by the employees, including physician current regulation at § 411.354(b)(3)(i), holding company. However, because the employees, through an ESOP, and that if, through his or her employment by retirement plan owns the holding the holding company owns a separate Entity A, a physician has an interest in company, and the holding company legal entity that furnishes designated a retirement plan offered by Entity A, owns the home health agency, the any interest the physician may have in physician has an indirect ownership or health services (an ‘‘entity’’ for purposes Entity A by virtue of his or her interest investment interest in the home health of section 1877 of the Act). Under in the retirement plan would not be agency that would not be carved out proposed § 411.354(b)(3)(vii), for considered to be an ownership or under § 411.354(b)(3)(i) and may not purposes of the physician self-referral investment interest for purposes of satisfy the requirements of an applicable law, the physician’s interest in the section 1877 of the Act. On the other exception at § 411.356. ESOP would not constitute an hand, if the retirement plan sponsored It is our understanding that a ownership or investment interest in the by Entity A purchased or invested in retirement plan structure involving holding company or the legally separate Entity B, the physician would have an ownership of a holding company and entity the holding company owns. As interest in Entity B that would not be indirect ownership of a legally separate with the current retirement interest excluded from the definition of entity furnishing designated health carve-out at § 411.354(b)(3)(i), employer ‘‘ownership or investment interest’’ for services may be particularly contributions to the ESOP on behalf of purposes of the physician self-referral advantageous or necessary in certain an employed physician would be law. For the physician to make referrals circumstances for the establishment of considered part of the physician’s for designated health services to Entity an employee stock ownership plan overall compensation and would have B, the ownership or investment interest (ESOP). An ESOP is an individually to meet the requirements of an in Entity B would have to satisfy the designed stock bonus plan, which is applicable exception for compensation requirements of an applicable qualified under Internal Revenue Code arrangements at § 411.357. exception. We explained in the FY 2009 (IRC) section 401(a), or a stock bonus We are seeking comments on whether IPPS final rule that it would pose a risk and a money purchase plan, both of the safeguards on ESOPs that are of program or patient abuse to permit a which are qualified under IRC section imposed by ERISA are sufficient for physician to own another entity that 401(a), and which are designed to invest purposes of the physician self-referral to furnishes designated health services primarily in qualifying employer ensure that they do not pose a risk of (other than the entity which employs securities. It is our understanding that program or patient abuse and, if not, the physician) through his or her ESOPs must be structured to comply what additional safeguards we should retirement plan, because the physician with certain safeguards under the could then use the retirement interest include to ensure that such interests do Employee Retirement Income Security not pose a risk of program or patient carve-out to skirt the prohibitions of the Act of 1974 (ERISA) (Pub. L. 93–406), physician self-referral law. abuse. To prevent the kind of abuses of including certain nondiscrimination retirement plans identified by the Since we published the 2009 IPPS rules and vesting rules that, among commenter on Phase II, we seek final rule, stakeholders have informed other things, do not allow an employee comment as to whether it is necessary us that, in certain cases, employers to receive the value of his or her to restrict the number or scope of seeking to offer retirement plans to employer stocks held through the entities owned by an ESOP that would physician employees may find it retirement plan until at least 1 year after not be considered an ownership or necessary or practical, for reasons of separation from the employer. Given the Federal law, State law, or taxation, to statutory and regulatory safeguards that investment interest of its physician structure a retirement plan using a exist for ESOPs, we believe that an employees. It is our understanding that holding company. By way of example, interest in an entity arising through an ESOP is designed to invest primarily assume a home health agency desires to participation in an ESOP merits the in ‘‘qualifying employer securities,’’ but sponsor a retirement plan for its same protection from the physician self- the ESOP may also invest in other employees and elects to establish such referral law’s prohibitions as an interest securities. Further, we seek comment plan using a holding company whose in an entity that arises from a retirement whether the exclusion from the primary asset will be the home health plan offered by that entity to the definition of ‘‘ownership or investment agency. To effectuate the retirement physician through the physician’s interest’’ should apply only to an plan, the home health agency’s assets employment with the entity. We do not interest in an entity arising from an are transferred to or purchased by the believe that excluding from the interest in ‘‘qualifying employer holding company, which then employs definition of ‘‘ownership or investment securities’’ that are offered to a the physicians and other staff of the interest’’ an interest in an entity that physician as part of an ESOP. We are home health agency. The holding arises through participation in an ESOP also seeking comment on whether the company sponsors the retirement plan qualified under IRC section 401(a) poses proposed revision to § 411.354(b)(3)(vii) for its employees, offering the a risk of program or patient abuse, and is necessary; that is, whether existing employees (including physician we are proposing at § 411.354(b)(3)(vii) § 411.354(b)(3)(i) affords entities employees) an interest in the holding to remove such interests from the furnishing designated health services company. Under our current definition of ‘‘ownership or investment sufficient regulatory flexibility to regulations, the physician’s interest in interest’’ for purposes of section 1877 of structure nonabusive retirement plans, the holding company would not be the Act. To provide regulatory flexibility including ESOPs or other plans that considered an ownership or investment in structuring retirement plans, involve holding companies.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00120 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55813

5. Special Rules on Compensation § 411.353(g) only once every 3 years arrangement is not sufficiently Arrangements (§ 411.354(e)) with respect to the same physician. We documented at the outset, depending on In the CY 2008 PFS proposed rule (72 stated that we would evaluate our the facts and circumstances, FR 38184 through 38186), we proposed experience with the special rule at contemporaneous documents created an alternative method for satisfying § 411.353(g) and that we may propose during the course of an arrangement certain requirements of some of the modifications, either more or less may allow parties to satisfy the writing exceptions in §§ 411.355 through restrictive, at a later date (73 FR 48707). requirement and the ‘‘set in advance’’ 411.357. We explained that, although Subsequently, in the CY 2016 PFS final requirement for referrals made after the we do not have the authority to waive rule, we removed the distinction contemporaneous documents were violations of the physician self-referral between failures to obtain missing created. Section 50404 of the Bipartisan law, we do have the authority under signatures that were inadvertent and not Budget Act of 2018 (Pub. L. 115–123, section 1877(b)(4) of the Act to inadvertent, thereby allowing all parties enacted February 9, 2018) added implement an alternative method for up to 90 days to obtain the missing provisions to section 1877(h)(1) of the satisfying the requirements of an signatures (80 FR 71333). As discussed Act pertaining to the writing and exception. The proposed method would in further detail in this section of the signature requirements in certain have required, among other things, that proposed rule, in the FY 2019 PFS final compensation arrangement exceptions. an entity self-disclose the facts and rule, we removed the provision limiting As amended, section 1877(h)(1)(D) of circumstances of the arrangement at the use of the special rule at § 411.353(g) the Act provides that the writing issue and that CMS make a to once every 3 years with respect to the same physician (83 FR 59715 through requirement in various compensation determination that the arrangement arrangement exceptions ‘‘shall be satisfied all but the ‘‘procedural or 59717). In the CY 2016 PFS final rule, we satisfied by such means as determined ‘form’ requirements’’ of an exception (72 by the Secretary,’’ including by a FR 38185). We cited the signature clarified that the writing requirement of various exceptions in § 411.357 can be collection of documents, including requirement of the exception for contemporaneous documents personal service arrangements at satisfied with a collection of documents, including contemporaneous documents evidencing the course of conduct § 411.357(d)(1) as an example of a between the parties. Section procedural or ‘‘form’’ requirement, and evidencing the course of conduct between the parties (80 FR 71314 1877(h)(1)(E) of the Act created a explained that the alternative method statutory special rule for temporary would not be available for violations of through 71317).5 A commenter requested that CMS permit a 60- or 90- noncompliance with signature requirements such as compensation that requirements, providing that the is fair market value, set in advance, and day grace period for satisfying the writing requirement of an applicable signature requirement of an applicable not determined in a manner that takes compensation arrangement exception into account the volume or value of exception, stating that such a grace period is needed for last minute shall be satisfied if the arrangement referrals. otherwise complies with all the In the FY 2009 IPPS final rule, we did arrangements between physicians and entities to which they refer patient for requirements of the exception and the not finalize the alternative method parties obtain the required signatures no proposed in the CY 2008 PFS proposed designated health services (80 FR 71316 through 71317). In response, we noted later than 90 consecutive calendar days rule. Instead, relying on our authority immediately following the date on that the special rule at § 411.353(g) under section 1877(b)(4) of the Act, we which the compensation arrangement applied only to temporary finalized a rule for temporary became noncompliant. In the CY 2019 noncompliance with the signature noncompliance with signature PFS final rule, we finalized at requirement of an applicable exception, requirements at § 411.353(g) (73 FR § 411.354(e) a special rule on and we declined to extend the special 48705 through 48709). As finalized in compensation arrangements, which rule to the writing requirement of the FY 2009 IPPS final rule, § 411.353(g) codified in our regulations the various exceptions at § 411.357. We applied only to the signature clarification of the writing requirement stated our belief that a ‘‘grace period’’ requirement of an applicable exception found at section 1877(h)(1)(D) of the Act for satisfying the writing requirement at § 411.357. We declined to extend the (83 FR 59715 through 59717). In special rule for temporary poses a risk of program or patient abuse; addition, we removed the 3-year noncompliance to any other procedural for example, if the rate of compensation limitation on the special rule on or ‘‘form’’ requirement of an exception is not documented before a physician temporary noncompliance with (73 FR 48706) or to noncompliance provides services to an entity, the entity signature requirements at § 411.353(g)(2) arising from ‘‘minor payment errors’’ (73 could adjust the rate of compensation in order to align the regulatory FR 48703). The special rule at during the proposed grace period in a provision at § 411.353(g) with section § 411.353(g) permitted an entity to manner that takes into account the 1877(h)(1)(E) of the Act. We proposed, submit a bill and receive payment for a volume or value of the physician’s in the alternative, to delete § 411.353(g) designated health service if the referrals (80 FR 71317). We added that in its entirety and to codify section compensation arrangement between the an entity could not satisfy the ‘‘set in 1877(h)(1)(E) of the Act in the newly referring physician and the entity fully advance’’ requirement at the outset of an created special rules on compensation complied with the requirements of an arrangement if the only documents arrangements at § 411.354(e). However, applicable exception at § 411.357, stating the compensation term of an we declined to finalize the alternative except with respect to the signature arrangement were generated after the proposal in the CY 2019 PFS final rule, requirement, and the parties obtained arrangement began. Finally, we because we believed it would be less the required signatures within 90 days reminded parties that, even if an disruptive to stakeholder compliance if the failure to obtain the signatures efforts to amend the already-existing was inadvertent, or within 30 days if the 5 Our guidance on the writing requirement was § 411.353(g). subsequently codified in statute at section failure to obtain the signatures was not 1877(h)(1)(D) of the Act and incorporated into our We have reconsidered our policy on inadvertent (73 FR 48706). Entities were regulations at § 411.354(e). See CY 2019 PFS final temporary noncompliance with the allowed to use the special rule at rule (83 FR 59715 through 59717). signature and writing requirements of

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00121 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55814 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

various compensation arrangement writing and signature requirements determine the means by which the exceptions. In our administration of the would not be mutually exclusive under writing requirement of various SRDP, we have reviewed numerous the proposal; that is, a party could rely compensation arrangement exceptions compensation arrangements that fully on proposed § 411.354(e)(3) if an may be satisfied, but it does not provide satisfied all the requirements of an arrangement was neither in writing nor the Secretary similar authority with applicable exception, including signed at the outset, provided both the respect to the set in advance requirements pertaining to fair market required writing and signature(s) were requirement. Moreover, we believe the value compensation and the volume or obtained within 90 days and the ‘‘set in advance’’ requirement is value of referrals, except for the writing arrangement otherwise satisfied all the necessary to prevent the amount of or signature requirements. In many requirements of an applicable compensation paid under an cases, there are short periods of exception. For arrangements that are 90 arrangement from fluctuating in a noncompliance with the physician self- days or less, such as short term manner that takes into account the referral law at the outset of a arrangements as permitted under the volume or value of a physician’s compensation arrangement, because the exception for fair market value referrals over the course of the parties begin performance under the compensation at § 411.357(l), if the arrangement, including the first 90 days. arrangement before reducing the key parties never obtain the required writing While we are not proposing to amend terms and conditions of the arrangement or signature(s), the arrangement could the special rule on compensation that is to writing. As long as the arrangement never have complied with an exception considered to be set in advance at otherwise meets all the requirements of in § 411.357 that includes a writing or § 411.354(d)(1), we are taking this an applicable exception, and the parties signature requirement; therefore, the opportunity to reiterate that the special memorialize the arrangement in writing special rule at § 411.354(e)(3) is not rule is merely a deeming provision (see and sign the written documentation available to protect such arrangements. Phase II, 69 FR 16070). That is, while within 90 days, we do not believe that However, depending on the facts and compensation is considered to be set in the arrangement poses a risk of program circumstances, the proposed exception advance under § 411.354(d)(1) if the or patient abuse. Therefore, we believe for limited remuneration at § 411.357(z), compensation is ‘‘set out in writing that entities and physicians should be which does not include a writing or before the furnishing of items or signature requirement, if finalized, provided flexibility under our rules to services’’ and the other requirements of might be available to protect the short satisfy the writing or signature § 411.354(d)(1) are met, in order to requirement of an applicable exception term arrangement. We remind readers that, as we satisfy the ‘‘set in advance’’ requirement within 90 calendar days of the inception included in various exceptions in of a compensation arrangement. explained in the CY 2016 PFS final rule and subsequently codified at § 411.357, it is not necessary that the Relying on our authority at section § 411.354(e)(2), a single formal written parties reduce the compensation to 1877(h)(1)(D) of the Act, which grants contract is not necessary to satisfy the writing before the furnishing of items or the Secretary the authority to determine writing requirement (80 FR 71314 services. For example, assume that the the means by which the writing through 71317). Depending on the facts parties to an arrangement agree on the requirement of a compensation and circumstances, the writing rate of compensation before the arrangement exception may be satisfied, requirement can be satisfied by a furnishing of items or services, but do and section 1877(h)(1)(E) of the Act, collection of documents, including not reduce the compensation rate to which establishes a statutory rule for contemporaneous documents writing at that point in time. Assume temporary noncompliance with evidencing the course of conduct further that the first payment under the signature requirements, we are between the parties. In this context, arrangement is documented and that, proposing to create a special rule for parties may rely on the special rule at under proposed § 411.354(e)(3), during noncompliance with the writing or § 411.354(e)(3) like a safe harbor to be the 90-day period after the items or signature requirement of an applicable sure that they have met the writing or services are initially furnished, the compensation arrangement exception. signature requirements of an applicable parties compile sufficient Specifically, we are proposing to delete exception. The special rule would not documentation of the arrangement to § 411.353(g) in its entirety, codify the be the only way to show compliance satisfy the writing requirement of an statutory rule for noncompliance with with the writing or signature applicable exception. Finally, assume signature requirements at section requirements. that the written documentation 1877(h)(1)(E) of the Act in a special rule The proposal to permit parties up to compiled during the 90-day period on compensation arrangements at 90 days to satisfy the writing provides for a rate of compensation that § 411.354(e)(3), and incorporate a requirement of an applicable exception is consistent with the documented special rule for noncompliance with the does not amend, nor does it affect, the amount of the first payment, that is, the writing requirement into the new requirement under various exceptions rate of compensation did not change special rule at § 411.354(e)(3). Under in § 411.357 that compensation be set in during the 90-day period. Under these this proposal, the writing requirement advance, including the special rule on specific circumstances, we would or the signature requirement would be compensation that is considered to be consider the compensation to be set in deemed to be satisfied if: (1) The set in advance at § 411.354(d)(1). For an advance. More broadly speaking, compensation arrangement satisfies all arrangement to be protected by records of a consistent rate of payment requirements of an applicable exception proposed § 411.354(e)(3), the amount of over the course of an arrangement, from other than the writing or signature or formula for calculating the the first payment to the last, typically requirement(s); and (2) the parties compensation must be set in advance support the inference that the rate of obtain the required writing or and the arrangement must satisfy all compensation was set in advance. To signature(s) within 90 consecutive other requirements of an applicable the extent that our preamble discussion calendar days immediately after the date exception, other than the writing or in the CY 2016 PFS final rule suggested on which the arrangement failed to signature requirements. Section that the rate of compensation must be satisfy the requirement(s) of the 1877(h)(1)(D) of the Act provides the set out in writing before the furnishing applicable exception. We note that the Secretary with the authority to of items or services in order to meet the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00122 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55815

‘‘set in advance’’ requirement of an records that are stored electronically. for the patient’s convenience. The applicable exception, we are retracting We are soliciting comments on whether disclosing parties assumed that the that statement (80 FR 71317). we should include specific regulation arrangements violated the physician We also note that there are many ways text at § 411.354(e) to reflect our policy self-referral law, because, based on their in which the amount of or a formula for on electronic signatures and documents. understanding of the exceptions at calculating the compensation under an § 411.357(a) and (b), the arrangements 6. Exceptions for Rental of Office Space arrangement can be documented before did not satisfy the exclusive use and Rental of Equipment (§ 411.357(a) the furnishing of items or services. It is requirement of the applicable exception. and (b)) not necessary that the document stating As noted in the 1998 proposed rule and the amount of or a formula for Section 1877(e)(1) of the Act in Phase II, the purpose of the exclusive calculating the compensation, taken by establishes an exception to the use rule is to prevent sham leases where itself, satisfies the writing requirement physician self-referral law’s referral and a lessor ‘‘rents’’ space or equipment to at § 411.354(e)(2); the document stating billing prohibitions for certain a lessee, but continues to use the space the amount of or a formula for arrangements involving the rental of or equipment during the time period calculating the compensation may be office space or equipment. Among other ostensibly reserved for the lessee. We do one document among many which, things, sections 1877(e)(1)(A)(ii) and not interpret sections 1877(e)(1)(A)(ii) taken together, constitute a collection of (e)(1)(B)(ii) of the Act require the office and (B)(ii) of the Act to prevent multiple documents sufficient to satisfy the space or equipment to be used lessees from using the rented space or writing requirement at § 411.354(e)(2). exclusively by the lessee when being equipment at the same time, so long as For example, depending on the facts used by the lessee. The exclusive use the lessor is excluded, nor do we and circumstances, informal requirements are incorporated into our interpret sections 1877(e)(1)(A)(ii) and communications via email or text, regulations at § 411.357(a)(3) and (b)(2). (B)(ii) of the Act to prohibit a lessee internal notes to file, similar payments In the 1998 proposed rule, we stated from inviting a party other than the between the parties from prior our belief that the exclusive use lessor (or any person or entity related to arrangements, generally applicable fee requirement in the statute was meant to the lessor) to use the office space or schedules, or other documents prevent ‘‘paper leases,’’ where payment equipment rented by the lessee. recording similar payments to or from passes from a lessee to a lessor, even Moreover, we do not believe it would other similarly situated physicians for though the lessee is not actually using pose a risk of program or patient abuse similar items or services, may be the office space or equipment (63 FR for multiple lessees (and their invitees) sufficient to establish that the amount of 1714). In Phase II, we further explained to use the space or equipment to the or a formula for calculating the our interpretation of the exclusive use exclusion of the lessor, provided that compensation was set in advance before requirement (69 FR 16086). We stated the arrangements satisfy all the furnishing of items or services. Even that, after reviewing the statutory requirements of the applicable if the amount of or a formula for scheme, we believe that the purpose of exception for the rental of office space calculating the compensation is not set the exclusive use requirement was to or equipment, and any financial in advance, depending on the facts and ensure that the rented office space or relationships between the lessees (or circumstances, the parties may be able equipment cannot be shared with the their invitees) that implicate the to rely on the newly proposed exception lessor when it is being used or rented by physician self-referral law likewise for limited remuneration to a physician the lessee (or any subsequent sublessee). satisfy the requirements of an applicable at § 411.357(z), if finalized. If proposed In other words, a lessee (or sublessee) exception. Therefore, relying on the § 411.357(z) is finalized, and an entity cannot ‘‘rent’’ office space or equipment Secretary’s authority under section initially pays a physician for services that the lessor will be using 1877(b)(4) of the Act, we are proposing relying on the exception for limited concurrently with, or in lieu of, the to clarify our longstanding policy that remuneration to a physician, if the lessee (or sublessee). We added that we the lessor (or any person or entity parties subsequently decide to continue were concerned that unscrupulous related to the lessor) is the only party the arrangement relying on an exception physicians or physicians groups might that must be excluded from using the that requires the compensation to be set attempt to skirt the exclusive use space or equipment under in advance, such as the exception for requirement by establishing holding § 411.357(a)(3) and 411.357(b)(2). personal services arrangements at companies to act as lessors. To foreclose Specifically, we are proposing to add § 411.357(d)(1), depending on the facts this possibility, we modified the the following clarification to the and circumstances, the parties may be exclusive use requirements at regulation text: For purposes of this able to use documentation of the initial § 411.357(a)(3) and (b)(2), to stipulate exception, exclusive use means that the payments made while relying on that the rented office space or lessee (and any other lessees of the same § 411.357(z) to establish that the amount equipment may not be ‘‘shared with or office space or equipment) uses the of or a formula for calculating the used by the lessor or any person or office space or equipment to the compensation was set in advance before entity related to the lessor’’ when the exclusion of the lessor (or any person or the furnishing of services under the lessee is using the office space or entity related to the lessor). The lessor personal service arrangement. equipment. (or any person or entity related to the Finally, we are taking this Disclosures to the SRDP have lessor) may not be an invitee of the opportunity to clarify our longstanding included several arrangements where lessee to use the office space or the policy that an electronic signature that multiple lessees use the same rented equipment. is legally valid under Federal or State office space or equipment either law is sufficient to satisfy the signature contemporaneously or in close 7. Exception for Physician Recruitment requirement of various exceptions in succession to one another, while the (§ 411.357(e)) our regulations. We also note that the lessor is excluded from using the Section 1877(e)(5) of the Act collection of writings that parties may premises or equipment. At least one established an exception for rely on under § 411.354(e)(2) to satisfy entity disclosed that it had invited a remuneration provided by a hospital to the writing requirement of our physician who was not the lessor into a physician to induce the physician to exceptions can include documents and its office space to treat a mutual patient relocate to the geographic area served by

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00123 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55816 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

the hospital in order to be a member of written agreement between the hospital FQHC or rural health clinic) of the type the hospital’s medical staff. The and either the recruited physician or the against which the statute is intended to exception at section 1877(e)(5) of the physician practice to which the protect; that is, the type of financial self- Act authorizes the Secretary to impose payments would be made or, in the interest that impacts a physician’s additional requirements on recruitment alternative, that we should permit the medical decision making. Because the arrangements as needed to protect hospital and the physician practice physician practice is not receiving a against program or patient abuse. The receiving the payments to sign a written financial benefit from the recruitment 1995 final rule incorporated the recruitment agreement and require the arrangement, we do not believe it is provisions of section 1877(e)(5) of the recruited physician to sign a one-page necessary for the physician practice to Act into our regulations at § 411.357(e). acknowledgment agreeing to be bound also sign the writing documenting the As finalized in the 1995 final rule, by the terms and conditions set forth in recruitment arrangement between the § 411.357(e) requires the recruitment that agreement. We responded that the recruited physician and the hospital (or arrangement to be in writing and signed exception for physician recruitment FQHC or rural health clinic) in order to by both parties, that is, the recruited requires a writing that is signed by all protect against program or patient physician and the hospital. parties, including the recruiting hospital abuse. We also believe that eliminating In Phase II, we substantially modified (or FQHC or rural health clinic, which the signature requirement for a § 411.357(e). Relying on our authority was added as a permissible recruiting physician practice that receives no under section 1877(b)(4) of the Act, we entity under Phase III), the recruited financial benefit under the recruitment expanded the exception at physician, and the physician practice arrangement would reduce undue § 411.357(e)(4) to address remuneration that the physician will be joining, if any, burden without posing a risk of program from a hospital (or a federally qualified and explained that nothing in the and patient abuse. For these reasons, we health center (FQHC), which was added regulations precluded execution of the are proposing to modify the signature as a permissible recruiting entity under agreement in counterparts. requirement at § 411.357(e)(4)(i). We are Phase II) to a physician who joins a We have reconsidered our position proposing to require the physician physician practice. There, we regarding the signature requirement at practice to sign the writing documenting established requirements for the recruitment arrangement, if the § 411.357(e)(4)(i). In the SRDP, we have recruitment arrangements under which remuneration is provided indirectly to seen arrangements in which a physician remuneration is provided by a hospital the physician through payments made practice that hired a physician who was or FQHC indirectly to a physician to the physician practice and the recruited by a hospital (or FQHC or through payments made to his or her physician practice does not pass rural health clinic) did not receive any physician practice as well as directly to directly through to the physician all of financial benefit as a result of the the physician who joins a physician the remuneration from the hospital. practice (69 FR 16094 through 16095). hospital and physician’s recruitment When payment is made to a physician arrangement. Examples of such 8. Exception for Remuneration indirectly through a physician practice arrangements include arrangements Unrelated to the Provision of Designated that the recruited physician joins, the under which: (1) The recruited Health Services (§ 411.357(g)) practice is permitted to retain actual physician joined a physician practice Under section 1877(e)(4) of the Act, costs incurred by the practice in but the hospital paid the recruitment remuneration provided by a hospital to recruiting the physician under remuneration to the recruited physician a physician does not create a § 411.357(e)(4)(ii), and, in the case of an directly; (2) remuneration was compensation arrangement for purposes income guarantee made by the hospital transferred from the hospital to the of the physician self-referral law, if the or FQHC to the recruited physician, the physician practice, but the practice remuneration does not relate to the practice may also retain the actual passed all of the remuneration from the provision of designated health services. additional incremental costs attributable hospital to the recruited physician (that The statutory exception is codified in to the recruited physician under is, the practice served merely as an our regulations at § 411.357(g). Our § 411.357(e)(4)(iii). Under the Phase II intermediary for the hospital’s payments prior rulemaking regarding § 411.357(g) regulation, if a recruited physician to the recruited physician and did not has been based in part on an joined a physician practice, retain any actual costs for recruitment, interpretation of the legislative history § 411.357(e)(4)(i) required the party to actual additional incremental costs of section 1877(e)(4) of the Act. In order whom the payments are directly made attributable to the recruited physician, to explain the changes we are currently (that is, the physician practice that the or any other remuneration); and (3) the proposing to § 411.357(g), it is necessary recruited physician joins) to sign the recruited physician joined the physician to examine the legislative history of written recruitment agreement (69 FR practice after the period of the income section 1877(e)(4) of the Act and certain 16139). guarantee but before the physician’s provisions that preceded it. In Phase III, we responded to a ‘‘community service’’ repayment As originally enacted by OBRA 1989, commenter who requested clarification obligation was completed. In each of the the referral and billing prohibitions of with respect to who must sign the arrangements disclosed to the SRDP, the the physician self-referral law applied writing documenting the physician arrangement was determined by the only to clinical laboratory services. recruitment arrangement (72 FR 51012). disclosing party not to satisfy the OBRA 1989 created three general The commenter’s concern was that requirements of the exception at exceptions for both ownership and § 411.357(e)(4)(i) could be interpreted to § 411.357(e) solely because the compensation arrangements at sections require that the recruiting entity (in the physician practice that the recruited 1877(b)(1) through (3) of the Act, and commenter’s example, a hospital), the physician joined had not signed the granted the Secretary the authority at physician practice, and the recruited writing evidencing the arrangement. We section 1877(b)(4) of the Act to create physician all had to sign one document. do not believe, however, that, under the additional exceptions. Section 42017(e) The commenter asserted that this would circumstances described by parties of OBRA 1990 (Pub. L. 101–508) be unnecessary and would add to the disclosing to the SRDP, there exists a redesignated section 1877(b)(4) as transaction costs of the recruitment. The compensation arrangement between the 1877(b)(5) of the Act, and added an commenter suggested that we require a physician practice and the hospital (or exception at section 1877(b)(4) of the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00124 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55817

Act for financial relationships with § 411.357(g) was based on former 16093). At the same time, we retracted hospitals that are unrelated to the sections 1877(b)(4) and (e)(4) of the Act the statement from the 1998 proposed provision of clinical laboratory services. as they were effective on January 1, rule that general utilization review or (To avoid confusion between the 1992 (63 FR 1669).) We stated that, for administrative services might not be exception added by OBRA 1990 at remuneration from a hospital to a related to the furnishing of designated section 1877(b)(4) of the Act and section physician to be excepted under health services. We justified our narrow 1877(b)(4) of the Act as it currently § 411.357(g), the remuneration must be interpretation of section 1877(e)(4) of exists, the exception for financial ‘‘completely unrelated’’ to the the Act on the legislative history of the relationships unrelated to the provision furnishing of designated health services. exception, noting that, initially, under of clinical laboratory services enacted We clarified that the remuneration the original statute, the exception was by OBRA 1990 is referred to herein as could not in any direct or indirect way necessary to insulate a hospital’s the ‘‘OBRA 1990 exception.’’) The involve designated health services, and relationships with physicians that were OBRA 1990 exception applied to both further that the exception would not unrelated to the provision of clinical ownership or investment interests and apply in any situation involving laboratory services, a very small element compensation arrangements, and remuneration that might have a nexus of a hospital’s practice. We continued excepted financial relationships with the provision of, or referrals for, a that, since 1995, however, all hospital between physicians (or immediate designated health service (63 FR 1702). services are designated health services family members of physicians) and We further stated that the remuneration and a narrower interpretation of the hospitals that did not relate to the could in no way reflect the volume or exception is required to prevent abuse provision of clinical laboratory services. value of a physician’s referrals, and that (69 FR 16093). We have made no OBRA 1993 eliminated the OBRA 1990 payments to physicians that were changes to § 411.357(g) since Phase II. exception, but the Social Security Act ‘‘inordinately high’’ or above fair market Commenters on Phase II stated that the Amendments of 1994 (Pub. L. 103–432) value would be presumed to be related Congress intended hospitals to be able (SSA 1994) reinstated the exception to the furnishing of designated health to provide any amount of remuneration through January 1, 1995. services. We provided the following to physicians, provided that the In place of the OBRA 1990 exception, examples of remuneration that might be remuneration did not directly relate to OBRA 1993 added a new exception at completely unrelated to the furnishing designated health services. In Phase III, section 1877(e)(4) of the Act. Under of designated health services and based on our interpretation of the section 1877(e)(4) of the Act, excepted under § 411.357(g): (1) Fair legislative history at that time, we remuneration provided by a hospital to market value rental payments made by reaffirmed our narrow interpretation of a physician that does not relate to the a teaching hospital to a physician to rent section 1877(e)(4) of the Act (72 FR provision of designated health services his or her house in order to use the 51056). is not considered a compensation house as a residence for a visiting Based on our review of the statutory arrangement for purposes of the referral faculty member; and (2) compensation and billing prohibitions. Although there history of the OBRA 1990 exception and for teaching, general utilization review, section 1877(e)(4) of the Act, and are certain similarities between section or administrative services. 1877(e)(4) of the Act and the OBRA comments we received on our CMS RFI, 1990 exception, the exception at section In Phase II, we finalized the exception we are proposing certain modifications 1877(e)(4) of the Act is narrower than at § 411.357(g) with modifications (69 to the exception at § 411.357(g) to the OBRA 1990 exception in several FR 16093 through 16094). As finalized, broaden the application of the important respects: (1) The OBRA 1990 in addition to requiring that the exception. As a preliminary matter, we exception excepts both ownership remuneration does not in any way take agree with the statement in Phase II that interests and compensation into account the volume or value of the the exception at section 1877(e)(4) of the arrangements between hospitals and physician’s referrals, § 411.357(g) Act is significantly narrower than the physicians, whereas section 1877(e)(4) requires that the remuneration is wholly OBRA 1990 exception. There are many of the Act applies only to compensation unrelated (that is, neither directly nor financial relationships between arrangements under which indirectly related) to the furnishing of hospitals and physicians that would be remuneration passes from the hospital designated health services. The permissible under the OBRA 1990 to the physician; (2) the OBRA 1990 regulation stipulates that remuneration exception because they do not relate, exception protects a broad range of relates to the furnishing of designated directly or indirectly, to the provision of financial relationships that are health services if it: (1) Is an item, clinical laboratory services. On the other unrelated to the provision of clinical service, or cost that could be allocated hand, insofar as the exception at section laboratory services, whereas section in whole or in part to Medicare or 1877(e)(4) of the Act requires the 1877(e)(4) of the Act has a narrower Medicaid under cost reporting remuneration to be unrelated to the application, applying only to principles; (2) is furnished, directly or provision of designated health services, remuneration unrelated to the provision indirectly, explicitly or implicitly, in a and OBRA 1993 defines this term to of designated health services; and (3) selective, targeted, preferential, or include inpatient and outpatient the OBRA 1990 exception applies to conditioned manner to medical staff or services, the scope of protected financial relationships between entities other persons in a position to make or compensation arrangements under and physicians or their immediate influence referrals; or (3) otherwise section 1877(e)(4) of the Act is much family members, whereas section takes into account the volume or value narrower than that of the OBRA 1990 1877(e)(4) of the Act applies only to of referrals or other business generated exception. Generally speaking, most compensation arrangements with by the referring physician. We stated financial relationships between physicians. that we incorporated cost reporting hospitals and physicians relate to the In the 1998 proposed rule, we principles in the regulation in order to furnishing of designated health services, proposed to revise our regulation at provide the industry with bright-line in particular, inpatient or outpatient § 411.357(g) to reflect our interpretation rules to determine whether hospital services. That being said, we of section 1877(e)(4) of the Act (63 FR remuneration is related to the furnishing must also consider that OBRA 1993 did 1702). (The prior regulation at of designated health services (69 FR not merely strike the term ‘‘clinical

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00125 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55818 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

laboratory services’’ in the OBRA 1990 care services. Section 1877(e)(4) of the the provision of designated health exception and substitute the term Act specifically excepts remuneration services, do not apply to any ‘‘designated health services.’’ Rather, unrelated to the provision of designated remuneration that is determined in a OBRA 1993 eliminated the OBRA 1990 health services. For purposes of manner that takes into account the exception and created a new (albeit applying the exception at section volume or value of a physician’s somewhat similar) exception at section § 411.357(g), we are interpreting section referrals. 1877(e)(4) of the Act. In light of this 1877(e)(4) of the Act to except We believe that remuneration from a statutory history, we believe that the remuneration unrelated to the act or hospital to a physician that pertains to most accurate interpretation of section process of providing designated health the physician’s patient care services is 1877(e)(4) of the Act is not as a services, a concept which is not as all- the paradigm of remuneration that carryover of the 1990 OBRA exception encompassing as remuneration that is relates to the provision of designated into the significantly revised statutory unrelated in any manner whatsoever to health services. Most obviously, when a regime established by OBRA 1993. designated health services. We believe physician provides patient care services Rather, we believe that section that patient care services provided by a to hospital patients, the physician’s 1877(e)(4) of the Act should be physician, when the physician is acting patient care services are directly interpreted as a new exception that was in his or her capacity as a medical correlated with the provision of intentionally created by the Congress in professional, are integrally related to the designated health services. Thus, OBRA 1993, the very same legislation in act or process of providing designated remuneration from the hospital to the which the Congress expanded the health services, regardless of whether physician for such services is clearly referral and billing prohibition of the such services are provided to patients of related to designated health services. physician self-referral law to inpatient the hospital; thus, payment for such However, there does not have to be a and outpatient hospital services. In services relates to the provision of direct one-to-one correlation between a creating a new exception for designated health services. Likewise, we physician’s services and the provision remuneration unrelated to the provision believe that items that are used in the of designated health services in order of designated health services and act or process of furnishing patient care for payments for the service to be expanding the definition of ‘‘designated services are integrally related to the related to the provision designated health services’’ to include inpatient provision of designated health services, health services. For example, payment and outpatient hospital services, we and payments for such items relate to for emergency department call coverage believe that the Congress intended the the provision of designated health relates to the furnishing of designated exception to apply to a narrow—but not services. On the other hand, we believe health services, even if the physician is empty—subset of compensation that remuneration from a hospital to a not as a matter of fact called to the arrangements between hospitals and physician for services that are not hospital to provide patient care services, physicians. patient care services or items that are because the hospital is paying the According to commenters that not used in the act or process of physician to be available to provide responded to the CMS RFI, current providing designated health services patient care services at the hospital. § 411.357(g) has an extremely limited does not relate to the provision of Similarly, medical director services application. Several commenters stated designated health services and would, typically include, among other things, that it is not clear what remuneration, therefore, not be prohibited under establishing clinical pathways and overseeing the provision of designated if any, is permissible under the section 1877(e)(4) of the Act or our exception, if the exception does not health services in a hospital. It is our regulations at proposed § 411.357(g) apply to any item, cost, or service that policy that payments for such services (provided that the remuneration is not could be allocated to Medicare or are related to the furnishing of determined in any manner that takes Medicaid under cost reporting designated health services for purposes into account the volume or value of the principles, or to remuneration that is of applying the exception at proposed physician’s referrals). offered in any preferential or selective § 411.357(g). We also believe that manner whatsoever. After reconsidering We believe that the concept of patient utilization review services are closely the matter, we agree with the care services, as further specified in the related to patient care services, and for commenters that the current exception proposed regulation text and as this reason, we consider remuneration is too restrictive. explained in this section of the for such services to be related to the To give appropriate meaning to the proposed rule, provides a determinant furnishing of designated health services. statutory exception at section 1877(e)(4) and practicable principle for applying In contrast to the services described of the Act, we are proposing to delete § 411.357(g) to compensation above, we do not believe that the the current provisions at § 411.357(g)(1) arrangements between hospitals and administrative services of a physician and (2) in their entirety and to remove physicians. We note that the proposed pertaining solely to the business the phrase ‘‘directly or indirectly’’ from regulation at § 411.357(g) retains the operations of a hospital relate to patient the regulation text. In place of existing requirement that the remuneration is care services. Thus, if a physician is a § 411.357(g)(1) and (2), we are proposing not determined in any manner that takes member of a governing board along with language that incorporates the concept into account the volume or value of the persons who are not licensed medical of patient care services as the physician’s referrals. Remuneration that professionals, and the physician touchstone for determining when is determined in a manner that takes receives stipends or meals that are remuneration for an item or service is into account the volume or value of a available to the other board members, it related to the provision of designated physician’s referrals clearly relates to is our policy that this remuneration health services. In particular, we are the provision of designated health would not relate to the provision of proposing regulation text to clarify that services, regardless of the nature of the designated health services under remuneration from a hospital to a item or service for which the physician proposed § 411.357(g), provided the physician does not relate to the receives remuneration. Thus, the physician’s compensation for the provision of designated health services proposed provisions at § 411.357(g)(2) administrative services is not if the remuneration is for items or and (g)(3), which are intended to clarify determined in a manner that takes into services that are not related to patient when remuneration does not relate to account the volume or value of his or

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00126 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55819

her referrals. In this instance, we believe services that are not necessarily or services if the items or services are that the dispositive factor in designated health services, is furnished at a price that is consistent determining that a physician’s services remuneration related to the provision of with fair market value. The 1995 final are not related to the provision of designated health services. However, if rule (60 FR 41929) incorporated the designated health services is that the a physician who joins another practice provisions of section 1877(e)(8) of the services are also provided by persons sells the furniture from his or her Act into our regulations at § 411.357(i). who are not licensed medical medical office to a hospital, and the In the 1998 proposed rule, we proposed professionals, and the physician is hospital places the furniture in the to interpret ‘‘other items and services’’ compensated on the same terms and hospital’s facilities, as long as the to mean any kind of item or service that conditions as the non-medical payment is not determined in a manner a physician might purchase (that is, not professionals. Insofar as services may be that takes into account the physician’s limited to ‘‘services’’ for purposes of the provided by persons who are not referrals, we do not believe that the Medicare program in § 400.202 of this licensed medical professionals, we do remuneration is related to the provision Chapter), but not including clinical not believe that they are patient care of designated health services. Also, we laboratory services or those items or services. To provide clarity for continue to believe that, as first stated services that are specifically excepted stakeholders, we are proposing a general in the 1998 proposed rule, § 411.357(g) by another provision in §§ 411.355 principle at § 411.357(g)(3) for (including proposed § 411.357(g)) through 411.357 (63 FR 1703). We stated determining when remuneration for a applies to rental payments made by a that we did not believe that the particular service, when provided by a teaching hospital to a physician to rent Congress meant the exception for physician, is related to the provision of his or her house in order to use the payments by a physician to protect designated health services. We believe house as a residence for a visiting financial relationships that were that, if a service can be provided legally faculty member. To provide covered by more specific exceptions by a person who is not a licensed stakeholders with greater clarity, we are with specific requirements, such as the medical professional and the service is proposing to stipulate in regulation that exceptions for rental arrangements at of the type that is typically provided by remuneration provided in exchange for section 1877(e)(1) of the Act. such persons, then payment for such a any item, supply, device, equipment, or In Phase II, we responded to service is unrelated to the provision of office space that is used in the diagnosis commenters who disagreed with our designated health services and may be or treatment of patients, or any position that the exception for payments protected under proposed § 411.357(g), technology that is used to communicate by a physician is not available for provided that it is not determined in a with patients regarding patient care arrangements involving any items or manner that takes into account the services, is presumed to be related to the services excepted by another exception volume or value of the physician’s provision of designated health services (69 FR 16099). We reiterated the referrals. We note in this context that for purposes of § 411.357(g). statutory interpretation from the 1998 ‘‘licensed medical professional’’ We believe that proposed proposed rule, explaining that the includes, but is not limited to, a § 411.357(g)(2) and (3) provide clarity determination that items and services licensed physician. That is, if a service regarding when payments for items and addressed by another exception should can be provided legally by both a services relate to the provision of not be covered in this exception is physician and a medical professional designated health services, and also give consistent with the overall statutory the meaning to the statutory exception. scheme and purpose and is necessary to who is not a physician, such as a We believe that the requirement prevent the exception for payments by registered nurse, but the service cannot pertaining to the volume or value of a a physician from negating the statute (69 be provided by a person who is not a physician’s referrals at § 411.357(g)(1) FR 16099; see also 72 FR 51057). As a licensed medical professional, it is still will ensure that payments to a physician result, we made no changes to the considered to be a patient care service for items or services that are ostensibly regulation at § 411.357(i) in Phase II. for purposes of § 411.357(g)(3). Thus, not related to patient care services are Thus, as finalized in Phase II, the remuneration provided by a hospital to not in fact disguised payments for the exception for payments by a physician a physician for the service would not be physician’s referrals. We seek comments at § 411.357(i) stated that the exception excepted under proposed § 411.357(g), on our proposals, as well as other could not be used for items or services notwithstanding the fact that the service possible ways for distinguishing that are specifically excepted by another does not have to be performed by a between remuneration that is related to exception in §§ 411.355 through physician. the provision of designated health 411.357, with a parenthetical clarifying With respect to remuneration from a services and remuneration that is that this included the exception for fair hospital for items provided by a unrelated to the provision of designated market value compensation at physician, typical examples of health services. Specifically, we seek § 411.357(l). However, at that time, the remuneration that is related to the comment as to whether we should limit exception for fair market value provision of designated health services what we consider to be ‘‘remuneration compensation applied only to the include rental of medical equipment related to the provision of designated provision of items or services by and purchasing of medical devices from health services’’ to remuneration paid physicians to entities; the exception did physicians. Because these items are explicitly for a physician’s provision of not apply to items or services provided used in the provision of patient care designated health services to a by entities to physicians. services, and the patient care services hospital’s patients. Following the publication of Phase II, may be designated health services or be commenters complained that neither directly correlated with the provision of 9. Exception for Payments by a § 411.357(i) nor § 411.357(l) were designated health services, Physician (§ 411.357(i)) available to protect many legitimate remuneration for such items clearly Section 1877(e)(8) of the Act excepts arrangements wherein physicians relates to the provision of designated payments made by a physician to a purchased items and services from health services. We also believe that laboratory in exchange for the provision entities, because: (1) The exception for rental of office space where patient care of clinical laboratory services, or to an payments by a physician was limited to services are provided, including patient entity as compensation for other items the purchase of items and services not

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00127 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55820 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

specifically excepted by another statutory exception. Commenters also requirements that the arrangements are exception in §§ 411.355 through 411.357 noted that compliance with other commercially reasonable, that rental (including § 411.357(l)); and (2) the exceptions is generally more charges are fair market value, and that exception for fair market value burdensome than compliance with the compensation is not determined in a compensation did not apply to items or statutory exception for payments by a manner that takes into account the services provided by an entity to a physician, and urged us to conform the volume or value of referrals or other physician (72 FR 51057). In response to language of the exception at § 411.357(i) business generated between the parties. the commenters, we expanded to the statutory language at section We do not believe that the Congress § 411.357(l) in Phase III to include both 1877(e)(8) of the Act. We find the CMS would have imposed these items and services furnished by RFI comments regarding the narrowing particularized requirements at section physicians to entities and items and of the statutory exception persuasive 1877(e)(1) of the Act, but also allowed services furnished by entities to and, as a result, have reconsidered our parties to sidestep them by relying on physicians (72 FR 51094 through position regarding the availability of the the exception for payments by a 51095). However, Phase III did not exception for payments by a physician physician to protect rental modify the exception for payments by a for certain compensation arrangements. arrangements. physician,6 including the parenthetical To explain the policies we set forth in Although we maintain our policy indicating that § 411.357(i) could not be this proposed rule regarding the with respect to the statutory exceptions, used for items or services specifically availability of the exception at we no longer believe that the regulatory excepted under § 411.357(l). We § 411.357(i), it is important to exceptions should limit the scope of the acknowledged that the expansion of the distinguish between the statutory exception for payments by a physician. exception for fair market value exceptions found at section 1877(e) of Thus, we are proposing to remove from compensation to items or services the Act (codified at § 411.357(a) through § 411.357(i)(2) the reference to the furnished by entities to physicians § 411.357(i) of our regulations) and the regulatory exceptions, including the would require parties in some instances regulatory exceptions (codified at parenthetical referencing the exception to rely on § 411.357(l) instead of § 411.357(j) et seq.) issued using the for fair market value compensation. We § 411.357(i). We concluded, however, Secretary’s authority under section are also proposing that the exception at that upon further consideration, we 1877(b)(4) of the Act.7 We continue to § 411.357(i) would not be available to believe that the required application of believe that the exception for payments protect compensation arrangements the fair market value compensation by a physician at section 1877(e)(8) of specifically addressed by one of the exception, which contains conditions the Act was not meant to apply to statutory exceptions, codified in our not found in the less transparent compensation arrangements that are regulations at § 411.357(a) through (h). exception for payments by a physician specifically excepted by other statutory Under the proposal, parties would to a hospital, further reduces the risk of exceptions in section 1877 of the Act. generally be able to rely on the program abuse (72 FR 51057). We also Given the placement of the exception exception at § 411.357(i) to protect fair emphasized in Phase III that the for payments by a physician as the final market value payments by a physician exception for payments by a physician statutory exception at section 1877(e) of to an entity for items or services could not be used to protect office space the Act, we believe that this exception furnished by the entity, even if a leases (72 FR 51044 through 51045). We functions as a catch-all to protect certain regulatory exception at § 411.357(j) et explained that we did not believe that legitimate arrangements that are not seq. may be applicable. However, for the the lease of office space is an ‘‘item or covered by the exceptions at sections reasons noted previously, § 411.357(i) service’’ and that parties seeking to 1877(e)(1) through (7) of the Act. As a would not be applicable to protect arrangements for the rental of matter of statutory construction, the arrangements for the rental of office 8 office space must rely on § 411.357(a) catch-all exception at section 1877(e)(8) space or equipment. That is, we believe (72 FR 51059). In 2015, when we of the Act does not supersede the that, as a matter of statutory finalized the exception at § 411.357(y) previous exceptions. With respect to construction, the exception for for timeshare arrangements, we arrangements for the rental of office payments by a physician is not available reaffirmed our position that the space or the rental of equipment, in to protect any type of arrangement that exception for payments by a physician particular, we note that the statutory is specifically addressed by another is not available for arrangements exceptions for such arrangements at statutory exception at section 1877(e) of involving the rental of office space (80 section 1877(e)(1) of the Act include the Act, including arrangements for the FR 71325 through 71327). requirements that are specific to rental rental of office space or the rental of Commenters on the CMS RFI stated arrangements, as well as general equipment. that our interpretation of the exception We are retracting our prior statements that office space is neither an ‘‘item’’ for payments by a physician, especially 7 Section 1877(b)(5) of the Act directs the our determination that the exception is Secretary to establish a regulatory exception for nor a ‘‘service.’’ We made these not available if any other exception electronic prescribing, but does not provide any statements, in significant part, to would apply to an arrangement, statutory text or specific requirements for the emphasize that we do not believe that exception. Pursuant to this authority, we the exception for payments by a unreasonably narrowed the scope of the established an exception for electronic prescribing items and services at § 411.357(v). Although physician should be available to protect 6 In the September 5, 2007 Federal Register, the § 411.357(v), unlike all the other exceptions at the type of arrangement for which the regulation text of the exception for payments by a § 411.357(j) et seq., was not issued using the Congress established a specific physician was modified in error. Phase II stated that Secretary’s authority under section 1877(b)(4) of the exception in statute. In this proposed § 411.357(i) is limited to payments for items or Act, for purposes of our interpretation of the services that are ‘‘not specifically excepted by exception for payments by a physician, we treat rule, we have more clearly explained another provision in §§ 411.355 through 411.357’’ § 411.357(v) as a regulatory exception. In particular, this position and no longer believe it is (69 FR 16140). The September 5, 2007 Federal we interpret section 1877(b)(5) of the Act as a grant Register replaced ‘‘excepted’’ with ‘‘addressed’’ (72 of authority for the Secretary to issue a regulatory 8 Elsewhere in this proposed rule, we are FR 51094). The original language of the exception exception; it is not itself a statutory exception, just proposing to extend § 411.357(l) to arrangements for was restored in a correction notice to Phase III and as section 1877(b)(4) of the Act grants the Secretary the rental of office space, including rentals of less published in the December 4, 2007 Federal Register authority to create exceptions, but is not an than 1 year, provided all the requirements of the (72 FR 68076). exception in its own right. proposed exception are satisfied.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00128 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55821

necessary to preclude office space from 10. Exception for Fair Market Value relying on § 411.357(l). In the CY 2016 the categories of ‘‘items’’ and ‘‘services.’’ Compensation (§ 411.357(l)) PFS final rule, we reaffirmed our (We note that we have not made prior In the 1998 proposed rule, we position that the exception for fair similar statements regarding proposed an exception at § 411.357(l) market value compensation does not equipment.) As such, and because the for fair market value compensation (63 apply to arrangements for the rental of exception at § 411.357(i) is unavailable FR 1699). We noted that the statutory office space (80 FR 71327). to protect an arrangement for the rental exceptions at section 1877(e) of the Act We have reconsidered our policy of office space or equipment, parties apply to specific categories of financial regarding the application of § 411.357(l). seeking to protect an arrangement for relationships and do not address many Through our administration of the SRDP, we have seen legitimate, the rental of office space or equipment common and legitimate compensation nonabusive arrangements for the rental must structure the arrangement to arrangements between physicians and of office space that could not satisfy the satisfy the requirements of § 411.357(a), the entities to which they refer requirements of § 411.357(a) because the designated health services. The § 411.357(b), § 411.357(l) (for direct term of the arrangement was less than exception for fair market value compensation arrangements), or 1 year, and could not satisfy the compensation was proposed as an open- § 411.357(p) (for indirect compensation requirements of § 411.357(y) because the ended exception to protect certain arrangements). We note that, under our arrangement conveyed a possessory compensation arrangements that may proposal, § 411.357(i) may be available leasehold interest in the office space. To not be specifically addressed in the to protect payments by a physician for provide flexibility to stakeholders to statutory exceptions. Among other the lease or use of space that is not protect such nonabusive arrangements, office space, such as storage space or things, we stated that the exception we are proposing to make § 411.357(l) residential real estate. might be used to protect arrangements available to protect arrangements for the for the sublease of office space (63 FR rental or lease of office space. We are also proposing to remove from 1714). We suggested that parties could § 411.357(i)(2) the reference to As discussed in many of our previous use the exception for fair market value rulemakings and most recently in the exceptions in §§ 411.355 and 411.356. compensation if they had any doubts As noted previously, we believe that the CY 2017 PFS proposed rule (81 FR about whether they met the 46448 through 46453) and final rule (81 exception at section 1877(e)(8) of the requirements of another exception in FR 80524 through 80534), we are Act for payments by a physician § 411.357. concerned about potential abuse that functions in the statutory scheme as a In Phase I, we finalized § 411.357(l), may arise when rental charges for the catch-all, to apply to compensation stating that parties could use the lease of office space or equipment are arrangements for the furnishing of other exception, even if another exception determined using a formula based on: items or services by entities that are not potentially applied to an arrangement (1) A percentage of the revenue raised, specifically addressed at sections (66 FR 919). We explained our belief earned, billed, collected, or otherwise 1877(e)(1) through (7) of the Act. that the safeguards incorporated into the attributable to the services performed or Therefore, we no longer believe that the exception for fair market value business generated in the office space (a exception should be limited by the compensation were sufficient to cover ‘‘percentage-based compensation exceptions at sections 1877(b) and (c) of various compensation arrangements, formula’’); or (2) per-unit of service the Act or the regulatory exceptions including arrangements covered by rental charges, to the extent that such codified in §§ 411.355 and 411.356. other exceptions. In Phase II, we charges reflect services provided to responded to commenters who Lastly, we would like to stress that the patients referred by the lessor to the requested that the exception at ‘‘items or services’’ furnished by the lessee (a ‘‘per-click compensation § 411.357(l) be made available to protect entity under the exception for payments formula’’). We stated that arrangements arrangements for the rental of office by a physician may not include cash or based on percentage compensation or space, including arrangements where per-unit of service compensation cash equivalents. That is, the physician space is rented by entities to physicians may not make in-kind ‘‘payments’’ to formulas present a risk of program or (69 FR 16111). We declined to extend patient abuse because they may the entity in exchange for cash from the § 411.357(l) to arrangements for the entity. We believe that cash provided by incentivize overutilization and patient rental of office space, and emphasized steering. To address this risk, in the FY an entity to a physician poses a risk of that § 411.357(l) applied only to 2009 IPPS final rule, we included in the program or patient abuse, and that the payments from an entity to a physician exceptions for the rental of office space, Congress would have included for items and services furnished by the the rental of equipment, fair market additional safeguards at section physician. We modified our policy in value compensation, and indirect 1877(e)(8) of the Act if the exception Phase III and extended the application compensation arrangements restrictions were designed to cover such of the exception at § 411.357(l) to on percentage-based compensation and arrangements. At the same time, we note payments from a physician to an entity per-click compensation formulas when that, if a physician pays an entity $10 for items or services provided by the determining the rental charges for the in cash for a gift card worth $10, we do entity, but continued to decline to make lease of equipment. Because the not believe that this would constitute a § 411.357(l) applicable to an exception at § 411.357(l), to date, has financial relationship for purposes of arrangement for the rental of office not been applicable to arrangements for the physician self-referral law. Likewise, space (72 FR 51059 through 51060). As the rental of office space, it does not in cases where a physician or an entity noted previously, we explained that the include a prohibition on percentage- acts as a pure pass-through, taking rental of office space is not an ‘‘item or based compensation and per-click money from one party and passing the service.’’ We added that, because compensation formulas when exact same amount of money to another arrangements for the rental of office determining the rental charges for the party, we do not believe that the pass- space had been subject to abuse, we lease of office space. (The exceptions for through arrangement is a financial believed that it could pose a risk of the rental of office space and indirect relationship for purposes of the program or patient abuse to permit compensation arrangements currently physician self-referral law. parties to protect such arrangements include the prohibitions as they relate to

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00129 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55822 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

the determination of rental charges for we are proposing to remove from our proposing to modify the 15 percent the lease of office space.) We remain exceptions the requirements pertaining physician contribution requirement and concerned about the potential abuse to the anti-kickback statute and Federal to permit certain donations of related to percentage-based or State billing and claims submission replacement technology. compensation and per-click rules. Although similar, at this time, we This proposed rule sets forth certain compensation formulas for determining are not proposing to remove proposed changes to the EHR exception. the rental charges of both office space § 411.357(l)(6). However, we are and equipment. Therefore, we are soliciting comments on whether this The OIG is considering changes to the proposing to incorporate into the requirement is necessary to protect EHR safe harbor elsewhere in this issue exception at § 411.357(l) prohibitions on against program or patient abuse or of the Federal Register. We seek percentage-based compensation and should be removed from the exception, comment on our proposals and, as noted per-unit of service compensation and whether substitute safeguards such above, given the close nexus between formulas with respect to the as those included in many of the our proposals and OIG’s proposals, we determination of rental charges for the statutory or regulatory exceptions to the encourage stakeholders to review and lease of office space, similar to the physician self-referral law would be submit comments on both proposed restrictions found in § 411.357(a)(5)(ii) appropriate. rules. Despite the differences in the and § 411.357(p)(1)(ii). respective underlying statutes, we Unlike the exception for the rental of 11. Electronic Health Records Items and Services (§ 411.357(w)) attempted to ensure as much office space at § 411.357(a), the consistency as possible between our exception for fair market value Relying on our authority at section proposed changes to the EHR exception compensation does not require a 1-year 1877(b)(4) of the Act, on August 8, 2006, and the policies that OIG is considering we published a final rule (the 2006 EHR term. Therefore, short-term with respect to its safe harbor. Because final rule) that, among other things, arrangements for the rental of office of the close nexus between this space of less than 1 year would be finalized an exception at § 411.357(w) proposed rule and OIG’s proposed rule, permissible under the proposed for certain arrangements involving the we may consider comments submitted exception. However, as with other donation of interoperable EHR software compensation arrangements permitted or information technology and training in response to OIG’s proposed rule, even under § 411.357(l), the parties would be services (the EHR exception) (71 FR if we do not receive such comments on permitted to enter into only one 45140). The EHR exception was initially our proposals, and take additional arrangement for the rental of the same scheduled to expire on December 31, actions when crafting our final rule. office space during the course of a year. 2013. On December 27, 2013, we a. Interoperability The parties would be able to renew the published a final rule (the 2013 EHR arrangement on the same terms and final rule) modifying the EHR exception The requirements at § 411.357(w)(2) conditions any number of times, by, among other things, extending the and (3) require donated items and provided that the terms of the expiration date of the exception to services to be interoperable and prohibit arrangement and the compensation for December 31, 2021, excluding the donor (or someone on the donor’s the same office space do not change. laboratory companies from the types of behalf) from taking action to limit the Although we believe that, in most cases, entities that may donate EHR items and interoperability of the donated item or services under the exception, and parties seeking to lease office space service. We are proposing changes that updating the provision under which prefer leases with longer terms—for impact § 411.357(w)(2) and (3) based on instance, to justify expenses spent on EHR software is deemed interoperable the Cures Act and the Office of the property improvements—as described (78 FR 78751). National Coordinator for Health by commenters, some parties, especially Although we did not specifically parties in rural areas, would prefer or request comments on the EHR exception Information Technology (ONC), HHS find necessary the flexibility of a short- in the CMS RFI, we received several Notice of Proposed Rulemaking, ‘‘21st term rental of office space. Given the comments on the exception. In addition, Century Cures Act: Interoperability, requirements of the exception for fair in its request for information, OIG Information Blocking, and the ONC market value compensation, including requested comments on the anti- Health IT Certification Program’’ (ONC the requirement that parties enter into kickback statute EHR safe harbor at 42 NPRM), which proposes to implement only one arrangement for the leased CFR 1001.952(y), which is substantively key provisions in Title IV of the Cures office space over the course of a year, similar to the EHR exception at Act.9 Among other things, the ONC we do not believe that short-term § 411.357(w). After reviewing comments NPRM proposes conditions and arrangements for the rental of office submitted on the EHR exception and maintenance of certification space that satisfy all the requirements of safe harbor, as well as recent statutory requirements for health IT developers § 411.357(l) pose a risk of program or and regulatory developments arising under the ONC Health IT Certification patient abuse. We remind readers that, from the 21st Century Cures Act (Pub. Program (certification program) and as explained in section II.D.9 of this L. 114–255 (December 13, 2016)) (Cures reasonable and necessary activities that proposed rule, the exception for Act), we are proposing to update do not constitute information blocking provisions in the EHR exception payments by a physician at § 411.357(i) for purposes of section 3022(a)(1) of the pertaining to interoperability is not available to protect any leases of Public Health Service Act (PHSA). (§ 411.357(w)(2)) and data lock-in office space, including short-term These proposed changes, if finalized, leases. (§ 411.357(w)(3)), clarify that donations would affect the deeming provision Lastly, § 411.357(l)(6) requires that of certain cybersecurity software and any services to be performed under the services are permitted under the EHR pertaining to interoperability at arrangement do not involve the exception, remove the sunset provision, § 411.357(w)(2) and provisions related counseling or promotion of a business and modify the definitions of to interoperability and data lock-in at arrangement or other activity that ‘‘electronic health record’’ and § 411.357(w)(3). violates a Federal or State law. As ‘‘interoperable’’ to ensure consistency explained in section II.D.1. of this rule, with the Cures Act. We are also 9 84 FR 7424 (March 4, 2019).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00130 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55823

(1) The ‘‘Deeming Provision’’ the donation was made would not cease such regulations into the requirement at (§ 411.357(w)(2)) to be protected by the exception if these § 411.357(w)(3) for purposes of the Section 411.357(w)(2) requires proposed changes are finalized. physician self-referral law if we finalize the proposals described in this proposed software donated under the EHR (2) Information Blocking and Data Lock- rule. In addition, proposed exception to be interoperable. The in (§ 411.357(w)(3)) deeming provision at § 411.357(w)(2) § 411.357(w)(3) provides that the donor The current requirement at provides certainty to parties seeking (or any person on the donor’s behalf) § 411.357(w)(3) prohibits the donor (or protection of the EHR exception by cannot engage in information blocking any person on the donor’s behalf) from providing an optional method of ‘‘in connection with the donated items taking any action to limit or restrict the ensuring that donated items or services or services,’’ in order to clarify that use, compatibility, or interoperability of meet the interoperability requirement at § 411.357(w)(3) prohibits both engaging the items or services with other § 411.357(w)(2). Specifically, in conduct constituting information electronic prescribing or EHR systems § 411.357(w)(2) provides that software is blocking that affects the functions of the (including, but not limited to, health IT deemed to be interoperable if it is donated items or services and using the applications, products, or services). certified under ONC’s certification donated items or services as an Beginning with the 2006 EHR final rule program. In the 2013 EHR final rule, we instrument of information blocking. and reaffirmed in the 2013 EHR final modified the deeming provision to We note that the current EHR rule, § 411.357(w)(3) has been designed reflect developments in the ONC exception requirements, while not using to: (1) Prevent the misuse of the the term ‘‘information blocking,’’ certification program and to track ONC’s exception that results in data and already include concepts similar to anticipated regulatory cycle. By relying referral lock-in; and (2) encourage the those found in the Cures Act’s on ONC’s certification program and free exchange of data (in accordance prohibition on information blocking. related updates of criteria and with protections for privacy) (78 FR For example, in our prior rulemaking, standards, we stated that the deeming 78762). Since the publication of the we were concerned about donors (or provision would meet our objective of final rules, significant legislative, those on the donor’s behalf) taking steps ensuring that software is certified to the regulatory, policy, and other Federal to limit the interoperability of donated current required standard of government action defined this problem software to lock in or steer referrals.11 interoperability when it is donated (78 further (now commonly referred to as The modifications proposed here are not FR 78753). We are proposing to retain ‘‘information blocking’’) and established intended to change the underlying this general construct for the proposed penalties for certain types of individuals purpose of this requirement, but instead updated EHR exception. However, we and entities that engage in information further our longstanding goal of are proposing two textual clarifications blocking. Most notably, the Cures Act preventing abusive arrangements that to this provision. Our current regulation added section 3022 of the PHSA, known lead to information blocking and referral text specifies that the software is as ‘‘the information blocking provision,’’ lock-in through modern understandings deemed to be interoperable if, on the which defines conduct by health care of those concepts established in the date it is provided to the physician, it providers, health IT developers of Cures Act.12 We solicit comments on has been certified by a certifying body certified health IT, exchanges, and aligning the condition at § 411.357(w)(3) to an edition of the electronic health networks that constitutes information with the PHSA and the information record certification criteria identified in blocking. Section 3022(a)(1) of the blocking definition in proposed 45 CFR the then-applicable version of 45 CFR PHSA defines ‘‘information blocking’’ in part 171, if finalized. part 170. We are proposing to modify broad terms, while section 3022(a)(3) of this language to clarify that, on the date the PHSA authorizes and charges the b. Cybersecurity the software is provided, it ‘‘is’’ Secretary to identify reasonable and We are proposing to amend the EHR certified. In other words, the necessary activities that do not exception to clarify that the exception is certification must be current as of the constitute information blocking. The available (and always has been date of the donation, as opposed to the ONC NPRM, which includes proposals available) to protect certain software having been certified at some to implement the statutory definition of cybersecurity software and services,13 point in the past but no longer information blocking at 45 CFR part and to more broadly protect the maintaining certification on the date of 171, proposes to define certain terms donation of software and services the donation. We also propose to related to the statutory definition of related to cybersecurity. Currently, the remove the reference to ‘‘an edition’’ of information blocking, and proposes exception protects EHR software or certification criteria to align with seven exceptions to the information information technology and training proposed changes to ONC’s certification blocking definition.10 services necessary and used program. We solicit comments on these In this proposed rule, we are predominantly to create, maintain, clarifications. As we describe in more proposing modifications to detail below, however, we are proposing § 411.357(w)(3) to recognize these 11 See, for example, Implementation of the 21st to update the definition of significant updates since the 2013 EHR Century Cures Act: Achieving the Promise of Health Information Technology Before the S. Comm. On ‘‘interoperable.’’ Although the revised final rule. Specifically, we are proposing Health, Education, Labor, & Pensions, 115th Cong. definition would not require a change to at § 411.357(w)(3) to prohibit the donor 1 (2017) (statement of James Cannatti, Senior the text of paragraph (w)(2), the revision (or any person on the donor’s behalf) Counselor for Health Information Technology HHS would impact the deeming provision, from engaging in a practice constituting OIG). and we solicit comments regarding this information blocking, as defined in 12 We recognize that the ONC NPRM is not a final rule and is subject to change. However, we base our update. We emphasize that any final section 3022 of the PHSA, in connection proposals on both the statutory language and the revisions to the deeming provisions or with the donated items or services. language in ONC’s NPRM for purposes of soliciting the definition of ‘‘interoperable’’ would Should ONC finalize its proposals to public input on our proposals. be prospective only. That is, donated implement section 3022 of the PHSA at 13 For instance, a secure log-in or encrypted access mechanism included with an EHR system or software that met the definition of 45 CFR part 171, we would incorporate EHR software suite would be cybersecurity features interoperable and satisfied the of the EHR that may be protected under the existing requirements of § 411.357(w) at the time 10 84 FR at 7602 through 7605. EHR exception.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00131 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55824 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

transmit, or receive electronic health we acknowledged in the 2006 EHR final terminology, the emerging standards for records. We are proposing to modify rule that the need for an exception for EHR, and other resources cited by this language to include software that donations of EHR technology should commenters at that time. The following ‘‘protects’’ electronic health records, diminish substantially over time as the proposed modifications to these and to expressly include services related use of such technology becomes a definitions are largely based on terms to cybersecurity. standard and expected part of medical and provisions in the Cures Act that In the 2006 EHR final rule, we practice. In the 2013 notice of proposed update or supersede terminology we emphasized the requirement that rulemaking for an amendment to the used in the 2006 EHR final rule. software, information technology and EHR exception, we acknowledged that, training services donated must be although EHR technology adoption had The term ‘‘electronic health record’’ is closely related to EHR and that the EHR risen dramatically, use of such currently defined at § 411.351 as a functions must predominate (71 FR technology had not yet been universally repository of consumer health status 54151). We stated that the core adopted nationwide. Because continued information in computer processable functionality of the technology must be EHR technology adoption remained an form used for clinical diagnosis and the creation, maintenance, transmission, important goal of the Department, we treatment for a broad array of clinical or receipt of individual patients’ EHR, solicited comments regarding an conditions. We are proposing the but, recognizing that EHR software is extension of the EHR exception. In following modifications: Replace the commonly integrated with other response to those comments, in the 2013 term ‘‘consumer health status features, we also stated that EHR final rule, we extended the sunset information’’ with ‘‘electronic health arrangements in which the software date of the exception to December 31, information;’’ replace the term package included other functionality 2021, a date that corresponds to the end ‘‘computer processable form’’ with ‘‘is related to the care and treatment of of the EHR Medicaid incentives. We transmitted by or maintained in individual patients would be protected. stated our continued belief that, as electronic media;’’ and replace the Under our proposal, the same criteria progress on this goal is achieved, the phrase ‘‘used for clinical diagnosis and would apply to cybersecurity software need for an exception for donations treatment for a broad array of clinical and services: The predominant purpose should continue to diminish over time. conditions’’ with ‘‘relates to the past, of the software or services must be However, commenters on the CMS RFI present, or future health or condition of cybersecurity associated with the EHR. and on OIG’s request for information an individual or the provision of health In section II.E.2. of this proposed rule, requested that we make the EHR care to an individual.’’ We are we also are proposing a new exception exception and safe harbor permanent. proposing these modifications to this at proposed § 411.357(bb) specifically to Although we acknowledge that definition to reflect the term ‘‘electronic protect arrangements involving the widespread adoption of EHR health information’’ that is used donation of cybersecurity technology technology, though not universal, throughout the Cures Act and that is and related services (the cybersecurity largely has been achieved, we no longer exception). As proposed, the believe that once this goal is achieved central to the definition of cybersecurity exception is broader and the need for an exception for interoperability at section 3000(9) of the includes fewer requirements than the arrangements involving the donation of PHSA and the information blocking EHR exception. Nonetheless, we are such technology will diminish over time provisions at section 3022 of the PHSA. proposing to expand the EHR exception or completely disappear. Rather, our Additionally, the ONC NPRM proposes to expressly include certain experience indicates that the continued a definition of ‘‘electronic health cybersecurity software and services so availability of the EHR exception plays information.’’ 14 We have based our that it is clear that an entity donating a part in achieving the Department’s proposed modifications, in part, on EHR software, and providing training goal of promoting EHR technology ONC’s proposed definition of and other related services, may also adoption by providing certainty with ‘‘electronic health information’’ to donate related cybersecurity software respect to the cost of EHR items and reflect more modern terminology used and services to protect the EHR. As services for recipients, by encouraging to describe the type of information that detailed in section II.E.2.a. of this adoption by physicians who are new is part of an electronic health record. proposed rule, we are proposing a entrants into medical practice or have We solicit comments on this updated definition of ‘‘cybersecurity’’ at postponed adoption based on financial definition. § 411.351 that would apply to both the concerns regarding the ongoing costs of The term ‘‘interoperable’’ is defined at EHR exception and the proposed maintaining and supporting an EHR existing § 411.351 and means able to cybersecurity exception at system, and by preserving the gains communicate and exchange data § 411.357(bb). A party seeking to protect already made in the adoption of accurately, effectively, securely, and an arrangement involving the donation interoperable EHR technology. consistently with different information of cybersecurity software and services Therefore, we are proposing to eliminate technology systems, software only needs to comply with the the sunset provision at § 411.357(w)(13). applications, and networks, in various requirements of one applicable In the alternative, we are considering an settings; and exchange data such that exception. We solicit comments on this extension of the sunset date. We seek the clinical or operational purposes and approach. In particular, with the comment on whether we should select addition of a stand-alone cybersecurity a later sunset date instead of making the meaning of the data are preserved and exception, we solicit comments on exception permanent, and if so, what unaltered. This definition of whether it is necessary to modify the that date should be. ‘‘interoperable’’ was based on 44 U.S.C. EHR exception to expressly include 3601(6) (pertaining to the management d. Definitions cybersecurity. and promotion of electronic We are proposing to modify the Government services) and several c. The Sunset Provision definitions of ‘‘interoperable’’ and comments we received in response to The EHR exception originally was ‘‘electronic health record.’’ In the 2006 the proposed rule that referenced scheduled to expire on December 31, EHR final rule, we finalized these 2013. In adopting this sunset provision, definitions based on contemporaneous 14 84 FR 7424, 7513 (Mar. 4, 2019).

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00132 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55825

emerging industry definitions and of the PHSA and its implementing requirement to upgrades and updates to standards related to interoperability.15 regulations. Software would be deemed EHR technology is restrictive and We are proposing to update the to meet interoperability standards if, on cumbersome and similarly acts as a definition of ‘‘interoperable’’ to align the date it is provided to the physician, barrier. We are considering and solicit with the statutory definition of it is certified by a certifying body comments on two alternatives to the ‘‘interoperability’’ added by the Cures authorized by the National Coordinator existing requirement as outlined below; Act to section 3000(9) of the PHSA. for Health Information Technology to however, we are not proposing specific Consistent with section 3000(9) of the electronic health record certification regulation text regarding the 15 percent PHSA, we are proposing to define criteria identified in the then-applicable contribution requirement at this time. ‘‘interoperable’’ to mean: (i) Able to version of 45 CFR part 170. We seek First, we are considering eliminating securely exchange data with and use comment regarding whether using or reducing the percentage contribution data from other health information terminology identical to the PHSA and required for small or rural physician technology without special effort on the ONC regulations would facilitate organizations. In particular, we solicit part of the user; (ii) allows for complete compliance with the requirements of the comments on how we should define access, exchange, and use of all EHR exception and reduce any ‘‘small or rural physician organization.’’ electronically accessible health regulatory burden resulting from the We solicit comments on whether ‘‘rural information for authorized use under differences in the agencies’ different physician organization’’ should be applicable State or Federal law; and (iii) terminology related to the singular defined as a physician organization does not constitute information blocking concept of interoperability. located in a rural area, as that term is as defined in section 3022 of the PHSA. We emphasize that our proposed defined at § 411.351, or defined in line Should ONC finalize its proposals to modifications of the definitions of with the definition of a rural provider at implement section 3022 of the PHSA at ‘‘electronic health record’’ and § 411.356(c)(1). We also solicit 45 CFR part 171, and if we finalize our ‘‘interoperable’’ are prospective only. comments on other subsets of potential proposed definition of ‘‘interoperable,’’ Donations made prior to the effective physician recipients for which the 15 we would incorporate the final ONC date of any finalized revisions to these percent contribution is a particular regulations into the definition of definitions are governed by the burden. ‘‘interoperable’’ at § 411.351 by definitions that are in effect when the As an alternative, we are considering referencing 45 CFR part 171 instead of donations are made. We solicit reducing or eliminating the 15 percent section 3022 of the PHSA. comments on this proposal. contribution requirement in the EHR We believe the statutory definition of exception for all physician recipients. ‘‘interoperability’’ includes concepts e. Additional Proposals and We solicit comments regarding the similar to the existing definition of Considerations impact this might have on the use and ‘‘interoperable’’ at § 411.351 (for (1) 15 Percent Recipient Contribution adoption of EHR technology, and any example, the ability to securely attendant risks of fraud and abuse. We In the 2006 EHR final rule, we agreed are interested in specific examples of exchange data across different systems with a number of commenters who or technology). Two new concepts in any prohibitive costs associated with suggested that cost sharing is an the 15 percent contribution the statutory definition are included in appropriate method to address some of the proposed modification: (1) requirement, both for the initial the fraud and abuse risks inherent in donation of EHR technology, and Interoperable means the ability to unlimited donations of technology. exchange electronic health information subsequent upgrades and updates to the Accordingly, we incorporated a technology. without special effort on the part of the requirement into § 411.357(w) that the user and (2) interoperable expressly Regardless of whether we retain the 16 physician pays 15 percent of the donor’s 15 percent contribution requirement or does not mean information blocking. cost of the technology. We noted in the As a practical matter, we believe these reduce that contribution requirement for 2006 EHR final rule that the 15 percent some or all physician recipients, we are two concepts are not substantively cost sharing requirement is high enough different from the existing definition considering modifying or eliminating to encourage prudent and robust EHR the contribution requirement for and only reflect an updated arrangements, without imposing a understanding of interoperability and updates to previously donated EHR prohibitive financial burden on software or technology. We solicit related terminology. We solicit recipients. Moreover, we stated that this comments on the proposed definition comments on this approach as well as approach requires recipients to what such a modification should entail. that would align the definition of contribute toward the benefits they may ‘‘interoperable’’ with the statutory For example, we are considering experience from the adoption of requiring a contribution for the initial definition of ‘‘interoperability.’’ interoperable EHR (for example, a In the alternative, we are considering investment only, as well as any new decrease in practice expenses or access revising our regulations to eliminate the modules, but not requiring a to incentive payments related to the term ‘‘interoperable’’ and instead contribution for any update of the adoption of health IT). software already purchased. We solicit incorporate the term ‘‘interoperability’’ We received a number of comments in and define this term by reference to comments on these alternatives, or response to our RFI, and OIG received another similar alternative that would section 3000(9) of the PHSA and 45 CFR similar comments in response to its RFI, part 170 (if finalized). Under this still involve some contribution but indicating that the 15 percent could reduce the uncertainty and alternative proposal, we would revise contribution has proven burdensome to § 411.357(w)(2) to require that the administrative burden associated with some recipients and acts as a barrier to assessing a contribution for each update. software meets interoperability adoption of EHR technology. We standards established under Title XXX understand that this burden may be (2) Replacement Technology particularly acute for small and rural In the 2013 EHR final rule, we 15 See 70 FR 59186 and 71 FR 45155 through 45156. practices that cannot afford the highlighted a commenter’s assertion that 16 Section 3000(9) of the PHSA; (42 U.S.C. contribution. Other commenters the prohibition on donating equivalent 300jj(9)). suggested that applying the 15 percent technology currently included in the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00133 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55826 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

exception locks physician practices into unless the NPP serves as a conduit for mean direct patient care services a vendor, even if they are dissatisfied physician referrals or is an immediate furnished by an NPP that address the with the technology, because the family member of a referring physician. medical needs of specific patients or recipient must choose between paying We further stated that payments made any task performed by an NPP that the full amount for a new system and by a hospital to subsidize a physician promotes the care of patients of the continuing to pay 15 percent of the cost practice’s costs of recruiting and physician or physician organization of the substandard system (78 FR employing NPPs would create a with which the NPP has a compensation 78766). The same commenter asserted compensation arrangement between the arrangement. Under the proposed that the cost differential between these hospital and the physician practice for definition of ‘‘NPP patient care two options is too high and effectively which no exception would apply, and services,’’ services provided by an locks physician practices into EHR that these kinds of subsidy individual who is not an NPP (as the technology vendors. In the 2013 EHR arrangements pose a substantial risk of term is defined at § 411.357(x)(3)) at the final rule, we responded that we fraud and abuse. Following the time the services are provided, are not continue to believe that items and publication of Phase III, we NPP patient care services for purposes services are not necessary if the reconsidered our position. There have of § 411.357(x). Thus, if an individual recipient already possesses the been significant changes in our health worked in the geographic area served by equivalent items or services. We noted care delivery and payment systems, as the hospital providing the assistance that providing equivalent items and well as projected shortages in the (for example, as a registered nurse) for services confers independent value on primary care workforce. To address this some period immediately prior to the the physician recipient and noted our changed landscape, in the CY 2016 PFS commencement of his or her expectation that physicians would not final rule, we finalized a limited compensation arrangement with the select or continue to use a substandard exception at § 411.357(x) for hospitals, physician or physician organization in system if it posed a threat to patient FQHCs, and rural health clinics (RHCs) whose shoes the physician stands, but safety. to provide remuneration to a physician had not worked as an NPP in that area We appreciate that advancements in to assist with the employment of an NPP during that time period, the exception at EHR technology are continuous and (80 FR 71301 through 71311). § 411.357(x) would be available to rapid. According to commenters, in The exception at § 411.357(x) applies protect remuneration from the hospital some situations replacement technology to remuneration provided by a hospital to the physician to compensate the NPP is appropriate but prohibitively to a physician to compensate an NPP to to provide NPP patient care services, expensive. We are proposing to allow provide patient care services. We have provided that all of the requirements of donations of replacement EHR received several inquiries regarding the the exception are satisfied. In this technology. We specifically seek meaning of the term ‘‘patient care example, the registered nursing services comment as to the types of situations in services’’ as it relates to an NPP. The would not be considered NPP patient which the donation of replacement inquiries generally concentrate on the care services when determining whether technology would be appropriate. We requirement at § 411.357(x)(1)(v)(B) that the arrangement satisfies the 1-year further solicit comment as to how we the NPP has not, within 1 year of the restriction at § 411.357(x)(1)(v). might safeguard against situations commencement of his or her In addition, we are proposing where donors inappropriately offer, or compensation arrangement with the conforming changes to the term physician recipients inappropriately physician, been employed or otherwise ‘‘referral’’ as defined at § 411.357(x)(4) solicit, unnecessary technology instead engaged to provide patient care services for purposes of the exception. of upgrading their existing technology by a physician or a physician Specifically, we are proposing to revise for appropriate reasons. organization that has a medical practice § 411.357(x) to change references to site located in the geographic area ‘‘referral’’ when describing the actions 12. Exception for Assistance To served by the hospital. Often, prior to of an NPP to ‘‘NPP referral’’ and revise Compensate a Nonphysician becoming an NPP, an individual may § 411.357(x)(4) accordingly. We believe Practitioner (§ 411.357(x)) have been a registered nurse (or some that it is unnecessary to have a general Section 1877(e)(5) of the Act sets forth other health care professional) and may definition of ‘‘referral’’ at § 411.351 that an exception for remuneration provided have provided services to patients that is applicable throughout our regulations by a hospital to a physician to induce are similar to the services provided by and a different definition of the same the physician to relocate to the an NPP. For purposes of the exception term that applies only for purposes of geographic area served by the hospital at § 411.357(x), the question presented the exception at § 411.357(x). We are not to be a member of the hospital’s medical by stakeholders is whether the services proposing substantive changes to the staff, subject to certain requirements. provided by the individual before the definition itself; however, we are This exception is codified in our individual became an NPP constitute proposing to move the definition to regulations at § 411.357(e). In Phase III, ‘‘patient care services.’’ § 411.357(x)(4)(ii) in order to we declined a commenter’s request to We realize that the definition of accommodate the inclusion of the expand § 411.357(e) to cover the ‘‘patient care services’’ found at related definition of ‘‘NPP patient care recruitment of nonphysician § 411.351 relates to tasks performed by services’’ within section § 411.357(x)(4). practitioners (NPPs) into a hospital’s a physician only. To clarify the meaning We are also proposing a related service area, including into an existing of ‘‘patient care services’’ for purposes change to § 411.357(x)(1)(v)(A). As physician practice, stating that the of the exception for assistance to currently drafted, § 411.357(x)(1)(v)(A) exception for physician recruitment at compensate an NPP, we are proposing requires the NPP to not have practiced § 411.357(e) applies only to payments to revise § 411.357(x) to change the in the geographical area served by the made directly (or, in some references to ‘‘patient care services’’ to hospital within 1 year of the circumstances, passed through) to a ‘‘NPP patient care services’’ and include commencement of the compensation recruited physician (72 FR 51049). a definition of the term ‘‘NPP patient arrangement with the physician. Recruitment payments made by a care services’’ in the exception at According to stakeholders that hospital directly to an NPP would not § 411.357(x)(4)(i). We are proposing to requested guidance on the scope of the implicate the physician self-referral law, define ‘‘NPP patient care services’’ to exception, the word ‘‘practiced’’ may be

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00134 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55827

interpreted to include the provision of protected under the exception do not health care providers (which may NPP patient care services (as we are pose a risk of program or patient abuse, include physicians). The BBA requires proposing to define the term here) and we are proposing to amend that the providers have at least a other services, for example, services § 411.357(x)(1)(i) to expressly require majority financial interest in the entity provided by a health care professional that the compensation arrangement and share a substantial financial risk for who is not an NPP at the time the between the hospital, FQHC, or RHC the provision of items and services. If services are furnished. To resolve any and the physician commences before such ownership was not excepted, the potential stakeholder confusion, we are the physician (or the physician physician owners of PSOs would not be proposing to replace the term organization in whose shoes the permitted to refer enrollees for ‘‘practiced’’ with ‘‘furnished NPP physician stands under § 411.354(c)) designated health services furnished by patient care services.’’ Under the enters into the compensation with the the coordinated care plan (or its proposal, a hospital would not run afoul NPP. Put another way, the contractors and subcontractors). of § 411.357(x)(1)(v)(A) if the hospital compensation arrangement between the Subsequently, in 1999, the Congress provided remuneration to a physician to NPP and the physician (or physician amended section 1877(b)(3) of the Act to compensate an NPP, and the individual organization in whose shoes the create a similar statutory exception for receiving compensation from the physician stands) must commence on or Medicare+Choice at section physician furnished services in the after the commencement of the 1877(b)(3)(E) of the Act (Pub. L. 106– hospital’s geographic service area compensation arrangement between the 113). within 1 year of the commencement of hospital, FQHC, or RHC and the Section 201 of the Medicare his or her compensation arrangement physician. Prescription Drug, Improvement, and with the physician, provided that the Modernization Act of 2003 (Pub. L. 108– 13. Updating and Eliminating an Out-of- services furnished by the individual 173, enacted on December 8, 2003) Date References during the 1-year period were not NPP (MMA) renamed the Medicare+Choice patient care services, as we are a. Medicare+Choice (§ 411.355(c)(5)) program as the Medicare Advantage program and provided that any statutory proposing to define the term at Section 1877(b)(3) of the Act and reference to ‘‘Medicare+Choice’’ was § 411.357(x)(4)(i). § 411.355(c) of the physician self- deemed to be a reference to the referral regulations set forth exceptions In addition to the inquiries related to Medicare Advantage program. In the meaning of the terms ‘‘patient care for designated health services furnished reviewing our regulations for out-of-date services’’ and ‘‘practice,’’ we are aware by various organizations to enrollees of references, including references to of stakeholder uncertainty regarding the certain prepaid health plans. When the Medicare+Choice, as part of this timing of arrangements that may be Medicare+Choice program was proposed rulemaking, it came to our permissible under § 411.357(x). established in the Balanced Budget Act attention that the language of Specifically, stakeholders have inquired of 1997 (Pub. L. 105–33) (BBA), the § 411.355(c)(5) may be inconsistent with whether an NPP must begin his or her Congress failed to update section other program regulations. Current compensation arrangement with the 1877(b)(3) of the Act to except the § 411.355(c)(5) excepts designated physician (or physician organization in designated health services furnished health services furnished by an whose shoes the physician stands) on or under Medicare+Choice coordinated organization (or its subcontractors) to after the commencement of the care plans. Based on our belief that this enrollees of a coordinated care plan compensation arrangement between the was an oversight, in the June 26, 1998 (within the meaning of section hospital, FQHC, or RHC and the interim final rule with comment period 1851(a)(2)(A) of the Act) offered by an physician. Stakeholders noted that the (Medicare Program; Establishment of the organization in accordance with a exception includes no explicit Medicare+Choice Program (63 FR contract with CMS under section 1857 prohibition on an entity providing 34968)), we revised § 411.355(c) to of the Act and Part 422 of Title 42, assistance to a physician to reimburse accommodate the creation of the Chapter IV of the Code of Federal the physician for the compensation, Medicare+Choice program and, relying Regulations. For consistency with the signing bonus, or benefits paid to an on the Secretary’s authority to create MMA directive and to ensure the NPP already employed or contracted by new exceptions under section 1877(b)(4) accuracy of our regulations, we are the physician prior to the date of the of the Act, we included proposing to revise § 411.355(c)(5) to commencement of the physician’s Medicare+Choice coordinated care more accurately reference Medicare compensation arrangement with the plans in § 411.355(c)(5) of our Advantage plans. Under this proposal, hospital, FQHC, or RHC. As we stated regulations (63 FR 35033 through § 411.355(c)(5) would reference when finalizing the exception at 35034). (We declined to include designated health services furnished by § 411.357(x), our underlying goal is to Medicare+Choice medical savings an organization (or its contractors or increase access to needed care (80 FR account plans and Medicare+Choice subcontractors) to enrollees of a 71309). Permitting a hospital, FQHC, or private fee-fee-for service plans due to coordinated care plan (within the RHC to simply reimburse a physician the risk of patient abuse related to meaning of section 1851(a)(2)(A) of the for overhead costs of current employees financial liability for premiums and cost Act) offered by a Medicare Advantage or contractors already serving patients sharing, which were not limited by the organization in accordance with a in the geographic area served by the BBA.) We included Medicare+Choice contract with CMS under section 1857 hospital, FQHC, or RHC does not coordinated care plans at of the Act and part 422 of this chapter. support this goal. Nonetheless, as § 411.355(c)(5), in part, to avoid This proposal does not represent a stakeholders pointed out, there is no contradiction with the BBA’s change in our policy. express requirement regarding the establishment of provider-sponsored The Medicare Advantage program timing of the compensation arrangement organization (PSO) plans as coordinated varies from the Medicare+Choice between the NPP and the physician (or care plans. PSOs are defined in the BBA program in ways other than its name physician organization in whose shoes as entities that must be organized and and has matured in the years since the physician stands) in § 411.357(x). To operated by a provider (which may be passage of the MMA. More than 20 years ensure that compensation arrangements a physician) or a group of affiliated have passed since we determined to

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00135 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55828 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

protect designated health services require that the arrangement be set forth physician’s provision of items and furnished to enrollees of coordinated in writing and signed by the parties. services to the entity. In some instances, care plans and exclude medical savings We also recognized in Phase I that the arrangements were ongoing service account plans and private fee-fee-for many of the incidental benefits that arrangements under which services service plans from the scope of hospitals provide to medical staff were furnished sporadically or for a low § 411.355(c)(5). In light of this, we are members do not qualify for the rate of compensation; in others, services seeking comments regarding whether exception at § 411.357(c) for bona fide were furnished during a short period of § 411.355(c)(5) is broad enough to employment relationships because most time and the arrangement did not protect designated health services members of a hospital’s medical staff are continue past the service period. For furnished to enrollees in the full range not hospital employees, nor would they example, one submission to the SRDP of Medicare Advantage plans that exist qualify for the exception at § 411.357(l) disclosed an arrangement with a today and that do not pose a risk of for fair market value compensation physician for short-term medical program or patient abuse. Specifically, because, to the extent that the medical director services while the hospital was we are interested in commenters’ views staff membership is the only finalizing the engagement of its new on which, if any, other Medicare relationship between the hospital and medical director following the Advantage plans we should include the physician, there is no written unexpected resignation of its previous within the scope of § 411.355(c)(5). arrangement between the parties to medical director. Despite the hospital’s which these incidental benefits could be legitimate need for the services and b. Website added. We acknowledged that many compensation that was fair market value We are proposing to modernize the medical staff incidental benefits are and not determined in any manner that regulatory text by changing ‘‘website’’ to customary industry practices that are took into account the volume or value ‘‘website’’ throughout the physician intended to benefit the hospital and its of the referrals or other business self-referral regulations to conform to patients; for example, free computer and generated by the physician, the the spelling of the term in the internet access benefits the hospital and arrangement could not satisfy all Government Publishing Office’s Style its patients by facilitating the requirements of any applicable Manual and other current style guides. maintenance of up-to-date, accurate exception because the compensation medical records and the availability of was not set in advance of the provision E. Providing Flexibility for Nonabusive cutting edge medical information (66 FR Business Practices of the services and was not reduced to 921). To address this, using the writing and signed by the parties. Under 1. Limited Remuneration to a Physician Secretary’s authority under section arrangements such as this, insofar as the (Proposed § 411.357(z)) 1877(b)(4) of the Act, we finalized a hospital paid the physician in cash, the second exception for noncash items or In the 1998 proposed rule, we exception at § 411.357(k) for services provided to a physician. The nonmonetary compensation would not proposed an exception for de minimis exception at § 411.357(m) for medical compensation in the form of noncash apply to the arrangement. Similarly, the staff incidental benefits permits a exception at § 411.357(l) for fair market items or services (63 FR 1699). In Phase hospital to provide noncash items or I, using the Secretary’s authority at value compensation would not protect services to members of its medical staff the payment if the arrangement was not section 1877(b)(4) of the Act, we when the item or service is used on the finalized the proposal at § 411.357(k) documented in contemporaneous signed hospital’s campus and certain writings and the amount of or formula and changed the name of the exception conditions are met, including that the for calculating the compensation was to nonmonetary compensation, noting compensation is reasonably related to not set in advance of provision of the that, although free or discounted items the provision of (or designed to items or services, even if the payment and services such as free samples of facilitate) the delivery of medical did not exceed fair market value for certain drugs, chemicals from a services at the hospital and the item or actual items or services provided and laboratory, or free coffee mugs or note service is provided only during periods was not determined in a manner that pads from a hospital fall within the when the physician is making rounds or takes into account the volume or value definition of ‘‘compensation engaged in other services or activities of referrals or other business generated arrangement,’’ we believe that such that benefit the hospital or its patients by the physician. compensation is unlikely to cause (66 FR 921). In addition the overutilization, if held within compensation may not be offered in a After reviewing numerous reasonable limits (66 FR 920). The manner that takes into account the arrangements in the SRDP, we believe exception for nonmonetary volume or value of referrals or other that the provision of limited compensation at § 411.357(k) permits an business generated between the parties. remuneration to a physician would not entity to provide compensation to a Under the exception, permissible pose a risk of program or patient abuse, physician in the form of items or noncash compensation is limited on a even in the absence of documentation services (other than cash or cash per-instance basis, and the current limit regarding the arrangement and where equivalents) up to an aggregate amount is $35 per instance. Like the exception the amount of or a formula for of $300 per calendar year, adjusted at § 411.357(k) for nonmonetary calculating the remuneration is not set annually for inflation and currently compensation, the exception at in advance of the provision of items or $416 per calendar year, provided that § 411.357(m) for medical staff incidental services, if: (1) The arrangement is for the compensation is not solicited by the benefits does not impose any items or services actually provided by physician and is not determined in any documentation or signature the physician; (2) the amount of the manner that takes into account the requirements. remuneration to the physician is volume or value of referrals or other Through our administration of the limited; (3) the arrangement furthers a business generated by the referring SRDP, we have been made aware of legitimate business purpose of the physician. The exception does not numerous nonabusive arrangements parties and is on similar terms and require that the physician provide under which a limited amount of conditions as like arrangements, anything to the entity in return for the remuneration was paid by an entity to regardless of whether it results in profit nonmonetary compensation, nor does it a physician in exchange for the for either or both of the parties; (4) the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00136 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55829

remuneration is not determined in any $3,500, we believe that the requirement or claims submission. However, we are manner that takes into account the that compensation is set in advance soliciting comment regarding whether volume or value of referrals or other before the provision of the items or such a safeguard is necessary here in business generated by the physician; services is necessary to ensure that light of the absence of requirements for and (5) the remuneration does not various payments made over the term of set in advance compensation and exceed the fair market value for the the arrangement are not determined written documentation of the items or services. Under these retrospectively to reward past referrals arrangement. We note that, if we do not circumstances, we believe that, if held or encourage increased referrals from finalize our proposal to remove the within reasonable limits, remuneration the physician. We note that the annual requirements related to the compliance is unlikely to cause overutilization or limit of $3,500 for the proposed with the anti-kickback statute and similar harms to the Medicare program. exception is higher than the annual Federal and State laws and regulations Therefore, using the Secretary’s limit for the exception for nonmonetary governing billing or claims submission, authority under section 1877(b)(4) of the compensation at § 411.357(k) because we would include a requirement at Act, we are proposing an exception for the exception for limited remuneration proposed § 411.357(z) that the limited remuneration from an entity to to a physician would protect a fair arrangement does not violate the anti- a physician for items or services market value exchange of remuneration kickback statute or any Federal or State actually provided by the physician. We for items or services actually furnished law or regulation governing billing or are proposing that the exception would by a physician, while the exception for claims submission. Moreover, to the apply only where the remuneration does nonmonetary compensation does not extent that remuneration implicates the not exceed an aggregate of $3,500 per require a physician to provide actual anti-kickback statute, nothing in our calendar year, which would be adjusted items or services in exchange for the proposals would affect the parties’ for inflation in the same manner as the nonmonetary compensation. We seek obligation to comply with the anti- annual limit on nonmonetary public comment on whether the $3,500 kickback statute, and compliance with compensation and the per-instance limit limit is appropriate, too high, or too low the exception for limited remuneration on medical staff incidental benefits; that to accommodate nonabusive to a physician, if finalized, would not is, adjusted to the nearest whole dollar compensation arrangements for the consequentially result in compliance by the increase in the Consumer Price provision of items or services by a with the anti-kickback statute. As we Index—Urban All Items for the 12- physician. We are also interested in stated in Phase I, section 1877 of the Act month period ending the preceding comments regarding whether it is is limited in its application and does not September 30. Under the proposal, the necessary to limit the applicability of address every abuse in the health care remuneration may not be determined in the exception to services that are industry. The fact that particular any manner that takes into account the personally performed by the physician referrals and claims are not prohibited volume or value of referrals or other and items provided by the physician in by section 1877 of the Act does not business generated by the physician or order to further safeguard against mean that the arrangement is not exceed fair market value for the items or program or patient abuse. abusive (66 FR 879). services provided by the physician, and The proposed exception at In determining whether payments to a the compensation arrangement must be § 411.357(z) for limited remuneration to physician under the proposed exception commercially reasonable. We believe a physician would apply to the for limited remuneration to a physician that an annual aggregate limit of $3,500 furnishing of both items and services by exceed the annual limit, we would not is sufficient to cover the typical range of a physician. Previously, we stated that count compensation to a physician for commercially reasonable arrangements we are retracting prior statements that items or services provided outside of the for the provision of items and services office space is neither an ‘‘item’’ nor a arrangement, if the items or services that a physician might provide to an ‘‘service.’’ Thus, for the reasons provided are protected under an entity on an infrequent or short-term articulated in section II.D.10. of this exception in § 411.355 or the basis. The proposed exception would proposed rule and the CY 2017 PFS arrangement for the other items or not be applicable to payments from an proposed rule (81 FR 46448 through services fully complies with the entity to a physician’s immediate family 46453) and final rule (81 FR 80524 requirements of another exception in member or to payments for items or through 80534), we are proposing to § 411.357. To illustrate, assume an services provided by the physician’s incorporate in proposed § 411.357(z) entity has an established call coverage immediate family member. prohibitions on percentage-based and arrangement with a physician that fully Given the low annual limit of the per-unit of service compensation to the satisfies the requirements of proposed exception and the other extent the remuneration is for the use or § 411.357(d)(1) or § 411.357(l). Assume proposed safeguards of the exception, lease of office space or equipment, further that the entity later engages the we believe that the exception for limited similar to the provisions at existing physician to provide supervision remuneration to a physician would not § 411.357(p)(1)(ii) for indirect services on a sporadic basis during the pose a risk of program or patient abuse. compensation arrangements and same year but failed to document the In contrast, when the remuneration a § 411.357(y)(6)(ii) for timeshare arrangement in a writing signed by the physician receives from an entity for arrangements. Lastly, in keeping with parties. In determining whether the items or services exceeds the aggregate our policy decision in this rule to supervision arrangement satisfies the annual limit of $3,500, as adjusted decouple exceptions issued under our requirements of the proposed exception annually for inflation, we believe that authority at section 1877(b)(4) of the Act for limited remuneration to a physician, the additional safeguards of other from the anti-kickback statute, the we would not count the compensation applicable exceptions are necessary to proposed exception for limited provided under the call coverage prevent program or patient abuse. For remuneration to a physician does not arrangement towards the aggregate example, for long-term arrangements for include a requirement that the $3,500 annual limit. However, if an items or services provided on a more arrangement must not violate the anti- entity has multiple undocumented, routine or frequent basis, where the kickback statute or other Federal or unsigned arrangements under which it aggregate annual compensation exceeds State law or regulation governing billing provides compensation to a physician

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00137 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55830 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

for items or services provided by the calendar days to document and sign the proposals, and take additional actions physician, we would consider the arrangement.) when crafting our final rule. parties to have a single compensation We note that § 411.357(d)(1)(ii) In recent years, both CMS and OIG arrangement for various items and requires that the personal service have received numerous comments and services, and the aggregate of all the arrangement covers all the services suggestions urging the creation of an compensation provided under the provided by the physician (or an exception and a safe harbor to protect arrangement could not exceed $3,500 immediate family member of the donations of cybersecurity technology during the calendar year in order for the physician) to the entity (or incorporate and related services.18 The digitization proposed exception to protect the other arrangements by reference or of health care delivery and rules remuneration to the physician. To cross-reference a master list of contracts) designed to increase interoperability illustrate, assume the entity in the and § 411.357(l)(2) requires that parties and data sharing in the delivery of previous example also engaged the enter into only one arrangement for the health care create numerous targets for physician to provide occasional EKG same services in a year. For purposes of cyberattacks. The health care industry interpretations during the course of the § 411.357(d)(1)(ii), we would not require and the technology used to deliver year, and that the aggregate annual an arrangement for items or services that health care have been described as an compensation for the supervision satisfies all of the requirements of the interconnected ecosystem where the services and the EKG interpretation proposed exception for limited weakest link in the system can 19 services taken together exceeded remuneration to a physician to be compromise the entire system. Given $3,500.17 Assuming neither arrangement covered by a personal service the prevalence of electronic health satisfied the requirements of any other arrangement protected under record storage, as well as the processing applicable exception, the exception for § 411.357(d) or listed in a master list of and transit of health records and other limited remuneration to a physician contracts. Likewise, with respect to the critical protected health information would not protect either arrangement restriction in the exception for fair (PHI) between and within the (which, as noted, we would treat as a market value compensation at components of the health care ecosystem, the risks associated with single arrangement for multiple § 411.357(l)(2), we would not consider cyberattacks originating with ‘‘weak services) after the $3,500 limit was an arrangement for items or services that links’’ are borne by every component of exceeded during the calendar year. is protected under the proposed We note that the proposed exception the system. exception at § 411.357(z) to violate the Although we did not specifically for limited remuneration to a physician prohibition on entering into an request comments on cybersecurity, could be used in conjunction with other arrangement for the same items and numerous commenters on the CMS RFI exceptions to protect an arrangement services during a calendar year. We are requested that we create an exception to during the course of a calendar year in seeking comments on whether the protect the donation of cybersecurity certain circumstances. To illustrate, regulation text at § 411.357(d)(1)(ii) or technology and related services. assume that an entity engages a § 411.357(l)(2) should be modified to Likewise, in response to its request for physician to provide call coverage explicitly state this policy. information specifically related to services, and that the arrangement is not 2. Cybersecurity Technology and cybersecurity, OIG received documented or the rate of compensation Related Services (Proposed overwhelming support for a safe harbor has not been set in advance at the time § 411.357(bb)) to protect the donation of cybersecurity the services are first provided. Further, technology and related services. Many assume that, after the services are Relying on our authority under commenters on both requests for provided and payment is made, the section 1877(b)(4) of the Act, we are information outlined the increasing parties agree to continue the proposing an exception at § 411.357(bb) prevalence of cyberattacks and other arrangement on a going forward basis to protect arrangements involving the threats. Commenters noted that and agree to a rate of compensation. donation of certain cybersecurity cyberattacks pose a fundamental risk to Assume also that the parties have no technology and related services. We the health care ecosystem and that data other arrangements between them. believe that the proposed exception will breaches result in high costs to the Depending on the facts and help improve the cybersecurity posture health care industry and may endanger circumstances, the parties could rely on of the health care industry by removing patients. Moreover, disclosures of PHI the proposed exception to protect the a perceived barrier to donations to through a data breach can result in first payments up to the $3,500 annual address the growing threat of identity fraud, among other things. limit, provided that the requirements of cyberattacks that infiltrate data systems The Health Care Industry the proposed exception are satisfied. For and corrupt or prevent access to health Cybersecurity (HCIC) Task Force, the ongoing compensation arrangement, records and other information essential created by the Cybersecurity the parties could rely on another to the delivery of health care. The OIG Information Sharing Act of 2015 applicable exception, such as is considering a similar safe harbor to (CISA),20 was established in March 2016 § 411.357(d)(1), to protect the the anti-kickback statute elsewhere in and is comprised of government and arrangement once the compensation is this issue of the Federal Register. private sector experts. The HCIC Task set in advance and the other Despite the differences in the respective Force produced its HCIC Task Force requirements of the exception are underlying statutes, we attempted to satisfied. (We remind readers that, ensure as much consistency as possible 18 See, for example, U.S. Department of Health under proposed § 411.354(e)(3), the between our proposed exception and and Human Services, Office of Inspector General, Semiannual Report to Congress, Apr. 1, 2018–Sept. parties would have up to 90 consecutive OIG’s proposed safe harbor. Because of 30, 2018, at 84. the close nexus between our proposed 19 See, for example, Health Care Industry 17 As noted previously, compensation paid under exception and the policies under Cybersecurity Task Force, Report on Improving the call coverage arrangement would not be consideration by OIG, we may consider Cybersecurity in the Health Care Industry, June included when determining whether the limit was comments submitted in response to 2017 (HCIC Task Force Report), available at https:// exceeded, because the call coverage arrangement in www.phe.gov/preparedness/planning/cybertf/ this example fully complies with an applicable OIG’s proposals, even if we do not documents/report2017.pdf. exception. receive such comments on our 20 Public Law 114–113, 129 Stat. 2242.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00138 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55831

Report in June 2017.21 The HCIC Task care IT systems without protecting definition or a definition that might Force recommended, among other potentially abusive arrangements. become obsolete over time. We solicit things, that the Congress ‘‘evaluate an We are proposing to protect comment on this approach and whether amendment to [the physician self- nonmonetary remuneration in the form a definition tailored to the health care referral law and the anti-kickback of certain types of cybersecurity industry would be more appropriate. statute] specifically for cybersecurity technology and related services. We are Our proposed definition of software that would allow health care proposing to include within the scope of ‘‘technology’’ is similarly broad. We organizations the ability to assist covered technology any software or intend to be neutral with respect to the physicians in the acquisition of this other type of IT, other than hardware. In types of non-hardware cybersecurity technology, through either donation or section II.E.2.e. of this proposed rule, technology to which the exception subsidy,’’ and noted that the regulatory we are alternatively proposing to permit would be applicable. We intend for this exception to the physician self-referral the donation of certain cybersecurity exception to be broad enough to include law for EHR items and services and the hardware under certain circumstances. cybersecurity software and other IT, safe harbor for EHR items and services In an effort to foster beneficial such as an Application Programming could serve as a template for a new cybersecurity donation arrangements Interface (API), which is neither statutory exception.22 without permitting arrangements that software nor a service as those terms are Based on responses to OIG’s request pose a risk of program or patient abuse, generally used, that is available now for information, we understand that the the proposed exception at § 411.357(bb) and technology that may become cost of cybersecurity technology and would impose a number of requirements available as the industry continues to related services has increased for cybersecurity donations, as set forth develop. The definition of ‘‘technology’’ dramatically, to the point where some below. Notably, the proposed exception for purposes of the proposed exception providers and suppliers are unable to would require the donation to be excludes hardware. Although we invest in and, therefore, have not necessary and used predominantly to recognize that effective cybersecurity invested in, adequate cybersecurity implement, maintain, or reestablish may require hardware that meets certain measures. Therefore, we believe that cybersecurity. standards (for example, encrypted allowing entities that are willing to endpoints or updated servers), we are donate certain cybersecurity technology a. Definitions concerned that donations of valuable, and related services, with appropriate We are proposing to define the terms multifunctional hardware may pose a safeguards, would greatly strengthen the ‘‘cybersecurity’’ and ‘‘technology.’’ risk of program or patient abuse. We entire health care ecosystem. Although Because the definition of believe that donations of technology donated technology and services may ‘‘cybersecurity’’ would also apply to our that may be used for purposes other have value for the recipients of a proposal to explicitly permit the than cybersecurity present a risk that donation insomuch as the recipient donation of cybersecurity software and the donation is being made to influence would be able to use its resources for services under § 411.357(w), we are referrals. Hardware is usually needs other than cybersecurity proposing to include the definition of multifunctional and, as a result, likely expenses, we believe that a primary ‘‘cybersecurity’’ in our regulations at would not be necessary and used reason donors would provide § 411.351. The proposed definition of predominantly to implement, maintain, cybersecurity technology and related ‘‘technology,’’ on the other hand, would or reestablish effective cybersecurity. To services is to protect themselves from be applicable only to the proposed illustrate this policy, the proposed cyberattacks. As previously noted, the exception for the donation of exception would not protect a laptop risks associated with a cyberattack on a cybersecurity technology and related computer or tablet used in the general single provider or supplier in an services and, therefore, would be course by a physician to enter patient interconnected system are ultimately included in the regulation text at visit information into an EHR and borne by every player in the system. proposed § 411.357(bb)(2). We are respond to emails. However, it would Thus, an entity wishing to protect itself proposing to define the term protect encryption software for the from cyberattacks has a vested interest ‘‘cybersecurity’’ to mean the process of laptop computer or tablet. Our proposal in ensuring that the physicians with protecting information by preventing, is consistent with a similar exclusion of whom the entity shares data are also detecting, and responding to hardware in the EHR exception at protected from cyberattacks, particularly cyberattacks and define the term § 411.357(w). (See 71 FR 45149 for a where the connections allow the ‘‘technology’’ to mean any software or discussion of our rationale for excluding physicians to establish bidirectional other type of information technology hardware from protection under the interfaces with the entity, which other than hardware. EHR exception.) We solicit comments inherently present higher risk than We intend to interpret on this approach. connections that permit physicians ‘‘cybersecurity’’ broadly and our We are considering two alternative ‘‘read-only’’ access to the entity’s data proposed definition is derived from the proposals that would allow for the systems. We believe that certain National Institute for Standards and donation of certain cybersecurity cybersecurity donations would not pose Technology (NIST) Framework for hardware. Under the first alternative proposal, the exception at § 411.357(bb) a risk of program or patient abuse, Improving Critical Infrastructure,23 a would cover specific hardware that is provided that they satisfy all the framework that does not apply necessary for cybersecurity, provided requirements of the proposed exception, specifically to the health care industry, that the hardware is stand-alone (that is, and that the exception we are proposing but applies generally to any United is not integrated within multifunctional in this proposed rule, if finalized, would States critical infrastructure. Our goal is equipment) and serves only promote increased security for to broadly define cybersecurity and cybersecurity purposes (for example, a interconnected and interoperable health avoid unintentionally limiting donations by relying on a narrow two-factor authentication dongle). We solicit comments on what types of 21 HCIC Task Force Report, available at https:// www.phe.gov/preparedness/planning/cybertf/ 23 Appendix B, Version 1.1 (April 16, 2018) hardware might qualify and whether we documents/report2017.pdf. available at https://nvlpubs.nist.gov/nistpubs/ should protect them under the proposed 22 Id. at 27. CSWP/NIST.CSWP.04162018.pdf. exception. Under our second alternative

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00139 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55832 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

proposal, we would permit entities to examples are indicative of the types of program or patient abuse. The proposed donate a broader range of cybersecurity technology that are necessary and used exception would not protect donations technology, including hardware, predominantly for cybersecurity. We of technology or services that are provided that specified requirements are solicit comments on the proposed otherwise used in the normal course of satisfied. We discuss the second breadth of protected technology as well the recipient’s business (for example, alternative proposal in section II.E.2.e. as whether we should expressly include general help desk services related to use of this proposed rule. (or exclude) other technology or of a practice’s IT). We solicit comment Finally, we note that the proposed categories of technology in the proposed on this approach and whether this exception only protects items and exception. proposed limitation would prohibit the services that meet the definition of Similarly, we are proposing to protect donation of cybersecurity technology cybersecurity technology and related a broad range of services. Such services and related services that are vital to services. It does not extend to other could include— improving the cybersecurity posture of • types of cybersecurity measures outside Services associated with the health care industry. of technology or services. For example, developing, installing, and updating For the purposes of meeting the the proposed exception would not cybersecurity software; proposed requirement at • Cybersecurity training services, protect donations of installation, § 411.357(bb)(1)(i) that the technology or such as training recipients on how to improvement, or repair of infrastructure services are necessary to implement, use the cybersecurity technology, how related to physical safeguards, even if maintain, or reestablish cybersecurity, to prevent, detect, and respond to cyber they could improve cybersecurity (for we are considering, and seek comment threats, and how to troubleshoot example, upgraded wiring or installing on, whether to deem certain high security doors). Donations of problems with the cybersecurity arrangements to satisfy this infrastructure upgrades are extremely technology (for example, ‘‘help desk’’ requirement. (The deeming provision valuable and have multiple benefits in services specific to cybersecurity); would not affect the requirement that addition to cybersecurity, and, thus, • Cybersecurity services for business the technology or services are used pose an increased risk that one purpose continuity and data recovery services to predominantly to implement, maintain, of the donation is to pay for or influence ensure the recipient’s operations can or reestablish cybersecurity. Parties a physician’s referrals to the donor continue during and after a would have to show on a case-by-case entity. cybersecurity attack; • ‘‘Cybersecurity as a service’’ models basis that this requirement is met.) b. Conditions on Donation and that rely on a third-party service Specifically, if we determine that a Protected Donors provider to manage, monitor, or operate deeming provision is appropriate, we At § 411.357(bb)(1)(i), we are cybersecurity of a recipient; would deem donors and recipients to proposing to limit the applicability of • Services associated with performing satisfy the requirement that the the exception for cybersecurity a cybersecurity risk assessment or technology or services are necessary to technology and related services to analysis, vulnerability analysis, or implement, maintain, or reestablish donated technology or services that are penetration test; or cybersecurity if the parties demonstrate necessary and predominantly used to • Services associated with sharing that the donation furthers a recipient’s implement, maintain, or reestablish information about known cyber threats, compliance with a written cybersecurity cybersecurity. The goal of this condition and assisting recipients responding to program that reasonably conforms to a is to ensure that donations are being threats or attacks on their systems. widely-recognized cybersecurity made for the purposes of addressing We believe these types of services are framework or set of standards. Examples legitimate cybersecurity needs of donors indicative of the types of services that of such frameworks and sets of and recipients; that is, the core function are necessary and used predominantly standards include those developed or of the donated technology or service for cybersecurity. We solicit comments endorsed by NIST, another American must be to protect information by on the proposed breadth of protected National Standards Institute-accredited preventing, detecting, and responding to services as well as whether we should standards body, or an international cyberattacks. Our intent is to protect a expressly include (or exclude) other voluntary standards body such as the wide range of technology and services services or categories of services in the International Organization for that are specifically donated for the proposed exception. In all cases, the Standardization. If finalized, the purpose of, and are necessary for, donation of services must be deeming provision would not require ensuring that donors and recipients nonmonetary. For example, donating compliance with a specific framework have cybersecurity. the time of a consultant to implement a or specific set of standards; rather, a As stated previously, we are taking a cybersecurity program could be deeming provision would merely neutral position with respect to protected, but if an entity were to provide an option for donors to protected technology, including as to experience a cyberattack that involved demonstrate that the donation is the types and versions of software that ransomware, payment of the ransom necessary to implement, maintain, or can receive protection. We do not amount for a recipient would not be reestablish cybersecurity. We believe distinguish between cloud-based protected. that a deeming provision would provide software and software that must be We reiterate that, although technology some assurance to donors and recipients installed locally. The types of or services may have multiple uses, the about how to demonstrate that technology potentially protected under proposed exception would only protect donations are necessary to secure IT the proposed exception include, but are donations of technology and services systems, devices, and patient data. We not limited to, software that provides that are used predominantly to solicit comments on incorporating a malware prevention, software security implement, maintain, and reestablish deeming provision in measures to protect endpoints that cybersecurity. As explained in the § 411.357(bb)(1)(i), including comments allow for network access control, discussion of the definition of on ways that parties could reliably business continuity software, data technology, we remain concerned that demonstrate that a donation furthers a protection and encryption, and email donations of valuable multi-use recipient’s compliance with a written traffic filtering. We believe these technology or services pose a risk of cybersecurity program that reasonably

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00140 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55833

conforms to a widely-recognized the entity would provide to a physician exception. We solicit comments on cybersecurity framework or set of with whom it has a read-only whether particular types of entities standards. For example, we seek connection to a properly implemented, should be excluded from donating comments on whether parties could standards-based API that enables only cybersecurity technology and related demonstrate that a donation meets the the secure transmission of a copy of the services, and if so, why. Specifically, in cybersecurity deeming provision patient’s record to the physician. We past rulemakings we have distinguished through documentation, certifications, solicit comments on this requirement. between individuals and entities with or other methods not proscribed by In contrast to the similar requirement direct and primary patient care regulation, as well as what qualifies as in the EHR exception at § 411.357(w)(6), relationships that have a central role in a widely recognized cybersecurity the proposed exception for the health care delivery infrastructure, framework or set of standards. cybersecurity technology and related such as hospitals and physician At proposed § 411.357(bb)(1)(ii), we services does not include a list of practices, and suppliers of ancillary would require that donors not condition selection criteria which, if met, would services, such as laboratories, and the amount or nature of, or eligibility be deemed not to directly take into manufacturers or vendors that indirectly for, cybersecurity donations on referrals. account the volume or value of referrals furnish items and services used in the In other words, we are proposing that a or other business generated by the care of patients. (For a discussion of our donor could not require, explicitly or physician. Our intent in proposing this rationale in past rulemakings, see 78 FR implicitly, that a recipient either refer to exception is to remove obstacles to the 78757 through 78762.) We seek the donor or recommend the donor’s adoption of cybersecurity in the health comments as to whether our historical business as a condition of receiving a care industry in order to address the concerns and other considerations cybersecurity donation. We understand growing threat of cyberattacks. We are regarding direct and indirect patient that the purpose of donating concerned that deeming provisions care apply in the context of cybersecurity technology and related pertaining to the volume or value of cybersecurity donations. services is to guard against threats that referrals or other business generated c. Conditions for Recipients come from interconnected systems, and may be interpreted as prescriptive we understand and expect that a donor requirements. It is our experience that In proposed § 411.357(bb)(1)(iii), we would provide the cybersecurity deeming provisions may act as limits on are proposing a requirement that neither technology and related services only to the type or range of items or services a potential recipient, nor a potential physicians that connect to its systems, that are deemed acceptable. Because we recipient’s practice (including which includes physicians that refer to do not want to inhibit legitimate employees or staff members), may make the donor. However, this condition cybersecurity donations that may not fit the receipt of cybersecurity technology would restrict a donor from squarely within an enumerated deeming and related services, or the amount or conditioning the donation on referrals or provision, we are not proposing any nature of the technology or services, a other business generated.24 deeming provisions pertaining to the condition of continuing to do business Nothing in the proposed requirements requirement at proposed with the donor. This requirement of the exception is intended to require § 411.357(bb)(1)(ii). At the same time, mirrors a requirement in the EHR a donor to donate cybersecurity we recognize that some parties may exception at § 411.357(w)(5). We solicit technology and related services to every prefer the guidance and assurance comments on this proposed physician that connects to its system. offered by deeming provisions, even if requirement. Donors would be able to select the deeming provisions are only ‘‘safe We are not proposing to require a recipients in a variety of ways, provided harbors’’ and are not requirements of the recipient contribution under the that neither a recipient’s eligibility, nor exception. Therefore, we are soliciting exception for cybersecurity technology the amount or nature of the comments on whether we should and related services. As we explained cybersecurity technology or related include deeming provisions in the previously, with this proposed services donated, is determined in a exception for cybersecurity donations exception, we seek to remove a barrier manner that directly takes into account that are similar to the provisions at to donations that improve cybersecurity the volume or value of referrals or other § 411.357(w)(6). We solicit comments on throughout the health care industry in business generated between the parties. this approach and any other conditions response to the critical cybersecurity For example, a donor could perform a or permitted conduct we should issues identified in the HCIC Task Force risk assessment of a potential recipient enumerate in this exception. Report, by commenters to the CMS RFI (or require a potential recipient to We do not propose to restrict the and OIG request for information, and provide the donor with a risk types of entities that may make elsewhere. We are proposing to include assessment) before determining whether cybersecurity donations under this only those requirements under the to make a donation or the scope of a exception. Although donating proposed exception that we believe are donation. If a donor is a hospital, the cybersecurity technology and related necessary to ensure that the hospital might choose to limit donations services would relieve a recipient of a arrangements do not pose a risk of program or patient abuse. In the case of to physicians who are on the hospital’s cost that it otherwise would incur, the cybersecurity technology and related medical staff. Or, the donor might select fraud and abuse risks associated with services, we do not believe that recipients based on the type of actual or cybersecurity are different than requiring a minimum contribution to proposed interface between them. For donations of other valuable technology, the cost by the recipient is necessary or, example, an entity may elect to provide such as EHR items and services. Several commenters to OIG’s request in some cases, practical. We recognize a higher level of cybersecurity for information suggest that technology that the level of services for each technology and services to a physician donations risk making referral sources recipient might vary, and might be with whom it has a higher-risk, bi- beholden to the donors. Therefore, we higher or lower each year, each month, directional read-write connection than are considering narrowing the scope of or even each week, resulting in the 24 We note that, if a system is only as strong as entities that may provide remuneration inability of certain physician practices, its weakest link, then even a very low-referring under the exception as we have done in especially those in rural areas, to make physician’s practice poses a cybersecurity risk. other exceptions, such as the EHR the required contribution, which, in

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00141 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55834 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

turn, risks the overall cybersecurity of arrangement, a reasonable estimate of risk assessment is to inform decision the health ecosystem of which the the value of the donation(s), and, if makers and support risk responses.25 practices are a part. Similarly, donors applicable, any financial responsibility According to NIST, a risk assessment may aggregate the cost of certain for the cost of the cybersecurity does so by identifying: (i) Relevant services across all recipients, such as technology and related services that is threats to organizations or threats cybersecurity patches and updates, on a shared by the recipient. We are not directed through organizations against regular basis, which may result in a requiring the parties to document the other organizations; (ii) vulnerabilities contribution requirement becoming a arrangement in a signed contract, both internal and external to barrier to widespread, low-cost because we believe that this organizations; (iii) impact ([that is], improvements in cybersecurity because requirement may lead to inadvertent harm) to organizations that may occur of the amount allocated to each violation of the physician self-referral given the potential for threats exploiting recipient. Moreover, if physicians are law, especially in situations where vulnerabilities; and (iv) likelihood that not required to utilize resources to donors need to act quickly and harm will occur. The end result is a contribute to the cost of cybersecurity decisively—prior to obtaining the determination of risk ([that is], typically that benefits both the donor and the signature of each physician who is a function of the degree of harm and physician, they will instead have the considered a party to the arrangement— likelihood of harm occurring). With flexibility to contribute to the overall to provide needed cybersecurity respect to health care organizations, the cybersecurity of the health care system technology or related services to HHS Office for Civil Rights has by using available resources for recipients. However, we note that a explained that conducting a risk otherwise unprotected cybersecurity- written agreement between the parties analysis is the first step in identifying related hardware that is core to their that includes the identified elements and implementing safeguards that business, including updates or would satisfy the proposed writing comply with and carry out the standards replacements for outdated legacy requirement at § 411.357(bb)(1)(iv). We and implementation specifications in hardware that may pose a cybersecurity solicit comments on whether we should the Health Information Technology for risk. specify in regulation which terms Economic and Clinical Health (HITECH) Importantly, although the proposed should be required to be in writing and, Act (Title XIII of the American Recovery exception would not require a recipient if so, whether they should be the terms and Reinvestment Act of 2009, Pub. L. to contribute to the cost of donated discussed in this section II.E.2.d. or 111–5). (For more information, see HHS cybersecurity technology or related whether additional or different terms Guidance on Risk Analysis at https:// services, the exception would not should be required. We also seek www.hhs.gov/hipaa/for-professionals/ prohibit donors from requiring such a comment regarding whether we should security/guidance/guidance-risk- contribution. Donors are free to require require a signed writing between the analysis/index.html?language=es.) We recipients to contribute to the cost, and parties to the arrangement. believe that risk assessments are a key such contributions would be excepted component to developing effective under proposed § 411.357(bb), provided e. Alternative Proposal for Inclusion of organization-wide risk management for that the arrangement satisfies all other Cybersecurity Hardware Donations information security and that, when requirements of the proposed exception, We are also proposing and solicit conducted consistent with industry including the requirement at proposed comments on an alternative approach standards, would provide a reasonable § 411.357(bb)(ii) regarding that would allow the donation of basis for donors to identify risks and determinations of the eligibility for or cybersecurity hardware, provided that threats to their organizational the amount or nature of the donated an additional requirement is satisfied. information security that could be cybersecurity technology and related Under this alternative proposal, a mitigated by donating cybersecurity services. For example, if a donor gave a protected donation could also include hardware to physicians who connect full suite of cybersecurity technology cybersecurity hardware that a donor has with their IT systems. We expect that and related services at no cost to a high- donations made in response to a risk or determined is reasonably necessary referring practice but required a low- threat identified through a cybersecurity based on cybersecurity risk assessments referring practice to contribute 20 risk assessment would satisfy the core of its own organization and the potential percent of the cost, then the donor could requirement of the proposed exception; recipient. We believe that this violate the conditions at proposed that is, that the donated cybersecurity alternative proposal would provide § 411.357(bb)(1)(ii). technology and related services are donors and recipients the ability to necessary to implement and maintain d. Written Documentation provide most types of technology effective cybersecurity. At § 411.357(bb)(iv), we are proposing necessary to bolster cybersecurity Under this alternative proposal, a to require that the arrangement is without creating a risk of program or donor must have a cybersecurity risk documented in writing. Although we patient abuse because the hardware assessment that identifies the recipient would not interpret this requirement to would be necessary to implement and as a risk to its cybersecurity. In addition, mean that every item of cybersecurity maintain effective cybersecurity if it was the recipient must have a cybersecurity technology and every potential related identified in the cybersecurity risk risk assessment (which may be provided cybersecurity service must be specified assessments. by the donor if all the requirements of in the documentation evidencing the This alternative proposal builds on proposed § 411.357(bb) are satisfied) arrangement, we expect that written existing legal requirements and best that would provide a reasonable basis to documentation of the arrangement practices related to information security determine that the donated would identify the recipient of the generally and the health care industry cybersecurity hardware is needed to donation and include the following: A more specifically. NIST Special address a risk or threat identified by a general description of the cybersecurity Publication 800–30, which does not technology and related services directly apply to the health care 25 NIST Special Publication 800–30 Revision 1, provided to the recipient over the industry, but represents industry Guide for Conducting Risk Assessments (Sept. standards for information security 2012), available at https://nvlpubs.nist.gov/ course of the arrangement, the nistpubs/legacy/sp/nistspecialpublication800– timeframe of donations made under the practices, explains that the purpose of a 30r1.pdf.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00142 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55835

risk assessment. Both risk assessments are interested in comments that describe • The need for the information must be conducted in a manner the existing practices of potential collection and its usefulness in carrying consistent with industry standards. We donors and recipients with respect to out the proper functions of our agency. are proposing to base our definition of the conducting of risk assessments that • The accuracy of our estimate of the ‘‘risk assessment’’ on NIST Special would provide a reasonable basis to information collection burden. • Publication 800–30 and we are determine that a donation of The quality, utility, and clarity of soliciting comment on whether such a the information to be collected. cybersecurity hardware is reasonable • definition would be sufficient for and necessary. Recommendations to minimize the information collection burden on the purposes of our proposed exception and We are considering additional the alternative proposal to allow affected public, including automated safeguards in the event we finalize this collection techniques. donations of hardware. We are also alternate proposal. For instance, we soliciting comment on whether we We are soliciting public comment on might limit the types of cybersecurity each of these issues for the following should include specific standards for hardware permitted under the cybersecurity risk assessments as sections of this document that contain alternative proposal by defining information collection requirements independent requirements of the ‘‘hardware’’ for purposes of exception at § 411.357(bb) if we finalize (ICRs): § 411.357(bb). We are interested in this alternative proposal, and whether comments that explain what types of A. ICRs Regarding Exceptions to the the requirement that any donated hardware are necessary for effective Physician Self-Referral Law Related to cybersecurity hardware must be cybersecurity. Even if we finalize this Compensation (§ 411.357) necessary and used predominantly for alternative proposal, multifunctional We are proposing new exceptions for cybersecurity obviates the need for hardware still would be prohibited compensation arrangements that requiring that the recipient has a because it would not be necessary and facilitate value-based health care cybersecurity risk assessment. Finally, predominantly used to implement and delivery and payment in a value-based we are interested in commenters’ maintain effective cybersecurity, as enterprise (§ 411.357(aa)). A value-based perspectives as to whether the required under proposed enterprise would be required to have a requirement that both the donor and § 411.357(bb)(1)(i). We are also governing document that describes the recipient have cybersecurity risk enterprise and how its VBE participants assessments: (1) Is necessary in light of considering requiring a 15 percent financial contribution from the intend to achieve the value-based other laws and regulations that require purposes of that enterprise (see the similar risk assessments; and (2) would recipient, similar to the EHR exception at § 411.357(w)(4). We are interested in proposed definition of ‘‘value-based inhibit donations of critical enterprise’’ at § 411.351). cybersecurity technology and related comments on this approach, whether a 15 percent financial contribution would The proposed exception for value- services by diverting resources to the based arrangements with meaningful procurement of such risk assessments be sufficient to ensure that the recipient would use the donated hardware to downside financial risk to the physician that could otherwise be used to improve at § 411.357(aa)(2) would require a the cybersecurity of the parties to the improve its cybersecurity posture as well as that of the donor, and whether description of the nature and extent of arrangement or the health care the physician’s downside financial risk ecosystem as a whole. a different financial contribution percentage would be more appropriate to be set forth in writing. As described previously in this and why. We are proposing to exempt The proposed exception for value- section II.E.2., the proposed exception small and rural providers from the based arrangements at § 411.357(aa)(3) for cybersecurity technology and related financial contribution requirement if we would require the arrangement to be set services would allow an entity to donate finalize this alternative proposal, and forth in writing and signed by the a cybersecurity risk assessment, we are interested in comments on this parties. All proposed exceptions at provided that all of the requirements of approach. § 411.357(aa) would require records of the exception are satisfied. One goal of the methodology for determining and our proposed exception is to eliminate Finally, we are soliciting comments the actual amount of remuneration paid certain barriers to the donation of regarding whether we should limit the under the arrangement to be maintained cybersecurity and related services, in amount or type of donated hardware by for a period of at least 6 years. We have order to increase the cybersecurity of all establishing a cap on the value of the also proposed a new exception for health care organizations and improve donated hardware, either in lieu of or in cybersecurity technology and related their cybersecurity practices. We believe conjunction with the 15 percent services (§ 411.357(bb)), and that protecting the donation of financial contribution. arrangements under this new exception cybersecurity hardware that is III. Collection of Information would have to be documented in reasonably based on the risks or threats Requirements writing. Finally, we have proposed identified in a risk assessment (whether streamlining the parties who must sign or not the risk assessment is donated by Under the Paperwork Reduction Act the writing in the exception for the donor) would lead to improved of 1995, we are required to provide 60- physician recruitment (§ 411.357(e)). cybersecurity for all health care day notice in the Federal Register and The burden associated with writing and organizations, especially those solicit public comment before a signature requirements would be the organizations that cannot afford to collection of information requirement is time and effort necessary to prepare retain dedicated in-house information submitted to the Office of Management written documents and obtain security personnel or designate an IT and Budget (OMB) for review and signatures of the parties. The burden staff member with cybersecurity as a approval. In order to fairly evaluate associated with record retention collateral duty. We expect that risk whether an information collection requirements would be the time and assessment practices vary across the should be approved by OMB, section effort necessary to compile and store the health care industry and may be 3506(c)(2)(A) of the Paperwork records. dependent on the size and Reduction Act of 1995 requires that we While the writing, signature, and sophistication of the organization. We solicit comment on the following issues: record retention requirements are

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00143 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55836 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

subject to the PRA, we believe the innovative arrangements that would alternatives and, if regulation is associated burden is exempt under 5 improve quality outcomes, produce necessary, to select regulatory CFR 1320.3(b)(2). We believe that the health system efficiencies, and lower approaches that maximize net benefits time, effort, and financial resources costs (or slow their rate of growth). This (including potential economic, necessary to comply with these proposed rule would address this issue environmental, public health and safety requirements would be incurred by by establishing three new exceptions effects, distributive impacts, and persons without federal regulation that would protect certain arrangements equity). An RIA must be prepared for during the normal course of their for value-based activities between major rules with economically activities. Specifically, we believe that, physicians and entities that furnish significant effects ($100 million or more for normal business operations designated health services in a value- in any 1 year). This rule is considered purposes, health care providers and based enterprise. These exceptions to be economically significant. Pursuant suppliers document their financial would provide critically needed to the Congressional Review Act (5 arrangements with physicians and flexibility for physicians and entities to U.S.C. 801 et seq.), the Office of others and retain these documents in work together while protecting the Information and Regulatory Affairs order to identify and be able to enforce integrity of the Medicare program. We designated this rule as a major rule, as the legal obligations of the parties. believe this new flexibility will promote defined by 5 U.S.C. 804(2). Therefore, we believe that the writing, innovation throughout the health care The RFA requires agencies to analyze signature and record retention system. options for regulatory relief of small requirements should be considered Commenters on the CMS RFI also told entities. For purposes of the RFA, small usual and customary business practices. us that they currently invest sizeable entities include small businesses, If you comment on these information resources to comply with the physician nonprofit organizations, and small collection and recordkeeping self-referral law’s billing and claims governmental jurisdictions. For requirements, please do either of the submission prohibitions and thereby purposes of the RFA, most hospitals and following: avoid its substantial penalties. Our most other providers and suppliers are 1. Submit your comments proposals that do not directly address considered small entities, either by electronically as specified in the value-based arrangements seek to nonprofit status or by having revenues ADDRESSES section of this proposed rule; balance genuine program integrity of less than $7.5 million to $38.5 or concerns against this considerable million in any 1 year. We anticipate that 2. Submit your comments to the burden. These proposals would reassess a large portion of affected entities are Office of Information and Regulatory our regulations to ensure they small based on these standards. The Affairs, Office of Management and appropriately reflect the scope of the specific affected entities are discussed Budget, Attention: CMS Desk Officer, statute’s reach, establish exceptions for later in this section. Individuals and CMS–1720–P, Fax: (202) 395–6974; or common nonabusive compensation states are not included in the definition Email: [email protected] arrangements between physicians and of a ‘‘small entity.’’ HHS considers a the entities to which they refer Medicare rule to have a significant impact on a IV. Response to Comments beneficiaries for designated health substantial number of small entities if it Because of the large number of public services, and provide critically has at least a three percent impact of comments we normally receive on necessary guidance for physicians and revenue on at least five percent of small Federal Register documents, we are not health care providers and suppliers entities. We are not preparing an able to acknowledge or respond to them whose financial relationships are analysis for the RFA because we have individually. We will consider all governed by the physician self-referral determined, and the Secretary proposes comments we receive by the date and law. We believe these reforms will to certify, that this proposed rule would time specified in the DATES section of greatly reduce burden by providing not have a significant economic impact this preamble, and, when we proceed additional flexibility to enable parties to on a substantial number of small with a subsequent document, we will enter into nonabusive arrangements and entities. respond to the comments in the by making physician self-referral law We determined that this proposed preamble to that document. compliance more straightforward. rule does not have a significant impact on small businesses because it would V. Regulatory Impact Statement (or B. Overall Impact likely reduce, not increase, regulatory Analysis) (RIA) We have examined the impact of this burden. This proposed rule would not rule as required by Executive Order require existing compliant financial A. Statement of Need 12866 on Regulatory Planning and relationships to be restructured. Instead, This proposed rule aims to remove Review (September 30, 1993), Executive it would provide important new potential regulatory barriers to care Order 13563 on Improving Regulation flexibility to enable parties to create coordination and value-based care and Regulatory Review (January 18, new arrangements that advance the created by the physician self-referral 2011), the Regulatory Flexibility Act transformation to a value-based health law. Currently, certain beneficial (RFA) (September 19, 1980, Pub. L. 96– care system and remove regulatory arrangements that would advance the 354), section 1102(b) of the Act, section barriers to certain beneficial and transition to value-based care and the 202 of the Unfunded Mandates Reform nonabusive arrangements, such as the coordination of care among providers in Act of 1995 (March 22, 1995; Pub. L. donation of cybersecurity technology both the Federal and commercial sectors 104–4), Executive Order 13132 on and services. It would also reduce may be impermissible under the Federalism (August 4, 1999), the burden by clarifying certain key physician self-referral law. Industry Congressional Review Act (5 U.S.C. provisions found in current regulations. stakeholders have informed us that, 804(2)), and Executive Order 13771 on Also, although we expect entities to because the consequences of Reducing Regulation and Controlling incur costs, these costs are estimated to noncompliance with the physician self- Regulatory Costs (January 30, 2017). be less than $1,000 per entity. These referral law are so dire, providers, Executive Orders 12866 and 13563 costs are unlikely to have an impact of suppliers, and physicians may be direct agencies to assess all costs and three percent of revenue, and we expect discouraged from entering into benefits of available regulatory they will be offset by savings resulting

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00144 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55837

from this rule. Overall, this proposed expected to be a deregulatory action. We to the rule. We request public comment rule is accommodating to legitimate seek comment on the economic impact on the entities affected by the rule. financial relationships while reducing of this proposed rule, including any We anticipate that directly affected regulatory burden and continuing to potential increase or decrease in entities will review the rule upon protect against program and patient utilization, any potential effects due to finalization in order to determine abuse. behavioral changes, or any other whether to explore newly permissible In addition, section 1102(b) of the Act potential cost savings or expenses to the value-based arrangements and to take requires us to prepare an RIA if a rule Government as a result of this rule. advantage of burden-reducing may have a significant impact on the clarifications provided by the rule. We C. Anticipated Effects operations of a substantial number of estimate that all directly affected small rural hospitals. This analysis must This proposed rule would affect entities described above that would be conform to the provisions of section 603 physicians and entities with which they eligible to use the proposed rules will of the RFA. For purposes of section have financial relationships that furnish review the rule. We estimate that 1102(b) of the Act, we define a small designated health services payable by reviewing the final rule will require an rural hospital as a hospital that is Medicare. The following items or average of three hours of time each from located outside of a Metropolitan services are DHS: (1) Clinical laboratory the equivalent of a compliance officer Statistical Area for Medicare payment services; (2) physical therapy services; and a lawyer. regulations and has fewer than 100 (3) occupational therapy services; (4) To estimate the costs associated with beds. The impact of this rule on small outpatient speech-language pathology this review, we use a 2018 wage rate of rural hospitals is minimal. In fact, services; (5) radiology and certain other $34.86 for compliance officers and several provisions of the rule benefit imaging services; (6) radiation therapy $69.34 for lawyers from the Bureau of small rural hospitals by giving them services and supplies; (7) durable Labor Statistics,27 and we double those more flexibility to maintain operations medical equipment and supplies; (8) wages to account for overhead and and participate in innovative parenteral and enteral nutrients, benefits. As a result, we estimate total arrangements that enhance care equipment, and supplies; (9) regulatory review costs of $31.7 million coordination and advance the transition prosthetics, orthotics, and prosthetic in the first year following finalization of to a value-based health care system. devices and supplies; (10) home health the rule. We seek public comment on Therefore, we are not preparing an services; (11) outpatient prescription these assumptions. analysis for section 1102(b) of the Act drugs; and (12) inpatient and outpatient In developing this proposed rule, we because we have determined, and the hospital services. We do not have data have taken great care to ensure that the Secretary certifies, that this proposed on the number of physicians and safeguards against program and patient rule would not have a significant impact entities that furnish designated health abuse in our proposed new exceptions on the operations of a substantial services payable by Medicare that have impose the minimum burden possible number of small rural hospitals. financial relationships, but we believe a while providing full protection against Section 202 of the Unfunded substantial fraction of Medicare- overutilization and other harms against Mandates Reform Act of 1995 also enrolled physicians, group practices, which the physician self-referral law is requires that agencies assess anticipated hospitals, clinical laboratories, and designed to protect. For example, we costs and benefits before issuing any home health agencies are affected by the believe a value-based enterprise would rule whose mandates require spending physician self-referral law. We ordinarily develop a governing in any 1 year of $100 million in 1995 anticipate that this proposed rule will document that describes the value-based dollars, updated annually for inflation. have significant, ongoing benefits for the enterprise and how the VBE participants In 2019, that threshold is approximately affected physicians and entities and the intend to achieve its value-based $154 million. This rule imposes no entire health care system. purpose(s), so our requirement would mandates on state, local, or tribal To estimate the number of entities not impose any additional burden. We governments, or on the private sector, directly affected by this rule, we use also believe that parties to an and reduces regulatory burden on health Medicare enrollment data. According to arrangement under which remuneration care providers and suppliers. is paid already keep business records Executive Order 13132 establishes this data, there were 2,039 single or necessary for a variety of purposes, such certain requirements that an agency multispecialty clinics or group as income tax filings, records of must meet when it promulgates a practices, 3,139 clinical laboratories proposed rule (and subsequent final (billing independently), 2,043 compliance with state laws (including rule) that imposes substantial direct outpatient physical therapy/speech fee splitting laws), and, for nonprofit requirement costs on state and local pathology providers, 2,843 independent entities, justification for tax-exempt governments, preempts state law, or diagnostic testing facilities, 11,593 status. Therefore, we do not believe the otherwise has Federalism implications. home health agencies, 6,123 inpatient proposed requirement to maintain Since this regulation does not impose hospitals, 4,233 rural health clinics, 180 records of the methodology for any costs on state or local governments, comprehensive outpatient rehabilitation determining and the actual amount of the requirements of Executive Order facilities, 8,289 federally qualified remuneration paid under a value-based 13132 are not applicable. health centers, and 9,748 medical arrangement for a period of at least 6 Executive Order 13771, titled supply companies enrolled in Medicare years imposes additional burden. In 26 Reducing Regulation and Controlling in in 2017. In addition, we estimate addition, we believe that physicians and Regulatory Costs, was issued on January that 400 physician practices entities routinely document their 30, 2017 and requires that the costs unassociated with single or financial arrangements in writing as a associated with significant new multispecialty clinics or group practices common good business practice and so regulations ‘‘shall, to the extent will independently review and respond the arrangements can be enforced. For permitted by law, be offset by the 26 CMS Program Statistics, https://www.cms.gov/ 27 U.S. Department of Labor, Bureau of Labor elimination of existing costs associated Research-Statistics-Data-and-Systems/Statistics- Statistics, May 2018 National Occupational with at least two prior regulations.’’ Trends-and-Reports/CMSProgramStatistics/2017/ Employment and Wage Estimates United States, This proposed rule, if finalized, is 2017_Providers.html. https://www.bls.gov/oes/2018/may/oes_nat.htm.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00145 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55838 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

example, we believe that an entity business generated standard) discussed a nonphysician practitioner would also would ordinarily ensure that the details in section II.B. of this proposed rule have a beneficial impact by reducing the of a shared loss repayment agreement would have significant, ongoing benefits existing burden on physicians and are documented in writing to ensure the to all physicians and entities affected by entities through the provision of arrangement can be enforced under state the physician self-referral law. These additional guidance and clarifications. law. Similarly, we believe that entities terms are used throughout the physician We lack data to quantify these effects that are working together to achieve a self-referral regulations. Commenters on and seek public comment on these purpose would routinely monitor their the CMS RFI indicated that additional impacts. operations to confirm that their plans guidance on these terms is necessary to The American Hospital Association are working as intended. We seek reduce the complexity of structuring estimates compliance costs faced by comments on these assumptions. financial arrangements to comply with hospitals.28 They estimate $350,000 29 The new exceptions for arrangements the physician self-referral law. in annual costs for an average hospital that facilitate value-based health care We anticipate that the proposed to comply with fraud and abuse delivery and payment have numerous changes to decouple the physician self- regulations, which include the benefits that would reduce costs and referral law regulations from the anti- physician self-referral rules. To estimate improve quality not only for Medicare kickback statute and federal and state aggregate fraud and abuse compliance and its beneficiaries but to patients and laws or regulations governing billing or costs, we multiply this figure by the the health care system in general. For claims submission would reduce burden number of Medicare enrolled hospitals, example, these new exceptions provide by making compliance more which implies $2.1 billion in total important new flexibility for physicians straightforward for physicians and annual costs across these hospitals. and entities to work together to improve entities. We stress that the anti-kickback Based on RFI comments, compliance patient care and reduce costs. This statute and billing laws remain in full with the physician self-referral increased flexibility would provide new force and effect, so those laws would regulations comprises a substantial opportunities for the private sector to continue to protect against program and fraction of these costs. Furthermore, we develop and implement cost-saving, patient abuse. We anticipate that our anticipate that clarifications provided in quality-improving programs that might proposed changes to the definitions of this rule will substantially reduce the currently be impermissible. We ‘‘designated health services,’’ complexity of compliance for affected anticipate that implementation of ‘‘physician,’’ and ‘‘remuneration;’’ the entities, greatly reducing the burden improvements and efficiencies such as proposed ownership and investment that they face. As a result, we expect care redesign protocols resulting from interest provisions in § 411.354(b); and this rule will substantially reduce net private sector innovation could have a the proposed exception for fraud and abuse compliance burden for beneficial effect on the care provided to remuneration unrelated to the provision affected entities, although we lack data Medicare beneficiaries and thereby of designated health services would to quantify these estimates. If this rule result in savings for beneficiaries and reduce compliance burden by providing reduces this burden for hospitals by 1.5 the Trust Funds. We believe that these protection for nonabusive financial percent, this burden reduction will new exceptions would also increase relationships. Our proposed changes for offset all first year costs of the rule and participation in Innovation Center the exception for payments by a generate substantial net savings in models because, unlike the fraud and physician and the exception to fair subsequent years. We believe it is very abuse waivers that have been issued for market value would make these likely that burden reduction at hospitals certain Innovation Models, the exceptions available to protect financial will exceed this level, and therefore exceptions would not expire and would arrangements that must currently be tentatively believe that this rule will be not be narrowly designed to apply protected by other exceptions that are considered a deregulatory action. We solely to one specific model. We more complicated and burdensome to note that hospitals represent a fraction anticipate that this increased meet. We anticipate that this added of entities affected by this rule, and participation would bolster the cost flexibility would provide substantial burden is likely to decline substantially savings and quality improvements of burden reduction through reduced for other categories of entities affected Innovation Center models. We also compliance costs. We note that RFI by this rule. We seek public comment believe that applying the new commenters expressed concern about on the extent to which this rule will exceptions would make compliance the need for regulatory change to reduce reduce compliance burden for hospitals more straightforward for physicians and burden on many of these matters. and entities other than hospitals. entities participating in Innovation We have also proposed numerous Our proposed modifications to the Center models, thus resulting in cost other changes that while relatively EHR exception are modest and would savings for these parties. In addition, we minor, would reduce burden. For clarify that protection for certain believe that the new exceptions for example, we believe that the cybersecurity technology is included as arrangements that facilitate value-based modifications to the group practice rules part of an electronic health records health care delivery and payment would provide useful clarification to arrangement, update provisions ensure that the physician self-referral physicians and group practices. We regarding interoperability to align with anticipate that even these minor law continues to provide meaningful newer CMS and ONC standards in a changes would provide a beneficial protection against overutilization and manner that is not expected to increase effect on the burden to comply with the other harms, thus preventing increased costs as a result of this rulemaking, and group practice rules. We anticipate that Medicare expenditures and associated remove the sunset date. The EHR our proposed changes relating to beneficiary liability. We lack data to exception would continue to be isolated transactions, the period of quantify these effects and seek public available to physicians and entities disallowance, the special rules on comment on these impacts. other than laboratories. We would We believe that the clarifications and compensation arrangements, the regulatory revisions of key terminology exceptions for rental of office space and 28 https://www.aha.org/sites/default/files/ (specifically, the terms ‘‘commercially rental of office equipment, the exception regulatory-overload-report.pdf. reasonable’’ and ‘‘fair market value,’’ the for physician recruitment, and the 29 Note that the figure is adjusted for inflation volume or value standard, and the other exception for assistance to compensate between 2017 and 2018.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00146 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55839

expect the same entities that are based enterprise. We rejected this of multi-use technology or services in currently using the EHR exception to alternative due to program integrity the proposed cybersecurity exception continue to use the exception. We concerns that could exist without the but are concerned that they may pose a anticipate that these proposed changes incentives and protections inherent in a risk of program or patient abuse. We would result in an incremental value-based enterprise. seek comments on these regulatory reduction in compliance burden. We considered including provisions alternatives. In section II.E. of this proposed rule, in the proposed exceptions for value- In accordance with the provisions of we discuss new exceptions for limited based arrangements that would require Executive Order 12866, this proposed remuneration to a physician and compensation to be set in advance, fair rule was reviewed by the Office of cybersecurity technology. We anticipate market value, and not determined in Management and Budget. that the new exception for limited any manner that takes into account the remuneration to a physician would ease volume or value of a physician’s List of Subjects in 42 CFR Part 411 compliance burden because it would referrals or the other business generated Diseases, Medicare, Reporting and allow entities to compensate a physician between the parties. We are concerned, recordkeeping requirements. for items or services provided by the however, that the inclusion of such For the reasons set forth in the physician without being subject to all requirements would conflict with our preamble, the Centers for Medicare & the documentation and certain other goal of dismantling and addressing Medicaid Services proposes to amend requirements of existing exceptions to regulatory barriers to value-based care 42 CFR part 411 as set forth below: the physician self-referral law. We transformation. We further believe that believe this new exception would also the disincentives for overutilization, PART 411—EXCLUSIONS FORM provide additional flexibility where stinting on patient care, and other harms MEDICARE AND LIMITATIONS ON these arrangements are not covered by the physician self-referral law was MEDICARE PAYMENT an existing exception. We anticipate intended to address that are built into that the cybersecurity exception would the proposed value-based definitions ■ 1. The authority citation for part 411 be widely used by physicians, group will operate in tandem with the continues to read as follows: practices, and hospitals. We believe this requirements included in the proposed Authority: 42 U.S.C. 1302, 1395w–101 proposed exception would help to exceptions and be sufficient to protect through 1395w–152, 1395hh, and 1395nn. address the growing threat of against program and patient abuse. We cyberattacks that infiltrate data systems are also considering whether to exclude Subpart J—Financial Relationships and corrupt or prevent access to health laboratories and DMEPOS suppliers Between Physicians and Entities records and other information essential from the definition of VBE participant. Furnishing Designated Health Services to the safe and effective delivery of It is not clear to us that laboratories and ■ 2. Amend § 411.351 by— health care. We lack data to quantify DMEPOS suppliers have the direct ■ a. Revising the introductory text; these effects and seek public comment patient contacts that would justify their ■ b. Adding alphabetically definitions on these impacts. inclusion as parties working under a for ‘‘Commercially reasonable’’ and protected value-based arrangement to D. Alternatives Considered ‘‘Cybersecurity’’; achieve the type of patient-centered care ■ c. In the definition of ‘‘Designated We carefully considered the that is a core tenet of care coordination health services (DHS)’’ by revising alternative of maintaining the status quo and a value-based health care system. and not pursuing regulatory action. paragraph (2); Through our own experience ■ d. Removing the definition of ‘‘Does However, we believe that the transition administering the physician self-referral not violate the anti-kickback statute’’; to a value-based healthcare system is law regulations and our thorough ■ e. Revising the definition of urgently needed due to unsustainable analysis of CMS RFI comments, we ‘‘Electronic health record’’; costs inherent in the current volume- recognize the urgent and compelling ■ f. Revising the definition of ‘‘Fair based system. We believe this proposed public policy need for additional market value’’; rule would address the critical need for guidance on the physician self-referral ■ g. Adding alphabetically a definition additional flexibility that is necessary to law. In preparing this rule, we for ‘‘General market value’’; advance the transition to value-based conducted an in-depth review of our ■ h. Revising the definition of care and improve the coordination of existing regulations to identify those ‘‘Interoperable’’; care among providers in both the matters that might benefit from ■ i. Adding alphabetically a definition Federal and commercial sectors. additional guidance. We have also taken for ‘‘Isolated financial transaction’’; We also considered proposing to limit great care to provide this guidance in ■ j. In the definition of ‘‘List of CPT/ the new exceptions for arrangements the clearest, most straightforward HCPCS Codes’’ by removing the term that facilitate value-based health care manner possible. For example, we ‘‘website’’ and adding in its place the delivery and payment to CMS- considered addressing the need for term ’’ website’’; sponsored models or establishing guidance on the applicability of the ■ k. In the definition of ‘‘Locum tenens separate exceptions with different physician self-referral law to referrals physician (or substitute physician)’’ by criteria for arrangements that exist for inpatient hospital services after removing the phrase ‘‘is a physician’’ outside CMS-sponsored models. admission through modifying the and adding in its place the phrase However, we believe that in their definition of ‘‘referral’’ rather than the ‘‘means a physician’’; current state, the physician self-referral definition of ‘‘designated health ■ l. Revising the definition of regulations discourage the development services.’’ We are concerned that ‘‘Physician’’; and adoption of rewards that encourage modifying the definition of ‘‘referral’’ ■ m. In the definition of ‘‘Referral’’ by change on a broad scale, across all could have a broader effect and would adding paragraph (4); patient populations and payor types, not be as clear. We have also carefully ■ n. In the definition of ‘‘Remuneration’’ and over indefinite periods of time. In weighed each proposal to ensure that it by revising paragraphs (2) introductory addition, we considered establishing an does not pose a risk of program or text and (3)(iii); exception to protect care coordination patient abuse. For example, we ■ o. Adding alphabetically a definition activities performed outside of a value- considered whether to protect donations for ‘‘Target patient population’’;

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00147 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55840 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

■ p. Revising the definition of under like circumstances, of like assets (ii) The payments are immediately ‘‘Transaction’’; and or services, consistent with the general negotiable, guaranteed by a third party, ■ q. Adding alphabetically definitions market value of the subject transaction. secured by a negotiable promissory for ‘‘Value-base activity’’, ‘‘Value-based (2) Rental of equipment. With respect note, or subject to a similar mechanism arrangement’’, ‘‘Value-based enterprise to the rental of equipment, the value in to ensure payment even in the event of (VBE)’’, ‘‘Value-based purpose’’, and an arm’s-length transaction, with like default by the purchaser or obligated ‘‘VBE participant’’. parties and under like circumstances, of party. The revisions and additions read as rental property for general commercial (2) An isolated financial transaction follows: purposes (not taking into account its includes a one-time sale of property or intended use), consistent with the § 411.351 Definitions. a practice, or similar one-time general market value of the subject transaction, but does not include a The definitions in this subpart apply transaction. single payment for multiple or repeated only for purposes of section 1877 of the (3) Rental of office space. With services (such as a payment for services Act and this subpart. As used in this respect to the rental of office space, the previously provided but not yet subpart, unless the context indicates value in an arm’s-length transaction, compensated). otherwise: with like parties and under like * * * * * * * * * * circumstances, of rental property for Physician has the meaning set forth in Commercially reasonable means that general commercial purposes (not taking the particular arrangement furthers a section 1861(r) of the Act. A physician into account its intended use), without and the professional corporation of legitimate business purpose of the adjustment to reflect the additional parties and is on similar terms and which he or she is a sole owner are the value the prospective lessee or lessor same for purposes of this subpart. conditions as like arrangements. An would attribute to the proximity or arrangement may be commercially convenience to the lessor where the * * * * * Referral *** reasonable even if it does not result in lessor is a potential source of patient (4) A referral is not an item or service profit for one or more of the parties. referrals to the lessee, and consistent for purposes of section 1877 of the Act * * * * * with the general market value of the and this subpart. Cybersecurity means the process of subject transaction. protecting information by preventing, General market value means— * * * * * detecting, and responding to (1) General. The price that assets or Remuneration *** cyberattacks. services would bring as the result of (2) The furnishing of items, devices, Designated health services (DHS) bona fide bargaining between the buyer or supplies that are, in fact, used solely *** and seller in the subject transaction on for one or more of the following (2) Except as otherwise noted in this the date of acquisition of the assets or purposes: subpart, the term ‘‘designated health at the time the parties enter into the * * * * * services’’ or DHS means only DHS service arrangement. (3) * * * payable, in whole or in part, by (2) Rental of equipment or office (iii) The amount of the payment is set Medicare. DHS do not include services space. The price that rental property in advance, does not exceed fair market that are reimbursed by Medicare as part would bring as the result of bona fide value, and is not determined in any of a composite rate (for example, SNF bargaining between the lessor and the manner that takes into account the Part A payments or ASC services lessee in the subject transaction at the volume or value of any referrals. identified at § 416.164(a)), except to the time the parties enter into the rental * * * * * extent that services listed in paragraphs arrangement. Target patient population means an (1)(i) through (x) of this definition are * * * * * identified patient population selected themselves payable through a composite Interoperable means— by a value-based enterprise or its VBE rate (for example, all services provided (1) Able to securely exchange data participants based on legitimate and as home health services or inpatient and with and use data from other health verifiable criteria that— outpatient hospital services are DHS). information technology without special (1) Are set out in writing in advance For services furnished to inpatients by effort on the part of the user; of the commencement of the value- a hospital, a service is not a designated (2) Allows for complete access, based arrangement; and health service payable, in whole or in exchange, and use of all electronically (2) Further the value-based part, by Medicare if the furnishing of the accessible health information for enterprise’s value-based purpose(s). service does not affect the amount of authorized use under applicable State or Transaction means an instance or Medicare’s payment to the hospital Federal law; and process of two or more persons or under the Acute Care Hospital Inpatient (3) Does not constitute information entities doing business. Prospective Payment System (IPPS). blocking as defined in section 3022 of Value-based activity—(1) Means any * * * * * the Public Health Service Act. of the following activities, provided that Electronic health record means a Isolated financial transaction—(1) the activity is reasonably designed to repository that includes electronic Isolated financial transaction means a achieve at least one value-based purpose health information that— transaction involving a single payment of the value-based enterprise: (1) Is transmitted by or maintained in between two or more persons or a (i) The provision of an item or service; electronic media; and transaction that involves integrally (ii) The taking of an action; or (2) Relates to the past, present, or related installment payments, provided (iii) The refraining from taking an future health or condition of an that— action. individual or the provision of health (i) The total aggregate payment is (2) The making of a referral is not a care to an individual. fixed before the first payment is made value-based activity. * * * * * and does not take into account the Value-based arrangement means an Fair market value means— volume or value of referrals or other arrangement for the provision of at least (1) General. The value in an arm’s- business generated by the physician; one value-based activity for a target length transaction, with like parties and and patient population between or among—

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00148 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55841

(1) The value-based enterprise and (A) Overall profits are divided per method used to calculate the profit one or more of its VBE participants; or capita (for example, per member of the share or productivity bonus under (2) VBE participants in the same group or per physician in the group). paragraphs (i)(1), (2), and (3) of this value-based enterprise. (B) Overall profits derived from section, and the resulting amount of Value-based enterprise (VBE) means designated health services are compensation, must be made available two or more VBE participants— distributed based on the distribution of to the Secretary upon request. (1) Collaborating to achieve at least the group’s revenues attributed to ■ 4. Section 411.353 is amended— one value-based purpose; services that are not designated health ■ a. By revising paragraph (c)(1); (2) Each of which is a party to a value- services and would not be considered ■ b. In paragraph (f)(1)(i) by removing based arrangement with the other or at designated health services if they were the semicolon and adding in its place ‘‘; least one other VBE participant in the payable by Medicare. and’’; value-based enterprise; (C) Revenues derived from designated ■ c. In paragraph (f)(1)(ii) by removing (3) That have an accountable body or health services constitute less than 5 ‘‘; and’’ and adding in its place a period; person responsible for financial and percent of the group’s total revenues, ■ d. By removing paragraphs (f)(1)(iii) operational oversight of the value-based and the portion of those revenues and (g). enterprise; and distributed to each physician in the The revision reads as follows: (4) That have a governing document group constitutes 5 percent or less of his or her total compensation from the § 411.353 Prohibition on certain referrals that describes the value-based enterprise by physicians and limitations on billing. and how the VBE participants intend to group. (2) Productivity bonuses. (i) * * * * * achieve its value-based purpose(s). Notwithstanding paragraph (g) of this (c) * * * Value-based purpose means— section, a physician in the group may be (1) Except as provided in paragraph (1) Coordinating and managing the paid a productivity bonus based on (e) of this section, no Medicare payment care of a target patient population; services that he or she has personally may be made for a designated health (2) Improving the quality of care for performed, or services ‘‘incident to’’ service that is furnished pursuant to a a target patient population; such personally performed services, that prohibited referral. (3) Appropriately reducing the costs is indirectly related to the volume or * * * * * to, or growth in expenditures of, payors value of the physician’s referrals (except ■ 5. Section 411.354 is amended— without reducing the quality of care for that the bonus may directly relate to the ■ a. In paragraph (b)(3)(iv) by removing a target patient population; or volume or value of referrals by the ‘‘or’’ at the end of the paragraph; (4) Transitioning from health care physician if the referrals are for services ■ b. In paragraph (b)(3)(v) by removing delivery and payment mechanisms ‘‘incident to’’ the physician’s personally the period at the end of the paragraph based on the volume of items and performed services). and adding in its place a semicolon; services provided to mechanisms based (ii) A productivity bonus must be ■ c. By adding paragraphs (b)(3)(vi) and on the quality of care and control of calculated in a reasonable and verifiable (vii); costs of care for a target patient manner. A productivity bonus will be ■ d. By revising paragraph (c)(2)(ii); population. deemed not to relate directly to the ■ e. By adding paragraph (c)(4); VBE participant means an individual volume or value of referrals if one of the ■ f. By revising paragraphs (d)(2) or entity that engages in at least one following conditions is met: through (4); value-based activity as part of a value- (A) The productivity bonus is based ■ g. By adding paragraphs (d)(5) and (6); based enterprise. on the physician’s total patient and ■ 3. Section 411.352 is amended by encounters or the relative value units ■ h. Adding paragraph (e)(3). revising paragraph (i) to read as follows: (RVUs) personally performed by the The additions and revisions read as § 411.352 Group practice. physician. (The methodology for follows: establishing RVUs is set forth in * * * * * § 414.22 of this chapter.) § 411.354 Financial relationship, (i) Special rules for profit shares and (B) The services on which the compensation, and ownership or productivity bonuses—(1) Overall productivity bonus is based are not investment interest. profits. (i) Notwithstanding paragraph designated health services and would * * * * * (g) of this section, a physician in the not be considered designated health (b) * * * group practice may be paid a share of services if they were payable by (3) * * * overall profits of the group that is Medicare. (vi) A titular ownership or investment indirectly related to the volume or value (C) Revenues derived from designated interest that excludes the ability or right of the physician’s referrals. health services are less than 5 percent to receive the financial benefits of (ii) Overall profits means the profits of the group’s total revenues, and the ownership or investment, including, but derived from all the designated health portion of those revenues distributed to not limited to, the distribution of services of any component of the group each physician in the group constitutes profits, dividends, proceeds of sale, or that consists of at least five physicians, 5 percent or less of his or her total similar returns on investment; or which may include all physicians in the compensation from the group. (vii) An interest in an entity that group. If there are fewer than five (3) Value-based enterprise arises from an employee stock physicians in the group, overall profits participation. Profits from designated ownership plan (ESOP) that is qualified means the profits derived from all the health services that are directly under Internal Revenue Code section designated health services of the group. attributable to a physician’s 401(a). (iii) Overall profits must be divided in participation in a value-based (c) * * * a reasonable and verifiable manner. The enterprise, as defined in § 411.351, are (2) * * * share of overall profits will be deemed distributed to the participating (ii) The referring physician (or not to relate directly to the volume or physician. immediate family member) receives value of referrals if one of the following (4) Supporting documentation. aggregate compensation from the person conditions is met: Supporting documentation verifying the or entity in the chain with which the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00149 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55842 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

physician (or immediate family (3) Unit-based compensation personal service arrangement, or member) has a direct financial (including time-based or per-unit of managed care contract. relationship that takes into account the service-based compensation) is deemed (5)(i) Compensation from an entity volume or value of referrals or other not to take into account other business furnishing designated health services to business generated by the referring generated between the parties or other a physician (or immediate family physician for the entity furnishing the business generated by the referring member of the physician) takes into DHS, regardless of whether the physician if the compensation is fair account the volume or value of referrals individual unit of compensation market value for items or services only if— satisfies the special rules on unit-based actually provided and does not vary (A) The formula used to calculate the compensation under paragraphs (d)(2) during the course of the compensation physician’s (or immediate family or (d)(3) of this section. If the financial arrangement in any manner that takes member’s) compensation includes the relationship between the physician (or into account referrals or other business physician’s referrals to the entity as a immediate family member) and the generated by the referring physician, variable, resulting in an increase or person or entity in the chain with which including private pay health care decrease in the physician’s (or the referring physician (or immediate business (except for services personally immediate family member’s) family member) has a direct financial performed by the physician, which are compensation that positively correlates relationship is an ownership or not considered ‘‘other business with the number or value of the investment interest, the determination generated’’ by the physician). physician’s referrals to the entity; or whether the aggregate compensation (4) If a physician’s compensation (B) There is a predetermined, direct takes into account the volume or value under a bona fide employment correlation between the physician’s of referrals or other business generated relationship, personal service prior referrals to the entity and the by the referring physician for the entity arrangement, or managed care contract prospective rate of compensation to be furnishing the DHS will be measured by is conditioned on the physician’s paid over the entire duration of the the nonownership or noninvestment referrals to a particular provider, arrangement for which the interest closest to the referring practitioner, or supplier, all of the compensation is determined. physician (or immediate family following conditions must be met. (ii) Compensation from an entity member). (For example, if a referring (i) The compensation, or a formula for furnishing designated health services to physician has an ownership interest in determining the compensation, is set in a physician (or immediate family company A, which owns company B, advance for the duration of the member of the physician) takes into which has a compensation arrangement arrangement. Any changes to the account the volume or value of other with company C, which has a compensation (or the formula for business generated only if— compensation arrangement with entity determining the compensation) must be (A) The formula used to calculate the D that furnishes DHS, we would look to made prospectively. physician’s (or immediate family the aggregate compensation between (ii) The compensation is consistent member’s) compensation includes other company B and company C for purposes with the fair market value of the business generated by the physician for of this paragraph (c)(2)(ii)); physician’s services. the entity as a variable, resulting in an * * * * * (iii) The compensation arrangement increase or decrease in the physician’s (4) Exceptions applicable to indirect otherwise complies with an applicable (or immediate family member’s) compensation arrangements—(i) exception at §§ 411.355 or 411.357. compensation that positively correlates General. Except as provided in this (iv) The compensation arrangement with the physician’s generation of other paragraph (c)(4) of this section, only the complies with both of the following business for the entity; or exceptions at §§ 411.355 and 411.357(p) conditions: (B) There is a predetermined, direct are applicable to indirect compensation (A) The requirement to make referrals correlation between the other business arrangements. to a particular provider, practitioner, or previously generated by the physician (ii) Special rule for indirect supplier is set out in writing and signed for the entity and the prospective rate of compensation arrangements involving by the parties. compensation to be paid over the entire value-based arrangements. When an (B) The requirement to make referrals duration of the arrangement for which unbroken chain described in paragraph to a particular provider, practitioner, or the compensation is determined. (c)(2)(i) of this section includes a value- supplier does not apply if the patient (iii) For purposes of applying this based arrangement (as defined in expresses a preference for a different paragraph (d)(5), a positive correlation § 411.351) to which the physician (or provider, practitioner, or supplier; the between two variables exists when one the physician organization in whose patient’s insurer determines the variable decreases as the other variable shoes the physician stands under this provider, practitioner, or supplier; or decreases, or one variable increases as paragraph) is a direct party, only the the referral is not in the patient’s best the other variable increases. exceptions at §§ 411.355, 411.357(p), medical interests in the physician’s (iv) This paragraph (d)(5) applies only and 411.357(aa) are applicable to the judgment. to section 1877 of the Act. indirect compensation arrangement. (v) The required referrals relate solely (6)(i) Compensation from a physician (d) * * * to the physician’s services covered by (or immediate family member of the (2) Unit-based compensation the scope of the employment, personal physician) to an entity furnishing (including time-based or per-unit of service arrangement, or managed care designated health services takes into service-based compensation) is deemed contract, and the referral requirement is account the volume or value of referrals not to take into account the volume or reasonably necessary to effectuate the only if— value of referrals if the compensation is legitimate business purposes of the (A) The formula used to calculate the fair market value for items or services compensation arrangement. In no event entity’s compensation includes the actually provided and does not vary may the physician be required to make physician’s referrals to the entity as a during the course of the compensation referrals that relate to services that are variable, resulting in an increase or arrangement in any manner that takes not provided by the physician under the decrease in the entity’s compensation into account referrals. scope of his or her employment, that negatively correlates with the

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00150 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55843

number or value of the physician’s and (4), (g)(2) and (3), (h)(2) and (3), and ■ w. By removing paragraph (s)(5); referrals to the entity; or (i)(2), and removing paragraphs (i)(3) ■ x. By removing paragraph (t)(3)(iv); (B) There is a predetermined, direct and (j)(1)(iv). ■ y. By removing paragraph (u)(3); correlation between the physician’s The revisions and addition read as ■ z. By revising paragraphs (w) prior referrals to the entity and the follows: introductory text, (w)(2) and (3), and prospective rate of compensation to be (w)(6) introductory text. paid over the entire duration of the § 411.355 General exceptions to the ■ aa By removing paragraphs (w)(11) referral prohibition related to both through (13); arrangement for which the ownership/investment and compensation. compensation is determined. ■ bb. By revising paragraphs (x)(1) and (ii) Compensation from a physician * * * * * (4); (or immediate family member of the (c) * * * ■ cc. In paragraph (x)(7)(ii) introductory physician) to an entity furnishing (5) A coordinated care plan (within text by removing the phrase ‘‘patient designated health services takes into the meaning of section 1851(a)(2)(A) of care services’’ is adding in its place the account the volume or value of other the Act) offered by a Medicare phrase ‘‘NPP patient care services’’; business generated only if— Advantage organization in accordance ■ dd. In paragraph (x)(7)(ii)(A) by (A) The formula used to calculate the with a contract with CMS under section removing the phrase ‘‘patient care entity’s compensation includes other 1857 of the Act and part 422 of this services’’ and adding in its place the business generated by the physician for chapter. phrase ‘‘NPP patient care services’’; the entity as a variable, resulting in an (e) * * * ■ ee. By revising paragraph (y)(6)(i); increase or decrease in the entity’s (1) * * * ■ ff. By removing and reserving compensation that negatively correlates (ii) * * * paragraph (y)(8); and with the physician’s generation of other (C) The total compensation paid by ■ gg. By adding paragraphs (z), (aa), and business for the entity; or each academic medical center (bb). (B) There is a predetermined, direct component is not determined in any The revisions and additions read as correlation between the other business manner that takes into account the follows: previously generated by the physician volume or value of referrals or other business generated by the referring § 411.357 Exceptions to the referral for the entity and the prospective rate of prohibition related to compensation compensation to be paid over the entire physician within the academic medical arrangements. duration of the arrangement for which center. (D) If any compensation paid to the (a) * * * the compensation is determined. (3) The space rented or leased does referring physician is conditioned on (iii) For purposes of applying this not exceed that which is reasonable and the physician’s referrals to a particular paragraph (d)(6), a negative correlation necessary for the legitimate business provider, practitioner, or supplier, the between two variables exists when one purposes of the lease arrangement and arrangement satisfies the requirements variable increases as the other variable is used exclusively by the lessee when of § 411.354(d)(4). decreases, or when one variable being used by the lessee (and is not decreases as the other variable * * * * * shared with or used by the lessor or any ■ increases. 7. Section 411.357 is amended— person or entity related to the lessor), ■ (iv) This paragraph (d)(6) applies only a. By revising paragraphs (a)(3), except that the lessee may make to section 1877 of the Act. (a)(5)(i), (b)(2), (b)(4)(i), and (c)(2)(ii); payments for the use of space consisting ■ (e) * * * b. By adding paragraph (c)(5); of common areas if the payments do not ■ (3) Special rule on writing and c. By revising paragraph (d)(1)(v); exceed the lessee’s pro rata share of signature requirements. In the case of ■ d. By adding paragraph (d)(1)(viii); ■ expenses for the space based upon the any requirement in this subpart for a e. By revising paragraph (d)(2) ratio of the space used exclusively by compensation arrangement to be in introductory text; the lessee to the total amount of space ■ f. By adding paragraph (d)(2)(iv); writing and signed by the parties, the (other than common areas) occupied by ■ g. By revising paragraphs (e)(1)(iii) writing requirement or the signature all persons using the common areas. For and (e)(4)(i) and (v); requirement is satisfied if— purposes of this paragraph (a), exclusive (i) The compensation arrangement ■ h. By removing paragraph (e)(4)(vii); use means that the lessee (and any other between the entity and the referring ■ i By revising paragraphs (e)(6)(i), (f)(1) lessees of the same office space) uses the physician fully complies with an and (3), (g), and (h)(5); office space to the exclusion of the applicable exception in this subpart ■ j. By adding paragraph (h)(7); lessor (or any person or entity related to except with respect to the writing or ■ k. By revising paragraph (i)(2); the lessor). The lessor (or any person or signature requirement of the exception; ■ l. Adding paragraph (i)(3); entity related to the lessor) may not be and ■ m. By removing paragraph (j)(3); an invitee of the lessee to use the office (ii) The parties obtain the required ■ n. By removing paragraph (k)(1)(iii); space. writing(s) or signature(s) within 90 ■ o. In paragraph (k)(2), by removing the consecutive calendar days immediately term ‘‘website’’ and adding in its place * * * * * following the date on which the the term ‘‘website’’; (5) * * * compensation arrangement became ■ p. By revising paragraphs (l) and (i) In any manner that takes into noncompliant with the requirements of (m)(1); account the volume or value of referrals the applicable exception. ■ q. In paragraphs (m)(2), (3), and (5) by or other business generated between the ■ 6. Section 411.355 is amended by— removing the term ’’ website’’ and parties; or ■ a. Removing and reserving paragraph adding in its place the term ’’ website’’; * * * * * (b)(4)(v); ■ r. By removing and reserving (b) * * * ■ b. Revising paragraphs (c)(5) and paragraph (m)(7); (2) The equipment leased does not (e)(1)(ii)(C); ■ s. By revising paragraph (n); exceed that which is reasonable and ■ c. Adding paragraph (e)(1)(ii)(D); ■ t. By removing paragraph (p)(3); necessary for the legitimate business ■ d. Removing paragraph (e)(1)(iv), ■ u. By revising paragraph (r)(2)(iv); purposes of the lease arrangement and removing and reserving paragraphs (f)(3) ■ v. By removing paragraph (r)(2)(x); is used exclusively by the lessee when

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00151 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55844 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

being used by the lessee (and is not arrangement satisfies the requirements relate to the provision of designated shared with or used by the lessor or any of § 411.354(d)(4). health services. Remuneration does not person or entity related to the lessor). (e) * * * relate to the provision of designated For purposes of this paragraph (b), (1) * * * health services if— exclusive use means that the lessee (and (iii) The amount of remuneration (1) The remuneration is not any other lessees of the same under the arrangement is not determined in any manner that takes equipment) uses the equipment to the determined in any manner that takes into account the volume or value of the exclusion of the lessor (or any person or into account the volume or value of physician’s referrals; and entity related to the lessor). The lessor actual or anticipated referrals by the (2) The remuneration is for an item or (or any person or entity related to the physician or other business generated service that is not related to the lessor) may not be an invitee of the between the parties; and provision of patient care services. lessee to use the equipment. * * * * * (3) For purposes of this this paragraph * * * * * (4) * * * (g): (4) * * * (i) The writing in paragraph (e)(1) of (i) Items that are related to the (i) In any manner that takes into this section is also signed by the provision of patient care services account the volume or value of referrals physician practice if the remuneration is include, but are not limited to, any item, or other business generated between the provided indirectly to the physician supply, device, equipment, or space that parties; or through payments made to the is used in the diagnosis or treatment of physician practice and the physician patients and any technology that is used * * * * * practice does not pass directly through to communicate with patients regarding (c) * * * to the physician all of the remuneration patient care services. (2) * * * from the hospital. (ii) A service is deemed to be not (ii) Except as provided in paragraph related to the provision of patient care (c)(4) of this section, is not determined * * * * * (v) The remuneration from the services if the service could be provided in any manner that takes into account hospital under the arrangement is not by a person who is not a licensed the volume or value of referrals by the determined in any manner that takes medical professional. referring physician. into account the volume or value of (h) * * * * * * * * actual or anticipated referrals by the (5) The compensation paid over the (5) If remuneration to the physician is recruited physician or the physician term of the agreement is consistent with conditioned on the physician’s referrals practice (or any physician affiliated fair market value, and the compensation to a particular provider, practitioner, or with the physician practice) receiving per unit of service is fixed in advance supplier, the arrangement satisfies the the direct payments from the hospital. and is not determined in any manner requirements of § 411.354(d)(4). * * * * * that takes into account the volume or (d) * * * (6) * * * value of referrals or other business (1) * * * (i) This paragraph (e) applies to generated between the parties. (v) The compensation to be paid over remuneration provided by a federally * * * * * the term of each arrangement is set in qualified health center or a rural health (7) If remuneration to the physician is advance, does not exceed fair market clinic in the same manner as it applies conditioned on the physician’s referrals value, and, except in the case of a to remuneration provided by a hospital. to a particular provider, practitioner, or physician incentive plan (as defined in * * * * * supplier, the arrangement satisfies the § 411.351), is not determined in any (f) * * * requirements of § 411.354(d)(4). manner that takes into account the (1) The amount of remuneration (i) * * * volume or value of referrals or other under the isolated financial transaction (2) To an entity as compensation for business generated between the parties. is— any other items or services— * * * * * (i) Consistent with the fair market (i) That are furnished at a price that (viii) If remuneration to the physician value of the isolated financial is consistent with fair market value; and is conditioned on the physician’s transaction; and (ii) To which the exceptions in referrals to a particular provider, (ii) Not determined in any manner paragraphs (a) through (h) of this section practitioner, or supplier, the that takes into account the volume or are not applicable. arrangement satisfies the requirements value of referrals by the referring (3) For purposes of this paragraph (i), of § 411.354(d)(4). physician or other business generated ‘‘services’’ means services of any kind (2) Physician incentive plan between the parties. (not merely those defined as ‘‘services’’ exception. In the case of a physician * * * * * for purposes of the Medicare program in incentive plan (as defined at § 411.351) (3) There are no additional § 400.202 of this chapter). between a physician and an entity (or transactions between the parties for 6 * * * * * downstream contractor), the months after the isolated financial (l) Fair market value compensation. compensation may be determined in transaction, except for transactions that Compensation resulting from an any manner (through a withhold, are specifically excepted under the arrangement between an entity and a capitation, bonus, or otherwise) that other provisions in §§ 411.355 through physician (or an immediate family takes into account the volume or value 411.357 and except for commercially member) or any group of physicians of referrals or other business generated reasonable post-closing adjustments that (regardless of whether the group meets between the parties, if the plan meets do not take into account the volume or the definition of a group practice set the following requirements: value of referrals or other business forth in § 411.352) for the provision of * * * * * generated by the referring physician. items or services or for the use of office (iv) If remuneration to the physician (g) Remuneration unrelated to the space or equipment, if the arrangement is conditioned on the physician’s provision of designated health services. meets the following conditions: referrals to a particular provider, Remuneration provided by a hospital to (1) The arrangement is in writing, practitioner, or supplier, the a physician if the remuneration does not signed by the parties, and covers only

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00152 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55845

identifiable items, services, office space, the volume or value of referrals or other referrals or other business generated or equipment, all of which are specified business generated between the parties. between the parties if any one of the in writing. * * * * * following conditions is met: (2) The writing specifies the (n) Risk-sharing arrangements. * * * * * timeframe for the arrangement, which Compensation pursuant to a risk-sharing (x) * * * can be for any period of time and arrangement (including, but not limited (1) Remuneration provided by a contain a termination clause, provided to, withholds, bonuses, and risk pools) hospital to a physician to compensate a that the parties enter into only one between a MCO or an IPA and a nonphysician practitioner to provide arrangement for the same items, physician (either directly or indirectly NPP patient care services, if all of the services, office space, or equipment through a subcontractor) for services following conditions are met: during the course of a year. An provided to enrollees of a health plan. (i) The arrangement— arrangement may be renewed any For purposes of this paragraph (n), (A) Is set out in writing and signed by number of times if the terms of the ‘‘health plan’’ and ‘‘enrollees’’ have the the hospital, the physician, and the arrangement and the compensation for meanings set forth in § 1001.952(l) of nonphysician practitioner; and the same items, services, office space, or this title. (B) Commences before the physician equipment do not change. * * * * * (or the physician organization in whose (3) The writing specifies the (r) * * * shoes the physician stands under compensation that will be provided (2) * * * § 411.354(c)) enters into the under the arrangement. The (iv) The hospital, federally qualified compensation arrangement described in compensation must be set in advance, health center, or rural health clinic does paragraph (x)(1)(vi)(A) of this section. consistent with fair market value, and not determine the amount of the (ii) The arrangement is not not determined in any manner that takes payment in any manner that takes into conditioned on— into account the volume or value of account the volume or value of referrals (A) The physician’s referrals to the referrals or other business generated by by the physician or other business hospital; or the referring physician. Compensation generated between the parties. (B) The nonphysician practitioner’s for the rental of office space or * * * * * NPP referrals to the hospital. equipment may not be determined using (w) Electronic health records items (iii) The remuneration from the a formula based on— and services. Nonmonetary hospital— (i) A percentage of the revenue raised, remuneration (consisting of items and (A) Does not exceed 50 percent of the earned, billed, collected, or otherwise services in the form of software or actual compensation, signing bonus, attributable to the services performed or information technology and training and benefits paid by the physician to business generated in the office space or services, including certain cybersecurity the nonphysician practitioner during a to the services performed on or business software and services) necessary and period not to exceed the first 2 generated through the use of the used predominantly to create, maintain, consecutive years of the compensation equipment; or transmit, receive, or protect electronic arrangement between the nonphysician (ii) Per-unit of service rental charges, health records, if all of the following practitioner and the physician (or the to the extent that such charges reflect conditions are met: physician organization in whose shoes services provided to patients referred by * * * * * the physician stands); and the lessor to the lessee. (2) The software is interoperable (as (B) Is not determined in any manner (4) The arrangement is commercially defined in § 411.351) at the time it is that takes into account the volume or reasonable (taking into account the provided to the physician. For purposes value of actual or anticipated— nature and scope of the transaction). of this paragraph (w), software is (1) Referrals by the physician (or any (5) [Reserved] deemed to be interoperable if, on the physician in the physician’s practice) or date it is provided to the physician, it other business generated between the (6) The services to be performed is certified by a certifying body parties; or under the arrangement do not involve authorized by the National Coordinator (2) NPP referrals by the nonphysician the counseling or promotion of a for Health Information Technology to practitioner (or any nonphysician business arrangement or other activity electronic health record certification practitioner in the physician’s practice) that violates a Federal or State law. criteria identified in the then-applicable or other business generated between the (7) The arrangement satisfies the version of 45 CFR part 170. parties. requirements of § 411.354(d)(4) in the (3) The donor (or any person on the (iv) The compensation, signing bonus, case of— donor’s behalf) does not engage in a and benefits paid to the nonphysician (i) Remuneration to the physician that practice constituting information practitioner by the physician does not is conditioned on the physician’s blocking, as defined in section 3022 of exceed fair market value for the NPP referrals to a particular provider, the Public Health Service Act, in patient care services furnished by the practitioner, or supplier; or connection with the donated items or nonphysician practitioner to patients of (ii) Remuneration paid to the group of services. the physician’s practice. physicians that is conditioned on one of * * * * * (v) The nonphysician practitioner has the group’s physician’s referrals to a (6) Neither the eligibility of a not, within 1 year of the commencement particular provider, practitioner, or physician for the items or services, nor of his or her compensation arrangement supplier. the amount or nature of the items or with the physician (or the physician (m) * * * services, is determined in any manner organization in whose shoes the (1) The compensation is offered to all that directly takes into account the physician stands under § 411.354(c))— members of the medical staff practicing volume or value of referrals or other (A) Furnished NPP patient care in the same specialty (but not business generated between the parties. services in the geographic area served necessarily accepted by every member For purposes of this paragraph (w), the by the hospital; or to whom it is offered) and is not offered determination is deemed not to directly (B) Been employed or otherwise in any manner that takes into account take into account the volume or value of engaged to provide NPP patient care

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00153 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 55846 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules

services by a physician or a physician exceed an aggregate of $3,500 per (i) The value-based enterprise is at organization that has a medical practice calendar year, as adjusted for inflation full financial risk (or is contractually site located in the geographic area in accordance with paragraph (z)(2) of obligated to be at full financial risk served by the hospital, regardless of this section, if all of the following within the 6 months following the whether the nonphysician practitioner conditions are satisfied: commencement of the value-based furnished NPP patient care services at (i) The compensation is not arrangement) during the entire duration the medical practice site located in the determined in any manner that takes of the value-based arrangement. geographic area served by the hospital. into account the volume or value of (ii) The remuneration is for or results (vi)(A) The nonphysician practitioner referrals or other business generated by from value-based activities undertaken has a compensation arrangement the physician. by the recipient of the remuneration for directly with the physician or the (ii) The compensation does not patients in the target patient population. physician organization in whose shoes exceed the fair market value of the items (iii) The remuneration is not an the physician stands under § 411.354(c); or services. inducement to reduce or limit medically and (iii) The arrangement is commercially necessary items or services to any (B) Substantially all of the NPP reasonable. patient. patient care services that the (iv) Compensation for the lease of (iv) The remuneration is not nonphysician practitioner furnishes to office space or equipment is not conditioned on referrals of patients who patients of the physician’s practice are determined using a formula based on— are not part of the target patient primary care services or mental health (A) A percentage of the revenue population or business not covered care services. raised, earned, billed, collected, or under the value-based arrangement. (vii) The physician does not impose otherwise attributable to the services (v) If remuneration paid to the practice restrictions on the performed or business generated in the physician is conditioned on the nonphysician practitioner that office space or to the services performed physician’s referrals to a particular unreasonably restrict the nonphysician on or business generated through the provider, practitioner, or supplier, the practitioner’s ability to provide NPP use of the equipment; or value-based arrangement satisfies the patient care services in the geographic (B) Per-unit of service rental charges, requirements of § 411.354(d)(4)(iv). area served by the hospital. to the extent that such charges reflect (vi) Records of the methodology for services provided to patients referred by determining and the actual amount of * * * * * the lessor to the lessee. remuneration paid under the value- (4) For purposes of this paragraph (x), (v) Compensation for the use of based arrangement must be maintained the following terms have the meanings premises, equipment, personnel, items, for a period of at least 6 years and made indicated. supplies, or services is not determined (i) ‘‘NPP patient care services’’ means available to the Secretary upon request. using a formula based on— (vii) For purposes of this paragraph direct patient care services furnished by (A) A percentage of the revenue (aa), ‘‘full financial risk’’ means that the a nonphysician practitioner that address raised, earned, billed, collected, or value-based enterprise is financially the medical needs of specific patients or otherwise attributable to the services responsible on a prospective basis for any task performed by a nonphysician provided while using the premises, the cost of all patient care items and practitioner that promotes the care of equipment, personnel, items, supplies, services covered by the applicable payor patients of the physician or physician or services covered by the arrangement; for each patient in the target patient organization with which the or population for a specified period of nonphysician practitioner has a (B) Per-unit of service fees that are not time. For purposes of this paragraph compensation arrangement. time-based, to the extent that such fees (aa), ‘‘prospective basis’’ means that the (ii) ‘‘NPP referral’’ means a request by reflect services provided to patients value-based enterprise has assumed a nonphysician practitioner that referred by the party granting financial responsibility for the cost of all includes the provision of any designated permission to use the premises, patient care items and services covered health service for which payment may equipment, personnel, items, supplies, by the applicable payor prior to be made under Medicare, the or services covered by the arrangement providing patient care items and establishment of any plan of care by a to the party to which the permission is services to patients in the target patient nonphysician practitioner that includes granted. population. the provision of such a designated (2) The annual remuneration limit in (2) Value-based arrangements with health service, or the certifying or this paragraph (z) is adjusted each meaningful downside financial risk to recertifying of the need for such a calendar year to the nearest whole the physician—Remuneration paid designated health service, but does not dollar by the increase in the Consumer under a value-based arrangement, as include any designated health service Price Index—Urban All Items (CPI–U) defined in § 411.351, if the following personally performed or provided by the for the 12-month period ending the conditions are met: nonphysician practitioner. preceding September 30. CMS displays (i) The physician is at meaningful * * * * * after September 30 each year both the downside financial risk for failure to (y) * * * increase in the CPI–U for the 12-month achieve the value-based purpose(s) of (6) * * * period and the new remuneration limit the value-based enterprise during the (i) In any manner that takes into on the physician self-referral website at entire duration of the value-based account the volume or value of referrals http://www.cms.hhs.gov/ arrangement. or other business generated between the PhysicianSelfReferral/10_CPI–U_ (ii) A description of the nature and parties; or Updates.asp. extent of the physician’s downside * * * * * (aa) Arrangements that facilitate financial risk is set forth in writing. (z) Limited remuneration to a value-based health care delivery and (iii) The methodology used to physician—(1) Remuneration from an payment—(1) Full financial risk— determine the amount of the entity to a physician for the provision of Remuneration paid under a value-based remuneration is set in advance of the items or services provided by the arrangement, as defined in § 411.351, if undertaking of value-based activities for physician to the entity that does not the following conditions are met: which the remuneration is paid.

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00154 Fmt 4701 Sfmt 4702 E:\FR\FM\17OCP2.SGM 17OCP2 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Proposed Rules 55847

(iv) The remuneration is for or results (D) The type or nature of the (ii) Neither the eligibility of a from value-based activities undertaken remuneration; physician for the technology or services, by the recipient of the remuneration for (E) The methodology used to nor the amount or nature of the patients in the target patient population. determine the remuneration; and technology or services, is determined in (v) The remuneration is not an (F) The performance or quality any manner that directly takes into inducement to reduce or limit medically standards against which the recipient account the volume or value of referrals necessary items or services to any will be measured, if any. or other business generated between the patient. (ii) The performance or quality parties. (vi) The remuneration is not standards against which the recipient (iii) Neither the physician nor the conditioned on referrals of patients who will be measured, if any, are objective physician’s practice (including are not part of the target patient and measurable, and any changes to the employees and staff members) makes population or business not covered performance or quality standards must the receipt of technology or services, or under the value-based arrangement. be made prospectively and set forth in the amount or nature of the technology (vii) If remuneration paid to the writing. or services, a condition of doing physician is conditioned on the (iii) The methodology used to business with the donor. physician’s referrals to a particular determine the amount of the (iv) The arrangement is documented provider, practitioner, or supplier, the remuneration is set in advance of the in writing. value-based arrangement satisfies the undertaking of value-based activities for requirements of § 411.354(d)(4)(iv). which the remuneration is paid. (2) For purposes of this paragraph (viii) Records of the methodology for (iv) The remuneration is for or results (bb), ‘‘technology’’ means any software determining and the actual amount of from value-based activities undertaken or other types of information technology remuneration paid under the value- by the recipient of the remuneration for other than hardware. patients in the target patient population. based arrangement must be maintained § 411.362 [Amended] for a period of at least 6 years and made (v) The remuneration is not an available to the Secretary upon request. inducement to reduce or limit medically ■ 8. Section 411.362 is amended in (ix) For purposes of this paragraph necessary items or services to any paragraphs (b)(3)(ii)(C), (c)(2)(iv), (aa), ‘‘meaningful downside financial patient. (c)(2)(v), and (c)(5) introductory text by risk’’ means that the physician— (vi) The remuneration is not removing the term ‘‘website’’ each time (A) Is responsible to pay the entity no conditioned on referrals of patients who it appears and adding in its place the less than 25 percent of the value of the are not part of the target patient term ‘‘website’’. remuneration the physician receives population or business not covered § 411.372 [Amended] under the value-based arrangement; or under the value-based arrangement. (B) Is financially responsible to the (vii) If the remuneration paid to the ■ 9. Section 411.372 is amended in entity on a prospective basis for the cost physician is conditioned on the paragraph (a) by removing the term of all or a defined set of patient care physician’s referrals to a particular ‘‘website’’ and adding in its place the items and services covered by the provider, practitioner, or supplier, the term ‘‘website’’. applicable payor for each patient in the value-based arrangement satisfies the § 411.384 [Amended] target patient population for a specified requirements of § 411.354(d)(4)(iv). period of time. (viii) Records of the methodology for ■ 10. Section 411.384 is amended in (3) Value-based arrangements— determining and the actual amount of paragraph (b) by removing the term Remuneration paid under a value-based remuneration paid under the value- ‘‘website’’ and adding in its place the arrangement, as defined in § 411.351, if based arrangement must be maintained term ‘‘website’’. the following conditions are met: for a period of at least 6 years and made Dated: September 26, 2019. (i) The arrangement is set forth in available to the Secretary upon request. Seema Verma, writing and signed by the parties. The (bb) Cybersecurity technology and writing includes a description of— related services. (1) Nonmonetary Administrator, Centers for Medicare & Medicaid Services. (A) The value-based activities to be remuneration (consisting of certain undertaken under the arrangement; types of technology and services), if all Dated: September 27, 2019. (B) How the value-based activities are of the following conditions are met: Alex M. Azar II, expected to further the value-based (i) The technology and services are Secretary, Department of Health and Human purpose(s) of the value-based enterprise; necessary and used predominantly to Services. (C) The target patient population for implement, maintain, or reestablish [FR Doc. 2019–22028 Filed 10–9–19; 4:15 pm] the arrangement; cybersecurity. BILLING CODE 4120–01–P

VerDate Sep<11>2014 20:24 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00155 Fmt 4701 Sfmt 9990 E:\FR\FM\17OCP2.SGM 17OCP2 Vol. 84 Thursday, No. 201 October 17, 2019

Part III

The President

Executive Order 13894—Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria Notice of October 15, 2019—Continuation of the National Emergency With Respect to Significant Narcotics Traffickers Centered in Colombia

VerDate Sep<11>2014 19:36 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\17OCE0.SGM 17OCE0 VerDate Sep<11>2014 19:36 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4717 Sfmt 4717 E:\FR\FM\17OCE0.SGM 17OCE0 55851

Federal Register Presidential Documents Vol. 84, No. 201

Thursday, October 17, 2019

Title 3— Executive Order 13894 of October 14, 2019

The President Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emer- gencies Act (50 U.S.C. 1601 et seq.) (NEA), section 212(f) of the Immigration and Nationality Act of 1952 (8 U.S.C. 1182(f)), and section 301 of title 3, United States Code, I, DONALD J. TRUMP, President of the United States of America, find that the situation in and in relation to Syria, and in particular the recent actions by the Government of Turkey to conduct a military offensive into northeast Syria, undermines the campaign to defeat the Islamic State of Iraq and Syria, or ISIS, endangers civilians, and further threatens to undermine the peace, security, and stability in the region, and thereby constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States. I hereby declare a national emergency to deal with that threat. I hereby determine and order: Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: (i) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State: (A) to be responsible for or complicit in, or to have directly or indirectly engaged in, or attempted to engage in, any of the following in or in relation to Syria: (1) actions or policies that further threaten the peace, security, stability, or territorial integrity of Syria; or (2) the commission of serious human rights abuse; (B) to be a current or former official of the Government of Turkey; (C) to be any subdivision, agency, or instrumentality of the Government of Turkey; (D) to operate in such sectors of the Turkish economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State; (E) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this order; or (F) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order. (b) The prohibitions in subsection (a) of this section apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted before the date of this order.

VerDate Sep<11>2014 19:36 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00003 Fmt 4705 Sfmt 4790 E:\FR\FM\17OCE0.SGM 17OCE0 55852 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents

Sec. 2. (a) The Secretary of State, in consultation with the Secretary of the Treasury and other officials of the U.S. Government as appropriate, is hereby authorized to impose on a foreign person any of the sanctions described in subsections (b) and (c) of this section, upon determining that the person, on or after the date of this order: (i) is responsible for or complicit in, has directly or indirectly engaged in, or attempted to engage in, or financed, any of the following: (A) the obstruction, disruption, or prevention of a ceasefire in northern Syria; (B) the intimidation or prevention of displaced persons from voluntarily returning to their places of residence in Syria; (C) the forcible repatriation of persons or refugees to Syria; or (D) the obstruction, disruption, or prevention of efforts to promote a political solution to the conflict in Syria, including: (1) the convening and conduct of a credible and inclusive Syrian-led constitutional process under the auspices of the United Nations (UN); (2) the preparation for and conduct of UN-supervised elections, pursuant to the new constitution, that are free and fair and to the highest international standards of transparency and accountability; or (3) the development of a new Syrian government that is representative and reflects the will of the Syrian people; (ii) is an adult family member of a person designated under subsection (a)(i) of this section; or (iii) is responsible for or complicit in, or has directly or indirectly engaged in, or attempted to engage in, the expropriation of property, including real property, for personal gain or political purposes in Syria. (b) When the Secretary of State, in accordance with the terms of subsection (a) of this section, has determined that a person meets any of the criteria described in that subsection and has selected one or more of the sanctions set forth below to impose on that person, the heads of relevant departments and agencies, in consultation with the Secretary of State, as appropriate, shall ensure that the following actions are taken where necessary to implement the sanctions selected by the Secretary of State: (i) agencies shall not procure, or enter into a contract for the procurement of, any goods or services from the sanctioned person; or (ii) the Secretary of State shall direct the denial of a visa to, and the Secretary of Homeland Security shall exclude from the United States, any alien that the Secretary of State determines is a corporate officer or principal of, or a shareholder with a controlling interest in, a sanctioned person. (c) When the Secretary of State, in accordance with the terms of subsection (a) of this section, has determined that a person meets any of the criteria described in that subsection and has selected one or more of the sanctions set forth below to impose on that person, the Secretary of the Treasury, in consultation with the Secretary of State, shall take the following actions where necessary to implement the sanctions selected by the Secretary of State: (i) prohibit any United States financial institution that is a U.S. person from making loans or providing credits to the sanctioned person totaling more than $10,000,000 in any 12-month period, unless such person is engaged in activities to relieve human suffering and the loans or credits are provided for such activities; (ii) prohibit any transactions in foreign exchange that are subject to the jurisdiction of the United States and in which the sanctioned person has any interest; (iii) prohibit any transfers of credit or payments between banking institutions or by, through, or to any banking institution, to the extent that

VerDate Sep<11>2014 19:36 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00004 Fmt 4705 Sfmt 4790 E:\FR\FM\17OCE0.SGM 17OCE0 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents 55853

such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the sanctioned person; (iv) block all property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the sanctioned person, and provide that such property and interests in property may not be transferred, paid, exported, withdrawn, or otherwise dealt in; (v) prohibit any United States person from investing in or purchasing significant amounts of equity or debt instruments of the sanctioned person; (vi) restrict or prohibit imports of goods, technology, or services, directly or indirectly, into the United States from the sanctioned person; or (vii) impose on the principal executive officer or officers, or persons performing similar functions and with similar authorities, of the sanctioned person the sanctions described in subsections (c)(i)–(c)(vi) of this section, as selected by the Secretary of State. (d) The prohibitions in subsections (b) and (c) of this section apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted before the date of this order. Sec. 3. (a) The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to impose on a foreign financial institution the sanctions described in subsection (b) of this section upon determining that the foreign financial institution knowingly conducted or facilitated any significant financial transaction for or on behalf of any person whose property and interests in property are blocked pursuant to section 1 of this order. (b) With respect to any foreign financial institution determined by the Secretary of the Treasury, in accordance with this section, to meet the criteria set forth in subsection (a) of this section, the Secretary of the Treasury may prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States of a correspondent account or a payable- through account by such foreign financial institution. (c) The prohibitions in subsection (b) of this section apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted before the date of this order. Sec. 4. The unrestricted immigrant and nonimmigrant entry into the United States of aliens determined to meet one or more of the criteria in subsection 1(a) or 2(a) of this order, or aliens for which the sanctions under subsection 2(b)(ii) have been selected, would be detrimental to the interests of the United States, and the entry of such persons into the United States, as immigrants or nonimmigrants, is hereby suspended, except where the Sec- retary of State determines that the entry of the person into the United States would not be contrary to the interests of the United States, including when the Secretary so determines, based on a recommendation of the Attor- ney General, that the person’s entry would further important United States law enforcement objectives. In exercising this responsibility, the Secretary of State shall consult the Secretary of Homeland Security on matters related to admissibility or inadmissibility within the authority of the Secretary of Homeland Security. Such persons shall be treated in the same manner as persons covered by section 1 of Proclamation 8693 of July 24, 2011 (Suspension of Entry of Aliens Subject to United Nations Security Council Travel Bans and International Emergency Economic Powers Act Sanctions). The Secretary of State shall have the responsibility for implementing this section pursuant to such conditions and procedures as the Secretary has established or may establish pursuant to Proclamation 8693.

VerDate Sep<11>2014 19:36 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00005 Fmt 4705 Sfmt 4790 E:\FR\FM\17OCE0.SGM 17OCE0 55854 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents

Sec. 5. I hereby determine that the making of donations of the types of articles specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to section 1 of this order would seriously impair my ability to deal with the national emergency declared in this order, and I hereby prohibit such donations as provided by section 1 of this order. Sec. 6. The prohibitions in sections 1 and 2 of this order include: (a) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and (b) the receipt of any contribution or provision of funds, goods, or services from any such person. Sec. 7. (a) Any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order is prohibited. (b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited. Sec. 8. For the purposes of this order: (a) The term ‘‘entity’’ means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization; (b) the term ‘‘foreign financial institution’’ means any foreign entity that is engaged in the business of accepting deposits, making, granting, transfer- ring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent. The term includes depository institutions, banks, savings banks, money service businesses, trust companies, securities brokers and dealers, commodity futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, dealers in precious metals, stones, or jewels, and holding companies, affiliates, or subsidiaries of any of the foregoing. The term does not include the international financial institutions identified in 22 U.S.C. 262r(c)(2), the International Fund for Agricultural Development, the North American Development Bank, or any other international financial institution so notified by the Secretary of the Treasury; (c) the term ‘‘knowingly,’’ with respect to conduct, a circumstance, or a result, means that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result; (d) the term ‘‘person’’ means an individual or entity; (e) the term ‘‘United States person’’ or ‘‘U.S. person’’ means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States; and (f) the term ‘‘Government of Turkey’’ means the Government of Turkey, any political subdivision, agency, or instrumentality thereof, or any person owned or controlled by or acting for or on behalf of the Government of Turkey. Sec. 9. For those persons whose property and interests in property are blocked pursuant to this order who might have a constitutional presence in the United States, I find that because of the ability to transfer funds or other assets instantaneously, prior notice to such persons of measures to be taken pursuant to this order would render those measures ineffectual. I therefore determine that for these measures to be effective in addressing the national emergency declared in this order, there need be no prior notice of a listing or determination made pursuant to this order. Sec. 10. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to take such actions, including the promulgation

VerDate Sep<11>2014 19:36 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00006 Fmt 4705 Sfmt 4790 E:\FR\FM\17OCE0.SGM 17OCE0 Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents 55855

of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may, consistent with applicable law, redelegate any of these functions within the Department of the Treasury. All departments and agencies of the United States shall take all appropriate measures within their authority to implement this order. Sec. 11. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to submit the recurring and final reports to the Congress on the national emergency declared in this order, consistent with section 401(c) of the NEA (50 U.S.C. 1641(c)), and section 204(c) of IEEPA (50 U.S.C. 1703(c)). Sec. 12. (a) Nothing in this order shall be construed to impair or otherwise affect: (i) the authority granted by law to an executive department or agency, or the head thereof; or (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals. (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations. (c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

THE WHITE HOUSE, October 14, 2019.

[FR Doc. 2019–22849 Filed 10–16–19; 11:15 am] Billing code 3295–F0–P

VerDate Sep<11>2014 19:36 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00007 Fmt 4705 Sfmt 4790 E:\FR\FM\17OCE0.SGM 17OCE0 Trump.EPS Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Presidential Documents 55857 Presidential Documents

Notice of October 15, 2019

Continuation of the National Emergency With Respect to Sig- nificant Narcotics Traffickers Centered in Colombia

On October 21, 1995, by Executive Order 12978, the President declared a national emergency with respect to significant narcotics traffickers centered in Colombia pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701–1706) to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by the actions of significant narcotics traffickers centered in Colombia and the extreme level of violence, corruption, and harm such actions cause in the United States and abroad. The actions of significant narcotics traffickers centered in Colombia continue to threaten the national security, foreign policy, and economy of the United States and cause an extreme level of violence, corruption, and harm in the United States and abroad. For this reason, the national emergency declared in Executive Order 12978 of October 21, 1995, and the measures adopted pursuant thereto to deal with that emergency, must continue in effect beyond October 21, 2019. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency with respect to significant narcotics traffickers centered in Colombia declared in Executive Order 12978. This notice shall be published in the Federal Register and transmitted to the Congress.

THE WHITE HOUSE, October 15, 2019. [FR Doc. 2019–22852 Filed 10–16–19; 11:15 am] Billing code 3295–F0–P

VerDate Sep<11>2014 19:37 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4790 Sfmt 4790 E:\FR\FM\17OCO0.SGM 17OCO0 Trump.EPS i

Reader Aids Federal Register Vol. 84, No. 201 Thursday, October 17, 2019

CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING OCTOBER

Federal Register/Code of Federal Regulations At the end of each month the Office of the Federal Register General Information, indexes and other finding 202–741–6000 publishes separately a List of CFR Sections Affected (LSA), which aids lists parts and sections affected by documents published since Laws 741–6000 the revision date of each title. 922...... 52384 Presidential Documents 2 CFR 966...... 52042 Executive orders and proclamations 741–6000 417...... 52993 The United States Government Manual 741–6000 8 CFR 3 CFR Other Services 103...... 52357 Proclamations: 212...... 52357 Electronic and on-line services (voice) 741–6020 9933...... 52737 213...... 52357 Privacy Act Compilation 741–6050 9934...... 52739 214...... 52357 9935...... 52741 245...... 52357 9936...... 52983 ELECTRONIC RESEARCH 248...... 52357 9937...... 52985 Proposed Rules: World Wide Web 9938...... 52987 9939...... 52989 204...... 55250 205...... 55250 Full text of the daily Federal Register, CFR and other publications 9940...... 52991 245...... 55250 is located at: www.govinfo.gov. 9941...... 53983 Federal Register information and research tools, including Public 9942...... 53985 9 CFR 9943...... 53987 Inspection List and electronic text are located at: 301...... 52300 www.federalregister.gov. 9944...... 53989 9945...... 53991 309...... 52300 E-mail 9946...... 54763 310...... 52300 9947...... 55485 10 CFR FEDREGTOC (Daily Federal Register Table of Contents Electronic 9948...... 55489 Mailing List) is an open e-mail service that provides subscribers 9949...... 55491 72...... 52747, 54465 with a digital form of the Federal Register Table of Contents. The 9950...... 55493 Proposed Rules: digital form of the Federal Register Table of Contents includes Executive Orders: 72...... 52815 HTML and PDF links to the full text of each document. 13811 (superseded in 429...... 52817 To join or leave, go to https://public.govdelivery.com/accounts/ part by 13889)...... 52743 430...... 52817, 52818 USGPOOFR/subscriber/new, enter your email address, then 13888...... 52355 431...... 52386 follow the instructions to join, leave, or manage your 13889...... 52743 810...... 52819 subscription. 13890...... 53573 955...... 53066 13891...... 55235 PENS (Public Law Electronic Notification Service) is an e-mail 12 CFR service that notifies subscribers of recently enacted laws. 13892...... 55239 13893...... 55487 26...... 54465 To subscribe, go to http://listserv.gsa.gov/archives/publaws-l.html 13894...... 55851 34...... 53579 and select Join or leave the list (or change settings); then follow 46...... 54472 the instructions. Administrative Orders: Memorandums: 201...... 52752 FEDREGTOC and PENS are mailing lists only. We cannot Memorandum of 204...... 52753 respond to specific inquiries. September 24, 212...... 54465 Reference questions. Send questions and comments about the 2019 ...... 52353 225...... 53579 Federal Register system to: [email protected] Notices: 238...... 54465 Notice of October 15, 323...... 53579 The Federal Register staff cannot interpret specific documents or 2019 ...... 55857 348...... 54465 regulations. 701...... 51942, 53278 5 CFR 715...... 53303 FEDERAL REGISTER PAGES AND DATE, OCTOBER 185...... 51937 746...... 53278 Proposed Rules: 51937–52356...... 1 6 CFR 30...... 55510 52357–52746...... 2 37...... 55017 208...... 55510 52747–52992...... 3 327...... 52826 52993–53302...... 4 7 CFR 337...... 54044 53303–53572...... 7 1...... 51938 364...... 55510 53573–53984...... 8 205...... 53577 390 ...... 52387, 52827, 52834, 53985–54464...... 9 51...... 51939 54045 54465–54762...... 10 251...... 52997 741...... 55510 400...... 52993 54763–55016...... 11 718...... 53579 14 CFR 55017–55244...... 15 930...... 53003 23...... 54476 55245–55488...... 16 1205...... 55019 25...... 53995 55489–55858...... 17 1412...... 53579 39 ...... 51952, 51955, 51957, 3565...... 55034 51960, 52754, 53008, 53997, Proposed Rules: 53999, 54480, 54482, 54490, 205...... 52041 54492, 54765, 55036, 55041, 273...... 52809 55495

VerDate Sep 11 2014 21:25 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00001 Fmt 4712 Sfmt 4712 E:\FR\FM\17OCCU.LOC 17OCCU ii Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Reader Aids

71 ...... 51963, 51964, 52757, 24 CFR 2...... 52363 54...... 54952 54001 Ch. IX...... 54009 7...... 52363 Proposed Rules: 97 ...... 51965, 51967, 51970, 42...... 51977 0...... 53355 51971 25 CFR Proposed Rules: 1...... 53355 1206...... 54773 170...... 55498 1...... 53090 76...... 53355 Proposed Rules: 38 CFR 25...... 52392 26 CFR 48 CFR 27...... 52392 1 ...... 53052, 54014, 54027, 3...... 54033 29...... 52392 Ch. 1...... 54760, 54762 55245 Proposed Rules: 2...... 54760 39 ...... 52044, 52047, 53070, Proposed Rules: 4...... 55086 Proposed Rules: 53073, 53076, 53082, 54046, 1 ...... 52398, 52410, 52835, 2...... 52420 54049, 54051, 55073 54067, 54068, 54079, 54529, 39 CFR 9...... 52420 71 ...... 52049, 52051, 53346, 55075 111...... 51982, 55504 12...... 52425, 55109 54053, 54525, 54526, 54528, 3002...... 53056 13...... 52420, 52425 54792 27 CFR 3004...... 53056 14...... 52428 91...... 52392 9...... 54779 Proposed Rules: 15...... 52425, 52428 121...... 52392 Proposed Rules: 111...... 55529 125...... 52392 16...... 52420, 52425 9...... 55075, 55082 Ch. III ...... 53840 19...... 52420 135...... 52392 501...... 53353 29 CFR 22...... 52420 15 CFR 25...... 52420 2200...... 53052 40 CFR 29...... 55109 744...... 54002 2700...... 54782 9...... 54033, 55058 30...... 52428 902.1...... 55044 4022...... 55055 52 ...... 51983, 51986, 51988, Proposed Rules: 37...... 52425 Proposed Rule: 52001, 52003, 52005, 52364, 52 ...... 52420, 52428, 55109 922...... 52053 10...... 53956 52368, 52766, 53057, 53061, 103...... 54533, 55265 53601, 54035, 54498, 54502, 16 CFR 49 CFR 516...... 53956 54785 Proposed Rules: 531...... 53956 180 ...... 52369, 52771, 52775, 190...... 52015 425...... 52393 578...... 53956 52778, 53316, 53322, 53326, 191...... 52180 1253...... 54055 579...... 53956 53373, 54510 192...... 52180 17 CFR 580...... 53956 271...... 54516 195...... 52260 1915...... 53902 282...... 52783 383...... 52029 200...... 55055 1926...... 53902 721 ...... 54033, 54518, 55058 384...... 52029 230...... 53011 4003...... 53084 580...... 52664 240...... 55055 Proposed Rules: 30 CFR 52 ...... 52838, 54080, 55094, Proposed Rules: Proposed Rules: 55100, 55104, 55107 29...... 52706 210...... 52936 56...... 55500 60...... 52055 350...... 54093 57...... 55500 229...... 52936 63 ...... 52419, 53662, 54278, 355...... 54093 240...... 54062 Proposed Rules: 54394 385...... 52432 242...... 54794 924...... 53349 180...... 52850 388...... 54093 249...... 52936 571...... 54533 31 CFR 282...... 52852 18 CFR 721 ...... 53663, 53670, 54816 Ch. X...... 53094 1010 ...... 51973, 53053, 54495 1039...... 55109 385...... 55498 Proposed Rules: 41 CFR 1250...... 53375 Proposed Rules: 208...... 55267 105-70...... 53064 1333...... 55114 292...... 53246 800...... 52411 Ch. 301 ...... 55246 375...... 53246 32 CFR Ch. 304 ...... 55246 50 CFR Ch. 305 ...... 55246 19 CFR 78...... 55056 17 ...... 52598, 52791, 53336, Ch. 306 ...... 55246 Proposed Rules: 316...... 51974 54436 216...... 52372 113...... 55251 637...... 52363 42 CFR 133...... 55251 887...... 51974 300...... 52035, 52800 412...... 53603 148...... 55251 622...... 52036 413...... 53603 151...... 55251 33 CFR 635 ...... 52806, 54522, 55507 495...... 53603 177...... 55251 100 ...... 51975, 53053, 53314, 648 ...... 52039, 53065, 54041, 54029 Proposed Rules: 54790 20 CFR 117...... 53054 411...... 55766 679 ...... 52039, 53343, 53344, 620...... 53037 165 ...... 51975, 52763, 54029, 1001...... 55694 53659, 54791, 55044, 55071, 54032, 54496, 54783, 55057, 1003...... 55694 55508 21 CFR Proposed Rules: 55501, 55502 44 CFR 510...... 53309 Proposed Rules: 17 ...... 52058, 53380, 54524, 520...... 53309 100...... 52411 64...... 54520 54732 522...... 53309 20...... 55120 117...... 53350 46 CFR 526...... 53309 127...... 53352 223...... 54354, 55530 529...... 53309 165...... 54783 501...... 54037 224...... 54354, 55530 556...... 53309 502...... 57037 226...... 54354, 55530 558...... 53309 34 CFR Proposed Rules: 229...... 54543 Proposed Rules: Proposed Rules: 501...... 54087 260...... 55130 117...... 53347 263...... 54806 503...... 54087 261...... 55130 573...... 52055 515...... 54087 300...... 52852 36 CFR 535...... 54087 600...... 52852 22 CFR Proposed Rules: 622 ...... 52438, 52864, 55132, 40...... 54996 294...... 55522 47 CFR 55531 0...... 54040 648...... 54094 23 CFR 37 CFR 2...... 53630 660...... 54561, 54579 652...... 53599 1...... 51977 25...... 53630 679...... 52442, 52852

VerDate Sep 11 2014 21:25 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4712 Sfmt 4712 E:\FR\FM\17OCCU.LOC 17OCCU Federal Register / Vol. 84, No. 201 / Thursday, October 17, 2019 / Reader Aids iii

in today’s List of Public enacted public laws. To Laws. subscribe, go to http:// LIST OF PUBLIC LAWS Public Laws Electronic listserv.gsa.gov/archives/ Last List October 11, 2019 Notification Service publaws-l.html (PENS) Note: No public bills which Note: This service is strictly have become law were for E-mail notification of new received by the Office of the PENS is a free electronic mail laws. The text of laws is not Federal Register for inclusion notification service of newly available through this service. PENS cannot respond to specific inquiries sent to this address.

VerDate Sep 11 2014 21:25 Oct 16, 2019 Jkt 250001 PO 00000 Frm 00003 Fmt 4712 Sfmt 4711 E:\FR\FM\17OCCU.LOC 17OCCU