Vol. 86 Thursday, No. 4 January 7, 2021

Pages 933–1248

OFFICE OF THE FEDERAL REGISTER

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Contents Federal Register Vol. 86, No. 4

Thursday, January 7, 2021

Agriculture Department Education Department See Economic Research Service NOTICES See Forest Service Applications for New Awards: See Office of Partnerships and Public Engagement Rehabilitation Training; Disability Innovation Fund, See Rural Business-Cooperative Service Career Advancement Initiative Model Demonstration See Rural Housing Service Project, 1092–1099 See Rural Utilities Service Privacy Act; Matching Program, 1099–1101 NOTICES Requests for Nominations: Urban Agriculture and Innovative Production Advisory Energy Department Committee, 1083–1084 See Federal Energy Regulatory Commission NOTICES Meetings: Centers for Disease Control and Prevention Environmental Management Site-Specific Advisory NOTICES Board, Savannah River Site, 1101 Agency Information Collection Activities; Proposals, Submissions, and Approvals, 1111–1114 Environmental Protection Agency RULES Children and Families Administration Air Quality State Implementation Plans; Approvals and NOTICES Promulgations: Agency Information Collection Activities; Proposals, Arizona; Maricopa County Air Quality Department; Submissions, and Approvals: Reasonably Available Control Technology State Child Care and Development Fund ACF–696 Financial Implementation Plan and Surface Coating Rule, 971– Report, 1115–1116 977 Child Care and Development Fund ACF–696T Financial Final Approval of State Underground Storage Tank Program Report, 1114 Revisions and Incorporation by Reference: Mental Health Care Services for Unaccompanied Alien Arkansas, 977–983 Children, 1114–1115 Review of Dust-Lead Post Abatement Clearance Levels, 983–994 Civil Rights Commission PROPOSED RULES NOTICES Final Approval of State Underground Storage Tank Program Meetings: Revisions and Incorporation by Reference: Texas Advisory Committee, 1088 Arkansas, 1081–1082 Washington Advisory Committee, 1088–1089 NOTICES Cross-Media Electronic Reporting: Authorized Program Commerce Department Revision Approval: See Industry and Security Bureau Tennessee, 1110–1111 See National Institute of Standards and Technology Guidance: See National Oceanic and Atmospheric Administration Preparation of Clean Air Act Demonstrations for Nonattainment Areas Affected by International Transport of Emissions, 1105–1106 Commodity Futures Trading Commission Official Release of the MOVES3 Motor Vehicle Emissions RULES Model for State Implementation Plans and Exemption From Derivatives Clearing Organization Transportation Conformity, 1106–1110 Registration, 949–971

Defense Department Federal Communications Commission RULES PROPOSED RULES Operational Contract Support Outside the United States, Restoring Internet Freedom; Bridging the Digital Divide for 1063–1080 Low-Income Consumers; Lifeline and Link Up Reform and Modernization, 994–1021 Drug Enforcement Administration PROPOSED RULES Federal Council on the Arts and the Humanities Amending Regulations To Require Online Submission of NOTICES Applications for and Renewals of Registration, 1030– Meetings: 1037 Arts and Artifacts Indemnity Panel Advisory Committee, 1119–1120 Economic Research Service NOTICES Federal Election Commission Agency Information Collection Activities; Proposals, NOTICES Submissions, and Approvals, 1084–1086 Meetings; Sunshine Act, 1111

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Federal Emergency Management Agency Maritime Administration NOTICES NOTICES Agency Information Collection Activities; Proposals, Requests for Administrative Waivers of the Coastwise Trade Submissions, and Approvals: Laws: Flood Mitigation Assistance; Building Resilient Vessel BALAM (Sailing Catamaran), 1124–1125 Infrastructure and Communities; Pre–Disaster Vessel HECHT YEAH (Motor Vessel), 1128–1129 Mitigation, 1117–1118 Vessel ISLAND REEF (Motor Vessel), 1127–1128 Vessel JAGUAR SHARK (Motor Yacht), 1123–1124 Federal Energy Regulatory Commission Vessel MAYAN STAR (Sailboat), 1129–1130 NOTICES Vessel PACIFIC CEREMONY (Motor Vessel), 1125–1126 Combined Filings, 1101–1104 Vessel SHARED ADVENTURE II (Power Catamaran), Institution of Section 206 Proceeding and Refund Effective 1126–1127 Date: PJM Interconnection, LLC; Potomac Electric Power Co., National Credit Union Administration 1104–1105 RULES Whitetail Solar 3, LLC, 1103 Civil Monetary Penalty Inflation Adjustment, 933–936

Federal Reserve System National Foundation on the Arts and the Humanities NOTICES See Federal Council on the Arts and the Humanities Formations of, Acquisitions by, and Mergers of Bank NOTICES Holding Companies, 1111 Meetings: Arts and Artifacts Indemnity Panel Advisory Committee, Fish and Wildlife Service 1119–1120 RULES National Institute of Standards and Technology Regulations Governing Take of Migratory Birds, 1134–1165 NOTICES Forest Service Agency Information Collection Activities; Proposals, Submissions, and Approvals: NOTICES Associates Information System, 1089 Meetings: Black Hills Resource Advisory Committee, 1086 National Oceanic and Atmospheric Administration NOTICES Health and Human Services Department Endangered and Threatened Species: See Centers for Disease Control and Prevention Initiation of a 5-Year Review of Indo-Pacific Reef- See Children and Families Administration Building Corals, 1090–1091 Initiation of a 5-Year Review of Staghorn Coral, Elkhorn Homeland Security Department Coral, Pillar Coral, Rough Cactus Coral, Lobed Star See Federal Emergency Management Agency Coral, Mountainous Star Coral, and Boulder Star See U.S. Customs and Border Protection Coral, 1091–1092 Meetings: Indian Affairs Bureau Western Pacific Fishery Management Council, 1089–1090 PROPOSED RULES American Indian Probate Regulations, 1037–1063 Nuclear Regulatory Commission NOTICES PROPOSED RULES Meetings: Calculated Maximum Fuel Element Cladding Temperature, Advisory Board for Exceptional Children, 1118–1119 1022–1030 NOTICES Industry and Security Bureau Agency Information Collection Activities; Proposals, RULES Submissions, and Approvals: Chemical Weapons Convention Regulations and Export Voluntary Reporting of Planned New Reactor Administration Regulations: Applications; Withdrawal, 1120 Additions to the Annex on Chemicals to the Chemical Weapons Convention, 936–944 Office of Partnerships and Public Engagement Commerce Control List: NOTICES Clarifications to the Scope of Export Control Meetings: Classification, 944–949 Public 2501 Stakeholder Call, 1086–1087

Interior Department Postal Service See Fish and Wildlife Service PROPOSED RULES See Indian Affairs Bureau Extra Services Refund Time Limit, 1080–1081 PROPOSED RULES NOTICES American Indian Probate Regulations, 1037–1063 Meetings; Sunshine Act, 1122 Product Change: Justice Department Parcel Select Negotiated Service Agreement, 1120–1121 See Drug Enforcement Administration Priority Mail and First-Class Package Service Negotiated Service Agreement, 1120–1123 Labor Department Priority Mail and Parcel Select Negotiated Service See Wage and Hour Division Agreement, 1121

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Priority Mail Express and Priority Mail Negotiated Treasury Department Service Agreement, 1120–1121 NOTICES Priority Mail Express, Priority Mail, and First-Class Interest Rate Paid on Cash Deposited to Secure U.S. Package Service Negotiated Service Agreement, Immigration and Customs Enforcement Immigration 1122–1123 Bonds, 1130 Priority Mail Express, Priority Mail, First-Class Package Service and Parcel Select Service Negotiated Service U.S. Customs and Border Protection Agreement, 1121 NOTICES Priority Mail Negotiated Service Agreement, 1121–1122 Delayed Deployment Date for Modification of Test Program Regarding Electronic Foreign Trade Zone Admission Applications for Expanded Zone Identification Rural Business-Cooperative Service Numbers, 1116 NOTICES OneRD Annual Notice of Guarantee Fee Rates, Periodic Veterans Affairs Department Retention Fee Rates, Loan Guarantee Percentage and NOTICES Fee for Issuance of the Loan Note Guarantee Prior to Reimbursement for Caskets and Urns for Burial of Construction Completion for Fiscal Year 2021; Unclaimed Remains in a National Cemetery or a VA- Correction, 1087–1088 Funded State or Tribal Veterans’ Cemetery, 1130–1131

Rural Housing Service Wage and Hour Division NOTICES RULES OneRD Annual Notice of Guarantee Fee Rates, Periodic Independent Contractor Status Under the Fair Labor Retention Fee Rates, Loan Guarantee Percentage and Standards Act, 1168–1248 Fee for Issuance of the Loan Note Guarantee Prior to Construction Completion for Fiscal Year 2021; Correction, 1087–1088 Separate Parts In This Issue

Rural Utilities Service Part II NOTICES Interior Department, Fish and Wildlife Service, 1134–1165 OneRD Annual Notice of Guarantee Fee Rates, Periodic Retention Fee Rates, Loan Guarantee Percentage and Part III Fee for Issuance of the Loan Note Guarantee Prior to Labor Department, Wage and Hour Division, 1168–1248 Construction Completion for Fiscal Year 2021; Correction, 1087–1088 Reader Aids Consult the Reader Aids section at the end of this issue for Social Security Administration phone numbers, online resources, finding aids, and notice NOTICES of recently enacted public laws. Penalty Inflation Adjustments for Civil Monetary Penalties, To subscribe to the Federal Register Table of Contents 1123 electronic mailing list, go to https://public.govdelivery.com/ accounts/USGPOOFR/subscriber/new, enter your e-mail Transportation Department address, then follow the instructions to join, leave, or See Maritime Administration manage your subscription.

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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.

10 CFR Proposed Rules: 50...... 1022 12 CFR 747...... 933 15 CFR 710...... 936 712...... 936 742...... 944 745...... 936 774...... 944 17 CFR 39...... 949 140...... 949 21 CFR Proposed Rules: 1301...... 1030 1309...... 1030 1321...... 1030 25 CFR Proposed Rules: 15...... 1037 29 CFR 780...... 1168 788...... 1168 795...... 1168 32 CFR Proposed Rules: 158...... 1063 39 CFR Proposed Rules: 111...... 1080 40 CFR 52...... 971 282...... 977 745...... 983 Proposed Rules: 281...... 1081 282...... 1081 43 CFR Proposed Rules: 30...... 1037 47 CFR 54...... 994 50 CFR 10...... 1134

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Rules and Regulations Federal Register Vol. 86, No. 4

Thursday, January 7, 2021

This section of the FEDERAL REGISTER Penalties Inflation Adjustment Act of also specify that each CMP maximum contains regulatory documents having general 1990.2 must be increased by the percentage by applicability and legal effect, most of which The current annual requirement stems which the consumer price index for are keyed to and codified in the Code of from the Bipartisan Budget Act of 2015,3 urban consumers (CPI–U) 12 for October Federal Regulations, which is published under which contains the Federal Civil of the year immediately preceding the 50 titles pursuant to 44 U.S.C. 1510. Penalties Inflation Adjustment Act year the adjustment is made exceeds the 13 The Code of Federal Regulations is sold by Improvements Act of 2015 (the 2015 CPI–U for October of the prior year. the Superintendent of Documents. amendments).4 This legislation Thus, for the adjustment to be made in provided for an initial ‘‘catch-up’’ 2021, an agency must compare the adjustment of CMPs in 2016, followed October 2019 and October 2020 CPI–U NATIONAL CREDIT UNION by annual adjustments. The catch-up figures. ADMINISTRATION adjustment reset CMP maximum An annual adjustment under the 2015 amounts by setting aside the inflation amendments is not required if a CMP 12 CFR Part 747 adjustments that agencies made in prior has been amended in the preceding 12 RIN 3133–AF34 years and instead calculated inflation months pursuant to other authority. with reference to the year when each Specifically, the statute provides that an Civil Monetary Penalty Inflation CMP was enacted or last modified by agency is not required to make an Adjustment Congress. Agencies were required to annual adjustment to a CMP if in the publish their catch-up adjustments in an preceding 12 months it has been AGENCY: National Credit Union interim final rule by July 1, 2016 and increased by an amount greater than the Administration (NCUA). make them effective by August 1, 2016.5 annual adjustment required by the 2015 ACTION: Final rule. The NCUA complied with these amendments.14 The NCUA did not SUMMARY: The NCUA Board (Board) is requirements in a June 2016 interim make any adjustments in the preceding amending its regulations to adjust the final rule, followed by a November 2016 12 months pursuant to other authority. final rule to confirm the adjustments as Therefore, this rulemaking adjusts the maximum amount of each civil 6 monetary penalty (CMP) within its final. NCUA’s CMPs pursuant to the 2015 The 2015 amendments also specified jurisdiction to account for inflation. amendments. how agencies must conduct annual This action, including the amount of the inflation adjustments after the 2016 B. Application to the 2021 Adjustments adjustments, is required under the catch-up adjustment. Following the and Office of Management and Budget Federal Civil Penalties Inflation catch-up adjustment, agencies must Guidance Adjustment Act of 1990, as amended by make the required adjustments and This section applies the statutory the Debt Collection Improvement Act of publish them in the Federal Register by requirements and the Office of 1996 and the Federal Civil Penalties January 15 each year.7 For 2017, the Management and Budget’s (OMB) Inflation Adjustment Act Improvements NCUA issued an interim final rule on guidance to the NCUA’s CMPs and sets Act of 2015. January 6, 2017,8 followed by a final forth the Board’s calculation of the 2021 DATES: This final rule is effective rule issued on June 23, 2017.9 For 2018, adjustments. January 7, 2021. 2019, and 2020, the NCUA issued a final The 2015 amendments directed OMB FOR FURTHER INFORMATION CONTACT: Gira rule in each year to satisfy the agency’s to issue guidance to agencies on Bose, Staff Attorney, at 1775 Duke annual requirements.10 This final rule implementing the inflation Street, Alexandria, VA 22314, or satisfies the agency’s requirement for adjustments.15 OMB is required to issue telephone: (703) 518–6562. the 2021 annual adjustment. its guidance each December and, with SUPPLEMENTARY INFORMATION: The law provides that the adjustments respect to the 2021 annual adjustment, I. Legal Background shall be made notwithstanding the did so on December 23, 2020.16 For II. Calculation of Adjustments section of the Administrative Procedure 2021, Federal agencies must adjust the III. Regulatory Procedures Act (APA) that requires prior notice and maximum amounts of their CMPs by the I. Legal Background public comment for agency percentage by which the October 2020 rulemaking.11 The 2015 amendments CPI–U (260.388) exceeds the October A. Statutory Requirements 2019 CPI–U (257.346). The resulting Every Federal agency, including the 2 Public Law 101–410, 104 Stat. 890 (Oct. 5, increase can be expressed as an inflation NCUA, is required by law to adjust its 1990), codified at 28 U.S.C. 2461 note. 3 Public Law 114–74, 129 Stat. 584 (Nov. 2, 2015). maximum CMP amounts each year to 12 This index is published by the Department of 4 129 Stat. 599. Labor, Bureau of Labor Statistics, and is available account for inflation. Prior to this being 5 Public Law 114–74, Sec. 701(b)(1), 129 Stat. 584, at its website: http://www.bls.gov/cpi/. an annual requirement, agencies were 599 (Nov. 2, 2015). 13 Public Law 114–74, Sec. 701(b)(2)(B), 129 Stat. required to adjust their CMPs at least 6 81 FR 40152 (June 21, 2016); 81 FR 78028 (Nov. 584, 600 (Nov. 2, 2015). once every four years. The previous 7, 2016). 14 Public Law 114–74, Sec. 701(b)(1), 129 Stat. 7 four-year requirement stemmed from the Public Law 114–74, Sec. 701(b)(1), 129 Stat. 584, 584, 600 (Nov. 2, 2015). 599 (Nov. 2, 2015). 15 Public Law 114–74, Sec. 701(b)(4), 129 Stat. Debt Collection Improvement Act of 8 82 FR 7640 (Jan. 23, 2017). 584, 601 (Nov. 2, 2015). 1 1996, which amended the Federal Civil 9 82 FR 29710 (June 30, 2017). 16 See OMB Memorandum M–21–10, 10 83 FR 2029 (Jan. 16, 2018); 84 FR 2055 (Feb. Implementation of Penalty Inflation Adjustments 1 Public Law 104–134, Sec. 31001(s), 110 Stat. 6, 2019); 85 FR 2009 (Jan. 14, 2020). for 2021, pursuant to the Federal Civil Penalties 1321–373 (Apr. 26, 1996). The law is codified at 28 11 Public Law 114–74, Sec. 701(b)(1), 129 Stat. Inflation Adjustment Act Improvements Act of 2015 U.S.C. 2461 note. 584, 599 (Nov. 2, 2015). (December 23, 2020).

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multiplier (1.01182) to apply to each maximums are found at 12 CFR 12 CFR 747.1001 under this final rule. current CMP maximum amount to 747.1001, as adjusted by the final rule The adjusted amounts will be effective determine the adjusted maximum. The that the Board approved in January upon publication in the Federal OMB guidance also addresses 2020. This amount is multiplied by the Register and can be applied to rulemaking procedures and agency inflation multiplier to calculate the new violations that occurred on or after reporting and oversight requirements for maximum in the far-right column. Only November 2, 2015, the date the 2015 17 CMPs. these adjusted maximum amounts, and amendments were enacted.18 The table below presents the not the calculations, will be codified at adjustment calculations. The current

TABLE—CALCULATION OF MAXIMUM CMP ADJUSTMENTS

Adjusted maximum ($) × 19 (current maximum Citation Description and tier Current maximum ($) Multiplier Multiplier, rounded to nearest dollar)

12 U.S.C. 1782(a)(3) ...... Inadvertent failure to submit a report or the in- 4,098 ...... 1.01182 4,146. advertent submission of a false or mis- leading report. 12 U.S.C. 1782(a)(3) ...... Non-inadvertent failure to submit a report or 40,979 ...... 1.01182 41,463. the non-inadvertent submission of a false or misleading report. 12 U.S.C. 1782(a)(3) ...... Failure to submit a report or the submission of Lesser of 2,048,915 or 1.01182 Lesser of 2,073,133 or a false or misleading report done knowingly 1% of total CU as- 1% of total CU as- or with reckless disregard. sets. sets. 12 U.S.C. 1782(d)(2)(A) ..... Tier 1 CMP for inadvertent failure to submit 3,747 ...... 1.01182 3,791. certified statement of insured shares and charges due to the National Credit Union Share Insurance Fund (NCUSIF), or inad- vertent submission of false or misleading statement. 12 U.S.C. 1782(d)(2)(B) ..... Tier 2 CMP for non-inadvertent failure to sub- 37,458 ...... 1.01182 37,901. mit certified statement or submission of false or misleading statement. 12 U.S.C. 1782(d)(2)(C) ..... Tier 3 CMP for failure to submit a certified Lesser of 1,872,957 or 1.01182 Lesser of 1,895,095 or statement or the submission of a false or 1% of total CU as- 1% of total CU as- misleading statement done knowingly or sets. sets. with reckless disregard. 12 U.S.C. 1785(a)(3) ...... Non-compliance with insurance logo require- 127 ...... 1.01182 129. ments. 12 U.S.C. 1785(e)(3) ...... Non-compliance with NCUA security require- 297 ...... 1.01182 301. ments. 12 U.S.C. 1786(k)(2)(A) ..... Tier 1 CMP for violations of law, regulation, 10,245 ...... 1.01182 10,366. and other orders or agreements. 12 U.S.C. 1786(k)(2)(B) ..... Tier 2 CMP for violations of law, regulation, 51,222 ...... 1.01182 51,827. and other orders or agreements and for recklessly engaging in unsafe or unsound practices or breaches of fiduciary duty. 12 U.S.C. 1786(k)(2)(C) ..... Tier 3 CMP for knowingly committing the vio- 2,048,915 ...... 1.01182 2,073,133. lations under Tier 1 or 2 (natural person). 12 U.S.C. 1786(k)(2)(C) ..... Tier 3 (same) (CU) ...... Lesser of 2,048,915 or 1.01182 Lesser of 2,073,133 or 1% of total CU as- 1% of total CU as- sets. sets. 12 U.S.C. 1786(w)(5)(A)(ii) Non-compliance with senior examiner post- 337,016 ...... 1.01182 341,000. employment restrictions. 15 U.S.C. 1639e(k) ...... Non-compliance with appraisal independence 11,767 ...... 1.01182 11,906. standards (first violation). 15 U.S.C. 1639e(k) ...... Subsequent violations of the same ...... 23,533 ...... 1.01182 23,811. 42 U.S.C. 4012a(f)(5) ...... Non-compliance with flood insurance require- 2,226 ...... 1.01182 2,252. ments.

III. Regulatory Procedures required inflation adjustments in 2017 rules effective no sooner than 30 days and subsequent years notwithstanding 5 after publication in the Federal A. Final Rule Under the APA U.S.C. 553,20 which generally requires Register. The 2015 amendments provide In the 2015 amendments, Congress agencies to follow notice-and-comment a clear exception to these provided that agencies shall make the procedures in rulemaking and to make requirements.21 In addition, as an

17 Id. 19 The table uses condensed descriptions of CMP 21 See 5 U.S.C. 559; Asiana Airlines v. Fed. 18 Public Law 114–74, 129 Stat. 600 (Nov. 2, tiers. Refer to the U.S. Code citations for complete Aviation Admin., 134 F.3d 393, 396–99 (D.C. Cir. 2015). descriptions. 1998). 20 Public Law 114–74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 2, 2015).

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independent basis, the Board finds that individual cases, which are not E. Assessment of Federal Regulations notice-and-comment procedures would numerous and generally do not involve and Policies on Families be impracticable and unnecessary under assessments at the maximum level. In the APA because of the largely addition, several of the CMPs are The Board has determined that this ministerial and technical nature of the limited to a percentage of a credit final rule will not affect family well- rule, which affords agencies limited union’s assets. Finally, in assessing being within the meaning of Section 654 discretion in promulgating the rule, and CMPs, the Board generally must of the Treasury and General the statutory deadline for making the consider a party’s financial resources.27 Government Appropriations Act, 22 adjustments. In these circumstances, Because this final rule will affect few, if 1999.29 the Board finds good cause to issue a any, small credit unions, the Board F. Congressional Review Act final rule without issuing a notice of certifies that the final rule will not have proposed rulemaking or soliciting a significant economic impact on a For purposes of the Congressional public comments. The Board also finds substantial number of small entities. Review Act,30 the OMB makes a good cause to make the final rule determination as to whether a final rule effective upon publication because of C. Paperwork Reduction Act constitutes a ‘‘major’’ rule. If OMB the statutory deadline. Accordingly, this final rule is issued without prior notice The Paperwork Reduction Act of 1995 deems a rule to be a ‘‘major rule,’’ the and comment and will become effective (PRA) applies to rulemakings in which Congressional Review Act generally immediately upon publication. an agency creates a new paperwork provides that the rule may not take burden on regulated entities or modifies effect until at least 60 days following its B. Regulatory Flexibility Act an existing burden.28 For purposes of publication. The Regulatory Flexibility Act (RFA) the PRA, a paperwork burden may take The Congressional Review Act defines generally requires that when an agency the form of either a reporting or a a ‘‘major rule’’ as any rule that the issues a proposed rule or a final rule recordkeeping requirement, both Administrator of the Office of 23 pursuant to the APA or another law, referred to as information collections. Information and Regulatory Affairs of the agency must prepare a regulatory This final rule adjusts the maximum the OMB finds has resulted in or is flexibility analysis that meets the amounts of certain CMPs that the Board likely to result in (A) an annual effect requirements of the RFA and publish may assess against individuals, entities, such analysis in the Federal Register.24 on the economy of $100,000,000 or or credit unions but does not require Specifically, the RFA normally requires more; (B) a major increase in costs or any reporting or recordkeeping. agencies to describe the impact of a prices for consumers, individual rulemaking on small entities by Therefore, this final rule will not create industries, Federal, State, or local providing a regulatory impact analysis. new paperwork burdens or modify any government agencies or geographic For purposes of the RFA, the Board existing paperwork burdens. regions, or (C) significant adverse effects considers FICUs with assets less than D. Executive Order 13132 on competition, employment, $100 million to be small entities.25 investment, productivity, innovation, or As discussed previously, consistent Executive Order 13132 encourages on the ability of United States-based with the APA,26 the Board has independent regulatory agencies to enterprises to compete with foreign- determined for good cause that general consider the impact of their actions on based enterprises in domestic and notice and opportunity for public state and local interests. In adherence to export markets.31 comment is unnecessary, and therefore fundamental federalism principles, the For the same reasons set forth above, the Board is not issuing a notice of NCUA, an independent regulatory proposed rulemaking. Rules that are the Board is adopting the final rule agency as defined in 44 U.S.C. 3502(5), without the delayed effective date exempt from notice and comment voluntarily complies with the Executive procedures are also exempt from the generally prescribed under the order. This final rule adjusts the Congressional Review Act. The delayed RFA requirements, including maximum amounts of certain CMPs that conducting a regulatory flexibility effective date required by the the Board may assess against Congressional Review Act does not analysis, when among other things the individuals, entities, and federally agency for good cause finds that notice apply to any rule for which an agency insured credit unions, including state- and public procedure are impracticable, for good cause finds (and incorporates chartered credit unions. However, the unnecessary, or contrary to the public the finding and a brief statement of final rule does not create any new interest. Accordingly, the Board has reasons therefor in the rule issued) that authority or alter the underlying concluded that the RFA’s requirements notice and public procedure thereon are statutory authorities that enable the relating to initial and final regulatory impracticable, unnecessary, or contrary Board to assess CMPs. Accordingly, this flexibility analysis do not apply. to the public interest.32 Nevertheless, the Board notes that this final rule will not have a substantial The Board believes this final rule is final rule will not have a significant direct effect on the States, on the not a major rule. As required by the economic impact on a substantial connection between the National number of small credit unions because Government and the States, or on the Congressional Review Act, the Board it affects only the maximum amounts of distribution of power and will submit the final rule and other CMPs that may be assessed in responsibilities among the various appropriate reports to OMB, Congress, levels of government. The Board has and the Government Accountability 22 5 U.S.C. 553(b)(3)(B); see Mid-Tex Elec. Co-op., determined that this final rule does not Office for review. Inc. v. Fed. Energy Regulatory Comm’n, 822 F.2d constitute a policy that has federalism 1123 (D.C. Cir. 1987). implications for purposes of the 29 23 Public Law 105–277, 112 Stat. 2681 (Oct. 21, 5 U.S.C. 553(b). Executive order. 24 5 U.S.C. 603, 604. 1998). 30 25 NCUA Interpretive Ruling and Policy 5 U.S.C. 801–808. Statement 15–1. 80 FR 57512 (Sept. 24, 2015). 27 12 U.S.C. 1786(k)(2)(G)(i). 31 5 U.S.C. 804(2). 26 5 U.S.C. 553(b)(3)(B). 28 44 U.S.C. 3507(d); 5 CFR part 1320. 32 5 U.S.C. 808.

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List of Subjects in 12 CFR Part 747 PART 747—ADMINISTRATIVE § 747.1001 Adjustment of civil monetary ACTIONS, ADJUDICATIVE HEARINGS, penalties by the rate of inflation. Civil monetary penalties, Credit RULES OF PRACTICE AND unions. (a) The NCUA is required by the PROCEDURE, AND INVESTIGATIONS Federal Civil Penalties Inflation Melane Conyers-Ausbrooks, ■ 1. The authority for part 747 Adjustment Act of 1990 (Pub. L. 101– Secretary of the Board. continues to read as follows: 410, 104 Stat. 890, as amended (28 U.S.C. 2461 note)), to adjust the For the reasons stated in the Authority: 12 U.S.C. 1766, 1782, 1784, 1785, 1786, 1787, 1790a, 1790d; 15 U.S.C. maximum amount of each civil preamble, the Board amends 12 CFR monetary penalty (CMP) within its part 747 as follows: 1639e; 42 U.S.C. 4012a; Pub. L. 101–410; Pub. L. 104–134; Pub. L. 109–351; Pub. L. jurisdiction by the rate of inflation. The 114–74. following chart displays those adjusted ■ 2. Revise § 747.1001 to read as amounts, as calculated pursuant to the follows: statute:

U.S. Code citation CMP description New maximum amount

(1) 12 U.S.C. 1782(a)(3) ...... Inadvertent failure to submit a report or the inadvertent submission of $4,146. a false or misleading report. (2) 12 U.S.C. 1782(a)(3) ...... Non-inadvertent failure to submit a report or the non-inadvertent sub- $41,463. mission of a false or misleading report. (3) 12 U.S.C. 1782(a)(3) ...... Failure to submit a report or the submission of a false or misleading $2,073,133 or 1 percent of the report done knowingly or with reckless disregard. total assets of the credit union, whichever is less. (4) 12 U.S.C. 1782(d)(2)(A) ...... Tier 1 CMP for inadvertent failure to submit certified statement of in- $3,791. sured shares and charges due to the National Credit Union Share Insurance Fund (NCUSIF), or inadvertent submission of false or misleading statement. (5) 12 U.S.C. 1782(d)(2)(B) ...... Tier 2 CMP for non-inadvertent failure to submit certified statement or $37,901. submission of false or misleading statement. (6) 12 U.S.C. 1782(d)(2)(C) ...... Tier 3 CMP for failure to submit a certified statement or the submis- $1,895,095 or 1 percent of the sion of a false or misleading statement done knowingly or with total assets of the credit union, reckless disregard. whichever is less. (7) 12 U.S.C. 1785(a)(3) ...... Non-compliance with insurance logo requirements ...... $129. (8) 12 U.S.C. 1785(e)(3) ...... Non-compliance with NCUA security requirements ...... $301. (9) 12 U.S.C. 1786(k)(2)(A) ...... Tier 1 CMP for violations of law, regulation, and other orders or $10,366. agreements. (10) 12 U.S.C. 1786(k)(2)(B) ...... Tier 2 CMP for violations of law, regulation, and other orders or $51,827. agreements and for recklessly engaging in unsafe or unsound practices or breaches of fiduciary duty. (11) 12 U.S.C. 1786(k)(2)(C) ...... Tier 3 CMP for knowingly committing the violations under Tier 1 or 2 $2,073,133. (natural person). (12) 12 U.S.C. 1786(k)(2)(C) ...... Tier 3 CMP for knowingly committing the violations under Tier 1 or 2 $2,073,133 or 1 percent of the (insured credit union). total assets of the credit union, whichever is less. (13) 12 U.S.C. 1786(w)(5)(A)(ii) ...... Non-compliance with senior examiner post-employment restrictions ... $341,000. (14) 15 U.S.C. 1639e(k) ...... Non-compliance with appraisal independence requirements ...... First violation: $11,906. Subse- quent violations: $23,811. (15) 42 U.S.C. 4012a(f)(5) ...... Non-compliance with flood insurance requirements ...... $2,252.

(b) The adjusted amounts displayed in DEPARTMENT OF COMMERCE SUMMARY: The Bureau of Industry and paragraph (a) of this section apply to Security (BIS) is publishing this final civil monetary penalties that are Bureau of Industry and Security rule to amend the Chemical Weapons assessed after the date the increase takes Convention Regulations (CWCR) and the effect, including those whose associated 15 CFR Parts 710, 712, and 745 Export Administration Regulations violation or violations pre-dated the (EAR) to reflect recent additions to increase and occurred on or after [Docket No. 201211–0336] Schedule 1(A) of the Annex on November 2, 2015. Chemicals to the Convention on the [FR Doc. 2020–29181 Filed 1–6–21; 8:45 am] RIN 0694–AH94 Prohibition of the Development, BILLING CODE 7535–01–P Production, Stockpiling and Use of Chemical Weapons Convention Chemical Weapons and on Their Regulations and the Export Destruction, also known as the Administration Regulations: Additions Chemical Weapons Convention (CWC). to Schedule 1(A) of the Annex on This final rule also amends the Chemicals to the Chemical Weapons definition of ‘‘production’’ in the CWCR Convention to clarify the scope of this term as it AGENCY: Bureau of Industry and applies to declarations regarding the Security, Commerce. production of ‘‘Schedule 1,’’ ‘‘Schedule ACTION: Final rule. 2,’’ or ‘‘Schedule 3’’ chemicals.

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DATES: This rule is effective January 7, ‘‘Schedule 1’’ chemicals) are (4) Provide that declared ‘‘Schedule 2021. implemented, pursuant to the Chemical 1’’ facilities are subject to initial and FOR FURTHER INFORMATION CONTACT: For Weapons Convention Implementation routine inspection by the OPCW (15 questions on the CWCR requirements Act of 1998 (CWCIA) (22 U.S.C. 6701 et CFR 712.5(e) and 716.1(b)(1)); for ‘‘Schedule 1’’ chemicals, contact seq.) and Executive Order 13128 (64 FR (5) Require 200 days advance Erica Sunyog, Treaty Compliance 34703, June 28, 1999), by the Chemical notification of establishment of new Division, Office of Nonproliferation and Weapons Convention Regulations ‘‘Schedule 1’’ production facilities Treaty Compliance, Bureau of Industry (CWCR) (see 15 CFR parts 710–722) and producing greater than 100 grams and Security, U.S. Department of the Export Administration Regulations aggregate of ‘‘Schedule 1’’ chemicals per Commerce, Phone: (202) 482–6237. (EAR) (see 15 CFR 742.18 and 15 CFR calendar year (15 CFR 712.4); part 745), both of which are SUPPLEMENTARY INFORMATION: (6) Require advance notification and administered by the Bureau of Industry annual reporting to the Technical Background and Security (BIS). Specifically, BIS Secretariat of the OPCW of all imports The Chemical Weapons Convention maintains the list of ‘‘Schedule 1’’ and exports of ‘‘Schedule 1’’ chemicals (hereinafter, ‘‘CWC’’ or ‘‘Convention’’), chemicals identified in the CWC Annex to, or from, other States Parties to the which entered into force on April 29, on Chemicals in Supplement No. 1 to CWC (15 CFR 712.6, 742.18(a)(1) and 1997, is an international arms control part 712 of the CWCR and as part of 745.1); and treaty whose object and purpose is to Supplement No. 1 to part 745 of the (7) Prohibit the export of ‘‘Schedule eliminate an entire category of weapons EAR. BIS also administers the CWC 1’’ chemicals to States not Party to the of mass destruction by prohibiting the ‘‘Schedule 1’’ chemical declaration, CWC (15 CFR 742.18(a)(1) and (b)(1)(ii)). development, production, acquisition, reporting, notification, and verification This final rule amends part 712 of the requirements that are described in part stockpiling, retention, transfer or use of CWCR and part 745 of the EAR to reflect 712 of the CWCR. In addition, § 745.1 of chemical weapons by States Parties. The recent additions to Schedule 1(A) of the the EAR describes the advance CWC States Parties have agreed to CWC Annex on Chemicals, as described notification and annual report destroy any stockpiles of chemical below. In addition, this rule amends the requirements that apply to exports of weapons they may hold and any definition of ‘‘production’’ in part 710 of ‘‘Schedule 1’’ chemicals. the CWCR to clarify the scope of this facilities that produced them, as well as The CWC identifies the toxic term as it applies to declarations any chemical weapons they have chemicals and immediate precursors regarding the production of ‘‘Schedule abandoned on the territory of other listed under ‘‘Schedule 1’’ in the CWC 1,’’ ‘‘Schedule 2,’’ or ‘‘Schedule 3’’ States Parties. The CWC States Parties Annex on Chemicals as posing a high chemicals. also have agreed to implement a risk to the object and purpose of the comprehensive data declaration, Convention. Consistent with Part VI of This rule amends part 712 of the notification, and inspection regime for the CWC Verification Annex, the CWCR CWCR and part 745 of the EAR to add those toxic chemicals and their restrict commercial production of three ‘‘Schedule 1’’ chemical families precursors listed in Schedule 1, 2 or 3 ‘‘Schedule 1’’ chemicals to research, and one individual ‘‘Schedule 1’’ in the CWC Annex on Chemicals to medical, or pharmaceutical purposes chemical to both sets of regulations, provide transparency and to verify that only. See 15 CFR 710.1, at definition of consistent with two decisions adopted their public and private sectors are not Purposes not prohibited by the CWC, by the States Parties to the CWC during engaged in activities prohibited under and 15 CFR 710.2(b), Activities subject the OPCW’s 24th Conference of the the CWC. to the CWCR. The CWCR prohibit States Parties, held in The Hague, the In addition, each State Party has commercial production of ‘‘Schedule 1’’ Netherlands, from November 25–29, agreed to adopt domestic legislation to chemicals for ‘‘protective purposes’’ (see 2019. Based on two separate proposals implement its obligations under the 15 CFR 712.2(a)) consistent with submitted to the Director-General of the Convention and to designate or establish Presidential Decision Directive (PDD) 70 OPCW, one by the United States, a National Authority to serve as the (December 17, 1999), which effectively Canada and the Netherlands, and the national focal point for effective liaison limits production for such purposes to other by the Russian Federation, these with the Organization for the facilities operated by the Department of decisions added three chemical families Prohibition of Chemical Weapons Defense. These CWCR restrictions and and one individual chemical to (OPCW) and other States Parties. The prohibitions apply to all persons and ‘‘Schedule 1’’ in the CWC Annex on designated U.S. National Authority is facilities located in the United States, Chemicals. The OPCW agreements are the Bureau of Arms Control, Verification except certain U.S. Government documented in OPCW Decisions C–24/ and Compliance, U.S. Department of facilities—see 15 CFR 710.2(a). In DEC.4 and C–24/DEC.5 and may be State. The OPCW was established by the addition to these general requirements obtained from the OPCW website States Parties to achieve the object and and prohibitions pertaining to (http://www.opcw.org). On December purpose of the Convention, to ensure ‘‘Schedule 1’’ chemicals, the CWCR: 10, 2019, the Director-General notified the implementation of its provisions (1) Prohibit the import of ‘‘Schedule all States Parties and the Depositary of (including those pertaining to 1’’ chemicals from States not Party to the CWC (i.e., the Secretary-General of international verification of the CWC (15 CFR 712.2(b)); the United Nations) of the adoption of compliance), and to provide a forum for (2) Require annual declarations by these decisions by the Conference of the consultation and cooperation among the facilities engaged in the production of States Parties. Pursuant to subparagraph States Parties. All CWC States Parties ‘‘Schedule 1’’ chemicals in excess of 100 5(g) of Article XV of the CWC, these are members of the OPCW, which grams aggregate per calendar year (i.e., changes to the Annex on Chemicals includes the Conference of the States declared ‘‘Schedule 1’’ facilities) for entered into force for all States Parties Parties, the Executive Council, and the purposes not prohibited by the CWC (15 180 days after the date of this Technical Secretariat. CFR 712.5(a)(1) and (a)(2)); notification, that is, on June 7, 2020. The provisions of the CWC that affect (3) Provide for government approval The additions to ‘‘Schedule 1’’ of the commercial activities involving of declared ‘‘Schedule 1’’ facilities (15 CWC Annex on Chemicals are as scheduled chemicals (including CFR 712.5(f)); follows:

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Schedule 1 1997), and as delegated from the part 712 of the CWCR that apply to A. Toxic chemicals: President, the Secretary of State, in ‘‘Schedule 1’’ chemicals or facilities (1) H-alkyl (H or ≤C10, incl. cycloalkyl) coordination with other U.S. involved in the production of such N-(1-(dialkyl(≤C10, incl. Government departments and agencies, chemicals. Although the newly added cycloalkyl)amino))alkylidene(H or ≤C10, including the Department of Commerce, ‘‘Schedule 1’’ chemicals are now subject incl. cycloalkyl) phosphonamidic must submit a report to the Senate to these requirements, BIS estimates that fluorides and corresponding alkylated Committee on Foreign Relations the amendments made by this rule will or protonated salts detailing, inter alia, the likely impact on not significantly affect the public e.g. N-(1-(di-n-decylamino)-n- United States industry of the proposed burden imposed by these requirements addition of a chemical or biological because very few (if any) commercial decylidene)-P-decylphosphonamidic substance to a schedule in the CWC facilities in the United States produce fluoride (CAS No. 2387495–99–8) Methyl-(1- Annex on Chemicals. Consistent with these chemicals. Consistent with this (diethylamino)ethylidene) Condition 23, on August 14, 2019, BIS estimate, BIS did not receive any phosphonamidofluoridate (CAS No. published a notice of inquiry (84 FR responses to its August 2019 notice of 2387496–12–8) 40389) that requested public comments inquiry requesting public comments on ≤ as to whether the legitimate commercial the impact on U.S. industry of the (2) O-alkyl (H or C10, incl. activities and interests of chemical, proposed addition of the families of cycloalkyl) N-(1-(dialkyl(≤C10, incl. ≤ biotechnology, and pharmaceutical chemicals at issue to ‘‘Schedule 1’’ of cycloalkyl)amino))alkylidene(H or C10, firms in the United States would be the CWC Annex on Chemicals. As incl. cycloalkyl) significantly harmed by the limitations further evidence of the limited scope of phosphoramidofluoridates and that would be imposed on access to, and any potential commercial applications, corresponding alkylated or protonated production of, the compounds included these chemicals are defense articles salts in certain chemical families that had subject to the export licensing e.g. O-n-Decyl N-(1-(di-n-decylamino)-n- been proposed for addition to jurisdiction of the U.S. Department of decylidene)phosphoramidofluoridate ‘‘Schedule 1’’ in the CWC Annex on State (as described below). (CAS No. 2387496–00–4) Chemicals. Methyl (1- BIS did not receive any public Amendments to Supplement No. 1 to (diethylamino)ethylidene) comments in response to this notice of Part 745 of the EAR (Schedules of phosphoramidofluoridate (CAS No. inquiry. Of the chemical families at Chemicals) 2387496–04–8) issue, three families of chemicals and Supplement No. 1 to part 745 of the Ethyl (1- one individual chemical from a fourth EAR includes the three schedules of (diethylamino)ethylidene) family, as described above, were added Chemicals (Schedules 1, 2 and 3) phosphoramidofluoridate (CAS No. to ‘‘Schedule 1’’ by the decisions contained in the CWC Annex on 2387496–06–0) adopted at the Conference of the States Chemicals. This rule amends ‘‘Schedule (3) Methyl- Parties in November 2019. These 1’’ in Supplement No. 1 to reflect the (bis(diethylamino)methylene) additions to ‘‘Schedule 1’’ are reflected decisions adopted at the November 2019 phosphonamidofluoridate (CAS No. in the amendments to the CWCR and CWC Conference of the States Parties to 2387496–14–0) the EAR described below. add three chemical families and one (4) Carbamates (quaternaries and individual chemical to ‘‘Schedule 1’’ in bisquaternaries of Amendments to Supplement No. 1 to the CWC Annex on Chemicals. In dimethylcarbamoyloxypyridines) Part 712 of the CWCR (Schedule 1 addition, this rule revises the formats of Quaternaries of Chemicals) ‘‘Schedule 2 and ‘‘Schedule 3’’ for dimethylcarbamoyloxypyridines: Supplement No. 1 to part 712 of the consistency with the format of 1-[N,N-dialkyl(≤C10)-N-(n-(hydroxyl, CWCR identifies ‘‘Schedule 1’’ ‘‘Schedule 1,’’ as amended by this rule. cyano, acetoxy)alkyl(≤C10)) ammonio]- chemicals listed in the CWC Annex on This rule also adds a Note following the n-[N-(3-dimethylcarbamoxy-a- Chemicals. This rule amends list of chemicals in Supplement No. 1 to picolinyl)-N,N-dialkyl(≤C10) Supplement No. 1 to: (1) Include the explain that the numerical sequence of ammonio]decane dibromide (n=1–8) three chemical families and one the ‘‘Schedule 1’’ Toxic Chemicals and e.g. 1-[N,N-dimethyl-N-(2- individual chemical that were added to Precursors specified therein is not hydroxy)ethylammonio]-10-[N-(3- ‘‘Schedule 1;’’ and (2) add a Note 3 consecutive so as to align with the dimethylcarbamoxy-a-picolinyl)-N,N- following the list of chemicals to December 23, 2019, consolidated textual dimethylammonio]decane dibromide explain that the numerical sequence of changes to the Annex on Chemicals, (CAS No. 77104–62–2) the ‘‘Schedule 1’’ Toxic Chemicals and which reflect the decisions adopted by Bisquaternaries of Precursors specified therein is not the CWC Conference of the States dimethylcarbamoyloxypyridines: consecutive so as to align with the Parties in November 2019. Specifically, 1,n-Bis[N-(3-dimethylcarbamoxy-a- December 23, 2019, consolidated textual the chemicals listed in ‘‘Schedule 1(A),’’ picolyl)-N,N-dialkyl(≤C10) ammonio]- changes to the Annex on Chemicals, Toxic Chemicals, are numbered 1–8 and alkane-(2,(n-1)-dione) dibromide which reflect the decisions adopted by 13–16 (the latter includes 16.1 and (n=2–12) the CWC Conference of the States 16.2), while the chemicals listed in e.g. 1,10-Bis[N-(3-dimethylcarbamoxy- Parties in November 2019. Specifically, ‘‘Schedule 1(B),’’ Precursors, are a-picolyl)-N-ethyl-N- the chemicals listed in ‘‘Schedule 1(A),’’ numbered 9–12. methylammonio]decane-2,9-dione Toxic Chemicals, are numbered 1–8 and This rule does not amend the advance dibromide (CAS No. 77104–00–8). 13–16 (the latter includes 16.1 and notification and reporting requirements 16.2), while the chemicals listed in for exports of ‘‘Schedule 1’’ chemicals Notice of Inquiry on the Impact of ‘‘Schedule 1(B),’’ Precursors, are described in § 745.1 of the EAR, which Proposed Additions to CWC ‘‘Schedule numbered 9–12. are, for all practical purposes, a cross- 1’’ This rule does not amend any of the reference to (or general restatement of) Pursuant to Condition 23 to Senate declaration, advance notification, the requirements in § 712.6 of the CWCR Resolution 75 (S. Res. 75, April 24, reporting or verification requirements in (except that the CWCR requirements

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also apply to imports of ‘‘Schedule 1’’ intermediates, by-products, or waste BIS estimates that the overall increase chemicals). Furthermore, these newly products are chemically stable and in costs and burdens due to the added ‘‘Schedule 1’’ chemicals are not therefore exist for a sufficient time to implementation of the changes made by subject to the export licensing make isolation from the manufacturing this final rule will be minimal, based on jurisdiction of BIS under the EAR. All stream possible, but where, under the fact that there are very few, if any, ‘‘Schedule 1’’ chemicals, except ricin normal or design operating conditions, commercial applications for the and saxitoxin (which are controlled isolation does not occur. ‘‘Schedule 1’’ chemicals added by this under Export Control Classification rule to Supplement No. 1 to part 712 of Number 1C351 on the Commerce Rulemaking Requirements the CWCR and Supplement No. 1 to part Control List in Supplement No. 1 to part 1. Executive Orders 13563 and 12866 745 of the EAR. Consistent with this 774 of the EAR), are subject to the direct agencies to assess all costs and estimate, BIS did not receive any export licensing jurisdiction of the benefits of available regulatory responses to its August 2019 notice of Directorate of Defense Trade Controls, alternatives and, if regulation is inquiry described herein. Additional Department of State, under the necessary, to select regulatory evidence of the limited scope of International Traffic in Arms approaches that maximize net benefits potential commercial applications is Regulations (ITAR) (22 CFR parts 120– (including: Potential economic, that the chemicals at issue are defense 130). Consequently, the conforming environmental, public health and safety articles subject to the export licensing amendments made by this rule will not effects; distributive impacts; and jurisdiction of the Department of State. affect the burden imposed on the public equity). Executive Order 13563 Also, pursuant to § 710.2(a) of the by the ‘‘Schedule 1’’ chemical advance emphasizes the importance of CWCR, certain U.S. Government notification and reporting requirements quantifying both costs and benefits and facilities (e.g., Department of Defense described in § 745.1 of the EAR. of reducing costs, harmonizing rules, and Department of Energy facilities) are not subject to the CWCR and, Clarification of the Definition of and promoting flexibility. This final rule consequently, the costs and burdens of ‘‘Production’’ in Part 710 of the CWCR has been determined to be not significant for purposes of Executive the requirements described therein do This final rule amends the definition Order 12866. This rule is not an not apply to such facilities. of ‘‘production’’ in § 710.1 of the CWCR Executive Order 13771 regulatory action In addition, although the newly added to clarify its application to the CWCR’s because this rule is not significant under ‘‘Schedule 1’’ chemicals are subject to declaration requirements concerning the Executive Order 12866. the declaration, advance notification, production of ‘‘Schedule 1,’’ ‘‘Schedule reporting or verification requirements in 2,’’ or ‘‘Schedule 3’’ chemicals. 2. Notwithstanding any other part 712 of the CWCR, the fact that these Specifically, this rule clarifies the provision of law, no person is required chemicals have few potential definition consistent with §§ 712.5(d), to respond to, nor shall any person be commercial applications will, as a 713.2(a)(2)(ii) and 714.1(a)(2)(ii) of the subject to a penalty for failure to comply practical matter, limit the impact of CWCR (as amended by the April 27, with, a collection of information subject these requirements. Consequently, the 2006, CWCR final rule (81 FR 24918)), to the requirements of the Paperwork amendments made by this rule will not whereby ‘‘Schedule 1,’’ ‘‘Schedule 2,’’ Reduction Act of 1995 (44 U.S.C. 3501 significantly alter the costs and burdens or ‘‘Schedule 3’’ chemicals that are et seq.) (PRA), unless that collection of imposed on the public by such CWCR intermediates, but not transient information displays a currently valid requirements. Furthermore, because intermediates, must be considered when Office of Management and Budget these newly added ‘‘Schedule 1’’ determining if a chemical is subject to (OMB) Control Number. This rule chemicals are defense articles subject to the declaration requirements in the contains the following collections of the export licensing jurisdiction of the CWCR. (See the OPCW Conference of information subject to the requirements Department of State under the ITAR, the the States Parties Decisions that form of the PRA. These collections have been conforming amendments made by this the basis of this treatment of such approved by OMB under control rule do not add to, or otherwise affect, intermediates: C–10/DEC.12, November numbers 0694–0091 (Chemical any export licensing requirements in the 10, 2005, ‘‘Understanding Relating to Weapons Convention Declaration and EAR; nor, as a practical matter, will they the Concept of ‘Captive Use’ in Report Handbook and Forms & significantly alter the costs and burdens Connection with Declarations of Chemical Weapons Convention imposed on the public by the reporting Production and Consumption Under Regulations (CWCR)) and 0694–0117 and advance notification requirements Part VI of the Verification Annex to the (Chemical Weapons Convention described in § 745.1 of the EAR. Convention;’’ and C–9/DEC.6, Provisions of the Export Administration Written comments and November 30, 2004, ‘‘Understanding of Regulations (EAR)). The approved recommendations for the information the Concept of ‘Captive Use’ in information collection under OMB collections referenced above should be Connection with Declarations of control number 0694–0091 includes sent within 30 days of the publication Production and Consumption Under CWCR declarations, reports, of this final rule to: www.reginfo.gov/ Parts VII and VIII of the Verification notifications, and on-site inspections of public/do/PRAMain. The public may Annex to the Chemical Weapons chemical facilities and carries a total locate these particular information Convention.’’) burden estimate of 14,813 hours. The collections by selecting ‘‘Currently As amended by this rule, the approved information collection under under 30-day Review—Open for Public definition of ‘‘production’’ in § 710.1 of OMB control number 0694–0117 Comments’’ or by using the search the CWCR is understood (for purposes includes Schedule 1 chemical advance function. of the ‘‘Schedule 1,’’ ‘‘Schedule 2,’’ and notifications and annual reports, 3. This rule does not contain policies ‘‘Schedule 3’’ chemical declaration Schedule 3 chemical End-Use with Federalism implications as that requirements in the CWCR) to include Certificates, and exports of term is defined in Executive Order intermediates, by-products, or waste ‘‘technology’’ to produce certain 13132. products that are produced and Schedule 2 and Schedule 3 chemicals 4. The provisions of the consumed within a defined chemical and carries a total burden estimate of 42 Administrative Procedure Act (5 U.S.C. manufacturing sequence, where such burden hours. 553) requiring notice of proposed

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rulemaking, the opportunity for public Based on the lack of any responses to conforms the definition to language participation, and a delay in effective BIS’s August 14, 2019, notice of inquiry already set forth in the CWCIA’s date, are inapplicable because this requesting public comments on the declaration requirements that apply to regulation involves a military and impact of the addition of these ‘‘Schedule 1,’’ ‘‘Schedule 2,’’ and foreign affairs function of the United chemicals (together with others) to the ‘‘Schedule 3’’ chemicals. States (see 5 U.S.C. 553(a)(1)). Annex, it does not appear that there any Because a notice of proposed Immediate implementation of these many (if any) chemical, biotechnology, rulemaking and an opportunity for amendments is non-discretionary and or pharmaceutical firms in the U.S. that public comment are not required to be fulfills the United States’ international would be adversely affected by the given for this rule by the APA or any obligations under the CWC. The CWC is substance of this rule. Moreover, these other law, the analytical requirements of an international arms control treaty chemicals are defense articles subject to the Regulatory Flexibility Act (5 U.S.C. prohibiting the development, the export licensing jurisdiction of the 601 et seq.) are not applicable. production, acquisition, stockpiling, Department of State under the ITAR Accordingly, no regulatory flexibility retention, transfer or use of chemical and, consequently, have few potential analysis is required, and none has been weapons by States Parties in order to commercial applications. prepared. eliminate an entire category of weapons Similarly, a delay of this rulemaking of mass destruction. The 193 CWC to provide notice and opportunity for List of Subjects States Parties have agreed to, among public comment would be contrary to 15 CFR Part 710 the public interest, as would a 30-day other things, implement a Chemicals, Exports, Foreign trade, delay in effective date, given the fact comprehensive data declaration, Imports, Treaties. notification, and inspection regime for that the restrictions associated with the those toxic chemicals and their addition of these chemicals to the 15 CFR Part 712 precursors listed in Schedules 1, 2 or 3 Annex have already come into force for Chemicals, Exports, Foreign trade, in the CWC Annex on Chemicals (the CWC States Parties as of June 7, 2020. Imports, Reporting and recordkeeping Annex). The amendments set forth in Providing notice and opportunity for requirements. this rule implement two decisions public comment and a 30-day delay in adopted by the States Parties during the effectiveness would not only impair the 15 CFR Part 745 OPCW’s 24th Conference of the States ability of the United States to fulfill its Administrative practice and Parties, held in The Hague, the obligations as a State Party in a timely procedure, Chemicals, Exports, Foreign Netherlands, from November 25–29, manner, it also might lead the public to trade, Reporting and recordkeeping 2019, and clarify a definition in the mistakenly assume that these changes requirements. CWCR to ensure consistency with the are discretionary. Such measures might For the reasons stated in the CWCR’s declaration requirements also have a significant adverse impact preamble, parts 710 and 712 of the regarding the production of ‘‘Schedule upon the ability of U.S. companies to Chemical Weapons Convention 1,’’ ‘‘Schedule 2,’’ or ‘‘Schedule 3’’ comply in a timely fashion with the Regulations (15 CFR parts 710–722) and chemicals. declaration, advance notification, part 745 of the Export Administration These provisions of the reporting, and other requirements that Regulations (15 CFR parts 730–774) are Administrative Procedure Act also are apply to these newly added ‘‘Schedule amended as follows: waived for good cause, as unnecessary 1’’ chemicals, as they would have to and contrary to the public interest (see wait until the amendments adding these PART 710—GENERAL INFORMATION 5 U.S.C. 553(b)(B)). This rule brings the chemicals to the CWCR and the EAR AND OVERVIEW OF THE CHEMICAL CWCR and the EAR into conformity have taken effect. Consequently, any WEAPONS CONVENTION with recent updates to ‘‘Schedule 1’’ in further delay in implementation would REGULATIONS (CWCR) the Annex by amending Supplement adversely impact the ability of the No. 1 to part 712 of the CWCR and United States to meet its ‘‘Schedule 1’’ ■ 1. The authority citation for 15 CFR Supplement No. 1 to part 745 of the chemical declaration, notification, and part 710 continues to read as follows: EAR. These changes to the Annex reporting obligations to the OPCW with Authority: 22 U.S.C. 6701 et seq.; E.O. entered into force, with respect to all respect to these newly added ‘‘Schedule 13128, 64 FR 36703, 3 CFR 1999 Comp., p. States Parties to the CWC, on June 7, 1’’ chemicals. Conversely, timely 199. 2020. As a State Party, the United States publication of these regulatory changes, ■ 2. In § 710.1, the definition of became obligated to apply the with immediate effectiveness, would ‘‘Production’’ is revised to read as declaration, advance notification, provide U.S. companies with adequate follows: reporting and verification requirements time to adjust their recordkeeping and in part 712 of the CWCR to these newly other activities in advance of any § 710.1 Definitions of terms used in the added ‘‘Schedule 1’’ chemicals as of that deadlines that would apply to the Chemical Weapons Convention Regulations date. submission of declarations, advance (CWCR). Because these obligations will have notifications, or reports associated with * * * * * already come into effect by the time this the newly added ‘‘Schedule 1’’ Production. Means the formation of a rule is published, a delay of this chemicals, thereby making it possible chemical through chemical reaction, rulemaking to allow for notice and for the U.S. to meet its CWC obligations including biochemical or biologically opportunity for public comment would in this regard. mediated reaction (see supplement no. 2 be unnecessary. As indicated above, the For similar reasons, application of the to this part). U.S. has no discretion in this matter— APA’s notice and comment and 30-day (1) Production of Schedule 1 it must implement these changes as a delay in effectiveness requirements to chemicals means formation through State Party. the clarification to the definition of chemical synthesis as well as processing Even if these changes were ‘‘production’’ set forth in § 710.1 of the to extract and isolate Schedule 1 discretionary, a delay of this rulemaking CWCIA made as part of this rule would chemicals. to allow for notice and opportunity for be unnecessary and contrary to the (2) Production of a Schedule 2 or public comment would be unnecessary. public interest. The clarification merely Schedule 3 chemical means all steps in

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the production of a chemical in any consumed within a defined chemical PART 712—ACTIVITIES INVOLVING units within the same plant through manufacturing sequence, where such SCHEDULE 1 CHEMICALS chemical reaction, including any intermediates, by-products, or waste associated processes (e.g., purification, products are chemically stable and ■ 3. The authority citation for 15 CFR separation, extraction, distillation, or therefore exist for a sufficient time to part 712 continues to read as follows: refining) in which the chemical is not make isolation from the manufacturing Authority: 22 U.S.C. 6701 et seq.; 50 U.S.C. converted into another chemical. The stream possible, but where, under 1601 et seq.; 50 U.S.C. 1701 et seq.; E.O. exact nature of any associated process normal or design operating conditions, 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. (e.g., purification, etc.) is not required to isolation does not occur. 950, as amended by E.O. 13094, 63 FR 40803, be declared. 3 CFR, 1998 Comp., p. 200; E.O. 13128, 64 * * * * * (3) Production of a Schedule 1, FR 36703, 3 CFR 1999 Comp., p. 199. Schedule 2 or Schedule 3 chemical is ■ 4. Supplement No. 1 to part 712 is understood, for declaration purposes, to amended by revising the table and include intermediates, by-products, or adding a Note 3 to the Notes to waste products that are produced and Supplement No. 1 to read as follows:

SUPPLEMENT NO. 1 TO PART 712—SCHEDULE 1 CHEMICALS

CAS registry No.

A. Toxic Chemicals: 1. Family: O-Alkyl(≤C10, incl. cycloalkyl) alkyl (Me, Et, n-Pr or i-Pr)- phosphonofluoridates Not limited to the following examples: Sarin: O-Isopropyl methylphosphonofluoridate ...... 107–44–8 Soman: O-Pinacolyl methylphosphonofluoridate ...... 96–64–0 2. Family: O-Alkyl (≤C10, incl. cycloalkyl) N,N-dialkyl (Me, Et, n-Pr or i-Pr) phosphoramidocyanidates Not limited to the following example: Tabun: O-Ethyl N,N-dimethyl phosphoramidocyanidate 77–81–6 3. Family: O-Alkyl (H or ≤C10, incl. cycloalkyl) S-2-dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl (Me, Et, n-Pr or i-Pr) phosphonothiolates and corresponding alkylated or protonated salts Not limited to the following example: VX: O-Ethyl S-2-diisopropylaminoethyl methyl phosphonothiolate 50782–69–9 4. Sulfur mustards: 2-Chloroethylchloromethylsulfide ...... 2625–76–5 Mustard gas: Bis(2-chloroethyl)sulfide ...... 505–60–2 Bis(2-chloroethylthio)methane ...... 63869–13–6 Sesquimustard: 1,2-Bis(2-chloroethylthio)ethane ...... 3563–36–8 1,3-Bis(2-chloroethylthio)-n-propane ...... 63905–10–2 1,4-Bis(2-chloroethylthio)-n-butane ...... 142868–93–7 1,5-Bis(2-chloroethylthio)-n-pentane ...... 142868–94–8 Bis(2-chloroethylthiomethyl)ether ...... 63918–90–1 O-Mustard: Bis(2-chloroethylthioethyl)ether ...... 63918–89–8 5. Lewisites: Lewisite 1: 2-Chlorovinyldichloroarsine ...... 541–25–3 Lewisite 2: Bis(2-chlorovinyl)chloroarsine ...... 40334–69–8 Lewisite 3: Tris(2-chlorovinyl)arsine ...... 40334–70–1 6. Nitrogen mustards: HN1: Bis(2-chloroethyl)ethylamine ...... 538–07–8 HN2: Bis(2-chloroethyl)methylamine ...... 51–75–2 HN3: Tris(2-chloroethyl)amine ...... 555–77–1 7. Saxitoxin ...... 35523–89–8 8. Ricin ...... 9009–86–3 13. Family: H-alkyl (H or ≤C10, incl. cycloalkyl) N-(1-(dialkyl(≤C10, incl. cycloalkyl)amino))alkylidene(H or ≤C10, incl. cycloalkyl) phosphonamidic fluorides and corresponding alkylated or protonated salts Not limited to the following examples: N-(1-(di-n-decylamino)-n-decylidene)-P-decylphosphonamidic fluoride ...... 2387495–99–8 Methyl-(1-(diethylamino)ethylidene)phosphonamidofluoridate ...... 2387496–12–8 14. Family: O-alkyl (H or ≤C10, incl. cycloalkyl) N-(1-(dialkyl(≤C10, incl. cycloalkyl)amino))alkylidene(H or ≤C10, incl. cycloalkyl) phosphoramidofluoridates and corresponding alkylated or protonated salts Not limited to the following examples: O-n-Decyl N-(1-(di-n-decylamino)-n decylidene)phosphoramidofluoridate ...... 2387496–00–4 Methyl (1-(diethylamino)ethylidene)phosphoramidofluoridate ...... 2387496–04–8 Ethyl (1-(diethylamino)ethylidene)phosphoramidofluoridate ...... 2387496–06–0 15. Methyl-(bis(diethylamino)methylene)phosphonamidofluoridate ...... 2387496–14–0 16. Carbamates (quaternaries and bisquaternaries of dimethylcarbamoyloxypyridines) 16.1. Family: Quaternaries of dimethylcarbamoyloxypyridines: 1-[N,N-dialkyl(≤C10)-N-(n-(hydroxyl, cyano, acetoxy)alkyl(≤C10)) ammonio]-n-[N-(3-dimethylcarbamoxy-a-picolinyl)-N,N-dialkyl(≤C10) ammonio]decane dibromide (n=1- 8) Not limited to the following example: 1-[N,N-dimethyl-N-(2-hydroxy)ethylammonio]-10-[N-(3-dimethylcarbamoxy-a-picolinyl)-N,N- dimethylammonio]decane dibromide ...... 77104–62–2 16.2. Family: Bisquaternaries of dimethylcarbamoyloxypyridines:1,n-Bis[N-(3-dimethylcarbamoxy-a-picolyl)-N,N-dialkyl(≤C10) ammonio]-alkane-(2,(n-1)-dione) dibromide (n=2-12) Not limited to the following example:

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SUPPLEMENT NO. 1 TO PART 712—SCHEDULE 1 CHEMICALS—Continued

CAS registry No.

1,10-Bis[N-(3-dimethylcarbamoxy-a-picolyl)-N-ethyl-N- methylammonio]decane-2,9-dione dibromide ...... 77104–00–8 B. Precursors: 9. Family: Alkyl (Me, Et, n-Pr or i-Pr) phosphonyldifluorides Not limited to the following example: DF: Methylphosphonyldifluoride ...... 676–99–3 10. Family: O-Alkyl (H or ≤C10, incl. cycloalkyl) O-2-dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl (Me, Et, n-Pr or i-Pr) phosphonites and corresponding alkylated or protonated salts Not limited to the following example: QL: O-Ethyl O-2-diisopropylaminoethyl methylphosphonite ...... 57856–11–8 11. Chlorosarin: O-Isopropyl methylphosphonochloridate ...... 1445–76–7 12. Chlorosoman: O-Pinacolyl methylphosphonochloridate ...... 7040–57–5

Notes to Supplement No. 1 Convention (CWC), which reflect the Authority: 50 U.S.C. 1701 et seq.; E.O. * * * * * decisions adopted by the CWC Conference of 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. the States Parties in November 2019. 950); 22 U.S.C. 6701 et seq.; E.O. 13128, 64 NOTE 3: The numerical sequence of the FR 36703, 3 CFR 1999 Comp., p. 199; 50 ‘‘Schedule 1’’ Toxic Chemicals and PART 745—CHEMICAL WEAPONS U.S.C. 4801–4852; Notice of November 12, Precursors is not consecutive so as to align CONVENTION REQUIREMENTS 2019, 84 FR 61817 (November 13, 2019). with the December 23, 2019, consolidated textual changes to ‘‘Schedule 1’’ of the Annex ■ 5. The authority citation for 15 CFR ■ 6. Supplement No. 1 to part 745 is on Chemicals to the Chemical Weapons part 745 is revised to read as follows: revised to read as follows:

SUPPLEMENT NO. 1 TO PART 745—SCHEDULES OF CHEMICALS

CAS registry No.

Schedule 1

A. Toxic Chemicals: 1. Family: O-Alkyl(≤C10, incl. cycloalkyl) alkyl (Me, Et, n-Pr or i-Pr)- phosphonofluoridates Not limited to the following examples: Sarin: O-Isopropyl methylphosphonofluoridate ...... 107–44–8 Soman: O-Pinacolyl methylphosphonofluoridate ...... 96–64–0 2. Family: O-Alkyl (≤C10, incl. cycloalkyl) N,N-dialkyl (Me, Et, n-Pr or i-Pr) phosphoramidocyanidates Not limited to the following example: Tabun: O-Ethyl N,N-dimethyl phosphoramidocyanidate ...... 77–81–6 3. Family: O-Alkyl (H or ≤C10, incl. cycloalkyl) S-2-dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl (Me, Et, n-Pr or i-Pr) phosphonothiolates and corresponding alkylated or protonated salts Not limited to the following example: VX: O-Ethyl S-2-diisopropylaminoethyl methyl phosphonothiolate ...... 50782–69–9 4. Sulfur mustards: 2-Chloroethylchloromethylsulfide ...... 2625–76–5 Mustard gas: Bis(2-chloroethyl)sulfide ...... 505–60–2 Bis(2-chloroethylthio)methane ...... 63869–13–6 Sesquimustard: 1,2-Bis(2-chloroethylthio)ethane ...... 3563–36–8 1,3-Bis(2-chloroethylthio)-n-propane ...... 63905–10–2 1,4-Bis(2-chloroethylthio)-n-butane ...... 142868–93–7 1,5-Bis(2-chloroethylthio)-n-pentane ...... 142868–94–8 Bis(2-chloroethylthiomethyl)ether ...... 63918–90–1 O-Mustard: Bis(2-chloroethylthioethyl)ether ...... 63918–89–8 5. Lewisites: Lewisite 1: 2-Chlorovinyldichloroarsine ...... 541–25–3 Lewisite 2: Bis(2-chlorovinyl)chloroarsine ...... 40334–69–8 Lewisite 3: Tris(2-chlorovinyl)arsine ...... 40334–70–1 6. Nitrogen mustards: HN1: Bis(2-chloroethyl)ethylamine ...... 538–07–8 HN2: Bis(2-chloroethyl)methylamine ...... 51–75–2 HN3: Tris(2-chloroethyl)amine ...... 555–77–1 7. Saxitoxin ...... 35523–89–8 8. Ricin ...... 9009–86–3 13. Family: P-alkyl (H or ≤C10, incl. cycloalkyl) N-(1-(dialkyl(≤C10, incl. cycloalkyl)amino))alkylidene(H or ≤C10, incl. cycloalkyl) phosphonamidic fluorides and corresponding alkylated or protonated salts Not limited to the following examples: N-(1-(di-n-decylamino)-n-decylidene)-P-decylphosphonamidic fluoride ...... 2387495–99–8 Methyl-(1-(diethylamino)ethylidene)phosphonamidofluoridate ...... 2387496–12–8 14. Family: O-alkyl (H or ≤C10, incl. cycloalkyl) N-(1-(dialkyl(≤C10, incl. cycloalkyl)amino))alkylidene(H or ≤C10, incl. cycloalkyl) phosphoramidofluoridates and corresponding alkylated or protonated salts Not limited to the following examples:

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SUPPLEMENT NO. 1 TO PART 745—SCHEDULES OF CHEMICALS—Continued

CAS registry No.

O-n-Decyl N-(1-(di-n-decylamino)-n decylidene)phosphoramidofluoridate ...... 2387496–00–4 Methyl (1-(diethylamino)ethylidene)phosphoramidofluoridate ...... 2387496–04–8 Ethyl (1-(diethylamino)ethylidene)phosphoramidofluoridate ...... 2387496–06–0 15. Methyl-(bis(diethylamino)methylene)phosphonamidofluoridate ...... 2387496–14–0 16. Carbamates (quaternaries and bisquaternaries of dimethylcarbamoyloxypyridines) 16.1. Family: Quaternaries of dimethylcarbamoyloxypyridines: 1-[N,N-dialkyl(≤C10)-N-(n-(hydroxyl, cyano, acetoxy)alkyl(≤C10)) ammonio]-n-[N-(3-dimethylcarbamoxy-a-picolinyl)-N,N-dialkyl(≤C10) ammonio]decane dibromide (n=1–8) Not limited to the following example: 1-[N,N-dimethyl-N-(2-hydroxy)ethylammonio]-10-[N-(3-dimethylcarbamoxy-a-picolinyl)-N,N- dimethylammonio]decane dibromide ...... 77104–62–2 16.2. Family: Bisquaternaries of dimethylcarbamoyloxypyridines:1,n-Bis[N-(3-dimethylcarbamoxy-a-picolyl)-N,N-dialkyl(≤C10) ammonio]-alkane-(2,(n-1)-dione) dibromide (n=2–12). Not limited to the following example: 1,10-Bis[N-(3-dimethylcarbamoxy-a-picolyl)-N-ethyl-N- methylammonio]decane-2,9-dione dibromide ...... 77104–00–8 B. Precursors: 9. Family: Alkyl (Me, Et, n-Pr or i-Pr) phosphonyldifluorides Not limited to the following example: DF: Methylphosphonyldifluoride ...... 676–99–3 10. Family: O-Alkyl (H or ≤C10, incl. cycloalkyl) O-2-dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl (Me, Et, n-Pr or i-Pr) phosphonites and corresponding alkylated or protonated salts Not limited to the following example: QL: O-Ethyl O–2-diisopropylaminoethyl methylphosphonite ...... 57856–11–8 11. Chlorosarin: O-Isopropyl methylphosphonochloridate ...... 1445–76–7 12. Chlorosoman: O-Pinacolyl methylphosphonochloridate ...... 7040–57–5

Schedule 2

A. Toxic Chemicals: 1. Amiton: O,O-Diethyl S-[2-(diethylamino)ethyl] phosphorothiolate and corresponding alkylated or protonated salts ...... 78–53–5 2. PFIB: 1,1,3,3,3-Pentafluoro-2-(trifluoromethyl)-1-propene ...... 382–21–8 3. BZ: 3-Quinuclidinyl benzilate ...... 6581–06–2 B. Precursors: 4. Family: Chemicals, except for those listed in Schedule 1, containing a phosphorus atom to which is bonded one methyl, ethyl or propyl (normal or iso) group but not further carbon atoms, Not limited to the following examples: Methylphosphonyl dichloride ...... 676–97–1 Dimethyl methylphosphonate ...... 756–79–6 Exemption: Fonofos: O-Ethyl S-phenyl ethylphosphonothiolothionate ...... 944–22–9 5. Family: N,N-Dialkyl (Me, Et, n-Pr or i-Pr) phosphoramidic dihalides 6. Family: Dialkyl (Me, Et, n-Pr or i-Pr) N,N-dialkyl (Me, Et, n-Pr or i-Pr)-phosphoramidates 7. Arsenic trichloride ...... 7784–34–1 8. 2,2-Diphenyl-2-hydroxyacetic acid ...... 76–93–7 9. Quinuclidine-3-ol ...... 1619–34–7 10. Family: N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethyl-2-chlorides and corresponding protonated salts 11. Family: N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-2-ols and corresponding protonated salts Exemptions: N,N-Dimethylaminoethanol and corresponding protonated salts ...... 108–01–0 N,N-Diethylaminoethanol and corresponding protonated salts ...... 100–37–8 12. Family: N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-2-thiols and corresponding protonated salts 13. Thiodiglycol: Bis(2-hydroxyethyl)sulfide ...... 111–48–8 14. Pinacolyl alcohol: 3,3-Dimethylbutane-2-ol ...... 464–07–3

Schedule 3

A. Toxic Chemicals: 1. Phosgene: Carbonyl dichloride ...... 75–44–5 2. Cyanogen chloride ...... 506–77–4 3. Hydrogen cyanide ...... 74–90–8 4. Chloropicrin: Trichloronitromethane ...... 76–06–2 B. Precursors: 5. Phosphorus oxychloride ...... 10025–87–3 6. Phosphorus trichloride ...... 7719–12–2 7. Phosphorus pentachloride ...... 10026–13–8 8. Trimethyl phosphite ...... 121–45–9 9. Triethyl phosphite ...... 122–52–1 10. Dimethyl phosphite ...... 868–85–9 11. Diethyl phosphite ...... 762–04–9 12. Sulfur monochloride ...... 10025–67–9 13. Sulfur dichloride ...... 10545–99–0 14. Thionyl chloride ...... 7719–09–7 15. Ethyldiethanolamine ...... 139–87–7

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SUPPLEMENT NO. 1 TO PART 745—SCHEDULES OF CHEMICALS—Continued

CAS registry No.

16. Methyldiethanolamine ...... 105–59–9 17. Triethanolamine ...... 102–71–6

Note to Supplement 1: The numerical the export controls that apply to certain vaccines were designed for use sequence of the ‘‘Schedule 1’’ Toxic vaccines, consistent with the vaccine ‘‘against’’ such items. Chemicals and Precursors is not consecutive release (i.e., exclusion) note contained This rule also expands the scope of so as to align with the December 23, 2019, in the Australia Group (AG) ‘‘List of medical products controlled under consolidated textual changes to ‘‘Schedule 1’’ ECCN 1C991 to include those of the Annex on Chemicals to the Chemical Human and Animal Pathogens and Weapons Convention (CWC), which reflect Toxins for Export Control’’ common containing genetically modified the decisions adopted by the CWC control list, as updated by a decision organisms and genetic elements Conference of the States Parties in November made at the AG Plenary meeting held in described in ECCN 1C353.a.3. In 2019. Paris, France, in June 2019. The AG is addition, this rule clarifies the a multilateral forum consisting of 42 definition of ‘immunotoxin’ that Matthew S. Borman, participating countries and the appears in ECCN 1C351 and ECCN Deputy Assistant Secretary for Export European Union that maintain export 1C991 and removes the definition of Administration. controls on a list of chemicals, ‘subunit’ from ECCN 1C351. [FR Doc. 2020–27759 Filed 1–6–21; 8:45 am] biological agents, and related equipment Finally, this rule renumbers ECCN BILLING CODE 3510–33–P and technology that could be used in a 1C991.c and .d by listing medical chemical or biological weapons products that are subject to chemical/ program. The AG periodically reviews biological (CB) controls, as well as anti- DEPARTMENT OF COMMERCE items on its control list to enhance the terrorism (AT) controls, under ECCN effectiveness of participating 1C991.c and listing medical products Bureau of Industry and Security governments’ national controls and to that are subject only to AT controls achieve greater harmonization among under ECCN 1C991.d. A conforming 15 CFR Parts 742 and 774 these controls. amendment is made to § 742.2(a)(3) of the EAR to reflect this change in [Docket No. 201208–0330] The AG specifically excludes certain paragraph sequencing. RIN 0694–AI09 vaccines from control under its ‘‘List of Human and Animal Pathogens and ECCN 1C991 (Vaccines, Immunotoxins, Commerce Control List: Clarifications Toxins for Export Control’’ and the Medical Products, Diagnostic and Food to the Scope of Export Control associated Warning List. However, prior Testing Kits) Classification Number 1C991 To to the June 2019 Plenary changes to this This final rule amends ECCN 1C991 Reflect Decisions Adopted at the June AG common control list, it was not clear on the Commerce Control List (CCL) 2019 Australia Group Plenary Meeting if the release note therein applied not (Supplement No. 1 to part 774 of the only to vaccines containing those EAR) to make the description of the AGENCY: Bureau of Industry and human and animal pathogens and vaccines controlled by this ECCN more Security, Commerce. toxins identified on the list, but also to closely reflect the scope of the vaccine ACTION: Final rule. vaccines containing the genetic release note contained in the AG ‘‘List elements and genetically modified SUMMARY: The Bureau of Industry and of Human and Animal Pathogens and organisms identified therein. Recent Toxins for Export Control.’’ ECCN Security (BIS) publishes this final rule changes to this AG common control list, to amend the Export Administration 1C991 does not control any of the based in part on a decision made at the human and animal pathogens and Regulations (EAR) to clarify the scope of June 2019 Plenary meeting, clarify that the export controls that apply to certain toxins or genetic elements and this release note applies to vaccines genetically modified organisms vaccines and medical products, containing the genetic elements and consistent with the release (i.e., identified on this AG list; however, it genetically modified organisms does control vaccines, immunotoxins, exclusion) notes contained in the identified on this list, as well as Australia Group (AG) ‘‘Human and medical products, and diagnostic and vaccines containing the viruses, food testing kits that contain certain of Animal Pathogens and Toxins for bacteria, and toxins identified on this Export Control’’ common control list. these AG-listed items. list. The amendments contained in this DATES: This rule is effective January 7, Specifically, this rule amends Export final rule are intended to clarify the 2021. Control Classification Number (ECCN) scope of the vaccine controls described FOR FURTHER INFORMATION CONTACT: Dr. 1C991 on the Commerce Control List in ECCN 1C991. Prior to the effective Kimberly Orr, Chemical and Biological (CCL) to indicate that it includes date of this final rule, the control text Controls Division, Office of vaccines containing, or designed for use for vaccines described in ECCN 1C991.a Nonproliferation and Treaty against, any of the items identified in indicated that this ECCN controlled Compliance, Bureau of Industry and ECCN 1C351, 1C353 or 1C354. Prior to ‘‘vaccines against items controlled by Security, Telephone: (202) 482–4201, the effective date of this final rule, ECCN 1C351, 1C353 or 1C354.’’ The use Email: [email protected]. ECCN 1C991 indicated that it controlled of the term ‘‘against’’ in the control text SUPPLEMENTARY INFORMATION: The vaccines ‘‘against’’ such items, but was created some uncertainty concerning the Bureau of Industry and Security (BIS) is not specific about whether all vaccines extent to which ECCN 1C991.a applied amending the Export Administration ‘‘containing’’ such items were to vaccines that ‘‘contain’’ items Regulations (EAR) to clarify the scope of controlled, irrespective of whether the controlled by ECCN 1C351, 1C353 or

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1C354, but that act against agents (or ECCN 1C991.c (i.e., CB controls, in included only those vaccines designed other disease causing organisms) that addition to AT controls) and to clearly to protect against biological agents are not identified in any of these ECCNs. indicate that the CB controls that apply controlled under ECCN 1C351, 1C353 or This uncertainty caused some concern to most of the medical products 1C354 on the CCL. For example, the among manufacturers and exporters controlled under this ECCN do not vaccine for protection against Ebola was about the correct classification and apply to the medical products now previously (and continues to be) licensing policies for such vaccines. controlled under ECCN 1C991.d, which classified for control under ECCN The clarifications in this rule to the are subject only to AT controls (the 1C991, because Ebola, itself, is a scope of the vaccine controls in ECCN controls that apply to items in ECCN controlled biological agent. The Ebola 1C991.a are also in response to recent 1C991 are described in more detail, vaccine also contains genetic elements scientific and medical developments. below). A conforming amendment is for recombinant vesicular stomatitis For example, viruses controlled under made to § 742.2(a)(3) of the EAR to virus (VSV), a controlled virus, and a ECCN 1C351 (e.g., vesicular stomatitis reflect this change in paragraph common vector for vaccine virus, yellow fever virus, and Newcastle sequencing. development. disease virus) are being modified to This rule also makes a technical However, ECCN 1C991 did not express surface proteins of other target correction to the definition of ‘medical previously include vaccines containing organisms or cells for stimulating products’ in the ‘‘Related Definitions’’ controlled biological agents that were immune response to the surface protein, paragraph under the List of Items not also designed to protect against a thus acting as vaccines against those Controlled for ECCN 1C991 by adding controlled agent. Other VSV-based targets. These medical products can be the parenthetical phrase ‘‘(or vaccines against EAR99 agents (i.e., designed for the following purposes: (1) veterinary)’’ to the criterion describing agents not controlled on the CCL), such Vaccination against agents controlled by pharmaceutical formulations. The as SARS-CoV–2, were controlled to all ECCN 1C351 (e.g., Ebolavirus or criterion, as corrected, reads as follows: destinations under ECCN 1C353, Chikungunya virus); (2) to protect ‘‘(1) pharmaceutical formulations because they did not act against a against uncontrolled agents; or (3) as designed for testing and human (or controlled agent as previously required oncolytic medical products for treating veterinary) administration in the by the ECCN 1C991 vaccine control text. specific cancers (oncolytic virotherapy treatment of medical conditions.’’ In This rule amends the vaccine controls is an emerging treatment that uses addition, the definition of in paragraph (a) of ECCN 1C991 to more replication competent viruses to destroy ‘immunotoxins’ in the ‘‘Related accurately reflect the scope of the AG cancers). Definitions’’ paragraph of ECCN 1C351 release note for vaccines, which This final rule addresses industry’s and ECCN 1C991 is clarified to read as exempts vaccines from control under concerns and the recent scientific and follows: ‘‘immunotoxins are monoclonal the AG List of Human and Animal medical developments described above antibodies linked to a toxin with the Pathogens and Toxins. Specifically, the by revising ECCN 1C991.a to read as intention of destroying a specific target AG release note exempts from control follows: ‘‘Vaccines containing, or cell while leaving adjacent cells intact.’’ all vaccines containing one or more of designed for use against, items This rule also adds a Technical Note the biological agents identified on this controlled by ECCN 1C351, 1C353 or at the beginning of the ‘‘Items’’ AG common control list. 1C354.’’ As a result of this change, paragraph in the List of Items Controlled Although certain COVID vaccines are ECCN 1C991.a now clearly indicates under ECCN 1C991 to clarify that, for not affected by this rule, the that it controls all vaccines that purposes of the controls described in development of an unknown number of ‘‘contain’’ items controlled by ECCN this ECCN, ‘toxins’ means those toxins, other vaccines, COVID and otherwise, is 1C351, 1C353 or 1C354, as well as those or their subunits, controlled under expected to be greatly facilitated as a vaccines that are designed for use ECCN 1C351.d. result of these amendments to the ‘‘against’’ these items. Note that all items controlled by vaccine controls in ECCN 1C991. This rule also amends ECCN 1C991 by ECCN 1C991, including the vaccines Effective with the publication of this expanding the scope of medical described in ECCN 1C991.a, require a rule, COVID vaccines containing genetic products controlled under this ECCN, license for AT reasons to the elements of items controlled by ECCN consistent with the release (i.e., destinations indicated under AT 1C353 (such as VSV) are now controlled exclusion) note for such products in the Column 1 on the Commerce Country under ECCN 1C991, instead of ECCN ‘‘List of Human and Animal Pathogens Chart in Supplement No. 1 to part 738 1C353. Consequently, instead of and Toxins for Export Control,’’ to of the EAR (also see the AT license requiring a license for export or reexport include medical products containing requirements described in part 742 of to all destinations, a license is required genetically modified organisms or the EAR that apply to Iran, North Korea, only to a much more limited number of genetic elements controlled under ECCN Sudan and Syria). In addition, the destinations (i.e., countries of concern 1C353.a.3. In addition, the control text medical products now controlled by for anti-terrorism (AT) reasons). for medical products in ECCN 1C991 is ECCN 1C991.c (as renumbered by this A specific example of the impact of renumbered by listing medical products rule) require a license for CB reasons, as this rule is a VSV–SARS-CoV–2 vaccine, that are subject to chemical/biological well as AT reasons, to the destinations which is a vesicular stomatitis virus (CB) controls, as well as anti-terrorism indicated under CB Column 3 and AT modified by adding the gene for the (AT) controls, under ECCN 1C991.c and Column 1, respectively, on the coronavirus spike protein. Because this listing medical products that are subject Commerce Country Chart. A license also vaccine acts against SARS-CoV–2, only to AT controls, under ECCN is required to certain destinations in which is not controlled under ECCN 1C991.d. Prior to the effective date of accordance with the embargoes and 1C351, it was not classified as an ECCN this final rule, the former were listed other special controls described in part 1C991 vaccine, prior to the publication under ECCN 1C991.d, while the latter 746 of the EAR. of this rule. Instead, it was controlled were listed under ECCN 1C991.c. This under ECCN 1C353, in spite of having change is intended to emphasize the Anticipated Impact of This Final Rule received FDA approval and being more stringent controls that apply to the Prior to the publication of this final packaged for patient use, because it medical products now described in rule, paragraph (a) of ECCN 1C991 contains genetic elements from VSV (a

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controlled virus). Consequently, this quantifying both costs and benefits and certain items affected by this rule). vaccine previously required a license to of reducing costs, harmonizing rules, Furthermore, consistent with the stated all destinations. Effective with the and promoting flexibility. This rule has purpose of the amendments to ECCN publication of this final rule, this been designated a ‘‘significant 1C991 (i.e., to enhance the national vaccine is now controlled under ECCN regulatory action,’’ although not security of the United States), this rule 1C991 and requires a license only to economically significant, under section meets the requirements set forth in the designated countries of concern for AT 3(f) of Executive Order 12866. April 5, 2017, Office of Management reasons. Accordingly, the rule has been reviewed and Budget (OMB) guidance by the Office of Management and implementing Executive Order 13771 Saving Clause Budget. (82 FR 9339, February 3, 2017), Shipments of items removed from The cost-benefit analysis required regarding what constitutes a regulation eligibility for export, reexport or transfer pursuant to Executive Orders 13563 and issued ‘‘with respect to a national (in-country) under a license exception 12866, as described below, indicates security function of the United States,’’ or without a license (i.e., under the that this rule is intended to improve and it is, therefore, exempt from the designator ‘‘NLR’’) as a result of this national security as its primary direct requirements of E.O. 13771. regulatory action that were on dock for benefit and that this benefit significantly 2. Notwithstanding any other loading, on lighter, laden aboard an outweighs the costs of this rule. provision of law, no person is required exporting carrier, or en route aboard a Specifically, implementation, in a to respond to, nor shall any person be carrier to a port of export, on January 7, timely manner, of the Australia Group subject to a penalty for failure to comply 2021, pursuant to actual orders for (AG) agreements described herein will with, a collection of information subject export, reexport or transfer (in-country) enhance the national security of the to the requirements of the Paperwork to a foreign destination, may proceed to United States by reducing the risk that Reduction Act of 1995 (44 U.S.C. 3501 that destination under the previously international trade involving dual-use et seq.) (PRA), unless that collection of applicable license exception or without chemical and biological items would information displays a currently valid a license (NLR) so long as they are contribute to the proliferation of OMB Control Number. This rule exported, reexported or transferred (in- chemical and biological weapons of contains the following collections of country) before March 8, 2021. Any mass destruction. The principal information subject to the requirements such items not actually exported, objective of AG participating countries of the PRA. These collections have been reexported or transferred (in-country) is to use licensing measures to ensure approved by OMB under control before midnight, on March 8, 2021, that exports of certain chemicals, numbers 0694–0088 (Simplified require a license in accordance with this biological agents, and dual-use chemical Network Application Processing regulation. and biological manufacturing facilities System) and 0694–0096 (Five Year ‘‘Deemed’’ exports of ‘‘technology’’ and equipment, do not contribute to the Records Retention Period). The and ‘‘source code’’ removed from proliferation of chemical and biological approved information collection under eligibility for export under a license weapons of mass destruction, which has OMB control number 0694–0088 exception or without a license (under been identified as a threat to domestic includes license applications, among the designator ‘‘NLR’’) as a result of this and international peace and security. other things, and carries a burden regulatory action may continue to be The AG achieves this objective by estimate of 29.6 minutes per manual or made under the previously available harmonizing participating countries’ electronic submission for a total burden license exception or without a license national export licensing measures. estimate of 31,833 hours. The approved (NLR) before March 8, 2021. Beginning These controls are essential, given that information collection under OMB at midnight on March 8, 2021, such the international chemical and control number 0694–0096 includes ‘‘technology’’ and ‘‘source code’’ may no biotechnology industries are a target for recordkeeping requirements and carries longer be released, without a license, to proliferators as a source of materials for a burden estimate of less than 1 minute a foreign national subject to the chemical and biological weapons per response for a total burden estimate ‘‘deemed’’ export controls in the EAR programs. of 248 hours. when a license would be required to the In calculating what costs (if any) will This rule contains minor clarifications home country of the foreign national in be imposed by this rule, BIS estimates to the EAR for certain vaccines accordance with this regulation. that 10 fewer license applications will controlled by ECCN 1C991.a for anti- need to be submitted to BIS, annually, terrorism (AT) reasons. Specifically, BIS Export Control Reform Act of 2018 as a result of the implementation of the expects the burden hours associated The Export Control Reform Act of amendments described in this rule (see with these collections will decrease by 2018 (ECRA), as amended, codified at Rulemaking Requirements #2, below). 5 hours and 6 minutes (i.e., 10 50 U.S.C. 4801–4852, serves as the By applying the cost-benefit analysis applications × 30.6 minutes per authority under which BIS issues this required under Executive Orders 13563 response) for a total estimated decrease rule. and 12866 to this rule, as described in cost of $153 (i.e., 5 hours and 6 herein, BIS has determined that the minutes × $30 per hour). The $30 per Rulemaking Requirements benefits of this rule (i.e., the hour cost estimate for OMB control 1. Executive Orders 13563 and 12866 enhancement of our national security numbers 0694–0088 and 0694–0096 is direct agencies to assess all costs and through the fulfillment our multilateral consistent with the salary data for benefits of available regulatory obligations as an AG participating export compliance specialists currently alternatives and, if regulation is country, together with the anticipated available through glassdoor.com necessary, to select regulatory reduction in the number of license (glassdoor.com estimates that an export approaches that maximize net benefits applications that would have to be compliance specialist makes $55,280 (including: Potential economic, submitted to export certain items annually, which computes to roughly environmental, public health and safety affected by this rule) significantly $26.58 per hour). Consequently, the effects; distributive impacts; and outweigh any potential costs (i.e., the burden hours associated with exports of equity). Executive Order 13563 incidental costs to exporters of adjusting the items affected by this rule will emphasizes the importance of their export control procedures for remain within the range of the existing

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estimates currently associated with ■ 2. In § 742.2, paragraph (a)(3) is License Requirement Notes: 1. All vaccines OMB control numbers 0694–0088 and revised to read as follows: and ‘immunotoxins’ are excluded from the 0694–0096. scope of this entry. Certain medical products Written comments and § 742.2 Proliferation of chemical and and diagnostic and food testing kits that biological weapons. recommendations for the information contain biological toxins controlled under (a) * * * paragraph (d) of this entry, with the collections referenced above should be exception of toxins controlled for CW reasons sent within 30 days of the publication (3) If CB Column 3 of the Country Chart (Supplement No. 1 to part 738 of under d.11 and d.12, are excluded from the of this final rule to: www.reginfo.gov/ scope of this entry. Vaccines, public/do/PRAMain. Find these the EAR) is indicated in the appropriate ECCN, a license is required to Country ‘immunotoxins,’ certain medical products, particular information collections by and diagnostic and food testing kits excluded Group D:3 (see Supplement No. 1 to part selecting ‘‘Currently under 30-day from the scope of this entry are controlled Review—Open for Public Comments’’ or 740 of the EAR) for medical products under ECCN 1C991. by using the search function. identified in ECCN 1C991.c. 2. For the purposes of this entry, only 3. This rule does not contain policies * * * * * saxitoxin is controlled under paragraph d.12; with Federalism implications as that other members of the paralytic shellfish PART 774—THE COMMERCE term is defined in Executive Order poison family (e.g., neosaxitoxin) are CONTROL LIST designated EAR99. 13132. 3. Clostridium perfringens strains, other 4. Pursuant to section 1762 of the ■ 3. The authority citation for 15 CFR than the epsilon toxin-producing strains of Export Control Reform Act of 2018 (50 part 774 continues to read as follows: Clostridium perfringens described in c.12, are U.S.C. Sec. 4821), this action is exempt excluded from the scope of this entry, since Authority: 50 U.S.C. 4801–4852; 50 U.S.C. from the Administrative Procedure Act they may be used as positive control cultures 4601 et seq.; 50 U.S.C. 1701 et seq.; 10 U.S.C. for food testing and quality control. (APA) (5 U.S.C. 553) requirements for 8720; 10 U.S.C. 8730(e); 22 U.S.C. 287c, 22 4. Unless specified elsewhere in this ECCN notice of proposed rulemaking, U.S.C. 3201 et seq.; 22 U.S.C. 6004; 42 U.S.C. 1C351 (e.g., in License Requirement Notes 1– opportunity for public participation and 2139a; 15 U.S.C. 1824; 50 U.S.C. 4305; 22 3), this ECCN controls all biological agents delay in effective date. U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. and ‘‘toxins,’’ regardless of quantity or Because a notice of proposed 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. attenuation, that are identified in the List of rulemaking and an opportunity for 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783. Items Controlled for this ECCN, including public comment are not required to be small quantities or attenuated strains of given for this rule by the APA or any ■ 4. In Supplement No. 1 to part 774, select biological agents or ‘‘toxins’’ that are other law, the analytical requirements of Category 1, ECCN 1C351 is revised to excluded from the lists of select biological the Regulatory Flexibility Act (5 U.S.C. read as follows: agents or ‘‘toxins’’ by the Animal and Plant 601 et seq.) are not applicable. Health Inspection Service (APHIS), U.S. Accordingly, no regulatory flexibility Supplement No. 1 to Part 774—The Department of Agriculture (USDA), or the analysis is required, and none has been Commerce Control List Centers for Disease Control and Prevention prepared. * * * * * (CDC), U.S. Department of Health and 1C351 Human and animal pathogens and Human Services (HHS), in accordance with List of Subjects ‘‘toxins,’’ as follows (see List of Items their regulations in 9 CFR part 121 and 42 Controlled). CFR part 73, respectively. 15 CFR Part 742 5. Biological agents and pathogens are Exports, Terrorism. License Requirements controlled under this ECCN 1C351 when they Reason for Control: CB, CW, AT are an isolated live culture of a pathogen 15 CFR Part 774 agent, or a preparation of a toxin agent that Exports, Reporting and recordkeeping Country chart has been isolated or extracted from any requirements. Control(s) (see supp. No. 1 to source or material, including living material part 738) that has been deliberately inoculated or For the reasons stated in the contaminated with the agent. Isolated live preamble, parts 742 and 774 of the CB applies to entire CB Column 1. cultures of a pathogen agent include live Export Administration Regulations (15 entry. cultures in dormant form or in dried CFR parts 730–774) are amended as CW applies to 1C351.d.11 and d.12 and a preparations, whether the agent is natural, follows: license is required for CW reasons for all enhanced or modified. destinations, including Canada, as follows: List Based License Exceptions (See Part 740 PART 742—CONTROL POLICY—CCL CW applies to 1C351.d.11 for ricin in the for a Description of All License Exceptions) BASED CONTROLS form of (1) Ricinus communis AgglutininII (RCAII), also known as ricin D or Ricinus LVS: N/A ■ 1. The authority citation for 15 CFR Communis LectinIII (RCLIII) and (2) Ricinus GBS: N/A part 742 continues to read as follows: communis LectinIV (RCLIV), also known as Special Conditions for STA ricin E. CW applies to 1C351.d.12 for STA: (1) Paragraph (c)(1) of License Authority: 50 U.S.C. 4801–4852; 50 U.S.C. saxitoxin identified by C.A.S. #35523–89–8. Exception STA (§ 740.20(c)(1)) may be 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. See § 742.18 of the EAR for licensing 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 information pertaining to chemicals subject used for items in 1C351.d.1 through et seq.; 22 U.S.C. 7210; Sec. 1503, Pub. L. to restriction pursuant to the Chemical 1C351.d.10 and 1C351.d.13 through 108–11, 117 Stat. 559; E.O. 12058, 43 FR Weapons Convention (CWC). The Commerce 1C351.d.18. See § 740.20(b)(2)(vi) for 20947, 3 CFR, 1978 Comp., p. 179; E.O. Country Chart is not designed to determine restrictions on the quantity of any one 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. licensing requirements for items controlled toxin that may be exported in a single 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 for CW reasons. shipment and the number of shipments Comp., p. 950; E.O. 13026, 61 FR 58767, 3 that may be made to any one end user in CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR Country chart a single calendar year. Also see the 44025, 3 CFR, 2001 Comp., p. 783; Control(s) (see supp. No. 1 to Automated Export System (AES) Presidential Determination 2003–23, 68 FR part 738) requirements in § 758.1(b)(4) of the EAR. 26459, 3 CFR, 2004 Comp., p. 320; Notice of (2) Paragraph (c)(2) of License Exception November 12, 2019, 84 FR 61817 (November AT applies to entire AT Column 1. STA (§ 740.20(c)(2) of the EAR) may not be 13, 2019). entry. used for any items in 1C351.

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List of Items Controlled a.18. Hendra virus (Equine morbillivirus); c.6. Burkholderia pseudomallei Related Controls: (1) Certain forms of ricin a.19. Japanese encephalitis virus; (Pseudomonas pseudomallei); and saxitoxin in 1C351.d.11. and d.12 are a.20. Junin virus; c.7. Chlamydia psittaci (Chlamydophila CWC Schedule 1 chemicals (see § 742.18 of a.21. Kyasanur Forest disease virus; psittaci); the EAR). The U.S. Government must a.22. Laguna Negra virus; c.8. Clostriduim argentinense (formerly known as Clostridium botulinum Type G), provide advance notification and annual a.23. Lassa virus; a.24. Louping ill virus; botulinum neurotoxin producing strains; reports to the OPCW of all exports of a.25. Lujo virus; c.9. Clostridium baratii, botulinum Schedule 1 chemicals. See § 745.1 of the a.26. Lumpy skin disease virus; neurotoxin producing strains; EAR for notification procedures. See 22 a.27. Lymphocytic choriomeningitis virus; c.10. Clostridium botulinum; CFR part 121, Category XIV and § 121.7 for a.28. Machupo virus; c.11. Clostridium butyricum, botulinum CWC Schedule 1 chemicals that are a.29. Marburgvirus (includes all members neurotoxin producing strains; ‘‘subject to the ITAR.’’ (2) The Animal and of the Marburgvirus genus); c.12. Clostridium perfringens, epsilon Plant Health Inspection Service (APHIS), a.30. Middle East respiratory syndrome- toxin producing types; U.S. Department of Agriculture, and the related coronavirus (MERS-related c.13. Coxiella burnetii; Centers for Disease Control and Prevention coronavirus); c.14. Francisella tularensis; (CDC), U.S. Department of Health and a.31. Monkeypox virus; c.15. Mycoplasma capricolum subspecies Human Services, maintain controls on the a.32. Murray Valley encephalitis virus; capripneumoniae (‘‘strain F38’’); possession, use, and transfer within the a.33. Newcastle disease virus; c.16. Mycoplasma mycoides subspecies United States of certain items controlled by a.34. Nipah virus; mycoides SC (small colony) (a.k.a. contagious this ECCN (for APHIS, see 7 CFR 331.3(b), a.35. Omsk hemorrhagic fever virus; bovine pleuropneumonia); 9 CFR 121.3(b), and 9 CFR 121.4(b); for a.36. Oropouche virus; c.17. Rickettsia prowazekii; CDC, see 42 CFR 73.3(b) and 42 CFR a.37. Peste-des-petits ruminants virus; c.18. Salmonella enterica subspecies 73.4(b)). (3) See 22 CFR part 121, Category a.38. Porcine Teschovirus; enterica serovar Typhi (Salmonella typhi); XIV(b), for modified biological agents and a.39. Powassan virus; c.19. Shiga toxin producing Escherichia biologically derived substances that are a.40. Rabies virus and all other members of coli (STEC) of serogroups O26, O45, O103, ‘‘subject to the ITAR.’’ the Lyssavirus genus; O104, O111, O121, O145, O157, and other Related Definitions: For the purposes of this a.41. Reconstructed 1918 influenza virus; shiga toxin producing serogroups; entry, ‘immunotoxins’ are monoclonal Technical Note: 1C351.a.41 includes Note: Shiga toxin producing Escherichia antibodies linked to a toxin with the reconstructed replication competent forms of coli (STEC) includes, inter alia, intention of destroying a specific target cell the 1918 pandemic influenza virus enterohaemorrhagic E. coli (EHEC), verotoxin while leaving adjacent cells intact. containing any portion of the coding regions producing E. coli (VTEC) or verocytotoxin Items: of all eight gene segments. producing E. coli (VTEC). a. Viruses identified on the Australia a.42. Rift Valley fever virus; c.20. Shigella dysenteriae; Group (AG) ‘‘List of Human and Animal a.43. Rinderpest virus; c.21. Vibrio cholerae; or Pathogens and Toxins for Export Control,’’ as a.44. Rocio virus; c.22. Yersinia pestis. follows: a.45. Sabia virus; d. ‘‘Toxins’’ identified on the Australia a.1. African horse sickness virus; a.46. Seoul virus; Group (AG) ‘‘List of Human and Animal a.2. African swine fever virus; a.47. Severe acute respiratory syndrome- Pathogens and Toxins for Export Control,’’ as a.3. Andes virus; related coronavirus (SARS-related follows, or their subunits: a.4. Avian influenza (AI) viruses identified coronavirus); d.1. Abrin; as having high pathogenicity (HP), as follows: a.48. Sheeppox virus; d.2. Aflatoxins; a.4.a. AI viruses that have an intravenous a.49. Sin Nombre virus; d.3. Botulinum toxins; pathogenicity index (IVPI) in 6-week-old a.50. St. Louis encephalitis virus; d.4. Cholera toxin; chickens greater than 1.2; or a.51. Suid herpesvirus 1 (Pseudorabies d.5. Clostridium perfringens alpha, beta 1, a.4.b. AI viruses that cause at least 75% virus; Aujeszky’s disease); beta 2, epsilon and iota toxins; mortality in 4- to 8-week-old chickens a.52. Swine vesicular disease virus; d.6. Conotoxins; infected intravenously. a.53. Tick-borne encephalitis virus (Far d.7. Diacetoxyscirpenol; Note: Avian influenza (AI) viruses of the Eastern subtype, formerly known as Russian d.8. HT-2 toxin; H5 or H7 subtype that do not have either of Spring-Summer encephalitis virus—see d.9. Microcystins (Cyanginosins); the characteristics described in 1C351.a.4 1C351.b.3 for Siberian subtype); d.10. Modeccin; (specifically, 1C351.a.4.a or a.4.b) should be a.54. Variola virus; d.11. Ricin; sequenced to determine whether multiple a.55. Venezuelan equine encephalitis virus; d.12. Saxitoxin; basic amino acids are present at the cleavage a.56. Vesicular stomatitis virus; d.13. Shiga toxins (shiga-like toxins, site of the haemagglutinin molecule (HA0). If a.57. Western equine encephalitis virus; or verotoxins, and verocytotoxins); the amino acid motif is similar to that a.58. Yellow fever virus. d.14. Staphylococcus aureus enterotoxins, observed for other HPAI isolates, then the b. Viruses identified on the APHIS/CDC hemolysin alpha toxin, and toxic shock isolate being tested should be considered as ‘‘select agents’’ lists (see Related Controls syndrome toxin (formerly known as HPAI and the virus is controlled under paragraph #2 for this ECCN), but not Staphylococcus enterotoxin F); 1C351.a.4. identified on the Australia Group (AG) ‘‘List d.15. T-2 toxin; of Human and Animal Pathogens and Toxins d.16. Tetrodotoxin; a.5. Bluetongue virus; for Export Control,’’ as follows: a.6. Chapare virus; d.17. Viscumin (Viscum album lectin 1); or b.1. [Reserved]; d.18. Volkensin. a.7. Chikungunya virus; b.2. [Reserved]; or e. ‘‘Fungi’’, as follows: a.8. Choclo virus; b.3. Tick-borne encephalitis virus (Siberian e.1. Coccidioides immitis; or a.9. Classical swine fever virus (Hog subtype, formerly West Siberian virus—see e.2. Coccidioides posadasii. cholera virus); 1C351.a.53 for Far Eastern subtype). a.10. Crimean-Congo hemorrhagic fever c. Bacteria identified on the Australia ■ 5. In Supplement No. 1 to part 774, virus; Group (AG) ‘‘List of Human and Animal Category 1, ECCN 1C991 is revised to a.11. Dobrava-Belgrade virus; Pathogens and Toxins for Export Control,’’ as read as follows: a.12. Eastern equine encephalitis virus; follows: 1C991 Vaccines, immunotoxins, medical a.13. Ebolavirus (includes all members of c.1. Bacillus anthracis; products, diagnostic and food testing the Ebolavirus genus); c.2. Brucella abortus; kits, as follows (see List of Items a.14. Foot-and-mouth disease virus; c.3. Brucella melitensis; Controlled). a.15. Goatpox virus; c.4. Brucella suis; a.16. Guanarito virus; c.5. Burkholderia mallei (Pseudomonas License Requirements a.17. Hantaan virus; mallei); Reason for Control: CB, AT

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Country chart (see marketed as a medical (or veterinary) ACTION: Final rule. Control(s) supp. No. 1 to part product or for use in clinical trials, that is 738) intended to stimulate a protective SUMMARY: immunological response in humans or The Commodity Futures CB applies to CB Column 3. animals in order to prevent disease in Trading Commission (Commission) is 1C991.c. those to whom or to which it is adopting policies and procedures that AT applies to entire AT Column 1. administered. the Commission will follow with entry. Items: respect to granting exemptions from List Based License Exceptions (See Part 740 Technical Note: For purposes of the registration as a derivatives clearing for a Description of All License Exceptions) controls described in this ECCN, ‘toxins’ organization (DCO). In addition, the refers to those toxins, or their subunits, LVS: N/A controlled under ECCN 1C351.d. Commission is amending certain related GBS: N/A delegation provisions in its regulations. a. Vaccines containing, or designed for use List of Items Controlled against, items controlled by ECCN 1C351, DATES: Effective February 8, 2021. Related Controls: (1) Medical products 1C353 or 1C354. FOR FURTHER INFORMATION CONTACT: containing ricin or saxitoxin, as follows, b. Immunotoxins containing toxins are controlled for CW reasons under ECCN controlled by 1C351.d; Eileen A. Donovan, Deputy Director, 1C351: c. Medical products that contain any of the 202–418–5096, [email protected]; following: (a) Ricinus communis AgglutininII (RCAII), Parisa Nouri, Associate Director, 202– c.1. Toxins controlled by ECCN 1C351.d also known as ricin D, or Ricinus Communis (except for botulinum toxins controlled by 418–6620, [email protected]; Eileen R. LectinIII (RCLIII); ECCN 1C351.d.3, conotoxins controlled by Chotiner, Senior Compliance Analyst, (b) Ricinus communis LectinIV (RCLIV), ECCN 1C351.d.6, or items controlled for CW 202–418–5467, [email protected]; also known as ricin E; or reasons under ECCN 1C351.d.11 or .d.12); or (c) Saxitoxin identified by C.A.S. #35523– Brian Baum, Special Counsel, 202–418– c.2. Genetically modified organisms or 89–8. 5654, [email protected]; August A. genetic elements controlled by ECCN (2) The export of a ‘‘medical product’’ that Imholtz III, Special Counsel, 202–418– 1C353.a.3 (except for those that contain, or is an ‘‘Investigational New Drug’’ (IND), as code for, botulinum toxins controlled by 5140, [email protected]; Abigail S. defined in 21 CFR 312.3, is subject to certain ECCN 1C351.d.3 or conotoxins controlled by Knauff, Special Counsel, 202–418–5123, U.S. Food and Drug Administration (FDA) [email protected]; Division of Clearing requirements that are independent of the ECCN 1C351.d.6); export requirements specified in this ECCN d. Medical products not controlled by and Risk, Commodity Futures Trading or elsewhere in the EAR. These FDA 1C991.c that contain any of the following: Commission, Three Lafayette Centre, requirements are described in 21 CFR d.1. Botulinum toxins controlled by ECCN 1155 21st Street NW, Washington, DC 312.110 and must be satisfied in addition to 1C351.d.3; d.2. Conotoxins controlled by ECCN 20581; Theodore Z. Polley III, Associate any requirements specified in the EAR. Director, 312–596–0551, tpolley@ (3) Also see 21 CFR 314.410 for FDA 1C351.d.6; or requirements concerning exports of new d.3. Genetically modified organisms or cftc.gov; Division of Clearing and Risk, drugs and new drug substances. genetic elements controlled by ECCN Commodity Futures Trading 1C353.a.3 that contain, or code for, Related Definitions: For the purpose of this Commission, 525 West Monroe Street, botulinum toxins controlled by ECCN Chicago, Illinois 60661. entry, ‘immunotoxins’ are monoclonal 1C351.d.3 or conotoxins controlled by ECCN antibodies linked to a toxin with the 1C351.d.6; SUPPLEMENTARY INFORMATION: intention of destroying a specific target cell e. Diagnostic and food testing kits while leaving adjacent cells intact. For the containing toxins controlled by ECCN Table of Contents purpose of this entry, ‘medical products’ 1C351.d (except for items controlled for CW are: (1) Pharmaceutical formulations reasons under ECCN 1C351.d.11 or .d.12). I. Background designed for testing and human (or A. Introduction veterinary) administration in the treatment Matthew S. Borman, B. Existing Exempt DCO Orders of medical conditions, (2) prepackaged for Deputy Assistant Secretary for Export II. Amendments to Part 39 distribution as clinical or medical Administration. A. Regulation 39.1—Scope products, and (3) approved by the U.S. B. Regulation 39.2—Definitions Food and Drug Administration either to be [FR Doc. 2020–27754 Filed 1–6–21; 8:45 am] marketed as clinical or medical products or BILLING CODE 3510–33–P C. Regulation 39.6—Exemption From DCO for use as an ‘‘Investigational New Drug’’ Registration (IND) (see 21 CFR part 312). For the D. Regulation 39.9—Scope purpose of this entry, ‘diagnostic and food COMMODITY FUTURES TRADING III. Amendments to Part 140 testing kits’ are specifically developed, COMMISSION IV. Related Matters packaged and marketed for diagnostic or A. Regulatory Flexibility Act public health purposes. Biological toxins 17 CFR Parts 39 and 140 B. Paperwork Reduction Act in any other configuration, including bulk C. Cost-Benefit Considerations shipments, or for any other end-uses are RIN 3038–AE65 D. Antitrust Considerations controlled by ECCN 1C351. For the purpose of this entry, ‘vaccine’ is defined Exemption From Derivatives Clearing as a medicinal (or veterinary) product in a Organization Registration pharmaceutical formulation, approved by the U.S. Food and Drug Administration or AGENCY: Commodity Futures Trading the U.S. Department of Agriculture to be Commission.

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I. Background first exemption from DCO registration in In light of these comments, the 2015 and, to date, has exempted four Commission further proposed in July A. Introduction clearing organizations organized outside 2019 to permit foreign intermediaries to Section 5b(a) of the Commodity of the United States (hereinafter referred clear swaps for U.S. customers at Exchange Act (’’CEA’’) provides that a to as ‘‘non-U.S. clearing organizations’’) exempt DCOs (2019 Proposal).10 clearing organization 1 may not from DCO registration.5 After considering the comments ‘‘perform the functions of’’ a clearing In August 2018, the Commission received in response to the 2019 organization with respect to swaps 2 proposed to codify the policies and Proposal,11 the Commission is adopting unless the clearing organization is a procedures it implemented in 2015 with the 2018 Proposal and, with limited DCO registered with the Commission.3 respect to granting exemptions from exceptions,12 declining to adopt the However, the CEA also permits the DCO registration, including permitting 2019 Proposal at this time. The Commission to conditionally or exempt DCOs to clear only proprietary Commission may consider permitting unconditionally exempt a clearing swap positions of U.S. persons and U.S. customer clearing at exempt DCOs organization from DCO registration for futures commission merchants (FCMs), or establishing a substantial risk test for the clearing of swaps if the Commission and not customer positions (2018 exempt DCOs at a later time. determines that the clearing Proposal).6 The Commission received B. Existing Exempt DCO Orders organization is subject to ‘‘comparable, four substantive comment letters on the comprehensive supervision and 2018 Proposal.7 As previously noted, a clearing regulation’’ by its home country In response to a specific request for organization must be subject to regulator.4 The Commission issued the comment as to whether the Commission comparable, comprehensive supervision should consider permitting an exempt and regulation by appropriate 1 The term ‘‘derivatives clearing organization’’ is DCO to clear swaps for U.S. customers,8 government authorities in the clearing statutorily defined to mean a clearing organization three commenters expressed support.9 organization’s home country to be in general. However, for purposes of the discussion eligible for an exemption from in this release, the term ‘‘registered DCO’’ refers to a Commission-registered DCO, the term ‘‘exempt exempt from DCO registration a securities clearing registration as a DCO for the clearing of DCO’’ refers to a DCO that is exempt from agency registered with the Securities and Exchange swaps. To date, the Commission has registration, and the term ‘‘clearing organization’’ Commission; however, the Commission has not issued four exempt DCO orders, subject granted, nor developed a framework for granting, refers to a clearing organization that: (a) Is neither to conditions, consistent with the registered nor exempt from registration with the such exemptions. Commission as a DCO; and (b) falls within the 5 See ASX Clear (Futures) Pty Amended Order of statute. In granting these exemptions, definition of ‘‘derivatives clearing organization’’ Exemption from Registration (Jan. 28, 2016), the Commission determined that a under section 1a(15) of the CEA, 7 U.S.C. 1a(15), available at http://www.cftc.gov/idc/groups/public/ supervisory and regulatory framework and ‘‘clearing organization or derivatives clearing @otherif/documents/ifdocs/ organization’’ under § 1.3 of the Commission’s asxclearamdorderdcoexemption.pdf; Korea that conforms to the PFMIs is regulations, 17 CFR 1.3. Exchange, Inc. Order of Exemption from comparable to, and as comprehensive 2 Section 5b(a) also provides that a clearing Registration (Oct. 26, 2015), available at http:// as, the supervisory and regulatory organization may not perform the functions of a www.cftc.gov/idc/groups/public/@otherif/ requirements applicable to registered documents/ifdocs/krxdcoexemptorder10-26-15.pdf; clearing organization with respect to futures unless DCOs.13 This conclusion is consistent it is a registered DCO. This, however, is limited to Japan Securities Clearing Corporation Order of futures executed on a designated contract market. Exemption from Registration (Oct. 26, 2015), Regulation 48.7 provides that a foreign board of available at http://www.cftc.gov/idc/groups/public/ clearing members can demonstrate that they are trade registered with the Commission may clear its @otherif/documents/ifdocs/jsccdcoexemptorder10- properly supervised, regulated, and licensed to contracts through a registered DCO or a clearing 26-15.pdf; OTC Clearing Hong Kong Limited Order provide customer clearing services in their home organization that observes the Recommendations of Exemption from Registration (Dec. 21, 2015), countries, where the regulatory authority maintains for Central Counterparties (RCCPs) or successor available at http://www.cftc.gov/idc/groups/public/ appropriate cooperative arrangements with the standards and is in good regulatory standing in its @otherif/documents/ifdocs/ CFTC.’’); and ISDA comment letter at 3 (stating home country jurisdiction. 17 CFR 48.7. The otccleardcoexemptorder12-21-15.pdf. ‘‘[i]n response to the Commission’s question about Principles for Financial Market Infrastructures 6 See Exemption From Derivatives Clearing customer clearing, ISDA strongly believes that the (PFMIs) are the successor standards to the RCCPs. Organization Registration, 83 FR 39923 (Aug. 13, CFTC should permit exempt DCOs to clear swaps See Committee on Payment and Settlement Systems 2018). for customers.’’). and the Technical Committee of the International 7 The Commission received comment letters from 10 See Exemption From Derivatives Clearing Organization of Securities Commissions, Principles the following in 2018: Japan Securities Clearing Organization Registration, 84 FR 35456 (Jul. 23, for financial market infrastructures (Apr. 2012), Corporation (JSCC); ASX Clear (Futures) Pty (ASX); 2019). available at http://www.iosco.org/library/pubdocs/ Futures Industry Association (FIA) and Securities 11 The Commission received comment letters pdf/IOSCOPD377-PFMI.pdf. Because an exempt and Financial Markets Association (SIFMA); and from the following in 2019: ASX; Americans for DCO is required to observe the PFMIs and be in International Swaps and Derivatives Association, Financial Reform Education Fund (AFR Ed Fund); good regulatory standing it its home country, it is Inc. (ISDA). Better Markets, Inc. (Better Markets); CCP12; eligible to clear contracts executed on a foreign 8 2018 Proposal, 83 FR at 39930. Citadel; CME Group, Inc. (CME); FIA; OTC Clearing board of trade. 9 See ASX Clear (Futures) Pty comment letter at Hong Kong Limited (OTC Clear); Intercontinental 3 7 U.S.C. 7a–1(a). Under section 2(i) of the CEA, 1 (stating that ‘‘ASXCF supports the CFTC Exchange, Inc. (ICE); International Bankers 7 U.S.C. 2(i), activities outside of the United States permitting exempt DCOs to clear swaps for U.S. Association of Japan (IBA Japan) and Japan are not subject to the swap provisions of the CEA, person customers. ASXCF believes it would be Financial Markets Council (JFMC); ISDA; JSCC; including any rules prescribed or regulations beneficial to allow U.S. person customers to access LCH Group (LCH); Milbank LLP (Milbank); SIFMA; promulgated thereunder, unless those activities the broadest possible range of central clearing and World Federation of Exchanges (WFE). either have a direct and significant connection with facilities (‘‘CCPs’’) as this would provide U.S. 12 As discussed further below, the Commission is activities in, or effect on, commerce of the United person customers with flexibility and choice in adopting § 39.6(b)(6), as modified in the 2019 States, or contravene any rule or regulation accessing the best commercial solutions for the Proposal, to specify the information that an exempt established to prevent evasion of a CEA provision products that they use subject to those CCPs DCO must provide to the Commission if it is unable enacted under the Dodd-Frank Wall Street Reform meeting global QCCP standards under the CPMI– to provide an unconditional certification that it and Consumer Protection Act, Public Law 111–203, IOSCO Principles for Financial Market continues to observe the PFMIs in all material 124 Stat. 1376 (Dodd-Frank Act). Therefore, Infrastructures (PFMIs).’’); JSCC comment letter at respects; § 39.6(b)(9) (renumbered as § 39.6(b)(8)), pursuant to section 2(i), the DCO registration 5 (stating that ‘‘JSCC would like the CFTC to which provides that the Commission may condition requirement extends to any clearing organization consider the potential benefits of allowing U.S. an exemption from DCO registration on any other whose clearing activities outside of the United customers to access exempt DCOs, using a similar facts and circumstances it deems relevant; and States have a direct and significant connection with approach to the correspondent clearing structure § 39.6(f), which establishes a process for activities in, or effect on, commerce of the United adopted for foreign futures markets, by permitting modification or termination of an exemption from States. . . . non-U.S. clearing members in an exempt DCO DCO registration upon Commission initiative. 4 Section 5b(h) of the CEA, 7 U.S.C. 7a–1(h). to clear for U.S. customers, without the necessity 13 The Commission holds systemically important Section 5b(h) also permits the Commission to to register as a FCM, as long as those non-U.S. DCOs and subpart C DCOs to requirements that are

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with previous Commission subpart A of new § 39.6 (discussed PFMIs ‘‘occur infrequently and are determinations.14 Under exempt DCO below), which sets forth the easily identifiable,’’ due to the orders granted to date, an exempt DCO requirements for an exemption from familiarity of exempt DCOs with the is required to observe the PFMIs in all DCO registration. The Commission did legal and regulatory framework in their material respects and be in good not receive any comments on this home countries. ASX added that an regulatory standing in its home country, provision and is adopting it as exempt DCO is best placed to determine as evidenced by an annual written proposed. whether a change is material and advise representation by its home country B. Regulation 39.2—Definitions the Commission accordingly. regulator. A memorandum of The Commission is adopting the understanding (MOU) must be in effect In connection with the proposed definition of ‘‘good regulatory standing’’ between the Commission and the home regulations, the Commission proposed largely as proposed.15 The country regulator. to add five definitions to § 39.2, which Commission’s supervisory experience The existing exempt DCO orders also apply only for purposes of part 39. with registered and exempt DCOs has require the exempt DCO to supply the 1. Exempt Derivatives Clearing shown that even well-functioning DCOs Commission with certain reports and Organization will experience instances of non- information, some on a periodic basis observance of applicable requirements— and others based on the occurrence of The Commission proposed to define ‘‘exempt derivatives clearing both material and immaterial. The specified events. For example, exempt Commission therefore seeks to refrain DCOs are required to provide daily and organization’’ to mean a clearing organization that the Commission has from adopting a mechanical or hyper- quarterly reporting of certain technical approach whereby isolated information regarding the clearing exempted from registration under section 5b(a) of the CEA, pursuant to instances of non-observance would be activity of U.S. persons and FCMs. An disqualifying.16 The Commission exempt DCO also is required to report section 5b(h) of the CEA and § 39.6. The Commission did not receive any further believes that the definition to the Commission if there is any change provides adequate assurance of in its licensure, registration or comments on this proposed definition and is adopting it as proposed. observance of the PFMIs or compliance authorization to act as a clearing with other relevant home country organization in its home country; if the 2. Good Regulatory Standing requirements, because any material non- exempt DCO takes action against a U.S. The Commission proposed that, to be observance must be resolved to the person or FCM; if there is a default by eligible for an exemption from satisfaction of the home country a U.S. person or FCM; or if there is any registration, a clearing organization regulator in order for the exempt DCO change in the home country regulatory would have to be in good regulatory to be deemed to be in good standing. regime that is material to the exempt standing in its home country. The 3. Home Country DCO’s continuing observance of the Commission proposed to define ‘‘good PFMIs or compliance with the regulatory standing’’ to mean either The Commission proposed to define requirements of the Commission’s order. there has been no finding by the home ‘‘home country’’ to mean, with respect In addition, existing exempt DCO orders country regulator of material non- to a non-U.S. clearing organization, the require the exempt DCO to make its observance of the PFMIs or other jurisdiction in which the clearing books and records available for relevant home country legal organization is organized. The inspection by the Commission and, requirements, or there has been such a Commission did not receive any where a clearing member has reported finding by the home country regulator, comments on this proposed definition information regarding a swap to a swap but it has been or is being resolved to and is adopting it as proposed. data repository (SDR), to also report the satisfaction of the home country information regarding that swap to the regulator by means of corrective action 15 In the 2018 Proposal, the Commission had SDR. taken by the clearing organization. proposed to define ‘‘good regulatory standing’’ in a Because the regulations being adopted Although the Commission proposed way that would apply only to exempt DCOs. See Exemption From Derivatives Clearing Organization herein are consistent with existing to reference ‘‘material’’ non-observance exempt DCO orders, the Commission Registration, 83 FR at 39933. In a separate, of the PFMIs or other relevant home subsequent proposal, the Commission proposed a does not anticipate amending any of the country legal requirements, the definition of ‘‘good regulatory standing’’ that exempt DCO orders it has issued to date. Commission requested comment in the retained the previously proposed definition for exempt DCOs but added a separate provision that II. Amendments to Part 39 2018 Proposal as to whether the would apply only to DCOs subject to alternative definition should instead refer to all compliance. See Registration With Alternative A. Regulation 39.1—Scope instances of non-observance. In their Compliance for Non-U.S. Derivatives Clearing The Commission proposed to amend responses to the 2019 Proposal, ASX, Organizations, 84 FR 34819, 34831 (July 19, 2019); see also Exemption From Derivatives Clearing § 39.1 to expand the scope of subpart A JSCC, and CCP12 supported the Organization Registration, 84 FR at 35471. The of part 39 to include a clearing proposed definition of ‘‘good regulatory Commission has adopted the definition as it relates organization applying for an exemption standing.’’ CCP12 and JSCC commented to DCOs subject to alternative compliance (see from DCO registration. This change was that the proposed definition is Registration with Alternative Compliance for Non- U.S. Derivatives Clearing Organizations, 85 FR meant to address the inclusion in appropriate, as individual regulators 67160, 67186 (Oct. 21, 2020)); therefore, the have taken differing approaches to how Commission is adopting here only that portion of fully consistent with the PFMIs. See 17 CFR 39.30, they apply the PFMIs in the context of the definition that applies to exempt DCOs. 39.40. the markets that they regulate and 16 While the Commission expects, in almost all 14 See, e.g., § 50.52(b)(4)(i)(E), 17 CFR cases, to defer to the home country regulator’s 50.52(b)(4)(i)(E) (permitting eligible affiliate supervise. CCP12 and JSCC did not determination of whether an instance of non- counterparties that are located in certain recommend extending the definition to compliance is or is not material, it does retain the jurisdictions to satisfy a condition to electing the all instances of non-observance of the discretion, in the context of the application of these exemption by clearing the swap through a DCO or PFMIs. JSCC further stated that rules of the Commission, to make that a clearing organization that is subject to supervision determination itself, and, in order to make such a by appropriate government authorities in the regulatory changes in the home country determination, to obtain information from the home clearing organization’s home country and that has of an exempt DCO affecting the exempt country regulator pursuant to the relevant been assessed to be in compliance with the PFMIs). DCO’s continuing observance of the memorandum of understanding.

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4. Home Country Regulator The Commission did not receive any statutes, rules, regulations, policies, or a The Commission proposed to define comments on this proposed definition combination thereof that, taken together, ‘‘home country regulator’’ to mean, with and is adopting it as proposed. are consistent with the PFMIs; (ii) it observes the PFMIs in all material respect to a non-U.S. clearing C. Regulation 39.6—Exemption From respects; (iii) and it is in good regulatory organization, an appropriate DCO Registration government authority which licenses, standing in its home country. The Commission proposed new § 39.6 In determining that adherence to the regulates, supervises, or oversees the 22 clearing organization’s clearing to establish a regulatory framework for PFMIs satisfies the ‘‘comparable, activities in the home country. The the granting of exemptions from DCO comprehensive supervision and Commission did not receive any registration consistent with the policies regulation’’ standard set forth in CEA comments on this proposed definition and procedures that the Commission section 5b(h), the Commission takes a and is adopting it as proposed. has been following with respect to holistic, outcomes-based approach. That granting exemptions from DCO is, the Commission has assessed 5. Principles for Financial Market registration. The specific provisions of whether, taken together in their entirety, Infrastructures § 39.6 are discussed in greater detail the PFMIs provide a comprehensive The Commission proposed to define below. framework for DCO supervision and ‘‘Principles for Financial Market regulation that is comparable to the 1. Regulation 39.6(a)—Eligibility for statutory and regulatory requirements Infrastructures’’ to mean the PFMIs Exemption published by the Committee on that comprise the DCO regulatory Payment and Settlement Systems The Commission proposed § 39.6(a) to framework—focusing, in particular, on (CPSS) and the Technical Committee of provide that the Commission may the core principles applicable to the International Organization of exempt a non-U.S. clearing organization registered DCOs set forth in CEA section Securities Commissions (IOSCO) in from registration as a DCO for the 5b (DCO Core Principles).23 The use of April 2012, as updated, revised, or clearing of swaps for U.S. persons 20 and the PFMIs as the benchmark in this otherwise amended. The Commission thereby exempt such clearing context builds upon the global effort to proposed the ‘‘as updated, revised, or organization from compliance with the develop an effective and consistent set otherwise amended’’ language in the provisions of the CEA and Commission of regulatory and supervisory standards 2018 Proposal to recognize that CPMI– regulations applicable to registered for CCPs. More specifically, the PFMIs IOSCO 17 could offer further DCOs, if the Commission determines address major elements critical to the interpretation of or guidance on the that all of the eligibility requirements safe and efficient operation of CCPs, PFMIs.18 As proposed in the 2019 listed in § 39.6(a) are met, and that the such as risk management, adequacy of Proposal,19 the Commission is striking clearing organization satisfies the financial resources, default ‘‘as updated, revised, or otherwise conditions set forth in § 39.6(b).21 management, margin, settlement, and participation requirements.24 amended’’ from the definition to clarify a. Subject to Comparable, that while a home country regulator The Commission recognizes that the Comprehensive Supervision and requirements of the PFMI-compliant may voluntarily adopt or amend its Regulation statutes, rules, regulations, policies or jurisdiction will not be identical to the combination thereof to incorporate The Commission proposed to codify Commission’s regulations in every subsequent interpretations and in § 39.6(a)(1) the statutory authority in aspect. Nevertheless, a foreign guidance, the home country regulator is section 5b(h) of the CEA that the jurisdiction’s observance of the PFMIs not required to do so to maintain a Commission may exempt a clearing provides assurance that its supervision regulatory regime that is comparable to organization from DCO registration for and regulation are sufficiently similar in and as comprehensive as the PFMIs. the clearing of swaps provided that the purpose and effect while avoiding a The Commission believes that striking Commission determines that the clearing organization is subject to 22 In addition to the principles applicable to that portion of the proposed definition central counterparties (CCPs) and other financial would provide exempt DCOs with comparable, comprehensive supervision market infrastructures, the PFMIs provide that greater regulatory certainty, as a DCO’s and regulation by a home country central banks, market regulators, and other relevant eligibility to remain exempt from regulator. To satisfy this condition, the authorities should observe five responsibilities. clearing organization would need to Consistent with this, the Commission expects that, registration would not be contingent on in order to meet the standard of being subject to whether a home country regulator has demonstrate that: (i) It is organized in a comparable, comprehensive supervision and adopted CPMI–IOSCO’s latest jurisdiction in which a home country regulation, a clearing organization’s home country interpretations or guidance. The regulator applies to the clearing regulator will observe these responsibilities. In organization, on an ongoing basis, particular, Responsibility D, Explanatory Note 4.4.1 Commission also does not believe it is provides that the home country regulator should appropriate to allow any future change adopt the PFMIs, and, ‘‘[w]hile the precise means to the PFMIs themselves to be 20 The Commission proposed to use the through which the principles are applied may vary interpretation of ‘‘U.S. person’’ as set forth in the from jurisdiction to jurisdiction, all CPSS and incorporated into the definition without Cross-Border Guidance, as such definition may be IOSCO members are expected to apply the the Commission and other regulators amended or superseded by a definition of the term principles to the relevant [financial market first having the opportunity to consider ‘‘U.S. person’’ that is adopted by the Commission infrastructures] in their jurisdictions to the fullest the change. However, the Commission and applicable to this final rule. See Cross-Border extent allowed by the legal framework in their Guidance, 78 FR 45292, 45316–45317. jurisdiction.’’ PFMIs, ¶ 4.4.1. Therefore, the reserves the ability to incorporate future 21 The eligibility requirements listed in § 39.6(a) Commission would not find a home country amendments to the PFMIs within the and the conditions set forth in § 39.6(b) are pre- regulator’s statement that it requires a clearing definition if the Commission determines conditions to the Commission’s issuance of any organization to observe the PFMIs to be sufficient that such amendments are appropriate. order exempting a clearing organization from the to meet the above standard for exemption, if the DCO registration requirement of the CEA and home country regulator has not itself adopted a Commission regulations. Additional conditions that regulatory framework that is consistent with the 17 The name of CPSS was changed to the are unique to the facts and circumstances specific PFMIs. Committee on Payment and Market Infrastructures to a particular clearing organization could be 23 7 U.S.C. 7a–1(c)(2). (CPMI) in 2014. imposed upon that clearing organization in the 24 See, e.g., Derivatives Clearing Organizations 18 2018 Proposal, 83 FR at 39925 n.14. Commission’s order of exemption, as permitted by and International Standards, 78 FR 72476 (Dec. 2, 19 2019 Proposal, 84 FR at 35459. section 5b(h) of the CEA. 2013) (adopting final rules).

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demand for strict compliance with U.S. the PFMIs, a set of broad principles with may be exempted from the DCO regulation that would subject CCPs to a no standing under U.S. law, for the registration requirements.25 As patchwork of U.S. and foreign statutory mandate to ensure that a DCO mentioned previously, the PFMIs are regulations. In summary, the PFMI- is subject to a regime comparable to U.S. comparable to the DCO Core Principles focused ‘‘comparability’’ framework regulation and supervision.’’ and the implementing Commission strikes the proper balance by showing Similarly, Better Markets argued that regulations in purpose and scope. Both an appropriate level of deference to the the proposal unlawfully treats the address major elements critical to the legal and supervisory regime of the PFMIs as being the equivalent of U.S. safe and efficient operations of clearing home country jurisdiction, while law for purposes of making a organizations, such as risk management, fulfilling the Commission’s supervisory comparability determination under adequacy of financial resources, default duty to ensure that foreign DCOs section 5b(h). Better Markets also argued management, margin, settlement, and clearing for U.S. market participants are that the U.S. statutory and regulatory participation requirements.26 Regulation subject to a sound regulatory requirements for DCOs are not the 39.40 expressly states that subpart C of framework. equivalent of the PFMIs because the part 39 of the Commission’s regulations CME, ISDA, IBA Japan, and JFMC PFMIs do not have the force of law until ‘‘is intended to establish standards supported the Commission’s reliance on they are incorporated into the home which, together with subparts A and B the PFMIs as the standard for jurisdiction’s laws or regulations, and of [part 39], are consistent with’’ section determining whether a non-U.S. because, even when the PFMIs are 5b(c) of the CEA and the PFMIs and clearing organization’s home country implemented, material differences may should be interpreted in that context. regulatory regime is comparable and exist between the PFMI-compliant Regarding Citadel’s comment, the comprehensive. IBA Japan and JFMC regulatory regime and the PFMI Commission acknowledges that the believe this approach strikes the correct principles. Better Markets further PFMIs are not identical to, nor as balance between addressing risk to the argued that because section 5b(h) is only detailed as, part 39. However, United States and promoting cross- implicated if the non-U.S. clearing ‘‘comparable and comprehensive’’ does border harmonization. ISDA encouraged organization is subject to the DCO not mean identical. The Commission the Commission to continue its dialogue registration requirement of section 5b(a) adopted the part 39 requirements for with foreign regulators in the EU and in the first instance, Congress limited registered DCOs, which may generally other jurisdictions to ensure that the Commission’s comparability inquiry clear futures, swaps, and other supervision in each jurisdiction is based to determining whether the non-U.S. instruments for various U.S. persons to on deference to home country regime is comparable to the U.S. the extent permissible under the CEA. regulations and compliance with the regulatory requirements that would Here, in light of the scope of an exempt PFMIs. ISDA argued that applying otherwise apply to the clearing DCO’s clearing activities, the PFMIs are inconsistent and duplicative regulatory organization. Better Markets claimed sufficiently comparable and frameworks to clearing organizations that the 2018 Proposal and the four comprehensive to provide the will lead to the fragmentation of global existing exemptive orders suffer from appropriate framework for the cleared derivatives markets. the same legal deficiencies alleged in its supervision and regulation of exempt AFR Ed Fund, Citadel, and Better comment. DCOs permitted to clear in accordance Markets opposed using the PFMIs to Citadel believes the Commission with this final rule and other relevant determine whether a clearing should directly compare its regulatory conditions contained within any organization is subject to comparable, regime with that of the clearing exemptive order granted by the comprehensive supervision and organization’s home country. Citadel Commission. Application of the PFMIs regulation by its home country pointed out that the PFMIs do not in the context of U.S. customer clearing, regulator. These commenters argued address a number of important elements which is not part of the final rule, can that section 5b(h) of the CEA requires of the Commission’s regulatory be considered if the Commission takes that the Commission compare the CEA framework for DCOs, including non- up the issue of customer clearing at with the clearing organization’s home discriminatory access, straight-through exempt DCOs. country regime and that the processing, gross margining, public The Commission is adopting Commission cannot use the fact that the disclosure of rule filings, and public § 39.6(a)(1) as proposed. foreign regulatory regime conforms to information. Lastly, Citadel stated that b. Memorandum of Understanding the PFMIs as a substitute for U.S. customer access should be determining whether the regulatory considered as a part of the overall The Commission proposed § 39.6(a)(2) regimes are comparable, as required by comparability assessment. to require that, in order for a clearing section 5b(h). The Commission notes that section organization to be eligible for an AFR Ed Fund argued that the 5b(h) provides that the Commission may exemption from registration, an MOU or Commission’s decision to deem exempt a clearing organization from similar arrangement satisfactory to the compliance with any foreign regulatory DCO registration ‘‘if the Commission Commission must be in effect between regime that conforms to the PFMIs as determines that the [ ] clearing fulfilling the statutory requirements for organization is subject to comparable, 25 As stated previously, this conclusion is exempting a clearing organization from comprehensive supervision and consistent with other previous Commission determinations. See, e.g., Regulation registration under U.S. law means that regulation . . . .’’ Accordingly, the 50.52(b)(4)(i)(E), 17 CFR 50.52(b)(4)(i)(E) a foreign clearing organization can be Commission may, and does, determine (permitting eligible affiliate counterparties that are exempted from registration without any that a foreign regulatory regime that located in certain jurisdictions to satisfy a condition to electing the exemption by clearing the swap determination that it is subject to conforms to the PFMIs constitutes through a DCO or a clearing organization that is supervision and regulation that is ‘‘in ‘‘comparable, comprehensive subject to supervision by appropriate government any way’’ comparable to the relevant supervision and regulation by . . . the authorities in the clearing organization’s home U.S. laws or regulations. AFR Ed Fund appropriate government authorities in country and that has been assessed to be in further argued that the Commission the home country of the organization,’’ compliance with the PFMIs). 26 See, e.g., Derivatives Clearing Organizations ‘‘cannot substitute its judgement as to and therefore that a clearing and International Standards, 78 FR 72476 (Dec. 2, whether a foreign regime conforms to organization subject to such a regime 2013) (adopting final rules).

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the Commission and the clearing To the extent that local laws limit a clearing member of the exempt DCO organization’s home country regulator, regulator’s ability to share information may clear swaps for any affiliated U.S. pursuant to which, among other things, with the Commission, the Commission person identified in the definition of the home country regulator agrees to works closely with the regulator to ‘‘proprietary account’’ set forth in § 1.3 provide to the Commission any resolve any issues. of this chapter; 29 and (iii) an FCM may information that the Commission deems The Commission is adopting be a clearing member of the exempt necessary to evaluate the clearing § 39.6(a)(2) as proposed. DCO, or otherwise maintain an account organization’s initial and continued with an affiliated broker that is a eligibility for exemption or to review 2. Regulation 39.6(b)—Conditions of Exemption clearing member, for the purpose of compliance with any conditions of such clearing only proprietary swaps exemption. The Commission proposed § 39.6(b) to positions for itself and those persons ISDA commented that the set forth the conditions to which an identified in the definition of Commission should identify the types of exempt DCO would be subject. These information that it expects to require are the same conditions the Commission ‘‘proprietary account’’ set forth in 30 under the MOU. ISDA argued that it is has imposed on exempt DCOs through § 1.3. important for the Commission to the orders of exemption that it has b. Open Access provide additional clarity regarding the issued to date. specific information it will require to The Commission proposed a. Clearing by or for U.S. Persons and evaluate the exempt DCO’s initial and § 39.6(b)(2) to codify the ‘‘open access’’ Futures Commission Merchants continued eligibility for exemption to requirements of section 2(h)(1)(B) of the ensure that providing such information The Commission proposed CEA, which applies to both registered would not violate any local laws. ISDA § 39.6(b)(1) to prohibit the clearing of and exempt DCOs, with respect to believes that doing so would allow the U.S. customer positions at an exempt swaps cleared by an exempt DCO to Commission to access necessary DCO. An FCM would be permitted to be which one or more of the counterparties information while, at the same time, a clearing member of an exempt DCO, is a U.S. person.31 Paragraph (b)(2)(i) taking into account any prohibitions on or maintain an account with an would require an exempt DCO to providing certain types of information affiliated broker that is a clearing maintain rules providing that all such under local laws. member, for the purpose of clearing swaps with the same terms and In response to ISDA’s comment, the swaps only for the FCM itself and those conditions (as defined by product Commission notes that § 39.6(e)(2) sets persons identified in the definition of specifications established under the forth the information that an applicant ‘‘proprietary account’’ in § 1.3 of the exempt DCO’s rules) submitted to the for exemption from DCO registration Commission’s regulations. must provide to the Commission. That The Commission requested comment exempt DCO for clearing are information would not be specified in in the 2018 Proposal as to whether the economically equivalent and may be an MOU because it must be provided by Commission should consider permitting offset with each other, to the extent that the applicant, not the applicant’s home an exempt DCO to clear swaps for U.S. offsetting is permitted by the exempt country regulator. However, an MOU customers. The Commission received DCO’s rules. Paragraph (b)(2)(ii) would between the Commission and the home four comments in response to that require an exempt DCO to maintain country regulator would allow the request. As noted above, the rules providing for non-discriminatory Commission to seek the home country Commission responded to these clearing of such a swap executed either regulator’s assistance in analyzing and comments by issuing the 2019 Proposal, bilaterally or on or subject to the rules interpreting the information as which proposed to permit U.S. of an unaffiliated electronic matching necessary to determine the applicant’s customers to clear at an exempt DCO, platform or trade execution facility, e.g., eligibility for an exemption. If the but only through foreign intermediaries, a swap execution facility. The applicant is granted an exemption, the not FCMs. However, at this time, the Commission did not receive any MOU would allow the Commission to Commission is adopting § 39.6(b)(1) comments on this provision. The gather additional information from the largely as proposed in the 2018 Commission is adopting § 39.6(b)(2) as home country regulator as necessary to Proposal, to permit an exempt DCO to proposed. determine the exempt DCO’s continued clear only proprietary positions of U.S. eligibility. For example, if an exempt persons and FCMs, and not customer association’’ that carries the proprietary account on DCO provides notice to the Commission positions. Specifically, § 39.6(b)(1) its books and records, and not simply to such types of a change in its home country provides that an exempt DCO must have of persons identified in the definition generally. regulatory regime pursuant to rules that limit swaps clearing services 29 This provision is intended to permit what § 39.6(c)(2)(iii), the Commission may for U.S. persons and FCMs as follows: would be considered clearing of ‘‘proprietary’’ positions under the Commission’s regulations, even wish to discuss the change with the (i) A U.S. person that is a clearing if the positions would qualify as ‘‘customer’’ home country regulator to understand member of the exempt DCO may clear positions under the laws and regulations of an what impact, if any, the change may swaps for itself and those persons exempt DCO’s home country. This provision have on the exempt DCO’s ability to identified in the definition of clarifies that an exempt DCO may clear positions for FCMs if the positions are not ‘‘customer’’ positions comply with the conditions of its ‘‘proprietary account’’ set forth in under the Commission’s regulations. 28 exemption. § 1.3; (ii) a non-U.S. person that is a 30 The reference to ‘‘those persons identified in The Commission notes that it already the definition of ‘proprietary account’ set forth in has several MOUs with other regulators International/MemorandaofUnderstanding/ § 1.3,’’ is intended to refer to those persons in place, and those specific to the mouInfo_Sharing_for_Supervisor.html. associated with the FCM in the manner provided 28 The reference to ‘‘those persons identified in in the definition of ‘‘proprietary account’’ as if the oversight of clearing organizations are FCM is the individual, a partnership, corporation or 27 the definition of ‘proprietary account’ set forth in generally similar in content and scope. § 1.3,’’ refers to those persons associated with the other type of association that carries the proprietary U.S. person that is a clearing member in the manner account on its books and records, and not simply 27 CFTC Memoranda of Understanding: provided in the definition of ‘‘proprietary account’’ to such types of persons identified in the definition Cooperation for Supervisory, Prudential, and Risk as if the U.S. person is the ‘‘individual, a generally. Assessment Purposes, https://www.cftc.gov/ partnership, corporation or other type of 31 7 U.S.C. 2(h)(1)(B).

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c. Consent to Jurisdiction; Designation ISDA believes that the proposed observance has been or is being resolved of Service of Process condition is too broad and that the by the exempt DCO. The Commission The Commission proposed Commission should specify how and proposed this modification in § 39.6(b)(3) to require that an exempt when it would undertake inspections of recognition of the fact that at some point DCO consent to jurisdiction in the exempt DCOs. ISDA also believes, to an exempt DCO may not be able to foster cross-border regulatory certify that it observes the PFMIs in all United States and designate an agent in cooperation, the Commission should material respects. The exempt DCO the United States, for notice or service consider obtaining consent for must disclose that information to the of process, pleadings, or other inspections from an exempt DCO’s Commission and allow the Commission documents issued by or on behalf of the home country regulator prior to to consider its impact on the exempt Commission or the U.S. Department of conducting onsite inspections. ISDA DCO’s standing. Justice in connection with any actions suggested, at a minimum, the The Commission did not receive or proceedings against, or any Commission should provide prior notice comments on this provision. The investigations relating to, the exempt to an exempt DCO’s home country Commission is adopting § 39.6(b)(6) as DCO or any U.S. person or FCM that is regulator in connection with any proposed. a clearing member or that clears swaps inspection or ask the home country through an affiliated clearing member. g. Representation of Good Regulatory regulator for the required information. Standing The name of the designated agent would ISDA argued that, not only would this be submitted as part of the clearing promote comity and coordination, but it The Commission proposed organization’s application for would also ensure that such inspections § 39.6(b)(7) to require that the exemption. If an exempt DCO appoints are not overly burdensome or in Commission receive an annual written another agent to accept such notice or violation of local laws. ISDA further representation from a home country service of process, the exempt DCO suggested that the Commission should regulator that an exempt DCO is in good would be required to promptly inform consider including an exempt DCO’s regulatory standing, within 60 days the Commission of this change. This is home country regulator during following the end of the exempt DCO’s consistent with requirements currently inspections, which would assist the fiscal year. The Commission received imposed in the registration orders of Commission in interpreting and comments on the definition of ‘‘good DCOs that are organized outside of the analyzing the exempt DCO’s books and regulatory standing,’’ as discussed United States as well as in each of the records in the context of the regulatory above, but did not receive comments on orders of exemption that the requirements of a particular jurisdiction. this provision. The Commission is Commission has issued thus far. The The Commission is adopting adopting § 39.6(b)(7) as proposed. Commission did not receive any § 39.6(b)(5) as proposed. The h. Other Conditions comments on this provision. The Commission notes that it does not Commission is adopting § 39.6(b)(3) as anticipate conducting routine site visits Lastly, the Commission proposed proposed. to exempt DCOs. However, the § 39.6(b)(9) in the 2019 Proposal to provide that the Commission may d. Compliance Commission may request a DCO’s books and records to ensure that, among other condition an exemption from DCO The Commission proposed things, the exempt DCO continues to registration on any other facts and 32 § 39.6(b)(4) as a general provision that meet the eligibility requirements for an circumstances it deems relevant. The would require an exempt DCO to exemption as well as the conditions of Commission stated that, in doing so, it comply, and demonstrate compliance as its exemption. The Commission further would be mindful of principles of requested by the Commission, with any notes that it already follows many of international comity. For example, the condition of the exempt DCO’s order of ISDA’s recommendations in the context Commission could take into account the exemption. The Commission did not of examining non-U.S. DCOs, and it extent to which the relevant foreign receive any comments on this provision. would expect to do the same in the regulatory authorities defer to the The Commission is adopting § 39.6(b)(4) context of an exempt DCO; such Commission with respect to oversight of as proposed. interactions with the home country registered DCOs organized in the United States. e. Inspection of Books and Records regulator would be addressed in the MOU. CME strongly supported the The Commission proposed Commission’s retaining discretion to § 39.6(b)(5) to require an exempt DCO to f. Observance of the PFMIs condition an exemption from DCO make all documents, books, records, In the 2018 Proposal, the Commission registration on principles of reports, and other information related to proposed § 39.6(b)(6) to require that an international comity and the extent to its operation as an exempt DCO (books exempt DCO provide an annual which the relevant home country and records) open to inspection and certification that it continues to observe regulator defers to the Commission with copying by any Commission the PFMIs in all material respects, respect to oversight of registered DCOs representative, and to promptly make its within 60 days following the end of its organized in the United States that are books and records available and provide fiscal year. In the 2019 Proposal, the accessed by local participants. CME them to Commission representatives Commission proposed to modify (and believes the Commission’s efforts to upon request. This condition is renumber) this condition to specify the support mutual deference among consistent with section 5b(h) of the information that an exempt DCO must regulators across the globe will foster CEA, which provides that the provide to the Commission if it is efficient markets and cooperative Commission may exempt a DCO from unable to provide an unconditional behavior to the benefit of all. As a result, registration with conditions that may certification that it continues to observe CME suggested that the Commission include requiring that the DCO be the PFMIs in all material respects. codify its ability to condition an available for inspection by the Specifically, the exempt DCO would be Commission and make available all required to identify the underlying 32 See 7 U.S.C. 7a–1(h) (stating, in relevant part, that the Commission may exempt, conditionally or information requested by the material non-observance of the PFMIs unconditionally, a DCO from registration under that Commission. and explain whether and how such non- section for the clearing of swaps).

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exemption from DCO registration on Specifically, the Commission members or affiliates of any clearing matters of international comity and proposed § 39.6(c)(2)(i) to require that member, with respect to the clearing of reciprocity within the regulatory text. an exempt DCO compile a report as of swaps, as of the last day of the fiscal The Commission is declining to the end of each trading day, and submit quarter. This information would enable specifically condition an exemption it to the Commission by 10:00 a.m. U.S. the Commission, in conducting risk from DCO registration on matters of Central time on the following business surveillance of U.S. persons and swaps international comity and reciprocity, day, containing with respect to swaps: markets more broadly, to better but only because it believes § 39.6(b)(9) (A) Initial margin requirements and understand and evaluate the nature and as proposed is sufficient for those initial margin on deposit for each U.S. extent of the cleared swaps activity of purposes. As noted in the 2019 person; and (B) daily variation margin, U.S. persons. Proposal, the Commission could use its separately listing the mark-to-market The Commission proposed paragraphs discretion under § 39.6(b)(9) to advance amount collected from or paid to each (c)(2)(iii) through (viii) of § 39.6 to the goal of regulatory harmonization, U.S. person. However, if a clearing require an exempt DCO to provide consistent with the express directive of member margins on a portfolio basis its information to the Commission upon Congress that the Commission own positions and the positions of its the occurrence of certain specified coordinate and cooperate with foreign affiliates, and either the clearing events. The Commission proposed regulatory authorities on matters related member or any of its affiliates is a U.S. § 39.6(c)(2)(iii) to require an exempt to the regulation of swaps.33 The person, the exempt DCO would be DCO to provide prompt notice to the recognition that market participants and required to report initial margin Commission regarding any change in its market facilities in a global swaps requirements and initial margin on home country regulatory regime that is market are subject to multiple regulators deposit for all such positions on a material to the exempt DCO’s and potentially duplicative regulations, combined basis for each such clearing continuing observance of the PFMIs or and can therefore benefit from member on a combined basis and with any requirements set forth in regulatory harmonization and mutual separately list the mark-to-market § 39.6, or the order of exemption issued deference among regulators, underpins amount collected from or paid to each by the Commission. the exempt DCO framework. The such clearing member, on a combined The Commission proposed framework is intended to encourage basis. These requirements are similar to § 39.6(c)(2)(iv) to require an exempt collaboration and coordination among certain reporting requirements DCO to provide to the Commission, to U.S. and foreign regulators in applicable to registered DCOs in the extent that it is available to the establishing comprehensive regulatory § 39.19(c)(1). These reports will provide exempt DCO, any assessment of the standards for swaps clearing. In the Commission with information exempt DCO’s or the home country addition, the framework seeks to regarding the cash flows associated with regulator’s observance of the PFMIs by promote fair competition and a level U.S. persons clearing swaps through a home country regulator or other playing field for all DCOs. As a result, exempt DCOs in order to analyze the national authority, or an international the Commission will consider the risks presented by such U.S. persons financial institution or international degree of deference that a home country and to assess the extent to which U.S. organization.35 regulator extends to the Commission’s business is being cleared by each The Commission proposed oversight of U.S. DCOs in determining exempt DCO. § 39.6(c)(2)(v) to require an exempt DCO The Commission proposed whether to extend the benefits of to provide to the Commission, to the § 39.6(c)(2)(ii)(A) and (B) to require an exemption from registration to DCOs in extent that it is available to the exempt exempt DCO to compile a report as of that jurisdiction, both at the point of DCO, any examination report, the last day of each fiscal quarter, and initially exempting a non-U.S. DCO, and examination findings, or notification of submit it to the Commission no later in determining whether compliance the commencement of any enforcement than 17 business days after the end of under that framework should continue. or disciplinary action by a home the fiscal quarter, containing the The Commission is adopting § 39.6(b)(9) country regulator. aggregate clearing volume of U.S. as proposed (renumbered as The Commission proposed persons during the fiscal quarter, and § 39.6(b)(8)). § 39.6(c)(2)(vi) to require an exempt the average open interest of U.S. persons DCO to provide immediate notice to the 3. Regulation 39.6(c)—General during the fiscal quarter, respectively. If Commission of any change with respect Reporting Requirements a clearing member is a U.S. person, this to its licensure, registration, or other data would include the transactions and The Commission proposed § 39.6(c) to authorization to act as a clearing positions of the clearing member and all require an exempt DCO to report certain organization in its home country. affiliates for which the clearing member information that would assist the The Commission proposed clears; if a clearing member is not a U.S. Commission in evaluating the continued § 39.6(c)(2)(vii) to require an exempt person, the data would only have to eligibility of the exempt DCO for DCO to provide immediate notice to the include the transactions and positions exemption, reviewing the exempt DCO’s Commission in the event of a default (as of affiliates that are U.S. persons. The compliance with any conditions of its defined by the exempt DCO in its rules) Commission proposed § 39.6(c)(2)(ii)(C) exemption, or monitoring the risk of by a U.S. person or FCM clearing swaps, to require that an exempt DCO’s U.S. persons and their affiliates clearing including the name of the U.S. person swaps at the exempt DCO. quarterly report to the Commission contain a list of U.S. persons and reporting would otherwise be required because 34 33 In order to promote effective and consistent FCMs that are either clearing such FCMs are affiliates of U.S. persons). However, global regulation of swaps, section 752 of the Dodd- the Commission has a supervisory interest in Frank Act directs the Commission to consult and 34 Such FCMs may or may not be U.S. persons. receiving information regarding which of its coordinate with foreign regulatory authorities on The Commission will not require that exempt DCOs registered FCMs are clearing members or affiliates the establishment of consistent international provide daily information regarding initial margin of clearing members, with respect to the clearing of standards with respect to the regulation of swaps, requirements, initial margin on deposit, and daily swaps at an exempt DCO. among other things. Section 752 of the Dodd-Frank variation margin, or quarterly aggregate clearing 35 Such an international organization may include Act, Public Law 111–203, 124 Stat. 1376 (2010), volume or average open interest, with respect to the International Monetary Fund or World Bank. codified at 15 U.S.C. 8325. swaps, for FCMs that are not U.S. persons (unless See PFMIs, ¶ 1.33.

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or FCM, a list of the positions held by reporting for such transactions, the explained in the 2018 Proposal, the the U.S. person or FCM, and the amount Commission also proposed to require an exempt DCO’s rules prohibiting of the U.S. person’s or FCM’s financial exempt DCO to have rules that prohibit reporting by the counterparties to the obligation. the reporting of the two new swaps by original swap are intended to avoid Finally, the Commission proposed the counterparties to the original swap. duplicative reporting.37 § 39.6(c)(2)(viii) to require an exempt Citadel commented that the In response to CCP12’s concern DCO to provide notice to the Commission should ensure that related to onboarding with an SDR that Commission of any action the exempt reporting requirements pursuant to parts uses a different reporting format than DCO has taken against a U.S. person or 43 and 45 of the Commission’s the exempt DCO’s home country, the FCM, no later than two business days regulations continue to be fulfilled in an Commission notes that it recently after taking such action. accurate manner for in-scope adopted revisions to part 45 of the The Commission requested comment transactions, including the ‘‘cleared or Commission’s regulations that include in the 2018 Proposal, with regard to uncleared’’ field in part 43 and the standardized data fields that proposed § 39.6(c)(2)(iii), on whether, ‘‘clearing indicator’’ and ‘‘clearing accommodate reporting for swaps instead of requiring an exempt DCO to venue’’ fields in part 45. JSCC supported cleared under either the ‘‘agency’’ provide prompt notice to the clearly defining an exempt DCO’s swap clearing model or the ‘‘principal’’ Commission regarding any change in its data reporting obligations within part clearing model.38 In regards to SDR fees, home country regulatory regime that is 39. However, JSCC was concerned that the Commission notes that SDRs are material to the exempt DCO’s the counterparties to the original swap required to provide their services on a continuing observance of the PFMIs, would still be required to report the fair, open, and equal basis and an SDR’s any requirements set forth in § 39.6, or cleared transaction arising from the fees must be equitable and applied in a the order of exemption issued by the novation of the original swap at an uniform and non-discriminatory Commission (thereby requiring the exempt DCO to an SDR under part 45, manner.39 As such, the burdens exempt DCO to determine whether a which JSCC viewed as in conflict with associated with SDR fees for exempt change is material), the Commission proposed § 39.6(d). JSCC commented DCOs will be no different than the should require an exempt DCO to that proposed § 39.6(d) could create burdens for other DCOs that clear swaps provide prompt notice of any change in confusion about reporting expectations that must be reported to SDRs. The its home country regulatory regime. for exempt DCOs and their respective Commission is adopting § 39.6(d) as ASX and JSCC supported requiring an clearing members.36 JSCC was hopeful proposed. exempt DCO to determine whether a that part 45 would be amended to 5. Regulation 39.6(e)—Application change to its home country regulatory address this issue. regime constitutes a material change. CCP12 acknowledged that Procedures ASX and JSCC believe an exempt DCO transparency in the swaps markets, The Commission proposed § 39.6(e) to is best situated to easily identify which it believes is supported by SDR codify the procedures a non-U.S. changes to its home country regulatory reporting, provides a number of clearing organization must follow when regime as well as determine whether benefits. However, CCP12 argued that applying for an exemption from DCO such changes are material. JSCC also the current SDR reporting requirements registration. commented that having the exempt DCO applied to exempt DCOs pose Specifically, the Commission make this materiality determination significant operational challenges, such proposed § 39.6(e)(1) to require a would avoid redundant reporting and as on-boarding with a U.S. SDR that has clearing organization to file an review for an exempt DCO and the a different reporting format than that of application for exemption with the Commission of any change to the home the exempt DCO’s home country. CCP12 Secretary of the Commission in the country regulatory regime. also commented that SDR reporting fees format and manner specified by the The Commission agrees with the are a burden based on the number of Commission. After reviewing the commenters that an exempt DCO should reported transactions. The Commission application, the Commission may: (1) be required to determine whether a believes that transparency in the swaps Grant an exemption without conditions; change to its home country regulatory market as provided by the swap data (2) grant an exemption with conditions; regime would constitute a material reporting requirements, which are or (3) deny the application. change, especially as the Commission applicable to all registered DCOs, Proposed § 39.6(e)(2) requires an would otherwise need to review including non-U.S. DCOs and existing applicant to submit a complete changes to home country regulatory exempt DCOs, strongly warrants application, including all applicable regimes in multiple jurisdictions. requiring exempt DCOs to report such information and documentation as The Commission is adopting § 39.6(c) information pursuant to § 39.6(d). outlined therein, and provide that the as proposed. In response to JSCC’s concern that Commission will not commence § 39.6(d) could cause confusion given processing an application unless the 4. Regulation 39.6(d)—Swap Data the time-limited no-action relief Reporting Requirements provided in CFTC Letter 18–03, the 37 See Exemption From Derivatives Clearing The Commission proposed § 39.6(d) Commission notes that § 39.6(d) Organization Registration, 83 FR at 39928, n.32. 38 See Swap Data Recordkeeping and Reporting to require an exempt DCO, if it accepts specifically requires an exempt DCO to Requirements, 85 FR 75503, 75567 (Nov. 25, 2020) for clearing a swap that has been have rules that prohibit the (appendix 1 to part 45 contains the ‘‘clearing reported to an SDR pursuant to part 45 counterparties to the original swap from member’’ field, which contains instructions for of the Commission’s regulations, to reporting to an SDR pursuant to part 45 reporting the field under the agency clearing model or the principal clearing model). See also Technical report to an SDR data for the two swaps the two new swaps which result from Specification Document: Parts 43 and 45 swap that result from the novation of the novation of the original swap. As reporting and public dissemination requirements at original swap. The exempt DCO would 1–2, available at https://www.cftc.gov/media/3496/ _ _ also be required to report the 36 JSCC cited CFTC Letter 18–03: Extension of No- DMO Part43 45TechnicalSpecification022020/ download (containing the technical specifications termination of the original swap to the Action Relief from Certain Reporting Obligations for Counterparties Clearing Swaps through Derivatives for the ‘‘clearing member’’ field). same SDR that received the original Clearing Organizations Acting Under Exemptive 39 See 17 CFR 49.27 (containing the SDR access swap report. To avoid duplicative Orders or No-Action Relief (Feb. 20, 2018). and fees requirements).

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application is complete. The application documents demonstrating that the modify or terminate an exemption from must include: (i) A cover letter applicant is organized in a jurisdiction DCO registration if any of the terms and providing general information in which its home country regulator conditions of the order of exemption are identifying the applicant, its regulatory applies to the applicant statutes, rules, not met, including: (i) The exempt DCO licenses or registrations, and relevant regulations, and/or policies that are observing the PFMIs in all material contact information; (ii) a description of consistent with the PFMIs as proposed respects; and (ii) the exempt DCO being the applicant’s business plan, including in § 39.6(e)(2)(iii); disclosures necessary subject to comparable, comprehensive swap asset classes that it would clear to observe the PFMIs as proposed in supervision and regulation by its home and whether the swaps are subject to a § 39.6(e)(2)(v); 41 draft rules that meet country regulator.42 clearing requirement issued by the the requirements of proposed The Commission proposed Commission or the applicant’s home § 39.6(b)(1) (U.S. persons clearing § 39.6(f)(2), (f)(3), and (f)(4) to set forth country regulator; (iii) documents that requirements), § 39.6(b)(2) (open access the process for modification or demonstrate that the applicant is held to requirements); and § 39.6(d) (swap data termination of an exemption upon the requirements consistent with the PFMIs; reporting requirements), as applicable; Commission’s initiative. Under (iv) a written representation from the and any other part of the application not proposed § 39.6(f)(2), the Commission applicant’s home country regulator that covered by a request for confidential must first provide written notification to the applicant is in good regulatory treatment, subject to § 145.9. This an exempt DCO that the Commission is standing; (v) copies of the applicant’s provision is similar to § 39.3(a)(6), considering whether to modify or most recent disclosures necessary to which identifies those portions of an terminate the DCO’s exemption and the observe the PFMIs, including the application for registration as a DCO basis for that consideration. financial market infrastructure that are made public. Under proposed § 39.6(f)(3), an disclosure template set forth in Annex The Commission did not receive exempt DCO may respond to the A to the Disclosure Framework and comments on this aspect of the notification in writing no later than 30 Assessment Methodology for the proposal. The Commission is adopting business days following receipt of the PFMIs; 40 (vi) a representation that the § 39.6(e) as proposed. Commission’s notification, or at such applicant will comply with each of the later time as the Commission may requirements and conditions of its 6. Regulation 39.6(f), (g), and permit in writing. The Commission exemption; (vii) a draft of the (h)—Modification or Termination of believes that a minimum 30-business applicant’s rules showing compliance Exemption; Notice to Clearing Members day timeframe would allow the with various requirements for an of Termination of Exemption Commission to take timely action to exemption; and (viii) the applicant’s The Commission initially proposed to protect its regulatory interests while consent to jurisdiction in the United provide in § 39.6(f) that the Commission providing the exempt DCO with States, with contact information for the may modify the terms and conditions of sufficient time to develop its response. applicant’s designated U.S. agent. an order of exemption, either at the The Commission proposed § 39.6(f)(4) Proposed § 39.6(e)(3) provides that, at request of the exempt DCO or on the to provide that, following receipt of a any time during the Commission’s Commission’s own initiative, based on response from the exempt DCO, or after review of an application for exemption, changes to or omissions in material facts expiration of the time permitted for a the Commission may request that the or circumstances pursuant to which the response, the Commission may either: applicant submit supplemental order of exemption was issued, or for (i) Issue an order terminating the information in order for the Commission any reason in the Commission’s exemption as of a date specified in the to process the application, and require discretion. This is a further expression order; (ii) issue an amended order of an applicant to file such supplemental of the Commission’s discretionary exemption that modifies the terms and information in the format and manner authority under section 5b(h) of the CEA conditions of the exemption; or (iii) specified by the Commission. to exempt a clearing organization from provide written notification to the Regulation 39.3(a)(4), which applies to registration ‘‘conditionally or exempt DCO that the Commission has applications for DCO registration, unconditionally,’’ and it reflects the determined to neither modify nor contains a similar provision. Commission’s authority to act with terminate the exemption. Proposed § 39.6(e)(4) requires an flexibility in responding to changed ASX, JSCC, and ISDA believe that an applicant to promptly amend its circumstances affecting an exempt DCO. automatic termination of exemptions application if it discovers a material In the 2019 Proposal, the Commission could result in market disruption and omission or error, or if there is a proposed to also provide for the legal uncertainty, particularly for U.S. material change in the information termination of an exemption upon the persons clearing through the exempt provided to the Commission in the Commission’s initiative, and to set forth DCO. However, the commenters application or other information the process by which the Commission recognized that the Commission must provided in connection with the would issue a modification or ensure that exempt DCOs continue to application. This provision is similar to termination. operate safe and efficient clearing § 39.3(a)(5), which addresses Under proposed § 39.6(f)(1), the operations under a regime that is amendments to applications for DCO Commission may modify or terminate consistent with the PFMIs. Therefore, registration. an exemption from DCO registration, in the commenters suggested that the Proposed § 39.6(e)(5) identifies those its discretion and upon its own Commission should first commit to sections of an application for exemption initiative, if the Commission determines working with the exempt DCO and its from registration that would be made that there are changes to or omissions in home country regulator(s) to resolve any public, including the cover letter material facts or circumstances pursuant issues with compliance with the terms required in proposed § 39.6(e)(2)(i); to which the order of exemption was and conditions of the order of issued. The Commission may also exemption. If these efforts are not 40 See CPSS–IOSCO, Principles for financial market infrastructures: Disclosure framework and Assessment methodology (Dec. 2012), at 82 et seq., 41 The Disclosure Framework contemplates that 42 In the 2019 Proposal, proposed § 39.6(f)(1) available at http://www.iosco.org/library/pubdocs/ CCPs will make public disclosures pursuant to the included a subparagraph (iii) that is not being pdf/IOSCOPD396.pdf. Disclosure Framework. See id. at 1. adopted at this time.

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successful, the commenters suggested DCO’s notice of such termination to all IV. Related Matters that the Commission allow for an U.S. persons clearing swaps through A. Regulatory Flexibility Act appropriate transitional period so that such clearing members. The affected clearing members and Commission did not receive any The Regulatory Flexibility Act (RFA) customers may migrate to other clearing comments on this provision. The requires that agencies consider whether organizations in an orderly manner. Commission is adopting § 39.6(h) as the regulations they propose will have The Commission agrees with the proposed. a significant economic impact on a commenters that sufficient time for substantial number of small entities transition will be needed in the event D. Regulation 39.9—Scope and, if so, provide a regulatory that it terminates an exemption from flexibility analysis on the impact.44 The registration. That is why the The Commission proposed to revise regulations being adopted by the Commission proposed in § 39.6(f)(4)(i) § 39.9 to make it clear that the Commission will affect clearing that it would issue an order of provisions of subpart B apply to any organizations. The Commission has termination with an effective date DCO, as defined under section 1a(15) of previously established certain intended to provide the exempt DCO the CEA and § 1.3, that is registered definitions of ‘‘small entities’’ to be used with a reasonable amount of time to with the Commission as a DCO pursuant by the Commission in evaluating the wind down its swap clearing services to section 5b of the CEA, but do not impact of its regulations on small for U.S. persons, including the apply to any exempt DCO. This revision entities in accordance with the RFA. liquidation or transfer of the positions was intended to clarify that the subpart The Commission has previous and related collateral of U.S. persons, as B regulations that address compliance determined that clearing organizations necessary. The Commission is adopting with the DCO Core Principles applicable are not small entities for the purpose of § 39.6(f) as proposed. to registered DCOs do not impose any the RFA.45 Accordingly, the Chairman, Furthermore, the Commission obligations upon exempt DCOs. The on behalf of the Commission, hereby proposed § 39.6(g) to set forth the Commission did not receive any certifies pursuant to 5 U.S.C. 605(b) that framework under which an exempt DCO comments on this proposal. The the regulations adopted herein will not may petition the Commission to Commission is adopting § 39.9 largely as have a significant economic impact on terminate its exemption and the proposed.43 a substantial number of small entities. applicable procedures. Specifically, B. Paperwork Reduction Act pursuant to proposed § 39.6(g)(1), an III. Amendments to Part 140 exempt DCO may request that the The Paperwork Reduction Act of 1995 Commission terminate its exemption if The Commission initially proposed (PRA) 46 imposes certain requirements the exempt DCO: (i) No longer qualifies amendments to § 140.94(c) to delegate on Federal agencies (including the for an exemption as a result of changed authority to the Director of the Division Commission) in connection with their circumstances; (ii) intends to cease of Clearing and Risk (DCR) for all conducting or sponsoring a collection of clearing swaps for U.S. persons; or (iii) functions reserved to the Commission in information as defined by the PRA. The submits an application for registration proposed § 39.6, subject to certain regulations adopted herein would result in accordance with § 39.3(a)(2) or exceptions. Specifically, the in such a collection, as discussed below. § 39.3(a)(3), as applicable. The Commission did not propose to delegate A person is not required to respond to Commission further proposed in its authority to grant, modify, or a collection of information unless it § 39.6(g)(2) that the petition for terminate an exemption or prescribe displays a currently valid control termination must include a detailed conditions to an exemption order. number issued by the Office of explanation for the request and describe Consistent with that proposal, the Management and Budget (OMB). The the exempt DCO’s plans for liquidation Commission further proposed to Commission requested a new OMB or transfer of the positions and related supplement its delegation to DCR to control number for the collection of collateral of U.S. persons, if applicable. include certain functions related to the information in connection with the Under proposed § 39.6(g)(3), the modification or termination of an proposal. Commission would issue an order of exemption order upon the The Commission received one termination within a reasonable time Commission’s initiative. These comment regarding its cost burden analysis in the preamble to the Proposal. appropriate to the circumstances or in functions would include, but would not conjunction with the issuance of an JSCC stated in its October 2018 be limited to, sending an exempt DCO order of registration, if applicable. comment letter that the Commission’s notice of an intention to modify or The Commission did not receive any cost estimate of $10,500 47 for an comments on § 39.6(g). The Commission terminate its exemption order. However, application for exemption from DCO is adopting this provision as proposed. the Commission alone would retain the registration substantially Lastly, the Commission proposed authority to modify or terminate the underestimated an applicant’s costs, § 39.6(h) to provide that, following the exemption order. The Commission did which JSCC stated would require a Commission’s issuance of an order of not receive any comments on this significant amount of resources to termination (unless issued in proposal. The Commission is adopting understand any legal and/or regulatory conjunction with the issuance of an the changes to § 140.94(c) as proposed. implications arising from the DCO order of registration), the exempt DCO exemption, as well as to identify any must provide immediate notice of such 43 Subsequent to the 2018 Proposal, the potential conflicts with the applicant’s termination to its clearing members. The Commission amended § 39.9 in the Alternative Compliance rulemaking to take into account a DCO 44 notice must include: (1) A Copy of the registered subject to alternative compliance. See 5 U.S.C. 601 et seq. Commission’s order of termination; (2) a Registration with Alternative Compliance for Non- 45 See 66 FR 45604, 45609 (Aug. 29, 2001). description of the procedures for orderly U.S. Derivatives Clearing Organizations, 85 FR at 46 44 U.S.C. 3501 et seq. disposition of any open swaps positions 67171. The Commission is adding to those 47 Due to minor adjustments to the burden amendments the changes it had originally proposed estimate for an exempt DCO application due to that were cleared for U.S. persons; and in the 2018 Proposal. See Exemption From consolidating the burden estimates for components (3) an instruction to clearing members, Derivatives Clearing Organization Registration, 83 of the application, the current estimated cost is requiring that they provide the exempt FR at 39929. $10,000 per application.

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home country regulatory and respondent: 0.33 swap had been reported to an SDR supervisory frameworks. However, JSCC Average number of hours per report: pursuant to part 45 of the Commission’s did not provide any estimate of what the 2 regulations. The Commission is revising expected cost of an application would Estimated gross annual reporting the information collection for part 45 to be. As stated in the Proposal, the burden: 0.66 include a separate information Commission based its cost estimate of • Notice to clearing members of collection under OMB Control No. $10,500 for the exempt DCO application termination of exemption 3038–0096. The burden for exempt on the significantly reduced Estimated number of respondents: 1 DCOs reporting in accordance with part requirements as compared to a DCO Estimated number of reports per 45 is estimated to be approximately one- registration application, which the respondent: 8 fifth of the burden for registered DCOs Commission estimated would cost Average number of hours per report: because exempt DCOs will not be $100,000. The Commission has not 0.1 required to report all swaps, only those received any information indicating Estimated gross annual reporting that result from the novation of original what the amount of additional costs burden: 0.8 swaps that have been reported to an over $10,500 would be, nor has it SDR. Consequently, the burden hours revised any of the elements of the 2. Reporting by Exempt DCOs for the collection of information in this proposal that would affect the cost The number of respondents for the rulemaking have been estimated as estimate. Therefore, the Commission is daily and quarterly reporting and follows: retaining the burden estimates it annual certification requirements is • Reporting in accordance with part 45 included in the proposal. conservatively estimated at a maximum Estimated number of respondents: 7. 1. Application for Exemption From DCO of seven, based on the number of Estimated number of reports per Registration Under § 39.6 existing exempt DCOs (4) and one respondent: 8,074 50 application for exemption each year. Based on its experience in addressing Average number of hours per report: Reporting of specific events is expected petitions for exemption, the 0.1 to occur infrequently, and the estimated Commission anticipates receiving one Estimated gross annual reporting number of respondents reflects that not application for exemption per year, and burden: 5649 all exempt DCOs will experience events one request for termination of an subject to the notification requirement: C. Cost-Benefit Considerations exemption every three years.48 Burden • hours and costs were estimated based Daily reporting 1. Introduction on existing information collections for Estimated number of respondents: 7 Section 15(a) of the CEA requires the DCO registration and reporting, adjusted Estimated number of reports per Commission to consider the costs and to reflect the significantly lower burden respondent: 250 benefits of its actions before of the proposed regulations. The Average number of hours per report: promulgating a regulation under the Commission has estimated the burden 0.1 CEA or issuing certain orders.51 Section hours for this collection of information Estimated gross annual reporting 15(a) further specifies that the costs and as follows: burden: 175 benefits shall be evaluated in light of • Application for exemption, including • Quarterly reporting five broad areas of market and public all exhibits, supplements and Estimated number of respondents: 7 concern: (1) Protection of market amendments 49 Estimated number of reports per participants and the public; (2) Estimated number of respondents: 1 respondent: 4 efficiency, competitiveness, and Estimated number of reports per Average number of hours per report: financial integrity of futures markets; (3) respondent: 1 1 price discovery; (4) sound risk Average number of hours per report: Estimated gross annual reporting management practices; and (5) other 40 burden: 28 Estimated gross annual reporting public interest considerations. The • burden: 40 Event-specific reporting Commission considers the costs and benefits resulting from its discretionary • Termination of exemption Estimated number of respondents: 4 Estimated number of reports per determinations with respect to the Estimated number of respondents: 1 section 15(a) factors. Estimated number of reports per respondent: 1 Average number of hours per report: The baseline for the Commission’s consideration of the costs and benefits 48 The Commission has determined that one 0.5 termination every three years is a more appropriate Estimated gross annual reporting of this rulemaking are: (1) The DCO estimate than one per year, which was used in the burden: 2 Core Principles; (3) the general information burden estimate for the 2018 Proposal. • Annual certification provisions applicable to registered 49 Although the 2018 Proposal included separate DCOs under subparts A and B of part burden estimates for the application and for Estimated number of respondents: 7 information requested by the Commission during its 39; (4) Form DCO in Appendix A to part Estimated number of reports per 39; and (5) part 40 of the Commission’s review, these estimates were combined in the 2019 respondent: 1 Proposal and in this final rule. The estimated regulations. Average number of hours per report: number of applications has been revised to one per This rulemaking codifies certain 1.5 year from two in the 2018 Proposal in response to conditions and procedures that the the Commission’s adoption of the Alternative Estimated gross annual reporting Compliance framework, which had not been burden: 10.5 proposed at the time of the 2018 Proposal, and 50 While updating the number of reports based on which provides an alternative that could lead to a 3. Reporting by Exempt DCOs in recent data, the Commission discovered that the reduced number of exemption applications. See estimated number in the NPRM—1987— Registration with Alternative Compliance for Non- Accordance With Part 45 inadvertently reflected a quarterly, rather than U.S. Derivatives Clearing Organizations, 85 FR Regulation 39.6(d) requires an exempt annual, number of reports. The estimate of 8074 67160 (Oct. 21, 2020). In addition, burden estimates reports per respondent represents the median for reporting by exempt DCOs have been updated DCO to report data regarding the two number of swaps reported to SDRs by existing based on recent observations of filing frequency by swaps resulting from the novation of an exempt DCOs during calendar year 2019. existing exempt DCOs. original swap to an SDR, if the original 51 7 U.S.C. 19(a).

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Commission has been using to grant under which a non-U.S. clearing reporting requirements are estimated to exemptions from DCO registration, with organization or an already registered impose the same hourly burden for both some modifications. To the extent that non-U.S. DCO would have the option of registered and exempt DCOs with the exemptions from DCO registration were applying for registration with alternative exception of swap data reporting under already available to non-U.S. clearing compliance, which would allow the part 45. Registered DCOs subject to organizations pursuant to these DCO to comply with the DCO Core Alternative Compliance will be subject conditions and procedures, the actual Principles through its home country to the same part 45 reporting costs and benefits of this rulemaking regulatory regime. The Commission has requirements as other registered DCOs, will likely be lower than the costs and compared these costs and benefits while exempt DCOs will only have to benefits relative to the baseline. below. report data regarding the two swaps The Commission notes that this resulting from the novation of an 2. Amendments to Part 39 consideration is based on its original swap previously reported to an understanding that the swaps market a. Summary SDR. In the PRA section for this release, functions internationally with (1) Section 5b(h) of the CEA permits the the Commission estimates that the part transactions that involve U.S. firms Commission to exempt a non-U.S. 45 reporting burden for an exempt DCO occurring across different international clearing organization from DCO would be about one fifth as much as the jurisdictions; (2) some entities organized registration for the clearing of swaps to burden on a registered DCO. Both outside of the United States that are the extent that the Commission exempt DCOs and registered DCOs prospective Commission registrants; and determines that such clearing subject to Alternative Compliance are (3) some entities that typically operate organization is subject to comparable, primarily subject to their home country both within and outside the United comprehensive supervision by regulatory regimes, but registered DCOs States and that follow substantially appropriate government authorities in subject to Alternative Compliance will similar business practices wherever the clearing organization’s home also be held to certain requirements set located. Where the Commission does country. Pursuant to this authority, the forth in the CEA and Commission not specifically refer to matters of Commission has exempted four non- regulations, including, for example, location, the discussion of costs and U.S. clearing organizations from DCO subpart A of part 39 and § 39.15. The benefits below refers to the effects of the registration. The final rule generally extent to which these additional final rule on all relevant swaps activity, codifies the policies and procedures that requirements will increase costs on whether based on their actual the Commission has followed with registered DCOs subject to Alternative occurrence in the United States or on respect to granting exemptions from Compliance relative to the costs to their connection with activities in, or DCO registration. Specifically, these exempt DCOs will depend on the extent effect on, U.S. commerce pursuant to regulations set forth the process by to which these requirements exceed the section 2(i) of the CEA.52 which a non-U.S. clearing organization legal requirements of their home The Commission recognizes that the may obtain an exemption from DCO countries and whether registered DCOs final rule may impose costs. The registration for the clearing of subject to Alternative Compliance have Commission has endeavored to assess proprietary swaps for U.S. persons to change their practices more than they the expected costs and benefits of the provided that it meets the specified would if they had sought an exemption final rule in quantitative terms, eligibility standards and can meet the instead. including PRA-related costs, where conditions of an exemption. Given the lower costs of an exemption possible. In situations where the as compared to registration, and the b. Benefits and Costs Commission is unable to quantify the greater clarity and regulatory certainty costs and benefits, the Commission With the Commission’s adoption of resulting from codification of the identifies and considers the costs and this final rule, non-U.S. clearing CFTC’s existing procedures, the final benefits of the applicable regulations in organizations seeking to clear swaps for regulation may promote competition qualitative terms. The lack of data and U.S. persons on a proprietary basis will among registered and exempt DCOs by information to estimate those costs is have a choice between seeking an encouraging more clearing organizations attributable in part to the nature of these exemption from DCO registration and to seek an exemption. Lower costs and final regulations. Additionally, the registering as a DCO, either under the competition may, in turn, result in initial and recurring compliance costs Commission’s original framework or the clearing members incurring lower costs for any particular exempt DCO will recently adopted Alternative to clear through exempt DCOs. In depend on the size, existing Compliance framework. The addition, access to more clearing infrastructure, level of clearing activity, Commission expects exemption from organizations may also encourage practices, and cost structure of the DCO. registration to be the least costly of the voluntary clearing of swaps that are not Finally, the costs and benefits of this three options. The Commission required to be cleared, as certain swaps final rule may be affected by the estimates that it would take about 421 may not be cleared by any registered Alternative Compliance framework 53 hours to prepare a traditional DCOs. This may, in turn, serve to application for DCO registration 54 and diversify the potential risk of cleared 52 Pursuant to section 2(i) of the CEA, activities 100 hours to prepare an application swaps, because any such risk would outside of the United States are not subject to the under the alternative procedures, as become less concentrated if a larger swap provisions of the CEA, including any rules compared to 40 hours to prepare an number of registered and exempt DCOs prescribed or regulations promulgated thereunder, application for an exemption.55 The were clearing swaps for U.S. persons, unless those activities either have a direct and significant connection with activities in, or effect daily, quarterly, and event-specific and the volume of those swaps could on, commerce of the United States; or contravene become more evenly distributed among any rule or regulation established to prevent 54 See Derivatives Clearing Organization General those registered and exempt DCOs. evasion of a CEA provision enacted under the Provisions and Core Principles, 85 FR 4800, 4829 While an exemption from DCO Dodd-Frank Act, Public Law 111–203, 124 Stat. (Jan. 27, 2020). registration would be less costly to 1376. 7 U.S.C. 2(i). 55 To the extent that current procedures for obtain than any form of DCO 53 Registration with Alternative Compliance for seeking an exemption from DCO registration are Non-U.S. Derivatives Clearing Organizations, 85 FR similar to the procedures adopted in this release, registration, registration provides 67160 (Oct. 21, 2020). these costs are currently being incurred. benefits that are not available to exempt

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DCOs or persons that clear through an practices. In this regard, the PFMIs Finally, since the PFMIs are already exempt DCO. For example, a registered include provisions that address DCOs used to determine eligibility for DCO is permitted to clear for U.S. establishing requirements and/or receiving an exemption from DCO customers. An eligible clearing procedures designed to ensure that registration, these costs are currently organization may choose to register, clearing members meet their obligations being realized by exempt DCOs and U.S. particularly under the Alternative to DCOs and safeguard customer funds. persons who currently clear proprietary Compliance framework, over seeking an For example, the PFMIs provide that swaps on exempt DCOs. exemption if it determines that the DCOs should establish risk-related New § 39.6(b) contain various benefits of customer clearing (including participation requirements adequate to conditions that the Commission is an enhanced ability to attract U.S. ensure that participants meet imposing for the granting of exemptions business) would justify the extra costs of operational, financial, and legal from DCO registration. These conditions registration relative to an exemption. requirements to allow them to fulfill are consistent with those that the Based on data submitted by registered their obligations to DCOs. Financial Commission has been imposing on DCOs to the Commission pursuant to requirements may include reasonable exempt DCOs prior to the adoption of § 39.19(c), customer clearing typically risk-related capital requirements for this rule. Therefore, the costs and accounts for a majority of the initial participants and appropriate indicators benefits of these conditions are margin at a DCO (about 70 percent on of participant creditworthiness.56 In currently being incurred by exempt average), and this is likely true for other addition, the PFMIs provide that a DCO DCOs and U.S. persons who currently clearing organizations as well. Thus, the should monitor compliance with its clear proprietary swaps on such DCOs. inability of exempt DCOs to clear for participation requirements on an New § 39.6(b)(2) codifies the ‘‘open U.S. customers may create a significant ongoing basis through the receipt of access’’ requirements of section disincentive to seeking exemption in timely and accurate information.57 The 2(h)(1)(B) of the CEA with respect to lieu of registration. PFMIs further provide that collateral swaps cleared by an exempt DCO to Registered DCOs may face a belonging to customers of clearing which one or more of the counterparties competitive disadvantage as a result of members should be segregated from the is a U.S. person.59 Under § 39.6(b)(2), an the final rule. A registered DCO may assets of the clearing member through exempt DCO is required to maintain have to compete with an exempt DCO which the customers clear.58 Moreover, rules providing that all such swaps with for U.S. proprietary swap business, yet using the PFMIs may promote the same terms and conditions may have higher ongoing compliance regulatory comity, since the PFMIs submitted to the exempt DCO for costs than an exempt DCO. This represent standards that have been clearing are economically equivalent competitive disadvantage is mitigated agreed to by the G20 and are widely and may be offset with each other, to the by the fact that exempt DCOs are, as a used in the regulation of clearing extent that offsetting is permitted by the precondition of such exemption, organizations. Although the PFMIs are exempt DCO’s rules. An exempt DCO is required to be subject to comparable, already used to determine eligibility for also required to maintain rules comprehensive supervision and receiving an exemption from DCO providing for non-discriminatory regulation by a home country regulator registration, the Commission believes clearing whether a swap is executed that is likely to impose costs similar to that codifying the use of the PFMIs is bilaterally or is executed on or subject those associated with Commission beneficial from the perspectives of to the rules of an unaffiliated electronic regulation. transparency and consistency. matching platform or trade execution The Commission is codifying in The Commission acknowledges, as facility, e.g., a swap execution facility. § 39.6(a)(1) the statutory authority in discussed in the preamble above, that This should benefit market participants section 5b(h) of the CEA that the the PFMIs are not identical to, nor as by ensuring that they are able to offset Commission may exempt a clearing detailed as, part 39. Thus, market their positions to the extent that it is organization from DCO registration for participants choosing to clear swaps feasible and consistent with DCO rules the clearing of swaps provided that the through exempt DCOs may incur costs and that they are not subject to Commission determines that the associated with forgoing certain discrimination based on whether or not clearing organization is subject to regulatory protections that are not they execute on a trading platform. The comparable, comprehensive supervision included in the PFMIs. However, these Commission believes that most or all and regulation by a home country costs are mitigated by some of the non-U.S. clearing organizations have regulator. To satisfy this standard, the conditions of exemption set out in open access rules that comply with clearing organization will need to § 39.6(b), as discussed below, as well as § 39.6(b)(2) and has received no demonstrate, among other things, that: other Commission regulations comments suggesting otherwise. (i) It is organized in a jurisdiction in applicable to exempt DCOs. These However, to the extent that a clearing which a home country regulator applies conditions (including, for example, the organization seeking an exemption from to the clearing organization, on an open access provision of § 39.6(b)(2)), DCO registration needs to change its ongoing basis, statutes, rules, provide additional regulatory rules to comply with this requirement, regulations, and/or policies that, taken protections beyond those required by that clearing organization could incur together, are consistent with the PFMIs; the PFMIs. Additionally, the costs of costs. and (ii) it observes the PFMIs in all using the PFMIs (as compared to some New § 39.6(b)(3) requires an exempt material respects. New § 39.6(b)(6) other means of determining that a DCO to consent to jurisdiction in the requires an annual certification that an clearing organization is subject to United States and designate an agent in exempt DCO continues to observe the comparable, comprehensive supervision the United States to receive notice or PFMIs in all material respects. and regulation by a home country service of various documents issued by The Commission believes that the regulator) will vary depending on the or on behalf of the Commission or the PFMIs provide numerous regulatory home country regulatory regime. U.S. Department of Justice in benefits and promote the protection of connection with investigations or for market participants and the public, the 56 PFMIs at Principle 18, Explanatory Note 3.18.5. certain other purposes. This will assist financial integrity of derivatives 57 Id. at Principle 18, Explanatory Note 3.18.8. markets, and sound risk management 58 Id. at Principle 14, Explanatory Note 3.14.1. 59 7 U.S.C. 2(h)(1)(B).

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the Commission and the Department of through the exempt DCO. An exempt data reporting requirements; and (v) Justice in protecting market participants DCO would also need to report the explicitly authorizes the Commission to and the public and will impose on termination of the original swap to the modify or terminate an order of exempt DCOs the minor costs associated SDR that received the swap data for the exemption on its own initiative if it with retaining a U.S. agent. original swap. To avoid duplicative determines that there are changes to or New §§ 39.6(b)(4) and 39.6(b)(8) are reporting, the exempt DCO is also omissions in material facts or general provisions that require an required to have rules that prohibit the circumstances pursuant to which the exempt DCO to comply, and part 45 reporting of the two new swaps order of exemption was issued, or that demonstrate compliance as requested by by the counterparties to the original any of the terms and conditions of the the Commission, with any condition of swap. CCP12 commented that order of exemption have not been met. the exempt DCO’s order of exemption transparency in the swaps markets, Collectively, these provisions protect and to provide that the Commission which is supported by SDR reporting, market participants and the public by may condition an exemption from DCO provides a number of benefits. However, ensuring that exempt DCOs are subject registration on any other facts and CCP12 argued that the SDR reporting to the internationally recognized PFMIs. circumstances it deems relevant. These requirements would post significant Although the Commission provisions do not provide any costs and operational challenges, such as acknowledges the possibility that some benefits in and of themselves. The costs onboarding with an SDR that has a foreign regulatory regimes may and benefits of any additional different reporting format than that of ultimately prove to be less effective than conditions that may be imposed the exempt DCO’s home country. CCP12 that of the United States, the pursuant to § 39.6(b)(8) can only be also commented that SDR reporting fees Commission believes that this risk is considered when such additional would be a burden based on the number mitigated for the reasons discussed conditions are imposed. of reported transactions. The above. New § 39.6(b)(5) requires an exempt Commission agrees that SDR reporting DCO to promptly make all books and b. Efficiency, Competitiveness, and enhances market transparency and thus Financial Integrity records related to its operation as an provides benefits to the market. The exempt DCO available to any Commission notes that SDR reporting The final rule promotes operational Commission representative upon costs would otherwise be borne by the efficiency by permitting exempt DCOs request. This provision will facilitate counterparties to the swap, and because to clear swaps for U.S. persons without having to apply for DCO registration, the Commission’s mission, including there are far more swap counterparties which involves the submission of the protection of market participants than exempt DCOs, it would be more extensive documentation to the and the public. While the Commission efficient to require the relatively few Commission. The final rule also does not anticipate making routine exempt DCOs to bear the operational requests for books and records, mitigates duplicative compliance burdens of setting up and following providing or making available books requirements by not requiring exempt reporting processes and procedures with and records pursuant to any such DCOs to comply with the Commission’s the various SDRs. The costs and benefits request will impose modest costs on part 39 regulations (with the exception of the reporting requirements are exempt DCOs. of § 39.6) in addition to the currently being realized to the extent New § 39.6(b)(7) requires an exempt requirements of their home country DCO’s home country regulator to that similar requirements are contained regulator. In addition, adopting these provide an annual certification that the in existing orders of exemption for regulations might prompt other exempt DCO is in good regulatory DCOs. regulators to adopt similar rules that standing. That rule, along with 3. Section 15(a) Factors would defer to the Commission in the § 39.6(a)(2) which requires an MOU or regulation of U.S. registered DCOs a. Protection of Market Participants and similar arrangement to be in effect operating outside the United States, the Public between the Commission and the home which could increase competitiveness country regulator, will assist the For the most part, the final rule does by reducing the regulatory burdens on Commission in protecting market not materially reduce the protections such DCOs. participants and the public, but will not available to market participants and the The exempt DCO framework may also impose any direct costs on exempt public because, among other things, it: promote competition for U.S. DCOs or market participants. Where no (i) Only permits exempt DCOs to clear proprietary business among non-U.S. MOU between the Commission and a swaps for U.S. persons for their clearing organizations because it holds home country regulator is in effect, a proprietary accounts, and not for exempt DCOs to the internationally clearing organization in that country customers; (ii) requires that an exempt recognized standards set forth in the wanting an exemption may incur costs DCO be subject to comparable, PFMIs. This will allow such clearing associated with facilitating such an comprehensive supervision and organizations to compete with each MOU, or it could incur the costs of regulation by a home country regulator other for the proprietary business of either registering with the Commission as provided by the PFMIs; (iii) requires U.S. clearing members under their own or forgoing U.S. participation. The an MOU or similar arrangement with comparable regulatory regimes, which requirements regarding an MOU also the home country regulator that would may potentially increase the number of exist in current procedures, so the costs enable the Commission to obtain any DCOs available to clear for U.S. persons. and benefits of those requirements are information that the Commission deems The final rule is expected to maintain currently being realized by exempt necessary to evaluate the initial and the financial integrity of swap DCOs and U.S. persons who currently continued eligibility of the DCO for transactions cleared by exempt DCOs clear proprietary swaps on exempt exemption from registration or to review because such DCOs are subject to DCOs. its compliance with any conditions of supervision and regulation by their Finally, new § 39.6(d) requires an such exemption; (iv) provides home country regulator within a legal exempt DCO to report swap data for the additional protections with the framework that is comparable to that two cleared swaps that result from the conditions of exemption set out in applicable to registered DCOs under the novation of an original swap cleared § 39.6(b), including open access and CEA and Commission regulations and as

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comprehensive. In addition, the final exempt DCO.60 However, the accounts. It is likely that the majority of rule may contribute to the financial Commission did request comment as to initial margin at exempt DCOs or integrity of the broader financial system whether the Commission should clearing organizations that may seek an by spreading the potential risk of consider permitting an exempt DCO to exemption is also in customer accounts. particular swaps among a greater clear swaps for U.S. customers.61 Thus, limiting clearing by U.S. persons number of registered and exempt DCOs, In response, three commenters at exempt DCOs to proprietary swaps thus reducing concentration risk. expressed support. ISDA stated that it will likely significantly reduce the ‘‘strongly believes’’ that the Commission number of U.S. persons who can benefit c. Price Discovery should permit exempt DCOs to clear from clearing at exempt DCOs and may Price discovery is the process of swaps for customers. ASX argued that it reduce the incentive for eligible clearing determining the price level for an asset would be beneficial to allow U.S. 62 through the interaction of buyers and customers to access the broadest organizations to seek exemption. sellers and based on supply and possible range of clearing organizations, However, there is uncertainty as to the demand conditions. The Commission which would provide them with extent to which U.S. customers would has not identified any impact of the flexibility and choice in accessing the be protected under the Bankruptcy Code final rule on price discovery. This is best commercial solutions for the in the event of an FCM bankruptcy because price discovery occurs before a products that they use. JSCC proceeding. The Commission is not transaction is submitted for clearing recommended that the Commission adopting these alternatives at this time, through the interaction of bids and consider allowing U.S. customers to but continues to weigh these risks offers on a trading system or platform, access exempt DCOs through non-U.S. against the potential benefits to U.S. or in the over-the-counter market. The clearing members that are not required customers and FCMs. final rule does not impact requirements to register as an FCM, as long as those D. Antitrust Considerations under the CEA or Commission non-U.S. clearing members can regulations regarding price discovery. demonstrate that they are properly Section 15(b) of the CEA requires the supervised, regulated, and licensed to Commission to take into consideration d. Sound Risk Management Practices provide customer clearing services in the public interest to be protected by the The exempt DCO framework their home countries, and if the home antitrust laws and endeavor to take the encourages sound risk management regulatory authority maintains practices because exempt DCOs are appropriate cooperative arrangements least anticompetitive means of subject to the risk management with the Commission. achieving the purposes of the CEA, in standards set forth in the PFMIs, which Similarly, in response to the 2019 issuing any order or adopting any are comparable to standards imposed on Proposal, several commenters, including Commission rule or regulation.63 registered DCOs. ASX, FIA, SIFMA, JSCC, and CCP12, The Commission believes that the proposed a regime for swaps similar to e. Other Public Interest Considerations public interest to be protected by the that for futures, including a clearing antitrust laws is the promotion of The Commission notes the public structure in which a U.S. customer competition. The Commission interest in access to clearing clears through an FCM that maintains requested, but did not receive, any organizations outside of the United the U.S. customer’s positions and comments on whether the proposed States in light of the international nature margin in a customer omnibus account rulemaking implicated any other of many swap transactions. The final held by a non-U.S. clearing member that specific public interest to be protected rule codifies the exemption process for is not registered as an FCM. The by the antitrust laws. The Commission non-U.S. clearing organizations that will commenters argued that such a regime permit them to clear swap transactions could potentially provide new business has considered the proposed rulemaking for U.S. persons on a proprietary basis opportunities to FCMs while allowing to determine whether it is when such clearing organizations meet customers to save money and improve anticompetitive. The Commission the eligibility requirements and efficiency by using the same FCMs to believes that the final rule may promote conditions included therein, thus clear at both registered and exempt greater competition in swap clearing promoting transparency and DCOs. This would permit customers to because it might encourage more non- consistency. Furthermore, the final rule avoid the time and expense of executing U.S. clearing organizations to seek an might encourage international comity by documentation with multiple exemption from registration to clear the deferring, under certain conditions, to intermediaries, for example, and to same types of swaps for U.S. persons regulators in other jurisdictions in the realize operational efficiencies such as that are currently cleared by registered oversight of non-U.S. clearing netting and offsetting within a single DCOs. organizations. The Commission expects intermediary, receiving fewer position The Commission has not identified that such regulators will defer to the statements, and managing fewer cash any less anticompetitive means of Commission in the supervision and transfers. The commenters noted that achieving the purposes of the CEA. The regulation of registered DCOs organized customers would also benefit from the Commission requested, but did not in the United States, thereby reducing various customer protections required of receive, any comments on whether there the regulatory and compliance burdens FCMs, such as those pertaining to are less anticompetitive means of to which such DCOs are subject. disclosure, net capital, and reporting. The Commission notes that, based on achieving the relevant purposes of the 4. Consideration of Alternatives data submitted pursuant to § 39.19(c), as CEA that would otherwise be served by The final rule does not permit U.S. of October 2020, approximately 70 adopting the final rule. customers to clear through exempt percent of initial margin at registered DCOs. As the Commission noted in the DCOs was in customer accounts, with 62 Clearing organizations could be incentivized to 2018 Proposal, there is uncertainty as to the remainder in house (proprietary) seek DCO registration instead, either under the how swaps customer funds would be Commission’s original framework or the recently treated under the U.S. Bankruptcy Code 60 2018 Proposal, 83 FR at 39926. adopted Alternative Compliance framework. if the customer’s swaps are cleared at an 61 2018 Proposal, 83 FR at 39930. 63 7 U.S.C. 19(b).

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List of Subjects there has been no finding by the home applicable to derivatives clearing country regulator of material non- organizations, if: 17 CFR Part 39 observance of the Principles for (1) The derivatives clearing Clearing, Derivatives clearing Financial Market Infrastructures or organization is subject to comparable, organization, Exemption, Procedures, other relevant home country legal comprehensive supervision and Registration, Swaps. requirements, or there has been a regulation by a home country regulator 17 CFR Part 140 finding by the home country regulator of as demonstrated by the following: material non-observance of the (i) The derivatives clearing Authority delegations (Government Principles for Financial Market organization is organized in a agencies), Organization and functions Infrastructures or other relevant home jurisdiction in which a home country (Government agencies). country legal requirements but any such regulator applies to the derivatives For the reasons stated in the finding has been or is being resolved to clearing organization, on an ongoing preamble, the Commodity Futures the satisfaction of the home country basis, statutes, rules, regulations, Trading Commission amends 17 CFR regulator by means of corrective action policies, or a combination thereof that, chapter I as follows: taken by the derivatives clearing taken together, are consistent with the organization; or Principles for Financial Market PART 39—DERIVATIVES CLEARING (2) In the case of a derivatives clearing Infrastructures; ORGANIZATIONS organization registered subject to (ii) The derivatives clearing organization observes the Principles for ■ compliance with subpart D of this part, 1. The authority citation for part 39 Financial Market Infrastructures in all continues to read as follows: either there has been no finding by the home country regulator of material non- material respects; and Authority: 7 U.S.C. 2, 6(c), 7a–1, and observance of the relevant home country (iii) The derivatives clearing 12a(5); 12 U.S.C. 5464; 15 U.S.C. 8325; legal requirements, or there has been a organization is in good regulatory Section 752 of the Dodd-Frank Wall Street standing in its home country; and Reform and Consumer Protection Act, Pub. L. finding by the home country regulator of material non-observance of the relevant (2) A memorandum of understanding 111–203, title VII, sec. 752, July 21, 2010, 124 or similar arrangement satisfactory to Stat. 1749. home country legal requirements but any such finding has been or is being the Commission is in effect between the ■ 2. Revise § 39.1 to read as follows: resolved to the satisfaction of the home Commission and the derivatives clearing organization’s home country § 39.1 Scope. country regulator by means of corrective regulator, pursuant to which, among The provisions of this subpart A action taken by the derivatives clearing organization. other things, the home country regulator apply to any derivatives clearing agrees to provide to the Commission any organization, as defined under section Home country means, with respect to a derivatives clearing organization that information that the Commission deems 1a(15) of the Act and § 1.3 of this necessary to evaluate the initial and chapter, that is registered or is required is organized outside of the United States, the jurisdiction in which the continued eligibility of the derivatives to register with the Commission as a clearing organization for exemption derivatives clearing organization derivatives clearing organization is organized. from registration or to review its pursuant to section 5b(a) of the Act, or compliance with any conditions of such that is applying for an exemption from Home country regulator means, with respect to a derivatives clearing exemption. registration pursuant to section 5b(h) of (b) Conditions of exemption. An the Act. organization that is organized outside of the United States, an appropriate exemption from registration as a ■ 3. In § 39.2, add definitions of the derivatives clearing organization shall terms ‘‘Exempt derivatives clearing government authority which licenses, regulates, supervises, or oversees the be subject to any conditions the organization,’’ ‘‘Home country,’’ ‘‘Home Commission may prescribe including, country regulator,’’ and ‘‘Principles for derivatives clearing organization’s clearing activities in the home country. but not limited to: Financial Market Infrastructures,’’ in (1) Clearing by or for U.S. persons and alphabetical order, and amend the * * * * * futures commission merchants. The definition of ‘‘Good regulatory Principles for Financial Market exempt derivatives clearing organization standing,’’ to read as follows: Infrastructures means the Principles for shall have rules that limit swaps Financial Market Infrastructures jointly clearing services for U.S. persons and § 39.2 Definitions. published by the Committee on futures commission merchants to the * * * * * Payment and Settlement Systems and following circumstances: Exempt derivatives clearing the Technical Committee of the (i) A U.S. person that is a clearing organization means a derivatives International Organization of Securities member of the exempt derivatives clearing organization that the Commissions in April 2012. clearing organization may clear swaps Commission has exempted from * * * * * for itself and those persons identified in registration under section 5b(a) of the ■ 4. Add § 39.6 to read as follows: the definition of ‘‘proprietary account’’ Act, pursuant to section 5b(h) of the Act set forth in § 1.3 of this chapter; and § 39.6. § 39.6 Exemption from derivatives clearing (ii) A non-U.S. person that is a * * * * * organization registration. clearing member of the exempt Good regulatory standing means, with (a) Eligibility for exemption. A derivatives clearing organization may respect to a derivatives clearing derivatives clearing organization that is clear swaps for any affiliated U.S. organization that is organized outside of organized outside of the United States person identified in the definition of the United States, and is licensed, shall be eligible for an exemption from ‘‘proprietary’’ account set forth in § 1.3 registered, or otherwise authorized to registration as a derivatives clearing of this chapter; and act as a clearing organization in its organization for the clearing of swaps (iii) An entity that is registered with home country, that: for U.S. persons, and thereby exempt the Commission as a futures (1) In the case of an exempt from compliance with provisions of the commission merchant may be a clearing derivatives clearing organization, either Act and Commission regulations member of the exempt derivatives

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clearing organization, or otherwise (5) Inspection of books and records. organization. Information provided to maintain an account with an affiliated The exempt derivatives clearing the Commission under this paragraph broker that is a clearing member, for the organization shall make all documents, shall be submitted in accordance with purpose of clearing swaps only for itself books, records, reports, and other § 39.19(b). and those persons identified in the information related to its operation as (2) Each exempt derivatives clearing definition of ‘‘proprietary account’’ set an exempt derivatives clearing organization shall provide to the forth in § 1.3 of this chapter; and organization open to inspection and Commission the following information: (2) Open access. The exempt copying by any representative of the (i) A report compiled as of the end of derivatives clearing organization shall Commission; and in response to a each trading day and submitted to the have rules with respect to swaps to request by any representative of the Commission by 10:00 a.m. U.S. Central which one or more of the counterparties Commission, the exempt derivatives time on the following business day, is a U.S. person that shall: clearing organization shall, promptly containing: (i) Provide that all swaps with the and in the form specified, make the (A) Initial margin requirements and same terms and conditions, as defined requested books and records available initial margin on deposit for each U.S. by product specifications established and provide them directly to person, with respect to swaps, provided under the exempt derivatives clearing Commission representatives. however if a clearing member margins organization’s rules, submitted to the (6) Observance of the Principles for on a portfolio basis its own positions and the positions of its affiliates, and exempt derivatives clearing organization Financial Market Infrastructures. On an either the clearing member or any of its for clearing are economically equivalent annual basis, within 60 days following affiliates is a U.S. person, the exempt within the exempt derivatives clearing the end of its fiscal year, the exempt derivatives clearing organization shall organization and may be offset with derivatives clearing organization shall report initial margin on deposit for all each other within the exempt provide to the Commission a such positions on a combined basis for derivatives clearing organization, to the certification that it continues to observe the Principles for Financial Market each such clearing member; and extent offsetting is permitted by the (B) Daily variation margin, separately exempt derivatives clearing Infrastructures in all material respects. To the extent the exempt derivatives listing the mark-to-market amount organization’s rules; and collected from or paid to each U.S. (ii) Provide that there shall be non- clearing organization is unable to provide to the Commission an person, with respect to swaps; provided, discriminatory clearing of a swap however, if a clearing member margins executed bilaterally or on or subject to unconditional certification, it must identify the underlying material non- on a portfolio basis its own positions the rules of an unaffiliated electronic observance of the Principles for and the positions of its affiliates, and matching platform or trade execution Financial Market Infrastructures and either the clearing member or any of its facility. identify whether and how such non- affiliates is a U.S. person, the exempt (3) Consent to jurisdiction; observance has been or is being resolved derivatives clearing organization shall designation of agent for service of by means of corrective action taken by separately list the mark-to-market process. The exempt derivatives the exempt derivatives clearing amount collected from or paid to each clearing organization shall: organization. such clearing member, on a combined (i) Consent to jurisdiction in the (7) Representation of good regulatory basis. United States; standing. On an annual basis, within 60 (ii) A report compiled as of the last (ii) Designate, authorize, and identify days following the end of its fiscal year, day of each fiscal quarter of the exempt to the Commission, an agent in the an exempt derivatives clearing derivatives clearing organization and United States who shall accept any organization shall request and the submitted to the Commission no later notice or service of process, pleadings, Commission must receive from a home than 17 business days after the end of or other documents, including any country regulator a written the exempt derivatives clearing summons, complaint, order, subpoena, representation that the exempt organization’s fiscal quarter, containing: request for information, or any other derivatives clearing organization is in (A) The aggregate clearing volume of written or electronic documentation or good regulatory standing. U.S. persons during the fiscal quarter, correspondence issued by or on behalf (8) Other conditions. The Commission with respect to swaps. If a clearing of the Commission or the United States may condition an exemption on any member is a U.S. person, the volume Department of Justice to the exempt other facts and circumstances it deems figure shall include the transactions of derivatives clearing organization, in relevant. the clearing member and all affiliates. If connection with any actions or (c) General reporting requirements. (1) a clearing member is not a U.S. person, proceedings brought against, or An exempt derivatives clearing the volume figure shall include only investigations relating to, the exempt organization shall provide to the transactions of affiliates that are U.S. derivatives clearing organization or any Commission the information specified persons. U.S. person or futures commission in this paragraph and any other (B) The average open interest of U.S. merchant that is a clearing member, or information that the Commission deems persons during the fiscal quarter, with that clears swaps through a clearing necessary, including, but not limited to, respect to swaps. If a clearing member member, of the exempt derivatives information for the purpose of the is a U.S. person, the open interest figure clearing organization; and Commission evaluating the continued shall include the positions of the (iii) Promptly inform the Commission eligibility of the exempt derivatives clearing member and all affiliates. If a of any change in its designated and clearing organization for exemption clearing member is not a U.S. person, authorized agent. from registration, reviewing compliance the open interest figure shall include (4) Compliance. The exempt by the exempt derivatives clearing only positions of affiliates that are U.S. derivatives clearing organization shall organization with any conditions of the persons. comply, and shall demonstrate exemption, or conducting oversight of (C) A list of U.S. persons and futures compliance as requested by the U.S. persons and their affiliates, and the commission merchants that are either Commission, with any condition of its swaps that are cleared by such persons clearing members or affiliates of any exemption. through the exempt derivatives clearing clearing member, with respect to the

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clearing of swaps, as of the last day of the termination of the original swap to (ii) A description of the applicant’s the fiscal quarter. the swap data repository to which the business plan for providing clearing (iii) Prompt notice regarding any original swap was reported. In order to services as an exempt derivatives change in the home country regulatory avoid duplicative reporting for such clearing organization, including regime that is material to the exempt transactions, the exempt derivatives information as to the classes of swaps derivatives clearing organization’s clearing organization shall have rules that will be cleared and whether the continuing observance of the Principles that prohibit the reporting, pursuant to swaps are subject to a clearing for Financial Market Infrastructures or part 45 of this chapter, of the two new requirement issued by the Commission compliance with any of the swaps by the counterparties to the or the applicant’s home country requirements set forth in this section or original swap. regulator; in the order of exemption issued by the (e) Application procedures. (1) An (iii) Documents that demonstrate that Commission; entity seeking to be exempt from the applicant is organized in a (iv) As available to the exempt registration as a derivatives clearing jurisdiction in which its home country derivatives clearing organization, any organization shall file an application for regulator applies to the applicant, on an assessment of the exempt derivatives exemption with the Secretary of the ongoing basis, statutes, rules, clearing organization’s or the home Commission in the format and manner regulations, policies, or a combination country regulator’s observance of the specified by the Commission. The thereof that, taken together, are Principles for Financial Market Commission will review the application consistent with the Principles for Infrastructures, or any portion thereof, for exemption and may approve or deny Financial Market Infrastructures; by a home country regulator or other the application or, if deemed (iv) A written representation from the national authority, or an international appropriate, exempt the applicant from applicant’s home country regulator that financial institution or international registration as a derivatives clearing the applicant is in good regulatory organization; organization subject to conditions in standing; (v) As available to the exempt addition to those set forth in paragraph (v) Copies of the applicant’s most derivatives clearing organization, any (b) of this section. recent disclosures that are necessary to examination report, examination (2) Application. An applicant for observe the Principles for Financial findings, or notification of the exemption from registration as a Market Infrastructures, including the commencement of any enforcement or derivatives clearing organization shall financial market infrastructure disciplinary action by a home country submit to the Commission the disclosure template set forth in Annex regulator; information and documentation A to the Disclosure Framework and (vi) Immediate notice of any change described in this section. Such Assessment Methodology for the with respect to the exempt derivatives information and documentation shall be Principles for Financial Market clearing organization’s licensure, clearly labeled as outlined in this Infrastructures, any other such registration, or other authorization to act section. The Commission will not disclosure framework issued under the as a derivatives clearing organization in commence processing an application authority of the International its home country; unless the applicant has filed a Organization of Securities Commissions (vii) In the event of a default by a U.S. complete application. Upon its own that is required for observance of the person or futures commission merchant initiative, an applicant may file with its Principles for Financial Market clearing swaps, with such event of completed application for exemption Infrastructures, and the URL to the default determined in accordance with additional information that may be specific page(s) on the applicant’s the rules of the exempt derivatives necessary or helpful to the Commission website where such disclosures may be clearing organization, immediate notice in processing the application. The found; of the default including the name of the application shall include: (vi) A representation that the U.S. person or futures commission (i) A cover letter containing the applicant will comply with each of the merchant clearing swaps, a list of the following information: requirements and conditions of positions held by the U.S. person or (A) Exact name of applicant as exemption set forth in paragraphs (b), futures commission merchant, and the specified in its charter, and the name (c), and (d) of this section, and the terms amount of the U.S. person’s or futures under which business will be conducted and conditions of its order of exemption commission merchant’s financial (including acronyms); as issued by the Commission; obligation; and (B) Address of applicant’s principal (vii) A copy of the applicant’s rules (viii) Notice of action taken against a office; that meet the requirements of U.S. person or futures commission (C) List of principal office(s) and paragraphs (b)(2) and (d) of this section, merchant clearing swaps by an exempt address(es) where clearing activities are/ as applicable; and derivatives clearing organization, no will be conducted; (viii) The applicant’s consent to later than two business days after the (D) A list of all regulatory licenses or jurisdiction in the United States, and exempt derivatives clearing organization registrations of the applicant (or the name and address of the applicant’s takes such action against a U.S. person exemptions from any licensing designated agent in the United States, or futures commission merchant. requirement) and the regulator granting pursuant to paragraph (b)(3) of this (d) Swap data reporting requirements. such license or registration; section. If an exempt derivatives clearing (E) Date of the applicant’s fiscal year (3) Submission of supplemental organization accepts for clearing a swap end; information. At any time during its that has been reported to a swap data (F) Contact information for the person review of the application for exemption repository pursuant to part 45 of this or persons to whom the Commission from registration as a derivatives chapter, the exempt derivatives clearing should address questions and clearing organization, the Commission organization shall report to a swap data correspondence regarding the may request that the applicant submit repository data regarding the two swaps application; and supplemental information in order for resulting from the novation of the (G) A signature and date by a duly the Commission to process the original swap. The exempt derivatives authorized representative of the application, and the applicant shall file clearing organization shall also report applicant. such supplemental information in the

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format and manner specified by the time permitted for a response, the (3) An instruction to clearing Commission. Commission may: members, requiring that they provide (4) Amendments to pending (i) Issue an order of termination, the exempt derivatives clearing application. An applicant for exemption effective as of a date to be specified organization’s notice of such from registration as a derivatives therein. Such specified date shall be termination to all U.S. persons clearing clearing organization shall promptly intended to provide the exempt swaps through such clearing members. amend its application if it discovers a derivatives clearing organization with a ■ 5. Revise § 39.9 to read as follows: material omission or error, or if there is reasonable amount of time to wind a material change in the information down its swap clearing services for U.S. § 39.9 Scope. provided to the Commission in the persons; application or other information (ii) Issue an amended order of Except as otherwise provided by provided in connection with the exemption that modifies the terms and Commission order, the provisions of application. conditions of the exemption; or this subpart B apply to any derivatives (5) Public information. The following (iii) Provide written notification to the clearing organization, as defined under sections of an application for exemption exempt derivatives clearing organization section 1a(15) of the Act and § 1.3 of from registration as a derivatives that the exemption will remain in effect this chapter, that is registered with the clearing organization will be public: The without modification to the terms and Commission as a derivatives clearing cover letter set forth in paragraph conditions of the exemption. organization pursuant to section 5b of (e)(2)(i) of this section; the (g) Termination of exemption upon the Act. The provisions of this subpart documentation required in paragraphs request by an exempt derivatives B do not apply to any exempt (e)(2)(iii) and (e)(2)(v) of this section; clearing organization. (1) An exempt derivatives clearing organization, as rules that meet the requirements of derivatives clearing organization may defined under § 39.2. petition the Commission to terminate its paragraphs (b)(2) and (d) of this section, PART 140—ORGANIZATION, as applicable; and any other part of the exemption if: (i) Changed circumstances result in FUNCTIONS, AND PROCEDURES OF application not covered by a request for THE COMMISSION confidential treatment, subject to § 145.9 the exempt derivatives clearing of this chapter. organization no longer qualifying for an ■ 6. The authority citation for part 140 (f) Modification or termination of exemption; (ii) The exempt derivatives clearing continues to read as follows: exemption upon Commission initiative. organization intends to cease clearing (1) The Commission may, in its Authority: 7 U.S.C. 2(a)(12), 12a, 13(c), swaps for U.S. persons; or 13(d), 13(e), and 16(b). discretion and upon its own initiative, (iii) In conjunction with the petition, terminate or modify the terms and the exempt derivatives clearing ■ 7. Amend § 140.94 by: conditions of an order of exemption organization submits an application for ■ a. Redesignating paragraphs (c)(4) from derivatives clearing organization registration in accordance with registration if the Commission through (13) as paragraphs (c)(5) § 39.3(a)(2) or § 39.3(a)(3), as applicable, through (14); and determines that there are changes to or to become a registered derivatives omissions in material facts or clearing organization pursuant to ■ b. Adding new paragraph (c)(4). circumstances pursuant to which the section 5b(a) of the Act. The addition reads as follows: order of exemption was issued, or that (2) The petition for termination of any of the terms and conditions of its exemption shall include a detailed § 140.94 Delegation of authority to the order of exemption have not been met, explanation of the facts and Director of the Division of Swap Dealer and including, but not limited to, the circumstances supporting the request Intermediary Oversight and the Director of the Division of Clearing and Risk. requirement that: and the exempt derivatives clearing (i) The exempt derivatives clearing organization’s plans for, as may be * * * * * organization observes the Principles for applicable, the liquidation or transfer of (c) * * * Financial Market Infrastructures in all the swaps positions and related (4) All functions reserved to the material respects; or collateral of U.S. persons. (ii) The exempt derivatives clearing Commission in § 39.6 of this chapter, (3) The Commission shall issue an except for the authority to: organization is subject to comparable, order of termination within a reasonable comprehensive supervision and time appropriate to the circumstances (i) Grant an exemption under § 39.6(a) regulation by its home country or, as applicable, in conjunction with of this chapter; regulator. the issuance of an order of registration. (ii) Prescribe conditions to an (2) The Commission shall provide (h) Notice to clearing members of exemption under § 39.6(b) of this written notification to an exempt termination of exemption. Following the chapter; derivatives clearing organization that it Commission’s issuance of an order of (iii) Modify or terminate an is considering whether to terminate or termination (unless issued in modify an exemption pursuant to this exemption under § 39.6(f)(4) of this conjunction with the issuance of an chapter; and paragraph and the basis for that order of registration), the exempt consideration. derivatives clearing organization shall (iv) Terminate an exemption under (3) The exempt derivatives clearing provide immediate notice of such § 39.6(g)(3) of this chapter. organization may respond to the termination to its clearing members. * * * * * notification in writing no later than 30 Such notice shall include: Issued in Washington, DC, on November business days following receipt of the (1) A copy of the Commission’s order 25, 2020, by the Commission. notification, or at such later time as the of termination; Christopher Kirkpatrick, Commission permits in writing. (2) A description of the procedures for (4) Following receipt of a response orderly disposition of any open swaps Secretary of the Commission. from the exempt derivatives clearing positions that were cleared for U.S. Note: The following appendices will not organization, or after expiration of the persons; and appear in the Code of Federal Regulations.

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Appendices to Exemption From rule does not permit exempt DCOs to clear provided such deference in many areas, Derivatives Clearing Organization for U.S. customers, but rather only for including swap dealer (SD) registration,2 Registration—Commission Voting proprietary swap transactions for U.S. uncleared swap margin requirements,3 swap 4 Summary, Chairman’s Statement, and clearing members and futures commission execution facilities (SEFs), registered merchants (FCMs). It reflects the CFTC’s DCOs,5 and foreign futures.6 Like these other Commissioners’ Statements continued efforts to foster cross-border actions, today’s final rule holds exempt DCO Appendix 1—Commission Voting cooperation and show deference to home to a high regulatory standard. Under the final Summary country regulation that is deemed rule, a DCO is only eligible for an exemption comparable to our own regulations. if its home country regulator ensures the On this matter, Chairman Tarbert and In 2019, the Commission issued a clearinghouse complies with rules consistent Commissioners Quintenz, Behnam, Stump, supplemental proposal that would have gone with the internationally accepted ‘‘Principles and Berkovitz voted in the affirmative. No further and permitted exempt DCOs to clear for Financial Market Infrastructures’’ (PFMIs) Commissioner voted in the negative. swaps for U.S. eligible contract participants issued by CPMI–IOSCO.7 Moreover, the 4 Appendix 2—Statement of Support of (ECPs) through foreign intermediaries. I exempt DCO must regularly provide the Chairman Heath P. Tarbert would have supported finalizing that CFTC with margin information concerning proposal for two reasons. First, the proposal U.S. clearing members, among other key We are voting to approve a rule proposed would have provided greater flexibility and information.8 in 2018 that codifies existing staff guidance choice to our most sophisticated U.S. I note that under the final rule, an exempt by which the CFTC exempts derivatives customers—ECPs—to access swaps cleared at DCO will only be authorized to clear the clearing organizations (DCOs) from non-U.S. clearinghouses. This would have proprietary positions of its U.S. clearing registration for the clearing of swaps.1 given these sophisticated counterparties members. I had supported and still support Pursuant to that guidance, we have exempted access to foreign-currency denominated the Commission’s 2019 proposal that would four clearinghouses that we determined are instruments traded overseas that would have expanded the exempt DCO framework subject to ‘‘comparable, comprehensive enable them to hedge their various risks on to allow for U.S. customers, like asset supervision and regulation’’ by the clearing a global basis. Second, exempting managers and insurance companies, to clear organization’s home country regulator.2 clearinghouses that do not pose a substantial at exempt DCOs directly to better manage Codifying this framework through a notice- risk to the U.S. financial system is consistent and hedge their risk.9 I continue to believe and-comment rulemaking is, frankly, good with principles of international comity. that all participants meeting the Commodity government. And doing so is in keeping with Because we have not worked through all Exchange Act’s definition of ‘‘eligible my recent directive on the use of staff letters the issues raised by the 2019 supplemental contract participant’’ 10 have the resources, and guidance, in which I noted that staff proposal to the satisfaction of our sophistication, and incentives to adequately guidance and letters should supplement Commission, today we are adopting only the assess how customer protections provided by rulemakings, rather than themselves function 2018 proposal. Nonetheless, I support an exempt DCO may differ from protections 3 as rules. This approach has many benefits, continued discussion on whether to permit established by CFTC regulations for including providing increased transparency. Exempt DCOs additionally to clear certain registered DCOs. The CFTC should provide It also furthers our strategic objective of non-U.S.-dollar denominated swaps for U.S. these market participants with the choice enhancing the regulatory experience for customers who are ECPs, either directly befitting their status, not only as market participants at home and abroad. through foreign intermediaries or through sophisticated market participants, but as This rulemaking is a modest first step. As U.S. FCMs. Although registration as a DCO— complex international organizations who is the case in the existing staff guidance, the under either our traditional or recently- 5 established alternative framework —should 2 Cross-Border Application of the Registration 1 See Exemption From Derivatives Clearing be the preferred route for most non-U.S. Thresholds and Certain Requirements Applicable to Organization Registration, 83 FR 39923 (Aug. 13, clearinghouses, there are likely SDs and Major Swap Participants (MSPs), 85 FR 2018). The Dodd-Frank Wall Street Reform and circumstances where U.S. customers would 56924 (Sept. 14, 2020). Consumer Protection Act, Public Law 111–203, 124 3 Stat. 1376, amended the Commodity Exchange Act benefit from access to additional risk- Comparability Determination for Australia: (‘‘CEA’’) to permit the Commission to exempt mitigating instruments offered overseas. Margin Requirements for Uncleared Swaps for SDs conditionally or unconditionally a DCO from and MSPs, 84 FR 12908 (Apr. 3, 2019); Amendment registration for the clearing of swaps if the Appendix 3—Supporting Statement of to Comparability Determination for Japan: Margin Commission determines that the clearing Commissioner Brian D. Quintenz Requirements for Uncleared Swaps for SDs and organization is subject to ‘‘comparable, MSPs, 84 FR 12074 (Apr. 1, 2019). comprehensive supervision and regulation’’ by I support today’s final rule to codify the 4 Amendment to Order of Exemption from SEF appropriate government authorities in the clearing CFTC’s existing practice of exempting non- registration for Recognized Market Operators organization’s home country. See Section 5b(a) of U.S. derivatives clearing organizations authorized in Singapore, Nov. 2, 2020, available at: the CEA, 7 U.S.C. 7a–1(a). (DCOs) from registration, pursuant to a https://www.cftc.gov/PressRoom/PressReleases/ 2 See Amended Order of Exemption from provision of the Commodity Exchange Act 8301-20; Amendment to Order of Exemption from SEF registration for E.U. multilateral trading Registration (Jan. 28, 2016) (ASX Clear (Futures) Pty that allows for U.S. swap market participants Limited), available at: https://www.cftc.gov/sites/ facilities and organized trading facilities, July 23, default/files/idc/groups/public/@otherif/ to access comparably regulated foreign 2020, available at: https://www.cftc.gov/PressRoom/ documents/ifdocs/ DCOs.1 That provision authorizes the PressReleases/8211-20; Order of Exemption from asxclearamdorderdcoexemption.pdf; Amended Commission to defer to its counterparts SEF registration for Japanese derivatives trading Order of Exemption from DCO Registration (May abroad, which I believe properly conserves facilities, July 11, 2019, available at: https:// 15, 2017) (Japan Securities Clearing Corporation), the Commission’s resources and enables www.cftc.gov/PressRoom/PressReleases/7968-19. available at: https://www.cftc.gov/sites/default/files/ firms to avoid duplicative regulation, while 5 Registration with Alternative Compliance for idc/groups/public/@otherif/documents/ifdocs/ providing U.S. market participants with Non-U.S. DCOs, 85 FR 67160 (Oct. 21, 2020). jsccdcoexemptamdorder5-15-17.pdf; Order of 6 Regulation 30.10 orders issued to the Bombay Exemption from DCO Registration (Oct. 26, 2015) greater choice. I am proud that today’s final rule provides yet another example of the Stock Exchange, National Stock Exchange Int’l (Korea Exchange, Inc.), available at: https:// Financial Service Centre Ltd. [India], Montreal www.cftc.gov/sites/default/files/idc/groups/public/ CFTC deferring to foreign regulators that Exchange, NZX Ltd. [New Zealand], and UBS AG @otherif/documents/ifdocs/krxdcoexemptorder10- provide comparable regulation and [Switzerland], Nov. 2, 2020, available at: https:// 26-15.pdf; and Order of Exemption from DCO supervision. During my tenure as a www.cftc.gov/PressRoom/PressReleases/8300-20. Registration (Dec. 21, 2015) (OTC Clearing Hong Commissioner, the CFTC has properly 7 Reg. 39.6(a)(1)(i). Kong Limited), available at: https://www.cftc.gov/ 8 sites/default/files/idc/groups/public/@otherif/ Reg. 39.6(c). documents/ifdocs/otccleardcoexemptorder12-21- 4 See Exemption From Derivatives Clearing 9 Exemption from DCO Registration, 84 FR 35456 15.pdf. Organization Registration, 84 FR 35456 (July 23, (July 23, 2019); Opening Statement of 3 See Directive of Chairman Heath P. Tarbert on 2019). Commissioner Brian Quintenz before the Open the Use of Staff Letters and Guidance (Oct. 27, 5 See Registration With Alternative Compliance Commission Meeting on July 11, 2019, available at: 2020), available at: https://www.cftc.gov/ for Non-U.S. Derivatives Clearing Organizations, 85 https://www.cftc.gov/PressRoom/ PressRoom/SpeechesTestimony/ FR 67160 (Oct. 21, 2020). SpeechesTestimony/quintenzstatement071119. tarbetstatement102720. 1 Sec. 5b(h) of the Commodity Exchange Act. 10 Sec. 1a(18) of the Commodity Exchange Act.

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need access to foreign markets, products, and the Principles for Financial Market Commodity Exchange Act (‘‘CEA’’) 1 in a a choice of liquidity pools. I hope the Infrastructures (PFMI) framework as the limited, pragmatic manner that will provide Commission will continue to consider the benchmark for making the comparability U.S. financial services firms that operate best way to expand the exempt DCO determination with respect to a foreign globally with access to foreign clearinghouses framework to allow for U.S. customer jurisdiction’s supervisory and regulatory and cleared swaps in order to more clearing. scheme required by CEA section 5b(h). I effectively manage the risks arising from their believe that the Commission’s reliance on the global operations. Appendix 4—Concurring Statement of PFMIs as providing a comprehensive In July of last year, I dissented from the Commissioner Rostin Behnam framework for DCO supervision that is proposed exempt DCO rule, because it also I respectfully concur with the Commodity comparable to the statutory and regulatory would have permitted Exempt DCOs to clear Futures Trading Commission’s final rule requirements applicable to registered DCOs, for U.S. customers, but only through foreign regarding policies and procedures that it will with a particular focus on the DCO Core intermediaries. In doing so, the proposed rule follow with respect to granting exemptions Principles,7 is within its discretion under would have subjected U.S. customer from derivatives clearing organization (DCO) CEA section 5b(h). However, I am concerned accounts to foreign bankruptcy and other registration pursuant to authority under that the Commission’s decision to limit its regulations, promoted the use of foreign section 5b(h) of the Commodity Exchange reference to the PFMIs as they existed in intermediaries at the expense of U.S. firms, Act (CEA) 1 (the ‘‘Final Rule’’). The Final 2012 may lead to untenable divergence in the and exceeded this agency’s limited Rule, with limited exceptions, codifies the future should the Commission determine to exemptive authority.2 Enabling U.S. policies and procedures followed by the incorporate subsequent amendments or customers to clear swaps and amass large Commission in issuing the four exempt DCO revisions to the PFMIs or related positions in non-U.S. markets in this manner orders which currently limit clearing interpretations and guidance into its own would not only pose risks to those customers, organizations organized outside of the United regulatory and supervisory DCO oversight. but also could have presented systemic risks States to clearing only proprietary swap Alternatively, I am concerned that to the U.S. financial system. positions of U.S. persons and futures maintaining a static definition of the PFMIs In response to commenters who expressed commission merchants, and not customer to provide exempt DCOs with greater similar objections, the Final Rule does not positions (‘‘exempt DCOs’’). Critical to my regulatory certainty with regard to their contain the concerning provisions. Neither vote today, the Final Rule prohibits the ongoing eligibility for the exemption could registered FCMs nor their foreign clearing of U.S. customer positions at an negatively impact the Commission’s intermediary counterparts can clear for U.S. exempt DCO.2 consideration regarding whether to adopt or person customers. With respect to clearing I supported the Commission’s 2018 notice incorporate future changes to the PFMIs or for U.S. persons, the Final Rule restricts of proposed rulemaking 3 as a means to related interpretations and guidance into its clearing by an Exempt DCO to only U.S. promote transparency and accountability as regulatory regime. However, I am reassured firms that become clearing members of the well as a positive step towards increased that the Commission explicitly reserves the Exempt DCO along with certain of their cross-border cooperation and deference to ability to incorporate future amendments to affiliates and persons associated with those our foreign regulatory counterparts. However, the PFMIs into the Final Rule’s PFMI firms in the manner identified in the I was unable to support the Commission’s definition in § 39.2. As well, because the 4 definition of ‘‘proprietary account’’ in section 2019 supplement to the 2018 Proposal, Commission also maintains broad discretion 1.3 of our regulations. In addition, registered which proposed permitting exempt DCOs to to condition an exemption on any facts and FCMs, including U.S. firms, can also clear at clear swaps for U.S. customers through circumstances it deems relevant under new exempt DCOs, but only for themselves and foreign intermediaries that would be wholly § 39.6(b)(8), I believe the Commission has persons associated with the FCMs in the outside the Commission’s direct regulation clear discretion and authority to make manner provided in the definition of and oversight. As articulated more fully in appropriate changes with regard to its ‘‘proprietary account.’’ These sophisticated my dissent,5 the 2019 Supplemental Proposal consideration of exempt DCO eligibility market participants are well equipped to was not the product of internal consensus criteria and ongoing compliance to maintain assess the risks of clearing swaps under the and its brief history and questionable comprehensive application of and adherence foreign regime. Furthermore, by requiring timeline signaled a lack of appropriate to comparable regulatory and supervisory that they be members of the Exempt DCO (or scrutiny and evaluation of the critical standards. clear through an affiliate that is a member), financial, market, consumer protection, and My decision to support the Final Rule is the Commission assures that such entities systemic risk issues raised by diverging from largely based on the Commission’s the customer protection model provided by determination to move forward with the 2018 have taken affirmative actions to assess and the CEA and U.S. Bankruptcy Code. It was Proposal without adopting the 2019 accept those risks. The margin funds and and remains my view that if the Commission Supplemental Proposal. However, I remain related obligations of these persons must also believes it is appropriate to provide U.S. supportive of the Commission’s endeavor to be segregated from customer funds held by customers with greater access to non-U.S. explore ways to adapt and—if appropriate— registered FCMs thereby minimizing any swap markets, then we can and should seek to adjust the current intermediary impact on U.S. customers of the cleared engage in a more careful analysis of options, structure established under the CEA and positions at Exempt DCOs. These limitations assessment of alternatives, and evaluation of Commission regulations to better are a reasonable, practical approach to consequences consistent with the accommodate both U.S. customer demand for implementing the authority provided to the Administrative Procedure Act.6 As the increased access to clearing in foreign Commission to exempt certain foreign DCOs Commission is declining to adopt the 2019 jurisdictions and evolving global swaps without adding uncertain risk into our Supplemental Proposal at this time, I am market structures. I remain open and look system of fully registered DCOs and FCMs. comfortable with supporting the Final Rule. forward to the possibility of further One area in which I will remain vigilant is discussing the regulatory and policy issues 1 Commodity Exchange Act section 5b(h). with regard to the Commission’s reliance on raised during this rulemaking. 2 See Dissenting Statement of Commissioner Berkovitz, 84 FR 35456 at 35479 (July 23, 2019). As Appendix 5—Statement of 1 7 U.S.C. 7a–1(a). discussed in my prior statement, in addition to my substantive concerns, the proposed rule would have 2 See Final Rule at II.B.2.a. and § 39.6(b)(1). Commissioner Dan M. Berkovitz relied on CEA Section 4(c) exemptive authority to 3 Exemption from Derivatives Clearing I am voting for the final rule establishing exempt non-U.S. intermediaries that provide Organization Registration, 83 FR 39923 (proposed procedures for granting registration customer clearing at Exempt DCOs from the FCM Aug. 13, 2018) (the ‘‘2018 Proposal’’). exemptions to foreign derivatives clearing registration requirement and the regulations 4 Exemption from Derivatives Clearing organizations (‘‘Exempt DCOs’’) to clear applicable to registered FCMs. This reliance would Organization Registration, 84 FR 35456 (proposed have exceeded the clearly limited authority granted July 23, 2019) (the ‘‘2019 Supplemental Proposal’’). swaps for certain U.S. persons (‘‘Final Rule’’). The Final Rule exercises the exemptive under Section 4(c). With the elimination of 5 See Appendix 4—Dissenting Statement of customer clearing in the Final Rule, the Commissioner Rostin Behnam, Supplemental authority provided by Congress in the Commission no longer needs to resort to an overly Proposal, 84 FR at 35476–35478. expansive reading of Section 4(c) authority to adopt 6 Id. at 35476. 7 See CEA section 5b(c)(2), 7 U.S.C. 7a–1(c)(2). the Final Rule.

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Furthermore, the Commission has, on an comprehensive supervision and home approach taken in the Final Rule is ad hoc basis, previously granted registration country regulation.’’ Under the Final Rule, to reasonable. exemptions to four foreign clearinghouses demonstrate comparability, the DCO must be In conclusion, the Final Rule creates a limited to proprietary swap positions with subject to home country regulations that are limited, practical set of policies and effectively the same conditions and consistent with, and the DCO must ‘‘observe procedures for granting exemptions from limitations as provided in the Final Rule. The in all material respects,’’ the ‘‘Principles for registration for foreign DCOs. The Exempt Final Rule will therefore maintain Financial Market Infrastructures’’ 4 (‘‘PFMIs’’) DCOs can only clear swaps for U.S. persons consistency with the existing exemptions. applicable to central counterparties. who are proprietary traders and who are able The Final Rule also contains fairly detailed Several commenters objected to this to assess the specific risks of clearing at the daily, quarterly, and annual reporting approach to comparability determinations on Exempt DCO. The U.S. customer accounts at requirements, as well as special event notice a number of grounds. These commenters registered FCMs will not be commingled requirements. These requirements allow the stated that the Commission should not with accounts used for Exempt DCO clearing. Commission to monitor U.S. person clearing substitute a commitment to adhere to the Finally, U.S. FCMs are not put at a activity at the Exempt DCO on a daily basis PFMIs for its own examination and competitive disadvantage to their foreign and keep the Commission informed of any assessment as to the comparability and counterparts. For these reasons, I support the material changes to the regulatory and comprehensiveness of the actual foreign changes made to the proposed rule that result financial status of the Exempt DCO in its regulations. As the PFMIs are only general in an appropriate, codified approach to home jurisdiction. While the Exempt DCOs principles, even when the PFMIs are exempting foreign DCOs who meet will be able to operate under the compliance appropriate standards. regime and oversight of its home country implemented, material differences may exist [FR Doc. 2020–26527 Filed 1–6–21; 8:45 am] regulator, the CFTC can maintain limited, but between the PFMI-compliant regime and the up-to-date oversight of the activities that are Commission’s DCO core principles and BILLING CODE 6351–01–P relevant for U.S. market participants and that regulations. Commenters further argued that could have an impact on our financial Congress intended for the Commission to system. analyze comparability only by direct ENVIRONMENTAL PROTECTION As noted above, the Final Rule does not comparison to the CTFC’s laws and AGENCY permit registered FCMs to clear U.S. regulations. customer swaps at Exempt DCOs. In the Over the past two years, I have expressed 40 CFR Part 52 Commission’s initial 2018 proposal to concerns over the erosion of the establish a framework for Exempt DCOs, the Commission’s standards and role in finding [EPA–R09–OAR–2020–0358 and EPA–R09– Commission proposed this prohibition. The comparability for various CFTC regulations. OAR–2019–0423; FRL–10017–89–Region 9] Commission explained: The Commission’s approach has been Section 4d(f)(1) of the CEA makes it increasingly deferential to other regulators, Air Plan Partial Approval, Partial unlawful for any person to accept money, which has the potential to permit the Disapproval, and Partial Conditional securities, or property (i.e., funds) from a importation of increased risks into the U.S. Approval; Arizona; Maricopa County swaps customer to margin a swap cleared financial system. Air Quality Department; Reasonably through a DCO unless the person is registered In this regard, I too have some concerns Available Control Technology State as an FCM. Any swaps customer funds held about the use of the PFMIs as a standard for Implementation Plan and Surface by a DCO are also subject to the segregation comparability. However, for the purpose of Coating Rule requirements of section 4d(f)(2) of the CEA, granting DCO registration exemptions, I and in order for a customer to receive believe the approach taken in the Final Rule AGENCY: Environmental Protection protection under this regime, particularly in is reasonable. I have consistently said that Agency (EPA). an insolvency context, its funds must be comparability determinations should involve carried by an FCM, and deposited with a a detailed examination of the other ACTION: Final rule. registered DCO. Absent that chain of jurisdiction’s standards, but also should be SUMMARY: The Environmental Protection registration, the swaps customer’s funds may outcomes based. Regulators around the world not be treated as customer property under the take substantively different approaches to Agency (EPA) is finalizing a partial U.S. Bankruptcy Code and the Commission’s regulating DCOs, but that does not mean any approval, partial disapproval, and regulations. Because of this, it has been the one approach is necessarily better or worse partial conditional approval of revisions Commission’s policy to allow exempt DCOs than another as to its expected outcome. The to the Maricopa County Air Quality to clear only proprietary positions of U.S. PFMIs tend to be more general in nature than Department (MCAQD or County) persons and FCMs.3 the DCO core principles and regulations in portion of the Arizona State The Final Rule notes that the Commission the CEA and CFTC regulations. However, Implementation Plan (SIP). This action may revisit the prohibition on U.S. customer regarding the general outcome of DCO concerns the County’s demonstration clearing in the future. While I agree with the regulation, the PFMIs—which the CFTC has regarding reasonably available control outcome in the Final Rule as to customer contributed to and incorporated in technology (RACT) requirements and clearing given the Commission’s regulation 5—are consistent with our DCO interpretation of CEA Section 4d(f), if the core principles. Furthermore, given the negative declarations for the 2008 8- above interpretation changes, whether by a limited scope of the Final Rule in that it hour ozone National Ambient Air change to the statute or by other appropriate applies only to clearing of proprietary Quality Standards (NAAQS or means, I could support a further amendment positions, using the PFMIs to find ‘‘standards’’) in the portion of the of the Final Rule. Any such change should comparability is not unwarranted. Finally, Phoenix-Mesa ozone nonattainment area place U.S. FCMs on an equal footing with the Final Rule allows for the Commission to under the jurisdiction of the MCAQD. their foreign counterparts when competing assess the extent to which the home country The EPA is also finalizing a conditional for U.S. customer clearing at Exempt DCOs. regulations are consistent with the PFMIs In addition, such a change should not create approval of a MCAQD rule that and the extent to which the applying DCO is regulates emissions from surface coating an advantage for unregistered Exempt DCOs observing the PFMIs. As such, I believe the over registered DCOs who comply with all of operations and was submitted with the our regulations. RACT SIP demonstration. 4 Finally, I note that CEA Section 5b(h) See Committee on Payment and Settlement Systems and the Technical Committee of the DATES: This rule is effective on February provides for the registration exemption if the International Organization of Securities 8, 2021. foreign DCO is subject to ‘‘comparable, Commissions, Principles for financial market ADDRESSES: The EPA has established infrastructures (Apr. 2012), available at http:// 3 Exemption from Derivatives Clearing www.iosco.org/library/pubdocs/pdf/IOSCOPD377- dockets for this action under Docket No. Organization Registration, 83 FR 39923, 39926 PFMI.pdf. EPA–R09–OAR–2020–0358 and EPA– (proposed Aug. 13, 2018). 5 See 17 CFR 39.30, 39.40. R09–OAR–2019–0423. All documents in

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the dockets are listed on the https:// disabilities who needs a reasonable I. Proposed Action www.regulations.gov website. Although accommodation at no cost to you, please listed in the index, some information is contact the person identified in the FOR On September 18, 2020 (85 FR 58310), not publicly available, e.g., Confidential FURTHER INFORMATION CONTACT section. the EPA proposed a partial approval and partial disapproval of the Arizona Business Information or other FOR FURTHER INFORMATION CONTACT: information whose disclosure is Nicole Law, EPA Region IX, 75 Department of Environmental Quality’s restricted by statute. Certain other Hawthorne St., San Francisco, CA (ADEQ) June 22, 2017 submittal of material, such as copyrighted material, 94105. By phone: (415) 947–4126 or by MCAQD’s Analysis of Reasonably is not placed on the internet and will be email at [email protected]. Available Control Technology for The 2008 8-Hour Ozone National Ambient publicly available only in hard copy SUPPLEMENTARY INFORMATION: Air Quality Standard (NAAQS) State form. Publicly available docket Throughout this document, ‘‘we,’’ ‘‘us’’ Implementation Plan (RACT SIP) and materials are available through https:// and ‘‘our’’ refer to the EPA. www.regulations.gov, or please contact the associated negative declarations. On the person identified in the FOR FURTHER Table of Contents January 28, 2020 (85 FR 4928), the EPA INFORMATION CONTACT section for I. Proposed Action proposed to conditionally approve additional availability information. If II. EPA Action MCAQD Rule 336 Surface Coating you need assistance in a language other III. Incorporation by Reference Operations and associated portions of than English or if you are a person with IV. Statutory and Executive Order Reviews the RACT Demonstration.

Local agency Document Adopted Submitted

MCAQD ...... Analysis of Reasonably Available Control Technology for the 2008 8-Hour Ozone National 05/24/2017 06/22/2017 Ambient Air Quality Standard (NAAQS) State Implementation Plan (RACT SIP). MCAQD ...... Appendix 1A: Negative Declarations ...... 05/24/2017 06/22/2017 MCAQD ...... Rule 336: Surface Coating Operations ...... 11/02/2016 06/22/2017

MCAQD’s RACT SIP provides the of Volatile Organic Emissions from RACT-level controls for the sources County’s demonstration that the Petroleum Liquid Storage in External within the following CTG source applicable SIP for the MCAQD satisfies Floating Roof Tanks’’ (EPA–450/2–78– categories: ‘‘Control of Volatile Organic CAA section 182 RACT requirements for 047), ‘‘Control of Hydrocarbons from Emissions from Solvent Metal Cleaning’’ the 2008 8-hour ozone NAAQS. This Tank Truck Gasoline Loading (EPA–450/2–77–022), ‘‘Control conclusion is based on the County’s Terminals’’ (EPA–450/2–77–026), Techniques Guidelines: Industrial analysis of SIP-approved requirements ‘‘Control of Volatile Organic Emissions Cleaning Solvents’’ (EPA–453/R–06– that apply to the following: (1) Source from Bulk Gasoline Plants’’ (EPA–450/ 001), ‘‘Control of Volatile Organic categories for which the EPA has issued 2–77–035), ‘‘Control of Volatile Organic Emissions from Existing Stationary a Control Techniques Guidelines (CTG) Compound Leaks from Gasoline Tank Sources—Volume VIII: Graphic Arts— document, and (2) major non-CTG Trucks and Vapor Collection Systems’’ Rotogravure and Flexography’’ (EPA– stationary sources of Volatile Organic (EPA–450/2–78–051), and ‘‘Design 430/2–78–033) and ‘‘Offset Lithographic Compounds (VOCs) or oxides of Criteria for Stage I Vapor Control Printing and Letterpress Printing’’ nitrogen (NOX). Systems—Gasoline Service Stations’’ (EPA–453/R06–002), and ‘‘Control of With respect to CTG source (EPA–450/R–75–102). MCAQD has Volatile Organic Compound Emissions categories, MCAQD determined that it committed to correct the EPA’s from Wood Furniture Manufacturing had sources subject to the CTGs identified deficiencies, and ADEQ has Operations’’ (EPA–453/R–96–007). covering solvent metal cleaning, committed to submit the updated rules On January 28, 2020 (85 FR 4928), the industrial cleaning solvents, within one year of the EPA’s final EPA proposed conditional approval of miscellaneous metal and plastic parts conditional approval. If MCAQD Rule 336 into the SIP, as well as coating, can coating, fabric coating, film corrects the identified deficiencies and conditional approval of the associated and foil coating, rotogravure and the EPA approves the updated rules, eight CTG source categories for the flexography, lithographic printing and MCAQD will have met its RACT County’s 2016 RACT SIP: ‘‘Control of letter press printing, wood furniture obligation for these rules, and the Volatile Organic Emissions from manufacturing operations, storage of associated CTGs. We are not acting on Existing Stationary Sources—Volume II: petroleum liquids, tank truck gasoline rules 350, 351, 352, and 353, or the Surface Coating of Cans, Coils, Paper, loading terminals, bulk gasoline plants, associated CTG categories in the Fabrics, Automobiles, and Light-Duty gasoline tank trucks and vapor MCAQD’s 2016 RACT SIP in this action. Trucks’’ (EPA–450/2–77–008), ‘‘Control collection systems, and gasoline service On August 27, 2019 (84 FR 44701), of Volatile Organic Emissions from stations. MCAQD submitted for SIP the EPA approved Rule 342 into the SIP, Existing Stationary Sources—Volume approval six rules to implement RACT finding that the rule met current RACT. III: Surface Coating of Metal Furniture’’ for these CTG categories: Rules 336, 342, This rulemaking also approved Rule (EPA–450/2–77–032), ‘‘Control of 350, 351, 352, and 353. 337, which had been submitted earlier Volatile Organic Emissions from On February 26, 2020 (85 FR 10986), and was not part of the 2016 RACT SIP Existing Stationary Sources—Volume V: the EPA conditionally approved Rules submittal. Although we approved Rules Surface Coating of Large Appliances’’ 350, 351, 352, and 353 into the SIP, and 337 and 342, and found that they (EPA–450/2–77–034), ‘‘Control of also conditionally approved the established RACT level controls, we did Volatile Organic Emissions from associated CTG source categories for the not in that action approve the 2016 Existing Stationary Sources—Volume MCAQD 2016 RACT SIP: ‘‘Control of RACT SIP for the associated CTG source VI: Surface Coating of Miscellaneous Volatile Organic Emissions from Storage categories. On September 18, 2020 (85 Metal Parts and Products’’ (EPA–450/2– of Petroleum Liquids in Fixed-Roof FR 58310), the EPA proposed to find 78–15), ‘‘Control Techniques Guidelines Tanks’’ (EPA–450/2–77–036), ‘‘Control that Rules 331, 337, and 342 establish for Metal Furniture Coatings’’ (EPA–

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453/R–07–005), ‘‘Control Techniques CTG sources of VOC and proposed to Also, as authorized in sections Guidelines for Large Appliance disapprove the RACT determination 110(k)(3) and 301(a) of the Act, the EPA Coatings’’ (EPA–453/R07–004), ‘‘Control that it has RACT rules covering major is finalizing a partial approval and Techniques Guidelines for sources of NOX. partial disapproval of the remainder of Miscellaneous Metal and Plastic Parts The proposed actions and associated the RACT SIP and associated negative Coatings’’ (EPA–453/R–08–003), and technical support documents contain declarations, as proposed. ‘‘Control Techniques Guidelines For more information on the basis for this We are finalizing a partial disapproval Paper, Film, and Foil Coatings’’ (EPA– rulemaking and on our evaluation of the with respect to the portions of the RACT 453/R–07–003). MCAQD has committed submittal. SIP addressing RACT for major sources to correct the EPA’s identified of NOX, and CTG source categories for deficiencies, and ADEQ has committed II. EPA Action Aerospace Coating and Industrial to submit the updated rule within one The EPA’s proposed actions provided Adhesives (‘‘National Emission year of the EPA’s final conditional 30-day public comment periods. During Standards for Hazardous Air Pollutants approval. If MCAQD corrects the the comment periods for the two for Source Categories: Aerospace identified deficiencies and the EPA proposed actions, we received no Manufacturing and Rework’’ (59 FR approves the updated rule, the County comments. Therefore, as authorized in 29216), ‘‘Control of Volatile Organic will have met its RACT obligation for section 110(k)(4) of the Act, the EPA is Compound Emissions from Coating this rule, and the associated CTGs. conditionally approving into the Operations at Aerospace Manufacturing On September 18, 2020 (85 FR 58310), Arizona SIP, Rule 336 and MCAQD’s and Rework Operations’’ (EPA–453/R– we proposed to approve negative RACT Demonstration for the 2008 8-hr 97–004), and ‘‘Control Techniques declarations, including negative ozone NAAQS with respect to the Guidelines for Miscellaneous Industrial declarations for some of the source following Control Techniques Adhesives’’ (EPA–453/R–08–005)). As a categories covered by Rule 336. Guidelines (CTGs), as described in our result of the final partial disapproval, Specifically, of eight CTG source proposal: offset sanctions will be imposed unless categories addressed by Rule 336 (as 1. ‘‘Control of Volatile Organic the EPA approves a subsequent SIP listed in the prior paragraph), our Emissions from Existing Stationary revision that corrects the identified September proposal proposed to Sources—Volume II: Surface Coating of deficiencies within 18 months of the approve negative declarations for five of Cans, Coils, Paper, Fabrics, effective date of this action. Highway them: ‘‘Control of Volatile Organic Automobiles, and Light-Duty Trucks’’ sanctions will be imposed unless the Emissions from Existing Stationary EPA–450/2–77–008, May 1977, cans EPA approves a subsequent SIP revision Sources—Volume III: Surface Coating of and fabrics portions only.1 that corrects the rule deficiencies within Metal Furniture’’ (EPA–450/2–77–032), 24 months of the effective date of this 2. ‘‘Control of Volatile Organic ‘‘Control of Volatile Organic Emissions action. These sanctions will be imposed Emissions from Existing Stationary from Existing Stationary Sources— under section 179 of the CAA and 40 Sources—Volume VI: Surface Coating of Volume V: Surface Coating of Large CFR 52.31. Additionally, section 110(c) Miscellaneous Metal Parts and Appliances’’ (EPA–450/2–77–034), requires the EPA to promulgate a federal Products,’’ EPA–450/2–78–15, June ‘‘Control Techniques Guidelines for implementation plan within 24 months 1978. Metal Furniture Coatings’’ (EPA–453/R– unless we approve subsequent SIP 07–005), ‘‘Control Techniques 3. ‘‘Control Techniques Guidelines for revisions that correct the deficiencies. Guidelines for Large Appliance Miscellaneous Metal and Plastic Parts The EPA is finalizing a partial Coatings’’ (EPA–453/R07–004), and Coatings,’’ EPA–453/R–08–003, approval of the RACT SIP with respect 2 ‘‘Control Techniques Guidelines For September 2008. to all remaining source categories, as Paper, Film, and Foil Coatings’’ (EPA– If the MCAQD and the ADEQ submit proposed. This includes approval of the 453/R–07–003). In addition, it proposed the required rule revisions to Rule 336 County’s negative declarations, with the approval of negative declarations for the by the specified deadline, and the EPA exception of the three disapproved coils, paper, automobile and light-duty approves the submission, then the negative declarations, and the County’s truck portions of the CTG ‘‘Control of identified deficiencies will be cured. RACT certifications for the following Volatile Organic Emissions from However, if MCAQD, through the CTG source categories: ‘‘Control of Existing Stationary Sources— Volume ADEQ, fails to submit these revisions to Volatile Organic Emissions from Solvent II: Surface Coating of Cans, Coils, Paper, Rule 336 within the required timeframe, Metal Cleaning’’ (EPA–450/2–77–022), Fabrics, Automobiles, and Light-Duty the conditional approval will be treated ‘‘Control Techniques Guidelines: Trucks’’ (EPA–450/2–77–008). In the as a disapproval for Rule 336 and the Industrial Cleaning Solvents’’ (EPA– same notice, the EPA also proposed to RACT demonstration for the three CTG 453/R–06–001), ‘‘Control of Volatile disapprove negative declarations for the categories listed above. Organic Emissions from Existing Aerospace Coating and Industrial Stationary Sources—Volume VIII: Adhesives source categories, because 1 Note that in this action the EPA is finalizing Graphic Arts—Rotogravure and there are applicable sources in the approval of negative declarations for the other Flexography’’ (EPA–430/2–78–033) and categories covered by this CTG: Surface coating of Maricopa County portion of the coils, paper, automobiles, and light-duty trucks. ‘‘Offset Lithographic Printing and Phoenix-Mesa ozone nonattainment 2 Our January 28, 2020 proposal also noted that Letterpress Printing’’ (EPA–453/R06– area. the deficiencies in Rule 336 were not consistent 002), and ‘‘Control of Volatile Organic With respect to major non-CTG with the 2007 CTGs for Metal Furniture and Large Compound Emissions from Wood stationary sources of Volatile Organic Appliance Coatings (85 FR at 4930). However, our September 18, 2020 proposal proposed to approve Furniture Manufacturing Operations’’ Compounds (VOCs) or oxides of negative declarations for these two source (EPA–453/R–96–007). nitrogen (NOX), MCAQD determined it categories. This final action approves these negative had RACT rules covering these sources. declarations. Therefore, the RACT SIP is fully III. Incorporation by Reference On September 18, 2020 (85 FR 58310), approved with respect to these CTG source In this rule, the EPA is finalizing categories, and they are not included within the the EPA proposed to approve the scope of the conditional approval of the RACT regulatory text that includes County’s RACT determination that it demonstration for CTG source categories associated incorporation by reference. In has RACT rules covering major non- with Rule 336. accordance with requirements of 1 CFR

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51.5, the EPA is finalizing the conditional approval does not in-and-of approves certain pre-existing State incorporation by reference of the itself create any new requirements but requirements for inclusion in the SIP. MCAQD rule described in the simply partially approves, partially amendments to 40 CFR part 52 set forth disapproves, and partially conditionally I. Executive Order 13211: Actions That below. Therefore, these materials have approves certain pre-existing State Significantly Affect Energy Supply, been approved by the EPA for inclusion requirements for inclusion in the SIP. Distribution, or Use in the SIP, have been incorporated by E. Unfunded Mandates Reform Act This action is not subject to Executive reference by the EPA into that plan, are (UMRA) Order 13211, because it is not a fully federally enforceable under significant regulatory action under sections 110 and 113 of the CAA as of This action does not contain any Executive Order 12866. the effective date of the final rulemaking unfunded mandate as described in of the EPA’s conditional approval, and UMRA, 2 U.S.C. 1531–1538, and does J. National Technology Transfer and will be incorporated by reference in the not significantly or uniquely affect small Advancement Act (NTTAA) next update to the SIP compilation.3 governments. This action partially The EPA has made, and will continue approves, partially disapproves, and Section 12(d) of the NTTAA directs to make, these documents available partially conditionally approves pre- the EPA to use voluntary consensus through www.regulations.gov and at the existing requirements under State or standards in its regulatory activities EPA Region IX Office (please contact the local law and imposes no new unless to do so would be inconsistent person identified in the FOR FURTHER requirements. Accordingly, no with applicable law or otherwise INFORMATION CONTACT section of this additional costs to state, local, or tribal impractical. The EPA believes that this preamble for more information). governments, or to the private sector, action is not subject to the requirements result from this action. of section 12(d) of the NTTAA because IV. Statutory and Executive Order Reviews F. Executive Order 13132: Federalism application of those requirements would be inconsistent with the CAA. Additional information about these This action does not have federalism statutes and Executive Orders can be implications. It will not have substantial K. Executive Order 12898: Federal found at http://www.epa.gov/laws- direct effects on the states, on the Actions To Address Environmental regulations/laws-and-executive-orders. relationship between the national Justice in Minority Populations and government and the states, or on the Low-Income Populations A. Executive Order 12866: Regulatory distribution of power and Planning and Review and Executive responsibilities among the various The EPA lacks the discretionary Order 13563: Improving Regulation and levels of government. authority to address environmental Regulatory Review justice in this rulemaking. G. Executive Order 13175: Coordination This action is not a significant With Indian Tribal Governments L. Congressional Review Act (CRA) regulatory action and was therefore not submitted to the Office of Management This action does not have tribal This action is subject to the CRA, and implications, as specified in Executive and Budget (OMB) for review. the EPA will submit a rule report to Order 13175, because the SIP revision each House of the Congress and to the B. Executive Order 13771: Reducing that the EPA is partially approving, Comptroller General of the United Regulations and Controlling Regulatory partially disapproving, and partially Costs conditionally approving would not States. This action is not a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). This action is not an Executive Order apply on any Indian reservation land or 13771 regulatory action because this in any other area where the EPA or an M. Petitions for Judicial Review action is not significant under Executive Indian tribe has demonstrated that a Order 12866. tribe has jurisdiction, and will not Under section 307(b)(1) of the Clean impose substantial direct costs on tribal Air Act, petitions for judicial review of C. Paperwork Reduction Act (PRA) governments or preempt tribal law. this action must be filed in the United This action does not impose an Thus, Executive Order 13175 does not States Court of Appeals for the information collection burden under the apply to this action. appropriate circuit by March 8, 2021. PRA, because this SIP partial approval, H. Executive Order 13045: Protection of Filing a petition for reconsideration by partial disapproval, and partial Children From Environmental Health the Administrator of this final rule does conditional approval does not in-and-of Risks and Safety Risks not affect the finality of this rule for the itself create any new information purposes of judicial review nor does it collection burdens, but simply partially The EPA interprets Executive Order extend the time within which a petition approves, partially disapproves, and 13045 as applying only to those for judicial review may be filed, and partially conditionally approves certain regulatory actions that concern shall not postpone the effectiveness of State requirements for inclusion in the environmental health or safety risks that such rule or action. This action may not the EPA has reason to believe may SIP. be challenged later in proceedings to disproportionately affect children, per enforce its requirements (see section D. Regulatory Flexibility Act (RFA) the definition of ‘‘covered regulatory 307(b)(2)). I certify that this action will not have action’’ in section 2–202 of the a significant economic impact on a Executive Order. This action is not List of Subjects in 40 CFR Part 52 substantial number of small entities subject to Executive Order 13045 under the RFA. This action will not because this SIP partial approval, partial Environmental protection, Air impose any requirements on small disapproval, and partial conditional pollution control, Incorporation by entities. This SIP partial approval approval does not in-and-of itself create reference, Intergovernmental relations, partial disapproval, and partial any new regulations, but simply Nitrogen dioxide, Ozone, Reporting and partially approves, partially recordkeeping requirements, Volatile 3 62 FR 27968 (May 22, 1997). disapproves, and partially conditionally organic compounds.

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Dated: December 11, 2020. twelve (12) months after the EPA’s Fabrics, Automobiles, and Light-Duty John Busterud, conditional approval. If the State fails to Trucks’’ EPA–450/2–77–008, May 1977 Regional Administrator, Region IX. meet its commitment, the conditional (cans and fabrics categories, only). Part 52, Chapter I, Title 40 of the Code approval will be treated as a disapproval ■ 3. Amend § 52.120 as follows: of Federal Regulations is amended as with respect to the rules and CTG ■ a. In paragraph (c), Table 4 under the follows: categories for which the corrections are table headings ‘‘Post-July 1988 Rule not met. The following MCAQD rules Codification’’ and ‘‘Regulation III— PART 52—APPROVAL AND and additional materials are Control of Air Contaminants,’’ by PROMULGATION OF conditionally approved: revising the entry for ‘‘Rule 336.’’ IMPLEMENTATION PLANS (i) Rule 336, Surface Coating ■ b. In paragraph (e), Table 1, under the Operations; ■ subheading ‘‘Part D Elements and Plans 1. The authority citation for part 52 (ii) The RACT demonstration titled for the Metropolitan Phoenix and continues to read as follows: ‘‘Analysis of Reasonably Available Tucson Areas,’’ by adding an entry for Authority: 42 U.S.C. 7401 et seq. Control Technology for the 2008 8-Hour ‘‘Analysis of Reasonably Available Ozone National Ambient Air Quality Control Technology for the 2008 8-Hour Subpart D—Arizona Standards (NAAQS) State Ozone National Ambient Air Quality Implementation Plan (RACT SIP),’’ only ■ 2. Amend § 52.119 by adding Standard (NAAQS) State those portions of the document claiming paragraph (c)(3) to read as follows: Implementation Plan (RACT SIP)’’ after RACT was met for the following CTG the entry for ‘‘Maricopa Association of § 52.119 Identification of plan—conditional source categories, ‘‘Control of Volatile Governments (MAG) 1987 Carbon approvals. Organic Emissions from Existing Monoxide (CO) Plan for the Maricopa * * * * * Stationary Sources—Volume VI: Surface County Area, MAG CO Plan (c) * * * Coating of Miscellaneous Metal Parts Commitments for Implementation, and (3) The EPA is conditionally and Products,’’ EPA–450/2–78–15, June Appendix A through E, Exhibit 4, approving portions of the Arizona SIP 1978, ‘‘Control Techniques Guidelines Exhibit D.’’ revisions submitted on June 22, 2017. for Miscellaneous Metal and Plastic The revision and addition read as The conditional approval is based upon Parts Coatings,’’ EPA–453/R–08–003, follows: the February 25, 2019 commitment from September 2008, and ‘‘Control of the State to submit a SIP revision Volatile Organic Emissions from § 52.120 Identification of plan. consisting of rule revisions that will Existing Stationary Sources—Volume II: * * * * * cure the identified deficiencies within Surface Coating of Cans, Coils, Paper, (c) * * *

TABLE 4—EPA-APPROVED MARICOPA COUNTY AIR POLLUTION CONTROL REGULATIONS

State effective County citation Title/subject date EPA approval date Additional explanation

*******

Post-July 1988 Rule Codification

*******

Regulation III—Control of Air Contaminants

*******

Rule 336 ...... Surface Coating Operations ...... 11/02/2016 01/07/2021, [INSERT Federal Submitted on June 22, 2017. Register CITATION].

*******

* * * * * (e) ** * TABLE 1—EPA-APPROVED NON-REGULATORY AND QUASI-REGULATORY MEASURES [Excluding certain resolutions and statutes, which are listed in tables 2 and 3, respectively] 1

Applicable geo- Name of SIP graphic or nonattain- State submittal provision ment area or title/ date EPA approval date Explanation subject

The State of Arizona Air Pollution Control Implementation Plan

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TABLE 1—EPA-APPROVED NON-REGULATORY AND QUASI-REGULATORY MEASURES—Continued [Excluding certain resolutions and statutes, which are listed in tables 2 and 3, respectively] 1

Applicable geo- Name of SIP graphic or nonattain- State submittal provision ment area or title/ date EPA approval date Explanation subject

*******

Part D Elements and Plans for the Metropolitan Phoenix and Tucson Areas

*******

Analysis of Rea- Maricopa County June 22, 2017 January 7, 2021, Except for those portions approved on 2/26/2020 in 85 FR 10986, and those por- sonably Avail- portion of Phoe- [INSERT Federal tions of the document claiming RACT was met for the following source cat- able Control nix-Mesa non- Register CITA- egories: ‘‘National Emission Standards for Hazardous Air Pollutants for Source Technology attainment area TION]. Categories: Aerospace Manufacturing and Rework’’ (59 FR 29216), ‘‘Control of for the 2008 for 2008 8-hour Volatile Organic Compound Emissions from Coating Operations at Aerospace 8-Hour Ozone ozone NAAQS. Manufacturing and Rework Operations’’ (EPA–453/R–97–004), ‘‘Control Tech- National Am- niques Guidelines for Miscellaneous Industrial Adhesives’’ (EPA–453/R–08–005), bient Air and major sources of NOX. Quality Stand- ard (NAAQS) State Imple- mentation Plan (RACT SIP).

******* 1 Table 1 is divided into three parts: Clean Air Act Section 110(a)(2) State Implementation Plan Elements (excluding Part D Elements and Plans), Part D Elements and Plans (other than for the Metropolitan Phoenix or Tucson Areas), and Part D Elements and Plans for the Metropolitan Phoenix and Tucson Areas.

* * * * * § 52.122 Negative declarations. (i) The following negative declarations for the 2008 ozone NAAQS ■ 4. Amend § 52.122 by adding (a) * * * (3) Maricopa County Air Quality were adopted on May 24, 2017 and paragraph (a)(3) as follows: Department. submitted on June 22, 2017.

EPA document No. Title

EPA–450/2–77–008 ...... Surface Coating of Coils. EPA–450/2–77–008 ...... Surface Coating of Paper. EPA–450/2–77–008 ...... Surface Coating of Automobiles and Light-Duty Trucks. EPA–450/2–77–025 ...... Refinery Vacuum Producing Systems, Wastewater Separators, and Process Unit Turnarounds. EPA–450/2–77–032 ...... Surface Coating of Metal Furniture. EPA–450/2–77–033 ...... Surface Coating of Insulation of Magnet Wire. EPA–450/2–77–034 ...... Surface Coating of Large Appliances. EPA–450/2–77–037 ...... Cutback Asphalt. EPA–450/2–78–029 ...... Manufacture of Synthesized Pharmaceutical Products. EPA–450/2–78–030 ...... Manufacture of Pneumatic Rubber Tires. EPA–450/2–78–032 ...... Factory Surface Coating of Flat Wood Paneling. EPA–450/2–78–036 ...... Leaks from Petroleum Refinery Equipment. EPA–450/3–82–009 ...... Large Petroleum Dry Cleaners. EPA–450/3–83–006 ...... Leaks from Synthetic Organic Chemical Polymer and Resin Manufacturing Equipment. EPA–450/3–83–007 ...... Leaks from Natural Gas/Gasoline Processing Plants. EPA–450/3–83–008 ...... Manufacture of High-Density Polyethylene, Polypropylene, and Polystyrene Resins. EPA–450/3–84–015 ...... Air Oxidation Processes in Synthetic Organic Chemical Manufacturing Industry. EPA–450/4–91–031 ...... Reactor Processes and Distillation Operations in Synthetic Organic Chemical Manufacturing Industry. EPA–453/R–94–032 ...... ACT Surface Coating at Shipbuilding and Ship Repair Facilities. 61 FR 44050; 8/27/96 .... Shipbuilding and Ship Repair Operations (Surface Coating). EPA–453/R–06–003 ...... Flexible Package Printing. EPA–453/R–06–004 ...... Flat Wood Paneling Coatings. EPA 453/R–07–003 ...... Paper, Film, and Foil Coatings. EPA 453/R–07–004 ...... Large Appliance Coatings. EPA 453/R–07–005 ...... Metal Furniture Coatings. EPA 453/R–08–004 ...... Fiberglass Boat Manufacturing Materials. EPA 453/R–08–006 ...... Automobile and Light-Duty Truck Assembly Coatings. EPA 453/B16–001 ...... Oil and Natural Gas Industry.

(ii) [Reserved] § 52.124 Part D disapproval. (i) RACT determinations for major sources of NO , and CTG source ■ 5. Amend § 52.124 by adding * * * * * X categories for Aerospace Coating and paragraph (b)(2) to read as follows: (b) * * * (2) Maricopa County Air Quality Industrial Adhesives (‘‘National Department. Emission Standards for Hazardous Air

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Pollutants for Source Categories: publication listed in the regulations is We recommend that you telephone Aerospace Manufacturing and Rework’’ approved by the Director of the Federal Audray Lincoln, Environmental (59 FR 29216), ‘‘Control of Volatile Register, as of March 8, 2021, in Protection Specialist at (214) 665–2239 Organic Compound Emissions from accordance with 5 U.S.C. 552(a) and 1 before visiting the Region 6 Office. Coating Operations at Aerospace CFR part 51. Interested persons wanting to examine Manufacturing and Rework Operations’’ ADDRESSES: Submit your comments by these documents should make an (EPA–453/R–97–004), and ‘‘Control one of the following methods: appointment with the office at least two Techniques Guidelines for 1. Federal eRulemaking Portal: weeks in advance. Miscellaneous Industrial Adhesives’’ https://www.regulations.gov. Follow the FOR FURTHER INFORMATION CONTACT: (EPA–453/R–08–005)), in the submittal on-line instructions for submitting Audray Lincoln, (214) 665–2239, titled ‘‘Analysis of Reasonably Available comments. [email protected]. Out of an Control Technology for the 2008 8-Hour 2. Email: [email protected]. abundance of caution for members of Ozone National Ambient Air Quality Instructions: Direct your comments to the public and our staff, the EPA Region Standard (NAAQS) State Docket ID No. EPA–R06–UST–2018– 6 office will be closed to the public to Implementation Plan (RACT SIP),’’ 0701. EPA’s policy is that all comments reduce the risk of transmitting COVID– dated December 5, 2016, as adopted on received will be included in the public 19. We encourage the public to submit May 24, 2017 and submitted on June 22, docket without change and may be comments via https:// 2017. available online at https:// www.regulations.gov, as there will be a (ii) [Reserved] www.regulations.gov, including any delay in processing mail and no courier * * * * * personal information provided, unless or hand deliveries will be accepted. [FR Doc. 2020–27806 Filed 1–6–21; 8:45 am] the comment includes information Please call or email the contact listed BILLING CODE 6560–50–P claimed to be Confidential Business above if you need alternative access to Information (CBI) or other information material indexed but not provided in whose disclosure is restricted by statute. the docket. ENVIRONMENTAL PROTECTION Do not submit information that you SUPPLEMENTARY INFORMATION: AGENCY consider to be CBI or otherwise I. Approval of Revisions to Arkansas’s 40 CFR Part 282 protected through https:// Underground Storage Tank Program www.regulations.gov, or email. The [EPA–R06–UST–2018–0701; FRL–10014– Federal https://www.regulations.gov A. Why are revisions to State programs 65–Region 6] website is an ‘‘anonymous access’’ necessary? system, which means the EPA will not States which have received final Arkansas: Final Approval of State know your identity or contact Underground Storage Tank Program approval from the EPA under RCRA information unless you provide it in the section 9004(b), 42 U.S.C. 6991c(b), Revisions and Incorporation by body of your comment. If you send an Reference must maintain an underground storage email comment directly to the EPA tank program that is equivalent to, AGENCY: Environmental Protection without going through https:// consistent with, and no less stringent Agency (EPA). www.regulations.gov, your email than the Federal underground storage ACTION: Direct final rule. address will be automatically captured tank program. When EPA makes and included as part of the comment revisions to the regulations that govern SUMMARY: Pursuant to the Resource that is placed in the public docket and the UST program, States must revise Conservation and Recovery Act (RCRA made available on the internet. If you their programs to comply with the or Act), the Environmental Protection submit an electronic comment, the EPA updated regulations and submit these Agency (EPA) is taking direct final recommends that you include your revisions to the EPA for approval. action to approve revisions to the State name and other contact information in Changes to State UST programs may be of Arkansas’s Underground Storage the body of your comment and with any necessary when Federal or State Tank (UST) program submitted by the disk or CD–ROM you submit. If the EPA statutory or regulatory authority is State. EPA has determined that these cannot read your comment due to modified or when certain other changes revisions satisfy all requirements technical difficulties, and cannot occur. Most commonly, States must needed for program approval. This contact you for clarification, the EPA change their programs because of action also codifies EPA’s approval of may not be able to consider your changes to the EPA’s regulations in 40 Arkansas’s State program and comment. Electronic files should avoid Code of Federal Regulations (CFR) part incorporates by reference those the use of special characters, any form 280. States can also initiate changes on provisions of the State regulations that of encryption, and be free of any defects their own to their underground storage we have determined meet the or viruses. tank program and these changes must requirements for approval. The The index to the docket for this action then be approved by EPA. provisions will be subject to EPA’s is available electronically at https:// inspection and enforcement authorities www.regulations.gov. You can view and B. What decisions has the EPA made in under Subtitle I of RCRA sections 9005 copy the documents that form the basis this rule? and 9006 and other applicable statutory for this codification and associated On October 17, 2018, in accordance and regulatory provisions. publicly available docket materials are with 40 CFR 281.51(a), Arkansas DATES: This rule is effective March 8, available either through https:// submitted a complete program revision 2021, unless EPA receives adverse www.regulations.gov or at the application seeking approval for its UST comment by February 8, 2021. If EPA Environmental Protection Agency, program revisions corresponding to the receives adverse comment, it will Region 6, 1201 Elm Street, Suite #500, EPA final rule published on July 15, publish a timely withdrawal in the Dallas, Texas 75270. This facility is 2015 (80 FR 41566), which finalized Federal Register informing the public open from 8:30 a.m. to 4:00 p.m. revisions to the 1988 UST regulations that the rule will not take effect. The Monday through Friday excluding and to the 1988 State program approval incorporation by reference of a certain Federal holidays and facility closures. (SPA) regulations. As required by 40

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CFR 281.20, the State submitted the EPA will withdraw the direct final rule owners and operators to provide notice following: A transmittal letter from the by publishing a document in the about contaminants and submissions of Governor requesting approval, a Federal Register before the rule final remediation plans. Requirements description of the program and becomes effective. The EPA will base for public participation and notification operating procedures, a demonstration any further decision on the approval of can be found in the ACA at sections 8– of the State’s procedures to ensure the State program changes on the 4–224 and 8–7–803, as well as in adequate enforcement, a Memorandum proposal to approve after considering all Regulation No. 12 at section 12.104 of Agreement outlining the roles and comments received during the comment which incorporates the Federal 40 CFR responsibilities of the EPA and the period. EPA will then address all public 280.67 by reference and Regulation No. implementing agency, a statement of comments in a later final rule. You may 8 at section 8.604. Arkansas has met the certification from the Attorney General, not have another opportunity to public participation requirements found and copies of all relevant State statutes comment. If you want to comment on in 40 CFR 281.42. and regulations. this approval, you must do so at this To qualify for final approval, a State’s We have reviewed the application and time. program must be ‘‘no less stringent’’ the revisions to Arkansas’s UST than the Federal program in all elements F. For what has Arkansas previously program and determined they are no of the revised EPA final rule published been approved? less stringent than the corresponding on July 15, 2015 (80 FR 41566). EPA Federal requirements in subpart C of 40 On February 24, 1995, EPA finalized added new operation and maintenance CFR part 281, and the Arkansas program a rule approving the UST program requirements and addressed UST provides for adequate enforcement of submitted by Arkansas in lieu of the systems deferred in the 1988 UST compliance (40 CFR 281.11(b)). Federal program. On January 18, 1996, regulations. The changes also added Therefore, the EPA grants Arkansas final EPA codified the approved Arkansas secondary containment requirements for approval to operate its UST program program that is subject to EPA’s new and replaced tank and piping, with the changes described in the inspection and enforcement authorities operator training requirements, periodic program revision application, and as under RCRA sections 9005 and 9006, 42 operation and maintenance outlined below in Section I.G of this U.S.C. 6991d and 6991e, and other requirements for UST systems, and document. The Arkansas Department of applicable statutory and regulatory requirements to ensure UST system Environmental Quality (ADEQ) is the provisions. compatibility before storing certain lead implementing agency for the UST G. What changes are we approving with biofuel blends. It removed past deferrals program in Arkansas, except in Indian this action? for emergency generator tanks, field country. constructed tanks and airport hydrant In order to be approved, the program systems. C. What is the effect of this approval must provide for adequate enforcement The ADEQ made updates to their decision? of compliance as described in 40 CFR regulations to ensure that they were no This action does not impose 281.11(b) and part 281, subpart D. The less stringent than the Federal additional requirements on the ADEQ has broad statutory authority to regulations which were revised on July regulated community because the regulate the installation, operation, 15, 2015 (80 FR 41566). Title 40 CFR regulations being approved by this rule maintenance, closure of USTs, and UST 281.30 through 281.39 contains the ‘‘no are already effective in the State of releases under the following: Arkansas less stringent than’’ criteria that a State Arkansas, and they are not changed by Code Annotated (ACA), Title 8, must meet in order to have its UST this action. This action merely approves Environmental Law; Chapter 1, General program approved. In the State’s the existing State regulations as meeting Provisions; Subchapter 1 General application for approval of its UST the Federal requirements and renders Provisions section 8–1–107; Subchapter program, the Arkansas Assistant them federally enforceable. 2 Powers of the Department and the Attorney General certified that it meets Commission section 8–1–202; Chapter 4 the requirements listed in 40 CFR D. Why is EPA using a direct final rule? Waste and Air Pollution Control Act; 281.30 through 281.39. EPA has relied The EPA is publishing this direct final Subchapter 1 sections 8–4–103(d)(1)(A) on this certification in addition to the rule without a prior proposed rule and (d)(3)(A)–(d)(4)(A); Subchapter 2 analysis submitted by the State in because we view this as a Water Pollution section 8–4–224; making our determination. For further noncontroversial action and anticipate Chapter 7 Hazardous Substances; information on EPA’s analysis of the no adverse comment. Arkansas received Subchapter 8 Regulated Substance State’s application, see the Technical comments during its comment period Storage Tanks; and Subchapter 9 Support Document (TSD) contained in when the rules and regulations in this Petroleum Storage Tank Trust Fund Act. the docket for this rulemaking. The document were being considered and Specific authorities to regulate the corresponding State regulations are as were proposed at the State level. All installation, operation, maintenance, follows: comments were addressed at public closure of USTs, and UST releases are Title 40 CFR 281.30 lists the Federal hearing and/or reflected in the adopted found under Arkansas Pollution Control requirements for new UST system regulations. and Ecology Commission (APC&EC) design, construction, installation, and Regulation Number 12 Storage Tanks, notification with which a State must E. What happens if the EPA receives sections Reg. 12.101 through 12.1002 as comply in order to be found to be no comments that oppose this action? amended effective August 24, 2018. The less stringent than Federal Along with this direct final rule, the aforementioned regulations satisfy the requirements. APC&EC Regulation No. EPA is publishing a separate document requirements of 40 CFR 281.40 and 12 Storage Tanks, section 12.104 in the ‘‘Proposed Rules’’ section of this 281.41. incorporates the necessary elements of Federal Register that serves as the The Arkansas DEQ’s Office of Land 40 CFR 280 by reference. Additionally, proposal to approve the State’s UST Resources (OLR) provides notice and the State includes requirements for program revision, providing opportunity opportunity for public comment on all notification and notification reporting at for public comment. If EPA receives proposed rules. The OLR investigates APC&EC Regulation No. 12 Storage comments that oppose this approval, and requires petroleum storage tank Tanks, section 12.201(A), requiring UST

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system owners and operators to notify requirements by reference contains the ACA 8–7–802(a)(2), grants the the implementing agency of any new required provisions as listed in 40 CFR Arkansas Pollution Control and Ecology UST systems, including instances where 281.35 for release response and Commission the power to set reasonable one assumes ownership of an existing corrective action. fees for licensure and registration. All UST. Title 40 CFR 281.36 contains the such State fees are broader in scope. Title 40 CFR 281.31 requires that most requirements for out of service UST At ACA 8–7–808, Arkansas details the existing UST systems meet the systems and closures that must be met requirements of the Regulated requirements of 281.30, are upgraded to in order for the State’s submission to be Substance Storage Tank Program Fund; prevent releases for their operating life considered no less stringent than all funds of this type are broader in due to corrosion, spills, or overfills, or Federal requirements. APC&EC scope because they have no Federal are permanently closed. APC&EC Regulation No. 12 Storage Tanks, counterparts. Regulation No. 12 Storage Tanks, section 12.104 which incorporates the At ACA 8–7–813, references to section 12.104 which incorporates the necessary Federal 40 CFR 280 aboveground storage tanks with respect necessary Federal 40 CFR 280 requirements by reference contains the to the State registration requirement are requirements by reference, as well as necessary requirements as listed in 40 broader in scope. sections 12.109, 12.502, and 12.503 CFR 281.36 for out of service UST ACA Chapter 7, Subchapter 9, contain the necessary requirements that systems and closures. sections 8–7–901 through 8–7–908 UST systems be upgraded to prevent regarding the detailed requirements of Title 40 CFR 281.37 contains the releases during their operating life due the State Petroleum Storage Tank Trust requirements for financial responsibility to corrosion, spills, or overfills. Fund Act are broader in scope. for UST systems containing petroleum Title 40 CFR 281.32 contains the At APC&EC Regulation No. 12, that must be met in order for the State’s general operating requirements that section 12.103(20), the reference to submission to be considered no less must be met in order for the State’s aboveground storage tanks are broader stringent than Federal requirements. submission to be considered no less in scope. stringent than the Federal requirements. APC&EC Regulation No. 12 Storage At APC&EC Regulation No. 12, APC&EC Regulation No. 12 Storage Tanks, section 12.104 which section 12.107, Arkansas regulates Tanks, section 12.104 which incorporates the necessary Federal 40 aboveground storage tanks in a manner incorporates the necessary Federal 40 CFR 280 requirements by reference, as that is broader in scope than the Federal CFR 280 requirements by reference, as well as sections 12.302(A)(1) and 12.314 program. well as section 12.105 contain the contain the necessary requirements as At APC&EC Regulation No. 12, necessary general operating listed in 40 CFR 281.37 for financial section 12.201(C) through (F), Arkansas requirements required by 40 CFR responsibility for UST systems. regulates aboveground storage tanks in a 281.32. Title 40 CFR 281.38 contains the manner that is broader in scope than the Title 40 CFR 281.33 contains the requirements for lender liability that Federal program. requirements for release detection that must be met in order for the State’s At APC&EC Regulation No. 12, must be met in order for the State’s submission to be considered no less sections 12.202(B)(2) and 12.203, submission to be considered no less stringent than Federal requirements. Arkansas assesses a storage tank stringent than Federal requirements. APC&EC Regulation No. 12 Storage registration fee to be paid by tank APC&EC Regulation No. 12 Storage Tanks, section 12.104 which owners and operators. All such State Tanks, section 12.104 which incorporates the necessary Federal 40 fees are broader in scope. incorporates the necessary Federal 40 CFR 280 requirements by reference, as APC&EC Regulation No. 12, Chapter 3 CFR 280 requirements by reference, as well as section 12.321 contain the Petroleum Storage Tank Trust Fund well as section 12.109 contain the requirements for lender liability as Corrective Action Reimbursement necessary requirements for release listed in 40 CFR 281.38. Procedures and Chapter 4 Petroleum detection as required by 40 CFR 281.33. Title 40 CFR 281.39 contains the Storage Tank Trust Fund Third-Party Title 40 CFR 281.34 contains the requirements for operator training that Payment Procedures; State trust funds of requirements for release reporting, must be met in order for the State’s this type are state-specific and are investigation, and confirmation that submission to be considered no less broader in scope than the Federal must be met in order for the State’s stringent than Federal requirements. program. submission to be considered no less APC&EC Regulation No. 12 Storage Where an approved State program has stringent than Federal requirements. Tanks, section 12.104 which a greater scope of coverage than APC&EC Regulation No. 12 Storage incorporates the necessary Federal 40 required by Federal law, the additional Tanks, section 12.104 which CFR 280 requirements by reference, as coverage is not part of the federally- incorporates the necessary Federal 40 well as sections 12.105, and 12.701 approved program. See 40 CFR CFR 280 requirements by reference, as through 12.710 contain the 281.12(a)(3)(ii). well as sections 12.108 and 12.305 requirements for operator training as More Stringent Provisions contain the necessary requirements as required by 40 CFR 281.39. required by 40 CFR 281.34 for release The following regulatory provisions reporting, investigation, and H. Where are the revised rules different are considered more stringent in confirmation. from the Federal rules? coverage than the Federal program: Title 40 CFR 281.35 contains the Broader in Scope Provisions At APC&EC Regulation No. 12 Storage requirements for release response and Tanks, section 12.105, Arkansas has corrective action that must be met in The following statutory and additional, state-only records order for the State’s submission to be regulatory provisions are considered requirements, including access by the considered no less stringent than broader in scope than the Federal Department, and additional records for Federal requirements. APC&EC program: state-specific programs such as the Regulation No. 12 Storage Tanks, At ACA 8–7–801(1) introductory broader in scope Trust Fund Act. section 12.104 which incorporates the paragraph through (1)(B), Arkansas At APC&EC Regulation No. 12 Storage necessary Federal 40 CFR 280 defines ‘‘aboveground storage tank’’. Tanks, section 12.109(A), the State

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began requiring secondary containment C. What codification decisions have we authorities. Section 282.53(d)(1)(ii) of 40 for new tanks installed after July 1, made in this rule? CFR lists those approved Arkansas 2007. In this rule, we are finalizing authorities that would fall into this At APC&EC Regulation No. 12 Storage regulatory text that includes category. Tanks, section 12.109(C), the State incorporation by reference. In E. What State provisions are not part of began requiring under dispenser accordance with the requirements of 1 the codification? containment for specific tank systems CFR 51.5, we are finalizing the The public also needs to be aware that installed after July 1, 2007. incorporation by reference of the some provisions of the State’s UST At APC&EC Regulation No. 12 Storage Arkansas rules described in the program are not part of the federally- Tanks, section 12.109(B), the State amendments to 40 CFR part 282 set approved State program. Such began requiring secondary containment forth below. The EPA has made, and provisions are not part of the RCRA for existing tanks replaced after July 1, will continue to make, these documents Subtitle I program because they are 2007. generally available through https:// ‘‘broader in coverage’’ than Subtitle I of www.regulations.gov and/or in hard RCRA. Title 40 CFR 281.12(a)(3)(ii) At APC&EC Regulation No. 12 Storage copy at the EPA Region 6 office (see the Tanks, Chapter 6 Licensing of states that where an approved State ADDRESSES section of this preamble for Underground Storage Tank Testers, program has provisions that are broader more information). in scope than the Federal program, section 12.602 through 12.613, Arkansas The purpose of this Federal Register those provisions are not a part of the requires UST testers to be licensed in a document is to codify Arkansas’s federally-approved program. As a result, manner that is not required by the approved UST program. The State provisions which are ‘‘broader in Federal program; however, this is codification reflects the State program coverage’’ than the Federal program are consistent with the licensing of other that would be in effect at the time the not incorporated by reference for tank professionals. EPA’s approved revisions to the purposes of enforcement in part 282. Arkansas UST program addressed in I. How does this action affect Indian Section 282.53(d)(1)(iii) of the this direct final rule become final. The country (18 U.S.C. 1151) in Arkansas? codification simply lists for reference document incorporates by reference and clarity the Arkansas statutory and Arkansas is not authorized to carry Arkansas’s UST regulations and clarifies regulatory provisions which are out its Program in Indian country (18 which of these provisions are included ‘‘broader in scope’’ than the Federal U.S.C. 1151) within the State. This in the approved and federally program and which are not, therefore, authority remains with EPA. Therefore, enforceable program. By codifying the part of the approved program being this action has no effect in Indian approved Arkansas program and by codified today. Provisions that are country. See 40 CFR 281.12(a)(2). amending the Code of Federal ‘‘broader in scope’’ cannot be enforced Regulations (CFR), the public will more II. Codification by EPA; the State, however, will easily be able to discern the status of the continue to implement and enforce such A. What is codification? federally-approved requirements of the provisions under State law. Arkansas program. Codification is the process of placing The EPA is incorporating by reference III. Statutory and Executive Order a State’s statutes and regulations that the Arkansas approved UST program in Reviews comprise the State’s approved UST 40 CFR 282.53. Section This action only applies to Arkansas’s program into the CFR. Section 9004(b) 282.53(d)(1)(i)(A) incorporates by of RCRA, as amended, allows the EPA UST Program requirements pursuant to reference for enforcement purposes the RCRA section 9004 and imposes no to approve State UST programs to State’s statutes and regulations. Section operate in lieu of the Federal program. requirements other than those imposed 282.53 also references the Attorney by State law. It complies with The EPA codifies its authorization of General’s Statement, the Demonstration State programs in 40 CFR part 282 and applicable Executive Orders (E.O.s) and of Procedures for Adequate statutory provisions as follows: incorporates by reference State Enforcement, the Program Description, regulations that the EPA will enforce and the Memorandum of Agreement, A. Executive Order 12866 Regulatory under RCRA sections 9005 and 9006 which are approved as part of the UST Planning and Review, Executive Order and any other applicable statutory program under subtitle I of RCRA. 13563: Improving Regulation and provisions. The incorporation by Regulatory Review reference of State authorized programs D. What is the effect of Arkansas’s codification on enforcement? The Office of Management and Budget in the CFR should substantially enhance (OMB) has exempted this action from the public’s ability to discern the The EPA retains the authority under the requirements of Executive Order current status of the approved State Subtitle I of RCRA sections 9003(h), 12866 (58 FR 51735, October 4, 1993) program and State requirements that can 9005 and 9006, 42 U.S.C. 6991b(h), and 13563 (76 FR 3821, January 21, be Federally enforced. This effort 6991d and 6991e, and other applicable 2011). This action approves and codifies provides clear notice to the public of the statutory and regulatory provisions to State requirements for the purpose of scope of the approved program in each undertake corrective action, inspections RCRA section 9004 and imposes no State. and enforcement actions and to issue additional requirements beyond those B. What is the history of codification of orders in approved States. With respect imposed by State law. Therefore, this Arkansas’s UST program? to these actions, EPA will rely on action is not subject to review by OMB. Federal sanctions, Federal inspection The EPA incorporated by reference authorities, and Federal procedures B. Executive Order 13771: Reducing Arkansas’s then-approved UST program rather than the State authorized Regulations and Controlling Regulatory effective March 18, 1996 (61 FR 1213; analogues to these provisions. Costs January 18, 1996). In this document, the Therefore, the EPA is not incorporating This action is not a regulatory action EPA is revising 40 CFR 282.53 to by reference such particular, approved under Executive Order 13771 (82 FR include the approved revisions. Arkansas procedural and enforcement 9339, February 3, 2017) because actions

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such as this final approval of Arkansas’s G. National Technology Transfer and to, and no less stringent than existing revised underground storage tank Advancement Act Federal requirements, and imposes no program under RCRA are exempted Under RCRA section 9004(b), EPA additional requirements beyond those under Executive Order 12866. grants a State’s application for approval imposed by State law, and there are no Accordingly, I certify that this action as long as the State meets the criteria anticipated significant adverse human will not have a significant economic required by RCRA. It would thus be health or environmental effects, the rule impact on a substantial number of small inconsistent with applicable law for is not subject to Executive Order 12898. entities under the Regulatory Flexibility EPA, when it reviews a State approval L. Congressional Review Act Act (5 U.S.C. 601 et seq.). application, to require the use of any particular voluntary consensus standard The Congressional Review Act, 5 C. Unfunded Mandates Reform Act and U.S.C. 801–808, generally provides that Executive Order 13175: Consultation in place of another standard that otherwise satisfies the requirements of before a rule may take effect, the agency and Coordination With Indian Tribal promulgating the rule must submit a Governments RCRA. Thus, the requirements of section 12(d) of the National rule report, which includes a copy of the rule, to each House of the Congress Because this action approves and Technology Transfer and Advancement and to the Comptroller General of the codifies pre-existing requirements under Act of 1995 (15 U.S.C. 272 note) do not United States. EPA will submit a report State law and does not impose any apply. containing this document and other additional enforceable duty beyond that H. Executive Order 12988: Civil Justice required information to the U.S. Senate, required by State law, it does not Reform the U.S. House of Representatives, and contain any unfunded mandate or the Comptroller General of the United significantly or uniquely affect small As required by section 3 of Executive States prior to publication in the governments, as described in the Order 12988 (61 FR 4729, February 7, Federal Register. A major rule cannot Unfunded Mandates Reform Act of 1995 1996), in issuing this rule, EPA has take effect until 60 days after it is (2 U.S.C. 1531–1538). For the same taken the necessary steps to eliminate published in the Federal Register. This reason, this action also does not drafting errors and ambiguity, minimize action is not a ‘‘major rule’’ as defined significantly or uniquely affect the potential litigation, and provide a clear by 5 U.S.C. 804(2). However, this action communities of tribal governments, as legal standard for affected conduct. will be effective March 8, 2021 because specified by Executive Order 13175 (65 I. Executive Order 12630: Governmental it is a direct final rule. FR 67249, November 9, 2000). Actions and Interference With Constitutionally Protected Property List of Subjects in 40 CFR Part 282 D. Executive Order 13132: Federalism Rights Environmental protection, This action will not have substantial EPA has complied with Executive Administrative practice and procedure, direct effects on the States, on the Order 12630 (53 FR 8859, March 15, Hazardous substances, Incorporation by relationship between the National 1988) by examining the takings reference, Insurance, Intergovernmental Government and the States, or on the implications of the rule in accordance relations, Oil pollution, Petroleum, distribution of power and with the ‘‘Attorney General’s Reporting and recordkeeping responsibilities among the various Supplemental Guidelines for the requirements, Surety bonds, Water levels of government, as specified in Evaluation of Risk and Avoidance of pollution control, Water supply. Executive Order 13132 (64 FR 43255, Unanticipated Takings’’ issued under Authority: This rule is issued under the August 10, 1999), because it merely the Executive order. authority of Sections 2002(a), 9004, and approves and codifies State J. Paperwork Reduction Act 7004(b) of the Solid Waste Disposal Act, as requirements as part of the State RCRA amended, 42 U.S.C. 6912, 6991c, 6991d, and underground storage tank program This rule does not impose an 6991e. information collection burden under the without altering the relationship or the Dated: October 27, 2020. provisions of the Paperwork Reduction distribution of power and Kenley McQueen, responsibilities established by RCRA. Act of 1995 (44 U.S.C. 3501 et seq.). ‘‘Burden’’ is defined at 5 CFR 1320.3(b). Regional Administrator, Region 6. E. Executive Order 13045: Protection of K. Executive Order 12898: Federal For the reasons set forth in the Children From Environmental Health preamble, EPA is amending 40 CFR part and Safety Risks Actions To Address Environmental Justice in Minority Populations and Low 282 as follows: This action also is not subject to Income Populations PART 282—APPROVED Executive Order 13045 (62 FR 19885, Executive Order 12898 (59 FR 7629, UNDERGROUND STORAGE TANK April 23, 1997), because it is not February 16, 1994) establishes Federal PROGRAMS economically significant and it does not executive policy on environmental make decisions based on environmental justice. Its main provision directs ■ 1. The authority citation for part 282 health or safety risks. Federal agencies, to the greatest extent continues to read as follows: F. Executive Order 13211: Actions That practicable and permitted by law, to Authority: 42 U.S.C. 6912, 6991c, 6991d, Significantly Affect Energy Supply, make environmental justice part of their and 6991e. Distribution, or Use mission by identifying and addressing, ■ 2. Revise § 282.53 to read as follows: as appropriate, disproportionately high This rule is not subject to Executive and adverse human health or § 282.53 Arkansas State-Administered Order 13211, ‘‘Actions Concerning environmental effects of their programs, Program. Regulations that Significantly Affect policies, and activities on minority (a) History of the approval of Energy Supply, Distribution, or Use’’ (66 populations and low-income Arkansas’s program. The State of FR 28355, May 22, 2001) because it is populations in the United States. Arkansas is approved to administer and not a ‘‘significant regulatory action’’ as Because this rule approves pre-existing enforce an underground storage tank defined under Executive Order 12866. State rules which are at least equivalent program in lieu of the Federal program

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under Subtitle I of the Resource number: (501) 682–0923. You may Reg. 12.709 Violations and Reg. 12.710 Conservation and Recovery Act of 1976 inspect all approved material at the EPA Disclosure Exemption; and Chapter 8 (RCRA), as amended, 42 U.S.C. 6991, et Region 6, 1201 Elm Street, Suite 500, Confidentiality Reg. 12.801 through Reg. seq. The State’s program, as Dallas, Texas 75270 (Phone number 12.805. administered by the Arkansas (214) 665–2239) or the National (iii) Provisions not incorporated by Department of Environmental Quality, Archives and Records Administration reference. The following specifically was approved by EPA pursuant to 42 (NARA). For information on the identified sections and rules applicable U.S.C. 6991c and Part 281 of this availability of the material at NARA, to the Arkansas underground storage Chapter. EPA published the notice of email [email protected] or go to tank program that are broader in scope final determination approving the http://www.archives.gov/federal- than the Federal program, are not part Arkansas underground storage tank base register/cfr/ibr-locations.html. of the approved program, and are not program effective on November 16, (A) ‘‘EPA-Approved Arkansas incorporated by reference herein for 1990. A subsequent program revision Regulatory Requirements Applicable to enforcement purposes: application was approved effective on the Underground Storage Tank (A) Arkansas Code Annotated (ACA), March 8, 2021. Program,’’ August 2020. Only those 2017, Title 8 Environmental Law: (b) Enforcement authority. Arkansas provisions that have been approved by Chapter 7 Hazardous Substances, has primary responsibility for EPA are incorporated by reference. Subchapter 8 Regulated Substance administering and enforcing its Those provisions are listed in Appendix Storage Tanks, sections 8–7–801(1) federally-approved underground storage A to part 282. introductory paragraph through (1)(B), tank program. However, EPA retains the (B) [Reserved] 8–7–802(a)(2), 8–7–808, 8–7–813 (as it authority to exercise its corrective (ii) Legal basis. EPA evaluated the applies to aboveground storage tanks action, inspection and enforcement following statutes and regulations [ASTs] only); and Subchapter 9 authorities under Subtitle I of RCRA which provide the legal basis for the Petroleum Storage Tank Trust Fund Act, sections 9003(h), 9005 and 9006, 42 State’s implementation of the sections 8–7–901 through 8–7–908. U.S.C. 6991b(h), 6991d and 6991e, as underground storage tank program, but (B) Arkansas Pollution Control and well as under any other applicable they are not being incorporated by Ecology Commission (APC&EC) statutory and regulatory provisions. reference and do not replace Federal Regulation No. 12 Storage Tanks, as (c) Retaining program approval. To authorities: amended effective August 24, 2018: retain program approval, Arkansas must (A) The statutory provisions include: Chapter 1 General Provisions, Reg. revise its approved program to adopt Arkansas Code Annotated (ACA), 2017 12.107 Entry and Inspection of new changes to the Federal subtitle I Title 8, Environmental Law: Aboveground Storage Tank Facilities; program which make it more stringent, (1) Chapter 1 General Provisions: Chapter 2 Registration of Storage Tanks, in accordance with RCRA section 9004, (i) Subchapter 1 General Provisions, Reg. 12.201(C) through (F) Registration 42 U.S.C. 6991c, and 40 CFR part 281, section 8–1–107; and Requirement, 12.202(B)(2) Certification subpart E. If Arkansas obtains approval (ii) Subchapter 2 Powers of the of Registration (as it applies to fees for the revised requirements pursuant to Department and Commission, section only), 12.203 Storage Tank Registration RCRA section 9004, 42 U.S.C. 6991c, the 8–1–202; Fees; Chapter 3 Petroleum Storage Tank newly approved statutory and (2) Chapter 4 Arkansas Water and Air Trust Fund Corrective Action regulatory provisions will be added to Pollution Control Act: Reimbursement Procedures; and this subpart and notice of any change (i) Subchapter 1 General Provisions, Chapter 4 Petroleum Storage Tank Trust will be published in the Federal sections 8–4–103(d)(1)(A) and 8–4– Fund Third-Party Payment Procedures. Register. 103(d)(3)(A) through (d)(4)(A); and (2) Statement of legal authority. The (d) Final program approval. Arkansas (ii) Subchapter 2 Water Pollution, Attorney General’s Statement, signed by has final approval for the following section 8–4–224; the Assistant Attorney General of elements of its program application (3) Chapter 7 Hazardous Substances: Arkansas September 21, 1994, and originally submitted to EPA and (i) Subchapter 8 Regulated Substance revisions to that Statement dated approved effective November 16, 1990, Storage Tanks, sections 8–7–801(2) October 2, 2018, though not and the program revision application through (14)(J); 8–7–802(a)(1); 8–7– incorporated by reference, are approved by EPA effective on March 8, 802(b); 8–7–803 through 8–7–807; 8–7– referenced as part of the approved 2021: 809 through 8–7–812, 8–7–813 (except underground storage tank program (1) State statutes and regulations—(i) references to aboveground storage tanks under Subtitle I of RCRA, 42 U.S.C. Incorporation by reference. The [ASTs]); 8–7–814; 8–7–816; 8–7–817; 6991 et seq. Arkansas provisions cited in this and (3) Demonstration of procedures for paragraph are incorporated by reference (ii) Subchapter 9 Petroleum Storage adequate enforcement. The ‘‘Adequate as part of the underground storage tank Tank Trust Fund Act, section 8–7–909. Enforcement of Compliance’’ submitted program under Subtitle I of RCRA, 42 (B) The regulatory provisions include: as part of the original application on U.S.C. 6991 et seq. The Director of the Arkansas Pollution Control and Ecology September 26, 1994 and as part of the Federal Register approves this Commission (APC&EC) Regulation No. program revision application for incorporation by reference in 12 Storage Tanks, as amended effective approval on October 17, 2018, though accordance with 5 U.S.C. 552(a) and 1 August 24, 2018: Chapter 1 General not incorporated by reference, is CFR part 51. You may obtain copies of Provisions, Reg. 12.110 Delivery referenced as part of the approved the Arkansas regulations that are Prohibition; Chapter 2 Registration of underground storage tank program incorporated by reference from the Storage Tanks, Reg. 12.201 Registration under Subtitle I of RCRA, 42 U.S.C. Arkansas Department of Environmental Requirement; Chapter 5 Licensing of 6991 et seq. Quality (ADEQ) website at http:// Underground Storage Tank Installers (4) Program description. The program www.adeq.state.ar.us/regs/default.htm and Service Personnel, Reg. 12.515; description and any other material or the Public Outreach Office, ADEQ, Chapter 6 Licensing of Underground submitted as part of the original 5301 Northshore Drive, North Little Storage Tank Testers, Reg. 12.613 application September 26, 1994, and as Rock, Arkansas 72118–5317; Phone Violations; Chapter 7 Operator Training, part of the program revision application

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October 17, 2018, though not Class C Operator Training, Reg. 12.708 Please note that due to the public incorporated by reference, are Operator Examination. health emergency, the EPA Docket referenced as part of the approved (b) Copies of the Arkansas regulations that Center (EPA/DC) and Reading Room underground storage tank program are incorporated by reference are available was closed to public visitors on March from the Arkansas Department of 31, 2020. Our EPA/DC staff will under Subtitle I of RCRA, 42 U.S.C. Environmental Quality (ADEQ) website at 6991 et seq. http://www.adeq.state.ar.us/regs/default.htm continue to provide customer service (5) Memorandum of Agreement. The or the Public Outreach Office, ADEQ, 5301 via email, phone, and webform. For Memorandum of Agreement between Northshore Drive, North Little Rock, further information on EPA/DC services, EPA Region 6 and the Arkansas Arkansas 72118–5317; Phone number: (501) docket contact information and the Department of Environmental Quality, 682–0923. current status of the EPA/DC and signed by the EPA Regional * * * * * Reading Room, please visit https:// Administrator on May 8, 2019, though [FR Doc. 2020–24240 Filed 1–6–21; 8:45 am] www.epa.gov/dockets. not incorporated by reference, is BILLING CODE 6560–50–P FOR FURTHER INFORMATION CONTACT: referenced as part of the approved For technical information contact: underground storage tank program Claire Brisse, Existing Chemicals Risk under Subtitle I of RCRA, 42 U.S.C. ENVIRONMENTAL PROTECTION Management Division, Office of 6991 et seq. AGENCY Pollution Prevention and Toxics ■ 3. Appendix A to part 282 is amended (Mailcode 7404T), Environmental by revising the entry for Arkansas to 40 CFR Part 745 Protection Agency, 1200 Pennsylvania read as follows: [EPA–HQ–OPPT–2020–0063; FRL–10018– Ave. NW, Washington, DC 20460–0001; 61] telephone number: (202) 564–9004; Appendix A to Part 282—State email address: [email protected]. Requirements Incorporated by RIN 2070–AK50 These phone numbers may also be Reference in Part 282 of the Code of reached by individuals who are deaf or Federal Regulations Review of Dust-Lead Post Abatement Clearance Levels hard of hearing, or who have speech * * * * * disabilities, through the Federal Relay AGENCY: Environmental Protection Service’s teletype service at (800) 877– Arkansas Agency (EPA). 8339. (a) The regulatory provisions include: ACTION: Final rule. For general information contact: The Arkansas Pollution Control and Ecology TSCA-Hotline, ABVI-Goodwill, 422 Commission (APC&EC) Regulation No. 12 SUMMARY: Reducing childhood lead South Clinton Ave., Rochester, NY Storage Tanks, as amended effective August exposure is a priority for the 14620; telephone number: (202) 554– 24, 2018: 1404; email address: TSCA-Hotline@ Chapter 1 General Provisions, Reg. 12.103 Environmental Protection Agency Definitions, except (B)(1), Reg. 12.104 (EPA). As part of EPA’s efforts to reduce epa.gov. Incorporation of Federal Regulations, Reg. childhood lead exposure, and in SUPPLEMENTARY INFORMATION: 12.105 Records, Reg. 12.106 Entry and coordination with the President’s Task Inspection of Underground Storage Tank Force on Environmental Health Risks I. Executive Summary Facilities, Reg. 12.108 Notice Requirements, and Safety Risks to Children, EPA A. Does this action apply to me? Reg. 12.109 Secondary Containment; reevaluated the 2001 dust-lead You may be potentially affected by Chapter 2 Registration of Storage Tanks, clearance levels (DLCL). Clearance Reg. 12.201(A); this action if you conduct Lead-Based Chapter 5: Licensing of Underground levels indicate the amount of lead in Paint (LBP) activities in accordance Storage Tank Installers and Service dust on a surface following the with 40 CFR 745.227; if you operate a Personnel, Reg. 12.502 Definitions, Reg. completion of an abatement activity. training program required to be 12.503 Applicability, Reg. 12.504 General Surface dust is collected via dust wipe accredited under 40 CFR 745.225; if you Requirements, Reg. 12.505 Surety samples that are sent to a laboratory for are a firm or individual who must be Requirement, Reg. 12.506 Notification analysis to determine whether clearance certified to conduct LBP activities in Requirement, Reg. 12.507 Contractor has been achieved. The post-abatement Licensing, Reg. 12.508 Individual Licensing, accordance with 40 CFR 745.226; or if dust-lead levels are evaluated against, you conduct rehabilitations or Reg. 12.509 Contractor/Individual Licensing, and must be below, the applicable Reg. 12.510 Experience Requirements, Reg. maintenance activities in most pre-1978 12.511 Licensing Examination, Reg. 12.512 clearance levels. The DLCL have not housing that is covered by a Federal Renewal of Licenses, Reg. 12.513 Denial of changed since they were issued in 2001. housing assistance program in Licenses, Reg. 12.514 Department Approval EPA is finalizing its proposal to lower accordance with 24 CFR part 35. You of Training and Continuing Education; the DLCL from 40 micrograms of per may also be affected by this action if 2 2 Chapter 6: Licensing of Underground square foot (mg/ft ) to 10 mg/ft for floors, you operate a laboratory that is Storage Tank Testers, Reg. 12.602 2 2 and from 250 mg/ft to 100 mg/ft for recognized by EPA’s National Lead Definitions, Reg. 12.603 Applicability, Reg. window sills. 12.604 General Requirements, Reg. 12.605 Laboratory Accreditation Program DATES: Surety Requirement, Reg. 12.606 Company This final rule is effective March (NLLAP) in accordance with 40 CFR Licensing, Reg. 12.607 Individual Licensing, 8, 2021. 745.90, 745.223, 745.227, 745.327. You Reg. 12.608 Company/Individual Licensing, ADDRESSES: The docket for this action, may also be affected by this action, in Reg. 12.609 Experience Requirements, Reg. identified by docket identification (ID) accordance with 40 CFR 745.107 and 24 12.610 Renewal of Licenses, Reg. 12.611 number EPA–HQ–OPPT–2020–0063, is CFR 35.88, as the seller or lessor of Denial of Licenses, Reg. 12.612 Department available at http://www.regulations.gov target housing, which is most pre-1978 Approval of Training and Continuing or at the Office of Pollution Prevention housing. See 40 CFR 745.103 and 24 Education; and Chapter 7: Operator Training, Reg. 12.702 and Toxics Docket (OPPT Docket), CFR 35.86. The following list of North Definitions, Reg. 12.703 Applicability, Reg. Environmental Protection Agency American Industrial Classification 12.704 General Requirements, Reg. 12.705 Docket Center (EPA/DC), West William System (NAICS) codes is not intended Class A Operator Certification, Reg. 12.706 Jefferson Clinton Bldg., Rm. 3334, 1301 to be exhaustive, but rather provides a Class B Operator Certification, Reg. 12.707 Constitution Ave. NW, Washington, DC. guide to help readers determine whether

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this document applies to them. shall be recleaned and retested. In 2001, health effects. The Lead Action Plan is Potentially affected entities may EPA originally established DLCL of 40 helping Federal agencies to work include: mg/ft2 for floors, 250 mg/ft2 for window strategically and collaboratively to D Real estate (NAICS code 531), e.g., sills and 400 mg/ft2 for window troughs reduce exposure to lead and improve lessors of residential buildings and in a final rule entitled, ‘‘Identification of children’s health. This final rule, which dwellings, residential property Dangerous Levels of Lead.’’ See 66 FR revises the DLCL, is an action that EPA managers. 1206, January 5, 2001 (FRL–6763–5), committed to undertake in the Lead D Other technical and trade schools also known as the 2001 LBP Hazards Action Plan (Ref. 5). (NAICS code 611519), e.g., training Rule (Ref. 2). In the 2001 LBP Hazards Rule, EPA providers. On June 24, 2020, EPA proposed to first established the DLHS that identify D Engineering services (NAICS code revise the DLCL for window sills and dust-lead hazards and the DLCL used to 541330) and building inspection floors. EPA is now finalizing its evaluate the effectiveness of cleaning services (NAICS code 541350), e.g., dust proposal to lower the DLCL set by the following an abatement. Abatements are sampling technicians. 2001 LBP Hazards Rule, from 40 mg/ft2 designed to permanently eliminate LBP D Lead abatement professionals to 10 mg/ft2 for floor dust and from 250 hazards including dust-lead hazards. (NAICS code 562910), e.g., firms and mg/ft2 to 100 mg/ft2 for window sill dust. In 2019, EPA reevaluated the DLHS supervisors engaged in LBP activities. As explained elsewhere in this (Ref. 3). Based on that revaluation, the D Testing laboratories (NAICS code preamble, EPA is not revising the DLCL final rule revised the DLHS from 40 mg/ 541380) that analyze dust wipe samples for window troughs at this time. The ft2 and 250 mg/ft2 to 10 mg/ft2 and 100 for lead. revised DLCL of 10 mg/ft2 on floors and mg/ft2 on floors and window sills, D Federal agencies that own 100 mg/ft2 on window sills will not respectively. EPA based that decision on residential property (NAICS code 92511, apply retroactively; that is, this final the best available science, the Agency’s 92811). rule will not impose retroactive review of public comments received on D Property owners, and property requirements on regulated entities that the proposal for that rule, and owners that receive assistance through have previously performed post- consideration of the potential for risk Federal housing programs (NAICS code abatement clearance testing using the reduction, including whether such 531110, 531311). original DLCL of 40 mg/ft2 on floors or actions were achievable. At that time, 2 EPA focused its rulemaking on the B. What is the Agency’s authority for 250 mg/ft on window sills. While EPA’s DLHS and the definition of LBP, which taking this action? dust-lead hazard standards (DLHS) do not compel property owners to evaluate were the two actions that EPA had EPA is finalizing this rule under their property for hazards or take agreed to undertake in response to a sections 401 and 402 of the Toxic control actions (40 CFR 745.61(c)), if 2009 citizen petition (Ref. 6). In that Substances Control Act (TSCA), 15 someone opts to perform a lead-based rulemaking, EPA did not propose to U.S.C. 2601 et seq., as created by Title paint activity such as an abatement, change DLCL in 40 CFR part 745, X of the Housing and Community then EPA’s regulations set requirements subpart L. Development Act of 1992 (also known for doing so (40 CFR 745.220(d)). This However, EPA recognizes the as the ‘‘Residential Lead-Based Paint final rule requires individuals and firms important relationship between the Hazard Reduction Act of 1992’’ or ‘‘Title who perform an abatement to achieve DLHS and DLCL: The DLHS are used to X’’) (Pub. L. 102–550) (Ref. 1). values below the DLCL of 10 mg/ft2 on identify dust-lead hazards and the DLCL TSCA section 402 (15 U.S.C. 2682) floors and 100 mg/ft2 on window sills at are used to demonstrate that specific directs EPA to regulate LBP activities, the end of the abatement, which the abatement activities have effectively which include risk assessments, 2019 rule updating the DLHS (‘‘Review abated those hazards. The purpose of inspections, and abatements. TSCA of the Dust-Lead Hazard Standards and this final rule is to update the DLCL so section 401 (15 U.S.C. 2681) defines the Definition of Lead-Based Paint,’’ (84 that attaining these levels demonstrates abatements as ‘‘measures designed to FR 32632, July 9, 2019) (FRL–9995–49), elimination of dust-lead hazards under permanently eliminate lead-based paint also known as the 2019 DLHS Rule) did the revised 2019 DLHS. Based on the hazards’’ and the term includes ‘‘all . . . not require under EPA’s regulations Agency’s careful review of the public cleanup . . . and post[-]abatement (Ref. 3). comments received on the proposal, clearance testing activities’’ (15 U.S.C. EPA is finalizing its proposal to revise 2681(1)). EPA is further directed, in D. Why is the Agency taking this action? the DLCL to 10 mg/ft2 for floors and to promulgating the regulations, to ‘‘tak[e] Reducing childhood lead exposure is 100 mg/ft2 for window sills. EPA finds into account reliability, effectiveness, an EPA priority. EPA continues to that attaining these DLCL abates the and safety’’ (15 U.S.C. 2682(a)(1)). collaborate with its federal partners to dust-lead hazards identified under the reduce lead exposures and, in so doing, 2019 standards, taking into account C. What action is the Agency taking? to explore ways to strengthen its reliability, effectiveness, and safety. Clearance levels are defined as values relationships and partnerships with EPA has not been persuaded that that indicate the amount of lead in dust states, tribes, and localities. In elimination of the dust-lead hazards (15 on a surface following completion of an December 2018, the President’s Task U.S.C. 2681(1)) while accounting for abatement activity (40 CFR 745.223). Force on Environmental Health Risks reliability, effectiveness, and safety (15 Surface dust is collected via dust wipe and Safety Risks to Children released U.S.C. 2682(a)(1)) justifies selecting samples that are sent to a laboratory for the Federal Action Plan to Reduce different clearance levels. Although EPA analysis. The post-abatement dust-lead Childhood Lead Exposures and is not persuaded to deviate from 10 mg/ levels must be below the clearance Associated Health Impacts (Lead Action ft2 for floors and 100 mg/ft2 for window levels, which are the standards used to Plan) (Ref. 4) to enhance the Federal sills for the DLCL, the Agency did evaluate the effectiveness of post- Government’s efforts to identify and consider whether potential reliability, abatement cleanings. If the levels are not reduce lead exposure while ensuring effectiveness, or safety factors supported below the clearance levels, the children impacted by such exposure are different clearance levels. In particular, components (i.e. floors, window sills, getting the support and care they need EPA considered the achievability of 10 etc.) represented by the failed sample(s) to prevent or mitigate any associated mg/ft2 for floors and 100 mg/ft2 for

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window sills in relation to their regulation. For the final rule Economic Fourteen states (CA, GA, IL, KS, LA, NC, application in lead risk reduction Analysis, EPA contacted states with NH, NJ, NV, OH, TX, VT, WA, and WV) programs, how the lower dust-lead authorized lead programs and found and the District of Columbia use an loadings can be reliably detected by that several have already revised or are action level of 10 mg/dL. Nineteen states laboratories, the effectiveness of these in the process of revising their (AL, AZ, CO, DE, FL, HI, IA, ID, KY, levels at eliminating dust-lead hazards, regulations to adopt clearance levels of MN, MO, MS, NM, NY, RI, SC, UT, VA, and consistency with the revised 2019 10 mg/ft2 on floors and 100 mg/ft2 on and WI) use an action level of 15 mg/dL. standards and across the Federal window sills. In addition, one locality Four states (CT, MA, OK, and TN) use Government. has adopted clearance levels below the an action level of 20 mg/dL or above. EPA did not propose to change the original federal levels of 40 mg/ft2 on Five states (AR, MT, ND, SD, and WY) post-abatement clearance level in 40 floors and 250 mg/ft2 on window sills. have no policy recommendation or CFR 745, subpart L for window troughs, Abatements in these jurisdictions will requirement for the blood lead level at and is not modifying the level at this clear below the levels of 10 mg/ft2 on which an environmental investigation time. Because the revised 2019 floors and 100 mg/ft2 on window sills should be conducted. The differences standards updated the DLHS for floors even without revisions to the federal between states may reflect the and window sills and because EPA clearance levels. As a result, EPA has prevalence of lead hazards in each state wanted to act as expeditiously as narrowed the range of estimated benefits and their relative prioritization of lead possible to update the DLCL in and costs in the Economic Analysis of hazards and other funding needs. recognition of the updated DLHS for the final rule by including abatements EPA’s analysis includes two scenarios floors and window sills, EPA believes it in these jurisdictions in the baseline. for the number of instances where has reasonably focused this rulemaking EPA estimates that 57% to 61% of the clearance testing is performed that will to update the DLCL so that attaining abatements otherwise affected by the be affected by the rule: (1) Where dust- these levels demonstrates elimination of clearance levels in this rule will take lead loadings are tested because a dust-lead hazards under the revised place in these jurisdictions. As a result, child’s blood lead level equals or 2019 standards. As a result, and after the Economic Analysis does not account exceeds 5 mg/dL (the current Centers for careful review of the public comments, for the benefits and costs of these Disease Control and Prevention (CDC) EPA is finalizing its proposal to only events. The information on state blood lead reference value) (Ref. 8), and revise the DLCL for floors and window regulations and its use in the final rule a loading is at or above the DLHS; and sills at this time. analysis is described in sections 2.3 and (2) where dust-lead loadings are tested because a child’s blood lead level equals E. What are the estimated incremental 3.1.3(C) of the Economic Analysis. EPA or exceeds the action level set by the impacts of this action? did not obtain any information state the child lives in, and a loading is EPA has prepared an Economic indicating the extent to which abatement contractors in other states at or above the DLHS. Analysis of the potential incremental Consequently, the Economic Analysis and localities (where the clearance impacts associated with this rulemaking includes a range for the number of levels are still 40 mg/ft2 on floors and (Ref. 7). The analysis is focused on a abatement events affected by this rule 250 mg/ft2 on window sills) are subset of the target housing (i.e., most revising the clearance levels. The upper voluntarily using 10 mg/ft2 on floors and pre-1978 housing) and child-occupied end of the range is approximately 100 mg/ft2 on window sills as clearance facilities where abatement activities are 11,000 events, which assumes that levels. Instead, section 8.3 of the subject to this rule. The analysis, which when a child’s blood lead level equals Economic Analysis presents sensitivity is available in the docket, estimates or exceeds 5 mg/dL an environmental incremental costs and benefits for analyses reflecting different investigation occurs that includes abatements where a dust-lead level is assumptions about abatement contractor testing the dust-lead loadings in their between the original DLCL (40 mg/ft2 for actions in the baseline. In order to home. The low end of the range is floors and 250 mg/ft2 for window sills) expand the range of possible estimates, approximately 1,200 events, which and alternate levels, including the EPA’s final estimates of the incremental assumes that dust-lead loading testing revised DLCL of 10 mg/ft2 for floors and impacts of this action include a lower occurs when a child’s blood lead level 100 mg/ft2 for window sills. Based on bound assumption that half of equals or exceeds the state blood lead data from the U.S. Department of abatement contractors are voluntarily level action level. The benefit and cost Housing and Urban Development applying the hazard standards as estimates are highly sensitive to this (HUD), EPA estimates that the vast clearance levels. range. The following is a brief outline of majority of floors and window sills are As in the Economic Analysis for the the estimated incremental impacts of already clearing at levels below the 2019 DLHS Rule, there is also this rulemaking. revised DLCL of 10 mg/ft2 and 100 mg/ uncertainty about the blood lead levels ft2 after the completion of an abatement. at which investigative actions and lead 1. Benefits EPA identified in the proposal that hazard reduction activities might be Incremental actions to meet the there was uncertainty about whether taken and the exact nature of these revised DLCL of 10 mg/ft2 for floors and some state and local regulations already activities. Most states set a blood lead 100 mg/ft2 for window sills after use the same levels in EPA’s DLHS as level at which an environmental abatements where a baseline post- DLCL, and about whether some investigation is recommended or intervention loading is between the abatement contractors voluntarily required. Based on guidance posted on original DLCL of 40 mg/ft2 for floors and conduct additional cleaning to ensure environmental and public health 250 mg/ft2 for window sills and the that the dust-lead levels fall below the department websites for each state, revised DLCL would reduce exposure to DLHS following an abatement. To the these blood lead action levels range lead, resulting in benefits from avoided extent that these situations occur, then from 5 micrograms per deciliter (mg/dL) adverse health effects. In the Economic the costs and benefits of meeting the to 25 mg/dL. In eight states (AK, IN, MD, Analysis of this rule, EPA quantified the DLCL estimated in the Economic ME, MI, NE, OR, and PA) the action benefits of reduced lead exposure to Analysis would be attributable to the level for an environmental investigation children from avoided Intelligence 2019 DLHS Rule and not to this is a blood lead level of 5 mg/dL. Quotient (IQ) loss as an indicator of

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improved cognitive function and, hence, perhaps even most, of these costs will II. Background lifetime earnings. For the subset of be passed on to the property owners. A. Health Effects adverse health effects where these effects were quantified, the estimated 4. Environmental Justice Lead exposure has the potential to ≤ impact individuals of all ages, but it is annualized benefits are $13 million to This rule would increase the level of ≥ especially harmful to young children $202 million per year using a 3% environmental protection for all affected discount rate, and ≤$3 million to ≥$44 because the developing brain can be populations without having any particularly sensitive to environmental million per year using a 7% discount disproportionately high and adverse rate, with the range representing the contaminants (Ref. 10, 11). Ingestion of human health or environmental effects uncertainties about the blood lead levels lead-contaminated dust is a major on any population, including any at which an environmental investigation contributor to blood lead levels in minority or low-income population. will be triggered and about the children, particularly those who reside relationship between changes in blood 5. Effects on State, Local, and Tribal in homes built prior to 1978 (Ref. 14, lead levels and IQ. The ‘‘≤’’ and ‘‘≥’’ Governments 15). Infants and young children can be symbols are intended to convey more highly exposed to lead through uncertainty in the results. They do not The rule would not have any floor dust at home and in child-care mean that the results are unbounded significant or unique effects on small facilities because they often put their (i.e., that the true values could be zero governments, or federalism or tribal hands and other objects that can have on the lower end or infinity on the implications. lead from dust on them into their higher end). There are additional mouths (Ref. 11). unquantified benefits due to other F. Children’s Environmental Health The best available science informs EPA’s understanding of the avoided adverse health or behavioral Lead exposure has the potential to effects in children, including attention- relationships between exposures to impact individuals of all ages, but it is dust-lead loadings, blood lead levels, related behavioral problems, greater especially harmful to young children incidence of problem behaviors, and adverse human health effects. These because the developing brain can be relationships are summarized in the decreased cognitive performance, particularly sensitive to environmental reduced post-natal growth, delayed Integrated Science Assessment for Lead contaminants (Refs. 10, 11). Exposure to puberty, decreased hearing, and (‘‘Lead ISA’’) (Ref. 16), which EPA lead is associated with increased risk of decreased kidney function (Ref. 9). released in June 2013, and the National a number of adverse health or Toxicology Program (NTP) Monograph 2. Costs behavioral effects in children, including on the Health Effects of Low-Level Lead, This rule is estimated to result in decreased cognitive performance, which was released by the Department costs of ≤$2 million to ≥$14 million per greater incidence of problem behaviors, of Health and Human Services in June year using either a 3% or a 7% discount and increased diagnoses of attention- 2012 (‘‘NTP Monograph’’) (Ref. 9).The rate. The ‘‘≤’’ and ‘‘≥’’ symbols are related behavioral problems (Ref. 9). Lead ISA is a synthesis and evaluation intended to convey uncertainty in the Furthermore, floor dust in homes and of scientific information on the health results. They do not mean that the child-care facilities is a significant route and environmental effects of lead, results are unbounded (i.e., that the true of exposure for young children given including cognitive function decrements values could be zero on the lower end their mouthing and crawling behavior in children (Ref. 16). or infinity on the higher end). In the and proximity to the floor. Therefore, The NTP, in 2012, completed an events affected by this rule, incremental the environmental health or safety risk evaluation of existing scientific costs are incurred for specialized addressed by this action may have a literature to summarize the scientific cleaning used to reduce dust-lead disproportionate effect on children (Ref. evidence regarding potential health loadings to below the clearance levels 12). effects associated with low-level lead exposure as indicated by blood lead and for retesting lead levels. In some Consistent with the Agency’s Policy instances, floors will also be sealed, levels less than 10 mg/dL. The on Evaluating Health Risks to Children overlaid or replaced, or window sills evaluation specifically focused on the (Ref. 13), EPA has evaluated the health will be sealed or repainted. life stage (prenatal, childhood, effects in children of decreased lead adulthood) associated with these 3. Small Entity Impacts exposure from the lowering of the potential health effects, and on EPA estimates that this rule may DLCL. EPA prepared a Technical epidemiological evidence at blood lead impact ≤1,240 to ≥10,215 small Support Document for this rulemaking, levels less than 10 mg/dL, because health abatement firms; ≤1,025 to ≥8,977 may which models dust-lead exposures and effects at higher blood lead levels are have cost impacts estimated at less than estimates both blood lead levels and well-established. The NTP concluded 1% of revenues, ≤113 to ≥990 may have associated impacts on IQ at the revised that there is sufficient evidence for impacts estimated between 1% and 3%, DLCL of 10 mg/ft2 and 100 mg/ft2 versus adverse health effects in children and and ≤28 to ≥240 may have impacts the original DLCL of 40 mg/ft2 and 250 adults at blood lead levels less than 10 estimated at greater than 3% of mg/ft2 on floors and window sills, mg/dL, and less than 5 mg/dL as well. revenues. The ‘‘≤’’ and ‘‘≥’’ symbols are respectively (Ref. 12). While no safe The NTP concluded that there is intended to convey uncertainty in the level of lead in blood has been sufficient evidence that blood lead results. They do not mean that the identified (Ref. 4), the reductions in levels less than 10 mg/dL are associated results are unbounded (i.e., that the true children’s blood-lead levels resulting with delayed puberty, decreased values could be zero on the lower end from this rule are expected to reduce the hearing, and reduced post-natal growth. or infinity on the higher end). EPA’s risk of adverse cognitive and In children, there is sufficient evidence analysis assumes that in all cases the developmental effects in children. The that blood lead levels less than 5 mg/dL costs are borne entirely by the lead paint Technical Support Document shows are associated with increased diagnoses abatement firm (as opposed to being that health risks to young children of attention-related behavioral passed through to the property owner). decrease with decreasing dust-lead problems, greater incidence of problem However, it is more likely that some, or levels. behaviors, and decreased cognitive

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performance. There is limited evidence hazards. EPA issued the final RRP Rule 40 CFR 745.325 (by submitting a report that blood lead levels less than 5 mg/dL under TSCA section 402(c)(3) on April pursuant to 40 CFR 745.324(h) with are associated with delayed puberty and 22, 2008 (Ref. 17). such demonstration within two years of decreased kidney function in children D TSCA section 403, 15 U.S.C. 2683, the effective date of a revision). 12 years of age and older (Ref. 9). gives EPA a related authority to carry HUD’s Lead Safe Housing Rule For further information regarding lead out responsibilities for addressing LBP (LSHR) is codified in 24 CFR part 35, and its health effects, and federal hazards under the Disclosure and LBP subparts B through R. The LSHR actions taken to eliminate LBP hazards Activities Rules. TSCA section 403 implements sections 1012 and 1013 of in housing, see the Lead Action Plan, requires EPA to promulgate regulations Title X. Under Title X, HUD has specific the Technical Support Document for that ‘‘identify . . . lead-based paint authority to control LBP and LBP this rulemaking and the background hazards, lead-contaminated dust, and hazards in federally-assisted target section of the Lead Renovation, Repair lead-contaminated soil’’ for purposes of housing (including COFs that are part of and Painting Rule, issued on April 22, TSCA Title IV and the Residential Lead- an assisted target housing property 2008 (also referred to as the ‘‘RRP Rule,’’ Based Paint Hazard Reduction Act of covered by the LSHR, because they are (73 FR 21692, April 22, 2008) (FRL– 1992. LBP hazards, under TSCA section part of the common area of the 8355–7), codified at 40 CFR part 745, 401, are defined as conditions of LBP property). The LSHR aims in part to subpart E) (Ref. 4, 12, 17). and lead-contaminated dust and soil ensure that federally-owned or that ‘‘would result’’ in adverse human federally-assisted target housing is free B. Federal Actions To Reduce Lead health effects (15 U.S.C. 2681(10)). of LBP hazards (Ref. 20). Under the Exposures TSCA section 401 defines lead- LSHR, when a child under age six with In 1992, Congress enacted Title X of contaminated dust as ‘‘surface dust in an elevated blood lead level residing in the Housing and Community residential dwellings’’ that contains lead certain categories of assisted target Development Act (also known as the in excess of levels determined ‘‘to pose housing is identified, the ‘‘designated Residential Lead-Based Paint Hazard a threat of adverse health effects’’ (15 party’’ and/or the housing owner shall Reduction Act of 1992 or ‘‘Title X’’) U.S.C. 2681(11)). The 2001 LBP Hazards undertake certain actions. (Ref. 1) in an effort to eliminate LBP Rule established the DLHS to identify C. Applicability and Uses of the DLCL hazards. Section 1018 of Title X conditions of lead-contaminated dust required EPA and HUD to promulgate that would result in adverse human The DLCL finalized in this regulation regulations for disclosure of any known health effects. These DLHS were revised support the LBP Activities program, and LBP or any known LBP hazards in target in the 2019 DLHS Rule and are used to apply to target housing (i.e., most pre- housing offered for sale or lease (known identify dust-lead hazards. 1978 housing) and COFs (i.e., pre-1978 as the ‘‘Disclosure Rule’’) (Ref. 18). The 2001 LBP Hazards Rule also non-residential properties where (‘‘Target housing’’ is defined in section established the DLCL (also referred to as children six years of age or under spend 401(17) of TSCA, 15 U.S.C. 2681(17).) ‘‘clearance levels’’ and sometimes a significant amount of time, such as On March 6, 1996, the Disclosure Rule referred to elsewhere as ‘‘clearance child care centers and kindergartens). was codified at 40 CFR part 745, subpart standards’’) under TSCA section 402(a). Apart from COFs, no other public and F, for EPA, and 24 CFR part 35, subpart These clearance levels are used to commercial buildings are covered by A, for HUD. It requires information evaluate the effectiveness of cleaning this rule. For further background on the disclosure activities before a purchaser following an abatement. As defined in types of buildings to which the LBP or lessee is obligated under a contract to TSCA section 401 abatements are Activities program apply, refer to the purchase or lease target housing. designed to permanently eliminate LBP proposed and final 2001 LBP Hazards TSCA section 402(a) directs EPA to hazards, including dust-lead hazards. Rule (Ref. 2, 21). promulgate regulations covering LBP For purposes of the DLCL, post- The DLCL are incorporated into the activities to ensure persons performing clearance dust-lead loadings below the post-abatement work practices outlined these activities are properly trained, that DLHS indicate permanent elimination in the LBP Activities Rule (40 CFR training programs are accredited, and of dust-lead hazards. 745.227). LBP Activities regulations that contractors performing these Pursuant to TSCA section 404, 15 apply to inspections, risk assessments, activities are certified. On August 29, U.S.C. 2684, and EPA’s regulations at 40 project design, and abatement activities. 1996, EPA published final regulations CFR part 745, subpart Q, interested Pre-abatement dust-lead testing occurs under TSCA section 402(a) that govern states, territories, and federally during a risk assessment, often initiated LBP inspections, risk assessments, and recognized tribes may apply for and to comply with HUD’s LSHR or in abatements in target housing and child receive authorization to administer their response to discovery of a child with a occupied facilities (COFs) (also referred own LBP Activities and RRP programs. blood lead level that equals or exceeds to as the ‘‘LBP Activities Rule,’’ codified EPA’s regulations are intended to the current CDC blood lead reference at 40 CFR part 745, subpart L) (Ref. 19). reduce exposures, and the LBP value (Ref. 9), or the action level set by The definition of ‘‘child-occupied Activities regulations in particular are the state the child lives in. The objective facility’’ is codified at 40 CFR 745.223 intended to identify and mitigate of a risk assessment is to determine, and for purposes of LBP activities. hazardous levels of lead. Authorized then report, the existence, nature, Regulations promulgated under TSCA programs must be ‘‘at least as protective severity, and location of LBP hazards in section 402(a) contain standards for of human health and the environment as residential dwellings and COFs through performing LBP activities, while taking the corresponding federal program,’’ an on-site investigation. During a risk into account reliability, effectiveness, and must provide for ‘‘adequate assessment, a risk assessor collects and safety. enforcement.’’ See 40 CFR 745.324(e)(2). environmental samples that include TSCA section 402(c)(3) directs EPA to The 2019 DLHS Rule revised the dust wipe samples from floors and promulgate regulations covering regulation to improve the process for window sills that are sent to an NLLAP- renovation or remodeling activities in states, federally recognized tribes, and recognized laboratory for analysis. target housing, public buildings territories with authorized LBP NLLAP is an EPA program that defines constructed before 1978, and Activities programs to demonstrate that the minimum requirements and abilities commercial buildings that create LBP their programs meet the requirements of that a paint chips, dust, or soil testing

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laboratory must meet to attain EPA building owners or their agents), and all response to comments related to this recognition as an accredited lead testing required records are retained by the final action can be found in the laboratory. Once the samples are abatement firm or by the individuals Response to Comments document (Ref. analyzed by an NLLAP-recognized who developed each report. 22). laboratory, the risk assessor compares Achieving the DLCL after an To the extent that commenters the results of the dust wipe samples abatement does not mean that the home discussed issues with the DLHS in their against the DLHS. If the dust-lead is free from all exposure to lead, since public comments, EPA has previously loadings from the samples are at or exposures are dependent on many promulgated the DLHS in the recent above the applicable DLHS, indicating factors. For instance, the physical 2019 rulemaking and notes that within LBP hazards are present, the risk condition of a property may change over this DLCL rule, EPA is not re-opening or assessor will identify acceptable options time, resulting in an increased exposure. reconsidering the recently revised for controlling the hazards in the EPA will continue coordinating with DLHS. other Federal agencies to encourage best respective property, which may include III. Final Rule abatements and/or interim controls. practices for occupants of post- TSCA section 401 defines abatements abatement properties to conduct The purpose of this rulemaking is to as, ‘‘measures designed to permanently ongoing maintenance that will help update the DLCL so that attaining these eliminate lead-based paint hazards,’’ (15 prevent dust-lead from being clearance levels demonstrates U.S.C. 2681(1)), while interim controls reintroduced on previously cleared elimination of dust-lead hazards under are ‘‘designed to temporarily reduce surfaces. the revised 2019 standards. EPA carefully considered all the public human exposure or likely exposure to D. Public Comments Summary lead-based paint hazards,’’ (40 CFR comments related to the proposed rule The proposed rule provided a 60-day 745.83 and 745.223). These options and is finalizing its proposal to lower public comment period, ending on the DLCL for floors from 40 mg/ft2 to 10 should allow the property owner to August 24, 2020. EPA received public mg/ft2 and to lower the DLCL for make an informed decision about what comments from 28 commenters during window sills from 250 mg/ft2 to 100 mg/ actions should be taken to protect the the comment period. Comments were ft2. As previously mentioned, because health of current and future residents. received from private citizens, state/ there is no DLHS for window troughs, Risk assessments can be performed only local governments (including state EPA is not revising the DLCL for by certified risk assessors. health departments), potentially affected window troughs at this time. The DLCL are used to evaluate the lead-based paint businesses, non- A. Approach for Reviewing and effectiveness of a cleaning following an governmental organizations, Selecting the Final Dust-Lead Clearance abatement. After an abatement is environmental and public health Levels complete, a risk assessor or inspector advocacy groups and an individual from determines whether there are any an academic institution. Several As EPA explained in the LBP ‘‘visible amounts of dust, debris or commenters, including individuals, Activities Rule (Ref. 19) (61 FR 45778, residue,’’ which will need to be non-governmental organizations, and 45779), the work practice standards removed before clearance sampling state/local governments supported the covered by those regulations are takes place (40 CFR 745.227(e)(8)). Once DLCL as proposed at 10 ug/ft2 for floors intended to ensure that abatements are the area is free of visible dust, debris and 100 ug/ft2 for window sills. A conducted reliably, effectively, and and residue, and one hour or more after number of commenters requested that safely. While considering those three final post-abatement cleaning ceases, EPA promulgate DLCL lower than the criteria, the 2001 LBP Hazards Rule clearance sampling for dust-lead (via proposed levels of 10 mg/ft2 for floors modified the work practice standards to dust wipe samples) can take place and and 100 mg/ft2 for window sills. Some include dust-lead clearance levels, will be conducted ‘‘using documented commenters specifically suggested that which ‘‘are used to evaluate the methodologies that incorporate EPA should revise the DLCL for window effectiveness of cleaning following an adequate quality control procedures’’ sills to 40 mg/ft2 or lower and/or 5 mg/ abatement.’’ (Ref. 2) (66 FR 1206, 1211). (40 CFR 745.227(e)(8)). Only a properly ft2 for floors. One commenter explained Abatements are designed to trained and certified risk assessor or that within the considered options for permanently eliminate LBP hazards inspector can conduct clearance the proposal, EPA should have analyzed including dust-lead hazards and the sampling. A NLLAP-recognized a floor level lower than 10 mg/ft2 and definition of an abatement includes laboratory must analyze the dust wipe that the Agency must consider a lower cleanup and post-abatement clearance samples and a risk assessor or inspector level for floors before finalizing the rule. testing activities (40 CFR 745.223). A must compare the results from window Other commenters expressed concern dust-lead hazard is identified by the sills and floors (and window troughs) to over lower DLCL and that contractors DLHS and the DLCL are used to the appropriate DLCL. Every sample may not be able to meet lower clearance demonstrate that abatement activities must test below the corresponding requirements without additional work effectively and permanently eliminate DLCL, and if a single sample is equal to in some cases, which may make it those hazards. Therefore, in choosing or greater than the corresponding DLCL, difficult to attract qualified contractors. which DLCL to finalize in this then the abatement fails clearance and A few commenters discussed the rulemaking, EPA considered how the the components represented by the discrepancy between the revised 2019 DLCL will support the reliability, sample must be recleaned and retested DLHS and the original DLCL from 2001 effectiveness, and safety of abatements (40 CFR 745.227(e)(8)). After the dust and noted that due to the inconsistency to permanently eliminate LBP hazards. wipe samples show dust-lead loadings an abatement could be cleared at levels The 2001 LBP Hazards Rule adopted below the DLCL, an abatement report is higher than the DLHS, which is the rationale outlined in EPA’s 1998 prepared, copies of any reports required confusing and less protective. In this proposed rule (‘‘Identification of under the LBP Activities Rule are preamble, EPA has responded to the Dangerous Levels of Lead,’’ 63 FR provided to the building owner (and to major comments relevant to this final 30302, 30341, June 3, 1998) (Ref. 21). potential lessees and purchasers under rule. In addition, the more See also 66 FR 1206, 1222–1223 (Ref. 2). the LBP Disclosure Rule by those comprehensive version of EPA’s EPA chose DLCL that were ‘‘achievable

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using products and methods known to HUD Clearance Survey, see the Response to Comments document (Ref. be reliable and effective’’ (Ref. 21). In preamble to the 2019 DLHS Rule (Ref. 22). the 2018 proposal for the 2019 DLHS 3). B. Technical Analysis Rule (‘‘Review of the Dust-Lead Hazard In addition to the specific criteria of Standards and the Definition of Lead- reliability, effectiveness, and safety, the The Technical Support Document that Based Paint,’’ 83 CFR 30889, July 2, 2001 LBP Hazards rulemaking accompanies this final rule evaluated 2018), EPA acknowledged that if the considered the DLCL in the broader the 2001 DLCL, the background dust- DLHS were set too low, the effectiveness context of Title X, and selected DLCL lead level, and the five DLCL options 2 2 of the LBP Activities program may be that are compatible with a ‘‘workable (15 mg/ft for floors and 100 mg/ft for 2 harmed if the abatement projects framework for lead-based paint hazard window sills; and 10 mg/ft for floors, 2 2 2 became overly expensive and time evaluation and reduction’’ (Ref. 21). To and 40 mg/ft , 60 mg/ft , 80 mg/ft and 2 consuming due to issues of achievability this end, EPA chose DLCL that were 100 mg/ft for window sills) with values (Ref. 23). That same concern for consistent with the DLHS in part to between background (lowest) and the achievability applies to EPA’s decision ensure they were ‘‘as easy as possible to 2001 DLCL (highest). The methods for on which DLCL to set in this understand and implement’’ (Ref. 21). estimating exposure and health impacts utilized for the 2019 DLHS rulemaking rulemaking. EPA maintains the concern for are reflected in the Technical Support EPA received several comments consistency between the DLCL and Document for this rule to analyze the during the public comment period DLHS for this rulemaking. During the DLCL options. The various components suggesting that EPA promulgate DLCL public comment period several of the model and input parameters used lower than the proposed levels at 10 mg/ commenters expressed concern over the 2 2 in the Technical Support Document for ft for floors and 100 mg/ft for window discrepancy between the 2019 DLHS the DLHS and this rulemaking have sills, while a subset of commenters and the 2001 DLCL (Ref. 22). The been the subject of multiple Science specifically requested lowering the commenters explained that this m 2 Advisory Board Reviews, workshops DLCL to 5 g/ft for floors and/or to 40 inconsistency in the levels created m 2 and publications in the peer review g/ft for window sills. A few confusion and leads to ethical concerns commenters also noted that lower levels literature (Ref. 12, 26). The analysis of clearing a home with post-abatement for DLCL have been shown to be feasible outlined in the 2019 DLHS Rule was levels higher than the 2019 revised by the survey of lead hazard control used in that rulemaking to identify DLHS. A few commenters urged EPA to grantees conducted by HUD’s Office of conditions that would result in adverse quickly finalize as proposed to, in part, Lead Hazard Control and Healthy health effects. Where the DLHS are used fix the mismatch between the DLHS and Homes (OLHCHH) (also known as the to identify conditions that would result the DLCL. Compounding the potential HUD Clearance Survey) (Ref. 24). in adverse health effects, the DLCL must As noted in the final 2019 DLHS Rule for such confusion is the fact that, as demonstrate that those conditions and the DLCL proposal, according to the indicated in the 2019 DLHS Rule and identified by the DLHS have been HUD Clearance Survey ‘‘reduction in described in greater detail elsewhere in eliminated. Therefore, the health impact the federal clearance standard for floors this preamble, HUD cross-references analysis for the DLCL is less central to from 40 mg/ft2 to 10 mg/ft2, a reduction EPA’s DLHS for clearance work the decision-making for this rule than it in the federal clearance standard for practices under HUD’s LSHR. This was to the 2019 DLHS Rule. Regardless, windowsills from 250 mg/ft2 to 100 mg/ means that if EPA chose a different EPA must understand the impact on ft2 . . . are all technically feasible using DLCL than the DLHS, a segment of the public health when selecting the DLCL the methods currently employed by regulated community would have had in order to inform the Economic OLHCHH LHC grantees to prepare for two sets of clearance levels to consider. Analysis. 2 clearance’’ even though, at the time the The selected DLCL of 10 mg/ft on floors The analyses that EPA developed and survey took place, the levels that and 100 mg/ft2 on window sills will presented in both the Technical Support projects had to be cleared to were the mitigate this confusion within the Document for the 2019 DLHS Rule and original DLCL of 40 mg/ft2 and 250 mg/ regulated community. the Technical Support Document ft2, respectively (Ref. 24). Additionally, As stated previously in this preamble, accompanying this final rule, were according to public comments, a state EPA wanted to act as expeditiously as specifically designed to model potential department of health and a non- possible to update the DLCL in health effects that might accrue to the governmental organization believe that recognition of the updated DLHS for subpopulation, i.e., children living in most NLLAP-recognized laboratories or floors and window sills. EPA believes it pre-1940 and pre-1978 housing. EPA those within their state are capable of has reasonably focused this rulemaking notes that its different program offices testing the clearance levels as proposed. to revise the DLCL so that attaining estimate exposures for different Therefore, the final DLCL of 10 mg/ft2 on these levels demonstrates elimination of populations, different media, and under floors and 100 mg/ft2 on window sills dust-lead hazards under the revised different statutory requirements and are shown to be achievable using 2019 standards. When finalizing DLCL thus different models or parameters may available products and methods that are of 10 mg/ft2 for floors and 100 mg/ft2 for be a better fit for their purpose. As such, effective and reliable in permanently window sills, as discussed above, the the approach and modeling parameters eliminating LBP hazards. To the extent EPA considered the achievability of chosen for this rulemaking should not commenters argue that lower options, these levels, how the lower dust-lead necessarily be construed as appropriate particularly for sills, are also achievable, loadings can be reliably detected by for or consistent with the goals of other such an argument does not necessitate laboratories, the effectiveness of these EPA programs (Ref. 12). selecting the lower options because the levels, and consistency with the revised In its evaluation, EPA estimated blood primary design of the DLCL is to 2019 standards and across the Federal lead levels and IQ changes as a proxy demonstrate permanent elimination of Government. For further information on for changes in cognitive function in the dust-lead hazards, which EPA finds the public comments received and a children, six and under, exposed long- is achieved by clearance levels of 10 mg/ more comprehensive version of EPA’s term to these analyzed dust-lead loading ft2 on floors and 100 mg/ft2 for window response to comments related to this levels. As also reflected in the 2019 sills. For further information on the final action can be found in the DLHS Rule, EPA generated two different

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modeling approaches to estimate the 2. Renovation, Repair and Painting Rule ongoing LBP maintenance. Hazard quantitative relationships between dust- The revised DLCL will not trigger new reduction activities are required in this lead and blood lead level data. The first requirements under the existing RRP housing when LBP hazards are approach used mechanistic modeling Rule (40 CFR part 745, subpart E). The identified or when maintenance or data that include consideration of age- RRP Rule requires post-renovation rehabilitation activities disturb paint known or presumed to be LBP. The specific ingestion rates, activity cleaning verification under 40 CFR patterns, and background exposures. LSHR’s clearance regulations, 24 CFR 745.85(b), but the rule does not require The second approach used empirical 35.1340, specify requirements for dust wipe sampling and analysis using data that includes co-reported dust-lead clearance of these projects (when they the DLCL. However, although optional and blood lead level measurements in disturb more than de minimis amounts under the RRP Rule, dust wipe sampling the homes of children. The dust-lead of known or presumed lead-based for clearance using the DLCL in and blood lead level data are used to painted surfaces, as defined in 24 CFR accordance with the LBP Activities Rule develop an empirical relationship to 35.1350(d)), including a visual (40 CFR 745.227(e)(8)) may be required estimate blood lead level for each assessment, dust sampling, submission by contract or by another Federal, state, candidate DLCL. Both approaches of samples for analysis for lead in dust, territorial, tribal, or local law or (mechanistic and empirical) are interpretation of sampling results, and regulation. At this time, other than compared to provide independent preparation of a report. As explained in HUD’s Lead Safe Housing Rule, EPA is confirmation of the relationship the preamble to the 2019 DLHS Rule not familiar with other laws and between dust-lead loadings and blood (Ref. 3), the LSHR clearance regulations regulations that require clearance testing lead level. For additional information cross-reference EPA’s DLHS. As a result, using EPA’s DLCL. summarizing the methodologies the LSHR clearance levels were lowered employed in the Technical Support 3. EPA–HUD Disclosure Rule to 10 mg/ft2 and 100 mg/ft2 for floors and window sills, respectively, when the Document, see the 2018 preamble to the Under the Disclosure Rule, 2019 DLHS Rule became effective on proposed DLHS rule (Ref. 23). prospective sellers and lessors of target January 6, 2020. Accordingly, activities housing must provide purchasers and C. Effect of the Revised DLCL on EPA under the LSHR are currently required and HUD Programs renters with a federally approved lead to be cleared using EPA’s DLHS. hazard information pamphlet and 1. LBP Activities Rule—EPA disclose known LBP and/or LBP 5. 2017 Policy Guidance—HUD Abatements hazards, and any available records, Requirements for Lead Hazard Control Abatements are any measures or set of reports, and additional information Grants measures designed to permanently pertaining to LBP and/or LBP hazards. On February 16, 2017, HUD’s eliminate lead-based paint hazards and The information disclosure activities are OLHCHH issued policy guidance to include activities such as the removal of required before a purchaser or renter is establish new and more protective paint and dust, the permanent enclosure obligated under a contract to purchase requirements for dust-lead action levels or encapsulation of lead-based paint, the or lease target housing. Records or for its Lead-Based Paint Hazard Control replacement of painted surfaces or reports pertaining to LBP and/or LBP (LBPHC) and Lead Hazard Reduction fixtures, and all preparation, cleanup, hazards must be disclosed, including Demonstration (LHRD) grantees (the disposal, and post-abatement clearance results from post-abatement clearance requirements also apply to related HUD testing activities associated with such testing, regardless of whether the level grants authorized by Title X, section measures. Abatements must be of dust-lead is below the clearance 1011 (42 U.S.C. 4852), under similar conducted by certified abatement levels. names, including Lead Hazard workers and supervisors. After LBP The revised DLCL of 10 mg/ft2 on Reduction (LHR) grants and their High abatements are conducted, EPA’s floors and 100 mg/ft2 on window sills Impact Neighborhoods and Highest regulations require a certified inspector will not result in additional disclosures Lead-Based Paint Abatement Needs or risk assessor to conduct post- because there are no new information grant categories) (Ref. 27). In particular, abatement clearance testing (via dust collection requirements to consider the guidance adopted clearance levels of wipe samples) of the abated area. If the under this rule. Property owners would 10 mg/ft2 and 100 mg/ft2 for floors and dust wipe sample results show dust- already be disclosing results, records, window sills, respectively, for lead lead loadings equal to or exceeding the reports, and any additional information hazard control activities performed applicable clearance level, ‘‘the that show dust-lead below the original under these grant programs. The change components represented by the failed DLCL of 40 mg/ft2 on floors or below 250 in requirements was supported by sample shall be recleaned and retested.’’ mg/ft2 on window sills, and any results, scientific evidence on the adverse See 40 CFR 745.227(e)(8)(vii). In other records, and reports of additional effects of lead exposure at low blood- words, the abatement is not cleared cleaning due to the lower DLCL would lead levels in children, (<10 mg/dL) as until the dust wipe samples in the work be reflected in this same record. well as the achievability of lower area are below the clearance levels. 4. LSHR Clearance Requirements clearance levels based on the HUD Under this final rule, inspectors and risk Clearance Survey (Ref. 24). The assessors would compare dust wipe The DLCL in this final rule will not guidance clearance levels for floors and sampling results for floors and window change the clearance levels that apply to window sills are equal to the final sills to the revised DLCL of 10 mg/ft2 and hazard reduction activities under HUD’s DLCL. Consequently, the changes to the 100 mg/ft2, respectively, and the results LSHR because the LSHR currently DLCL that EPA is promulgating with for window troughs to the DLCL of 400 requires clearance at the DLHS level, this final rule, will not affect the mg/ft2. Dust wipe sampling results at or which is reflected by the lower DLCL. clearance levels used by the LBPHC and above the DLCL would indicate that the The LSHR requires certain hazard LHRD grantees. components represented by the sample reduction activities to be performed in must be recleaned and retested. This certain federally-owned and assisted 6. HUD Guidelines final rule does not change any other risk target housing including abatements, The HUD Guidelines for the assessment requirements. interim controls, paint stabilization, and Evaluation and Control of Lead-Based

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Paint Hazards in Housing were abatement activity’’ (40 CFR 745.223) information considered by EPA, developed in 1995 under section 1017 (emphasis added). EPA also notes that including documents that are referenced of Title X. They provide detailed, HUD’s clearance standards rule for within the documents that are included comprehensive, technical information interim controls of lead-based paint in the docket, even if the referenced on how to identify LBP hazards in hazards in HUD-assisted target housing document is not physically located in residential housing and COFs, and how is consistent with the procedures set the docket. For assistance in locating to control such hazards safely and forth in 40 CFR 745.227 rather than 40 these other documents, please consult efficiently. The Guidelines were revised CFR 745.223. To resolve this post- the technical person listed under FOR in 2012 to incorporate new information, abatement discrepancy, EPA is FURTHER INFORMATION CONTACT. technological advances, and new conforming the definition of clearance 1. Public Law 102–550, Title X—Housing and Federal regulations, including EPA’s levels found in 40 CFR 745.223 to the Community Development Act, enacted LBP hazard standards. Based on EPA’s post-abatement clearance procedures in October 28, 1992 (also known as the changes to the DLHS in 2019 and the 40 CFR 745.227, in order to clarify in Residential Lead-Based Paint Hazard changes to DLCL from this final rule, the definition that the post-abatement Reduction Act of 1992 or ‘‘Title X’’) (42 HUD plans to revise Chapter 5 of the dust-lead levels must be below the U.S.C. 4851 et seq.). https:// Guidelines on risk assessment and clearance levels. www.govinfo.gov/content/pkg/USCODE- reevaluation and Chapter 15 on Three commenters (including state 2017-title42/html/USCODE-2017-title42- clearance, and make conforming health departments and an chap63A-sec4851.htm. environmental non-governmental 2. U.S. EPA. Lead; Identification of changes elsewhere as needed. Dangerous Levels of Lead; Final Rule. organization) submitted public 7. Previous LBP-Related Activities Federal Register (66 FR 1206, January 5, comments that supported EPA’s 2001) (FRL–6763–5). https:// The DLCL are used to evaluate the decision to clarify in the DLCL www.federalregister.gov/documents/ effectiveness of a cleaning following an definition that the post-abatement dust- 2001/01/05/01-84/lead-identification-of- abatement. After the dust wipe samples lead levels need to be below the DLCL dangerous-levels-of-lead. show dust-lead loadings below the in order to achieve clearance. EPA 3. U.S. EPA. Review of the Dust-Lead Hazard DLCL, an abatement report is prepared, agrees with the support from the public Standards and the Definition of Lead- copies of any reports required under the commenters and is conforming the Based Paint; Final Rule. Federal Register LBP Activities Rule are provided to the (84 FR 32632, July 9, 2019) (FRL–9995– definition in 40 CFR 745.223 as 49). https://www.federalregister.gov/ building owner (and to potential lessees proposed. documents/2019/07/09/2019-14024/ and purchasers under the LBP E. State Authorization review-of-the-dust-lead-hazard- Disclosure Rule by those building standards-and-the-definition-of-lead- owners or their agents), and all required Pursuant to TSCA section 404 and based-paint. records are also retained by the EPA’s regulations at 40 CFR part 745, 4. President’s Task Force on Environmental abatement firm or by the individuals subpart Q, interested states, territories Health Risks and Safety Risks to who developed each report. The revised and federally recognized tribes may Children. Federal Action Plan to Reduce DLCL of 10 mg/ft2 on floors and 100 mg/ apply for and receive authorization to Childhood Lead Exposures and ft2 on window sills will not impose administer their own LBP Activities Associated Health Impacts. December programs, as long as their programs are 2018. https://www.epa.gov/lead/federal- retroactive requirements on regulated action-plan-reduce-childhood-lead- entities that have previously performed at least as protective of human health exposure. post-abatement clearance testing using and the environment as the EPA’s 5. U.S. EPA. Implementation Status of EPA the original DLCL of 40 mg/ft2 on floors program and provide adequate Actions Under the 2018 Federal Action or 250 mg/ft2 on window sills. These enforcement. As part of the Plan To Reduce Childhood Lead new requirements would only apply to authorization process, states, territories Exposures and Associated Health post-abatement clearance sampling and and federally recognized tribes must Impacts: Fiscal Year 2019, 4th Quarter. analysis conducted after the effective demonstrate to EPA that they meet the October 2019. https://www.epa.gov/ date of this final rule. requirements of the LBP Activities Rule. leadactionplanimplementation/ implementation-status-epa-actions- A state, territory or federally recognized D. Conforming the Definition of under-2018-federal-action-plan-1#goal1. tribe must demonstrate that it meets the Clearance Levels 6. Sierra Club et al. Letter to Lisa Jackson RE: revised DLCL in its application for Citizen Petition to EPA Regarding the EPA is finalizing as proposed, authorization or, if already authorized, Paint and Dust Lead Standards. August clarifying language that defines the in a report submitted under 40 CFR 10, 2009. https://www.epa.gov/sites/ achievement of post-abatement 745.324(h) no later than two years after production/files/2015-10/documents/ _ _ _ _ clearance, which explains what dust- the effective date of the new epa lead standards petition final.pdf. lead levels are permitted on a surface requirements. If an application for 7. U.S. EPA, Office of Pollution Prevention and Toxics. Economic Analysis of the following an abatement that would authorization has been submitted but achieve clearance. The post-abatement Final Rule to Revise the TSCA Dust-Lead not yet approved, the state, territory or Clearance Levels. December 2020. clearance procedures set forth in 40 CFR federally recognized tribe must 8. CDC. Childhood Blood Lead Levels in 745.227 state that clearance is not demonstrate that it meets the new Children Aged <5 Years—United States, achieved when post-abatement dust- requirements either by amending its 2009–2014. CDC Morbidity and Mortality lead levels (which are a measure of the application, or in a report it submits Weekly Report, Vol. 66 No. 3, January mass of lead per area, commonly under 40 CFR 745.324(h) no later than 20, 2017. https://www.cdc.gov/mmwr/ expressed in micrograms per square foot two years after the effective date of the volumes/66/ss/ss6603a1.htm. 9. HHS, National Toxicology Program. NTP (mg/ft2)) equal or exceed the clearance new requirements. levels (40 CFR 745.227(e)(8)(vii)). Monograph on Health Effects of Low- IV. References Level Lead. National Institute of However, prior to this rule’s amended Environmental Health Sciences, language, 40 CFR 745.223 defined The following is a list of the Research Triangle Park, NC. NIH Pub. clearance levels as ‘‘the maximum documents that are specifically No. 12–5996. ISSN 2330–1279. June 13, amount of lead permitted in dust on a referenced in this document. The docket 2012. https://ntp.niehs.nih.gov/ntp/ohat/ surface following completion of an includes these documents and other lead/final/

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monographhealtheffectslowlevellead_ to Elevated Blood Lead Levels; Final January 21, 2011). Any changes made in newissn_508.pdf. Rule. Federal Register (82 FR 4151, response to OMB recommendations 10. Agency for Toxic Substances and Disease January 13, 2017) (FR–5816–F–02). have been documented in the docket. Registry, Division of Toxicology and https://www.federalregister.gov/ The Agency prepared an analysis of the Human Health Sciences. Lead— documents/2017/01/13/2017-00261/ potential costs and benefits associated ToxFAQsTMCAS #7439–92–1. August requirements-for-notification-evaluation- 2007. https://www.atsdr.cdc.gov/toxfaqs/ and-reduction-of-lead-based-paint- with this action, which is available in tfacts13.pdf. hazards-in-federally. the docket (Ref. 7). 11. U.S. EPA. Exposure Factors Handbook 21. U.S. EPA. Lead; Identification of B. Executive Order 13771: Reducing 2011 Edition (Final Report). U.S. Dangerous Levels of Lead; Proposed Regulations and Controlling Regulatory Environmental Protection Agency, Rule. Federal Register (63 FR 30302, Washington, DC, EPA/600/R–09/052F. June 3, 1998) (FRL–5791–9). https:// Costs September 2011. https://cfpub.epa.gov/ www.federalregister.gov/documents/ This action is considered an ncea/risk/ 1998/06/03/98-14736/lead- Executive Order 13771 regulatory action recordisplay.cfm?deid=236252. identification-of-dangerous-levels-of- (82 FR 9339, February 3, 2017). Details 12. U.S. EPA, Office of Pollution Prevention lead. on the estimated costs of this final rule and Toxics. Technical Support 22. U.S. EPA. Review of the Dust-Lead Post- can be found in EPA’s analysis of the Document for Residential Dust-lead Abatement Clearance Levels RIN 2070– Clearance Levels Rulemaking Estimation AK50 Response to Public Comments. potential costs and benefits associated of Blood Lead Levels and Effects from December 2020. with this action (Ref. 7). Exposures to Dust-lead. December 2020. 23. U.S. EPA. Review of the Dust-Lead C. Paperwork Reduction Act (PRA) 13. U.S. EPA. Policy on Evaluating Health Hazard Standards and the Definition of Risks to Children. Policy. October 1995. Lead-Based Paint; Proposed Rule. This action does not directly impose https://www.epa.gov/sites/production/ Federal Register (83 FR 30889, July 2, an information collection burden under _ files/2014-05/documents/1995 2018) (FRL–9976–04). https:// the PRA, 44 U.S.C. 3501 et seq. Under _ _ _ childrens health policy statement.pdf. www.federalregister.gov/documents/ 24 CFR part 35, subpart A, and 40 CFR 14. Zartarian, V., Xue, J., Tornero-Velez, R., 2018/07/02/2018-14094/review-of-the- 745, subpart F, and approved under & Brown, J. Children’s Lead Exposure: A dust-lead-hazard-standards-and-the- Multimedia Modeling Analysis to Guide OMB Control Number 2070–0151, definition-of-lead-based-paint. sellers and lessors must already provide Public Health Decision-Making. 24. HUD, Office of Lead Hazard Control and Environmental Health Perspectives, Healthy Homes. Lead Hazard Control purchasers or lessees any available 125(9), 097009–097009. September 12, Clearance Survey. Final Report. October records or reports ‘‘pertaining to’’ LBP, 2017. https://doi.org/10.1289/EHP1605. 2015. https://www.hud.gov/sites/ LBP hazards and/or any lead hazard 15. President’s Task Force on Environmental documents/clearancesurvey_ evaluative reports available to the seller Health Risks and Safety Risks to 24oct15.pdf. or lessor. Accordingly, a seller or lessor Children. Key Federal Programs to 25. U.S. EPA. Review of the Dust-Lead must disclose any reports showing dust- Reduce Childhood Lead Exposures and Hazard Standards and the Definition of lead levels, regardless of the value. Eliminate Associated Health Impacts. Lead-Based Paint RIN 2070–AJ82 November 2016. https:// Thus, this action would not result in Response to Public Comments. June additional disclosures. Because there ptfceh.niehs.nih.gov/features/assets/ 2019. https://www.regulations.gov/ _ _ _ _ _ files/key federal programs to reduce document?D=EPA-HQ-OPPT-2018-0166- are no new information collection _ _ _ _ childhood lead exposures and 0571. requirements to consider under this _ _ _ eliminate associated health 26. U.S. EPA, Office of Pollution Prevention rule, or any changes to the existing _ impactspresidents 508.pdf. and Toxics. Technical Support requirements to consider under this 16. U.S. EPA. Integrated Science Assessment Document for Residential Dust-lead rule, an ICR is not necessary. (ISA) for Lead (Final Report, June 2013). Hazard Standards Rulemaking U.S. EPA, Washington, DC, EPA/600/R– Approach taken to Estimate Blood Lead D. Regulatory Flexibility Act (RFA) 10/075F, 2013. https://www.epa.gov/isa/ Levels and Effects from Exposures to I certify that this action will not have integrated-science-assessment-isa-lead. Dust-lead. June 2019. a significant economic impact on a 17. U.S. EPA. Lead; Renovation, Repair, and 27. HUD. Revised Dust-Lead Action Levels for Painting Program; Final Rule. Federal substantial number of small entities Risk Assessment and Clearance; under the RFA, 5 U.S.C. 601 et seq. The Register (73 FR 21692, April 22, 2008) Clearance of Porch Floors. Policy (FRL–8355–7). https:// Guidance 2017–01 Rev 1. February 16, small businesses subject to the www.federalregister.gov/citation/73-FR- 2017. https://www.hud.gov/sites/ requirements of this action are 21692. documents/LEADDUSTLEVELS_ abatement firms that may incur costs 18. HUD, EPA. Lead; Requirements for REV1.pdf. associated with additional cleaning and Disclosure of Known Lead-Based Paint sealing in houses where a post- and/or Lead-Based Paint Hazards in V. Statutory and Executive Order abatement loading is between the Housing; Final Rule. Federal Register Reviews original DLCL of 40 mg/ft2 for floors and (61 FR 9064, March 6, 1996) (FRL–5347– m 2 9). https://www.federalregister.gov/ Additional information about these 250 g/ft for window sills, and the 2 citation/61-FR-9064. statutes and Executive orders can be revised DLCL of 10 mg/ft for floors and 19. U.S. EPA. Lead; Requirements for Lead- found at https://www.epa.gov/laws- 100 mg/ft2 for window sills. Based Paint Activities in Target Housing regulations/laws-and-executive-orders. EPA’s Economic Analysis (Ref. 7) and Child-Occupied Facilities; Final presents low and high scenarios for the Rule. Federal Register (61 FR 45778, A. Executive Order 12866: Regulatory number of housing units where a child August 29, 1996) (FRL–5389–9). https:// Planning and Review and Executive with a blood lead level that equals or www.federalregister.gov/documents/ Order 13563: Improving Regulation and exceeds a Federal or state trigger value 1996/08/29/96-21954/lead-requirements- Regulatory Review lives. For the low scenario, for-lead-based-paint-activities-in-target- This action is an economically environmental investigations are housing-and-child-occupied-facilities. 20. HUD. Requirements for Notification, significant regulatory action that was assumed to be conducted when a child’s Evaluation and Reduction of Lead-Based submitted to the Office of Management blood lead level equals or exceeds the Paint Hazards in Federally Owned and Budget (OMB) for review under trigger value set by that child’s state. Residential Property and Housing Executive Orders 12866 (58 FR 51735, These values vary from 5 mg/dL to 25 Receiving Federal Assistance; Response October 4, 1993) and 13563 (76 FR 3821, mg/dL, depending on the state. For the

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high scenario, environmental clearance testing for such events. Again, not wish to adopt the new DLCL they investigations are assumed to be this assumption may overestimate the can relinquish their authorization. In conducted when a child’s blood lead number of abatements affected, and thus the absence of a state authorization, EPA level equals or exceeds the CDC’s the number of small abatement firms will administer these requirements. reference level of 5 mg/dL. The two with significant impacts. Thus, Executive Order 13132 does not scenarios function as bounding Finally, the analysis assumes that in apply to this action. estimates, and a more realistic all cases the costs are borne entirely by assessment of the number of the lead paint abatement firm (as G. Executive Order 13175: Consultation environmental investigations is that opposed to being passed through to the and Coordination With Indian Tribal they are between the high and low property owner). However, it is more Governments scenarios. The low and high scenarios likely that some, or perhaps even most, for the number of environmental of these costs will be passed on to the This action does not have tribal investigations affect the estimated property owners. In some circumstances implications as specified in Executive number of small business that might the demand for abatements is likely to Order 13175 (65 FR 67249, November 9, incur costs for cleaning and additional be relatively inelastic. Furthermore, the 2000). Federally recognized tribes that dust wipe testing if EPA promulgates costs of this rule for an affected job are have authorized LBP Activities the clearance levels in this final rule. a fraction of the costs of a typical programs must demonstrate that they The Agency has determined that this abatement, and only a fraction of jobs have DLCL at least as protective as the rule may impact ≤1,240 to ≥10,215 small are estimated to require re-clearance clearance level at 40 CFR 745.227. abatement firms. Of these, about ≤1,025 (meaning that the additional costs for a However, these authorized tribes are to ≥8,977 may have cost impacts less few jobs can be spread over the up-front under no obligation to continue to ≤ ≥ than 1% of revenues, 113 to 990 may prices of a much larger pool of administer the LBP Activities program, have impacts between 1% and 3%, and abatements). EPA believes it is likely and if they do not wish to adopt the new ≤28 to ≥240 may have impacts greater that abatement contractors will be able ≤ ≥ DLCL they can relinquish their than 3% of revenues. The ‘‘ ’’ and ‘‘ ’’ to raise up-front prices to some degree authorization. In the absence of a tribal to account for the potential costs of symbols are intended to convey authorization, EPA will administer uncertainty in the results. They do not additional cleaning and associated these requirements. Thus, Executive mean that the results are unbounded activities. Such pass-through of costs Order 13175 does not apply to this (i.e., that the true values could be zero would decrease the magnitude of the on the lower end or infinity on the cost impacts on individual abatement action. higher end). Details of the analysis are firms. H. Executive Order 13045: Protection of presented in the EA, which is available In light of these conservative Children From Environmental Health in the docket (Ref. 7). assumptions, the small entity impacts Risks and Safety Risks In addition to the use of the high analysis likely overstates the number of scenario (which is likely to overestimate small businesses with large impacts, This action is subject to Executive the number of small entities with both in terms of the magnitude of the Order 13045 (62 FR 19885, April 23, significant impacts), the analysis makes impacts and the number of businesses 1997), because it is economically a series of other assumptions that are affected. significant as defined in Executive likely to lead to an overestimate of small Order 12866, and EPA believes that the entity impacts. In order to estimate the E. Unfunded Mandates Reform Act (UMRA) environmental health or safety risk potential impacts of the rule, EPA addressed by this action may have a assumed that an environmental This action does not contain an disproportionate effect on children. investigation occurs whenever a child’s unfunded mandate of $100 million or Accordingly, we have evaluated the blood lead level is found to equal or more as described in UMRA, 2 U.S.C. exceed a Federal or state trigger value; 1531–1538, and does not significantly or environmental health or safety effects of that the environmental investigation uniquely affect small governments. The dust-lead exposure in children. The always includes dust wipe testing of the total estimated annual cost of the rule is results of this evaluation are contained child’s home; and that a clean-up occurs $3 million to $14 million per year (Ref. in Unit I.F. of the preamble titled whenever the environmental 7), which does not exceed the inflation- ‘‘Children’s Environmental Health,’’ investigation indicates that dust-lead adjusted unfunded mandate threshold Unit II.A. of the preamble titled ‘‘Health loadings exceed a hazard standard. of $156 million. Effects,’’ the Economic Analysis and the Neither the DLCL nor the other Technical Support Document, where the F. Executive Order 13132: Federalism provisions of EPA’s LBP activities health impacts of lead exposure and regulations require property owners to This action does not have federalism children is discussed more fully (Ref. 7, evaluate their properties for the implications, as specified in Executive 12). The documents referenced above presence of dust-lead hazards, nor to Order 13132 (64 FR 43255, August 10, are available in the public docket for take action to address the hazards if 1999). It will not have substantial direct this action. dust-lead hazards are identified. These effects on the states, on the relationship The primary purpose of this rule is to assumptions may overestimate the between the national government and number of abatements affected, and thus the states, or on the distribution of clear abatements to a level that can the number of small abatement firms power and responsibilities among the reliably, effectively and safely eliminate with significant impacts. various levels of government. States that LBP hazards in target housing, The analysis also assumes that in all have authorized LBP Activities including target housing where children cases where a dust-lead hazard is programs must demonstrate that they reside, and COFs. EPA’s analysis identified, the property owner performs have DLCL at least as protective as the indicates that there will be at least one baseline abatement activity. levels at 40 CFR 745.227. However, approximately 2,300 to 22,000 children This likely overestimates costs because authorized states are under no per year affected by the rule (Ref. 7). some events may only involve interim obligation to continue to administer the controls, and EPA does not require LBP Activities program, and if they do

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I. Executive Order 13211: Actions § 745.223 Definitions. FOR FURTHER INFORMATION CONTACT: Concerning Regulations That * * * * * Annick Banoun, Competition Policy Significantly Affect Energy Supply, Clearance levels are values that Division, Wireline Competition Bureau, Distribution or Use indicate the amount of lead in dust on at (202) 418–1521, annick.banoun@ This action is not a ‘‘significant a surface following completion of an fcc.gov. energy action’’ as defined in Executive abatement activity. To achieve clearance SUPPLEMENTARY INFORMATION: This is a Order 13211 (66 FR 28355, May 22, when dust sampling is required, values summary of the Commission’s Order on 2001), because it is not likely to have a below these levels must be achieved. Remand in WC Docket Nos. 11–42, 17– significant adverse effect on the supply, * * * * * 108, and 17–287, adopted October 27, distribution or use of energy and the ■ 3. Amend § 745.227 by revising 2020, and released on October 29, 2020. Administrator of the Office of paragraph (e)(8)(viii) to read as follows: The document is available for download Information and Regulatory Affairs has at https://www.fcc.gov/document/fcc- not otherwise determined that the § 745.227 Work practice standards for responds-narrow-remand-restoring- action is a significant energy action. conducting lead-based paint activities: internet-freedom-order-0. To request Target housing and child-occupied materials in accessible formats for J. National Technology Transfer and facilities. people with disabilities (Braille, large Advancement Act (NTTAA) * * * * * print, electronic files, audio format), Since this action does not involve any (e) * * * send an email to [email protected] or call technical standards, NTTAA section (8) * * * the Consumer & Governmental Affairs 12(d), 15 U.S.C. 272 note, does not (viii) The clearance levels for lead in 2 2 Bureau at 202–418–0530 (voice), 202– apply to this action. dust are 10 mg/ft for floors, 100 mg/ft 418–0432 (TTY). for interior window sills, and 400 mg/ft2 K. Executive Order 12898: Federal for window troughs. Synopsis Actions To Address Environmental * * * * * 1. In the Restoring Internet Freedom Justice in Minority Populations and [FR Doc. 2020–28565 Filed 1–6–21; 8:45 am] Order (83 FR 7852, Feb. 22, 2018), we Low-Income Populations BILLING CODE 6560–50–P reversed the Commission’s misguided EPA believes that this action does not and short-lived utility-style regulation have disproportionately high and of the internet and returned to the light- adverse human health or environmental FEDERAL COMMUNICATIONS touch regulatory framework for effects on minority populations, low- COMMISSION broadband internet access service that income populations and/or indigenous facilitated rapid and unprecedented peoples, as specified in Executive Order 47 CFR Part 54 growth for almost two decades. In this 12898 (59 FR 7629, February 16, 1994). [WC Docket Nos. 11–42, 17–108, 17–287; Order on Remand, we maintain this The documentation for this decision is FCC 20–151; FRS 17241] well-established approach after further contained in the Economic Analysis, considering three discrete issues raised which is available in the docket (Ref. 7). Restoring Internet Freedom; Bridging by the U.S. Court of Appeals for the the Digital Divide for Low-Income L. Congressional Review Act (CRA) District of Columbia Circuit (D.C. Consumers; Lifeline and Link Up Circuit). This action is subject to the CRA, 5 Reform and Modernization 2. In Mozilla Corp. v. FCC, the D.C. U.S.C. 801 et seq., and EPA will submit Circuit upheld the vast majority of our AGENCY: a rule report to each House of the Federal Communications decision in the Restoring Internet Congress and to the Comptroller General Commission. Freedom Order, remanding three of the United States. This action is a ACTION: Final rule. discrete issues for further ‘‘major rule’’ as defined by 5 U.S.C. consideration—namely, the effect of that SUMMARY: In this document, the Federal 804(2). Order on: (1) Public safety; (2) the Communications Commission regulation of pole attachments; and (3) List of Subjects in 40 CFR Part 745 (Commission) responds to a remand universal service support for low- from the U.S. Court of Appeals for the Environmental protection, Abatement, income consumers through the Lifeline D.C. Circuit directing the Commission to Child-occupied facility, Clearance program. Because the court concluded assess the effects of the Commission’s levels, Hazardous substances, Lead, that ‘‘the Commission may well be able Restoring Internet Freedom Order on Lead poisoning, Lead-based paint, to address on remand’’ these three public safety, pole attachments, and the Target housing. issues, it declined to vacate the statutory basis for broadband internet Restoring Internet Freedom Order, Andrew Wheeler, access service’s inclusion in the pending our further analysis. After Administrator. universal service Lifeline program. This considering the three issues identified document also amends the Therefore, for the reasons set forth in by the court in light of the record Commission’s rules to remove the preamble, 40 CFR chapter I, developed thereafter, we see no grounds broadband internet service from the list subchapter R, is amended as follows: to depart from our determinations in the of services supported by the universal Restoring Internet Freedom Order. PART 745—[AMENDED] service Lifeline program, while preserving the Commission’s authority I. Background ■ 1. The authority citation for part 745 to fund broadband internet access continues to read as follows: 3. Building on decades of precedent, service through the Lifeline program. the Commission adopted the Restoring Authority: 15 U.S.C. 2605, 2607, 2681– DATES: This Order on Remand shall Internet Freedom Order to return to the 2692 and 42 U.S.C. 4852d. become effective February 8, 2021. successful light-touch bipartisan ■ 2. Amend § 745.223 by revising the ADDRESSES: Federal Communications framework that promoted a free and definition for ‘‘Clearance levels’’ to read Commission, 45 L Street NE, open internet and, for almost twenty as follows: Washington, DC 20554. years, saw it flourish. The Restoring

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Internet Freedom Order took effect on safety that would arise under the Lifeline program helps low-income June 11, 2018. The Restoring Internet proposed (and ultimately adopted)’’ Americans gain access to affordable Freedom Order reversed the Title II Restoring Internet Freedom Order, communications services, and is part of Order (80 FR 19738, April 13, 2015), including ‘‘how allowing broadband the Commission’s universal service adopted in March 2015, which providers to prioritize internet traffic as efforts to close the digital divide. First reclassified broadband internet access they see fit, or to demand payment for created by the Commission in 1985, service from an information service to a top-rate speed, could imperil the ability Congress codified this commitment to telecommunications service and of first responders, providers of critical low-income consumers in the 1996 reclassified mobile broadband internet infrastructure, and members of the Telecommunications Act. Currently, the access services as a commercial mobile public to communicate during a crisis.’’ Lifeline program offers qualifying low- service and adopted three bright-line The court declined to consider income consumers a discount of up to rules—blocking, throttling, and paid petitioners’ arguments based on ‘‘an $9.25 per month on voice, broadband prioritization—as well as a general incident involving the (apparently internet access service, or bundled internet conduct standard and accidental) decision by Verizon to services that meet the program’s ‘‘enhancements’’ to the transparency throttle the broadband internet of Santa minimum service standards. Consumers rule. The Restoring Internet Freedom Clara firefighters while they were who reside on Tribal lands can receive Order, adopted in December 2017, battling a devastating California a discount of up to $34.25 on Lifeline ended the agency’s brief foray into wildfire,’’ which occurred after the service that satisfies the minimum utility-style regulation of the internet Restoring Internet Freedom Order. service standards. The D.C. Circuit and restored the light-touch framework Likewise, the court declined to consider described petitioners’ concern ‘‘that under which a free and open internet the responses to those arguments in the reclassification would eliminate the underwent rapid and unprecedented Commission’s brief because they had statutory basis for broadband’s inclusion growth for almost two decades. The not been set forth in the Restoring in the [Lifeline] Program’’ and pointed Restoring Internet Freedom Order ended Internet Freedom Order. out that ‘‘Congress [ ] tethered Lifeline Title II regulation of the internet and 5. The second discrete issue that the eligibility to common-carrier status,’’ returned broadband internet access D.C. Circuit remanded is how the citing statutory language limiting the service to its long-standing classification reclassification of broadband internet designation of eligible as an information service under Title I, access service affects the regulation of telecommunications carriers (ETCs) and consistent with Supreme Court’s pole attachments. The D.C. Circuit receipt of universal service support to holding in Brand X. Having determined noted petitioners’ ‘‘substantial concern common carriers. Similarly, citing the that broadband internet access service— that, in reclassifying broadband internet U.S. Court of Appeals for the Tenth regardless of whether offered using as an information service, the Circuit’s ‘‘observ[ation], before fixed or mobile technologies—is an Commission, without reasoned broadband was classified as a information service under the consideration, took broadband outside telecommunications service, that Communications Act of 1934, as the current statutory scheme governing ‘broadband-only providers . . . cannot amended (the Act), we also concluded pole attachments.’’ Our authority over be designated as ‘eligible that as an information service, mobile pole attachments pursuant to section telecommunications carriers’ ’ because broadband internet access service 224 of the Act extends to attachments ‘under the existing statutory framework, made by a cable television system or should not be classified as a commercial only ‘common carriers’ . . . are eligible provider of telecommunications service. mobile service or its functional to be designated as ‘eligible States may ‘‘reverse preempt’’ our pole equivalent. telecommunications carriers,’ ’’ the D.C. attachment rules and adopt their own Circuit concluded that the Restoring 4. Mozilla Corp. v. FCC. In Mozilla rules governing pole attachments in Internet Freedom Order’s Corp. v. FCC, the D.C. Circuit largely place of ours. The Mozilla court reclassification of broadband internet affirmed the Commission’s classification acknowledged our observation that access service would appear to preclude decision in the Restoring Internet facilities remain subject to pole broadband’s inclusion in the Lifeline Freedom Order. On February 6, 2020, attachment regulation when deployed Program. Consequently, the Mozilla the D.C. Circuit denied all pending by entities commingling broadband court ‘‘remand[ed] this portion of the petitions for rehearing, and the Court internet access service with a service [Restoring Internet Freedom Order] for issued its mandate on February 18, covered by section 224 of the Act. The the Commission to address.’’ 2020. Although largely affirming the D.C. Circuit found that our conclusion Commission’s decision, the Mozilla was sound with respect to ‘‘providers II. Discussion court ‘‘remand[ed] for further who ‘commingl[e]’ telecommunication 7. We address in turn each of the proceedings on three discrete points.’’ and broadband services’’ but incomplete three issues the Mozilla court remanded The first is the effect of the ‘‘changed given the court’s view that post- and conclude that, in each case, there is regulatory posture’’ in the Restoring reclassification, ‘‘the statute textually no basis to alter our conclusions in the Internet Freedom Order on public forecloses any pole-attachment Restoring Internet Freedom Order. safety. The D.C. Circuit observed that protection for standalone broadband Specifically, we examine the effects that ‘‘Congress created the Commission for providers.’’ The Mozilla court the Restoring Internet Freedom Order the purpose of, among other things, concluded that ‘‘[t]he Commission was might have on public safety ‘promoting safety of life and property required to grapple with’’ the matter of communications, pole attachment rights through the use of wire and radio pole-attachment regulation for for broadband-only providers, and the communications’ ’’ in section 1 of the broadband-only providers and universal service Lifeline program, as Act, and concluded that public safety is remanded the issue for further well as how such possible effects bear ‘‘an important aspect of the problem’’ consideration. on the Commission’s underlying that the agency must consider and 6. The third discrete issue that the decisions to classify broadband internet address. The Mozilla court also noted court remanded is the statutory basis for access service as an information service that ‘‘[a] number of commenters voiced broadband internet access service’s and eliminate the internet rules. Our concerns about the threat to public inclusion in the Lifeline program. The analysis below shows that the Restoring

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Internet Freedom Order promotes public classification would still outweigh any establishment of the Cross Sector safety, facilitates broadband potential harms. Resiliency Forum in February 2020. infrastructure deployment for ISPs, and Further, to safeguard America’s critical 1. The Commission’s Public Safety allows us to continue to provide Lifeline communications infrastructure from Responsibilities support for broadband internet access potential security threats, we prohibited service. Further, we conclude that any 10. Advancing public safety is one of the use of public funds from the potential negative effects that the our fundamental obligations. The Title I Commission’s Universal Service Fund reclassification may have on public approach spurs investment in a robust (USF) to purchase or obtain any safety, pole attachment rights for network and innovative services, which equipment or services produced or broadband-only providers, and the enhances the effectiveness of our work provided by companies posing a Lifeline program are limited and would to promote public safety consistent with national security threat to the integrity not change our classification decision in our statutory responsibilities. Indeed, of communications networks or the the Restoring Internet Freedom Order this has been the case over the almost communications supply chain, and even if such negative effects were 20 years during which broadband proposed to require certain USF substantiated. Rather, we find that that internet access service (and, as recipients to remove and replace such overwhelming benefits of Title I appropriate, mobile broadband internet equipment and services from their classification and restoration of light- access service) was classified as a Title networks and reimburse them for doing touch regulation outweigh any adverse I service. so. We also initially designated Huawei effects. 11. As the D.C. Circuit explained, Technologies Company (Huawei) and when ‘‘ ‘Congress has given an agency ZTE Corporation (ZTE) as covered A. Public Safety the responsibility to regulate a market companies for purposes of this rule, and 8. The Mozilla court directed us to such as the telecommunications we established a process for designating address the effect on public safety of the industry that it has repeatedly deemed additional covered companies in the ‘‘changed regulatory posture’’ in the important to protecting public safety,’ future. Additionally, the Commission’s Restoring Internet Freedom Order. The then the agency’s decisions ‘must take Public Safety and Homeland Security Mozilla court focused in particular on into account its duty to protect the Bureau issued final designations of claims in the record concerning dangers public.’ ’’ We take seriously our public Huawei and ZTE as covered companies, that might arise from ‘‘allowing safety responsibilities, as demonstrated thereby prohibiting the use of USF broadband providers to prioritize by a number of our recent actions. In funds on equipment or services internet traffic as they see fit, or to 2019, for example, pursuant to Kari’s produced or provided by these two demand payment for top-rate speed,’’ Law Act of 2017 the Commission suppliers. We also recently proposed, and how such actions ‘‘could imperil required newly manufactured, pursuant to the Secure and Trusted the ability of first responders, providers imported, sold, or leased multi-line Communications Networks Act, to (1) of critical infrastructure, and members telephone systems—such as those used create a list of covered communications of the public to communicate during a by hotels and campuses—to allow users equipment and services that pose an crisis.’’ Among other things, the D.C. to dial 911 directly, without having to unacceptable risk to the national Circuit rejected our argument that ‘‘the dial a prefix such as a ‘‘9’’ to reach an security of the United States or the public safety issues . . . were outside line. We also adopted rules security and safety of United States redundant of the arguments made by pursuant to section 506 of the RAY persons; (2) ban the use of federal edge providers,’’ finding instead that BAUM’S ACT to ensure that subsidies for any equipment or services ‘‘unlike most harms to edge providers ‘‘dispatchable location’’ information, on the list of covered communications incurred because of discriminatory such as the street address, floor level, equipment and services; (3) require that practices by broadband providers, the and room number of a 911 caller, is all providers of advanced harms from blocking and throttling conveyed with 911 calls so that first communications service report whether during a public safety emergency are responders can more quickly locate the they use any covered communications irreparable.’’ caller. More recently, we proposed equipment and services; and (4) 9. We find that neither our decision taking action to modernize the establish regulations to prevent waste, to return broadband internet access Commission’s rules to facilitate the fraud, and abuse in the proposed service to its long-standing classification priority treatment of voice, data, and reimbursement program to remove, as an information service, nor our video services for public safety replace, and dispose of insecure subsequent decision to eliminate the personnel and first responders, equipment. In furtherance of our duties internet conduct rules, is likely to including removing outdated to protect life, we also recently adversely impact public safety. To the requirements that may impede the use designated 988 as the 3-digit number to contrary, our analysis reinforces our of IP-based technologies. The reach the National Suicide Prevention determinations made in the Restoring Commission has taken important Lifeline and required all service Internet Freedom Order, and we find measures to increase the effectiveness of providers to complete the transition by that on balance, the light-touch Wireless Emergency Alerts (WEAs) by July 16, 2022. approach we adopted and the regulatory requiring Participating Commercial certainty provided by the Restoring Mobile Service Providers to support 2. Overview of Public Safety Internet Freedom Order benefit public longer WEA messages; support Spanish- Communications Marketplace safety and further our charge of language messages; create a new 12. Public safety communications fall promoting ‘‘safety of life and property’’ message category (‘‘State/Local WEA into two broad categories: (1) and the national defense though the use Tests’’); and further implement Communications within and between of wire and radio communications. We enhanced geotargeting capabilities. We public safety entities, and (2) also find that even if there were some have also urged wireless service communications between public safety adverse impacts on public safety providers and electric power providers entities and the public. We review each applications in particular cases—which to coordinate their response and in turn. we do not anticipate—the restoration efforts more closely 13. Communications Among Public overwhelming benefits of Title I following disasters, resulting in the Safety Entities. The record reflects that

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many public safety entities have access relying on the FirstNet core and public T-Mobile is also expanding these efforts to and make use of dedicated public safety’s own dedicated network for by offering Connecting Heroes, a safety-specific and/or prioritized, critical public safety communications— program launching later this year to specialized enterprise-level broadband one that offers faster performance than provide a version of this service for free services for data communications commercial networks.’’ The Spectrum to U.S. state and local public and non- between public safety officials. Perhaps Act requires FirstNet to apply for profit law enforcement, fire, and the most important example of a renewal of its license after 10 years (i.e., emergency medical services (EMS) dedicated network is the in 2022). The Act states that to obtain agencies. Congressionally-created First Responder renewal, FirstNet must demonstrate that 16. Though many communications Network Authority (FirstNet). In 2012, ‘‘during the preceding license term, the between public safety entities Congress passed the Middle Class Tax First Responder Network Authority has increasingly take advantage of these Relief and Job Creation Act, which in met the duties and obligations set forth enterprise-level dedicated public safety part directed ‘‘the establishment of a under [the Spectrum] Act.’’ broadband services, the record reflects nationwide, interoperable public safety 14. As we observed previously, other that public safety entities employ network’’ to ‘‘ensure the deployment service providers have recently begun broadband internet access services for and operation of a nationwide, offering or enhanced their public safety their communications between public broadband network for public safety services to compete with FirstNet. For safety officials as well. As the communications’’—a resilient network example, Verizon offers services Association of Public-Safety capable of supporting both data and designed for first responders and public Communications Officials-International, safety entities through its public safety Inc. (APCO) explains, public safety voice communications. The law granted private core that include the ability to agencies rely on retail broadband 20 megahertz of spectrum to be used for prioritize public safety communications services for a variety of public safety the network and allocated $7 billion of to ensure that they stay connected applications, including for example, funding. FirstNet is ‘‘explicitly designed during emergencies. Such services also accessing various databases, sharing for fast, prioritized public safety provide an extra layer of assurance that data with emergency responders, communications.’’ FirstNet offers public safety communications will translating communications with 911 service priority and preemption, which continue to operate during peak times. callers and patients in the field, allow first responders to communicate In addition, public safety users ‘‘have streaming video into 911 and emergency over an ‘‘always-on’’ network. Public access to several . . . enhanced operations centers, and accessing safety entities using FirstNet can boost services’’ from Verizon, including critical information about a 911 caller their priority levels during emergency Mobile Broadband Priority Service and that is not delivered through the situations ‘‘to ensure first responder data preemption. These services traditional 911 network. teams stay connected’’ even when ‘‘provide public safety users priority 17. While this proceeding focuses on networks are congested. AT&T describes service for data transmissions’’ by giving a specific data service—broadband preemption as an ‘‘enhanced’’ form of users priority over commercial users internet access service—we note that the priority service because it ‘‘shifts non- during periods of heavy network universe of public safety to public safety emergency traffic to another line,’’ congestion and ‘‘reallocat[ing] network communications extends beyond this which ensures national security and resources from commercial data/internet particular service. The enterprise emergency preparedness users’ users to first responders’’ if networks services described above often provide a communications are successfully reach full capacity. viable alternative for states and completed. According to AT&T, priority 15. Similarly, U.S. Cellular offers localities to purchase dedicated and preemption support voice calls, ‘‘enhanced data priority services for first broadband connections to use for public ‘‘text messages, images, videos, location responders and other emergency safety communications. In addition, information, [and] data from apps . . . response teams.’’ The company uses a voice services continue to play an in real time.’’ In the first half of 2019, ‘‘dedicated broadband LTE network that important role. The Commission has the monthly numbers of device separates mission-critical data from historically supported these efforts connections to FirstNet ‘‘outperformed commercial and consumer traffic,’’ through the establishment of three expectations at approximately 196% of ensuring that national security and priority services programs that support projected targets.’’ In May 2019, ‘‘a emergency preparedness personnel prioritized voice services for public majority of agencies and nearly 50% of ‘‘have access to vital services’’ during safety users. The Telecommunications FirstNet’s total connections were new emergency situations. In addition to Services Priority System (TSP) subscribers (not AT&T migrations).’’ As prioritizing network access, U.S. authorizes the ‘‘assignment and of August 2019, FirstNet was deployed Cellular uses preemption ‘‘to approval of priorities for provisioning in all 50 states, and nearly 9,000 public automatically and temporarily reallocate and restoration of common-carrier safety agencies and organizations were lower priority network resources to provided telecommunication services’’ subscribers of the network. The number emergency responders so they can stay and ‘‘services which are provided by of public safety agencies subscribing to connected during emergencies or other government and/or non-common FirstNet services continues to increase. high-traffic events.’’ T-Mobile also carriers and are interconnected to Recent data suggests that more than launched a specialized set of rate plans common carrier services.’’ The 12,000 public safety agencies and for first responder organizations in early Government Emergency organizations—accounting for over 1.3 2019, aimed at addressing these Telecommunications Service (GETS) million connections nationwide— organizations’ needs that their high- ‘‘provides government officials, first subscribe to FirstNet services. These speed data allowance not run out or be responders, and NSEP personnel with trends suggest that first responders slowed during emergencies. These ‘priority access and prioritized recognize the benefits of prioritization, dedicated or specialized types of service processing in the local and long preemption, and other innovative plans allow first responder distance segments of the landline features that enhance public safety organizations to receive unlimited networks, greatly increasing the communications. The record reflects smartphone or hotspot data that receives probability of call completion.’ ’’ And, that ‘‘[m]ore and more, public safety is high priority on the network at all times. the Wireless Priority Service program

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(WPS) provides ‘‘prioritized voice home and quarantine orders. 5G concluding that our position as to the calling for subscribers using networks’ ability to transmit massive economic benefits of reclassification Commercial Mobile Radio Service . . . amounts of data in real time will also away from public-utility style networks.’’ As noted above, we recently help enable new applications that will regulations was ‘‘supported by proposed modernizing these rules to allow more advanced communications substantial evidence.’’ The record broaden the scope of information between the public and health care reflects that our finding applies just as covered to address data and video and officials, such as allowing health care much, if not more so, to public safety to remove outdated requirements that professionals, through ubiquitous communications. Consistent with our may impede the use of IP-based wireless sensors, to remotely monitor findings in the Restoring Internet technologies. patients’ health and transmit data to Freedom Order, a number of 18. Communications Between Public their doctors before problems become commenters assert that the Safety Entities and the Public. emergencies, and to develop connected Commission’s reclassification of Communications between public safety ambulance services for faster patient broadband internet access services has entities and the public occur using a transport. ‘‘restored a regulatory environment that wide array of communications 20. Non-data and one-way broadcast encourages robust investment in technologies. With respect to broadband communications services, notably broadband networks and facilities that services, the record reflects broad including members of the public making can be used for many purposes, consensus that not only do public safety use of voice services to call 911, including public safety purposes,’’ and entities and first responders need to be continue to play a central role in public that this light-touch regulatory able to communicate rapidly and safety communications between environment has improved and reliably with each other during crisis Americans and public safety entities. expanded the resources available to situations, but members of the public Consistent with Congressional direction, public safety entities and consumers using mass-market services must also be the Commission has ‘‘designate[d] 9–1– alike. Though many factors affect ISPs’ able to easily and efficiently 1 as the universal emergency telephone investment decisions, these comments communicate with first responders and number within the United States for lend support to our findings in the access public safety resources and reporting an emergency to appropriate Restoring Internet Freedom Order that information. As the County of Santa authorities and requesting assistance,’’ ‘‘reclassification of broadband internet Clara states, ‘‘[T]he fundamental work of and has adopted regulations designed to access service from Title II to Title I is government, including public safety improve its performance and likely to increase ISP investment and personnel, is outward facing: To protect effectiveness. Audio and video output’’ and that the ‘‘ever-present our residents, we must be able to communications also are important for threat of regulatory creep is communicate with them, and they with public safety communications to the substantially likely to affect the risk us.’’ The record suggests that most data public, including for communicating calculus taken by ISPs when deciding communications between public safety emergency alerts. The Emergency Alert how to invest their shareholders’ entities and individuals likely take System is a national public warning capital, potentially deterring them from place over broadband internet access system through which broadcasters, investment in broadband.’’ Given the services, and not enterprise or dedicated cable systems, and other service variety of factors and the limited nature services. As CTIA explains, consumers providers deliver audio alerts that of the scope of the remand and regularly use their mobile devices and include modulated data that can be subsequent record, described below, we broadband connections ‘‘to access converted into a visual message to the do not reopen or expand on these broadly available information regarding public to warn them of impending predictions at this time. We reject the threatening weather, shelter-in-place emergencies and dangers to life and argument that AT&T’s plan to mandates, ongoing active-shooter property in accordance with grandfather legacy DSL services (with scenarios, and other matters essential to Commission regulations. In addition, speeds ranging from 788 kbps to 6 public safety.’’ Members of the public communications via text message also Mbps) undermines our reliance on the often rely on broadband services during have taken on an important public likelihood of increased investment as a emergencies to enable them to find and safety role, including through result of the Restoring Internet Freedom receive potentially life-saving Commission-mandated text-to-911 Order. The Mozilla court has already information, and to allow public safety capabilities and Wireless Emergency officials to build on-the-ground Alerts. Consistent with its statutory affirmed the Commission’s finding that situational awareness with information duties, the Commission has played a the Restoring Internet Freedom Order is they gather from residential broadband major role in establishing and likely to promote investment and service users. First responders can also facilitating these means of deployment. In any event, AT&T’s filing gain valuable information from communication between public safety demonstrates that its customers in the members of the public through mass- entities and the public. service areas referenced by Public market broadband access, such as when Knowledge et al. have plenty of options 3. The Benefits of Increased Innovation, ‘‘citizens used hashtags to flag rescuers for broadband internet access service (at Investment, and Regulatory Certainty and to compile helpful databases’’ in the speeds of 10 Mbps and higher). Finally, Provided by the Restoring Internet wake of Hurricane Harvey in 2017. we observe that the reclassification of 19. Further, ‘‘public safety’’ Freedom Order Will Enhance Public broadband internet access service as an communications may encompass more Safety information service had no effect on the than just communications during 21. In the Restoring Internet Freedom Commission’s authority over ISPs’ emergencies, as the COVID–19 Order, the Commission ‘‘eliminat[ed] discontinuance of broadband services, pandemic has demonstrated, with many burdensome regulation that stifles as the Commission explicitly forbore Americans relying on telemedicine over innovation and deters investment’’ and from section 214 with respect to mass-market broadband services for predicted that ‘‘this light-touch broadband internet access services in ‘‘routine health care, triage, and basic information service framework will the Title II Order. health advice’’ as well as for updates on promote investment and innovation.’’ 22. As described above, an increasing public health information and stay-at- The Mozilla court affirmed this finding, number of public safety entities

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subscribe to enterprise-level quality-of- potentially be offered over these robustness and reliability of ISPs’ service dedicated public safety data networks expands. networks have helped make possible the services. While the Greenlining Institute 23. The record reflects that the large-scale changes to daily life, raises concerns that the record does not regulatory certainty and light-touch including reliance on telework, digital specify the number of public safety approach the Restoring Internet learning, telehealth, and online entities that purchase enterprise-grade Freedom Order affords also likely gives communications with local and state services, or the affordability and ISPs stronger incentives to upgrade officials. The record demonstrates that, competitiveness of the fees for such networks to 5G, paving the way for new even with unprecedented increases in services, we observe several and innovative applications and traffic during the COVID–19 pandemic, commenters explained the widespread services that can benefit public safety. broadband networks have been able to nature of such services. For example, 5G networks’ ability to transmit massive handle the increase in traffic and shift NCTA explains that one of its members amounts of data in real time will help in usage patterns. The ability of these provides data connectivity solutions enable new applications that provide networks to absorb major increases in ‘‘for thousands of public safety entities, immediate situational awareness to traffic has allowed Americans to including police and fire departments, enable public safety professionals and maintain social distancing, which hospitals, ambulance services, public first responders to ‘‘provide more experts have found to yield tremendous safety dispatchers, medical dispatch informed support and make better public health and safety benefits by centers, and 911 providers throughout decisions during an emergency.’’ For ‘‘flattening the curve’’ of viral the country.’’ Further, as noted above, as example, 5G capabilities will enable transmissions. USTelecom observes that search and rescue drones and other of August 2019, FirstNet was deployed one study showed that out of the ten unmanned vehicles to reach areas that in all 50 states, and nearly 9,000 public countries with the highest populations would otherwise be inaccessible, and safety agencies and organizations were in the world, the United States was the will also help enable products ‘‘like subscribers of the network. As Verizon only country to not experience any augmented reality headsets that can explains, public safety entities generally download speed degradation in April help firefighters see through smoke, and purchase enterprise service contracts 2020. Further, unlike the European create augmented disaster mapping that Union, which takes a utility-style that are ‘‘similar to other large helps rescue teams get a clearer picture approach to broadband regulation and agreements that government entities use of the situation on the ground.’’ The has had to request that bandwidth to buy most goods and services on deployment and growth of 5G and the intensive services such as Netflix reduce favorable terms for a fair price,’’ innovative applications it will enable video quality in order to ease stress on explaining that some states use master will have clear public safety benefits, its network infrastructure, the United agreements negotiated by nationwide and we believe that our light-touch, States has not had to take similar steps, purchases organizations such as the market driven approach likely has, and despite similar surges in internet traffic. National Association of State likely will continue, to encourage ISPs’ This country’s robust and resilient Procurement Offices, for example. We investments in these networks. broadband networks are, in significant also note that because such services 24. The record reflects that improved, part, the result of over two decades of were excluded from regulation under more robust broadband networks and almost continuous light-touch the Title II Order, that Order did not services also have obvious and regulation, which has promoted reduce the costs of such services in any significant benefits for communications substantial infrastructure investment case. These types of plans were not between public safety entities and the and deployment. For the foregoing subject to the requirements of the Title public. According to one commenter, reasons, we conclude that our decision II Order or the Open Internet Order (76 ‘‘[t]hree in ten Americans describe to return broadband internet access FR 59192, Sept. 23, 2011). However, themselves as ‘constantly’ online,’’ and service to its historical information even these non-mass-market offerings that ‘‘the best way to reach them will be service classification benefits public benefit from the Restoring Internet for public safety communication to also safety communications by encouraging Freedom Order’s light-touch approach, take place online.’’ As the Edward Davis the deployment of more robust, resilient regulatory certainty, and likely Company explains, ‘‘better, faster, and broadband services networks and investment incentives because they more widespread broadband infrastructure over which public safety often make use of infrastructure that connections make it easier for the public communications to, from, and among also is used to facilitate broadband to contact public safety in times of need the public ride. internet access services (e.g., middle and help public safety respond more mile connections). As CTIA states, quickly.’’ Indeed, the Public Safety 4. The Restoring Internet Freedom Order ‘‘[r]obust and expansive broadband Broadband Technology Association Is Unlikely To Harm Public Safety infrastructure benefits both consumers asserts that light-touch regulation Communications, and Any Harm That It and public safety personnel, whether ‘‘promotes extensive deployment and Could Cause Would Be Minimal they rely on mass-market connectivity quick adoption of fast broadband, which 26. We find that our reclassification or enterprise offerings, because even enables citizens to reach public safety and rule determinations in the Restoring infrastructure built principally to serve more easily in times of need.’’ Similarly, Internet Freedom Order are not likely to mass-market broadband consumers USTelecom observes that increased adversely affect public safety (such as middle-mile networking) investment has ‘‘given rise to robust, communications over broadband increases overall network capacity, reliable, and resilient networks that internet access service. First, we explain improving the experience of enterprise improve consumers’ access to public why the same protections we identify in and government users and those safety information, providing first the Restoring Internet Freedom Order as utilizing non-[broadband internet access responders and other government sufficient to protect openness service] data services.’’ Further, as agencies with new and innovative ways generally—transparency, antitrust, and broadband speeds and other to communicate and share, analyze, and consumer protection law—equally performance characteristics continue to act on information during emergencies.’’ protect the openness of public safety improve, the range of public safety 25. The COVID–19 pandemic has communications. Next, we find an services and applications that could brought that point into stark relief. The absence of evidence of harms to public

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safety communications arising from the now publicly made enforceable safety of their neighbors, family and Restoring Internet Freedom Order or commitments not to engage in conduct friends.’’ As we previously found in the from the two-decade history of light- that violates consensus open internet Restoring Internet Freedom Order, even touch regulation of the internet. We principles.’’ ISPs have made these when public safety is not at stake, it is then review assertions regarding commitments despite the lack of Title II likely that ‘‘any attempt by ISPs to specific forms of possible harm to regulation, and the record reflects that undermine the openness of the internet public safety communications— ISPs recognize the importance of these would be resisted by consumers and blocking, throttling, loss or delay due to commitments with respect to public edge providers.’’ paid prioritization, barriers to safety communications—for example, 30. Likewise, consistent with our communications by individuals with Comcast explains that its incentives to findings in the Restoring Internet disabilities, and damage to the safety adhere to public commitments to open Freedom Order, we find that antitrust and reliability of critical internet protections ‘‘are rightly even law can also protect consumers from infrastructure—and conclude that the stronger . . . when it comes to serving practices that may hinder their ability to record reflects insufficient evidence of the public safety community, access public safety resources and such harms as a result of the Restoring particularly first responders during an similarly helps protect public safety Internet Freedom Order or that such emergency.’’ We disagree with Free communications over broadband harms are likely to arise. Finally, we Press’s assertions that the ‘‘notion that internet access service from blocking, conclude that even if a harm to public transparency and shaming will throttling, alleged degradation due to safety communication were to somehow discipline carriers is a vain hope.’’ We paid prioritization, and other harms to arise from the Restoring Internet observe that the Mozilla court has openness. The antitrust laws, Freedom Order, its impact would be already upheld the Commission’s particularly sections 1 and 2 of the limited because broadband internet findings regarding reliance on the Sherman Act, as well as section 5 of the access service, while important, is only transparency rule. These commitments FTC Act, protect competition in all a part of the broader public safety are not merely empty promises with no sectors of the economy, including communications ecosystem. As such, binding effect; instead, as a direct result broadband internet access. we reject assertions by Public of the Restoring Internet Freedom Order, Consequently, if an ISP attempts to Knowledge et al. that ‘‘[i]n making its the terms of such commitments are now block or degrade traffic in a manner that finding that reclassification and enforceable by the Federal Trade is anticompetitive, relief may be elimination of the rules will not harm Commission (FTC), the nation’s premier available under the antitrust laws. public safety, the Commission focuses consumer protection agency. Indeed, a Moreover, to the extent an ISP has strictly on the question of prioritization Memorandum of Understanding market power, antitrust laws could be of service.’’ between the Commission and the FTC used to address any anticompetitive 27. Transparency, Antitrust, and states that the FTC will ‘‘investigate and paid prioritization practices by an ISP. Consumer Protection Laws Prevent take enforcement action as appropriate As we explained in the Restoring Harms. The protections highlighted in against internet service providers for internet Freedom Order, ‘‘[o]ne of the the Restoring Internet Freedom Order unfair, deceptive, or otherwise unlawful benefits of antitrust law is its strong are important factors in preserving the acts or practices, including . . . actions focus on protecting competition and openness of public safety pertaining to the accuracy of the consumers.’’ If the types of conduct and practices that had been prohibited communications over broadband disclosures such providers make internet access service. Among these under the Title II Order were challenged pursuant to the Internet Freedom protections are the transparency rules as anticompetitive under the antitrust Order’s requirements, as well as their we adopted, which ‘‘require ISPs to laws, such conduct would likely be marketing, advertising, and promotional disclose any blocking, throttling, evaluated under the ‘‘rule of reason,’’ activities.’’ affiliated prioritization, or paid which amounts to a consumer welfare prioritization in which they engage.’’ As 29. Commitments to transparency test. A welfare approach was established we explained in the Restoring Internet carry particular force in the context of in Reiter v. Sonotone Corp., 442 U.S. Freedom Order—in analysis that the public safety communications because 330, 343 (1979). The transparency rule Mozilla court upheld as reasonable— of the strong incentive for ISPs to the Commission adopted amplifies the ‘‘[h]istory demonstrates that public maintain or improve their reputations power of antitrust law and the FTC Act attention, not heavy-handed by protecting such communications. As to deter and, where needed, remedy Commission regulation, has been most NCTA explains, ‘‘broadband providers behavior that harms consumers, effective in deterring ISP threats to recognize the vital importance of including for public safety purposes. openness and bringing about resolution ensuring robust and reliable networks 31. Further, consistent with our of the rare incidents that arise. The for public safety communications, and conclusion in the Restoring Internet Commission has had transparency know that they would need to answer to Freedom Order, we believe that requirements in place since 2010, and customers and policymakers if their consumer protection laws also help there have been very few incidents in practices were to threaten to hamper protect public safety communications the United States that plausibly raise public safety in any way.’’ In addition, from practices that could harm openness concerns.’’ ‘‘Transparency there are strong business incentives for openness. The FTC has broad authority thereby ‘increases the likelihood that broadband providers to ensure that to protect consumers from ‘‘unfair and harmful practices will not occur in the public safety communications remain deceptive acts or practices.’’ The FTC’s first place and that, if they do, they will unharmed. ISPs have more than unfair-and-deceptive-practices authority be quickly remedied.’ ’’ business incentives to ensure that ‘‘prohibits companies from selling 28. Indeed, many ISPs, including all broadband communications remain consumers one product or service but major ISPs, have gone further than unhampered by harmful network then providing them something disclosing their policies by making management practices. As ACA different,’’ which makes voluntary ‘‘enforceable commitments to maintain Connects explains, the community- commitments not to engage in blocking, internet openness.’’ As NCTA explains, based providers that it represents also throttling, or paid prioritization ‘‘[a]ll major broadband providers have ‘‘have a personal stake in ensuring the enforceable. The FTC also requires the

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‘‘disclos[ur]e [of] material information if public safety concerns expressed by focused on commenters’ concerns about not disclosing it would mislead the commenters here—those laws help ‘‘dire, irreversible’’ public safety consumer,’’ so if an ISP ‘‘failed to address any public safety concerns consequences from ISP conduct such as disclose blocking, throttling, or other notwithstanding their lack of an express loss of life, commenters here raise a practices that would matter to a public safety focus. Although some wide array of situations with a claimed reasonable consumer, the FTC’s commenters observe that antitrust and nexus to safety of life and property deception authority would apply.’’ consumer protection laws are not where it is doubtful that ISP conduct— Reclassification restored the FTC’s framed with a focus on public safety even assuming arguendo that it authority to enforce those consumer concerns, neither the Title II regulatory occurred and had momentary effects on protection requirements in the case of framework nor the restrictions on ISP the relevant applications—would result broadband internet access service. conduct in the bright line and general in meaningful harm, let alone loss of Indeed, the FTC has already conduct rules adopted in the Title II life. More fundamentally, we rely on successfully used its authority to pursue Order specified particular restrictions transparency, consumer protection laws, a complaint against AT&T for allegedly on ISPs in connection with public and antitrust laws only as one part of a deceptively marketing one of its own safety, either. Although ‘‘traffic broader set of considerations that mobile broadband subscription plans. prioritization . . . practices that serve a collectively persuade us that public And all states have laws proscribing public safety purpose, may be safety harms are unlikely to result from deceptive trade practices. acceptable under our rules as reasonable the regulatory approach in the Restoring 32. The D.C. Circuit found that the network management’’ under the Title II Internet Freedom Order. For example, Commission’s reliance on antitrust and Order, the restrictions on ISP conduct ISPs’ conduct in the first instance is consumer protection laws to limit under the bright line rules were not likely to be informed by the highly anticompetitive behavior was framed in terms of public safety, nor did probable reputational effects. In reasonable, especially as part of the the factors identified by the Commission addition, as we explain below, even if broader regulatory and economic to guide the application of its general ISP conduct like paid prioritization framework, and we do not revisit those conduct rule focus on public safety were to occur, the record does not reveal prior Commission findings here. Nor do concerns. This conclusion is not likely practical harm to applications we find that reasoning substantially diminished by the fact that the used for public safety communications diminished when public safety concerns Commission did adopt a public safety- over mass market broadband internet are at issue. For one, that reasoning focused carve-out from those conduct access service. We note that such public retains its full force with respect to safety communications often occur over protections that flow from the ISPs’ own rules because that carve-out rule did not restrict ISP conduct in any way. In sum, specialized networks which generally public statements. ISPs know that their include quality-of-service guarantees— public statements regarding network even the Title II Order itself thus adopted rules restricting ISP conduct unlike best efforts broadband internet management—whether made to comply access service—which further limits the with our transparency rule or that it anticipated ultimately could benefit public safety, notwithstanding scope of communications potentially otherwise—are subject to enforcement affected. by the FTC. Thus, ISPs’ public the lack of a public safety focus. statements, in effect, create ex ante Consequently, although we do not 34. Absence of Proven Harms. The requirements to which they are bound. presume that consumer protection and internet has been subject to light-touch The record does not reveal that antitrust laws themselves provide regulation for the entirety of the time enforcement of those statements, such perfect protections against all possible since enactment of the 1996 Act, apart as through the FTC’s consumer public safety concerns, we conclude from the short period in which the Title protection authority, would be any less that they do still provide significant II Order controlled. Further, during effective at preventing contrary ISP protections notwithstanding their lack most of the past two decades, the conduct than would enforcement of of an express public safety focus, and Commission did not have in place Commission rules prohibiting the same rely on them in conjunction with the potentially enforceable attempts at network management practices. broader range of considerations that conduct regulation. The Commission 33. Consumer protection and antitrust collectively persuade us that public adopted the Comcast-BitTorrent Order, laws help guard against risks from safety harms are unlikely under our which attempted to directly enforce conduct not foreclosed by providers’ regulatory framework in the Restoring Federal internet policy that it drew from public statements, as well. The record Internet Freedom Order. Even ex post various statutory provisions, in August here does not reveal credible claims that FTC enforcement of such conduct as 2008. On April 6, 2010, the U.S. Court ISPs would somehow target their ‘‘unfair’’ or anticompetitive practices of Appeals for the D.C. Circuit rejected conduct to harm public safety in a would have a significant effect by the Commission’s action, holding that manner that would require ex ante causing providers to avoid conduct in the Commission had not justified its public safety-focused legal protections. the first instance if it has the potential action as a valid exercise of ancillary Instead, commenters’ concerns here to result in liability under those legal authority. The Commission adopted the reflect the view that the ISP conduct regimes. We anticipate a similar Open Internet Order in December 2010, that could lead to public safety harms is deterrent effect from consumer but it was not effective until some the same conduct about which concerns protection laws. Although the Mozilla months later. The Verizon court have been expressed more generally, court noted that the record reflected decision was decided on January 14, even if the consequences of such concern about adequacy of ex post 2014, and the Title II Order was not conduct could be particularly dire in the enforcement in the public safety context adopted until over a year later, on public safety context. Because consumer to the extent that such potential for February 26, 2015, and became effective protection and antitrust laws help enforcement did not fully deter harmful several months later. Yet for all this safeguard users of broadband internet ISP conduct from occurring, we find time from which to draw, commenters access service from conduct that could that to be a far more limited concern claiming that the Restoring Internet undermine internet openness—and than some commenters claim. As a Freedom Order harms public safety because that same conduct underlies the threshold matter, while the court communications are only able to point

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to a few heavily-contested public-safety- week, Verizon introduced a new plan included Verizon’s decision to cap and related incidents. Notably, none of the for public safety customers that throttle firefighters during an claims arises from the time period prior eliminated any data speed restrictions emergency. . . .’’ It is undisputed that to the existence of rules governing ISPs. for first responders, at no additional Verizon’s plan with respect to Santa Even if these claims were valid—and we cost, and that gave other public safety Clara County was not a broadband find below that they are not—they do customers two month’ leeway before internet access service offering; not establish a compelling basis to any throughput limitation would be therefore, as discussed above, it would reconsider the Restoring Internet enforced. not have been subject to the internet Freedom Order’s determinations and 36. As an initial matter, the Santa conduct rules under the Title II Order, impose preemptive, industry-wide, Clara incident is not relevant to an including the no unreasonable utility-style regulations. The dearth of analysis of the effect of the Restoring interference/disadvantage standard. evidence of practices harmful to public Internet Freedom Order on public 37. We also disagree with ADT that safety is unsurprising, as ISPs lack an safety. Because the fire department’s two incidents from 2015 and 2016 economic incentive to engage in service plan from Verizon was an warrant Commission rules prohibiting practices such as blocking or throttling, enterprise plan rather than a mass- blocking and throttling of public safety- especially when these practices may market service, it is not a broadband related services. ADT alleges an harm public safety. internet access service under either the incident occurred in 2015, in which a 35. Commenters opposing the Title II Order or the Restoring Internet number of its customers in Puerto Rico Restoring Internet Freedom Order Freedom Order. Even if the service plan using a specific broadband provider repeatedly cite as support a 2018 had been a mass-market service, suddenly lost the ability to use features incident involving the decrease in the however, the record does not of its home automation service that Santa Clara, California fire department’s demonstrate that it would have run enables customers to control their alarm broadband service speed during an afoul of the Title II Order. Neither the systems remotely or to access their emergency. However, as explained classification of broadband internet video surveillance cameras, and below, the changed regulatory posture access service as a telecommunications another, similar incident occurred on in the Restoring Internet Freedom Order service nor the Title II Order’s bright the mainland in 2016. We considered had no bearing on how this incident line rules prohibited data use caps such and rejected such concerns as a basis for played out, both because the broadband as the one in the fire department’s conduct rules in the Restoring Internet service at issue was not subject to either service plan. In fact, the Title II Order Freedom Order, however, explaining regulatory regime and because the specifically explained that ‘‘[a] that ‘‘it is unclear if the blocking was provider’s conduct would not have been broadband provider may offer a data intentional and the blocking was prohibited under the Title II Order even plan in which a subscriber receives a set resolved informally.’’ ADT does not if it did apply. Notably, no commenter amount of data at one speed tier and any provide any new information here that contested in their reply comments other remaining data at a lower tier.’’ Neither justifies revisiting those observations. commenters’ claims that the incident does the record demonstrate that the Further, we observe that ADT has not would not have been prevented under possibility of case-by-case review of pointed to any such issues since the the Title II Order. The County of Santa data caps under the general conduct adoption of the Restoring Internet Clara asserts that while the County’s rule—with its uncertain outcomes— Freedom Order, consistent with our firefighters were ‘‘in the midst of would have prohibited such plans. expectation that ISPs are unlikely to risk fighting the Mendocino Complex Fire in Following the incident, to avoid another the reputational damage of engaging in the summer of 2018, Verizon severely such error, Verizon took a number of such practices. In addition, our throttled the broadband internet’’ of the steps, such as ‘‘updating training for call transparency rule requires ISPs to fire department, which prevented the center representatives to ensure that disclose such practices, which would department’s equipment ‘‘from tracking, they are aware that they must promptly enable alarm services companies like organizing, and prioritizing resources remove any data throughput limitations ADT to address such issues in a timely from around the state and country to for first responders in an emergency’’ manner. Indeed, ADT itself recognizes where they are most urgently needed.’’ and ‘‘introducing a new plan for public that the currently mandated disclosures The County of Santa Clara concedes that safety customers that eliminated any ‘‘provide a framework for ensuring that Verizon reduced the speed of the fire data speed restrictions for first public safety and alarm company department’s broadband service because responders, at no additional cost.’’ communications using broadband the fire department’s account had Thus, the issue was quickly addressed services are afforded protections against exceeded its monthly data cap. due to public awareness and market- unintentional blocking or throttling, that Although Verizon’s established practice based pressure on Verizon to take swift they are informed of mechanisms to was to not enforce data speed corrective action—precisely the promptly restore services, including any restrictions on public safety users’ plans mechanisms that we anticipated would repair or restoration performance during emergency situations, a customer be most effective under the Restoring metrics, and that they are provided service error led to the speed of the fire Internet Freedom Order’s light-touch contact information necessary to trigger department’s service being reduced approach. Further, the record does not ISP corrective actions.’’ ADT urges us to despite this policy. Verizon contends provide demonstrable evidence that the ‘‘remind ISPs that they must that once its management learned of the Title II Order regime would have prominently display contact customer’s complaint, Verizon resulted in any incremental benefit. We information and sufficiently disclose ‘‘immediately and publicly addressed disagree with Free Press’ assertion that the[ ] mechanisms to have service the situation, including by updating ‘‘Title II allowed the Commission to do promptly restored in the event of training for call center representatives to more than just enforce those Net inadvertent blocking or throttling of ensure that they are aware that they Neutrality rules. It also empowered the broadband services.’’ We restrict this must promptly remove any data Commission to assess and prevent other Order on Remand to addressing the throughput limitations for first forms of unjust or unreasonable issues specifically remanded by the D.C. responders in an emergency. That same behavior—which may well have Circuit and decline to comment upon or

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interpret other aspects of the Restoring that the record lacks evidence of communications, lest they risk Internet Freedom Order such as the blocked or throttled public safety as a reputational damage they might suffer if transparency requirements. We do note, result of the reclassification of they were found to be hampering however, that ISPs remain obligated to broadband internet access service as an communications that have public safety fulfill all transparency obligations set information service and the elimination implications. ISPs’ successful response forth in the Restoring Internet Freedom of the internet conduct rules. Thus, we to the exponential network demands Order, including disclosure of redress find no basis on this record to conclude during the COVID–19 pandemic options. Relevant to its concerns about that ISPs have engaged or are likely to demonstrate their willingness and discrimination by ISPs with competing engage in blocking or throttling that ability to act under a light-touch alarm monitoring services, ADT notes cause harm to public safety in a manner regulatory framework to protect and that ISPs have ‘‘stated commitments to that would have been prohibited under facilitate public safety communications refrain from engaging in unreasonable Title II. during crises. discrimination’’ and recognizes that 40. Importantly, although proponents 43. Taken together, these ‘‘[f]ailure to comply with disclosed of Title II regulation express concern considerations persuade us that practices exposes ISPs to liability.’’ that a light-touch framework will lead to commenters’ concerns that the Thus, we conclude that the incidents practices such as throttling and regulatory approach of the Restoring cited by ADT do not justify revisiting blocking, the record does not contain Internet Freedom Order would lead to the regulatory approach we adopted in even one recent example of such ISP blocking or throttling that causes the Restoring Internet Freedom Order. conduct harmful to public safety that harm to public safety are speculative 38. Speculation Regarding Specific would have been prohibited under Title and unlikely to occur. The dearth of Forms of Harm. We next review II. If unleashing ISPs from Title II real-world examples of public safety speculative claims in the record regulation truly endangered public harms from blocking or throttling mass regarding various specific types of harm safety, then one would expect that this market broadband internet access to public safety communications that threat would have materialized in the service bolsters our views discussed allegedly could arise from the Restoring more than two years that have passed above that the transparency rule, Freedom Order. In each case, we find no since the Restoring Internet Freedom coupled with consumer protection and evidence that the form of harm at issue Order took effect. Instead, there has antitrust laws—especially when further has occurred and conclude that such been no evidence that the anticipated coupled with the particular reputational harm is unlikely to arise as a result of harms have occurred, or that ISPs plan harms likely to arise were ISPs to block the Restoring Internet Freedom Order. to engage in blocking or throttling of or throttle traffic in a way that harmed 39. Speculative Harm—Blocking and public safety traffic. public safety—substantially reduce the Throttling. We disagree with 41. Likewise, we find unpersuasive likelihood of such conduct occurring in commenters who assert that the commenters’ concerns regarding the the first instance. And scenarios of Restoring Internet Freedom Order will effect of service plans that limit data or concern to commenters involving lead to ISPs engaging in blocking and speeds on members of the public who service plans with data caps or speed throttling practices that harm public rely on mass market broadband internet limits would not have been addressed safety. As an initial matter, all major access services to access public safety differently under the Title II regime in ISPs have made written commitments information. We observe that broadband any event. As a result, these speculative not to engage in practices considered to service plans that limit data or speeds concerns do not justify altering our violate open internet principles, were not prohibited even under the Title regulatory approach in the Restoring including blocking and throttling. Even II Order; as such, we find the return of Internet Freedom Order. in the absence of such commitments, as broadband internet access service to its 44. Speculative Harm—Paid we previously found in the Restoring information services classification and Prioritization. We are unpersuaded by Internet Freedom Order, it is likely that elimination of the conduct rules commenters who assert that the ‘‘any attempt by ISPs to undermine the irrelevant to the impact on the Restoring Internet Freedom Order will openness of the internet would be permissibility of throttling under a data result in ISPs engaging in harmful paid resisted by consumers and edge plan when the data cap is exceeded. We prioritization practices that will have an providers.’’ Consequently, ISPs lack an also observe that the record provides no adverse effect on public safety. The economic incentive to engage in evidence of any actual incidences of Commission has long recognized and practices such as blocking or throttling, throttling or usage-based plan permitted prioritization of public safety especially when these practices may allowances that have harmed communications. For decades, National harm public safety. As the D.C. Circuit consumers’ mass market broadband Security and Emergency Preparedness explained, ‘‘the harms from blocking internet access service communications (NSEP) personnel have had access to and throttling during a public safety in the public safety context. priority services programs that leverage emergency are irreparable.’’ We agree, 42. We are similarly unpersuaded by access to commercial voice and as such note ISPs’ enforceable commenters’ concerns that public safety communications infrastructure to commitments against blocking and communications may be harmed if ISPs support national command, control, and throttling, and again note that such theoretically engaged in blocking or communications by providing emergency communication often occur throttling practices because prioritized connectivity during national over specialized, non-mass market data ‘‘transmissions from public safety emergencies. (‘‘NSEP personnel’’ services to maintain quality-of-service. officials’’ cannot ‘‘reliably be isolated generally refers to individuals who are Even if, as the County of Santa Clara et and identified as governmental responsible for maintaining a state of al. claims, ‘‘[i]t is difficult, if not communications.’’ Because ISPs readiness or responding to and impossible for governments to identify understand that broadband internet managing any event or crisis (local, harm caused by violations of net access service is used for public safety national, or international), which causes neutrality principles,’’ we observe that it communications, they have strong or could cause injury or harm to the would be as difficult to detect violations incentives to act in accordance with population, damage to or loss of of binding net neutrality rules as it is their commitments to abide by open property, or degrades or threatens the voluntary commitments. We observe internet principles for all NSEP posture of the United States.) This

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prioritized connectivity may consist of management.’’ Moreover, the to their customers not to engage in paid prioritized provisioning and restoration Commission’s proposals, should they be prioritization. We also observe that our of wired communications circuits or adopted, could provide an additional theories in the Restoring Internet prioritized communications for wireline avenue to ensure that public safety Freedom Order for when paid or wireless calls. The current priority communications are appropriately prioritization might be used services programs were established prioritized. As Free State Foundation contemplated fairly narrow scenarios pursuant to Executive Order 12472, explains, ‘‘[s]haring commercial cores that are unlikely to be the kind of issued in 1984, which called for and network traffic on an pervasive practices feared in the Title II development of priority services undifferentiated basis with non-public Order, and the record here does not programs to facilitate communications safety users can pose serious risk to the undercut that assessment. In particular, among top national leaders, policy integrity of public safety we rejected assertions that allowing makers, military forces, disaster communications in times of emergency paid prioritization would lead ISPs to response/public health officials, public and other peak congestion situations. create artificial scarcity on their utility services, and first responders. When networks are congested or at risk networks by neglecting or downgrading The Commission’s rules for the current of becoming so, providing network non-paid traffic or public safety priority services programs date back to preferences for public safety-related communications, creating a widespread the establishment of the data traffic can prevent disruptions of need for, and purchase of, paid Telecommunications Service Priority calls and other timely information being prioritization arrangements. Instead, we (TSP) System in 1988 and the creation sent to and from first responders and anticipated paid prioritization being of the Priority Access Service (PAS), other responsible agencies.’’ used to address innovative, but more commonly referred to as Wireless 45. The Commission explained in the ultimately targeted, scenarios. In Priority Service (WPS), in 2000. As the Restoring Internet Freedom Order that addition, a number of ISPs question the Commission explained when it ‘‘we expect that eliminating the ban on likelihood and prevalence of paid classified wireline broadband internet paid prioritization will help spur prioritization arrangements actually access service as an information service, innovation and experimentation, occurring in practice. Given those for example, the ‘‘classification of encourage network investment, and considerations, neither scarcity of wireline broadband internet access better allocate the costs of network resources nor instances of paid service as an information service, . . . infrastructure, likely benefiting prioritization are likely to be anywhere will not affect the Commission’s consumers and competition.’’ We see no as pervasive as feared by proponents of existing rules implementing the basis for departing from this reasoning the Title II Order, particularly to the National Security Emergency in the public safety context. Concerns point of adversely impacting public Preparedness (NSEP) expressed by commenters regarding safety communications. Further, as Telecommunications Service Priority potential adverse effects to public safety AT&T points out, the Title II Order did (TSP) System.’’ In any case, even as a result of paid prioritization of non- not ban all prioritization. That Order assuming arguendo that classification of public safety communications appear to expressly permitted direct broadband internet access service as a be purely hypothetical at this point. interconnection between ISPs and telecommunications service otherwise Indeed, even as the country faces an content delivery networks, which act as might have affected the application of unprecedented crisis, the harms agents for paying content providers. The these rules—such that obligations under predicted by such commenters have not Title II Order also made clear that those rules newly would have applied materialized. We note that paid certain categories of service, such as as a result of that classification—that prioritization arrangements are ‘‘enterprise’’ services and those services outcome did not actually result from the ubiquitous throughout our economy. As considered ‘‘non-BIAS services,’’ were Title II Order given the forbearance Free State Foundation explains, ‘‘[b]oth not subject to the Order’s restrictions. granted there. We recently sought market participants and economists Finally, under the Title II Order, the comment on updating and revising our have recognized that such arrangements Commission was authorized to grant rules governing the priority services can benefit customers who choose to waivers of the paid priority ban where programs. The Commission recently pay more for enhanced services while the petitioner could demonstrate that proposed to update its rules to expand making other customers no worse off. In ‘‘the practice would provide some the scope of the priority services the broadband communications context, significant public interest benefit and programs to include data, video, and IP- paid priority arrangements between would not harm the open nature of the based voice services. As the variety and broadband ISPs and edge providers can internet.’’ We thus conclude that the volume of dedicated services for benefit consumers by offering them scenarios of potential concern for public prioritization of public safety traffic novel services supported by Quality-of- safety communications are much demonstrate, prioritization of public Service guarantees. Edge service narrower than commenters fear. As a safety communications is critically providers, including new entrants, result, such concerns do not alter our important to protecting life and potentially can improve their decision to retain the regulatory property, and nothing in our rules competitiveness by obtaining fast and framework of the Restoring Internet currently prevents service providers extra-reliable broadband connections. Freedom Order. from prioritizing public safety Prioritized access may be necessary for 46. We are unpersuaded by assertions communications. Even the Title II Order some future internet-based innovative that permitting paid prioritization acknowledged that public safety could services to function and attract practices that were impermissible under benefit from traffic prioritization customers. And public safety agencies the Title II Order will necessarily lead without running afoul of the bright-line already stand to benefit from these pro- to degradation of public safety rules in effect at the time, noting that innovation and pro-investment effects of communications. Such commenters ‘‘traffic prioritization, including paid prioritization arrangements and to ‘‘mistakenly believe that QoS is a zero- practices that serve a public safety thereby better fulfill their duties to the sum game, one in which it is impossible purpose, may be acceptable under our public.’’ Moreover, ISPs have made to tailor the management of network rules as reasonable network clear, enforceable written commitments resources to the needs of specific

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organizations and applications without harm to persons with disabilities are the communications services cited by the impairing those not so managed.’’ As we same harms commenters raise with California PUC, BBIC cites educational already concluded in the Restoring respect to the public more generally tools for persons with disabilities: Internet Freedom Order, ‘‘ ‘prioritizing from potential blocking, throttling, or ‘‘Remote Real-time Captioning for the packets for latency-sensitive paid prioritization—that users’ classes, E-Text through Bookshare.org applications will not typically degrade broadband internet access service-based (Accessing and Downloading Accessible other applications sharing the same communications services needed for Text Books) and the ability to access infrastructure,’ such as email, software public safety reasons might be hindered and download software including updates, or cached video.’’ The record by such ISP conduct and/or that users dictation software, screen readers, and here supports a similar conclusion for a might pay more for broadband internet Text To Speech Softwares.’’ As a wider array of applications, as well. As access services with capabilities that threshold matter, the nexus to public Rysavy Research explains, for example, avoid such harms. To the extent that safety is unclear, particularly as it ‘‘prioritizing one application over commenters simply raise the same relates to the use of broadband internet another does not necessarily mean a concerns that we have considered and access service by persons with poorer experience for the lower-priority found unpersuasive in the case of the disabilities to download books and applications. A video streaming public more generally, we likewise software. We also find that downloading application can tolerate considerable reject them in the specific context of books and software are likely akin to the delay because the player buffers persons with disabilities for the same non-latency-sensitive uses of broadband information, so a user watching a video reasons. internet access service that the will never notice some slightly-delayed 49. Nor does the record persuade us Commission already held unlikely data.... Because different that there are likely public safety harms typically to be affected by prioritization applications have different needs, traffic in connection with services used of other traffic, and the record here does management is not a zero-sum game.’’ specifically by persons with disabilities not demonstrate otherwise. With respect As such, we find that commenters’ as a result of the regulatory approach to ‘‘Remote Real-time Captioning for concerns that the Restoring Internet adopted in the Restoring Internet classes,’’ we are not persuaded that any Freedom Order will lead to reduced Freedom Order. The California Public public safety implications are materially speed for customers that do not pay Utilities Commission (California PUC) different for that use of broadband extra for paid prioritization, resulting in contends that persons with disabilities internet access service than for others, harms to public safety, are not well- ‘‘increasingly rely upon internet-based like video communications, discussed founded. 47. Speculative Harm— video communications, both to in the text. To the extent that BBIC’s Communications by Individuals with communicate directly (point-to-point) concern is about blocking or throttling Disabilities. We are not persuaded by with other persons who are deaf or hard of traffic, the Commission already the claims of some commenters that the of hearing who use sign language, and rejected the likelihood of that in the regulatory approach adopted in the through video relay service,’’ and that Restoring Internet Freedom Order, and Restoring Internet Freedom Order would ‘‘[t]hese applications often require we do not revisit that conclusion here. detrimentally effect the safety of life and significant bandwidth, making their use Nor are we persuaded that there are property for persons with disabilities. particularly sensitive to data caps and public safety implications for these We consider these arguments insofar as network management practices.’’ As to specific uses of broadband internet they relate to the public safety remand data caps, however, neither the access service cited by BBIC that cannot in Mozilla. To the extent that these classification of broadband internet adequately be addressed, if needed, comments raise other issues related to access service as a telecommunications through the marketplace or other laws the effect of the Restoring Internet service nor the Title II Order’s bright given that their nature and context does Freedom Order’s regulatory approach on line rules prevented such caps. Nor does not appear to involve the need for persons with disabilities, we do not the record demonstrate that the immediate communications to address reopen those issues from the Restoring possibility of case-by-case review of imminent threats to life or property. But Internet Freedom Order here and thus data caps—with its uncertain we do not find the likely effects on these reject the arguments as outside the outcomes—would meaningfully address services meaningfully different than our scope of this proceeding. Consistent commenters’ hypothetical public safety public safety analysis of the other video with the Commission’s commitment to concerns that data caps would hinder communications applications communications services for the functionality of services relied upon potentially used by the public more individuals with disabilities, we by persons with disabilities for public generally as raised by commenters in conclude that the regulatory approach safety-related communications. the record here. Indeed, there is no established in the Restoring Internet Commenters do not explain why they evidence of such harm occurring since Freedom Order ultimately benefits think the application of that case-by- the Restoring Internet Freedom Order public safety communications by case review would have addressed any took effect. Consequently, we reject individuals with disabilities in the same theoretical concerns about public safety public safety concerns about video manner as public safety communications involving persons with applications used by persons with communications more generally—by disabilities. We do recognize that the disabilities for the same reasons we encouraging competition and use of broadband internet access service reject public safety concerns raised in deployment. Further, as held in the to facilitate video communications by connection with other latency-sensitive Restoring Internet Freedom Order, the persons with disabilities is distinct from over-the-top services used by the public regulatory approach adopted there does the specific types of applications ‘‘such more generally for public safety not significantly alter the regulatory as email, software updates, or cached purposes. Although the record does not landscape of statutory protections for video’’ that the Restoring Internet persuade us of likely public safety communications by persons with Freedom Order identified as typically harms to communications involving disabilities. unlikely to be degraded by prioritization persons with disabilities using video 48. In substantial part, the concerns of latency-sensitive applications on the communications over broadband raised about potential public safety same facilities. In addition to the video internet access service, should such

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evidence emerge we have authority to disabilities. For one, the record does not removed, insofar as it expresses concern act consistent with the regulatory demonstrate that such effects on third about the loss of ‘‘copper wires which approach to broadband internet access party compliance are likely. carry 911, closed captioning and TTY service adopted in the Restoring Internet Independently, we are not persuaded services.’’ Neither the definition nor Freedom Order. As we held in the that such speculative concerns would classification of broadband internet Restoring Internet Freedom Order, the provide a sound basis upon which to access service is tied to the physical Twenty-First Century Communications revisit the regulatory approach of the medium—copper vs. fiber—over which and Video Accessibility Act of 2010 Restoring Internet Freedom Order. Even it is provided, however, nor does the (CVAA) ‘‘directed the Commission to assuming arguendo that certain California PUC give any indication of enact regulations to prescribe, among regulation of ISPs could make it easier how the Title II Order would have other things, that networks used to for third parties to comply with those addressed its concerns about the loss of provide’’ advanced communications third parties’ statutory obligations, the copper network facilities better (or at services (ACS), which includes net result would be to shift compliance all). electronic messaging and interoperable burdens away from the parties actually 53. Speculative Harm—Critical video conferencing services, ‘‘ ‘may not subject to the statutory duties and onto Infrastructure. We disagree that the impair or impede the accessibility of the ISPs. In effect, such regulation elimination of the internet conduct rules information content when accessibility would require ISPs to implicitly will impact the safety and reliability of has been incorporated into that content subsidize the compliance costs of the ‘‘critical infrastructure sectors,’’ for transmission through . . . networks entities actually subject to the statutory including electric, gas, water, and used to provide [ACS].’ ’’ duties. We are not persuaded that would communications utilities, ‘‘which in 50. We also are not persuaded by be an appropriate basis for regulation. turn negatively impacts public safety,’’ commenters’ claims that ISP conduct 52. Finally, we are unpersuaded by as claimed by some commenters. will lead to violations of laws BBIC’s assertion that provider conduct Commenters cite various federal laws or establishing protections for persons no longer prohibited by the regulatory statements of policy regarding critical with disabilities. As a threshold matter, approach in the Restoring Internet infrastructure in general or the use of the nexus between those concerns and Freedom Order might violate the the internet and other communications public safety issues (or any other Americans with Disabilities Act’s (ADA) technologies as part of those sectors. In remanded issue) is far from clear—and ‘‘prohibit[on on] interference with rights some cases, the cited materials appear to to the extent commenters raise issues adopt principles or requirements lacking a nexus to the remanded issues, granted under the ADA statute’’ or we reject them as beyond the scope of ‘‘raise state law tort issues such as specific only to the implementation of this proceeding. Independently, the claims for prospective interference with those statutes or involve record does not demonstrate that the business advantage.’’ BBIC does not communications services generally in a regulatory approach adopted in the explain why the theoretical potential for way that extends far beyond the scope Restoring Internet Freedom Order will a provider’s conduct to violate any such of this proceeding. Nor is our analysis lead to the violation of the laws cited by requirements is, in itself, a reason to altered by references to ‘‘state laws commenters. Commenters express vague return to the regulatory approach of the making the interference with concerns about the potential violation of Title II Order. Not only is the potential administration of government an offense section 225 of the Act, which calls for for violations theoretical, but BBIC has ranging from a civil to a criminal the Commission to establish not sufficiently articulated a potential misdemeanor—or felony.’’ The record is Telecommunications Relay Services legal violation. We thus reject BBIC’s not sufficiently developed on these legal (TRS) to provide certain persons with assertion that ‘‘[t]he FCC must explain standards and their potential disabilities communications services its analysis of whether the ADA application to any provider conduct that that are functionally equivalent to voice interference statute is violated by ISP theoretically could raise public safety telephone service. The Commission’s demands for payment for fast internet concerns for us to formally opine on rules define the standards that providers access for additional payments or at risk them here, and in any case BBIC does subject to section 225 must meet. of slowdown of the data or vital services not explain why the theoretical Although some TRS services are carried including telemedicine for persons with potential for a provider’s conduct to via broadband internet access service, disabilities.’’ In other words, even violate any such requirements is, in commenters do not explain how the assuming arguendo that certain provider itself, a reason to return to the regulatory approach in the Restoring conduct already is prohibited by a law regulatory approach of the Title II Order. Internet Freedom Order will preclude like the ADA’s prohibition on The California PUC also cites its efforts providers subject to section 225 from interference, the record does not reveal to ‘‘adopt[ ] a number of emergency complying with the Commission’s rules any public safety benefit from the customer protection measures to implementing section 225. We also see Commission separately and support residential and small business no basis in this record to conclude that independently regulating broadband customers of utilities affected by our policy discretion under section 225 internet access service providers simply disasters,’’ stating that these come in the of the Act to revise our TRS rules to to ensure they comply with obligations aftermath of a disaster and involve what reflect evolving standards over time they already otherwise are subject to by it asserts without elaboration are ‘‘vital would be materially affected under the law. Finally, the record does not reveal communications services.’’ The actual regulatory approach adopted in the any additional public safety concerns nexus between the California PUC’s Restoring Internet Freedom Order. that would arise from the speculative customer protection measures and 51. Commenters’ arguments are also claimed violation of these laws, protection of critical infrastructure or flawed insofar as they focus not on independent of the concerns about the public safety more generally is unclear violations of laws by the ISPs public safety effects of ISPs’ pricing and on this record. And the California PUC’s themselves but on the theory that ISPs’ network management practices that we concern in this regard appears to center conduct might make it harder for third already considered and rejected above. on arguments certain providers made parties to comply with their obligations Indeed, one concern raised by the objecting to its regulations, among many under laws protecting individuals with California PUC appears even further other grounds, on the basis of the

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preemption portion of the Restoring Freedom Order that are materially marketplace. Public safety entities often Internet Freedom Order. These different from the arguments the rely on enterprise-level broadband data arguments appear to have been made Commission otherwise finds services for communications between prior to the Mozilla court vacating that unpersuasive in its analysis here. Nor is public safety officials, which were never portion of the Restoring Internet there evidence of such harm occurring subject to the Title II Order. And while Freedom Order—a fact the California since the Restoring Internet Freedom mass market broadband services are a PUC does not address—and otherwise Order took effect. critical element of public safety remain unresolved. We thus are not 54. Although commenters discuss communications for members of the persuaded that these arguments various applications that arguably have public, such services are not the only demonstrate a public safety harm arising at least some nexus to critical means of disseminating, accessing, and from the Restoring Internet Freedom infrastructure protection, the record conveying important public health and Order’s regulatory approach. does not reveal technical details safety communications, as consumers Commenters’ concerns about critical regarding the operation of any of those rely on voice services (most notably 911 infrastructure-related risks are premised applications that demonstrates that they capabilities), the emergency alert on the same ISP conduct that underlie would be significantly affected by ISP system, and wireless emergency alerts commenters’ public safety concerns network management, let alone in a way for accessing important public safety more generally—blocking, throttling, that would have been prohibited by the information as well. rules adopted in the Title II Order. Nor and paid prioritization—which we find 5. The Public Safety Benefits and unlikely to occur for the reasons already is it even clear that all of the cited applications rely on mass market Overall Benefits of the Restoring discussed above. As we found, the broadband internet access service, Internet Freedom Order Outweigh Any effects of ISP conduct involving paid rather than enterprise services, Unlikely Harms to Public Safety prioritization, should they occur, are specialized services, or other services 56. Our analysis leads us to conclude unlikely to detrimentally affect that fell outside the scope of the Open that the likely benefits of the Restoring applications used for public safety Internet Order and Title II Order. For Internet Freedom Order for public safety purposes generally, and the record does example, it is not clear from the record clearly outweigh any harms. Getting not justify a different conclusion in the that ‘‘ ‘Smart Grid communication to the broadband to more Americans sooner case of the applications cited by internet-enabled backbone,’ ’’ and at lower prices can and will likely commenters in connection with critical necessarily relies on mass market save lives. This public safety benefit infrastructure. Late in the proceeding broadband internet access service. Nor extends beyond broadband internet BBIC filed an ex parte attaching in full is it clear whether the operation of access service to all commingled a number of law journal articles and a certain devices that facilitate the services that rely on the same facilities, brief from the Mozilla litigation from applications cited by commenters, such and even to other services that ISPs may 2018 and 2019 without directing the as ‘‘internet-connected thermostats, invest in with money that they would Commission’s attention to particular solar panels, and energy storage units,’’ otherwise have spent on regulatory elements or aspects of those attachments would rely on mass market broadband compliance. Weighed against our beyond the specific quotes or arguments internet access service or instead on conclusion that harms to public safety from those materials that it referenced some other ‘‘non-BIAS data services’’ have not arisen and are unlikely to arise in earlier filings, instead stating simply and as such, by default would not have as a result of the Restoring Internet that ‘‘the attached material [is] been regulated by the Title II Order in Freedom Order, it is clear that the responsive to issues raised in these any event. Commenters’ various high- benefits of the underlying order proceedings.’’ Reviewing that filing in a level claims about the general outweigh the costs as to public safety. manner consistent with the importance of communications to Moreover, we must take into account circumstances, each of the attachments critical infrastructure also appear to that the likely benefits of the Restoring appear, at least in part, to discuss public extend beyond mass market broadband Internet Freedom Order extend far safety concerns in general, including internet access services. Indeed, it is the beyond public safety, and into every critical infrastructure issues in increasingly robust broadband made realm of American life touched by the particular. To the extent that the available since the Restoring Internet internet. As we explained in the attachments appear to bear on the Freedom Order that has made possible Restoring Internet Freedom Order, remanded public safety issue, these the ‘‘fast, instantaneous reinstating the information service attachments do not appear to raise facts, communications’’ needed for many of classification for broadband internet arguments, or concerns that differ in the beneficial critical infrastructure- access service ‘‘is more likely to material ways from those we otherwise related programs to be effective. encourage broadband investment and address and find unpersuasive in this 55. Limited Scope of Any innovation, further our goal of making section. For example, we do not readily Hypothetical Harm. We emphatically broadband available to all Americans identify in these attachments—and agree with the Mozilla court that and benefitting the entire internet BBIC’s accompanying ex parte letter ‘‘whenever public safety is involved, ecosystem. ISP investment does not does not highlight—circumstances lives are at stake.’’ Our analysis above simply take the form of greater where ISPs are likely to behave demonstrates that harms to public deployment, but can also be directed differently than otherwise reflected in safety, and thus American lives, have toward new and more advanced services our public safety analysis; nor not arisen and are unlikely to arise as a for consumers. Enabling ISPs to freely applications or services with technical result of the Restoring Internet Freedom experiment with services and business characteristics materially different than Order. To be thorough, we must further arrangements that can best serve their those otherwise considered in our observe that if some harm were customers, without excessive regulatory analysis; nor legal responsibilities nonetheless to arise, its impact would and compliance burdens, ‘‘is an imposed on the Commission that we necessarily be limited by the important important factor in connecting have not met here; nor other reasons for but bounded role that broadband underserved and hard-to-reach the Commission to reject its regulatory internet access service plays in the populations,’’ and we agree with the approach from the Restoring Internet broader public safety communications Chamber of Commerce that the positive

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effects of the Restoring Internet Freedom access right under section 224(f)(1). The types of service.’’ This determination is Order likely will help ‘‘enable the Commission has held that when consistent with the U.S. Supreme deployment of rural broadband and 5G incumbent local exchange carriers Court’s decision in NCTA v. Gulf Power technologies that benefit the entire obtain access to poles, section 224 Co., in which the Court held that the economy and will help close the digital governs the rates, terms, and conditions protections afforded by section 224 to divide.’’ We thus conclude that the of those attachments. The Act allows cable attachments remain in place when overall benefits of the Restoring Internet utilities that provide electric service to a service provider uses the same Freedom Order (including to public deny access to their poles, ducts, facilities to offer broadband internet safety) clearly outweigh any harms to conduits, or rights-of-way because of access service to its subscribers. Thus, public safety. ‘‘insufficient capacity and for reasons of in non-reverse preemption states, ‘‘the safety, reliability and generally B. Pole Attachments protections afforded by section 224 to applicable engineering purposes.’’ cable television systems and providers 57. The Mozilla court directed us to 59. The Act nonetheless only gives of telecommunications service remain ‘‘grapple with the lapse in legal the Commission limited authority. It in place when a service provider uses safeguards’’ that results from exempts from our jurisdiction those the same facilities to offer broadband reclassification eliminating section 224 pole attachments in states that have internet access service to its pole attachment rights of ISPs that lack elected to regulate pole attachments subscribers.’’ Only the few ISPs that do a commingled telecommunications themselves, referred to as reverse not offer cable or telecommunications service or cable television system (i.e., preemption states. Twenty-four states services over the same network would broadband-only providers). For the and the District of Columbia have not be able to avail themselves of the reasons below, we find that the benefits elected this reverse preemption, leaving protections Congress established in of returning to the light-touch our rules to govern pole attachments in section 224 and the Commission’s information service classification 26 states and the U.S. Territories. implementing rules. adopted in the Restoring Internet Section 224 also does not cover poles 62. We find that the vast majority of Freedom Order far outweigh any limited owned by municipalities, electric subscribers are served by ISPs that potential negative effects resulting from cooperatives, railroads, or the Federal or provide either cable or the loss of section 224 rights for state governments. broadband-only ISPs. telecommunications services over their 2. The Benefits of Reclassification networks and therefore remain able to 1. Section 224 Authority Outweigh Any Potential Drawbacks for take advantage of the rights guaranteed 58. The Commission has broad Broadband-Only ISPs by section 224 after the reclassification authority under section 224 of the Act 60. Based on the record, we find that of broadband internet access service as to regulate attachments to utility- the benefits of returning broadband an information service. Public owned-and-controlled poles, ducts, internet access service to its historical Knowledge et al. claim that AT&T may conduits, and rights-of-way. Section 224 information service classification soon cease to provide a defines pole attachments as ‘‘any outweigh any potential adverse effects telecommunications service or a cable attachment by a cable television system resulting from the loss of pole television service, and as a result, ‘‘the or provider of telecommunications attachment rights under section 224 for entire AT&T network will no longer be service to a pole, duct conduit, or right- broadband-only ISPs. First, we find that eligible for pole attachment rates’’ and of-way owned or controlled by a any drawbacks of reclassification are AT&T may no longer ‘‘qualify as a LEC.’’ utility.’’ It authorizes us to prescribe limited because in the areas where Speculation regarding a single provider rules to ensure that the rates, terms, and federal pole attachment regulation is insufficient to justify changing our conditions of pole attachments are just applies, almost all ISPs’ pole course. Further, in the attachment on and reasonable; require utilities to attachments remain subject to section which Public Knowledge et al. rely, provide nondiscriminatory access to 224, as they commingle cable or AT&T merely sets forth a plan to their poles, ducts, conduits, and rights- telecommunications services with their grandfather DSL (a legacy information of-way to telecommunications carriers broadband services. Second, we service). The document specifically and cable television systems conclude that the benefits of states that customers that wish to retain (collectively, attachers); provides reclassification for broadband-only plain old telephone service (a procedures for resolving pole providers outweigh any limited pole telecommunications service) may do so, attachment complaints; governs pole attachment-related drawbacks they and Public Knowledge et al. do not attachment rates for attachers; and face—and the overall benefits of provide any evidence that AT&T plans allocates make-ready costs among reclassification outweigh the drawbacks to discontinue any telecommunications attachers and utilities. The Act defines of broadband-only ISPs’ attachments no services offered over any of its facilities. a utility as a ‘‘local exchange carrier or longer being subject to section 224. Carriers must obtain Commission an electric, gas, water, steam, or other 61. Drawbacks of Reclassification Are approval prior to discontinuing public utility, . . . who owns or Limited. Section 224 applies to telecommunications services, and controls poles, ducts, conduits, or attachments of cable television systems interested parties would have an rights-of-way used, in whole or in part, and providers of telecommunications opportunity to object to any proposed for any wire communications.’’ services, but not to providers of only continuance. The record However, for purposes of pole information services. As the overwhelmingly confirms our attachments, a utility does not include Commission has previously clarified, conclusion. According to ACA any railroad, any cooperatively- however, ‘‘where the same Connects, all of its members organized entity, or any entity owned by infrastructure would provide ‘both ‘‘ ‘commingle’ broadband with either or a federal or state government. Section telecommunications and wireless both a cable or telecommunications 224 excludes incumbent local exchange broadband internet access service,’ the service over the same network.’’ carriers from the meaning of the term provisions of section 224 governing pole Likewise, the Edison Electric Institute’s ‘‘telecommunications carrier,’’ therefore attachments would continue to apply to members ‘‘report that at this time very these entities do not have a mandatory such infrastructure used to provide both few ISPs seek to attach to electric

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company poles to provide broadband- ‘‘routinely enter into pole license despite the fact this proceeding only service.’’ USTelecom cites a agreements with entities that are neither occurred after we reclassified broadband November 2019 report stating that at cable television systems nor as an information service in the least 96% of the broadband market was telecommunications carriers’’ and ‘‘[t]he Restoring Internet Freedom Order. served by companies that either negotiation of these pole license Google Fiber also had a representative provided telecommunications services agreements is often more efficient than on the Broadband Deployment Advisory or operated a cable system.’’ Further, we negotiation of pole license agreements Committee who voted in favor of its agree with ACA Connects that ISPs will with cable television systems or report recommending that the continue to offer commingled services telecommunications carriers because the Commission adopt OTMR. We find this for the foreseeable future because ‘‘ISPs prospective licensee appears to be more speculation unconvincing and, to the have an incentive to offer as many interested in a deal that works than they contrary, agree with ACA Connects services as possible over their networks are interested in ensuring that any members that over time, new and to achieve efficiencies and maximize perceived regulatory rights are reflected existing attachers, as well as pole revenues, and thus very few providers in the agreement.’’ Further, since the owners, will ‘‘find it to their advantage only offer over their networks adoption of the Restoring Internet to use [the OTMR] process, making it an standalone broadband service.’’ In fact, Freedom Order, there is only limited industry standard—regardless of NCTA argues that a reason broadband- evidence in the record that a small whether an attacher has section 224 only providers are particularly rare is number of broadband-only providers rights.’’ ‘‘precisely because triple-play services have experienced increased costs to 64. Further, despite its concerns that pole owners will use the reclassification are both popular with subscribers and obtain access to poles, and there is also of broadband internet access service as beneficial to providers.’’ Notably, evidence that such costs or other an information service to delay and multiple commenters agree that the barriers have not increased. For even block new deployments by majority of existing ISPs offer instance, Southern Company explains broadband-only providers, Google commingled services. Further, ISPs may that ‘‘its operating companies have not acknowledges that before broadband gain the status of telecommunications increased pole attachment rates or internet access service was classified as providers, and thus become eligible for prohibited a broadband provider from a telecommunications service, it was section 224 pole attachment rights. Our attaching equipment following the able to enter into such agreements with experience with the substantial Order’’ and that it must ‘‘answer to a participation in the Connect America utilities. Southern Company confirms state public service commission when it that in February 2014, ‘‘Google Fiber Fund (CAF) Phase II universal service comes to the lease of property support auction and, more recently, our first approached Georgia Power about a capitalized within the rate base.’’ Only pole license agreement’’ and ‘‘[b]y Rural Digital Opportunity Fund Phase I WISPA provides some isolated and auction demonstrates that providers are December 15, 2014, the parties had fully anecdotal examples of higher pole executed their agreement.’’ Notably, willing or able to become attachment rates, but fails to telecommunications carriers when they although Google Fiber repeatedly demonstrate the existence of a emphasizes the unfairness of its find it beneficial. 220 applicants widespread problem. Indeed, WISPA qualified to bid in the CAF Phase II inability to take advantage of pole emphasizes that these few incidents do access rights for cable operators under auction, and as of September 2020, 192 not outweigh the overall positive impact section 224, NCTA contends that Google of 194 winning bidders had been of Title I reclassification for its Fiber could, in fact, be classified as a designated as ETCs in 45 states and members. Although some commenters Title VI cable service due to its video been authorized to begin receiving contend that the reclassification has offering, but has taken the position that support. The Rural Digital Opportunity adversely impacted broadband-only its video offering is not a cable service Fund auction imposed similar ETC providers, they largely fail to provide in order to avoid regulatory burdens designation requirements on applicants. data or specific examples that connect under Title VI. Bidding in the Rural Digital the Restoring Internet Freedom Order to 65. The limited impact of the loss of Opportunity Fund Phase I auction is a rise in pole attachment rates or denials section 224 rights for broadband-only scheduled to begin on October 29, 2020, of pole access. For instance, while providers is further diminished by the and the Commission received 505 Google Fiber states that, prior to the fact that states have the ability to applications to participate. As another Title II Order, negotiations over pole reverse-preempt the Commission’s rules option, a broadband-only provider may attachment agreements with pole under section 224(c)—and a substantial also partner with an existing cable or owners ‘‘were difficult and time minority have in fact done so. As telecommunications provider to invoke consuming,’’ and it ‘‘had to be willing multiple commenters note, our Title I section 224 protections. to pay higher rent than cable operators classification does not impact the 24 63. Although we agree that timely and telecommunications providers,’’ as states and the District of Columbia that ‘‘access to utility poles is a competitive commenters note, Google does not have chosen to reverse-preempt our bottleneck,’’ based on the record, we are provide examples of similar negotiation rules. Therefore, if a state prefers to convinced that reclassification does not and rate difficulties since the adoption adopt a different regulatory approach, significantly limit new entrants to the of the Restoring Internet Freedom Order. that state has the opportunity to exercise marketplace or the effectiveness of the Notably, Google merely speculates that its authority to expand the reach of Commission’s recent one-touch-make- it ‘‘may find itself with no right to use government oversight of pole ready rules. Broadband-only providers [‘‘one-touch make-ready’’] OTMR attachments, and several states that have now have the regulatory flexibility to procedures in a given market.’’ Google reverse preempted currently regulate enter into innovative and solution- Fiber advocacy at the time suggests that pole attachments by information service oriented pole attachment agreements it anticipated accruing benefits from our providers. The Restoring Internet with pole owners. Indeed, Southern adoption of OTMR. Google Fiber Freedom Order does not disturb the Company notes that its operating strongly supported OTMR adoption in authority of states that have reverse companies—Georgia Power, Alabama the 2018 Wireline Infrastructure (83 FR preempted to assert such jurisdiction or Power, and Mississippi Power— 46812, Sept. 14, 2018) proceeding, prevent states that have not reverse

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preempted from doing so in order to in the Restoring Internet Freedom Order during the past decade, in order to allow assert such jurisdiction. The California create incentives that likely help foster broadband-only providers to compete Public Utilities Commission expresses substantial investment in new on a more level regulatory playing concern that ‘‘ISPs may attempt to broadband infrastructure, including field.’’ For the purposes of this Order on invoke the information services poles, and increased broadband Remand, we find that even assuming we classification as a shield against a deployment. For instance, ‘‘[a] WISPA lack authority to extend section 224 to State’s jurisdiction to regulate pole member in Minnesota has invested $1.5 cover broadband-only providers, the attachment safety.’’ It claims that million dollars to expand its network by overall benefits of reclassification ‘‘overloaded poles and/or insufficiently adding 12 new towers since January outweigh the limited drawbacks. Parties maintained attachments’’ have 2018’’ and ‘‘[t]his expansion has arguing in favor of extending pole presented public safety issues. However, allowed the company to fully cover two attachment rights to broadband-only California currently regulates pole additional counties in Minnesota.’’ We ISPs are free to file a petition for attachments at the state level so it is free agree with the majority of commenters rulemaking or petition for declaratory to assert its authority over pole that these benefits outweigh the loss of ruling, which we then may consider attachments by broadband-only section 224 protections for the very with the benefit of a full and focused providers under California law as it limited number of broadband-only record on the topic. wishes without federal restriction under providers that do not offer a cable or C. Lifeline Broadband Services the Act. telecommunications service over the 66. We note further that section 224 same network as they provide 71. The D.C. Circuit in Mozilla has several gaps, such that the exclusion broadband internet access service. directed us to consider on remand the of broadband-only providers is not Indeed, despite a membership including statutory basis for broadband internet aberrant. Section 224 applies to specific broadband-only providers, WISPA access service’s inclusion in the Lifeline categories of poles and, as noted above, emphatically confirms our position that program. After such consideration, we only in applicable states. As noted ‘‘[t]here is no doubt that the Restoring further explain our finding that we have above, poles owned by municipalities, Internet Freedom Order’s abandonment legal authority under section 254(e) of electric cooperatives, railroads, and of burdensome Title II regulations for the Act to distribute Lifeline support for Federal and state governments are not broadband internet access service broadband service provided by ETCs. covered under section 224, and so the providers is of paramount importance in That authority is undergirded by the clear intent of Congress that universal adoption of the Restoring Internet promoting deployment of new service service efforts should increase access to Freedom Order does not affect the and enhancing competitive offerings. If advanced services, and the record in access of any ISP to such poles. it were actually a choice between the this proceeding offers broad support for 67. The Benefits of Reclassification world of Title II regulation and the Outweigh Any Pole Attachment-Related our conclusion. lighter touch of Title I regulation, with Drawbacks. Ultimately, the record no pole attachment protections for 1. The History of Funding Broadband supports our determination that the broadband-only providers, WISPA Services Through the Universal Service reclassification of broadband internet would choose the latter paradigm.’’ Fund access service as an information service has facilitated rather than inhibited new 70. We decline at this time to address 72. In the 2011 USF/ICC technologies and business models, requests in the record to reinterpret Transformation Order (76 FR 73830, despite the rare potential for pole section 224 or rely on other sources of Nov. 29, 2011), the Commission adopted attachment access challenges. To this authority to extend the availability of comprehensive reforms to modernize end, given the overall benefits of Title access rights under section 224 to the Universal Service Fund (USF or I reclassification, we find that it would broadband-only providers. A number of Fund) to ‘‘implement Congress’s goal of be counterproductive to upend our commenters propose sources of promoting ubiquitous deployment of, light-touch regulatory framework for Commission authority to extend section and consumer access to, both traditional broadband internet access service 224 to cover broadband-only ISPs. For voice calling capabilities and modern because of speculative concerns that at instance, WISPA proposes to directly broadband services over fixed and most would impact a small minority of apply section 224 or rely on ancillary mobile networks.’’ As part of this ISPs and consumers. authority. Specifically, WISPA contends modernization effort, the Commission 68. First, there is no question that the that the plain text and objective of leveraged the funding disbursed through overall benefits of reclassification section 224, as well as provisions such the Fund’s high-cost mechanism to outweigh the limited drawbacks that as sections 157 and 257 of the Act, and encourage the deployment of stem from broadband-only ISPs losing section 706 of the 1996 Act, is ‘‘to level broadband-capable networks, even their section 224 pole attachment rights. the playing field, promote competition, though broadband internet access As we have discussed, numerous expand the public’s access to advanced service was at the time classified as an commenters—including broadband-only services or ensure that customers have information service. The Commission ISPs—assert that Title I reclassification access to service at ‘just and reasonable stated that by ‘‘referring to ‘facilities’ has promoted robust infrastructure rates.’ ’’ According to WISPA, we could and ‘services’ as distinct items [in investment and deployment in also exercise our ancillary jurisdiction section 254(e)] for which federal broadband networks and facilities. under section 154 or rely on section 706 universal service funds may be used Indeed, the Mozilla Court upheld our as our statutory authority to extend pole . . . Congress granted the Commission cost-benefit analysis in the Restoring access and rate rights to broadband-only the flexibility not only to designate the Internet Freedom Order, stating that we providers. Other commenters offer types of telecommunications service for made a ‘‘reasonable case that [our] general support for us to extend section which support would be provided but ‘light-touch’ approach is more 224 to cover broadband-only providers. also to encourage the deployment of the conducive to innovation and openness Alternatively, Southern Company types of facilities that will best achieve than the Title II Order.’’ proposes ‘‘to unwind many of the the principles set forth in section 254(b) 69. Second, the regulatory certainty incumbent-friendly pole attachment and any other universal service provided by the Commission’s actions regulations adopted by the Commission principle that the Commission may

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adopt under section 254(b)(7).’’ The Indeed, the Commission further Lifeline program to reimburse Commission further concluded that concluded that it had a ‘‘ ‘mandatory broadband-only service offerings. section 254 allowed it to condition the duty’ to adopt universal service policies 77. We conclude, as the Commission receipt of universal service support on that advance the principles outlined in found in the context of the high-cost ETCs offering broadband capabilities to section 254(b) and we have the mechanism, that we have authority their customers. The Tenth Circuit authority to ‘create some inducement’ to under section 254 to continue funding affirmed this approach as a reasonable ensure that those principles are broadband internet access service interpretation of the statute and upheld achieved.’’ In the same NPRM, the offerings in the Lifeline program and the Commission’s authority to structure Commission sought comment on that this position is strongly supported universal service support to ensure that eliminating the Lifeline Broadband by the text of the Communications Act the universal service policies set out in Provider category of ETC, a broadband- and the record. Under section 254(e), section 254(b) of the Act are achieved. only ETC designation that had been carriers receiving support ‘‘shall use 73. The Commission first funded newly created in the 2016 Lifeline Order that support only for the provision, broadband internet access service when broadband internet access service maintenance, and upgrading of facilities offerings in the Lifeline program when had been classified as a Title II service. and services for which the support is it launched the Lifeline Broadband Pilot 75. Finally, in the 2019 Lifeline Order intended.’’ Under this statutory Program as part of the reforms adopted (84 FR 71308, Dec. 27, 2019), the provision, the Commission has in the 2012 Lifeline Order (77 FR 12952, Commission re-evaluated the legal flexibility to design its support March 2, 2012). In doing so, the structure of the Lifeline Broadband mechanisms to fund both the service Commission relied upon the same Provider ETC category. With no itself—here, voice telephony—and the theory of legal authority it applied to the obligation to offer the supported voice underlying facilities used to offer the high-cost mechanism in the USF/ICC service under section 254(c), the supported service—here, broadband- Transformation Order. At the time that Commission found that the Lifeline capable networks. Modern the Commission initiated the Lifeline Broadband Provider category was in communications networks are multi-use Broadband Pilot Program, broadband conflict with section 214. As such, the networks used to provide an array of internet access service was classified as Commission eliminated this ETC services. Providing Lifeline support an information service under Title I. category. Free Press argues that the when ETCs provide broadband internet After a successful pilot program, in the Commission’s decision to reclassify access service thus has the effect of 2016 Lifeline Order (81 FR 33026, May broadband internet access service as an supporting the underlying broadband- 24, 2016), the Commission expanded information service ‘‘locks [ ] out’’ capable network also used to offer voice the Lifeline program to include support broadband-only providers from the telephony. As in the high-cost program, for broadband internet access service Lifeline program. Thus, all ETCs the Commission’s support mechanisms funding. However, since broadband currently are required to be common can and should incentivize ETCs to offer internet access service had been carriers and to offer voice service. The access to the services that advance the reclassified as a telecommunications Commission has held that the section principles of section 254(b). The service subject to Title II regulatory 214 requirement that an ETC offer the Leadership Conference Ex Parte also requirements before the 2016 Lifeline supported services through ‘‘its own raises a number of suggestions for Order, the Commission relied on that facilities or a combination of its own further Commission action to respond to reclassification when expanding the facilities and resale of another carrier’s the COVID–19 pandemic, which we do Lifeline program to include support for service’’ would be satisfied when not address here as they are beyond the broadband but did not disavow the legal service is provided by any affiliate scope of this remand proceeding. Other authority theory used in the USF/ICC within the holding company structure. commenters argue that the Commission Transformation Order or the 2012 lacks authority to fund broadband 2. The Commission Has Authority To Lifeline Order. internet access services through the Support Broadband Service in the 74. In the 2017 Lifeline Notice of Lifeline program under section 254. We Lifeline Program Proposed Rulemaking (NPRM) (83 FR believe this is incorrect, and we address 2104, Jan. 16, 2018), to ensure that the 76. Upon further review and having those arguments below. All ETCs Commission was administering the considered the record in both the participating in the Lifeline program are Lifeline program on sound legal footing, Restoring Internet Freedom proceeding and will remain common carriers and the Commission proposed to apply the and in response to the 2017 Lifeline must offer voice services by themselves same theory of legal authority it used in NPRM, we determine that we have or through an affiliate, but the the USF/ICC Transformation Order and authority under section 254 of the Act Commission can also continue to the 2012 Lifeline Order to continue to provide support for broadband support broadband internet access funding broadband internet access internet access service from the Lifeline service in the Lifeline program, and the service in the Lifeline program. In that program in addition to a qualifying universal service support will flow to NPRM, the Commission asserted that it voice service. First, we elaborate on our the facilities of ETCs that are by had the proper authority ‘‘under Section application of the theory of legal definition common carrier providers of 254(e) of the Act to provide Lifeline authority adopted in the USF/ICC voice services. support to ETCs that provide broadband Transformation Order to the Lifeline 78. Section 254(e) states that ETCs service over facilities-based broadband- program. Second, we address how this ‘‘shall be eligible to receive specific capable networks that support voice authority is not dependent on the Federal universal service support’’ and service.’’ The Commission concluded regulatory classification of broadband that an ETC receiving universal service that this ‘‘legal authority does not internet access service and is consistent support ‘‘shall use that support only for depend on the regulatory classification with the section 214(e) requirement that the provision, maintenance, and of broadband internet access service, ETCs be common carriers. Third, we upgrading of facilities and services for and thus, ensures the Lifeline program make necessary adjustments to the which the support is intended.’’ Section has a role in closing the digital divide Commission’s rules to implement this 254(c) does not impose an impediment regardless of the regulatory approach. Finally, we address how this to this conclusion. While section classification of broadband service.’’ legal authority will still allow the 254(c)(1) refers to universal service as

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‘‘an evolving level of as well as AT&T, pointed to section not a telecommunications carrier as ‘an telecommunications services,’’ this does 254(j) as another potential source of ‘eligible telecommunications carrier’ ’; not prohibit the Commission from using authority for supporting broadband under § 214(e).’’ Since NARUC provides the program to more broadly advance internet access service in the Lifeline no evidence that a non-common carrier the principles set forth in section 254(b) program. Additionally, the Lifeline has been designated by the FCC or a and indicates that Congress disfavored a Connects Coalition urged us to explore state commission, much less as the static approach focused on legacy using Title I’s general jurisdictional result of the Restoring Internet Freedom technologies. Additionally, section grant as an option to support broadband proceeding, and the legal authority we 254(b) establishes the principles on internet access service in the Lifeline identify today continues to require ETCs which the Commission shall base its program or ancillary authority options to be common carriers, we see no risk policies for the preservation and for the principles outlined in section that a non-common carrier will receive advancement of universal service. Such 254(b). Because we find that section an ETC designation. principles include ensuring that quality 254(e) provides a clear source of 81. We thus reject arguments that we services are available at ‘‘affordable authority for the Commission to support cannot support broadband internet rates’’ and that ‘‘access to advanced ETCs providing broadband internet access service in the Lifeline program if telecommunications and information access service in the Lifeline program, it is not classified as a services should be provided in all we do not find it necessary to rely on telecommunications service. Our regions of the Nation.’’ the other sources of legal authority approach outlined today does not 79. As the Commission concluded in proposed in the record. impact the ETC designation process or the USF/ICC Transformation Order, by 80. The D.C. Circuit in Mozilla, in the requirement that support recipients requiring in section 254(e) that ETCs use remanding this issue back to the be ETCs and, consistent with the statute high-cost support for both facilities and Commission, stated that we ‘‘fail[ ] to ETCs will still offer voice telephony services, Congress granted the explain’’ how our authority under service and be required to be common Commission flexibility to not only section 254(e) could extend to carriers. While the Commission has not designate the types of services for which broadband internet access service ‘‘now classified VoIP service as a support would be provided, but also to that broadband is no longer considered telecommunications service, it has encourage the deployment of the types to be a common carrier[service].’’ We consistently recognized that a provider of facilities that will best achieve the clarify that while broadband internet may offer VoIP on a Title II basis if it principles set forth in section 254(b). In access service itself is not a common voluntarily ‘‘holds itself out as a addition, the Commission has a carrier service, many broadband telecommunications carrier and ‘‘mandatory duty’’ to implement providers are ETCs—and thus, by complies with appropriate federal and universal service policies that advance definition, are common carriers. Section state requirements.’’ Thus, the the principles outlined in section 254(e) permits us to direct universal Commission is continuing to support 254(b), and to accomplish that duty we service support to both the voice service telecommunications services pursuant have the authority to ‘‘create some and broadband internet access service to its authority under section 254 of the inducement’’ to ensure that those provided by such ETCs. This support Act. This approach simply enables low- principles are achieved. Our authority flows regardless of the type of service income consumers to receive discounts under section 254 therefore permits us provided, as long as it goes to support for broadband internet access service to direct universal service support the facilities of a designated ETC. Thus, provided by ETCs, allowing us to work through the Lifeline program to both it is the ‘‘common-carrier status’’ of the towards fulfilling our principles of voice services and broadband internet provider, not the service, that governs ensuring affordable rates and access to access service in accordance with our whether the provider is eligible to advanced telecommunications and long-standing principle ‘‘that universal receive Lifeline support for services information services across all regions service support should be directed provided over its network. If a service of the Nation. where possible to networks that provide provider is not a common carrier and 82. We disagree with commenters that advanced services, as well as voice thus cannot become an ETC, the Lifeline argue that the Restoring Internet services.’’ In upholding the program cannot support its provision of Freedom Order renders the Commission Commission’s reliance on this approach broadband internet access service. For unable to ensure the availability of when it instituted the modernized high- this reason we also reject NARUC’s Lifeline-supported options for low- cost programs, the Tenth Circuit contention that the Commission’s income consumers. The Commission approvingly noted that by ‘‘interpreting continued use of ‘‘voice telephony retains the authority, if warranted, to the second sentence of § 254(e) as an service’’ to define the supported service condition Lifeline support on the implicit grant of authority that allows it creates a risk that a provider that is not provision of broadband internet access to decide how USF funds shall be used a common carrier will obtain service, as it has in the context of the by recipients, the FCC also acts in a designation as an ETC. There is no basis high-cost mechanism. The limited manner consistent with the directive in for NARUC’s claim that the 10th example put forward in the context of § 254(b) and allows itself to make Circuit’s decision in In re FCC 11–161 AT&T’s grandfathering of legacy DSL funding directives that are consistent rejected the Commission’s use of voice does not persuade us otherwise—as the with the principles outlined in telephony service as the supported commenters who raise the point admit, § 254(b)(1) through (7).’’ The National service, and nothing in our Order today ‘‘the loss of these DSL connections does Lifeline Association (NaLA) and AT&T changes that result. As the court noted not necessarily mean a loss to existing propose that the Commission may be in that decision, only common carriers Lifeline subscribers.’’ We also note that able to rely on its ancillary authority are eligible to obtain designation as an the Restoring Internet Freedom Order under section 4(i) of the Act to continue ETC and the court ‘‘agree[d] with the does nothing to change the procedures to support broadband internet access FCC that the petitioners’ argument ‘will by which carriers may seek to relinquish service in the Lifeline program. The not be ripe for judicial review unless their status as ETCs, which will National Consumer Law Center (NCLC) and until a state commission (or the continue to be governed by section and the United Church of Christ (UCC), FCC) designates . . . an entity’ that is 214(e)(4) of the Act to ensure that

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geographic areas are not left without a 2012 Lifeline Order—well before the as nearly 90% of Lifeline subscribers Lifeline provider. Commission decided to impose Title II currently choose to apply their discount 83. We further reject arguments that regulation on broadband internet access to a bundled offering that includes voice the Commission cannot apply the legal service. The Commission’s authority to service along with broadband internet authority articulated in the USF/ICC disburse Lifeline funds for broadband access service that meets the program’s Transformation Order because of the service is in part due to the fact that minimum service standards. As such, differences between the high-cost such funding ultimately flows to even as the voice phasedown continues, program and the Lifeline program. support the provision, maintenance, and the Commission will continue to However, as articulated in this section, upgrading of the voice-capable support the provision of voice services we do not believe that the program networks, but the Commission can and and voice-capable networks by ETCs. differences are material with respect to does still direct Lifeline funds in a way We therefore disagree with commenters the Commission’s authority under to best promote affordable voice and asserting that it is unreasonable to claim section 254(e) to provide funding for broadband services for low-income that Lifeline support would benefit broadband service in the Lifeline consumers. voice facilities while continuing to program, as funding will ultimately flow 84. We also reject arguments by some phase out support for voice-only to supported facilities. Every ETC, commenters that we cannot justify service. As to comments urging the whether they participate in the high- supporting broadband internet access Commission to pause the voice cost program, Lifeline program, or both service through the Lifeline program if phasedown at this time, we decline to programs, necessarily incurs network the supported voice service is scheduled decide here and the issue remains open costs associated with the provision of to eventually receive no Lifeline from the 2017 Lifeline NPRM. This the supported voice service and reimbursement in certain parts of the Order is limited to addressing the three advanced services, such as broadband country. In the 2016 Lifeline Order, the discrete issues remanded to the internet access service. In the case of Commission adopted a phasing out of Commission by the D.C. Circuit. facilities-based Lifeline providers, these support for voice-only service in the Nevertheless, we believe that a continued voice phasedown does not costs arise in deploying and maintaining Lifeline program in most areas after impede the Commission from relying on their own broadband-capable networks December 1, 2021. In doing so, the the legal authority we have explained used to offer the voice telephony Commission concluded that ‘‘Lifeline herein. supported service. Resellers should transition to focus more on 85. We also disagree with commenters participating in the Lifeline program [broadband internet access service] who argue that the best approach to likewise incur costs associated with the given the increasingly important role supporting broadband internet access network used to offer the supported that broadband service plays in the service through Lifeline is to simply voice service by directly compensating marketplace. . . .’’ The Commission reclassify broadband internet access the underlying facilities-based providers also created a carve-out of the support service as a Title II service. We find our for the wholesale voice services. Some phasedown, allowing continued support approach today instead allows for the commenters also raised concerns that to voice services at a rate of $5.25 per Lifeline program to fund broadband our actions to reclassify broadband month after December 1, 2021 to eligible internet access service offerings, while internet access service as an information subscribers served by a provider that is also allowing the Commission to service would bar resellers from the the only Lifeline provider in a Census continue to apply a light-touch Lifeline program. In the 2017 Lifeline block. First, support for voice-only regulatory approach to broadband NPRM the Commission sought comment services is not ending entirely, as the internet access service, and will on the continued role of resellers in the Lifeline program will continue to offer promote investment and innovation Lifeline program more generally, as well support to eligible subscribers in a without grafting costly and restrictive as on other possible rule changes that Census block with only one ETC. requirements onto a program that is might be warranted should resellers Nothing in the text of section 254 focused on making vital services remain in the Lifeline program. requires an ETC to receive universal affordable. Free Press also raises the Although we do not adopt changes in service funds everywhere it offers the possibility that as providers transition that regard in this Order, those issues section 254(c)(1) supported service. away from offering switched telephone remain pending. Both programs Section 254(c)(1) refers to the services service they may not be eligible to ultimately offset those network costs. included in the definition of universal participate in the Lifeline program with The main difference is that the high-cost service as being ‘‘supported by Federal broadband internet access service program provides supplemental support universal service support mechanisms,’’ classified as a Title I service. While Free for areas that are especially expensive to but does not specify the details of those Press casually raises this concern, it serve, while the Lifeline program mechanism or under what range of does not offer any evidence of it compensates providers for some of their circumstances universal service funds impacting the Lifeline marketplace costs so they can offer discounted must actually flow. Likewise, although today, or anytime in the near future. As service to low-income Americans, thus section 254(e) requires ETCs to use such, we decline to address this concern incentivizing ETCs to provision, support ‘‘only for the provision, at this time and believe that voice maintain, and upgrade facilities and maintenance, and upgrading of facilities telephony as a supported service will services where low-income consumers and services for which the support is not present any near-term challenges for live. Contrary to some commenters’ intended,’’ it does not specify how the providers. suggestion, this statutory authority is Commission must direct those funds to 86. We next make necessary entirely consistent with the Lifeline be allocated as between support for ‘‘the adjustments to the Commission’s rules. program’s goals of promoting provision . . . of services’’ vs. ‘‘the In the 2016 Lifeline Order, the affordability and availability of voice provision, maintenance, and upgrading Commission amended § 54.101 of its and broadband services. Indeed, the of facilities’’ used to offer the section rules to include broadband internet Commission first established the 254(c)(1) supported service. Second, access service as a supported service. As Lifeline program goal of ensuring the voice services will continue to be a we discuss above, the classification of availability of broadband service in the component of many Lifeline offerings, broadband internet access service as an

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information service does not bar us from did specifically seek comment on Commission is required to base its providing support for the provision of relying on section 254(e) as the legal universal service policies pursuant to broadband by ETCs who are providing authority to support broadband internet section 254(b). voice telephony, but broadband internet access service in the Lifeline program 89. Using universal support to access service cannot be an independent without relying on the regulatory promote advanced services by ETCs that supported telecommunications service classification of broadband internet are, by definition, common carriers is under section 254(c). Although section access service as a telecommunications consistent with past Commission efforts 254(e) directs that ‘‘[a] carrier that service. Since this rule change is a in the high-cost mechanism. In 2016, for receives [universal service] support direct result of our reliance on this legal example, the Commission allowed high- shall use that support only for the theory, we find that removing cost support for broadband-only loops provision, maintenance, and upgrading broadband internet access service as a for rate-of-return carriers. In doing so, of facilities and services for which the supported service in these rule sections the Commission stated that it was support is intended,’’ section 254 is is supported by the text of the NPRM applying the principle first outlined in silent about the mechanics by which the itself and, in addition, is in any event the USF/ICC Transformation Order Commission may determine the a ‘‘logical outgrowth’’ of the proposal in ‘‘that universal service support should magnitude of high-cost or Lifeline the NPRM. We also note that this rule be directed where possible to networks support an ETC will receive, including change will have little practical effect that provide advanced services, as well the conditions that trigger the flow of on ETCs as the authority outlined today as voice services.’’ NaLA echoed this support. By contrast, where Congress allows the Lifeline program to continue approach when it stated that, even if the wished to specify in greater detail the funding broadband internet access Commission continues its phase-down mechanics of how support amounts service offerings. in Lifeline voice support, ‘‘as long as voice telephony service remains a would be calculated and triggered, it did 88. Continued Support for Plans that supported service and ETCs are offering so. Consequently, so long as the Lifeline Only Satisfy the Broadband Minimum voice service, the Commission can funds ultimately are used consistent Service Standards. We next clarify that continue to provide universal service with the requirements of section 254(e), the Lifeline program can continue to funding only for the provision of there is no statutory bar to conditioning provide support for broadband-only broadband service. . . .’’ Under the the receipt of support on the provision offerings by ETCs to qualifying low- of an information service offered over approach we adopt today, ETCs, income households. In order to receive operating as common carriers, would the network that provides the section reimbursement for providing a Lifeline 254(c)(1) supported service, and still be required to offer voice service, service, ETCs must identify if the including through bundled service calculating support amounts in a way service meets the mandatory minimum that accounts for the fulfillment of that offerings, but the Lifeline program standards for voice or broadband to would target its resources to induce condition. The California PUC determine the amount of support they previously argued that if broadband ETCs to provide broadband internet can claim from the Lifeline program. access service offerings, both bundled internet access service were reclassified With the phasedown of voice support as an information service, the and standalone, to Lifeline subscribers. proceeding in accordance with the 90. A number of commenters Commission may not have the ability to Commission’s current rules, we expect expressed concern that the Commission impose its Lifeline minimum service to see some subscribers who receive a would be unable to support broadband- standards on broadband services offered Lifeline service that only qualifies for only providers as a result of broadband in the Lifeline program because of the Lifeline support because the service internet access service’s status as an limitations of section 254(c). As stated meets the program’s minimum service information service. The Commission here, however, section 254(c) does not standards for broadband internet access has already decided this issue and it is impose a bar on how the Commission service. Even though these offerings do no longer before us now. As we might trigger universal support to a not rely on a qualifying voice service— explained in the 2019 Lifeline Order, properly designated ETC. In the high- although they could very well include broadband-only providers that do not cost program, the Commission long has some level of bundled non-qualifying offer any voice service cannot provided support without relying on a voice service, as many Lifeline participate in the program because they trigger based solely on the provision of subscribers receive today—we can are not common carriers offering the the section 254(c)(1) supported service. continue to provide reimbursement supported voice service and thus do not For example, the Commission under the statutory authority we outline satisfy the requirement in section calculated the amount of high-cost today. As the Mozilla court notes, 214(e)(1) that ETCs ‘‘offer the services support for rate-of-return carriers based section 214(e) requires that entities that are supported by the Federal on the number of voice or broadband designated as ETCs must be common universal support mechanisms’’ under internet access services lines they carriers. The common carrier section 254(c). AARP encourages us to provided, even though only voice requirement of section 214(e) creates a use section 706 of the 1996 Act as a telephony was the section 254(c)(1) limitation on the type of entities that source of authority to support stand- supported service. Thus, because may be designated as an ETC, but it alone broadband. However, we have broadband internet access service is not does not prohibit an ETC from determined that section 706 is not a a section 254(c) telecommunications providing a broadband only-service to a grant of regulatory authority and merely service, we remove broadband internet qualifying low-income household and a hortatory congressional statement. access service from the list of supported also receiving Lifeline support for that 91. The California PUC raises a services in § 54.101, while preserving service to that household. The statute concern that classifying broadband our authority to fund broadband does not mandate that ETCs only offer internet access service as a Title I internet access service through the service on a common carrier basis, nor service will impact states’ ability to Lifeline program. does it prevent the Commission from support broadband-only services in state 87. We note that, while we did not reimbursing broadband internet access universal service programs. We propose this specific rule change in the service offerings as a way to accomplish disagree. Congress specifically 2017 Lifeline NPRM, the Commission the principles on which the delineated the states’ authority to

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‘‘advance universal service, protect the D. The Order on Remand Is Consistent the list of supported services—our public safety and welfare, ensure the With the Administrative Procedure Act response to the three remanded issues could be seen as, at most, an continued quality of telecommunication 1. The Commission’s Notice and interpretive rule or policy statement. service, and safeguard the rights of Comment Procedures Comported With consumers.’’ This authority is broad the Administrative Procedure Act 95. Independently, we conclude that enough for the states to accomplish their even if some form of additional notice universal service goals without forcing a 93. We conclude that we have and comment procedures were required satisfied the notice and comment burdensome federal regulatory regime here in light of Mozilla, our procedures requirements of the Administrative on remand have been sufficient. The (i.e., Title II) on broadband internet Procedure Act (APA) in this proceeding. Bureau elected to refresh the record on access service offerings. It is true that We therefore reject arguments to the issues implicated by the Mozilla remand the text specifically references contrary. The Restoring Internet to supplement the original Restoring telecommunications services, but that Freedom NPRM (82 FR 25568, June 2, Internet Freedom rulemaking record and reference is part of a larger list of areas 2017) sought comment on returning to the record of the 2017 Lifeline NPRM, where states can act as long as the state the long-standing information service consistent with similar actions taken by action is not inconsistent with section classification of broadband internet the Commission’s Bureaus in many 254. Section 254 not only permits a state access service, and we did just that in instances in the past. Nothing in the to work with telecommunications the Restoring Internet Freedom Order. D.C. Circuit’s remand displaced the carriers in the state to support its own The D.C. Circuit’s decision in Mozilla Commission’s authority to ‘‘conduct its universal service programs, but it also left the regulatory approach adopted in proceedings in such manner as will best allows states to ‘‘adopt regulations to the Restoring Internet Freedom Order in place while remanding to us for further conduce to the proper dispatch of provide for additional definitions and business and to the ends of justice,’’ nor standards to preserve and advance analysis the effect on certain public safety, pole attachment, and Lifeline to rely on Bureaus’ actions on delegated universal service within the state. . . .’’ authority for ‘‘the prompt and orderly As long as those state actions do not rely universal service support issues. The Commission sought comment in the conduct of its business.’’ The Bureau’s on or burden Federal universal support request for comment on the Mozilla mechanisms, then a state is permitted to 2017 Lifeline NPRM on, among other things, the treatment of broadband remand was published in the Federal structure its programs in a way that it internet access service under the Register (85 FR 12555, March 3, 2020), deems best to promote universal service. Lifeline program irrespective of the hereinafter referred to as ‘‘Restoring 92. Finally, while we are confident regulatory classification of that service. Internet Freedom Remand Public Notice that our analysis of the statutory 94. Agencies generally have broad (PN)’’). We also agree with numerous authority allows for the continued discretion to choose the appropriate commenters that the issues to be support of broadband internet access procedural response to a court remand, addressed on remand were apparent, service through the Lifeline program, we including whether and to what extent to including from the Mozilla decision would still reach the same conclusion conduct a new rulemaking proceeding. itself. Before turning to specific on the classification of broadband In this Order on Remand, we do not questions upon which the Bureau sought to develop the record further, the internet access service that we did in reconsider or alter any aspect of the Restoring Internet Freedom Remand PN the Restoring Internet Freedom Order regulatory approach adopted in the Restoring Internet Freedom Order. To began with requests for comment even if a court were to conclude that the framed in terms that mirrored the scope Lifeline program could not support the extent that commenters contend that additional notice would be required to of the D.C. Circuit’s remand in Mozilla. broadband internet access service. As adopt an approach different than the Commenters criticizing the scope of the the Commission previously stated, a one we take in this Order on Remand, Restoring Internet Freedom Remand return to Title I classification better those arguments are not applicable here. PN’s request for comments on the facilitates critical broadband investment Instead, we simply act in response to remanded issues neglect that fact. through the removal of regulatory the Mozilla remand to explain our Nothing about the Restoring Internet uncertainty and lower compliance decision not to revisit that approach in Freedom Remand PN hindered burdens. Further, Title I classification light of the three discrete issues commenters from understanding the allows for greater freedom to operate remanded by the D.C. Circuit. Thus, as supplemental information that the and serve customers in rural or a threshold matter, we conclude that the Commission would be considering or underserved areas of the country. APA does not compel additional notice from raising the arguments they wished Additionally, by reclassifying beyond that already provided. Indeed, to raise in response to the remand. To broadband internet access service as a except to the extent that we remove the extent that some court precedent Title I service the Commission sought to broadband internet access service from contemplates notice and comment in bring greater regulatory certainty to the the list of supported services in our certain circumstances where an agency market, removing a fog that stifled universal service rules, our Order on engages in new fact-gathering on innovation. As such, we believe that the Remand procedurally could be remand, the objective is to ensure that benefits of reclassification would analogized to a decision declining to parties have an opportunity to comment outweigh the removal of broadband initiate a rulemaking to revise the on any new factual information critical internet access service from the Lifeline regulatory approach adopted in the to the agency’s decision whether to program, were the sound statutory Restoring Internet Freedom Order in modify a rule on remand. While we authority relied on today be found light of the three remanded issues— consider the additionally-gathered which need not be preceded by its own information instead to supplement insufficient. notice and comment procedures under information in the original rulemaking the APA. Alternatively—and again, record, even if it were critical except to the extent that we modify our information, we find that the objectives universal service rules to remove of that precedent have been satisfied broadband internet access service from here.

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96. We also find that there was 98. We reject the claims of some issues remanded in Mozilla. In Little adequate time for participation by commenters that the U.S. Supreme Sisters of the Poor, the Supreme Court commenters. Commenters expressing Court’s recent decision in DHS v. recently ‘‘decline[d] to evaluate the final concern about the timing of the Regents of the Univ. of Cal. support rules [at issue there] under the open- comment period focus specifically on their prior contentions that ‘‘the mindedness test’’ that had been used by the development of the record related to Commission must have a formal Notice the Third Circuit given that ‘‘the text of public safety issues. Commenters do not of Proposed Rulemaking (NPRM) as a the APA provides the ‘‘maximum identify any inadequacy in the comment prelude to issuing any response to the procedural requirements’’ that an period provided in the Restoring remand by the Mozilla Court.’’ Contrary agency must follow in order to Internet Freedom Remand PN, which to those claims, DHS v. Regents of the promulgate a rule.’’ The Court provided a full opportunity for Univ. of Cal. does not specify that a concluded that ‘‘the open-mindedness commenters to raise public safety new, Commission-level Notice of test violates the ‘general proposition concerns and which the Commission is Proposed Rulemaking would be that courts are not free to impose upon considering in responding to the Mozilla required here. To the extent that DHS v. agencies specific procedural remand. With respect to the Restoring Regents of the Univ. of Cal. speaks to the requirements that have no basis in the Internet Freedom Remand PN procedures to be followed when an APA.’ ’’ To the extent that commenters requesting comment to supplement the agency takes new action to provide seek to advance the same basic ‘‘open- record in response to the remand, the additional explanation on remand, it mindedness’’ test here, the Supreme process was appropriate, as well. As does not adopt any one-size-fits-all Court’s decision provides an additional USTelecom observes, ‘‘the Commission approach, but merely observes that the reason why it is unavailing. But in any published the Notice on March 3, 2020, procedures followed must be whatever case, we independently conclude that more than a month and a half before otherwise is required for the relevant we did, in fact, remain open-minded for comments were due.’’ This comment action. In contrast to the posture in that the reasons discussed in the text. For cycle included an extension of time ‘‘to case—where DHS’s prior decision was one, the cases cited by commenters enable state, county, and municipal vacated—the D.C. Circuit in Mozilla expressing concern in this regard governments to be able to respond remanded without vacatur, leaving the involved scenarios where the court was adequately to the issues raised in the Restoring Internet Freedom Order in evaluating the adequacy of the original Public Notice relating to how the place, and in this Order on Remand we notice or opportunity for comment Commission’s action affects public do not modify or alter the regulatory rather than where, as here, the agency safety.’’ This provided ample approach adopted there. Consequently, is responding to a court’s remand to opportunity to submit information in whatever procedures theoretically might consider certain specific issues in response to the Restoring Internet be required for DHS in response to DHS evaluating whether they warrant a Freedom Remand PN. To the extent that v. Regents of the Univ. of Cal., it does change in its prior decision. Indeed, certain parties belatedly sought a further not follow that a new, Commission-level rather than evidence that the extension, we agree with the Bureau rulemaking would be required here. Commission had a closed mind on the that the request was neither timely nor Independently, as discussed above, we remanded issues as some commenters provided evidence that further also find that even assuming arguendo contend, the solicitation of comments in extension of time was warranted. that some manner of additional notice the Restoring Internet Freedom Remand and comment were required, our PN reveals our willingness to give full 97. The record also does not persuade procedures here have been adequate. us that there are additional arguments or consideration to those issues. In contrast information that interested parties in 2. The Commission Thoroughly to the Bureau’s requests for comment in fact would have raised under a different Considered the Relevant Issues on the Restoring Internet Freedom Remand comment process that they were unable Remand PN, the district court in Int’l to raise in the record for consideration 99. In the substantive sections of this Snowmobile Mfrs. Ass’n v. Norton, in this proceeding. We reject arguments Order we thoroughly analyze the effects confronted a situation where agency in response to the Restoring Internet of the Restoring Internet Freedom Order decisionmakers made ‘‘definitive Freedom Remand PN that reiterate on public safety, pole attachments, and statements’’ about the outcome ‘‘before concerns that certain commenters’ Lifeline consistent with the D.C. the [environmental review] process was efforts to address the COVID–19 Circuit’s remand, and explain why those complete.’’ A Bureau-level Public pandemic limit their ability to fully considerations do not persuade us to Notice requesting comment does not participate even under the extended depart from the regulatory approach we similarly represent ‘‘definitive comment cycle. Those arguments are adopted in that Order. This included statements’’ about the outcome the full not materially different from the addressing the thousands of public Commission will reach in this arguments the Bureau considered and comments by identifying which ones proceeding. Our analysis likewise appropriately rejected in the Further were responsive to the three specific demonstrates that we remained open- Extension Denial Order. Further, in issues subject to the remand and minded in that regard, but were not addition to the formal comment process, analyzing those responsive arguments persuaded to depart from our regulatory parties were able to make ex parte here. Our action satisfies both the approach in the Restoring Internet filings, as well. Insofar as certain parties Mozilla remand and the APA’s reasoned Freedom Order on the basis of those sought a further 60-day extension of the decision-making requirements. We considerations. already once-extended comment period, therefore reject arguments that the 101. We also have no obligation in we note that substantially more than 60 Commission’s analysis of the remanded this proceeding to re-open issues from days have passed since that comment issues has failed, or will fail, the the Restoring Internet Freedom Order deadline, during which time they have reasoned decision-making requirements that were not remanded by Mozilla. been free to raise their arguments in ex of the APA. Some commenters quote language from parte filings, which are considered by 100. Our analysis in the Order on DHS v. Regents of the Univ. of Cal., that the Commission as part of the record in Remand also demonstrates that we an agency supplementing its original this proceeding. remained open-minded regarding the reasoning must ‘‘ ‘deal with the problem

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afresh.’ ’’ To the extent that these the same comprehensive way that they Accountability Office pursuant to 5 commenters suggest that we therefore did prior to the Restoring Internet U.S.C. 801(a)(1)(A). must reopen the issues in the Restoring Freedom Order. Perhaps for that reason, 105. People with Disabilities: To Internet Freedom Order more broadly, the evidence offered in this proceeding request materials in accessible formats we reject that claim. The DHS action at fails to grapple with the effect of Title for people with disabilities (braille, issue in DHS v. Regents of the Univ. of I classification on competition, large print, electronic files, audio Cal. had been both vacated and investment, and innovation with nearly format), send an email to [email protected] remanded in full. The relevant the same depth of analysis as the studies or call the Consumer & Governmental ‘‘problem’’ that DHS was dealing with submitted in the Restoring Internet Affairs Bureau at 202–418–0530 (voice), there thus was the entirety of its action. Freedom record, and therefore nothing 202–418–0432 (tty). Here, by contrast, the D.C. Circuit in the comments in this remand 106. For further information about declined to vacate the Restoring Internet proceeding provides firm ground to this rulemaking proceeding, please Freedom Order, leaving it in place while revisit the predictive judgment that we contact Annick Banoun, Competition directing the Commission to address have already made. Should parties wish Policy Division, Wireline Competition ‘‘three discrete points.’’ In this context, to raise issues beyond those subject to Bureau, at (202) 418–1521 or [email protected]. it is most reasonable to define the the D.C. Circuit’s remand in support of ‘‘problem’’ that we consider afresh here a request for new rules, they may do so IV. Supplemental Final Regulatory to be the effect of the regulatory in a petition for rulemaking supporting Flexibility Analysis their request for such broader action. approach in the Restoring Internet 107. As required by the Regulatory Freedom Order on the public safety, E. The Order on Remand Is Consistent Flexibility Act of 1980, as amended pole attachment, and Lifeline universal With the First Amendment (RFA), this Supplemental Final service support issues identified by the 102. Our Order on Remand also is Regulatory Flexibility Analysis Mozilla court. Insofar as commenters consistent with the First Amendment of (Supplemental FRFA) supplements the raise issues beyond the scope of the the U.S. Constitution. Contrary to the Final Regulatory Flexibility Analysis remanded issues, we reject them as suggestion of some commenters, neither (FRFA) included in the 2019 Lifeline outside the scope of this proceeding. the classification of broadband internet Order in WC Docket Nos. 17–287, 11– While in some cases commenters raise access service as an information service 42, and 09–197, to the extent required issues with no clear nexus to the nor the Restoring Internet Freedom by the adoption of this Order on remanded issues at all, in other cases Remand PN seeking comment on the Remand. The Commission sought commenters raise arguments that Mozilla remand represents a written public comment on the potentially encompass, but extend government restriction on speech that proposals in the 2017 Lifeline NPRM, beyond, the remanded issues. We reject requires scrutiny under the First including comment on the initial arguments only insofar as they fall Amendment. In particular, we are not Regulatory Flexibility Analysis. This outside or extend beyond the remanded persuaded that actions taken by Supplemental FRFA conforms to the issues, and otherwise consider them in broadband internet access service RFA. our analyses of public safety, pole providers to manage traffic on their A. Need for, and Objectives of, the attachments, and Lifeline support, networks constitutes governmental Order on Remand respectively, insofar as they do in fact action. Nor does the record support the bear on any of those issues. Taking up view that the request for comments in 108. The Commission is required by those broader issues here would the Restoring Internet Freedom Remand section 254 of the Communications Act unsettle reasoning and decisions not PN somehow compelled, restricted, or of 1934, as amended, to promulgate rejected by the court, giving us—and otherwise chilled private parties’ rules to implement the universal service parties supportive of the Restoring speech. provisions of section 254. The Lifeline Internet Freedom Order’s regulatory program was implemented in 1985 in approach—a task on remand that not III. Procedural Matters the wake of the 1984 divestiture of only was not required but that could not 103. Paperwork Reduction Act. This AT&T. On May 8, 1997, the Commission reasonably have been anticipated by document does not contain new or adopted rules to reform its system of Mozilla’s remand of ‘‘three discrete modified information collection universal service support mechanisms points.’’ For example, commenters requirements subject to the Paperwork so that universal service is preserved relitigate the question whether the Reduction Act of 1995 (PRA), Public and advanced as markets move toward Commission was correct in predicting Law 104–13. In addition, therefore, it competition. Since the 2012 Lifeline that Title I classification would promote does not contain any new or modified Order, the Commission has acted to competition, investment, and information collection burden for small address waste, fraud, and abuse in the innovation—a finding that was affirmed business concerns with fewer than 25 Lifeline program and improved program by the D.C. Circuit and is outside the employees, pursuant to the Small administration and accountability. scope of the remand. While many Business Paperwork Relief Act of 2002, 109. In this Order on Remand, the commenters argue that experience Public Law 107–198, see 44 U.S.C. Commission addresses several items following the Restoring Internet 3506(c)(4). remanded to it by the D.C. Circuit Court Freedom Order has borne out the 104. Congressional Review Act. The of Appeals in Mozilla v. FCC. As part of Commission’s prediction, some argue Commission has determined, and the addressing those issues, the that Title I classification has had no Administrator of the Office of Commission clarifies its legal authority effect in investment, and others still Information and Regulatory Affairs, for reimbursing broadband internet claim that it has decreased investment. Office of Management and Budget, access service through the Lifeline We need not and cannot settle this concurs that this rule is non-major program. This clarification requires dispute here: Because such issues lie under the Congressional Review Act, 5 minor revisions to the Commission’s outside the scope of the remand, U.S.C. 804(2). The Commission will Lifeline rules. With this action, we commenters did not have a full and fair send a copy of this Order on Remand to fulfill the Commission’s role as the opportunity to address these issues in Congress and the Government steward of the Universal Service Fund

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(USF or Fund) and ensure that the employees. These types of small they were incumbent local exchange Lifeline program can continue to businesses represent 99.9% of all service providers. Of this total, an allocate its limited resources to businesses in the United States, which estimated 1,006 have 1,500 or fewer reimbursing increasingly important translates to 30.7 million businesses. employees. Thus, using the SBA’s size broadband internet access service for 115. Next, the type of small entity standard the majority of incumbent low-income Americans. described as a ‘‘small organization’’ is LECs can be considered small entities. generally ‘‘any not-for-profit enterprise 118. Competitive Local Exchange B. Summary of Significant Issues Raised which is independently owned and Carriers (Competitive LECs), by Public Comments to the IRFA or operated and is not dominant in its Competitive Access Providers (CAPs), FRFA field.’’ The Internal Revenue Service Shared-Tenant Service Providers, and 110. The Commission received no (IRS) uses a revenue benchmark of Other Local Service Providers. Neither comments in direct response to the $50,000 or less to delineate its annual the Commission nor the SBA has IRFA contained in the 2017 Lifeline electronic filing requirements for small developed a small business size NPRM or the FRFA in the 2019 Lifeline exempt organizations. Nationwide, for standard specifically for these service Order. tax year 2018, there were approximately providers. The appropriate NAICS Code 571,709 small exempt organizations in category is Wired Telecommunications C. Response to Comments by the Chief the U.S. reporting revenues of $50,000 Carriers and under that size standard, Counsel for Advocacy of the Small or less according to the registration and such a business is small if it has 1,500 Business Administration tax data for exempt organizations or fewer employees. U.S. Census Bureau 111. Pursuant to the Small Business available from the IRS. data for 2012 indicate that 3,117 firms Jobs Act of 2010, which amended the 116. Finally, the small entity operated during that year. Of that RFA, the Commission is required to described as a ‘‘small governmental number, 3,083 operated with fewer than respond to any comments filed by the jurisdiction’’ is defined generally as 1,000 employees. Based on these data, Chief Counsel of the Small Business ‘‘governments of cities, counties, towns, the Commission concludes that the Administration (SBA), and to provide a townships, villages, school districts, or majority of Competitive LECS, CAPs, detailed statement of any change made special districts, with a population of Shared-Tenant Service Providers, and to the proposed rule(s) as a result of less than fifty thousand.’’ U.S. Census Other Local Service Providers, are small those comments. Bureau data from the 2017 Census of entities. According to Commission data, 112. The Chief Counsel did not file Governments indicate that there were 1,442 carriers reported that they were any comments in response to the 90,075 local governmental jurisdictions engaged in the provision of either proposed rule(s) in this proceeding. consisting of general purpose competitive local exchange services or D. Description and Estimate of the governments and special purpose competitive access provider services. Of Number of Small Entities to Which governments in the United States. Of these 1,442 carriers, an estimated 1,256 Rules May Apply this number there were 36,931 general have 1,500 or fewer employees. In purpose governments (county, addition, 17 carriers have reported that 113. The RFA directs agencies to municipal and town or township) with they are Shared-Tenant Service provide a description of and, where populations of less than 50,000 and Providers, and all 17 are estimated to feasible, an estimate of the number of 12,040 special purpose governments— have 1,500 or fewer employees. Also, 72 small entities that may be affected by independent school districts with carriers have reported that they are the rules adopted herein. The RFA enrollment populations of less than Other Local Service Providers. Of this generally defines the term ‘‘small 50,000. Accordingly, based on the 2017 total, 70 have 1,500 or fewer employees. entity’’ as having the same meaning as U.S. Census of Governments data, we Consequently, based on internally the terms ‘‘small business,’’ ‘‘small estimate that at least 48,971 entities fall researched FCC data, the Commission organization,’’ and ‘‘small governmental into the category of ‘‘small estimates that most providers of jurisdiction.’’ In addition, the term governmental jurisdictions.’’ competitive local exchange service, ‘‘small business’’ has the same meaning 1. Wireline Providers competitive access providers, Shared- as the term ‘‘small business concern’’ Tenant Service Providers, and Other under the Small Business Act. A small 117. Incumbent Local Exchange Local Service Providers are small business concern is one that: (1) Is Carriers (Incumbent LECs). Neither the entities. independently owned and operated; (2) Commission nor the SBA has developed 119. Interexchange Carriers (IXCs). is not dominant in its field of operation; a small business size standard Neither the Commission nor the SBA and (3) satisfies any additional criteria specifically for incumbent local has developed a small business size established by the Small Business exchange services. The closest standard specifically for Interexchange Administration (SBA). applicable NAICS Code category is Carriers. The closest applicable NAICS 114. Small Businesses, Small Wired Telecommunications Carriers. Code category is Wired Organizations, Small Governmental Under the applicable SBA size standard, Telecommunications Carriers. The Jurisdictions. Our actions, over time, such a business is small if it has 1,500 applicable size standard under SBA may affect small entities that are not or fewer employees. U.S. Census Bureau rules is that such a business is small if easily categorized at present. We data for 2012 indicate that 3,117 firms it has 1,500 or fewer employees. U.S. therefore describe here, at the outset, operated the entire year. Of this total, Census Bureau data for 2012 indicate three broad groups of small entities that 3,083 operated with fewer than 1,000 that 3,117 firms operated for the entire could be directly affected herein. First, employees. Consequently, the year. Of that number, 3,083 operated while there are industry specific size Commission estimates that most with fewer than 1,000 employees. standards for small businesses that are providers of incumbent local exchange According to internally-developed used in the regulatory flexibility service are small businesses that may be Commission data, 359 companies analysis, according to data from the affected by our actions. According to reported that their primary SBA’s Office of Advocacy, in general a Commission data, one thousand three telecommunications service activity was small business is an independent hundred and seven (1,307) Incumbent the provision of interexchange services. business having fewer than 500 Local Exchange Carriers reported that Of this total, an estimated 317 have

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1,500 or fewer employees. entities that may be affected by the rules Universal Licensing System—indicate Consequently, the Commission adopted. that, as of August 31, 2018 there are 265 estimates that the majority of 122. Toll Resellers. The Commission Cellular licensees that will be affected interexchange service providers are has not developed a definition for Toll by our actions. The Commission does small entities. Resellers. The closest NAICS Code not know how many of these licensees 120. Operator Service Providers Category is Telecommunications are small, as the Commission does not (OSPs). Neither the Commission nor the Resellers. The Telecommunications collect that information for these types SBA has developed a small business Resellers industry comprises of entities. Similarly, according to size standard specifically for operator establishments engaged in purchasing internally developed Commission data, service providers. The closest applicable access and network capacity from 413 carriers reported that they were NAICS Code category is Wired owners and operators of engaged in the provision of wireless Telecommunications Carriers. The telecommunications networks and telephony, including cellular service, applicable size standard under SBA reselling wired and wireless Personal Communications Service rules is that such a business is small if telecommunications services (except (PCS), and Specialized Mobile Radio it has 1,500 or fewer employees. U.S. satellite) to businesses and households. (SMR) Telephony services. Of this total, Census Bureau data for 2012 indicate Establishments in this industry resell an estimated 261 have 1,500 or fewer that 3,117 firms operated for the entire telecommunications; they do not employees, and 152 have more than year. Of that number, 3,083 operated operate transmission facilities and 1,500 employees. Thus, using available with fewer than 1,000 employees. infrastructure. MVNOs are included in data, we estimate that the majority of According to internally developed this industry. The SBA has developed a wireless firms can be considered small. Commission data, 359 companies small business size standard for the 124. Wireless Communications reported that their primary category of Telecommunications Services. This service can be used for telecommunications service activity was Resellers. Under that size standard, such fixed, mobile, radiolocation, and digital the provision of interexchange services. a business is small if it has 1,500 or audio broadcasting satellite uses. The Of this total, an estimated 317 have fewer employees. 2012 U.S. Census Commission defined ‘‘small business’’ 1,500 or fewer employees. Bureau data show that 1,341 firms for the wireless communications Consequently, the Commission provided resale services during that services (WCS) auction as an entity with estimates that the majority of OSPs are year. Of that number, 1,341 operated average gross revenues of $40 million with fewer than 1,000 employees. Thus, small entities. for each of the three preceding years, under this category and the associated and a ‘‘very small business’’ as an entity 121. Local Resellers. The SBA has not small business size standard, the developed a small business size with average gross revenues of $15 majority of these resellers can be million for each of the three preceding standard specifically for Local Resellers. considered small entities. According to years. The SBA has approved these The SBA category of Commission data, 881 carriers have small business size standards. In the Telecommunications Resellers is the reported that they are engaged in the Commission’s auction for geographic closest NAICS code category for local provision of toll resale services. Of this area licenses in the WCS there were resellers. The Telecommunications total, an estimated 857 have 1,500 or seven winning bidders that qualified as Resellers industry comprises fewer employees. Consequently, the ‘‘very small business’’ entities, and one establishments engaged in purchasing Commission estimates that the majority winning bidder that qualified as a access and network capacity from of toll resellers are small entities. owners and operators of 2. Wireless Carriers and Service ‘‘small business’’ entity. telecommunications networks and Providers 125. Satellite Telecommunications reselling wired and wireless 123. Wireless Telecommunications Providers. This category comprises firms telecommunications services (except Carriers (except Satellite). This industry ‘‘primarily engaged in providing satellite) to businesses and households. comprises establishments engaged in telecommunications services to other Establishments in this industry resell operating and maintaining switching establishments in the telecommunications; they do not and transmission facilities to provide telecommunications and broadcasting operate transmission facilities and communications via the airwaves. industries by forwarding and receiving infrastructure. Mobile virtual network Establishments in this industry have communications signals via a system of operators (MVNOs) are included in this spectrum licenses and provide services satellites or reselling satellite industry. Under the SBA’s size using that spectrum, such as cellular telecommunications.’’ Satellite standard, such a business is small if it services, paging services, wireless telecommunications service providers has 1,500 or fewer employees. 2012 internet access, and wireless video include satellite and earth station Census Bureau data shows that 1,341 services. The appropriate size standard operators. The category has a small firms provided resale services during under SBA rules is that such a business business size standard of $35 million or that year. Of that number, all operated is small if it has 1,500 or fewer less in average annual receipts, under with fewer than 1,000 employees. Thus, employees. For this industry, U.S. SBA rules. For this category, U.S. under this category and the associated Census Bureau data for 2012 show that Census Bureau data for 2012 show that small business size standard, the there were 967 firms that operated for there were a total of 333 firms that majority of these resellers can be the entire year. Of this total, 955 firms operated for the entire year. Of this considered small entities. According to employed fewer than 1,000 employees total, 299 firms had annual receipts of Commission data, 213 carriers have and 12 firms employed of 1000 less than $25 million. Consequently, we reported that they are engaged in the employees or more. Thus under this estimate that the majority of satellite provision of local resale services. Of category and the associated size telecommunications providers are small these, an estimated 211 have 1,500 or standard, the Commission estimates that entities. fewer employees and two have more the majority of Wireless 126. Common Carrier Paging. As than 1,500 employees. Consequently, Telecommunications Carriers (except noted, since 2007 the Census Bureau the Commission estimates that the Satellite) are small entities. The has placed paging providers within the majority of local resellers are small Commission’s own data—available in its broad economic census category of

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Wireless Telecommunications Carriers have 1,500 or fewer employees and 152 the majority of firms in this industry can (except Satellite). have more than 1,500 employees. be considered small. 127. In addition, in the Paging Second Therefore, more than half of these E. Description of Projected Reporting, Report and Order (83 FR 19440, May 3, entities can be considered small. 2018), the Commission adopted a size Recordkeeping, and Other Compliance 130. All Other Telecommunications. Requirements for Small Entities standard for ‘‘small businesses’’ for The ‘‘All Other Telecommunications’’ purposes of determining their eligibility category is comprised of establishments 132. As the changes enacted today are for special provisions such as bidding primarily engaged in providing primarily clarifications of existing credits and installment payments. A specialized telecommunications Commission rules or statutory small business is an entity that, together services, such as satellite tracking, authorities, we do not anticipate that the with its affiliates and controlling communications telemetry, and radar changes will result in significant principals, has average gross revenues station operation. This industry also additional compliance requirements for not exceeding $15 million for the includes establishments primarily small entities. However, some small entities may have an additional burden. preceding three years. The SBA has engaged in providing satellite terminal For those changes, we have determined approved this definition. An initial stations and associated facilities that the clarity the rule changes will auction of Metropolitan Economic Area connected with one or more terrestrial bring to the Lifeline program outweighs (‘‘MEA’’) licenses was conducted in the systems and capable of transmitting the burden of any increased compliance year 2000. Of the 2,499 licenses telecommunications to, and receiving concerns. We have noted the applicable auctioned, 985 were sold. Fifty-seven telecommunications from, satellite rule changes below impacting small companies claiming small business systems. Establishments providing status won 440 licenses. A subsequent entities. internet services or voice over internet 133. Compliance burdens. The rules auction of MEA and Economic Area protocol (VoIP) services via client- (‘‘EA’’) licenses was held in the year we implement impose some compliance supplied telecommunications burdens on small entities by requiring 2001. Of the 15,514 licenses auctioned, connections are also included in this 5,323 were sold. One hundred thirty- them to become familiar with the new industry. The SBA has developed a two companies claiming small business rules to comply with them. In most small business size standard for ‘‘All status purchased 3,724 licenses. A third instances, the burden of becoming Other Telecommunications’’, which auction, consisting of 8,874 licenses in familiar with the new rule in order to consists of all such firms with annual each of 175 EAs and 1,328 licenses in comply with it is the only additional receipts of $35 million or less. For this all but three of the 51 MEAs, was held burden the rule imposes. category, U.S. Census Bureau data for in 2003. Seventy-seven bidders claiming 134. Adjusting systems to account for 2012 show that there were 1,442 firms small or very small business status won potential changes in Lifeline that operated for the entire year. Of 2,093 licenses. reimbursement rates. The rules we 128. Currently, there are those firms, a total of 1,400 had annual implement may require small entities to approximately 74,000 Common Carrier receipts less than $25 million and 15 change their billing systems, customer Paging licenses. According to the most firms had annual receipts of $25 million service plans, and other business recent Trends in Telephone Service, 291 to $49,999,999. Thus, the Commission operations to account for modifications carriers reported that they were engaged estimates that the majority of ‘‘All Other in the Lifeline supported services. We in the provision of ‘‘paging and Telecommunications’’ firms potentially believe these changes will not be messaging’’ services. Of these, an affected by our action can be considered significant. estimated 289 have 1,500 or fewer small. F. Steps Taken To Minimize the employees and two have more than 3. Internet Service Providers Significant Economic Impact on Small 1,500 employees. We estimate that the Entities, and Significant Alternatives majority of common carrier paging 131. Internet Service Providers Considered providers would qualify as small (Broadband). Broadband internet entities under the SBA definition. service providers include wired (e.g., 135. The RFA requires an agency to 129. Wireless Telephony. Wireless cable, DSL) and VoIP service providers describe any significant, specifically telephony includes cellular, personal using their own operated wired small business, alternatives that it has communications services, and telecommunications infrastructure fall considered in reaching its proposed specialized mobile radio telephony in the category of Wired approach, which may include the carriers. The closest applicable SBA Telecommunication Carriers. Wired following four alternatives (among category is Wireless Telecommunications Carriers are others): ‘‘(1) the establishment of Telecommunications Carriers (except comprised of establishments primarily differing compliance or reporting Satellite). Under the SBA small business engaged in operating and/or providing requirements or timetables that take into size standard, a business is small if it access to transmission facilities and account the resources available to small has 1,500 or fewer employees. For this infrastructure that they own and/or entities; (2) the clarification, industry, U.S. Census Bureau data for lease for the transmission of voice, data, consolidation, or simplification of 2012 show that there were 967 firms text, sound, and video using wired compliance and reporting requirements that operated for the entire year. Of this telecommunications networks. under the rule for such small entities; total, 955 firms had fewer than 1,000 Transmission facilities may be based on (3) the use of performance rather than employees and 12 firms had 1000 a single technology or a combination of design standards; and (4) an exemption employees or more. Thus under this technologies. The SBA size standard for from coverage of the rule, or any part category and the associated size this category classifies a business as thereof, for such small entities.’’ standard, the Commission estimates that small if it has 1,500 or fewer employees. 136. This rulemaking could impose a majority of these entities can be U.S. Census Bureau data for 2012 show minimal additional burdens on small considered small. According to that there were 3,117 firms that operated entities. These impacted small entities Commission data, 413 carriers reported that year. Of this total, 3,083 operated should already be familiar with the that they were engaged in wireless with fewer than 1,000 employees. Commission’s supported services rules, telephony. Of these, an estimated 261 Consequently, under this size standard but the removal of broadband internet

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access service as a defined supported Internet, Libraries, Puerto Rico, not receiving Phase I frozen high-cost service may cause some small entities to Reporting and recordkeeping support must offer broadband services adjust their business practices. requirements, Schools, within the areas where it receives high- 137. The Commission will send a Telecommunications, Telephone, Virgin cost support consistent with the copy of this Order on Remand including Islands. obligations set forth in this subpart and this Supplemental FRFA, in a report to Federal Communications Commission. subparts D, K, L, and M of this part. be sent to Congress pursuant to the Marlene Dortch, (d) Any ETC must comply with Congressional Review Act. In addition, subpart E of this part. the Commission will send a copy of this Secretary. ■ 3. Amend § 54.400 by revising Order on Remand, including the Final Rules paragraph (n) to read as follows: Supplemental FRFA, to the Chief The Federal Communications Counsel for Advocacy of the SBA. A § 54.400 Terms and definitions. Commission amends part 54 of title 47 copy of this Order on Remand and the * * * * * Supplemental FRFA (or summaries of the Code of Federal Regulations as follows: (n) Supported service. Voice thereof) will also be published in the telephony service is the supported Federal Register. PART 54—UNIVERSAL SERVICE service for the Lifeline program. V. Ordering Clauses * * * * * ■ 1. The authority citation for part 54 138. Accordingly, It is ordered that, continues to read as follows: ■ 4. Amend § 54.403 by revising pursuant to sections 1–4, 201, 230, 231, paragraph (b)(1) to read as follows: 254, 257, 303, 332, 403, 501, and 503 of Authority: 47 U.S.C. 151, 154(i), 155, 201, the Communications Act of 1934, as 205, 214, 219, 220, 229, 254, 303(r), 403, § 54.403 Lifeline support amount. 1004, and 1302 unless otherwise noted. amended, 47 U.S.C.151–154, 201, 230, * * * * * 231, 254, 257, 303, 332, 403, 501, and ■ 2. Revise § 54.101 to read as follows: (b) * * * 503, and § 1.2 of the Commission’s (1) Eligible telecommunications § 54.101 Supported services for rural, rules, 47 CFR 1.2, this Order is Adopted. insular, and high cost areas. carriers that charge Federal End User 139. It is further ordered that, Common Line charges or equivalent pursuant to §§ 1.4(b)(1) and 1.103(a) of (a) Voice telephony services shall be Federal charges must apply Federal the Commission’s rules, 47 CFR supported by Federal universal service Lifeline support to waive the Federal 1.4(b)(1), 1.103(a), this Order on support mechanisms. Eligible voice End User Common Line charges for Remand shall be effective 30 days after telephony services must provide voice Lifeline subscribers if the carrier is publication in the Federal Register. grade access to the public switched seeking Lifeline reimbursement for 140. It is further ordered that part 54 network or its functional equivalent; eligible voice telephony service of the Commission’s rules Is Amended minutes of use for local service provided to those subscribers. Such as set forth in Appendix A of the Order provided at no additional charge to end carriers must apply any additional on Remand. users; access to the emergency services Federal support amount to a qualifying 141. It is further ordered that the provided by local government or other low-income consumer’s intrastate rate, Commission shall send a copy of this public safety organizations, such as 911 if the carrier has received the non- Order on Remand to Congress and to the and enhanced 911, to the extent the Federal regulatory approvals necessary Government Accountability Office local government in an eligible carrier’s to implement the required rate pursuant to the Congressional Review service area has implemented 911 or reduction. Other eligible Act, see 5 U.S.C. 801(a)(1)(A). enhanced 911 systems; and toll telecommunications carriers must apply 142. It is further ordered that the limitation services to qualifying low- the Federal Lifeline support amount, Commission’s Consumer and income consumers as provided in plus any additional support amount, to Governmental Affairs Bureau, Reference subpart E of this part. reduce the cost of any generally (b) An eligible telecommunications Information Center, shall send a copy of available residential service plan or carrier eligible to receive high-cost this Order on Remand, including the package offered by such carriers that support must offer voice telephony Final Regulatory Flexibility Analysis provides at least one service service as set forth in paragraph (a) of (FRFA), to the Chief Counsel for commensurate with the requirements this section in order to receive Federal Advocacy of the Small Business outlined in § 54.408, and charge Lifeline universal service support. Administration. subscribers the resulting amount. (c) An eligible telecommunications List of Subjects in 47 CFR Part 54 carrier (ETC) subject to a high-cost * * * * * Communications common carriers, public interest obligation to offer [FR Doc. 2020–25880 Filed 1–6–21; 8:45 am] Health facilities, Infants and children, broadband internet access services and BILLING CODE 6712–01–P

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Proposed Rules Federal Register Vol. 86, No. 4

Thursday, January 7, 2021

This section of the FEDERAL REGISTER individual listed in the FOR FURTHER aspects of the NRC’s regulations and contains notices to the public of the proposed INFORMATION CONTACT section of this associated regulatory guidance on issuance of rules and regulations. The document. Emergency Core Cooling Systems purpose of these notices is to give interested • NRC’s Agencywide Documents (ECCS) acceptance criteria and persons an opportunity to participate in the Access and Management System rule making prior to the adoption of the final evaluation models are not conservative rules. (ADAMS): You may obtain publicly- and that additional regulations are available documents online in the necessary. Therefore, the petitioner ADAMS Public Documents collection at requested that the NRC: (1) Amend its NUCLEAR REGULATORY https://www.nrc.gov/reading-rm/ regulations to require that the calculated COMMISSION adams.html. To begin the search, select maximum fuel element cladding ‘‘ADAMS Public Documents’’ and then temperature not exceed a limit based on 10 CFR Part 50 select ‘‘Begin Web-based ADAMS data from cited experiments; (2) amend Search.’’ For problems with ADAMS, [Docket Nos. PRM–50–93 and PRM–50–95; its regulations and associated regulatory please contact the NRC’s Public NRC–2009–0554] guidance to require that the rates of Document Room (PDR) reference staff at energy release, hydrogen generation, Calculated Maximum Fuel Element 1–800–397–4209, 301–415–4737, or by and Zircaloy cladding oxidation from Cladding Temperature email to [email protected]. For the convenience of the reader, instructions the metal-water reaction of zirconium AGENCY: Nuclear Regulatory about obtaining materials referenced in with steam considered in the evaluation Commission. this document are provided in Section models used to calculate ECCS cooling ACTION: Petitions for rulemaking; denial. IV, ‘‘Availability of Documents.’’ performance be based on data from cited • Attention: The PDR, where you may experiments; and (3) issue a new SUMMARY: The U.S. Nuclear Regulatory examine and order copies of public regulation that requires minimum Commission (NRC) is denying two documents, is currently closed. You allowable core reflood rates in the event related petitions for rulemaking (PRMs), may submit your request to the PDR via of a loss-of-coolant accident (LOCA). PRM–50–93 and PRM–50–95, submitted email at [email protected] or call 1– On June 7, 2010, Mark Edward Leyse, by Mark Edward Leyse. The petitioner 800–397–4209 between 8:00 a.m. and requested that the NRC amend its on behalf of the New England Coalition, 4:00 p.m. (EST), Monday through submitted a petition for enforcement regulations for the domestic licensing of Friday, except Federal holidays. production and utilization facilities. action under § 2.206, ‘‘Requests for FOR FURTHER INFORMATION CONTACT: The petitioner asserted that data from action under this subpart.’’ The Daniel Doyle, Office of Nuclear Material multirod (assembly) severe fuel damage petitioner requested that the NRC order Safety and Safeguards, telephone: 301– experiments indicate that specific the Vermont Yankee Nuclear Power 415–3748, email: [email protected], aspects of the NRC’s regulations on Station to lower its licensing basis peak U.S. Nuclear Regulatory Commission, emergency core cooling systems cladding temperature to provide an Washington, DC 20555–0001. acceptance criteria and evaluation adequate margin of safety in the event models are not conservative and that SUPPLEMENTARY INFORMATION: of a LOCA. The NRC staff concluded additional regulations are necessary. I. Background and Summary of the Petitions that this petition did not meet the The NRC is denying these petitions II. Public Comments on the Petitions criteria for review under § 2.206 because because existing NRC regulations III. NRC Technical Evaluation and Reasons it identified generic issues that could provide reasonable assurance of for Denial require revisions to existing NRC adequate protection of public health and IV. Availability of Documents V. Conclusion regulations. Therefore, the NRC decided safety. The petitioner did not present to review it as a PRM under § 2.802 and sufficient new information or arguments I. Background and Summary of the assigned it docket number PRM–50–95. to support the requested changes. Petitions Because PRM–50–93 and PRM–50–95 DATES: The dockets for the petitions for Section 2.802 of title 10 of the Code address similar issues, the NRC staff rulemaking, PRM–50–93 and PRM–50– of Federal Regulations (10 CFR), consolidated its review into a single 95, are closed on January 7, 2021. ‘‘Petition for Rulemaking— activity. On October 27, 2010, the NRC ADDRESSES: Please refer to Docket ID Requirements for Filing,’’ provides an published a notice of consolidation of NRC–2009–0554 when contacting the opportunity for any interested person to PRM–50–93 and PRM–50–95 in the NRC about the availability of petition the Commission to issue, Federal Register (75 FR 66007) and information for this action. You may amend, or rescind any regulation. On requested public comment. obtain publicly-available information November 17, 2009, Mark Edward Leyse The NRC identified three main issues related to this action by any of the submitted a PRM under § 2.802. The following methods: NRC assigned docket number PRM–50– in the two petitions. The remaining • Federal Rulemaking Website: Go to 93 to this petition and published a paragraphs of Section I summarize the https://www.regulations.gov and search notice of receipt and request for public following information for each main for Docket ID NRC–2009–0554. Address comment in the Federal Register on issue: (1) Relevant background questions about NRC dockets to Dawn January 25, 2010 (75 FR 3876). information; (2) arguments in the Forder; telephone: 301–415–3407; The petitioner asserted that data from petitions; and (3) specific requests the email: [email protected]. For multirod (assembly) severe fuel damage petitioner made to address each issue. technical questions, contact the experiments indicate that specific

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Issue 1: Calculated Maximum Fuel temperature excursion. The petitioner applicable experimental data must be Element Cladding Temperature Limit asserted that data from cited made and uncertainties must be experiments indicate that such identified and assessed so that the Background for Issue 1 autocatalytic metal-water oxidation uncertainty in the calculated results can Under § 50.46, ‘‘Acceptance criteria reactions and uncontrolled temperature be estimated to (1) account for the for emergency core cooling systems for excursions involving Zircaloy cladding uncertainty in comparing the calculated light-water nuclear power reactors,’’ of have occurred at temperatures below ECCS cooling performance to the 10 CFR, light-water nuclear power 2,200 °F. The petitioner provided this criteria specified in § 50.46(b); and (2) reactors fueled with uranium oxide assertion as evidence that the 2,200 °F assure that there is a high probability of pellets within cylindrical Zircaloy limit is not conservative, and requested not exceeding these criteria. cladding must be provided with an that the NRC amend § 50.46 to require RG 1.157 describes models,5 ECCS that must be designed so that its that the calculated maximum fuel correlations,6 data, model evaluation calculated cooling performance element cladding temperature not following postulated loss of coolant exceed a limit based on data from cited procedures, and methods that are accidents (LOCAs) 1 conforms to the experiments, instead of the 2,200 °F acceptable to the NRC staff for meeting criteria specified in § 50.46(b).2 Under limit specified in § 50.46(b)(1). the requirements for: (1) A realistic or § 50.46(b)(1), the calculated maximum best-estimate calculation of ECCS fuel element cladding temperature shall Issue 2: Metal-Water Reaction Rate cooling performance during a LOCA; (2) not exceed 2,200 °F. In addition, Equations for ECCS Evaluation Models estimating the uncertainty in that § 50.46(b)(2) through (5), respectively, Background for Issue 2 calculation; and (3) including contain requirements for calculations uncertainty in the comparisons of the To evaluate conformance with the involving: Maximum cladding calculated results to the criteria of criteria specified in § 50.46(b), ECCS oxidation, maximum hydrogen § 50.46(b) to assure a high probability cooling performance must be calculated generation, changes in core geometry, that the criteria would not be exceeded. using an acceptable evaluation model 3 and long-term cooling. Other models, data, model evaluation for a range of postulated LOCAs of procedures, and methods can be Petitioner’s Arguments and Requests different sizes, locations, and other considered if they are supported by Related to Issue 1 properties sufficient to provide appropriate experimental data and assurance that the most severe The petitioner asserted that data from technical justification. multirod (assembly) severe fuel damage postulated LOCAs are evaluated. On To be considered acceptable under RG experiments indicate that the calculated September 16, 1988, the NRC amended maximum fuel element cladding the requirements of § 50.46 and 1.157, evaluation models should temperature limit of 2,200 °F specified appendix K, ‘‘ECCS Evaluation account for identified sources of heat— in § 50.46(b)(1) is not conservative. Models,’’ to 10 CFR part 50 to reflect an including the metal-water reaction Although not its intended purpose, the improved understanding of ECCS rate—in performing best-estimate NRC previously determined that this performance during reactor transients calculations. In particular, the rates of limit provides a conservative safety that was obtained through extensive energy release, hydrogen generation, margin from an area of Zircaloy research performed after promulgation and Zircaloy cladding oxidation from cladding oxidation behavior known as of the original requirements (53 FR the metal-water reaction of zirconium the autocatalytic regime. An 35996). Under § 50.46(a)(1), licensees or with steam should be calculated in a autocatalytic condition occurs when the applicants may use one of two best-estimate manner using one of two heat released by the metal-water acceptable ECCS evaluation model procedures, depending on the cladding reaction of zirconium with steam is options: (1) A best-estimate or realistic temperature: 4 greater than the heat that can be evaluation model or (2) a conservative (1) If the cladding temperature is less transferred away from the Zircaloy evaluation model. Each ECCS than or equal to 1,900 °F, correlations to cladding. This causes the Zircaloy evaluation model option is summarized be used to calculate metal-water cladding temperature to rise, thereby below. reaction rates should: (a) Be checked increasing the diffusion of oxygen into Option 1: Best-Estimate or Realistic against a set of relevant data and (b) the metal, which in turn raises the rate ECCS Evaluation Model recognize the effects of steam pressure, at which the zirconium-steam oxidation pre-oxidation of the cladding, Section 50.46(a)(1)(i) of 10 CFR reaction occurs. As the metal-water deformation during oxidation, and specifies that a best-estimate evaluation reaction rate continues to increase, the internal oxidation from both steam and model must include sufficient temperature of the Zircaloy cladding uranium oxide fuel. supporting justification to show that the continues to rise, eventually resulting in (2) If the cladding temperature is an uncontrolled reaction and analytical technique realistically describes the behavior of the reactor greater than 1,900 °F, the Cathcart-Pawel equation and the underlying empirical 1 Under § 50.46(c), LOCAs are hypothetical system during a LOCA. Comparisons to accidents that would result from the loss of reactor data used to derive it are considered coolant, at a rate that exceeds the capability of the 3 Regulatory Guide (RG) 1.157, ‘‘Best-Estimate acceptable for calculating the rates of reactor coolant makeup system, from breaks in Calculations of Emergency Core Cooling System energy release, hydrogen generation, pipes in the reactor coolant pressure boundary. Performance,’’ issued May 1989, states that ‘‘the and cladding oxidation. 2 Criterion 35 of appendix A to 10 CFR part 50, term ‘evaluation model’ refers to a nuclear plant ‘‘General Design Criteria for Nuclear Power Plants,’’ system computer code or any other analysis tool further requires that a system to provide abundant designed to predict the aggregate behavior of a 5 RG 1.157 states that ‘‘the term ‘model’ refers to emergency core cooling shall be provided and that reactor during a loss of coolant accident. It can be a set of equations derived from fundamental the system safety function shall be to transfer heat either best-estimate or conservative and may physical laws that is designed to predict the details from the reactor core following any loss of reactor contain many correlations or models.’’ of a specific phenomenon.’’ coolant at a rate such that: (1) Fuel and cladding 4 RG 1.157 states that ‘‘the terms ‘best-estimate’ 6 RG 1.157 states that ‘‘the term ‘correlation’ refers damage that could interfere with continued and ‘realistic’ have the same meaning. Both terms to an equation having empirically determined effective core cooling is prevented and (2) the are used to indicate that the techniques attempt to constants such that it can predict some details of cladding metal-water reaction is limited to predict realistic reactor system thermal-hydraulic a specific phenomenon for a limited range of negligible amounts. response.’’ conditions.’’

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Option 2: Conservative ECCS Evaluation occur during a LOCA; and (2) (1) Although reflood rates would vary Model underestimate the rate of Zircaloy throughout the reactor core during a cladding oxidation from the metal-water LOCA, local reflood rates could be Alternatively, a conservative reaction of zirconium with steam and, approximately 1 inch per second or evaluation model may be developed in therefore, underestimate the heatup, lower; and (2) extrapolation of data from conformance with the required and heatup rate, and maximum temperature the cited experiments indicates that a acceptable features of appendix K, of the Zircaloy cladding during a LOCA. constant core reflood rate of ‘‘ECCS Evaluation Models,’’ to 10 CFR Therefore, the petitioner requested that approximately 1 inch per second or part 50. Under appendix K, section I.A., the NRC amend RG 1.157 and appendix lower would not, with high probability, evaluation models must account for K to 10 CFR part 50 to require that the prevent Zircaloy cladding from various sources of heat during LOCA rates of energy release, hydrogen exceeding the 2,200 °F limit, if the conditions including the metal-water generation, and Zircaloy cladding cladding temperature was greater than reaction rate. In particular, section I.A.5, oxidation from the metal-water reaction or equal to 1,200 °F at the onset of ‘‘Metal-Water Reaction Rate,’’ of of zirconium with steam considered in reflood.7 appendix K requires use of the Baker- Therefore, the petitioner evaluation models used to calculate Just equation to calculate the rates of requested that the NRC issue a new ECCS cooling performance be calculated energy release, hydrogen generation, regulation that would require minimum based on data from cited experiments, and Zircaloy cladding oxidation from allowable core reflood rates in the event instead of using the Cathcart-Pawel or the metal-water reaction of zirconium of a LOCA. Baker-Just equations. with steam, assuming that the reaction II. Public Comments on the Petitions is not steam limited. Issue 3: Minimum Allowable Core II.A. Overview of Public Comments Reflood Rate Petitioner’s Arguments and Requests The NRC received a total of 33 Related to Issue 2 Background for Issue 3 comment submissions that collectively The petitioner argued that data from Section 50.46(b) of 10 CFR does not included 125 individual comments. The multirod (assembly) severe fuel damage include criteria for calculated ECCS NRC reviewed and considered all 125 experiments indicate that the equations cooling performance pertaining to the comments in its evaluation of the used to calculate the metal-water core reflood rate following postulated petitions. Table I identifies the number reaction rate in ECCS evaluation models LOCAs. of comment submissions and individual that the NRC has determined to be comments submitted, grouped by three Petitioner’s Arguments and Requests acceptable for use in evaluating ECCS main categories of comments. These Related to Issue 3 cooling performance are not categories are used only to facilitate conservative. In particular, the The petitioner asserted that a constant presenting a high-level summary and petitioner asserted that data from cited core reflood rate of approximately 1 totals for the comments that different experiments indicate that use of the inch per second or lower would not, stakeholder groups submitted; the NRC Cathcart-Pawel equation in realistic with high probability, prevent Zircaloy staff used the same approach for evaluation models or use of the Baker- cladding from exceeding the 2,200 °F addressing all submitted comments, Just equation in conservative evaluation limit in § 50.46(b)(1) if, at the onset of regardless of category or who submitted models would: (1) Overestimate the reflood, the cladding temperature was them. The paragraphs that follow temperature at which autocatalytic greater than or equal to 1,200 °F. In provide a high-level overview of each metal-water oxidation reactions would particular, the petitioner asserted that: category of comments.

TABLE I—NUMBER OF COMMENT SUBMISSIONS AND INDIVIDUAL COMMENTS BY CATEGORY

Number of Number of Category comment individual submissions comments

Comments from the Petitioner ...... a 13 a 97 Comments from Nuclear Industry Representatives ...... 3 9 Comments from Public Interest Groups or Other Interested Individuals ...... 17 19

Total ...... 33 125 a The petitioner provided nine comment submissions after the public comment period that closed on November 26, 2010. Although not required to do so, the NRC also considered all the comment submissions that were submitted after the public comment period closed.

Category 1: Comments From the In general, the petitioner’s comments petitioner identified additional Petitioner further supported the petitions by technical issues that were relevant to either: (1) Repeating information that the subject matter, but were not directly Petitioner Mark Edward Leyse had already been provided; (2) related to the requested changes to the provided 13 comment submissions in providing additional details to clarify NRC’s regulations. As discussed in support of PRM–50–93 and PRM–50–95. specific issues; or (3) citing other Section III, the NRC staff addressed He provided nine of these comment references that the petitioner believed these additional technical issues in its submissions after the comment period further substantiated the arguments in final technical safety analysis report. closed. The NRC considered all 13 comment submissions in its evaluation. the petitions. In some comments, the

7 Extrapolation of the experimental data was The petitioner hypothesized that, if these tests had cladding would have occurred with high necessary because the referenced tests were started started with higher initial cladding temperatures, probability. with relatively low initial cladding temperatures. autocatalytic oxidation and failure of the Zircaloy

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Category 2: Comments From Nuclear comments either repeated information 2. General Opposition to Petitions Industry Representatives provided in the petitions or expressed Without Providing Rationale The Nuclear Energy Institute (NEI) his view that the NRC did not Comment: The requested amendments provided two comment submissions appropriately consider all relevant to NRC’s regulations are not necessary. that oppose PRM–50–93 and PRM–50– information in its denial of PRM–50–76. (18–1) 95. Overall, NEI recommended that the II.B. NRC Response to Public Comments NRC response: Because this comment NRC deny PRM–50–93 and PRM–50–95 Two main factors influenced the generally opposed the petitions without because the experiments identified in NRC’s approach to developing and providing a rationale to substantiate this the petitions—whether considered documenting its response to public opposition, the NRC’s overall response individually or in conjunction with comments submitted on PRM–50–93 to the petitions applies to this bin of other experiments—do not substantiate and PRM–50–95: (1) The substantial comments. The final technical safety the assertions or requests made in the number, length, and complexity of the analysis report provides additional petitions. NEI further provided comments that were submitted; and (2) details to support the NRC staff’s additional experimental evidence that the limited availability of NRC resources position. indicates the NRC’s regulations and due to competing, higher-priority work. 3. Comments Related to PRM–50–76 associated regulatory guidance on ECCS In this approach, individual comments acceptance criteria and evaluation that addressed similar subject categories Comment: As stated in PRM–50–76, models are adequate. were grouped into one of 16 high-level the Cathcart-Pawel and Baker-Just Exelon Corporation provided one comment bins. The following equations are not conservative because comment submission that opposes paragraphs provide for each bin of they were not developed to consider PRM–50–93 and PRM–50–95, stating comments: (1) A high-level summary of how complex thermal-hydraulic that: (1) It did not consider the proposed the main subject category addressed in phenomena would affect the metal- amendments to the NRC’s regulations or the grouped comments, including a water reaction rate in the event of a associated regulatory guidance to be listing in parentheses of the unique LOCA. (2–1, 17–2) necessary and (2) it agreed with the identifiers for individual comments that NRC response: The NRC disagrees comments that NEI submitted. were assigned to the bin; and (2) the with these comments. Consistent with the technical safety analysis that was Category 3: Comments From Public NRC’s response to the grouped performed for PRM–50–76, the NRC Interest Groups or Other Interested comments, including—if appropriate—a staff determined that—for the Individuals high-level summary of the basis for the response and reference to the relevant development of metal-water reaction Three public interest groups (Don’t section(s) of the NRC’s final technical rate equations—well-characterized Waste Michigan, Beyond Nuclear, and safety analysis report that provide(s) isothermal tests are more important than Union of Concerned Scientists (UCS)) additional details to support the NRC’s considering the effects of complex each provided one comment submission position. A separate document thermal-hydraulic phenomena. The in support of PRM–50–93 and PRM–50– consolidates all 33 comment suggested use of complex thermal- 95. In general, these comments provided submissions and 125 individual hydraulic conditions would be high-level statements of support for the comments, and provides the following counterproductive in tests that petitions but did not cite relevant information: (1) A table that lists the experimentally derive reaction rate evidence to substantiate the petitions. unique identifier and ADAMS accession correlations because temperature Other interested individuals provided number assigned to each comment control is required to develop a a total of 10 comment submissions on submission document and (2) markings consistent set of data for correlation PRM–50–93 and PRM–50–95. In that clearly assign unique identifiers to derivation. Isothermal tests provide this general, these individual comments also portions of each comment submission needed temperature control. Section 1.1, provided high-level statements of that were identified as distinct ‘‘Similar Petition Previously Considered support for the petitions but did not cite individual comments. Information about by NRC (ML041210109),’’ of the final relevant evidence to substantiate the how to access this consolidated technical safety analysis report provides petitions. In addition, several comments document is provided in Section IV. additional details to support the NRC identified unrelated concerns about the staff’s position. NRC’s regulations or practices that the 1. General Support for Petitions NRC staff determined to be outside the Without Providing Rationale 4. Peak Cladding Temperature Limit Is scope of PRM–50–93 and PRM–50–95. Comment: The NRC should initiate Not Conservative Robert Leyse, a relative of petitioner rulemaking to address the issues raised Comment: Data from cited Mark Edward Leyse, provided four in the petitions. (5–1, 6–1, 7–1, 8–1, 9– experiments indicate that autocatalytic comment submissions in support of 1, 10–1, 11–1, 12–1, 15–1, 19–1, 23–1) metal-water oxidation reactions and PRM–50–93 and PRM–50–95. Robert NRC response: Because these uncontrolled temperature excursions Leyse had previously submitted a comments generally supported the involving Zircaloy cladding have related petition for rulemaking (PRM– petitions without providing a rationale occurred at temperatures below 50–76) that the NRC denied on to substantiate this support, the NRC’s 2,200 °F, indicating the regulatory limit September 6, 2005.8 In general, his overall response to the petitions applies of 2,200 °F is not conservative. (2–6, 2– to this bin of comments. The final 10, 3–1, 4–1, 14–5, 14–7, 14–11, 16–2, 8 Robert Leyse petitioned the NRC on May 1, technical safety analysis report provides 16–4, 20–1, 20–5, 20–6, 20–10, 20–14, 2002, requesting the NRC to amend Appendix K of additional details to support the NRC 10 CFR part 50 and RG 1.157 to correct asserted 20–15, 21–4, 21–14, 23–2, 24–1, 25–1, technical deficiencies in the Baker-Just and staff’s position. 26–11, 32–1, 32–7) Cathcart-Pawel equations used to calculate the NRC response: The NRC disagrees metal-water reaction rate in ECCS evaluation data used to support ECCS cooling performance with these comments. The NRC staff models. The NRC denied PRM–50–76, determining evaluations; and (2) the NRC’s regulations and that: (1) None of the specific technical issues raised regulatory guidance on ECCS cooling performance reviewed experimental data and by the petitioner showed safety-significant evaluations were based on sound science and did information from the cited experiments deficiencies in the research, calculation methods, or not need to be amended (70 FR 52893). and found no evidence of temperature

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escalation rates that demonstrated the the cited experiments—that steam insignificant eutectic reactions occur for occurrence of autocatalytic or runaway cooling would be sufficient to maintain times and maximum temperatures oxidation reactions below 2,200 °F Zircaloy cladding temperatures below assumed in a design-basis LOCA. under LOCA conditions. Section 2.1, the 2,200 °F limit. Section 2.3, ‘‘Need for Section 3.2, ‘‘Eutectic Behavior at ‘‘Peak Cladding Temperature Limit is a Minimum Allowable Reflood Rate,’’ of Temperatures below 2,200 °F (1,204 Nonconservative,’’ of the final technical the final technical safety analysis report °C),’’ of the final technical safety safety analysis report provides provides additional details to support analysis report provides additional additional details to support the NRC the NRC staff’s position. details to support the NRC staff’s staff’s position. 7. Issues Related to National Research position. 5. Baker-Just and Cathcart-Pawel Universal Full-Length High- 9. TRAC/RELAP 10 Advanced Equations Are Not Conservative Temperature (FLHT) In-Reactor Tests Computational Engine (TRACE) Code Comment: Data from cited Comment: In the FLHT–1 test, the test Simulation of (Full Length Emergency experiments indicate that the Baker-Just conductors were unable to prevent a Cooling Heat Transfer) FLECHT Run and Cathcart-Pawel equations used to temperature excursion and runaway 9573 calculate the metal-water reaction rate oxidation by increasing the coolant flow Comment: NRC’s TRACE simulations in ECCS evaluation models that the NRC rate when peak cladding temperatures of FLECHT Run 9573 are invalid has determined to be acceptable for use reached approximately 2,200 °F. This because they did not simulate the in evaluating ECCS cooling performance provides additional evidence indicating section of the test bundle that incurred ° are not conservative. (1–1, 2–5, 14–1, that the regulatory limit of 2,200 F is runaway oxidation. Therefore, since 14–8, 14–9, 14–10, 14–12, 14–13, 14–14, not conservative. (21–5, 26–4, 26–8, 28– NRC’s conclusions regarding the reflood 16–1, 20–4, 20–7, 20–8, 20–9, 20–11, 3, 29–1, 29–4) rate are based on its TRACE simulations 20–12, 20–16, 20–17, 21–3, 21–10, 21– NRC response: The NRC disagrees of FLECHT Run 9573, these conclusions 13, 24–2, 26–1, 27–1, 27–3, 28–2, 29–3, with these comments. The NRC staff are also invalid. (31–4, 32–3, 32–5, 33– 29–5, 29–6, 30–1, 30–2, 32–2, 32–9) determined that excessive heatup rates 1) NRC response: The NRC agrees in part were not experienced during the FLHT– NRC response: The NRC disagrees and disagrees in part with these 1 experiment until temperatures ° with these comments. The NRC staff comments. The NRC agrees that the exceeded 2,420 F. Section 3.1, ‘‘Issues determined that the experimental data Cathcart-Pawel equation is generally not Related to National Research Universal from FLECHT run 9573 do not show conservative. However, consistent with (NRU) full-length high-temperature evidence of runaway oxidation below its intended use, the NRC staff has (FLHT) In-reactor Tests,’’ of the final 2,200 °F, despite its low reflood rate. In determined that use of the Cathcart- technical safety analysis report provides addition, FLECHT run 9573 was a low- Pawel equation generally results in additional details to support the NRC reflood-rate experiment in which sufficiently accurate calculations of the staff’s position. thermocouple measurements were taken metal-water reaction rate that are 8. Eutectic Behavior at Temperatures at five elevations. All five elevations appropriate for realistic ECCS Below 2,200 °F were included in the NRC’s TRACE evaluation models. The NRC disagrees Comment: In a design-basis LOCA, simulation of FLECHT run 9573. that the Baker-Just equation is not Section 3.3, ‘‘TRACE simulation of conservative. Consistent with its eutectic reactions 9 between various fuel assembly components (the Zircaloy FLECHT run 9573,’’ of the final intended use, the NRC staff has technical safety analysis report provides determined that use of the Baker-Just cladding, control rods, and spacer grids) at temperatures below 2,200 °F could additional details to support the NRC equation results in sufficiently staff’s position. conservative calculations of the metal- significantly reduce the safety margins water reaction rate that are appropriate for the following types of materials 10. Stainless Steel and Zircaloy Heat for conservative ECCS evaluation interactions: (1) Degradation of boiling- Transfer Coefficients water reactor (BWR) control blades due models. Section 2.2, ‘‘Baker-Just and Comment: The heat transfer to the eutectic reaction of boron carbide Cathcart-Pawel Equations are coefficients used in appendix K ECCS (B4C), stainless steel, and Zircaloy; (2) Nonconservative,’’ of the final technical evaluation models are based on data degradation of pressurized-water reactor safety analysis report provides from thermal-hydraulic experiments (PWR) cladding due to the eutectic additional details to support the NRC conducted with stainless steel rod reaction between Inconel grids and staff’s position. bundles and therefore should not be Zircaloy cladding; and (3) degradation used to infer what would happen in a 6. Need for a Minimum Allowable of PWR control rods that contain silver, reactor core with Zircaloy bundles in Reflood Rate indium, and cadmium. (21–1, 21–6, 21– the event of a LOCA. (2–9, 22–1, 26–3, 7, 21–8, 21–9, 24–4, 26–10) Comment: Extrapolation of data from 26–5, 26–6, 32–4) cited experiments indicates that a new NRC response: The NRC disagrees with these comments. These assertions NRC response: The NRC disagrees regulation that requires minimum with these comments. The NRC staff allowable core reflood rates in the event are not supported by available experimental evidence. In its review of determined that models for convective of a LOCA is necessary to prevent heat transfer are dependent upon the Zircaloy cladding from exceeding the available information, the NRC staff was ° unable to find any evidence that loss of properties of the fluid—not the material regulatory limit of 2,200 F under properties of the heat transfer surface. certain conditions. (2–2, 2–3, 2–4, 16–3, a coolable geometry had occurred at ° Therefore, the heater rod material used 20–2, 20–3, 20–13, 20–18, 21–2, 24–3, temperatures below 2,200 F. Test results and analyses have shown that in the experiments is irrelevant to 26–2, 26–7, 26–9, 32–6) developing correlations based on the NRC response: The NRC disagrees experimental data. Section 3.5, with these comments. The NRC staff has 9 In this context, a eutectic reaction is a reaction in which two materials in contact with one another determined—using simulations of a at relatively high temperatures can liquefy at a 10 TRAC: Transient Reactor Analysis Code. Zircaloy cladding bundle with the temperature that is lower than the melting RELAP: Reactor Excursion and Leak Analysis geometry and design that was used for temperatures of the two individual materials. Program.

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‘‘Stainless Steel and Zircaloy Heat and would cause the Baker-Just that incurred autocatalytic oxidation in Transfer Coefficients,’’ of the final equation to be not conservative. (13–1, their application of the Baker-Just technical safety analysis report provides 14–2, 14–3, 14–4, 14–6, 17–1, 27–2) equation under LOCA conditions to additional details to support the NRC NRC response: The NRC disagrees evaluate its suitability. For this reason, staff’s position. with these comments. The NRC staff it was incorrect for Westinghouse and determined that the subject the NRC to conclude that there is 11. Issues Related to the PHEBUS B9R experimental data are consistent with sufficient conservatism in applying the Test data obtained using other methods and Baker-Just equation to LOCA conditions. Comment: Oxidation models are concluded that radiative heat losses are (2–8, 21–11, 21–12, 28–1) unable to predict autocatalytic oxidation not relevant in correlating the data to NRC response: The NRC disagrees reactions that occurred below 2,200 °F develop the metal-water reaction rate with these comments. The NRC in the PHEBUS B9R–2 test. (32–8, 32– equation. The NRC staff further considered the information about the 10) concluded that use of the Baker-Just FRF–1 experiment in the TREAT facility NRC response: The NRC disagrees equation results in sufficiently in the 1971 Indian Point Unit 2 with these comments. The NRC staff conservative calculations of the metal- licensing hearing and determined that determined that data from the cited water reaction rate that are appropriate the ECCS evaluation models were PHEBUS B9R test does not demonstrate for conservative ECCS evaluation adequate. In addition, while it is true that an autocatalytic oxidation reaction models. Section 3.9, ‘‘Experimental that the Baker-Just equation has not occurred at temperatures below Methods Used to Derive the Baker-Just been applied to metallurgical data from 2,200 °F. Section 3.6, ‘‘Issues Related to Metal-Water Oxidation Reaction the locations of FLECHT run 9573 that the PHEBUS B9R Test,’’ of the final Correlation,’’ of the final technical incurred autocatalytic oxidation, these technical safety analysis report provides safety analysis report provides data were not collected at the time of additional details to support the NRC additional details to support the NRC the experiment, and therefore do not staff’s position. staff’s position. exist. However, the NRC staff has determined that the inability to apply 14. Issues Related To Cladding 12. Whether Runaway Oxidation Begins the Baker-Just equation to such data is ° Oxidation and Hydrogen Production at 2,012 F an inadequate basis for asserting that it Comment: Information in a report Comment: The Cathcart-Pawel and was incorrect for Westinghouse and the about degraded core quench Baker-Just equations are unable to NRC to conclude that there is sufficient experiments 11 indicates that determine the increased hydrogen conservatism in applying the Baker-Just temperatures at which temperature production that occurred in the CORA equation to LOCA conditions. Several excursions associated with runaway and LOFT LP–FP–2 experiments. (29–2, independent studies have shown that oxidation occur range from 1,922 °F to 31–3) use of the Baker-Just equation results in 2,012 °F. (2–7) NRC response: The NRC neither sufficiently conservative calculations of NRC response: The NRC disagrees agrees nor disagrees with these the metal-water reaction rate under with this comment. The NRC staff comments. The cited experiments were design-basis LOCA conditions. Section examined the cited report and found no performed to better understand reactor 3.11, ‘‘Issues Related to the FRF Tests data to support a determination that behavior under severe accident Conducted in the TREAT Reactor,’’ of runaway oxidation occurs at cladding conditions. Increased hydrogen the final technical safety analysis report temperatures less than 2,200 °F for production under such beyond-design- provides additional details to support experiments simulating conditions for basis conditions is not relevant in the NRC staff’s position. design-basis accidents. Section 3.7, determining the suitability of the Cathcart-Pawel or Baker-Just equations 16. Issues Raised at the Public ‘‘Issue Related to Whether Runaway Commission Meeting in January 2013 Oxidation Temperatures Start at 1100 °C when used in evaluations of ECCS Comment: An NRC document 12 states (2012 °F),’’ of the final technical safety cooling performance for design-basis that runaway zirconium oxidation analysis report provides additional LOCAs. Section 3.10, ‘‘Issues Related to would commence at 1,832 °F in a details to support the NRC staff’s Cladding Oxidation and Hydrogen postulated station blackout scenario at position. Production,’’ of the final technical safety analysis report provides additional Grand Gulf Nuclear Station, which 13. Experimental Methods Used To details to support the NRC staff’s indicates the regulatory limit of 2,200 °F Derive the Baker-Just Metal-Water position. is not conservative. In addition, a report Oxidation Reaction Correlation about best-estimate predictions for the 15. Issues Related to the Fuel Rod LOFT LP–FP–2 experiments 13 states Comment: The Baker-Just equation is Failure (FRF) Tests Conducted in the that runaway oxidation would not conservative because it is partly Transient REActor Test (TREAT) commence if fuel-cladding temperatures derived using experimental data from Facility Reactor were to start increasing at a rate of 3.0 inductive heating experiments that Comment: Data from the FRF–1 kelvins/second (K/s). Since an analysis included radiative heat losses. These experiment for the TREAT facility in support of the NRC staff’s interim radiative heat losses would affect the indicate that ECCS evaluation models evaluation of the petitions showed oxidation behavior such that the underpredicted the amount of hydrogen heatup rates of 10.3 K/s and 11.9 K/s at experiment is not representative of produced in that experiment. This reactor behavior in the event of a LOCA means that ECCS evaluation models 12 Haskin FE, Camp AL. Perspectives on Reactor would underpredict the amount of Safety. NUREG/CR–6042 (SAND93–0971). 11 Committee on the Safety of Nuclear Washington, DC: U.S. Nuclear Regulatory Installations, Nuclear Energy Agency, Organisation hydrogen produced in the event of a Commission; 1994. Available at: https:// for Economic Co-operation and Development. LOCA and therefore are not www.nrc.gov/docs/ML0727/ML072740014.pdf. Degraded Core Quench: Summary of Progress 1996– conservative. In addition, neither 13 Guntay S, Carboneau M, Anoda Y. Best 1999. NEA/CSNI/R(99)23. Paris, France: Westinghouse nor the NRC applied the Estimate Prediction for OECD LOFT Project Fission Organisation for Economic Co-operation and Product Experiment LP–FP–2. OECD LOFT–T–3803. Development; 2000. Available at: http://www.oecd- Baker-Just equation to metallurgical data Idaho Falls, ID: EG&G IDAHO, INC.; 1985. Available nea.org/nsd/docs/1999/csni-r99-23.pdf. from the locations of FLECHT run 9573 at ADAMS accession no. ML071940361.

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2,199 °F, this indicates that runaway The NRC staff completed its technical information to support amending 10 oxidation has occurred at temperatures evaluation of the petitions and prepared CFR 50.46 to require that the calculated below the 2,200 °F limit. (31–1, 31–2) a final technical safety analysis report maximum fuel element cladding NRC response: The NRC disagrees that documents the official technical temperature not exceed a limit based on with the comments. First, the postulated basis for the staff’s evaluation. This final data from cited experiments, instead of station blackout scenario discussed in technical safety analysis report includes the 2,200 °F limit in § 50.46(b)(1). the document is a severe accident that the NRC staff’s evaluation of (1) each of Section 2.1, ‘‘Peak Cladding involves conditions that are beyond the the three main issues raised in the Temperature Limit is Nonconservative,’’ design basis, and it is inappropriate to petitions and (2) additional technical of the final technical safety analysis evaluate the regulatory limit of 2,200 °F issues that are not directly related to the report provides additional details to for design-basis LOCAs using requested changes to the NRC’s support the staff’s position. information obtained from models of regulations that were raised in either the Issue 2: Metal-Water Reaction Rate severe accidents, which model petitions or in subsequent Equations for ECCS Evaluation Models conditions that are more severe than communications (e.g., submitted public those of design-basis accidents and comments, email messages, letters, and The NRC staff has determined that: (1) therefore do not provide information oral statements in a public meeting with Use of the Cathcart-Pawel equation about how fuel cladding would respond the Commission). generally results in sufficiently accurate to high temperatures under design-basis Overall, the NRC is denying the calculations of the metal-water reaction LOCA conditions. Second, the NRC staff petitions because the petitioner did not rate that are appropriate for realistic has determined that the runaway present sufficient new information or ECCS evaluation models and (2) use of oxidation described in the cited LOFT arguments to support the requested the Baker-Just equation results in LP–FP–2 report was initiated because of changes. In addition, the NRC disagrees sufficiently conservative calculations of the high temperature (2,870 °F), not with the arguments in the petitions and the metal-water reaction rate that are because of the heatup rate of 3.0 K/s. concludes that the requested appropriate for conservative ECCS Therefore, the NRC staff concluded that amendments to its regulations and evaluation models. The final technical there is no basis for the assertion that associated regulatory guidance on ECCS safety analysis report also cites several runaway oxidation has occurred at acceptance criteria or evaluation models independent studies that provide temperatures below the 2,200 °F limit are not necessary. The remaining further support for these findings. because heatup rates of more than 3.0 paragraphs of Section III summarize the The petitioner relied on two main K/s have been observed at lower staff’s evaluation of each of the three arguments to support the assertion that temperatures. Section 3.12, ‘‘Issues main issues identified in the petitions the Cathcart-Pawel and Baker-Just Raised at the Public Commission and identify the relevant section of the equations are not conservative. The first Meeting in January 2013,’’ of the final staff’s final technical safety analysis argument was that data from cited technical safety analysis report provides report that provides additional details to multirod (assembly) severe fuel damage additional details to support the NRC support the NRC’s position. Information experiments indicate both equations are staff’s position. about how to access the final technical not conservative for use in analyses that safety analysis report is provided in calculate the temperature at which an III. NRC Technical Evaluation and Section IV. autocatalytic or runaway oxidation Reasons for Denial reaction involving the Zircaloy cladding The NRC staff used a special review Issue 1: Calculated Maximum Fuel would occur in the event of a LOCA. process to evaluate these petitions. It Element Cladding Temperature Limit The NRC staff disagrees with this did this for three main reasons: (1) The NRC staff reviewed experimental argument for two reasons: (1) Additional time and resources were data and information from the multirod Autocatalytic or runaway oxidation needed to reevaluate more than 40 years (assembly) severe fuel damage does not begin at a specific temperature of severe accident and thermal- experiments cited in the petitions and and (2) the petitioner made invalid hydraulic experimental data from more found no evidence of temperature comparisons between the results of than 200 technical references to address escalation rates that demonstrated the specific experiments and generic all arguments in the petitions; (2) to occurrence of autocatalytic or runaway calculations that were not intended to promptly respond to any significant oxidation reactions at Zircaloy cladding be applied to a specific test facility. safety issues, if any were to be temperatures less than 2,200 °F. The second argument was that the identified; and (3) to keep the public Although some rapid temperature Cathcart-Pawel and Baker-Just equations informed and to publicly address any increases were observed in the data were not developed to consider how stakeholder concerns about the from the cited experiments, the NRC complex thermal-hydraulic phenomena adequacy of the NRC’s regulations staff disagrees with the assertion that would affect the metal-water reaction following the accident that occurred in these data indicate that (1) autocatalytic rate in the event of a LOCA. However, 2011 at the Fukushima Dai-ichi Nuclear metal-water oxidation reactions and consistent with the technical safety Power Station in Japan. uncontrolled temperature excursions analysis that was performed for PRM– As part of this special review process, involving Zircaloy cladding have 50–76, the NRC staff determined that— the NRC made a series of draft interim occurred at temperatures less than the for the development of metal-water reports available to the public. These 2,200 °F limit under LOCA conditions reaction rate equations—well- reports informed the public of NRC’s and (2) the 2,200 °F limit is therefore not characterized isothermal tests are more progress in evaluating the petitions and conservative. The NRC staff has further important than the complex thermal included the NRC staff’s initial determined that the 2,200 °F limit in hydraulics suggested in the petitions. evaluation of specific issues and § 50.46(b)(1) provides an adequate The suggested use of complex thermal- relevant data that were prioritized to margin of safety to preclude hydraulic conditions would be determine the order in which they autocatalytic metal-water oxidation counterproductive in tests to would be evaluated. Information about reactions. experimentally derive reaction rate how to access these draft interim reports Therefore, the NRC concludes that the correlations because temperature is provided in Section IV. petitioner did not provide sufficient control is required to develop a

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consistent set of data for correlation from cited experiments, instead of using cladding temperatures to predict final derivation. Isothermal tests provide this the Cathcart-Pawel or Baker-Just cladding temperature is inappropriate necessary temperature control. equations. Section 2.2, ‘‘Baker-Just and because of increased radiative cooling at However, previous studies have applied Cathcart-Pawel Equations are higher temperatures; and (3) the derived correlations to transients Nonconservative’’ of the final technical extrapolation of experimental data does that include complex thermal-hydraulic safety analysis report provides not show ‘‘with high probability’’ that conditions to verify that the proposed additional details to support the NRC peak cladding temperatures will exceed phenomena embodied in the staff’s position. 2,200 °F. correlations are limiting. These studies Issue 3: Minimum Allowable Core Therefore, the NRC staff concludes showed that (1) use of the Cathcart- Reflood Rate that the petitioner did not provide Pawel equation results in conservative NRC calculations using simulations of sufficient information to support or best-estimate calculations of the issuance of a new regulation that metal-water reaction rate and (2) use of a Zircaloy cladding bundle with the geometry and design that was used for requires minimum allowable core the Baker-Just equation results in the cited multirod (assembly) severe reflood rates in the event of a LOCA. conservative calculations of the metal- fuel damage experiments disproved the Section 2.3, ‘‘Need for a Minimum water reaction rate. petitioner’s assertions about the reflood Allowable Reflood Rate,’’ of the final Therefore, the NRC concludes that the rate. In particular, calculations using technical safety analysis report provides petitioner did not provide sufficient simulations showed that steam cooling additional details to support the NRC information to support revising RG would be sufficient to maintain the staff’s position. 1.157 and appendix K to 10 CFR part 50 Zircaloy cladding temperatures below IV. Availability of Documents to require that the rates of energy the 2,200 °F limit specified in release, hydrogen generation, and § 50.46(b)(1). Moreover, the NRC staff Table II provides information about Zircaloy cladding oxidation from the determined that (1) cooling of a fuel rod how to access the documents referenced metal-water reaction of zirconium with bundle depends on several parameters in this document. The ADDRESSES steam considered in evaluation models and heat transfer mechanisms rather section of this document provides used to calculate ECCS cooling than on the reflood rate alone; (2) linear additional information about how to performance be calculated based on data extrapolation of initial Zircaloy access ADAMS.

TABLE II—INFORMATION ABOUT HOW TO ACCESS REFERENCED DOCUMENTS

ADAMS accession Date Document No. or Federal Register citation

Submitted Petitions

May 1, 2002 ...... Petition for Rulemaking (PRM–50–76) ...... ML022240009 November 17, 2009 ...... Petition for Rulemaking (PRM–50–93) ...... ML093290250 June 7, 2010 ...... Petition for Rulemaking (PRM–50–95) ...... ML102770018

Federal Register Notices

September 6, 2005 ...... Denial of Petition for Rulemaking (PRM–50–76) ...... 70 FR 52893 January 25, 2010 ...... Notice of Receipt of Petition for Rulemaking (PRM–50–93) ...... 75 FR 3876 October 27, 2010 ...... Notice of Consolidation of Petitions for Rulemaking and Re-Opening of Comment Period 75 FR 66007 (PRM–50–93 and PRM–50–95).

Consolidated Public Comments Document

November 21, 2017 ...... Public Comments on Petitions for Rulemaking: Calculated Maximum Fuel Element Cladding ML17325A007 Temperature.

Draft Interim Reports

August 23, 2011 ...... Draft Interim Review of PRM–50–93/95 Issues Related to the CORA Tests ...... ML112290888 September 27, 2011 ...... Draft Interim Review of PRM–50–93/95 Issues Related to the LOFT LP–FP–2 Test ...... ML112650009 October 16, 2012 ...... Draft Interim Review of PRM–50–93/95 Issues Related to Conservatism of 2200 °F, Metal- ML12265A277 Water Reaction Rate Correlations, and ‘‘The Impression Left from [FLECHT] Run 9573.’’. March 8, 2013 ...... Draft Interim Review of PRM–50–93/95 Issues Related to Minimum Allowable Core Reflood ML13067A261 Rate.

Final Technical Safety Analysis Report

August 19, 2016 ...... Technical Safety Analysis of PRM–50–93/95, Petition for Rulemaking on § 50.46 ...... ML16078A318

V. Conclusion information or arguments to support the and associated regulatory guidance are requested changes. In addition, the NRC not necessary. The NRC’s existing For the reasons cited in this disagrees with the arguments in the regulations provide reasonable document, the NRC is denying PRM– petitions and concludes that the assurance of adequate protection of 50–93 and PRM–50–95. The petitioner requested amendments to its regulations public health and safety. did not present sufficient new

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Dated: December 29, 2020. • Paper comments: Paper comments as name, address, and phone number) For the Nuclear Regulatory Commission. that duplicate electronic submissions included in the text of your electronic Annette L. Vietti-Cook, are not necessary. Should you wish to submission that is not identified as Secretary of the Commission. mail a paper comment, in lieu of an confidential as directed above. [FR Doc. 2020–29151 Filed 1–6–21; 8:45 am] electronic comment, it should be sent An electronic copy of this proposed rule is available at http:// BILLING CODE 7590–01–P via regular or express mail to: Drug Enforcement Administration, Attn: DEA www.regulations.gov for easy reference. Federal Register Representative/DPW, Legal Authority DEPARTMENT OF JUSTICE 8701 Morrissette Drive, Springfield, Virginia 22152. The Controlled Substances Act (CSA) grants the Attorney General authority to Drug Enforcement Administration FOR FURTHER INFORMATION CONTACT: promulgate rules and regulations Scott A. Brinks, Regulatory Drafting and relating to: The registration and control 21 CFR Parts 1301, 1309, and 1321 Policy Support Section, Diversion of the manufacture, distribution, and Control Division, Drug Enforcement [Docket No. DEA–587] dispensing of controlled substances and Administration; Mailing Address: 8701 RIN 1117–AB58 listed chemicals; reporting changes to Morrissette Drive, Springfield, Virginia professional or business addresses; and 22152; Telephone: (571) 362–3261. Amending Regulations To Require the efficient execution of his statutory SUPPLEMENTARY INFORMATION: Online Submission of Applications for functions. 21 U.S.C. 821, 822(a), 827(h), and Renewals of DEA Registration Posting of Public Comments 871(b), 957(a). 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If a comment submitted comments are not has so much confidential business 1 21 CFR 1301.13(e)(1)(iv). instantaneously available for public information that it cannot be effectively 2 21 CFR 1301.13(e)(1)(1)(i)–(iii), (v)–(vi), and view on Regulations.gov. If you have redacted, all or part of that comment (viii)–(x). 3 21 CFR 1301.13(e)(1)(vii). received a Comment Tracking Number, may not be made publicly available. 4 21 CFR 1309.21. your comment has been successfully Comments posted to http:// 5 21 CFR 1301.13(e)(1) and 1309.21 submitted and there is no need to www.regulations.gov may include any 6 https://www.deadiversion.usdoj.gov/drugreg/ resubmit the same comment. personal identifying information (such index.html#regapps.

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submitted through the secure online structures, and definitions governing and paper submissions. No special database, and that paper forms will no regulatory review established in E.O. software is needed to complete an longer be accepted. Submission through 12866. online application via DEA’s public the secure online database will be a E.O. 12866 classifies a ‘‘significant website. Furthermore, all applicants, streamlined process which will benefit regulatory action,’’ requiring review by including the estimated 0.7 percent of both DEA and registrants. the Office of Management and Budget applicants using paper forms, are (OMB), as any regulatory action that is assumed to be able to access the internet Discussion of Regulatory Changes likely to result in a rule that may: (1) without incurring additional costs. 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This rule proposes to amend (2) create a serious inconsistency or applications are available at no existing DEA regulations in seven otherwise interfere with an action taken additional cost, DEA acknowledges sections.7 Title 21 CFR 1301.13 and or planned by another agency; (3) some applicants have a preference for 1301.14 are proposed to be amended to materially alter the budgetary impact of paper forms. DEA does not have a basis remove the option to submit paper entitlements, grants, user fees, or loan to quantify this preference; however, forms and provide instructions for programs or the rights and obligations of DEA believes any cost of eliminating online application and payment recipients thereof; or (4) raise novel this preference is offset by the instructions. The rule also proposes legal or policy issues arising out of legal qualitative cost savings discussion removing 21 CFR 1301.14 (b), which mandates, the President’s priorities, or below. will become obsolete with the adoption the principles set forth in the E.O. DEA DEA anticipates there will be cost of the secure application portal. 21 CFR has determined that this proposed rule savings associated with electronic 1309.12 is proposed to be amended to is not a ‘‘significant regulatory action’’ submissions. Some cost savings are clarify payment options. Title 21 CFR under E.O. 12866, section 3(f). described qualitatively and some are 1309.32 is proposed to be amended to Analysis of Benefits and Costs quantified. Many paper submissions remove the option to submit paper contain illegible or erroneous forms and provide instruction for online DEA has examined the benefits and information or omit required applications and payments for listed costs of this proposed rule. There has information. Many such errors or chemical handlers. Title 21 CFR 1309.33 been a continued decrease in the use of omissions, such as not including a is proposed to be amended to clarify the paper forms from 2016 to 2020. Paper signature or paying the wrong amount online application and payment process forms as a percentage of total require DEA to contact applicants for while removing § 1309.33 (b), which applications decreased annually from corrections or clarifications, a time- will become obsolete with the adoption 7.5 percent in 2016 to 2.8 percent, 1.5 consuming process for both DEA and of the secure application portal. Title 21 percent, and 1.1 percent, in years 2017, the applicant. Electronic submissions CFR 1309.34 is proposed to be amended 2018, and 2019, respectively. In the first are expected to virtually eliminate the to clarify the handling of defective three months of 2020, 99.3 percent of all requirement for DEA to contact applications. Title 21 CFR 1321.01 is DEA registration forms were submitted applicants for clarification of form data proposed to be amended to remove electronically via DEA’s secure website or for correction of submission errors, as reference to submitting paper forms by and 0.7 percent were submitted by validation features in the system will mail to any DEA Registration Unit paper. While it is possible the flag common errors before transmission. address. percentage of paper submissions will DEA has not tracked the number or the continue to drop, DEA believes 0.7 duration of such delays and does not Regulatory Analyses percent is a reasonable estimate. have a strong basis to quantify these cost Executive Orders 12866, 13563, and Therefore, this proposed rule will savings. 13771, Regulatory Planning and Review, impact the remaining 0.7 percent of This proposed rule would eliminate Improving Regulation and Regulatory registration forms that are submitted by the need to print paper forms and paper, approximately 4,453 registrations transmit them by mail or courier Review, and Reducing Regulation and 8 Controlling Regulatory Costs per year. Benefits include cost savings, service. DEA estimates there will be a as discussed in the following This proposed rule was developed in cost savings of $0.63 ($0.55 for postage paragraphs, and increased simplicity in plus $0.08 for an envelope), or a total of accordance with the principles of the registration process. This proposed Executive Orders (E.O.) 12866, 13563, $2,805 per year for an estimated 4,453 rule will simplify the form submission responses per year. DEA assumes the and 13771. E.O. 12866 directs agencies process and require that all new to assess all costs and benefits of cost savings associated with eliminating applications and renewals be submitted printing costs is negligible. available regulatory alternatives and, if online. Additionally, electronic regulation is necessary, to select submissions will increase efficiency and regulatory approaches that maximize 9 Based on review of applications from January accuracy. 2020 to March 2020, there were 307 applications for net benefits (including potential There are no new costs associated initial registration using the paper form. Six of 307 economic, environmental, public health, with this proposed rule. The labor applications did not contain a contact email and safety effects; distributive impacts; burden to submit an application is address. DEA believes it is likely the six applicants and equity). E.O. 13563 is supplemental have email addresses (and have access to the estimated to be the same for electronic internet), but opted to not provide the email to and reaffirms the principles, address. Including the online applications, six of 8 The average annual number of applications from 30,509 applications for new registrations over the 7 21 CFR 1301.13, 1301.14, 1309.12, 1309.32, 2017 to 2019 is 636,097. 636,097 × 0.7 percent = three-month period, January-March 2020, did not 1309.33, 1309.34, and 1321.01. 4,453. contain email addresses.

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Furthermore, DEA anticipates cost Executive Order 13132, Federalism applications be submitted online. The savings from the elimination of This proposed rule does not have rule would affect all applicants for DEA production costs (i.e., paper forms, federalism implications warranting the registration or re-registration who would envelopes, postage, equipment, and application of E.O. 13132. The proposed use paper forms. There has been a labor). Based on the information rule does not have substantial direct continued decrease in the use of paper collection requests for the registration effects on the States, on the relationship applications from 2016 to 2020. Paper forms, recently approved by OMB, between the National Government and applications, as a percentage of total DEA’s production costs of $49,910 will the States, or on the distribution of applications, decreased annually from 10 be eliminated. In summary, DEA power and responsibilities among the 7.5 percent in 2016 to 2.8 percent, 1.5 estimates this proposed rule will result various levels of government. percent, and 1.1 percent, in years 2017, in an annual cost savings of $52,715 Executive Order 13175, Consultation 2018, and 2019, respectively. In the first ($2,805 to applicants and $49,910 to three months of 2020, 99.3 percent of all DEA). and Coordination With Indian Tribal DEA Registration Forms were submitted Section 2(a) of E.O. 13771 11 requires Governments electronically via DEA’s secure website an agency, unless prohibited by law, to The proposed rule does not have identify at least two existing regulations and 0.7 percent were submitted by substantial direct effects on one or more paper. While it is possible the to be repealed when the agency publicly Indian tribes, on the relationship percentage of paper submissions will proposes for notice and comment or between the Federal Government and continue to drop, DEA believes 0.7 otherwise promulgates a new regulation. Indian tribes, or on the distribution of In furtherance of this requirement, power and responsibilities between the percent is a reasonable estimate. Section 2(c) of E.O. 13771 requires that Federal Government and Indian tribes. Therefore, this proposed rule will the new incremental costs associated impact the remaining 0.7 percent of with new regulations, to the extent Regulatory Flexibility Act registration forms that are submitted by permitted by law, be offset by the In accordance with the Regulatory paper, approximately 4,453 registrations elimination of existing costs associated Flexibility Act (RFA), the DEA has per year.12 with at least two prior regulations. reviewed the economic impact of this All registration business activities Because this proposed rule is estimated proposed rule on small entities. DEA’s (registrant-type) have used paper to have a total cost of less than zero economic impact evaluation indicates registration forms in the past three (cost savings of $52,715 per year), DEA that the rule will not, if promulgated, years. DEA estimated the number of expects the rule will be considered an have a significant economic impact on applications by business activity based E.O. 13771 deregulatory action. a substantial number of small entities. The RFA requires an agency to on the three-year average, 2017–2019, of Executive Order 12988, Civil Justice analyze options for regulatory relief of actual paper application submissions. Reform small entities unless it can certify that DEA applied the percentages for each This proposed rule meets the the rule will not have a significant business activity to the estimated 4,453 applicable standards set forth in impact on substantial number of small paper registration per year. For example, sections 3(a) and 3(b)(2) of E.O. 12988, entities. DEA has analyzed the on average, 5.73 percent of total paper Civil Justice Reform to eliminate economic impact of each provision of registration forms were for pharmacy ambiguity, minimize litigation, establish this proposed rule and estimates that it registrations. Applying 5.73 percent to clear legal standards, and reduce will have minimal economic impact on the 4,453 estimated total paper burdens. DEA expects the instant affected entities, including small registrations, the estimated number of validation of online registration businesses, nonprofit organizations, and paper registrations for pharmacy applications to reduce ambiguity and small governmental jurisdictions. registrations was 255 (4,453 × 5.73 reduce the number of errors in This proposed rule will simplify the percent). This calculation was submissions and reduce burdens on form submission process by requiring conducted for each business activity both DEA and registrants. all initial registration and renewal and the results are in Table 1 below.

TABLE 1—PERCENTAGE AND NUMBER OF PAPER REGISTRATIONS BY BUSINESS ACTIVITY

2017 2018 2019 Average Number of Business activity (percent) (percent) (percent) (percent) registrations

Pharmacy ...... 3.12 6.25 7.81 5.73 255 Hospital/Clinic ...... 2.11 2.67 3.57 2.78 124 Practitioner ...... 79.73 77.99 74.13 77.29 3,442 Teaching Institution ...... 0.03 0.04 0.01 0.03 1 Manufacturer ...... 0.23 0.33 0.39 0.32 14 Distributor ...... 0.15 0.18 0.28 0.20 9 Researcher/Canine Handler ...... 3.00 3.61 2.96 3.19 142 Analytical Lab ...... 0.41 0.53 0.51 0.48 22 Importer ...... 0.07 0.10 0.10 0.09 4 Exporter ...... 0.03 0.04 0.07 0.05 2 Reverse Distributor ...... 0.01 0.02 0.04 0.03 1 Mid-level Practitioner (MLP) ...... 10.38 7.62 9.40 9.14 407 Narcotic Treatment Program ...... 0.38 0.33 0.38 0.36 16 Chemical Manufacturer ...... 0.11 0.11 0.10 0.11 5

10 The estimated production cost is the sum of the Collections, April 13, 2020, https:// 11 82 FR 9339. estimated production cost for each of the forms. www.reginfo.gov/public/do/PRAMain (accessed 12 The average annual number of applications Office of Information and Regulatory Affairs, April 13, 2020). See Paperwork Reduction Act from 2017 to 2019 is 636,097. 636,097 × 0.7 percent Inventory of Currently Approved Information section below for specific OMB control numbers. = 4,453.

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TABLE 1—PERCENTAGE AND NUMBER OF PAPER REGISTRATIONS BY BUSINESS ACTIVITY—Continued

2017 2018 2019 Average Number of Business activity (percent) (percent) (percent) (percent) registrations

Chemical Importer ...... 0.06 0.02 0.03 0.04 2 Chemical Distributor ...... 0.13 0.10 0.13 0.12 5 Chemical Exporter ...... 0.03 0.04 0.09 0.05 2

Total ...... 100.00 100.00 100.00 100.00 4,453 (Source: DEA)

As this proposed rule affects all affect small entities in a wide variety of affected by the proposed rule. Most DEA business activities that are required to industries. Table 2 indicates the sectors, registrants are, or are employed by, obtain a registration with DEA pursuant as defined by the North American small entities under Small Business to the CSA, this proposed rule would Industry Classification System (NAICS), Administration (SBA) standards.

TABLE 2—INDUSTRIAL SECTORS OF DEA REGISTRANTS

Business Activity NAICS Code NAICS Code Description

Manufacturer ...... 325411 Medicinal and Botanical Manufacturing. 325412 Pharmaceutical Preparation Manufacturing. Distributor, Importer, Exporter ...... 424210 Drugs and Druggists’ Sundries Merchant Wholesalers. Reverse Distributor ...... 5621 Waste Collection. 5622 Waste Treatment and Disposal. Pharmacy ...... 445110 Supermarkets and Other Grocery (except Convenience) Stores. 446110 Pharmacies and Drug Stores. 452210 Department Stores. 452311 Warehouse Clubs and Supercenters. Analytical Labs ...... 541380 Testing Laboratories. Teaching institute ...... 611310 Colleges, Universities and Professional Schools. Researcher ...... 541715 Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology). Canine Handler ...... 561612 Security Guards and Patrol Services. Practitioner, Mid-level Practitioner,* Nar- 541940 Veterinary Services. cotic Treatment Program, Hospital/Clin- ic. 621111 Offices of Physicians (except Mental Health Specialists). 621112 Offices of Physicians, Mental Health Specialists. 621210 Offices of Dentists. 621330 Offices of Mental Health Practitioners (except Physicians). 621391 Offices of Podiatrists. 621420 Outpatient Mental Health and Substance Abuse Centers. 621491 HMO Medical Centers. 621493 Freestanding Ambulatory Surgical and Emergency Centers. 622110 General Medical and Surgical Hospitals. 622210 Psychiatric and Substance Abuse Hospitals. 622310 Specialty (except Psychiatric and Substance Abuse) Hospitals. Chemical Manufacturer ...... 325 Chemical Manufacturing. Chemical Distributor, Chemical Importer, 424690 Other Chemical and Allied Products Merchant Wholesalers. Chemical Exporter. * Practitioners and mid-level practitioners are generally employed in one of these industries.

As shown in Table 2, the proposed (i.e., 446110-Pharmacies and Drug average annual revenue for the smallest rule would affect a wide variety of Stores, 622110-General Medical and of small businesses in each industry entities across many industry sectors. Surgical Hospitals, etc.), this proposed sector. The table below lists the results. As some industry sectors are expected rule is expected to affect some small to consist primarily of DEA registrants entities. For reference, Table 3 lists the

TABLE 3—AVERAGE ANNUAL REVENUE OF SMALLEST OF SMALL ENTITIES

Enterprise Average NAICS code NAICS code description size Number of revenue per (number of establishments establishment employees) ($)

325 ...... Chemical Manufacturing ...... 0–4 3,148 1,938,546 325411 ...... Medicinal and Botanical Manufacturing ...... 0–4 108 727,444 325412 ...... Pharmaceutical Preparation Manufacturing ...... *5–9 129 2,639,287 424210 ...... Drugs and Druggists’ Sundries Merchant Wholesalers ...... 0–4 3,630 1,367,131

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TABLE 3—AVERAGE ANNUAL REVENUE OF SMALLEST OF SMALL ENTITIES—Continued

Enterprise Average size Number of revenue per NAICS code NAICS code description (number of establishments establishment employees) ($)

424690 ...... Other Chemical and Allied Products Merchant Wholesalers ...... 0–4 3,352 2,007,996 445110 ...... Supermarkets and Other Grocery (except Convenience) Stores ...... 0–4 23,710 453,787 446110 ...... Pharmacies and Drug Stores ...... 0–4 6,360 1,069,655 452112 ...... Discount Department Stores ...... 0–4 6 266,167 452910 ...... Warehouse Clubs and Supercenters ...... 0–4 12 326,333 541380 ...... Testing Laboratories ...... 0–4 2,415 297,737 541712 ...... Research and Development in the Physical, Engineering, and Life 0–4 5,013 427,790 Sciences (except Biotechnology). 541940 ...... Veterinary Services ...... 0–4 8,881 292,166 561612 ...... Security Guards and Patrol Services ...... 0–4 2,162 114,198 5621 ...... Waste Collection ...... 0–4 3,853 365,902 5622 ...... Waste Treatment and Disposal ...... 0–4 616 461,159 611310 ...... Colleges, Universities, and Professional Schools ...... 0–4 372 913,078 621111 ...... Offices of Physicians (except Mental Health Specialists) ...... 0–4 95,648 447,715 621112 ...... Offices of Physicians, Mental Health Specialists ...... 0–4 8,980 253,837 621210 ...... Offices of Dentists ...... 0–4 50,781 330,868 621320 ...... Offices of Optometrists ...... 0–4 10,939 269,348 621330 ...... Offices of Mental Health Practitioners (except Physicians) ...... 0–4 16,149 145,005 621391 ...... Offices of Podiatrists ...... 0–4 5,300 288,546 621420 ...... Outpatient Mental Health and Substance Abuse Centers ...... 0–4 1,810 211,249 621491 ...... HMO Medical Centers ...... * 5–9 16 620,188 621493 ...... Freestanding Ambulatory Surgical and Emergency Centers ...... 0–4 1,011 549,974 622110 ...... General Medical and Surgical Hospitals ...... 0–4 39 10,621,308 622210 ...... Psychiatric and Substance Abuse Hospitals ...... * 20–99 27 5,142,444 622310 ...... Specialty (except Psychiatric and Substance Abuse) Hospitals ...... 0–4 21 8,561,238 * The revenue figure for the smallest size category is unavailable. The revenue figure for the smallest size category with available revenue fig- ure is used.

There are no new costs associated the qualitative cost savings discussion Therefore, this proposed rule, if with this proposed rule. The labor below. promulgated, will not have a significant burden to submit an application is DEA anticipates there will be cost economic impact on a substantial estimated to be the same for electronic savings associated with electronic number of small entities. and paper submissions. No special submissions. Some cost savings are Unfunded Mandates Reform Act of 1995 software is needed to complete an described qualitatively and some are In accordance with the Unfunded online application via DEA’s public quantified. Many paper applications Mandates Reform Act of 1995 website. Furthermore, all applicants, submitted contain illegible or erroneous (UMRA),14 DEA has determined that information or omit required including the estimated 0.7 percent of this action would not result in any information. Many such errors or applicants using paper forms, are Federal mandate that may result ‘‘in the omissions, such as not including a assumed to be able to access the internet expenditure by State, local, and tribal signature or paying the wrong amount, without incurring additional costs. DEA governments, in the aggregate, or by the require DEA to contact applicants to believes using email for contact is private sector, of $100,000,000 or more correct or clarify the information in the indicative of having internet access. (adjusted annually for inflation) in any paper form, consuming DEA’s and the Although the applicant’s contact email 1 year.’’ Therefore, neither a Small address is an optional field on a paper applicant’s time and resources. Government Agency Plan nor any other registration application, virtually all Electronic submissions are expected to action is required under the UMRA. virtually eliminate the requirement for applications submitted include contact DEA to contact applicants for Paperwork Reduction Act email addresses.13 Although online clarifications of form data or correction applications are available at no This proposed rule would modify of submission errors, as validation existing collection(s) of information additional cost, DEA acknowledges features in the system will flag common some applicants have a preference for requirement under the Paperwork errors prior to transmission. As DEA has 15 paper forms. DEA does not have a basis Reduction Act (PRA). Pursuant to the not tracked the number of delays or the PRA,16 DEA has identified the to quantify this preference; however, duration of such delays, DEA does not collections of information below related DEA believes any costs associated with have a basis to quantify the cost savings. to this proposed rule. A person is not eliminating this preference is offset by Furthermore, this proposed rule required to respond to a collection of would eliminate the need to print paper information unless it displays a valid 13 Based on a review of applications submitted OMB control number.17 from January 2020 to March 2020, there were 307 forms and transmit by mail or courier applications for initial registrations submitted using service. DEA estimates there will be a the paper form. Six of those 307 applications did cost savings of $0.63 ($0.55 for postage 14 2 U.S.C. 1501, et seq. not contain a contact email address. Including the plus $0.08 for an envelope) per each 15 44 U.S.C. 3501–3521. 16 online applications, six of 30,509 applications for paper form not submitted. DEA assumes 44 U.S.C. 3507(d). new registrations over the three month period, 17 Copies of existing information collections January-March 2020, did not contain email the cost savings associated with approved by OMB may be obtained at http:// addresses. eliminating printing costs is negligible. www.reginfo.gov/public/do/PRAMain.

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A. Collections of Information Associated Administration’s receipt of applications DEA through the DEA Diversion Control With the Proposed Rule in a more timely and organized manner. Diversion secure network (available on 1. Title: Application for Registration- DEA estimates the following number the DEA Diversion Control Division DEA 224, Application of Registration of respondents and burden associated website). The online submission of new Renewal-DEA 224A. with this collection of information: and renewal applications through the OMB Control Number: 1117–0014. • Number of respondents: 16,338 secure database will ensure the Form Number: DEA–224/224a. • Frequency of response: 1 Administration’s receipt of applications DEA is proposing to amend its • Number of responses: 16,338 in a more timely and organized manner. regulations for all new and renewal • Burden per response (hour): DEA estimates the following number registration applications to implement 0.199106 19 of respondents and burden associated the requirement of online submission • Total annual hour burden: 3,253 with this collection of information: through the DEA Diversion Control 3. Title: Application for Registration • Number of respondents: 1,001 Division website. This amendment (DEA Form 363) and Application for • Frequency of response: 1 would improve the submission process Registration Renewal (DEA Form 363a). • Number of responses: 1,001 by aligning it with the Administration’s OMB Control Number: 1117–0015. • Burden per response (hour): current requirements for other online Form Number: DEA–363/363a. 0.182817 21 form submissions. The online DEA is proposing to amend its • Total annual hour burden: 183 regulations for all new and renewal submission of DEA Forms 224/224a by B. Request for Comments Regarding the registration applications to implement a Retail Pharmacy, Hospital/Clinic, Proposed Collections of Information Practitioner, Teaching Institution, or the requirement of online submission. Mid-Level Practitioner would be filed This amendment would clarify the Written comments and suggestions with DEA through the DEA Diversion submission process by aligning it with from the public and affected entities Control Division secure network the Administration’s current concerning the proposed collections of (available on the DEA Diversion Control requirements for other online form information are encouraged. Under the Division website). The online submissions. The electronic submission PRA, DEA is required to provide a submission of new and renewal of DEA Forms 363/363a by a Narcotic notice regarding the proposed applications through the secure Treatment Program would be filed with collections of information in the FR database will ensure the DEA through the DEA Diversion Control with the notice of proposed rulemaking Administration’s receipt of applications Diversion secure network (available on and solicit public comment. Pursuant to in a more timely and organized manner. the DEA Diversion Control Division the PRA,22 DEA solicits comments on DEA estimates the following number website). The online submission of new the following issues: of respondents and burden associated and renewal applications through the • Whether the proposed collection of with this collection of information: secure database will ensure the information is necessary for the proper • Number of respondents: 617,086. Administration’s receipt of applications performance of the functions of DEA, • Frequency of response: 1. in a more timely and organized manner. including whether the information will • Number of responses: 617,086. DEA estimates the following number have practical utility. • 18 Burden per response: 0.202186 of respondents and burden associated • The accuracy of DEA’s estimate of • Total annual hour burden: 124,766. with this collection of information: the burden of the proposed collection of 2. Title: Application for Registration • Number of respondents: 1,900 information, including the validity of (DEA Form 225); Application for • the methodology and assumptions used. Frequency of response: 1 • Registration Renewal (DEA Form 225a); • Number of responses: 1,900 Recommendations to enhance the Affidavit for Chain Renewal (DEA Form • Burden per response: 0.187895 20 quality, utility, and clarity of the 225B). • Total annual hour burden: 357 information to be collected. OMB Control Number: 1117–0012. • Recommendations to minimize the 4. Title: Application for Registration Form Number: DEA–225/225(A). burden of the collection of information Under Domestic Chemical Diversion DEA is proposing to amend its on those who are to respond, including Control Act of 1993 and Renewal regulations for all new and renewal through the use of automated collection Application for Registration under registration applications to implement techniques or other forms of information Domestic Chemical Diversion Control the requirement of electronic only technology. Act of 1993. submission. This amendment would All comments concerning collections clarify the submission process by OMB Control Number: 1117–0031. Form Number: DEA 510/510a. of information under the PRA must be aligning it with the Administration’s DEA is proposing to amend its submitted to the Office of Information current requirements for other online regulations for all new and renewal and Regulatory Affairs, OMB, Attention: form submissions. The online registration applications to implement Desk Officer for the Department of submission of DEA Forms 225/225a by the requirement of online submission. Justice, Washington, DC 20503. Please Manufacturer, Distributor, Researcher, This amendment would clarify the state that your comments refer to RIN Canine Handler, Analytical Laboratory, submission process by aligning it with 1117–0014, 1117–0012, 1117–0015, or Importer, or Exporter would be filed the Administration’s current 1117–0031/Docket No. DEA–587. All with DEA through the DEA Diversion requirements for other form comments must be submitted to OMB Control Diversion secure network submissions. The electronic submission on or before March 8, 2021. The final (available on the DEA Diversion Control of DEA Forms 510/510a by a Domestic rule will respond to any OMB or public Division website). The online Chemical Handler would be filed with comments on the information collection submission of new and renewal requirements contained in this proposed applications through the secure 19 Calculated based on total annual hour burden rule. database will ensure the and the number of respondents (3,253/16,338 = 0.199106). 21 Calculated based on total annual hour burden 18 Calculated based on total annual hour burden 20 Calculated based on total annual hour burden and the number of respondents (183/1,001 = and the number of respondents (124,766/617,086 = and the number of respondents (357/1,900 = 0.182817). 0.202186). 0.187895). 22 44 U.S.C. 3506(c)(2).

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If you need a copy of the proposed registration. DEA Forms 224a, 225a, and § 1309.32 Application forms; contents; information collection instrument(s) 363a may be obtained online at signature. with instructions or additional www.DEAdiversion.usdoj.gov. Only (a) Any person who is required to be information, please contact the applications submitted online through registered pursuant to § 1309.21 and is Regulatory Drafting and Policy Support the secure application portal on DEA’s not so registered, shall apply on DEA Section (DPW), Diversion Control website will be accepted for processing. Form 510 using the secure application Division, Drug Enforcement * * * * * portal at www.DEAdiversion.usdoj.gov. Administration; Mailing Address: 8701 ■ 3. Amend § 1301.14 by: (b) Any person who is registered Morrissette Drive, Springfield, Virginia ■ a. Revising paragraph (a); pursuant to Section 1309.21, shall apply 22152; Telephone: (571) 362–3261. for reregistration on DEA Form 510a ■ b. Removing paragraph (b); using the secure application portal at List of Subjects ■ c. Redesignating paragraphs (c) and www.DEAdiversion.usdoj.gov. (d) as paragraphs (b) and (c); and 21 CFR Part 1301 (c) DEA Forms 510 and 510a may be ■ d. Revising newly redesignated Administrative practice and obtained online at paragraph (b). procedure, Drug traffic control, Security www.DEAdiversion.usdoj.gov. DEA will measures. The revisions read as follows: send renewal notifications via email to registrants approximately 60 days prior 21 CFR Part 1309 § 1301.14 Filing of application; acceptance for filing; defective applications. to their registration expiration date. Administrative practice and Registrants are responsible for keeping (a) All applications for registration procedure, Drug traffic control, Exports, their email address current in the secure shall be submitted for filing online Imports, Security measures. application portal on DEA’s website using the secure application portal at throughout the duration of their 21 CFR Part 1321 www.DEAdiversion.usdoj.gov. registration. Only applications Administrative practice and (b) Application submitted for filing submitted online through the secure procedure. are dated by the system upon receipt. If application portal on DEA’s website will For the reasons stated in the found to be complete, the application be accepted for processing. preamble, DEA proposes to amend 21 will be accepted for filing. Applications failing to comply with the requirements * * * * * CFR parts 1301 and 1309 as follows: ■ of this part will be rejected by the 7. Revise § 1309.33 to read as follows: PART 1301—REGISTRATION OF system, with the applicate receiving § 1309.33 Filing of application; joint filings. MANUFACTURERS, DISTRIBUTORS, error messages at the time of All applications for registration shall AND DISPENSERS OF CONTROLLED application. be submitted online at SUBSTANCES * * * * * www.DEAdiversion.usdoj.gov for filing. The appropriate registration fee and any ■ 1. The authority citation for part 1301 PART 1309—REGISTRATION OF required attachments must accompany continues to read as follows: MANUFACTURERS, DISTRIBUTORS, the application. IMPORTERS AND EXPORTERS OF Authority: 21 U.S.C. 821, 822, 823, 824, ■ 8. Amend § 1309.34 by revising 831, 871(b), 875, 877, 886a, 951, 952, 956, LIST I CHEMICALS 957, 958, 965 unless otherwise noted. paragraph (a) to read as follows: ■ 4. The authority citation for part 1309 ■ 2. In § 1301.13, revise paragraphs § 1309.34 Acceptance for filing; defective continues to read as follows: (e)(2) and (3) to read as follows: applications. Authority: 21 U.S.C. 802, 821, 822, 823, (a) Applications submitted for filing § 1301.13 Application for registration; time 824, 830, 871(b), 875, 877, 886a, 952, 953, are dated upon receipt. If the for application; expiration date; registration 957, 958. for independent activities; application application is found to be complete, the forms, fees, contents and signature; ■ 5. Revise § 1309.12 to read as follows: application will be accepted for filing. coincident activities. Applications failing to comply with the § 1309.12 Time and method of payment; requirements of this part will not be * * * * * refund. (e) * * * accepted for filing. (2) DEA Forms 224, 225, and 363 may (a) For each application for * * * * * be obtained online at registration or reregistration to www.DEAdiversion.usdoj.gov. Only manufacture, distribute, import, or PART 1321—DEA MAILING applications submitted online through export the applicant shall pay the fee ADDRESSES the secure application portal on DEA’s when the application for registration or reregistration is submitted for filing ■ 9. The authority citation for part 1321 website will be accepted for processing. continues to read as follows: (3) DEA will send renewal online using the secure application notifications via email to registrants portal at www.DEAdiversion.usdoj.gov. Authority: 21 U.S.C. 871(b). approximately 60 days prior to their (b) Payment shall be made online by ■ 10. Amend § 1321.01 by revising the registration expiration date. Registrants credit card at the time of submission table heading and the entry under ‘‘DEA are responsible for keeping their email using the secure application portal at Registration Section’’ to read as follows: address current in the secure www.DEAdiversion.usdoj.gov. application portal on DEA’s website ■ 6. In § 1309.32, revise paragraphs (a) § 1321.01 DEA mailing addresses. throughout the duration of their through (c) to read as follows: * * * * *

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TABLE 1 TO § 1321.01—DEA MAILING ADDRESSES

Code of Federal Regulations Section—Topic DEA mailing address

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DEA Registration Section

1301.03—Procedures information request (controlled substances reg- Drug Enforcement Administration, Attn: Registration Section/DRR, P.O. istration). Box 2639, Springfield, VA 22152. 1301.18(c)—Research project controlled substance increase request ... 1301.51—Controlled substances registration modification request ...... 1301.52(b)—Controlled substances registration transfer request. 1301.52(c)—Controlled substances registration discontinuance of busi- ness activities notification. 1309.03—List I chemicals registration procedures information request. 1309.61—List I chemicals registration modification request.

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* * * * * justify reopening of closed probate I. Executive Summary estates. The proposed revisions would II. Background Timothy J. Shea, also enhance OHA’s processing by III. Proposed Resolution to Issues Identified Acting Administrator. adding certainty as to how estates in ANPRM and Response to Comments [FR Doc. 2020–28532 Filed 1–6–21; 8:45 am] on the ANPRM should be distributed when certain A. Issue 1: Gaps in AIPRA Intestacy BILLING CODE 4410–09–P circumstances arise that are not Distribution addressed in the statute. B. Issue 2: Overly Burdensome ‘‘Purchase DATES: Submit written comments by at Probate’’ Process DEPARTMENT OF THE INTERIOR March 8, 2021. A Tribal consultation C. Issue 3: Notice to Co-Owners Who Are session will be held on February 9, Potential Heirs Bureau of Indian Affairs D. Issue 4: Insufficient Trust Funds for 2021, at 2 p.m. Eastern Time and a Funeral Services public hearing will be held on February 25 CFR Part 15 E. Issue 5: No Regulatory Process for 11, 2021, at 2 p.m. Eastern Time (see Exercise of ‘‘Tribal Purchase’’ Option Section V in the SUPPLEMENTARY F. Issue 6: Minor Estate Inventory Office of the Secretary INFORMATION for details). Corrections G. Issue 7: Judicial Authority ADDRESSES: 43 CFR Part 30 You may submit comments H. Issue 8: Indian Status Determinations by any one of the following methods: I. Issue 9: Increase Opportunities To Use [212A2100DD/AAKC001030/ • Federal Rulemaking Portal: ‘‘Renunciation’’ To Maintain Trust A0A501010.999900 253G] www.regulations.gov. The rule is listed Status of Property RIN 1094–AA55 under Agency Docket Number DOI– J. Issue 10: Presumption of Death 2019–0001. K. Issue 11: Reopening Closed Probate American Indian Probate Regulations • Email: Tribes may email comments Cases to: [email protected]. All others L. Issue 12: Streamlining Process for Small AGENCY: Estates Bureau of Indian Affairs, Office should email their comments to: of the Secretary, Interior. M. Issue 13: Descent of Off-Reservation [email protected]. Lands ACTION: Proposed rule. • Mail or Courier: Ms. Elizabeth IV. Overview of Proposed Rule Appel, Office of Regulatory Affairs & A. Summary of Proposed Changes SUMMARY: The Department of the Collaborative Action, U.S. Department B. Crosswalk of Current Regulation to Interior (Department) is updating of the Interior, 1849 C Street NW, Mail Proposed Regulation regulations governing probate of Stop 4660 MIB, Washington, DC 20240. V. Tribal Consultation and Public Hearing property that the United States holds in We cannot ensure that comments VI. Procedural Requirements trust or restricted status for American received after the close of the comment A. Regulatory Planning and Review (E.O. Indians. Since the regulations were last 12866 and 13563) period (see DATES) will be included in revised in 2008, the Department B. Reducing Regulations and Controlling the docket for this rulemaking and Regulatory Costs (E.O. 13771) identified opportunities for improving considered. Comments sent to an the probate process. These proposed C. Regulatory Flexibility Act address other than those listed above D. Small Business Regulatory Enforcement revisions would allow the Office of will not be included in the docket for Fairness Act Hearings and Appeals (OHA) to this rulemaking. Locations of the Tribal E. Unfunded Mandates Act adjudicate probate cases more consultation session and public hearing F. Takings (E.O. 12630) efficiently by, among other things, are listed in Section V of this rule. G. Federalism (E.O. 13132) establishing an expedited process for H. Civil Justice Reform (E.O. 12988) small, funds-only estates, reorganizing FOR FURTHER INFORMATION CONTACT: I. Consultation With Indian Tribes (E.O. the purchase-at-probate process so that Elizabeth K. Appel, Director, Office of 13175) estates may be closed more quickly, Regulatory Affairs & Collaborative J. Paperwork Reduction Act Action—Indian Affairs, K. National Environmental Policy Act streamlining notice to co-owners who L. Effects on the Energy Supply (E.O. are potential heirs while adding [email protected], (202) 273– 4680. 13211) electronic notice to all by website M. Clarity of This Regulation posting, and specifying which reasons SUPPLEMENTARY INFORMATION: N. Public Availability of Comments

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I. Executive Summary current issues in the existing regulations process in a manner that eliminates the This proposed rule would update and sought input, through an advance need to keep probate cases open while regulations that address how OHA notice of proposed rulemaking providing certainty as to who the heirs probates property that the United States (ANPRM), on where improvements may and devisees are and what interests they holds in trust or restricted status for be made through regulatory change. 84 have consented to selling before American Indians. In October 2019, the FR 58353 (October 31, 2019). The proceeding with the purchase at Department sought input on a number Department received six comment probate. The Department received comments of issues in the existing probate submissions in response to the ANPRM on two aspects of the purchase at regulations through an advance notice and addresses them, issue by issue, in probate issue, as follows: of proposed rulemaking (ANPRM). 84 Section III. Section III also discusses FR 58353 (October 31, 2019). The how the proposed rule addresses issues 1. Notice to Co-Owners of a Purchase at Department reviewed and considered identified in the ANPRM. Through the Probate process of evaluating the responses and the input and developed this proposed Current regulations provide that OHA rule to improve the probate process. further examining the current regulations, the Department identified will provide notice that it has received These proposed revisions would allow a written request to purchase at probate OHA to adjudicate probate cases more additional changes that could improve current processes, which the proposed to certain parties by mail, and other efficiently by, among other things, parties by posting. See § 30.165. Co- establishing an expedited process for rule also incorporates. Section IV provides an overview of all the changes owners of property in the estate are small, funds-only estates, reorganizing eligible purchasers, and under the the purchase-at-probate process so that this proposed rule would make to the current regulations. current regulations, receive notice of a estates may be closed more quickly, request to purchase at probate through streamlining notice to co-owners who III. Proposed Resolution to Issues a posted notice. The ANPRM suggested are potential heirs, and specifying Identified in ANPRM and Response to instead requiring notice of a request to which reasons justify reopening of Comments on the ANPRM purchase at probate by mail to any co- closed probate estates. The proposed owners who have submitted prior notice A. Issue 1: Gaps in AIPRA Intestacy revisions would also enhance OHA’s to the BIA that they want to receive Distribution processing by adding certainty as to notice of probates involving specified how estates should be distributed when AIPRA sets out how a decedent’s allotments. certain circumstances arise that are not estate should be distributed when a The proposed rule’s approach to addressed in the statute. decedent dies without a will (i.e., purchase at probate requires OHA to intestate) at 25 U.S.C. 2206(a), but fails provide notice of a pending purchase II. Background to account for how trust personalty request in the probate decision. See The Department probates thousands (including trust funds) should be proposed § 30.408. The current of estates each year for American Indian distributed under two circumstances regulations include a provision individuals who own trust or restricted when there are no eligible family heirs requiring OHA to mail or deliver notice property. The Bureau of Indian Affairs under AIPRA: (1) The estate contains of the probate decision to interested (BIA), OHA, and the Office of the trust personalty but no trust real parties. See § 30.237. That provision is Special Trustee for American Indians property; and (2) more than one Tribe unchanged by the proposed rule, so (OST) each play a role in the probate has jurisdiction over trust real property interested parties will receive notice of process. BIA compiles the information in the estate. No comments were the purchase at probate request in the necessary to build a case record (i.e., the received on this issue in response to the probate decision; however, the proposed probate file) and then transfers the ANPRM. The proposed rule addresses rule revises the definition of ‘‘interested record to OHA for a judge to adjudicate this issue by adding a new § 30.507 to party’’ to exclude anyone who may or and issue a final probate decision. In clarify how trust personalty is will inherit solely as a co-owner of an accordance with the final probate distributed in these circumstances. allotment. See proposed § 30.101. decision, OST distributes trust funds Another proposed revision allows B. Issue 2: Overly Burdensome from the estate and BIA distributes the anyone who may or will inherit solely ‘‘Purchase at Probate’’ Process trust or restricted real property. as a co-owner of an allotment to obtain After the American Indian Probate AIPRA authorizes certain ‘‘eligible notice by filing a request for such notice Reform Act (AIPRA) was enacted in purchasers’’ to purchase trust and with regard to any allotment they 2004, the Department codified restricted interests in a parcel of land in identify. See proposed § 30.114 implementing regulations at 25 CFR part the decedent’s estate under certain The proposed rule would also 15 for the BIA and OST portions of the circumstances. See 25 U.S.C 2206(o). eliminate posting of notices of purchase probate process and at 43 CFR part 30 The current regulations set out this requests because posting adds for the OHA adjudication process. 73 FR ‘‘purchase at probate’’ process at 43 CFR significant time to the purchase process, 67255 (November 13, 2008); 76 FR part 30, subpart G, but the process has while resulting in few, if any, co-owner 45198 (July 28, 2011). In 2016 and 2017, proven to be unwieldy because it requests to purchase. (Note, however, BIA reached out to Tribes for input on requires the estate to be kept open that notices of the hearing are still how the probate process was working, indefinitely during the purchase at posted, so any interested co-owner may hosting a Tribal listening session in probate process and requires completion choose to participate in the hearing). Spokane, Washington, on June 27, 2016, of the purchase at probate before issuing The revisions would work to reserve hosting two Tribal consultation the final probate decision. This in turn notice to co-owners only for situations teleconference sessions on July 12 and requires OHA to make provisional in which a co-owner has requested to 13, 2016, and accepting written determinations of heirs or devisees receive notice, while continuing to meet comment through January 4, 2017. More (creating the possibility of having to re- due process requirements and reducing recently, in an effort to streamline the do the already-lengthy process). The complexities in the probate process. process and benefit Indian heirs and proposed rule addresses this issue by Comment: The revision would devisees, the Department identified overhauling the purchase at probate eliminate the right of eligible purchasers

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(co-owners) to notice when OHA Comment: Elimination of purchase at proceeding, unless they have previously receives a request to purchase at probate probate of mineral interests-only filed a request for notice with BIA or and would place the onus on the co- interests is adverse to and limits the OHA. This proposed rule includes that owners to provide notice that they wish rights of Tribes. Consult with Tribes and provision at § 30.114 and provides that to be told of purchase offers. explain why valuation does not provide public notice will continue to be posted. Response: Co-owners may purchase fair market value of minerals-only Comment: Owners are entitled to due interests in the allotment at any time: interest and why the ‘‘OVS valuation’’ process in the form of notice sent by Before probate (with the consent of the cannot be the basis for an appraisal. first class mail, but the ANPRM would interest owner), during probate (through Instead of eliminating purchase at instead require potential heirs to notify purchase at probate, only if consent is probate, regulations could address BIA of their wish to be notified when given by the heir or devisee who would whatever issues may have been they become a potential heir. otherwise inherit the interest and all identified with the OVS–DME Response: This comment suggests a requirements are met to permit a judge valuations. concern that a co-owner may be to approve the purchase at probate), or Response: There is no statutory deprived of an opportunity to testify at after probate (with the consent of the requirement for approval of a purchase hearing about his/her right to receive a new interest owner). Given that the co- at probate or providing anyone with a share of the decedent’s estate if the co- owner may purchase interests in the right to purchase at probate; rather, a owner does not receive notice of the allotment at any time, and must always judge decides in any given case whether hearing by mail. Co-owners are only obtain the consent of another party to do to allow a purchase at probate. In cases potential heirs in the circumstance in so, removing notice by posting of where a judge decides to allow a which there are no eligible family heirs another purchase offer during probate purchase at probate, the statute requires and no Tribe with jurisdiction. Co- does not harm the co-owner in any way. that the judge ensure the purchase is for owners rarely know the decedent or If the co-owner would like to receive at least fair market value. In cases in decedent’s family and therefore rarely have information to assist the judge notice of a purchase at probate offer on which the mineral and surface estates with the determination of heirs. The the allotment, the co-owner may request are not separated, appraisals of the only relevant testimony of most co- such notice and receive it directly, by combined surface and mineral estate are owners would involve the legal question mail. relied upon for fair market value. In cases where there is no surface estate, as to whether a Tribe has jurisdiction Comment: OHA must be required to the ‘‘OVS valuations’’ do not reflect the over property. If a co-owner has the notify co-owners by mail of an open fair market value of the real property. resources to develop and present a legal period for registering their desire to be Those valuations nearly always estimate argument as to whether a Tribe has notified of a purchase at probate offer. the minerals-only interests at zero jurisdiction over a property, it should Response: Establishing an open dollars; therefore, the proposed rule not be a burden on that co-owner to take period for registering a desire to be would provide that no interest of a the step of notifying the BIA of a desire notified would unnecessarily limit the minerals-only property may be to be notified by mail of probates time for co-owners to state their desire purchased at probate on the basis of the involving the property. Additionally, to be notified. At any time, co-owners value of the minerals themselves. The the proposed rule provides that notice may request to be notified in writing in proposed rule does not entirely will be posted on OHA’s website, and the event any request to purchase is foreclose the opportunity to purchase a still provides for physical posting of submitted for the property. minerals-only interest at probate, notice of a probate hearing, unless Additionally, requiring notification to however. The proposed rule would physical posting was not possible due to co-owners by mail of an open period for provide that purchase of a minerals-only one of the listed circumstances. registering their desire to be notified of real property interest may be considered Comment: The proposed change a purchase at probate offer would make for purchase at probate if sufficient could result in unconstitutional takings the process less, rather than more, evidence of the fair market value of the and extinguishes the fiduciary efficient. real property interest (rather than the responsibility of the Department to co- 2. Elimination of Purchase at Probate of value of the minerals themselves) is owners. Response: Providing notice of a Minerals-Only Interests submitted. probate hearing through posting in lieu Allotments contain both surface C. Issue 3: Notice to Co-Owners Who of mailing does not result in any takings interests and minerals interests. In some Are Potential Heirs because the co-owner is not at risk of circumstances, the surface interests and The current regulations require OHA losing any property interest. While the minerals interests have been severed to provide all interested parties— co-owner has an ownership interest in from each other. As a result, a including co-owners, when they are the allotment, the co-owner does not decedent’s estate may contain real potential heirs—with mailed notice of own the specific fractional property property interests that are referred to as probate proceedings. See § 30.114. Co- interest being probated. If the co-owner ‘‘minerals-only’’ interests. Purchasers owners may be potential heirs in one will be inheriting a share of that sometimes seek to purchase those circumstance: If a decedent dies without property interest (as the only eligible minerals-only interests from the estate. any eligible person heirs as listed in heir because there are no other heirs and The current probate regulations state AIPRA’s order of succession, and there there is not a Tribe with jurisdiction that fair market value will be is no Tribe with jurisdiction over the over the allotment), then the co-owner determined by an appraisal or valuation allotment, then a surviving co-owner of will receive the interest through the method developed by the Secretary. See a trust or restricted interest in the inheritance. A co-owner may have the § 30.264. The Department is able to allotment may potentially be an ‘‘heir’’ option to purchase the interest— provide the fair market value of a real of last resort. The ANPRM suggested something co-owners are free to pursue property interest only via an appraisal. revising the regulations to state that at any time outside of the probate The Department is unable to perform potential heirs who may inherit solely context—or the fractional interest the appraisals for minerals-only interests at based on their status as co-owners will co-owner already owns may slightly this time. not receive mailed notice of a probate increase. There are limited situations in

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which co-owners may be considered plans to a consider addressing it in a § 30.250. Proposed revisions also potential heirs at the start of a case, but future rulemaking. address how OHA may direct the property interest being probated distribution of property that BIA F. Issue 6: Minor Estate Inventory ends up being distributed to another identifies as belonging to an estate after Corrections person or entity. For example, a will a probate decision is issued, and how may be submitted at the hearing, a At times, BIA determines after a OHA may address property that BIA person may credibly claim to be the probate decision has been issued that identifies as having been incorrectly decedent’s child and heir, or the judge trust or restricted property belonging to included in an estate. Anyone who is may rule that a Tribe does in fact have a decedent was either omitted from, or adversely affected may challenge the jurisdiction over an off-reservation incorrectly included in, the inventory of OHA distribution order by filing an allotment. In those situations, the judge an estate. Under the current regulations, appeal through a reconsideration retains the discretion, on a case-by-case such circumstances require multiple process, which is designed to be more basis, to mail notices and decisions to orders, including a modification order, expeditious than an appeal to IBIA. See all affected co-owners. For these from a judge. The current regulations proposed §§ 30.251–30.253. reasons, the proposed rule continues to also require that the modification order G. Issue 7: Judicial Authority take the approach of notifying most co- be appealable to the Interior Board of owners by posting, rather than mail. Indian Appeals (IBIA). As a result, it can The ANPRM suggested adding (For other changes to posting in general, take significant time to make minor provisions to the regulations to please see Section IV.A. ‘‘Summary of estate inventory corrections to include explicitly allow the OHA judge to order Proposed Changes’’ below). If concerns omitted property. both medical records and vital records remain about notice to co-owners, the The ANPRM suggested certain from State and local entities as needed, revisions to improve probate process Department requests additional and to issue interrogatories in cases efficiency and reduce the amount of information to identify the concern involving will contests. time for corrections of estate underlying this comment, given that the Comment: Judges should be provided inventories, by authorizing BIA to make co-owner will not be losing any rights. additional discovery powers to obtain minor estate inventory corrections or to basic facts about the cases. D. Issue 4: Insufficient Trust Funds for streamline the process that OHA follows Response: The Department has Funeral Services before issuing an inventory modification determined that a more comprehensive order. One such streamlining measure overhaul of judicial authority is The current regulations allow could involve an heir or devisee being whoever is responsible for making the required, and will consider addressing allowed to—prior to the exercise of an these issues in a future rulemaking. funeral arrangements on behalf of the IBIA appeal option—request that an decedent’s family to obtain up to $1,000 OHA judge reconsider a modification H. Issue 8: Indian Status Determinations from the decedent’s Individual Indian order, thus reducing the number of Under current probate regulations, a Money (IIM) account to pay for funeral cases that might result in such an IBIA probate decision must determine the services. See 25 CFR 15.301. Due to the appeal. Indian status of every heir or devisee. passage of time, this amount has proven Comment: Do not allow BIA to make But a determination of Indian status is to be insufficient. In addition, the inventory corrections because the often not necessary for a probate current regulations require a balance of current regulations protect rights that decision to be made. The ANPRM at least $2,500 in the decedent’s IIM were adjudicated through the original would require the probate decisions to account at the date of death in order for probate and the finality of a probate determine the Indian status of an heir or individuals to request the $1,000 decision provides clarity and certainty. devisee only when such a determination distribution. The Department sought, This change could result in a significant is necessary; for example, the but did not receive, comments on this increase of OHA caseload as eligible determination of Indian status may be ANPRM issue. The proposed rule would parties appeal erroneous or conflicted necessary in AIPRA cases involving a allow individuals to request up to decisions. It would be impossible to will and where the devisee is not a $5,000 from the decedent’s IIM account ensure equal standing for co-owners lineal descendant of the decedent. to pay for funeral services and would seeking redress from unilateral Comment: Require an Indian status eliminate the requirement for the IIM modifications. Also, ‘‘minor’’ and determination only for those individuals account to have a specific balance as of ‘‘corrections’’ are undefined, and any who stand to inherit as an heir or the date of death. This change would corrections must be treated as a devisee. recognize the increase in the cost of rehearing or reopening subject to Response: The proposed rule would funeral services since the $1,000 limit advance notice to existing co-owners, limit determinations of Indian status to was put in place, and would help to and no administrative action (e.g., those situations where such ensure that family members are able to distributing revenue to prospective new determinations are necessary for a pay such costs immediately. co-owner) should be imposed by the probate decision to be made. agency pending final appeal decision.. E. Issue 5: No Regulatory Process for I. Issue 9: Increase Opportunities To Use Exercise of ‘‘Tribal Purchase’’ Option Response: The proposed rule addresses the concerns expressed in the ‘‘Renunciation’’ To Maintain Trust The ANPRM highlighted that there comments about BIA making inventory Status of Property are currently no regulatory provisions corrections by allowing BIA to petition The current regulations allow an heir implementing the AIPRA authority for a OHA for a distribution order, but or devisee to renounce an inherited or Tribe with jurisdiction to purchase an leaving the decision as to whether and devised interest in trust or restricted interest in trust or restricted land if the how changes to an estate inventory property, but provide that the owner of the interest devises it to a non- affect distribution to the judge. The renunciation must take place before the Indian. See 25 U.S.C. 2205(c)(1)(A). The proposed rule would add a new section probate decision is made. (See 43 CFR Department did not receive any that specifically addresses typographical part 30, subpart H). Once a probate comments on this section, and is not and other non-substantive errors for decision is made, renunciation is not addressing it in this proposed rule, but correction by OHA. See proposed allowed. The current regulations allow

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petitions for rehearing to be filed within specifies that the presumption may be Comment: The rules are clear enough, 30 days of a probate decision being rebutted by evidence that establishes but the agency manipulates or ignores made but fail to list renunciation among that the person is still alive or explains the rules; clarify that the Department the bases for which an OHA judge may the individual’s absence in a manner may not act on its own volition. grant a rehearing. The ANPRM noted consistent with continued life rather Response: The rules are intended to that, where renunciations are available than death. establish consistency and predictability, at later stages, such as during a but judges have the flexibility to make rehearing, then individuals could K. Issue 11: Reopening Closed Probate judgments within the framework of the renounce to prevent property from going Cases rules. out of trust. The Department did not In separate areas of the current L. Issue 12: Streamlining Process for receive any comments on this issue. The regulations, a party may file a petition Small Estates proposed rule revises the renunciation for rehearing or a petition for reopening provisions to allow for renunciations at (see 43 CFR 30.240 and 30.125). A Current regulations require estates three additional times after the issuance petition for rehearing must be filed with trust property or trust funds in of a probate decision: Within 30 days within 30 days of the probate decision excess of $5,000 to be adjudicated by an from the mailing date of the decision; and the requirements for presenting new OHA decision maker through the formal before the entry of an order on evidence are specifically laid out. probate process involving a hearing: a rehearing, if a petition for rehearing is Petitions for reopening may be filed process that can be perceived as pending; or within 30 days of the much later with few limitations on the disproportionately time consuming for mailing date of the distribution order reasons for a reopening. The ANPRM small estates. Current regulations also that provides the heir or devisee with suggested revising the current establish a summary probate process— additional property. regulations to: (1) Limit the ability of a which allows for disposition of the estate without a formal hearing, by a J. Issue 10: Presumption of Death party who did not use the opportunity to participate in an initial probate judge or ADM, based on the probate file The probate process authorizes proceeding to later file a petition for alone—if the estate involves only cash of $5,000 or less on the date of death. OHA—in some circumstances—to reopening; and (2) in both rehearing and The ANPRM suggested increasing the determine whether a person is deceased. reopening proceedings, make clear the scope of estates that are subject to Proof of death is not always available. circumstances under which new OHA’s summary process, which does To facilitate the decision-making evidence may be presented. process, the current regulations allow not require a formal hearing (see 43 CFR Comment: Limit the number of times OHA to apply a presumption of death. part 30, subpart I), and/or determine an interested party or BIA may petition The current rule is that such a what would be considered a small estate for reopening. presumption may be made if there has and, for estates within that definition, been no contact with the absent person Response: The proposed rule includes create a streamlined distribution scheme for the last six years, dating back from limits on re-petitioning to ensure for such estates. the time of the hearing. The hearing finality of probate proceedings. Comment: Reject the change because does not always occur until well after a Comment: Reject limitations on eliminating hearings for simple estates probate file is sent by BIA to OHA, so petitions to reopen because individuals would undermine due process. the ANPRM suggested revising the fail to participate in probates for Response: Eliminating hearings for provisions in 43 CFR 30.124(b)(2), legitimate reasons. Probate judges small estates that include only minimal keeping the six-year rule but having it already have discretion to deny funds and no land or trust personalty date back from the last date of known petitions to reopen where they see fit. promotes due process by allowing faster contact with the absent person. As Response: It is true that probate resolution of pending probate cases. needed for practicality, these revisions judges already have discretion to deny However, in recognition of this could include exceptions and/or rules petitions to reopen where they see fit, commenter’s concern regarding limiting about what ‘‘known contact’’ entails but probate judges will usually deny hearings, the proposed rule takes a and/or how ‘‘known contact’’ is shown. petitions to reopen where an individual different approach from that suggested Comment: Exclude word-of-mouth had the opportunity to participate in an in the ANPRM. Rather than increasing and social media postings from initial probate proceeding and failed to the scope of estates subject to summary acceptable forms of contact, and limit to avail himself or herself of that probate proceedings as suggested in the tamper-proof forms of written or opportunity. If the individual received ANPRM, the proposed rule limits the timestamped recorded media that notice of the opportunity to participate estates that are subject to summary conform to requirement for ‘‘clear and in the probate proceeding, it is probate proceedings by lowering the convincing evidence’’ found at 43 CFR incumbent upon that individual to dollar threshold (from $5,000 to $300), 30.124. participate in the proceeding, notify while further streamlining the summary Response: The proposed rule does not OHA, or seek a rehearing within 30 probate process to allow estates to be exclude word-of-mouth and social days. If, as the commenter notes, the handled more efficiently in the media postings or otherwise limit what individual had a ‘‘legitimate reason’’ for summary probate process. Like the evidence of contact can be presented not participating, the individual should current regulations, the proposed because it is the judge’s role to weigh contact the court at that time or seek a summary probate process allows for the evidence and determine its rehearing within 30 days, rather than disposition of an estate by a judge or credibility, as the judge would with any wait until after the probate decision has ADM based on the probate file, without other evidence. The proposed rule lists become final. At some point, there a hearing. The proposal further specific evidence that will allow a judge needs to be finality in each probate streamlines the process by obviating the to presume that a missing person has proceeding, and subjecting probate need for notice prior to issuance of the died and presume the date of death, proceedings to being reopened probate decision through elimination of including specific evidence showing undermines that finality. As such, the option to convert the proceedings to that the person has been absent for at reopening should be reserved for only formal probate proceedings, elimination least 6 years. The proposed rule also the most necessary of circumstances. of consideration of claims against the

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estate, and extending the deadline for case sooner allows for distribution of The proposed rule also includes renouncing to 30 days after the mailing property more quickly and creates revisions to provide that, in addition to of the probate decision. The probate certainty in the determination of the mailing notice to heirs and devisees and decision under the proposed rule would heirs and devisees. Each open probate others listed in § 30.114, OHA will post then not only set out and explain the case has the potential to create ripple notice of formal probate proceedings on distribution, but provide instructions on effects of uncertainty as heirs and its website and physically post notice how to renounce or seek review of the devisees become decedents themselves. (unless physical posting is not possible decision. This proposal also promotes The Department recognizes both the due to one of the listed circumstances). due process by providing the financial and emotional toll open It also proposes to eliminate physical opportunity for anyone adversely probate cases take on families and, with posting for a hearing that will not be affected by the decision in a summary this proposed rule, aims to provide held in person and proposes to provide to file a request for review, but certainty for families and future better targeted locations for physical streamlines the process by allowing for generations more expeditiously. posting. reconsideration rather than de novo The current rule requires posting at review. A. Summary of Proposed Changes the agency with jurisdiction over the Comment: Develop, in consultation One way in which the proposed rule trust or restricted parcels in the estate with Tribes, a separate process for would accomplish the goal of and at five or more conspicuous places ‘‘micro estates’’ where value to be streamlining the probate process is by in the vicinity of the designated place of distributed is $100 or less, so value can overhauling the process and criteria for hearing (which is generally located in be distributed in less than 60 days. summary probate proceedings, to the area of the identified heirs or Where multiple heirs, allow heirs to establish a process for very small devisees). The proposed rule would relinquish their interests with a one- estates: Estates that contain no interests require OHA to post on its website, page notarized attestation. in trust or restricted land and that allowing notice to be available to all. Response: The proposed rule revises include only funds (no other trust These changes would accommodate the summary probate proceeding provisions personalty) of $300 or less. The increased use of telephonic and other to establish an expedited process for expedited process for these small estates alternatives to in-person hearings, small estates consisting only of funds of will allow OHA to adjudicate the cases which are occurring and are anticipated $300 or less. This threshold amount was based on the probate file alone, while to continue to occur as a result of identified as a natural dividing point allowing anyone adversely affected by technological advances. Posting notice based on data reflecting the amounts of the decision a limited time to seek on OHA’s website also establishes one probate estates. review. Other revisions that will help to location that is available for anyone to Comment: Object to change based on expedite resolution of probate cases access regardless of residency. The sense of equal treatment. If changes are include: proposed rule retains provisions for made, at a minimum, co-owners and • A revision so that the judge does some physical postings in addition to potential heirs should be granted not need to determine the status of mailed notice and the website posting. sufficient notice that this provision may eligible heirs or devisees as Indian in Specifically, the proposed rule allows be invoked only with an opportunity to every probate case, but only those in for physical posting at the home agency object. which that information is necessary; and at the agency with jurisdiction over the trust or restricted parcels in the Response: As proposed, all interested • A revision to eliminate the need to estate, if different from the home parties will receive notice of the provide mailed notice to co-owners who agency, but reduces from five to one the decision and anyone adversely affected would inherit only because of their number of conspicuous places in the will have the opportunity to seek status as co-owners if there were no vicinity of the hearing that notice must review. eligible family heirs and no Tribe with be physically posted. The proposed rule M. Issue 13: Descent of Off-Reservation jurisdiction; • further clarifies that if there is not an in- Lands A new provision allowing OHA to person hearing, then the posting in the The ANPRM noted that the current issue a correction order to correct non- conspicuous place in the vicinity of the regulations do not address the provision substantive and typographical errors hearing is not required. The proposed of AIPRA regarding descent of interests without reopening the probate case; • rule would also establish that OHA may in trust or restricted lands that are Revised processes for when it is proceed with a hearing even if physical located outside the boundaries of an discovered after issuance of a decision posting was not possible due to one of Indian reservation and are not subject to in a probate case that additional the listed circumstances. The the jurisdiction of a Tribe. See 25 U.S.C. property must be added to an estate Department specifically invites 2206(d)(2). The Department received no inventory or that property was comment on these changes, including: comments on this provision and will incorrectly included in the estate • Whether physical posting is consider addressing this issue in a inventory, including a process for effective in actually providing notice to future rulemaking. challenging these types of decisions potential parties who do not receive through reconsideration rather than IV. Overview of Proposed Rule mailed notice; appeal to the IBIA; • Whether locations for posting other The Department is proposing • Revisions to allow heirs and than the ones presented in the proposed revisions to existing regulations that are devisees to renounce their interests at rule would be more effective; unclear and/or create uncertainty and hearings (having their written • Whether posting would be more may lengthen the time it takes to declarations acknowledged before a effective using any method(s) other process probates. The proposed rule judge) and allowing them to renounce than, or in addition to, those presented aims to streamline probate processes, not just prior to issuance of the probate in the proposed rule; while providing due process, so that decision, but also within 30 days of the • Whether there should be physical probate cases may be closed and decision, upon rehearing, or when postings in more than one conspicuous distribution to heirs and devisees may additional property is added to the place in the vicinity of in-person occur more quickly. Closing the probate decedent’s estate. hearings (and if so, how many); and

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• Whether OHA should proceed with family heirs, and when there are either request is conveyed with an scheduling a hearing when it is only no land interests in the decedent’s estate encumbrance. able to mail notices and post notices on or there are land interests within the • If consent is needed for the its website, but the physical posting of jurisdiction of more than one Tribe. purchase, BIA holds off on ordering the additional notices is ‘‘not possible’’ (i.e., As mentioned in the prior section, the appraisal/valuation until at least one the agency office is closed or proposed rule would also overhaul the heir or devisee has filed the written inaccessible or extenuating purchase at probate process. The current notification that the heir or devisee circumstances exist preventing purchase at probate provisions are would consider selling the interest. • personnel from physically posting) and unwieldy in their fit with the formal BIA obtains the appraisal/valuation. • whether the definition of ‘‘extenuating probate proceedings and result in BIA files a Petition to Complete circumstances’’ is appropriate. probate cases being kept open Purchase at Probate, and OHA issues an The proposed rule would also clarify indefinitely while the purchase at Order to Submit Bids to all potential terminology and state what happens probate process, including appraisals/ bidders that includes the fair market when various eventualities arise, which valuations, continues. Additionally, value. • will help judges decisively address the because the current provisions require Anyone who may be affected by the issues and provide clarity for heirs and the purchase at probate to be completed determination of the fair market value devisees throughout the process. For before the probate decision is issued, may object to the fair market value example, the proposed rule would purchases at probate are completed stated in the Order to Submit Bids by delineate: filing a written objection with OHA • based on provisional heirs and devisees, That there is one probate which causes uncertainty and increases within 45 days. • ‘‘decision,’’ which results from the the chance of having to redo the OHA determines whether the bid is summary probate proceeding or formal already-lengthy process. The proposed successful based on whether the bid was probate proceeding, and all other rule would instead sequence the timely, equal to or greater than the fair written rulings issued by judges are purchase at probate process to allow the market value, and, when consent is ‘‘orders,’’ such as an order on rehearing, probate to be closed, while the purchase required for the purchase, the applicable an order on reopening, or a distribution at probate continues, as follows: heir, devisee, or surviving spouse order; • accepts the bid. • The evidence a judge may rely on The eligible purchaser may request • OHA notifies parties of the to presume that an individual has died to purchase at any time before the successful bid. and their date of death; completion of the first probate hearing • The successful bidder pays for the • How a judge will partition an (including at the hearing) or within 30 interest purchased and the interest allotment when a will attempts to days of the distribution order mailing transfers. divide an allotment into two or more date, when requesting to purchase • Any interested party who is distinct portions and devises at least property newly added to the inventory. adversely affected by the judge’s order one of those portions; • If the request is still pending at the to approve or disapprove the purchase • Who receives personal, mailed time the probate decision is issued and at probate may appeal to the IBIA notice of a formal probate proceeding is not denied in the decision, OHA then within 30 days of the order. and how public notice is posted; includes in the probate decision (or • Rehearing and reopening processes reconsideration order if property was B. Crosswalk of Current Regulation to and how they relate to each other; added) a list of all the purchase at Proposed Regulation • The meanings of joint tenancy and probate requests that have been The following chart provides a high- tenants-in-common and how the submitted, direction to BIA to obtain an level crosswalk of the current regulatory presumption of joint tenancy and the appraisal/valuation of the interest, and provisions as compared to the proposed anti-lapse provision each operate in the direction to heirs or devisees on how to provisions. Sections not listed in the determination of heirs and devisees; consent if they wish to do so. The ‘‘current’’ column are unaffected by this • How trust personalty will be property is distributed and any property proposed rule. distributed when there are no eligible subject to the purchase at probate In 25 CFR part 15:

Current § Proposed § Summary of proposed changes

15.202 What items must the 15.202 What items must the Redesignates paragraphs and adds a new paragraph (b) to establish agency include in the probate agency include in the probate a more limited universe of documents required to be included in file?. file?. estates that will be subject to a summary probate proceeding (i.e., estates with no land and $300 or less in funds). Also adds a new paragraph (a)(16) to address the need for the probate file to in- clude valuation reports in the limited circumstances in which a spe- cial statute applies that requires the valuation report. 15.301 May I receive funds from 15.301 May I receive funds from Increases the amount that may be requested and approved for dis- the decedent’s IIM account for fu- the decedent’s IIM account for tribution from a decedent’s IIM account to pay for funeral expenses neral services?. funeral services?. from $1,000 to $5,000. Also deletes requirement for the IIM ac- count to contain at least $2,500 and clarifies that funds, if ap- proved, are taken from the balance of the account as of the date of death. N/A ...... 15.404 What happens if BIA New section. identifies additional property of a decedent after the probate deci- sion is issued?.

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N/A ...... 15.405 What happens if BIA New section. identifies that property was in- correctly included in a dece- dent’s inventory?

In 43 CFR part 30:

Current § Proposed § Summary of proposed changes

30.100 How do I use this part? 30.100 How do I use this part? Updates citations (no substantive change). 30.101 What definitions do I need 30.101 What definitions do I Deletes definitions of ‘‘BLM’’ and ‘‘de novo review’’ because they are to know? need to know? no longer used. Revises the definitions of ‘‘ADM’’ to delete reference to de novo re- view, ‘‘decision’’ to clarify that there is a single probate decision, ‘‘Indian probate Judge’’ to reflect that the judges exercise dele- gated authority, ‘‘Interested party’’ to exclude those who may in- herit solely as a co-owner, and ‘‘summary probate proceeding’’ to reflect the new approach to these proceedings. Adds definitions for ‘‘distribution order,’’ ‘‘extenuating circumstances,’’ ‘‘home agency,’’ ‘‘joint tenancy,’’ ‘‘lineal descendant,’’ ‘‘order,’’ ‘‘Pe- tition to Complete Purchase at Probate,’’ and ‘‘tenants in common.’’ 30.114 Will I receive notice of the 30.114 Will I receive notice of Deletes provisions in current paragraph (b) regarding requesting a probate proceeding? the probate proceeding? formal probate proceeding in lieu of a summary probate proceeding because, with the proposed revisions to the summary probate pro- ceeding elsewhere in the proposed rule, this provision is no longer applicable. Revises paragraph (b) to provide that potential heirs who may inherit solely as co-owners of an allotment will not receive actual notice unless they have previously filed a request for notice with BIA or OHA. 30.123 Will the judge determine 30.123 Will the judge determine Adds ‘‘if relevant’’ so that a judge is not required to determine the matters of status and nationality? matters of status and nation- status of eligible heirs or devisees as Indian if their status is not ality? relevant in the probate case. 30.124 When may a judge make 30.124 When may a judge make Revises to list specific evidence that will support a presumption that a finding of death? a finding of death? an heir, devisee, or person for whom a probate case has been opened has died and the date of death. Also establishes what evi- dence will rebut the presumption. 30.125 May a judge reopen a pro- 30.129 May a judge reopen a Redesignated to follow other section on correcting errors in ‘‘Judicial bate case to correct errors and probate case to correct errors Authority’’ subpart. No substantive change. omissions? and omissions? N/A 30.125 May a judge order that a New section. property interest be partitioned as a result of a devise? N/A 30.250 May a correction order be New section. issued to correct typographical and other non-substantive er- rors? 30.126 What happens if property 30.251 What happens if BIA Clarifies what information BIA must provide to OHA in support of the was omitted from the inventory of identifies additional property of a petition to add the property, and provides that the judge will issue a the estate? decedent after a decision is distribution order of the additional property. issued? 30.127 What happens if property 30.252 What happens if BIA Clarifies what information BIA must provide to OHA in support of the was improperly included in the in- identifies that property was in- petition to remove the property, and provides that the judge will ventory? correctly included in a dece- issue a distribution order that addresses any modifications to the dent’s inventory? distribution of the decedent’s property resulting from the correction of the inventory. N/A 30.253 What happens if a re- New section. Adds a process to allow interested parties to seek re- quest for reconsideration of a consideration of the distribution order. distribution order is timely made? Subpart G—Purchase at Probate Subpart M—Purchase at Probate Revises this subpart overall to streamline the process for purchasing decedent’s interests at probate using the statutory authority in the American Indian Probate Reform Act. 30.160 What may be purchased 30.400 What may be purchased Adds a provision regarding purchase of minerals-only interests at at probate? at probate? probate. Deletes provision regarding timing of requesting a purchase at pro- bate (addressed in proposed § 30.404). 30.161 Who may purchase at pro- 30.401 Who may purchase at No substantive change. bate? probate? 30.162 Does property purchased 30.402 Does property purchased No change. at probate remain in trust or re- at probate remain in trust or re- stricted status? stricted status?

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30.163 Is consent required for a 30.403 Is consent required for a Adds that, to purchase any interest included in an approved consoli- purchase at probate? purchase at probate? dation agreement, the consent of the recipient of the consolidated interest is required. Adds a new paragraph (b) establishing procedures for heirs and devi- sees to refuse consent to a purchase at probate. Adds to the conditions in which a Tribe does not need consent to purchase that the interest is not part of an approved consolidation agreement. 30.164 What must I do to pur- 30.404 How do I initiate a pur- Changes the deadline for filing a purchase request from before chase at probate? chase at probate? issuance of the final probate decision or order to instead before the 30.405 When may I initiate a end of the first probate hearing. purchase at probate? N/A 30.406 May I withdraw my re- New section. quest to purchase at probate? N/A 30.407 How will OHA address New section. requests to purchase at pro- bate? 30.165 Who will OHA notify of a 30.408 What will OHA include in Revisions to incorporate the purchase at probate process into the request to purchase at probate? the probate decision or recon- final probate decision or reconsideration order, since that final deci- 30.166 What will the notice of the sideration order when a pur- sion and order are provided to the heirs or devisees, BIA, and any- request to purchase at probate chase at probate is pending? one who has submitted a request to purchase. include? N/A 30.409 How will a pending pur- New section. chase at probate request affect how the decedent’s property is distributed? N/A 30.410 How will the purchase at New section. probate process continue after the decision or reconsideration order is issued? 30.167 How does OHA decide 30.411 How will the interests to Adds that BIA will obtain the appraisal or other fair market valuation whether to approve a purchase be purchased at probate be val- and that any appraisal/valuation must be made on the basis of the at probate? ued? fair market value as of the decedent’s date of death. 30.416 How does OHA decide Adds that the appraisal/valuation must state or include a certification whether a bid is successful?. that it is assessing the fair market value of the real property inter- est. Clarifies that OHA may hold a hearing and that the applicable heir, devisee, or surviving spouse may choose which bid to accept if multiple bids are submitted. 30.168 How will the judge allocate (see 30.419, listed below) ...... Combines information on allocating proceeds with information on the proceeds from a sale? OHA issuing the order approving the sale. 30.169 What may I do if I do not 30.415 What may I do if I do not Expands who may object to a fair market value determination to in- agree with the appraised market agree with the determination of clude any party who may be affected by the determination. value? fair market value in the Order to Combines time for filing an objection (30 days) and filing supporting Submit Bids? documentation (15 days) into a deadline of 45 days for both. Requires objecting party to provide copies of the objection and sup- porting documents to parties who have an interest in the purchase of the property. Provides that the judge may issue a Modified Order to Submit Bids. 30.170 What may I do if I dis- 30.423 What may I do if I dis- Replaces process for objecting to the judge with a process for ap- agree with the judge’s determina- agree with the judge’s deter- pealing to IBIA. tion to approve a purchase at mination to approve or deny a probate? purchase at probate. 30.171 What happens when the 30.412 What will OHA do when it Clarifies that OHA issues an Order to Submit Bids to all potential bid- judge grants a request to pur- receives BIA’s notification that ders, and that this occurs after the fair market value has been de- chase at probate? an appraisal/valuation has been termined. completed? 30.417 How does the judge no- tify the parties whether there was a successful bid? N/A 30.413 Who are potential bid- New section. ders? N/A 30.414 What will be contained in New section. the Order to Submit Bids? 30.172 When must the successful 30.418 When must the success- No substantive change. bidder pay for the interest pur- ful bidder pay for the interest chased? purchased? 30.173 What happens after the 30.419 What happens after the Adds information on allocation of the proceeds of the sale. successful bidder submits pay- successful bidder submits pay- ment? ment? 30.174 What happens if the suc- 30.420 What happens if the suc- No substantive change. cessful bidder does not pay with- cessful bidder does not pay in 30 days? within 30 days?

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30.175 When does a purchased 30.421 When does a purchased No substantive change. interest vest in the purchaser? interest vest in the purchaser? N/A 30.422 What will happen to any New section. lease income received or ac- crued from purchased land inter- ests before the purchased inter- est vests in the purchaser? N/A 30.424 When will the order ap- New section. proving or denying the purchase at probate become final? Subpart H—Renunciation of Inter- Subpart H—Renunciation of Inter- See below for specific sections. est est. 30.180 May I give up an inherited 30.180 May I give up an inher- No change. interest in trust or restricted prop- ited interest in trust or restricted erty or trust personalty? property or trust personalty? 30.181 How do I renounce an in- 30.181 When may I renounce a Splits into two sections. Expands when someone may renounce to herited interest? devised or inherited interest? allow renunciation 30 days after the probate decision is mailed, be- 30.186 How do I renounce an in- fore the entry of an order on rehearing, or within 30 days after herited interest? mailing of the distribution for additional property. 30.188 What steps will the judge Expands the manner in which someone may renounce to allow ac- take if I designate a recipient? knowledgment before either a notary or a judge, so that someone may renounce in person at a hearing. N/A 30.182 Who may renounce an New section. Specifies who may renounce on behalf of an heir or inherited interest on behalf of an devisee who dies before the hearing. heir or devisee who dies before the hearing? 30.182 Who may receive a re- 30.183 Who may receive a re- Reorganizes these sections to distinguish based on whether the de- nounced interest in trust or re- nounced interest in trust or re- cedent had a will or not. No substantive change. stricted land? stricted land if the land will pass 30.183 Who may receive a re- pursuant to a valid will? nounced interest of less than 5 30.184 Who will receive a re- percent in trust or restricted nounced interest in trust or re- land? stricted land if the land will pass by intestate succession? 30.184 Who may receive a re- 30.185 Who may receive a re- Deletes paragraph (c) of the current section, which says the fol- nounced interest in trust person- nounced interest in trust person- lowing, because it is not directly relevant to the probate process: alty? alty? ‘‘The Secretary will directly disburse and distribute trust personalty transferred by renunciation to a person or entity other than those listed in paragraph (b) of this section.’’ 30.185 May my designated recipi- 30.189 May my designated re- Adds a provision allowing the designated recipient the opportunity to ent refuse to accept the interest? cipient refuse to accept the in- refuse the interest. terest? 30.186 Are renunciations that pre- 30.190 Are renunciations that No change. date the American Indian Probate predate the American Indian Reform Act of 2004 valid? Probate Reform Act of 2004 valid? 30.187 May I revoke my renunci- 30.191 May I revoke my renunci- Revised when a written renunciation becomes irrevocable to when ation? ation? the applicable order distributing the property becomes final, rather than when the judge enters the final order in the probate pro- ceeding. 30.188 Does a renounced interest 30.187 What happens if I do not Reorganizes to split into two sections. No substantive change. vest in the person who re- designate any eligible individual nounced it? or entity to receive the re- nounced interest? 30.192 Does a renounced inter- est vest in the person who re- nounced it? Subpart I—Summary Probate Pro- Subpart I—Summary Probate Pro- See specific sections below. ceedings ceedings. 30.200 What is a summary pro- 30.200 What is a summary pro- Deletes that the supervising judge may determine whether the pro- bate proceeding? bate proceeding? ceeding is conducted by a judge or ADM because this is an inter- nal procedure. Changes the qualification for summary probate proceedings from funds-only estates with a value of $5,000 or less to funds-only es- tates with a value of $300 or less. Specifies what funds are considered in determining the value of the estate. 30.201 What does a notice of a 30.206 What notice of the sum- Changes the notice provided to be notice of the summary probate summary probate proceeding mary probate decision will the decision and right to challenge the decision because the proposed contain? judge or ADM provide? rule eliminates the option for a hearing and claims renunciations from the summary probate proceeding. Deletes reference to renun- ciations because the option to renounce will now occur after the summary probate decision is issued.

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30.202 May I file a claim or re- 30.201 May I file a claim in a Revises to disallow claims in summary probate proceedings because nounce or disclaim an interest in summary probate proceeding? the estate value is only $300 or less. the estate in a summary probate proceeding? N/A 30.202 What will happen when New section. Provides that OHA determines the distribution of es- OHA receives the summary pro- tates under summary probate proceedings based on the informa- bate file? tion included in the probate file. N/A 30.203 What will happen if the New section. Clarifies that if the funds in the estate are insufficient to funds in the estate are insuffi- provide all heirs or devisees with one cent, then the oldest heir or cient to provide each heir or devisee receives all the funds. devisee at least one cent? 30.203 May I request that a for- 30.204 May I request that a for- Revises to eliminate the option for requesting the summary probate mal probate proceeding be con- mal probate proceeding be con- be conducted as a formal probate proceeding because the estate ducted instead of a summary ducted instead of a summary value is so small. probate proceeding? probate proceeding? 30.204 What must a summary 30.205 What must a summary Reorganizes. probate decision contain? probate decision contain? Deletes reference to a proposed decision, because the judge decides the case without first releasing a proposed decision. Deletes references to claims. Adds that determination of ‘‘Indian’’ status is necessary only if rel- evant. Allows renunciation for 30 days after the mailing date of the decision (or within 30 days of an order on review, if applicable). Adds a statement that a formal probate proceeding will be initiated if BIA later identifies trust or restricted land that should have been in- cluded in the estate. 30.205 How do I seek review of a 30.207 How do I seek review of Deletes reference to ‘‘de novo’’ review. summary probate proceeding? a summary probate proceeding? Clarifies that BIA may also seek review. 30.206 What happens after I file a 30.208 What happens after I file Lengthens the time OHA has to notify the agency that prepared the request for de novo review? a request for review? probate file, all other affected agencies, and all interested parties of the request for review from 10 days to 30 days of receipt of the re- quest for review. No longer requires a hearing on review. Clarifies that the judge may issue an order affirming, modifying, or vacating the summary probate decision. Lists who the judge must distribute the final order to and what it must include. Allows appeal to the IBIA. 30.207 What happens if nobody 30.209 What will the judge or Provides that OHA transmits the official record back to the agency files for de novo review? ADM do with the official record originating the probate and lists what will be included in the record. of the summary probate case? Deletes provision requiring OHA to send copies to other affected agencies. (Section specifying that the order becomes final after 30 days is in proposed § 30.206(b)). Subpart J—Formal Probate Pro- Subpart J—Formal Probate Pro- See affected sections below. ceedings ceedings. 30.210 How will I receive personal 30.210 How will I receive per- Reorganizes to group all mailed (personal) notice into one section notice of the formal probate pro- sonal notice of the formal pro- and all public notice into a separate section. ceeding? bate proceeding? Clarifies that the will and codicils will be mailed with the notice of the 30.211 How will OHA provide proceeding. (Section 30.114 lists who receives mailed notice of the public notice of the formal pro- hearing). bate proceeding? Allows the posted notice that supplements the mailed notice to con- tain information for more than one hearing and specifies the min- imum information that must be included for each. Adds requirement for OHA to post notice of all hearings on its website. Adds a provision for physical posting at the decedent’s home agency. Clarifies that a posting in the vicinity of the designated place of hear- ing will occur only if OHA designates a specific hearing location and reduces the number of conspicuous places for posting from five to one. Adds that OHA may proceed with a hearing without physical posting if physical posting is not possible due to one of the listed cir- cumstances, including when the agency office is closed or inacces- sible or extenuating circumstances prevent personnel from posting. (See definition of ‘‘extenuating circumstances,’’ which includes situ- ations such as a natural disaster affecting the agency office or trav- el to the agency office or other event affecting the agency office’s ability to provide sustained continuous operations and services.)

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30.211 Will the notice be pub- N/A ...... Deletes separate provision for publishing in a newspaper to give lished in a newspaper? judge discretion to post notice in places other than the OHA website (including in a newspaper, if appropriate), for the purpose of increasing the chances of reaching individuals or entities with an interest in a probate case. 30.238 May I file a petition for re- 30.238 May I file a petition for re- Specifies that you must be an interested party to seek a rehearing hearing if I disagree with the hearing if I disagree with the and the basis for your request must be to correct a substantive judge’s decision in a formal pro- judge’s decision in a formal pro- error. Expands on what issues may be raised and what evidence bate hearing? bate hearing? may be relied upon in rehearing. 30.239 Does any distribution of 30.239 Does any distribution of No change. the estate occur while a petition the estate occur while a petition for rehearing is pending? for rehearing is pending? 30.240 How will the judge decide 30.240 How will the judge decide Clarifies that the judge will consider the petition for rehearing as a a petition for rehearing? a petition for rehearing? petition for reopening if not timely filed. Adds provision allowing the judge to summarily deny the petition based on certain deficiencies. 30.241 May I submit another peti- 30.241 May I submit another pe- No substantive change. Moves information regarding the judge’s ju- tion for rehearing? tition for rehearing? risdiction to § 30.242. 30.242 When does the judge’s 30.242 When does the judge’s Includes information on when the jurisdiction of the judge terminates. order on a petition for rehearing order on a petition for rehearing become final? become final? 30.243 May a closed probate 30.243 May a closed probate Deletes the chart and states by whom and the circumstances in case be reopened? case be reopened? which a closed probate case may be reopened. 30.244 When must a petition for Splits provisions regarding deadlines for filing petitions to reopening reopening be filed? to proposed § 30.244 to simplify the deadline to one year after dis- 30.245 What legal standard will covery of the error. be applied to reopen a case?. Clarifies that the 3-year threshold is important only with regard to the 30.246 What must be included in heightened legal standard that is applied to the petition to reopen a petition for reopening? after 3 years. Expands on what information must be included in a petition for re- opening to justify reopening. N/A 30.247 What is not appropriate New section. Clarifies what issues or objections a petition may not for a petition for reopening? raise and what evidence a petition may not rely upon for a reopen- ing, to encourage parties to address issues and bring evidence during the initial probate proceeding. 30.244 How will the judge decide 30.248 How will the judge decide Adds provision allowing the judge to summarily deny the petition my petition for reopening? my petition for reopening? based on certain deficiencies. 30.245 What happens if the judge 30.249 What happens when the Combines two sections. No substantive change. reopens the case? judge issues an order on re- 30.246 When will the decision on opening? reopening become final? Subpart K—Miscellaneous Subpart N—Miscellaneous ...... See affected sections below. 30.250 When does the anti-lapse 30.500 When does the anti-lapse Redesignated. No change. provision apply? provision apply? N/A 30.501 When is joint tenancy New section. Establishes that joint tenancy will be presumed where a presumed? testator devises the same interests to more than one person with- out specifying otherwise. N/A 30.502 How does a judge re- New section. Clarifies that the judge will give priority to the presump- solve conflicts between the anti- tion of joint tenancy, such that the share of the deceased devisee lapse provision and presumption will go to the surviving devisees (rather than to the deceased devi- of joint tenancy? see’s descendants). 30.251 What happens if an heir or 30.503 What happens if an heir Redesignated. No change. devisee participates in the killing or devisee participates in the of the decedent? killing of the decedent? 30.252 May a judge allow fees for 30.504 May a judge allow fees Redesignated. No change. attorneys representing interested for attorneys representing inter- parties? ested parties? 30.253 How must minors or other 30.505 How must minors or Redesignated. No change. legal incompetents be rep- other legal incompetents be rep- resented? resented? 30.254 What happens when a 30.506 When a decedent died in- Deletes chart. Reorganizes based on whether the decedent died be- person dies without a valid will testate without heirs, what law fore or after the date of AIPRA’s enactment. Adds detail as to how and has no heirs? applies to trust or restricted interests will be distributed under the statute in each case, rather property? than just citing the statutory provisions. N/A 30.507 How will trust personalty New section. Specifies how trust personalty is distributed in the cir- be distributed if a decedent died cumstance in which AIPRA applies but fails to state how trust per- intestate on or after June 20, sonalty is distributed: If the decedent has no surviving spouse or 2006, and the Act does not eligible heirs or trust or restricted property over which one and only specify how the trust personalty one Tribe has jurisdiction. should be distributed?

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V. Tribal Consultation and Public Hearing The Department will be hosting the following Tribal consultation session to discuss this proposed rule:

Date Time Location

Tuesday, February 9, 2021 ...... 2 p.m.–5 p.m. Eastern Time ...... Call-in number: (800) 369–3356. Passcode: 8182564

The Department will also be holding the Department holds property in trust interested in this rulemaking, as a public hearing for anyone for whom or restricted status or for anyone else follows:

Date Time Location

Thursday, February 11, 2021 ...... 2 p.m.–5 p.m. Eastern Time ...... Call-in number: (888) 790–3548. Passcode: 6643062

Tribal consultation is reserved for B. Reducing Regulations and only probates of individuals’ trust or officially designated representatives of Controlling Regulatory Costs (E.O. restricted property. 13771) federally recognized Tribes. Anyone E. Unfunded Mandates Reform Act who is not an officially designated E.O. 13771 of January 30, 2017, This proposed rule does not impose representative of a federally recognized directs Federal agencies to reduce the Tribe that is interested in this an unfunded mandate on State, local, or regulatory burden on regulated entities Tribal governments or the private sector rulemaking should join the public and control regulatory costs. E.O. 13771, of more than $100 million per year. The hearing session only. however, applies only to significant proposed rule does not have a regulatory actions, as defined in Section VI. Procedural Requirements significant or unique effect on State, 3(f) of E.O. 12866. Therefore, E.O. 13771 local, or Tribal governments or the A. Regulatory Planning and Review does not apply to this rule. private sector. A statement containing (E.O. 12866 and 13563) C. Regulatory Flexibility Act the information required by the Unfunded Mandates Reform Act (2 Executive Order (E.O.) 12866 provides The Department of the Interior U.S.C. 1531 et seq.) is not required. that the Office of Information and certifies that this proposed rule will not Regulatory Affairs (OIRA) at the Office have a significant economic effect on a F. Takings (E.O. 12630) of Management and Budget (OMB) will substantial number of small entities This proposed rule does not affect a review all significant rules. OIRA has under the Regulatory Flexibility Act (5 taking of private property or otherwise determined that this proposed rule is U.S.C. 601 et seq.). This proposed rule have taking implications under not significant. affects only individuals’ estates and Executive Order 12630 because this does not affect small entities. E.O. 13563 reaffirms the principles of rulemaking, if adopted, does not affect E.O. 12866 while calling for D. Small Business Regulatory individual property rights protected by improvements in the Nation’s regulatory Enforcement Fairness Act the Fifth Amendment or involve a system to promote predictability, to compensable ‘‘taking.’’ A takings This proposed rule is not a major implication assessment is not required. reduce uncertainty, and to use the best, rulemaking under 5 U.S.C. 804(2), the most innovative, and least burdensome Small Business Regulatory Enforcement G. Federalism (E.O. 13132) tools for achieving regulatory ends. The Fairness Act. This proposed rule: Under the criteria in section 1 of E.O. directs agencies to consider (a) Does not have an annual effect on Executive Order 13132, this rule does regulatory approaches that reduce the economy of $100 million or more not have sufficient federalism burdens and maintain flexibility and because this rule addresses only the implications to warrant the preparation freedom of choice for the public where transfer through probate of individuals’ of a federalism summary impact these approaches are relevant, feasible, property held in trust or restricted statement because the rule affects only and consistent with regulatory status. the probate of individuals’ trust or objectives. E.O. 13563 emphasizes (b) Will not cause a major increase in restricted property. A federalism further that regulations must be based costs or prices for consumers, summary impact statement is not on the best available science and that individual industries, Federal, State, or required. local government agencies, or the rulemaking process must allow for H. Civil Justice Reform (E.O. 12988) public participation and an open geographic regions because this rule exchange of ideas. We have developed affects only probates of individuals’ This proposed rule complies with the this proposed rule in a manner trust or restricted property. requirements of Executive Order 12988. consistent with these requirements. This (c) Does not have significant adverse Specifically, this proposed rule: (a) proposed rule is also part of the effects on competition, employment, Meets the criteria of section 3(a) investment, productivity, innovation, or requiring that all regulations be Department’s commitment under the the ability of U.S.-based enterprises to reviewed to eliminate errors and Executive Order to reduce the number compete with foreign-based enterprises ambiguity and be written to minimize and burden of regulations. because this rule affects only affects litigation; and (b) Meets the criteria of

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section 3(b)(2) requiring that all L. Effects on the Energy Supply (E.O. Title 25—Indians regulations be written in clear language 13211) Chapter I—Bureau of Indian Affairs, and contain clear legal standards. This proposed rule is not a significant Department of the Interior I. Consultation With Indian Tribes (E.O. energy action under the definition in PART 15—PROBATE OF INDIAN 13175) Executive Order 13211. A Statement of ESTATES, EXCEPT FOR MEMBERS OF Energy Effects is not required. The Department of the Interior strives THE OSAGE NATION AND THE FIVE to strengthen its government-to- M. Clarity of This Regulation CIVILIZED TRIBES government relationship with Indian ■ 1. The authority citation for part 15 Tribes through a commitment to We are required by Executive Orders 12866 (section 1(b)(12)), and 12988 continues to read as follows: consultation with Indian Tribes and (section 3(b)(1)(B)), and 13563 (section recognition of their right to self- Authority: 5 U.S.C. 301; 25 U.S.C. 2, 9, 1(a)), and by the Presidential 372–74, 410, 2201 et seq.; 44 U.S.C. 3101 et governance and Tribal sovereignty. We Memorandum of June 1, 1998, to write seq. have evaluated this proposed rule under all rules in plain language. This means ■ the Department’s consultation policy 2. Revise § 15.202 to read as follows: that each rule we publish must: and under the criteria in Executive § 15.202 What items must the agency Order 13175 and have determined that (a) Be logically organized; include in the probate file? it has substantial direct effects on (b) Use the active voice to address (a) We will include the items listed in federally recognized Indian Tribes readers directly; this section in the probate file, except as because the proposed rule affects the (c) Use clear language rather than specified in paragraph (b) of this probate of trust or restricted property jargon; section. held by individuals, many or most of (1) The evidence of death of the (d) Be divided into short sections and whom are likely Tribal members. decedent as provided under § 15.104. sentences; and, Information on Tribal consultation is (2) A completed ‘‘Data for Heirship provided in Section IV. (e) Use lists and tables wherever Findings and Family History Form’’ or possible. successor form, certified by BIA, with J. Paperwork Reduction Act If you feel that we have not met these the enrollment or other identifying This proposed rule does not contain requirements, send us comments by one number shown for each potential heir or any new collection of information that of the methods listed in the ADDRESSES devisee. (3) Information provided by potential requires approval from the Office of section. To better help us revise the rule, your comments should be as heirs, devisees, or the Tribes on: Management and Budget (OMB) under (i) Whether the heirs and devisees specific as possible. For example, you the Paperwork Reduction Act of 1995 meet the definition of ‘‘Indian’’ for should tell us the numbers of the (PRA), 44 U.S.C. 3501 et seq. OMB has probate purposes, including enrollment sections or paragraphs that are unclearly previously approved the information or eligibility for enrollment in a Tribe; written, which sections or sentences are collection requirements associated with or compiling the probate file for an estate too long, the sections where you believe (ii) Whether the potential heirs or and assigned the information collection lists or tables would be useful, etc. devisees are within two degrees of requirements OMB Control Number N. Public Availability of Comments consanguinity of an ‘‘Indian.’’ 1076–0169 (expires 7/31/2021). We (4) If an individual qualifies as an estimate the annual burden associated Before including your address, phone Indian only because of ownership of a with this information collection to be number, email address, or other trust or restricted interest in land, the 617,486 hours per year. An agency may personal identifying information in your date on which the individual became not conduct or sponsor, and a person is comment, you should be aware that the owner of the trust or restricted not required to respond to, a collection your entire comment—including your interest. of information unless it displays a personal identifying information—may (5) A certified inventory of trust or currently valid OMB control number. be made publicly available at any time. restricted land, including: While you can ask us in your comment (i) Accurate and adequate K. National Environmental Policy Act to withhold your personal identifying descriptions of all land; and (ii) Identification of any interests that This proposed rule does not information from public review, we represent less than 5 percent of the constitute a major Federal action cannot guarantee that we will be able to undivided interests in a parcel. significantly affecting the quality of the do so. (6) A statement showing the balance human environment. A detailed List of Subjects and the source of funds in the statement under the National 25 CFR Part 15 decedent’s IIM account on the date of Environmental Policy Act of 1969 death. (NEPA) is not required because these are Estates, Indians—law. (7) A statement showing all receipts ‘‘regulations . . . whose environmental and sources of income to and effects are too broad, speculative, or 43 CFR Part 30 disbursements, if any, from the conjectural to lend themselves to Administrative practice and decedent’s IIM account after the date of meaningful analysis and will later be death. subject to the NEPA process, either procedure, Claims, Estates, Indians, Lawyers. (8) Originals or copies of all wills, collectively or case-by-case.’’ 43 CFR codicils, and revocations that have been 46.210(i). We have also determined that For the reasons given in the preamble, provided to us. the rulemaking does not involve any of the Department of the Interior proposes (9) A copy of any statement or the extraordinary circumstances listed to amend part 15 of title 25 and part 30 document concerning any wills, in 43 CFR 46.215 that would require of title 43 of the Code of Federal codicils, or revocations the BIA returned further analysis under NEPA. Regulations as follows: to the testator.

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(10) Any statement renouncing an § 15.301 May funds for funeral services be ownership of each parcel (after being interest in the estate that has been paid from the decedent’s IIM account? added to the decedent’s estate) under submitted to us, and the information (a) Before the probate case is § 15.401(b); and necessary to identify any person submitted to OHA, you may request an (5) A certification that all interested receiving a renounced interest. amount of no more than $5,000 from the parties have been associated to the case (11) Claims of creditors that have been decedent’s IIM account if: and their names and addresses are submitted to us under §§ 15.302 through (1) You are responsible for making the current. 15.305, including documentation funeral arrangements on behalf of the (b) BIA may submit the petition at any required by § 15.305. family of a decedent who has an IIM time after issuance of the decision. account; and (12) Documentation of any payments (c) BIA must send a copy of the (2) You have an immediate need to made on requests filed under the petition and all supporting pay for funeral arrangements before provisions of § 15.301. documentation to each interested party burial. (13) All the documents acquired at the time of filing and include * * * * * under § 15.105. certification of service. (c) In response to a request submitted (14) The record of each Tribal or under paragraph (a) of this section, we § 15.405 What happens if BIA identifies individual request to purchase a trust or may approve, without the need for an that property was incorrectly included in a restricted land interest at probate. order from OHA, costs of no more than decedent’s inventory? (15) The record of any individual $5,000 from the date of death IIM If, after issuance of a decision, BIA request for a consolidation agreement, account balance that are reasonable and identifies certain trust or restricted including a description, such as an necessary for the burial services, taking property or an interest therein that was Individual/Tribal Interest Report, of any into consideration: incorrectly included in a decedent’s lands not part of the decedent’s estate (1) The availability of non-trust funds, inventory, then BIA will submit a that are proposed for inclusion in the including availability of any Tribal petition to OHA for an order notifying consolidation agreement. contribution; and all heirs or devisees of the correction (16) Valuation reports for those (2) Any other relevant factors. and addressing any changes in interests to which the special * * * * * distribution of property resulting from circumstances listed in 43 CFR 30.264 ■ 4. Add §§ 15.404 and 15.405 to read the correction. apply. as follows: (a) The petition must identify the (b) If the estate includes only cash and property that it removed from the estate § 15.404 What happens if BIA identifies and explain why the property should the total value of the estate does not additional property of a decedent after the exceed $300 on the date of death, probate decision is issued? not have been included, and must include the following: including funds deposited and accruing If, after OHA issues the probate (1) A newly issued certified inventory on or before the date of death, then we decision, BIA identifies additional trust describing the trust or restricted land will include only the following the or restricted property of a decedent that remaining in decedent’s estate, if probate file. it had not already identified at the time applicable; (1) The evidence of death of the of the decision, then BIA will submit a (2) A copy of the decision, or decedent as provided under § 15.104. petition to OHA for an order directing modification or distribution order and (2) A completed ‘‘Data for Heirship distribution of the additional property. Findings and Family History Form’’ or (a) The petition must identify the corresponding inventory issued in the successor form, certified by BIA as an additional property and the source of probate case from which BIA discovered accurate summary of the information that property (e.g., inheritance or that the property was incorrectly available to BIA that is relevant to the approval of a deed) and must include included in the decedent’s estate, if probate of the estate (this form should the following: applicable; be completed with information (1) A certified inventory describing (3) A statement identifying each provided by potential heirs, devisees, or the additional trust or restricted land, if property in the decedent’s estate that Tribes to the greatest extent possible, applicable, or, if the additional property decreased to a total share of the but BIA is not required to obtain is trust personalty, documents verifying ownership of the allotment to less than documentation in addition to that the balance and source of the additional 5 percent as a result of the removal of provided by those entities). trust personalty, and a statement that property from the estate; and (4) A certification that all interested (3) A statement showing the balance the inventory lists only the property to parties have been associated to the case and the source of funds in the be added; and their names and addresses are decedent’s IIM account on the date of (2) A copy of the decision, or current. death. modification or distribution order and (b) BIA may submit the petition at any (4) Certification that the decedent’s corresponding inventory issued in the time after issuance of the decision. estate does not contain any interests in probate case from which the property (c) BIA must send a copy of the trust or restricted land. was inherited by the decedent, if applicable; petition and all supporting (5) Originals or copies of all wills, (3) A statement identifying each documentation to each interested party codicils, and revocations that have been newly added share of any allotment that at the time of filing and include provided to BIA. increases the decedent’s total share of certification of service. (6) A copy of any statement or the ownership interest of the allotment Title 43—Public Lands: Interior document concerning any wills, to 5 percent or more; codicils, or revocations the BIA returned (4) A copy of BIA’s notification to the PART 30—INDIAN PROBATE to the testator. Tribes with jurisdiction over the HEARINGS PROCEDURES ■ 3. In § 15.301, revise the section interests of the list of the additional heading and paragraphs (a) and (c) to interests that represent less than 5 ■ 5. The authority citation for part 30 read as follows: percent of the entire undivided continues to read as follows:

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Authority: 5 U.S.C. 301, 503; 25 U.S.C. 9, ■ 6. In § 30.100, revise paragraphs (a)(5) § 30.100 How do I use this part? 372–74, 410, 2201 et seq.; 43 U.S.C. 1201, and (7) through (9) and (c)(2) and (3) to (a) * * * 1457. read as follows:

For provisions relating to . . . consult . . .

******* (5) Formal probate proceedings before an administrative law judge or Indian probate judge ...... §§ 30.210 through 30.253.

******* (7) Purchases at probate ...... §§ 30.400 through 30.424. (8) Renunciation of interests ...... §§ 30.180 through 30.192. (9) Summary probate proceedings ...... §§ 30.200 through 30.209.

*******

* * * * * Distribution order means the OHA Lineal descendent means a blood (c) * * * order distributing additional property relative of a person in that person’s (2) Sections 30.400 through 30.424 that has been added to an estate under direct line of descent. (purchases at probate); § 30.251. * * * * * (3) Sections 30.183 through 30.188, * * * * * Order means any written direction or except for §§ 30.186(a), (b)(2), and (d) Extenuating circumstances means determination, other than a decision, and 30.187; circumstances including, but not issued by a judge in a probate case, * * * * * limited to, situations such as a natural including a distribution order, an order ■ 7. Amend § 30.101 by: disaster affecting the agency office or on rehearing, an order on reopening, or ■ a. Revising the definition of ‘‘Attorney travel to the agency office or other event a reconsideration order. decision maker (ADM)’’; affecting the agency office’s ability to * * * * * ■ b. Removing the definitions for provide sustained continuous Petition to Complete Purchase at ‘‘BLM’’ and ‘‘Decision or order (or operations and services. Probate means a petition BIA files with decision and order)’’; * * * * * an appraisal or valuation to request that ■ c. Adding in alphabetical order the Home agency means the agency that OHA complete the purchase at probate definition of ‘‘Decision’’; serves the Tribe in which the decedent process. ■ d. Removing the definition for ‘‘De is a member or where the decedent’s IIM novo review’’; * **** account originated. ■ e. Adding in alphabetical order Summary probate proceeding means definitions for ‘‘Distribution order’’, * * * * * the consideration of a probate file ‘‘Extenuating circumstances’’, and Indian probate judge (IPJ) means an without a hearing. A summary probate ‘‘Home agency’’; attorney with OHA, to whom the proceeding may be conducted if the ■ f. Revising the definitions of ‘‘Indian Secretary has delegated the authority to estate involves only an IIM account that probate judge’’ and ‘‘Interested party’’; hear and decide Indian probate cases, did not exceed $300 in value on the date ■ g. Adding in alphabetical order pursuant to 25 U.S.C. 372–2. of the death of the decedent. definitions for ‘‘Joint tenancy’’, ‘‘Lineal Interested party means: Tenants in common means two or descendant’’, ‘‘Order’’, and ‘‘Petition to (1) Any potential or actual heir, more people who share ownership Complete Purchase at Probate’’; except for potential or actual heirs who rights in a property, but whose ■ h. Revising the definition of may or will inherit solely as co-owners ownership rights are divisible from each ‘‘Summary probate proceeding’’; and of an allotment; other and, when a tenant in common ■ i. Adding in alphabetical order the (2) Any devisee under a will; dies, the property descends to that definition ‘‘Tenants in common’’. (3) Any person or entity asserting a tenant’s heirs or devisees rather than to The revisions and additions read as claim against a decedent’s estate; the other tenant or tenants. follows: (4) Any Indian Tribe having a * * * * * ■ § 30.101 What definitions do I need to statutory option to purchase the trust or 8. In § 30.114, revise paragraph (b) to know? restricted property interest of a read as follows: * * * * * decedent; or § 30.114 Will I receive notice of the probate Attorney decision maker (ADM) (5) Any co-owner exercising a proceeding? means an attorney with OHA who purchase option. * * * * * conducts summary probate proceedings. * * * * * (b) Potential heirs who may inherit * * * * * Joint tenancy means ownership by solely as co-owners of an allotment will Decision means a written document two or more persons of the same not be sent actual notice unless they issued by a judge in a formal probate property, where the individuals, who have previously filed a request for proceeding or by a judge or ADM in a are called joint tenants, share equal, notice with BIA or OHA. summary probate proceeding making undivided ownership of the property ■ 9. In § 30.123, revise paragraph (a)(1) determinations as to heirs, wills, and have a right of survivorship such to read as follows: devisees, and the claims of creditors, that upon the death of a joint tenant, the and ordering distribution of trust or property descends to the other joint § 30.123 Will the judge determine matters restricted land or trust personalty. tenants by operation of law. of status and nationality? * * * * * * * * * * (a) * * *

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(1) If relevant, the status of eligible of the identified incident, the judge will 30.182 Who may renounce an inherited heirs or devisees as Indians; use the date of the identified incident as interest on behalf of an heir or devisee the date of death. who dies before the hearing? * * * * * 30.183 Who may receive a renounced ■ (5) When a person cannot be located 10. Revise § 30.124 to read as follows: interest in trust or restricted land if the by BIA or known surviving family § 30.124 When may a judge presume the land will descend pursuant to a valid members and was born at least 100 will? death of an heir, devisee, or person for years before the submission of a probate whom a probate case has been opened? 30.184 Who may receive a renounced case to OHA, certification from BIA or interest in trust or restricted land if the (a) When a person cannot be proven signed affidavits or sworn testimony by land will descend by intestate dead but evidence of death is needed, a those in a position to know the succession? judge may presume that an heir, approximate date of birth. If there is no 30.185 Who may receive a renounced devisee, or person for whom a probate evidence available that the person interest in trust personalty? 30.186 How do I renounce an inherited case has been opened has died at a continued to live after reaching the age certain time if any of the following interest? of 100, the judge will use the date that evidence is submitted: 30.187 What happens if I do not designate is 100 years after the date of birth as the (1) A certified copy of an official any eligible individual or entity to date of death. report or finding by an agency or receive the renounced interest? (b) A presumption of death made 30.188 What steps will the judge take if I department of the United States, State, based on paragraph (a) of this section designate a recipient? or Tribe that a missing person is dead can be rebutted by evidence that 30.189 May my designated recipient refuse or presumed to be dead. The judge will establishes that the person is still alive to accept the interest? use the date of death found by the or explains the individual’s absence in 30.190 Are renunciations that predate the agency or department, if such a finding American Indian Probate Reform Act of a manner consistent with continued life was made. If no such finding was made, 2004 valid? rather than death. unless other evidence is submitted 30.191 May I revoke my renunciation? 30.192 Does a renounced interest vest in the showing an actual date of death, the § 30.125 [Redesignated as § 30.129] person who renounced it? judge will use the date on which the ■ 11. Redesignate § 30.125 as § 30.129. person was reported missing as the date ■ 12. Add a new § 30.125 to read as § 30.180 May I give up an inherited interest of death. follows: in trust or restricted property or trust (2) A certified copy of an order from personalty? a court of competent jurisdiction that a § 30.125 May a judge order that a property You may renounce an inherited or missing person is dead or presumed to interest be partitioned as a result of a devised interest in trust or restricted be dead. The judge will use the date of devise? property, including a life estate, or in death found by the court, if such a (a) A judge may order a property trust personalty if you are 18 years or finding was made. If no such finding interest to be partitioned if: older and not under a legal disability. was made, unless other evidence is (1) A will attempts to divide an submitted showing an actual date of allotment into two or more distinct § 30.181 When may I renounce a devised death, the judge will use the date on portions and devises at least one of or inherited interest? which the person was reported missing those portions; (a) If the judge has not yet issued a as the date of death. (2) The decedent was the sole owner decision, you may renounce a devised (3) Signed affidavits or sworn of the allotment; or inherited interest at any time before testimony by those in a position to (3) The allotment is held entirely in the issuance of the decision. know that facts and other records show trust or restricted status; and (b) If the judge has issued a decision, that the person has been absent from his (4) The devise describes the portions you may renounce a devised or or her residence for no apparent reason, of the allotment in a manner that allows inherited interest in any property or has no identifiable place of residence the judge to readily ascertain which distributed by the decision: and cannot be located, and has not been portion of the allotment descends to (1) Within 30 days from the mailing heard from for at least 6 years. If there each intended devisee. date of the decision; or is no evidence available that the person (b) If the requirements of paragraph (2) Within 30 days of the order on continued to live after the date of (a) of this section are not met, the judge review, in a summary probate disappearance or the date of last contact may find that a devise of a portion of an proceeding in which a request for if the person has no identifiable place of undivided allotment fails. review has been filed; or residence, the judge will use the date (3) Before the entry of an order on §§ 30.126 and 30.127 [Removed and rehearing, in a formal probate the person disappeared or the date of Reserved] last contact as the date of death. proceeding in which a petition for (4) When a person has been missing ■ 13. Remove and reserve §§ 30.126 and rehearing is pending. for less than 6 years but may be 30.127. (c) You may renounce a devised or presumed dead due to an identified inherited interest that is added to the Subpart G [Removed and Reserved] incident, such as drowning, fire, or decedent’s estate after the decision is issued pursuant to § 30.251 within 30 accident, signed affidavits or sworn ■ 14. Remove and reserve subpart G. days of mailing the distribution order. testimony from individuals who know ■ 15. Revise subpart H to read as (d) Once the order on rehearing is the circumstances surrounding the follows: issued, you may not renounce a devised occurrence leading to the person’s or inherited interest that was distributed disappearance. The best evidence is Subpart H—Renunciation of Interest by the decision. statements from individuals who Sec. witnessed the occurrence or saw the 30.180 May I give up an inherited interest § 30.182 Who may renounce an inherited missing person at the scene of the in trust or restricted property or trust interest on behalf of an heir or devisee who occurrence shortly before it happened. If personalty? dies before the hearing? there is no evidence available that the 30.181 When may I renounce a devised or If an individual heir or devisee dies person continued to live after the date inherited interest? before the hearing, a renunciation may

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be made on his or her behalf by any of (1) Designate an eligible person or § 30.192 Does a renounced interest vest in the following, if the judge makes a entity meeting the requirements of the person who renounced it? determination that the renunciation is § 30.182 or § 30.183 as the recipient; or No. An interest in trust or restricted in the best interest of the parties: (2) Renounce without making a property renounced under this subpart (a) An individual appointed by a designation. is not considered to have vested in the probate court to act on behalf of his or renouncing heir or devisee, and the her private (i.e., non-Federal-trust) (c) If a distribution order to add renunciation is not considered a transfer estate, including but not limited to a property to the decedent’s estate is by gift of the property renounced. personal representative, administrator, issued, you may renounce an inherited ■ 16. Revise subpart I to read as follows: interest in the property to be added by or executor; or Subpart I—Summary Probate Proceedings (b) Someone appointed by the judge notifying the judge in writing of your with the express approval of all the intent to renounce the interest within 30 Sec. heirs or devisees of the deceased heir or days of the mailing date of the 30.200 What is a summary probate distribution order. proceeding? devisee. 30.201 May I file a claim in a summary § 30.183 Who may receive a renounced § 30.187 What happens if I do not probate proceeding? interest in trust or restricted land if the land designate any eligible individual or entity to 30.202 What will happen when OHA will descend pursuant to a valid will? receive the renounced interest? receives the summary probate file? 30.203 What will happen if the funds in the A devisee may renounce an interest in If you do not designate any individual estate are insufficient to provide each trust or restricted land in favor of any or entity to receive the renounced heir or devisee at least one cent? one or more of the following: interest, or if you designate an 30.204 May I request that a formal probate (a) A lineal descendant of the testator; individual or entity who is not eligible proceeding be conducted instead of a (b) A person who owns an undivided to receive the renounced interest, the summary probate proceeding? 30.205 What must a summary probate trust or restricted interest in the same interest will descend to the decedent’s parcel; decision contain? heirs or devisees as if you predeceased 30.206 What notice of the summary probate (c) The Tribe with jurisdiction over the decedent. the interest; or decision will the judge or ADM provide? 30.207 How do I seek review of a summary (d) Any Indian. § 30.188 What steps will the judge take if probate proceeding? I designate a recipient? § 30.184 Who may receive a renounced 30.208 What happens after I file a request interest in trust or restricted land if the land If you choose to renounce your for review? will descend by intestate succession? interests in favor of a designated 30.209 What will the judge or ADM do with the official record of the summary (a) If the interest in trust or restricted recipient, the judge will determine probate case? land represents 5 percent or more of the whether the designated recipient is entire undivided ownership of the eligible to receive the interest. If the Subpart I—Summary Probate parcel, you may renounce that interest designated recipient is eligible, the Proceedings in favor of one or more of the following: judge must notify the designated (1) Eligible heirs of the decedent; or recipient of the renunciation. § 30.200 What is a summary probate (2) The Tribe with jurisdiction over proceeding? the interest. § 30.189 May my designated recipient (a) A summary probate proceeding is (b) If the interest in the trust or refuse to accept the interest? the disposition of a probate case without restricted land represents less than 5 Yes. Your designated recipient may a formal hearing, which is conducted on percent of the entire undivided refuse to accept the interest, in which the basis of the probate file received ownership of the parcel, you may case the renounced interest will from the agency. A summary probate renounce that interest in favor of only descend to the devisees or heirs of the proceeding may be conducted by a one person or entity listed in paragraph decedent as if you had predeceased the judge or an ADM. (a) of this section, or to one Indian decedent. When the judge notifies the (b) A decedent’s estate may be person related to you by blood. designated recipient of the renunciation, processed summarily if the estate the judge will specify a deadline for the involves only funds in an IIM account § 30.185 Who may receive a renounced and the total value of the estate does not interest in trust personalty? recipient to file a written refusal to accept the interest. If no written refusal exceed $300 on the decedent’s date of You may renounce an interest in trust is received before the deadline, the death, including: personalty in favor of any person or interest will descend to the designated (1) Funds deposited into the IIM entity. recipient. account on or before the date of death; § 30.186 How do I renounce an inherited and interest? § 30.190 Are renunciations that predate (2) Funds accrued on or before the the American Indian Probate Reform Act of date of death. To renounce an interest under 2004 valid? § 30.180, you must file with the judge a § 30.201 May I file a claim in a summary written declaration specifying the Any renunciation filed and included probate proceeding? as part of a probate decision or order interest to be renounced. The No. Claims may not be filed in issued before October 27, 2004, the declaration must be signed by you and summary probate proceedings. acknowledged before a notary or judge. effective date of the American Indian (a) In your declaration, you may retain Probate Reform Act of 2004, remains § 30.202 What will happen when OHA a life estate in a specified interest in valid. receives the summary probate file? When OHA receives a summary trust or restricted land and renounce the § 30.191 May I revoke my renunciation? remainder interest, or you may probate file from BIA under 25 CFR renounce the complete interest. A written renunciation is irrevocable 15.202(b), OHA will determine the (b) If you renounce an interest in trust when the applicable order distributing distribution of the estate based on the or restricted land, you may either: the renounced property becomes final. information included in the probate file

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and issue a summary probate decision the decedent’s estate after the affected agency and to each interested directing distribution of the estate. completion of the summary probate party. The order must include a notice process, BIA should file a petition for stating that interested parties who are § 30.203 What will happen if the funds in reopening and include all documents adversely affected, or BIA, have a right the estate are insufficient to provide each heir or devisee at least one cent? required for a formal probate proceeding to appeal the final order to the Board pursuant to 25 CFR 15.202(a); and within 30 days of the date on which the If the funds in the estate are (h) The signature of the judge or ADM final order was mailed, and giving the insufficient to provide each of the heirs and date of the probate decision. Board’s address. or devisees at least one cent, all of the funds will be paid to the oldest heir or § 30.206 What notice of the summary § 30.209 What will the judge or ADM do devisee, whichever is applicable. probate decision will the judge or ADM with the official record of the summary provide? probate case? § 30.204 May I request that a formal When the judge or ADM issues a The judge or ADM will transfer the probate proceeding be conducted instead decision in a summary probate of a summary probate proceeding? official record of the summary probate proceeding, the judge or ADM must case to the agency originating the No. Formal probate proceedings are mail or deliver a notice of the decision, probate, by sending all original hard available only for estates that contain together with a copy of the decision, to copies, and transmitting all digital files, trust or restricted land or contain trust each affected agency and to each that are designated by OHA as part of personalty in an amount greater than interested party. the official record, including: $300. (a) The notice must include a (a) The decision, order, and the § 30.205 What must a summary probate statement that interested parties who are notices thereof; decision contain? adversely affected have a right to file a (b) A copy of the notice of hearing on The written decision in a summary request for review with the judge or review with proof of mailing, if probate proceeding must be in the form ADM within 30 days of the mailing date applicable; of findings of fact and conclusions of of the decision. (c) The record of the evidence law, with an order for distribution. Each (b) The decision will become final at received at the hearing on review, if a decision must include the following: the end of the 30-day period, unless a hearing was held, including any (a) The name, birth date, and timely request is filed. transcript made of the testimony; relationship to the decedent of each heir § 30.207 How do I seek review of a (d) Any wills, codicils and or devisee; summary probate proceeding? revocations; (e) Any pleadings and briefs filed; (b) A statement as to whether the heir (a) If you are adversely affected by the (f) Interlocutory orders; or devisee is eligible to hold property in written decision in a summary probate (g) Copies of all proposed or accepted trust status and, if relevant, a statement proceeding, you may seek review of the settlement agreements, consolidation of whether the heir or devisee is summary probate decision. To do this, agreements, and renunciations and ‘‘Indian’’ for purposes of the Act; you must file a request with the OHA (c) If the case involves a will, a acceptances of renunciations; and office that issued the summary probate statement approving or disapproving the (h) Any other documents deemed decision within 30 days after the date will, interpreting provisions of an material by the judge. the summary probate decision was approved will as necessary, and mailed. BIA may also seek review describing the share each devisee is to Subpart J—Formal Probate within the same deadline. Proceedings receive under an approved will; (b) The request for review must be in (d) In intestate cases, citation to the writing and signed, and must contain ■ 17. Revise §§ 30.210 and 30.211 to law of descent and distribution under the following information: read as follows: which the summary probate decision is (1) The name of the decedent; made, and description of the share each (2) A description of your relationship § 30.210 How will I receive personal notice heir is to receive; to the decedent; of the formal probate proceeding? (e) A statement advising all interested (3) An explanation of what errors you (a) You will receive personal notice of parties, other than potential claimants, allege were made in the summary the formal probate proceeding hearing that they have a right to seek review probate decision; and described in § 30.114 by first class mail under § 30.207 and that, if they fail to (4) An explanation of how you are that includes: do so, the summary probate decision adversely affected by the decision. (1) The most recent will submitted will become final 30 days after it is with the probate case and any codicils mailed; § 30.208 What happens after I file a to that will; and (f) Notice to the heirs or devisees that request for review? (2) A certificate of mailing with the each may renounce his or her right to (a) Within 30 days of receiving a mailing date signed by the person who inherit the funds in favor of one or more request for review, OHA will notify the mailed the notice. individuals or entities. The heir or agency that prepared the probate file, all (b) The notice will be mailed to you devisee will be ordered to submit the other affected agencies, and all at least 21 days before the date of the renunciation within 30 days of the interested parties of the request. hearing. mailing date of the decision or within (b) A judge will review the merits of (c) A presumption of actual notice 30 days of an order on review if a the case, consider any allegations of exists for any person to whom OHA sent request for review is filed by any party; errors in the summary probate decision, a notice under this section unless the (g) A statement that the findings in a conduct a hearing if necessary or notice is returned by the Postal Service summary probate decision may not be appropriate to address the issues raised as undeliverable to the addressee. used to determine the decedent’s heirs in the request, and issue an order or devisees for distribution of any trust affirming, modifying, or vacating the § 30.211 How will OHA provide public or restricted land that may be added to summary probate decision. notice of the formal probate proceeding? the decedent’s estate at a later time. If (c) The judge must distribute the final (a) In addition to the mailed notice in BIA identifies trust or restricted land in order on the request to review to each § 30.210, OHA will also arrange for the

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posting of notice of probate hearings for § 30.238 May I file a petition for rehearing § 30.240 How will the judge decide a formal probate proceedings at least 21 if I disagree with the judge’s decision in the petition for rehearing? days before the date of the hearing. formal probate hearing? (a) The judge may consider a petition (b) The notice may contain (a) A petition for rehearing seeking to as a petition for reopening if the petition information for more than one hearing correct a substantive error may be filed for rehearing is not timely filed. and will specify the names of the by the BIA or by an interested party who (b) The judge may summarily deny decedents, the probate case numbers of is adversely affected by the decision. the petition based on the deficiencies of the cases, the dates of the decedents’ (b) A petition for rehearing must be the petition. A summary denial is an deaths, the dates of the most recent filed with the judge within 30 days after order in which the judge denies the wills filed with the probate cases, and the date on which the decision was petition without deciding the merits of the dates, times, and places of the mailed under § 30.237. the issues raised in the petition and is hearings. (c) A petition for rehearing must warranted if: allege an error of fact or law in the (c) OHA will post the notice on its (1) The petition alleges mere decision and must state specifically and website at the following link: https:// disagreement with a decision; concisely the grounds on which the www.doi.gov/oha/organization/phd. (2) The petition is based on newly petition is based. The petition may be discovered evidence and fails to meet (d) Unless one of the circumstances supported with newly discovered the requirements of § 30.238(e); or listed in paragraph (e) of this section is evidence or evidence that was not (3) The petition is based solely on present, OHA will also arrange for the available at the time of the hearing. issues or evidence described in physical posting of the notice in each of (d) If you are an interested party and § 30.238(d)(1) or (2). the following locations: you received proper notice of the (c) If the petition fails to show proper (1) The home agency; hearing: grounds for rehearing, the judge will (2) The agency with jurisdiction over (1) You, or BIA on your behalf, may issue an order denying the petition for each parcel of trust or restricted raise an issue on rehearing only if you rehearing and including the reasons for property in the estate, if different from raised it at or before the hearing, denials. the home agency; whether or not you attended the (d) If the petition shows proper (3) A conspicuous place in the hearing. Any issue you raise for the first grounds for rehearing, the judge must: vicinity of the designated place of time on rehearing may be denied solely (1) Cause copies of the petition and all hearing, if the hearing is designated for because you failed to timely raise the papers filed by the petitioner to be a location other than the agency listed issue; and served on those persons whose interest in paragraph (d)(1) or (2) of this section; (2) You may only use evidence on in the estate may be affected if the and rehearing that was submitted at or petition is granted; before the hearing, if that evidence was (4) Additional locations if the judge (2) Allow all persons served a available or discoverable to you at that determines that further posting is reasonable, specified time in which to time. Any new evidence you submit on appropriate. respond to the petition for rehearing; rehearing may be disregarded by the and (e) OHA may proceed with the judge, if it was available or discoverable (3) Consider with or without a hearing without physical posting of the to you at the time the hearing was held. hearing, the issues raised in the petition. notice if physical posting was not (e) If the petition is based on newly (e) The judge may affirm, modify, or possible due to: discovered evidence or evidence that vacate the former decision. (1) The agency office being closed or was unavailable at the time of the (f) On entry of a final order, including inaccessible; or hearing, it must: a summary denial, the judge must (2) Extenuating circumstances (1) Be accompanied by documentation distribute the order to the petitioner, the preventing personnel physically of that evidence, including, but not agencies, and the interested parties. The posting. limited to, one or more affidavits of a order must include a notice stating that ■ 18. Revise §§ 30.238 through 30.246 to witness stating fully the content of the interested parties who are adversely read as follows: new evidence; and affected, or BIA, have the right to appeal Sec. (2) State the reasons for failure to the final order to the Board, within 30 * * * * * discover and present that evidence at days of the date on which the order was 30.238 May I file a petition for rehearing if the hearings held before issuance of the mailed, and giving the Board’s address. I disagree with the judge’s decision in decision. the formal probate hearing? (f) OHA will send to BIA a notice of § 30.241 May I submit another petition for 30.239 Does any distribution of the estate receipt of a petition for rehearing as rehearing? occur while a petition for rehearing is soon as practicable, ordering that the No. Successive petitions for rehearing pending? decedent’s estate not be distributed may not be filed by the same party or 30.240 How will the judge decide a petition during the pendency of the petition for BIA. for rehearing? rehearing. OHA will also forward a copy 30.241 May I submit another petition for § 30.242 When does the judge’s order on rehearing? of the petition and any documents filed a petition for rehearing become final? 30.242 When does the judge’s order on a with the petition to the interested parties and affected agencies. The order on a petition for rehearing petition for rehearing become final? will become final on the expiration of 30.243 May a closed probate case be § 30.239 Does any distribution of the reopened? the 30 days allowed for the filing of a estate occur while a petition for rehearing 30.244 When must a petition for reopening notice of appeal, as provided in this part is pending? be filed? and § 4.320 of this chapter. The 30.245 What legal standard will be applied The agencies must not initiate jurisdiction of the judge terminates to reopen a case? payment of claims or distribute any when he or she issues an order finally 30.246 What must be included in a petition portion of the estate while the petition disposing of a petition for rehearing, for reopening? is pending, unless otherwise directed by except for the reopening of a case under * * * * * the judge. this part.

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§ 30.243 May a closed probate case be the interested party discovered the (2) The petition requests the same reopened? alleged error; relief that was previously addressed in A closed probate case may be (c) A petition filed more than 3 years a rehearing order or reopening order; reopened if, the decision or order issued after the date of the decision or order (3) The petition raises only issues or in the probate case contains an error of must show that the need to correct the objections by or on behalf of an fact or law (including, but not limited error outweighs the interests of the interested party for the first time on to, a missing or improperly included public and heirs or devisees in the reopening and that interested party heir or devisee, a found will, or an error finality of the probate proceeding, received proper notice of the hearing or in the distribution of property), and the which may be shown by addressing the summary decision; error is discovered more than 30 days following factors in the petition, as (4) The petition is based on newly after the mailing date of a decision. applicable: discovered evidence and fails to meet (a) Any interested party or BIA may (1) The nature of the error; the requirements of § 30.238(e); or (5) The petition is based solely on seek correction of the error of fact or law (2) The passage of time; issues or evidence described in by filing a petition for reopening. (3) Whether the interested party (b) Reopening may also be initiated on § 30.245(c). exercised due diligence in pursuing his (b) If a summary denial is not a judge’s own motion. or her rights; warranted, the judge will review the § 30.244 When must a petition for (4) Whether the interested party’s merits of the petition to determine if the reopening be filed? ancestor exercised due diligence in petition asserts proper grounds for pursuing his or her rights and whether (a) A petition for reopening to correct reopening. a failure to exercise should be imputed an error of fact or law in a decision or (1) If the petition fails to assert proper to the interested party; post-decision order may be filed at any grounds for reopening, then the judge time, but if a petition for reopening is (5) The availability of witnesses and will issue an order denying the petition filed by an interested party, or by BIA documents; for reopening and addressing the merits on behalf of an interested party, it must (6) The general interest in of the petition. be filed within 1 year after the administrative finality; (2) If the petition asserts proper interested party’s discovery of the (7) The number of other estates that grounds for reopening, the judge will: (i) Cause copies of the petition and all alleged error. would be affected by the reopening, if papers filed by the petitioner to be (b) If a petition for reopening to known; and served on those persons whose interest correct an error of fact or law in the (8) Whether the property that was in the estate is still available for in the estate may be affected if the original decision is filed before the petition is granted; deadline to file a petition for rehearing redistribution if the case is reopened, if known. (ii) Allow all persons served a has passed, it will be treated as a reasonable, specified time in which to petition for rehearing. ■ 19. Add §§ 30.247 through 30.249 under undesignated center heading respond to the petition for reopening by § 30.245 What legal standard will be ‘‘Decisions in Formal Proceedings’’ to filling responses, cross-petitions, or applied to reopen a case? read as follows: briefs; (iii) Suspend further distribution of (a) If a petition for reopening is filed the estate or income during the within 3 years or less of the date of the § 30.247 What is not appropriate for a petition for reopening? reopening proceedings, if appropriate, decision or order, the judge may reopen by order to the affected agencies; the case to correct an error of fact or law A petition for reopening may not: (iv) Consider, with or without a in the decision or order. (a) Raise issues or objections that were hearing, the issues raised in the petition; (b) When a petition for reopening is already addressed in a prior rehearing or reopening order; and filed more than 3 years after the date of (v) Affirm, modify, or vacate the (b) Raise issues or objections when the decision or order, the judge may decision or order. reopen the case if the judge finds that the interested party had the opportunity (c) On entry of a final order, including the need to correct the error outweighs to raise them earlier because they a summary denial, the judge must the interests of the public and heirs or received proper notice of the hearing or distribute the order to the petitioner, the devisees in the finality of the probate summary decision; or agencies, and the interested parties. The proceeding. (c) Submit evidence that was available order must include a notice stating that or discoverable at the time the decision interested parties who are adversely § 30.246 What must be included in a was issued, or available during the petition for reopening? affected, or BIA, have the right to appeal rehearing period. The requirements at the final order to the Board, within 30 (a) A petition for reopening must: § 30.238(e) concerning presentation of (1) State specifically and concisely the days of the mailing date, and giving the new evidence on rehearing also apply to Board’s address. grounds on which the petition is based; the presentation of new evidence on and reopening. § 30.249 What happens when the judge (2) Include all relevant evidence in issues an order on reopening? the form of documents and/or sworn § 30.248 How will the judge decide my (a) Copies of the judge’s order on petition for reopening? affidavits supporting any allegations reopening must be mailed to the and relief requested in the petition. (a) The judge may summarily deny petitioner, the affected agencies, and all (b) A petition filed by an interested the petition for reopening based on interested parties. party or by BIA on behalf of an deficiencies in the petition. A summary (b) The judge must submit the record interested party must also: denial is an order in which the judge made on a reopening petition to the (1) State the date the interested party denies the petition without deciding the designated LTRO. discovered the alleged error; merits of the allegations in the petition (c) The order on reopening will (2) Include all relevant evidence in and is warranted if: become final on the expiration of the 30 the form of documents and/or sworn (1) The petition alleges mere days allowed for the filing of a notice of affidavits, concerning when and how disagreement with a decision; appeal, as provided in this part.

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§§ 30.250 and 30.251 through 30.254 (3) A statement identifying each untimely filed request for [Redesignated as §§ 30.500 and 30.503 newly added share of any allotment that reconsideration will not be considered through 30.506] increases the decedent’s total share of by OHA and will not disturb the finality ■ 20. Redesignate §§ 30.250 and 30.251 the ownership interest of the allotment of the distribution order. through 30.254 as §§ 30.500 and 30.503 to 5 percent or more; through 30.506. (4) A copy of BIA’s notification to the § 30.252 What happens if BIA identifies Tribes with jurisdiction over the that property was incorrectly included in a decedent’s inventory? Subpart K [Removed and Reserved] interests of the list of the additional interests that represent less than 5 If, after issuance of a decision, BIA ■ 21. Remove and reserve subpart K. identifies certain trust or restricted ■ percent of the entire undivided 22. Add new §§ 30.250 through 30.253 property or an interest therein that was under undesignated center heading ownership of each parcel (after being added to the decedent’s estate) under 25 incorrectly included in a decedent’s ‘‘Decisions in Formal Proceedings’’ to inventory, then BIA will submit a read as follows: CFR 15.401(b); and (5) A certification that all interested petition to OHA for an order notifying § 30.250 May a correction order be issued parties have been associated to the case all heirs or devisees of the correction to correct typographical and other non- and their names and addresses are and addressing any changes in substantive errors? current. distribution of property resulting from If, after issuance of a decision or other (c) The judge may, at the judge’s the correction. probate order, it appears that the discretion, either: (a) OHA will accept the petition at decision or other probate order contains (1) Deny the request for good cause; any time after issuance of the decision. non-substantive errors, the judge may or (b) The judge will review the petition issue a correction order to correct them. (2) Address the request with or to ensure that it identifies the property Errors are non-substantive if they are without a hearing. that it removed from the estate, explains merely typographical, clerical, or their (d) If the judge does not deny the why the property should not have been correction would not change the petition, the judge will issue an order included, and includes the following: distribution of a decedent’s property. that directs distribution of the (1) A newly issued certified inventory (a) A judge may issue a correction additional property. The order may describing the trust or restricted land order for the purpose of correcting non- direct that the additional property be remaining in decedent’s estate, if substantive errors on the judge’s own distributed in the same manner as applicable; motion. A request for correction order property already addressed in the (2) A copy of the decision, or may also be filed by BIA or an interested decision, or the order may direct that modification or distribution order and party at any time. the additional property be distributed in corresponding inventory issued in the (b) Copies of the correction order will a different manner than property probate case from which BIA discovered be sent to BIA and all interested parties. already addressed in the decision. that the property was incorrectly (c) The correction order is not subject (e) The judge must furnish copies of included in the decedent’s estate, if to appeal to the Board. the distribution order to the agency and applicable; to all interested parties who share in the (3) A statement identifying each § 30.251 What happens if BIA identifies estate. The distribution order will notify property in the decedent’s estate that additional property of a decedent after the all heirs or devisees, including any decreased to a total share of the probate decision is issued? surviving spouse, of the right to seek ownership of the allotment to less than If, after issuance of a decision, BIA reconsideration to: 5 percent as a result of the removal of identifies additional trust or restricted (1) Object to the findings and property from the estate; and property of a decedent that it had not conclusions of the distribution order; (4) A certification that all interested already identified at the time of the (2) Renounce their interest(s) in any of parties have been associated to the case decision, then BIA will submit a the additional property; and their names and addresses are petition to OHA for an order directing (3) Include the additional property in current. distribution of the additional property. an existing or new consolidation (c) The judge may, at the judge’s (a) OHA will accept the petition at agreement; discretion, either: any time after issuance of the decision. (4) Allege an error in BIA’s inventory (1) Deny the request for good cause; (b) The judge will review the petition under § 30.128; or or to ensure that the petition identifies the (5) File a request to purchase the (2) Address the request with or additional property and the source of additional property at probate. without a hearing. that property (e.g., inheritance or (f) The distribution order will also (d) If the judge does not deny the approval of a deed) and includes the instruct the heirs or devisees that they petition, the judge will issue an order following: must notify OHA in writing of their that addresses any modifications to the (1) A certified inventory describing request for reconsideration of the distribution of the decedent’s property the additional trust or restricted land, if distribution order within 30 days of the resulting from the correction of the applicable, or, if the additional property mailing of the distribution order, and inventory. The order may find that the is trust personalty, documents verifying that their right to seek reconsideration correction of the inventory does not the balance and source of the additional will be waived if they fail to notify OHA modify the distribution of any trust personalty, and a statement that in writing by the deadline. For purposes remaining property in the estate. the inventory lists only the property to of filing the request for reconsideration, (e) The judge must furnish copies of be added; the written submission will be the distribution order to the agency and (2) A copy of the decision, or considered to be filed with OHA on the to all interested parties who share in the modification or distribution order and date it is postmarked or faxed to OHA. estate. The distribution order will corresponding inventory issued in the (g) If OHA does not receive a timely inform all heirs or devisees, including probate case from which the property request for reconsideration, the any surviving spouse, of the right to was inherited by the decedent, if distribution order will become final on seek reconsideration to object to the applicable; the 45th day after the mailing date. An findings and conclusions of the

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distribution order or to allege an error distribution of the additional property 30.420 What happens if the successful in BIA’s inventory under § 30.128. or modification to distribution resulting bidder does not submit payment within (f) The distribution order will also from the inventory correction, as 30 days? instruct the heirs or devisees that they applicable. 30.421 When does a purchased interest vest must notify OHA in writing of their in the purchaser? (f) The judge may affirm, modify, or 30.422 What will happen to any lease objection to the distribution order vacate the distribution order. income received or accrued from within 30 days of the mailing of the (g) On entry of a final order, the judge purchased land interests before the distribution order, and that their right to must distribute the order to the purchased interest vests in the seek reconsideration will be waived if petitioner, the agencies, and the purchaser? they fail to notify OHA in writing by the interested parties. The order must 30.423 What may I do if I disagree with the deadline. For purposes of filing the include notice stating that interested judge’s determination to approve or deny request for reconsideration, the written parties who are adversely affected, or a purchase at probate? 30.424 When will the order approving or submission will be considered to be BIA, have the right to appeal the final filed with OHA on the date it is denying the purchase at probate become order to the Board, within 30 days of the final? postmarked or faxed to OHA. date on which the order was mailed, (g) If OHA does not receive a timely and giving the Board’s address. § 30.400 What may be purchased at request for reconsideration, the (h) Neither BIA nor any interested probate? distribution order will become final on party may file successive petitions for (a) The judge may allow an eligible the 45th day after the mailing date. An reconsideration. purchaser to purchase at probate all or untimely filed request for (i) The order on a petition for part of the trust or restricted land in the reconsideration will not be considered reconsideration will become final on the estate of a person who died on or after by OHA and will not disturb the finality expiration of the 30 days allowed for the June 20, 2006. Any interest in trust or of the distribution order. filing of a notice of appeal, as provided restricted land, including a life estate § 30.253 What happens if a request for in this part and § 4.320 of this chapter. that is part of the estate (i.e. a life estate reconsideration of a distribution order is ■ 23. Add subpart M to read as follows: owned by the decedent but measured by timely made? the life of someone who survives the Subpart M—Purchase at Probate (a) If an heir, devisee, BIA or Tribe decedent), may be purchased at probate, except as provided in paragraph (b) of files a timely request for Sec. reconsideration, OHA will: 30.400 What may be purchased at probate? this section. (1) Send to BIA a notice of receipt of 30.401 Who may purchase at probate? (b) Purchase of minerals-only real a petition for reconsideration as soon as 30.402 Does property purchased at probate property interests (i.e., an allotment that practicable, ordering that the newly remain in trust or restricted status? does not include a surface interest) may added property not be distributed or 30.403 Is consent required for a purchase at be considered for purchase at probate incorrectly included property not be probate? only if sufficient evidence of the fair 30.404 How do I initiate a purchase at removed, as applicable, during the market value of the real property probate? interest is submitted. No interest in a pendency of the petition for 30.405 When may I initiate a purchase at reconsideration; and minerals-only property may be probate? purchased at probate on the basis of the (2) Forward a copy of the petition and 30.406 May I withdraw my request to any documents filed with the petition to purchase at probate? value of the minerals themselves. the interested parties and affected 30.407 How will OHA address requests to § 30.401 Who may purchase at probate? agencies. purchase at probate? An eligible purchaser at probate is (b) The agencies must not distribute 30.408 What will OHA include in the any of the following: any portion of the estate while the probate decision or reconsideration order (a) Any devisee or eligible heir who petition is pending, unless otherwise when a purchase at probate request is pending? is receiving an interest in the same directed by the judge. 30.409 How will a pending purchase at parcel of land by devise or descent in (c) If proper grounds for probate request affect how the decedent’s the probate proceeding; reconsideration are not shown, the property is distributed? (b) Any person who owns an judge will issue an order denying the 30.410 How will the purchase at probate undivided trust or restricted interest in petition for reconsideration and process continue after the decision or the same parcel of land; including the reasons for the denial. reconsideration order is issued? (c) The Indian Tribe with jurisdiction (d) If proper grounds for 30.411 How will the interests to be over the parcel containing the interest; reconsideration are shown, the judge purchased at probate be valued? or must: 30.412 What will OHA do when it receives (1) Allow all persons served a BIA’s notification that an appraisal/ (d) The Secretary on behalf of the valuation has been completed? Tribe. reasonable, specified time in which to 30.413 Who are potential bidders? submit answers or legal briefs in 30.414 What will be contained in the Order § 30.402 Does property purchased at response to the petition; and to Submit Bids? probate remain in trust or restricted status? (2) Consider, with or without a 30.415 What may I do if I do not agree with Yes. The property interests purchased hearing, the issues raised in the petition, the determination of fair market value in at probate must remain in trust or including requests to renounce, requests the Order to Submit Bids? restricted status. to purchase newly added properties at 30.416 How does OHA decide whether a probate, and requests to include newly bid is successful? § 30.403 Is consent required for a added property in an existing or new 30.417 How does the judge notify the purchase at probate? parties whether there was a successful consolidation agreement. bid? (a) Except as provided in paragraphs (e) The judge will not reconsider 30.418 When must the successful bidder (b) and (c) of this section, to purchase findings made in the decision; the judge pay for the interest purchased? at probate a decedent’s interest in trust will only reconsider findings made in 30.419 What happens after the successful or restricted property, the eligible the distribution order regarding the bidder submits payment? purchaser must have the consent of:

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(1) The heir or devisee of the share to the eligible purchaser must submit the interest to an eligible purchaser during be purchased; written request before the completion of the probate process if a bid is made for (2) Any surviving spouse whose share the first probate hearing. fair market value or greater; is to be purchased and who receives a (b) If a property interest the eligible (2) Inform the heirs or devisees that life estate under 25 U.S.C. 2206(a)(2)(A) purchaser would like to purchase has OHA may consider failure to provide or (D); or been added to the decedent’s estate such written notification as a refusal to (3) Any recipient of an interest under § 30.251, the purchaser must consent to sell the property during received under an approved submit the written request within 30 probate, and may rely on such refusal to consolidation agreement whose share is days of the mailing of the distribution deny the request to purchase at probate; to be purchased. order issued under § 30.251(d). and (b) If consent is required from an heir (3) Direct BIA to postpone seeking an or devisee for a purchase at probate, the § 30.406 May I withdraw my request to appraisal/valuation of that property purchase at probate? heir or devisee may notify OHA at any until BIA receives future notice from time after the request for purchase at At any point before the purchase is OHA that at least one heir or devisee probate is filed that the heir or devisee complete, a purchaser may withdraw a has filed the written notification that the is not willing to consent to sell. request to purchase at probate. In order heir or devisee would consider selling (1) To notify OHA, the heir or devisee to withdraw a request to purchase, the the interest. must state, either on record at the requester must file with OHA a written § 30.409 How will a pending purchase at probate hearing, or in writing to OHA, statement that the request is withdrawn. The requester is not required to provide probate request affect how the decedent’s that the heir or devisee is not willing to property is distributed? consent to sell the property under any reasons or justification for withdrawal of the request. When the decision (or distribution circumstances and/or is not willing to order following a reconsideration order consider any bids to purchase the § 30.407 How will OHA address requests under § 30.251) becomes final, BIA may property interest. to purchase at probate? distribute the estate as stated in the (2) When OHA receives such notice, The judge has discretion to deny a decision or distribution order. Any it will deny the request to purchase the request to purchase at probate in the property interest that is the subject of a property interest to which the notice decision or at any time thereafter. If one pending request for purchase at probate applies. or more requests to purchase at probate will be conveyed with an encumbrance, (c) If you are the Tribe with are timely filed, OHA will address those which will remain on the property jurisdiction over the parcel containing requests in the probate decision (or interest until the request is fully the interest, you do not need the reconsideration order if the request to addressed. The encumbrance does not consent of those listed under paragraph purchase is for property that has been affect distribution of trust personalty. (a) of this section if the following five added to the decedent’s estate under conditions are met: § 30.251) and either deny the requests at § 30.410 How will the purchase at probate (1) The interest will descend by that time or provide instructions for process continue after the decision or reconsideration order is issued? intestate succession; continuing the purchase at probate (2) The judge determines based on the process. After a decision or reconsideration Department’s records that the order is issued: decedent’s interest at the time of death § 30.408 What will OHA include in the (a) If consent is required for the was less than 5 percent of the entire probate decision or reconsideration order purchase of an interest, and an heir or undivided ownership of the parcel of when a purchase at probate request is devisee does not submit written land; pending? notification that he or she would (3) The heir or surviving spouse was (a) If a purchase at probate request is consider selling the interest by the not residing on the property at the time pending at the time the probate decision deadline OHA established, the request of the decedent’s death; (or reconsideration order under to purchase the applicable property (4) The heir or surviving spouse is not § 30.251) is issued, and is not denied in interest(s) is denied by operation of law. a member of your Tribe or eligible to the decision (or reconsideration order), In such cases, OHA will notify the BIA become a member; and the decision (or reconsideration order) that it may remove the encumbrance (5) The interest is not included in an will include the following to address the remaining on the applicable property approved consolidation agreement. request: interest(s). (d) BIA may purchase an interest in (1) A list of all requests to purchase (b) If the heirs or devisees submit the trust or restricted land on behalf of the at probate that have been submitted; written notification that they would Tribe with jurisdiction over the parcel (2) Notification to the parties as to consider selling the interest by the containing the interest if BIA obtains whether consent of the applicable heirs deadline OHA established, then OHA consent under paragraph (a) of this or devisees is required to approve the will notify BIA that it may obtain an section or the conditions in paragraph requested purchase; and approval/valuation of the property. (3) Direction to BIA to obtain an (c) of this section are met. (c) In any other instances in which a appraisal or valuation for each interest purchase request is denied, BIA may § 30.404 How do I initiate a purchase at for which a purchase at probate request remove any encumbrance remaining on probate? has been submitted. the applicable property interest(s). Any eligible purchaser may initiate a (b) If the purchase of the interest purchase at probate by submitting a requires consent of the applicable heirs § 30.411 How will the interests to be written request to OHA to purchase at or devisees, the probate decision or purchased at probate be valued? probate. reconsideration order will also: (a) For each parcel for which a request (1) Direct the heirs or devisees to to purchase has been submitted, BIA § 30.405 When may I initiate a purchase at submit written notification within 30 will obtain appraisal(s) or other fair probate? days of the mailing date of the decision market valuation(s) in compliance with (a) To initiate a purchase at probate or reconsideration order that the heirs or the Uniform Standards of Professional during the initial probate proceeding, devisees would consider selling the Appraisal Practice (USPAP) or other

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approved valuation methods under 25 (b) Information concerning where a § 30.416 How does OHA decide whether a U.S.C. 2214. copy of the appraisal/valuation may be bid is successful? (b) Any appraisal/valuation must be viewed; OHA will decide that a bid is made on the basis of the fair market (c) Direction to potential bidders to successful if it meets the following value of the parcel as of the date of the submit bids to purchase the property requirements. decedent’s death. that are equal to or greater than the fair (a) The bid is equal to or greater than (c) No valuation document filed by market value; the fair market value of the interest and the BIA, aside from an appraisal, will be (d) A deadline by which OHA must was timely filed. used to determine the fair market value receive bids from all potential bidders; (b) In cases in which consent of an of trust land during a purchase at and heir, devisee, or surviving spouse is probate unless the document clearly required for the purchase, the applicable (e) A statement that if no bids are states that it assesses the fair market heir devisee, or surviving spouse submitted by the deadline, the request value of the real property interest or is accepts a bid. to purchase will be denied. accompanied by a certification that it (1) OHA may hold a hearing for the does so. § 30.415 What may I do if I do not agree purpose of determining whether the with the determination of fair market value § 30.412 What will OHA do when it applicable heir, devisee, or surviving in the Order to Submit Bids? receives BIA’s notification that an appraisal/ spouse accepts a bid. valuation has been completed? (a) You may object to the (2) If multiple bids are submitted, the When OHA receives BIA’s determination of fair market value applicable heir, devisee, or surviving notification that an appraisal/valuation stated in the Order to Submit Bids if: spouse may choose which bid to accept. has been completed and BIA files a (1) You are the heir, devisee, or (3) If the applicable heir, devisee, or Petition to Complete Purchase at surviving spouse whose interest is to be surviving spouse does not accept any Probate, OHA will issue an Order to sold; bid for his or her property interest, the request to purchase that property Submit Bids to all potential bidders to (2) You filed a written request to interest at probate will be denied. submit bids for property interests with purchase; or pending purchase at probate requests. (3) Any potential bidder or other party § 30.417 How does the judge notify the (a) Potential bidders may submit bids who may be affected by the parties whether there was a successful bid? even if they have not previously determination of the fair market value. (a) When a judge determines that a submitted a request to purchase at (b) To object to the determination of bid is successful, the judge will issue a probate. Notice of Successful Bid to all bidders, (b) OHA will identify the individuals/ fair market value: OST, the BIA agency that prepared the entities who are eligible to submit bids (1) You must file a written objection probate file, and the BIA agency having for each property interest available for with OHA no later than 45 days after the jurisdiction over the interest sold. The purchase at probate. mailing date of the Order to Submit Bids. Notice of Successful Bid will include the following information: § 30.413 Who are potential bidders? (2) The objection must: (a) The Tribe will be the only (1) The parcel and interest sold; (i) State the reasons for the objection; (2) The identity of the successful potential bidder and no other bids will and be accepted if: bidder; (1) The Tribe with jurisdiction over (ii) Include any supporting (3) The amount of the successful bid; the property submits the only request to documentation showing why the fair and purchase within the deadline; and market value should be modified. (4) Instructions to the successful (2) The requirements of § 30.403(c) (3) You must provide copies of the bidder to submit payment for the (i.e. consent of the heir is not required) written objection and any supporting interest. are met. documentation to all parties who have (b) If no successful bids are received, (b) In other situations, potential an interest in the purchase of the the judge will issue an order denying bidders may include: property. the request to purchase the property. (1) Any eligible purchaser who has (c) Any party who may be affected by satisfied the requirements of §§ 30.404 § 30.418 When must the successful bidder the determination of the fair market pay for the interest purchased? and 30.405; value may file a response to the written (2) Eligible heirs; objection with OHA no later than 45 The successful bidder makes (3) Eligible devisees; days after the date the written objection payment, according to the instructions (4) The Indian Tribe with jurisdiction was served on the interested parties. in the Notice of Successful Bid, of the over the property interest; and Any document supporting the party’s full amount of the purchase price no (5) Co-owners of trust or restricted response must be submitted with the later than 30 days after the mailing date interests in the same allotment who response. of the Notice of Successful Bid. have previously notified BIA in writing (d) The judge will consider any timely § 30.419 What happens after the that they wish to receive probate notices submitted written objection and successful bidder submits payment? concerning that allotment. responses, and will determine whether When the judge is notified by BIA that § 30.414 What will be contained in the to modify the finding of fair market BIA has received payment, the judge Order to Submit Bids? value, with or without a valuation will issue an order: For each property for which a request hearing. OHA will issue a Modified (a) Approving the sale and stating that to purchase at probate is pending, the Order to Submit Bids that addresses the title must transfer as of the date the Order to Submit Bids will include: objection and responses. order becomes final; and (a) A finding of the fair market value (e) If you were directed to submit a (b) For the sale of an interest subject of the interest to be sold, determined in bid, you may preserve your right to to a life estate, directing allocation of accord with the appraisal/valuation submit a bid by filing the written the proceeds of the sale and accrued provided by the BIA under § 30.411; objection instead of a bid. income among the holder of the life

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estate and the holders of any remainder § 30.501 When is joint tenancy presumed? decedent’s date of death, subject to the interests using 25 CFR part 179. A judge will presume that a testator exceptions and limitations detailed in intended to devise interests in joint 25 U.S.C. 2206(a)(2)(B)–(C). § 30.420 What happens if the successful tenancy when: (2) If the decedent died without bidder does not submit payment within 30 surviving lineal descendants who are days? (a) A testator devises trust or eligible heirs, and the decedent owned (a) If the successful bidder fails to pay restricted interests in the same parcel of land to more than one person; and less than 5 percent of an allotment, that the full amount of the bid within 30 interest will be distributed either to the days, the judge will issue an order (b) The will does not contain clear and express language stating that the Indian Tribe with jurisdiction over the denying the request to purchase or the interest or, if there is no Indian Tribe bid (whichever is applicable) and the devisees receive the interests as tenants in common. with jurisdiction, then split equally interest in the trust or restricted among the co-owners of the parcel as of property will be distributed as § 30.502 How does a judge resolve the decedent’s date of death, subject to determined by the judge in the decision conflicts between the anti-lapse provision the exceptions and limitations or distribution order. and the presumption of joint tenancy? concerning small fractional interests (b) The time for payment may not be If the presumption of joint tenancy detailed in 25 U.S.C. 2206(a)(2)(D). extended. and anti-lapse provisions conflict, then (3) For either paragraph (b)(1) or (2) of (c) Any partial payment received will the judge will give priority to the this section, the judge will also be returned. presumption of joint tenancy and the determine whether the decedent had a § 30.421 When does a purchased interest share of the deceased devisee will surviving spouse, and whether the vest in the purchaser? descend to the surviving devisees. surviving spouse is entitled to a life If the request to purchase (or a bid ■ 26. Revise newly redesignated estate. ■ submitted by a potential bidder) is § 30.506 to read as follows: 27. Add § 30.507 to read as follows: approved, the purchased interest vests § 30.506 When a decedent died intestate § 30.507 How will trust personalty be in the purchaser on the date OHA’s without heirs, what law applies to trust or distributed if decedent died intestate on or order approving the sale becomes final. restricted property? after June 20, 2006, and the Act does not The law that applies to trust or specify how the trust personalty should be § 30.422 What will happen to any lease distributed? income received or accrued from restricted property when a decedent purchased land interests before the died intestate without heirs depends When the judge determines that a purchased interest vests in the purchaser? upon whether the decedent died before decedent died intestate on or after June 20, 2006, without a surviving spouse or Any lease income received or accrued June 20, 2006 or on or after June 20, eligible heirs under the Act, and from a property interest before the date 2006. without trust or restricted land over the purchased interest vests in the (a) When the judge determines that a which one, and only one, Indian Tribe purchaser will be paid to the heir(s), decedent died before June 20, 2006, has jurisdiction, the judge will direct devisee(s), or surviving spouse from intestate without heirs, the judge will distribution of trust personalty, whom purchase of the interest was apply 25 U.S.C. 373a or 25 U.S.C. 373b including trust funds that were on made based on the fractional ownership to address distribution of trust or deposit in the decedent’s IIM account or interests in the parcel as determined in restricted property in the decedent’s owing to the decedent as of the the decision or distribution order. estate. If it is necessary to determine the decedent’s date of death, as follows: value of an interest in land located on (a) To the decedent’s surviving § 30.423 What may I do if I disagree with the public domain, to properly apply 25 children, grandchildren, great- the judge’s determination to approve or U.S.C. 373b, the judge will determine deny a purchase at probate? grandchildren, parents, or siblings who fair market value based on an appraisal are not eligible heirs under the Act, in If you are an interested party who is or other valuation method developed by the order set forth in 25 U.S.C. adversely affected by the judge’s order the Secretary under 25 U.S.C. 2214. If to approve or deny a purchase at 2206(a)(2)(B). the interest in land located on the (b) If trust personalty does not probate, you may file an appeal to the public domain is valued at more than Board within 30 days after the mailing descend under paragraph (a) of this $50,000, the judge’s decision concerning section, then to the decedent’s surviving date of OHA’s order approving or distribution of that interest will be a denying the purchase at probate. nieces and nephews, in equal shares. recommended decision only. (c) If trust personalty does not § 30.424 When will the order approving or (b) When the judge determines that a descend under paragraph (b) of this denying the purchase at probate become decedent died intestate on or after June section, then to the Indian Tribe in final? 20, 2006, without surviving lineal which the decedent was enrolled at the The order to approve or deny the descendants, parents, or siblings who time the decedent died. purchase at probate becomes final at the are eligible heirs, the judge will apply (d) If trust personalty does not end of the 30-day appeal period, unless provisions of the Act to determine descend under paragraph (c) of this a timely appeal is filed. distribution of trust or restricted land in section, then: the decedent’s estate. (1) To the Indian Tribe in which the §§ 30.500 and 30.503 through 30.506 (1) If the decedent died without [Designated as Subpart N] decedent’s biological parents were surviving lineal descendants, parents, or enrolled, if both were enrolled in the ■ 24. Designate newly redesignated siblings who are eligible heirs, and the same Tribe; §§ 30.500 and 30.503 through 30.506 as decedent owned at least 5 percent of an (2) To the Indian Tribes in which the subpart N and add a heading for subpart allotment, that interest will be decedent’s biological parents were N to read as follows: distributed either to the Indian Tribe enrolled, in equal shares, if each of the Subpart N—Miscellaneous with jurisdiction over the interest or, if decedent’s biological parents was there is no Indian Tribe with enrolled in a different Tribe; or ■ 25. Add §§ 30.501 and 30.502 to read jurisdiction, then split equally among (3) If only one biological parent was as follows: the co-owners of the parcel as of the enrolled in an Indian Tribe, to the

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Indian Tribe in which that biological include designating contractor commanders have a full understanding parent was enrolled. personnel as part of the DoD total force, of what contracted support is needed (e) If trust personalty does not incorporating requirements for and when; how requirements can be descend under paragraph (d) of this accountability and reporting, and optimized and executed; and how the section, then: clarifying responsibilities. Through Department includes contracted support (1) To the Indian Tribe in which the these updates, the Department will also as part of the total force. The existing decedent’s biological grandparents were address open recommendations from part describes, in detail, the specific enrolled; if all enrolled biological the Government Accountability Office DoD policy, responsibilities, and grandparents were enrolled in the same (GAO). OCS is a segment of the GAO procedures that enable and substantiate Tribe; High Risk Area of DoD Contract OCS and enable both the DoD and its (2) To the Indian Tribes in which the Management and while the latest update commercial partners to plan for decedent’s biological grandparents were in March 2019 acknowledged progress, contractor support when operating with enrolled, in equal shares, if two or more GAO cited the need to revise and U.S. Armed Forces in applicable of the decedent’s biological reissue guidance to address several open operations. Contractors are currently grandparents were enrolled in different recommendations. required to load their employees’ Tribes; or DATES: Comments must be received by information in the Synchronized Pre- (3) If only one biological grandparent March 8, 2021. deployment Operational Tracker— Enterprise System (SPOT–ES) when an was enrolled in an Indian Tribe, to the ADDRESSES: You may submit comments, employee deploys under a contract to Indian Tribe in which that biological identified by docket number and/or support U.S. military operations grandparent was enrolled. Regulatory Information Number (RIN) overseas, and this revision neither (f) If trust personalty does not descend number and title, by any of the under paragraph (e) of this section, then increases nor decreases the burden of following methods: this requirement. The changes resulting to an Indian Tribe selected by the judge, • Federal Rulemaking Portal: http:// from the revised rule increase in consideration of the following factors: www.regulations.gov. Follow the (1) The origin of the funds in the transparency of new policies and better instructions for submitting comments. inform the DoD’s commercial partners. decedent’s IIM account; • Mail: DoD cannot receive written (2) The Tribal designator contained in comments at this time due to the B. Background the owner identification number or IIM COVID–19 pandemic. Comments should account number assigned to the Operational contract support was be sent electronically to the docket born in the aftermath of significant decedent by BIA; and listed above. reporting on DoD acquisition and (3) The geographic origin of the Instructions: All submissions received contracting operations in Iraq and decedent’s Indian ancestors. must include the agency name and Afghanistan, including the 2008 Tara Sweeney, docket number or RIN for this Federal ‘‘Commission on Army Acquisition and Assistant Secretary—Indian Affairs. Register document. The general policy Program Management in Expeditionary for comments and other submissions Scott Cameron, Operations’’ and the 2011 ‘‘Commission from members of the public is to make on Wartime Contracting in Iraq and Principal Deputy Assistant Secretary for these submissions available for public Policy, Management and Budget. Afghanistan.’’ The Commission on viewing on the internet at http:// [FR Doc. 2020–28306 Filed 1–6–21; 8:45 am] Wartime Contracting in Iraq and www.regulations.gov as they are Afghanistan published findings that BILLING CODE 4337–15–P received without change, including any identified deficiencies related to personal identifiers or contact contract management and oversight that information. required DoD’s attention. As a result, DEPARTMENT OF DEFENSE FOR FURTHER INFORMATION CONTACT: Ms. the DoD has invested heavily in efforts Office of the Secretary Donna M. Livingston, 703–692–3032, to address these findings and enhance [email protected]. oversight, better define contract requirements, and improve the visibility 32 CFR Part 158 SUPPLEMENTARY INFORMATION: and accounting of contractors [Docket ID: DOD–2020–OS–0015] I. Executive Summary supporting U.S. operations overseas. There has been persistent scrutiny of the RIN 0790–AK81 A. Purpose of the Rule DoD’s progress to close these Operational Contract Support (OCS) The Joint Force relies on contracted deficiencies, namely by the GAO. The Outside the United States support in nearly every mission and GAO has reviewed the Departments’ operational setting. Operational progress on OCS on multiple occasions, AGENCY: Office of the Under Secretary of Contract Support (OCS) is how the and classified OCS as a segment within Defense for Acquisition and Department plans for and integrates the DoD Contract Management High Sustainment, Department of Defense contracted capabilities and associated Risk Area. In the last report (GAO–19– (DoD). contractor personnel providing support 157SP) published in March 2019 ACTION: Proposed rule. to operations within a designated (available at https://www.gao.gov/ geographic area. Since 2007, the products/GAO-19-157SP), GAO SUMMARY: The DoD is issuing this rule Department has been heavily focused on recognized the progress made on OCS to update the policies and procedures better oversight, management, and and affirmed that it could remove its for operational contract support (OCS) accounting of contractors supporting high-risk status. Removal could come outside the United States. These U.S. military operations. Concurrently, quickly once the DoD successfully changes include broadening the range of there has been increasing demand from completes the few remaining GAO applicable operational scenarios, commanders for more visibility of recommendations. By implementing the eliminating content internal to the contractor personnel. Successfully GAO recommendations, updating Department, and making updates to planning for, procuring, and integrating internal policies especially DoD comply with law and policy. Changes contracted support requires that Instruction 3020.41 ‘‘Operational

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Contract Support’’ (available at https:// II. Regulatory History may be employed; updates requirements www.esd.whs.mil/Portals/54/ An interim final rule for this part was for the development of contractor Documents/DD/issuances/dodi/ published on December 29, 2011 (76 FR oversight plans; increases visibility and 302041p.pdf), and revising this CFR 81807). The DoD adopted the interim accountability; reinforces requirements part, the DoD will address the vital need final rule as a final rule without change for adequate military personnel for greater efficiency and accountability. on December 3, 2013 (78 FR 72573). The necessary to execute contract oversight; Improved policy and guidance will 2011 rule action procedurally closed and describes U.S. Government foster an environment focused on gaps that existed in planning, oversight, standards for medical care available to operational planning of contracted and management of DoD contractors deployed contractor personnel, when support to operations and improved supporting contingency operations. The authorized. It also updates policy readiness, and will result in cost savings rule was necessary to address legislative resulting from changes in law and by reducing the potential for waste, mandates, remove confusion with other policy. Lastly, the rule has been fraud, and abuse. policies, and better reflect the practices streamlined to show only information relevant to the public and removes C. Summary of Major Provisions and procedures in place at that time. The rule was crucial at the time due to internally facing responsibilities and This proposed rule: (1) Broadens the the sustained employment of a large procedures. types of operations when contracted number of contractors in the U.S. c. Affected Population support may be employed, beyond Central Command area of responsibility; contingency operations; (2) describes the importance of contractor oversight The existing rule provides and clarifies contractors’ responsibilities in support of counter-insurgency information relevant to contractors and related to theater admission operations in Afghanistan; and the their personnel that may provide requirements for their personnel requirement to manage contractors contracted support to the DoD during deploying in support of operations effectively during the withdrawal of applicable operations outside the outside the United States; (3) clarifies U.S. forces from Iraq in 2011. United States. The following populations are expected to continue to contractors’ responsibilities to provide III. Regulatory Analysis personnel who meet specific medical be stakeholders in the content of the and dental fitness standards; (4) details A. Regulatory Planning and Review revised rule: the services the U.S. Government is a. Executive Orders D Contractor personnel—Provides authorized to provide to contractors; information and describes the and (5) removes all internally facing Executive Order 12866, ‘‘Regulatory requirements the DoD imposes on information to promote efficiency and Planning and Review,’’ and Executive employees of commercial industry streamline communication with the Order 13563, ‘‘Improving Regulation partners who may be employed in public. and Regulatory Review’’ support of DoD operations conducted To address GAO recommendations to Executive Orders 12866 and 13563 outside the United States. improve the ability to track contracts direct agencies to assess all costs and D CCompanies or organizations— and contractor personnel in contingency benefits of available regulatory Provides information for commercial and other operations and to help ensure alternatives and, if regulation is industry partners to understand how that DoD possesses the capability to necessary, to select regulatory contractor personnel are managed and collect and report statutorily required approaches that maximize net benefits accounted for and includes deployment information and to clarify (including potential economic, requirements necessary to provide responsibilities and procedures, environmental, public health and safety support to DoD in applicable operations. § 158.5(g) was updated to address SPOT effects, distribute impacts, and equity). minimum reporting requirements, Executive Order 13563 emphasizes the d. Costs importance of quantifying both costs system requirements, and references to A negligible burden reduction to the and benefits, of reducing costs, of the SPOT business rules were included public may be achieved by the harmonizing rules, and of promoting which include area specific clarifications and increased requirements. flexibility. This rule has been designated a ‘‘not significant regulatory transparency provided by this revision. D. Legal Authority action’’ and has been determined not to Contractors may save time by having be economically significant under increased access to DoD policy The legal authority for this rule is section 3(f) of Executive Order 12866. requirements and in avoiding found in Section 861, Memorandum of unnecessary duplication or providing Understanding on Matters Relating to Executive Order 13771, ‘‘Reducing personnel not suitable or prepared to Contracting, of the National Defense Regulation and Controlling Regulatory support applicable operations outside Authorization Act for Fiscal Year 2008 Costs’’ the United States. The changes (Pub. L. 110–181), and Section 854, This rule is not significant under implemented by this rule are not Additional Contractor Requirements Executive Order 12866; therefore, it is expected to alter significantly the and Responsibilities Relating to Alleged not subject to the requirements of baseline burden that was calculated as Crimes By or Against Contractor Executive Order 13771. part of the most recent SPOT–ES system Personnel in Iraq and Afghanistan, of collection, Control Number 0704–0460, the Duncan Hunter National Defense b. Summary approved by the OMB in 2019 in Authorization Act for Fiscal Year 2009 This rule broadens the range of accordance with the Public Law 96–511, (Pub. L. 110–417). operations in which contracted support ‘‘Paperwork Reduction Act.’’

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Collection instrument 2016 approved 2019 approved (SPOT database) estimates estimates

Estimation of Respondent Burden Hours

Number of Respondents ...... 1670 964. Number of Responses per Respondent ...... 56 77. Number of Total Annual Responses ...... 93,520 74,561. Response Time (Amount of time needed to complete the collection instrument) ...... 5 .5. Respondent Burden Hours (Total Annual Responses multiplied by Response Time) Please 46,760 37,291. compute these into hours).

Labor Cost of Respondent Burden

Number of Responses ...... 93,520 74,561 (decrease of 18,959). Response Time per Response ...... 5 .5. Respondent Hourly Wage ...... $36.00 $32.11. Labor Burden per Response (Response Time multiplied by Respondent Hourly Wage) ...... $18.00 $16.06. Total Labor Burden (Number of Respondents multiplied by Response Time multiplied by Re- $1,683,360 $1,197,077 spondent Hourly Wage). (decrease of $486,283).

The burden and cost decreased due to has been working for more than a In summary, if the status quo is contractor deployments to ongoing decade to establish OCS as a core maintained, resolution of the GAO contingencies having been reduced defense capability; one that minimizes recommendations cannot be since 2016. Thus, the number of risk, increases readiness and flexibility, implemented. responses required was reduced from and improves effectiveness. This rule B. Public Law 96–354, ‘‘Regulatory 93,520 to 74,561. This drove the codifies policy that implements a Flexibility Act’’ (5 U.S.C. 601) associated calculations down and programmatic approach and improves resulted in a decrease in cost of oversight of contracted support, The DoD certifies that this rule, if $486,283. In addition, the difference in reducing the likelihood that historical promulgated, does not have a significant the respondent hourly range is instances of waste, fraud, and abuse will economic impact on a substantial attributed to the respondent labor be repeated. This rule furthermore number of small entities. Based on data category from a management labor ensures contractors supporting from the Federal Procurement Data category in 2016 to human resources applicable operations are fully prepared System—Next Generation for contract specialist in 2019. Wage information is to meet the requirements necessary to actions for fiscal year 2019 with a place based on data from the Department of support operations outside the United of performance outside the United Labor Statistics (https://www.bls.gov/ States. States, approximately 15,742 of 2.4 oes/current/oes_nat.htm). million (or 1 percent), are to small Based on data from the Federal f. Alternatives businesses. This amounts to Procurement Data System—Next $2,438,406,319 of $36,747,264,771 (or The DoD has considered the following less than 8 percent) of contracts Generation for contract actions for fiscal alternatives: year 2019 with a place of performance obligated to small businesses D worldwide. Therefore, the requirements outside the United States, No action—maintain the status quo. of the Regulatory Flexibility Act do not approximately 15,742 of 2.4 million (or If no action is taken, the significant apply. 1 percent), are to small businesses. This improvements made to accounting and amounts to $2,438,406,319 of managing, planning for, and overseeing C. Congressional Review Act $36,747,264,771 (or less than 8 percent) contracted support will not be codified, raising the risk that past The Congressional Review Act, 5 of contracts obligated to small U.S.C. 801 et seq. generally provides businesses worldwide. mismanagement will persist, resulting in significant waste, fraud, and abuse. In that before a rule may take effect, the e. Benefits addition, the rule must be updated and agency promulgating the rule must submit a rule report, which includes a OCS is a force multiplier, giving published before an update to the associated DoD issuance, DoD copy of the rule, to each House of the commanders more options, and Congress and to the Comptroller General supports force optimization. When Instruction 3020.41, ‘‘Operational Contract Support (OCS),’’ may be of the United States. The DoD will properly planned for and integrated into submit a report containing the final rule operations, OCS can be leveraged to issued. Publishing the updated policy is required to remove the OCS element of and other required information to the support the Secretary of Defense’s U.S. Senate, the U.S. House of objective of restoring military readiness DoD Contract Management as a GAO High-Risk Area. Representatives, and the Comptroller and to close any gaps in fulfilling General of the United States. A major requirements associated with D Publish proposed rule. Codify rule cannot take effect until 60 days maintenance, material, intelligence changes in policy and statute that result after it is published in the Federal information, or translation services, in improved management of contract Register. This rule is not a ‘‘major rule’’ which can be filled by either short- or requirements, contractor management as defined by 5 U.S.C. 804(2). long-term commercial capabilities. This and visibility and accountability of rule most significantly improves and contractors. These improvements will D. Sec. 202, Public Law 104–4, refines DoD policy for planning and support removing OCS as a sub-area ‘‘Unfunded Mandates Reform Act’’ integrating contracted support in under the GAO High Risk Area of DoD Section 202 of the Unfunded applicable operations. The Department Contract Management. Mandates Reform Act of 1995 (UMRA)

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(2 U.S.C. 1532) requires agencies to ■ Accordingly, 32 CFR part 158 is by a combatant commander (CCDR) or assess anticipated costs and benefits proposed to be revised to read as as directed by the Secretary of Defense. before issuing any rule whose mandates follows: Austere environment. Areas where require spending in any one year of applicable operations may be conducted $100 million in 1995 dollars, updated PART 158—OPERATIONAL that are in remote, isolated locations, annually for inflation. This rule will not CONTRACT SUPPORT (OCS) OUTSIDE where access to modern comforts and mandate any requirements for State, THE UNITED STATES resources may be limited or non- local, or tribal governments. existent. Sec. Civil augmentation program. External E. Public Law 96–511, ‘‘Paperwork 158.1 Purpose. support contracts designed to augment Reduction Act’’ (44 U.S.C. Chapter 35) 158.2 Applicability. 158.3 Definitions. Military Department logistics 158.4 Policy. capabilities with contracted support in It has been determined that 32 CFR both preplanned and short-notice part 158 does impose reporting or 158.5 Procedures. 158.6 Guidance for contractor medical and operations. recordkeeping requirements under the dental fitness. Contingency contract. A legally Paperwork Reduction Act of 1995. This binding agreement for supplies, SPOT–ES system collection has been Authority: Public Law 110–181; Public Law 110–417. services, and/or construction let by a reviewed and approved by the OMB and U.S. Government contracting officer in assigned OMB Control Number 0704– § 158.1 Purpose. the operational area, or that has a 0460 (cleared through September 30, This part establishes policy, assigns prescribed area of performance within 2022). The SPOT–ES collection package responsibilities, and provides an operational area. encapsulated the requirement for all procedures for operational contract Contingency operation. A military DoD, Department of State (DOS), and support (OCS), including contract operation that is either designated by United States Agency for International support integration, contracting support, the Secretary of Defense as a Development (USAID) contractor management, and deployment of contingency operation or becomes a personnel to register in the SPOT–ES defense contractor personnel in contingency operation as a matter of law database. Within the current collection, applicable operations outside the as defined in 10 U.S.C. 101(a)(13). 87 percent of contractor personnel United States. Contract administration. The records were related to DoD contracts processes and procedures of contracting, and less than 13 percent were from § 158.2 Applicability. from contract award through closeout, other government agencies. This This part applies to contracts and that includes oversight efforts by collection of information does not contractor personnel supporting DoD contracting professionals and require collection to be conducted in a Components operating outside the designated non-contracting personnel to manner inconsistent with the guidelines United States in contingency operations, ensure that supplies, services, and/or delineated in 5 CFR 1320.5(d)(2). humanitarian assistance, or peace construction are delivered and/or System of Records Notices (SORNs) operations and other activities, performed in accordance with the terms and Privacy Impact Assessments (PIAs) including operations and exercises as and conditions of the contract. (https://www.dmdc.osd.mil/appj/dwp/ determined by a Combatant Commander Contract support integration. The documents.jsp) have been accomplished or as directed by the Secretary of coordination and synchronization of under SORN Identifier DMDC 18 DoD Defense. contracted support executed in a designated operational area in support (https://dpcld.defense.gov/Privacy/ § 158.3 Definitions. SORNsIndex/DOD-wide-SORN-Article- of military operations. View/Article/570569/dmdc-18-dod/), Unless otherwise noted, the following Contracting. Purchasing, renting, ‘‘Synchronized Predeployment terms and their definitions are for the leasing, or otherwise obtaining supplies Operational Tracker Enterprise Suite.’’ purposes of this part. or services from nonfederal sources. Acquisition. The acquiring by contract Contracting includes description (but F. Executive Order 13132, ‘‘Federalism’’ with appropriated funds of supplies or not determination) of supplies and services (including construction) by and services required, selection and Executive Order 13132 establishes for the use of the Federal Government solicitation of sources, preparation and certain requirements that an agency through purchase or lease, whether the award of contracts, and all phases of must meet when it promulgates a supplies or services are already in contract administration. It does not proposed rule (and subsequent final existence or must be created, developed, include making grants or cooperative rule) that imposes substantial direct demonstrated, and evaluated. agreements. requirement costs on State and local Acquisition begins at the point when Contracting officer. A person with the governments, preempts State law, or agency needs are established and authority to enter into, administer, and/ otherwise has federalism implications. includes the description of requirements or terminate contracts and make related The changes in this rule will not have to satisfy agency needs, solicitation and determinations and findings. The term a substantial effect on State and local selection of sources, award of contracts, includes certain authorized governments and do not implicate contract financing, contract representatives of the contracting officer federalism. performance, contract administration, acting within the limits of their List of Subjects in 32 CFR Part 158 and those technical and management authority as delegated by the contracting functions directly related to the process officer. ‘‘Administrative contracting Accountability/visibility, Accounting, of fulfilling agency needs by contract. officer (ACO)’’ refers to a contracting Armed forces, Combating trafficking in Applicable operations. Contingency officer who is administering contracts. persons, Deployment and redeployment, operations, humanitarian assistance, or ‘‘Termination contracting officer (TCO)’’ Government contracts, Medical peace operations conducted outside the refers to a contracting officer who is clearances, Passports and visas, United States and other activities, settling terminated contracts. A single Planning, Security measures, Support to including operations and exercises contracting officer may be responsible contractors, Transportation. outside the United States as determined for duties in any or all of these areas.

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Contracting Officer’s Representative with the DoD to furnish services, situation where they must survive, (COR). An individual, including a supplies, or construction. evade, resist, or escape. contracting officer’s technical DoD Components. Includes the Office Law of war. The treaties and representative (COTR), designated and of the Secretary of Defense, the Military customary international law binding on authorized in writing by the contracting Departments, the Office of the Chairman the United States that regulate: The officer to perform specific technical or of the Joint Chiefs of Staff (CJCS) and resort to armed force; the conduct of administrative functions. the Joint Staff, the Combatant hostilities and the protection of war Contracting support. The Commands (CCMDs), the Office of the victims in international and non- coordination of contracts and execution Inspector General of the Department of international armed conflict; belligerent of contracting authority by a warranted Defense, the Defense Agencies, and the occupation; and the relationships contracting officer that legally binds DoD Field Activities. between belligerent, neutral, and non- commercial entities to perform Essential contractor service. A service belligerent States. Sometimes also called contractual requirements in support of provided by a firm or an individual the ‘‘law of armed conflict’’ or DoD operational requirements. under contract to the DoD to support ‘‘international humanitarian law,’’ the Contractor management. The mission-essential functions, such as law of war is specifically intended to oversight and integration of contractor support of vital systems, including ships address the circumstances of armed personnel and associated equipment owned, leased, or operated in support of conflict. providing support to military military missions or roles at sea; Letter of authorization (LOA). A operations. associated support activities, including document issued by a contracting officer Contractor personnel. Any individual, installation, garrison, and base support or his or her designee that authorizes employed by a firm, corporation, services; and similar services provided contractor personnel to accompany the partnership, or association, employed to foreign military sales customers force to travel to, from, and within an under contract with the DoD to furnish under the Security Assistance Program. operational area, and outlines U.S. services, supplies, or construction. Services are essential if the effectiveness Government authorized support Contractor personnel may include U.S. of defense systems or operations has the authorizations within the operational citizens and host nation and third area, as agreed to under the terms and potential to be seriously impaired by the country national (TCN) individuals. conditions of the contract. For more interruption of these services, as Contractor personnel accountability. information, see 48 CFR subpart 225.3. The process of identifying, capturing, determined by the appropriate Local national (LN). An individual and recording the personally functional commander or civilian who is a permanent resident of the identifiable information and assigned equivalent. nation in which the United States is permanent duty location of an Expeditionary Contract conducting operations. individual contractor employee through Administration (ECA). Contract Long-term care. A variety of services the use of a designated database. administration conducted during joint that help a person with comfort, Contractor personnel visibility. or other expeditionary operations. personal, or wellness needs. These Information on the daily location, Formerly known as the Contingency services assist in the activities of daily movement, status, and identity of Contract Administrative Services or living, including such things as bathing contractor personnel. CCAS. and dressing. Sometimes known as Contractors Authorized to Expeditionary operations. Activities custodial care. Accompany the Force (CAAF). organized to achieve a specific objective Mission-essential functions. Those Contractor personnel and all tiers of in a foreign country. organizational activities that must be subcontractor personnel authorized to External support contracts. Contracts performed under all circumstances to accompany U.S. Armed Forces in awarded by contracting organizations achieve DoD component missions or applicable operations outside of the whose contracting authority does not responsibilities, as determined by the United States who have been afforded derive directly from the theater support appropriate functional commander or this status through the issuance of a contracting head(s) of contracting civilian equivalent. Failure to perform Letter of Authorization (LOA). CAAF activity or from systems support or sustain these functions would generally include all U.S. citizen and contracting authorities. significantly affect the DoD’s ability to TCN employees not normally residing Host nation (HN). A nation that provide vital services or exercise within the operational area whose area permits, either in writing or other authority, direction, and control. of performance is in the direct vicinity official invitation, government Non-CAAF. Personnel who are not of the U.S. Armed Forces and who are representatives or agencies and/or designated as CAAF, such as LN routinely co-located with the U.S. agencies of another nation to operate, employees and non-LN employees who Armed Forces. In some cases, CCDR under specified conditions, within its are permanent residents in the subordinate commanders may designate borders. operational area or TCNs not routinely mission-essential host nation (HN) or Hostile environment. Operational residing with the U.S. Armed Forces local national (LN) contractor personnel environment in which local government (and TCN expatriates who are (e.g., interpreters) as CAAF. CAAF forces, whether opposed to or receptive permanent residents in the operational includes contractor personnel to operations that a unit intends to area), who perform support functions previously identified as contractors conduct, do not have control of the away from the close proximity of, and deploying with the force. CAAF status territory and population in the intended do not reside with, the U.S. Armed does not apply to contractor personnel operational area. Forces. U.S. Government-furnished within U.S. territory working in support Isolated personnel. U.S. military, DoD support to non-CAAF is typically of contingency operations outside the civilians, and contractor personnel (and limited to force protection, emergency United States. others designated by the President or medical care, and basic human needs Defense contractor. Any individual, Secretary of Defense) who are (e.g., bottled water, latrine facilities, firm, corporation, partnership, unaccounted for as an individual or a security, and food when necessary) association, or other legal non-Federal group while supporting an applicable when performing their jobs in the direct entity that enters into a contract directly operation and are, or may be, in a vicinity of the U.S. Armed Forces.

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Operational area. An overarching the Military Service component, special (e) A common joint database (i.e., the term encompassing more descriptive operations force command, or Synchronized Predeployment and terms (such as area of responsibility and designated joint contracting authority Operational Tracker-Enterprise Suite joint operations area) for geographic for the designated operation. (SPOT–ES) or its successor) will be used areas where military operations are Total force. The organizations, units, to maintain contractor personnel conducted. and individuals that comprise the DoD visibility and accountability in Operational contract support (OCS). resources for implementing the National applicable operations. References to The ability to orchestrate and Security Strategy. It includes DoD SPOT–ES in this part will refer to that synchronize the provision of integrated Active and Reserve Component military system or any database system that contract support and management of personnel, military retired members, supersedes it for contractor personnel contractor personnel providing support DoD civilian personnel (including visibility and accountability. to command-directed operations within foreign national direct- and indirect- (f) Solicitations and contracts will: a designated operational area. hires, as well as nonappropriated fund (1) Require defense contractors to Operationally critical support. A employees), contractors, and host-nation provide personnel who are ready to critical source of supply for airlift, support personnel. (For source perform contract duties in applicable sealift, intermodal transportation information, see paragraph (a) of operations and environments by services, or logistical support that is appendix A to this part.) verifying the medical, dental, and essential to the mobilization, Uncertain environment. Operational psychological fitness of their employees deployment, or sustainment of the U.S. environment in which host government and, if applicable, by ensuring currency Armed Forces in applicable operations. forces, whether opposed to or receptive of any professional qualifications and Prime contractor. Any supplier, to operations that a unit intends to associated certification requirements distributor, vendor, or firm that has conduct, do not have totally effective needed for employees to perform entered into a contract with the United control of the territory and population contractual duties. States government. in the intended operational area. (2) Incorporate contractual terms and Replacement centers. Centers at clauses into the contract that are selected installations that ensure § 158.4 Policy. consistent with applicable host nation necessary accountability, training, and It is DoD policy that: (HN) laws and agreements or designated processing actions are taken to prepare (a) Defense contractor personnel are operational area performance personnel for onward movement and part of the total force. (See paragraph (a) considerations. deployment to a designated operational of appendix A of this part). (g) Contracts for highly sensitive, area. (b) DoD Components implement OCS Requiring activity. A military or other classified, cryptologic, or intelligence functions, including contract support designated supported organization that projects and programs must implement integration, contracting support, and identifies the need for and receives this rule to the maximum extent contractor management, during contracted support to meet mission possible, consistent with applicable applicable operations. requirements during military laws, Executive orders, presidential operations. (c) DoD Components will use directives, and relevant DoD issuances. Subcontractor. Any supplier, contracted support only in appropriate To the extent that contracting activities distributor, vendor, or firm that situations, consistent with 48 CFR are unable to comply with this rule, furnishes supplies or services to or for subpart 7.5, 48 CFR subpart 207.5, and they should submit a request for a a prime contractor or another Office of Federal Procurement Policy waiver to the Under Secretary of subcontractor. (OFPP) Policy Letter 11–01 (available at Defense for Acquisition and Synchronized Pre-deployment https://www.federalregister.gov/ Sustainment (USD(A&S)). Waiver Operational Tracker-Enterprise System documents/2011/09/12/2011-23165/ requests should include specific (SPOT–ES). A common joint database publication-of-the-office-of-federal- information providing the rationale used to maintain contractor personnel procurement-policy-ofpp-policy-letter- regarding the inability to comply with visibility and accountability in 11-01-performance-of), and paragraph this rule. (b) of appendix A to this part. applicable operations. References to § 158.5 Procedures. SPOT–ES in this part will refer to that (d) Generally, contractors are system or any database system that responsible for providing their (a) Planning considerations and supersedes it for use in OCS. employees with all life, mission, requirements; requirements for Systems support contract. Contracts medical, logistics, and administrative publication. CCDRs will make awarded by Military Service acquisition support necessary to perform the management policies and specific OCS program management offices that contract. However, in many operations, requirements for contractual support provide fielding support, technical especially in those in which conditions available to affected contractor support, maintenance support, and, in are austere, hostile, and/or non- personnel. The Geographic Combatant some cases, repair parts support, for permissive, the contracting officer may Commander (GCC) OCS web page will selected military weapon and support decide it is in the interest of the U.S. set forth the following: systems. Government to allow for selected life, (1) Theater business clearance (TBC) Theater business clearance. A CCDR mission, medical, logistics, and requirements for contracts currently policy or process to ensure visibility of administrative support to be provided to being performed and delivering and control over systems support and contractor personnel to ensure contracted support in the CCDR’s AOR. external support contracts executing or continuation of essential contractor (2) Restrictions imposed by applicable delivering support in designated areas services. Contractors authorized to local laws, international law, status of of operations. accompany the force (CAAF) may forces agreements (SOFAs), and other Theater support contract. A type of receive U.S. Government-furnished agreements with the HN. contract awarded by contracting officers support commensurate with the (3) CAAF-related deployment deployed to an operational area serving operational situation in accordance with requirements, including, but not limited under the direct contracting authority of the terms of the contract. to:

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(i) Pre-deployment and required Determinations for Civilian or (1) 48 CFR subpart 222.17 and 48 CFR individual protective equipment (IPE) Contractual Groups.’’ 52.222–50 also known and referred to as training. (3) The contract must contain Combating Trafficking in Persons, (ii) Physical health standards. applicable clauses to ensure efficient describe how contractors, contracting (iii) Immunization and medical deployment, accountability, visibility, officers and their representatives, and requirements. protection, and redeployment of commanders must deter activities such (iv) Deployment procedures and contractor personnel and detail as prostitution, forced labor, and other theater reception. authorized levels of health service, related activities contributing to (4) Reporting requirements for sustainment, and other support that is trafficking in persons. For more accountability and visibility of authorized to be provided to contractor information, see paragraph (d) of contractor personnel and associated personnel supporting applicable appendix A to this part. contracts. operations outside the United States. (2) Contracts in support of applicable (5) Operational security (OPSEC) (c) Restrictions on contractors operations will include terms and plans and restrictions. performing inherently governmental provisions that require that the (6) Force protection policies. functions. (1) Paragraph (c) of appendix contractor remove personnel from the (7) Personnel recovery procedures. A of this part, 48 CFR subpart 7.5, 48 performance of the contract and return (8) Availability of medical and other CFR subpart 207.5; Public Law 105–270 any of its personnel who have been authorized U.S. Government support and Office of Management and Budget determined to have engaged in any of (AGS). Circular No. A–76 (available at https:// the activities mentioned in paragraph (9) Redeployment procedures, www.whitehouse.gov/sites/ (h)(4)(v)(H) of this section from the including disposition of U.S. whitehouse.gov/files/omb/circulars/ operational area to the home of record, Government-furnished equipment. A76/a76_incl_tech_correction.pdf) bar point of origin, or an authorized (b) Contractual relationships. The inherently governmental functions and location at the end of contract contract provides the only legal basis for duties from private sector performance. performance or sooner as directed by the contractual relationship between the (2) Contractor personnel may provide the contracting officer. Once notified of DoD and the contractor. The contracting such an incident, the contracting officer officer is the only individual with the support during applicable operations, including, but not limited to: will notify the commander responsible legal authority to enter into such a in the AOR and provide any information binding relationship with the (i) Transporting munitions and other supplies. required to support an investigation. For contractor. more information, see 48 CFR subpart (ii) Providing communications (1) Commanders have the ability to 222.17. restrict installation access, and support. (e) CAAF designation, legal status, contractor personnel must comply with (iii) Performing maintenance credentialing, and security clearance applicable CCDR and local commander functions for military equipment. requirements—(1) CAAF designation. (i) force protection policies. However, (iv) Providing force protection and CAAF designation is provided to military commanders or unit personnel private security services. contractor personnel, including all tiers do not have contracting authority over (v) Providing foreign language of subcontractor personnel, through a contractors or contractor personnel and interpretation and translation services. letter of authorization (LOA). CAAF may not direct contractors or contractor (vi) Providing logistics services, such generally include all U.S. citizen and personnel to perform contractual tasks. as billeting and messing. third country national (TCN) employees Moreover, the contract does not provide (vii) Intelligence surveillance and not normally residing within the a basis for commanders to exercise reconnaissance support. operational area whose area of operational control or tactical control (viii) Commercial air assets. performance is in the direct vicinity of over contractors or their personnel or to (3) The requiring official will review the U.S. Armed Forces and who assign or attach contractors or their each service performed by contractor routinely are co-located with the U.S. personnel to a command or personnel in applicable operations on a Armed Forces, especially in non- organization. case-by-case basis to ensure compliance permissive environments. Personnel co- (2) The contract must specify: with paragraph (b) of appendix A of this located with the U.S. Armed Forces will (i) The terms and conditions under part and applicable laws and be afforded CAAF status through an which the contractor is to perform, international agreements. LOA. including minimum acceptable (4) Restrictions on use of contractor (ii) In some cases, CCDRs or professional and technical standards. personnel for private security services. subordinate commanders may designate (ii) The method by which the A contractor may be authorized to mission-essential HN or LN contractor contracting officer will notify the provide private security services only if personnel as CAAF unless otherwise contractor of the deployment such authorization is consistent with precluded by HN law, a SOFA, or other procedures to process contractor applicable U.S., local, and international agreement. In general, LNs are only personnel who are deploying to the law, including applicable agreements afforded CAAF status when they assume operational area. with the HN or other applicable great personal risk to perform an (iii) The specific contractual support international agreements, and 32 CFR essential function. terms and agreement between the part 159. For more information, see (iii) Personnel who do not receive a contractor and DoD. paragraph (b) of appendix A of this part CAAF designation are referred to as (iv) The appropriate flow-down of and 48 CFR subpart 252.2, which non-CAAF. Individuals’ CAAF status provisions and clauses to subcontractors provide specific procedures and may change depending on where their and state that the service performed by guidance. employers or the provisions of their contractor personnel is not considered (d) Combating trafficking in persons. contract details them to work. CAAF to be active duty or active service. For Trafficking in persons is a violation of designation may affect, but does not more information, see paragraph (c) in U.S. law and internationally recognized necessarily affect, a person’s legal status appendix A to this part, and 38 U.S.C. human rights, and is incompatible with under the law of war and the treatment 106, ‘‘Active Duty Service DoD core values. to which that person is entitled under

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the 1949 Geneva Conventions if that federal criminal jurisdiction to certain a contractor) will receive a separate person falls into the power of the enemy contractor personnel for offenses identification card in each personnel during international armed conflict. committed outside U.S. territory. category for which they are eligible. Although CAAF are regarded as (B) The March 10, 2008, Secretary of Individuals under a single personnel ‘‘persons authorized to accompany the Defense Memorandum states that category code may not hold multiple armed forces,’’ personnel who are not contractor personnel are subject to current identification cards of the same CAAF may also receive this status under prosecution pursuant to 10 U.S.C. form. the law of war. For more information, Chapter 47, also known and referred to (5) Security clearance requirements. see § 4.15 of paragraph (e) of appendix in this part as the Uniform Code of To the extent necessary, the contract A of this part. In addition, although Military Justice (UCMJ), when serving must require the contractor to provide CAAF designation and access to AGS overseas in support of a declared war or personnel who have the appropriate often coincide, CAAF status does not contingency, and provides guidance to security clearance or who are able to determine AGS provided. commanders on the exercise of this satisfy the appropriate background (2) Legal status. In implementing this UCMJ jurisdiction. investigation requirements to obtain part, the DoD Component heads must (C) Other U.S. law may allow access required to perform contractual abide by applicable laws, regulations, prosecution of offenses by contractor requirements in support of the international agreements, and DoD personnel (e.g., 18 U.S.C. 7). applicable operation. policy as they relate to contractor (3) 1949 Geneva Conventions. The (f) Considerations for support to personnel performing contractual 1949 Geneva Conventions, including the contractors—(1) U.S. Government support in support of applicable Geneva Convention Relative to the support. Generally, contracts supporting operations. Treatment of Prisoners of War, may be applicable operations must require (i) HN and third country laws. All applicable to certain contractor contractors to provide to their personnel contractor personnel must comply with personnel who fall into the power of the all life, mission, medical, and applicable HN and third country laws. enemy during international armed administrative support necessary to The applicability of HN and third conflict. perform the contractual requirements country laws may be affected by (i) All contractor personnel may be at and meet CCDR guidance posted on the international agreements (e.g., risk of injury or death incidental to GCC OCS web page. In some operations, agreements between the United States enemy actions while supporting especially those in which conditions are and the HN) and customary military operations. austere, uncertain, or non-permissive, international law (e.g., limits imposed (ii) Contractor personnel with CAAF the CCDR may decide it is in the U.S. by customary international law on the status will receive an appropriate Government’s interest for the DoD to reach of third country laws). identification card required by the allow contractor personnel access to (A) U.S., HN, or other countries may Geneva Convention Relative to the selected AGS. The contract must state hire contractor personnel whose status Treatment of Prisoners of War, the level of access to AGS in its terms may change (e.g., from non-CAAF to consistent with paragraph (f) of and conditions. CAAF) depending on where in the appendix A to this part. (i) In operations where conditions are operational AOR their employers or the (iii) CAAF may be used in support of austere, uncertain, or non-permissive, provisions of their contracts detail them applicable operations, consistent with the contracting officer will consult with to work. the terms of U.S. Government the requiring activity to determine if it (B) CCDRs, as well as subordinate authorization. If they fall into the power is in the U.S. Government’s interests to commanders, Military Service of the enemy during international armed allow for selected life, mission, medical, Component commanders, the Directors conflict, contractor personnel with and administrative support to certain of the Defense Agencies, and Directors CAAF status are entitled to prisoner of contractor personnel. of DoD Field Activities should recognize war status. (ii) The solicitation and contract must limiting factors regarding the (4) Credentialing. Contracts must specify the level of AGS that the U.S. employment of LN and TCN personnel. require CAAF to receive an Government will provide to contractor Limiting factors include, but are not identification card with the Geneva personnel and what support provided to limited to: Convention’s category of persons the contractor personnel is reimbursable (1) Imported labor worker permits. authorized to accompany the armed to the U.S. Government. (2) Workforce and hour restrictions. forces. For more information, see (iii) Access to DoD benefits facilitated (3) Medical, life, and disability paragraphs (f) through (h) of appendix A by the identification card may be insurance coverage. to this part. At the time of identification granted to contractors under certain (4) Taxes, customs, and duties. card issuance, CAAF must present their circumstances. For more information, (5) Cost of living allowances. SPOT–ES-generated LOA as proof of see paragraph (i) of appendix A to this (6) Hardship differentials. eligibility. part. (7) Access to classified information. (i) Sponsorship must incorporate the (2) IPE. When necessary or directed (8) Hazardous duty pay. processes for confirming eligibility for by the CCDR, the contracting officer will (ii) U.S. laws. U.S. citizens and CAAF, an identification card. The sponsor is include language in the contract with some exceptions, are subject to the person affiliated with the DoD or authorizing the issuance of military IPE U.S. laws and U.S. Government another Federal agency that takes (e.g., chemical, biological, radiological, regulations. responsibility for verifying and nuclear (CBRN) protective ensemble, (A) All U.S. citizen and TCN CAAF authorizing an applicant’s need for a body armor, ballistic helmet) to are subject to potential prosecutorial Geneva Convention identification card. contractor personnel as part of AGS. action under the criminal jurisdiction of A DoD official or employee must (i) Typically, IPE will be issued by the the United States, including, but not sponsor applicants for a common access central issue facility at the deployment limited to, 18 U.S.C. 3261, also known card (CAC). center before deployment to the and referred to in this part as the (ii) Individuals who have multiple designated operational area and must be Military Extraterritorial Jurisdiction Act DoD personnel category codes (e.g., an accounted for and returned to the U.S. of 2000 (MEJA). MEJA extends U.S. individual who is both a reservist and Government or otherwise accounted for,

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in accordance with appropriate DoD performing contractual requirements in responsibility of contractor personnel, Component regulations, directives, and support of the U.S. Armed Forces. their employers, or their health instructions. Mortuary affairs support and insurance providers. For more (ii) Contractor personnel deployment transportation will be provided on a information, see paragraph (l) of training will include training on the reimbursable basis for the recovery, appendix A to this part. Nothing in this proper care, fitting, and maintenance of identification, and disposition of paragraph is intended to affect the protective equipment, whether issued remains and personal effects of CAAF. allowability of costs incurred under a by the U.S. Government or provided by (i) Every effort must be made to contract. the contractor in accordance with the identify remains and account for un- (ii) Medical support and evacuation contractual requirements. This training recovered remains of contractor procedures: will include practical exercises within personnel and their dependents who die (A) All CAAF will normally be mission-oriented protective posture in military operations, training afforded emergency medical and dental levels. accidents, and other incidents. The care if injured while supporting (iii) When the terms and conditions of remains of contractor personnel who die applicable operations. Additionally, a contract require a contractor to as the result of an incident in support non-CAAF who are injured while in the provide IPE, such IPE must meet of military operations are afforded the vicinity of the U.S. Armed Forces while minimum standards as defined by the same dignity and respect afforded to supporting applicable operations also contract. military remains. For more information, normally will receive emergency (3) Clothing. Contractors, or their see paragraph (k) of appendix A to this medical and dental care. Emergency personnel, must provide their own part. medical and dental care includes personal clothing, including casual and (ii) The DoD may provide mortuary medical care situations in which life, work clothing required to perform the affairs support and transportation on a limb, or eyesight is jeopardized. contract requirements. reimbursable basis for the recovery, Examples of emergency medical and (i) Generally, CCDRs will not identification, and disposition of dental care include: authorize the issuance of military remains and personal effects of non- (1) Examination and initial treatment clothing to contractor personnel or will CAAF at the request of the Department of victims of sexual assault. not allow the wearing of military or of State (DOS) and in accordance with (2) Refills of prescriptions for life- military look-alike uniforms. Contractor this rule, applicable agreements with dependent drugs. personnel are prohibited from wearing the HN, and applicable contract (3) Repair of broken bones, military clothing unless specifically provisions. The Under Secretary of lacerations, and infections. authorized in writing by the CCDR. Defense for Personnel and Readiness (4) Traumatic injuries to the teeth. However, a CCDR or subordinate joint (USD(P&R)) will coordinate this support (B) MTFs normally will not authorize force commander (JFC) deployed with the DOS, including for cost or provide primary medical or dental forward may authorize contractor reimbursement to the DoD Component care to CAAF. When required and personnel to wear standard uniform for the provision of this support. authorized by the CCDR or subordinate items for operational reasons. Contracts (iii) The responsibility for JFC, this support must be specifically must include terms and clauses that coordinating the transfer of non-CAAF authorized under the terms and require that this authorization be remains to the HN or affected nation conditions of the contract and detailed provided in writing by the CCDR and resides with the GCC in coordination in the corresponding LOA. Primary care that the uniforms are maintained in the with the DOS, through the respective is not authorized for non-CAAF. possession of authorized contractor embassies, or through the International Primary care includes: personnel at all times. Committee of the Red Cross, the (1) Routine inpatient and outpatient (ii) When commanders issue any type International Federation of the Red services. of standard uniform item to contractor Cross or Red Crescent Societies, as (2) Non-emergency evacuation. personnel, care must be taken to ensure appropriate, and in accordance with (3) Pharmaceutical support (with the that contractor personnel are applicable contract clauses. exception of emergency refills of distinguishable from military personnel (6) Medical support and evacuation. prescriptions for life-dependent drugs). through the use of distinctive patches, Generally, the DoD will provide only (4) Non-emergency dental services. arm bands, nametags, or headgear, resuscitative care, stabilization, and (5) Other medical support, as consistent with force protection hospitalization at military medical determined by the CCDR or JFC based measures, and that contractor personnel treatment facilities (MTFs) and on recommendations from the cognizant carry the CCDR’s written authorization assistance with patient movement in medical authority and the existing with them at all times. emergencies where loss of life, limb, or capabilities of the forward-deployed (4) Weapons. Contractor personnel are eyesight could occur. The DoD Foreign MTFs. not authorized to possess or carry Clearance Guide (FCG) and the GCC (C) The DoD will not provide long- firearms or ammunition during OCS web pages contain theater-specific term care to contractor personnel. applicable operations, except as contract language to provide contract (D) The CCDR or subordinate provided in paragraph (h)(2)(ii) of this terms to clarify available healthcare for commander has the authority to section and 32 CFR part 159. The contractor personnel. During operations quarantine or restrict movement of contract will provide the terms and in austere, uncertain, or hostile contractor personnel. For more conditions governing the possession of environments, CAAF may encounter information, see paragraph (m) of firearms by contractor personnel. situations in which they cannot access appendix A to this part. Information on all weapons authorized adequate medical support in the local (E) When CAAF are evacuated for for contractors and their personnel will area. medical reasons from the designated be entered into the SPOT–ES database. (i) All costs associated with the operational area to MTFs funded by the (5) Mortuary affairs. The DoD treatment and transportation of Defense Health Program, normal Mortuary Affairs Program, as described contractor personnel to the selected reimbursement policies will apply for in paragraph (j) of appendix A to this civilian facility are reimbursable to the services rendered by the facility. If part, covers all CAAF who die while U.S. Government and are the CAAF require medical evacuation

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outside the United States, the sending assistance, or peace operations, entered into as of the end of each MTF staff will assist the CAAF in contractors will use SPOT–ES in calendar quarter. making arrangements for transfer to a situations required by the CCDR and as (2) The total number of contractor civilian facility of the CAAF’s choice. follows: personnel performing security functions When U.S. forces provide emergency (2) To account for: under contracts entered into with the medical care to LN contractor (i) All U.S. citizen and TCN contractor DoD. personnel, these patients will use HN personnel. (3) The total number of contractor transportation means, when possible, (ii) All private security contractor personnel killed or wounded who were for evacuation or transportation to their personnel and all other contractor performing under any contracts entered local medical systems. For more personnel authorized to carry weapons, into with the DoD. information, see paragraph (n) of where the designated area and place of (C) Provide personnel accountability appendix A to this part. performance are outside the United via unique identifier (e.g., Electronic (7) Other AGS. 48 CFR subpart 225.3 States, regardless of the length of Data Interchange Personnel Identifier or lists types of support that may be performance or contract value. Foreign Identification Number) of authorized for contractor personnel who (3) The contracting officer will contractor personnel and other are deployed with or otherwise provide account for an estimated total number of personnel, as directed by the USD(A&S), support to applicable operations, which LNs employed under the contract, by 48 CFR subpart 225.3, or the CCDR. may include transportation to and country or on a monthly basis. (D) Contain, or link to, minimum (4) Contract linguists will register in within the operational area, mess contract information necessary to: SPOT–ES in the same manner as other operations, quarters, phone service, (1) Establish and maintain contractor personnel and will also be religious support, and laundry. accountability of the personnel in tracked using the Contract Linguist (i) Contractor personnel of U.S. paragraph (g) of this section. Enterprise-wide Database. For more owned-contractors who are supporting (2) Maintain information on specific information, see paragraph (r) of DoD activities may be authorized the equipment related to the performance of appendix A to this part. use of the military postal service. For private security contracts. more information, see paragraph (o) of (5) LNs should be registered in SPOT– ES by name to improve data quality and (3) Maintain oversight information on appendix A to this part. The extent of the contracted support in applicable postal support will be set forth in the reduce confusion during a transition to accountability requirements during a operations. contract. The provisions for postal (E) Comply with: support in such contracts must be contingency operation, which will require by-name accountability. (1) The personnel identity protection reviewed and approved by the program requirements found in applicable CCDR, or the designated (6) The DoD has designated SPOT–ES as the joint web-based database to assist paragraphs (t) and (u) of appendix A to representative, and the Military this part. Department concerned before execution the CCDRs in maintaining awareness of (2) The DoD Information Enterprise of the contract. the nature, extent, and potential risks architecture. For more information, see (ii) Morale, welfare, and recreation and capabilities associated with paragraph (v) of appendix A to this part. and exchange services are authorized for contracted support for contingency (3) The interoperability and secure contractor personnel who are U.S. operations, humanitarian assistance, sharing of information requirements citizens supporting DoD activities and peacekeeping operations, or found in paragraphs (w) through (y) of outside the United States. For more military exercises designated by the appendix A to this part. information, see paragraphs (p) and (q) CCDR. To facilitate integration of of appendix A to this part. contractors and other personnel, as (ii) Before registering in SPOT–ES, (g) Accountability and visibility of directed by the USD(A&S) or the CCDR, contracting officers, company contracts and contractor personnel. (1) and to ensure the accurate forecasting administrators, and U.S. Government During applicable operations, and provision of accountability, administrators or authorities must meet contractors will use SPOT–ES as visibility, force protection, medical minimum training requirements in the follows: support, personnel recovery, and other SPOT Business Rules. (i) All CAAF will register in SPOT–ES related support, the following (iii) The contractor must enter all by name. procedures will help establish, required data into SPOT–ES before its (ii) Non-CAAF will be registered in maintain, and validate the accuracy of employees may deploy to or enter a SPOT–ES by name if they are information in the database. theater of operations, and maintain such performing on a DoD contract for at least (i) SPOT–ES will: data, as directed by the USD(A&S), 48 30 consecutive days unless a lesser (A) Serve as the central repository for CFR subpart 225.3, or the CCDR. number of days is requested by the deployment status and reporting on the (iv) The contracting officer will enter CCDR or if they require access to a U.S. contractor personnel as well as other the DoD contract services or capabilities or coalition-controlled installation. U.S. Government agency contractor for all contracts that are awarded in Contracting officers will ensure non- personnel, as applicable. For additional support of applicable operations, CAAF who require access to U.S. or information, see paragraph (s) of including theater support, external coalition-controlled installations are appendix A to this part. support, and systems support contracts, registered in SPOT–ES before requesting (B) Track information for all DoD into SPOT–ES consistent with 48 CFR or receiving installation access. contracts that are awarded in support of 252.225–7040. (iii) All private security contractor applicable operations outside of the (v) In accordance with applicable personnel and all other contractor United States, in accordance with the acquisition policy and regulations and personnel authorized to carry weapons, SPOT Business Rules and as directed by under the terms and conditions of each regardless of the length of the the USD(A&S), 48 CFR subpart 225.3, or affected contract, all contractors performance or contract value, will the CCDR. SPOT–ES will collect and awarded contracts that support register in SPOT–ES by name. report on: applicable operations must input (iv) During operations other than (1) The total number of contractor employee data and maintain contingency operations, humanitarian personnel working under contracts accountability, by name, of designated

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contractor personnel in SPOT–ES as or other appropriate DoD credential U.S. Government medical requirements, required by 48 CFR 252.225–7040. from the deploying center. including to receiving U.S. Government- (A) Contractors must maintain current (i) Deployment procedures. Contracts required immunizations and disclosing status of the daily location of their must contain terms and conditions that their private medical information to the employees and, when requested, submit detail the need for contractors to follow U.S. Government. to the COR up-to-date, real-time these credentialing requirements, as (iii) All CAAF will receive medical information reflecting all personnel required by 48 CFR subpart 225.3, 48 threat pre-deployment briefings at the deployed or to be deployed in support CFR 252.225–7040, and as outlined in deployment center to communicate of applicable operations. the DoD FCG. At a minimum, health risks and countermeasures in the (B) Prime contractors must enter up- contracting officers must ensure that designated operational area. For more to-date information regarding their contracts address operational area- information, see paragraph (bb) of subcontractors at all tiers into SPOT–ES. specific contract requirements and the appendix A to this part. (vi) In all cases, users providing means by which the DoD will inform (A) In accordance with GCC or JFC classified information in response to the contractor personnel of the plans and orders, contracts must requirements of this part must report requirements and procedures applicable include terms and conditions that fully and maintain that information on to their deployment. specify health readiness and force systems approved for the level of (1) Deployment center designation. A health protection capability, either as a classification of the information formally designated group, joint, or responsibility of the contractor or the provided. Military Department deployment center DoD Components, to ensure appropriate (7) The contracting officer or his or will be used to conduct deployment and medical staffing in the operational area. her designee will ensure a SPOT–ES- redeployment processing for CAAF, (B) Health surveillance activities must generated LOA has been issued to all unless contractor-performed theater include plans for CAAF. For more CAAF who are approved to deploy, as admission preparation is authorized or information, see paragraphs (bb) and waived by the CCDR or designee required by 48 CFR 252.225–7040, and (cc) of appendix A to this part. Section pursuant to DoDI 3020.41, ‘‘Operational selected non-CAAF (e.g., LN and non- 158.7 of this rule further addresses Contract Support (OCS).’’ If the contract LN employees who are permanent deoxyribonucleic acid (DNA) collection contains clauses that specify another residents in the operational area, or and other medical requirements. U.S. Government-authorized process TCNs not routinely residing with the (3) Training. Joint training policy and that incorporates all the functions of a U.S. Armed Forces who perform guidance for the Military Services, deployment center, such process may support functions away from the close including contractors, is provided. For also be used by a contractor to conduct proximity of, and do not reside with, the more information, see paragraph (dd) of deployment and redeployment U.S. Armed Forces, and private security appendix A to this part. CCDRs will processing for CAAF. contractors), pursuant to 48 CFR subpart (2) Medical preparation. (i) In place standing training requirements on 225.3, or as otherwise designated by the accordance with 32 CFR 158.7, contracts the GCC OCS web pages for reference by CCDR. must require that contractors provide contractors. Other training requirements (i) The contract will require that all medically and physically qualified that are specific to an applicable contractor personnel issued an LOA contractor personnel to perform duties operation will be placed on the GCC carry the LOA with them at all times. in applicable operations, as outlined in OCS web pages shortly after identifying (ii) Reserved. the contract. the requirement so that contracting (h) Theater admission requirements. (A) Any CAAF deemed unsuitable to officers can incorporate the training Special area, country, and theater deploy during the deployment process requirement into the appropriate personnel clearance documents must be due to medical or dental reasons will contracts as soon as possible. Training current, in accordance with the DoD not be authorized to deploy. requirements: FCG, and coordinated with affected (B) The Secretary of Defense may (i) Must be included, or incorporated agencies to ensure that entry direct immunizations as mandatory for by reference in contracts employing requirements do not adversely affect CAAF performing essential contractor contractor personnel supporting accomplishment of mission services. applicable operations. requirements. (C) For contracts that employ CAAF (ii) Include specific requirements (1) CAAF employed in support of DoD who are U.S. citizens, the contract must established by the CCDR and training missions are considered DoD-sponsored require that contractors make available required in accordance with this rule, personnel for DoD FCG purposes. the medical and dental records of 32 CFR part 159, and paragraphs (ee) (2) Contracting officers must ensure deploying employees who authorize through (hh) of appendix A to this part. contracts include a requirement for release for this purpose based on this (4) Deployment center procedures. contractor personnel to meet theater section, applicable cognizant medical Affected contracts must require that all personnel clearance requirements and authority guidance, and relevant CAAF deploying from outside the obtain personnel clearances through the Military Department policy. These operational area process through a Aircraft and Personnel Automated records should include current designated deployment center or a U.S. Clearance System before entering a panographic x-rays. For more Government-authorized, contractor- designated theater of operations. For information see paragraph (aa) of performed deployment processing more information, see paragraph (z) of appendix A to this part. facility before deploying to an appendix A to this part. (ii) U.S. Government personnel may applicable operation and redeploy in (3) Contracts must require contractor not involuntarily immunize contractor the same manner. Upon receiving the personnel to obtain proper personnel or require contractor contracted company’s certification that identification credentials, such as personnel to disclose their medical employees meet deployability passports, visas, and other documents records involuntarily. Therefore, the requirements, the contracting officer or required to enter and exit a designated contracting officer will provide representative will digitally sign the operational area, and have a required contractors time to notify and/or hire LOA, which CAAF will then present to Geneva Conventions identification card, employees who voluntarily consent to officials at the deployment center. The

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deployment process includes, but is not of the cognizant medical authority or cognizant military commander may limited to: their designee. If a contract authorizes recommend or issue warnings or (i) Verifying registration in SPOT–ES. contractor personnel to be armed, the messages urging contractor personnel to (ii) Issuing applicable U.S. requirements of paragraphs (c)(4) and take emergency actions to remove Government-furnished equipment. (k)(2) of this section may not be waived. themselves from harm’s way or to take (iii) Verifying the completion of (j) Reception—(1) Designated other appropriate self-protective medical and dental screening before reception site. In applicable operations, measures. During armed conflict, arrival. all CAAF must enter into the contractor personnel are not exempt (iv) Administering required theater- operational area through a designated from the authority that commanders specific immunizations and medications reception site. may exercise to control the movement of not available through healthcare (i) Based upon a visual inspection of persons and vehicles within the providers in the general public. the LOA, the site will verify that immediate vicinity of operations. For (v) Verifying and, when necessary, contractor personnel are entered in more information, see §§ 5.2.2.1, 13.8, providing required training, country and SPOT–ES and meet theater-specific and 14.6 of paragraph (e) of appendix A cultural awareness briefings, and other entry requirements. to this part. training and briefings, as required by the (ii) Contractor personnel already in (ii) The contractor is responsible for CCDR. Examples of required training the designated operational area when a disciplining contractor personnel, as include, but are not limited to: contingency is declared must report to necessary and appropriate. However, in (A) Law of war, including the 1949 the designated reception site as soon as accordance with paragraph (h)(1) of 48 Geneva Conventions. it is operational based on the terms and CFR 252.225–7040, the contracting (B) Law and policy applicable to conditions of the contract. officer may direct the contractor, at its detainee operations and intelligence (iii) When entering a designated own expense, to remove and replace any interrogation operations, as appropriate. reception site for theater entry contractor personnel who jeopardize or (C) General orders. processing, if any CAAF does not have interfere with mission accomplishment, (D) Standards of conduct. the proper documentation to perform in who threaten force protection measures, (E) Force protection. an area, he or she will be refused entry or who fail to comply with or violate (F) Personnel recovery. into the theater, and the contracting applicable requirements of the contract. (G) First aid. officer will notify the contractor to take Such action may: (H) Combatting trafficking in persons. the necessary action to resolve the issue. (A) Include contractor personnel (I) OPSEC. Should the contractor fail to take action, whose actual field performance (J) Anti-terrorism. the CAAF individual will be sent back (certification or professional standard) is (K) Counterintelligence reporting. to his or her departure point, or directed below the contractual requirement. (L) The use of CBRN protective to report to the Military Service (B) Be taken at U.S. Government ensemble. Component command or Defense discretion without prejudice to the (M) Deployment health threats Agency responsible for that specific contractor’s rights under any other briefing. contract for theater entrance processing. provision of the contract. A commander (5) Certification. Contracts supporting (2) Contractor integration. It is critical also has the authority to take certain applicable operations must include that CAAF brought into an operational actions affecting contractor personnel, terms and conditions requiring area are properly integrated into the such as the ability to revoke or suspend contractors to certify to the authorized military operation through a formal security access or impose restrictions U.S. Government representative, before reception process. At a minimum, they from access to military installations or deployment, that each individual has will: specific worksites. completed all required deployment (i) Meet theater entry requirements (iii) CAAF, or individuals employed processing actions. and be authorized to enter the theater. by or accompanying the Military (6) Legal. Contractor personnel are not (ii) Be accounted for in SPOT–ES. Services outside the United States, are entitled to military legal assistance in- (iii) Possess any required IPE, subject to potential prosecutorial action theater or at the deployment center. including CBRN protective ensemble. under the criminal jurisdiction of the Individual contractor personnel must (iv) Be authorized any contractually United States, pursuant to Sections 7, have their personal legal affairs in order required AGS and force protection. 2441, 2442, or 3261 of Title 18, U.S.C., (e.g., preparing and completing powers (k) In-theater management—(1) or other provisions of U.S. law, of attorney, wills, trusts, and estate Conduct and discipline. Contract terms including the UCMJ. plans) before reporting to deployment and conditions must require that CAAF (A) Commanders possess significant centers. comply with CCDR theater orders, authority to act whenever criminal acts (7) Waivers. For required contracted applicable directives, laws, and are committed by anyone subject to the support of 17 days or less in an regulations. Non-CAAF who require MEJA and UCMJ that relates to or affects operational area, the CCDR or designee base access to perform contractual the commander’s responsibilities. This may waive a portion of the formal requirements must follow base force includes situations in which the alleged procedural requirements pursuant to protection and security-related offender’s precise identity or actual DoDI 3020.41, ‘‘Operational Contract procedures, as applicable. affiliation is undetermined. The March Support (OCS),’’ which may include the (i) The contracting officer may 10, 2008, Secretary of Defense CCDR or designee waiving the appoint a designee (usually a COR) as a Memorandum provides guidance to requirement in writing for processing liaison between the contracting officer commanders on the exercise of this through a deployment center. However, and the contractor and requiring UCMJ jurisdiction over DoD contractor the CCDR or designee may not waive the activity. This designee monitors and personnel serving with or requirements to possess proper reports contractor performance and accompanying the U.S. Armed Forces identification cards and to establish and requiring activity concerns to the overseas during declared war and in maintain accountability for all contracting officer. In emergency contingency operations. contractor personnel, or any medical situations (e.g., enemy or terrorist (B) Contracting officers will ensure requirement without the prior approval actions or natural disaster), the that contractors are aware of their

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employees’ status and liabilities as (B) Relevant SOFAs and other coordination cell or the CCMD joint CAAF and the required training agreements; personnel recovery center). associated with this status. (C) Other arrangements with local (ii) Upon recovery following an (C) CCDRs retain authority to respond authorities; and isolating event, a CAAF returnee must to an incident, restore safety and order, (D) The rules for the use of force, and enter the first of the three phases of investigate, apprehend suspected guidance and orders regarding the reintegration. For more information, see offenders, and otherwise address the possession, use, safety, accountability of paragraph (jj) of appendix A to this part. immediate needs of the situation. weapons and ammunition that are The contractor must offer the additional (iv) The Department of Justice may issued by the CCDR. phases of reintegration to the returnee to prosecute misconduct under applicable (ii) Depending on the operational ensure his or her physical and Federal laws, including MEJA and 18 situation and the specific circumstances psychological well-being while U.S.C. 2441. Contractor personnel also of contractor personnel, the contractor adjusting to the post-captivity are normally subject to the domestic may apply for its personnel to be armed environment. criminal law of the local country. When for self-defense purposes on a case-by- (iii) The contractor must report all confronted with disciplinary problems case basis. The appropriate Staff Judge CAAF and non-CAAF casualties. For involving contractor personnel, Advocate (or their designee) to the more information, see paragraph (s) of CCDR will review all applications to commanders should seek the assistance appendix A to this part. ensure there is a legal basis for approval. (l) Redeployment procedures. The of their legal staff, the contracting officer In reviewing applications, CCDRs will considerations in this section apply responsible for the contract, and the apply the criteria mandated for arming during the redeployment of CAAF. At contractor’s management team. contractor personnel for private security the end of the performance period of a (v) In the event of an investigation of services consistent with 32 CFR part contract, or in cases of early reported offenses allegedly committed 159. redeployment, CAAF must complete the by or against contractor personnel, (A) In such cases, the contractor will redeployment process to adjust AGS appropriate investigative authorities validate to the contracting officer, or requirements and turn in U.S. will keep the contracting officer designee, that the contractor personnel Government-provided equipment. informed, to the extent possible without have received weapons familiarization, (1) Preparation for redeployment. compromising the investigation, if the qualification, and briefings regarding CAAF must complete intelligence out- alleged offense has a potential contract the rules for the use of force, in briefs and customs and immigration performance implication. accordance with CCDR policies. briefings and inspections in accordance (2) Force protection and weapons (B) Acceptance of weapons by with CCDR policy and applicable HN issuance. CCDRs must include contractor personnel is voluntary. In law. CAAF are subject to customs and contractor personnel in their force accordance with paragraph (j) of 48 CFR immigration processing procedures at protection planning and communicate 252.225–7040, the contract must require all designated stops and their final the results to contracting activities and contractors to ensure that applicable destination during their redeployment. contractors via the GCC OCS web page. U.S. law does not prohibit personnel CAAF returning to the United States are In general, contractors are responsible from possessing firearms. subject to U.S. reentry customs for the security of their own personnel. (C) Contracts must require all requirements in effect at the time of Contractor personnel working within a contractor personnel to comply with reentry. U.S. military facility or in close applicable CCDR and local commander (2) Transportation out of theater. The proximity to the U.S. Armed Forces may force protection policies. When armed terms and conditions of the contract receive incidentally the benefits of for personal protection, the contract will state whether the U.S. Government measures taken to protect the U.S. may only authorize contractor personnel will provide transportation out of Armed Forces. For more information, to use force for self-defense and must theater. see paragraph (ee) of appendix A to this require contractors to ensure that U.S. (i) Upon completion of the part. However, where additional law does not prohibit its personnel from deployment or other authorized release, security is needed to achieve force possessing firearms, in accordance with the U.S. Government must provide protection, and it is not operationally or paragraph (j) of 48 CFR 252.225–7040. contractor personnel transportation cost effective for contractors to do so Unless not subject to local laws or HN from the theater of operations to the individually, the commander may jurisdiction by virtue of an international location from which they deployed, in determine it is in the interests of the agreement or customary international accordance with each individual’s LOA U.S. Government to provide security for law, the contract must include terms and unless otherwise directed. If contractor personnel. When security is and conditions setting forth that the commercial transportation is not provided through military means, inappropriate use of force could subject available, it should be stated in the LOA contractor personnel should receive a contractor personnel to U.S. and/or in accordance with paragraph (l) of level of force protection equal to that of local or HN prosecution and civil appendix A to this part. CAAF are also DoD civilian employees. liability. required to depart from the operational (i) When the CCDR deems military (3) Personnel recovery, missing area through the designated reception force protection and legitimate civil persons, and casualty reporting. (i) The site. authority are unavailable or insufficient, DoD personnel recovery program (ii) Before redeployment, the he or she may authorize, in writing, applies to all CAAF regardless of their contractor personnel, through his or her contractor personnel to be armed for citizenship. For more information, see contractor, will coordinate exit times self-defense purposes only. In paragraph (ii) of appendix A to this part. and transportation with the continental authorizing contractor personnel to be If a CAAF individual becomes isolated U.S. replacement center or designated armed, the contractor, the armed or unaccounted for, the contractor must reception site. contractor personnel, and the U.S. promptly file a search and rescue (3) Redeployment center procedures. military must adhere to: incident report to the theater’s In most instances, the deployment (A) Applicable U.S., HN, and personnel recovery architecture (e.g., center or site that prepared the CAAF international law; the component personnel recovery for deployment will serve as the return

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processing center. As part of CAAF programs for the protection of all forces performing the functional requirements redeployment processing, the assigned or attached to their command of the contract, especially in the austere designated reception site personnel will in accordance with force health work environments encountered in screen contractor records, recover U.S. protection (FHP) standards and some applicable operations. Government-issued identification cards applicable medical and dental standards (3) CAAF will receive a health threat and equipment, and conduct of fitness in order to promote and and countermeasures briefing from the debriefings, as appropriate. The sustain a healthy and fit force. For more applicable Military Service before returning CAAF will spend the information, see paragraph (kk) of deployment to the operational area. For minimum amount of time possible at appendix A to this part. When the more information, see paragraph (bb) of the return processing center in order to requiring activity requests exceptions to appendix A to this part. complete the necessary administrative these standards through the contracting (4) In general, CAAF who have any of procedures. officer, the CCDR concerned will the medical conditions listed in (i) Contractor personnel must return establish a process for reviewing such paragraph (j) of this section should not all U.S. Government-issued exceptions and ensuring that a be deployed. identification and access badges (e.g., mechanism is in place to track and (5) Individuals who are deemed ‘‘not badges, key cards, and other access archive all approved and denied medically fit’’ at the deployment center devices, including CACs). waivers, including the medical or at any period during the deployment (ii) Contractor personnel must return condition supporting the basis for the process based upon an individual any issued clothing and equipment and waiver. assessment by a licensed medical report any lost, damaged, or destroyed (3) The GCC concerned will ensure provider, or who require extensive clothing and equipment in accordance that processes and procedures are in preventive dental care (see paragraph with procedures of the issuing facility. place to remove contractor personnel in (j)(2)(xxv) of this section), are not Contractor personnel also will receive a theater who are not medically qualified, authorized to deploy. post-deployment medical briefing on once so identified by a healthcare (6) Non-CAAF shall be medically signs and symptoms of potential provider. The GCC concerned will screened by a U.S. Government designee diseases (e.g., tuberculosis (TB)). As ensure development of appropriate when required by the requiring activity some countries hosting an intermediate procedures and criteria for requiring and the contract, for the class of labor staging base may not permit certain removal of contractor personnel under consideration (e.g., LNs working items to enter their territory, certain identified as ‘‘no longer medically in a dining facility). clothing and equipment, whether issued qualified,’’ and post such language on (7) Contracts will require contractors by the contractor, purchased by the the GCC OCS web page. Contracting to replace individuals who develop employee, or provided by the DoD, may officers will incorporate the language conditions that cause them to become not be permitted to be removed from the into clauses for all contracts for medically unqualified to perform AOR. In this case, CCDR or JFC performance in the AOR. contractual requirements at any time guidance and contract terms and (4) Unless otherwise stated in the during contract performance. conditions will provide alternate contract terms and conditions, all (8) Contracts must require that CAAF methods of accounting for U.S. medical evaluations and treatment are complete a post-deployment health Government-issued equipment and the contractor’s responsibility. assessment in the Defense Medical clothing. (b) Medical and dental evaluations. Surveillance System at the end of their (4) Update to SPOT–ES. Contracting (1) All CAAF deploying in support of an deployment or within 30 days of officers or their designated applicable operation must be medically, redeployment. For more information, representatives must verify that dentally, and psychologically fit for see paragraph (bb) of appendix A to this contractors have updated SPOT–ES to deployment pursuant to paragraph (kk) part. reflect their employee’s change in status of appendix A to this part and CCDR (c) Glasses and contact lenses. (1) If within three days of a contractor guidance. Fitness specifically includes contractor personnel require vision employee’s redeployment, close out the the ability to accomplish the tasks and correction, they must have two pairs of deployment, and collect or revoke the duties unique to a particular operation glasses, and if applicable, eyeglass LOA. and the ability to tolerate the inserts for a chemical protective mask. (5) Transportation to home environmental and operational The contractor personnel may also destination. Transportation of CAAF conditions of the deployed location. provide a written prescription to the from the deployment center or site to Under the terms and conditions of their supporting military medical component their home destinations is the contracts, contractors will employ in order to prepare eyeglass inserts for employer’s responsibility. medically, dentally, and psychologically use in a compatible chemical protective fit contractor personnel to perform mask. If the type of protective mask to § 158.6 Guidance for contractor medical contractual duties. be issued is known and time permits, and dental fitness. (2) All CAAF must undergo a medical the military medical component should (a) General. (1) DoD contracts and dental assessment within 12 attempt to complete the preparation of requiring the deployment of CAAF must months before arrival at the designated eyeglass inserts before deployment. include medical and dental fitness deployment center or U.S. Government- (2) Wearing contact lenses in a field requirements as specified in this authorized contractor-performed environment is not recommended and is section. Under the terms and conditions deployment processing facility. This at the contractor personnel’s own risk of their contracts, contractors will assessment, conducted by the due to the potential for irreversible eye employ personnel who meet such contractor’s medical health provider, damage caused by debris, chemical or medical and dental requirements. should emphasize diagnosing system other hazards present, and the lack of Replacement of non-medically qualified disease conditions (e.g., cardiovascular, ophthalmologic care in a field contractor personnel already deployed pulmonary, orthopedic, neurologic, environment. to theater will be at the contractor’s cost. endocrinologic, dermatologic, (d) Medications. Other than those (2) The GCC concerned will establish psychological, visual, auditory, dental) force health protection prescription force health protection policies and that may preclude the CAAF from products provided by the U.S.

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Government to CAAF and selected non- approved by the World Health contractor has collected the DNA CAAF, contracts must require that Organization or the Department of specimen sample. contractor personnel deploy with a Health and Human Services Centers for (2) If CAAF who are U.S. citizens do minimum 90-day supply of any required Disease Control and Prevention Form not process through a deployment medications obtained at their own 731. However, the contract must center, or the contractor is authorized to expense. For more information, see stipulate that CAAF and selected non- process its own personnel, the contract paragraph (bb) of appendix A to this CAAF obtain all other necessary must require that the contractor collect part. immunizations before their arrival at the and forward DNA specimen samples for (1) Contractor personnel must know deployment center. The TB skin test is all contractor personnel who are that deployed medical units are required for all contractor personnel deployed as CAAF to the AFRSSIR. equipped and staffed to provide within three months before they are Regardless of what specimen collection emergency care to healthy adults and deployed. and storage arrangements are made, all are unable to provide or replace many (4) The DoD will provide theater- contractors deploying CAAF who are medications required for routine specific medical supplies and force U.S. citizens must provide the CAAF’s treatment of chronic medical health protection prescription products name and Social Security number, conditions, such as high blood pressure, to CAAF and selected non-CAAF. location of the DNA specimen sample, heart conditions, and arthritis. Additionally, these personnel will facility contact information, and (2) The contract must require receive deployment medication retrieval plan to AFRSSIR. If the contractor personnel to review both the information sheets for all vaccines or AFRSSIR is not used and a CAAF who amount of the medication and its deployment-related medications that are is a U.S. citizen becomes a casualty, the suitability in the foreign area with their to be dispensed or administered. contractor must be able to retrieve personal physician and make any (5) Contractors will ensure that identification media for use by the necessary adjustments before deploying. individuals with a positive TB skin test Armed Forces Medical Examiner The contract must also hold the be evaluated for targeted diagnosis and (AFME) or other competent authority to contractor personnel responsible for the treatment of latent TB infection in conduct a medical-legal investigation of re-supply of required medications. accordance with the procedures the incident and identification of the (e) Comfort items. The contract must victim or victims. These records must be require that contractor personnel take outlined in the World Health Organization Guidelines on the retrievable within 24 hours for spare hearing-aid batteries, sunglasses, forwarding to the AFME when there is insect repellent, sunscreen, and any Management of Latent Tuberculosis Infection. a reported incident that would other supplies related to their necessitate their use for identifying (6) The contract must stipulate that individual physical requirements. DoD human remains. The contractor shall CAAF and selected non-CAAF bring a sources will not provide these items. have access to the location of its current copy of the International (f) Immunizations. A list of employees’ fingerprint, medical, and Certificate of Vaccination or Prophylaxis immunizations, both those required for dental records, including panographs. entry into the designated area of to the pre-deployment processing center (3) AFRSSIR is responsible for operations and those recommended by and to the operational area. implementing special rules and medical authorities, will be produced by (g) Human Immunodeficiency Virus procedures to ensure the protection of the cognizant medical authority for each (HIV) Testing. HIV testing is not privacy interests in regards to the deployment; posted to the GCC OCS mandatory for contractor personnel specimen samples and any DNA web page and DoD FCG; and unless specified by the GCC CCDR or by analysis of those samples. Specimen incorporated in contracts for host nation requirements. HIV testing, if samples shall only be used for the performance in the designated AOR. required, must occur within one year purposes outlined in paragraph (ll) of (1) The GCC, upon the before deployment. appendix A to this part. recommendation of the cognizant (h) Armed Forces Repository of (i) Pre-existing medical conditions. medical authority, will provide Specimen Samples for the Identification All evaluations of pre-existing medical contractor personnel who are deploying of Remains (AFRSSIR). For conditions should occur before to the applicable theater of operation identification of remains purposes, contractor personnel deploy. Personnel guidance and a list of immunizations contractors whose CAAF members are who have pre-existing medical required to protect against U.S. citizens will obtain a dental conditions may deploy if: communicable diseases assessed to be a panograph and will forward a specimen (1) The condition is not of such a potential hazard to their health. The sample suitable for DNA analysis to, nature it is likely to have a medically cognizant medical authority will and ensure it is on file with, the grave outcome or a negative impact on prepare and maintain this list. AFRSSIR before or during deployment mission execution if it unexpectedly (2) The contract must require that processing and recorded in SPOT–ES. worsens. CAAF be immunized appropriately The DoD Components must ensure that (2) The condition is stable and before completing the pre-deployment all contracts require CAAF who are U.S. reasonably anticipated by the pre- process. citizens to provide DNA specimen deployment medical evaluator not to (3) During pre-deployment samples for AFRSSIR as a condition of worsen during the deployment under processing, the DoD will provide deployment. For more information, see contractor-provided medical care in- contractor personnel, at no cost to the paragraph (ll) of appendix A to this part. theater in light of the physical, contractor, any theater-specific (1) All CAAF who are U.S. citizens physiological, psychological, immunizations and medications not processing through a deployment center environmental, and nutritional effects of available to the general public. will have a DNA specimen sample the duties and location. Contractor personnel must obtain all collected and forwarded to the AFRSSIR (3) Any required ongoing health care other immunizations before arrival at for storage. Contracts must require or medications must be available or the deployment center, documented on contractors to verify in SPOT–ES or its accessible to contractor personnel, the International Certificate of successor that AFRSSIR has received independent of the military health Vaccinations of Prophylaxis as the DNA specimen sample or that the system, and not be subject to special

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handling, storage, or other requirements may determine if adequate treatment (xiv) Any medical conditions that (e.g., refrigeration requirements and/or facilities and specialist support are require surgery or for which surgery has cold chain, electrical power available at the duty station for: been performed that requires requirements) that cannot be met in the (i) Physical or psychological rehabilitation or additional surgery to specific theater of operations. conditions resulting in the inability to remove devices. (4) The condition does not and is not wear IPE effectively, if wearing IPE may (xv) Asthma that has a Forced anticipated to require duty limitations be reasonably anticipated or required in Expiratory Volume-1 (FEV–1) of less that would preclude performance of the deployed location. than or equal to 50 percent of predicted contractual requirements or to require (ii) Conditions that prohibit FEV–1 despite appropriate therapy, that accommodation by the DoD component immunizations or use of force health has required hospitalization at least two or requiring activity. When necessary, protection prescription products times in the last 12 months, or that the cognizant medical authority (or required for the specific deployment. requires daily systemic oral or injectable delegated representative) is the Depending on the applicable threat steroids. appropriate authority to evaluate the assessment, required force health (xvi) Any musculoskeletal conditions suitability of an individual’s limitations protection prescription products, that significantly impair performance of in theater. vaccines, and countermeasures may duties in a deployed environment. (5) There is no need for routine out- include atropine, epinephrine, and/or 2- (xvii) HIV antibody positive with the of-theater evacuation for continuing pam chloride auto-injectors, certain presence of progressive clinical illness diagnostics or other evaluations. antimicrobials, antimalarials, and/or or immunological deficiencies. The (j) Conditions usually precluding pyridostigmine bromide. contracting officer should consult the medical clearance. This section is not (iii) Any chronic medical conditions cognizant medical authority in all intended to be comprehensive. A list of that require frequent clinical visits, fail instances of HIV seropositivity before all possible diagnoses, including to respond to adequate conservative medical clearance for deployment. relevant severity levels that should treatment, or necessitate significant (xviii) Hearing loss. The requirement preclude approval by the cognizant limitation of physical activity. for use of a hearing aid does not medical authority or designee would be (iv) Any medical conditions that necessarily preclude deployment. too expansive to list in this part. These However, the individual must have are minimum requirements. Contractor require durable medical equipment or personnel may have additional medical appliances or periodic evaluation or sufficient unaided hearing to perform clearance requirements based on their treatment by medical specialists not duties safely. occupation and local laws. It is the readily available in theater (e.g., (xix) Loss of vision. Best corrected responsibility of the contractor to ensure Continuous Positive Airway Pressure visual acuity must meet job that its employees’ medical clearances (CPAP) machine for sleep apnea). requirements to perform duties safely. comply with any applicable local (v) Any unresolved acute or chronic (xx) Symptomatic coronary artery occupation-specific medical illness or injuries that would impair disease. requirements. duty performance in a deployed (xxi) History of myocardial infarction (1) In general, individuals with the environment during the duration of the within one year of deployment. conditions in paragraph (b) of § 158.7, deployment. (xxii) History of coronary artery based on an individual assessment (vi) Active TB or known blood-borne bypass graft, coronary artery pursuant to paragraph (bb) of appendix diseases that may be transmitted to angioplasty, carotid endarterectomy, A to this part, will not normally be others in a deployed environment. (For other arterial stenting, or aneurysm approved for deployment to provide HIV infections, see paragraph (j)(2)(xvii) repair within one year of deployment. contractual support in applicable of this section.) (xxiii) Cardiac dysrhythmias or operations. The medical evaluator must (vii) An acute exacerbation of a arrhythmias, either symptomatic or carefully consider whether climate; physical or mental health condition that requiring medical or electrophysiologic altitude; the nature of available food and could affect duty performance. control, such as the presence of an housing available; the nature of medical, (viii) Recurrent loss of consciousness implanted defibrillator and/or behavioral health, and dental services; for any reason. pacemaker. or other environmental or operational (ix) Any medical condition that could (xxiv) Heart failure. factors may prove hazardous to the result in sudden incapacitation (xxv) Individuals without a dental deploying person’s heath because of a including a history of stroke within the exam within the last 12 months or who known physical or mental condition. last 24 months, seizure disorders, and are likely to require dental treatment or (2) Medical clearance for deployment diabetes mellitus type I or II, treated reevaluation for oral conditions that are of persons with any of the conditions in with insulin or oral hypoglycemic likely to result in dental emergencies this section shall be granted by the agents. within 12 months. contracting officer only after (x) Hypertension not controlled with (xxvi) Psychotic and/or bipolar consultation with the appropriate medication or that requires frequent disorders. For detailed guidance on cognizant medical authority or a monitoring to achieve control. deployment-limiting psychiatric designated representative. The (xi) Pregnancy. conditions or psychotropic medications, cognizant medical authority makes (xii) Cancers for which individuals see paragraph (mm) of appendix A to recommendations and serves as the are receiving continuing treatment or this part. GCC’s advisor on conditions precluding that require periodic specialty medical (xxvii) Psychiatric disorders under the medial clearance of deploying evaluations during the anticipated treatment with fewer than three months personnel; however, the geographic duration of the deployment. of demonstrated stability. CCDR is the final approval or (xiii) Precancerous lesions that have (xxviii) Clinical psychiatric disorders disapproval authority except as not been treated or evaluated and that with residual symptoms that impair provided in paragraph (k)(3) of this require treatment or evaluation during duty performance. section. The cognizant medical the anticipated duration of the (xxix) Mental health conditions that authority or designated representative deployment. pose a substantial risk for deterioration

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or recurrence of impairing symptoms in facilities and specialist support in the within the DoD’’ (available at https:// the deployed environment. general duty area versus the operational www.esd.whs.mil/Portals/54/Documents/DD/ (xxx) Chronic medical conditions that criticality of the particular SOF member. issuances/dodi/620003p.pdf). require ongoing treatment with The TSOC surgeon will recommend (n) DoD Instruction 6000.11, ‘‘Patient antipsychotics, lithium, or Movement (PM)’’ (available at https:// approval or disapproval to the TSOC www.esd.whs.mil/Portals/54/Documents/DD/ anticonvulsants. Commander. The TSOC Commander is issuances/dodi/600011p.pdf). (k) Exceptions to medical standards the final approval or disapproval (o) DoD 4525.6–M, ‘‘Department of Defense (waivers). If a contractor believes an authority. Postal Manual’’ (available at https:// individual CAAF with one of the www.esd.whs.mil/Portals/54/Documents/DD/ conditions listed in paragraphs (j)(2)(i) Appendix A to Part 158—Related issuances/dodm/452506m.pdf). through (xxx) of this section can Policies (p) DoD Instruction 1015.10, ‘‘Military accomplish his or her tasks and duties The Operational Contract Support Outside Morale, Welfare, and Recreation (MWR) and tolerate the environmental and the United States Program is supported by Programs’’ (available at https:// the following policies: www.esd.whs.mil/Portals/54/Documents/DD/ operational conditions of the deployed issuances/dodi/101510p.pdf). location, the contractor may request a (a) DoD Directive 5124.02, ‘‘Under Secretary of Defense for Personnel and (q) DoD Directive 1330.21, ‘‘Armed waiver for that individual through the Readiness (USD(P&R))’’ (available at https:// Services Exchange Regulations’’ (available at contracting officer to the CCDR for www.esd.whs.mil/Portals/54/Documents/DD/ https://www.esd.whs.mil/Portals/54/ approval. issuances/dodd/512402p.pdf). Documents/DD/issuances/dodi/ (1) It is unlikely that the CCDR will (b) DoD Instruction 1100.22, ‘‘Policy and 133021p.pdf). grant waivers for contractor personnel. Procedures for Determining Workforce Mix’’ (r) DoD Directive 5160.41E, ‘‘Defense Thus, the contractor must provide an (available at https://www.esd.whs.mil/ Language, Regional Expertise, and Culture explanation as to why it has no other Portals/54/Documents/DD/issuances/dodi/ (LREC) Program’’ (available at https:// qualified employees available who meet 110022p.pdf). www.esd.whs.mil/Portals/54/Documents/DD/ (c) DoD Directive 1000.20, ‘‘Active Duty issuances/dodd/516041Ep.pdf). the medical standards to fulfill the Service Determinations for Civilian or (s) Synchronized Predeployment and deployed duties. Contractors will Contractual Groups’’ (available at https:// Operational Tracker (SPOT) Business Rules include a summary of a detailed www.esd.whs.mil/Portals/54/Documents/DD/ (available at https://www.acq.osd.mil/LOG/ medical evaluation or consultation issuances/dodd/100020p.pdf). PS/spot.html). concerning the medical condition or (d) DoD Instruction, ‘‘Combating (t) DoD 5400.11–R, ‘‘Department of Defense conditions in the requests for waivers. Trafficking in Persons (CTIP)’’ (available at Privacy Program’’ (available at https:// Since maximization of mission https://www.esd.whs.mil/Portals/54/ www.esd.whs.mil/Portals/54/Documents/DD/ accomplishment and the protection of Documents/DD/issuances/dodi/ issuances/dodm/540011r.pdf). 220001p.pdf). the health of personnel are the ultimate (u) DoD Manual 6025.18, ‘‘Implementation (e) DoD Law of War Manual (June 2015, of the Health Insurance Portability and goals, justification for the waiver will Updated Dec. 2016) (available at https:// Accountability Act (HIPPA) Privacy Rule in include: ogc.osd.mil/images/law_war_manual_ DoD Health Care Programs’’ (available at (i) Statement indicating the CAAF december_16.pdf). https://www.esd.whs.mil/Portals/54/ individual’s experience. (f) DoD Instruction 1000.01, ‘‘Identification Documents/DD/issuances/dodm/ (ii) The position the CAAF individual (ID) Cards Required by the Geneva 602518m.pdf). will occupy and the nature and scope of Conventions’’ (available at https:// (v) DoD Directive 8000.01, ‘‘Management of contractual duties assigned. www.esd.whs.mil/Portals/54/Documents/DD/ the Department of Defense Information (iii) Any known specific hazards of issuances/dodi/100001p.pdf). Enterprise (DoD IE)’’ (available at https:// (g) DoD Instruction 1000.13, ‘‘Identification the position. www.esd.whs.mil/Portals/54/Documents/DD/ (ID) Cards for Members of the Uniformed issuances/dodd/800001p.pdf). (iv) Anticipated availability and need Services, Their Dependents, and Other for care while deployed. (w) DoD Instruction 8320.02, ‘‘Sharing Eligible Individuals’’ (available at https:// Data, Information, and Information (v) The benefit expected to accrue www.esd.whs.mil/Portals/54/Documents/DD/ from the waiver. Technology (IT) Services in the Department issuances/dodi/100013p.pdf). of Defense’’ (available at https:// (2) Medical clearance to deploy or (h) DoD Manual 1000.13, ‘‘DoD www.esd.whs.mil/Portals/54/Documents/DD/ Identification (ID) Cards: ID Card Life-Cycle’’ continue serving in a deployed issuances/dodi/832002p.pdf). Volume 1 (available at https:// environment for persons with any of the (x) DoD Instruction 8330.01, www.esd.whs.mil/Portals/54/Documents/DD/ conditions in paragraphs (j)(2)(i) ‘‘Interoperability of Information Technology issuances/dodm/100013_vol1.pdf). through (xxx) of this section must have (IT), Including National Security Systems (i) DoD Manual 1000.13, ‘‘DoD the concurrence of the cognizant Identification (ID) Cards: ID Card Life-Cycle’’, (NSS)’’ (available at https:// medical authority, or designee, who will Volume 2 (available at https:// www.esd.whs.mil/Portals/54/Documents/DD/ recommend approval or disapproval to www.esd.whs.mil/Portals/54/Documents/DD/ issuances/dodi/833001p.pdf). the GCC. The GCC, or designee, is the issuances/dodm/100013_vol2.pdf). (y) DoD Instruction 8500.01, ‘‘Cybersecurity’’ (available at https:// final decision authority for approvals (j) DoD Directive 1300.22, ‘‘Mortuary Affairs Policy’’ (available at https:// www.esd.whs.mil/Portals/54/Documents/DD/ and disapprovals. _ www.esd.whs.mil/Portals/54/Documents/DD/ issuances/dodi/850001 2014.pdf). (3) For CAAF employees working (z) DoD Directive 4500.54E, ‘‘DoD Foreign with Special Operations Forces issuances/dodd/130022p.pdf). (k) DoD Instruction 1300.18, ‘‘Department Clearance Program (FCP)’’ (available at personnel who have conditions in of Defense (DoD) Personnel Casualty Matters, https://www.esd.whs.mil/Portals/54/ paragraphs (j)(2)(i) through (xxx) of this Policies, and Procedures’’ (available at Documents/DD/issuances/dodd/ section, medical clearance may be https://www.esd.whs.mil/Portals/54/ 450054E.pdf). granted by the contracting officer after Documents/DD/issuances/dodi/ (aa) DoD Directive 6485.02E, ‘‘DoD Human consultation with the appropriate 130018p.pdf). Immunodeficiency Virus (HIV)/Acquired Theater Special Operations Command (l) DoD Instruction 4515.13, ‘‘Air Immune Deficiency Syndrome (AIDS) Prevention Program (DHAPP) to Support (TSOC) surgeon. The TSOC surgeon, in Transportation Eligibility’’ (available at https://www.esd.whs.mil/Portals/54/ Foreign Militaries’’ (available at https:// coordination with the CCMD cognizant Documents/DD/issuances/dodi/ www.esd.whs.mil/Portals/54/Documents/DD/ medical authority and senior in-theater 451513p.PDF). issuances/dodd/648502E.pdf). medical authority, will ascertain the (m) DoD Instruction 6200.03, ‘‘Public (bb) DoD Instruction 6490.03, ‘‘Deployment capability and availability of treatment Health Emergency Management (PHEM) Health’’ (available at https://

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www.esd.whs.mil/Portals/54/Documents/DD/ ACTION: Proposed rule; revision; to meet the required workflow timelines issuances/dodi/649003p.pdf). additional comment period. for these extra services, and for (cc) DoD Directive 6490.02E, consistency in application of the refund ‘‘Comprehensive Health Surveillance’’ SUMMARY: The Postal Service is revising processes, the Postal Service is (available at https://www.esd.whs.mil/ its pending proposal to amend Mailing proposing to extend the current Priority Portals/54/Documents/DD/issuances/dodd/ Standards of the United States Postal Mail Express with an extra service 649002Ep.pdf). Service, Domestic Mail Manual (DMM®) (dd) CJCS Instruction 3500.01H, ‘‘Joint timelines to no sooner than 30 days, or Training Policy for the Armed Forces of the in subsection 604.9.2 to revise the time no later than 60 days. For all other United States’’ (available at https:// limit for extra service refunds. classes of mail with an extra service, the www.jcs.mil/Portals/36/Documents/Library/ DATES: Submit comments on or before 10-day time limit will be extended to a Instructions/3500_01.pdf). February 8, 2021. 30-day time limit before a customer can (ee) DoD Instruction 2000.12, ‘‘DoD ADDRESSES: Mail or deliver written file for a refund. Antiterrorism (AT) Program’’ (available at comments to the manager, Product We believe this proposed revision https://www.esd.whs.mil/Portals/54/ Classification, U.S. Postal Service, 475 will provide customers with a more Documents/DD/issuances/dodi/ efficient process and a more consistent 200012p.pdf). L’Enfant Plaza SW, Room 4446, (ff) DoD Directive 2310.01, ‘‘DoD Detainee Washington, DC 20260–5015. If sending customer experience. Program’’ (available at https:// comments by email, include the name Although exempt from the notice and www.esd.whs.mil/Portals/54/Documents/DD/ and address of the commenter and send comment requirements of the issuances/dodd/231001e.pdf). to PC Federal [email protected], with a Administrative Procedure Act (5 U.S.C. (gg) DoD Directive 2311.01, ‘‘DoD Law of subject line of ‘‘Extra Services Refund 553(b), (c)) regarding proposed War Program’’ (available at https:// Time Limit’’. Faxed comments are not rulemaking by 39 U.S.C. 410(a), the www.esd.whs.mil/Portals/54/Documents/DD/ accepted. Postal Service invites public comments issuances/dodd/231101e.pdf). on the following proposed revisions to (hh) DoD Directive 3115.09, ‘‘DoD Confidentiality Mailing Standards of the United States Intelligence Interrogations, Detainee All submitted comments and Postal Service, Domestic Mail Manual Debriefings, and Tactical Questioning’’ (DMM), incorporated by reference in the (available at https://www.esd.whs.mil/ attachments are part of the public record Portals/54/Documents/DD/issuances/dodd/ and subject to disclosure. Do not Code of Federal Regulations. See 39 CFR 311509p.pdf). enclose any material in your comments 111.1. (ii) DoDD 3002.01, ‘‘Personnel Recovery in that you consider to be confidential or We will publish an appropriate the Department of Defense’’ (available at inappropriate for public disclosure. amendment to 39 CFR part 111 to reflect https://www.esd.whs.mil/Portals/54/ You may inspect and photocopy all these changes. Documents/DD/issuances/dodd/ written comments, by appointment Accordingly, 39 CFR part 111 is 300201p.pdf). ® proposed to be amended as follows: (jj) DoD Instruction 3002.03, ‘‘DoD only, at USPS Headquarters Library, Personnel Recovery—Reintegration of 475 L’Enfant Plaza SW, 11th Floor List of Subjects in 39 CFR Part 111 Recovered Personnel’’ (available at https:// North, Washington, DC 20260. These Administrative practice and www.esd.whs.mil/Portals/54/Documents/DD/ records are available for review on procedure, Postal Service. issuances/dodi/300203p.pdf). Monday through Friday, 9 a.m.–4 p.m., (kk) DoD Directive 6200.04, ‘‘Force Health by calling 202–268–2906. PART 111—GENERAL INFORMATION Protection (FHP)’’ (available at https:// FOR FURTHER INFORMATION CONTACT: ON POSTAL SERVICE www.esd.whs.mil/Portals/54/Documents/DD/ Sheila Marano at (202) 268–4257, issuances/dodd/620004p.pdf). Adaisja Johnson at (202) 268–6724, or ■ 1. The authority citation for 39 CFR (ll) DoD Instruction 5154.30, ‘‘Armed part 111 continues to read as follows: Forces Medical Examiner System (AFMES) Garry Rodriguez at (202) 268–7281. Operations’’ (available at https:// SUPPLEMENTARY INFORMATION: On May Authority: 5 U.S.C. 552(a); 13 U.S.C. 301– www.esd.whs.mil/Portals/54/Documents/DD/ 14, 2020, the Postal Service published a 307; 18 U.S.C. 1692–1737; 39 U.S.C. 101, issuances/dodi/515430p.pdf). notice of proposed rulemaking (85 FR 401, 403, 404, 414, 416, 3001–3011, 3201– (mm) Assistant Secretary of Defense for 3219, 3403–3406, 3621, 3622, 3626, 3632, 28917–28918) to revise the time limit 3633, and 5001. Health Affairs Memorandum, ‘‘Policy for extra service refunds on all classes Guidance for Deployment-Limiting ® ■ 2. Revise the Mailing Standards of the Psychiatric Conditions and Medications,’’ of mail except Priority Mail Express . The Postal Service has elected to issue United States Postal Service, Domestic November 7, 2006 (available at http:// Mail Manual (DMM) as follows: www.ha.osd.mil/policies/2006/061107_ a second revised proposed rule that also deployment-limiting_psych_conditions_ includes revising the timelines for Mailing Standards of the United States meds.pdf). Priority Mail Express® with an extra Postal Service, Domestic Mail Manual Dated: October 30, 2020. service. (DMM) Currently, DMM Exhibit 604.9.2.1, Patricia L. Toppings, * * * * * OSD Federal Register Liaison Officer, Postage and Fees Refunds, provides that Department of Defense. for Priority Mail Express with an extra 600 Basic Standards for All Mailing service a customer must apply for an Services [FR Doc. 2020–27694 Filed 1–6–21; 8:45 am] extra service refund no sooner than 10 * * * * * BILLING CODE 5001–06–P days, or no later than 30 days, and for all other classes of mail with an extra 604 Postage Payment Methods and service a customer must apply for an Refunds POSTAL SERVICE extra service refund no sooner than 10 * * * * * days, or no later than 60 days, from the 9.0 Exchanges and Refunds 39 CFR Part 111 date the service was purchased. Certain extra services (e.g., Certified * * * * * Extra Services Refund Time Limit Mail®) have workflow timelines that extend beyond the current 10-day limit 9.2 Postage and Fee Refunds AGENCY: Postal ServiceTM. to initially file for a refund. As a result, * * * * *

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9.2.1 General Standards Exhibit 9.2.1 Postage and Fees Refunds * * * * * Customers must apply for a refund within the time limits in the chart below.

When to apply (from mailing date) Mail type or service No sooner than No later than

******* [Revise the text of the ‘‘Priority Mail Express with an Extra Service’’ line item to read as follows:] Priority Mail Express with an Extra Service(s) (9.2.4h) ...... 30 days ...... 60 days.

******* [Revise the text of the ‘‘Extra Services’’ line item to read as follows:] All other classes of mail with an Extra Service(s) (9.2.4h) ...... 30 days ...... 60 days.

*******

9.2.4 Postage and Fee Refunds Not ENVIRONMENTAL PROTECTION Instructions: Direct your comments to Available AGENCY Docket ID No. EPA–R06–UST–2018– 0701. EPA’s policy is that all comments Refunds are not made for the 40 CFR Parts 281 and 282 received will be included in the public following: [EPA–R06–UST–2018–0701; FRL–10014– docket without change and may be * * * * * 71–Region 6] available online at https:// [Revise the text of item h to read as www.regulations.gov, including any Arkansas: Final Approval of State follows:] personal information provided, unless Underground Storage Tank Program the comment includes information h. Fees paid for extra services, as Revisions and Incorporation by claimed to be Confidential Business allowed under 9.2.3, when refund Reference Information (CBI) or other information request is made by the mailer less than whose disclosure is restricted by statute. AGENCY: Environmental Protection 30 days, or more than 60 days, from the Do not submit information that you Agency (EPA). date the service was purchased, unless consider to be CBI or otherwise ACTION: otherwise authorized by the manager, Proposed rule. protected through https:// Revenue and Field Accounting (see SUMMARY: Pursuant to the Resource www.regulations.gov, or email. The 608.8.0 for address). Conservation and Recovery Act (RCRA Federal https://www.regulations.gov * * * * * or Act), the Environmental Protection website is an ‘‘anonymous access’’ Agency (EPA) is proposing to approve system, which means the EPA will not 9.5 Priority Mail Express Postage and revisions to the State of Arkansas’s know your identity or contact Fees Refunds Underground Storage Tank (UST) information unless you provide it in the * * * * * program submitted by the State. This body of your comment. If you send an action is based on EPA’s determination email comment directly to the EPA 9.5.4 Conditions for Refund that these revisions satisfy all without going through https:// requirements needed for program www.regulations.gov, your email A postage refund request, as allowed approval. This action also proposes to address will be automatically captured under 9.0, must be made within the codify EPA’s approval of Arkansas’s and included as part of the comment timelines provided in Exhibit 9.2.1. state program and to incorporate by that is placed in the public docket and * * * * * reference those provisions of the State made available on the internet. If you regulations that we have determined submit an electronic comment, the EPA Ruth Stevenson, meet the requirements for approval. The recommends that you include your Attorney, Federal Compliance. provisions will be subject to EPA’s name and other contact information in [FR Doc. 2020–27802 Filed 1–6–21; 8:45 am] inspection and enforcement authorities the body of your comment and with any BILLING CODE P under sections 9005 and 9006 of RCRA disk or CD–ROM you submit. If the EPA subtitle I and other applicable statutory cannot read your comment due to and regulatory provisions. technical difficulties, and cannot DATES: Send written comments by contact you for clarification, the EPA February 8, 2021. may not be able to consider your comment. Electronic files should avoid ADDRESSES: Submit any comments, identified by EPA–R06–UST–2018– the use of special characters, any form 0701, by one of the following methods: of encryption, and be free of any defects 1. Federal eRulemaking Portal: or viruses. https://www.regulations.gov. Follow the You can view and copy the on-line instructions for submitting documents that form the basis for this comments. codification at the Environmental 2. Email: [email protected]. Protection Agency, Region 6, 1201 Elm

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Street, Suite #500, Dallas, Texas 75270. [email protected]. Out of an in response to this action, no further This facility is open from 8:30 a.m. to abundance of caution for members of activity is contemplated. If the EPA 4:30 p.m. Monday through Friday, the public and our staff, the EPA Region receives relevant adverse comments, the excluding Federal holidays and facility 6 office will be closed to the public to direct final rule will be withdrawn, and closures due to COVID–19. We reduce the risk of transmitting COVID– all public comments received will be recommend that you telephone Audray 19. We encourage the public to submit addressed in a subsequent final rule Lincoln, Environmental Protection comments via https:// based on this proposed rule. The EPA Specialist at (214) 665–2239, before www.regulations.gov, as there will be a will not institute a second comment visiting the Region 6 office. Interested delay in processing mail and no courier period. Any parties interested in persons wanting to examine these or hand deliveries will be accepted. commenting on this action should do so documents should make an Please call or email the contact listed at this time. For additional information, appointment with the office at least two above if you need alternative access to see the direct final rule published in the weeks in advance. The documents are material indexed but not provided in ‘‘Rules and Regulations’’ section of this also available in the docket for this the docket. Federal Register. rulemaking at https:// SUPPLEMENTARY INFORMATION: In the Authority: This proposed rule is issued www.regulations.gov. final rules section of this Federal under the authority of Sections 2002(a), 9004, Register, the EPA is approving the and 7004(b) of the Solid Waste Disposal Act, FOR FURTHER INFORMATION CONTACT: Ms. State’s UST program submittal as a as amended, 42 U.S.C. 6912, 6991c, 6991d, Audray Lincoln, Region 6, Project direct rule without prior proposal and 6991e. Officer, LUST Prevention/Corrective because the Agency views this as a Dated: October 27, 2020. Action Section (LCRPU), Land Chemical noncontroversial submittal and and Redevelopment Division, EPA anticipates no adverse comments. A Kenley McQueen, Region 6, 1201 Elm Street, Suite #500, detailed rationale for the approval is set Regional Administrator, Region 6. Dallas, Texas 75270, phone number forth in the direct final rule. If no [FR Doc. 2020–24241 Filed 1–6–21; 8:45 am] (214) 665–2239, email address relevant adverse comments are received BILLING CODE 6560–50–P

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Notices Federal Register Vol. 86, No. 4

Thursday, January 7, 2021

This section of the FEDERAL REGISTER Secretary of the USDA to establish an Æ 2 are agricultural producers in an contains documents other than rules or ‘‘Urban Agriculture and Innovative urban area or urban cluster; and proposed rules that are applicable to the Production Advisory Committee’’ to Æ agricultural producers who use public. Notices of hearings and investigations, advise the Secretary on the development innovative technology; committee meetings, agency decisions and of policies and outreach relating to • 2 representatives from an rulings, delegations of authority, filing of petitions and applications and agency urban, indoor, and other emerging institution of higher education or statements of organization and functions are agricultural production practices; and extension program; examples of documents appearing in this any other aspects of the implementation • 1 representative of a nonprofit section. of section 222 of the Reorganization Act organization, which may include a of 1994 (Pub. L. 103–354). The Urban public health, environmental, or Ag Advisory Committee will advise the community organization; DEPARTMENT OF AGRICULTURE Secretary of Agriculture on the • 1 representative of business and development of policies and outreach economic development, which may Establishment of the Urban Agriculture relating to urban, indoor, and other include a business development entity, and Innovative Production Advisory emerging agricultural production a chamber of commerce, a city Committee and Solicitation of practices; and will further develop government, or a planning organization; Nominations for Membership on the recommendations. • 1 individual with supply chain Advisory Committee In addition, the Urban Ag Advisory experience, which may include a food Committee will advise the Director of AGENCY: Natural Resources aggregator, wholesale food distributor, the Office of Urban Agriculture and food hub, or an individual who has Conservation Service, United States Innovative Production on policies, Department of Agriculture (USDA). direct-to-consumer market experience; initiatives, and outreach administered • 1 individual from a financing ACTION: Notice. by that office. The Urban Ag Advisory entity; and Committee will evaluate and review • SUMMARY: 2 individuals with related The Secretary of USDA ongoing research and extension announces the establishment of the experience or expertise in urban, activities relating to urban, indoor, and indoor, and other emerging agriculture Urban Agriculture and Innovative other innovative agricultural practices; Production Advisory Committee (Urban production practices, as determined by identify new and existing barriers to the Secretary. Ag Advisory Committee). The successful urban, indoor, and other Committee will advise the Secretary on Nominees to the Urban Ag Advisory emerging agricultural production Committee will be evaluated on a the development of policies and practices; and provide additional outreach relating to urban, indoor, and number of criteria, including expertise assistance and provide advice to the or experience with urban, indoor, and other emerging agricultural production Director as appropriate. practices; and other aspects of the other emerging agricultural practices. implementation section of Subtitle A, Urban Ag Advisory Committee Serving as an Urban Ag Advisory Section 222 of the Reorganization Act of Membership Committee member will not constitute employment by, or the holding of, an 1994. This notice also solicits The Urban Ag Advisory Committee is office of the United States for the nominations for membership on the expected to meet not less than 3 times purpose of any Federal law. Persons Urban Ag Advisory Committee. each year, with meetings held at various selected for membership on the Urban DATES: January 7, 2021. locations across the United States. There Ag Advisory Committee will not receive ADDRESSES: will be 12 members appointed to the We will consider compensation from USDA for their Urban Ag Advisory Committee. Of the nominations that are postmarked by service as Urban Ag Advisory members first appointed to this Urban March 8, 2021 to Ronald Harris, Committee members, except that while Ag Advisory Committee, as determined Designated Federal Officer, Director of away from home or regular place of Outreach and Partnerships, Natural by the Secretary: • 4 of the members will be appointed business the member will be eligible for Resources Conservation Service, travel expenses paid by USDA, Department of Agriculture, 1400 for a term of 3 years; • 4 of the members will be appointed including per diem in lieu of Independence Avenue SW, Room 6006– subsistence, at the same rate as a person S, Washington, DC 20250; or send by for a term of 2 years; and • 4 of the members will be appointed employed intermittently in the email to: [email protected]. government service, under 5 U.S.C. Ronald Harris, as the Designated Federal for a term of 1 year. Future members will be appointed for 5703. Officer will acknowledge receipt of Equal opportunity practices, in line nominations. a term of 3 years. An initial appointee of the Urban Ag Advisory Committee with the USDA policies, will be FOR FURTHER INFORMATION CONTACT: may serve an additional consecutive followed in all appointments to the Ronald Harris; telephone: (202) 720– term if the member is reappointed by Urban Ag Advisory Committee. 6646; email: [email protected]. the Secretary. To ensure that the recommendations SUPPLEMENTARY INFORMATION The Urban Ag Advisory Committee of the Urban Ag Advisory Committee will be composed of individuals have taken into account the needs of the Urban Ag Advisory Committee Purpose representing a broad spectrum of the diverse groups served by the Section 12302 of the Agriculture following representation: Department, membership should Improvement Act of 2018 (Pub. L. 115– Æ 4 agricultural producers, of include, to the extent practicable, 334, the 2018 Farm Bill) directs the whom— individuals with demonstrated ability to

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represent minorities, women, and Today Center at (202) 720–2600 (voice methodology and assumptions used; (c) persons with disabilities. and TDD). USDA is an equal ways to enhance the quality, utility, and opportunity provider and employer. clarity of the information to be Member Nominations Dated: December 28, 2020. collected; and (d) ways to minimize the Any interested person or organization Cikena Reid, burden of the collection of information may nominate qualified individuals for on those who are to respond, including Committee Management Officer, USDA. membership. Interested candidates may use of appropriate automated, nominate themselves. Individuals who [FR Doc. 2020–29077 Filed 1–6–21; 8:45 am] electronic, mechanical, or other wish to be considered for membership BILLING CODE 3410–16–P technological collection techniques or on the Urban Ag Advisory Committee other forms of information technology. must submit a nomination with DEPARTMENT OF AGRICULTURE FOR FURTHER INFORMATION CONTACT: For information, including a background further information contact Steven disclosure form (Form AD–755). Economic Research Service Wallander at the mailing address listed Nominations should be typed and above or by phone: (202) 694–5546. include the following: Notice of Intent to Request New SUPPLEMENTARY INFORMATION: Title: 1. A brief summary, no more than two Information Collection pages, explaining the nominee’s Conservation Auction Behavior: Effects qualifications to serve on the Urban Ag AGENCY: Economic Research Service, of Default Offers and Score Updating. Advisory Committee and addressing the USDA. OMB Number: To be assigned by criteria described above. OMB. ACTION: Notice and request for Expiration Date: Three years from 2. A resume providing the nominee’s comments. background, experience, and approval date. educational qualifications. SUMMARY: In accordance with the Type of Request: New information 3. A completed background disclosure Paperwork Reduction Act of 1995 and collection. form (Form AD–755) signed by the Office of Management and Budget Abstract: In accordance with the nominee https://www.ocio.usda.gov/ (OMB) implementing regulations, the Paperwork Reduction Act of 1995 (Pub. sites/default/files/docs/2012/AD-755- U.S. Department of Agriculture L. 104–12) and OMB regulations at 5 Approved_Master-exp-3.31.22_508.pdf. Economic Research Service (ERS) CFR part 1320 (60 FR 44978, August 29, 4. Any recent publications by the invites the general public and other 1995), this notice announces USDA nominee relative to urban agriculture or Federal agencies to take this Economic Research Services’ intention innovations in urban agricultural opportunity to comment on a proposed to request approval from the Office of production (if appropriate). new information collection for a study Management and Budget (OMB) for a 5. Letters of endorsement (optional). of ‘‘Conservation Auction Behavior: new data collection effort. Send typed nominations to Ronald Effects of Default Offers and Score This data collection will use an online Harris, Designated Federal Officer, Updating.’’ simulated auction experiment with Director of Outreach and Partnerships, former participants in the USDA Natural Resources Conservation Service, DATES: Written comments on this notice Conservation Reserve Program (CRP) Department of Agriculture, 1400 must be received on or before March 8, general signup and university students Independence Avenue SW, Room 6006– 2021 to be assured of consideration. to (1) study the anchoring effect of using S, Washington, DC 20250; telephone: ADDRESSES: Address all comments a high-scoring default offer in the CRP (202) 720–6646; email: Ronald.Harris@ concerning this notice to Steven enrollment software rather than an usda.gov. Ronald Harris, the Designated Wallander, Rural and Resource active-choice default, and (2) study how Federal Officer, will acknowledge Economics Division, Economic Research the timing of information about final receipt of nominations. Service, U.S. Department of Agriculture, ranking score in the software influences 1400 Independence Ave. SW, Mail Stop responsive to baseline ranking scores. Equal Opportunity Statement 1800, Washington DC 20250–0002. Outputs for the experiment will be used To ensure that recommendations of Submit electronic comments to to inform potential updates to the CRP the Urban Ag Advisory Committee take [email protected] . software and enrollment software as into account the needs of underserved All written comments will be well as future lab experiments on and diverse communities served by the available for public inspection during general conservation auctions. USDA, membership will include, to the regular business hours (8:30 a.m. to 5:00 USDA’s Conservation Reserve extent practicable, individuals p.m. (Eastern time), Monday through Program (CRP) enrolls environmentally representing minorities, women, and Friday). To arrange access to the sensitive cropland in long-term persons with disabilities. USDA comments, contact Steven Wallander at contracts. Enrolled landowners receive prohibits discrimination in all of its the email address listed above. annual rental payments for establishing programs and activities on the basis of All responses to this notice will be the approved conservation vegetative race, sex, color, national origin, gender, summarized and included in the request cover and not farming the land. Most religion, age, sexual orientation, or for Office of Management and Budget land is enrolled through the CRP disability. Additionally, discrimination approval. All comments and replies will General Signup, a multi-unit, sealed- on the basis of political beliefs and be a matter of public record. Comments bid, reverse auction. Offers are ranked marital status or family status is also are invited on: (a) Whether the proposed on both quality and price. Participants prohibited by statutes enforced by collection of information is necessary can increase the probability that their USDA (not all prohibited bases apply to for the proper performance of the offer is accepted by agreeing to a higher all programs). Persons with disabilities functions of the agency, including quality conservation cover practice or who require alternate means for whether the information shall have lowering their asking price (annual communication of program information practical utility; (b) the accuracy of the payment). By encouraging better (Braille, large print, audio tape, etc.) agency’s estimate of the burden of the practices and lower payments, the should contact USDA’s Technology and proposed collection of information, auction design improves the cost Accessible Resources Give Employment including the validity of the effectiveness of the CRP.

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The CRP general signup is a fairly we will be able to identify whether the levels, we took into consideration complex decision environment in which effects observed in other complex academic standards, statistical power participants must decide whether to decision-making environments are also considerations, budgetary limitations, select one of several dozen possible likely in the context of a large and discussions between OMB and ERS higher cost but higher scoring practices conservation auction like the CRP. We regarding this and other approved and whether to ask for lower annual plan to use these experiments to inform experimental research. rental payments in order to increase the possible future redesigns of the CRP Authority: These data will be likely that their offer is accepted into general signup software and enrollment collected under the legal authority of 7 the program. A larger literature in other process by the Farm Service Agency U.S.C. 2204(a). domains finds that in complex decision (FSA), future experiments using environments the initial option simulated conservation auctions, and ERS intends to protect respondent presented can have a significant the overall effort to extrapolated from information under the Privacy Act of anchoring effect in which final choices the larger literature on conservation 1974 and 7 U.S.C. 2276. ERS has are closer to that default option than auction experiments that relied decided not to invoke the Confidential they would be otherwise. The current primarily on students as subjects. Information Protection and Statistical CRP general signup software uses an Participation in this experiment will Efficiency Act of 2002 (CIPSEA). The ‘‘active choice’’ default, in which the be voluntary, and subjects will be complexity and cost necessary to invoke cover practice and annual rental choices recruited using multiple waves of mail CIPSEA is not justified given the nature are initially blank. Additional literature and email communications. During each of the collection; the collection will be on complex decision-making session, subjects will participate in four conducted by the University of environments finds that the way in rounds of a conservation auction: One Delaware and hosted in non-government which information is provided can practice round and three actual rounds. owned computer systems, where influence outcome. The current CRP Within each round, subjects will be CIPSEA compliance cannot be assured. general signup software provides assigned a different field for potential Affected Public: Half of the participants with their ranking score at enrollment and, based on the respondents will be farmers or farmland the end of a series of offer selection characteristics of that field, will make a owners who previously participated in screens. Providing live updating of that decision about which conservation at least one CRP general signup. The score earlier in the software could make cover practice to select and what annual other half will be students at the respondents more sensitive to the rental payment to ask for. Sessions will University of Delaware. underlying program incentives. be conducted using an on-line auction Estimated Number of Respondents Using a stylized version of the portal developed by the University of and Respondent Burden: Since enrollment software to create a Delaware. Participants can sign into the recruitment will occur through multiple simulated (artefactual) CRP auction, the web page and make their offers at any waves to reach the target number of study will experimentally test the point during a two-week enrollment participants, the total respondent impacts on final practice and payment period. Recruitment will occur in burden for participation time will be offers from two behavioral multiple waves until the required constant and the total respondent interventions: (i) A high-quality default number of subjects is met. burden for recruitment will depend starting offer; and (ii) live updates on Each session will last for an average upon the participation rate. Under lower the offer score at the point of offer 30 minutes, including watching an participation rates, the respondent selection. In addition, to assess the introductory video that explains the burden of recruitment is higher. Since external validity (generalizability) of auction rules and software. Subjects will students will be recruited through email conducting experiments with students, receive a show-up fee of $10. In a common practice in the literature on addition to the show-up fee, subjects and farmers will be recruited through conservation auction design, this study will receive compensation based on the mail, the burden per subject for will run the experiment with both a decisions they make during the course recruitment is slightly lower (3 minutes) sample of university students (drawn of the experiment. After the enrollment for students than for farmers (5 from the full population of period for each recruitment wave closes, minutes). For all subjects who opt to undergraduate and graduate students at one of the three auction rounds will be participate, the expected time to the University of Delaware) and a randomly selected and the highest- complete the experiment online is 30 sample of former participants in the ranking offers will be ‘‘accepted’’ and minutes. General Signup to test whether the two receive a virtual payment. The number Under a conservative assumption that populations respond differently to the of winning offers will depend upon the the participation rate will be 10 percent behavioral interventions. complete pool of bids. Higher quality of the sampled population for farmers The information to be collected in this and lower cost offers will be more likely and 25 percent of the sampled proposed initiative is necessary to test to get accepted but will receive lower population for students, the public the expected behavioral responses to payments if they are accepted. Payment respondent burden for this information these changes in the auction levels are higher for the farmer collection is estimated to be 2,033 information environment. Such population than for the student hours. The calculations are shown in responses cannot be estimated using population since the lower level of the table below based on a sample of observational data because there is not incentives for students is one of the 10,000 farmers that results in 1,000 systematic variation in the information major reasons that many conservation farmer participants and a sample of environment. In addition, such auction studies use only a student 4,000 students that results in a sample responses cannot be estimated using population. We expect the winning bids of 1,000 student participants. At higher mathematical programming models to receive an average of $40 for farmers participation rates of 20 percent for because the underlying psychological and $15 for students, not including the farmers and 33 percent for students, the drivers of anchoring effects are highly show-up fee. In designing our total respondent burden would be 1,567 context specific. By using experiments, experimental procedures and payment hours.

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SAMPLE BURDEN HOURS: 10% RESPONSE RATE FOR FARMERS, 25% RESPONSE RATE FOR STUDENTS

Responses Non-Response Sample size Subtotal Subtotal Total Count Minutes/ burden Count Minutes/ burden burden response hours response hours hours

Farmer Population: Recruitment ...... 10,000 1,000 5 83.3 9,000 5 750.0 833.3 Participation ...... 1,000 30 500.0 ...... 500.0

Total ...... 1,333.3 Student Population: Recruitment ...... 4,000 1,000 3 50.0 3,000 3 150.0 200.0 Participation ...... 1,000 30 500.0 ...... 500.0

Total ...... 700.0

Total Both Populations ...... 2,033.3

Comments: Comments are invited on: collaborative relationships and to funding under the Secure Rural School (a) Whether the proposed collection of provide advice and recommendations to allocations to Custer, Lawrence, and information is necessary for the proper the Forest Service concerning projects Pennington Counties for 2017, 2018 and performance of the functions of the and funding consistent with Title II of 2019. Agency, including whether the the Act. RAC information can be found The meeting is open to the public. information will have practical utility; at the following website: https:// The agenda will include time for people (b) the accuracy of the Agency’s www.fs.usda.gov/detail/blackhills/ to make oral statements of three minutes estimate of the burden of the proposed workingtogether/advisorycommittees/ or less. Individuals wishing to provide collection of information, including the ?cid=STELPRD3807565. comments with regards to this meeting’s validity of the methodology and DATES: The meeting will be held on agenda and for comments to be included assumptions used; (c) ways to enhance Thursday, January 28, 2021, at 5:30 p.m. with the meeting minutes/records, the quality, utility, and clarity of the All meetings are subject to comments must be submitted in writing information to be collected; (d) ways to cancellation. For updated status of by Friday January 22, 2021. Anyone minimize the burden of the collection of meeting prior to attendance, please who would like to bring related matters information on those who are to contact the person listed under FOR to the attention of the committee may respond, including through the use of FURTHER INFORMATION CONTACT. file written statements with the appropriate automated, electronic, ADDRESSES: The meeting will be held committee staff before or after the mechanical, or other technological virtually along with a conference call meeting. Written comments must be collection techniques or other forms of line. For virtual meeting information, sent to Kelly Warnke, Mystic Ranger information technology. Comments please contact the person listed under District, 8221 Mount Rushmore Road, should be sent to the address in the For Further Information Contact. Rapid City, South Dakota 57702; by preamble. All responses to this notice Detailed instructions on how to attend email to [email protected], or via will be summarized and included in the the meeting virtually will be sent out via facsimile to 605–343–7134. request for OMB approval. All email with a news release Meeting Accommodations: If you are comments will also become a matter of approximately one week prior to the a person requiring reasonable public record. meeting. accommodation, please make requests Spiro Stefanou, Written comments may be submitted in advance for sign language Administrator, Economic Research Service. as described under Supplementary interpreting, assistive listening devices, Information. All comments, including [FR Doc. 2021–00004 Filed 1–6–21; 8:45 am] or other reasonable accommodation. For names and addresses, when provided, BILLING CODE 3410–18–P access to the facility or proceedings, are placed in the record and available please contact the person listed in the for public inspection and copying. The section titled For Further Information DEPARTMENT OF AGRICULTURE public may inspect comments received Contact. All reasonable accommodation at the Mystic Ranger District Office. requests are managed on a case-by-case Forest Service Please call ahead to facilitate entry into basis. the building. Dated: 1/4/2021. Black Hills Resource Advisory FOR FURTHER INFORMATION CONTACT: Committee Kelly Warnke, Committee Coordinator, Cikena Reid, USDA Committee Management Officer. AGENCY: Forest Service, USDA. by phone at 605–716–1978 or by email at [email protected]. [FR Doc. 2021–00024 Filed 1–6–21; 8:45 am] ACTION: Notice of meeting. Individuals who use BILLING CODE 3411–15–P SUMMARY: The Black Hills Resource telecommunication devices for the deaf Advisory Committee (RAC) will conduct (TDD) may call the Federal Information a virtual meeting. The committee is Relay Service (FIRS) at 1–800–877–8339 DEPARTMENT OF AGRICULTURE between 8:00 a.m. and 8:00 p.m., authorized under the Secure Rural Office of Partnerships and Public Eastern Standard Time, Monday Schools and Community Self- Engagement Determination Act (the Act) and through Friday. operates in compliance with the Federal SUPPLEMENTARY INFORMATION: The Public 2501 Stakeholder Call Advisory Committee Act. The purpose purpose of the meeting is to further of the committee is to improve review and recommend projects for AGENCY: OPPE, USDA.

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ACTION: Notice of public 2501 expanded the program’s reach to assist ACTION: Notice; correction. Stakeholder Call. veterans. Under this program, grants are SUMMARY: The Rural Business- SUMMARY: In accordance with the 2018 awarded to higher education Cooperative Service (RBCS), Rural Farm Bill, this notice announces the institutions and nonprofit and Housing Service (RHS), and the Rural intention of the OPPE to host a public community-based organizations to Utilities Service (RUS), agencies of the teleconference to solicit stakeholder extend USDA’s engagement efforts in Rural Development mission area within feedback for its Outreach and Assistance these communities. Projects funded the U.S. Department of Agriculture for Socially Disadvantaged Farmers and under the 2501 Program include but are (USDA), published a document on Ranchers and Veteran Farmers and not limited to conferences, workshops, Tuesday, September 1, 2020, Ranchers Grant Program, also known as and demonstrations on various farming announcing the Guarantee Fee rates, the 2501 Program. techniques, and connecting underserved Guarantee percent for Guaranteed DATES: The teleconference will be held farmers and ranchers to USDA local Loans, the Periodic Retention Fee, and on January 25, 2021, 1:00 p.m.—3:00 officials to increase awareness of Fee for Issuance of the Loan Note p.m. EST. Comments on this notice USDA’s programs and services while Guarantee Prior to Construction must be received by 5:00 p.m. EST on filling the needs for increased Completion for FY 2021, to be used January 25, 2021, to be assured of partnerships. Since 2010, the 2501 when applying for guarantee loans consideration. program has awarded 533 grants totaling under the aforementioned guarantee more than $138 million. loan types. The document was missing ADDRESSES: OPPE invites interested Jacqueline Davis-Slay, a guarantee percentage specific to the persons to participate in the call with State of Alaska and information the following call-in instructions: Deputy Director, Office of Partnerships and Public Engagement. regarding collection of the periodic Call-in number: 888–251–2949 guarantee retention fee. Passcode: 1813982# [FR Doc. 2021–00015 Filed 1–6–21; 8:45 am] BILLING CODE 3412–89–P FOR FURTHER INFORMATION CONTACT: For Comments may be submitted by Email information specific to this notice at: [email protected]. contact Michele Brooks, Director, Instructions: All items submitted by DEPARTMENT OF AGRICULTURE Regulations Management, Rural electronic mail must include the Agency Development Innovation Center— name and docket number [USDA– Rural Business-Cooperative Service Regulations Management, USDA, 1400 OPPE]. Independence Avenue SW, STOP 1522, Rural Housing Service FOR FURTHER INFORMATION CONTACT: U.S. Room 4266, South Building, Department of Agriculture, Attention: Washington, DC 20250–1522. Rural Utilities Service Kenya Nicholas, Program Director, 1400 Telephone: (202) 690–1078. Email Independence Ave., SW, Mail Stop [Docket No. RUS–20–WATER–0032] [email protected]. For 0601, Washington, DC 20250, Office information regarding implementation 202–720–6350 and/or email at: OneRD Annual Notice of Guarantee contact your respective Rural [email protected]. Fee Rates, Periodic Retention Fee Development State Office listed here: Rates, Loan Guarantee Percentage and SUPPLEMENTARY INFORMATION: http://www.rd.usda.gov/browse-state. The 2501 Fee for Issuance of the Loan Note SUPPLEMENTARY INFORMATION: Program was created through the 1990 Guarantee Prior to Construction Farm Bill to assist socially Completion for Fiscal Year 2021; Correction disadvantaged farmers, ranchers, and correction foresters, who have historically In the Federal Register of September experienced limited access to USDA AGENCY: Rural Business-Cooperative 1, 2020, in FR Doc 2020–19288, on page loans, grants, training, and technical Service, Rural Housing Service, and 54344, the chart is corrected to read as assistance. The 2014 Farm Bill Rural Utilities Service, USDA. follows:

Fee for issuance of Periodic loan note Guarantee fee guarantee Loan guarantee Loan type (percentage) retention fee guarantee prior to (percentage) percentage construction completion (percentage)

B&I ...... 3.0 0.5 80 0.5 B&I Reduced Fee ...... 1.0 0.5 80 0.5 A B&I project in a high cost, isolated rural area of the State of Alaska that is not connected to a road system ...... 1.0 0.5 90 0.5 CF ...... 1.5 0.5 80 0.5 REAP ...... 1.0 0.25 80 0.5 WWD ...... 1.0 N/A 80 0.5

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On page 54344, in the first column, after Please email Brooke Peery at bpeery@ the Washington Advisory Committee the table, add the following sentence at usccr.gov if you would like a copy of the (Committee) will hold a series of the end of the first paragraph: ‘‘For draft. meetings via Webex on loans where the Loan Note Guarantee is Persons with hearing impairments Monday, January 11, and Monday, issued between October 1 and December may also follow the proceedings by first February 1, and Wednesday, February 31, the first periodic retention fee calling the Federal Relay Service at 1– 17, 2021 from 2:30 p.m.–4:00 p.m. payment is due January 31 of the second 800–877–8339 and providing the Pacific Time. The purpose of the year following the date the Loan Note Service with the conference call number meetings is for the Committee to begin Guarantee was issued.’’ and conference ID number. planning their upcoming panels on Members of the public are entitled to police use of force and accountability. Bette B. Brand, make comments during the open period DATES: These meetings will be held on: Deputy Undersecretary, Rural Development. at the end of the meeting. Members of • Monday, January 11, 2021 from 2:30 [FR Doc. 2021–00005 Filed 1–6–21; 8:45 am] the public may also submit written p.m.–4:00 p.m. Pacific Time BILLING CODE 3410–XY–P comments; the comments must be • Monday, February 1, 2021 from 2:30 received in the Regional Programs Unit p.m.–4:00 p.m. Pacific Time within 30 days following the meeting. • Wednesday, February 17, 2021 from COMMISSION ON CIVIL RIGHTS Written comments may be mailed to the 2:30 p.m.–4:00 p.m. Pacific Time Western Regional Office, U.S. January 11th PUBLIC WEBEX Notice of Public Meeting of the Texas Commission on Civil Rights, 300 North REGISTRATION LINK: https:// Advisory Committee Los Angeles Street, Suite 2010, Los tinyurl.com/ycnnynbr AGENCY: U.S. Commission on Civil Angeles, CA 90012 or email Brooke February 1st PUBLIC WEBEX Rights. Peery (DFO) at [email protected]. REGISTRATION LINK: https:// Records and documents discussed ACTION: Announcement of meetings. tinyurl.com/ya9xp7zj during the meeting will be available for February 17th PUBLIC WEEX SUMMARY: Notice is hereby given, public viewing prior to and after the REGISTRATION LINK: https:// pursuant to the provisions of the rules meeting at https:// tinyurl.com/y8l3pojk and regulations of the U.S. Commission www.facadatabase.gov/FACA/ FOR FURTHER INFORMATION CONTACT: on Civil Rights (Commission) and the FACAPublicViewCommittee Brooke Peery, Designated Federal Federal Advisory Committee Act Details?id=a10t0000001gzkoAAA. Officer (DFO), at [email protected] or by (FACA) that the Texas Advisory Please click on the ‘‘Meeting Details’’ phone at (202) 701–1376. Committee (Committee) will hold a and ‘‘Documents’’ links. Records SUPPLEMENTARY INFORMATION: Members series of meetings via Webex on generated from this meeting may also be of the public may listen to the Thursday, February 11, Thursday, inspected and reproduced at the discussion. This meeting is available to February 18, Thursday, February 25, Regional Programs Unit, as they become the public through the above listed toll and Thursday, March 4, and Monday available, both before and after the free number. An open comment period 15, 2021 at 2:00 p.m. Central Time. The meeting. Persons interested in the work will be provided to allow members of purpose of the meetings is for reviewing of this Committee are directed to the the public to make a statement as time the Committee’s advisory memorandum Commission’s website, https:// allows. The conference call operator on Hurricane Harvey. www.usccr.gov, or may contact the will ask callers to identify themselves, DATES: These meetings will be held on: Regional Programs Unit at the above the organization they are affiliated with • Thursday, February 11, 2021 at 2:00 email or street address. (if any), and an email address prior to p.m. CT Agenda placing callers into the conference • Thursday, February 18, 2021 at 2:00 room. Callers can expect to incur regular I. Welcome & Roll Call p.m. CT charges for calls they initiate over • II. Approval of Minutes Thursday, February 25, 2021 at 2:00 III. Discussion on Draft wireless lines, according to their p.m. CT wireless plan. The Commission will not • IV. Public Comment Thursday, March 4, 2021 at 2:00 p.m. V. Adjournment refund any incurred charges. Callers CT Dated: January 4, 2021. will incur no charge for calls they • Monday, March 15, 2021 at 2:00 p.m. initiate over land-line connections to David Mussatt, CT the toll-free telephone number. Persons Access for the public can register at: Supervisory Chief, Regional Programs Unit. with hearing impairments may also • Thursday, February 11: https:// [FR Doc. 2021–00043 Filed 1–6–21; 8:45 am] follow the proceedings by first calling tinyurl.com/y5lvuq9u BILLING CODE 6335–01–P the Federal Relay Service at 1–800–877– • Thursday, February 18: https:// 8339 and providing the Service with the tinyurl.com/y6h7opct conference call number and conference • Thursday, February 25: https:// COMMISSION ON CIVIL RIGHTS ID number. tinyurl.com/y2gr37t4 Members of the public are also • Thursday, March 4: https:// Notice of Public Meeting of the Washington Advisory Committee entitled to submit written comments; tinyurl.com/y6yzv46m the comments must be received in the • Monday, March 15: https:// AGENCY: U.S. Commission on Civil regional office within 30 days following tinyurl.com/y2vfa3l6 Rights. the meeting. Written comments may be FOR FURTHER INFORMATION CONTACT: ACTION: Announcement of meetings. mailed to the Western Regional Office, Brooke Peery, Designated Federal U.S. Commission on Civil Rights, 300 N Officer (DFO) at [email protected] or by SUMMARY: Notice is hereby given, Los Angeles St., Suite 2010, Los phone at (202) 701–1376. The most up- pursuant to the provisions of the rules Angeles, CA 90012 or email Brooke to-date draft of the advisory and regulations of the U.S. Commission Peery at [email protected]. memorandum will be available to the on Civil Rights (Commission) and the Records generated from this meeting public 48 hours before each meeting. Federal Advisory Committee Act that may be inspected and reproduced at the

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Regional Programs Unit Office, as they Number 0693–0067 in the subject line of the proper functions of the Department, become available, both before and after your comments. Do not submit including whether the information will the meeting. Records of the meeting will Confidential Business Information or have practical utility; (b) Evaluate the be available at: https:// otherwise sensitive or protected accuracy of our estimate of the time and www.facadatabase.gov/FACA/ information. cost burden for this proposed collection, FACAPublicViewCommittee FOR FURTHER INFORMATION CONTACT: including the validity of the Details?id=a10t0000001gzkZAAQ. Requests for additional information or methodology and assumptions used; (c) Please click on the ‘‘Meeting Details’’ specific questions related to collection Evaluate ways to enhance the quality, and ‘‘Documents’’ links. Persons activities should be directed to Mary utility, and clarity of the information to interested in the work of this Committee Clague, NIST Technology Partnerships be collected; and (d) Minimize the are also directed to the Commission’s Office, 301–975–4188, mary.clague@ reporting burden on those who are to website, http://www.usccr.gov, or may nist.gov. respond, including the use of automated contact the Regional Programs Unit collection techniques or other forms of office at the above email or street SUPPLEMENTARY INFORMATION: information technology. address. I. Abstract Comments that you submit in response to this notice are a matter of Agenda NIST Associates (NA) will include public record. We will include or I. Welcome & Roll Call guest researchers, research associates, summarize each comment in our request II. Approval of Minutes contractors, and other non-NIST to OMB to approve this ICR. Before III. Discussion on Panels employees that require access to NIST including your address, phone number, IV. Public Comment campuses or NIST resources. The NIST email address, or other personal V. Adjournment Associates Information System (NAIS) identifying information in your information collection instrument(s) are Dated: January 4, 2021. comment, you should be aware that completed by the incoming NAs. The your entire comment—including your David Mussatt, NAs will be requested to provide Supervisory Chief, Regional Programs Unit. personal identifying information—may personal identifying data including be made publicly available at any time. [FR Doc. 2021–00042 Filed 1–6–21; 8:45 am] home address, date and place of birth, While you may ask us in your comment BILLING CODE P employer name and address, and basic to withhold your personal identifying security information. The data provided information from public review, we by the collection instruments will be cannot guarantee that we will be able to DEPARTMENT OF COMMERCE input into NAIS, which automatically do so. populates the appropriate forms, and is National Institute of Standards and routed through the approval process. Sheleen Dumas, Technology NIST’s Office of Security receives Department PRA Clearance Officer, Office of security forms through the NAIS process the Chief Information Officer, Commerce Agency Information Collection and is able to allow preliminary access Department. Activities; Submission to the Office of to NAs to the NIST campuses or [FR Doc. 2021–00056 Filed 1–6–21; 8:45 am] Management and Budget (OMB) for resources. The data collected will also BILLING CODE 3510–13–P Review and Approval; Comment be the basis for further security Request; NIST Associates Information investigations as necessary. System DEPARTMENT OF COMMERCE II. Method of Collection AGENCY: National Institute of Standards National Oceanic and Atmospheric and Technology (NIST), Commerce. The information is collected in paper format. Administration ACTION: Notice of information collection, III. Data request for comment. [RTID 0648–XA775] SUMMARY: The Department of OMB Control Number: 0693–0067. Western Pacific Fishery Management Commerce, in accordance with the Form Number(s): None. Council; Public Meeting Paperwork Reduction Act of 1995 Type of Review: Revision and extension of a current information (PRA), invites the general public and AGENCY: National Marine Fisheries other Federal agencies to comment on collection. Affected Public: Individuals or Service (NMFS), National Oceanic and proposed, and continuing information Atmospheric Administration (NOAA), collections, which helps us assess the households. Estimated Number of Respondents: Commerce. impact of our information collection ACTION: Notice of a public meeting. requirements and minimize the public’s 4,000. Estimated Time Per Response: 40 reporting burden. The purpose of this minutes. SUMMARY: The Western Pacific Fishery notice is to allow for 60 days of public Estimated Total Annual Burden Management Council (Council) will comment preceding submission of the Hours: 2,667. hold an Intersessional Fisher Data collection to OMB. Estimated Total Annual Cost to Collection and Research Committee DATES: To ensure consideration, Public: $0. (FDCRC) meeting to discuss and make comments regarding this proposed Respondent’s Obligation: Mandatory. recommendations on fishery data information collection must be received Legal Authority: collection and management issues in the on or before March 8, 2021. Western Pacific Region. ADDRESSES: Interested persons are IV. Request for Comments DATES: The FDCRC will meet on invited to submit written comments by We are soliciting public comments to Thursday, January 21, 2021, between 1 mail to Maureen O’Reilly, Management permit the Department/Bureau to: (a) p.m. and 5 p.m., Hawaii Standard Time. Analyst, NIST to PRAcomments@ Evaluate whether the proposed For specific times and agendas, see doc.gov). Please reference OMB Control information collection is necessary for SUPPLEMENTARY INFORMATION.

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ADDRESSES: The meeting will be held by 6. Public Comment identified by NOAA–NMFS–2020–0151, web conference via WebEx. Audio and 7. Other business by either of the following methods: visual portions for all of the web 8. Discussions and recommendations • Electronic Submission: Submit conferences can be accessed at: https:// Special Accommodations electronic information via the Federal e- wprfmc.webex.com/wprfmc/onstage/ Rulemaking Portal. Go to g.php?MTID=e3e70e10f64290 This meeting is physically accessible www.regulations.gov and enter NOAA– c1a9428b8175c2627d2. Web conference to people with disabilities. Requests for NMFS–2020–0151. Click on the access information and instructions for sign language interpretation or other ‘‘Comment Now!’’ icon and complete providing public comments will be auxiliary aids should be directed to the required fields. Enter or attach your posted on the Council website at Kitty M. Simonds, (808) 522–8220 comments. www.wpcouncil.org. For assistance with (voice) or (808) 522–8226 (fax), at least • Email: Submit written comments to the web conference connection, contact 5 days prior to the meeting date. Lance Smith at [email protected]. the Council office at (808) 552–8220. Authority: 16 U.S.C. 1801 et seq. Instructions: Comments sent by any FOR FURTHER INFORMATION CONTACT: Dated: January 4, 2021. other method, to any other address or individual, or received after the end of Kitty M. Simonds, Executive Director, Rey Israel Marquez, Western Pacific Fishery Management the specified period, may not be Acting Deputy Director, Office of Sustainable considered. All comments received are Council; telephone: (808) 522–8220. Fisheries, National Marine Fisheries Service. SUPPLEMENTARY INFORMATION a part of the public record and will : [FR Doc. 2021–00049 Filed 1–6–21; 8:45 am] The Intersessional FDCRC meeting generally be posted for public viewing will be held on January 21, 2021, from BILLING CODE 3510–22–P on www.regulations.gov without change. 1 p.m. to 5 p.m. Hawaii Standard Time All personal identifying information (e.g., name, address, etc.), confidential (HST) (noon to 4 p.m. Samoa Standard DEPARTMENT OF COMMERCE Time (SST); 9 a.m. to 1 p.m. on January business information, or otherwise 22, 2021, Chamorro Standard Time National Oceanic and Atmospheric sensitive or protected information (ChST)). Opportunities to present oral Administration submitted voluntarily by the sender will public comment will be provided at the be publicly accessible. NMFS will end of the agenda. The order of the [RTID 0648–XA681] accept anonymous submissions (enter ‘‘N/A’’ in the required fields if you wish agenda may change, and will be Endangered and Threatened Species; to remain anonymous). announced in advance at the meetings. Notice of Initiation of a 5-Year Review The meetings may run past the of Indo-Pacific Reef-building Corals FOR FURTHER INFORMATION CONTACT: scheduled times noted above to Lance Smith at (808) 725–5131 or complete scheduled business. AGENCY: National Marine Fisheries [email protected]. Service (NMFS), National Oceanic and SUPPLEMENTARY INFORMATION: This Schedule and Agenda for the APT Atmospheric Administration (NOAA), Meeting notice announces our review of the Commerce. following Indo-Pacific reef-building Thursday, January 21, 2021, 1 p.m.–5 ACTION: Notice; request for information. coral species listed as threatened under p.m. the ESA: Acropora globiceps, Acropora SUMMARY: NMFS announces the jacquelineae, Acropora lokani, 1. Welcome remarks and introductions initiation of a 5-year review for 15 Indo- 2. Round robin updates on impacts of Acropora pharaonis, Acropora retusa, Pacific reef-building corals (Acropora COVID on data collection Acropora rudis, Acropora speciosa, globiceps, Acropora jacquelineae, 3. Data collection improvement updates Acropora tenella, Anacropora spinosa, Acropora lokani, Acropora pharaonis, A. Status of mandatory license and Euphyllia paradivisa, Isopora Acropora retusa, Acropora rudis, reporting regulations development crateriformis, Montipora australiensis, Acropora speciosa, Acropora tenella, and implementation Pavona diffluens, Porites napopora, and Anacropora spinosa, Euphyllia 1. Guam Seriatopora aculeata. Section 4(c)(2)(A) paradivisa, Isopora crateriformis, 2. Commonwealth of the Northern of the ESA requires that we conduct a Montipora australiensis, Pavona Mariana Islands review of listed species at least once diffluens, Porites napopora, and 3. American Samoa every 5 years. This will be the first Seriatopora aculeata). NMFS is required B. Implementation of the Catchit-Logit review of these species since they were by the Endangered Species Act (ESA) to electronic reporting listed in 2014. The regulations in 50 C. Pacific Island Fishery Science conduct 5-year reviews to ensure that CFR 424.21 require that we publish a Center fishery-dependent data the listing classifications of species are notice in the Federal Register collection improvements accurate. The 5-year review must be announcing species currently under 4. Discussion on addressing the 2019 based on the best scientific and active review. On the basis of such Pacific Islands Fishery Monitoring commercial data available at the time of reviews under ESA Section 4(c)(2)(B), and Assessment Planning Summit the review. We request submission of we determine whether any species recommendations any such information on these 15 coral should be removed from the list (i.e., A. Moving towards electronic self- species, particularly information on the delisted) or reclassified from reporting status, threats, and recovery of the endangered to threatened or from B. Moving creel surveys to Marine species that has become available since threatened to endangered (16 U.S.C. Recreational Information Program their listing, effective September 10, 1533(c)(2)(B)). As described by the C. Moving towards electronic 2014. technologies for the market regulations in 50 CFR 424.11(e), the sampling DATES: To allow us adequate time to Secretary shall delist a species if the D. Improved data collection conduct this review, we must receive Secretary finds that, after conducting a coordination and effective outreach your information no later than February status review based on the best and communication 8, 2021. scientific and commercial data 5. Strategic planning session for the ADDRESSES: You may submit available: (1) The species is extinct; (2) FDCRC Technical Committee information on this document, the species does not meet the definition

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of an endangered species or a threatened Dated: January 4, 2021. • Email: Submit written comments to species; and/or (3) the listed entity does Angela Somma, [email protected]. not meet the statutory definition of a Chief, Endangered Species Division, Office Instructions: We may not consider species. Any change in Federal of Protected Resources, National Marine comments if they are sent by any other classification would require a separate Fisheries Service. method, to any other address or rulemaking process. [FR Doc. 2021–00031 Filed 1–6–21; 8:45 am] individual, or received after the end of BILLING CODE 3510–22–P the specified period. All comments Background information on each of received are a part of the public record the 15 species is available on the NMFS and will generally be posted for public website at: https:// DEPARTMENT OF COMMERCE viewing on www.regulations.gov www.fisheries.noaa.gov/corals. without change. All personal identifying National Oceanic and Atmospheric Public Solicitation of New Information information (e.g., name, address, etc.), Administration confidential business information, or To ensure that the reviews are [RTID 0648–XA644] otherwise sensitive information complete and based on the best submitted voluntarily by the sender will available scientific and commercial Endangered and Threatened Species; be publicly accessible. We will accept information, we are soliciting new Initiation of a 5-Year Review of anonymous comments (enter ‘‘N/A’’ in information from the public, Staghorn Coral, Elkhorn Coral, Pillar the required fields if you wish to remain governmental agencies, Tribes, the Coral, Rough Cactus Coral, Lobed Star anonymous). scientific community, industry, Coral, Mountainous Star Coral, and FOR FURTHER INFORMATION CONTACT: environmental entities, and any other Boulder Star Coral Alison Moulding at the above email interested parties concerning the status AGENCY: National Marine Fisheries address or by phone at 727–551–5607. of Acropora globiceps, Acropora Service (NMFS), National Oceanic and SUPPLEMENTARY INFORMATION: On May 9, jacquelineae, Acropora lokani, Atmospheric Administration (NOAA), 2006, we listed elkhorn coral and Acropora pharaonis, Acropora retusa, Commerce. staghorn coral as threatened under the Acropora rudis, Acropora speciosa, ACTION: Notice of initiation of 5-Year ESA (71 FR 26852). On September 10, Acropora tenella, Anacropora spinosa, Review; request for information. 2014, we listed lobed star coral, Euphyllia paradivisa, Isopora mountainous star coral, boulder star crateriformis, Montipora australiensis, SUMMARY: NMFS announces a 5-year coral, rough cactus coral, and pillar Pavona diffluens, Porites napopora, and review of staghorn coral (Acropora coral as threatened and reaffirmed the Seriatopora aculeata. Categories of cervicornis), elkhorn coral (Acropora status of elkhorn coral and staghorn requested information include: (1) palmata), pillar coral (Dendrogyra coral as threatened (79 FR 53852). Species biology including, but not cylindrus), rough cactus coral Section 4(c)(2)(A) of the ESA requires (Mycetophyllia ferox), lobed star coral limited to, population trends, that we conduct a review of listed (Orbicella annularis), mountainous star species at least once every 5 years. The distribution, abundance, demographics, coral (Orbicella faveolata), and boulder ESA’s implementing regulations at 50 and genetics; (2) habitat conditions star coral (Orbicella franksi) under the CFR 424.21 require that we publish a including, but not limited to, amount, Endangered Species Act of 1973 (ESA). notice in the Federal Register distribution, and important features for A 5-year review is based on the best announcing those species currently conservation; (3) status and trends of scientific and commercial data available under active review. On the basis of this threats to the species and its habitats; (4) at the time of the review; therefore, we review, under section 4(c)(2)(B), we conservation measures that have been are requesting submission of any such determine whether these species should implemented that benefit the species, information on staghorn coral, elkhorn be delisted or reclassified from including, but not limited to, coral, pillar coral, rough cactus coral, endangered to threatened or from monitoring data demonstrating lobed star coral, mountainous star coral, threatened to endangered. As described effectiveness of such measures; and (5) and boulder star coral that has become in 50 CFR 424.11(e), the Secretary will other new information, data, or available since their original listings as delist a species if the Secretary finds corrections including, but not limited threatened species or the most recent that, after conducting a status review to, taxonomic or nomenclatural changes, status review for staghorn and elkhorn based on the best scientific and and improved analytical methods for coral in 2014. commercial data available: (1) The evaluating extinction risk. DATES: To allow us adequate time to species is extinct; (2) the species does If you wish to provide information for conduct this review, we must receive not meet the definition of an the reviews, you may submit your your information no later than March 8, endangered species or threatened species; or (3) the listed entity does not information and materials electronically 2021. However, we will continue to accept meet the statutory definition of a or via mail (see ADDRESSES section). We new information about any listed species. Changes to the listing status of request that all information be species at any time. a species can only be made following accompanied by supporting ADDRESSES: Submit your comments, publication of a proposed rule with an documentation such as maps, identified by NOAA–NMFS–2020–0147, opportunity for public comment and our bibliographic references, or reprints of by either of the following methods: consideration of the comments before pertinent publications. We also would • Electronic Submissions: Submit all making a final determination to appreciate the submitter’s name, electronic public comments via the reclassify or delist the species. address, and any association, Federal e-Rulemaking Portal. Public Solicitation of New Information institution, or business that the person 1. Go to www.regulations.gov/ represents; however, anonymous document?D=NOAA-NMFS-2020-0147, To ensure that the 5-year review is submissions will also be accepted. 2. Click the ‘‘Comment Now!’’ icon, complete and based on the best (Authority: 16 U.S.C. 1531 et seq.) complete the required fields, and available scientific and commercial 3. Enter or attach your comments. information, we are soliciting new

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information from the public, year (FY) 2021 for the Disability RSAGrantInfo.aspx within six days after governmental agencies, Tribes, the Innovation Fund—Career Advancement the pre-application meeting. scientific community, industry, Initiative Model Demonstration Project, Deadline for Intergovernmental environmental entities, and any other Assistance Listing Number 84.421C. The Review: May 7, 2021. interested parties concerning the status Department intends to fund a multi-site ADDRESSES: For the addresses for of staghorn coral, elkhorn coral, pillar model demonstration project designed obtaining and submitting an coral, rough cactus coral, lobed star to assist State vocational rehabilitation application, please refer to our Common coral, mountainous star coral, and (VR) agencies, in partnership with other Instructions for Applicants to boulder star coral. entities, to develop career pathways Department of Education Discretionary The 5-year review considers the best focused on career advancement. This Grant Programs, published in the scientific and commercial data and all competition will help VR-eligible Federal Register on February 13, 2019 new information that has become individuals with disabilities, including (84 FR 3768) and available at available since the listing determination previously served VR participants in www.govinfo.gov/content/pkg/FR–2019– or most recent status review. Categories employment who re-enter the VR 02–13/pdf/2019–02206.pdf. of requested information include (A) program, to advance in high-demand, FOR FURTHER INFORMATION CONTACT: species biology including, but not high-quality careers, such as science, Cassandra P. Shoffler, U.S. Department limited to, population trends, technology, engineering, and math of Education, 400 Maryland Avenue distribution, abundance, demographics, (STEM), including computer science, SW, Room 5065A, Potomac Center and genetics; (B) habitat conditions careers; to enter career pathways in Plaza, Washington, DC 20202–2800. including, but not limited to, amount, industry-driven sectors through pre- Telephone: (202) 245–7827. Email: distribution, and suitability; (C) apprenticeships, registered [email protected]. conservation measures that have been apprenticeships and Industry If you use a telecommunications implemented that benefit the species; Recognized Apprenticeship Program device for the deaf (TDD) or a text (D) status and trends of threats; and (E) (IRAP); to improve and maximize telephone (TTY), call the Federal Relay other new information, data, or competitive integrated employment Service (FRS), toll free, at 1–800–877– corrections including, but not limited outcomes, economic self-sufficiency, 8339. to, taxonomic or nomenclature changes independence, and inclusion in society; SUPPLEMENTARY INFORMATION: and improved analytical methods. and to reduce reliance on public If you wish to provide information for benefits (e.g., Supplemental Security Full Text of Announcement this 5-year review, you may submit your Income (SSI)/Social Security Disability I. Funding Opportunity Description information and materials electronically Insurance (SSDI), and/or Temporary at www.regulations.gov or via email (see Assistance for Needy Families (TANF), Purpose of Program: The purpose of ADDRESSES section). We request that all and State or local benefits). This notice the Disability Innovation Fund (DIF) information be accompanied by relates to the approved information Program, as provided by the Further supporting documentation such as collection under OMB control number Consolidated Appropriations Act, 2020 maps, bibliographic references, or 1820–0018. (Pub. L. 116–94), is to support reprints of pertinent publications. We innovative activities aimed at improving DATES: also would appreciate the submitter’s the outcomes of individuals with name, address, and any association, Applications Available: January 7, disabilities, as defined in section institution, or business that the person 2021. 7(20)(B) of the Rehabilitation Act of represents; however, anonymous Deadline for Transmittal of 1973, as amended, including activities submissions will also be accepted. Applications: April 7, 2021. aimed at improving the education and post-school outcomes of children (Authority: 16 U.S.C. 1531 et seq.) Date of Pre-Application Meeting: The receiving SSI and their families that Dated: January 4, 2021. Office of Special Education and may result in long-term improvement in Rehabilitative Services (OSERS) will Angela Somma, the SSI child recipient’s economic post a PowerPoint presentation that status and self-sufficiency. Chief, Endangered Species Division, Office provides general information about the of Protected Resources, National Marine Priorities: This competition contains Fisheries Service. Rehabilitation Services Administration’s an absolute priority and an invitational (RSA) discretionary grants and a [FR Doc. 2021–00032 Filed 1–6–21; 8:45 am] priority. We are establishing the PowerPoint presentation specifically BILLING CODE 3510–22–P absolute priority for the FY 2021 grant about the Disability Innovation Fund— competition, and any subsequent year in Career Advancement Initiative Model which we make awards from the list of Demonstration Projects at https:// DEPARTMENT OF EDUCATION unfunded applications from this ncrtm.ed.gov/RSAGrantInfo.aspx. competition, in accordance with section Applications for New Awards; OSERS will conduct a pre-application 437(d)(1) of the General Education Rehabilitation Training: Disability meeting specific to this competition via Provisions Act (GEPA), 20 U.S.C. Innovation Fund—Career conference call to respond to questions. 1232(d)(1). Advancement Initiative Model Information about the pre-application Absolute Priority: This priority is an Demonstration Project meeting will be available at https:// absolute priority. Under 34 CFR ncrtm.ed.gov/RSAGrantInfo.aspx prior 75.105(c)(3), we consider only AGENCY: Office of Special Education and to the date of the call. OSERS invites applications that meet this priority. Rehabilitative Services, Department of you to send questions to 84.421C@ This priority is: Education. ed.gov in advance of the pre-application Career Advancement Initiative Model ACTION: Notice. meeting. The teleconference Demonstration Project. information, including the 84.421C pre- Background: SUMMARY: The U.S. Department of application meeting summary of the Though always permissible under the Education (Department) is issuing a questions and answers, will be available Vocational Rehabilitation (VR) program, notice inviting applications for fiscal at https://ncrtm.ed.gov/ the amendments to the Rehabilitation

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Act of 1973 (Rehabilitation Act) made participants earned less than $17 per Drudik, J., Arter, Z., and Foley, S. by the Workforce Innovation and hour. Of the 128,866 individuals who (2020). Upskill/Backfill Model of Career Opportunity Act (WIOA) clarified and exited the VR program in CIE, 28,926 Pathways Advancement: The Nebraska emphasized that individuals with (22 percent) indicated that they had Vocational Rehabilitation Approach. disabilities were eligible for VR services private insurance through their Journal of Applied Rehabilitation for the purpose of advancing in employer and 3,309 (3 percent) Counseling, 51(3), 1–14). The results of employment. Among the stated indicated that they were not yet eligible Nebraska’s project demonstrate that this purposes of WIOA, Congress included— for private insurance through their model does assist former clients in To improve the quality and labor market employer. advancing in their careers, as well as relevance of workforce investment, The 10 most common occupations, obtaining CIE that comes with higher education, and economic development efforts reported by fully one third of the income and benefits (Moore et al., to provide America’s workers with the skills participants who exited in CIE, were: 2020). As former clients are increasing and credentials necessary to secure and 1. Stock Clerks and Order Fillers; their skills or ‘‘getting upskilled’’ (e.g., advance in employment with family- through credentialed training programs) sustaining wages. 2. Customer Service Representatives; 3. Janitors and Cleaners, Except Maids and and advancing in their careers, new WIOA Section 2, Paragraph (3); 29 Housekeeping Cleaners; clients can fill the newly vacated U.S.C. 3101(3) (emphasis added). As 4. Laborers and Freight, Stock, and positions (Moore et al., 2020). In such, the VR program is not solely Material Movers, Hand; Georgia, the project focused on intended to place individuals with 5. Retail Salespersons; expanding pre-employment transition disabilities in entry-level jobs, but, 6. Cashiers; services to students with disabilities rather, to assist them to obtain, retain, 7. Combined Food Preparation and Serving and transition services to VR eligible advance in, or regain employment, Workers, including Fast Food; students, thereby increasing the number 8. Food Preparation Workers; consistent with their unique strengths, 9. Production Workers, All Other; and of participants who achieved a resources, priorities, concerns, abilities, 10. Dishwashers. recognized post-secondary credential capabilities, and informed choice, from 12 in FY 2016 to 353 in FY 2020. through the services and supports Wages at this level, in combination In Kentucky, the focus was on career identified on their individualized plans with less than full-time work in these pathways STEM events, employer for employment (IPE). positions and without employer- engagement, and workforce While the VR program has a long provided medical benefits, provide little partnerships, which resulted in an history of helping individuals with opportunity for individuals to reduce increase in employment outcomes from disabilities secure employment, there is their reliance on public benefits (e.g., 168 in FY 2017 to 294 in FY 2019. In room for improvement in helping SSI, SSDI, and/or TANF, and State or Virginia, the focus was on sustainable individuals with disabilities move off of local benefits), and the wages suggest strategies, including business-driven public benefits and advance in that there is room for many individuals strategies and credential training, which employment, which as used in section with disabilities to advance in resulted in an increase in the number of 102(a)(1)(B) of the Rehabilitation Act, employment and their careers. To credentials obtained from 8 in FY 2016 includes both advancing within current emphasize the point, individuals who to 56 in FY 2020 and an increase in the employment and advancing into new earned $20 per hour or more reported number of individuals whose cases were employment. their top five occupations as: closed in competitive integrated Our examination of RSA–911 data for 1. Registered Nurses; employment outcomes from 7 in FY program year (PY) 2019, located at 2. Heavy and Tractor-Trailer Truck Drivers; 2016 to 32 in FY 2020. https://rsa.ed.gov/performance-data/ 3. Managers, All Other; Further, Congress made career rsa-911-policy-directive, demonstrates 4. Teachers and Instructors, All Other; and 5. Accountants and Auditors. pathways a necessary, if not that, of 361,421 new applicants, 105,760 foundational, part of WIOA’s workforce (29 percent) reported their primary The Department believes that career reforms. States, for example, are source of support as SSI, SSDI, or pathways provide a mechanism for VR required to include career pathways in TANF. Of the 128,866 individuals who agencies to assist VR eligible their workforce development systems, exited the VR program in competitive individuals with disabilities, including WIOA section 101(d)(3)(B); career integrated employment (CIE), 15,233 (12 previously served VR participants in pathways are required in training percent) indicated that their primary employment who re-enter the VR programs, WIOA section 101(d)(5)(C); source of support was still SSI, SSDI, or program, to obtain or advance in and local workforce development TANF. employment or change careers. boards are required to include career The U.S. Department of Labor Federal In FY 2015, RSA awarded four Career pathways in their local plans, WIOA Minimum Wage website, https:// Pathways for Individuals with sections 107(d)(5), 108(b)(3). www.dol.gov/general/topic/wages/ Disabilities projects under the As earning a degree or certificate may minimumwage, indicates that the Demonstration and Training program. be part of a successful career pathway, Federal minimum wage for covered Early results from States that received RSA–911 data show that while many VR nonexempt employees is $7.25 per hour. these awards are encouraging. In 2015, customers are pursuing degrees or There are numerous States with Nebraska VR created the Career certificates, there are opportunities for minimum wage laws. In cases where an Pathways Advancement Project and many more to do so. Of the 875,275 employee is subject to both the State employed the upskill/backfill model of individuals in receipt of VR services and Federal minimum wage laws, the career pathways advancement for their through an IPE during PY 2019, 154,239 employee is entitled to the higher of the former VR participants in five career participants (18 percent) were enrolled two minimum wages. Participants who pathways based upon the State’s in some form of postsecondary exited the VR program in CIE reported economy’s needs: Information education or career/technical training, a median wage of $12 per hour and Technology; Manufacturing; 80,916 (9 percent) received either median 30 hours worked per week. Transportation, Distribution, and Associate, Bachelor, or Graduate School Approximately 80 percent of Logistics; Healthcare; and Architecture/ training, 31,258 (4 percent) received Construction (Moore, D., Haines, K., vocational training and 194 participants

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were taking part in Registered careers, such as STEM careers.1 This specific occupation or occupational Apprenticeship Training. also includes individuals who enter cluster; This competition will provide an career pathways in industry-driven (e) Organizes education, training, and opportunity and flexibility for a State sectors through pre-apprenticeships, other services to meet the particular VR agency, given additional funding registered apprenticeships and IRAPs; to needs of an individual in a manner that and the full range of resources available improve and maximize CIE outcomes, accelerates the educational and career through the VR program, to demonstrate economic self-sufficiency, advancement of the individual to the the effectiveness of providing the career independence, and inclusion in society; extent practicable; pathways services needed by VR- and to reduce reliance on public (f) Enables, as appropriate, an eligible individuals, including those benefits (e.g., Supplemental Security individual to attain a secondary school participating in the VR program and Income (SSI)/Social Security Disability diploma or its recognized equivalent, those who are not receiving services in Insurance (SSDI)). and at least one recognized the VR program for reasons such as Priority: postsecondary credential; and assignment to closed priority categories This priority establishes model (g) Helps an individual enter or under an order of selection. This demonstration projects in which State advance within a specific occupation or includes previously served VR vocational rehabilitation (VR) agencies, occupational cluster (i.e., a group of participants in employment who re- whether applying alone or in a occupations and broad industries based enter the VR program, to obtain, change consortium, by developing and using on common knowledge and skills, job careers to, advance in, or maximize career pathways, will assist VR eligible requirements, or worker characteristics). employment in fields that provide a true individuals with disabilities, including Project Requirements: Under this living wage and freedom from public previously served VR participants in priority, the model demonstration support. employment who re-enter the VR proposed by an applicant must, at a VR agencies, whether applying alone program, to advance in their careers. minimum— or in a consortium with multiple State Projects should help these individuals (a) Develop and implement a VR agencies, must implement career obtain promotional opportunities with a collaborative model that demonstrates a 2 advancement initiative model current employer or a different rationale in the use of career pathways demonstration projects by establishing employer; obtain additional to enable VR eligible individuals with career pathway and work-based learning responsibility and compensation by disabilities, including previously served partnerships with employers, advancing in a formal career or job VR participants in employment who re- community colleges and postsecondary series; obtain industry recognized enter the VR program, to advance in institutions, entities that make up the credentials that result in additional their careers, such as obtaining workforce development systems, responsibilities, compensation, and promotional opportunities with a entities that provide registered benefits; improve and maximize CIE current employer or a different apprenticeships, pre-apprenticeships outcomes, economic self-sufficiency, employer; obtaining additional and IRAPs, comprehensive independence, and inclusion in society; responsibility and compensation by rehabilitation centers, local or State and/or reduce reliance on public advancing in a formal career or job educational agencies (LEAs or SEAs), benefits (e.g., SSI, SSDI, and/or TANF, series; increasing the number of hours and providers or other Federal or State and State or local benefits). worked; and obtaining industry agencies (i.e., State Apprenticeships As used in this competition, career recognized credentials that result in Programs, Employment Networks under pathway means a combination of additional responsibilities, Social Security, Department of Labor, rigorous and high-quality education, compensation, and benefits; etc.), as appropriate to the career training, and other services that— (1) The model project must involve pathway or pathways chosen and the (a) Aligns with the skill needs of providing access to existing career industries or types of professions industries in the economy of the State pathways, creating a new pathway, or served. The models must be or regional economy involved; both; implemented at multiple local sites to (2) The model project must propose (b) Prepares an individual to be ensure replicability and delivered multiple partnerships and multiple successful in any of a full range of through a coordinated system. pathways to serve different populations, secondary or postsecondary education Assistance to individuals could provided that the applicant identify any options, including apprenticeships include, as appropriate for the separate personnel, activities, and registered under the Act of August 16, individual, pre-apprenticeship, budgets; registered apprenticeship and IRAP 1937 (commonly known as the (3) The model project must propose to training or postsecondary training and ‘‘National Apprenticeship Act’’; 50 Stat. serve diverse geographic regions, graduate-level postsecondary education, 664, chapter 663; 29 U.S.C. 50 et seq.); including urban, suburban, rural and (c) Includes counseling to support an registered apprenticeships in formal Tribal communities, if applicable. trades, other work-based learning individual in achieving the individual’s (b) Establish partnerships between the experiences, community college and education and career goals; VR agencies and appropriate employers, technical college education and (d) Includes, as appropriate, agencies, and entities that are critical to training, or other appropriate training education offered concurrently with and the development of the career pathway and education opportunities to achieve in the same context as workforce or pathways used in the model. These the advancement in employment preparation activities and training for a partnerships could include two-year specified as the individual’s vocational and four-year institutions of higher 1 This competition is aligned with the aims of the goal. Federal Government’s five-year strategic plan for education, American Job Centers, and In sum, this competition is designed STEM education entitled Charting A Course for to help VR-eligible individuals with Success: America’s Strategy for STEM Education 2 For purposes of this priority, ‘‘demonstrates a disabilities, including previously served (Plan) published in December 2018, including the rationale’’ means a key project component included Plan’s overarching goal to Increase Diversity, in the project’s logic model is informed by research VR participants in employment who re- Equity, and Inclusion in STEM. https:// or evaluation findings that suggest the project enter the VR program, to advance in or www.whitehouse.gov/wp-content/uploads/2018/12/ component is likely to improve relevant outcomes, change to high-demand, high-quality STEM-Education-Strategic-Plan-2018.pdf. as defined in 34 CFR 77.1.

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other workforce training providers, such that documents the relationship services; flexible design of education, as registered apprenticeship and pre- between participants’ engagement with training, work settings and assistive apprenticeship providers, or use of specific practices and technology; and focus on the attainment comprehensive support service strategies implemented by the project of secondary education, recognized providers, and on-the-job and and key outcomes. postsecondary credentials, sector- customized training providers); Application Requirements: Under this specific employment, and related (c) Include the following career priority, to be considered for funding, knowledge and skills in order to pathway components: an application must include the advance in employment; (1) Alignment of secondary and following: (ii) Identify local workforce needs, postsecondary education, training, and (a) A detailed review of the literature aligned with the skill needs of targeted employment, such as skilled trades and that supports the potential effectiveness industry sectors important to local, STEM careers important to local, of the proposed model, its components, regional, or State economies; regional, or State economies; and processes to improve career (iii) Involve employers in the project (2) Rigorous, sequential, connected, advancement for individuals with design and in partnering with project and efficient curricula that connect disabilities; staff to develop integrated community education and skills training courses (b) A logic model that communicates settings for assessments, job shadowing, and that integrate education with how the demonstration project will internships, apprenticeships, and other training, as appropriate; achieve its outcomes and provides a paid and unpaid work experiences that (3) Multiple entry and exit points for framework for project evaluation. The are designed to lead to career VR participants entering and exiting logic model must: advancement competitive for training; (1) Depict, at a minimum, the goals, (4) Comprehensive, coordinated and individuals with disabilities; activities, outputs, and outcomes of the (iv) Provide technical assistance or personalized support services that are proposed model demonstration project; designed to ensure the individual’s other resources (e.g., trainings) for and employers as needed on topics or success in completing education and (2) Demonstrate how the specific strategies related to career advancement training programs: career pathways components developed for VR eligible individuals with (i) Financial literacy, benefits and implemented in the project are disabilities, including previously served counseling, childcare, physical health thought to affect project outcomes. VR participants in employment who re- and mental health services and Project activities that demonstrate a enter the VR program; transportation; rationale and are depicted in the logic (v) Collaborate with participating (ii) Educational supports (e.g., tutors, model must be specifically noted; on-campus supports such as writing (c) A description of the applicant’s agencies and organizations, including labs, math labs, and disability services); plan, methods, and criteria for career pathway partners; and (iii) Self-advocacy training (e.g., implementing the project, including a (vi) Develop strategies and conduct mentoring, peer relationships, description of— outreach activities to identify VR- understanding how to request services (1) A cohesive, articulated model of eligible individuals with disabilities, and supports); and partnership and coordination among the including previously served VR (iv) Appropriate assistive technology participating agencies and participants in employment who re- services and devices; enter the VR program, whom the career (5) Flexible design of education and organizations; (2) The coordinated set of practices pathways approach could assist in training programs and services to meet and strategies in the use and changing careers or advancing their the particular needs of VR participants, development of career pathways that are careers. Note: If a project proposes including flexible work schedules, aligned with employment, training, and multiple career pathways, the plan must alternative class times and locations, education programs and reflect the separately describe the strategies and and the innovative use of technology; needs of employers and VR-eligible outreach activities that will be used to and identify VR-eligible individuals with (6) Education and training programs individuals, including previously served VR participants in employment disabilities, including previously served that focus on advancing in employment VR participants in employment who re- and are designed to develop the who re-enter the VR program to advance in their careers; enter the VR program; following knowledge and skills: (d) A memorandum of understanding (i) Comprehensive career (3) The model demonstration project’s between the State VR agency and its development counseling and guidance, proposed sites and targeted proposed partners in developing and including self-exploration and career occupational clusters, and the proposed implementing the project. In the case of exploration and career planning and criteria for selecting such sites and a consortium, the application must also management; occupational clusters. State VR agencies (ii) Career and technical skills leading applying as a group must also identify include a signed agreement among the to advancement in careers, including the shared geographic area and describe constituent State VR agencies that the skilled trades and STEM careers; how they will coordinate their project designates the agency legally authorized and activities, including the data collection to submit the application on behalf of (iii) Soft skills (e.g., understanding, and evaluation, within the shared area; the group; binds each agency to every communication, teamwork, networking, (4) How the proposed project will— statement, assurance, and obligation in problem solving, critical thinking and (i) Provide access to existing career the application; and details the professionalism, learning styles, pathways, create new pathways, or both, agencies’ assigned roles and identifying strengths and weaknesses); incorporating the six required career responsibilities, in accordance with 34 (d) Collaborate with other federally pathway components: Secondary and CFR 75.128 and 75.129; funded career pathway initiatives postsecondary education and training (e) A plan for evaluating the project’s conducting activities relevant to the aligned with targeted industry sector performance, including documenting work of its proposed project; and needs; rigorous, sequential, connected the relationship between program (e) Develop and conduct an and efficient curricula; multiple entry participation and the project’s goals and evaluation of the project’s performance and exit points; comprehensive support objectives:

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Specifically, the evaluation plan must the employment goal for all individuals part 3485. (c) The Uniform include a description of— served under this project will be CIE, Administrative Requirements, Cost (1) Project goals, measurable including customized or supported Principles, and Audit Requirements for objectives, and operational definitions; employment; Federal Awards (Uniform Guidance) in (2) The data to be collected; (i) An assurance that the project will 2 CFR part 200, as adopted and (3) How the data will be analyzed; collaborate with other federally funded amended as regulations of the and career pathway initiatives conducting Department in 2 CFR part 3474. (4) How the outcomes for individuals activities relevant to its work; and II. Award Information with disabilities served by the project (j) An assurance that the project will compared with the outcomes of train employers, including businesses, Type of Award: Discretionary grants individuals with VR-eligible individuals to collaborate with VR on working with negotiated as cooperative agreements. with disabilities, including previously employees or trainees with disabilities. Estimated Available Funds: served VR participants, not receiving Within this absolute priority, we are $110,000,000. project services; particularly interested in applications Contingent upon the availability of (f) For each career pathway accessed that address the following invitational funds and the quality of applications, or created through the project, the priority. we may make additional awards in FY evaluation plan must provide the Invitational Priority: Under 34 CFR 2022 from the list of unfunded following information: 75.105(c)(1) we do not give an applications from this competition. (1) Description of the career pathway, application that meets this invitational Estimated Range of Awards: including the respective occupational priority a competitive or absolute $3,548,387.10 to $18,333,333.33 cluster(s) or career field(s), stackable preference over applications that do not (frontloaded for the 60-month project credentials, and multiple entry/exit meet the invitational priority. period). points; and This priority is: Maximum Award: We will not make (2) Collection of the following data, at Career pathway projects that focus on an award exceeding $18, 333,333.33 for minimum: individuals with intellectual or a single budget period of 60 months. (i) The relevant RSA–911 Case Service developmental disabilities. Estimated Number of Awards: 6 (if all Report data for each project participant, Waiver of Proposed Rulemaking: awards are made at the estimated including disability and other Under the Administrative Procedure Act maximum amount) to 31 (if all awards demographic data; (5 U.S.C. 553), the Department generally are made at the estimated minimum (ii) The number of participants who offers interested parties the opportunity amount). entered the career pathway; to comment on proposed priorities. Note: The Department is not bound by any (iii) The number of participants who Section 437(d)(1) of GEPA, however, estimates in this notice. completed training in the career allows the Secretary to exempt from Project Period: Up to 60 months. pathway; rulemaking requirements regulations (iv) The number of participants who governing the first grant competition Note: The Final Performance Report must be completed and submitted by the end of attained one or more recognized under a new or substantially revised postsecondary credential and the types the project period, September 30, 2026. program authority. This is the first grant Therefore, all project activities (other than of credentials attained; competition for this program under the (v) The number of participants who work on the evaluation and final authority given in the Further achieved CIE through the project; performance report) must conclude earlier Consolidated Appropriations Act, 2020, than 60 months to allow time for the (vi) The corresponding weekly wage and, therefore, qualifies for this evaluation and final performance report to be and employer-provided medical benefits exception. To ensure timely grant completed and submitted by the end of the received by these participants before awards, the Secretary has decided to project period of September 30, 2026. and after receiving services; forego public comment on the absolute (vii) The corresponding weekly hours Note: Applicants under this competition worked by these participants before and priority under section 437(d)(1) of are required to provide detailed budget after receiving services; GEPA. This priority will apply to the FY information for each of the five years of this (viii) The number of participants who 21 grant competition and any project and for the total grant. receive a promotion or additional subsequent year in which we make responsibilities resulting in an increase awards from the list of unfunded III. Eligibility Information in salary; and; applications for this competition. 1. Eligible Applicants: State VR (ix) The number of participants who Program Authority: Further agencies or State VR agencies applying report public benefits (e.g., SSI, SSDI, Consolidated Appropriations Act, 2020 as a consortium under 34 CFR 75.128. and/or TANF, and State or local (Pub. L. 116–94), 133 Stat. 2590–91. 2. a. Cost Sharing or Matching: This benefits) as their primary source of Note: Projects must be awarded and competition does not require cost support at the time they exit in CIE; operated in a manner consistent with the sharing or matching. (g) A plan for systematic nondiscrimination requirements contained in b. Indirect Cost Rate Information: This dissemination of project findings and the U.S. Constitution and the Federal civil program uses an unrestricted indirect knowledge gained that will assist State rights laws. cost rate. For more information and local agencies in adapting or Applicable Regulations: (a) The regarding indirect costs, or to obtain a replicating the model career pathways Education Department General negotiated indirect cost rate, please see developed and implemented by the Administrative Regulations in 34 CFR www2.ed.gov/about/offices/list/ocfo/ project. This plan could include parts 75, 77, 79, 81, 82, 84, 86, 97, 98, intro.html. elements such as development of a and 99. (b) The Office of Management c. Administrative Cost Limitation: website or community of practice, and and Budget Guidelines to Agencies on This program does not include any participation in national and State Governmentwide Debarment and program-specific limitation on conferences; Suspension (Nonprocurement) in 2 CFR administrative expenses. All (h) An assurance that, based on the part 180, as adopted and amended as administrative expenses must be informed choice of the VR participant, regulations of the Department in 2 CFR reasonable and necessary and conform

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to the Cost Principles described in 2 restrictions in the Applicable (i) The extent to which the goals, CFR part 200 subpart E of the Uniform Regulations section of this notice. objectives, and outcomes to be achieved Guidance. 5. Recommended Page Limit: The by the proposed project are clearly 3. Subgrantees: Under the Further application narrative is where you, the specified and measurable. Consolidated Appropriations Act, 2020, applicant, address the selection criteria (ii) The extent to which the design of a grantee under this competition may that reviewers use to evaluate your the proposed project reflects up-to-date award subgrants for a portion of the application. We recommend that you (1) knowledge from research and effective funds to other public and private, limit the application narrative to no practice. nonprofit entities to directly carry out more than 45 pages and (2) use the (iii) The extent to which the results of project activities described in the following standards: the proposed project are to be grantee’s application. Under 34 CFR • A ‘‘page’’ is 8.5″ x 11″, on one side disseminated in ways that will enable 75.708(e), a grantee may contract for only, with 1’’ margins at the top, others to use the information or supplies, equipment, and other services bottom, and both sides. strategies. in accordance with 2 CFR part 200. • Double space (no more than three (iv) The extent to which the proposed lines per vertical inch) all text in the project represents an exceptional IV. Application and Submission application narrative, including titles, approach to the priority or priorities Information headings, footnotes, quotations, established for the competition. 1. Application Submission references, and captions, as well as all (v) The extent to which performance Instructions: Applicants are required to text in charts, tables, figures, and feedback and continuous improvement follow the Common Instructions for graphs. are integral to the design of the Applicants to Department of Education • Use a font that is either 12 point or proposed project. Discretionary Grant Programs, larger or no smaller than 10 pitch (c) Quality of project services (20 published in the Federal Register on (characters per inch). points) • February 13, 2019 (84 FR 3768) and Use one of the following fonts: (1) The Secretary considers the available at www.govinfo.gov/content/ Times New Roman, Courier, Courier quality of the services to be provided by pkg/FR–2019–02–13/pdf/2019– New, or Arial. the proposed project. 02206.pdf, which contain requirements The recommended page limit does not (2) In determining the quality of and information on how to submit an apply to the cover sheet; the budget services to be provided by the proposed application. section, including the narrative budget project, the Secretary considers the 2. Submission of Proprietary justification; the assurances and quality and sufficiency of strategies for Information: Given the types of projects certifications; or the one-page abstract, ensuring equal access and treatment for that may be proposed in applications for the resumes, the bibliography, or the eligible project participants who are the Disability Innovation Fund, your letters of support. However, the members of groups that have application may include business recommended page limit does apply to traditionally been underrepresented information that you consider all of the application narrative. based on race, color, national origin, gender, age, or disability. proprietary. In 34 CFR 5.11 we define V. Application Review Information ‘‘business information’’ and describe the (3) In addition, the Secretary 1. Selection Criteria: The selection process we use in determining whether considers the following factors: criteria for this competition are from 34 (i) The extent to which the services to any of that information is proprietary CFR 75.210 and are as follows: be provided by the proposed project and, thus, protected from disclosure (a) Need for project and significance involve the collaboration of appropriate under Exemption 4 of the Freedom of of the project (10 points) partners for maximizing the Information Act (5 U.S.C. 552, as (1) The Secretary considers the need effectiveness of project services. amended). for the proposed project and the (ii) The extent to which the services Because we plan to make successful significance of the proposed project. to be provided by the proposed project applications available to the public, you (2) In determining the need for the are appropriate to the needs of the may wish to request confidentiality of proposed project and the significance of intended recipients or beneficiaries of business information. the proposed project, the Secretary those services. Consistent with Executive Order considers the following factors: (iii) The likely impact of the services 12600, please designate in your (i) The national significance of the to be provided by the proposed project application any information that you proposed project. on the intended recipients of those believe is exempt from disclosure under (ii) The magnitude of the need for the services. Exemption 4. In the appropriate services to be provided or the activities (iv) The likelihood that the services to Appendix section of your application, to be carried out by the proposed be provided by the proposed project under ‘‘Other Attachments Form,’’ project. will lead to improvements in skills please list the page number or numbers (iii) The extent to which the proposed necessary to gain employment or build on which we can find this information. project is likely to build local capacity capacity for independent living. For additional information please see 34 to provide, improve, or expand services (d) Quality of the project evaluation CFR 5.11(c). that address the needs of target (20 points) 3. Intergovernmental Review: This population. (1) The Secretary considers the competition is subject to Executive (b) Quality of the project design (20 quality of the evaluation to be Order 12372 and the regulations in 34 points) conducted of the proposed project. CFR part 79. Information about (1) The Secretary considers the (2) In determining the quality of the Intergovernmental Review of Federal quality of the design of the proposed evaluation, the Secretary considers the Programs under Executive Order 12372 project. following factors: is in the application package for this (2) In determining the quality of the (i) The extent to which the methods competition. design of the proposed project, the of evaluation are thorough, feasible, and 4. Funding Restrictions: We reference Secretary considers the following appropriate to the goals, objectives, and regulations outlining funding factors: outcomes of the proposed project.

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(ii) The extent to which the methods applicant organization or the lead $10,000,000, the reporting requirements of evaluation include the use of applicant organization. in 2 CFR part 200, Appendix XII, objective performance measures that are 2. Review and Selection Process: We require you to report certain integrity clearly related to the intended outcomes remind potential applicants that in information to FAPIIS semiannually. of the project and will produce reviewing applications in any Please review the requirements in 2 CFR quantitative and qualitative data to the discretionary grant competition, the part 200, Appendix XII, if this grant extent possible. Secretary may consider, under 34 CFR plus all the other Federal funds you (iii) The extent to which the 75.217(d)(3), the past performance of the receive exceed $10,000,000. evaluation will provide performance applicant in carrying out a previous 5. In General: In accordance with the feedback and permit periodic award, such as the applicant’s use of Office of Management and Budget’s assessment of progress toward achieving funds, achievement of project guidance located at 2 CFR part 200, all intended outcomes. objectives, and compliance with grant applicable Federal laws, and relevant (iv) The extent to which the methods conditions. The Secretary may also Executive guidance, the Department of evaluation will, if well implemented, consider whether the applicant failed to will review and consider applications produce promising evidence (as defined submit a timely performance report or for funding pursuant to this notice in 34 CFR 77.1(c)) about the project’s submitted a report of unacceptable inviting applications in accordance effectiveness. quality. with— (e) Quality of project personnel (15 In addition, in making a competitive (a) Selecting recipients most likely to points) grant award, the Secretary requires be successful in delivering results based (1) The Secretary considers the various assurances, including those on the program objectives through an quality of the personnel who will carry applicable to Federal civil rights laws objective process of evaluating Federal out the proposed project. that prohibit discrimination in programs award applications (2 CFR 200.205); (2) In determining the quality of or activities receiving Federal financial (b) Prohibiting the purchase of certain project personnel, Secretary considers assistance from the Department (34 CFR telecommunication and video the extent to which the applicant 100.4, 104.5, 106.4, 108.8, and 110.23). surveillance services or equipment in encourages applications for employment 3. Risk Assessment and Specific alignment with section 889 of the from persons who are members of Conditions: Consistent with 2 CFR National Defense Authorization Act of groups that have traditionally been 200.205, before awarding grants under 2019 (Pub. L. 115—232) (2 CFR underrepresented based on race, color, this competition the Department 200.216); national origin, gender, age, or conducts a review of the risks posed by (c) Promoting the freedom of speech disability. applicants. Under 2 CFR 3474.10, the and religious liberty in alignment with (3) In addition, the Secretary Secretary may impose specific Promoting Free Speech and Religious considers the following factors: conditions and, in appropriate Liberty (E.O. 13798) and Improving Free (i) The qualifications, including circumstances, high-risk conditions on a Inquiry, Transparency, and relevant training and experience, of the grant if the applicant or grantee is not Accountability at Colleges and project director or principal financially stable; has a history of Universities (E.O. 13864) (2 CFR investigator. unsatisfactory performance; has a 200.300, 200.303, 200.339, and (ii) The qualifications, including financial or other management system 200.341); relevant training and experience, of key that does not meet the standards in 2 (d) Providing a preference, to the project personnel. CFR part 200, subpart D; has not extent permitted by law, to maximize (iii) The extent to which time fulfilled the conditions of a prior grant; use of goods, products, and materials commitments of the project director and or is otherwise not responsible. produced in the United States (2 CFR other key personnel are appropriate and 4. Integrity and Performance System: 200.322); and adequate to meet the objectives of the If you are selected under this (e) Terminating agreements in whole proposed project. competition to receive an award that or in part to the greatest extent (f) Adequacy of resources (15 points) over the course of the project period authorized by law if an award no longer (1) The Secretary considers the may exceed the simplified acquisition effectuates the program goals or agency adequacy of resources for the proposed threshold (currently $250,000), under 2 priorities (2 CFR 200.340). project. CFR 200.206(a)(2) we must make a (2) In determining the adequacy of judgment about your integrity, business VI. Award Administration Information resources for the proposed project, the ethics, and record of performance under 1. Award Notices: If your application Secretary considers the following Federal awards—that is, the risk posed is successful, we notify your U.S. factors: by you as an applicant—before we make Representative and U.S. Senators and (i) The relevance and demonstrated an award. In doing so, we must consider send you a Grant Award Notification commitment of each partner in the any information about you that is in the (GAN); or we may send you an email proposed project to the implementation integrity and performance system containing a link to access an electronic and success of the project. (currently referred to as the Federal version of your GAN. We may notify (ii) The extent to which the costs are Awardee Performance and Integrity you informally, also. reasonable in relation to the number of Information System (FAPIIS)), If your application is not evaluated or persons to be served and to the accessible through the System for not selected for funding, we notify you. anticipated results and benefits. Award Management. You may review 2. Administrative and National Policy (iii) The potential for the and comment on any information about Requirements: We identify incorporation of project purposes, yourself that a Federal agency administrative and national policy activities, or benefits into the ongoing previously entered and that is currently requirements in the application package program of the agency or organization at in FAPIIS. and reference these and other the end of the Federal funding. Please note that, if the total value of requirements in the Applicable (iv) The adequacy of support, your currently active grants, cooperative Regulations section of this notice. including facilities, equipment, agreements, and procurement contracts We reference the regulations outlining supplies, and other resources, from the from the Federal Government exceeds the terms and conditions of an award in

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the Applicable Regulations section of measuring program results against those the document published in the Federal this notice and include these and other goals. Register. You may access the official specific conditions in the GAN. The For the purposes of GPRA and edition of the Federal Register and the GAN also incorporates your approved Department reporting under 34 CFR Code of Federal Regulations at application as part of your binding 75.110, we have established the www.govinfo.gov. At this site you can commitments under the grant. following performance measures for this view this document, as well as all other 3. Open Licensing Requirements: program: documents of this Department Unless an exception applies, if you are (a) Of the individuals participating in published in the Federal Register, in awarded a grant under this competition, the project, their average hourly wage at text or Portable Document Format you will be required to openly license the time they exit in CIE. (PDF). To use PDF you must have to the public grant deliverables created (b) Of the individuals participating in Adobe Acrobat Reader, which is in whole, or in part, with Department the project, their average hours worked available free at the site. grant funds. When the deliverable per week at the time they exit in CIE. You may also access documents of the consists of modifications to pre-existing (c) Of the individuals participating in Department published in the Federal works, the license extends only to those the project, the number and percentage Register by using the article search modifications that can be separately who exit in CIE with employer-provided feature at: www.federalregister.gov. identified and only to the extent that medical benefits. Specifically, through the advanced open licensing is permitted under the (d) Of the individuals participating in search feature at this site, you can limit terms of any licenses or other legal the project, the number and percentage your search to documents published by restrictions on the use of pre-existing who report their income as the primary the Department. source of support at the time they exit works. Additionally, a grantee or Mark Schultz, subgrantee that is awarded competitive in CIE. (e) Of the individuals participating in Commissioner, Rehabilitation Services grant funds must have a plan to the project, the number and percentage Administration, Delegated the authority to disseminate these public grant perform the functions and duties of the who report public benefits (e.g., SSI, deliverables. This dissemination plan Assistant Secretary for the Office of Special SSDI, and/or TANF, and State or local can be developed and submitted after Education and Rehabilitative Services. benefits) as their primary source of your application has been reviewed and [FR Doc. 2021–00149 Filed 1–5–21; 4:15 pm] support at the time they exit in CIE. selected for funding. For additional BILLING CODE 4000–01–P 6. Continuation Awards: In making a information on the open licensing continuation award under 34 CFR requirements please refer to 2 CFR 75.253, the Secretary considers, among 3474.20. DEPARTMENT OF EDUCATION other things: Whether a grantee has 4. Reporting: (a) If you apply for a made substantial progress in achieving [Docket ID ED–2020–FSA–0151] grant under this competition, you must the goals and objectives of the project; Privacy Act of 1974; Matching Program ensure that you have in place the whether the grantee has expended funds necessary processes and systems to in a manner that is consistent with its AGENCY: Federal Student Aid, comply with the reporting requirements approved application and budget; and, Department of Education. in 2 CFR part 170 should you receive if the Secretary has established funding under the competition. This ACTION: Notice of a new matching performance measurement program. does not apply if you have an exception requirements, the performance targets in under 2 CFR 170.110(b). the grantee’s approved application. SUMMARY: This provides notice of the re- (b) At the end of your project period, In making a continuation award, the establishment of the matching program you must submit a final performance Secretary also considers whether the between the U.S. Department of report, including financial information, grantee is operating in compliance with Education (Department) and the Social as directed by the Secretary. If you the assurances in its approved Security Administration (SSA), which receive a multiyear award, you must application, including those applicable sets forth the terms, safeguards, and submit semiannual and annual to Federal civil rights laws that prohibit procedures under which the SSA will performance reports that provide the discrimination in programs or activities disclose to the Department data related most current performance and financial receiving Federal financial assistance to the Medical Improvement Not expenditure information as directed by from the Department (34 CFR 100.4, Expected (MINE) disability data of the Secretary under 34 CFR 75.118. The 104.5, 106.4, 108.8, and 110.23). beneficiaries and recipients under title Secretary may also require more II and title XVI of the Social Security frequent performance reports under 34 VII. Other Information Act from the SSA system of records CFR 75.720(c). For specific Accessible Format: Individuals with entitled the Disability Control File requirements on reporting, please go to disabilities can obtain this document (DCF) and the Master Beneficiary www.ed.gov/fund/grant/apply/ and a copy of the application package in Record (MBR). This matching program appforms/appforms.html. an accessible format (e.g., braille, large will enable the Department to contact (c) Under 34 CFR 75.250(b), the print, audiotape, or compact disc) on the individuals who have a balance on Secretary may provide a grantee with request to the program contact person a loan under title IV of the Higher additional funding for data collection listed under FOR FURTHER INFORMATION Education Act of 1965, as amended and reporting. In this case, the Secretary CONTACT. The Department will provide (HEA), have a title IV loan written off establishes a data collection period. the requestor with an accessible format due to default, or have an outstanding 5. Performance Measures: The that may include Rich Text Format service obligation under the Teacher Government Performance and Results (RTF) or text format (txt), a thumb drive, Education Assistance for College and Act of 1993 (GPRA) directs Federal an MP3 file, braille, large print, Higher Education (TEACH) Grant departments and agencies to improve audiotape, or compact disc, or other Program to inform those borrowers and the effectiveness of their programs by accessible format. TEACH Grant recipients of the total and engaging in strategic planning, setting Electronic Access to This Document: permanent disability (TPD) process. outcome-related goals for programs, and The official version of this document is Once informed, those borrowers who

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wish to apply for a discharge may do so Federal Relay Service (FRS), toll free, at ‘‘National Student Loan Data System more efficiently and effectively. 1–800–877–8339. (NSLDS)’’ (18–11–06) the name, date of DATES: Submit your comments on the SUPPLEMENTARY INFORMATION: We birth (DOB), and Social Security number proposed re-establishment of the provide this notice in accordance with (SSN) of the individuals identified in matching program on or before February Privacy Act of 1974, as amended the preceeding section. These 8, 2021. (Privacy Act) (5 U.S.C. 552a); Office of individuals will be matched with SSA The matching program will go into Management and Budget (OMB) Final data recorded in the DCF, which effect 30 days after the publication of Guidance Interpreting the Provisions of originate from the Supplemental this notice, on January 7, 2021, unless Public Law 100–503, the Computer Security Income Record and Special comments have been received from Matching and Privacy Protection Act of Veterans Benefits (SSR/SVB), 60–0103, interested members of the public 1988, 54 FR 25818 (June 19, 1989); and and the MBR, SSA/ORSIS 60–0090, in requiring modification and OMB Circular No. A–108. order to provide ED with Medical republication of the notice. The Participating Agencies: The U.S. Improvement Not Expected disability matching program will continue for 18 Department of Education and the Social data. months after the effective date and may Security Administration. System(s) of Records: The Department be renewed for up to an additional 12 Authority for Conducting the will disclose records to SSA from its months if, within 3 months prior to the Matching Program: The Department’s system of records identified as expiration of the 18 months, the legal authority to enter into the ‘‘National Student Loan Data System (NSLDS)’’ (18–11–06), as last published respective Data Integrity Boards of the matching program and to disclose in the Federal Register in full on Department and SSA determine that the information thereunder is sections conditions specified in 5 U.S.C. September 9, 2019 (84 FR 47265). 420N(c), 437(a)(1), 455(a)(1), and SSA will disclose records back to the 552a(o)(2)(D) have been met. 464(c)(1)(F)(ii & iii) of the HEA (20 Department from its systems of records ADDRESSES: Submit your comments U.S.C. 1070g–2(c), 1087(a)(1), identified as the ‘‘Disability Control File through the Federal eRulemaking Portal 1087e(a)(1)), and 1087dd((c)(1)(F)(ii & (DCF)’’ and the ‘‘Master Beneficiary or via postal mail, commercial delivery, iii), the regulations promulgated Record (MBR).’’ The DCF, which or hand delivery. We will not accept pursuant to those sections (34 CFR originates from the SSR/SVB, 60–0103, comments submitted by fax or by email 674.61(b), 682.402(c), 685.213, and was last fully published in the Federal or those submitted after the comment 686.42(b)), and subsection (b)(3) of the Register at 71 FR 1830 on January 11, period. To ensure that we do not receive Privacy Act (5 U.S.C. 552a(b)(3)). 2006, and updated on December 10, duplicate copies, please submit your SSA’s legal authority to disclose 2007 (72 FR 69723), July 3, 2018 (83 FR comments only once. In addition, please information as part of this matching 31250–31251), and November 1, 2018 include the Docket ID at the top of your program is section 1106 of the Social (83 FR 54969). The MBR, 60–0090, was comments. Security Act (42 U.S.C. 1306), the • last fully published in the Federal Federal eRulemaking Portal: Go to regulations promulgated pursuant to Register at 71 FR 1826 on January 11, www.regulations.gov to submit your that section (20 CFR part 401), and 2006, and updated on December 10, comments electronically. Information subsection (b)(3) of the Privacy Act (5 2007 (72 FR 69723), July 5, 2013 (78 FR on using Regulations.gov, including U.S.C. 552a(b)(3)). 40542), July 3, 2018 (83 FR 31250– instructions for accessing agency Purpose(S): This matching program 31251), and November 1, 2018 (83 FR documents, submitting comments, and will enable the Department to contact 54969). viewing the docket, is available on the the individuals who have a balance on Subsection (b)(3) of the Privacy Act (5 site under the ‘‘help’’ tab. a loan under title IV of the HEA, have U.S.C. 552a(b)(3)) authorizes a Federal • Postal Mail, Commercial Delivery, a title IV loan written off due to default, agency to disclose a record about an or Hand Delivery: If you mail or deliver or have an outstanding service individual that is maintained in a your comments about the matching obligation under the TEACH Grant system of records, without the program, address them to the Brenda Program to inform those borrowers and individual’s prior written consent, when Vigna, Division Chief, Federal Student TEACH Grant recipients of the TPD the disclosure is pursuant to a routine Aid, U.S. Department of Education, 830 process. Once informed, those use published in a System of Records First Street NE, Washington, DC 20202– borrowers who wish to apply for a Notice (SORN) as required by 5 U.S.C. 5320. discharge may do so more efficiently 552a(e)(4)(D) and is compatible with the Privacy Note: The Department’s and effectively. purposes for which the records were policy is to make all comments received Categories of Individuals: The collected. SSA and ED determined that from members of the public available for individuals whose records are used in their systems of records contain public viewing in their entirety on the the matching program are described as appropriate routine use disclosure Federal eRulemaking Portal at follows: authority and that the use is compatible www.regulations.gov. Therefore, The Department will disclose to SSA with the purpose for which the commenters should be careful to from the system of records entitled information was collected. include in their comments only ‘‘National Student Loan Data System Accessible Format: Individuals with information that they wish to make (NSLDS)’’ (18–11–06) individuals who disabilities can obtain this document in publicly available. owe a balance on one or more title IV, an accessible format (such as, braille, FOR FURTHER INFORMATION CONTACT: Ron HEA loans, who have a title IV, HEA large print, audiotape, or compact disc) Bennett, Group Director Program loan written off due to default, or who on request to Lisa Tessitore, Program Technical & Business Support Group, have an outstanding service obligation Operations Specialist, Federal Student Federal Student Aid, U.S. Department of under the TEACH Grant Program. Aid, U.S. Department of Education, 830 Education, 830 First Street, NE, Categories of Records: The records First Street NE, Washington, DC 20202– Washington, DC 20202–5320. used in the matching program are 5320. Telephone: (202) 377–3249. If you use a telecommunications described as follows: Electronic Access to This Document: device for the deaf (TDD) or a text The Department will disclose to SSA The official version of this document is telephone (TTY), you may call the from the system of records entitled the document published in the Federal

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Register. You may access the official SUPPLEMENTARY INFORMATION: Purpose of Description: § 284.123 Rate Filing: edition of the Federal Register and the the Board: The purpose of the Board is Negotiated Rate Agreement Filing (CFEi) Code of Federal Regulations at to make recommendations to DOE–EM to be effective 1/1/2021. www.govinfo.gov. At this site you can and site management in the areas of Filed Date: 12/30/20. view this document, as well as all other environmental restoration, waste Accession Number: 202012305028. documents of this Department management, and related activities. Comments/Protests Due: 5 p.m. ET published in the Federal Register, in 1/20/2021. Tentative Agenda text or Portable Document Format Docket Numbers: RP21–341–000. (PDF). To use PDF, you must have —Meeting Rules and Agenda Review Applicants: Iroquois Gas Adobe Acrobat Reader, which is —Opening and Chair Update Transmission System, L.P. available free at the site. —Agency Updates Description: § 4(d) Rate Filing: 122920 You may also access documents of the —Break Negotiated Rates—Mercuria Energy Department published in the Federal —Committee Round Robin: America, LLC R–7540–02 to be effective • Facilities Disposition & Site Register by using the article search 1/1/2021. Remediation Committee feature at www.federalregister.gov. Filed Date: 12/29/20. • Nuclear Materials Committee Specifically, through the advanced Accession Number: 20201229–5121. • Strategic & Legacy Management search feature at this site, you can limit Comments Due: 5 p.m. ET 1/11/21. your search to documents published by Committee • Docket Numbers: RP21–342–000. the Department. Waste Management Committee • Administrative & Outreach Applicants: Algonquin Gas Mark Brown, Committee Transmission, LLC. Chief Operating Officer, Federal Student Aid. —Board Discussion of EM SSAB Description: § 4(d) Rate Filing: AGT [FR Doc. 2021–00046 Filed 1–6–21; 8:45 am] Charges Negotiated Rate—eff 12–30–2020 to be BILLING CODE 4000–01–P —Reading of Public Comments effective 12/30/2020. —Voting Filed Date: 12/29/20. • EM SSAB Charge Document #1 Accession Number: 20201229–5141. • DEPARTMENT OF ENERGY EM SSAB Charge Document #2 Comments Due: 5 p.m. ET 1/11/21. • 2021 Committee Chairs Docket Numbers: RP21–343–000. Environmental Management Site- —Adjourn Applicants: Dauphin Island Gathering Specific Advisory Board, Savannah Public Participation: The online Partners. River Site virtual meeting is open to the public. Description: § 4(d) Rate Filing: Written statements may be filed with Negotiated Rate Filing 12–29–2020 to be AGENCY: Office of Environmental the Board either before or after the effective 1/1/2021. Management, Department of Energy. meeting as there will not be Filed Date: 12/29/20. ACTION: Notice of open virtual meeting. opportunities for live public comment Accession Number: 20201229–5179. SUMMARY: This notice announces an during this online virtual meeting. The Comments Due: 5 p.m. ET 1/11/21. online virtual meeting of the Deputy Designated Federal Officer is Docket Numbers: RP21–344–000. Environmental Management Site- empowered to conduct the meeting in a Applicants: Kinder Morgan Louisiana Specific Advisory Board (EM SSAB), fashion that will facilitate the orderly Pipeline LLC. Savannah River Site. The Federal conduct of business. Individuals Description: § 4(d) Rate Filing: Rate Advisory Committee Act requires that wishing to submit public comments Schedule ITS-Removal of Authorized public notice of this online virtual should email them as directed above. Overrun Filing to be effective 2/1/2021. meeting be announced in the Federal Minutes: Minutes will be available by Filed Date: 12/30/20. Register. writing or calling Amy Boyette at the Accession Number: 20201230–5001. address or telephone number listed Comments Due: 5 p.m. ET 1/11/21. DATES: Monday, January 25, 2021; 1:00 above. Minutes will also be available at p.m.–3:30 p.m. Docket Numbers: RP21–345–000. the following website: https:// Applicants: Texas Eastern ADDRESSES: Online Virtual Meeting. To cab.srs.gov/srs-cab.html. attend, please send an email to: Transmission, LP. [email protected] by Signed in Washington, DC, on January 4, Description: § 4(d) Rate Filing: TETLP 2021. no later than 4:00 p.m. ET on Friday, EPC FEB 2021 FILING to be effective January 22, 2021. LaTanya Butler, 2/1/2021. To Submit Public Comments: Public Deputy Committee Management Officer. Filed Date: 12/30/20. comments will be accepted via email [FR Doc. 2021–00029 Filed 1–6–21; 8:45 am] Accession Number: 20201230–5030. prior to and after the meeting. BILLING CODE 6450–01–P Comments Due: 5 p.m. ET 1/11/21. Comments received by no later than Docket Numbers: RP21–346–000. 4:00 p.m. ET on Friday, January 22, Applicants: NEXUS Gas 2021 will be read aloud during the DEPARTMENT OF ENERGY Transmission, LLC. virtual meeting. Comments will also be Description: § 4(d) Rate Filing: accepted after the meeting, by no later Federal Energy Regulatory Negotiated Rates—Various 1–1–2021 than 4:00 p.m. ET on Monday, February Commission Releases to be effective 1/1/2021. Filed Date: 12/30/20. 1, 2021. Please submit comments to Combined Notice of Filings [email protected]. Accession Number: 20201230–5045. FOR FURTHER INFORMATION CONTACT: Take notice that the Commission has Comments Due: 5 p.m. ET 1/11/21. Amy Boyette, Office of External Affairs, received the following Natural Gas Docket Numbers: RP21–347–000. U.S. Department of Energy, Savannah Pipeline Rate and Refund Report filings: Applicants: Algonquin Gas River Operations Office, P.O. Box A, Docket Number: PR21–13–000. Transmission, LLC. Aiken, SC 29802; Phone: (803) 952– Applicants: Rocky Mountain Natural Description: § 4(d) Rate Filing: 6120; email: [email protected]. Gas LLC. Negotiated Rate—Yankee Gas 510802

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Release eff 12–31–2020 to be effective DEPARTMENT OF ENERGY Comments Due: 5 p.m. ET 1/11/21. 12/31/2020. Docket Numbers: RP21–346–000. Filed Date: 12/30/20. Federal Energy Regulatory Applicants: NEXUS Gas Commission Accession Number: 20201230–5077. Transmission, LLC. Description: § 4(d) Rate Filing: Combined Notice of Filings Comments Due: 5 p.m. ET 1/11/21. Negotiated Rates—Various 1–1–2021 Docket Numbers: RP21–348–000. Take notice that the Commission Releases to be effective 1/1/2021. Applicants: Algonquin Gas received the following electric rate Filed Date: 12/30/20. Transmission, LLC. filings: Accession Number: 20201230–5045. Comments Due: 5 p.m. ET 1/11/21. Description: § 4(d) Rate Filing: AGT Pipeline Rate and Refund Report Docket Numbers: RP21–347–000. Negotiated Rates—Various Releases eff Filings: 1–1–2021 to be effective 1/1/2021. Applicants: Algonquin Gas Docket Numbers: RP21–322–000. Transmission, LLC. Filed Date: 12/30/20. Applicants: Stagecoach Pipeline & Description: § 4(d) Rate Filing: Accession Number: 20201230–5147. Storage Company LL. Negotiated Rate—Yankee Gas 510802 Comments Due: 5 p.m. ET 1/11/21. Description: Stagecoach Pipeline & Release eff 12–31–2020 to be effective Storage Company LLC Notification of 12/31/2020. Docket Numbers: RP21–349–000. Bankruptcy Court Approval under Filed Date: 12/30/20. Applicants: Transcontinental Gas RP21–322. Accession Number: 20201230–5077. Pipe Line Company. Filed Date: 12/29/20. Comments Due: 5 p.m. ET 1/11/21. Description: § 4(d) Rate Filing: Accession Number: 20201229–5395. Docket Numbers: RP21–348–000. Negotiated Rates—Cherokee AGL— Comments Due: 5 p.m. ET 1/11/21. Applicants: Algonquin Gas Replacement Shippers—Jan 2021 to be Docket Numbers: RP21–341–000. Transmission, LLC. effective 1/1/2021. Applicants: Iroquois Gas Description: § 4(d) Rate Filing: AGT Filed Date: 12/30/20. Transmission System, L.P. Negotiated Rates—Various Releases eff Accession Number: 20201230–5155. Description: § 4(d) Rate Filing: 122920 1–1–2021 to be effective 1/1/2021. Negotiated Rates—Mercuria Energy Filed Date: 12/30/20. Comments Due: 5 p.m. ET 1/11/21. America, LLC R–7540–02 to be effective Accession Number: 20201230–5147. Docket Numbers: RP21–350–000. 1/1/2021. Comments Due: 5 p.m. ET 1/11/21. Applicants: El Paso Natural Gas Filed Date: 12/29/20. Docket Numbers: RP21–349–000. Company, L.L.C. Accession Number: 20201229–5121. Applicants: Transcontinental Gas Comments Due: 5 p.m. ET 1/11/21. Description: § 4(d) Rate Filing: Pipe Line Company. Negotiated Rate Agreement Filing (CFEi) Docket Numbers: RP21–342–000. Description: § 4(d) Rate Filing: to be effective 1/1/2021. Applicants: Algonquin Gas Negotiated Rates—Cherokee AGL— Transmission, LLC. Replacement Shippers—Jan 2021 to be Filed Date: 12/30/20. Description: § 4(d) Rate Filing: AGT effective 1/1/2021. Accession Number: 20201230–5217. Negotiated Rate—eff 12–30–2020 to be Filed Date: 12/30/20. Comments Due: 5 p.m. ET 1/11/21. effective 12/30/2020. Accession Number: 20201230–5155. The filings are accessible in the Filed Date: 12/29/20. Comments Due: 5 p.m. ET 1/11/21. Commission’s eLibrary system (https:// Accession Number: 20201229–5141. Docket Numbers: RP21–350–000. elibrary.ferc.gov/idmws/search/ Comments Due: 5 p.m. ET 1/11/21. Applicants: El Paso Natural Gas fercgensearch.asp) by querying the Docket Numbers: RP21–343–000. Company, L.L.C. docket number. Applicants: Dauphin Island Gathering Description: § 4(d) Rate Filing: Partners. Negotiated Rate Agreement Filing (CFEi) Any person desiring to intervene or Description: § 4(d) Rate Filing: to be effective 1/1/2021. protest in any of the above proceedings Negotiated Rate Filing 12–29–2020 to be Filed Date: 12/30/20. must file in accordance with Rules 211 effective 1/1/2021. Accession Number: 20201230–5217. and 214 of the Commission’s Filed Date: 12/29/20. Comments Due: 5 p.m. ET 1/11/21. Regulations (18 CFR 385.211 and Accession Number: 20201229–5179. 385.214) on or before 5:00 p.m. Eastern Docket Number: PR21–13–000. Comments Due: 5 p.m. ET 1/11/21. time on the specified comment date. Applicants: Rocky Mountain Natural Protests may be considered, but Docket Numbers: RP21–344–000. Gas LLC. intervention is necessary to become a Applicants: Kinder Morgan Louisiana Description: § 284.123 Rate Filing: party to the proceeding. Pipeline LLC. Negotiated Rate Agreement Filing (CFEi) Description: § 4(d) Rate Filing: Rate to be effective 1/1/2021. eFiling is encouraged. More detailed Schedule ITS-Removal of Authorized Filed Date: 12/30/20. information relating to filing Overrun Filing to be effective 2/1/2021. Accession Number: 202012305028. requirements, interventions, protests, Filed Date: 12/30/20. Comments/Protests Due: 5 p.m. ET service, and qualifying facilities filings Accession Number: 20201230–5001. 1/20/2021. can be found at: http://www.ferc.gov/ Comments Due: 5 p.m. ET 1/11/21. docs-filing/efiling/filing-req.pdf. For The filings are accessible in the other information, call (866) 208–3676 Docket Numbers: RP21–345–000. Commission’s eLibrary system (https:// (toll free). For TTY, call (202) 502–8659. Applicants: Texas Eastern elibrary.ferc.gov/idmws/search/ Transmission, LP. fercgensearch.asp) by querying the Dated: December 31, 2020. Description: § 4(d) Rate Filing: TETLP docket number. Nathaniel J. Davis, Sr., EPC FEB 2021 FILING to be effective Any person desiring to intervene or Deputy Secretary. 2/1/2021. protest in any of the above proceedings [FR Doc. 2020–29328 Filed 1–6–21; 8:45 am] Filed Date: 12/30/20. must file in accordance with Rules 211 BILLING CODE 6717–01–P Accession Number: 20201230–5030. and 214 of the Commission’s

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Regulations (18 CFR 385.211 and time, the Commission has suspended Accession Number: 20201231–5034. 385.214) on or before 5:00 p.m. Eastern access to the Commission’s Public Comments Due: 5 p.m. ET 3/2/21. time on the specified comment date. Reference Room, due to the Docket Numbers: ER10–2877–003. Protests may be considered, but proclamation declaring a National Applicants: Cobb Electric intervention is necessary to become a Emergency concerning the Novel Membership Corporation. party to the proceeding. Coronavirus Disease (COVID–19), issued Description: Triennial Market Power eFiling is encouraged. More detailed by the President on March 13, 2020. For Analysis for Southeast Region of Cobb information relating to filing assistance, contact FERC at Electric Membership Corporation. requirements, interventions, protests, [email protected] or call Filed Date: 12/30/20. service, and qualifying facilities filings toll-free, (886) 208–3676 or TYY, (202) Accession Number: 20201230–5258. can be found at: http://www.ferc.gov/ 502–8659. Comments Due: 5 p.m. ET 3/1/21. docs-filing/efiling/filing-req.pdf. For The Commission strongly encourages Docket Numbers: ER10–3079–018. other information, call (866) 208–3676 electronic filings of comments, protests Applicants: Tyr Energy, LLC. (toll free). For TTY, call (202) 502–8659. and interventions in lieu of paper using Description: Triennial Market Power Dated: December 31, 2020. the ‘‘eFile’’ link at http://www.ferc.gov. Analysis for Southeast Region of Tyr Nathaniel J. Davis, Sr., In lieu of electronic filing, you may Energy, LLC. submit a paper copy. Submissions sent Filed Date: 12/30/20. Deputy Secretary. via the U.S. Postal Service must be Accession Number: 20201230–5359. [FR Doc. 2020–29327 Filed 1–6–21; 8:45 am] addressed to: Kimberly D. Bose, Comments Due: 5 p.m. ET 3/1/21. BILLING CODE 6717–01–P Secretary, Federal Energy Regulatory Docket Numbers: ER10–3109–013. Commission, 888 First Street, NE, Room Applicants: Washington County 1A, Washington, DC 20426. DEPARTMENT OF ENERGY Power, LLC. Submissions sent via any other carrier Description: Triennial Market Power Federal Energy Regulatory must be addressed to: Kimberly D. Bose, Analysis for Southeast Region of Commission Secretary, Federal Energy Regulatory Washington County Power, LLC. Commission, 12225 Wilkins Avenue, Filed Date: 12/30/20. [Docket No. EL21–27–000] Rockville, Maryland 20852. Accession Number: 20201230–5371. Comments Due: 5 p.m. ET 3/1/21. Whitetail Solar 3, LLC; Notice of Dated: December 31, 2020. Institution of Section 206 Proceeding Nathaniel J. Davis, Sr., Docket Numbers: ER12–637–006. and Refund Effective Date Deputy Secretary. Applicants: Calhoun Power Company, LLC. [FR Doc. 2020–29325 Filed 1–6–21; 8:45 am] On December 31, 2020, the Description: Triennial Market Power BILLING CODE 6717–01–P Commission issued an order in Docket Analysis for Southeast Region of No. EL21–27–000, pursuant to section Calhoun Power Company, LLC. 206 of the Federal Power Act (FPA), 16 DEPARTMENT OF ENERGY Filed Date: 12/30/20. U.S.C. 824e, instituting an investigation Accession Number: 20201230–5358. into whether Whitetail Solar 3, LLC’s Federal Energy Regulatory Comments Due: 5 p.m. ET 3/1/21. proposed rate schedule is unjust, Commission Docket Numbers: ER17–615–004; unreasonable, unduly discriminatory, or ER10–2184–028; ER10–2192–036; preferential, or otherwise unlawful. Combined Notice of Filings #1 ER10–2178–036; ER11–2014–026; Whitetail Solar 3, LLC, 173 FERC 61,288 ER11–2013–026; ER13–1536–020; Take notice that the Commission (2020). ER11–2005–026. received the following electric rate The refund effective date in Docket Applicants: Albany Green Energy, filings: No. EL21–27–000, established pursuant LLC, CER Generation, LLC, to section 206(b) of the FPA, will be the Docket Numbers: ER10–1338–004. Constellation Energy Commodities date of publication of this notice in the Applicants: Southern Indiana Gas and Group Maine, LLC, Constellation Federal Register. Electric Company, Inc. NewEnergy, Inc., Cow Branch Wind Any interested person desiring to be Description: Triennial Market Power Power, LLC, CR Clearing, LLC, Exelon heard in Docket No. EL21–27–000 must Analysis for Central Region of Southern Generation Company, LLC, Wind file a notice of intervention or motion to Indiana Gas and Electric Company, Inc. Capital Holdings, LLC. intervene, as appropriate, with the Filed Date: 12/30/20. Description: Triennial Market Power Federal Energy Regulatory Commission, Accession Number: 20201230–5360. Analysis for Southeast Region of Exelon in accordance with Rule 214 of the Comments Due: 5 p.m. ET 3/1/21. Southeast MBR Entities. Commission’s Rules of Practice and Docket Numbers: ER10–2127–020. Filed Date: 12/30/20. Procedure, 18 CFR 385.214 (2020), Applicants: Invenergy TN LLC. Accession Number: 20201230–5242. within 21 days of the date of issuance Description: Triennial Market Power Comments Due: 5 p.m. ET 3/1/21. of the order. Analysis for Southeast Region of Docket Numbers: ER20–1505–002. In addition to publishing the full text Invenergy TN LLC. Applicants: Basin Electric Power of this document in the Federal Filed Date: 12/31/20. Cooperative. Register, the Commission provides all Accession Number: 20201231–5035. Description: Triennial Market Power interested persons an opportunity to Comments Due: 5 p.m. ET 3/2/21. Analysis for Central Region of Basin view and/or print the contents of this Docket Numbers: ER10–2134–013. Electric Power Cooperative. document via the internet through the Applicants: Hardee Power Partners Filed Date: 12/30/20. Commission’s Home Page (http:// Limited. Accession Number: 20201230–5229. www.ferc.gov) using the ‘‘eLibrary’’ link. Description: Triennial Market Power Comments Due: 5 p.m. ET 3/1/21. Enter the docket number excluding the Analysis for Southeast Region of Hardee Docket Numbers: ER21–251–001. last three digits in the docket number Power Partners Limited. Applicants: Degrees3 Transportation field to access the document. At this Filed Date: 12/31/20. Solutions, LLC.

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Description: Tariff Amendment: Description: § 205(d) Rate Filing: Any person desiring to intervene or Amendment to 1 to be effective 10/30/ Revisions to Rate Schedule Nos. 315, protest in any of the above proceedings 2020. 316, 317, and 335 to be effective 1/1/ must file in accordance with Rules 211 Filed Date: 12/31/20. 2021. and 214 of the Commission’s Accession Number: 20201231–5017. Filed Date: 12/31/20. Regulations (18 CFR 385.211 and Comments Due: 5 p.m. ET 1/21/21. Accession Number: 20201231–5020. 385.214) on or before 5:00 p.m. Eastern Docket Numbers: ER21–775–000. Comments Due: 5 p.m. ET 1/21/21. time on the specified comment date. Applicants: NorthWestern Docket Numbers: ER21–782–000. Protests may be considered, but Corporation. Applicants: ISO New England Inc., intervention is necessary to become a Description: § 205(d) Rate Filing: SA New England Power Pool Participants party to the proceeding. 305 16th Rev—NITSA with Stillwater Committee. eFiling is encouraged. More detailed Mining Company to be effective 3/1/ Description: § 205(d) Rate Filing: ISO– information relating to filing 2021. NE & NEPOOL; Change to Implement requirements, interventions, protests, Filed Date: 12/30/20. New Methodology for Calculating FCM service, and qualifying facilities filings Accession Number: 20201230–5220. DDBT to be effective 3/2/2021. can be found at: http://www.ferc.gov/ Comments Due: 5 p.m. ET 1/21/21. Filed Date: 12/31/20. docs-filing/efiling/filing-req.pdf. For Docket Numbers: ER21–776–000. Accession Number: 20201231–5026. other information, call (866) 208–3676 Applicants: East Coast Power and Gas, Comments Due: 5 p.m. ET 1/21/21. (toll free). For TTY, call (202) 502–8659. LLC. Docket Numbers: ER21–783–000. Dated: December 31, 2020. Description: Tariff Cancellation: Applicants: Southwest Power Pool, Nathaniel J. Davis, Sr., Cancellation Filing to be effective 12/ Inc. Deputy Secretary. 31/2020. Description: § 205(d) Rate Filing: [FR Doc. 2020–29324 Filed 1–6–21; 8:45 am] Filed Date: 12/31/20. 3330R3 City of Nixa, Missouri to be BILLING CODE 6717–01–P Accession Number: 20201231–5000. effective 12/1/2020. Comments Due: 5 p.m. ET 1/21/21. Filed Date: 12/31/20. Docket Numbers: ER21–777–000. Accession Number: 20201231–5032. DEPARTMENT OF ENERGY Applicants: NSTAR Electric Comments Due: 5 p.m. ET 1/21/21. Company. Docket Numbers: ER21–784–000. Federal Energy Regulatory Description: § 205(d) Rate Filing: Applicants: New York State Electric & Commission Large Generator Interconnection Gas Corporation. [Docket No. EL21–28–000] Agreement -MMWEC, Stony Description: § 205(d) Rate Filing: Brook?Ludlow to be effective 12/31/ Revisions to 2020 Facilities Agreement PJM Interconnection, L.L.C.; Potomac 2020. Update to be effective 1/1/2021. Electric Power Company; Notice of Filed Date: 12/31/20. Filed Date: 12/31/20. Accession Number: 20201231–5002. Institution of Section 206 Proceeding Accession Number: 20201231–5033. and Refund Effective Date Comments Due: 5 p.m. ET 1/21/21. Comments Due: 5 p.m. ET 1/21/21. Docket Numbers: ER21–778–000. Docket Numbers: ER21–785–000. On December 30, 2020, the Applicants: Niagara Mohawk Power Applicants: Southwest Power Pool, Commission issued an order in Docket Corporation, New York Independent Inc. No. EL21–28–000, pursuant to section System Operator, Inc. Description: § 205(d) Rate Filing: 3751 206 of the Federal Power Act (FPA), 16 Description: § 205(d) Rate Filing: NorthWestern Energy NITSA and NOA U.S.C. 824e, instituting an investigation Reimbursement Agreement (SA 2590) to be effective 12/1/2020. into whether Potomac Electric Power between NMPC and NY Transco to be Filed Date: 12/31/20. Company’s proposed depreciation rates effective 12/11/2020. Accession Number: 20201231–5037. are unjust, unreasonable, unduly Filed Date: 12/31/20. Comments Due: 5 p.m. ET 1/21/21. discriminatory, or preferential, or Accession Number: 20201231–5004. otherwise unlawful. PJM Comments Due: 5 p.m. ET 1/21/21. Docket Numbers: ER21–786–000. Interconnection, L.L.C., 173 FERC Docket Numbers: ER21–779–000. Applicants: Trans Bay Cable LLC. 61,286 (2020). Applicants: NorthWestern Description: § 205(d) Rate Filing: The refund effective date in Docket Corporation. Annual TRBAA Filing—2020 to be No. EL21–28–000, established pursuant Description: Compliance filing: Order effective 1/1/2021. to section 206(b) of the FPA, will be the No. 864 Compliance Filing (Montana Filed Date: 12/31/20. date of publication of this notice in the OATT) to be effective 1/27/2020. Accession Number: 20201231–5038. Federal Register. Filed Date: 12/31/20. Comments Due: 5 p.m. ET 1/21/21. Any interested person desiring to be Accession Number: 20201231–5011. Docket Numbers: ER21–787–000. heard in Docket No. EL21–28–000 must Comments Due: 5 p.m. ET 1/21/21. Applicants: ISO New England Inc. file a notice of intervention or motion to Docket Numbers: ER21–780–000. Description: § 205(d) Rate Filing: ISO– intervene, as appropriate, with the Applicants: PJM Interconnection, NE; Updates to CONE, Net CONE, and Federal Energy Regulatory Commission, L.L.C. Capacity Performance Payment Rate to in accordance with Rule 214 of the Description: § 205(d) Rate Filing: be effective 3/2/2021. Commission’s Rules of Practice and Original ISA, SA No. 5863; Queue No. Filed Date: 12/31/20. Procedure, 18 CFR 385.214 (2020), AE2–249 to be effective 12/3/2020. Accession Number: 20201231–5060. within 21 days of the date of issuance Filed Date: 12/31/20. Comments Due: 5 p.m. ET 1/21/21. of the order. Accession Number: 20201231–5016. The filings are accessible in the In addition to publishing the full text Comments Due: 5 p.m. ET 1/21/21. Commission’s eLibrary system (https:// of this document in the Federal Docket Numbers: ER21–781–000. elibrary.ferc.gov/idmws/search/ Register, the Commission provides all Applicants: Duke Energy Carolinas, fercgensearch.asp) by querying the interested persons an opportunity to LLC. docket number. view and/or print the contents of this

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document via the internet through the Research Triangle Park, NC 27711, Air Quality Standard (NAAQS) but for Commission’s Home Page (http:// telephone (919) 541–5246, email at air pollutant emissions emanating from www.ferc.gov) using the ‘‘eLibrary’’ link. [email protected]. For outside the United States. The guidance Enter the docket number excluding the questions about the technical issues describes and provides examples of the last three digits in the docket number discussed in Section 6 of this guidance, kinds of information and analyses that field to access the document. At this please contact Barron Henderson, U.S. the U.S. Environmental Protection time, the Commission has suspended EPA, Office of Air Quality Planning and Agency (EPA) recommends air agencies access to the Commission’s Public Standards, Air Quality Assessment consider including in a CAA section Reference Room, due to the Division, Research Triangle Park, NC 179B demonstration. The guidance also proclamation declaring a National 27711, telephone (919) 541–2760, email describes a weight of evidence approach Emergency concerning the Novel at [email protected]. that the EPA intends to use when Coronavirus Disease (COVID–19), issued SUPPLEMENTARY INFORMATION: evaluating CAA section 179B by the President on March 13, 2020. For demonstrations. This nonbinding assistance, contact FERC at I. General Information guidance is intended to assist air [email protected] or call How can I get copies of this guidance agencies considering the preparation of toll-free, (886) 208–3676 or TYY, (202) document and other related a CAA section 179B demonstration but 502–8659. information? does not limit the types of information The Commission strongly encourages or analyses that could be provided as electronic filings of comments, protests Docket: The EPA has established a part of any such demonstration under and interventions in lieu of paper using docket for this action under Docket ID the CAA. the ‘‘eFile’’ link at http://www.ferc.gov. No. EPA–HQ–OAR–2019–0668. All The EPA has the authority under CAA In lieu of electronic filing, you may documents in the docket are listed on section 179B to assess such an submit a paper copy. Submissions sent the https://www.regulations.gov international transport demonstration via the U.S. Postal Service must be website. Although listed in the index, when evaluating a state implementation addressed to: Kimberly D. Bose, some information may not be publicly plan (SIP) submitted in response to a Secretary, Federal Energy Regulatory available, e.g., Confidential Business nonattainment designation or Commission, 888 First Street NE, Room Information or other information whose reclassification of an area, or when the 1A, Washington, DC 20426. disclosure is restricted by statute. EPA determines whether a Submissions sent via any other carrier Certain other material, such as nonattainment area has or has not failed must be addressed to: Kimberly D. Bose, copyrighted material, is not placed on to attain the standard by the attainment Secretary, Federal Energy Regulatory the internet and will be publicly date (and thus would become subject to Commission, 12225 Wilkins Avenue, available only in hard copy. Publicly additional CAA requirements). If the Rockville, Maryland 20852. available docket materials are available EPA determines that such a electronically through https:// demonstration is approvable, the EPA Dated: December 31, 2020. www.regulations.gov. will provide certain regulatory relief as Nathaniel J. Davis, Sr., Agency Website: The EPA has described in CAA section 179B. If the Deputy Secretary. established the EPA Guidance Portal EPA approves a CAA section 179B [FR Doc. 2020–29326 Filed 1–6–21; 8:45 am] website for posting of all active final demonstration showing that an area in BILLING CODE 6717–01–P guidance documents. The EPA the future would attain the relevant Guidance Portal can be accessed at the NAAQS but for international emissions, following website: https://epa.gov/ then the air agency would not be subject ENVIRONMENTAL PROTECTION guidance/. to the SIP requirement to provide an AGENCY The EPA has a website to house attainment demonstration. If the EPA information related to the international approves a CAA section 179B [EPA–HQ–OAR–2019–0668; FRL–10019–17– transport of air pollution at: https:// demonstration showing that a OAR] www.epa.gov/ground-level-ozone- nonattainment area would have attained Guidance on the Preparation of Clean pollution/international-transport-air- the relevant NAAQS based on past air Air Act Section 179B Demonstrations pollution. The website includes the quality data but for international for Nonattainment Areas Affected by EPA’s draft and final Clean Air Act emissions, then the nonattainment area International Transport of Emissions (CAA) section 179B guidance would not be subject to reclassification documents, a recording of and the slides to a higher classification and would not AGENCY: Environmental Protection presented during the public webinar be subject to additional regulatory Agency (EPA). held on February 12, 2020, and other requirements that come with a higher ACTION: Notice of availability. technical information and resources classification. related to the international transport of In addition to describing the kinds of SUMMARY: Notice is hereby given that air pollution. The website provides information and analyses that may be the Environmental Protection Agency related information that the public may helpful to include in a CAA section (EPA) has posted on its website a final find useful. 179B demonstration, this guidance guidance document titled, ‘‘Guidance What’s the purpose of the EPA’s provides: on the Preparation of Clean Air Act • A review of the existing regulatory guidance? Section 179B Demonstrations for framework for considering CAA section Nonattainment Areas Affected by The purpose of this new final 179B demonstrations; International Transport of Emissions.’’ guidance document is to assist state, • A review of other existing FOR FURTHER INFORMATION CONTACT: For local, and tribal air agencies that are regulatory mechanisms that may be general questions concerning this final considering the development of a more appropriate alternatives to CAA guidance document, please contact demonstration, under section 179B of section 179B in certain situations; Gobeail McKinley, U.S. EPA, Office of the CAA, that a nonattainment area • Recommended timeframes for the Air Quality Planning and Standards, Air would be able to attain, or would have CAA section 179B demonstration Quality Policy Division, C539–04, attained, the relevant National Ambient development and submittal process; and

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• Background on the nature of Dated: December 18, 2020. I. General Information intracontinental and intercontinental Panagiotis Tsirigotis, II. What is MOVES3? transport of air pollution. Director, Office of Air Quality Planning and III. SIPs and MOVES3 IV. Transportation Conformity and MOVES3 The EPA accepted comments on the Standards. draft guidance from January 9, 2020, [FR Doc. 2021–00026 Filed 1–6–21; 8:45 am] I. General Information through March 10, 2020. The EPA BILLING CODE 6560–50–P A. Does this action apply to me? received comments from 15 entities. All Entities potentially impacted by the comments received by the EPA are ENVIRONMENTAL PROTECTION included in the docket for this guidance. approval of MOVES3 are those that AGENCY adopt, approve, or fund transportation The EPA thoroughly considered the plans, transportation improvement points raised in the comments in the [FRL–10016–84–OAR] programs (TIPs), or projects under title development of this final guidance. Official Release of the MOVES3 Motor 23 U.S.C. or title 49 U.S.C. Chapter 53 1. Executive Order 12866: Regulatory Vehicle Emissions Model for SIPs and and those that develop and submit SIPs Planning and Review and Executive Transportation Conformity to EPA. Regulated categories and Order 13563: Improving Regulation and entities affected by today’s action AGENCY: Environmental Protection include: Regulatory Review Agency (EPA). This action is a significant guidance ACTION: Notice of availability. Examples of regulated Category entities document that was submitted to the SUMMARY: The Environmental Protection Office of Management and Budget Agency (EPA) is announcing the Local govern- Local air quality and trans- (OMB) for review. Any changes made in availability of the MOtor Vehicle ment. portation agencies, includ- response to OMB recommendations Emission Simulator model (MOVES3) ing metropolitan planning have been documented in the docket. for official purposes outside of organizations (MPOs). California. MOVES3 is the latest state- State govern- State air quality and trans- 2. Executive Order 13771: Reducing ment. portation agencies. Regulations and Controlling Regulatory of-the art upgrade to EPA’s modeling Federal gov- Department of Transpor- Costs tools for estimating emissions from cars, ernment. tation (Federal Highway trucks, buses, and motorcycles based on Administration (FHWA) This action is not considered an the latest data and regulations. MOVES3 and Federal Transit Ad- Executive Order 13771 deregulatory or is available for use in state ministration (FTA)). regulatory action. This action is implementation plans (SIPs) and considered a significant guidance transportation conformity analyses This table is not intended to be action. There are no quantified cost outside of California. This notice starts exhaustive, but rather provides a guide estimates for this guidance because it a two-year grace period before MOVES3 for readers regarding entities likely to be does not create regulatory requirements will need to be used as the latest EPA affected by the release of MOVES. Other for states. To the extent the emissions model in new regional entities not listed in the table could also emissions analyses and a two-year grace clarifications in the guidance influence be affected. To determine whether your period before MOVES3 will need to be the behaviors of states, this guidance organization is affected by this action, used in new hot-spot analyses for could help a state develop an you should carefully examine the transportation conformity transportation conformity applicability approvable CAA section 179B determinations outside of California. requirements in 40 CFR 93.102. If you demonstration, which in turn would be DATES: EPA’s announcement of the have questions regarding the expected to reduce the state’s burden MOVES3 emissions model for SIPs and applicability of this action to a associated with implementing transportation conformity analyses in particular entity, consult the persons nonattainment area requirements. states other than California is effective listed in the preceding FOR FURTHER 3. Executive Order 13609: Promoting January 7, 2021. This announcement INFORMATION CONTACT section. starts a two-year transportation International Regulatory Cooperation B. How can I get copies of MOVES3 and conformity grace period that ends on other related information? This guidance does not impact January 9, 2023. After this date, regulatory cooperation because it is not MOVES3 will need to be used as the The official version of the MOVES3 a regulation. latest EPA emissions model in both model, along with user guides and regional emissions analyses and in hot- supporting documentation, are available 4. Executive Order 13777: Enforcing the spot analysis for new transportation on EPA’s MOVES website: Regulatory Reform Agenda conformity analyses outside of www.epa.gov/moves. Individuals who This guidance is not being issued as California. wish to receive EPA announcements a result of the agency’s regulatory FOR FURTHER INFORMATION CONTACT: For related to the MOVES3 model should reform agenda or through a technical model questions regarding the subscribe to the EPA–MOBILENEWS recommendation from the Agency’s official release or use of MOVES3, email listserv, which can be done at EPA’s website at: www.epa.gov/moves/ Regulatory Reform Task Force because it please email EPA at [email protected]. forms/epa-mobilenews-listserv. is not a regulation. For questions about SIPs, contact Rudy Kapichak at Kapichak.Rudolph@ Available guidance on how to apply 5. Executive Order 13891: Promoting the epa.gov, 734–214–4574. For MOVES3 for SIPs and transportation Rule of Law Through Improved Agency transportation conformity questions, conformity purposes can be found on Guidance Documents contact Astrid Terry at Terry.Astrid@ EPA’s transportation conformity epa.gov, 734–214–4812. website, www.epa.gov/state-and-local- This guidance complies with all the SUPPLEMENTARY INFORMATION: The transportation/policy-and-technical- requirements of Executive Order 13891. contents of this notice are as follows: guidance-state-and-local-

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transportation,1 including ‘‘Policy • Updated emission rates for HD The structure of MOVES3 is Guidance on the Use of MOVES3 for gasoline and compressed natural gas fundamentally the same as State Implementation Plan (CNG) trucks; MOVES2014, although there are new Development, Transportation • Updated light-duty (LD) vehicle format options for some inputs, and the Conformity, General Conformity, and emission rates for hydrocarbons (HC), model run time may differ depending Other Purposes’’ (EPA–420–B–20–044, CO and NOx-based on in-use testing on the type of run and user inputs and November 2020).2 data; computer configuration. As for EPA will continue to update these • Updated LD PM rates for Model emissions, EPA performed a comparison websites as other MOVES support Year (MY) 2004 and later, incorporating of MOVES3 to MOVES2014b using materials and guidance are developed or data on gasoline direct injection default information in MOVES3 at the updated. engines; national level, and for two sample urban • New fuel characteristic data from II. What is MOVES3? counties with different local travel EPA fuel compliance submissions; patterns and ambient conditions. In MOVES3 is EPA’s latest motor vehicle • Updated fuel effect calculations to general, compared to MOVES2014b, emissions model for state and local better characterize the base fuel used to MOVES3 national emission estimates agencies to estimate volatile organic develop LD base emission rates; are slightly lower for most criteria compounds (VOCs), nitrogen oxides • The effects of the HD Phase 2 GHG pollutants in future years. However, in 5 (NOx), particulate matter (PM2.5 and rule; the two sample urban counties, NOX PM10), carbon monoxide (CO), and other • The effects of the Safer Affordable emissions estimates were higher in precursors from cars, trucks, buses, and Fuel-Efficient (SAFE) Vehicles Rule on future years. This is due to higher motorcycles for SIP purposes and light-duty fuel economy; 6 running emissions from heavy-duty conformity determinations outside of • ‘‘Off-network idle’’ emissions trucks outweighing declines from California.3 The model is based on beyond the idling that is already heavy-duty hotelling. Note that results analyses of millions of emission test considered in the MOVES drive cycles; will vary based on the pollutant selected results and considerable advances in the and and that area’s local inputs. Based on Agency’s understanding of vehicle • Several improvements to the our testing, MOVES run time at the emissions. MOVES interface, user inputs and Default and County Scale should be The first model in the MOVES series, outputs. about the same or faster than runs with called MOVES2010, was released in MOVES3 also includes a variety of MOVES2014b. In addition, MOVES3 December of 2009. MOVES2010 was activity updates, most notably: run time at the Project Scale may be • followed by two minor updates, Vehicle start and idling activity notably longer compared to MOVES2010a and MOVES2010b. Both patterns are based on real-world MOVES2014 depending on the type of of these minor MOVES2010 revisions instrumented vehicle data collected by run, user inputs and computer enhanced model performance. a telecommunications company for LD configuration. MOVES2014, released in 2014, was a vehicles and the Department of Energy’s major revision to MOVES2010b and (DOE) National Renewable Energy Lab III. SIPs and MOVES3 included new data, new emissions (NREL) for HD vehicles; EPA has articulated its policy standards, and new functional • Default hotelling activity has been regarding the use of MOVES3 in SIP improvements and features. It substantially reduced from what was development in its ‘‘Policy Guidance on incorporated substantial new data for included in MOVES2014 based on the the Use of MOVES3 for State emissions, fleet, and activity developed NREL instrumented truck data; Implementation Plan Development, since the release of MOVES2010. • National vehicle miles travelled Transportation Conformity, General MOVES2014 was also followed by two (VMT) and vehicle population inputs Conformity and Other Purposes’’ (EPA– minor updates, MOVES2014a and have been updated with newer 420–B–20–044, November 2020). MOVES2014b.4 historical data from the Federal Today’s notice highlights certain aspects MOVES3 incorporates new Highway Administration (FHWA) and of the guidance, but state and local regulations, features and significant new more recent forecasts from DOE; and governments should refer to the data, as detailed in the MOVES3 • National onroad vehicle default guidance for more detailed information technical reports. Notably, MOVES3 fuel, regulatory class, and age on how and when to use MOVES3 in incorporates: distributions are based on newer vehicle reasonable further progress SIPs, • Improvements to heavy-duty (HD) registration data. attainment demonstrations, diesel running emission rates based on MOVES3 includes the capability to maintenance plans, inventory updates, manufacturer in-use testing data from estimate vehicle exhaust and and other SIP submissions. hundreds of HD trucks; evaporative emissions as well as brake MOVES3 should be used in ozone, wear and tire wear emissions for criteria CO, PM, and nitrogen dioxide (NO2) SIP 1 Interested parties can find these documents pollutants and precursors. However, development as expeditiously as under either the ‘‘Emission Models and MOVES3 does not include the Conformity’’ or ‘‘Project-Level Conformity’’ topics possible, as there is no grace period for on this website. capability to estimate emissions of re- the use of MOVES3 in SIPs. The Clean 2 This guidance, along with the other EPA entrained road dust. To estimate Air Act requires that SIP inventories guidance referenced in this document, is listed in emissions from re-entrained road dust, and control measures be based on the the EPA guidance portal at www.epa.gov/guidance/ practitioners should continue to use the most current information and applicable guidance-documents-managed-office-air-and- 7 radiation. latest approved methodologies. models that are available when a SIP is 8 3 MOVES can also model emissions in the District developed. However, EPA also of Columbia, Puerto Rico, and the U.S. Virgin 5 81 FR 7348, October 25, 2016. Islands. Nonattainment and maintenance areas 6 85 FR 24174, April 30, 2020. 8 See Clean Air Act section 172(c)(3). Also see the located in California use the latest approved version 7 See EPA’s notice of availability, ‘‘Official discussion of emissions inventory requirements in of the Emission FACtor (EMFAC) model. Release of the January 2011 AP–42 Method for the ‘‘Fine Particulate Matter National Ambient Air 4 In the remainder of this notice, ‘‘MOVES2014’’ Estimating Re-Entrained Road Dust from Paved Quality Standards: State Implementation Plan refers to all of the MOVES2014 models: Roads,’’ published in the Federal Register on Requirements’’ rule (81 FR 58029, August 24, 2016) MOVES2014, MOVES2014a, and MOVES2014b. February 4, 2011 (76 FR 6328). Continued

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recognizes the time and level of effort based on MOVES3 (40 CFR 93.111), so recent estimates of emissions, and such that certain states may have already having MOVES3-based SIP budgets in estimates shall be determined from the undertaken in SIP development using a place at that time could provide more most recent population, employment, version of MOVES2014. States should consistency with transportation travel, and congestion estimates. . .’’. consult with their EPA Regional Office conformity determinations. Additionally, the transportation conformity rule (40 CFR 93.111) if they have questions about how IV. Transportation Conformity and requires conformity analyses to be based MOVES3 affects SIPs under MOVES3 development in specific nonattainment on ‘‘the latest emissions estimation or maintenance areas. Early consultation In today’s notice, EPA is announcing model available,’’ and further states that can facilitate EPA’s adequacy finding for the availability of MOVES3 for use in this requirement is satisfied if the most SIP motor vehicle emissions budgets for transportation conformity analyses current version of EPA’s motor vehicle transportation conformity purposes or outside of California. EPA is also emissions model is used. When EPA EPA’s SIP approval. establishing a two-year grace period announces a new emissions model, such States should use the latest version of before MOVES3 will need to be used in as MOVES3, we establish a grace period MOVES that is available at the time that regional emissions analysis for before the model needs to be used for a SIP is developed. All states other than transportation conformity transportation conformity purposes (40 California should use MOVES3 for SIPs determinations and in hot-spot analyses CFR 93.111(b)). In consultation with that will be submitted in the future so for project-level transportation DOT, EPA must consider the degree of that they are based on the most accurate conformity determinations which use change in the emissions model and the estimates of emissions possible. EPA’s emissions model. The MOVES3 effects of the new model on the However, state and local agencies that grace period for regional emissions and transportation planning process (40 CFR have already completed significant work hot-spot analyses applies to the use of 93.111(b)(2)). The transportation on a SIP with a version of MOVES2014 MOVES3 and any future minor conformity rule provides that EPA will (e.g., attainment modeling has already revisions that occur during the grace establish a grace period for new been completed with MOVES2014) may period. emissions models of between three and Transportation conformity is a Clean continue to rely on the earlier version of 24 months (40 CFR 93.111(b)(1)). Air Act requirement to ensure that MOVES. It would be unreasonable to EPA articulated its intentions for federally supported highway and transit require the states to revise these SIPs establishing the length of a conformity activities are consistent with (‘‘conform with MOVES3 since significant work grace period in the preamble to the 1993 to’’) the SIP. Conformity to a SIP means has already occurred based on the latest transportation conformity rule that a transportation activity will not information available at the time the SIP (November 24, 1993; 58 FR 62211): cause or contribute to new air quality ‘‘EPA and DOT [the Department of was developed, and EPA intends to act violations; worsen existing violations; or Transportation] will consider extending on these SIPs in a timely manner. delay timely attainment of national the grace period if the effects of the new The Clean Air Act does not require ambient air quality standards or any emissions model are so significant that states that have already submitted SIPs interim milestones. Transportation previous SIP demonstrations of what or will submit SIPs shortly after the conformity applies in nonattainment emission levels are consistent with release of a new model to revise these and maintenance areas for attainment would be substantially SIPs simply because a new motor transportation-related pollutants: affected. In such cases, States should vehicle emissions model is now Ozone, CO, PM , PM and NO . EPA’s have an opportunity to revise their SIPs available.9 States can choose to use 2.5 10 2 transportation conformity regulations before MPOs must use the model’s new MOVES3 in these SIPs, for example, if (40 CFR parts 51.390 and 93 Subpart A) emissions factors.’’ it is determined that it is appropriate to describe how federally funded and In consultation with DOT, EPA update motor vehicle emissions budgets approved highway and transit projects considered the degree of change in (‘‘budgets’’) with the model for future meet these statutory requirements. MOVES3 and the effects of the new conformity determinations. However, as The remainder of this section model on the transportation planning stated above, states should use MOVES3 describes how the transportation process (40 CFR 93.111(b)(2)). EPA where SIP development is in its initial conformity grace period was determined considered the time it will take state stages or has not progressed far enough and summarizes how it will be and local transportation and air quality along that switching from a previous implemented, including those agencies to conduct and provide model version would create a significant circumstances when the grace period technical support for analyses. State and adverse impact on state resources. could be shorter than two years for local agencies will need to become Incorporating MOVES3 into the SIP regional emissions analyses. However, familiar with the MOVES3 emissions now could assist areas in mitigating for complete explanations of how model and may need to convert existing possible transportation conformity MOVES3 is to be implemented for data for use in MOVES3. Since 1993, the difficulties in the future after the transportation conformity, including fundamental purpose of section MOVES3 conformity grace period ends. details about using MOVES3 during the 93.111(b) of the transportation New regional emissions analyses using grace period, refer to ‘‘Policy Guidance conformity rule has been to provide a EPA’s emissions model that are started on the Use of MOVES3 for State sufficient amount of time for MPOs and after the grace period is over must be Implementation Plan Development, other state and local agencies to learn Transportation Conformity, General and employ new emissions models. The and in the ‘‘Implementation of the 2015 National transition to a new emissions model for Ambient Air Quality Standards for Ozone: Conformity and Other Purposes’’ (EPA– Nonattainment Area State Implementation Plan 420–B–20–044). conformity involves more than learning Requirements’’ rule (83 FR 63022, December 6, to use the new model and preparing 2018). A. Why is EPA establishing a two-year input data and model output. After 9 Sierra Club v. EPA, 356 F.3d. 296, 308 (DC Cir. conformity grace period? model start-up is complete, state and 2004) (‘‘To require states to revise completed plans every time a new model is announced would lead Section 176(c)(1) of the Clean Air Act local agencies also need to consider how to significant costs and potentially endless delays states that ‘‘. . .[t]he determination of the model affects regional emissions in the approval processes.’’) conformity shall be based on the most analysis results and whether SIP and/or

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transportation plan/TIP changes are effective date of the Federal Register should also consider how future necessary to assure future conformity notice announcing EPA’s adequacy regional emissions analyses will be determinations. finding. In this example, if the area is affected when the MOVES3 grace period The two-year conformity grace period nonattainment for PM10 and ozone, the ends. Areas should carefully consider also provides sufficient time for state MOVES3 grace period would end for whether the SIP and budgets should be and local agencies to learn and apply PM10 regional emissions analyses once revised with MOVES3 or if new technical guidance and training EPA found the new MOVES3-based SIP transportation plans and TIPs should be courses that reflect MOVES3. EPA is budgets adequate. However, revised before the end of the conformity working to update guidance documents MOVES2014 could continue to be used grace period, since doing so may be and training courses as quickly as for ozone-related regional emissions necessary to ensure conformity in the possible. EPA will notify MOVES3 users analyses begun before the end of the future. when these important materials are MOVES3 grace period.10 In addition, the Finally, the transportation conformity available. Training courses are length of the grace period for hot-spot rule provides flexibility for completing anticipated to be provided in the form analyses would not be affected by an conformity determinations based on of webinars and other courses and early submission of MOVES3-based regional emissions analyses that use address different levels of State and budgets. In this example, the two-year MOVES2014 that are started before the local expertise. grace period for PM10 hot-spot analyses end of the grace period. Regional In addition, many agencies will be would continue to apply even if the emissions analyses that are started implementing the transition to PM and grace period is shortened for regional during the grace period can use either CO hot-spot analyses with MOVES3 for PM10 conformity analyses. EPA Regional MOVES2014 or MOVES3. The applicable projects in those Offices should be consulted for interagency consultation process should nonattainment and maintenance areas, questions regarding such situations in be used if it is unclear if a MOVES2014- with each analysis potentially involving multi-pollutant areas. based analysis was begun before the end multiple state and local agencies. States In addition, in most cases, if the state of the grace period. If there are with CO hot-spot protocols that were revises previously approved budgets questions about which model should be previously approved into the SIP (40 based on an earlier EPA emissions used in a conformity determination, the CFR 93.123(a)(1)) that are based on a model, the revised MOVES3 budgets EPA Regional Office can be consulted. previous model will need time to revise could not be used for conformity When the grace period ends on them. Additional time is necessary to purposes until EPA approves them, i.e., January 9, 2023, MOVES3 will become revise previously approved CO hot-spot approves the SIP revision. In general, the only EPA motor vehicle emissions protocols, and the SIP revision process submitted SIPs cannot supersede model for regional emissions analyses and state requirements can vary. approved budgets until the submitted for transportation conformity in states Finally, EPA considered the general SIP is approved. See 40 CFR other than California. In general, this time and monetary resource constraints 93.118(e)(1). means that all new transportation plan in which state and local agencies However, 40 CFR 93.118(e)(1) allows and TIP conformity determinations currently operate. Upon considerations an approved budget to be replaced by an started after the end of the grace period of all these factors, EPA is establishing adequate budget if EPA’s approval of the must be based on MOVES3, even if the a two-year grace period, which begins initial budgets specifies that the budgets SIP is based on MOVES2014 or an older today and ends on January 9, 2023, being approved may be replaced in the version of the MOVES model. before MOVES3 needs to be used for future by new adequate budgets. This D. Use of MOVES3 for Project-Level Hot- new transportation conformity analyses flexibility has been used in limited Spot Analyses During the Conformity outside of California. situations in the past. In such cases, the Grace Period B. Circumstances When Grace Period MOVES3-based budgets would be used The MOVES3 grace period also Will Be Shorter Than Two Years for conformity purposes once they have applies to the use of MOVES3 for CO, been found adequate, if requested by the The grace period for regional PM10 and PM2.5 hot-spot analyses. emissions analyses will be shorter than state in its SIP submission and specified Sections 93.116 and 93.123 of the two years for a given pollutant if an area in EPA’s SIP approval. States should transportation conformity regulation revises its SIP and motor vehicle consult with their EPA Regional Office contain the requirements for when a emissions budgets with MOVES3 and to determine if this flexibility applies to hot-spot analysis is required for project- such budgets have been found adequate their situation. level conformity determinations.11 The or approved into the SIP prior to the end C. Use of MOVES3 for Regional transportation conformity rule provides of the two-year grace period. In this Emissions Analyses During the Grace flexibility for analyses that are started case, the new regional emissions Period before the end of the grace period. A conformity determination for a analysis must use MOVES3 if the During the conformity grace period, transportation project may be based on conformity determination is based on a areas should use interagency a previous model if the analysis was MOVES3-based budget (40 CFR 93.111). consultation to examine how MOVES3 begun before or during the grace period, Areas that are designated will impact their future transportation and if the final environmental document nonattainment or maintenance for plan and TIP conformity for the project is issued no more than multiple pollutants may rely on both determinations, including regional MOVES3 and MOVES2014 to determine emissions analyses. Isolated rural areas conformity for different pollutants 11 In CO nonattainment and maintenance areas, a during the grace period. For example, if hot-spot analysis is required for all non-exempt 10 In this example, such an area would use projects, with quantitative hot-spot analyses being an area revises a previously submitted MOVES3 to develop a regional emissions analysis required for larger, congested intersections and (but not approved) MOVES2014-based for PM10 for comparison to the revised MOVES3- other projects (40 CFR 93.123(a)(1)). In addition, in PM10 SIP with MOVES3 and EPA finds based budgets (e.g., PM10 budgets). The regional PM2.5 and PM10 nonattainment and maintenance emissions analysis for ozone could be based on areas, the transportation conformity regulation these revised MOVES3 budgets MOVES2014 for the VOC and NOx budgets in the requires that a quantitative hot-spot analysis be adequate for conformity, such budgets ozone SIP for the remainder of the conformity grace completed for certain projects (see 40 CFR would apply for conformity on the period. 93.123(b)(1)).

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three years after the issuance of the draft finding because the finding was based (70 FR 59848) and codified as part 3 of environmental document (40 CFR on MOVES2014. title 40 of the CFR. CROMERR 93.111(c)). Interagency consultation establishes electronic reporting as an F. CO Hot-Spot Protocols That Were should be used if it is unclear if a acceptable regulatory alternative to Previously Approved Into the SIP previous analysis was begun before the paper reporting and establishes end of the grace period. For CO, PM10 Section 93.123(a)(1) of the requirements to assure that electronic and PM2.5 hot-spot analyses that start transportation conformity regulation documents are as legally dependable as during the grace period, project allows areas to develop alternate their paper counterparts. Subpart D of sponsors can choose to use MOVES2014 procedures for determining localized CROMERR requires that state, tribal or or MOVES3. CO hot-spot analyses, when developed local government agencies that receive, through interagency consultation and or wish to begin receiving, electronic EPA encourages sponsors to use the approved by the EPA Regional consultation process to determine reports under their EPA-authorized Administrator. Some states have chosen programs must apply to EPA for a which option may be most appropriate in the past to develop such procedures for a given situation. Any new CO, PM revision or modification of those 10 based on previous EPA emissions programs and obtain EPA approval. or PM2.5 hot-spot analyses for models. conformity purposes begun after the end Subpart D provides standards for such During the MOVES3 grace period, approvals based on consideration of the of the grace period must be based on areas with previously approved CO hot- MOVES3. EPA has guidance on how to electronic document receiving systems spot protocols based on MOVES2014 that the state, tribe, or local government conduct quantitative PM and PM 2.5 10 may continue to rely on these protocols. will use to implement the electronic hot-spot modeling for transportation Once the MOVES3 two-year grace reporting. Additionally, § 3.1000(b) conformity purposes, and on how to use period ends, new CO hot-spot analyses through (e) of 40 CFR part 3, subpart D MOVES for a CO hot-spot analysis. EPA for conformity purposes will need to be provides special procedures for program will be updating these guidance based on MOVES3 and thus may no revisions and modifications to allow documents with MOVES3; until that longer rely on a CO hot-spot protocols electronic reporting, to be used at the time, the MOVES2014-based guidance based on MOVES2014. option of the state, tribe or local may still generally be used for MOVES3. government in place of procedures See EPA’s ‘‘Project-level Conformity’’ Dated: November 24, 2020. available under existing program- website, www.epa.gov/state-and-local- Karl J. Simon, Director, Transportation and Climate specific authorization regulations. An transportation/project-level-conformity- application submitted under the subpart and-hot-spot-analyses, for the latest Division, Office of Transportation and Air Quality. D procedures must show that the state, information and guidance documents on [FR Doc. 2021–00023 Filed 1–6–21; 8:45 am] tribe or local government has sufficient how to conduct CO, PM10 and PM2.5 hot- BILLING CODE 6560–50–P legal authority to implement the spot modeling for transportation electronic reporting components of the conformity purposes. programs covered by the application Any new, quantitative CO, PM10 or ENVIRONMENTAL PROTECTION and will use electronic document PM2.5 hot-spot analysis for conformity AGENCY receiving systems that meet the purposes begun after the end of the applicable subpart D requirements. [FRL–10016–65–OMS] grace period using EPA’s emissions On September 3, 2020, the Tennessee model must use MOVES3. The Cross-Media Electronic Reporting: Department of Environmental interagency consultation process should Authorized Program Revision Conservation (TDEC) submitted an be used if it is unclear whether these Approval, State of Tennessee application titled MyTDEC Forms for conditions are met. For questions about revisions/modifications to its EPA- AGENCY: which model should be used in a Environmental Protection approved programs under title 40 CFR project-level conformity determination, Agency (EPA). to allow new electronic reporting. EPA consult with your EPA Regional Office. ACTION: Notice. reviewed TDEC’s request to revise/ E. FHWA’s CO Categorical Hot-Spot SUMMARY: This notice announces the modify its EPA-authorized programs Finding Environmental Protection Agency (EPA) and, based on this review, EPA approval of the State of Tennessee’s determined that the applications met FHWA released the most recent CO request to revise/modify certain of its the standards for approval of authorized categorical hot-spot finding for EPA-authorized programs to allow program revisions/modifications set out intersection projects on July 17, 2017, electronic reporting. in 40 CFR part 3, subpart D. In that was based on MOVES2014a.12 accordance with 40 CFR 3.1000(d), this DATES: EPA approves the authorized During the MOVES3 grace period, a notice of EPA’s decision to approve the program revisions/modifications as of project sponsor outside of California State of Tennessee’s request to revise/ January 7, 2021. may continue to rely on the categorical modify its following EPA-authorized finding for applicable projects that are FOR FURTHER INFORMATION CONTACT: programs under 40 CFR parts 123 and determined through interagency Shirley M. Miller, CROMERR Program 403, to allow electronic reporting under consultation to be covered by the Manager, U.S. Environmental Protection 40 CFR parts 122, 125, and 403–471, is finding’s parameters. Any new CO hot- Agency, Office of Information being published in the Federal Register: Management, Mail Stop 2824T, 1200 spot analyses for conformity purposes Part 123: EPA-Administered Permit begun after the end of the MOVES3 Pennsylvania Avenue NW, Washington, DC 20460, (202) 566–2908, Programs: the National Pollutant grace period may no longer rely on the Discharge Elimination System July 2017 CO categorical hot-spot [email protected]. SUPPLEMENTARY INFORMATION: On (NPDES) Reporting under CFR 122 & 125 12 See www.epa.gov/state-and-local- October 13, 2005, the final Cross-Media transportation/project-level-conformity-and-hot- Electronic Reporting Rule (CROMERR) Part 403: General Pretreatment spot-analyses#cohotspot. was published in the Federal Register Regulations for Existing and New

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Sources of Pollution Reporting under the offices of the Board of Governors. the previous notice. This notice serves CFR 403–471 This information may also be obtained to allow an additional 30 days for public TDEC was notified of EPA’s on an expedited basis, upon request, by and affected agency comments. determination to approve its application contacting the appropriate Federal CDC will accept all comments for this with respect to the authorized programs Reserve Bank and from the Board’s proposed information collection project. listed above. Freedom of Information Office at The Office of Management and Budget https://www.federalreserve.gov/foia/ is particularly interested in comments Dated: December 11, 2020. request.htm. Interested persons may that: Jennifer Campbell, express their views in writing on the (a) Evaluate whether the proposed Office Director, Office of Information standards enumerated in the BHC Act collection of information is necessary Management. (12 U.S.C. 1842(c)). for the proper performance of the [FR Doc. 2021–00057 Filed 1–6–21; 8:45 am] Comments regarding each of these functions of the agency, including BILLING CODE 6560–50–P applications must be received at the whether the information will have Reserve Bank indicated or the offices of practical utility; the Board of Governors, Ann E. (b) Evaluate the accuracy of the FEDERAL ELECTION COMMISSION Misback, Secretary of the Board, 20th agencies estimate of the burden of the Street and Constitution Avenue NW, proposed collection of information, Sunshine Act Meeting Washington, DC 20551–0001, not later including the validity of the than February 8, 2021. methodology and assumptions used; TIME AND DATE: Tuesday, January 12, A. Federal Reserve Bank of Chicago (c) Enhance the quality, utility, and 2021 at 10:00 a.m. and its continuation clarity of the information to be on January 14, 2021 at 10:00 a.m. (Colette A. Fried, Assistant Vice President) 230 South LaSalle Street, collected; PLACE: 1050 First Street, NE, Chicago, Illinois 60690–1414: (d) Minimize the burden of the Washington, DC (This meeting will be a 1. Marathon MHC and Marathon collection of information on those who virtual meeting). Bancorp, Inc., both of Wausau, are to respond, including, through the STATUS: This meeting will be closed to Wisconsin; to become a mutual bank use of appropriate automated, the public. holding company and a mid-tier stock electronic, mechanical, or other MATTERS TO BE CONSIDERED: Compliance bank holding company, respectively, by technological collection techniques or matters pursuant to 52 U.S.C. 30109. acquiring the voting shares of Marathon other forms of information technology, Matters concerning participation in Bank, Wausau, Wisconsin, in e.g., permitting electronic submission of civil actions or proceedings or connection with the conversion of responses; and arbitration. Marathon Bank from mutual to stock (e) Assess information collection * * * * * form and a minority stock issuance by costs. Marathon Bancorp, Inc. To request additional information on CONTACT PERSON FOR MORE INFORMATION: the proposed project or to obtain a copy Judith Ingram, Press Officer, Telephone: Board of Governors of the Federal Reserve of the information collection plan and (202) 694–1220. System, December 18, 2020. instruments, call (404) 639–7570. Ann Misback, Laura E. Sinram, Comments and recommendations for the Secretary of the Board. Acting Secretary and Clerk of the proposed information collection should Commission. [FR Doc. 2021–00184 Filed 1–5–21; 4:15 pm] be sent within 30 days of publication of [FR Doc. 2021–00191 Filed 1–5–21; 4:15 pm] BILLING CODE P this notice to www.reginfo.gov/public/ BILLING CODE 6715–01–P do/PRAMain. Find this particular information collection by selecting DEPARTMENT OF HEALTH AND ‘‘Currently under 30-day Review—Open FEDERAL RESERVE SYSTEM HUMAN SERVICES for Public Comments’’ or by using the search function. Direct written Formations of, Acquisitions by, and Centers for Disease Control and comments and/or suggestions regarding Mergers of Bank Holding Companies Prevention the items contained in this notice to the [30Day–21–20QO] Attention: CDC Desk Officer, Office of The companies listed in this notice Management and Budget, 725 17th have applied to the Board for approval, Agency Forms Undergoing Paperwork Street NW, Washington, DC 20503 or by pursuant to the Bank Holding Company Reduction Act Review fax to (202) 395–5806. Provide written Act of 1956 (12 U.S.C. 1841 et seq.) comments within 30 days of notice (BHC Act), Regulation Y (12 CFR part In accordance with the Paperwork publication. 225), and all other applicable statutes Reduction Act of 1995, the Centers for and regulations to become a bank Disease Control and Prevention (CDC) Proposed Project holding company and/or to acquire the has submitted the information Pilot Implementation of the Violence assets or the ownership of, control of, or collection request titled ‘‘Pilot Against Children and Youth Survey the power to vote shares of a bank or Implementation of the Violence Against (VACS) in the United States—New— bank holding company and all of the Children and Youth Survey (VACS) in National Center for Injury Prevention banks and nonbanking companies the United States’’ to the Office of and Control (NCIPC), Centers for owned by the bank holding company, Management and Budget (OMB)for Disease Control and Prevention (CDC). including the companies listed below. review and approval. CDC previously The public portions of the published a ‘‘Proposed Data Collection Background and Brief Description applications listed below, as well as Submitted for Public Comment and Violence against children is a global other related filings required by the Recommendations’’ notice on July 28, human rights violation that spans every Board, if any, are available for 2020 to obtain comments from the country worldwide and affects a billion immediate inspection at the Federal public and affected agencies. CDC did children each year. In the US, many Reserve Bank(s) indicated below and at not receive public comments related to youth are the victims of multiple forms

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of violence and abuse. An estimated 10 VACS is a methodology which CDC (2) a convenience sample of 13–24 year million children in the US have has conducted in 24 countries globally old youth in rural Garrett County, experienced child abuse and neglect. to measure the magnitude of physical, Maryland to test the VACS in-person Each day, about a dozen youth are sexual, and emotional violence against methodology in a rural location. Data victims of homicide and more than 100 children as well as associated risk and will be collected through in-person times that number (∼1,400) are treated protective factors. VACS has probability-based household surveys, annually in emergency rooms for contributed to research throughout the which will be conducted using a physical assault injuries. world, demonstrating the high combination of interviewer- prevalence of violence against children administration and Audio Computer- Youth are also involved in high levels in a variety of countries and cultures, Assisted Self-Interview Software on of peer violence, which is one of the and have proven to be critical tools that tablets. Data will be analyzed using leading causes of death for people ages can fill data gaps in ways that are vital statistical software to account for the 10–24. A body of research has shown to informing strategic planning and complexity of the survey design to that the impact of violence against evidence-based public health efforts in compute weighted counts, percentages, children goes far beyond the initial many countries. However, VACS have and confidence intervals using incident, and that those who have not been implemented in the U.S., and probability-based survey data at the experienced emotional, physical, and the existing representative datasets of local level. sexual violence can experience severe violence against youth in the U.S. have The findings from this pilot study will short to long-term health and social significant limitations that prevent the be used primarily to better understand consequences. Given the serious and data from being actionable for the feasibility and effectiveness of lasting impact on children, it is critical prevention planning by public health implementing VACS in the U.S., which to understand the magnitude and nature departments at the local level. VACS in will ultimately determine the magnitude of violence against children in order to the U.S will help fill this gap with of violence against children and develop effective prevention and rigorous probability-based estimates of underlying risk and protective factors in response strategies. Currently, data to the problem of youth violence combined order to make recommendations to guide state and local violence with an internationally tested approach national and international agencies and prevention and response efforts in the to embed the VACS survey into the local non-governmental organizations on United States are quite limited. While strategic planning process of local developing strategies to identify, treat some studies have provided information public health partners. and prevent violence against children. on the risks and impact on violence The present project will implement a CDC is requesting three years approval against children, they are mostly limited pilot testing for the adapted VACS from OMB for this collection with a in scale and cannot be generalized to the survey and methodology in two total estimated annualized burden of scope of violence against youth across contexts: (1) a representative sample of 800 hours There are no costs to the US or for specific regions. 13–24 year old youth in Baltimore and respondents other than their time.

ESTIMATED ANNUALIZED BURDEN HOURS

Average Number of Number of burden per Type of respondent Form name respondents responses per response respondent (hours)

Head of Household ...... Invitation letter ...... 3,121 1 2/60 Screener Questionnaire ...... 2,808 1 3/60 Head of Household Consent ...... 702 1 2/60 Head of Household Questionnaire ...... 632 1 15/60 Youth ages 13–24 in Baltimore or Garrett Youth participant consent/assent ...... 632 1 3/60 County, Maryland. Core Youth Participant Questionnaire ...... 377 1 1

Jeffrey M. Zirger, DEPARTMENT OF HEALTH AND Comment and Recommendations’’ Lead, Information Collection Review Office, HUMAN SERVICES notice on September 14, 2020 to obtain Office of Scientific Integrity, Office of Science, comments from the public and affected Centers for Disease Control and Prevention. Centers for Disease Control and agencies. CDC did not receive comments [FR Doc. 2021–00002 Filed 1–6–21; 8:45 am] Prevention related to the previous notice. This BILLING CODE 4163–18–P [30Day–21–1080] notice serves to allow an additional 30 days for public and affected agency Agency Forms Undergoing Paperwork comments. Reduction Act Review CDC will accept all comments for this proposed information collection project. In accordance with the Paperwork The Office of Management and Budget Reduction Act of 1995, the Centers for is particularly interested in comments Disease Control and Prevention (CDC) that: has submitted the information (a) Evaluate whether the proposed collection request titled HIV Outpatient collection of information is necessary Study to the Office of Management and for the proper performance of the Budget (OMB) for review and approval. functions of the agency, including CDC previously published a ‘‘Proposed whether the information will have Data Collection Submitted for Public practical utility;

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(b) Evaluate the accuracy of the cohort of adults living with HIV in Interview (ACASI). Data collection agencies estimate of the burden of the outpatient care at eight well-established includes: Age, sex at birth, use of proposed collection of information, private HIV care practices and alcohol and drugs, cigarette smoking, including the validity of the university-based clinics in the U.S. The adherence to antiretroviral medications, methodology and assumptions used; HOPS study sites are located in six types of sexual intercourse, condom use, (c) Enhance the quality, utility, and cities: Tampa, Florida; Washington, DC; and disclosure of HIV status to partners. clarity of the information to be Stony Brook, New York; Chicago, The estimated burden per response is collected; Illinois; Denver, Colorado; and seven minutes. (d) Minimize the burden of the Philadelphia, Pennsylvania. The study The core areas of HOPS research collection of information on those who currently collects information on a extending through the present HIV are to respond, including, through the maximum of 2,700 outpatients per year. treatment era include (i) investigating use of appropriate automated, A portion of HOPS participants are lost and characterizing (new) problems electronic, mechanical, or other to follow-up each year (most due to associated with long-term HIV infection technological collection techniques or transferring out of the HOPS clinics), and its treatments using the longitudinal other forms of information technology, and our target goal is to enroll up to 450 cohort data, (ii) monitoring death rates e.g., permitting electronic submission of new participants (50–60 per site) and causes of death, (iii) characterizing responses; and annually. Patients are approached the optimal patient management (e) Assess information collection during one of their routine clinic visits strategies to reduce HIV related costs. and invited to participate in the HOPS. morbidity and mortality (e.g., There are two sources of information To request additional information on effectiveness of antiretroviral therapies for the HOPS. First, clinical data are the proposed project or to obtain a copy and other clinical interventions), (iv) abstracted on ongoing basis from the of the information collection plan and assessing sexual and drug use behaviors medical records of study participants. instruments, call (404) 639–7570. and other patient reported outcomes Medical records provide data in five Comments and recommendations for the that supplement data from chart general categories: demographics and proposed information collection should abstraction, and (v) investigating risk behaviors for HIV infection; be sent within 30 days of publication of disparities in the HIV care continuum symptoms; diagnosed conditions this notice to www.reginfo.gov/public/ by various demographic factors. In (definitive and presumptive); do/PRAMain. Find this particular recent years, the HOPS has been medications prescribed (including dose, information collection by selecting instrumental in bringing attention to duration, and reasons for stopping); and ‘‘Currently under 30-day Review—Open emerging issues in chronic HIV all laboratory values, including CD4+ T for Public Comments’’ or by using the infection with actionable opportunities lymphocyte (CD4+) cell counts, plasma search function. Direct written for prevention, including cardiovascular HIV–RNA determinations, and comments and/or suggestions regarding disease, fragility fractures, renal and the items contained in this notice to the genotype, phenotype, and trophile hepatic disease, and cancers. The Attention: CDC Desk Officer, Office of results. Clinic charts also provide data HOPS remains an important source for Management and Budget, 725 17th about visit frequency, AIDS, and death. multiyear trend data concerning Street, NW, Washington, DC 20503 or by Medical records abstraction is conditions and behaviors for which data fax to (202) 395–5806. Provide written conducted by trained study staff and are not readily available elsewhere, comments within 30 days of notice does not impose ongoing burden on including: rates of opportunistic publication. HOPS participants, however, CDC does account for burden associated with the illnesses, rates of comorbid conditions Proposed Project initial study consent and orientation (e.g., hypertension, obesity, diabetes) HIV Outpatient Study (HOPS) (OMB process. The estimated burden per and antiretroviral drug resistance. Control No. 0920–1080, Exp. 9/30/ response is 15 minutes. OMB approval is requested for three 2021)—Extension—National Center for The second source of HOPS years. The estimated number of HIV/AIDS, Hepatitis, STD and TB information is the annual behavioral participants in the annual behavioral Prevention (NCHHSTP), Centers for assessment, an optional activity assessment will increase from 2,500 Disease Control and Prevention (CDC). scheduled in conjunction with the respondents to 2,700 respondents, participant’s annual clinic visit. For resulting in an increase of 23 burden Background and Brief Description convenience, the behavioral assessment hours. There are no changes to the The Centers for Disease Control and can be completed in either of two information collection forms or Prevention requests OMB approval to modes: A brief Telephone Audio- methods. Participation is voluntary and continue collecting information for HIV Computer Assisted Self-Interview (T– there are no costs to respondents other Outpatient Study (HOPS). The study is ACASI) survey or an identical Web- than their time. The total estimated based on a prospective longitudinal based Audio-Computer Assisted Self- annualized burden is 428 hours.

ESTIMATED ANNUALIZED BURDEN HOURS

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

HOPS study Patients ...... Behavioral survey ...... 2,700 1 7/60 HOPS Study Patients ...... Consent form ...... 450 1 15/60

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Jeffrey M. Zirger, requesting a 3-year extension of the Administration for Children and Lead, Information Collection Review Office, form ACF–696T: Child Care and Families, Office of Planning, Research, Office of Scientific Integrity, Office of Science, Development Fund Annual Financial and Evaluation (OPRE), 330 C Street Centers for Disease Control and Prevention. Report. This form is currently approved SW, Washington, DC 20201, Attn: ACF [FR Doc. 2021–00003 Filed 1–6–21; 8:45 am] under the ACF Generic Clearance for Reports Clearance Officer. All requests, BILLING CODE 4163–18–P Financial Reports (OMB #0970–0510; emailed or written, should be identified expiration May 31, 2021), and ACF is by the title of the information collection. proposing to reinstate the previous OMB SUPPLEMENTARY INFORMATION: DEPARTMENT OF HEALTH AND number under which this form had been HUMAN SERVICES Description: The ACF–696T Financial approved. There are no changes Report along with the instruction for requested to the form. Administration for Children and completion of Form ACF–696T Families DATES: Comments due within 60 days of Financial Reporting Form for the Child publication. In compliance with the Care and Development Fund (CCDF) are Proposed Information Collection requirements of Section 3506(c)(2)(A) of being submitted for renewal with no Activity; Child Care and Development the Paperwork Reduction Act of 1995, changes. The form collects CCDF Fund (CCDF) ACF–696T Financial ACF is soliciting public comment on the financial expenditures data for the 221 Report (OMB #0970–0195) specific aspects of the information Tribal Lead Agencies that receive CCDF collection described above. AGENCY: Office of Child Care, funding. This report form is submitted Administration for Children and ADDRESSES: Copies of the proposed annually by the referenced CCDF grant Families, HHS. collection of information can be recipients. The form collects expenditures data for all respondents ACTION: Request for public comment. obtained and comments may be forwarded by emailing infocollection@ that receive CCDF funding. SUMMARY: The Administration for acf.hhs.gov. Alternatively, copies can Respondents: The 221 Tribal Lead Children and Families (ACF) is also be obtained by writing to the Agencies that receive CCDF funding.

ANNUAL BURDEN ESTIMATES

Annual Annual number of Average Annual Instrument number of responses per burden hours burden hours respondents respondent per response

Child Care and Development Fund ACF–696T Financial Report ...... 221 1 5 1,105

Estimated Total Annual Burden DEPARTMENT OF HEALTH AND ADDRESSES: Copies of the proposed Hours: 1,105. HUMAN SERVICES collection of information can be Comments: The Department obtained and comments may be Administration for Children and specifically requests comments on (a) forwarded by emailing infocollection@ Families whether the proposed collection of acf.hhs.gov. Alternatively, copies can also be obtained by writing to the information is necessary for the proper Proposed Information Collection Administration for Children and performance of the functions of the Activity; Mental Health Care Services Families, Office of Planning, Research, agency, including whether the for Unaccompanied Alien Children and Evaluation (OPRE), 330 C Street information shall have practical utility; (New Collection) SW, Washington, DC 20201, Attn: ACF (b) the accuracy of the agency’s estimate Reports Clearance Officer. All requests, of the burden of the proposed collection AGENCY: Office of Refugee Resettlement, Administration for Children and emailed or written, should be identified of information; (c) the quality, utility, by the title of the information collection. and clarity of the information to be Families, Department of Health and Human Services. SUPPLEMENTARY INFORMATION: collected; and (d) ways to minimize the burden of the collection of information ACTION: Request for public comment. Description on respondents, including through the SUMMARY: The Office of Refugee 1. Initial Mental Health Evaluation use of automated collection techniques Resettlement (ORR), Administration for (Form MH–1): This instrument is used or other forms of information Children and Families (ACF), U.S. by clinicians to document the UAC’s technology. Consideration will be given Department of Health and Human mental state upon arrival to the care to comments and suggestions submitted Services (HHS), is inviting public provider facility. It includes an within 60 days of this publication. comments on the proposed collection. assessment of the UAC’s current mental Authority: Section 658G(d), Pub. L. 113– The request consists of several forms state, psychiatric history, and substance 186, 128 Stat. 1971. that allow the Unaccompanied Alien use history. Children (UAC) Program to provide 2. Columbia Suicide Severity Rating Mary B. Jones, mental health care services to UAC. Scale (SSRS) Risk Assessment (Form ACF/OPRE Certifying Officer. DATES: Comments due within 60 days of MH–2): This instrument is used by [FR Doc. 2021–00017 Filed 1–6–21; 8:45 am] publication. In compliance with the clinicians to assess suicide risk for UAC BILLING CODE 4184–43–P requirements of Section 3506(c)(2)(A) of who verbalize or demonstrate suicidal the Paperwork Reduction Act of 1995, thoughts or behavior. It is a shorter ACF is soliciting public comment on the version of the standard Columbia SSRS specific aspects of the information used to triage mental health care for collection described above. UAC, a tool designed to support suicide

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risk assessment through a series of evaluations, and collateral contact with psychotherapy, medical referrals, and simple, plain-language questions that services providers involved in the treatment), acute and long-term anyone can ask. The Columbia SSRS UAC’s case. Mental Health Group psychiatric hospitalizations, and includes the most essential, evidence- Events (Form MH–3) may be linked to referrals to out-of-network residential supported questions required for a a Clinical Contact Log entry. treatment centers. In addition, the UAC thorough assessment. Further 5. Mental Health Referral (Form MH– interview portion of the Out-of-Network information about the Columbia SSRS 5): This instrument is used by clinicians Site Visit Report (Form M–3B), which is can be found at https:// and/or medical coordinators to refer a part of a different information collection UAC for community-based mental cssrs.columbia.edu/the-columbia-scale- request, is accessible from within this c-ssrs/about-the-scale/. health care services (assessments/ instrument. 3. Mental Health Group Event (Form evaluations, psychotherapy, medical MH–3): This instrument is used by referrals, and treatment), acute and long- 7. Mental Health Task (Form MH–7): clinicians to document group term psychiatric hospitalizations, and This instrument is auto-generated to counseling or community meetings held referrals to out-of-network residential create reminders for clinicians and/or at the care provider program. treatment centers. medical coordinators of tasks that must 4. Clinical Contact Log (Form MH–4): 6. Mental Health Service Report be completed. Clinicians and/or medical This instrument is used by clinicians to (Form MH–6): This instrument is used coordinators may edit the instrument document the following mental health by clinicians and/or medical after it is generated. services: Individual counseling, group coordinators to document the provision Respondents: ORR grantee and counseling, community meetings, of community-based mental health care family counseling sessions, screenings/ services (assessments/evaluations, contractor staff, and UAC.

ANNUAL BURDEN ESTIMATES

Annual total Annual total number of Average Annual total Instrument number of responses per burden minutes burden hours respondents respondent per response

Initial Mental Health Evaluation (Form MH–1) ...... 216 241 60 52,056 Columbia SSRS Risk Assessment (Form MH–2) ...... 216 5 45 810 Mental Health Group Event (Form MH–3) ...... 216 156 10 5,616 Clinical Contact Log (Form MH–4) ...... 216 11,194 10 402,984 Mental Health Referral (Form MH–5) ...... 216 24 45 3,888 Mental Health Service Report (Form MH–6) ...... 216 31 45 5,022 Mental Health Task (Form MH–7) ...... 216 55 5 990

Estimated Annual Burden Hours Total: ...... 471,366

Comments: The Department DEPARTMENT OF HEALTH AND requirements of Section 3506(c)(2)(A) of specifically requests comments on (a) HUMAN SERVICES the Paperwork Reduction Act of 1995, whether the proposed collection of ACF is soliciting public comment on the information is necessary for the proper Administration for Children and specific aspects of the information performance of the functions of the Families collection described above. agency, including whether the ADDRESSES: Copies of the proposed Proposed Information Collection collection of information can be information shall have practical utility; Activity; Child Care and Development obtained and comments may be (b) the accuracy of the agency’s estimate Fund (CCDF) ACF–696 Financial forwarded by emailing infocollection@ of the burden of the proposed collection Report (OMB #0970–0163) of information; (c) the quality, utility, acf.hhs.gov. Alternatively, copies can and clarity of the information to be AGENCY: Office of Child Care, also be obtained by writing to the collected; and (d) ways to minimize the Administration for Children and Administration for Children and burden of the collection of information Families, HHS. Families, Office of Planning, Research, on respondents, including through the ACTION: Request for public comment. and Evaluation (OPRE), 330 C Street use of automated collection techniques SW, Washington, DC 20201, Attn: ACF SUMMARY: The Administration for Reports Clearance Officer. All requests, or other forms of information Children and Families (ACF) is emailed or written, should be identified technology. Consideration will be given requesting a 3-year extension of the by the title of the information collection. to comments and suggestions submitted form ACF–696: Child Care and SUPPLEMENTARY INFORMATION: within 60 days of this publication. Development Fund (CCDF) Quarterly Description: The ACF–696 Financial Authority: 6 U.S.C. 279; 8 U.S.C. 1232; Financial Report. This form is currently Report along with the instructions for Flores v. Reno Settlement Agreement, No. approved under the ACF Generic completion of Form ACF–696, Financial CV85–4544–RJK (C.D. Cal. 1996). Clearance for Financial Reports (OMB Reporting Form for CCDF are being #0970–0510; expiration May 31, 2021), Mary B. Jones, submitted for renewal with no changes and ACF is proposing to reinstate the under a previous OMB number. The ACF/OPRE Certifying Officer. previous OMB number under which this form collects CCDF financial [FR Doc. 2021–00001 Filed 1–6–21; 8:45 am] form had been approved. There are no expenditures data for the 50 States, the BILLING CODE 4184–45–P changes requested to the form. District of Columbia, and five U.S. DATES: Comments due within 60 days of Territories that receive CCDF funding publication. In compliance with the (American Samoa, Commonwealth of

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Northern Mariana Islands, Guam, Puerto form collects expenditures data for all Territories that receive CCDF funding Rico, and Virgin Islands). This report respondents that receive CCDF funding. (American Samoa, Commonwealth of form is submitted quarterly by the Respondents: The 50 states, the Northern Mariana Islands, Guam, Puerto referenced CCDF grant recipients. The District of Columbia, and five U.S. Rico, and Virgin Islands).

ANNUAL BURDEN ESTIMATES

Annual Annual number of Average Annual Instrument number of responses per burden hours burden hours respondents respondent per response

Child Care and Development Fund ACF–696 Financial Report ...... 56 4 5 1,120

Estimated Total Annual Burden modifications to the electronic FTZ Modernization Act) (Pub. L. 103–182, Hours: 1,120. admission applications test including, 107 Stat. 2057, 2170, December 8, 1993) Comments: The Department inter alia, the expansion of the zone (19 U.S.C. 1411). The notice announced specifically requests comments on (a) identification number from seven to modifications to the electronic Foreign whether the proposed collection of nine digits. These zone identification Trade Zone (FTZ) admission information is necessary for the proper number changes were to have been applications test including, inter alia, performance of the functions of the implemented on January 25, 2021, and the expansion of the zone identification agency, including whether the this notice announces that the (ID) number from seven to nine digits. information shall have practical utility; deployment date in the Automated The deployment date in the Automated Commercial Environment is delayed (b) the accuracy of the agency’s estimate Commercial Environment (ACE) for the until April 25, 2021. of the burden of the proposed collection modifications regarding the expanded of information; (c) the quality, utility, DATES: The expanded zone zone ID number was to have been and clarity of the information to be identification number will be January 25, 2021. collected; and (d) ways to minimize the implemented as of April 25, 2021. This burden of the collection of information test will continue until concluded by Subsequent to publishing the on respondents, including through the way of announcement in the Federal September 25, 2020, notice in the use of automated collection techniques Register. Federal Register, CBP published the or other forms of information ADDRESSES: Comments concerning this relevant updates in the ACE FTZ technology. Consideration will be given notice and any aspect of this test may chapter of the CBP and Trade to comments and suggestions submitted be submitted at any time during the test Automated Interface Requirements within 60 days of this publication. via email to Cargo & Conveyance (CATAIR), available at: https:// Authority: Section 658G(d), Pub. L. 113– Security, Office of Field Operations, www.cbp.gov/trade/ace/catair. CBP has 186, 128 Stat. 1971. U.S. Customs and Border Protection, at assessed stakeholder readiness and [email protected], with a determined that a delayed deployment Mary B. Jones, subject line identifier reading date in ACE for the modifications ACF/OPRE Certifying Officer. ‘‘Comment on Electronic FTZ regarding the expanded zone ID number [FR Doc. 2021–00016 Filed 1–6–21; 8:45 am] Admission Application FRN.’’ is in the best interests of all parties BILLING CODE 4184–43–P FOR FURTHER INFORMATION CONTACT: For involved. Delaying the deployment date operational questions, contact Lydia will allow for the required programming Jackson, Cargo & Conveyance Security, modifications on the part of trade DEPARTMENT OF HOMELAND Office of Field Operations, U.S. Customs participants (specifically by allowing SECURITY and Border Protection, at 202–344–3055 additional time to code and test) and or [email protected]. For U.S. Customs and Border Protection will also provide CBP with more time to technical questions, contact Arnold coordinate with local zone operators Delayed Deployment Date for Buratty, Cargo Systems Program (who will be receiving new zone ID Modification of Test Program Directorate, Office of Information and numbers). Accordingly, the deployment Technology, U.S. Customs and Border Regarding Electronic Foreign Trade date in ACE for the modifications of the Protection, at 571–468–5309 or Zone Admission Applications for electronic FTZ admission application [email protected]. Expanded Zone Identification Numbers test regarding the expanded zone ID SUPPLEMENTARY INFORMATION: AGENCY: U.S. Customs and Border number is April 25, 2021. Protection, Department of Homeland Background Dated: December 31, 2020. Security. On September 25, 2020, U.S. Customs William A. Ferrara, ACTION: General notice. and Border Protection (CBP) published Executive Assistant Commissioner, Office of a notice entitled ‘‘Modification of Test Field Operations. SUMMARY: This notice announces that Program Regarding Electronic Foreign [FR Doc. 2021–00006 Filed 1–6–21; 8:45 am] the deployment date for the expanded Trade Zone Admission Applications’’ in zone identification number the Federal Register (85 FR 60479). The BILLING CODE 9111–14–P modifications to the electronic Foreign test is part of the National Customs Trade Zone admission applications test Automation Program (NCAP), which is delayed until April 25, 2021. On was established by Subtitle B of Title September 25, 2020, U.S. Customs and VI—Customs Modernization in the Border Protection published a notice in North American Free Trade Agreement the Federal Register announcing (NAFTA) Implementation Act (Customs

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DEPARTMENT OF HOMELAND SUPPLEMENTARY INFORMATION: This community to invest in and adopt SECURITY collection of information is necessary to policies related to mitigation. implement grants for the Flood The guiding principles of the BRIC Federal Emergency Management Mitigation Assistance (FMA) program, program are to (1) support state and Agency Pre-Disaster Mitigation (PDM), and local governments, tribes, and territories through capability and capacity- [Docket ID: FEMA–2020–0035; OMB No. Building Resilient Infrastructure and 1660–0072] Communities (BRIC) program. building to enable them to identify The FMA program is authorized mitigation actions and implement Agency Information Collection pursuant to Section 1366 of the National projects that reduce risks posed by Activities: Submission for OMB Flood Insurance Act of 1968, as natural hazards; (2) encourage and Review; Comment Request; Flood amended (42 U.S.C. 4104c). FMA was enable innovation while allowing Mitigation Assistance (FMA); Building created as part of the National Flood flexibility, consistency, and Resilient Infrastructure and Insurance Reform Act (NFIRA) of 1994, effectiveness; (3) promote partnerships Communities (BRIC); Pre-Disaster Public Law 103–325. The Biggert-Waters and enable high-impact investments to Mitigation (PDM) Flood Insurance Reform Act of 2012 reduce risk from natural hazards with a (BW–12), Public Law 112–141, focus on critical services and facilities, AGENCY: Federal Emergency consolidated the Repetitive Flood public infrastructure, public safety, Management Agency, Department of Claims (RFC) and Severe Repetitive Loss public health, and communities; (4) Homeland Security (DHS). grant (SRL) programs into FMA. Under provide a significant opportunity to ACTION: 30-Day notice and request for FMA, cost-share requirements were reduce future losses and minimize comments. changed to allow more Federal funds for impacts on the Disaster Relief Fund; and properties with repetitive flood claims. (5) support the adoption and SUMMARY: The Federal Emergency The FMA program, under 44 CFR part enforcement of building codes, Management Agency (FEMA) will 79, provides funding for measures taken standards, and policies that will protect submit the information collection to reduce or eliminate the long-term risk the health, safety, and general welfare of described below to the Office of of flood damage to buildings, the public, take into account future Management and Budget for review and manufactured homes, and other conditions, and have long-lasting clearance in accordance with the structures insured under the National impacts on community risk reduction, requirements of the Paperwork Flood Insurance Program (NFIP). including for critical services and Reduction Act of 1995. While this PDM was authorized under Section facilities and for future disaster costs. information collection continues to 203 of the Robert T. Stafford Disaster The BRIC program will distribute funds include the Flood Mitigation Assistance Relief and Emergency Assistance Act annually and apply a federal/non- (FMA) and Pre-Disaster Mitigation (Stafford Act), Public Law 93–288, as federal cost share. (PDM) programs, it introduces the amended by Section 102 of the Disaster In accordance with OMB Circular A– Building Resilient Infrastructure and Mitigation Act of 2000, Public Law 106– 102, FEMA requires that all parties Communities (BRIC) program, and 390 (42 U.S.C. 5133). As a result of interested in receiving FEMA mitigation addresses the process for using a BRIC amendments by the Disaster Recovery grants to submit an application package fiscal year (FY) 20 National Competition Reform Act of 2018 (DRRA), the PDM for grant assistance. Applications and Panel Review Expression of Interest program is being replaced with the BRIC sub-applications for the BRIC and FMA Form to solicit panel members to review program. Therefore, PDM is established programs are submitted via the FEMA competitive BRIC grant applications. as a legacy program. The PDM program Grants Outcome (GO) system. After reviewing all the comments provided grants for cost-effective Information necessary for the ongoing submitted, FEMA has decided to use the mitigation actions prior to a disaster monitoring and closeout of the PDM BRIC FY20 National Competition Panel event to reduce overall risks to the program for FY 2019 and prior will be Review Expression of Interest Form to population and structures while also collected via the e-Grants system. The solicit interest from potential panelists. reducing reliance on funding from FEMA GO and e-Grants systems have DATES: Written comments must be actual disaster declarations. While the been developed to meet the intent of the received on or before February 8, 2021. last cycle of the PDM program awards e-Government initiative, authorized by were made in Fiscal Year (FY) 2019, Public Law 106–107. This initiative ADDRESSES: Written comments and information collection will continue requires that all government agencies recommendations for the proposed through FY 2020–2021 for grant both streamline grant application information collection should be sent monitoring and closeout. processes and provide for the means to within 30 days of publication of this The Disaster Recovery Reform Act of electronically create, review, and submit notice to www.reginfo.gov/public/do/ 2018, Section 1234, National Public a grant application via the internet. PRAMain. Find this particular Infrastructure Pre-Disaster Hazard To increase transparency in decision- information collection by selecting Mitigation, amended Section 203 of the making while building capability and ‘‘Currently under 30-day Review—Open Stafford Act (42 U.S.C. 5133) to partnerships, FEMA will convene a for Public Comments’’ or by using the authorize BRIC. The BRIC program is National Review Panel to score search function. designed to promote a national culture applications and sub-applications based FOR FURTHER INFORMATION CONTACT: of preparedness and public safety on qualitative evaluation criteria. The Jennie Orenstein, Grants Policy Branch through encouraging investments to qualitative criteria are narrative Chief, Federal Insurance and Mitigation protect our communities and submissions to allow applicants and Administration, FEMA, infrastructure and through sub-applicants the flexibility to fully [email protected], (202) strengthening national mitigation explain the strengths of the proposed 212–4071. You may contact the Records capabilities to foster resilience. The project. Qualitative evaluation criteria Management Division for copies of the BRIC program seeks to fund effective have graded scales of point scoring. proposed collection of information at and innovative projects that will reduce The BRIC program will need to solicit email address: FEMA-Information- risk, increase resilience, and serve as a volunteers from State, local, Tribal, and [email protected]. catalyst to encourage the whole territorial governments (SLTTs) and

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Other Federal Agencies (OFAs) to 100 possible points. The scoring is made Estimated Number of Respondents: review applications that are routed to up of six (6) criteria, all ranging in 436. the qualitative panel reviews. The different point value. The panelists will Estimated Number of Responses: volunteers will review and score leverage their mitigation experience and 5,364. applications based on a pre-determined expertise during the review to assess the Estimated Total Annual Burden scoring criterion. degree to which subapplications meet Hours: 58,248. This proposed information collection the six BRIC qualitative evaluation Estimated Total Annual Respondent previously published in the Federal criteria. The subapplication’s final Cost: $3,324,211. Register on October 27, 2020, with a 60- qualitative score will be calculated by Estimated Respondents’ Operation day public comment period. The averaging the qualitative scores from and Maintenance Costs: None. comment period closed on December each panelist. The six criteria include Estimated Respondents’ Capital and 28, 2020. FEMA received one comment the following: (1) Risk Reduction/ Start-Up Costs: None. with two parts via www.regulations.gov Resiliency Effectiveness possible 35 Estimated Total Annual Cost to the in response to Information Collection points, (2) Future Conditions possible Federal Government: $7,586,635. 1660–0072. A summary of the comment 15 points, (3) Implementation Measures Comments and FEMA’s response is provided possible 15 points, (4) Population below. Impacted possible 15 points, (5) Comments may be submitted as The first part of the comment stated Outreach Activities possible 5 points, indicated in the ADDRESSES caption that because ‘‘community’’ is used in and (6) Leveraging Partners possible 15 above. Comments are solicited to (a) program descriptions, applications and points. More information on the evaluate whether the proposed data sub-applications submitted by SLTTs background, evaluation process and collection is necessary for the proper for BRIC and FMA grants should scoring, and criteria can be found here: performance of the agency, including include additional information such as https://www.fema.gov/sites/default/ whether the information shall have evidence of public outreach and files/2020-08/fema_bric-qualitative- practical utility; (b) evaluate the education on proposed mitigation criteria_support_document_08-2020.pdf accuracy of the agency’s estimate of the activities and public comment on the . For the qualitative panels, each burden of the proposed collection of proposed mitigation activities. In application will be reviewed and scored information, including the validity of response, while FEMA appreciates this by three (3) volunteer panel members. the methodology and assumptions used; comment, the Federal Register notice The panelists will not be compensated (c) enhance the quality, utility, and for this information collection was for their participation. clarity of the information to be published to solicit feedback about the collected; and (d) minimize the burden expression of interest form created to Collection of Information of the collection of information on those solicit potential panelists for the BRIC Title: Mitigation Grant Programs. who are to respond, including through application review process. Adding Type of Information Collection: the use of appropriate automated, additional requirements to BRIC Revision of a currently approved electronic, mechanical, or other applications and sub-applications is collection. technological collection techniques or outside the scope of this matter. OMB Number: 1660–0072. other forms of information technology, The second part of the comment seeks e.g., permitting electronic submission of FEMA Forms: Building Resilient additional information about the responses. makeup of the qualitative panel, the Infrastructure and Communities (BRIC) review process, and whether panelists FY20 National Competition Panel Millicent L Brown, will be compensated for their Review Expression of Interest Form. Acting Records Management Branch Chief, participation in the review process. In Abstract: FEMA’s FMA and BRIC Office of the Chief Administrative Officer, response, FEMA provides the following programs use an automated grant Mission Support, Federal Emergency information. application and management system Management Agency, Department of BRIC applications and sub- called FEMA GO. The Pre-Disaster Homeland Security. applications will be reviewed for Mitigation program uses an automated [FR Doc. 2021–00027 Filed 1–6–21; 8:45 am] Eligibility and Completeness (E&C) by grant application and management BILLING CODE 9111–BW–P FEMA’s respective regional offices. system called e-Grants. These grant During the E&C review, projects that are programs provide funding for the submitted to the national competition purpose of reducing or eliminating the DEPARTMENT OF THE INTERIOR risks to life and property from hazards. will also be provided a technical score. Bureau of Indian Affairs Technical scores are made up of 100 The FEMA GO and e-Grants systems points, which are binary points. After include all the application information [212A2100DD/AAKC001030/ applications have gone through the E&C needed to apply for funding under these A0A501010.999900 253G] review, they will be forwarded to the grant programs. FEMA and SLTTs will National Technical Review (NTR). use the information submitted via the Advisory Board for Exceptional Projects that are marked as standard or FY20 National Competition Panel Children decentralized during the E&C review Review Expression of Interest Form to AGENCY: Bureau of Indian Affairs, will be reviewed and issued an NTR solicit volunteers from SLTTs and OFAs Interior. memo. After NTR has concluded, the to review applications that are routed to ACTION: Notice of meeting. projects that are submitted to the the BRIC qualitative panel reviews. The national competition will be sent to the volunteers will review, and score SUMMARY: The Bureau of Indian qualitative panels. During the applications based on a pre-determined Education (BIE) is announcing that the qualitative panels, applications will be scoring criterion. Advisory Board for Exceptional reviewed by representatives from the Affected Public: Federal Government; Children will hold an online meeting. SLTTs and OFAs that comprise the State, local, Tribal, and territorial The purpose of the meeting is to meet panel and scored based on a gradient governments; Individuals or the mandates of the Individuals with scale. Qualitative scoring has a total of Households. Disabilities Education Act of 2004

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(IDEA) for Indian children with the same online access codes as listed information from public review, we disabilities. Due to the COVID–19 below for the January 27th meeting. cannot guarantee that we will be able to pandemic and for the safety of all Æ On Thursday, January 28, 2021 do so. individuals, it will be necessary to from 1 p.m. to 1:30 p.m. MST, public Authority: 5 U.S.C. Appendix 5; 20 U.S.C. conduct an online meeting. comments can be provided via webinar 1400 et seq. DATES: The BIE Advisory Board meeting or telephone conference call. Please use Tara Sweeney, will be held Wednesday, January 27, the same online access codes as listed 2021 from 8 a.m. to 4 p.m. Mountain below for the January 28th meeting. Assistant Secretary—Indian Affairs. Æ Standard Time (MST) and Thursday, Public comments can be emailed to [FR Doc. 2020–29322 Filed 1–6–21; 8:45 am] January 28, 2021 from 8 a.m. to 4 p.m. the DFO at Jennifer.davis@ BILLING CODE 4337–15–P Mountain Standard Time (MST). indianaffairs.gov; or faxed to (602) 265– ADDRESSES: All Advisory Board 0293 Attention: Jennifer Davis, DFO; or activities and meetings will be mailed or hand delivered to the Bureau NATIONAL FOUNDATION ON THE conducted online. See the of Indian Education, Attention: Jennifer ARTS AND THE HUMANITIES SUPPLEMENTARY INFORMATION section of Davis, DFO, 2600 N Central Ave., Suite 800, Phoenix, Arizona 85004. Federal Council on the Arts and the this notice for information on how to Humanities join the meeting. Public comments can To Access the January 27, 2021 Meeting be emailed to the DFO at You can join the meeting on January Arts and Artifacts Indemnity Panel [email protected]; or 27, 2021 through any of the following Advisory Committee Meeting faxed to (602) 265–0293 Attention: means: AGENCY: Jennifer Davis, DFO; or mailed or hand • Federal Council on the Arts From your computer, tablet or and the Humanities; National delivered to the Bureau of Indian smartphone using https:// Education, Attention: Jennifer Davis, Foundation on the Arts and the global.gotomeeting.com/join/ Humanities. DFO, 2600 N Central Ave., Suite 800, 172073373. ACTION: Notice of Meeting. Phoenix, AZ 85004. • Using your phone in the United FOR FURTHER INFORMATION CONTACT: States, by dialing +1 (669) 224–3412 and SUMMARY: Pursuant to the Federal Jennifer Davis, Designated Federal using Access Code: 172–073–373. Advisory Committee Act, notice is Officer, Bureau of Indian Education, • From a video-conferencing room or hereby given that the Federal Council 2600 N Central Ave., Suite 800, system by dialing or typing in: on the Arts and the Humanities will Phoenix, Arizona 85004, Jennifer.davis@ 67.217.95.2 or inroomlink.goto.com, hold a meeting of the Arts and Artifacts indianaffairs.gov, or (202) 860–7845 or Meeting ID: 172 073 373, or by dialing Domestic Indemnity Panel. (602) 240–8597. directly: [email protected] or DATES: The meeting will be held on SUPPLEMENTARY INFORMATION: In 67.217.95.2##172073373. If you are new Wednesday, February 17, 2021, from accordance with the Federal Advisory to GoToMeeting you can get the app by 12:00 p.m. until adjourned. using this link: https:// Committee Act, the BIE is announcing ADDRESSES: The meeting will be held by the Advisory Board will hold its next global.gotomeeting.com/install/ videoconference originating at the meeting online. The Advisory Board 172073373. National Endowment for the Arts, was established under the Individuals To Access the January 28, 2021 Meeting Washington, DC 20506. with Disabilities Act of 2004 (20 U.S.C. FOR FURTHER INFORMATION CONTACT: 1400 et seq.) to advise the Secretary of You can join the meeting on January Elizabeth Voyatzis, Committee the Interior, through the Assistant 28, 2021 through any of the following Management Officer, 400 7th Street SW, Secretary-Indian Affairs, on the needs of means: Room 4060, Washington, DC 20506, Indian children with disabilities. The • From your computer, tablet or (202) 606–8322; [email protected]. meeting is open to the public. smartphone using https:// The following items will be on the global.gotomeeting.com/join/ SUPPLEMENTARY INFORMATION: The agenda: 491120013. purpose of the meeting is for panel • Update Reports regarding special • Using your phone in the United review, discussion, evaluation, and education from: BIE Central Office, BIE/ States, by dialing +1 (646) 749–3112 and recommendation on applications for Division of Performance and using Access Code: 491–120–013. Certificates of Indemnity submitted to Accountability (DPA), BIE/Associate • From a video-conferencing room or the Federal Council on the Arts and the Deputy Directors for Tribally Controlled system by dialing in or type: 67.217.95.2 Humanities, for exhibitions beginning Schools, Bureau Operated Schools and or inroomlink.goto.com, Meeting ID: 491 on or after April 1, 2021. Because the Navajo Region Schools. 120 013, or dialing directly: meeting will consider proprietary • The BIE’s Office of Sovereignty in [email protected] or financial and commercial data provided Indian Education—will provide an 67.217.95.2##491120013. If you are new in confidence by indemnity applicants, overview and update of the Tribal to GoToMeeting you can get the app by and material that is likely to disclose Education Department (TED) grant using this link: https:// trade secrets or other privileged or program. global.gotomeeting.com/install/ confidential information, and because it • The Chief Academic Office—will 491120013. is important to keep the values of provide an overview and Update of the Before including your address, phone objects to be indemnified and the BIE’s Standards, Assessments, and number, email address, or other methods of transportation and security Accountability System personal identifying information in your measures confidential, I have • Public Commenting Sessions will comment, you should be aware that determined that that the meeting will be be provided during both meeting days. your entire comment—including your closed to the public pursuant to Æ On Wednesday, January 27, 2021 personal identifying information—may subsection (c)(4) of section 552b of Title from 11 a.m. to 11:30 a.m. MST, public be made publicly available at any time. 5, United States Code. I have made this comments can be provided via webinar While you can ask us in your comment determination under the authority or telephone conference call. Please use to withhold your personal identifying granted me by the Chairman’s

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Delegation of Authority to Close 415–4737, or by email to pdr.resource@ Priority Mail & First-Class Package Advisory Committee Meetings, dated nrc.gov. Service Contract 188 to Competitive April 15, 2016. • Attention: The PDR, where you may Product List. Documents are available at Dated: January 4, 2021. examine and order copies of public www.prc.gov, Docket Nos. MC2021–62, Caitlin Cater, documents is currently closed. You may CP2021–64. submit your request to the PDR via Attorney-Advisor, National Endowment for Sean Robinson, the Humanities. email at [email protected] or call 1– 800–397–4209 or 301–415–4737 Attorney, Corporate and Postal Business Law. [FR Doc. 2021–00036 Filed 1–6–21; 8:45 am] between 8:00 a.m. and 4:00 p.m. (EST), [FR Doc. 2020–29314 Filed 1–6–21; 8:45 am] BILLING CODE 7536–01–P Monday through Friday, except Federal BILLING CODE 7710–12–P holidays. FOR FURTHER INFORMATION CONTACT: POSTAL SERVICE NUCLEAR REGULATORY David C. Cullison, Office of the Chief COMMISSION Information Officer, U.S. Nuclear Product Change—Parcel Select [NRC–2020–0162] Regulatory Commission, Washington, Negotiated Service Agreement DC 20555–0001; telephone: 301–415– Information Collection: Voluntary 2084; email: Infocollects.Resource@ AGENCY: Postal ServiceTM. Reporting of Planned New Reactor nrc.gov. ACTION: Notice. Applications; Withdrawal SUPPLEMENTARY INFORMATION: The NRC SUMMARY: The Postal Service gives AGENCY: Nuclear Regulatory is withdrawing Information Collection: notice of filing a request with the Postal Commission. Voluntary Reporting of Planned New Regulatory Commission to add a Reactor Applications published in the ACTION: Renewal of existing information domestic shipping services contract to Federal Register on December 29, 2020 collection; request for comment; the list of Negotiated Service (85 FR 85673). The information withdrawal. Agreements in the Mail Classification collection is a duplicate of a notice Schedule’s Competitive Products List. SUMMARY: On December 29, 2020, the previously published in the Federal DATES: Date of required notice: January U.S. Nuclear Regulatory Commission Register on December 1, 2020 (85 FR 7, 2021. (NRC) inadvertently issued an 77279). The comment period for the FOR FURTHER INFORMATION CONTACT: information collection titled, information collection published on Sean Robinson, 202–268–8405. December 1, 2020 ends on February 1, ‘‘Voluntary Reporting of Planned New SUPPLEMENTARY INFORMATION: The 2021, as stated in the original notice (85 Reactor Applications’’ in the Federal United States Postal Service® hereby FR 77279). Register. The information collection is gives notice that, pursuant to 39 U.S.C. being withdrawn because it duplicates a Dated: December 31, 2020. 3642 and 3632(b)(3), on December 28, document previously published in the For the Nuclear Regulatory Commission. 2020, it filed with the Postal Regulatory Federal Register on December 1, 2020. David C. Cullison, Commission a USPS Request to Add DATES: The withdrawal of Information NRC Clearance Officer, Office of the Chief Parcel Select Contract 46 to Competitive Collection: Voluntary Reporting of Information Officer. Product List. Documents are available at Planned New Reactor Applications [FR Doc. 2020–29320 Filed 1–6–21; 8:45 am] www.prc.gov, Docket Nos. MC2021–63, takes effect on January 7, 2021. BILLING CODE 7590–01–P CP2021–65. ADDRESSES: Please refer to Docket ID Sean Robinson, NRC–2020–0162 when contacting the Attorney, Corporate and Postal Business Law. NRC about the availability of POSTAL SERVICE information regarding this document. [FR Doc. 2020–29315 Filed 1–6–21; 8:45 am] You may obtain publicly available Product Change—Priority Mail and BILLING CODE 7710–12–P information related to this document First-Class Package Service using any of the following methods: Negotiated Service Agreement POSTAL SERVICE • Federal Rulemaking Website: Go to AGENCY: Postal ServiceTM. https://www.regulations.gov and search Product Change—Priority Mail Express ACTION: Notice. for Docket ID NRC–2020–0162. Address and Priority Mail Negotiated Service questions about Docket IDs in SUMMARY: The Postal Service gives Agreement Regulations.gov to Jennifer Borges; notice of filing a request with the Postal AGENCY: Postal ServiceTM. telephone: 301–287–9127; email: Regulatory Commission to add a ACTION: Notice. [email protected]. For technical domestic shipping services contract to questions, contact the individual listed the list of Negotiated Service SUMMARY: in the FOR FURTHER INFORMATION The Postal Service gives Agreements in the Mail Classification notice of filing a request with the Postal CONTACT section of this document. Schedule’s Competitive Products List. • NRC’s Agencywide Documents Regulatory Commission to add a Access and Management System DATES: Date of required notice: January domestic shipping services contract to (ADAMS): You may obtain publicly 7, 2021. the list of Negotiated Service available documents online in the FOR FURTHER INFORMATION CONTACT: Agreements in the Mail Classification ADAMS Public Documents collection at Sean Robinson, 202–268–8405. Schedule’s Competitive Products List. https://www.nrc.gov/reading-rm/ SUPPLEMENTARY INFORMATION: The DATES: Date of required notice: January adams.html. To begin the search, select United States Postal Service® hereby 7, 2021. ‘‘Begin Web-based ADAMS Search.’’ For gives notice that, pursuant to 39 U.S.C. FOR FURTHER INFORMATION CONTACT: problems with ADAMS, please contact 3642 and 3632(b)(3), on December 28, Sean Robinson, 202–268–8405. the NRC’s Public Document Room (PDR) 2020, it filed with the Postal Regulatory SUPPLEMENTARY INFORMATION: The reference staff at 1–800–397–4209, 301– Commission a USPS Request to Add United States Postal Service® hereby

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gives notice that, pursuant to 39 U.S.C. FOR FURTHER INFORMATION CONTACT: domestic shipping services contract to 3642 and 3632(b)(3), on December 28, Sean Robinson, 202–268–8405. the list of Negotiated Service 2020, it filed with the Postal Regulatory SUPPLEMENTARY INFORMATION: The Agreements in the Mail Classification Commission a USPS Request to Add United States Postal Service® hereby Schedule’s Competitive Products List. Priority Mail Express & Priority Mail gives notice that, pursuant to 39 U.S.C. DATES: Date of required notice: January Contract 122 to Competitive Product 3642 and 3632(b)(3), on December 28, 7, 2021. List. Documents are available at 2020, it filed with the Postal Regulatory www.prc.gov, Docket Nos. MC2021–60, Commission a USPS Request to Add FOR FURTHER INFORMATION CONTACT: CP2021–62. Priority Mail Contract 686 to Sean Robinson, 202–268–8405. Sean Robinson, Competitive Product List. Documents are available at www.prc.gov, Docket SUPPLEMENTARY INFORMATION: The Attorney, Corporate and Postal Business Law. ® Nos. MC2021–58, CP2021–60. United States Postal Service hereby [FR Doc. 2020–29312 Filed 1–6–21; 8:45 am] gives notice that, pursuant to 39 U.S.C. BILLING CODE 7710–12–P Sean Robinson, 3642 and 3632(b)(3), on December 28, Attorney, Corporate and Postal Business Law. 2020, it filed with the Postal Regulatory [FR Doc. 2020–29310 Filed 1–6–21; 8:45 am] Commission a USPS Request to Add POSTAL SERVICE BILLING CODE 7710–12–P Priority Mail Express, Priority Mail, Product Change—Parcel Select First-Class Package Service, and Parcel Negotiated Service Agreement Select Service Contract 8 to Competitive POSTAL SERVICE Product List. Documents are available at AGENCY: TM Postal Service . Product Change—Priority Mail and www.prc.gov, Docket Nos. MC2021–66, ACTION: Notice. Parcel Select Negotiated Service CP2021–68. Agreement SUMMARY: The Postal Service gives Sean Robinson, notice of filing a request with the Postal AGENCY: Postal ServiceTM. Attorney, Corporate and Postal Business Law. Regulatory Commission to add a ACTION: Notice. [FR Doc. 2020–29318 Filed 1–6–21; 8:45 am] domestic shipping services contract to BILLING CODE 7710–12–P the list of Negotiated Service SUMMARY: The Postal Service gives Agreements in the Mail Classification notice of filing a request with the Postal Schedule’s Competitive Products List. Regulatory Commission to add a POSTAL SERVICE domestic shipping services contract to DATES: Date of required notice: January 7, 2021. the list of Negotiated Service Product Change—Priority Mail and Agreements in the Mail Classification First-Class Package Service FOR FURTHER INFORMATION CONTACT: Schedule’s Competitive Products List. Negotiated Service Agreement Sean Robinson, 202–268–8405. DATES: Date of required notice: January SUPPLEMENTARY INFORMATION: The 7, 2021. AGENCY: Postal ServiceTM. United States Postal Service® hereby FOR FURTHER INFORMATION CONTACT: ACTION: Notice. gives notice that, pursuant to 39 U.S.C. Sean C. Robinson, 202–268–8405. 3642 and 3632(b)(3), on December 21, SUPPLEMENTARY INFORMATION: The 2020, it filed with the Postal Regulatory SUMMARY: The Postal Service gives United States Postal Service® hereby Commission a USPS Request to Add notice of filing a request with the Postal gives notice that, pursuant to 39 U.S.C. Parcel Select Contract 45 to Competitive Regulatory Commission to add a 3642 and 3632(b)(3), on December 28, Product List. Documents are available at domestic shipping services contract to 2020, it filed with the Postal Regulatory www.prc.gov, Docket Nos. MC2021–51, the list of Negotiated Service Commission a Request of the United CP2021–53. Agreements in the Mail Classification States Postal Service to Add Priority Schedule’s Competitive Products List. Sean Robinson, Mail & Parcel Select Contract 5 to Attorney, Corporate and Postal Business Law. Competitive Product List. Documents DATES: Date of required notice: January [FR Doc. 2020–29305 Filed 1–6–21; 8:45 am] are available at www.prc.gov, Docket 7, 2021. Nos. MC2021–56, CP2021–58. BILLING CODE 7710–12–P FOR FURTHER INFORMATION CONTACT: Sean Robinson, Sean Robinson, 202–268–8405. Attorney, Corporate and Postal Business Law. POSTAL SERVICE SUPPLEMENTARY INFORMATION: The [FR Doc. 2020–29308 Filed 1–6–21; 8:45 am] United States Postal Service® hereby Product Change—Priority Mail BILLING CODE 7710–12–P gives notice that, pursuant to 39 U.S.C. Negotiated Service Agreement 3642 and 3632(b)(3), on December 28, AGENCY: Postal ServiceTM. POSTAL SERVICE 2020, it filed with the Postal Regulatory Commission a USPS Request to Add ACTION: Notice. Product Change—Priority Mail Priority Mail & First-Class Package SUMMARY: The Postal Service gives Express, Priority Mail, First-Class Service Contract 186 to Competitive notice of filing a request with the Postal Package Service, and Parcel Select Product List. Documents are available at Regulatory Commission to add a Service Negotiated Service Agreement www.prc.gov, Docket Nos. MC2021–57, domestic shipping services contract to AGENCY: Postal ServiceTM. CP2021–59. the list of Negotiated Service ACTION: Agreements in the Mail Classification Notice. Sean Robinson, Attorney, Corporate and Postal Business Law. Schedule’s Competitive Products List. SUMMARY: The Postal Service gives DATES: Date of required notice: January notice of filing a request with the Postal [FR Doc. 2020–29309 Filed 1–6–21; 8:45 am] 7, 2021. Regulatory Commission to add a BILLING CODE 7710–12–P

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POSTAL SERVICE are available at www.prc.gov, Docket Board, U.S. Postal Service, 475 L’Enfant Nos. MC2021–64, CP2021–66. Plaza SW, Washington, DC 20260–1000. Product Change—Priority Mail and Telephone: (202) 268–4800. First-Class Package Service Sean Robinson, Negotiated Service Agreement Attorney, Corporate and Postal Business Law. Michael J. Elston, [FR Doc. 2020–29316 Filed 1–6–21; 8:45 am] Secretary. AGENCY: Postal ServiceTM. BILLING CODE 7710–12–P [FR Doc. 2021–00117 Filed 1–5–21; 4:15 pm] BILLING CODE 7710–12–P ACTION: Notice. POSTAL SERVICE SUMMARY: The Postal Service gives POSTAL SERVICE notice of filing a request with the Postal Product Change—Priority Mail and Regulatory Commission to add a First-Class Package Service Product Change—Priority Mail and domestic shipping services contract to Negotiated Service Agreement First-Class Package Service the list of Negotiated Service TM Negotiated Service Agreement Agreements in the Mail Classification AGENCY: Postal Service . Schedule’s Competitive Products List. ACTION: Notice. AGENCY: Postal ServiceTM. ACTION: Notice. DATES: Date of required notice: January SUMMARY: The Postal Service gives 7, 2021. notice of filing a request with the Postal SUMMARY: The Postal Service gives Regulatory Commission to add a FOR FURTHER INFORMATION CONTACT: notice of filing a request with the Postal domestic shipping services contract to Sean Robinson, 202–268–8405. Regulatory Commission to add a the list of Negotiated Service domestic shipping services contract to SUPPLEMENTARY INFORMATION: The Agreements in the Mail Classification the list of Negotiated Service ® United States Postal Service hereby Schedule’s Competitive Products List. Agreements in the Mail Classification gives notice that, pursuant to 39 U.S.C. DATES: Date of required notice: January Schedule’s Competitive Products List. 3642 and 3632(b)(3), on December 21, 7, 2021. DATES: Date of required notice: January 2020, it filed with the Postal Regulatory FOR FURTHER INFORMATION CONTACT: 7, 2021. Commission a USPS Request to Add Sean Robinson, 202–268–8405. Priority Mail & First-Class Package FOR FURTHER INFORMATION CONTACT: SUPPLEMENTARY INFORMATION: The Service Contract 184 to Competitive Sean Robinson, 202–268–8405. United States Postal Service® hereby Product List. Documents are available at SUPPLEMENTARY INFORMATION: The gives notice that, pursuant to 39 U.S.C. ® www.prc.gov, Docket Nos. MC2021–52, United States Postal Service hereby 3642 and 3632(b)(3), on December 28, CP2021–54. gives notice that, pursuant to 39 U.S.C. 2020, it filed with the Postal Regulatory 3642 and 3632(b)(3), on December 21, Sean Robinson, Commission a USPS Request to Add 2020, it filed with the Postal Regulatory Attorney, Corporate and Postal Business Law. Priority Mail & First-Class Package Commission a USPS Request to Add [FR Doc. 2020–29306 Filed 1–6–21; 8:45 am] Service Contract 187 to Competitive Priority Mail & First-Class Package BILLING CODE 7710–12–P Product List. Documents are available at Service Contract 185 to Competitive www.prc.gov, Docket Nos. MC2021–61, Product List. Documents are available at CP2021–63. www.prc.gov, Docket Nos. MC2021–53, POSTAL SERVICE Sean Robinson, CP2021–55. Product Change—Priority Mail Attorney, Corporate and Postal Business Law. Sean Robinson, Negotiated Service Agreement [FR Doc. 2020–29313 Filed 1–6–21; 8:45 am] Attorney, Corporate and Postal Business Law. BILLING CODE 7710–12–P [FR Doc. 2020–29307 Filed 1–6–21; 8:45 am] AGENCY: TM Postal Service . BILLING CODE 7710–12–P ACTION: Notice. POSTAL SERVICE

SUMMARY: The Postal Service gives Board of Governors; Sunshine Act POSTAL SERVICE notice of filing a request with the Postal Meeting Product Change—Priority Mail Regulatory Commission to add a Express, Priority Mail, & First-Class DATE AND TIME: January 14, 2021, at 3:00 domestic shipping services contract to Package Service Negotiated Service p.m. the list of Negotiated Service Agreement Agreements in the Mail Classification PLACE: Potomac, MD. Schedule’s Competitive Products List. STATUS: Closed. AGENCY: Postal ServiceTM. DATES: Date of required notice: January MATTERS TO BE CONSIDERED: ACTION: Notice. 7, 2021. Thursday, January 14, 2021, at 3:00 p.m. SUMMARY: The Postal Service gives FOR FURTHER INFORMATION CONTACT: 1. Strategic Items. notice of filing a request with the Postal Sean Robinson, 202–268–8405. 2. Administrative Items. Regulatory Commission to add a domestic shipping services contract to SUPPLEMENTARY INFORMATION: The GENERAL COUNSEL United States Postal Service® hereby CERTIFICATION: The General Counsel the list of Negotiated Service gives notice that, pursuant to 39 U.S.C. of the United States Postal Service has Agreements in the Mail Classification 3642 and 3632(b)(3), on December 28, certified that the meeting may be closed Schedule’s Competitive Products List. 2020, it filed with the Postal Regulatory under the Government in the Sunshine DATES: Date of required notice: January Commission a USPS Request to Add Act. 7, 2021. Priority Mail Contract 687 to CONTACT PERSON FOR MORE INFORMATION: FOR FURTHER INFORMATION CONTACT: Competitive Product List. Documents Michael J. Elston, Secretary of the Sean Robinson, 202–268–8405.

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SUPPLEMENTARY INFORMATION: The updated maximum civil monetary amounts effective January 15, 2020.5 United States Postal Service® hereby penalties. These amounts are effective Based on Office of Management and gives notice that, pursuant to 39 U.S.C. from January 15, 2021 through January Budget (OMB) guidance,6 the 3642 and 3632(b)(3), on December 28, 14, 2022. These figures represent an information below serves as public 2020, it filed with the Postal Regulatory annual adjustment for inflation. The notice of the new maximum penalty Commission a USPS Request to Add updated figures and notification are amounts for 2021. The adjustment Priority Mail Express, Priority Mail, & required by the Federal Civil Penalties results in the following new maximum First-Class Package Service Contract 73 Inflation Adjustment Act Improvements penalties, which will be effective as of to Competitive Product List. Documents Act of 2015. January 15, 2021. are available at www.prc.gov, Docket FOR FURTHER INFORMATION CONTACT: Section 1129 CMPs (42 U.S.C. 1320a– Nos. MC2021–59, CP2021–61. David Rodriguez, Senior Counsel, Room 8): Sean Robinson, 3–ME–1, 6401 Security Boulevard, $8,116.00 (current maximum per violation Baltimore, MD 21235–6401, 410–965– for fraud facilitators in a position of trust) × Attorney, Corporate and Postal Business Law. 3498. For information on eligibility or 1.01182 (OMB-issued inflationary adjustment [FR Doc. 2020–29311 Filed 1–6–21; 8:45 am] filing for benefits, call the Social multiplier) = $8,211.93. When rounded to the BILLING CODE 7710–12–P Security Administration’s national toll- nearest dollar, the new maximum penalty is free number, 1–800–772–1213 or TTY $8,212.00. 1–800–325–0778, or visit the Social $8,606.00 (current maximum per violation POSTAL SERVICE for all other violators) × 1.01182. (OMB- Security Administration’s internet site, issued inflationary adjustment multiplier) = Product Change—Priority Mail and Social Security Online, at http:// $8,707.72. When rounded to the nearest First-Class Package Service www.socialsecurity.gov. dollar, the new maximum penalty is Negotiated Service Agreement SUPPLEMENTARY INFORMATION: On June $8,708.00. 27, 2016, pursuant to the Federal Civil Section 1140 CMPs (42 U.S.C. 1320b– AGENCY: TM Postal Service . Penalties Inflation Adjustment Act 10): ACTION: Notice. Improvements Act of 2015 (the 2015 $10,705.00 (current maximum per 1 violation for all violations other than SUMMARY: The Postal Service gives Act), we published an interim final broadcast or telecasts) × 1.01182 (OMB- notice of filing a request with the Postal rule to adjust the level of civil monetary issued inflationary adjustment multiplier) = Regulatory Commission to add a penalties (CMP) under Sections 1129 $10,831.53. When rounded to the nearest domestic shipping services contract to and 1140 of the Social Security Act, 42 dollar, the new maximum penalty is the list of Negotiated Service U.S.C. 1320a–8 and 1320b–10, $10,832.00. $53,524.00 (current maximum per violative Agreements in the Mail Classification respectively, with an initial ‘‘catch-up’’ 2 broadcast or telecast) × 1.01182 (OMB-issued Schedule’s Competitive Products List. adjustment effective August 1, 2016. We announced in the interim final rule inflationary adjustment multiplier) = DATES: Date of required notice: January that for any future adjustments, we $54,156.65. When rounded to the nearest 7, 2021. dollar, the new maximum penalty is would publish a notice in the Federal $54,157.00. FOR FURTHER INFORMATION CONTACT: Register to announce the new amounts. Sean Robinson, 202–268–8405. The annual inflation adjustment in Gail S. Ennis, SUPPLEMENTARY INFORMATION: The subsequent years must be a cost-of- United States Postal Service® hereby Inspector General, Social Security living adjustment based on any Administration. gives notice that, pursuant to 39 U.S.C. increases in the October Consumer Price [FR Doc. 2021–00007 Filed 1–6–21; 8:45 am] 3642 and 3632(b)(3), on December 28, Index for All Urban Consumers (CPI–U) BILLING CODE P 2020, it filed with the Postal Regulatory (not seasonally adjusted) each year.3 Commission a USPS Request to Add Inflation adjustment increases must be Priority Mail & First-Class Package 4 rounded to the nearest multiple of $1. DEPARTMENT OF TRANSPORTATION Service Contract 189 to Competitive We last updated the maximum penalty Product List. Documents are available at Maritime Administration www.prc.gov, Docket Nos. MC2021–65, 1 See https://www.congress.gov/bill/114th- CP2021–67. congress/house-bill/1314/text. See also 81 FR [Docket No. MARAD–2020–0177] 41438, https://www.federalregister.gov/documents/ Sean Robinson, 2016/06/27/2016-13241/penalty-inflation- Requested Administrative Waiver of Attorney, Corporate and Postal Business Law. adjustments-for-civil-money-penalties. the Coastwise Trade Laws: Vessel 2 See 81 FR 41438, https:// [FR Doc. 2020–29317 Filed 1–6–21; 8:45 am] www.federalregister.gov/documents/2016/06/27/ JAGUAR SHARK (Motor Yacht); BILLING CODE 7710–12–P 2016-13241/penalty-inflation-adjustments-for-civil- Invitation for Public Comments money-penalties. 3 See OMB Memorandum, Implementation of the AGENCY: Maritime Administration, DOT. SOCIAL SECURITY ADMINISTRATION Federal Civil Penalties Inflation Adjustment Act ACTION: Notice. Improvements Act of 2015, M–16–06, p. 1 (February [Docket No. SSA–2020–0066] 24, 2016), https://www.whitehouse.gov/sites/ SUMMARY: The Secretary of whitehouse.gov/files/omb/memoranda/2016/m-16- Transportation, as represented by the Notice on Penalty Inflation 06.pdf. See also 81 FR 41438, https:// www.federalregister.gov/documents/2016/06/27/ Maritime Administration (MARAD), is Adjustments for Civil Monetary 2016-13241/penalty-inflation-adjustments-for-civil- Penalties money-penalties. 5 See 85 FR 1369, https://www.federalregister.gov/ 4 OMB Memorandum, Implementation of the documents/2020/01/10/2020-00236/notice-on- AGENCY: Social Security Administration. Federal Civil Penalties Inflation Adjustment Act penalty-inflation-adjustments-for-civil-monetary- ACTION: Notice announcing updated Improvements Act of 2015, M–16–06, p. 3 (February penalties. 6 penalty inflation adjustments for civil 24, 2016), https://www.whitehouse.gov/sites/ See OMB Memorandum, Implementation of whitehouse.gov/files/omb/memoranda/2016/m-16- Penalty Inflation Adjustments for 2021, Pursuant to monetary penalties for 2021. 06.pdf. See also 81 FR 41438, https:// the Federal Civil Penalties Inflation Adjustment Act www.federalregister.gov/documents/2016/06/27/ Improvements of 2015, M–21–10 (December 23, SUMMARY: The Social Security 2016-13241/penalty-inflation-adjustments-for-civil- 2020), https://www.whitehouse.gov/wp-content/ Administration is giving notice of its money-penalties. uploads/2020/12/M-21-10.pdf.

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authorized to grant waivers of the U.S.- as MARAD–2020–0177 at http:// a summary of your submission that can build requirements of the coastwise www.regulations.gov. Interested parties be made available to the public. trade laws to allow the carriage of no may comment on the effect this action Privacy Act more than twelve passengers for hire on may have on U.S. vessel builders or vessels, which are three years old or businesses in the U.S. that use U.S.-flag In accordance with 5 U.S.C. 553(c), more. A request for such a waiver has vessels. If MARAD determines, in DOT solicits comments from the public been received by MARAD. The vessel, accordance with 46 U.S.C. 12121 and to better inform its rulemaking process. and a brief description of the proposed MARAD’s regulations at 46 CFR part DOT posts these comments, without service, is listed below. 388, that the issuance of the waiver will edit, to www.regulations.gov, as DATES: Submit comments on or before have an unduly adverse effect on a U.S.- described in the system of records February 8, 2021. vessel builder or a business that uses notice, DOT/ALL–14 FDMS, accessible ADDRESSES: You may submit comments U.S.-flag vessels in that business, a through www.dot.gov/privacy. To identified by DOT Docket Number waiver will not be granted. Comments facilitate comment tracking and MARAD–2020–0177 by any one of the should refer to the vessel name, state the response, we encourage commenters to following methods: commenter’s interest in the waiver provide their name, or the name of their • Federal eRulemaking Portal: Go to application, and address the waiver organization; however, submission of http://www.regulations.gov. Search criteria given in section 388.4 of names is completely optional. Whether MARAD–2020–0177 and follow the MARAD’s regulations at 46 CFR part or not commenters identify themselves, instructions for submitting comments. 388. all timely comments will be fully • Mail or Hand Delivery: Docket considered. If you wish to provide Management Facility is in the West Public Participation comments containing proprietary or Building, Ground Floor of the U.S. How do I submit comments? confidential information, please contact Department of Transportation. The the agency for alternate submission Please submit your comments, Docket Management Facility location instructions. including the attachments, following the address is: U.S. Department of instructions provided under the above (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, Transportation, MARAD–2020–0177, 46 U.S.C. 12121) 1200 New Jersey Avenue SE, West heading entitled ADDRESSES. Be advised Building, Room W12–140, Washington, that it may take a few hours or even Dated: January 4, 2021. DC 20590, between 9 a.m. and 5 p.m., days for your comment to be reflected By Order of the Maritime Administrator. Monday through Friday, except on on the docket. In addition, your T. Mitchell Hudson, Jr., comments must be written in English. Federal holidays. Secretary, Maritime Administration. We encourage you to provide concise Note: If you mail or hand-deliver your comments and you may attach [FR Doc. 2021–00011 Filed 1–6–21; 8:45 am] comments, we recommend that you include additional documents as necessary. BILLING CODE 4910–81–P your name and a mailing address, an email address, or a telephone number in the body There is no limit on the length of the attachments. of your document so that we can contact you DEPARTMENT OF TRANSPORTATION if we have questions regarding your Where do I go to read public comments, submission. and find supporting information? Maritime Administration Instructions: All submissions received must include the agency name and Go to the docket online at http:// [Docket No. MARAD–2020–0172] specific docket number. All comments www.regulations.gov., keyword search received will be posted without change MARAD–2020–0177 or visit the Docket Requested Administrative Waiver of to the docket at www.regulations.gov, Management Facility (see ADDRESSES for the Coastwise Trade Laws: Vessel including any personal information hours of operation). We recommend that BALAM (Sailing Catamaran); Invitation provided. For detailed instructions on you periodically check the Docket for for Public Comments new submissions and supporting submitting comments, see the section AGENCY: Maritime Administration, DOT. entitled Public Participation. material. ACTION: Notice. FOR FURTHER INFORMATION CONTACT: Will my comments be made available to Russell Haynes, U.S. Department of the public? SUMMARY: The Secretary of Transportation, Maritime Transportation, as represented by the Yes. Be aware that your entire Administration, 1200 New Jersey Maritime Administration (MARAD), is comment, including your personal Avenue SE, Room W23–461, authorized to grant waivers of the U.S.- identifying information, will be made Washington, DC 20590. Telephone 202– build requirements of the coastwise publicly available. 366–3157, Email Russell.Haynes@ trade laws to allow the carriage of no dot.gov. May I submit comments confidentially? more than twelve passengers for hire on SUPPLEMENTARY INFORMATION: As If you wish to submit comments vessels, which are three years old or described by the applicant the intended under a claim of confidentiality, you more. A request for such a waiver has service of the vessel JAGUAR SHARK is: should submit three copies of your been received by MARAD. The vessel, —Intended Commercial Use of Vessel: complete submission, including the and a brief description of the proposed ‘‘Live aboard Charter boat.’’ information you claim to be confidential service, is listed below. —Geographic Region Including Base of business information, to the Department DATES: Submit comments on or before Operations: ‘‘Alaska (Excluding of Transportation, Maritime February 8, 2021. Waters in SE Alaska)’’ (Base of Administration, Office of Legislation ADDRESSES: You may submit comments Operations: Homer, Alaska) and Regulations, MAR–225, W24–220, identified by DOT Docket Number —Vessel Length and Type: 41’ Motor 1200 New Jersey Avenue SE, MARAD–2020–0172 by any one of the Yacht Washington, DC 20590. Include a cover following methods: The complete application is available letter setting forth with specificity the • Federal eRulemaking Portal: Go to for review identified in the DOT docket basis for any such claim and, if possible, http://www.regulations.gov. Search

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MARAD–2020–0172 and follow the MARAD’s regulations at 46 CFR part all timely comments will be fully instructions for submitting comments. 388. considered. If you wish to provide • Mail or Hand Delivery: Docket comments containing proprietary or Public Participation Management Facility is in the West confidential information, please contact Building, Ground Floor of the U.S. How do I submit comments? the agency for alternate submission Department of Transportation. The Please submit your comments, instructions. Docket Management Facility location including the attachments, following the (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, address is: U.S. Department of instructions provided under the above 46 U.S.C. 12121) Transportation, MARAD–2020–0172, heading entitled ADDRESSES. Be advised Dated: January 4, 2021. 1200 New Jersey Avenue SE, West that it may take a few hours or even Building, Room W12–140, Washington, days for your comment to be reflected By Order of the Maritime Administrator. DC 20590, between 9 a.m. and 5 p.m., on the docket. In addition, your T. Mitchell Hudson, Jr., Monday through Friday, except on comments must be written in English. Secretary, Maritime Administration. Federal holidays. We encourage you to provide concise [FR Doc. 2021–00008 Filed 1–6–21; 8:45 am] Note: If you mail or hand-deliver your comments and you may attach BILLING CODE 4910–81–P comments, we recommend that you additional documents as necessary. include your name and a mailing There is no limit on the length of the address, an email address, or a attachments. DEPARTMENT OF TRANSPORTATION telephone number in the body of your document so that we can contact you if Where do I go to read public comments, Maritime Administration and find supporting information? we have questions regarding your [Docket No. MARAD–2020–0176] submission. Go to the docket online at http:// Instructions: All submissions received www.regulations.gov., keyword search Requested Administrative Waiver of must include the agency name and MARAD–2020–0172 or visit the Docket the Coastwise Trade Laws: Vessel specific docket number. All comments Management Facility (see ADDRESSES for PACIFIC CEREMONY (Motor Vessel); received will be posted without change hours of operation). We recommend that Invitation for Public Comments to the docket at www.regulations.gov, you periodically check the Docket for including any personal information new submissions and supporting AGENCY: Maritime Administration, DOT. provided. For detailed instructions on material. ACTION: Notice. submitting comments, see the section SUMMARY: The Secretary of entitled Public Participation. Will my comments be made available to the public? Transportation, as represented by the FOR FURTHER INFORMATION CONTACT: Maritime Administration (MARAD), is Russell Haynes, U.S. Department of Yes. Be aware that your entire comment, including your personal authorized to grant waivers of the U.S.- Transportation, Maritime build requirements of the coastwise Administration, 1200 New Jersey identifying information, will be made publicly available. trade laws to allow the carriage of no Avenue SE, Room W23–461, more than twelve passengers for hire on Washington, DC 20590. Telephone 202– May I submit comments confidentially? vessels, which are three years old or 366–3157, Email Russell.Haynes@ If you wish to submit comments more. A request for such a waiver has dot.gov. under a claim of confidentiality, you been received by MARAD. The vessel, SUPPLEMENTARY INFORMATION: As should submit three copies of your and a brief description of the proposed described by the applicant the intended complete submission, including the service, is listed below. service of the vessel BALAM is: information you claim to be confidential DATES: Submit comments on or before —Intended Commercial Use of Vessel: business information, to the Department February 8, 2021. ‘‘Sailing lessons and charters’’ of Transportation, Maritime ADDRESSES: You may submit comments —Geographic Region Including Base of Administration, Office of Legislation identified by DOT Docket Number Operations: ‘‘CA’’ (Base of and Regulations, MAR–225, W24–220, MARAD–2020–0176 by any one of the Operations: San Diego, CA) 1200 New Jersey Avenue SE, following methods: —Vessel Length and Type: 50’ Sailing Washington, DC 20590. Include a cover • Federal eRulemaking Portal: Go to Catamaran letter setting forth with specificity the http://www.regulations.gov. Search The complete application is available basis for any such claim and, if possible, MARAD–2020–0176 and follow the for review identified in the DOT docket a summary of your submission that can instructions for submitting comments. as MARAD–2020–0172 at http:// be made available to the public. • Mail or Hand Delivery: Docket www.regulations.gov. Interested parties Management Facility is in the West Privacy Act may comment on the effect this action Building, Ground Floor of the U.S. may have on U.S. vessel builders or In accordance with 5 U.S.C. 553(c), Department of Transportation. The businesses in the U.S. that use U.S.-flag DOT solicits comments from the public Docket Management Facility location vessels. If MARAD determines, in to better inform its rulemaking process. address is: U.S. Department of accordance with 46 U.S.C. 12121 and DOT posts these comments, without Transportation, MARAD–2020–0176, MARAD’s regulations at 46 CFR part edit, to www.regulations.gov, as 1200 New Jersey Avenue SE, West 388, that the issuance of the waiver will described in the system of records Building, Room W12–140, Washington, have an unduly adverse effect on a U.S.- notice, DOT/ALL–14 FDMS, accessible DC 20590, between 9 a.m. and 5 p.m., vessel builder or a business that uses through www.dot.gov/privacy. To Monday through Friday, except on U.S.-flag vessels in that business, a facilitate comment tracking and Federal holidays. waiver will not be granted. Comments response, we encourage commenters to Note: If you mail or hand-deliver your should refer to the vessel name, state the provide their name, or the name of their comments, we recommend that you include commenter’s interest in the waiver organization; however, submission of your name and a mailing address, an email application, and address the waiver names is completely optional. Whether address, or a telephone number in the body criteria given in section 388.4 of or not commenters identify themselves, of your document so that we can contact you

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if we have questions regarding your Where do I go to read public comments, DEPARTMENT OF TRANSPORTATION submission. and find supporting information? Instructions: All submissions received Maritime Administration Go to the docket online at http:// must include the agency name and [Docket No. MARAD–2020–0174] specific docket number. All comments www.regulations.gov., keyword search received will be posted without change MARAD–2020–0176 or visit the Docket Requested Administrative Waiver of to the docket at www.regulations.gov, Management Facility (see ADDRESSES for the Coastwise Trade Laws: Vessel including any personal information hours of operation). We recommend that SHARED ADVENTURE II (Power provided. For detailed instructions on you periodically check the Docket for Catamaran); Invitation for Public submitting comments, see the section new submissions and supporting Comments entitled Public Participation. material. AGENCY: Maritime Administration, DOT. FOR FURTHER INFORMATION CONTACT: Will my comments be made available to ACTION: Notice. Russell Haynes, U.S. Department of the public? Transportation, Maritime SUMMARY: The Secretary of Administration, 1200 New Jersey Yes. Be aware that your entire Transportation, as represented by the Avenue SE, Room W23–461, comment, including your personal Maritime Administration (MARAD), is Washington, DC 20590. Telephone 202– identifying information, will be made authorized to grant waivers of the U.S.- 366–3157, Email Russell.Haynes@ publicly available. build requirements of the coastwise dot.gov. May I submit comments confidentially? trade laws to allow the carriage of no SUPPLEMENTARY INFORMATION: As more than twelve passengers for hire on described by the applicant the intended If you wish to submit comments vessels, which are three years old or service of the vessel PACIFIC under a claim of confidentiality, you more. A request for such a waiver has CEREMONY is: should submit three copies of your been received by MARAD. The vessel, —Intended Commercial Use of Vessel: complete submission, including the and a brief description of the proposed ‘‘Private Vessel Charters, Passengers information you claim to be confidential service, is listed below. Only’’ business information, to the Department DATES: Submit comments on or before —Geographic Region Including Base of of Transportation, Maritime February 8, 2021. Operations: ‘‘California, Oregon, Administration, Office of Legislation ADDRESSES: You may submit comments Washington, and Alaska (excluding and Regulations, MAR–225, W24–220, identified by DOT Docket Number waters in Southeastern Alaska).’’ 1200 New Jersey Avenue SE, MARAD–2020–0174 by any one of the (Base of Operations: Seattle, WA) Washington, DC 20590. Include a cover following methods: —Vessel Length and Type: 63.3’ Motor letter setting forth with specificity the • Federal eRulemaking Portal: Go to Vessel basis for any such claim and, if possible, http://www.regulations.gov. Search The complete application is available a summary of your submission that can MARAD–2020–0174 and follow the for review identified in the DOT docket be made available to the public. instructions for submitting comments. as MARAD–2020–0176 have on U.S. • Mail or Hand Delivery: Docket Privacy Act vessel builders or businesses in the U.S. Management Facility is in the West that use U.S.-flag vessels. If MARAD In accordance with 5 U.S.C. 553(c), Building, Ground Floor of the U.S. determines, in accordance with 46 DOT solicits comments from the public Department of Transportation. The U.S.C. 12121 and MARAD’s regulations to better inform its rulemaking process. Docket Management Facility location at 46 CFR part 388, that the issuance of DOT posts these comments, without address is: U.S. Department of the waiver will have an unduly adverse edit, to www.regulations.gov, as Transportation, MARAD–2020–0174, effect on a U.S.-vessel builder or a described in the system of records 1200 New Jersey Avenue SE, West business that uses U.S.-flag vessels in notice, DOT/ALL–14 FDMS, accessible Building, Room W12–140, Washington, that business, a waiver will not be through www.dot.gov/privacy. To DC 20590, between 9 a.m. and 5 p.m., granted. Comments should refer to the facilitate comment tracking and Monday through Friday, except on vessel name, state the commenter’s response, we encourage commenters to Federal holidays. interest in the waiver application, and provide their name, or the name of their Note: If you mail or hand-deliver your address the waiver criteria given in organization; however, submission of comments, we recommend that you include section 388.4 of MARAD’s regulations at names is completely optional. Whether your name and a mailing address, an email 46 CFR part 388. or not commenters identify themselves, address, or a telephone number in the body of your document so that we can contact you Public Participation all timely comments will be fully if we have questions regarding your considered. If you wish to provide How do I submit comments? submission. comments containing proprietary or Please submit your comments, confidential information, please contact Instructions: All submissions received including the attachments, following the the agency for alternate submission must include the agency name and instructions provided under the above instructions. specific docket number. All comments heading entitled ADDRESSES. Be advised received will be posted without change that it may take a few hours or even (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, to the docket at www.regulations.gov, days for your comment to be reflected 46 U.S.C. 12121) including any personal information on the docket. In addition, your Dated: January 4, 2021. provided. For detailed instructions on submitting comments, see the section comments must be written in English. By Order of the Maritime Administrator. We encourage you to provide concise entitled Public Participation. T. Mitchell Hudson, Jr., comments and you may attach FOR FURTHER INFORMATION CONTACT: additional documents as necessary. Secretary, Maritime Administration. Russell Haynes, U.S. Department of There is no limit on the length of the [FR Doc. 2021–00013 Filed 1–6–21; 8:45 am] Transportation, Maritime attachments. BILLING CODE 4910–81–P Administration, 1200 New Jersey

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Avenue SE, Room W23–461, Will my comments be made available to SUMMARY: The Secretary of Washington, DC 20590. Telephone 202– the public? Transportation, as represented by the 366–3157, Email Russell.Haynes@ Yes. Be aware that your entire Maritime Administration (MARAD), is dot.gov. comment, including your personal authorized to grant waivers of the U.S.- SUPPLEMENTARY INFORMATION: As identifying information, will be made build requirements of the coastwise described by the applicant the intended publicly available. trade laws to allow the carriage of no service of the vessel SHARED more than twelve passengers for hire on ADVENTURE II is: May I submit comments confidentially? vessels, which are three years old or —Intended Commercial Use of Vessel: If you wish to submit comments more. A request for such a waiver has ‘‘Carrying passengers for hire’’ under a claim of confidentiality, you been received by MARAD. The vessel, —Geographic Region Including Base of should submit three copies of your and a brief description of the proposed Operations: ‘‘Florida, Alabama, complete submission, including the service, is listed below. Mississippi, Louisiana, Texas, information you claim to be confidential DATES: Submit comments on or before Georgia, South Carolina, North business information, to the Department February 8, 2021. Carolina, Virginia, Pennsylvania, of Transportation, Maritime ADDRESSES: You may submit comments Maryland, Delaware, New Jersey, New Administration, Office of Legislation identified by DOT Docket Number York’’ (Base of Operations: Fort and Regulations, MAR–225, W24–220, MARAD–2020–0173 by any one of the Lauderdale, FL) 1200 New Jersey Avenue SE, following methods: —Vessel Length and Type: 51’ power Washington, DC 20590. Include a cover • Federal eRulemaking Portal: Go to catamaran letter setting forth with specificity the http://www.regulations.gov. Search The complete application is available basis for any such claim and, if possible, MARAD–2020–0173 and follow the for review identified in the DOT docket a summary of your submission that can instructions for submitting comments. as MARAD–2020–0174 at http:// be made available to the public. • Mail or Hand Delivery: Docket www.regulations.gov. Interested parties Privacy Act Management Facility is in the West may comment on the effect this action Building, Ground Floor of the U.S. may have on U.S. vessel builders or In accordance with 5 U.S.C. 553(c), Department of Transportation. The businesses in the U.S. that use U.S.-flag DOT solicits comments from the public Docket Management Facility location vessels. If MARAD determines, in to better inform its rulemaking process. address is: U.S. Department of accordance with 46 U.S.C. 12121 and DOT posts these comments, without Transportation, MARAD–2020–0173, MARAD’s regulations at 46 CFR part edit, to www.regulations.gov, as 1200 New Jersey Avenue SE, West 388, that the issuance of the waiver will described in the system of records Building, Room W12–140, Washington, have an unduly adverse effect on a U.S.- notice, DOT/ALL–14 FDMS, accessible DC 20590, between 9 a.m. and 5 p.m., vessel builder or a business that uses through www.dot.gov/privacy. To Monday through Friday, except on U.S.-flag vessels in that business, a facilitate comment tracking and Federal holidays. response, we encourage commenters to waiver will not be granted. Comments Note: If you mail or hand-deliver your should refer to the vessel name, state the provide their name, or the name of their organization; however, submission of comments, we recommend that you include commenter’s interest in the waiver your name and a mailing address, an email application, and address the waiver names is completely optional. Whether address, or a telephone number in the body criteria given in section 388.4 of or not commenters identify themselves, of your document so that we can contact you MARAD’s regulations at 46 CFR part all timely comments will be fully if we have questions regarding your 388. considered. If you wish to provide submission. comments containing proprietary or Instructions: All submissions received Public Participation confidential information, please contact must include the agency name and the agency for alternate submission How do I submit comments? specific docket number. All comments instructions. Please submit your comments, received will be posted without change including the attachments, following the (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, to the docket at www.regulations.gov, instructions provided under the above 46 U.S.C. 12121) including any personal information heading entitled ADDRESSES. Be advised Dated: January 4, 2021. provided. For detailed instructions on that it may take a few hours or even By Order of the Maritime Administrator. submitting comments, see the section days for your comment to be reflected T. Mitchell Hudson, Jr., entitled Public Participation. on the docket. In addition, your Secretary, Maritime Administration. FOR FURTHER INFORMATION CONTACT: comments must be written in English. Russell Haynes, U.S. Department of [FR Doc. 2021–00014 Filed 1–6–21; 8:45 am] We encourage you to provide concise Transportation, Maritime comments and you may attach BILLING CODE 4910–81–P Administration, 1200 New Jersey additional documents as necessary. Avenue SE, Room W23–461, There is no limit on the length of the DEPARTMENT OF TRANSPORTATION Washington, DC 20590. Telephone 202– attachments. 366–3157, Email Russell.Haynes@ Where do I go to read public comments, Maritime Administration dot.gov. and find supporting information? [Docket No. MARAD–2020–0173] SUPPLEMENTARY INFORMATION: As Go to the docket online at http:// described by the applicant the intended www.regulations.gov., keyword search Requested Administrative Waiver of service of the vessel ISLAND REEF is: MARAD–2020–0174 or visit the Docket the Coastwise Trade Laws: Vessel —Intended Commercial Use of Vessel: Management Facility (see ADDRESSES for ISLAND REEF (Motor Vessel); ‘‘Snorkel, Sport Fishing, Scuba hours of operation). We recommend that Invitation for Public Comments Tours’’ you periodically check the Docket for AGENCY: Maritime Administration, DOT. —Geographic Region Including Base of new submissions and supporting Operations: ‘‘Puerto Rico’’ (Base of ACTION: Notice. material. Operations: Fajardo, PR)

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—Vessel Length and Type: 34’ Motor 1200 New Jersey Avenue SE, MARAD–2020–0171 by any one of the Vessel Washington, DC 20590. Include a cover following methods: • The complete application is available letter setting forth with specificity the Federal eRulemaking Portal: Go to for review identified in the DOT docket basis for any such claim and, if possible, http://www.regulations.gov. Search as MARAD–2020–0173 at http:// a summary of your submission that can MARAD–2020–0171 and follow the www.regulations.gov. Interested parties be made available to the public. instructions for submitting comments. • Mail or Hand Delivery: Docket may comment on the effect this action Privacy Act Management Facility is in the West may have on U.S. vessel builders or Building, Ground Floor of the U.S. businesses in the U.S. that use U.S.-flag In accordance with 5 U.S.C. 553(c), Department of Transportation. The vessels. If MARAD determines, in DOT solicits comments from the public Docket Management Facility location accordance with 46 U.S.C. 12121 and to better inform its rulemaking process. address is: U.S. Department of MARAD’s regulations at 46 CFR part DOT posts these comments, without Transportation, MARAD–2020–0171, 388, that the issuance of the waiver will edit, to www.regulations.gov, as 1200 New Jersey Avenue SE, West have an unduly adverse effect on a U.S.- described in the system of records Building, Room W12–140, Washington, vessel builder or a business that uses notice, DOT/ALL–14 FDMS, accessible DC 20590, between 9 a.m. and 5 p.m., U.S.-flag vessels in that business, a through www.dot.gov/privacy. To Monday through Friday, except on waiver will not be granted. Comments facilitate comment tracking and response, we encourage commenters to Federal holidays. should refer to the vessel name, state the Note: If you mail or hand-deliver your commenter’s interest in the waiver provide their name, or the name of their organization; however, submission of comments, we recommend that you application, and address the waiver include your name and a mailing criteria given in section 388.4 of names is completely optional. Whether or not commenters identify themselves, address, an email address, or a MARAD’s regulations at 46 CFR part telephone number in the body of your 388. all timely comments will be fully considered. If you wish to provide document so that we can contact you if Public Participation comments containing proprietary or we have questions regarding your submission. How do I submit comments? confidential information, please contact the agency for alternate submission Instructions: All submissions received Please submit your comments, instructions. must include the agency name and including the attachments, following the specific docket number. All comments (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, instructions provided under the above 46 U.S.C. 12121) received will be posted without change heading entitled ADDRESSES. Be advised to the docket at www.regulations.gov, that it may take a few hours or even Dated: January 4, 2021. including any personal information days for your comment to be reflected By Order of the Maritime Administrator. provided. For detailed instructions on on the docket. In addition, your T. Mitchell Hudson, Jr., submitting comments, see the section comments must be written in English. Secretary, Maritime Administration. entitled Public Participation. We encourage you to provide concise [FR Doc. 2021–00010 Filed 1–6–21; 8:45 am] FOR FURTHER INFORMATION CONTACT: comments and you may attach BILLING CODE 4910–81–P Russell Haynes, U.S. Department of additional documents as necessary. Transportation, Maritime There is no limit on the length of the Administration, 1200 New Jersey attachments. DEPARTMENT OF TRANSPORTATION Avenue SE, Room W23–461, Where do I go to read public comments, Washington, DC 20590. Telephone 202– Maritime Administration and find supporting information? 366–3157, Email Russell.Haynes@ dot.gov. Go to the docket online at http:// [Docket No. MARAD–2020–0171] www.regulations.gov., keyword search SUPPLEMENTARY INFORMATION: As MARAD–2020–0173 or visit the Docket Requested Administrative Waiver of described by the applicant the intended Management Facility (see ADDRESSES the Coastwise Trade Laws: Vessel service of the vessel HECHT YEAH is: for hours of operation). We recommend HECHT YEAH (Motor Vessel); —Intended Commercial Use of Vessel: that you periodically check the Docket Invitation for Public Comments ‘‘Bareboat Charter’’ —Geographic Region Including Base of for new submissions and supporting AGENCY: Maritime Administration, DOT. material. Operations: ‘‘Puerto Rico’’ (Base of ACTION: Notice. Operations: Fajardo, Puerto Rico) Will my comments be made available to —Vessel Length and Type: 73.3’ Motor the public? SUMMARY: The Secretary of Vessel Transportation, as represented by the The complete application is available Yes. Be aware that your entire Maritime Administration (MARAD), is comment, including your personal for review identified in the DOT docket authorized to grant waivers of the U.S.- as MARAD–2020–0171 at http:// identifying information, will be made build requirements of the coastwise publicly available. www.regulations.gov. Interested parties trade laws to allow the carriage of no may comment on the effect this action May I submit comments confidentially? more than twelve passengers for hire on may have on U.S. vessel builders or If you wish to submit comments vessels, which are three years old or businesses in the U.S. that use U.S.-flag under a claim of confidentiality, you more. A request for such a waiver has vessels. If MARAD determines, in should submit three copies of your been received by MARAD. The vessel, accordance with 46 U.S.C. 12121 and complete submission, including the and a brief description of the proposed MARAD’s regulations at 46 CFR part information you claim to be confidential service, is listed below. 388, that the issuance of the waiver will business information, to the Department DATES: Submit comments on or before have an unduly adverse effect on a U.S.- of Transportation, Maritime February 8, 2021. vessel builder or a business that uses Administration, Office of Legislation ADDRESSES: You may submit comments U.S.-flag vessels in that business, a and Regulations, MAR–225, W24–220, identified by DOT Docket Number waiver will not be granted. Comments

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should refer to the vessel name, state the provide their name, or the name of their include your name and a mailing commenter’s interest in the waiver organization; however, submission of address, an email address, or a application, and address the waiver names is completely optional. Whether telephone number in the body of your criteria given in section 388.4 of or not commenters identify themselves, document so that we can contact you if MARAD’s regulations at 46 CFR part all timely comments will be fully we have questions regarding your 388. considered. If you wish to provide submission. Instructions: All submissions received Public Participation comments containing proprietary or confidential information, please contact must include the agency name and How do I submit comments? the agency for alternate submission specific docket number. All comments Please submit your comments, instructions. received will be posted without change including the attachments, following the (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, to the docket at www.regulations.gov, instructions provided under the above 46 U.S.C. 12121) including any personal information heading entitled ADDRESSES. Be advised provided. For detailed instructions on Dated: January 4, 2021. that it may take a few hours or even submitting comments, see the section days for your comment to be reflected By Order of the Maritime Administrator. entitled Public Participation. on the docket. In addition, your T. Mitchell Hudson, Jr., FOR FURTHER INFORMATION CONTACT: comments must be written in English. Secretary, Maritime Administration. Russell Haynes, U.S. Department of We encourage you to provide concise [FR Doc. 2021–00009 Filed 1–6–21; 8:45 am] Transportation, Maritime comments and you may attach BILLING CODE 4910–81–P Administration, 1200 New Jersey additional documents as necessary. Avenue SE, Room W23–461, There is no limit on the length of the Washington, DC 20590. Telephone 202– attachments. DEPARTMENT OF TRANSPORTATION 366–3157, Email Russell.Haynes@ dot.gov. Where do I go to read public comments, Maritime Administration and find supporting information? SUPPLEMENTARY INFORMATION: As [Docket No. MARAD–2020–0178] described by the applicant, the intended Go to the docket online at http:// www.regulations.gov., keyword search service of the vessel MAYAN STAR is: Requested Administrative Waiver of —Intended Commercial Use of Vessel: MARAD–2020–0171 or visit the Docket the Coastwise Trade Laws: Vessel Management Facility (see ADDRESSES for ‘‘Bare Boat Charters’’ MAYAN STAR (Sailboat); Invitation for —Geographic Region Including Base of hours of operation). We recommend that Public Comments you periodically check the Docket for Operations: ‘‘California’’ (Base of new submissions and supporting AGENCY: Maritime Administration, DOT. Operations: Marina Del Rey, CA) material. SUMMARY: The Secretary of —Vessel Length and Type: 51.0’ Transportation, as represented by the Sailboat Will my comments be made available to Maritime Administration (MARAD), is the public? The complete application is available authorized to grant waivers of the U.S.- for review identified in the DOT docket Yes. Be aware that your entire build requirements of the coastwise as MARAD–2020–0178 at http:// comment, including your personal trade laws to allow the carriage of no www.regulations.gov. Interested parties identifying information, will be made more than twelve passengers for hire on may comment on the effect this action publicly available. vessels, which are three years old or may have on U.S. vessel builders or May I submit comments confidentially? more. A request for such a waiver has businesses in the U.S. that use U.S.-flag been received by MARAD. The vessel, vessels. If MARAD determines, in If you wish to submit comments and a brief description of the proposed accordance with 46 U.S.C. 12121 and under a claim of confidentiality, you service, is listed below. MARAD’s regulations at 46 CFR part should submit three copies of your 388, that the issuance of the waiver will complete submission, including the DATES: Submit comments on or before February 8, 2021. have an unduly adverse effect on a U.S.- information you claim to be confidential vessel builder or a business that uses business information, to the Department ADDRESSES: You may submit comments identified by DOT Docket Number U.S.-flag vessels in that business, a of Transportation, Maritime waiver will not be granted. Comments Administration, Office of Legislation MARAD–2020–0178 by any one of the following methods: should refer to the vessel name, state the and Regulations, MAR–225, W24–220, commenter’s interest in the waiver 1200 New Jersey Avenue SE, • Federal eRulemaking Portal: Go to http://www.regulations.gov. Search application, and address the waiver Washington, DC 20590. Include a cover criteria given in section 388.4 of letter setting forth with specificity the MARAD–2020–0178 and follow the instructions for submitting comments. MARAD’s regulations at 46 CFR part basis for any such claim and, if possible, 388. a summary of your submission that can • Mail or Hand Delivery: Docket be made available to the public. Management Facility is in the West Public Participation Building, Ground Floor of the U.S. Privacy Act Department of Transportation. The How do I submit comments? In accordance with 5 U.S.C. 553(c), Docket Management Facility location Please submit your comments, DOT solicits comments from the public address is: U.S. Department of including the attachments, following the to better inform its rulemaking process. Transportation, MARAD–2020–0178, instructions provided under the above DOT posts these comments, without 1200 New Jersey Avenue SE, West heading entitled ADDRESSES. Be advised edit, to www.regulations.gov, as Building, Room W12–140, Washington, that it may take a few hours or even described in the system of records DC 20590, between 9 a.m. and 5 p.m., days for your comment to be reflected notice, DOT/ALL–14 FDMS, accessible Monday through Friday, except on on the docket. In addition, your through www.dot.gov/privacy. To Federal holidays. comments must be written in English. facilitate comment tracking and Note: If you mail or hand-deliver your We encourage you to provide concise response, we encourage commenters to comments, we recommend that you comments and you may attach

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additional documents as necessary. By Order of the Maritime Administrator. Treasury bills auctioned during the There is no limit on the length of the T. Mitchell Hudson, Jr. preceding calendar quarter, or 3 per attachments. Secretary, Maritime Administration. centum per annum, but in no case less than zero. [FR Doc. 2015–18545] In Where do I go to read public comments, [FR Doc. 2021–00012 Filed 1–6–21; 8:45 am] BILLING CODE 4910–81–P addition to this Notice, Treasury posts and find supporting information? the current quarterly rate in Table 2b— Go to the docket online at http:// Interest Rates for Specific Legislation on the TreasuryDirect website. www.regulations.gov., keyword search DEPARTMENT OF THE TREASURY The Deputy Assistant Secretary for MARAD–2020–0178 or visit the Docket Interest Rate Paid on Cash Deposited Public Finance, Gary Grippo, having Management Facility (see ADDRESSES for reviewed and approved this document, hours of operation). We recommend that To Secure U.S. Immigration and Customs Enforcement Immigration is delegating the authority to you periodically check the Docket for Bonds electronically sign this document to new submissions and supporting Heidi Cohen, Federal Register Liaison material. AGENCY: Departmental Offices, Treasury. for the Department, for purposes of ACTION: Will my comments be made available to Notice. publication in the Federal Register. the public? SUMMARY: For the period beginning Heidi Cohen, January 1, 2021, and ending on March Federal Register Liaison. Yes. Be aware that your entire 31, 2021, the U.S. Immigration and comment, including your personal [FR Doc. 2021–00055 Filed 1–6–21; 8:45 am] Customs Enforcement Immigration BILLING CODE 4810–AS–P identifying information, will be made Bond interest rate is .09 per centum per publicly available. annum. May I submit comments confidentially? DATES: Rates are applicable January 1, DEPARTMENT OF VETERANS 2021 to March 31, 2021. AFFAIRS If you wish to submit comments ADDRESSES: Comments or inquiries may under a claim of confidentiality, you be mailed to Will Walcutt, Supervisor, Reimbursement for Caskets and Urns should submit three copies of your Funds Management Branch, Funds for Burial of Unclaimed Remains in a complete submission, including the Management Division, Fiscal National Cemetery or a VA-Funded information you claim to be confidential Accounting, Bureau of the Fiscal State or Tribal Veterans’ Cemetery business information, to the Department Services, Parkersburg, West Virginia AGENCY: Department of Veterans Affairs. of Transportation, Maritime 26106–1328. ACTION: Notice. Administration, Office of Legislation You can download this notice at the and Regulations, MAR–225, W24–220, following internet addresses: http:// SUMMARY: The Department of Veterans 1200 New Jersey Avenue SE, www.treasury.gov or http:// Affairs (VA) is updating the monetary Washington, DC 20590. Include a cover www.federalregister.gov. reimbursement rates for caskets and letter setting forth with specificity the FOR FURTHER INFORMATION CONTACT: urns purchased for interment in a VA basis for any such claim and, if possible, Ryan Hanna, Manager, Funds national cemetery or a VA-funded state a summary of your submission that can Management Branch, Funds or tribal veterans’ cemetery of veterans be made available to the public. Management Division, Fiscal who die with no known next of kin and Accounting, Bureau of the Fiscal where there are insufficient resources Privacy Act Service, Parkersburg, West Virginia for furnishing a burial container. The purpose of this notice is to notify In accordance with 5 U.S.C. 553(c), 261006–1328 (304) 480–5120; Will interested parties of the rates that will DOT solicits comments from the public Walcutt, Supervisor, Funds Management Branch, Funds apply to reimbursement claims that to better inform its rulemaking process. occur during calendar year (CY) 2021. DOT posts these comments, without Management Division, Fiscal DATES: The applicable date of this notice edit, to www.regulations.gov, as Accounting, Bureau of the Fiscal Services, Parkersburg, West Virginia is January 1, 2021. described in the system of records 26106–1328, (304) 480–5117. FOR FURTHER INFORMATION CONTACT: Jerry notice, DOT/ALL–14 FDMS, accessible SUPPLEMENTARY INFORMATION: Sowders, National Cemetery through www.dot.gov/privacy. To Federal law requires that interest payments on Administration, Department of Veterans facilitate comment tracking and cash deposited to secure immigration Affairs, 4850 Lemay Ferry Road, Saint response, we encourage commenters to bonds shall be ‘‘at a rate determined by Louis, MO, 63129. The telephone provide their name, or the name of their the Secretary of the Treasury, except number is 314–461–6216. This is not a organization; however, submission of that in no case shall the interest rate toll-free number. names is completely optional. Whether exceed 3 per centum per annum.’’ 8 SUPPLEMENTARY INFORMATION: Section or not commenters identify themselves, U.S.C. 1363(a). Related Federal 2306(f) of title 38, United States Code, all timely comments will be fully regulations state that ‘‘Interest on cash authorizes VA’s National Cemetery considered. If you wish to provide deposited to secure immigration bonds Administration to furnish a casket or comments containing proprietary or will be at the rate as determined by the urn for interment in a VA national confidential information, please contact Secretary of the Treasury, but in no case cemetery or a VA-funded state or tribal the agency for alternate submission will exceed 3 per centum per annum or veterans’ cemetery of the unclaimed instructions. be less than zero.’’ 8 CFR 293.2. remains of veterans for whom VA (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, Treasury has determined that interest on cannot identify a next of kin, and 46 U.S.C. 12121) the bonds will vary quarterly and will determines that sufficient financial accrue during each calendar quarter at resources for the furnishing of a casket * * * * * a rate equal to the lesser of the average or urn for burial are not available. VA Dated: January 4, 2021. of the bond equivalent rates on 91-day implemented regulations to administer

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this authority as a reimbursement Using this method of computation, in electronically as an official document of benefit in 38 CFR 38.628. FY 2020, the average costs were the Department of Veterans Affairs. Reimbursement for a claim received determined to be $1,984.00 for caskets Brooks D. Tucker, Assistant Secretary in any CY will not exceed the average and $145.00 for urns. Accordingly, the for Congressional and Legislative cost of a 20-gauge metal casket or a maximum reimbursement rates payable Affairs, Performing the Delegable Duties durable plastic urn during the fiscal for qualifying interments occurring of the Chief of Staff, Department of year (FY) preceding the CY of the claim. during Veterans Affairs, approved this Average costs are determined by market CY 2021 are $1,984.00 for caskets and document on December 31, 2020, for analysis for 20-gauge metal caskets, $145.00 for urns. publication. designed to contain human remains, Signing Authority Luvenia Potts, with a gasketed seal, and external rails Regulation Development Coordinator, Office or handles. The same analysis is The Secretary of Veterans Affairs, or of Regulation Policy & Management, Office completed for durable plastic urns, designee, approved this document and of the Secretary, Department of Veterans designed to contain human remains, authorized the undersigned to sign and Affairs. which include a secure closure to submit the document to the Office of the [FR Doc. 2021–00025 Filed 1–6–21; 8:45 am] contain the cremated remains. Federal Register for publication BILLING CODE 8320–01–P

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Part II

Department of the Interior

Fish and Wildlife Service 50 CFR Part 10 Regulations Governing Take of Migratory Birds; Final Rule

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DEPARTMENT OF THE INTERIOR transport or cause to be transported, carry or interpretations and an earlier Solicitor’s cause to be carried, or receive for shipment, Opinion, M–37041, ‘‘Incidental Take Fish and Wildlife Service transportation, carriage, or export, any Prohibited Under the Migratory Bird migratory bird, any part, nest, or egg of any Treaty Act.’’ The Office of the Solicitor 50 CFR Part 10 such bird, or any product, whether or not manufactured, which consists, or is performs the legal work for the [Docket No. FWS–HQ–MB–2018–0090; composed in whole or part, of any such bird Department of the Interior, including FF09M22000–201–FXMB1231090BPP0] or any part, nest, or egg thereof.... the U.S. Fish and Wildlife Service (hereafter ‘‘Service’’). The Service is the RIN 1018–BD76 16 U.S.C. 703(a). Section 3(a) of the MBTA authorizes Federal agency delegated the primary Regulations Governing Take of and directs the Secretary of the Interior responsibility for managing migratory Migratory Birds to ‘‘adopt suitable regulations’’ allowing birds. ‘‘hunting, taking, capture, killing, M–37050 thoroughly examined the AGENCY: Fish and Wildlife Service, possession, sale, purchase, shipment, text, history, and purpose of the MBTA Interior. transportation, carriage, or export of any and concluded that the MBTA’s ACTION: Final rule. such bird, or any part, nest, or egg prohibitions on pursuing, hunting, thereof’’ while considering (‘‘having due taking, capturing, killing, or attempting SUMMARY: We, the U.S. Fish and regard to’’) temperature zones and to do the same apply only to actions that Wildlife Service (FWS, Service, we), ‘‘distribution, abundance, economic are directed at migratory birds, their define the scope of the Migratory Bird value, breeding habits, and times and nests, or their eggs. On August 11, 2020, Treaty Act (MBTA or Act) as it applies lines of migratory flight of such birds.’’ a district court vacated M–37050, to conduct resulting in the injury or 16 U.S.C. 704(a). Section 3(a) also holding that the language of the MBTA death of migratory birds protected by requires the Secretary to ‘‘determine plainly prohibits incidental take, the Act. We determine that the MBTA’s when, to what extent, if at all, and by despite multiple courts failing to agree prohibitions on pursuing, hunting, what means, it is compatible with the on how to interpret the relevant taking, capturing, killing, or attempting terms of the conventions [listed in statutory language. Natural Res. Defense to do the same, apply only to actions section 2 between the United States and Council v. U.S. Dep’t of the Interior, directed at migratory birds, their nests, Canada, Mexico, Russia, and Japan]’’ to 2020 WL 4605235 (S.D.N.Y.). The or their eggs. adopt such regulations allowing these Department of Justice filed a notice of DATES: This rule is effective February 8, otherwise-prohibited activities. Id.; see appeal on October 8, 2020. We 2021. also Convention between the United respectfully disagree with the district ADDRESSES: Public comments submitted States and Great Britain for the court’s decision and have addressed the on the proposed rule and Protection of Migratory Birds, U.S.-Gr. court’s findings where appropriate in supplementary documents to the Brit., Aug. 16, 1916, 39 Stat. 1702, the discussion below. Moreover, M– proposed rule, including the amended by the Protocol between the 37050 is consistent with the Fifth environmental impact statement and United States and Canada Amending the Circuit appellate court decision in regulatory impact analysis, may be 1916 Convention for the Protection of United States v. CITGO Petroleum found at the Federal rulemaking portal Migratory Birds in Canada and the Corp., 801 F.3d 477 (5th Cir. 2015), http://www.regulations.gov in Docket United States, U.S.-Can., Dec. 14, 1995, which held that the MBTA does not No. FWS–HQ–MB–2018–0090. T.I.A.S. 12721; Convention between the prohibit incidental take. FOR FURTHER INFORMATION CONTACT: United States of America and Mexico This rule addresses the Service’s Jerome Ford, Assistant Director, for the Protection of Migratory Birds and responsibilities under the MBTA. Migratory Birds, at 202–208–1050. Game Mammals, U.S.-Mex., Feb. 7, Consistent with the language and SUPPLEMENTARY INFORMATION: 1936, 50 Stat. 1311, and Agreement legislative history of the MBTA, as Supplementing the Agreement of amended, and relevant case law, the Background February 7, 1936, U.S.-Mex., Mar. 10, Service defines the scope of the MBTA’s The Migratory Bird Treaty Act 1972, 23 U.S.T. 260; Convention prohibitions to reach only actions (MBTA; 16 U.S.C. 703 et seq.) was between the Government of the United directed at migratory birds, their nests, enacted in 1918 to help fulfill the States of America and the Government or their eggs. of Japan for the Protection of Migratory United States’ obligations under the Provisions of the Final Rule 1916 ‘‘Convention between the United Birds and Birds in Danger of Extinction, States and Great Britain for the and their Environment, U.S.-Japan, Mar. Scope of the Migratory Bird Treaty Act protection of Migratory Birds.’’ 39 Stat. 4, 1972, 25 U.S.T. 3329; and Convention As a matter of both law and policy, 1702 (Aug. 16, 1916) (ratified Dec. 7, between the United States of American the Service hereby adopts the 1916) (Migratory Bird Treaty). The list and the Union of Soviet Socialist conclusion of M–37050 in a regulation of applicable migratory birds protected Republics Concerning the Conservation defining the scope of the MBTA. M– by the MBTA is currently codified in of Migratory Birds and their 37050 is available on the internet at the title 50 of the Code of Federal Environment, U.S.-U.S.S.R., Nov. 19, Federal eRulemaking Portal: http:// Regulations at 50 CFR 10.13. In its 1976, 29 U.S.T. 4647. www.regulations.gov in Docket No. current form, section 2(a) of the MBTA On December 22, 2017, the Principal FWS–HQ–MB–2018–0090 and at provides in relevant part that, unless Deputy Solicitor of the Department of https://www.doi.gov/solicitor/opinions. permitted by regulations, it is unlawful: the Interior, exercising the authority of the Solicitor pursuant to Secretary’s The text and purpose of the MBTA at any time, by any means or in any manner, Order 3345, issued a legal opinion, M– indicate that the MBTA’s prohibitions to pursue, hunt, take, capture, kill, attempt to take, capture, or kill, possess, offer for sale, 37050, ‘‘The Migratory Bird Treaty Act on pursuing, hunting, taking, capturing, sell, offer to barter, barter, offer to purchase, Does Not Prohibit Incidental Take’’ (M– killing, or attempting to do the same purchase, deliver for shipment, ship, export, 37050 or M-Opinion). The Solicitor’s only criminalize actions that are import, cause to be shipped, exported, or interpretation marked a change from specifically directed at migratory birds, imported, deliver for transportation, prior U.S. Fish and Wildlife Service their nests, or their eggs.

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The relevant portion of the MBTA ‘‘capture,’’ and ‘‘kill.’’ Accordingly, the nobody is acquired by the natural law by the reads, ‘‘it shall be unlawful at any time, statutory construction canon of noscitur person who first possesses it. We do not by any means or in any manner, to a sociis (‘‘it is known by its associates’’) distinguish the acquisition of these wild pursue, hunt, take, capture, kill, attempt counsels in favor of reading each verb beasts and birds by whether one has captured to take, capture, or kill . . . any to have a related meaning. See Scalia & them on his own property [or] on the property of another; but he who wishes to migratory bird, [or] any part, nest, or egg Garner at 195 (‘‘The canon especially enter into the property of another to hunt can of any such bird.’’ 16 U.S.C. 703(a). Of holds that ‘words grouped in a list be readily prevented if the owner knows his the five referenced verbs, three—pursue, should be given related meanings.’’’ purpose to do so. hunt, and capture—unambiguously (quoting Third Nat’l Bank, 432 U.S. at require an action that is directed at 322)). Geer v. Connecticut, 161 U.S. 519, 523 migratory birds, nests, or eggs. To wit, Thus, when read together with the (1896) (quoting Digest, Book 41, Tit. 1, according to the entry for each word in other active verbs in section 2 of the De Adquir. Rer. Dom.). Likewise, a contemporary dictionary: MBTA, the proper meaning is evident. Blackstone’s Commentaries provide: • Pursue means ‘‘[t]o follow with a The operative verbs (‘‘pursue, hunt, A man may lastly have a qualified property view to overtake; to follow eagerly, or take, capture, kill’’) ‘‘are all affirmative in animals feroe naturoe, propter privilegium, with haste; to chase.’’ Webster’s Revised acts . . . which are directed that is, he may have the privilege of hunting, Unabridged Dictionary 1166 (1913); immediately and intentionally against a taking and killing them in exclusion of other • Hunt means ‘‘[t]o search for or particular animal—not acts or omissions persons. Here he has a transient property in follow after, as game or wild animals; to that indirectly and accidentally cause these animals usually called game so long as chase; to pursue for the purpose of they continue within his liberty, and may injury to a population of animals.’’ restrain any stranger from taking them catching or killing.’’ Id. at 713; and Sweet Home, 515 U.S. at 719–20 (Scalia, • therein; but the instant they depart into Capture means ‘‘[t]o seize or take J., dissenting) (agreeing with the another liberty, this qualified property possession of by force, surprise, or majority opinion that certain terms in ceases. stratagem; to overcome and hold; to the definition of the term ‘‘take’’ in the Id. at 526–27 (1896) (quoting 2 secure by effort.’’ Id. at 215. Endangered Species Act (ESA)— Blackstone Commentary 410). Thus, one does not passively or identical to the other prohibited acts Dictionary definitions of the term accidentally pursue, hunt, or capture. referenced in the MBTA—refer to ‘‘take’’ at the time of MBTA enactment Rather, each requires a deliberate action deliberate actions, while disagreeing specifically directed at achieving a goal. that the use of the additional were consistent with this historical use By contrast, the verbs ‘‘kill’’ and definitional term ‘‘harm’’—used only in in the context of hunting and capturing ‘‘take’’ are ambiguous in that they could the ESA—meant that ‘‘take’’ should be wildlife. For example, Webster’s defined refer to active or passive conduct, read more broadly to include actions not ‘‘take’’ to comprise various actions depending on the context. See id. at 813 deliberately directed at covered directed at reducing a desired object to (‘‘kill’’ may mean the more active ‘‘to species); see also United States v. personal control: ‘‘to lay hold of; to put to death; to slay’’ or serve as the CITGO Petroleum Corp., 801 F.3d 477, seize with the hands, or otherwise; to general term for depriving of life); id. at 489 n.10 (5th Cir. 2015) (‘‘Even if ‘kill’ grasp; to get into one’s hold or 1469 (‘‘take’’ has many definitions, does have independent meaning [from possession; to procure; to seize and including the more passive ‘‘[t]o receive ‘take’], the Supreme Court, interpreting carry away; to convey.’’ Webster’s into one’s hold, possession, etc., by a a similar list in the [Endangered Species Revised Unabridged Dictionary 1469 voluntary act’’ or the more active ‘‘[t]o Act], concluded that the terms pursue, (1913). lay hold of, as in grasping, seizing, hunt, shoot, wound, kill, trap, capture, Thus, under common law ‘‘[t]o ‘take,’ catching, capturing, adhering to, or the and collect, generally refer to deliberate when applied to wild animals, means to like; grasp; seize;—implying or actions’’); cf. Sweet Home, 515 U.S. at reduce those animals, by killing or suggesting the use of physical force’’). 698 n.11 (Congress’s decision to capturing, to human control.’’ Sweet Any ambiguity inherent in the specifically define ‘‘take’’ in the ESA Home, 515 U.S. at 717 (Scalia, J., statute’s use of the terms ‘‘take’’ and obviated the need to define its common- dissenting); see also CITGO, 801 F.3d at ‘‘kill’’ is resolved by applying law meaning). We explain the meaning 489 (‘‘Justice Scalia’s discussion of established rules of statutory of the terms ‘‘take’’ and ‘‘kill’’ in the ‘take’ as used in the Endangered Species construction. First and foremost, when context of section 2 in turn below. Act is not challenged here by the any words ‘‘are associated in a context The notion that ‘‘take’’ refers to an government . . . because Congress gave suggesting that the words have action directed immediately against a ‘take’ a broader meaning for that something in common, they should be particular animal is supported by the statute.’’). As is the case with the ESA, assigned a permissible meaning that use of the word ‘‘take’’ in the common in the MBTA, ‘‘[t]he taking prohibition makes them similar.’’ Antonin Scalia & law. As the Supreme Court has is only part of the regulatory plan . . ., Bryan A. Garner, Reading the Law: The instructed, ‘‘absent contrary indications, which covers all stages of the process by interpretation of Legal Texts, 195 (2012); Congress intends to adopt the common which protected wildlife is reduced to see also Third Nat’l Bank v. Impac, Ltd., law definition of statutory terms.’’ man’s dominion and made the object of 432 U.S. 312, 321 (1977) (‘‘As always, United States v. Shabani, 513 U.S. 10, profit,’’ and, as such, is ‘‘a term of art ‘[t]he meaning of particular phrases 13 (1994). As Justice Scalia noted, ‘‘the deeply embedded in the statutory and must be determined in context’ . . . .’’ term [‘take’] is as old as the law itself.’’ common law concerning wildlife’’ that (quoting SEC v. Nat’l Sec., Inc., 393 U.S. Sweet Home, 515 U.S. at 717 (Scalia, J., ‘‘describes a class of acts (not omissions) 453, 466 (1969)); Beecham v. United dissenting). For example, the Digest of done directly and intentionally (not States, 511 U.S. 368, 371 (1994) (the fact Justinian places ‘‘take’’ squarely in the indirectly and by accident) to particular that ‘‘several items in a list share an context of acquiring dominion over wild animals (not populations of animals).’’ attribute counsels in favor of animals, stating: Sweet Home, 515 U.S. at 718 (Scalia, J., interpreting the other items as [A]ll the animals which can be taken upon dissenting). The common-law meaning possessing that attribute as well’’). the earth, in the sea, or in the air, that is to of the term ‘‘take’’ is particularly Section 2 of the MBTA groups together say, wild animals, belong to those who take important here because, unlike the ESA, five verbs—‘‘pursue,’’ ‘‘hunt,’’ ‘‘take,’’ them.... Because that which belongs to which specifically defines the term

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‘‘take,’’ the MBTA does not define erred in conflating the active and ‘‘reinforce[ ] the dictionary definition, ‘‘take’’—instead it includes the term in passive definitions of the word ‘‘kill’’ and confirm[ ] that ‘take’ does not refer a list of similar actions. Thus, the Sweet and finding no meaningful difference to accidental activity or the unintended Home majority’s ultimate conclusion between the two. The cases cited by the results of passive conduct.’’ Brigham Oil that Congress’s decision to define ‘‘take’’ court in footnote 13 interpreting the & Gas, 840 F. Supp. 2d at 1209. in the ESA obviated the need to divine term ‘‘kill’’ do so in the context of To support an argument that the terms its common-law meaning is inapplicable criminal homicide, which ‘‘take’’ and ‘‘kill’’ should be read here. See id. at 697, n.10. Instead, the unsurprisingly interprets ‘‘kill’’ in the expansively to include incidental opposite is true. Congress intended broader sense. These cases are also conduct, a number of courts including ‘‘take’’ to be read consistent with its inapposite because they do not interpret the NRDC court, as well as the prior M- common law meaning—to reduce birds the term ‘‘kill’’ in relation to adjacent, Opinion, focused on the MBTA’s to human control. related terms that could be read to limit direction that a prohibited act can occur It is also reasonable to conclude that effectively the scope of ‘‘kill’’ in its ‘‘at any time, by any means, in any the MBTA’s prohibition on killing is general sense. Instead, because the term manner’’ to support the conclusion that similarly limited to deliberate acts that ‘‘kill’’ is ambiguous in the context of the statute prohibits any activity that result in bird deaths. See Newton section 2, we must read ‘‘kill’’ along results in the death of a bird, which County Wildlife Ass’n v. U.S. Forest with the preceding terms and conclude would necessarily include incidental Serv., 113 F.3d 110, 115 (8th Cir. 1997) they are all active terms describing take. However, the quoted statutory (‘‘MBTA’s plain language prohibits active conduct. language does not change the nature of conduct directed at migratory The NRDC district court predicated its those prohibited acts and simply birds.... [T]he ambiguous terms ‘take’ broad reading of ‘‘kill’’ primarily on the clarifies that activities directed at and ‘kill’ in 16 U.S.C. 703 mean notion that a narrower reading would migratory birds, such as hunting and ‘physical conduct of the sort engaged in read the term out of the Act by poaching, are prohibited whenever and by hunters and poachers....’’’ depriving it of independent meaning. wherever they occur and whatever (quoting Seattle Audubon Soc’y v. The court reasoned that it is difficult to manner is applied, be it a shotgun, a Evans, 952 F.2d 297, 302 (9th Cir. conceive of an activity where ‘‘kill’’ bow, or some other creative approach to 1991))); United States v. CITGO applies, but ‘‘hunt’’ and ‘‘take’’ do not. deliberately taking birds. See generally Petroleum Corp., 801 F.3d 477, 489 n.10 To the contrary, there are several CITGO, 801 F.3d at 490 (‘‘The addition (5th Cir. 2015) (‘‘there is reason to think situations where ‘‘kill’’ retains of adverbial phrases connoting ‘means’ that the MBTA’s prohibition on ‘killing’ independent meaning. For example, and ‘manner,’ however, does not serve is similarly limited to deliberate acts consistent with a product’s usage as to transform the nature of the activities that effect bird deaths’’). authorized by the Environmental themselves. For instance, the manner By contrast, the NRDC court Protection Agency and based on its and means of hunting may differ from interpreted ‘‘kill’’ more expansively, intended usage, a farmer could spread bow hunting to rifles, shotguns, and air holding that, in combination with the poisoned bait to kill birds depredating rifles, but hunting is still a deliberately phrase ‘‘by any means or in any on her crops. That action is directed at conducted activity. Likewise, rendering manner,’’ the MBTA unambiguously birds but does not ‘‘take’’ them in the all-inclusive the manner and means of prohibits incidental killing. The court common law sense that ‘‘take’’ means to ‘taking’ migratory birds does not change centered its reading of section 2 around reduce wildlife to human physical what ‘take’ means, it merely modifies its conclusion that any means of killing control, and it could also not be fairly the mode of take.’’). migratory birds is prohibited, whether characterized as hunting, pursuing, or The NRDC court countered that the killing is the result of an action capturing them either. Instead, the referencing different manners of taking directed at a migratory bird or wholly action was directed at protecting the birds does not give effect to the ‘‘by any the result of passive conduct. While the farmer’s crops from the birds, but not means and in any manner’’ language, term ‘‘kill’’ can certainly be interpreted physically possessing or controlling the but instead clarifies the term ‘‘hunt’’ broadly in a general sense, we disagree birds in any way other than killing because the referenced activities are that ‘‘kill’’ should take on its most them. Likewise, a county road and primarily different means of hunting. expansive meaning in the context of highway department could use However, other actions such as section 2 of the MBTA. machinery to destroy bird nests under a poisoning bait to control birds Additionally, the NRDC court found bridge. Any chicks within those nests depredating on crops would ‘‘kill’’ birds no meaningful difference between active would likely be destroyed killing those outside the context of hunting. Many and passive definitions of the term chicks, but the maintenance workers other methods of hunting, capturing, ‘‘kill.’’ The court focused on one would not ‘‘take’’ them in the common pursuing, taking, or killing birds no possible reading of ‘‘kill,’’ meaning ‘‘to law sense. Moreover, as noted above, at doubt exist, and that is precisely the deprive of life,’’ which could be least two appellate courts have point. Congress used the operative construed as either active or passive specifically found that the terms ‘‘take’’ language to ensure that any method conduct. However, the term ‘‘kill’’ can and ‘‘kill’’ are ambiguous and apply to employed could amount to a violation be read purely as an active verb, physical conduct of hunters and of the MBTA, so long as it involves one meaning, ‘‘to put to death; to slay.’’ poachers. Newton County; Seattle of the enumerated prohibited actions When contrasted with the more passive Audubon. and is directed at migratory birds. definition as the general term for This conclusion is also supported by The prior Solicitor’s Opinion, M– depriving of life, the difference is clear. the Service’s longstanding 37041, took a different tack from the Focusing on that difference and reading implementing regulations, which define NRDC court and assumed that because the term ‘‘kill’’ in relation to the other ‘‘take’’ to mean ‘‘to pursue, hunt, shoot, the criminal misdemeanor provision of prohibited actions in section 2 before it, wound, kill, trap, capture, or collect’’ or the MBTA is a strict-liability crime, there is a compelling reason to read the attempt to do the same. 50 CFR 10.12. meaning that no mens rea or criminal term ‘‘kill’’ in an active sense. That is, The component actions of ‘‘take’’ intent is required for a violation to have all the words before the word ‘‘kill’’ are involve direct actions to reduce animals taken place, any act that takes or kills active verbs. Thus, the NRDC court to human control. As such, they a bird must be covered as long as the act

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results in the death of a bird. In making interplay between activities that are sufficient supply to permit them to go back that assumption, M–37041 improperly specifically directed at birds and the there. ignored the meaning and context of the strict liability standard of the MBTA: Protection of Migratory Birds: Hearing actual acts prohibited by the statute. [A comment in the legislative history] in on H.R. 20080 Before the House Comm. Instead, the opinion presumed that the favor of strict liability does not show any on Foreign Affairs, 64th Cong. 22–23 lack of a mental state requirement for a intention on the part of Congress to extend (1917) (statement of R.W. Williams, misdemeanor violation of the MBTA the scope of the MBTA beyond hunting, Solicitor’s Office, Department of equated to reading the prohibited acts trapping, poaching, and trading in birds and Agriculture). Likewise, the Chief of the ‘‘kill’’ and ‘‘take’’ as broadly applying to bird parts to reach any and all human activity Department of Agriculture’s Bureau of actions not specifically directed at that might cause the death of a migratory bird. Those who engage in such activity and Biological Survey noted that he ‘‘ha[s] migratory birds, so long as the result is always had the idea that [passenger their death or injury. However, the who accidentally kill a protected migratory bird or who violate the limits on their pigeons] were destroyed by relevant acts prohibited by the MBTA permits may be charged with misdemeanors overhunting, being killed for food and are voluntary acts directed at killing or without proof of intent to kill a protected for sport.’’ Protection of Migratory Birds: reducing an animal to human control, bird or intent to violate the terms of a permit. Hearing on H.R. 20080 Before the House such as when a hunter shoots a That does not mean, however, that Congress Comm. on Foreign Affairs, 64th Cong. protected bird causing its death. The intended for ‘‘strict liability’’ to apply to all 11 (1917) (statement of E. W. Nelson, key remains that the actor was engaged forms of human activity, such as cutting a Chief Bureau of Biological Survey, in an activity the object of which was to tree, mowing a hayfield, or flying a plane. The 1986 amendment and corresponding Department of Agriculture). kill or render a bird subject to human Statements from individual control. legislative history reveal only an intention to close a loophole that might prevent felony Congressmen evince a similar focus on By contrast, liability fails to attach to hunting. Senator Smith, ‘‘who actions that are not directed toward prosecutions for commercial trafficking in migratory birds and their parts. introduced and championed the Act rendering an animal subject to human Thus, there appears to be no explicit basis . . . in the Senate,’’ Leaders in Recent control. Common examples of such in the language or the development of the Successful Fight for the Migratory Bird actions include driving a car, allowing MBTA for concluding that it was intended to Treaty Act, Bulletin—The American a pet cat to roam outdoors, or erecting be applied to any and all human activity that Game Protective Association, July 1918, a windowed building. All of these causes even unintentional deaths of at 5, explained: actions could foreseeably result in the migratory birds. deaths of protected birds, and all would Nobody is trying to do anything here be violations of the MBTA under the 927 F. Supp. at 1581 (referencing S. except to keep pothunters from killing game now-withdrawn M-Opinion if they did Rep. No. 99–445, at 16 (1986), reprinted out of season, ruining the eggs of nesting in fact result in deaths of protected in 1986 U.S.C.C.A.N. 6113, 6128). Thus, birds, and ruining the country by it. Enough birds will keep every insect off of every tree birds, yet none of these actions have as limiting the range of actions prohibited by the MBTA to those that are directed in America, and if you will quit shooting their object rendering any animal them, they will do it. subject to human control. Because no at migratory birds will focus ‘‘take’’ has occurred within the meaning prosecutions on activities like hunting 55 Cong. Rec. 4816 (statement of Sen. of the MBTA, the strict-liability and trapping and exclude more Smith) (1917). Likewise, during provisions of the Act would not be attenuated conduct, such as lawful hearings of the House Foreign Affairs triggered. commercial activity, that Committee, Congressman Miller, a The prior M-Opinion posited that unintentionally and indirectly results in ‘‘vigorous fighter, who distinguished amendments to the MBTA imposing the death of migratory birds. himself in the debate’’ over the MBTA, Leaders in Recent Successful Fight for mental state requirements for specific The History of the MBTA offenses were only necessary if no the Migratory Bird Treaty Act, mental state is otherwise required. The history of the MBTA and the Bulletin—The American Game However, the conclusion that the taking debate surrounding its adoption Protective Association, July 1918, at 5, and killing of migratory birds is a strict- illustrate that the Act was part of put the MBTA squarely in the context liability crime does not answer the Congress’s efforts to regulate the of hunting: separate question of what acts are hunting of migratory birds in direct I want to assure you . . . that I am heartily criminalized under the statute. The response to the extreme over-hunting, in sympathy with this legislation. I want it Fifth Circuit in CITGO stated, ‘‘we largely for commercial purposes, that to go through, because I am up there every disagree that because misdemeanor had occurred over the years. See United fall, and I know what the trouble is. The MBTA violations are strict liability States v. Moon Lake Electric Ass’n, 45 trouble is in shooting the ducks in Louisiana, crimes, a ‘take’ includes acts (or F. Supp. 2d 1070, 1080 (D. Colo. 1999) Arkansas, and Texas in the summer time, and omissions) that indirectly or (‘‘the MBTA’s legislative history also killing them when they are nesting up accidentally kill migratory birds.’’ The indicates that Congress intended to in Canada. court goes on to note that ‘‘[a] person regulate recreational and commercial Protection of Migratory Birds: Hearing whose car accidentally collided with the hunting’’); Mahler, 927 F. Supp. at 1574 on H.R. 20080 Before the House Comm. bird . . . has committed no act ‘taking’ (‘‘The MBTA was designed to forestall on Foreign Affairs, 64th Cong. 7 (1917) the bird for which he could be held hunting of migratory birds and the sale (statement of Rep. Miller). strictly liable. Nor do the owners of of their parts’’). Testimony concerning In seeking to take a broader view of electrical lines ‘take’ migratory birds the MBTA given by the Solicitor’s Office congressional purpose, the Moon Lake who run into them. These distinctions for the Department of Agriculture court looked to other contemporary are inherent in the nature of the word underscores this focus: statements that cited the destruction of ‘taking’ and reveal the strict liability We people down here hunt [migratory habitat, along with improvements in argument as a non-sequitur.’’ 801 F.3d birds]. The Canadians reasonably want some firearms, as a cause of the decline in at 493. Similarly, in Mahler v. U.S. assurances from the United States that if they migratory bird populations. The court Forest Serv., 927 F. Supp. 1559 (S.D. let those birds rear their young up there and even suggested that these statements, Ind. 1996), the court described the come down here, we will preserve a which ‘‘anticipated application of the

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MBTA to children who act ‘through 911, 913–14 (8th Cir. 1981), aff’d on controversial and legally fraught subject. inadvertence’ or ‘through accident,’ ’’ other grounds, 460 U.S. 300 (1983). For example, on the floor of the Senate, supported a broader reading of the Some courts have attempted to Senator Reed proclaimed: legislative history. Moon Lake, 45 F. interpret a number of floor statements as I am opposed not only now in reference to Supp. 2d at 1080–81. Upon closer supporting the notion that Congress this bill [the MBTA], but I am opposed as a examination, these statements are intended the MBTA to regulate more general proposition to conferring power of instead consistent with a limited than just hunting and poaching, but that kind upon an agent of the reading of the MBTA. those statements reflect an intention to Government.... One such contemporary statement prohibit actions directed at birds— . . . Section 3 proposes to turn these cited by the court is a letter from whether accomplished through hunting powers over to the Secretary of Secretary of State Robert Lansing to the or some other means intended to kill Agriculture. . . to make it a crime for a man to shoot game on his own farm or to make President attributing the decrease in birds directly. For example, some it perfectly legal to shoot it on his own migratory bird populations to two Members ‘‘anticipated application of the farm.... general issues: MBTA to children who act ‘through When a Secretary of Agriculture does a • Habitat destruction, described inadvertence’ or ‘through accident.’ ’’ thing of that kind I have no hesitancy in generally as ‘‘the extension of What are you going to do in a case like this: saying that he is doing a thing that is utterly agriculture, and particularly the A barefoot boy, as barefoot boys sometimes indefensible, and that the Secretary of draining on a large scale of swamps and do, largely through inadvertence and without Agriculture who does it ought to be driven meadows;’’ and meaning anything wrong, happens to throw from office.... • Hunting, described in terms of a stone at and strikes and injures a robin’s 55 Cong. Rec. 4813 (1917) (statement of ‘‘improved firearms and a vast increase nest and breaks one of the eggs, whereupon Sen. Reed). in the number of sportsmen.’’ he is hauled before a court for violation of Federal regulation of hunting was also Representative Baker referenced these a solemn treaty entered into between the legally tenuous at that time. Whether statements during the House floor United States of America and the Provinces the Federal Government had any of Canada. debate over the MBTA, implying that authority to regulate the killing or taking the MBTA was intended to address both Moon Lake, 45 F. Supp. 2d at 1081 of any wild animal was an open issues. Moon Lake, 45 F. Supp. 2d at (quoting 56 Cong. Rec. 7455 (1918) question in 1918. Just over 20 years 1080–81 (quoting H. Rep. No. 65–243, at (statement of Rep. Mondell)). earlier, the Supreme Court in Geer had 2 (1918) (letter from Secretary of State ‘‘[I]nadvertence’’ in this statement refers ruled that the States exercised the Robert Lansing to the President)). to the boy’s mens rea. As the rest of the power of ownership over wild game in However, Congress addressed hunting sentence clarifies, the hypothetical boy trust, implicitly precluding Federal and habitat destruction in the context of acted ‘‘without meaning anything regulation. See Geer v. Connecticut, 161 the Migratory Bird Treaty through two wrong,’’ not that he acted U.S. 519 (1896). When Congress did separate acts: unintentionally or accidentally in attempt to assert a degree of Federal • First, in 1918, Congress adopted the damaging the robin’s nest. This is jurisdiction over wild game with the MBTA to address the direct and reinforced by the rest of the 1913 Weeks-McLean Law, it was met intentional killing of migratory birds; hypothetical, which posits that the boy with mixed results in the courts, leaving • Second, in 1929, Congress adopted threw ‘‘a stone at and strikes and injures the question pending before the the Migratory Bird Conservation Act to a robin’s nest.’’ The underlying act is Supreme Court at the time of the ‘‘more effectively’’ implement the directed specifically at the robin’s nest. MBTA’s enactment. See, e.g., United Migratory Bird Treaty by protecting In other statements, various members of States v. Shaver, 214 F. 154, 160 (E.D. certain migratory bird habitats. Congress expressed concern about Ark. 1914); United States v. McCullagh, The Migratory Bird Conservation Act ‘‘sportsmen,’’ people ‘‘killing’’ birds, 221 F. 288 (D. Kan. 1915). It was not provided the authority to purchase or ‘‘shooting’’ of game birds or until Missouri v. Holland in 1920 that rent land for the conservation of ‘‘destruction’’ of insectivorous birds, the Court, relying on authority derived migratory birds, including for the and whether the purpose of the MBTA from the Migratory Bird Treaty (Canada establishment of inviolate ‘‘sanctuaries’’ was to favor a steady supply of ‘‘game Convention) under the Treaty Clause of wherein migratory bird habitats would animals for the upper classes.’’ Moon the U.S. Constitution, definitively be protected from persons ‘‘cut[ting], Lake, 45 F. Supp. 2d at 1080–81. One acknowledged the Federal burn[ing], or destroy[ing] any timber, Member of Congress even offered a Government’s ability to regulate the grass, or other natural growth.’’ statement that explains why the statute taking of wild birds. 252 U.S. 416, 432– Migratory Bird Conservation Act, Sec. is not redundant in its use of the various 33 (1920). 10, 45 Stat. 1222, 1224 (1929) (codified terms to explain what activities are Given the legal uncertainty and as amended at 16 U.S.C. 715–715s). If regulated: ‘‘[T]hey cannot hunt ducks in political controversy surrounding the MBTA was originally understood to Indiana in the fall, because they cannot Federal regulation of intentional protect migratory bird habitats from kill them. I have never been able to see hunting in 1918, it is highly unlikely incidental destruction, enactment of the why you cannot hunt, whether you kill that Congress intended to confer Migratory Bird Conservation Act 11 or not. There is no embargo on hunting, authority upon the executive branch to years later would have been largely at least down in South Carolina....’’’ prohibit all manner of activity that had superfluous. Instead, the MBTA and the Id. at 1081 (quoting 56 Cong. Rec. 7446 an incidental impact on migratory birds. Migratory Bird Conservation Act are (1918) (statement of Rep. Stevenson)). The provisions of the 1916 Canada complementary: ‘‘Together, the Treaty That Congress was animated regarding Convention authorize only certain Act in regulating hunting and potential restrictions on hunting and its circumscribed activities specifically possession and the Conservation Act by impact on individual hunters is evident directed at migratory birds. Articles II establishing sanctuaries and preserving from even the statements relied upon as through IV of the Convention create natural waterfowl habitat help support for the conclusion that the closed periods during which hunting of implement our national commitment to statute reaches incidental take. migratory species covered by the the protection of migratory birds.’’ Finally, in 1918, Federal regulation of Convention may be authorized only for United States v. North Dakota, 650 F.2d the hunting of wild birds was a highly limited purposes, such as scientific use

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or propagation. Article VII allows taking throughout the year for subsistence (‘‘Many other statutes enacted in the to resolve conflicts under extraordinary purposes); Protocol between the intervening years also counsel against conditions when birds become seriously Government of the United States of reading the MBTA to prohibit any and injurious to agricultural or other America and the Government of the all migratory bird deaths resulting from interests, subject to permits issued by United Mexican States Amending the logging activities in national forests. As the parties under regulations prescribed Convention for Protection of Migratory is apparent from the record in this case, by them respectively. Additionally, Birds and Game Mammals, Sen. Treaty the Forest Service must comply with a Article V prohibits the taking of eggs or Doc. 105–26 (May 5, 1997) (authorizing myriad of statutory and regulatory nests of certain protected species, indigenous groups to harvest migratory requirements to authorize even the very except for scientific and propagating birds and eggs throughout the year for modest type of salvage logging operation purposes under regulations issued by subsistence purposes). of a few acres of dead and dying trees the parties, and Article VI prohibits It was not until more than 50 years at issue in this case. Those laws require transport, import, and export of after the initial adoption of the MBTA the Forest Service to manage national protected species except for scientific or and 25 years after the Mexico Treaty Act forests so as to balance many competing propagating purposes. See Canada that Federal prosecutors began applying goals, including timber production, Convention, 39 Stat. 1702. the MBTA to incidental actions. See biodiversity, protection of endangered Subsequent legislative history does Lilley & Firestone at 1181 (‘‘In the early and threatened species, human not undermine a limited interpretation 1970s, United States v. Union Texas recreation, aesthetic concerns, and of the MBTA, as enacted in 1918. The Petroleum [No, 73–CR–127 (D. Colo. Jul. many others.’’). Given the ‘‘fixed-meaning canon of statutory 11, 1973)] marked the first case dealing overwhelming evidence that the construction directs that ‘‘[w]ords must with the issue of incidental take.’’). This primary purpose of section 2, as be given the meaning they had when the newfound Federal authority was not amended by the Mexico Treaty Act, was text was adopted.’’ Scalia & Garner at accompanied by any corresponding to control over-hunting, the references 78. The meaning of written instruments legislative change. The only to the later agreements do not bear the ‘‘does not alter. That which it meant contemporaneous changes to section 2 weight of the conclusion reached by the when adopted, it means now.’’ South of the MBTA were technical updates prior Opinion (M–37041). Carolina v. United States, 199 U.S. 437, recognizing the adoption of a treaty with Thus, the only legislative enactment 448 (1905). Japan. See Act of June 1, 1974, Public concerning incidental activity under the The operative language in section 2 of Law 93–300, 88 Stat. 190. Implementing MBTA is the 2003 appropriations bill the MBTA has changed little since its legislation for the treaty with the Soviet that explicitly exempted military- adoption in 1918. The current iteration Union also did not amend section 2. See readiness activities from liability under of the relevant language—making it Fish and Wildlife Improvement Act of the MBTA for incidental takings. See unlawful for persons ‘‘at any time, by 1978, Public Law 95–616, sec. 3(h), 92 Bob Stump National Defense any means or in any manner, to pursue, Stat. 3110. Similar to the earlier Authorization Act for Fiscal Year 2003, hunt, take, capture, kill, attempt to take, Conventions, the provisions of the Japan Public Law 107–314, Div. A, Title III, capture, or kill, possess’’ specific and Russia Conventions authorized Sec. 315, 116 Stat. 2509 (2002), migratory birds—was adopted in 1935 purposeful take for specific activities reprinted in 16 U.S.C.A. 703, Historical as part of the Mexico Treaty Act and has such as hunting, scientific, educational, and Statutory Notes. There is nothing in remained unchanged since then. and propagation purposes, and this legislation that authorizes the Compare Mexico Treaty Act, 49 Stat. protection against injury to persons and government to pursue incidental takings 1555, Sec. 3 with 16 U.S.C. 703(a). As property. However, they also outlined charges in other contexts. Rather, some with the 1916 Canada Convention, the mechanisms to protect habitat and have ‘‘argue[d] that Congress expanded Mexico Convention focused primarily prevent damage from pollution and the definition of ‘take’ by negative on hunting and establishing protections other environmental degradation implication’’ since ‘‘[t]he exemption did for birds in the context of take and (domestically implemented by the not extend to the ‘operation of industrial possession for commercial use. See Migratory Bird Conservation Act and facilities,’ even though the government Convention between the United States other applicable Federal laws). See had previously prosecuted activities of America and Mexico for the Convention between the Government of that indirectly affect birds.’’ CITGO, 801 Protection of Migratory Birds and Game the United States and the Government F.3d at 490–91. Mammals, 50 Stat. 1311 (Feb. 7, 1936) of Japan for the Protection of Migratory This argument is contrary to the (Mexico Convention). Subsequent birds and Birds in Danger of Extinction, Supreme Court’s admonition that Protocols amending both these and their Environment, 25 U.S.T. 3329 ‘‘Congress . . . does not alter the Conventions also did not explicitly (Mar. 4, 1972) (Japan Convention); fundamental details of a regulatory address incidental take or otherwise Convention between the United States scheme in vague terms or ancillary broaden their scope to prohibit anything of America and the Union of Soviet provisions—it does not, one might say, other than purposeful take of migratory Socialist Republics Concerning the hide elephants in mouseholes.’’ birds. See Protocol between the Conservation of Migratory Birds and Whitman v. Am. Trucking Ass’ns, 531 Government of the United States and their Environment, 29 U.S.T. 4647 (Nov. U.S. 457, 468 (2001). As the Fifth the Government of Canada Amending 19, 1976) (Russia Convention). Circuit explained, ‘‘[a] single carve-out the 1916 Convention between the No changes were made to the section from the law cannot mean that the United Kingdom and the United States of the MBTA at issue here following the entire coverage of the MBTA was of America for the Protection of later conventions except that the Act implicitly and hugely expanded.’’ Migratory Birds, Sen. Treaty Doc. 104– was modified to include references to CITGO, 801 F.3d at 491. Rather, it 28 (Dec. 14, 1995) (outlining these later agreements. Certainly, other appears Congress acted in a limited conservation principles to ensure long- Federal laws may require consideration fashion to preempt a specific and term conservation of migratory birds, of potential impacts to birds and their immediate impediment to military- amending closed seasons, and habitat in a way that furthers the goals readiness activities. ‘‘Whether Congress authorizing indigenous groups to of the Conventions’ broad statements. deliberately avoided more broadly harvest migratory birds and eggs See, e.g., Mahler, 927 F. Supp. at 1581 changing the MBTA or simply chose to

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address a discrete problem, the most CITGO, 801 F.3d at 493, and ‘‘offers However, it would also turn many that can be said is that Congress did no unlimited potential for criminal Americans into potential criminals. See more than the plain text of the prosecutions.’’ Brigham Oil, 840 F. Mahler, 927 F. Supp. 1577–78 (listing a amendment means.’’ Id. It did not hide Supp. 2d at 1213. ‘‘The list of birds now litany of scenarios where normal the elephant of incidental takings in the protected as ‘migratory birds’ under the everyday actions could potentially and mouse hole of a narrow appropriations MBTA is a long one, including many of incidentally lead to the death of a single provision. the most numerous and least bird or breaking of an egg in a nest)). Such an interpretation could lead to Constitutional Issues endangered species one can imagine.’’ Mahler, 927 F. Supp. at 1576. Currently, absurd results, which are to be avoided. The Supreme Court has recognized over 1,000 species of birds—including See Griffin v. Oceanic Contractors, 458 that ‘‘[a] fundamental principle in our ‘‘all species native to the United States U.S. 564, 575 (1982) (‘‘interpretations of legal system is that laws which regulate or its territories’’—are protected by the a statute which would produce absurd persons or entities must give fair notice MBTA. 78 FR 65,844, 65,845 (Nov. 1, results are to be avoided if alternative of conduct that is forbidden or 2013); see also 50 CFR 10.13 (list of interpretations consistent with the required.’’ FCC v. Fox Television protected migratory birds); Migratory legislative purpose are available’’); see Stations, Inc., 567 U.S. 239, 253 (2012). Bird Permits; Programmatic also K Mart Corp. v. Cartier, 486 U.S. ‘‘No one may be required at peril of life, Environmental Impact Statement, 80 FR 281, 324 n.2 (1988) (Scalia, J. concurring liberty or property to speculate as to the 30032, 30033 (May 26, 2015) (‘‘Of the in part and dissenting in part) (‘‘it is a meaning of penal statutes.’’ Lanzetta v. 1,027 currently protected species, venerable principle that a law will not New Jersey, 306 U.S. 451, 453 (1939). approximately 8% are either listed (in be interpreted to produce absurd Accordingly, a ‘‘statute which either whole or in part) as threatened or results.’’). forbids or requires the doing of an act endangered under the Endangered These potentially absurd results are in terms so vague that men of common Species Act (ESA) (16 U.S.C. 1531 et not ameliorated by limiting the intelligence must necessarily guess at its seq.) and 25% are designated (in whole definition of ‘‘incidental take’’ to ‘‘direct meaning and differ as to its application, or in part) as Birds of Conservation and foreseeable’’ harm as some courts violates the first essential of due process Concern (BCC).’’). Service analysis have suggested. See U.S. Fish and of law.’’ Fox Television, 567 U.S. at 253 indicates that the top threats to birds Wildlife Service Manual, part 720, ch. 3, (quoting Connally v. General Constr. are: Incidental Take Prohibited Under the Co., 269 U.S. 385, 391 (1926)). Thus, • Cats, which kill an estimated 2.4 Migratory Bird Treaty Act (Jan. 11, ‘‘[a] conviction or punishment fails to billion birds per year; 2017). The court in Moon Lake comply with due process if the statute • Collisions with building glass, identified an ‘‘important and inherent or regulation under which it is obtained which kill an estimated 599 million limiting feature of the MBTA’s ‘fails to provide a person of ordinary birds per year; misdemeanor provision: To obtain a intelligence fair notice of what is • Collisions with vehicles, which kill guilty verdict ..., the government prohibited, or is so standardless that it an estimated 214.5 million birds per must prove proximate causation.’’ Moon authorizes or encourages seriously year; Lake, 45 F. Supp. 2d at 1085. Quoting discriminatory enforcement.’ ’’ Id. • Chemical poisoning (e.g., pesticides Black’s Law Dictionary, the court (quoting United States v. Williams, 553 and other toxins), which kill an defines proximate cause as ‘‘that which, U.S. 285, 304 (2008)). estimated 72 million birds per year; in a natural and continuous sequence, Assuming, arguendo, that the MBTA • Collisions with electrical lines, unbroken by any efficient intervening is ambiguous, the interpretation that which kill an estimated 25.5 million cause, produces the injury and without limits its application to conduct birds per year; which the accident could not have specifically directed at birds is • Collisions with communications happened, if the injury be one which necessary to avoid potential towers, which kill an estimated 6.6 might be reasonably anticipated or constitutional concerns. As the Court million birds per year; foreseen as a natural consequence of the has advised, ‘‘where an otherwise • Electrocutions, which kill an wrongful act.’’ Id. (quoting Black’s Law acceptable construction of a statute estimated 5.6 million birds per year; Dictionary 1225 (6th ed. 1990)) would raise serious constitutional • Oil pits, which kill an estimated (emphasis in original). The Tenth problems, the Court will construe the 750 thousand birds per year; and Circuit in Apollo Energies took a similar statute to avoid such problems unless • Collisions with wind turbines, approach, holding ‘‘the MBTA requires such construction is plainly contrary to which kill an estimated 234 thousand a defendant to proximately cause the the intent of Congress.’’ Edward J. birds per year. statute’s violation for the statute to pass DeBartolo Corp. v. Fla. Gulf Coast Bldg. U.S. Fish and Wildlife Service, constitutional muster’’ and quoting from & Constr. Trades Council, 485 U.S. 568, Threats to Birds: Migratory Birds Black’s Law Dictionary to define 575 (1988); cf. Natural Res. Defense Mortality—Questions and Answers, ‘‘proximate cause.’’ Apollo Energies, 611 Council v. U.S. Dep’t of the Interior, available at https://www.fws.gov/birds/ F.3d at 690. 2020 WL 4605235 (S.D.N.Y. Aug. 11, bird-enthusiasts/threats-to-birds.php Contrary to the suggestion of the 2020) (dismissing constitutional (last updated September 14, 2018). courts in Moon Lake and Apollo concerns, but on the basis that the Interpreting the MBTA to apply strict Energies that principles of proximate relevant language is unambiguous). criminal liability to any instance where causation can be read into the statute to Here, an attempt to impose liability for a migratory bird is killed as a result of define and limit the scope of incidental acts that are not directed at migratory these threats would certainly be a clear take, the death of birds as a result of birds raises just such constitutional and understandable rule. See United activities such as driving, flying, or concerns. States v. Apollo Energies, Inc., 611 F.3d maintaining buildings with large The ‘‘scope of liability’’ under an 679, 689 (10th Cir. 2010) (concluding windows is a ‘‘direct,’’ ‘‘reasonably interpretation of the MBTA that extends that under an incidental take anticipated,’’ and ‘‘probable’’ criminal liability to all persons who kill interpretation, ‘‘[t]he actions consequence of those actions. As or take migratory birds incidental to criminalized by the MBTA may be discussed above, collisions with another activity is ‘‘hard to overstate,’’ legion, but they are not vague’’). buildings and cars are the second and

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third most common human-caused pesticides. But the court was silent as to Under this approach, it is literally threat to birds, killing an estimated 599 how far this rule extends, even in the impossible for individuals and million and 214.5 million birds per relatively narrow context of pesticides. companies to know exactly what is year, respectively. It is eminently This type of uncertainty is required of them under the law when foreseeable and probable that cars and problematic under the Supreme Court’s otherwise-lawful activities necessarily windows will kill birds. Thus, limiting due process jurisprudence. See Rollins, result in accidental bird deaths. Even if incidental take to direct and foreseeable 706 F. Supp. at 745 (dismissing charges they comply with everything requested results does little to prevent absurd against a farmer who applied pesticides of them by the Service, they may still be outcomes. to his fields that killed a flock of geese, prosecuted, and still found guilty of To avoid these absurd results, the reasoning ‘‘[f]armers have a right to criminal conduct. See generally United government has historically relied on know what conduct of theirs is criminal, States v. FMC Corp., 572 F.2d 902, 904 prosecutorial discretion. See Ogden at especially where that conduct consists (2d Cir. 1978) (the court instructed the 29 (‘‘Historically, the limiting of common farming practices carried on jury not to consider the company’s mechanism on the prosecution of for many years in the community. While remediation efforts as a defense: incidental taking under the MBTA by statutes do not have to be drafted with ‘‘Therefore, under the law, good will non-federal persons has been the ‘mathematical certainty,’ they must be and good intention and measures taken exercise of prosecutorial discretion by drafted with a ‘reasonable degree of to prevent the killing of the birds are not the FWS.’’); see generally FMC, 572 F.2d certainty.’ The MBTA fails this test. . . . a defense.’’). In sum, due process at 905 (situations ‘‘such as deaths Under the facts of this case, the MBTA ‘‘requires legislatures to set reasonably caused by automobiles, airplanes, plate does not give ‘fair notice as to what clear guidelines for law enforcement glass modern office buildings or picture constitutes illegal conduct’ so that [the officials and triers of fact in order to windows in residential dwellings . . . farmer] could ‘conform his conduct to prevent ‘arbitrary and discriminatory properly can be left to the sound the requirements of the law.’ ’’ (internal enforcement.’ ’’ Smith v. Goguen, 415 discretion of prosecutors and the citations omitted)). U.S. 566, 572–73 (1974). courts’’). Yet, the Supreme Court has While the MBTA does contemplate Reading the MBTA to capture declared ‘‘[i]t will not do to say that a the issuance of permits authorizing the incidental takings could potentially prosecutor’s sense of fairness and the taking of wildlife, it requires such transform average Americans into Constitution would prevent a successful permits to be issued by ‘‘regulation.’’ criminals. The text, history, and . . . prosecution for some of the See 16 U.S.C. 703(a) (‘‘Unless and purpose of the MBTA demonstrate activities seemingly embraced within except as permitted by regulations made instead that it is a law limited in the sweeping statutory definitions.’’ as hereinafter provided . . . .’’ relevant part to actions, such as hunting Baggett v. Bullitt, 377 U.S. 360, 373 (emphasis added)). No regulations have and poaching, that reduce migratory (1964); see also Mahler, 927 F. Supp. been issued to create a permit scheme birds and their nests and eggs to human 1582 (‘‘Such trust in prosecutorial to authorize incidental take, so most control by killing or capturing. Even discretion is not really an answer to the potential violators have no formal assuming that the text could be subject issue of statutory construction’’ in mechanism to ensure that their actions to multiple interpretations, courts and interpreting the MBTA.). For broad comply with the law. There are agencies are to avoid interpreting statutes that may be applied to voluntary Service guidelines issued for ambiguous laws in ways that raise seemingly minor or absurd situations, different industries that recommend constitutional doubts if alternative ‘‘[i]t is no answer to say that the statute best practices to avoid incidental take of interpretations are available. would not be applied in such a case.’’ protected birds; however, these Interpreting the MBTA to criminalize Keyishian v. Bd. of Regents, 385 U.S. guidelines provide only limited incidental takings raises potential due 589, 599 (1967). protection to potential violators and do process concerns. Based upon the text, Recognizing the challenge posed by not constitute a regulatory authorization history, and purpose of the MBTA, and relying upon prosecutorial discretion, or result in the issuance of permits. consistent with decisions in the Courts the FMC court sought to avoid absurd In the absence of a permit issued of Appeals for the Fifth, Eighth, and results by limiting its holding to pursuant to Departmental regulation, it Ninth circuits, there is an alternative ‘‘extrahazardous activities.’’ FMC, 572 is not clear that the Service has any interpretation that avoids these F.2d at 907. The term ‘‘extrahazardous authority under the MBTA to require concerns. Therefore, the Service activities’’ is not found anywhere in the minimizing or mitigating actions that concludes that the scope of the MBTA statute and is not defined by either the balance the environmental harm from does not include incidental take. court or the Service. See Mahler, 927 F. the taking of migratory birds with other Supp. at 1583 n.9 (noting that the FMC societal goals, such as the production of Policy Analysis of Incidental Take court’s ‘‘limiting principle . . . of strict wind or solar energy. Accordingly, the Under the MBTA liability for hazardous commercial guidelines do not provide enforceable As detailed above, the Service has activity . . . ha[s] no apparent basis in legal protections for people and determined that the MBTA’s the statute itself or in the prior history businesses who abide by their terms. To prohibitions on pursuing, hunting, of the MBTA’s application since its wit, the guidelines themselves state, ‘‘it taking, capturing, killing, or attempting enactment’’); cf. United States v. is not possible to absolve individuals or to do the same apply only to actions Rollins, 706 F. Supp. 742, 744–45 (D. companies’’ from liability under the directed at migratory birds, their nests, Idaho 1989) (‘‘The statute itself does not MBTA. Rather, the guidelines are or their eggs is compelled as a matter of state that poisoning of migratory birds explicit that the Service may only law. In addition, even if such a by pesticide constitutes a criminal consider full compliance in exercising conclusion is not legally compelled, the violation. Such specificity would not its discretion whether to refer an Service proposes to adopt it as a matter have been difficult to draft into the individual or company to the of policy. statute’’). Thus, it is unclear what Department of Justice for prosecution. The Service’s approach to incidental activities are ‘‘extrahazardous.’’ In FMC, See, e.g., U.S. Fish and Wildlife Service, take prior to 2017 was implemented the concept was applied to the Land-Based Wind Energy Guidelines 6 without public input and has resulted in manufacture of ‘‘toxic chemicals,’’ i.e., (Mar. 23, 2012). regulatory uncertainty and

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inconsistency. Prosecutions for Newton County Wildlife Ass’n v. U.S. clarifying that injury to or mortality of incidental take occurred in the 1970s Forest Serv., 113 F.3d 110 (8th Cir. migratory birds that results from, but is without any accompanying change in 1997); Seattle Audubon Soc’y v. Evans, not the purpose of, an action (i.e., either the underlying statute or Service 952 F.2d 297 (9th Cir. 1991); Mahler v. incidental taking or killing) is not regulations. Accordingly, an U.S. Forest Serv., 927 F. Supp. 1559 prohibited by the Migratory Bird Treaty interpretation with broad implications (S.D. Ind. 1996); Curry v. U.S. Forest Act. for the American public was implicitly Serv., 988 F. Supp. 541, 549 (W.D. Pa. Public Comments adopted without public debate. 1997). Subsequently, the Service has sought to As a result of these cases, the Federal On February 3, 2020, the Service limit the potential reach of MBTA Government is clearly prohibited from published in the Federal Register (85 liability by pursuing enforcement enforcing an incidental take prohibition FR 5915) a proposed rule to define the proceedings only against persons who in the Fifth Circuit. In the Eighth scope of the MBTA as it applies to fail to take what the Service considers Circuit, the Federal Government has conduct resulting in the injury or death ‘‘reasonable’’ precautions against previously sought to distinguish court of of migratory birds protected by the Act. foreseeable risks. appeals rulings limiting the scope of the We solicited public comments on the Based upon the Service’s analysis of MBTA to the habitat-destruction proposed rule for 45 days, ending on manmade threats to migratory birds and context. See generally Apollo Energies, March 19, 2020. We received 8,398 the Service’s own enforcement history, 611 F.3d at 686 (distinguishing the comments. Many comments included common activities such as owning and Eighth Circuit decision in Newton additional attachments (e.g., scanned operating a power line, wind farm, or County on the grounds that it involved letters, photographs, and supporting drilling operation pose an inherent risk logging that modified a bird’s habitat in documents). These comments of incidental take. An expansive reading some way). However, that argument was represented the views of multiple State of the MBTA that includes an rejected by a subsequent district court. and local government agencies, private incidental-take prohibition would See United States v. Brigham Oil & Gas, industries, non-governmental subject those who engage in these L.P., 840 F. Supp. 2d 1202 (D.N.D. organizations (NGOs), and private common, and necessary, activities to 2012). Likewise, the Federal citizens. In addition to the individual criminal liability. Government has sought to distinguish comments received, 10 organizations This approach effectively leaves holdings in the habitat-destruction submitted attachments representing otherwise lawful and often necessary context in the Ninth Circuit. See United individuals’ comments, form letters, and businesses to take their chances and States v. Moon Lake Electrical Ass’n, 45 signatories to petition-like letters hope they avoid prosecution, not F. Supp. 2d 1070, 1075–76 (D. Colo. representing almost 180,000 signers. because their conduct is or even can be 1999) (suggesting that the Ninth The following text presents the in strict compliance with the law, but Circuit’s ruling in Seattle Audubon may substantive comments we received and because the government has chosen to be limited to habitat modification or responses to them. forgo prosecution. Otherwise-lawful destruction). In the Second and Tenth Comment: Multiple commenters economic activity should not be Circuits, the Federal Government can noted that Congress has amended the functionally dependent upon the ad hoc apply the MBTA to incidental take, MBTA in multiple instances (i.e., exercise of enforcement discretion. albeit with differing judicial limitations. narrowing scope of strict liability, Further, as a practical matter, These cases demonstrate the potential adding knowledge requirement to felony inconsistency and uncertainty are built for a convoluted patchwork of legal violation, narrowly exempting certain into the MBTA enforcement regime by standards; all purporting to apply the activities from incidental take, etc.). The virtue of a split between Federal Circuit same underlying law. The MBTA is a commenters noted that Congress could Courts of Appeals. Courts have adopted national law. Many of the companies have clarified any objection to the different views on whether section 2 of and projects that face potential liability enforcement of incidental take but did the MBTA prohibits incidental take, under the MBTA operate across not. The commenters suggested that and, if so, to what extent. Courts of boundary lines for judicial circuits. Yet these later congressional interpretations Appeals in the Second and Tenth what is legal in the Fifth and Eighth should be given great weight and that Circuits, as well as district courts in at Circuits may become illegal as soon as failure to include incidental take within least the Ninth and District of Columbia an operator crosses State lines into the the scope of the statute would virtually Circuits, have held that the MBTA bordering Tenth Circuit or become a nullify these amendments. Congress criminalizes some instances of matter of uncertainty in the Ninth specifically demonstrated its familiarity incidental take, generally with some Circuit. The Service concludes that it is with the development of take liability in form of limiting construction. See in its own interest, as well as that of the 1998 when it tackled the ‘‘unfairness’’ of United States v. FMC Corporation, 572 public, to have and apply a national strict liability in baiting cases. Rather F.2d 902 (2d Cir. 1978); United States v. standard that sets a clear, articulable than strict liability, the MBTA would Apollo Energies, Inc., 611 F.3d 679 rule for when an operator crosses the apply a negligence standard to hunters (10th Cir. 2010); United States v. Corbin line into criminality. The most effective who used fields with loose grain. In Farm Serv., 444 F. Supp. 510 (E.D. Cal. way to reduce uncertainty and have a making this change, the Senate Report 1978); Ctr. for Biological Diversity v. truly national standard is for the Service noted that the amendment was ‘‘not Pirie, 191 F. Supp. 2d 161 (D.D.C. 2002), to codify and apply a uniform intended in any way to reflect upon the vacated on other grounds sub nom. Ctr. interpretation of the MBTA that its general application of strict liability for Biological Diversity v. England, 2003 prohibitions do not apply to incidental under the MBTA.’’ App. LEXIS 1110 (D.C. Cir. 2003). By take, based upon the Fifth Circuit’s Response: The operative language contrast, Courts of Appeals in the Fifth, ruling in CITGO Petroleum Corporation. originally enacted in section 2 of the Eighth, and Ninth Circuits, as well as Therefore, as a matter of both law and MBTA has not substantively changed district courts in the Third and Seventh policy, the Service adopts a regulation since 1936. The 1936 amendment Circuits, have indicated that it does not. limiting the scope of the MBTA to modified the language to clarify its See United States v. CITGO Petroleum actions that are directed at migratory meaning and application, but there is no Corp., 801 F.3d 477 (5th Cir. 2015); birds, their nests, or their eggs, and indication those changes were intended

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to broaden the scope of the statute Response: As explained by the Fifth intent to prepare an EIS but without any beyond actions directed at migratory Circuit in the CITGO case, the 2003 concurrent environmental analysis of birds. The subsequent amendments Authorization Act does not require the alternatives. This approach have instead fine-tuned the mens rea conclusion that Congress interpreted the compromised the ability of commenters required for violations directed at MBTA to apply broadly to incidental reviewing the proposed rule to migratory birds, including commercial take. Congress was simply acting to understand fully the effects of the rule. use, hunting, and baiting. Interpreting preempt application of a judicial Further, the subsequent publication and the statute to reach only actions directed decision that specifically and comment period on the draft EIS was at migratory birds would not nullify immediately restricted military- after-the-fact, indicating a decision was these amendments. The 1960 readiness activities. Imputing already made regardless of the amendment was enacted prior to the Congressional intent beyond the plain environmental consequences initial prosecutions for take by text of a narrow appropriation provision determined in the EIS. In addition, industrial activities at a time when is not warranted. We do not interpret commenters noted that the 45-day Congress had no reason to believe the that action as Congress clearly speaking comment period was inadequate for a MBTA could potentially reach beyond to the broad issue of the overall scope rule that proposes to substantially hunting and commercial use of birds. of the statute as it applies to incidental change decades of conservation policy The 1988 amendment was, as noted, take. Congress may simply have chosen and hinder bird conservation in the simply a reaction to a court decision to address a discrete problem without United States, given the current that added a negligence standard for any intent to interpret more broadly the National State of Emergency in response baiting violations. As noted in the M- MBTA outside of that particular context. to the novel Covid–19 coronavirus. Opinion, nothing in the referenced In any event, the views of the 2003 Many of these commenters requested an amendments disturbs Congress’s Congress in a rider to an appropriation extended comment period. original intent that section 2 apply only act that did not even explicitly amend Response: The procedures followed in to actions directed at migratory birds. any of the MBTA’s language have little this rulemaking process were Moreover, the views of one Congress if any significance to interpreting the appropriate and lawful. A draft EIS, regarding the construction of a statute MBTA. issued subsequent to the proposed rule, adopted many years before by another Comment: The proposed rule analyzed various alternatives, some of Congress are typically given little to no contained no information on the which were discussed in the public weight, particularly where, as here, the consequences of the action on migratory webinars conducted as part of the NEPA amendments did not disturb the birds and the environment as a whole scoping process. One alternative in the operative language governing the scope (through decreased ecosystem services). draft EIS covers the expected effects of of that statute. The commenter went on to note that reverting to the Department’s prior there is no evidence presented as to the interpretation of the statute. There is no Comment: Several commenters economic burden for implementing requirement under the Administrative concluded that the Department of voluntary best management practices. Procedure Act (APA) to consider Defense Authorization Act for Fiscal Response: Per the National alternatives in the proposed rule itself Year 2003 demonstrates that Congress Environmental Policy Act (NEPA), the (Executive Order 12866 requires intended the MBTA to prohibit Service analyzed the impacts mentioned consideration of alternatives that would incidental take of migratory birds by the commenter within the draft have less economic impact on regulated because it directed FWS and the Environmental Impact Statement (EIS) entities for economically significant Department of Defense to develop a published June 5, 2020. Within the EIS, rulemakings, as set forth in the regulation authorizing incidental take of the Service analyzed impacts of the no regulatory impact analysis made migratory birds during military action alternative and two additional available for review with the proposed readiness activities. Congress enacted alternatives on (1) The overall effect of rule). The NEPA process provides a the relevant provision in the wake of a each alternative on migratory bird broad analysis of the environmental and case in which the court enjoined populations, (2) the effect of any socioeconomic impacts of reasonable specific U.S. Navy live-fire training decrease in migratory bird populations alternatives to the agency’s proposal. exercises that incidentally killed on ecosystem services, (3) the potential The 45-day period for commenting on migratory birds. The commenters effects of climate change in combination the proposed rule and NEPA scoping reasoned that Congress could have of each alternative, and (4) the impacts process, along with the subsequent 45- directed the Service to issue MBTA to industry and small business that may day comment period for the draft EIS, regulations that achieved the same profit from migratory birds. The Service provided sufficient time for the public result as this rulemaking action by also asked for and provided discussion to address this rulemaking. Moreover, limiting the MBTA to direct actions on what extent industry would continue the M-Opinion, which provided the against migratory birds. Alternatively, to implement best practices when there original basis for this rulemaking, has Congress could have amended the is no incentive to do so. This EIS was been publicly available for more than 2 MBTA itself to clarify that it did not open for public comments, and years. apply to incidental takes and kills. comments focused on these analyses are Comment: Members of the U.S. Senate However, Congress did not do either of addressed within the final EIS. We have commented that the Department closed those things; instead, it temporarily added additional discussion in the final the comment period on the proposed exempted incidental taking caused by EIS and Regulatory Impact Analysis rule in mid-March during the height of military-readiness activities from the regarding the types of practices and a pandemic, ignoring requests from MBTA prohibition and directed the types of costs associated with best some in Congress to extend the Service to issue MBTA regulations to practices. comment deadline, and without even create a permanent authorization for Comment: Multiple commenters responding to Congress until after the military-readiness activities. Thus, noted that the process being used for deadline ended. Since then, some of the Congress spoke clearly to the matter of this rulemaking is unconventional. The Nation’s governors, State legislatures, whether the MBTA scope includes commenters noted that the proposed and mayors jointly requested a incidental takes and kills. rule was published with a notice of suspension of public comment periods

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during this national emergency. The notice, the proposed rulemaking, and with sufficient flexibility to incorporate Department should not be putting the publication of the draft EIS. the alternatives analyzed in the draft additional burdens on the public to Comment: One State expressed EIS. The NEPA process informed our respond at a time when the public is concern with the Service’s attempt to decision-making process culminating in dealing with a global pandemic. The alter its previous interpretation of the this final rule. Department appears to be rushing MBTA (M–37041) in the absence of Comment: The Service cannot through this entire process to meet an review pursuant to NEPA. Therefore, conduct a credible NEPA process based arbitrary timeline. At the very least, the the State requested that the short- and on the timeline and chronology it has Department should not be providing the long-term impacts of the proposed rule presented at this point. Completing the minimum comment period. Rather, it change be fully and accurately entire NEPA process and reaching a should extend that comment period by evaluated in the EIS, and that there be final record of decision (ROD) and final 45 days or more. at least a 60-day comment period after rule by fall of 2020 is an extraordinarily Response: The procedures followed in the draft EIS is published in order to short timeline of less than 10 months to this rulemaking process were facilitate a thorough public review. In proceed from initial scoping to final appropriate and lawful. The Department the Service’s evaluation of those rule. It is difficult to imagine any provided 45-day comment periods on impacts, it is critical to compare the scenario under which the Federal both the NEPA scoping process and the proposed rule’s impacts with the prior agencies could review and give serious draft EIS and a separate 45-day interpretation of the MBTA represented consideration to the comments it will comment period on the proposed rule. in M–37041, which concluded that the receive on this proposed rule, let alone These three separate 45-day periods MBTA prohibits incidental take. incorporate them into a final EIS, ROD, provided sufficient time for the public Response: The Service has fulfilled and final rule. to address this rulemaking. Moreover, the commenter’s request through the Response: The Service has complied the M-Opinion, which provided the publication of a draft EIS, which with the procedural requirements of original basis for this rulemaking, has analyzed a no action alternative and two NEPA for developing an EIS by been publicly available for more than 2 action alternatives. One of the publishing a scoping notice and a draft years. alternatives reverts to the prior EIS inviting public comment before interpretation of the MBTA described in developing a final EIS and record of Comment: Multiple commenters Solicitor’s Opinion M–37041. In the decision. The Service provided noted that NEPA requires that decisions draft EIS, we compared the impacts of alternatives to the proposed action and be analyzed in a public process before codifying M–37050 with returning to has not predetermined any outcome of an agency irretrievably commits its the prior Opinion’s interpretation. We the NEPA process. The Service will take resources. Specifically, an agency ‘‘shall established 45 days as an appropriate a reasonable amount of time to address commence preparation of an [EIS] as period for public comment on the draft and incorporate comments as necessary, close as possible to the time the agency EIS. We concluded a 45-day comment deliberate on a final determination, and is developing or is presented with a period was reasonable given the prior select an alternative presented in the proposal.’’ The DOI should suspend M- opportunity to comment on the scoping final EIS. We will explain that selection Opinion 37050 while the Service notice published on February 3, 2020 in a record of decision at the considers the environmental impacts as (85 FR 5913), and during the associated appropriate time. required by NEPA. public hearings, which invited input on Comment: Multiple commenters felt Response: The Service began the the environmental effects of the the manner in which this proposed NEPA process at the appropriate time— proposed action and the potential rulemaking was announced on January when it first considered rulemaking alternatives we should consider. 30, 2020, by the Service’s Office of regarding the interpretation of the Comment: Multiple commenters were Public Affairs was improper and a MBTA originally set forth in M–37050. concerned about the unorthodox violation of the APA (Pub. L. 79–404, 60 The Service drafted the proposed rule approach of simultaneously publishing Stat. 237). They asserted that the with sufficient flexibility to incorporate a draft rule and a NEPA scoping inclusion of 28 statements of support for the alternatives analyzed in the draft announcement and seeking comments this proposed rule within the EIS. The NEPA process informed our on both at the same time. The rulemaking announcement establishes a decision-making process culminating in commenters felt this approach strongly record of pre-decisional collusion with this final rule. suggests that the Service had already certain interest groups by a regulatory Comment: The Flyway Councils noted reached a conclusion about the outcome agency that has tainted the entire that the proposed rule was brought forth of this process and that the NEPA rulemaking process and clouded the without the proper procedures as process is nothing more than a ultimate decision the Service will be outlined by NEPA and the APA. The formality. Under the normal NEPA EIS called upon to make, once the comment Flyways noted that there was no process, Federal agencies would period closes and all public testimony is advance notice of rulemaking to assess conduct scoping of an issue, develop fairly and impartially evaluated. the implications of the proposed rule. In multiple action alternatives, put those Response: The Service did not collude addition, the Flyways noted that no alternatives out for public notice and with any stakeholders, industry or alternatives were put forth and there comment, and ultimately select an otherwise, on the contents of the was no opportunity to propose other alternative to advance. In this case, the proposed rule before it was published in alternatives. Service appears at the scoping phase to the Federal Register. No organizations Response: The Service announced the have already selected the outcome it or persons outside of the Federal scoping process in a notice of intent intended to reach. Government were given an advance (NOI) to complete an EIS in the Federal Response: The Service began the copy of the proposed rule to read before Register on February 3, 2020 (85 FR NEPA process at the appropriate time— it was published in the Federal 5913). An advanced notice of proposed when it first considered rulemaking Register. Interagency review limited to rulemaking is not required. The Service regarding the interpretation of the Federal agencies occurred prior to has provided three opportunities to MBTA originally set forth in M–37050. issuance of the proposed rule under submit comments through the scoping The Service drafted the proposed rule procedures required by Executive Order

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12866 and implemented by the Office of MBTA prohibits incidental take. See conduct that incidentally results in the Management and Budget. The Natural Res. Defense Council v. U.S. death of migratory birds. announcement of the proposed rule was Dep’t of the Interior, 2020 WL 4605235 Comment: The original legislative primarily a notification to the public (S.D.N.Y.). We respectfully disagree intent of the MBTA was the protection and the media summarizing the with that court’s opinion and have and sustainability of migratory bird contents of the proposed rule and its finalized this rulemaking consistent populations. The word ‘‘protection’’ availability for public comment, with with the Supreme Court’s holding in occurs in its first sentence. There has the viewpoints of several stakeholders Brand X. been no express delegation of law- included. It is not part of the official Comment: The proposed rule making duties or authority to amend the APA rulemaking process or docket and incorrectly concludes that the terms MBTA. The MBTA’s legislative intent is plays no part in the agency’s ultimate ‘‘kill’’ and ‘‘take’’ are ambiguous. Even to prevent needless losses, establish decision. The announcement was not if the terms were ambiguous, the closed seasons for hunting, prohibit the considered in developing this final rule. proposed rule’s attempt to meld all the taking of nests or eggs of migratory game Comment: If the press release prohibited conduct into a singular or insectivorous nongame birds except accepted quotes from industry and meaning is unsupported by any canon for scientific or propagating purposes, government entities, it should also have of statutory interpretation. The Service further establish longer closures for included quotes and perspectives from proposes that ‘‘kill’’ and ‘‘take’’ exclude certain species, and provide for the environmental NGOs or ornithologists unintentional actions as they are listed issuance of permits to address the to comply with APA fairness rules. among directed actions such as ‘‘hunt’’ killing of specified birds. Despite the Response: The referenced section was or ‘‘pursue.’’ Yet this construction phrase ‘‘incidental take’’ not appearing contained in a press release issued with renders the list meaningless, working in either the MBTA or implementing the publication of the proposed rule. It contrary to established norms of regulations, its protective statutory is not part of the rulemaking record, and interpretation—if ‘‘kill’’ were limited to intent remains clear, as shown by its we did not consider the statements ‘‘hunt’’ and ‘‘pursue,’’ then there would common and long-time use in included in the press release as official be no need to include ‘‘hunt’’ and Congressional hearings and public comments. The Service received ‘‘pursue’’ on the list. The statutory correspondence, and in inter- and intra- many responses during the public context of the MBTA would make little agency communications. Since its intent comment period for the proposed rule sense if it merely prohibited directed has not been amended by an act of from migratory bird experts and action such as hunting because its Congress, the agency charged by interested non-governmental purpose extends beyond conserving Congress with its administration does organizations. We analyzed those game birds. Its provisions protect non- not have the authority to restrict its comments, responded to any game and insectivorous birds that are meaning and intent. substantive issues presented, and Response: This rulemaking is based not—and have never been— amended the proposed rule where on the Department’s interpretation of intentionally pursued for game, appropriate based on those comments. ambiguous language in a statute the poaching, or trafficking. Comment: Multiple commenters Secretary is charged with implementing noted that the codification of the Response: We disagree with the and does not amend the language of the Solicitor’s M-Opinion 37050 is commenter’s interpretation of the MBTA. It does not require any premature as it has not been fully vetted MBTA. The preamble to the proposed delegation from Congress other than the or withstood legal challenges. These rule and this final rule provides a delegations to the Secretary already commenters recommended that the detailed analysis of the language of the included in the terms of the statute. The Service postpone any rulemaking statute and why the scope of the MBTA Service disagrees that this rulemaking regarding MBTA prohibitions of does not include incidental take, restricts the meaning and intent of the incidental take until the legal challenges including the best reading of the MBTA. The preamble to this rule to the M-Opinion currently pending in ambiguous terms ‘‘take’’ and ‘‘kill.’’ We explains our interpretation of the the United States District Court for the refer the commenter to that analysis, MBTA’s statutory language and Southern District of New York are which provides the basis for issuing this legislative history and why the resolved. Given the uncertain future of regulation. interpretation set forth by this rule is M-Opinion 37050 and accompanying Comment: The plain language of this consistent with and the best reading of legal vulnerability of the proposed rule, statute pertains to conduct directed at that language and history. Thus, we it would be prudent for the Service to species, and nowhere in the operative disagree with the commenter’s assertion put the proposed rulemaking on hold language does the law suggest an intent that this rule restricts or alters the until the courts have determined on the part of Congress to impose meaning or intent of the MBTA. whether the M-Opinion on which it is criminal liability for the incidental Comment: Although the MBTA was based withstands legal scrutiny. effects of otherwise lawful activities. written in large part to address the then- Response: There is no statutory or The scope of prohibited conduct covers largest threat to migratory birds— other legal requirement to wait for a actions, which require intent— hunters and poachers—the proposed Departmental legal opinion or any other ‘‘pursue,’’ ‘‘hunt,’’ and ‘‘capture’’ are all rule offers no evidence to show its agency opinion to be vetted in Federal actions directed at wildlife and cannot passage was intended to regulate only court before it can be codified as a be performed by accident. The terms the activities that threatened birds in regulation. In fact, agencies may codify ‘‘take’’ and ‘‘kill’’ are informed by the 1918. With ‘‘effective protection,’’ the interpretations struck down by courts context of the rest of the statute in drafters wanted to be able to revive and and have subsequent courts defer to and which they must be read, and by the sustain completely decimated uphold the later rulemaking. See Natl. legislative and historical record of the populations on behalf of the Americans Cable & Telecommunications Ass’n v. MBTA and other environmental laws. who recognized aesthetic, economic, Brand X internet Svcs., 545 U.S. 967 Response: We agree with the and recreational value in sustaining (2005). We note that on August 11, comment that the language of section 2 migratory bird populations. To impose a 2020, a district court vacated M–37050 of the MBTA pertains to conduct limit on the activities it could regulate and held that the plain language of the directed at migratory birds and not under the MBTA would be to ossify this

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broadly written protection into only difference is underscored by the recent alternative from further review because applying to activities that existed during Federal district court decision vacating the vast majority of Federal courts have the decade immediately following its the M-Opinion. The final EIS and concluded the MBTA’s misdemeanor passage. An intention found nowhere in Regulatory Impact Analysis analyze the provision is a strict liability crime—in its text, legislative history, or ecosystem services, such as insect other words, it has no minimum mens subsequent interpretation and consumption, provided by migratory rea requirement. Because the proposed implementation. birds. alternative would have established a Response: Congress’s primary concern Comment: Multiple commenters minimum mens rea of gross negligence when enacting the MBTA in 1918 was presented arguments that the Service before the Service could enforce the hunting, poaching, and commercial has misquoted the provisions of the statute’s misdemeanor provision, it overexploitation of migratory birds. It is MBTA and that the proposal does not would not be legally defensible. Thus, clear from the legislative history leading address the statutory authority in codifying the Service’s interpretation of up to the statute’s passage that Congress section 3 to authorize take of migratory the scope of the MBTA under a gross drafted language to address those birds that would otherwise violate the negligence standard would only serve to threats. To be sure, Congress may draft statute, which the commenters contend reduce legal certainty. statutory language to include potential is the source of the Secretary’s authority Comment: One commenter future concerns not readily predicted at to implement the statute. recommended that the Service prohibit the time of enactment, but there is no Response: This proposal does not incidental take that results from an indication that Congress intended the authorize the taking of migratory birds; extra-hazardous activity. The language of section 2 to encompass it defines the scope for when commenter felt that providing such a accidental or incidental deaths of authorizations under section 2 are take threshold would allow the Service migratory birds. Instead, the balance of necessary and proper. Thus, it does not to address incidental take that occurs the legislative history favors the rely on the statutory language presented because of an entity’s negligence. opposite interpretation as explained in by the commenter. The authority to Response: The proposed rule did not the preamble. implement a statute necessarily comes provide a threshold for prohibiting Comment: A letter from some with it the authority either to interpret incidental take because it proposed to members of the U.S. Senate stated that ambiguous language in that statute or to codify the interpretation set forth in M– the stakes of the proposed rule are correct a prior improper interpretation 37050 that the Act does not prohibit considerable, and like the legal opinion, of that statute. The authority in section incidental take in the first place. The it will have a significant detrimental 3 is also contingent on an understanding commenter is essentially proposing impact on migratory birds. This letter of what actions violate the statute in the adopting an extra-hazardous activity explained that birds provide first place. requirement as a proxy for negligence or tremendous value to our communities. Comment: Several commenters gross negligence. We decline to adopt Congress and the executive branch suggested that the proposed rule paints that proposal for the same reasons we understood this fact a century ago when a broad brush over incidental takes, rejected application of a gross- it signed the 1916 treaty and passed the treating all equally and absolving even negligence standard. MBTA, even in the midst of World War grossly negligent behavior that can Comment: One commenter I. Congress also recognized that birds result in the large-scale death of birds. recommended following a Safe Harbor benefit American agriculture and The commenters suggested that the approach for industry that participates forestry through the consumption of Service modify the proposed rule to in avoidance, minimization, and vast numbers of insect pests. This fact include a provision where incidental mitigation measures. remains true today and takes on new take resulting from reckless negligent Response: This approach would be importance with the spread of invasive behavior is considered a violation (i.e., very similar to establishing a policy to species and outbreaks. The proposed gross negligence). This approach would decline enforcement except in cases of rule contravenes the text and purpose of include creating a definition of ‘‘extra- gross negligence. We decline to adopt the MBTA and fails to align with the hazardous activities’’ and enforcing this proposal for the same reasons we purpose of our migratory bird treaties incidental take when it results from rejected application of a gross- and our international obligations. The gross negligence. The commenters negligence standard. rule also presents a false choice between conclude that the Service should focus Comment: Multiple commenters felt regulatory certainty and implementing enforcement of incidental take on large- that the MBTA needed to be amended the MBTA. scale, high-mortality, and predictable by Congress to make the changes being Response: This rulemaking does not situations where unintentional loss of proposed in this regulation. present a false choice between migratory birds is likely to occur, based Response: The commenters are correct regulatory certainty and implementing on the best scientific information. The that only Congress can amend the the MBTA. M–37050 concluded that the language of the act needs to be changed language of the MBTA. The Service is MBTA does not prohibit incidental take. to protect those who injure birds on a charged with implementing the statute This rulemaking codifies that purely accidental basis. However, there as written. The Department’s Principal interpretation; thus, the Service has needs to be language that allows for the Deputy Solicitor, exercising the ultimately determined that developing a prosecution of individuals who are authority of the Solicitor pursuant to framework to authorize incidental take grossly negligent. Secretary’s Order 3345, determined in is not an action that is consistent with Response: During scoping for the M–37050 that the statute as written does the statute. The Service notes that a associated EIS, we considered an not prohibit incidental take. We are Federal regulation applies across all alternative where the Service would codifying that interpretation in this agencies of the Federal Government and promulgate a regulation defining what rulemaking. Thus, we are simply provides a more permanent standard constitutes incidental take of migratory interpreting the existing language and that the public and regulated entities birds and develop an enforcement not amending the statute or altering can rely on for the foreseeable future, in policy requiring gross negligence to statutory language in this regulation. contrast to continued implementation of establish a misdemeanor violation of the Comment: One commenter suggested the MBTA under a legal opinion. This MBTA. The Service eliminated this amending the proposed regulatory

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language by adding: ‘‘provided that the mechanism that the Service can apply to Response: The Service appreciates the person, association, partnership, or require actions that avoid or minimize perspective of the entities that support corporation takes reasonably practicable incidental take that is otherwise this rulemaking. precautionary measures to prevent the preventable. Comment: Multiple commenters taking or killing of migratory birds. Response: The Service does not agree supported the proposal because, in their Owing to the diversity in operations of that the MBTA is the only mechanism view, criminalizing incidental take does the various industries affected by this to achieve bird conservation. The not advance conservation and other rule, USFW shall develop industry Service is committed to working with mechanisms could be used to protect specific guidelines for developing those that voluntarily seek to reduce birds. precautionary measures to prevent the their project-related impacts to Response: The Service agrees with taking or killing of migratory birds.’’ migratory birds. In addition to the this comment. We will continue to work Response: The language proposed by MBTA, other Federal and State laws with any entity that seeks to reduce the commenter is not consistent with protect birds and require specific their impacts to migratory birds to our interpretation of the MBTA. The actions to reduce project-related achieve conservation outcomes. proposal would essentially be adding impacts. Comment: One commenter asked who language to the MBTA given our Comment: Multiple commenters would be financially responsible to interpretation that it does not prohibit opposed the proposed rule because, as mitigate and/or reverse the effects of an incidental take. We have no authority to written, the rule does not hold entities environmental disaster on a large or amend the statutory language or add accountable for causing the incidental small scale, to prevent any further provisions that simply are not there. take of migratory birds. incidental takes of birds or their eggs Thus, we respectfully decline to adopt Response: Our interpretation set forth once the disaster is under way. The the commenter’s proposed language. in the proposed rule is that take commenter noted that under the prior Comment: Multiple commenters incidental to the purpose of the action interpretation of the MBTA, the party opposed the proposed action because is not prohibited under the MBTA. We causing the disaster was clearly held recent studies have demonstrated that will not hold entities accountable for liable and financially responsible. North American bird populations are take that does not violate the MBTA. Under the new interpretation, this is no facing significant population declines. The Service will continue to manage longer the case. The commenter asked Birds have economic and ecosystem and enforce the provisions of the MBTA whether the Service will be establishing services value, and, if birds continue to as they relate to activities directed at a fund to step in for cleanup and decline, the economy and ecosystems migratory birds, including ensuring incidental take mitigation when will be compromised. The commenters those holding take permits are environmental mishaps occur. If not, called for more protections and see the accountable for complying with these where does the Service anticipate such proposed rule as weakening actions for permits. needed funds will originate? the conservation of migratory birds. Comment: Some commenters Response: The proposed rule does not Response: The Service is aware of the suggested that the interpretation of the directly affect Natural Resource Damage recent science that demonstrates that MBTA set forth in the proposed rule is assessments for accidents that have North America has lost nearly 3 billion flawed and does not account for the environmental impacts because birds over the last 50 years. However, mission of the Department and the statutory authorities that provide the the proposed action is based on a legal Service. basis for that program do not rely on the interpretation of the MBTA. It is also Response: The enforcement of the MBTA. Pursuant to the Comprehensive noteworthy that those losses occurred MBTA is just one part of how the Environmental Response Compensation despite the Department’s prior Service works with others to conserve and Liability Act, the Oil Pollution Act, interpretation of the MBTA as migratory birds. We have found that and the Clean Water Act, the prohibiting incidental take. The Service building partnerships domestically and Department is authorized to assess is a conservation organization and will internationally to build strategies for injury to natural resources caused by continue to address bird-conservation implementing measures that protect, releases of hazardous substances and priorities in a manner that provides for manage, and conserve migratory birds is discharges of oil to compensate the the most effective conservation of a more effective conservation tool than public for lost natural resources and protected species, such as working with enforcing incidental take under the their services. The Department’s domestic and international partners to MBTA on a piecemeal basis with our assessment of natural resource injuries conserve habitat and habitat limited law enforcement resources. A under the Natural Resource Damage connectivity, addressing threats both few examples of our partnership work Assessment Program includes any anthropogenic and natural, developing include: (1) Managing and injury to migratory birds, which in partnerships with Federal, State, and implementing grant programs under the many cases could otherwise be Tribal agencies, industry and NGOs that Neotropical Migratory Bird classified as incidental take. address the greatest conservation needs, Conservation Act and North American Comment: One commenter asked and effectively implementing the array Wetlands Conservation Act, (2) using whether any best management practices of Federal statutes that provide Joint Ventures to build regional would be required under any protections for migratory birds. For partnerships for habitat and species circumstances and how the proposed example, the Service will continue to conservation, and (3) working with rule affected both Executive Order work with any partner that is interested other Federal, State, and industry 13186: Responsibilities of Federal in reducing their impacts on birds by partners to develop voluntary solutions Agencies to Protect Migratory Birds and developing voluntary practices to for reducing impacts to migratory birds the implementation of the Land-based reduce mortality and providing and their habitat. Wind Energy Guidelines. technical assistance for effectively Comment: Multiple commenters Response: Best management practices implementing those practices. supported the proposed action because (BMPs) have never been required under Comment: Multiple commenters a clarification of the scope of the MBTA the MBTA, other than as part of our opposed the proposed rule because it was needed to avoid unnecessary occasional application of the special removes the MBTA as the only regulation of industry projects. purpose permit provision to authorize

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incidental take under certain Service explain in the preamble how monitor incidental mortality and the circumstances, as there has never been such action compounds or alleviates the stressors causing this mortality, as well a specific permit provision for findings of certain reports and other as to develop voluntary best practices authorizing incidental take that would available science and biological data— that industry sectors can implement require their implementation. The including but not limited to data from when they seek to reduce their project- Service has worked with project Partners in Flight, the State of the Birds level impacts on the environment. proponents to encourage the voluntary report, Christmas Bird Counts, Breeding Comment: One commenter focused on use of BMPs and used enforcement Bird Surveys, and project-level nesting impacts of wind energy and suggested discretion to determine when an and demographic information that the that the final rule should provide enforcement action was appropriate. Service has on file. language that terminates wind-energy Under the proposed rule, the Service Response: The Service acknowledges projects where the migratory bird will continue to work with and that birds are currently in decline. mortality levels are not remediable. The encourage the voluntary Numerous technical reports including commenter suggested that, without such implementation of BMPs when the the 2019 Science paper have highlighted thresholds, the MBTA will be rendered entity seeks to reduce their project- the declines in many habitat groups due meaningless. related impacts. E.O. 13186 remains in to numerous anthropogenic sources (see Response: Our interpretation of the place and is a valuable tool for Federal page 26). However, this rulemaking is MBTA concludes that the statute does agencies to work cooperatively to not expected to affect significantly those not prohibit incidental take, including implement bird conservation strategies continuing declines. The Service will any resulting from wind-energy within their agency missions. The Land- continue to work with partners to facilities. However, the Service will based Wind Energy Guidelines are a address migratory bird declines outside continue to work with any industry or voluntary approach to siting wind- of a regulatory context. entity that is interested in voluntarily Comment: One commenter in support energy facilities. This rule may reduce reducing their impacts on migratory of the proposed rule noted that there are the incentive for affected parties to birds to identify best practices that other statutes that protect birds, implement these guidelines. could reduce impacts. With respect to including NEPA; industry would still Comment: Several commenters stated the wind industry, the Service will have to comply with some of these laws that some estimates of bird mortality continue to encourage developers to and thus birds would benefit. There are used in the rule are more than a decade follow our Land-based Wind Energy also State and local laws that would old and out of date. In one of the Guidance developed through the comments, they referenced that the prevent the unnecessary killing of birds. collaboration of many different proposed rule cites 500,000 to 1,000,000 Response: The Service recognizes that stakeholders, including industrial and deaths per year at oil pits as old and there are numerous reasons why an environmental interests. high, suggesting that new technological entity would continue to implement Comment: Multiple commenters innovation and State regulations have best practices, including other Federal caused a decrease in oil pit mortality. or State laws, industry standard recommended that the Service abandon Response: The summary of mortality practices, public perception, etc. These the current proposed action and revert from anthropogenic sources was based mechanisms could reduce impacts to to the previous M-Opinion and the 2015 on the best scientific information birds in some circumstances. We note, MBTA proposal for developing and currently available. Often, monitoring of however, that NEPA does not provide implementing a general permit program industrial projects is not conducted, and substantive environmental protections that works with industry to identify best when it is, the Service rarely gets by itself. practices to avoid or minimize avian reports of the findings. The Service Comment: Multiple commenters mortality. The commenters noted that a recognizes that these estimates may recommended the Service clarify how well-designed general permit system represent both over- and under- the Service will continue to collect will also create efficiencies for industry estimates depending on the mortality project-level data on industrial impacts by removing regulatory uncertainty for source. Within our environmental to birds. There is concern from the developers and investors. Permit analysis of this rulemaking conducted commenters that the impact of this holders would have no risk of under NEPA, we acknowledge that other proposed rule will be a long-term loss prosecution provided they comply with Federal or State regulations may require of data and oversight of industrial the terms of the permit. Further, it will measures that reduce incidental take of impacts to avian species. discourage actors who fail to avoid, birds. In the proposed rule and the Response: Project-level information is minimize, or mitigate for the impacts of NEPA notice of intent, and during the still recorded when a project proponent their activities from gaming the system public scoping webinars, the Service engages the Service for technical and taking advantage of the Service’s requested that new information and data assistance. It is not required for projects limited prosecutorial resources. be provided to update our current to submit data on incidental take; Response: In the draft EIS, we information on sources and associated however, we encourage proponents considered an alternative under which magnitude of incidental take. The voluntarily to submit these data so that the Service would promulgate a Service did not receive any industry- we are able to track bird mortality. We regulation defining what constitutes related information for further note that even under the prior incidental take of migratory birds and consideration. If an industry sector has interpretation of the MBTA, there was subsequently establish a regulatory new or different information, we no general mechanism to provide for the general-permit framework. The Service encourage them to submit those data to collection of project-level data on eliminated that alternative from further the Service for review and impacts to avian species. When an consideration because developing a consideration. intentional take permit is issued, general-permit system would be a Comment: A few commenters stated conditions of that permit request any complex process and better suited to that the Department of the Interior’s information on incidental mortalities analysis in a separate, subsequent reinterpretation of the MBTA removed a that are discovered. The Service will proposal. Thus, we did not consider broad layer of protection to birds against continue to work to develop developing a general permit program as industrial harms and requested that the partnerships with industry sectors to suggested by the commenters.

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Comment: One commenter will have no effect on those species. We substantially as further declines in recommended imposing stricter also note that several Service programs migratory bird populations could result regulations along main migratory routes exist that are designed to conserve in additional management requirements where high concentrations of MBTA species that are candidates for ESA and protections for declining species, species are biologically vulnerable listing, such as Candidate Conservation including additional listings under State (including stopover areas along Agreements and the Prelisting endangered species protection laws migration routes, and core breeding/ Conservation Policy. implemented by State fish and wildlife wintering areas), especially for Regarding the future listing of agencies. This series of events would threatened or endangered species or migratory birds as threatened species, as lead to further restrictions and require Species of Conservation Concern. stated in the final rule rescinding the substantial resources to manage and Response: Given our interpretation of ‘‘blanket rules’’ for threatened species ensure conservation and recovery. This the MBTA, the commenter’s proposal is (84 FR 44753, August 27, 2019) and rulemaking may violate federalism not a viable option. This final rule restated here, our intention is to finalize rules, as States will be required to use defines the scope of the MBTA to species-specific section 4(d) rules their budgets to implement migratory exclude incidental take, thus incidental concurrently with final listing or bird protection actions, including take that occurs anywhere within the reclassification determinations. regulation development and permit United States and its territories is not an Finalizing a species-specific 4(d) rule systems. The limitation of State enforceable violation. This rule does not concurrent with a listing or protections to projects within State affect the prohibitions under the ESA, reclassification determination ensures borders, coupled with the absence of the and thus species listed under that that the species receives appropriate Service providing necessary leadership statute would continue to be covered by protections at the time it is added to the and coordination would severely hinder all the protections accorded listed list as a threatened species. migratory bird management and species under the ESA. The status of Comment: Multiple commenters recovery efforts nationwide. migratory bird populations in the areas noted that the effects of this rule on Response: This rule would not violate described by the commenter may be ESA-listed species must be seriously any laws or executive branch policy relevant in our decision to permit take scrutinized in an EIS as well as in regarding unfunded mandates. under the Service’s current permit section 7 consultation under the ESA. Unfunded mandates occur when system. The proposed rule will harm species Congress enacts Federal law that Comment: Multiple commenters that have already been listed as includes directives that must be carried noted that M-Opinion 37050 and the threatened and subject to broad ESA out by States and does not also provide proposed action will likely result in section 4(d) regulations. funding for the States to fulfill those increased mortality of migratory birds. Response: The effects of this rule have Federal requirements. This rule would Thus, in combination with the already been analyzed in the EIS accompanying alter the Service’s interpretation of the significant population declines of many this rulemaking. Under the ESA, we MBTA to exclude incidental take from species, the proposed rule will almost have determined that this rule regarding its scope. Thus, it removes what had certainly result in the need to increase the take of migratory birds will have no been a Federal requirement for States to the number of bird species listed under effect on ESA-listed species. This rule avoid engaging in or authorizing the Endangered Species Act (ESA) and does not alter consultation requirements activities that incidentally take increase the risk of extinction. The under the ESA for migratory bird migratory birds. This rule effectively commenters noted that such deleterious species also listed as endangered or removes that directive. State partners effects are a more than sufficient basis threatened species. Any likely impacts are critical to the conservation of to withdraw the proposed rule (and the of a Federal action on migratory bird migratory birds, and we encourage underlying Opinion). Given the species also listed under the ESA would States to continue to conserve and Service’s recent elimination in the ESA require consultation whether or not manage migratory bird species regulations of automatic take protection incidental take of that species is consistent with the MBTA and would be for threatened species (subject to the prohibited under the MBTA. Thus, this happy to engage with and assist our adoption of species-specific 4(d) proposed action would not have any State partners in their management and regulations), the proposed rule will have effect on those species. conservation of MBTA species. The extremely deleterious impacts going Comment: Commenters claimed that Service acknowledged in the EIS that forward as the Service increasingly lists the Service must examine the effect the this rule may result in incremental species as threatened without affording proposed rule would have on certain declines in bird populations as them any protections for incidental take ESA-listing decisions, such as a not- companies learn they are not required to under the ESA. These entirely warranted determination or 4(d) rule, implement best management practices foreseeable effects of the action which may have been determined with to decrease incidental take. Enforcement proposed by the Service must be the understanding that the MBTA actions have been few since the 2017 M- analyzed in formal section 7 incidental take protections would still Opinion, so it would be speculative to consultation under the ESA. apply. assert that this change in policy will Response: While it is possible that Response: The Service has not issued result in further significant population this rule could potentially be a any 4(d) rules or not-warranted declines. However, States may decide to contributing factor in the future ESA determinations with the understanding expend resources for conservation and listing of a migratory bird species, there that MBTA protections stemming from recovery of these species due to this is no requirement under section 7 to an interpretation that it prohibits rulemaking. address the potential effects of an action incidental take would still apply. Comment: How is the Service going to on a species that may hypothetically be Comment: Multiple States commented monitor bird populations to ensure that listed at some undetermined point in that the proposed rule would lead to this proposal does not lead to increased the future. Instead, section 7 requires an further declines in migratory bird population declines? If significant agency to analyze the effects of an populations. The States voiced concerns declines are noted, how will the Service action on currently listed or proposed- that this rule would increase their respond if declines are attributed to to-be-listed species. This rulemaking species-management burden incidental take? The commenter

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recommended including a clause to stop develop and implement best killing migratory birds, or availability of the implementation of this proposed management practices, the MBTA has standard industry practices. Some rule if populations are negatively provided a key incentive for adopting entities may continue to implement impacted by incidental take from common-sense practices that protect practices that reduce take for any of anthropogenic sources. birds. The commenters suggested that, these reasons or simply to reduce their Response: Monitoring bird without any legal obligations, industries perceived legal risk due to short- or populations is outside the scope of this no longer need to consider how their long-term uncertainty concerning future action. However, the Service continues activities may harm migratory birds or application of laws and regulations to work with the bird conservation take action to prevent any harm. Thus, governing take of migratory birds. community to identify, support, and it is unlikely that the Service’s Comment: One commenter stated that implement bird-monitoring programs. implementation of voluntary measures the removal of Federal authority to The Service is partner to multiple efforts will result in benefits to birds. regulate incidental take of migratory to track migratory bird populations (e.g., Response: There are many other birds could strongly affect offshore- Partners in Flight Landbird Plan, Avian factors that influence an entity’s wind siting and management decisions. Conservation Assessment Database, decision to implement measures that One of the most important ways to etc.). These efforts and partnerships are may protect migratory birds from minimize avian impacts from wind- not impacted by this rulemaking, and incidental take. In some cases, there are energy development and make it ‘‘bird- data will continue to drive the actions other Federal, State, Tribal, or local laws friendly’’ is to site projects properly and of the Service to protect migratory birds. and regulations that directly or implement measures to avoid impacts. The clause proposed by the commenter indirectly require actions to benefit or The commenter noted that many would be inconsistent with our otherwise reduce impacts on migratory stakeholders are engaged in identifying interpretation of the Act and would birds. Federal statutes such as the common-sense mitigation measures to essentially add a requirement to the Endangered Species Act and the Bald minimize remaining impacts from the MBTA. Only Congress can amend and Golden Eagle Protection Act require construction and operation of wind- statutory language. entities to take steps to reduce energy facilities. Without a Federal Comment: Multiple commenters incidental take and protect habitat, mechanism for incorporating suggested that compliance with the which may in turn benefit migratory consideration of incidental take of MBTA was not a burden to State and birds and other wildlife. Many other migratory birds into decision-making, it local governments and has Federal statutes include provisions that will be much more difficult to make straightforward and minimal impacts on require implementing agencies to assess informed decisions that benefit bird capital-improvement projects. The and mitigate potential environmental populations. commenters noted there is a successful impacts, including impacts to migratory Response: The Service works with history of the Federal, State, and local birds and their habitat. In addition, offshore-wind-energy companies and governments along with industry Federal agencies are required to Federal and State agencies responsible working in coordination to implement evaluate their impacts to the for regulating this industry. The Service measures to reduce impacts to migratory environment under NEPA. NEPA will continue to work to provide birds and that the proposed rule would compliance requires Federal entities to recommendations for voluntary dismantle the extraordinary and identify impacts to the environment measures and siting locations based on successful history of this cooperation. affected by a proposal, including sound science. Given the success of the MBTA to date, impacts to migratory birds and Comment: One commenter noted that the commenter felt the proposed action socioeconomic impacts if they are likely the MBTA has not been used against was unnecessary. to occur. NEPA also requires Federal many businesses in court because it has Response: This rulemaking codifies entities to assess potential mitigation of encouraged businesses to self-regulate, our interpretation of the MBTA as unavoidable adverse environmental to the benefit of people and birds alike, prohibiting only conduct directed at impacts, which may include analysis of as well as those businesses. This migratory birds. It should not be viewed project design or mitigation measures approach has long-term financial benefit as standing in the way of the successful that reduce potential impacts to as it focuses on prevention rather than actions the commenter notes. The migratory birds. reparations in the future. Service will continue to work with State Some States have statutes with Response: The Service has provided and local governments as well as procedural requirements similar to in the past and will continue to provide industry to implement voluntary those found in NEPA (e.g., California in the future technical assistance to measures to reduce impacts to migratory Environmental Quality Act) and a interested parties to implement birds. This rulemaking should increase variety of provisions regulating some measures to reduce negative effects on that cooperation and coordination by form of incidental, indirect, or migratory birds. removing the specter of a potential accidental take, or potentially allowing Comment: One commenter suggested criminal prosecution, which has often commissions or agencies to make that in some cases incidental take by acted as a deterrent for private parties to applicable rules. In 2019, in response to industry should be considered share information with the Service on M-Opinion 37050, California passed the purposeful since some of this mortality their impact on migratory birds and Migratory Bird Protection Act, which is well studied, predictable, and there work with the Service on conserving makes it unlawful to take or possess any are easy low-cost mitigation options migratory bird species. Economic effects migratory nongame bird protected under available to reduce these takes. The on government entities are examined for the MBTA. Additional States may create commenter contended that entities that each alternative in the RIA. new regulations to clarify that they have choose not to implement known Comment: Multiple commenters jurisdiction to regulate or otherwise measures are purposefully taking noted that the proposed action removes oversee incidental take of migratory migratory birds. all incentives for industry to work with birds. Other factors entities consider Response: Incidental take refers to the Service. The commenters noted that include public perception, status as a mortality that occurs in the course of an through judicious enforcement and by green company, size of company, cost of activity that is not directed at birds and working directly with industries to implementation, perceived risk of often does not relate to birds in any

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way—for example, the intent of building this correct interpretation of the MBTA MBTA at that time, but we have since a wind turbine is generating energy not will reduce regulatory uncertainty changed our position as reflected by this killing birds. Though knowledge of the created by the prior agency practice of rulemaking. likely results of a suspect’s conduct may reliance on enforcement discretion, we Comment: Multiple commenters be relevant to determine whether a acknowledged in our draft EIS that stated that the rule sends a message to suspect has the requisite intent to different State laws may create industry that companies do not need to violate a criminal statute, it is not difficulties for national companies that implement even modest measures to relevant under the MBTA for two must navigate those differences. We also prevent entirely foreseeable bird reasons: First, because criminal note that this problem already exists in mortality. The commenters claimed that misdemeanor violations under the large part and do not expect this the rule communicates that for even the MBTA are a strict-liability crime, they rulemaking to significantly contribute to most egregious and demonstrably do not require proof of intent. Second, inconsistencies in State laws. We will deliberate violations, violators’ real- the MBTA only prohibits actions that continue to cooperate with States that world liability will still be limited by are directed at migratory birds. An request our assistance in developing Service funding, investigatory resources activity that causes incidental take will best management practices for various and expertise, and political will with never be directed at migratory birds industries that minimize incidental take respect to enforcement. In all three regardless of the actor’s knowledge of of migratory birds. In fact, such categories, the Service is presently ill the potential consequences. partnerships will likely become suited to fulfill the role envisioned by Comment: The analysis under the increasingly important to promote the proposed rule. To pretend otherwise Regulatory Flexibility Act shows likely conservation of migratory birds and lead ignores the agency’s own established minimal economic benefit to all of the to greater consistency in both practices and guidance and constitutes affected businesses. If anything, this conservation and regulation nationwide. another failure of the Federal finding argues that the proposed rule is Comment: One commenter stated that Government’s trust responsibilities. a solution in search of a problem. In the in an international forum the United Response: We disagree with the commenters’ experience the expenses of States agreed that the MBTA is a strict- commenters’ assertion that this rule taking measures to minimize incidental liability statute covering incidental take. signals that industry should not take are minor and even the fines are The commenter noted that in 1999, implement best management practices. minor to small businesses. This analysis several environmental groups from The Service continues to be willing and really shows that the benefits of the Mexico, Canada, and the United States able to work with any entity that is proposed rule are overblown and filed a submission under the North interested in developing and targeted to a few companies that just do American Agreement on Environmental implementing voluntary measures that not want to be regulated. Cooperation asserting that the United will avoid or minimize impacts to Response: The purpose of this action States was failing to enforce migratory birds. For example, the is to provide an official regulatory environmental laws, including the Service is working proactively with both definition of the scope of the statute as MBTA. The United States disputed the the communication tower industry and it relates to incidental take of migratory allegations, but acknowledged that the with Federal agencies, cities, and other birds. This action is necessary to MBTA is a strict-liability statute municipalities to address tower and improve consistency in enforcement of covering incidental take, writing: glass collisions. The Service will the MBTA’s prohibitions across the ‘‘Under the MBTA, it is unlawful by any continue to investigate instances of country and inform the public, means or manner, to pursue, hunt, take, unauthorized taking or killing directed businesses, government agencies, and capture [or] kill any migratory birds at migratory birds. This rulemaking will other entities what is and is not except as permitted by regulation 16 not affect those investigations. prohibited under the MBTA. U.S.C. 703–704. Except for the baiting of Comment: A commenter noted that Comment: Multiple commenters game birds, the MBTA is a strict liability deaths of birds that are preventable and noted that the purpose and need of the statute that allows for the imposition of foreseeable are, in the context of the rule is to create legal certainty and that criminal penalties.’’ This is clear MBTA, negligent. Deliberate implies an this rulemaking removes a patchwork of evidence of the longstanding U.S. intentional act, where foreseeable means court decisions that create uncertainty position under international law, and in consequences that may be reasonably for MBTA compliance. The commenters agreement with its treaty partners, that anticipated. Nevertheless, the proposed noted that there is currently a the MBTA is a strict-liability statute rule attempts to parse the difference patchwork of legal standards that covering incidental take. The United between definitions of the terms protect migratory birds in each of the States must honor its obligations under ‘‘deliberate’’ and ‘‘foreseeable.’’ States. In the absence of national international law or change them Regardless of the scale and scope of protection against incidental take, each through an act of Congress. destruction, the rule proposes to make State may seek to enforce or embolden Response: The language cited by the deliberateness in the form of passive existing State rules, thereby creating commenter simply refers to the language negligence consequence-free. By additional regulatory uncertainty for of the MBTA and asserts that it is a specifying that entities should be held industry. The inconsistency among strict-liability statute. As described in liable only if they can be proven to have States in State code may complicate the preamble to this rulemaking, the set out to purposefully kill birds, the industry understanding of expectations Service continues to view the proposed rule flips the burden from across the many States in which they misdemeanor provision as a strict- regulated entities to the government. If operate, potentially requiring multiple liability crime consistent with the promulgated, the rule would force State permits to conduct business. majority of Federal courts that have Service employees to act as private Response: It is appropriate for ruled on the issue. Any statements made detectives with the nearly (and from all individual States to determine whether by the United States in prior appearances, deliberately) impossible and how to regulate incidental take of international meetings regarding task of proving what was in the hearts migratory birds, given that the MBTA whether the MBTA prohibits incidental and minds of violators. does not prohibit incidental take. take would have been consistent with Response: The rule does not attempt Although we conclude on balance that the Department’s interpretation of the to parse the difference between

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‘‘deliberate’’ and ‘‘foreseeable.’’ Those analysis includes comparing the effects alternatives include potential outcomes terms are not relevant to our of both interpretations. of the proposed rulemaking), and that interpretation of the MBTA. We Comment: A comment stated that an process will be complete before any currently authorize, and will continue agency charged with administering a final formal agency decision is made. A to authorize, various activities that statute cannot restrict, amend, repeal or draft EIS, issued subsequent to the directly take migratory birds through expand it without congressional proposed rule on June 5, 2020, analyzed our permit regulations at 50 CFR part approval. An agency has no authority to various alternatives, some of which 21. The Service’s Office of Law remove statutory protections without were discussed in the public webinars Enforcement will continue to investigate congressional approval. A rulemaking conducted as part of the NEPA scoping unauthorized taking and killing of cannot violate a statute or make it process. Those alternatives analyze the migratory birds resulting from actions inoperable and must be consistent with environmental effects of both directed at migratory birds. The the legislative intent of the law. The prohibiting incidental take under the rulemaking will not change those proposed rule impermissibly excludes MBTA and excluding incidental take investigations in any way or require our requirements of foreseeability and under the MBTA and gave the public officers to prove anything in addition to negligence by arguing that the statute opportunity to comment on those what they already would have to prove. only prohibits actions directed at birds effects. In some sense, actions directed at to exempt industries whose projects kill Comment: Multiple Tribes stated that migratory birds are deliberate in nature, birds incidentally. The proposed rule this proposed action violates multiple but the concept of foreseeability is not would largely make the statute Tribal-specific treaties, dating back to relevant. Regarding the commenter’s inoperable, thus violating its the mid-1800s. These treaties statements on enforcing a negligence congressional intent by removing its established the Federal Government’s standard, the misdemeanor provision of purpose. trust responsibility to Federally the MBTA contains no mental state Response: The preamble to this Recognized Tribes. The Federal Indian requirement and is a strict-liability rulemaking explains in detail our trust responsibility is a continuing crime. For this reason, we cannot interpretation of the language of the fiduciary duty and legal obligation owed introduce a mental-state requirement MBTA, including applicable legislative by the Federal Government to Tribes as such as negligence to the MBTA’s history and why our interpretation is beneficiaries. Under the trust misdemeanor provision. consistent with that history. Nothing in responsibility, the United States is Comment: Multiple commenters this rulemaking changes the language or legally responsible for the protection of noted issues with how the proposed purpose of the MBTA. Only Congress Tribal lands, assets, resources, and rule and associated NEPA document can enact or amend statutory language. treaty rights for the benefit of Tribes. define a ‘‘Federal action.’’ The The proposed rule uses the commonly Government-to-government consultation commenters noted that fundamental to understood definition of ‘‘incidental’’ is one facet of effectuation of the trust this rulemaking effort is to identify and does not purport to redefine that responsibility. Several Tribes stated that properly the major Federal action. Major term in any way. As stated on numerous they have no record of receiving any Federal actions include policy changes occasions throughout this rule, the communication or outreach from the like M-Opinion 37050. The commenters MBTA’s criminal misdemeanor Service or DOI regarding the proposed stated that the rule ignores the real provision is a strict-liability crime and regulation revisions or associated draft major Federal action and agency we have no authority to insert a mental EIS, much less an invitation to consult decision of greatest consequence: The state such as negligence into that on either. The Tribes recommended that Service’s reliance on Interior’s M- provision. That approach would require the rulemaking process be paused so Opinion 37050 to reverse course on congressional action. The MBTA will that intelligent and respectful decades of protections for migratory continue to operate as Congress consultation with any Tribe that birds against incidental take. The intended it to operate. The Service will expresses interest in response to the environmental consequences of the continue to implement the full suite of invitation to consult can proceed. underlying sweeping policy change, regulations authorizing conduct Response: The Service takes its Tribal which occurred in M-Opinion 37050, directed at migratory birds. trust responsibilities seriously and have yet to be held up to the mandates Comment: Multiple commenters completed government-to-government of NEPA. The commenters stated that, to suggest that the Service’s choice to consultation when requested. Prior to proceed in any defensible fashion, the release a proposed rule based on a the publication of the proposed rule, the agency must reckon with the policy change it is already Service held six public scoping consequence of adopting M-Opinion implementing, and conduct a NEPA webinars in March 2019, which were 37050 in the first place. analysis after-the-fact, turns NEPA on its open to any members of the public, Response: The EIS associated with head. This confused order of events also including members of Federal and State this rulemaking analyzes the difference hampers a fair public understanding of agencies, Tribes, non-governmental between adopting an interpretation of the agency’s proposed action, organizations, private industries, and the MBTA that excludes incidental take alternatives, and likely impacts. The American citizens. On March 16, 2020, and the prior interpretation that the agency in essence has already been the Service held a webinar that was MBTA prohibits incidental take. Thus, implementing the underlying policy restricted in attendance to allow only in our view, the M-Opinion was neither change that is reflected in the Tribal members to attend, with the sole final agency action nor major Federal rulemaking without the benefit of public purpose of informing Tribes of the action. It was simply the initial stage of review and comment at the time it made proposed action. Tribal representatives a process to alter agency practice to that policy change. were allowed to ask questions and seek conform to the correct reading of the Response: The procedures followed in clarifications. In addition, a letter was MBTA regarding incidental take. We this rulemaking process were sent through our regional offices to conducted the NEPA analysis at the appropriate and lawful. The Service invite Tribes to engage in this proposed appropriate time to analyze the engaged the NEPA process at the time action via the government-to- environmental effects of this rulemaking it began to consider rulemaking to government consultation process. Nine to codify that interpretation. That codify the M-Opinion (the reasonable Tribes requested government-to-

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government consultation. The Service our interpretation of the MBTA. Justice comply with the law.’’ 85 FR at 5922. completed these consultations prior to Gorsuch in Bostock was quite clear that According to the Service, this absence of publication of this final rule. legislative intent is only irrelevant if the regulations designed to address Comment: Contrary to the Service’s language of the statute is plain, as he incidental take, and the reliance instead position, the proposed definition of found the applicable language of the on discretionary enforcement, ‘‘has incidental take would not improve the Civil Rights Act to be. He noted that a resulted in regulatory uncertainty and implementation of the MBTA. This statute’s application may reach inconsistency,’’ thus necessitating a definition still requires law enforcement ‘‘ ‘beyond the principle evil’ legislators ‘‘truly national standard’’ and a to prove intent, which can be just as may have intended or expected to ‘‘uniform’’ approach to implementation difficult to prove, just as legally address,’’ Bostock, 140 S. Ct. 1731, of the MBTA. Id. at 5922–23; see also uncertain, and equally burdensome to 1749, but only where no ambiguity draft EIS at 3 (stating that the ‘‘purpose law enforcement. exists in the broadness of that statutory and need’’ for the action is to ‘‘improve Response: This rulemaking has no language. We do not rely on an consistency in enforcement of the effect on investigations into conduct argument that section 2’s application to MBTA’s prohibitions’’). This refusal to directed at migratory birds or the incidental take would demonstrate scrutinize an otherwise viable MBTA’s criminal felony and baiting ambiguity simply because Congress alternative that would further the provisions that require a specific mental could not have foreseen that application agency’s own purported objective—i.e., state. We will continue to interpret the in 1918. Instead, the language of increasing certainty and consistency in misdemeanor provision of the MBTA as MBTA’s section 2 is inherently enforcement—while also promoting the a strict-liability provision with no ambiguous in nature as it relates to conservation of migratory birds, mental-state requirement, including incidental take for the reasons stated in constitutes precisely the kind of intent. the preamble to this rulemaking and as arbitrary and capricious conduct that Comment: One commenter noted that evidenced by the split in Federal the Supreme Court denounced in its the recent Supreme Court ruling in appellate courts that have addressed the ruling on the DACA rescission. Bostock v. Clayton County, Georgia, 140 issue. Therefore, the Supreme Court’s Response: The Court’s holding in S. Ct. 1731 (2020), does not support this holding in Bostock does not apply here. Homeland Security does not apply to rulemaking. In Bostock v. Clayton Comment: The same commenter also this rulemaking because the Service has County, the Supreme Court relied on the noted that the recent Supreme Court considered the prior Departmental ‘‘ordinary’’ meaning of title VII of the ruling in Dep’t of Homeland Security v. interpretation and agency practice in Civil Rights Act of 1964, to hold that it Regents of the University of California, developing this rulemaking. Both the is unlawful to discriminate in 207 L. Ed. 2d 353 (2020), similarly does underlying M-Opinion and the employment decisions based on not support moving forward with this preamble to this rule analyzed the prior individuals’ sexual orientation. Id. at rulemaking. In Homeland Security, the interpretation and explained both why 1754. In reaching this result, the Court Supreme Court rejected the Trump it is incorrect and why it does not squarely rejected the argument that the Administration’s effort to rescind the provide the same level of certainty or Court’s reading of the statute’s Deferred Action for Childhood Arrivals consistency in enforcement. The EIS expansive terms ‘‘ignore[d] the (‘‘DACA’’) program, partly because the examined the impacts of this legislature’s purpose in enacting Title Department of Homeland Security rulemaking and specifically compared VII’’ and that ‘‘few in 1964 would have (‘‘DHS’’) had sought to justify its the environmental impacts of adopting expected Title VII to apply to rescission of the entire program on the each interpretation of the MBTA to discrimination against homosexual and basis that certain affirmative benefits inform the decisionmaker of the transgender persons.’’ Id. at 1745. The should not be extended to DACA consequences of adopting either Court reaffirmed the longstanding recipients while failing to consider the alternative. Thus, the Service principle that ‘‘ ‘the fact that [a statute] policy alternative of decoupling the scrutinized alternatives to the preferred has been applied in situations not extension of benefits from the deferral of action of codifying our interpretation expressly anticipated by Congress’ does deportation action. Id. at 375. The Court that the MBTA does not prohibit not demonstrate ambiguity, instead, it held that ‘‘when an agency rescinds a incidental take. simply ‘demonstrates [the] breadth’ of a prior policy its reasoned analysis must Comment: A commenter stated that legislative command.’’ Id. at 1749 consider the ‘alternative[s]’ that are the prosecution of incidental take under (citation omitted). The Supreme Court’s ‘within the ambit of the existing the MBTA does not violate due process. result and reasoning are impossible to [policy].’ ’’ Id. at 374, 375 (citation The Solicitor’s M-Opinion and the square with a central justification for the omitted). The Court held that this proposed rule cite due process concerns proposed rule and M-Opinion 37050 on ‘‘omission alone renders [the agency’s] as one justification for rolling back which it is based. According to the decision arbitrary and capricious.’’ Id. at critical protections for migratory birds proposed rule, Congress’s purpose in 375. under the MBTA. The commenter noted enacting the MBTA was to ‘‘regulate the The commenter stated that this ruling that as the Courts have advised, ‘‘where hunting of migratory birds,’’ and thus and analysis further undermine the an otherwise acceptable construction of the broad prohibitions on any taking or Service’s justification for reversing a statute would raise serious killing of migratory birds without course on many decades of prior policy constitutional problems, the Court will authorization from the Service should and practice in implementing the construe the statute to avoid such be construed so as not to encompass any MBTA. The Service has sought to justify problems unless such construction is taking or killing other than that the reversal on the grounds that, plainly contrary to the intent of specifically directed at migratory birds. ‘‘[w]hile the MBTA does contemplate Congress.’’ The commenter claimed the 85 FR at 5918, February 3, 2020. This, the issuance of permits authorizing the Service appears concerned that strict however, is exactly the mode of taking of wildlife . . . [n]o regulations liability for incidental takes of migratory statutory construction rebuffed by the have been issued to create a permit birds does not provide adequate notice Supreme Court in Bostock. scheme to authorize incidental take, so of what constitutes a violation and Response: The Supreme Court’s most potential violators have no formal would lead to absurd results. However, decision in Bostock is not applicable to mechanism to ensure that their actions the interpretation of the MBTA applying

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strict liability to the law’s criminal incidental take. The opposite would inform the rulemaking process and misdemeanor provision covering seem to be true. Regarding enforcement address Tribal concerns. We also sent a incidental take raises no constitutional of Federal law, the Department and the letter through our regional offices problems, nor is it contrary to the intent Service are obligated to interpret and inviting Tribes to engage in this of Congress. Rather, it is the only follow the law established by Congress. proposed action via the government-to- possible reading of the MBTA that This rulemaking will establish a firm government consultation process. Nine accomplishes its intended purpose. position on enforcement of the MBTA as Tribes and two Tribal councils Response: The commenter it applies to incidental take and will not requested government-to-government misconstrues our interpretation of the provide a moving target. The consultation. The Service has completed MBTA’s criminal misdemeanor commenter’s assertion would be better these consultations with all interested provision in section 6. We agree that applied to the Service’s prior exercise of parties. strict liability applies to misdemeanor enforcement discretion under the former Comment: One commenter suggested violations of the MBTA. The due interpretation, which left many that the proposed rule should be process concerns we raise in the regulated entities uncertain whether abandoned because the meanings of preamble to this regulation apply to the their conduct violated the MBTA and ‘‘take’’ and ‘‘kill’’ need to be given broad Department’s prior interpretation of would be investigated by the Service. A interpretations to achieve the remedial section 2 of the MBTA, rather than the primary reason for engaging in this purpose of protecting wildlife and criminal provisions of section 6. The rulemaking is to remove any uncertainty remain consistent with the common law Service determines the relevant in application of the statute to alleviate definitions of these terms. The language in section 2 to be ambiguous, precisely the concern voiced by this commenter stated that the Department which is consistent with the views of comment. and the Service misinterprets the Fifth most Federal courts. Potential due Comment: Multiple Tribes stated that Circuit’s narrow decision in CITGO, 801 process concerns are relevant when the the United Nations ‘‘Declaration on the F.3d 477 (5th Cir. 2015), which only language of a statute is ambiguous and Rights of Indigenous Peoples’’ (2007) holds that the MBTA does not impose assist in divining its proper meaning. (‘‘UNDRIP’’), endorsed by the United strict liability for nonculpable We do not base our current States in 2010, recognizes that omissions. Further, the commenter interpretation solely on those due indigenous people must give Free, Prior noted that the notice of the proposed process concerns; instead, they reinforce and Informed Consent for projects rule acknowledges that Congress our current interpretation as the correct affecting their interests, prior to intended to adopt the common law construction of section 2’s ambiguous approval of any project affecting their definition of statutory terms such as language. land or territories. Multiple federally ‘‘take.’’ Comment: Multiple commenters recognized Tribes expect DOI to honor Response: The preamble to this claimed that because the new Solicitor’s this policy in order to ensure no rulemaking exhaustively explains our Opinion rests on but does not resolve unilateral actions are taken that affect interpretation of the terms ‘‘kill’’ and the Circuit court split indicates that Tribal land, territories or people without ‘‘take’’ in MBTA section 2. We disagree courts are not obligated to adhere to its Tribal consent. with the commenter’s conclusions and interpretation. The fact that no permit Response: The UNDRIP—while not refer readers to our analysis in the program has ever existed for incidental legally binding or a statement of current preamble. take demonstrates established international law—has both moral and Comment: One commenter stated that precedent. The Department and the political force. The United States the proposed rule does not address the Service cannot ethically, legally, or Government announced its support of Service’s statutory authority to change morally make enforcement of Federal the UNDRIP in 2010. In its the interpretation of the MBTA. The law a moving target for the convenience announcement, the United States commenter stated that the proposed rule of the regulated industry. explained that it recognizes the does not facilitate the Service’s only Response: The commenters are correct significance of the Declaration’s authorized action under the statute, that whether the Service interprets the provisions on free, prior-and-informed which is the authority ‘‘to determine MBTA to prohibit or exclude incidental consent, which the United States when, to what extent, if at all, and by take, that interpretation will not by itself understands to call for a process of what means, it is compatible with the resolve the current split in the circuit meaningful consultation with Tribal terms of the conventions to allow’’ courts. However, Federal courts are leaders—but not necessarily the hunting, etc., of such birds, or any part, obliged to defer to an agency’s agreement of those leaders—before the nest, or egg thereof. The Service’s reasonable interpretation of ambiguous actions addressed in those consultations proposal does not even address its statutory language if that interpretation are taken. actual statutory authority. is codified in a regulation that To this end, the United States Response: This proposal does not undergoes public notice and comment supports these aspirations of the authorize the taking of migratory birds; under the Administrative Procedure UNDRIP through the government-to- it defines the scope for when Act. See Chevron, U.S.A. v. Natural government consultation process when authorizations under section 703 are Resources Defense Council, 467 U.S. agency actions may affect the interests necessary and appropriate. Thus, it does 837 (1984). Application of judicial of federally recognized Tribes. The not rely on the statutory language Chevron deference to this rulemaking Service has sought to involve and quoted by the commenter. The authority would provide more certainty than any consult with Tribes regarding this to implement a statute necessarily prior position of the Department by rulemaking. Prior to the publication of comes with it the authority both to increasing the likelihood that Federal the proposed rule, the Service held a interpret ambiguous language in that courts will defer to the Service’s NEPA scoping webinar on March 16, statute and to correct a prior improper interpretation. We do not understand 2020, that we allowed only Tribal interpretation of that language. the point of the commenter’s statement members to attend, with the sole Comment: Multiple commenters that the absence of a prior permit purpose of informing Tribes of the stated that Solicitor’s M-Opinion 37050 program established precedent on proposed action. The Service sought stands in direct conflict with Executive whether or not the MBTA prohibits feedback from Tribal representatives to Order 13186 executed by President

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Clinton in 2001. The commenters noted ESA. This rulemaking will not and the draft EIS provided opportunities that the Executive Order defines ‘‘take’’ significantly affect the Service’s to weigh in on the alternatives to the consistent with the Service’s general obligations under other legal statutes proposed action. Both the M-Opinion definition applicable to all wildlife that protect migratory birds. and the preamble to the proposed rule statutes in 50 CFR 10.12. The Executive Comment: Only a few years ago, the provide detailed background and Order further states without any United States exchanged formal analysis that explain why the Solicitor uncertainty that the MBTA and its diplomatic notes with Canada concluded the MBTA does not prohibit implementing regulations apply to both reaffirming our countries’ common incidental take and why the Service intentional and unintentional takings of interpretation that the treaty prohibited adopted that analysis and conclusion. migratory birds. Because E.O. 13186 has the incidental killing of birds. The The Service has provided a Regulatory not to date been revoked, M-Opinion Service must consider how its proposed Impact Analysis with the proposed rule, 37050 and this rulemaking directly interpretation is consistent with that which provides a cost-benefit analysis conflict with that standing presidential diplomatic exchange and seek Canada’s of the rule along with reasonable directive. The Service must explain how views on the Service’s new alternatives, to comply with Executive the proposed rule meets and affects its interpretation in light of that exchange. Order 12866 and certifies that the rule own responsibilities and those of other Response: The exchange of diplomatic will not have a significant economic Federal agencies under this Executive notes the commenter references impact on a substantial number of small Order. occurred in 2008 and did not amount to entities to comply with the Regulatory Response: We do not agree with the an agreement that prohibiting incidental Flexibility Act. commenters that this rulemaking take was required by the Convention. Comment: A commenter stated that conflicts with Executive Order 13186. Therefore, we do not regard our current the proposed rule will result in a This rulemaking does not directly affect approach to be inconsistent with the dangerous slippery slope, making intent how Federal agencies manage incidental 2008 diplomatic exchange. difficult to prove because if there is no take as set forth in memoranda of Comment: Numerous commenters regulation for ‘‘unintentional’’ take, then understanding (MOUs) developed under requested that the Service return to the anything could be classified as the Executive Order. E.O. 13186 was not previous interpretation of the MBTA ‘‘incidental take.’’ The proposed rule designed to implement the MBTA per and publish a proposed rule that change puts the burden of proof on the se, but rather was intended to govern codifies the former interpretation that Service of determining ‘‘intent,’’ which Federal efforts to conserve migratory the MBTA prohibits incidental take. can be difficult or impossible to truly birds more broadly. In any case, each Response: We have chosen to codify establish. Without retaining the legal Federal agency should continue to the interpretation set forth in Solicitor’s responsibility by individuals and/or comply with the Executive Order, and Opinion M–37050 and interpret the companies under the existing MBTA, each agency with an MOU should scope of the MBTA to exclude there would be far less money available continue to carry out that MOU, incidental take. Thus, we decline the for mitigation of preventable including any conservation measures commenter’s request to codify the prior environmental damage. that reduce incidental take, even though interpretation as set forth in M–37041, Response: The proposed rule does not that take does not violate the MBTA. which would achieve the opposite alter the burden of proof for intentional Comment: The Service must complete effect. take under the MBTA. Over 100 years of a full analysis of the impacts of the Comment: One commenter stated that case law and amendments to the statute Solicitor’s M-Opinion itself, not just the it is notable that no additional have provided extensive guidance on incremental impacts of codifying the M- alternatives were in the proposed rule. the requirements to prove intent under Opinion. The commenter further noted that the the criminal provisions of the MBTA. Response: The EIS analyzes the Service failed to disclose the thought This rulemaking will not disturb that incremental impact of codifying M– process followed in the selection of the case law or change our enforcement of 37050 and the alternative of returning to proposed course of action in the the statute in that context. An analysis the interpretation of the MBTA proposed rule. Therefore, the of the amount of funding available for espoused by the prior Opinion, M– commenter requested that the proposed mitigation of environmental damage, 37041, which concluded the MBTA rule be revised to include the three including incidental take of migratory does prohibit incidental take. The EIS alternatives described in NEPA scoping birds, would be largely speculative at compares the environmental effects of and detailed information about the this point and not directly relevant to both alternatives. Thus, the Service has implementation of each, ensuring all this rulemaking. To the extent there are analyzed the environmental impacts of affected parties are aware of the economic impacts associated with this adopting either opposing interpretation alternatives, through proper notice of rulemaking or the alternatives of the MBTA. rulemaking, as well as how the Service considered in the associated NEPA Comment: The Service must reconcile made its choice. The rule should be analysis, those are described in the EIS how this action aligns with other legal reissued in proposed form, allowing the and the regulatory impact analysis statutes that protect birds and public to weigh in on the alternatives conducted to comply with Executive demonstrate how the rule aligns with and on the Service’s choice. Orders 12866, 13563, and 13771. other statutory obligations such as the Response: An analysis of reasonable Comment: Some commenters noted Fish and Wildlife Conservation Act, alternatives to a proposed action is a that the application of the MBTA as which obligates monitoring for bird requirement of the NEPA process. There restricting anything other than populations. is no requirement under the APA to intentional take of covered species Response: The Service’s consider alternatives in a proposed rule. offends canons of American criminal implementation of the Fish and Wildlife The Service proposed to codify the law and is perhaps most absurd when Conservation Act is not directly relevant interpretation set forth in Solicitor’s viewed in this light. The U.S. Supreme to this rulemaking. The Service will Opinion M–37050 and presented Court has held: ‘‘Under a long line of continue to monitor migratory bird reasonable alternatives to that proposal our decisions, the tie must go to the species, particularly species of concern in the associated draft EIS. The public defendant. The rule of lenity requires and candidates for listing under the comment period for the scoping notice ambiguous criminal laws to be

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interpreted in favor of the defendants scenario in which the majority of demonstrate how this proposed rule subjected to them.... This venerable Americans could be considered actually benefits birds, instead focusing rule not only vindicates the potential criminals. The commenter almost exclusively on economic fundamental principle that no citizen notes that enforcement of the MBTA interests of previously regulated should be held accountable for a under such an extreme interpretation industries. The commenter notes there violation of a statute whose commands would have devastating consequences is little mention in either notice of are uncertain, or subjected to for American businesses and biological impacts or assessment of bird punishment that is not clearly communities, particularly in rural species protected by the Act. Interior prescribed. It also places the weight of communities in close proximity to and the Service fail to recognize that the inertia upon the party that can best migratory bird habitat. As described in MBTA’s singular statutory purpose is to induce Congress to speak more clearly the proposed rule, millions of birds are protect and conserve migratory birds. and keeps courts from making criminal killed every year from accidents such as The U.S. Supreme Court described this law in Congress’s stead.’’ United States collisions with glass windows, power purpose as ‘‘a national interest of very v. Santos, 553 U.S. 507, 514 (2008) lines, and vehicles. These are nearly the first magnitude,’’ and the (internal citations omitted). unfortunately realities of modern life origin of the statute to implement the Response: We agree with this and beyond the scope of the MBTA. The international treaties signed for comment. U.S. Supreme Court has ruled that the migratory bird conservation must not be Comment: Some commenters noted interpretation of a statute that would overlooked. This environmental review that the prosecution of individual lead to absurd results must be avoided should focus on the biological impacts citizens or companies for the incidental in favor of other interpretations and benefits to birds of the proposed take of migratory birds does not benefit ‘‘consistent with the legislative rule and any authorization program that conservation efforts. A few commenters purpose.’’ the Service is considering. It is noted that their industry sectors will Response: We agree with the misleading and simply false to suggest, continue to work with Federal and State commenter that interpreting the MBTA as Interior does, that any regulation of agencies and help them fulfill their to prohibit incidental take could incidental take under the MBTA is mission to conserve, protect, and potentially lead to some of the cited unduly burdensome. enhance wildlife and their habitat for absurd results. We refer the commenter Response: We constructed the the continuing benefit of all people. The to the analysis of the economic impacts purpose and need in the draft EIS to commenters noted that despite efforts to of interpreting the scope of the statute reflect our proposal to codify the correct prevent incidental take, such take is not to prohibit incidental take in the EIS interpretation of the MBTA as it relates one-hundred-percent preventable and and regulatory impact analysis to incidental take. Developing an criminalizing incidental take does not conducted to comply with Executive authorization program was not within advance conservation efforts. Removing Orders 12866, 13563, and 13771. the scope of our proposal. We disagree the threat of unwarranted legal attacks Comment: One commenter stated that with the commenter’s interpretation of under the MBTA will allow businesses as a result of the Federal Circuit Court the MBTA and our nondiscretionary to continue operating under good faith split and dueling Solicitor’s opinions, and discretionary duties to implement efforts to limit impacts to migratory and without MBTA regulations the MBTA. We refer the commenter to birds. addressing what activities are the EIS for analysis and discussion of Response: We appreciate that the prohibited under the MBTA, the same the environmental impacts of the commenters have engaged with the activities that are entirely lawful in proposal and reasonable alternatives. Service to advance conservation efforts some parts of the country could give rise The Service will continue to ensure that that protect and enhance wildlife, to strict criminal liability in parts of the migratory birds are protected from including migratory birds, and that country in which Federal Circuit Courts direct take. We will also continue to commenters advocate continued use of have held that unintentional take is work with other Federal agencies and good faith efforts to limit impacts to prohibited under the MBTA. The stakeholders to promote conservation migratory birds. commenter noted that the MBTA should measures that reduce incidental take Comment: One commenter noted that be given a uniform interpretation across and protect migratory bird habitat, the proposed codification differentiates all regions of the country and is consistent with the Federal statutes we between wanton acts of destruction and appreciative that the Service is engaging implement to manage, conserve, and criminal negligence, on the one hand, in a rulemaking process to achieve this protect migratory birds and other and the accidental or incidental take of result. wildlife. a protected bird, however regrettable, on Response: We agree with this Comment: As a policy matter, the the other. U.S. law has long comment. Service has not justified its departure differentiated between harm caused by Comment: One commenter questioned from its prior interpretation of the Act, intent and harm caused by accident. the evidence suggesting that this rule which was effective in protecting The proposed rulemaking extends that change is warranted. The commenter migratory birds without undue practice to the MBTA. questions what economic progress has regulatory burden. Response: We agree with the been halted due to the protections of the Response: We respectfully disagree commenter that this rulemaking will MBTA and how this action is in the best that the Service has not justified its continue to authorize criminal interest of the American people. current interpretation of the MBTA. M– enforcement of intentional take while Response: We refer the commenter to 37050 and the preamble to the proposed codifying that the MBTA does not the EIS and the regulatory impact rule explained the basis for the prohibit incidental take. analysis for our conclusions regarding interpretation of the MBTA we are Comment: One industry commenter the environmental and economic codifying in this rulemaking in great claimed that an extreme application of impacts of this rulemaking and its detail referencing the language of the the MBTA imposes criminal liability reasonable alternatives on migratory statute itself, the international any time a migratory bird is killed birds and regulated entities. Conventions underlying the MBTA, its incidental to another activity and would Comment: A commenter stated that legislative history, and subsequent case create an absurd and likely disastrous the Service has done little to law. As part of our duty as the agency

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responsible for implementing the address the evolution of threats to Act (CERCLA), the Oil Pollution Act, MBTA, we are obliged to present to the migratory birds or to ensure the and the Clean Water Act, the public our interpretation of any sustainability of healthy bird Department is authorized to assess ambiguous language that affects public populations. While unregulated injury to natural resources caused by rights or obligations. harvesting is no longer a primary threat releases of hazardous substances and Comment: One commenter noted that to migratory birds, declines in bird discharges of oil to compensate the the Service should not rely on other populations continue to remain a public for lost natural resources and statutes or regulations to absolve itself serious international issue. The their services. The Department’s from addressing incidental take. The commenters noted that international assessment of natural resource injuries commenter noted that the current partners would suffer the loss of the under the Natural Resource Damage administration is relaxing a number of many benefits of migratory birds as the Assessment Program includes any regulations such as the Clean Water Act United States rolls back its protective injury to migratory birds, which in and the Endangered Species Act. policies. many cases could otherwise be Collectively, the change in Response: We disagree that this classified as incidental take. We will interpretation of these foundational rulemaking will result in a substantial continue to implement these programs laws and rules will undoubtedly remove increase in the number of migratory consistent with our treaty obligations. any motivation for regulated entities to birds killed. The EIS notes that it may Comment: One commenter stated that mitigate the harm caused by their result in a measurable increase, but we the proposed rule is not consistent with actions on birds and their eggs and will do not expect it to be substantial. In section 2(a) of the Migratory Bird Treaty increase incidental take. other words, there may be a measurable Act, which states that ‘‘it shall be Response: A wide array of statutory difference but we do not expect it to unlawful at any time, by any means or mandates provide protections to substantially affect the existing in any manner, to pursue, hunt, take, wildlife, including migratory birds. In trajectory of the number of migratory capture, kill . . . any migratory bird.’’ this rulemaking, the Service describes birds killed. It is important to note that The key words regarding the prohibition these various protections, but does not the MBTA should not be relied upon by of incidental take are ‘‘at any time, by rely on them to address incidental take itself to reduce large-scale impacts on any means or in any manner.’’ The of migratory birds in the absence of migratory bird populations, whether or words ‘‘in any manner’’ means MBTA protection. Our interpretation of not it is interpreted to prohibit regardless of whether it is purposeful or the MBTA is primarily governed by the incidental take. It is simply one tool in not. language of the statute, its legislative what must be a multifaceted approach. Response: We disagree with the history, and subsequent case law. Voluntary efforts and development of commenter on the import and context of Whether other statutes provide industry best practices are an the language ‘‘at any time, by any means protection to migratory birds is not indispensable part of this approach, or in any manner’’ in section 2 of the directly relevant to codifying our particularly given that the substantial MBTA. The preamble to this regulation current interpretation. The Service also decreases in migratory bird populations explains the correct context for that notes that the motivation to implement over the last 50 years have occurred language and its relevance to whether conservation measures to mitigate harm despite the prior agency practice of the MBTA prohibits incidental take. to migratory birds is not simply driven enforcing the MBTA with respect to Comment: Multiple commenters by the threat of enforcement. Many incidental take. We will continue to suggested that reinterpretation of the other factors are often at play for work with our domestic and MBTA will cause tension with Canada, companies engaged in actions that may international partners, the regulated whose migratory bird populations will affect migratory birds, including public community, and the public at large to also be affected by rules that are more perception, green business credentials, uphold our commitment to ensure the lenient. economic factors, State law, and long-term conservation of migratory Response: The Service has met with pressure from investors and lenders. birds under the migratory bird its counterparts in Canada regarding the Comment: One commenter requested Conventions. proposed rule. The Government of that the Service remember their treaty Comment: The proposed rule ignores Canada submitted comments on the obligation to protect birds that are article IV of the amended Canada treaty draft EIS associated with this shared with other countries that as that the United States is to ‘‘seek means rulemaking. We summarized and independent nations could not ensure to prevent damage to such birds and addressed substantive comments the protection of species that migrate their environments, including damage received from the Government of across borders. resulting from pollution.’’ Under the Canada in Appendix C of the final EIS. Response: We acknowledge this new interpretation of the MBTA, Any impacts to migratory birds that we comment and submit that we will pollution is no longer a considered share with Canada are also discussed in continue to implement relevant factor as pollution is almost never a the EIS. domestic laws and regulations and direct, purposeful act. This failure to Additionally, after publication of the provide technical advice and assistance address threats beyond harvesting final EIS, the Government of Canada to our treaty partners and encourage undermines the United States’ submitted a further comment expressing continued conservation and protection commitment under the amended concern regarding this rule. Regarding of migratory birds to the extent Canada treaty to ensure the long-term the comments from the Government of authorized by their domestic laws. conservation of shared migratory bird Canada, the Service identified the Comment: Multiple commenters species. impacts to migratory birds to the extent stated that the proposed rule is likely to Response: Our commitment to our it was able in the final EIS, based on the facilitate a substantial increase in the treaty partners to prevent and mitigate information available. number of migratory birds killed, in damage to migratory birds from Comment: Multiple comments stated direct conflict with the amended treaty pollution is implemented by several that this proposed major shift in policy with Canada. The commenters noted domestic laws. For example, pursuant to and regulation in the MBTA will have that the proposed rule change is the Comprehensive Environmental international implications. The extremely limited in scope as it fails to Response Compensation and Liability commenters note that migratory birds

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are a shared hemispheric resource, for risk.’’ The commenters noted that rather hold migratory birds in trust for their which we are only custodians and than providing certainty into the citizenry. Moreover, the States and their stewards while they are within the enforcement of the law, the M-Opinion citizens benefit from the role that borders of the United States. Any and this rulemaking may have increased migratory birds play in maintaining attempt to permanently weaken the uncertainty about what will be expected ecological balance and the valuable MBTA, which will perpetuate, and for industries, especially as many ecological services that they provide. almost certainly increase, the level of development decisions need to be made The critically important ecological injury and death of migratory birds, considering many years and decades services these species provide include needs concurrence by Canada, Mexico, into the future. Additionally, the M- insect and rodent control, pollination, Japan, and Russia if our treaty Opinion and the proposed rule may and seed dispersal. As the U.S. Supreme obligations are to have any true inject more uncertainty about what is Court recognized 100 years ago, State- meaning. The Service has not addressed considered ‘‘take’’ compared to the level protections are insufficient to this international aspect in its planning previous decades of enforcement. For protect transient species that travel and has not worked with the State example, the removal of active nests outside of a State’s territorial bounds. In Department on the issue. With this when the purpose of the underlying a landmark decision upholding the proposed change, the Service is making activity is not to harm birds but related constitutionality of the MBTA, Justice a unilateral change that will later be to another activity, such as construction Holmes wrote that migratory birds, deemed an abrogation of our or cleaning, has created confusion and which ‘‘yesterday had not arrived, international agreements with these a major loophole. Documents released tomorrow may be in another State and other sovereign nations. under the Freedom of Information Act in a week a thousand miles away’’ can Response: The MBTA, along with reveal numerous questions from entities be ‘‘protected only by national action.’’ several other statutes, implements the since publication of the M-Opinion Missouri v. Holland, 252 U.S. 416, 434– migratory bird Conventions. The parties about what constitutes prohibited take. 35 (1920). If left to the States, the result to those Conventions may meet to This legal uncertainty also leads to would be a patchwork of legal amend and update the provisions of the scientific uncertainty about future approaches, reducing consistency Conventions, but enactment, impacts on birds. This additional nationwide. Individual States therefore amendment, and implementation of uncertainty should be considered by the rely on Federal law (and the domestic laws that implement those Service going forward. international treaties implemented by Conventions do not require concurrence Response: We note that a primary Federal law) to protect their own bird by the other parties. We have undergone purpose of codifying the interpretation populations when individual birds interagency review of this rulemaking at presented in M–37050 is to provide migrate beyond their boundaries. the proposed and final stages facilitated more certainty and permanence Interior’s elimination of longstanding by the Office of Management and regarding the Department’s position on Federal protection harms State interests. Budget, which included input from the the scope of the MBTA as it relates to Response: The intent of this State Department. We will not speculate incidental take. Adopting the prior rulemaking is not to harm States, but to on the views of our Convention partners interpretation through regulation would interpret the MBTA in the manner beyond the public comments reflected not provide any more long-term Congress intended when it drafted and here. certainty in this regard. Codification in enacted the statute. States remain free to Comment: One commenter stated that the Code of Federal Regulations prohibit, manage, or regulate incidental this rule represents a fundamental provides the maximum certainty and take of migratory birds as they see fit abdication of the Service’s mission to permanence possible absent new under State law, and nothing in this protect native wild birds. There is legislation, over which we have no regulation or the MBTA prevents them simply no question that the Service’s control. To a certain extent, some degree from doing so. The EIS associated with history of interpretation (until 2017) of of short-term uncertainty is to be this rulemaking analyzes the broader the MBTA as applying to incidental take expected when a change in agency effects of codifying our interpretation. has been the bulwark protecting tens of practice occurs. We continue to provide Though we conclude that this rule will millions of birds from unnecessary technical advice when requested have some negative effects on deaths. regarding application of the MBTA in populations of some species, we do not Response: We do not agree with the specific situations. The example find that those effects will be commenter’s assessment of this provided by the commenter regarding substantial. rulemaking or that available data active nest removal is a clear case of Comment: A commenter noted that supports the commenter’s analysis of incidental take that is not prohibited by the proposed rule fails to provide the Service’s prior interpretation. the MBTA, although it may violate other adequate justification under Executive Comment: One commenter Federal, State, Tribal, or local laws and Orders 12866 and 13563 with regard to recommended that the Service consider regulations. If the purpose of the providing flexible approaches consistent to what extent the proposed rule may referenced activity were specifically to with scientific integrity and protecting increase regulatory uncertainty for remove active bird nests, then that the environment. Simply stating that the industrial entities and other activity would still be a violation of the Service has used the best available stakeholders. This administration’s MBTA and a permit would be required science is not sufficient. The commenter sudden policy change has thrown before any removal could lawfully recommends the Service review its own decades of practice and policy into proceed. We will also continue to web pages and the scientific literature to upheaval for all entities, including monitor bird populations in partnership show that incidental take of birds is a industry, Federal, State, local, and with State wildlife agencies and other significant problem. Adopting this international agencies, conservation stakeholders. regulation ignores that science and fails groups, and more. Legal observers have Comment: The proposed rule would to protect the environment. It also fails also suggested that this policy may not harm States by depriving them of the the intent of the treaties. Providing a be permanent, and one analysis noted MBTA’s protections for migratory birds regulatory approach such as a that entities ‘‘would be wise to keep a that nest in, winter in, or pass through permitting program or a program based long-term perspective of MBTA-related their territories. The States own and upon a gross negligence approach

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would fulfill the Treaty obligations and freedom of choice for the public for public comment a regulatory while also satisfying the intent of E.O.s where these approaches are relevant, flexibility analysis that describes the 12866 and 13563. The commenter called feasible, and consistent with regulatory effects of the rule on small businesses, for the Office of Information and objectives. E.O. 13563 emphasizes small organizations, and small Regulatory Affairs to review the further that regulations must be based government jurisdictions. However, in justification for consistency with these on the best available science and that lieu of an initial or final regulatory Executive Orders. the rulemaking process must allow for flexibility analysis (IRFA or FRFA) the Response: The regulatory impact public participation and an open head of an agency may certify on a analysis developed for the proposed exchange of ideas. We have developed factual basis that the rule would not rule documents compliance with this rule in a manner consistent with have a significant economic impact on Executive Orders 12866 and 13563 and these requirements. a substantial number of small entities. was reviewed and approved by OMB’s Codifying our interpretation that the SBREFA amended the Regulatory Office of Information and Regulatory MBTA does not prohibit incidental take Flexibility Act to require Federal Affairs. We acknowledge that incidental into Federal regulations would provide agencies to provide a statement of the take of migratory birds has a negative the public, businesses, government factual basis for certifying that a rule impact on many migratory bird agencies, and other entities legal clarity would not have a significant economic populations and have assessed any and certainty regarding what is and is impact on a substantial number of small incremental impact caused by this not prohibited under the MBTA. It is entities. Thus, for an initial/final rulemaking and its reasonable anticipated that some entities that regulatory flexibility analysis to be alternatives in the EIS. We disagree that currently employ mitigation measures to required, impacts must exceed a this rulemaking will have a substantial reduce or eliminate incidental migratory threshold for ‘‘significant impact’’ and a impact on migratory bird populations bird take would reduce or curtail these threshold for a ‘‘substantial number of when compared to prior agency activities given the legal certainty small entities.’’ See 5 U.S.C. 605(b). This practice. provided by this regulation. Others may analysis first estimates the number of continue to employ these measures Required Determinations businesses impacted and then estimates voluntarily for various reasons or to the economic impact of the rule. Regulatory Planning and Review comply with other Federal, State, and (Executive Orders 12866 and 13563) local laws and regulations. The Service Table 1 lists the industry sectors Executive Order (E.O.) 12866 provides has conducted a cost-benefit analysis likely impacted by the rule. These are that the Office of Information and which can be viewed online at https:// the industries that typically incidentally Regulatory Affairs (OIRA) in the Office beta.regulations.gov/docket/FWS-HQ- take substantial numbers of birds and of Management and Budget (OMB) will MB-2018-0090/document and https:// that the Service has worked with to review all significant rules. OIRA has www.fws.gov/regulations/mbta/. reduce those effects. In some cases, determined that this rule is significant. these industries have been subject to Executive Order 13563 reaffirms the Regulatory Flexibility Act and Small enforcement actions and prosecutions principles of E.O. 12866 while calling Business Regulatory Enforcement under the MBTA prior to the issuance for improvements in the nation’s Fairness Act of M–37050. The vast majority of regulatory system to promote Under the Regulatory Flexibility Act entities in these sectors are small predictability, to reduce uncertainty, (5 U.S.C. 601 et seq., as amended by the entities, based on the U.S. Small and to use the best, most innovative, Small Business Regulatory Enforcement Business Administration (SBA) small and least burdensome tools for Fairness Act (SBREFA) of 1996 (Pub. L. business size standards. Not all small achieving regulatory ends. The 104–121)), whenever an agency is businesses will be impacted by this rule. executive order directs agencies to required to publish a notice of Only those businesses choosing to consider regulatory approaches that rulemaking for any proposed or final reduce best management practices will reduce burdens and maintain flexibility rule, it must prepare and make available accrue benefits.

TABLE 1—DISTRIBUTION OF BUSINESSES WITHIN AFFECTED INDUSTRIES

Small business Number NAICS industry description NAICS code Number of size of small businesses standard businesses (employees)

Finfish Fishing ...... 114111 1,210 20 (a) 1,185 Crude Petroleum and Natural Gas Extraction ...... 211111 6,878 1,250 6,868 Drilling Oil and Gas Wells ...... 213111 2,097 1,000 2,092 Solar Electric Power Generation ...... 221114 153 250 153 Wind Electric Power Generation ...... 221115 264 250 263 Electric Bulk Power Transmission ...... 221121 261 500 214 Electric Power Distribution ...... 221122 7,557 1,000 7,520 Wireless Telecommunications Carriers (except Satellite) ...... 517312 15,845 1,500 15,831 Source: U.S. Census Bureau, 2012 County Business Patterns. a Note: The Small Business Administration size standard for finfish fishing is $22 million. Neither Economic Census, Agriculture Census, nor the National Marine Fisheries Service collect business data by revenue size for the finfish industry. Therefore, we employ other data to approxi- mate the number of small businesses. Source: U.S. Census Bureau, 2017 Economic Annual Survey.

Since the Service does not have a incidental take of migratory birds, the information regarding how many permitting system authorizing Service does not have specific businesses in each sector implement

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measures to reduce incidental take of entities would benefit from this rule summary of the economic effects of the birds. Not all businesses in each sector because it would remove uncertainty rule on the business sectors identified in incidentally take birds. In addition, a about the potential impacts of proposed Table 1 (Table 7). variety of factors would influence projects. Therefore, these entities will whether, under the previous have better information for planning Finfish (NAICS 114111) interpretation of the MBTA, businesses projects and achieving goals. Although longline fishing is regulated However, the economic impact of the would implement such measures. It is under the Magnuson–Stevens Act, rule on small entities is likely not also unknown how many businesses seabirds are not afforded protection as significant. As shown in Table 6, the continued or reduced practices to they do not fall under that statute’s costs of actions businesses typically reduce the incidental take of birds since definition of bycatch. See 16 U.S.C. implement to reduce effects on birds are publication of the Solicitor’s M- 1802. Therefore, it is probable these small compared to the economic output Opinion. We did not receive any finfish businesses may reduce bird information on that issue during the of business, including small businesses, mitigation measures such as changes in public comment period for this rule. in these sectors. In addition, many design of longline fishing hooks, change This rule is deregulatory in nature businesses will continue to take actions and is thus likely to have a positive to reduce effects on birds because these in offal management practices, and economic impact on all regulated actions are best management practices flagging or streamers on fishing lines. entities, and many of these entities for their industry or are required by Table 6 shows example costs of some of likely qualify as small businesses under other Federal or State regulations, there the mitigation measures. the Small Business Administration’s is a public desire to continue them, or Data are unavailable regarding fleet threshold standards (see Table 1). By the businesses simply desire to reduce size and how many measures are codifying the Service’s interpretation, their effects on migratory birds. For employed on each vessel. Because data first outlined in Solicitor’s Opinion, M– example, 13 States have oil pit covering are unavailable about the distribution of 37050, this rulemaking would remove requirements. possible range of measures and costs, legal uncertainty for any individual, This analysis examines the potential we do not extrapolate cost data to small government entity, or business entity effect of the rule on small businesses in businesses. Table 2 shows the that undertakes any activity that may selected industries. Following this distribution of businesses by kill or take migratory birds incidental to discussion is a summary of mitigation employment size and average annual otherwise lawful activity. Such small measures and costs (Table 6) and a payroll.

TABLE 2—FINFISH NAICS 14111: EMPLOYMENT SIZES AND PAYROLL 1

Number of Average Employment size businesses annual payroll per business 2

Less than 5 employees ...... 1,134 $62,000 5 to 9 employees ...... 45 372,000 10 to 19 employees ...... 23 639,000 20 to 49 employees ...... 20 2,837,000 50 to 99 employees ...... 5 4,333,000 100 to 249 employees ...... 4 13,941,000 1 2017 Economic Census. 2 Sales data are not available by employment size.

Crude Petroleum and Natural Gas businesses in the crude petroleum and across the United States or across the Extraction (NAICS 211111) natural gas extraction industry. Since remaining States is unknown. the Small Business Size Standard is less Furthermore, the average number of oil The degree to which these small than 1,250 employees, we assume all pits per business is unknown. An businesses may be impacted by the rule businesses are small. Table 3 shows the estimate for the number of pits is is variable and is dependent on location distribution of businesses by unknown because some are ephemeral, and choice. Thirteen States (Illinois, employment size and sales. present only while a well is being Arkansas, Oklahoma, Texas, North Businesses located in the States that drilled, and others last for the life of the Dakota, South Dakota, Nebraska, do not have existing regulations would well. The replacement timeline for Montana, Wyoming, Colorado, Utah, have the option to reduce or eliminate netting is also variable because New Mexico, and California) have best management practices without hurricanes, strong winds, and strong regulations governing the treatment of potential litigation. As Table 6 shows, sun all have deleterious impacts on oil pits such as netting or screening of oil pit nets range in cost from about nets. Because data are unavailable about reserve pits, including measures $131,000 to $174,000 per acre, where the distribution or possible range of oil beneficial to birds. The remaining States most netted pits are about 1⁄4 to 1⁄2 acre. pits per business, we do not extrapolate represent approximately 24 percent of The distribution and number of oil pits netting cost data to small businesses.

TABLE 3—CRUDE PETROLEUM AND NATURAL GAS EXTRACTION NAICS 21111: EMPLOYMENT SIZES AND SALES 1

Number of Number of impacted Average Employment size businesses businesses sales per (37 states) business

Less than 5 employees ...... 3,957 966 $1,473,000

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TABLE 3—CRUDE PETROLEUM AND NATURAL GAS EXTRACTION NAICS 21111: EMPLOYMENT SIZES AND SALES 1— Continued

Number of Number of impacted Average Employment size businesses businesses sales per (37 states) business

5 to 9 employees ...... 723 177 9,291,000 10 to 19 employees ...... 632 154 22,386,000 20 to 49 employees ...... 552 135 72,510,000 50 to 99 employees ...... 203 50 180,065,000 100 to 249 employees ...... 156 38 344,694,000 250 employees or more ...... 84 21 839,456,000 1 2017 Economic Census.

Drilling Oil and Gas Wells (NAICS in the crude petroleum and natural gas across the United States or across the 213111) extraction industry. Since the Small remaining States is unknown. The degree to which these small Business Size Standard is less than Furthermore, the average number of oil business in NAICS 213111 may be 1,000 employees, we assume all pits per business is unknown. An impacted by the rule is variable and is businesses are small. Table 4 shows the estimate for the number of pits is dependent on location and choice. distribution of businesses by unknown because some are ephemeral, Thirteen States (Illinois, Arkansas, employment size and sales. present only while a well is being Oklahoma, Texas, North Dakota, South Businesses located in the States that drilled, and others last for the life of the Dakota, Nebraska, Montana, Wyoming, do not have existing regulations would well. The replacement timeline for Colorado, Utah, New Mexico, and have the option to reduce or eliminate netting is also variable because California) have regulations governing best management practices without hurricanes, strong winds, and strong the treatment of oil pits such as netting potential litigation. As Table 6 shows, sun all have deleterious impacts on or screening of reserve pits, including oil pit nets range in cost from about nets. Because data are unavailable about measures beneficial to birds. The $131,000 to $174,000 per acre, where the distribution or possible range of oil remaining States represent most netted pits are about 1⁄4 to 1⁄2 acre. pits per business, we do not extrapolate approximately 32 percent of businesses The distribution and number of oil pits netting cost data to small businesses.

TABLE 4—DRILLING OIL AND GAS WELLS NAICS 213111: EMPLOYMENT SIZES AND SALES 1

Number of Number of impacted Average sales Employment size businesses businesses per business (37 states)

Less than 5 employees ...... 1,217 393 $312,000 5 to 9 employees ...... 289 93 1,674,000 10 to 19 employees ...... 299 97 3,300,000 20 to 49 employees ...... 330 107 11,791,000 50 to 99 employees ...... 150 48 17,454,000 100 to 249 employees ...... 85 27 38,874,000 250 employees or more ...... 52 17 140,769,000 1 Economic Census 2017.

Solar Electric Power Generation (NAICS the number of States with regulations is potential litigation. As Table 6 shows, 221114) unknown. Table 5 shows the the cost of pre- and post-construction The degree to which these small distribution of businesses by bird surveys is unknown because data businesses may be impacted by the rule employment size and sales. are not publicly available and public is variable and is dependent on location Businesses located in States that do comments were not received to estimate and choice. Some States may have not have existing regulations would costs. Due to these unknowns, we do regulations that require monitoring bird have the option to reduce or eliminate not extrapolate cost data to small use and mortality at facilities; however, best management practices without businesses.

TABLE 5—SOLAR ELECTRIC POWER GENERATION NAICS 221114: EMPLOYMENT SIZES AND SALES 1

Average Employment size Number of sales per businesses business

Less than 5 employees ...... 91 $6,792,000 5 to 9 employees ...... 28 4,518,000 10 to 19 employees ...... 21 5,806,000 20 to 49 employees ...... 14 19,754,000 50 to 99 employees ...... 6 64,296,000

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TABLE 5—SOLAR ELECTRIC POWER GENERATION NAICS 221114: EMPLOYMENT SIZES AND SALES 1—Continued

Average Employment size Number of sales per businesses business

100 to 249 employees ...... 5 51,170,000 1 2017 Economic Census.

Other Industries (NAICS 221115, small relative to the cost of projects (see National Environmental Policy Act), 221121, 221122, and 517312) Table 7). Because there is not now, nor and potential litigation. has there previously been a large-scale Summary For the selected industries, we do not permit program for incidental take, the provide further analysis because baseline does not include the potential Table 6 identifies examples of bird minimal effects are expected on small costs of complying with such a program, mitigation measures and their businesses relative to an environmental including the regulatory uncertainty associated cost. Table 7 summarizes baseline based on current regulations associated with permit approval, likely economic effects of the rule on and voluntary conservation measures, compliance with other statutes (e.g., the the business sectors identified in Table due to the fact that mitigation costs are 1.

TABLE 6—BEST MANAGEMENT PRACTICES COSTS BY INDUSTRY 1

Why data are not extrapolated to entire NAICS industry Example of bird mitigation measure Estimated cost industry or small businesses

Finfish Fishing Changes in design of longline fishing • Costs are per vessel per • No data available on fleet size. (NAICS 11411). hooks, change in offal management year. • No data available on how many meas- practices, flagging or streamers on fish- • $1,400 for thawed blue-dyed ures are employed on each vessel. ing lines. bait. • $150 for strategic offal dis- cards. • $4,600 for Tori line ...... • $4,000 one-time cost for un- derwater setting chute. • $4,000 initial and $50 annual for side setting. Crude Petroleum and • Netting of oil pits and ponds ...... • $130,680 to $174,240 per • Infeasible to net pits larger than 1 acre Natural Gas Ex- • Closed wastewater systems ...... acre to net ponds. due to sagging. traction NAICS • Most netted pits are 1⁄4 to 1⁄2 • Size distribution of oil pits is unknown. (211111). acre. • Average number of pits per business is • Cost not available for waste- unknown. water systems. • Closed wastewater systems typically used for reasons other than bird mitiga- tion. Drilling Oil and Gas • Netting of oil pits and ponds ...... • $130,680 to $174,240 per • Infeasible to net pits larger than 1 acre Wells (NAICS • Closed loop drilling fluid systems ...... acre to net ponds. due to sagging. 213111). • Cost not available for closed • Size distribution of oil pits is unknown. loop drilling fluid systems, but • Average number of pits per business is may be a net cost savings in unknown. arid areas with water con- • Closed loop drilling fluid systems typi- servation requirements. cally used for reasons other than bird mitigation. • High variability in number of wells drilled per year (21,200 in 2019). Solar Electric Power Pre- and post-construction bird surveys ... No public comments received New projects can vary from 100 to 5,000 Generation to estimate costs. acres in size, and mortality surveys may (NAICS 221114). not scale linearly. Wind Electric Power • Pre-construction adjustment of turbine • Cost not available for adjust- • Data not available for adjustment of tur- Generation locations to minimize bird mortality dur- ment of turbine construction bine construction locations. (NAICS 221115). ing operations. locations. • High variability in survey costs and high • Pre- and post-construction bird surveys • $100,000 to $500,000 per fa- variability in need to conduct surveys. • Retrofit power poles to minimize eagle cility per year for pre-con- • High variability in cost and need to ret- mortality. struction site use and post- rofit power poles. construction bird mortality surveys. • $7,500 per power pole with high variability of cost. • Annual nationwide labor cost to implement wind energy guidelines: $17.6M. • Annual nationwide non-labor cost to implement wind en- ergy guidelines: $36.9M.

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TABLE 6—BEST MANAGEMENT PRACTICES COSTS BY INDUSTRY 1—Continued

Why data are not extrapolated to entire NAICS industry Example of bird mitigation measure Estimated cost industry or small businesses

Electric Bulk Power Retrofit power poles to minimize eagle $7,500 per power pole with High variability in cost and need to retrofit Transmission mortality. high variability of cost. power poles. (NAICS 221121). Electric Power Dis- Retrofit power poles to minimize eagle $7,500 per power pole with High variability in cost and need to retrofit tribution (NAICS mortality. high variability of cost. power poles. 221122). Wireless Tele- • Extinguish non-flashing lights on towers • Industry saves hundreds of Data not available for number of operators communications taller than 350′. dollars per year in electricity who have implemented these practices. Carriers (except • Retrofit towers shorter than 350′ with costs by extinguishing lights. Satellite) (NAICS LED flashing lights. • Retrofitting with LED lights 517312). requires initial cost outlay, which is recouped over time due to lower energy costs and reduced maintenance. 1 Sources: FWS personnel, National Oceanic and Atmospheric Administration Revised Seabird Regulations Amendment, eccnetting.com, statista.com, aerion.com, FWS Wind Energy Guidelines, FWS Public Records Act data, FWS Eagle Conservation Plan Guidance.

TABLE 7—SUMMARY OF ECONOMIC EFFECTS ON SMALL BUSINESSES

NAICS Bird mitigation meas- Economic effects on industry description NAICS code ures with no action small businesses Rationale

Finfish Fishing ...... 11411 Changes in design of Likely minimal effects .... Seabirds are specifically excluded from the defi- longline fishing nition of bycatch under the Magnuson-Ste- hooks, change in offal vens Fishery Conservation and Management management prac- Act, and therefore seabirds not listed under tices, and flagging/ the Endangered Species Act may not be cov- streamers on fishing ered by any mitigation measures. The impact lines. of this on small entities is unknown. Crude Petroleum and 211111 Using closed waste- Likely minimal effects .... Thirteen States have regulations governing the Natural Gas Extraction. water systems or net- treatment of oil pits such as netting or screen- ting of oil pits and ing of reserve pits, including measures bene- ponds. ficial to birds. In addition, much of the industry is increasingly using closed systems, which do not pose a risk to birds. For these rea- sons, this rule is unlikely to affect a significant number of small entities. Drilling Oil and Gas 213111 Using closed waste- Likely minimal effects .... Thirteen States have regulations governing the Wells. water systems or net- treatment of oil pits, such as netting or ting of oil pits and screening of reserve pits, including measures ponds. beneficial to birds. In addition, much of the in- dustry is increasingly using closed systems, which do not pose a risk to birds. For these reasons, this rule is unlikely to affect a signifi- cant number of small entities. Solar Electric Power 221114 Monitoring bird use and Likely minimal effects .... Bird monitoring in some States may continue to Generation. mortality at facilities, be required under State policies. The number limited use of deter- of States and the policy details are unknown. rent systems such as streamers and reflec- tors. Wind Electric Power 221115 Following Wind Energy Likely minimal effects .... Following the Wind Energy Guidelines has be- Generation. Guidelines, which in- come industry best practice and would likely volve conducting risk continue. In addition, the industry uses these assessments for guidelines to aid in reducing effects on other siting facilities. regulated species like eagles and threatened and endangered bats. Electric Bulk Power 221121 Following Avian Power Likely minimal effects .... Industry would likely continue to use APLIC Transmission. Line Interaction Com- guidelines to reduce outages caused by birds mittee (APLIC) guide- and to reduce the take of eagles, regulated lines. under the Bald and Golden Eagle Protection Act. Electric Power Distribu- 221122 Following Avian Power Likely minimal effects .... Industry would likely continue to use APLIC tion. Line Interaction Com- guidelines to reduce outages caused by birds mittee (APLIC) guide- and to reduce the take of eagles, regulated lines. under the Bald and Golden Eagle Protection Act.

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TABLE 7—SUMMARY OF ECONOMIC EFFECTS ON SMALL BUSINESSES—Continued

NAICS Bird mitigation meas- Economic effects on industry description NAICS code ures with no action small businesses Rationale

Wireless Telecommuni- 517312 Installation of flashing Likely minimal effects .... Industry will likely continue to install flashing ob- cations Carriers (ex- obstruction lighting. struction lighting to save energy costs and to cept Satellite). comply with recent Federal Aviation Adminis- tration Lighting Circular and Federal Commu- nication Commission regulations.

As explained above and in the federalism summary impact statement Decision signed by the Director of the rationale set forth in Regulatory under E.O. 13132. U.S. Fish and Wildlife Service. Planning and Review, the economic Civil Justice Reform Compliance with Endangered Species effects on most or all regulated entities Act Requirements will be positive and this rule is not a In accordance with E.O. 12988, we major rule under SBREFA (5 U.S.C. determined that this rule will not Section 7 of the Endangered Species 804(2)). The head of the agency unduly burden the judicial system and Act of 1973, as amended (ESA; 16 therefore certifies that the rule would meets the requirements of sections 3(a) U.S.C. 1531–44), requires that ‘‘The not have a significant economic impact and 3(b)(2) of the Order. Secretary [of the Interior] shall review other programs administered by him on a substantial number of small Paperwork Reduction Act entities. and utilize such programs in This rule does not contain furtherance of the purposes of this Act.’’ Executive Order 13771—Reducing information collection requirements, 16 U.S.C. 1536(a)(1). It further states Regulation and Controlling Regulatory and a submission to the Office of ‘‘[e]ach Federal agency shall, in Costs Management and Budget (OMB) under consultation with and with the This rule is an E.O. 13771 (82 FR the Paperwork Reduction Act of 1995 assistance of the Secretary, insure that 9339, February 3, 2017) deregulatory (44 U.S.C. 3501 et seq.) is not required. any action authorized, funded, or action. We may not conduct or sponsor, and carried out by such agency . . . is not you are not required to respond to, a likely to jeopardize the continued Unfunded Mandates Reform Act collection of information unless it existence of any endangered species or In accordance with the Unfunded displays a currently valid OMB control threatened species or result in the Mandates Reform Act (2 U.S.C. 1501 et number. destruction or adverse modification of seq.), we have determined the following: [critical] habitat.’’ 16 U.S.C. 1536(a)(2). National Environmental Policy Act a. This rule would not ‘‘significantly We have determined that this rule or uniquely’’ affect small government We evaluated this regulation in regarding the take of migratory birds activities. A small government agency accordance with the criteria of the will have no effect on species listed plan is not required. National Environmental Policy Act under the provisions of the ESA. This b. This rule would not produce a (NEPA), the Department of the Interior rule does not lessen the requirements Federal mandate on local or State regulations on Implementation of the under the ESA and thus, species listed government or private entities. National Environmental Policy Act (43 under the ESA continue to be afforded Therefore, this action is not a CFR 46.10–46.450), and the Department the full protection of the ESA. ‘‘significant regulatory action’’ under of the Interior Manual (516 DM 8). We Therefore, this action will not have any the Unfunded Mandates Reform Act. completed an environmental impact effect on these species. statement (EIS) analyzing the potential Takings impacts of a reasonable range of Government-to-Government Relationship With Tribes In accordance with E.O. 12630, this alternatives for this action. Based on the rule does not contain a provision for analysis contained within the final EIS, In accordance with Executive Order taking of private property, and would the Service selected Alternative A— 13175, ‘‘Consultation and Coordination not have significant takings Promulgate regulations that define the with Indian Tribal Governments,’’ and implications. A takings implication scope of the MBTA to exclude the Department of the Interior’s manual assessment is not required. incidental take. Under Alternative A, at 512 DM 2, we considered the possible the Service hereby promulgates a effects of this rule on federally Federalism regulation that defines the scope of the recognized Indian Tribes. The This rule will not create substantial MBTA take prohibitions to include only Department of the Interior strives to direct effects or compliance costs on actions directed at migratory birds. This strengthen its government-to- State and local governments or preempt regulatory change is not expected to government relationship with Indian State law. Some States may choose to change current implementation or Tribes through a commitment to enact changes in their management enforcement of the MBTA. The Service consultation with Indian Tribes and efforts and regulatory processes and selected this alternative because it recognition of their right to self- staffing to develop and or implement clarifies our interpretation of the MBTA governance and Tribal sovereignty. We State laws governing birds, likely and reduces the regulatory burden on have evaluated this rule under the increasing costs for States. These efforts the public without significantly criteria in Executive Order 13175 and would require increased expenditure of affecting the conservation of migratory under the Department’s Tribal funds, but would not constitute direct bird species protected by the MBTA. consultation policy and have compliance costs. Therefore, this rule The Service’s selection of this determined that this rule may have a would not have sufficient federalism alternative and the basis for that substantial direct effect on federally effects to warrant preparation of a selection are provided in the Record of recognized Indian Tribes. We received

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requests from nine federally recognized distribution, or use of energy. The ■ 2. Add § 10.14 to subpart B to read as Tribes and two Tribal councils for action has not been otherwise follows: government-to-government designated by the Administrator of consultation. Accordingly, the Service OIRA as a significant energy action. No § 10.14 Scope of the Migratory Bird Treaty Act. initiated government-to-government Statement of Energy Effects is required. consultation via letters signed by List of Subjects in 50 CFR Part 10 The prohibitions of the Migratory Bird Regional Directors and completed the Treaty Act (16 U.S.C. 703) that make it consultations before issuing this final Exports, Fish, Imports, Law unlawful at any time, by any means or rule. The results of these consultations enforcement, Plants, Transportation, in any manner, to pursue, hunt, take, are summarized in the NEPA Record of Wildlife. capture, or kill migratory birds, or Decision associated with this attempt to engage in any of those Regulation Promulgation rulemaking, published at http:// actions, apply only to actions directed at www.regulations.gov in Docket No. For the reasons described in the migratory birds, their nests, or their FWS–HQ–MB–2018–0090. preamble, we amend subchapter B of eggs. Injury to or mortality of migratory chapter I, title 50 of the Code of Federal Energy Supply, Distribution, or Use birds that results from, but is not the Regulations, as set forth below: (E.O. 13211) purpose of, an action (i.e., incidental taking or killing) is not prohibited by E.O. 13211 requires agencies to PART 10—GENERAL PROVISIONS the Migratory Bird Treaty Act. prepare Statements of Energy Effects when undertaking certain actions. As ■ 1. The authority citation for part 10 George Wallace, noted above, this rule is a significant continues to read as follows: Assistant Secretary for Fish and Wildlife and Parks. regulatory action under E.O. 12866, but Authority: 16 U.S.C. 668a–d, 703–712, the rule is not likely to have a 742a–j–l, 1361–1384, 1401–1407, 1531–1543, [FR Doc. 2021–00054 Filed 1–5–21; 11:15 am] significant adverse effect on the supply, 3371–3378; 18 U.S.C. 42; 19 U.S.C. 1202. BILLING CODE 4333–15–P

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Part III

Department of Labor

Wage and Hour Division 29 CFR Parts 780, 788 and 795 Independent Contractor Status Under the Fair Labor Standards Act; Final Rule

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DEPARTMENT OF LABOR independent contractor either the factor being dispositive, and that actual minimum wage or overtime pay, nor practices are entitled to greater weight Wage and Hour Division does it require that person to keep than what may be contractually or records regarding that independent theoretically possible. The final rule 29 CFR Parts 780, 788 and 795 contractor. The Act does not define the sharpens this inquiry into five distinct RIN 1235–AA34 term ‘‘independent contractor,’’ but it factors, instead of the five or more defines ‘‘employer’’ as ‘‘any person overlapping factors used by most courts Independent Contractor Status Under acting directly or indirectly in the and previously the Department. the Fair Labor Standards Act interest of an employer in relation to an Moreover, consistent with the FLSA’s employee,’’ 29 U.S.C. 203(d), text, its purpose, and the Department’s AGENCY: Wage and Hour Division, ‘‘employee’’ as ‘‘any individual experience administering and enforcing Department of Labor. employed by an employer,’’ id. at 203(e) the Act, the final rule explains that two ACTION: Final rule. (subject to certain exceptions), and of those factors—(1) the nature and ‘‘employ’’ as ‘‘includ[ing] to suffer or degree of the worker’s control over the SUMMARY: The U.S. Department of Labor permit to work,’’ id. at 203(g). Courts work and (2) the worker’s opportunity (the Department) is revising its and the Department have long for profit or loss—are more probative of interpretation of independent contractor interpreted the ‘‘suffer or permit’’ the question of economic dependence or status under the Fair Labor Standards standard to require an evaluation of the lack thereof than other factors, and thus Act (FLSA or the Act) to promote extent of the worker’s economic typically carry greater weight in the certainty for stakeholders, reduce dependence on the potential analysis than any others. litigation, and encourage innovation in employer—i.e., the putative employer or The regulatory guidance promulgated the economy. alleged employer—and have developed in this final rule regarding independent DATES: This final rule is effective on a multifactor test to analyze whether a contractor status under the FLSA is March 8, 2021. worker is an employee or an generally applicable across all FOR FURTHER INFORMATION CONTACT: independent contractor under the FLSA. industries. As such, it replaces the Amy DeBisschop, Division of The ultimate inquiry is whether, as a Department’s previous interpretations of Regulations, Legislation, and matter of economic reality, the worker is independent contractor status under the Interpretation, Wage and Hour Division dependent on a particular individual, FLSA which applied only in certain (WHD), U.S. Department of Labor, Room business, or organization for work (and contexts, found at 29 CFR 780.330(b) S–3502, 200 Constitution Avenue NW, is thus an employee) or is in business (interpreting independent contractor Washington, DC 20210; telephone: (202) for him- or herself (and is thus an status under the FLSA for tenants and 693–0406 (this is not a toll-free independent contractor). sharecroppers) and 29 CFR 788.16(a) This economic realities test and its number). Copies of this final rule may (interpreting independent contractor component factors have not always been be obtained in alternative formats (Large status under the FLSA for certain sufficiently explained or consistently Print, Braille, Audio Tape, or Disc), forestry and logging workers). The articulated by courts or the Department, upon request, by calling (202) 693–0675 Department believes this final rule will resulting in uncertainty among the (this is not a toll-free number). TTY/ significantly clarify to stakeholders how regulated community. The Department TDD callers may dial toll-free 1–877– to distinguish between employees and believes that a clear articulation will independent contractors under the Act. 889–5627 to obtain information or lead to increased precision and request materials in alternative formats. This final rule is considered to be an predictability in the economic reality Executive Order 13771 deregulatory Questions of interpretation and/or test’s application, which will in turn enforcement of the agency’s regulations action. Details on the estimated benefit workers and businesses and increased efficiency and cost savings of may be directed to the nearest WHD encourage innovation and flexibility in district office. Locate the nearest office this rule can be found in the regulatory the economy. Accordingly, earlier this impact analysis (RIA) in section VI. by calling WHD’s toll-free help line at year the Department proposed to (866) 4US–WAGE ((866) 487–9243) introduce a new part to Title 29 of the II. Background between 8 a.m. and 5 p.m. in your local Code of Federal Regulations setting A. Relevant FLSA Definitions time zone, or logging onto WHD’s forth its interpretation of whether website for a nationwide listing of WHD workers are ‘‘employees’’ or Enacted in 1938, the FLSA requires district and area offices at http:// independent contractors under the Act. that, among other things, covered www.dol.gov/whd/america2.htm. Having received and reviewed the employers pay their nonexempt SUPPLEMENTARY INFORMATION: comments to its proposal, the employees at least the Federal minimum Department now adopts as a final rule wage for every hour worked and I. Executive Summary the interpretive guidance set forth in the overtime pay for every hour worked The FLSA requires covered employers Notice of Proposed Rulemaking (NPRM) over 40 in a workweek, and it mandates to pay their nonexempt employees at (85 FR 60600) largely as proposed. This that employers keep certain records least the Federal minimum wage for regulatory guidance adopts general regarding their employees. See 29 U.S.C. every hour worked and overtime pay for interpretations to which courts and the 206(a), 207(a) (minimum wage and every hour worked over 40 in a Department have long adhered. For overtime pay requirements); 29 U.S.C. workweek, and it mandates that example, the final rule explains that 211(c) (recordkeeping requirements). employers keep certain records independent contractors are workers The FLSA does not define the term regarding their employees. A worker who, as a matter of economic reality, are ‘‘independent contractor.’’ The Act who performs services for an individual in business for themselves as opposed to defines ‘‘employer’’ in section 3(d) to or entity (‘‘person’’ as defined in the being economically dependent on the ‘‘include[ ] any person acting directly or Act) as an independent contractor, potential employer for work. The final indirectly in the interest of an employer however, is not that person’s employee rule also explains that the inquiry into in relation to an employee,’’ under the Act. Thus, the FLSA does not economic dependence is conducted by ‘‘employee’’ in section 3(e)(1) to mean, require such person to pay an applying several factors, with no one subject to certain exceptions, ‘‘any

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individual employed by an employer,’’ the common law. 322 U.S. 123–25. also considered whether the work was and ‘‘employ’’ in section 3(g) to include Congress responded by amending the ‘‘a part of the integrated unit of ‘‘to suffer or permit to work.’’ 1 The definition of employment under the production’’ (meaning whether the Supreme Court has recognized that NLRA on June 23, 1947, ‘‘with the putative independent contractors were ‘‘there is in the [FLSA] no definition obvious purpose of hav[ing] the integrated into the assembly line that solves problems as to the limits of [National Labor Relations] Board and alongside the company’s employees) to the employer-employee relationship the courts apply general agency assess whether they were employees or under the Act.’’ Rutherford Food Corp. principles in distinguishing between independent contractors under the v. McComb, 331 U.S. 722, 728 (1947). employees and independent contractors FLSA. Id. at 729–730. The Supreme Court has interpreted under the [NLRA].’’ NLRB v. United Ins. In November 1947, five months after the ‘‘suffer or permit’’ language to define Co. of Am., 390 U.S. 254, 256 (1968). Silk and Rutherford Food, the FLSA employment to be broad and more On June 16, 1947, one week before Department of the Treasury (Treasury) inclusive than the common law Congress amended the NLRA in proposed regulations r defining when an standard. See Nationwide Mut. Ins. Co. response to Hearst, the Supreme Court individual was an independent v. Darden, 503 U.S. 318, 326 (1992). decided Silk, which addressed the contractor or employee under the SSA, However, the Court also recognized that distinction between employees and which used a test that balanced the the Act’s ‘‘statutory definition[s] . . . independent contractors under the SSA. following factors: have [their] limits.’’ Tony & Susan In that case, the Court relied on Hearst 1. Degree of control of the individual; Alamo Found. v. Sec’y of Labor, 471 to hold that ‘‘economic reality,’’ as 2. Permanency of relation; U.S. 290, 295 (1985) (internal citation opposed to ‘‘technical concepts’’ of the 3. Integration of the individual’s work omitted); see also Walling v. Portland common law standard alone, determines in the business to which he renders Terminal Co., 330 U.S. 148, 152 (1947) workers’ classification. 331 U.S. at 712– service; (‘‘The definition ‘suffer or permit to 14. Although the Court found it to be 4. Skill required by the individual; 5. Investment by the individual in work’ was obviously not intended to ‘‘quite impossible to extract from the facilities for work; and stamp all persons as employees.’’). The [SSA] a rule of thumb to define the 6. Opportunity of the individual for Supreme Court specifically recognized limits of the employer-employe[e] profit or loss. that ‘‘[t]here may be independent relationship,’’ it identified five factors as contractors who take part in production ‘‘important for decision’’: ‘‘degrees of 12 FR 7966. Factors one, two, and four or distribution who would alone be control, opportunities for profit or loss, through six corresponded directly with responsible for the wages and hours of investment in facilities, permanency of the five factors identified as being their own employees.’’ Rutherford Food, relation[,] and skill required in the ‘‘important for decision’’ in Silk, 331 331 U.S. at 729. Accordingly, Federal claimed independent operation.’’ Id. at U.S. at 716, and the third factor courts of appeals have uniformly held, 716. The Court added that ‘‘[n]o one corresponded with Rutherford Food’s and the Department has consistently [factor] is controlling nor is the list consideration of the fact that the maintained, that independent complete.’’ Id. One week after Silk and workers were ‘‘part of an integrated unit contractors are not ‘‘employees’’ for on the same day Congress amended the of production.’’ 331 U.S. at 729. The purposes of the FLSA. See, e.g., Saleem NLRA, the Court reiterated these five Treasury proposal further relied on v. Corporate Transp. Group, Ltd., 854 factors in Bartels, another case involving Bartels, 332 U.S. at 130, to apply these F.3d 131, 139–40 (2d Cir. 2017); Karlson employee or independent contractor factors to determine whether a worker v. Action Process Serv. & Private status under the SSA. In Bartels, the was ‘‘dependent as a matter of economic Court explained that under the SSA, reality upon the business to which he Investigation, LLC, 860 F.3d 1089, 1092 3 (8th Cir. 2017). employee status ‘‘was not to be renders services.’’ 12 FR 7966. determined solely by the idea of control Congress replaced the interpretations B. Economic Dependence and the which an alleged employer may or of the definitions of ‘‘employee’’ Economic Reality Test could exercise over the details of the adopted in Hearst for the NLRA and in Silk and Bartels for the SSA ‘‘to 1. Supreme Court Development of the service rendered to his business by the demonstrate that the usual common-law Economic Reality Test worker.’’ Id. Although ‘‘control is principles were the keys to meaning.’’ As the NPRM explained, the U.S. characteristically associated with the employer-employee relationship,’’ Darden, 503 U.S. at 324–25. However, Supreme Court explored the limits of Congress did not similarly amend the the employer-employee relationship in a employees under ‘‘social legislation’’ such as the SSA are ‘‘those who as a FLSA. Thus, the Supreme Court stated series of cases from 1944 to 1947 under in Darden that the scope of employment three different Federal statutes: The matter of economic reality are dependent upon the business to which under the FLSA remains broader than FLSA, the National Labor Relations Act that under common law and is (NLRA), and the Social Security Act they render service.’’ Id. The same day as it decided Silk, the determined not by the common law but (SSA). 85 FR 60601 (summarizing NLRB instead by the economic reality of the v. Hearst Publications, Inc., 322 U.S. Court ruled in Rutherford Food that certain workers at a slaughterhouse relationship at issue. See id. Since 111 (1944); United States v. Silk, 331 implicitly doing so in Rutherford Food, U.S. 704 (1947); Bartels v. Birmingham, were employees under the FLSA, and not independent contractors, by 332 U.S. 126 (1947); and Rutherford permanent work arrangement. Id. ‘‘The managing examining facts pertaining to the five official of the plant kept close touch on the Food, 331 U.S. 722)). 2 In Hearst, the Supreme Court held factors identified in Silk. The Court operation,’’ indicating control by the alleged that the NLRA’s definition of employer. Id. And ‘‘[w]hile profits to the boners 2 For example, the Court noted that the depended upon the efficiency of their work, it was employment was broader than that of slaughterhouse workers performed unskilled work more like piecework than an enterprise that actually ‘‘on the production line.’’ 331 U.S. at 730. ‘‘The depended for success upon the initiative, judgment 1 29 U.S.C. 203(d), (e), (g). The Act defines a premises and equipment of [the employer] were or foresight of the typical independent contractor.’’ ‘‘person’’ as ‘‘an individual, partnership, used for the work,’’ indicating little investment by Id. association, corporation, business trust, legal the workers. Id. ‘‘The group had no business 3 The Treasury proposal was never finalized representative, or any organized group of persons.’’ organization that could or did shift as a unit from because Congress amended the SSA to foreclose the 29 U.S.C. 203(a). one slaughter-house to another,’’ indicating a proposal.

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the Court has not again applied (or Most courts of appeals articulate a of an integrated unit of production,’’ 331 rejected the application of) the Silk similar test, but application between U.S. at 729, has now been replaced by factors to an FLSA classification courts may vary significantly. Compare, many courts of appeals by consideration question. e.g., Sec’y of Labor v. Lauritzen, 835 of whether the service rendered is F.2d 1529, 1534–35 (7th Cir. 1987) ‘‘integral,’’ which those courts have 2. Application of the Economic Reality (applying six-factor economic reality applied as meaning important or central Test by Federal Courts of Appeals test to hold that pickle pickers were to the potential employer’s business. As the NPRM explained, in the 1970s employees under the FLSA), with See, e.g., Verma v. 3001 Castor, Inc., 937 and 1980s Federal courts of appeals Donovan v. Brandel, 736 F.2d 1114, F.3d 221, 229 (3rd Cir. 2019) began to adopt versions of a multifactor 1117 (6th Cir. 1984) (applying the same (concluding that workers’ services were ‘‘economic reality’’ test based on Silk, six-factor economic reality test to hold integral because they were the providers Rutherford Food, and Bartels and that pickle pickers were not employees of the business’s ‘‘primary offering’’); similar to Treasury’s 1947 proposed under the FLSA). For example, the Acosta v. Off Duty Police Servs., Inc., SSA regulation to analyze whether a Second Circuit has analyzed 915 F.3d 1050, 1055 (6th Cir. 2019) worker was an employee or an opportunity for profit or loss and (concluding that services provided by independent contractor under the FLSA. investment (the second and third factors workers were ‘‘integral’’ because the See 85 FR 60603.4 Drawing on the listed above) together as one factor. See, putative employer ‘‘built its business Supreme Court precedent discussed e.g., Brock v. Superior Care, Inc., 840 around’’ those services); McFeeley v. above, courts have recognized that the F.2d 1054, 1058 (2d Cir. 1988). The Jackson Street Entertainment, LLC, 825 heart of the inquiry is whether ‘‘as a Fifth Circuit has not adopted the sixth F.3d 235, 244 (4th Cir. 2016) matter of economic reality’’ the workers factor listed above, which analyzes the (considering ‘‘the importance of the are ‘‘dependent upon the business to integrality of the work, as part of its services rendered to the company’s which they render service.’’ Usery v. standard, see, e.g., Usery, 527 F.2d at business’’). Pilgrim Equip. Co., 527 F.2d 1308, 1311 1311, but has at times assessed Courts of appeals have cautioned (5th Cir. 1976) (quoting Bartels, 332 U.S. integrality as an additional factor, see, against the ‘‘mechanical application’’ of at 130). Some courts have clarified that e.g. Hobbs v. Petroplex Pipe & Constr., the economic reality factors. See, e.g., this question of economic dependence Inc., 946 F.3d 824, 836 (5th Cir. 2020). Saleem, 854 F.3d at 139. ‘‘Rather, each may be boiled down to asking ‘‘whether, The NPRM highlighted noteworthy factor is a tool used to gauge the as a matter of economic reality, the modifications some courts of appeals economic dependence of the alleged workers depend upon someone else’s have made to the economic reality employee, and each must be applied business for the opportunity to render factors as originally articulated in 1947 with this ultimate concept in mind.’’ service or are in business for by the Supreme Court. See 85 FR Hopkins, 545 F.3d at 343. Further, themselves.’’ Saleem, 854 F.3d at 139 60603–04. First, the ‘‘skill required’’ courts of appeals make clear that the (internal quotation marks and citations factor identified in Silk, 331 U.S. at 716, analysis should draw from the totality of omitted). Courts have also explained is now articulated more expansively by circumstances, with no single factor that a non-exhaustive set of factors— some courts to include ‘‘initiative.’’ See, being determinative by itself. See, e.g., derived from Silk and Rutherford e.g., Parrish, 917 F.3d at 379 (‘‘the skill Keller, 781 F.3d at 807 (‘‘No one factor Food—shape and guide this inquiry. and initiative required in performing the is determinative.’’); Baker, 137 F.3d at See, e.g., Usery, 527 F.2d at 1311 job’’); Karlson, 860 F.3d at 1093 (same); 1440 (‘‘None of the factors alone is (identifying ‘‘[f]ive considerations Superior Care, 840 F.2d at 1058–59 dispositive; instead, the court must [which] have been set out as aids to (‘‘the degree of skill and independent employ a totality-of-the-circumstances making the determination of initiative required to perform the approach.’’). dependence, vel non’’); Real v. Driscoll work’’). Strawberry Assocs., Inc., 603 F.2d 748, Second, Silk analyzed workers’ 3. Application of the Economic Reality 754 (9th Cir. 1979) (articulating a six- investments, 331 U.S. at 717–19. Test by WHD factor test). However, the Fifth Circuit has revised Since at least 1954, WHD has applied In Driscoll, the Ninth Circuit Court of the ‘‘investment’’ factor to instead variations of this multifactor analysis Appeals described its six-factor test as consider ‘‘the extent of the relative when considering whether a worker is follows: investments of the worker and the an employee under the FLSA or an 1. The degree of the alleged alleged employer.’’ Hopkins, 545 F.3d at independent contractor. See WHD employer’s right to control the manner 343. Some other circuits have adopted Opinion Letter (Aug. 13, 1954) in which the work is to be performed; this ‘‘relative investment’’ approach but (applying six factors very similar to the 2. the alleged employee’s opportunity continue to use the phrase ‘‘worker’s six economic reality factors currently for profit or loss depending on his investment’’ to describe the factor. See, used by courts of appeals). In 1964, managerial skill; e.g., Keller v. Miri Microsystems LLC, WHD stated, ‘‘The Supreme Court has 3. the alleged employee’s investment 781 F.3d 799, 810 (6th Cir. 2015); Dole made it clear that an employee, as in equipment or materials required for v. Snell, 875 F.2d 802, 805 (10th Cir. distinguished from a person who is his task, or his employment of helpers; 1989). engaged in a business of his own, is one 4. whether the service rendered Third, although the permanence who as a matter of economic reality requires a special skill; factor under Silk was understood to follows the usual path of an employee 5. the degree of permanency of the mean the continuity and duration of and is dependent on the business which working relationship; and working relationships, see 12 FR 7967, he serves.’’ WHD Opinion Letter FLSA– 6. whether the service rendered is an some courts of appeals have expanded 795 (Sept. 30, 1964). integral part of the alleged employer’s this factor to also consider the Over the years since, WHD has issued business. Id. at 754. exclusivity of such relationships. See, numerous opinion letters applying a e.g., Scantland, 721 F.3d at 1319; Keller, multifactor analysis very similar to the 4 As explained below, versions of this multifactor economic realty test have also been enforced and 781 F.3d at 807. multifactor economic reality test courts articulated by the Department in subregulatory Finally, Rutherford Food’s use (with some variation) to determine guidance since the 1950s. consideration of whether work is ‘‘part whether workers are employees or

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independent contractors.5 WHD has also economic realities factors. AI 2015–1 economically dependent on an promulgated regulations applying a was withdrawn on June 7, 2017 and is employer for work (employee). The multifactor analysis for independent no longer in effect. Department further identified two ‘‘core contractor status under the FLSA in WHD’s most recent opinion letter factors’’: The nature and degree of the certain specific industries. See, e.g., 29 addressing this issue, from 2019, worker’s control over the work; and the CFR 780.330(b) (applying a six factor generally applied the principles and worker’s opportunity for profit or loss economic reality test to determine factors similar to those described in the based on initiative, investment, or both. whether a sharecropper or tenant is an prior opinion letters and Fact Sheet #13, The Department explained it was independent contractor or employee but not the ‘‘independent business proposing to emphasize these factors under the Act); 29 CFR 788.16(a) organization’’ factor because it did not because they are the most probative of (applying a six factor economic reality add to the analysis as a separate factor whether workers are economically test in forestry and logging operations and was ‘‘[e]ncompassed within’’ the dependent on someone else’s business with no more than eight employees). other factors. It also stated that the or are in business for themselves. The Further, WHD has promulgated a investment factor should focus on the proposal identified three other factors to regulation applying a multifactor ‘‘amount of the worker’s investment in also be considered, though they are less economic reality analysis for facilities, equipment, or helpers.’’ The probative than the core factors: The determining independent contractor opinion letter addressed the FLSA amount of skill required for the work, status under the Migrant and Seasonal classification of service providers who the degree of permanence of the Agricultural Worker Protection Act used a virtual marketplace company to working relationship between the (MSPA). 29 CFR 500.20(h)(4). be referred to end-market consumers to individual and the potential employer, The Department’s sub-regulatory whom the services were actually and whether the work is part of an guidance, WHD Fact Sheet #13, provided. WHD concluded that the integrated unit of production. The ‘‘Employment Relationship under the service providers appeared to be Department further proposed to advise Fair Labor Standards Act (FLSA)’’ (Jul. independent contractors and not that the actual practice is more 2008), similarly stated that, when employees of the virtual marketplace probative than what may be determining whether an employment company. See WHD Opinion Letter contractually or theoretically possible in relationship exists under the FLSA, FLSA2019–6 at 7. WHD found that it determining whether a worker is an common law control is not the exclusive was ‘‘inherently difficult to employee or an independent contractor. consideration. Instead, ‘‘it is the total conceptualize the service providers’ D. Comments activity or situation which controls’’; ‘working relationship’ with [the virtual and ‘‘an employee, as distinguished marketplace company], because as a The Department solicited comments from a person who is engaged in a matter of economic reality, they are on all aspects of the proposed rule. business of his or her own, is one who, working for the consumer, not [the More than 1800 individuals and as a matter of economic reality, follows company].’’ Id. Because ‘‘[t]he facts . . . organizations timely commented on the the usual path of an employee and is demonstrate economic independence, Department’s NPRM during the thirty- dependent on the business which he or rather than economic dependence, in day comment period that ended on she serves.’’ 6 The fact sheet identified the working relationship between [the October 26, 2020. The Department seven economic reality factors; in virtual marketplace company] and its received comments from employers, addition to factors that are similar to the service providers,’’ WHD opined that workers, industry associations, worker six factors identified above, it also they were not employees of the advocacy groups, and unions, among considered the worker’s ‘‘degree of company under the FLSA but rather others. All timely comments may be independent business organization and were independent contractors. Id. at 9. viewed at the website operation.’’ On July 15, 2015, WHD As explained below, the Department’s www.regulations.gov, docket ID WHD– issued Administrator’s Interpretation prior interpretations of independent 2020–0007. No. 2015–1, ‘‘The Application of the contractor status, which themselves Of the comments received, the Fair Labor Standards Act’s ‘Suffer or have evolved over time, are subject to Department received approximately 230 comments from workers who identified Permit’ Standard in the Identification of similar limitations as that of court themselves as independent contractors Employees Who Are Misclassified as opinions, and the Department believes (not including the over 900 comments Independent Contractors’’ (AI 2015–1). that stakeholders would benefit from received from Uber drivers discussed AI 2015–1 provided guidance regarding clarification. For these reasons, the below). Of those, the overwhelming the employment relationship under the Department proposed promulgating a majority expressed support for the FLSA and the application of the six clearer and more consistent standard for evaluating whether a worker is an NPRM. These individuals identified themselves as freelancers or 5 See, e.g., WHD Opinion Letter FLSA2019–6 at employee or independent contractor 4 (Apr. 29, 2019); WHD Opinion Letter, 2002 WL under the FLSA and is now finalizing independent contractors in jobs 32406602, at *2 (Sept. 5, 2002); WHD Opinion that proposal, with some modifications including translator, journalist, Letter, 2000 WL 34444342, at *3 (Dec. 7, 2000); based on comments received. consultant, musician, and many others. WHD Opinion Letter, 2000 WL 34444352, at *1 (Jul. Among this group of commenters, over 5, 2000); WHD Opinion Letter, 1999 WL 1788137, C. The Department’s Proposal at *1 (Jul. 12, 1999); WHD Opinion Letter, 1995 WL 200 expressed support for the proposed 1032489, at *1 (June 5, 1995); WHD Opinion Letter, On September 25, 2020, the rule, while only 8 opposed it. The 1995 WL 1032469, at *1 (Mar. 2, 1995); WHD Department published the NPRM in the remaining individuals in this group did Opinion Letter, 1986 WL 740454, at *1 (June 23, Federal Register. The Department not express a specific position. Uber 1986); WHD Opinion Letter, 1986 WL 1171083, at *1 (Jan. 14, 1986); WHD Opinion Letter WH–476, proposed to adopt an ‘‘economic drivers submitted over 900 comments. 1978 WL 51437, at *2 (Oct. 19, 1978); WHD reality’’ test to determine a worker’s While many expressed views on Uber Opinion Letter WH–361, 1975 WL 40984, at *1 status as an FLSA employee or an corporate policies and not on the NPRM (Oct. 1, 1975); WHD Opinion Letter (Sept. 12, 1969); independent contractor. The test itself, the majority of these drivers who WHD Opinion Letter (Oct. 12, 1965). 6 Fact Sheet #13 is available at https:// considers whether a worker is in addressed the NRPM supported the www.dol.gov/sites/dolgov/files/WHD/legacy/files/ business for himself or herself Department’s proposal. The Department whdfs13.pdf. (independent contractor) or is instead also received a number of other

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comments that are beyond the scope of under the FLSA. The NPRM explained businesses and workers alike. For this rulemaking. For example, several that such a regulation would provide example, the Coalition for Workforce commenters expressed opinions related much needed clarity and encourage (or Innovation (CWI) asserted that to the issues addressed in the at least stop deterring) flexible work additional clarity of the economic Department’s proposal but that were arrangements that benefit both reality test would ‘‘allow workers and specific to state legislation or employer businesses and workers. businesses to pursue [ ] mutually policies. Significant issues raised in the Commenters in the business beneficial opportunities as the United timely comments received are discussed community and freelance workers States economy evolves with below, along with the Department’s generally agreed with the Department technology.’’ Fight for Freelancers response to those comments. that the multifactor balancing test is explained that its members value confusing and needs clarification. The flexibility that comes with working as III. Need for Rulemaking National Retail Federation (NRF) independent contractors and supported The NPRM explained that the complained that ‘‘existing tests for the Department’s ‘‘efforts to protect [its Department has never promulgated a independent contractor status tend to members’] classification.’’ generally-applicable regulation have a large number of factors which Some commenters who opposed this addressing who is an independent can be nebulous, overlapping, and even rulemaking questioned the need for a contractor and thus not an employee irrelevant to the ultimate inquiry.’’ The regulation on this topic. The Southwest under the FLSA. Instead, as described Workplace Policy Institute of Littler Regional Council of Carpenters above, the Department has issued and Mendelson, P.C. (WPI) stated that (SWRCC) stated that the ‘‘[t]he first of revised guidance since at least 1954, ‘‘[b]oth the Department and the courts the Rule’s shortcomings is its using different variations of a have struggled to define ‘dependence’ ’’ assumption that a new rule is necessary multifactor economic reality test that in the modern economy—resulting in in the first place,’’ and the American analyzes economic dependence to confusion, unpredictability and Federation of Labor & Congress of distinguish independent contractors inconsistent results.’’ The Society for Industrial Organization (AFL–CIO) from employees. Such guidance reflects, Human Resource Management (SHRM) asserted that the Department’s ‘‘quest in large part, application of the general echoed this sentiment, writing ‘‘the for certainty . . . is quixotic.’’ Mr. principles of the economic reality test business community and workers are Edward Tuddenham, an attorney, by Federal courts of appeals. Such left applying numerous factors in a contended that the current test is guidance, however, did not reflect any variety of ways that is mired in ‘‘generally consistent and predictable’’ public input. Indeed, the NPRM kicked uncertainty and, therefore, unnecessary and thus does not need further off the Department’s first ever notice- risk.’’ The U.S. Chamber of Commerce clarification. He and others repeatedly and-comment rulemaking to provide a stated that ‘‘[t]he confusion regarding questioned the Department’s reasons for generally applicable interpretation of whether a worker is properly classified rulemaking by asserting that the independent contractor status under the as an employee or an independent Department did not identify cases where FLSA. As recounted just above, the contractor has long been a vexing courts reached incorrect outcomes. Department received many comments problem for the business community, Rather than focus on the outcomes in from stakeholders who are actually across many different industries and particular cases, the NPRM highlighted impacted by FLSA classification work settings.’’ See also, e.g., World inconsistent or confusing reasoning in decisions, which are valuable Floor Covering Association (WFCA) many decisions to explain why the information and insight that the (‘‘The current test has resulted in regulated community would benefit Department has not previously gathered inconsistent decisions, much confusion, from regulatory clarity. See 85 FR and many of which reinforced the and unnecessary costs.’’). Numerous 60605. Mr. Tuddenham and others also Department’s view that more clarity is individual freelancers and organizations provided thoughtful and detailed needed in this area. that represent freelance workers also comments criticizing specific aspects of The Department explained in the stated they would welcome ‘‘greater the reasons presented in the NPRM’s NPRM preamble that prior articulations clarity and predictability in the need for rulemaking discussion. The of the test have proven to be unclear and application of the ‘economic realities’ following discussion retraces those unwieldy for the four following reasons. test.’’ Coalition to Promote Independent reasons and responds to these First, the test’s overarching concept of Entrepreneurs (CPIE); see also Coalition criticisms. ‘‘economic dependence’’ is under- of Practicing Translators & Interpreters A. Confusion Regarding the Meaning of developed and sometimes of California (CoPTIC) (requesting Economic Dependence inconsistently applied, rendering it a ‘‘greater clarity in Federal law’’). source of confusion. Second, the test is Individual freelancers generally The NPRM explained that indefinite in that it makes all facts welcomed greater legal clarity. For undeveloped analysis and inconsistency potentially relevant without guidance example, one individual commenter cloud the application of ‘‘economic on how to prioritize or balance different wrote ‘‘to express [her] support for this dependence,’’ the touchstone of the and sometimes competing proposed rule. As someone who has economic reality test. 85 FR 60605. The considerations. Third, inefficiency and enjoyed freedom and flexibility as a Department and some courts have lack of structure in the test further stem freelancer for 20 years, this would be a attempted to furnish a measure of clarity from blurred boundaries between the welcome clarification.’’ Another by explaining, for example, that the factors. Fourth, these shortcomings have individual freelancer stated that ‘‘[t]he proper inquiry is ‘‘ ‘whether the workers become more apparent over time as clarity and updating of [the FLSA] are dependent on a particular business technology, economic conditions, and through this NPRM is long overdue and or organization for their continued work relationships have evolved. the DOL should issue ruling on employment’ in that line of business,’’ The Department thus proposed to independent contracting. . . .’’ Brock v. Mr. W Fireworks, Inc., 814 F.2d promulgate a regulation that would These supportive commenters 1042, 1054 (5th Cir. 1987) (quoting clarify and sharpen the contours of the generally agreed with the Department DialAmerica, 757 F.2d at 1385), or economic reality test used to determine that additional clarity would encourage instead ‘‘are in business for independent contractor classification flexible work arrangements that benefit themselves,’’ Saleem, 854 F.3d at 139.

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But the Department and many courts not concern whether the workers at B. Lack of Focus in the Multifactor have often applied the test without issue depend on the money they earn Balancing Test helpful clarification of the meaning of for obtaining the necessities of life.’’). The NPRM explained that the the economic dependency that they are As the DialAmerica court explained, the versions of the multifactor economic seeking. dependence-for-income approach reality test used by courts since at least The NPRM explained that the lack of ‘‘would lead to a senseless result’’ the 1980s and the Department since the explanation of economic dependence because a wealthy individual who had 1950s lack clear, generally applicable has sometimes led to inconsistent an independent source of income would guidance about how to balance the approaches and results and highlighted be an independent contractor even multiple factors and the countless facts as an example the apparently though a poorer individual who worked encompassed therein. See 85 FR inconsistent results in Cromwell v. 60606.The test’s lack of guidance leads Driftwood Elec. Contractor, Inc., 348 F. for the same company under the same to uncertainty regarding ‘‘which aspects App’x 57 (5th Cir. 2009) (holding that work arrangement is an employee. 757 cable splicers hired by Bellsouth to F.2d at 1385 n.11. Mr. Tuddenham of ‘economic reality’ matter, and why.’’ perform post-Katrina repairs were initially defended the reasoning in Lauritzen, 835 F.2d at 1539 (Easterbrook employees), and Thibault v. BellSouth Thibault, but later listed that case as an J., concurring). As examples of such uncertainty, the Telecommunication, 612 F.3d 843 (5th example of ‘‘the occasional erroneous NPRM highlighted court decisions Cir. 2010) (holding that cable splicer application of the [economic reality] analyzing economic reality factors to hired by same company under a very test.’’ reach an overall decision about a similar arrangement was an The NPRM also highlighted the worker’s classification without independent contractor). See 85 FR decision in Parrish v. Premier 60605. The Thibault court distinguished meaningful explanation of how they Directional Drilling, 917 F.3d 369, as an balanced the factors to reach the final its result from Cromwell in part by example of inconsistent articulation of highlighting Mr. Thibault’s significant decision. 85 FR 60606 (citing, e.g., economic dependence. In that case, the income from (1) his own sales company Parrish, 917 F.3d at 380; Chao v. Mid- court first applied a dependence-for- that had profits of approximately Atl. Installation Servs., Inc., 16 F. App’x $500,000, (2) ‘‘eight drag-race cars [that] work concept to analyze the control 104, 108 (4th Cir. 2001); and Snell, 875 generated $1,478 in income from racing factor and then explicitly departed from F.2d at 912). Even where many facts and professionally[,]’’ and (3) ‘‘commercial that framework in favor of a factors support both sides of the rental property that generated some dependence-for-income analysis of the classification inquiry, courts have not income.’’ Thibault, 612 F.3d at 849. opportunity factor. See 85 FR 60606. explained how they balanced the While these facts indicate that Mr. The Parrish court impliedly took a third competing considerations. See, e.g., Thibault may have been in business for concept of dependence to analyze the Acosta v. Paragon Contractors Corp., himself as a manager of a sales business, investment factor through a ‘‘side-by- 884 F.3d 1225, 1238 (10th Cir. 2018); drag-race cars, and commercial side comparison’’ of each worker’s Iontchev v. AAA Cab. Services, 685 F. properties, they are irrelevant as to individual investment to that of the App’x 548, 550 (9th Cir. 2017). The whether he was in business for himself alleged employer.’’ 917 F.3d at 383. AI NPRM thus identified a need for as a cable splicer.7 The Thibault court 2015–1 took the same approach and guidance on which factors are most probative. nonetheless assigned these facts explained that ‘‘it is the relative substantial weight because it Even some commenters critical of the investments that matter’’ because ‘‘[i]f Department’s approach in the NPRM understood economic dependence to the worker’s investment is relatively mean dependence for income or wealth, conceded that the test as currently minor, that suggests that the worker and applied can create considerable which is incompatible with the the employer are not on similar footing dependence-for-work approach that ambiguity. Mr. Tuddenham asserted and that the worker may be that the lack of general guidance other courts and the Department economically dependent on the apply.8 See, e.g., Off Duty Police, 915 regarding how to balance factors is ‘‘an employer.’’ The comparative analysis of F.3d at 1058 (‘‘[W]hether a worker has unavoidable function of determining investments thus appears to rely on a more than one source of income says something as nebulous as ‘economic concept of economic dependence that little about that worker’s employment dependence.’ ’’ See also Farmworker status.’’); Halferty, 821 F.2d at 268 (‘‘[I]t means ‘‘not on a similar footing,’’ which Justice (‘‘[T]he test, as currently applied, is not dependence in the sense that one is different from the ‘‘dependence for creates necessary ambiguity.’’). The could not survive without the income work’’ concept that the Department Department disagrees that the concept from the job that we examine, but believes to be correct. of ‘‘economic dependence’’ is dependence for continued In summary, courts and the necessarily ‘‘nebulous.’’ FLSA employment’’); DialAmerica, 757 F.2d Department typically economic employment itself depends on economic at 1385 (‘‘The economic-dependence dependence as ‘‘dependence for work,’’ dependence, and nothing in the statute requires that this standard be nebulous aspect of the [economic reality] test does but have sometimes applied other and thus unmanageable. See Usery, 527 concepts of dependence to analyze 7 F.2d at 1311 (‘‘It is dependence that The Thibault court also highlighted the fact that certain factors, such as ‘‘dependence for Mr. Thibault worked for only 3 months—although indicates employee status.’’). Instead, he intended to work for 7 or 8 months—before income’’ and ‘‘not on similar footing.’’ the Department believes the correct being fired. See 612 F.3d at 846, 849. In contrast, Because economic dependence is the concept of economic dependence the splicers in Cromwell worked approximately 11 ultimate inquiry of FLSA employment, tangibly defines FLSA employment to months. See 348 F. App’x at 58. these different conceptions result in 8 The Thibault case recognized that ‘‘[a]n include individuals who are dependent individual’s wealth is not a solely dispositive factor essentially different tests that confuse on others for work, and to exclude in the economic dependence question.’’ 612 F.3d at the regulated community. Accordingly, individuals who are, as a matter of 849 n.4. This confirms that wealth was in fact a the economic reality test needs a more meaningful consideration, which runs against other economic reality, in business for cases explaining that dependence on wealth is an developed and dependable touchstone themselves. See Saleem, 854 F.3d at inappropriate lens. at its heart. 139. The Department thus believes it is

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possible to provide generally applicable independent contractor status, but 331 U.S. at 719. The Second Circuit guidance regarding how to consider and nonetheless found the ‘skill and recognized such clear overlap, noting balance the economic reality factors to initiative factor points towards that ‘‘[e]conomic investment, by assess this concept of economic employee status’ due to ‘the key missing definition, creates the opportunity for dependence. ingredient . . . of initiative.’ ’’ 85 FR loss, [and] investors take such a risk 60607 (quoting Express Sixty-Minutes with an eye to profit.’’ Saleem, 854 F.3d C. Confusion and Inefficiency Due to Delivery, 161 F.3d at 303). at 145 n.29. Nonetheless, most courts Overlapping Factors Next, the permanence factor originally and Department have analyzed The NPRM next explained that courts concerned the continuity and duration opportunity for profit and loss and and the Department have articulated the of a working relationship but has since investment as separate factors. When economic reality factors such that they been expanded by some courts and the done right, separate analysis leads to have overlapping coverage, which Department to also consider the redundancy. See, e.g., Mid-Atlantic undermines the structural benefits of a exclusivity of that relationship. See 85 Installation Servs., 16 F. App’x at 106– multifactor test. See 85 FR 60607. The FR 60608 (citing Parrish 917 F.3d at 07. When done wrong, it leads to NPRM noted that most of these overlaps 386–87; Keller, 781 F.3d at 807–09; analysis of investment without regard did not exist in the Supreme Court’s Scantland, 721 F.3d at 1319; WHD for the worker’s profit or loss, such as original articulation of the economic Opinion Letter FLSA 2019–6 at 8). But by comparing the dollar value of a reality factors in Silk and were instead exclusivity—the ability or inability for a worker’s personal investments against introduced by subsequent court of worker to offer services to different the total investment of a large company appeals decisions. The NPRM then companies—is already a part of the that, for example, ‘‘maintain[s] explained several ways in which control factor. This overlap results in corporate offices.’’ Hopkins 545 F.3d at extensive overlaps may lead to exclusivity being analyzed twice and 344. The NPRM explained that such a inefficiency and confusion for the causes the actual consideration of comparison says nothing about whether regulated community. permanence being potentially subsumed the worker is in business for himself, as First, the ‘‘skill required’’ factor by control. opposed to being economically articulated in Silk, 331 U.S. at 716, has Third, the ‘‘integral part’’ factor is dependent on that company for work, been expanded by the Department and used by some courts to be merely a and is therefore not probative and some courts to analyze ‘‘skill and proxy of control. As one such court potentially misleading. 85 FR 60608. initiative.’’ See, e.g., Superior Care, 840 explained: ‘‘It is presumed that, with The NRPM concluded that reducing the F.2d at 1060; WHD Fact Sheet WHD respect to vital or integral parts of the above-mentioned overlaps would make #13. Because the capacity for on-the-job business, the employer will prefer to the economic reality test easier to initiative is already part of the control engage an employee rather than an understand and apply. factor, the NPRM explained that this independent contractor. This is so The SWRCC contended that approach essentially imports control because the employer retains control ‘‘overlapping factors [have] never been analysis into the skill factor. Indeed, the over the employee and can compel the source of—and the DOL cannot presence of control appears to overrides attendan[ce] at work on a consistent point to—any credible criticism,’’ but the existence of skill,9 effectively basis.’’ Baker v. Dataphase, Inc., 781 F. did not question or even acknowledge transforming the skill factor into an Supp. 724, 735 (D. Utah 1992). But the the above criticism discussed at length extension of the control factor in some control factor already directly analyzes in the NRPM. In contrast, commenters circuits, but not others.10 The ‘‘skill and whether a business can compel that are significantly impacted by the initiative’’ factor also overlaps with the attendance on a consistent basis. It is FLSA’s obligations generally agreed opportunity factor, which considers the unclear what additional value can be with the Department that overlapping impact of initiative on worker’s gained by indirectly analyzing that same factors have created confusion. For earnings, resulting in initiative being consideration a second time under the example, the Association of General analyzed under three different factors. ‘‘integral part’’ factor.11 Contractors stated that ‘‘[n]avigating and As an illustration of confusion resulting Finally, while Silk articulated the complying with the various overlapping from this overlap, the NPRM opportunity for profit and loss and and inconsistent standards are highlighted a case in which a court investment as separate factors, it confusing and costly,’’ and WPI found that workers exercised enough analyzed the two together in concluding ‘‘agree[d] with the Department that such on-the-job initiative for the control and that truck drivers in that case were overlap and blurring of factors is opportunity factors to point towards independent contractors in part because confusing and inefficient.’’ See also, they ‘‘invested in their own trucks and e.g., Center for Workplace Compliance 9 See, e.g., Selker Bros., 949 F.2d at 1295 had ‘‘an opportunity for profit from (CWC); NRF; U.S. Chamber of (concluding that the skill factor weighed towards employee classification due to ‘‘the degree of sound management’’ of that investment. Commerce. control exercised by [the potential employer] over A multifactor test is a useful the day-to-day operation’’); Baker, 137 F.3d at 1443 11 As the NPRM explained, this presumption that framework for determining FLSA (finding that the skill factor weighed towards firms would control all important services on which employment in part because it organizes employee classification where skilled welders ‘‘are they rely may rest on a mistaken premise because, the many facts that are part of economic told what to do and when to do it’’); Superior Care, for example, manufacturers routinely have critical 840 F.2d at 1060 (finding that the skill factor parts and components produced and delivered by reality into distinct categories, thus weighed towards employee classification for skilled wholly separate companies. 85 FR 60608. And providing some structure to an nurses because ‘‘Superior Care in turn controlled companies whose business is to connect otherwise roving inquiry. However, this the terms and conditions of the employment independent service providers with customers benefit is lost if the lines between those relationship’’). would find those service providers to be important 10 Some courts of appeal continue to analyze skill even though they are independent from the factors blur. Under prior articulations of rather than control as part of the skill factor. See, company’s business. See State Dep’t of the test, considerations within the e.g., Paragon, 884 F3d at 1235 (considering ‘‘the Employment, Training & Rehab., Employment Sec. control factor—capacity for on-the-job degree of skill required to perform the work’’); see Div. v. Reliable Health Care Servs. of S. Nevada, initiative, exclusivity, and ability to also Iontchev, 685 F. App’x at 550 (asking ‘‘whether Inc., 983 P.2d 414, 419 (Nev. 1999) (‘‘[W]e cannot services rendered . . . require[d] a special skill’’); ignore the simple fact that providing patient care compel attendance—have been Keller, 791 F.3d at 807 (analyzing ‘‘the degree of and brokering workers are two distinct imported into analysis of three other skill required’’). businesses.’ ’’) factors: Skill, permanence, and integral

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part. Indeed, those control-based more willing to allocate certain pieces of is unclear what empirical data could considerations appear to be the most their production, even integrated parts, measure innovation that is not occurring important aspect of the other factors, to independent contractors.’’); Food due to legal uncertainty. Commenters which obscures those factors’ distinctive Industry Association (‘‘societal changes who represent technology companies probative values. Moreover, have resulted in innovative work stated that legal uncertainty regarding considerations under the opportunity arrangements and changes in job tenure worker classification in fact deters them factor—the ability to affect profits expectation’’). Former Deputy Under from developing innovative and flexible through initiative—have been imported Secretary of Labor and retired law work arrangements. See, e.g., CWI; into the skill factor. And the ability to professor Henry H. Perritt, Jr. found the TechNet. In addition, economists who earn profits through investment discussion of modern trends to be study the impact of labor regulation on overlaps completely with the ‘‘particularly insightful and should be entrepreneurship also commented that investment factor. The Department retained and expanded in the preamble clear independent contractor regulations continues to believe these overlapping to any final rule.’’ Other commenters would assist startup companies. Dr. Liya coverages contribute to confusion and disagreed. The AFL–CIO, for instance, Palagashvilli (‘‘71 percent of startups should be reduced where practicable. theorized that lower transaction costs relied on independent contractors and ‘‘might just as easily result in employers thought it was necessary to use contract D. The Shortcomings and not taking steps to retain employees labor during their early stages’’); Dr. Misconceptions That This Rulemaking who perform work central to their Michael Farren and Trace Mitchell Seeks To Remedy Are More Apparent in business, but instead tolerate frequent (‘‘[G]reater legal clarity to employers the Modern Economy turnover in such positions’’ and that the and workers will allow for more The NPRM explained that certain ‘‘job tenure of independent contractors efficient production processes and will technological and social changes have may have fallen more’’ than for reduce the resources wasted on made shortcomings of the economic employees—though it did not provide determining a worker’s employment reality test more apparent in the modern evidence in support of its hypotheses.13 classification through the legal economy. It highlighted the effects of The Department continues to believe process.’’). three types of change. First, falling that each of the above shortcomings of For the reasons mentioned above, the transaction costs in many industries the previously applied economic reality Department continues to believe that, makes it more cost effective for firms to test provides sufficient reason for this unless revised, the multifactor economic hire independent contractors rather than rulemaking and that technological and reality test suffers because the analytical employees to perform core functions.12 societal changes have made these lens through which all the factors are This in turn means analyzing the shortcomings even more apparent. filtered remains inconsistent; there is no clear principle regarding how to balance importance of the work through the E. Effects of Additional Regulatory the multiple factors; the lines between ‘‘integral part’’ factor, which the Clarity on Innovation Supreme Court never endorsed, is more many of the factors are blurred; and likely to result in misleading signals The NPRM expressed concern that the these shortcomings have become more regarding an individual’s employment legal uncertainty arising from the above- apparent in the modern economy. The status. Second, the transition from a described shortcomings of the resulting legal uncertainty obscures more industrial-based to a more multifactor economic reality test may workers’ and businesses’ respective knowledge-based economy reduces the deter innovative, flexible work rights and obligations under the FLSA probative value of the investment factor arrangements that benefit businesses and deters innovative work in certain industries because and workers alike. Some commenters arrangements, thus inhibiting the individuals can be in business for questioned this assumption. The development of new job opportunities themselves in those industries with Coalition of State Attorneys General, or eliminating existing jobs. The minimal physical capital. Third, shorter Cities, and Municipal Agencies (State Department is therefore issuing this job tenures among employees dull the AGs), for instance, contended that the final rule to increase legal certainty. Department ‘‘provides no empirical ability of the permanence factor to IV. Final Regulatory Provisions distinguish between employees and evidence or data demonstrating that independence contractor. See 85 FR employers now hesitate to engage in Having reviewed commenter feedback 60608–09. innovative arrangements’’ and further submitted in response to the proposed Several commenters agreed with the argued that because ‘‘digital platforms rule, the Department is finalizing the Department’s assessments of modern have become part of the modern addition of a new part 795 to Title 29 trends. See, e.g., TechNet (‘‘Given economy . . . they have not been stifled of the Code of Federal Regulations, falling transaction costs, companies are by the current test.’’ But the mere which will address whether particular existence of certain types of businesses workers are ‘‘employees’’ or 12 Ronald Coase, Nature of the Firm, 4 Economica is insufficient evidence that other such independent contractors under the 386 (1937), https://onlinelibrary.wiley.com/doi/ businesses are not being stifled, and it FLSA. In relevant part, and as discussed epdf/10.1111/j.1468-0335.1937.tb00002.x. See also in greater detail below, the part Nobel Prizes and Laureates, Oct., 15, 1991, https:// 13 The Department notes that it is unlikely that www.nobelprize.org/prizes/economic-sciences/ includes: job tenures of independent contractors have fallen • An introductory provision at 1991/press-release/ (explaining The Nature of the by more than employees because average job tenure Firm’s contribution to economics literature as a for employees have dropped by many years, which § 795.100 explaining the purpose and central reason for Coase’s receipt of the 1991 Nobel is greater than the total duration of a typical legal authority for the new part; Prize in Economics); Katz and A. Krueger, ‘‘The independent contractor relationship. See Julie • a provision at § 795.105(a) Rise and Nature of Alternative Work Arrangements Hotchkiss and Christopher Macpherson, Falling Job explaining that independent contractors in the United States, 1995–2015,’’ p. 25 (2018) Tenure: It’s Not Just about Millennials, Federal (‘‘Coase’s (1937) classic explanation for the Reserve Bank of Atlanta, June 8, 2015, https:// are not employees under the FLSA; boundary of firms rested on the minimization of www.frbatlanta.org/blogs/macroblog/2015/06/08/ • a provision at § 795.105(b) transaction costs within firm-employee falling-job-tenure-its-not-just-about- discussing the ‘‘economic reality’’ test relationships. Technological changes may be millennials.aspx. (showing that median job tenure for distinguishing FLSA employees from reducing the transaction costs associated with for individuals born in 1933 was ten years or longer contracting out job tasks, however, and thus while median job tenure for individuals born after independent contractors and clarifying supporting the disintermediation of work.’’). 1983 was three years or less). that the concept of economic

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dependence turns on whether a worker deference it expects to receive from this rulemaking has great value is in business for him- or herself courts interpreting its proposed regardless of what deference courts (independent contractor) or is regulation. A diverse collection of ultimately give to it. economically dependent on a potential commenters, including the American While proposed § 795.100 employer for work (employee); Trucking Association (ATA), the emphasized that part 795 would state • provisions at § 795.105(c) and (d) National Home Delivery Association the Department’s interpretation of describing factors examined as part of (NHDA), the Northwest Workers Justice independent contractor status under the the economic reality test, including two Project (NWJP), and Winebrake & FLSA, some commenters expressed ‘‘core’’ factors—the nature and degree of Santillo, LLC, opined that the concern that it would affect the scope of the worker’s control over the work and Department’s proposed regulation employment under other Federal laws. the worker’s opportunity for profit or would be entitled to Skidmore The United Food and Commercial loss—which typically carry greater deference from courts, though these Workers International Union (UFCW) weight in the analysis, as well as three commenters diverged on the proposed believed that the proposal may narrow other factors that may serve as rule’s ‘‘power to persuade.’’ Skidmore v. the coverage of the ‘‘Title VII of the Civil additional guideposts in the analysis; Swift & Co., 323 US 134, 140 (1944). Rights Act of 1964, Americans with • a provision at § 795.110 advising Finally, the AFL–CIO asserted that Disabilities Act, Age Discrimination in that the parties’ actual practice is more ‘‘[t]he proposed rule is based on Employment Act (ADEA), and the Equal probative than what may be considerations that did not motivate Pay Act.’’ See also National Women’s contractually or theoretically possible; Congress when it adopted the FLSA, Law Center (NWLC); CLASP. The • fact-specific examples at § 795.115; that the Department of Labor is not Department reaffirms that the rule and concerns the distinction between • authorized to consider in construing the a severability provision at terms of the FLSA, and that the employees and independent contractors § 795.120. Department has no expertise regarding,’’ solely for the purposes of the FLSA, and The Department responds to thus placing the proposed rule ‘‘outside as such, would not affect the scope of commenter feedback on the proposed the ‘limits of the delegation’ from employment under other Federal rule below. Congress to the Department contained laws.15 A. The Purpose of Part 795 in the Act.’’ (quoting Chevron, U.S.A., Many commenters requested that the Department promulgate a standard more Proposed § 795.100 explained that the Inc. v. NRDC, Inc., 467 U.S. 837, 865 (1984)). broadly applicable across other state interpretations in part 795 will guide and Federal employment laws. See, e.g., WHD’s enforcement of the FLSA and are The Department appreciates commenter interest in these issues. The American Society of Travel Advisors, intended to be used by employers, Inc. (‘‘[The NPRM . . . represents businesses, the public sector, Department without question has relevant expertise in the area of what something of a missed opportunity employees, workers, and courts to insofar as it fails to address the assess employment status classifications constitutes an employment relationship under the FLSA, given its responsibility longstanding difficulty associated with under the Act. See 85 FR 60638. the continued use of multiple tests at Proposed § 795.100 further clarified for administering and enforcing the Act 14 and its decades of experience the Federal level to determine worker that, if proposed part 795 is adopted, status.’’); Cambridge Investment employers may safely rely upon the doing so. The Department’s authority to interpret the Act comes with its Research, Inc. (‘‘[W]ithout a more interpretations in part 795 under section encompassing Department position or 10 of the Portal-to-Portal Act, unless and authority to administer and enforce the Act. See Herman v. Fabri-Centers of guidance addressing different state until any such interpretation ‘‘is standards, some of the current modified or rescinded or is determined Am., Inc., 308 F.3d 580, 592–93 (6th Cir. 2002) (noting that ‘‘[t]he Wage and Hour uncertainty and unpredictability by judicial authority to be invalid or of remain.’’); Chun Fung Kevin Chiu no legal effect.’’ Id. (quoting 29 U.S.C. Division of the Department of Labor was created to administer the Act’’ while (‘‘[I]nconsistent Federal and state 259). standards with regards to classification Few commenters specifically agreeing with the Department’s interpretation of one of the Act’s may render the DOL rules ineffective in addressed proposed § 795.100, but practice for those independent several discussed issues relevant to its provisions); Dufrene v. Browning-Ferris, Inc., 207 F.3d 264, 267 (5th Cir. 2000) contractors and businesses affected.’’). content. For example, a few commenters While several commenters questioned the Department’s legal (‘‘By granting the Secretary of Labor the power to administer the FLSA, Congress acknowledged the Department’s lack of authority to promulgate any regulation authority to interpret the scope of laws addressing independent contractor implicitly granted him the power to interpret.’’); Condo v. Sysco Corp., 1 outside of its jurisdiction, the National status under the FLSA. See Northern Association of Manufacturers and the California Carpenters Regional Council F.3d 599, 603 (7th Cir. 1993) (same). The Department believes a clear Mechanical Contractors Association of (‘‘At no time since the FLSA was passed America (MCAA) urged the Department has Congress made substantive explanation of the test for whether a worker is an employee under the FLSA to collaborate with other Federal amendments to the definitions of agencies to harmonize the varying employee, employer, or the ‘suffer or or an independent contractor not entitled to the protections of the Act in employment definitions under Federal permit to work’ standard . . . nor has it law. Finally, the Zobrist Law Group directed any changes in the controlling easily accessible regulatory text is valuable to potential employers, to ‘‘urge[d] the Department to prohibit regulations.’’); Rep. Bobby Scott et al. states from using classification tests that (‘‘Congress has not delegated workers, and to other stakeholders. It has a long history of offering rulemaking authority to the DOL with 15 Additionally and as explained in greater detail respect to the scope of the employment interpretations in this area and believes below, this rule does not narrow the longstanding relationship under the FLSA.’’). A few standard for distinguishing between FLSA 14 See 29 U.S.C. 204, 211(a), 212(b), 216(c), 217; employees and independent contractors; employees commenters requested that the see also Fernandez v. Zoni Language Centers, Inc., are economically dependent on another for work, Department explain its source of 858 F.3d 45, 48–49 (2d Cir. 2017) (noting that ‘‘[t]he and independent contractors are in business for rulemaking authority and the level of DOL . . . administers the FLSA’’). themselves as matter of economic reality.

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conflict with the proposed rule,’’ 500.20(h)(4), as we are unsure whether status under the FLSA ‘‘[t]o the extent asserting that ‘‘state law not preempted application of the six factor economic . . . [that such guidance is] inconsistent by the FLSA is narrow’’ and that state reality test described in that regulation or in conflict with the interpretations laws ‘‘shifting an independent has resulted in confusion and stated in this part.’’ As explained in the contractor under the FLSA to an uncertainty in the more limited MSPA NPRM, the Department engaged in this employee under state law . . . [impose] context similar to that described in the rulemaking to ‘‘clarify the existing greater obligations upon those workers.’’ FLSA context. Importantly, the standard, not radically transform it,’’ 85 But see Truckload Carriers Association regulatory standard for determining an FR 60636, and none of the industry- (‘‘TCA understands that, due to our individual’s classification status under specific guidance in Administrator’s nation’s federalist system, individual MSPA is generally consistent with the Interpretation No. 2014–1 is states such as California can pursue FLSA guidance finalized in this rule: meaningfully affected by this final rule. misguided statues that are more ‘‘In determining if the farm labor For similar reasons, we believe that the stringent than the Federal standard the contractor or worker is an employee or assertion by the Nebraska Appleseed Department is seeking to clarify[.]’’). an independent contractor, the ultimate Center for Law in the Public Interest While the Department appreciates the question is the economic reality of the (Appleseed Center) that this rulemaking desire to achieve uniformity across the relationship—whether there is will ‘‘rescind years of [Departmental] various state and Federal laws which economic dependence upon the guidance’’ is an overstatement. This rule may govern work arrangements, agricultural employer/association or is premised on familiar FLSA concepts requests to modify definitions and tests farm labor contractor, as appropriate.’’ that courts, employers, workers, and the under different laws are outside the 29 CFR 500.20(h)(4). Therefore, as Department have applied for years scope of this rulemaking. explained in the NPRM, the Department while providing updated and clearer Some commenters supportive of the prefers to proceed incrementally at this explanations of what the concepts mean proposed rule requested that the time by leaving the MSPA regulation at and how they are considered. Although Department make conforming edits to 29 CFR 500.20(h)(4) unchanged.16 17 this rule will change the Department’s its MSPA regulation at 29 CFR The American Network of Community analysis for classifying workers as 500.20(h)(4), addressing whether or not Options and Resources (ANCOR) employees or independent contractors a farm labor contractor engaged by an expressed concern about the in some respect, those changes do not agricultural employer/association is an Department’s statement in proposed favor independent contractor independent contractor or an employee § 795.100 that, if finalized, the proposed classification (i.e., the ultimate legal under MSPA. See Americans for rule ‘‘would contain the Department’s outcome) relative to the status quo, but Prosperity Foundation (AFPF) (‘‘To sole and authoritative interpretation of rather offer greater clarity as to workers’ further the Department’s goal of independent contractor status under the proper classifications. clarification, simplification, and FLSA,’’ fearing that the statement could consistency . . . the same criteria used be interpreted to ‘‘render obsolete the B. Clarification That Independent in the NPRM to define independent Department’s specific guidance on the Contractors Are Not Employees Under contractors for purposes of the FLSA application of the FLSA to shared living the Act also should apply to the MSPA, and to in Fact Sheet #79G and Administrator’s Proposed § 795.105(a) explained that any other provision that references the Interpretation No. 2014–1.’’ The an independent contractor who renders FLSA.’’); Administrative Law Clinic at Department disagrees with this services to a person is not an employee the Antonin Scalia Law School (‘‘[T]he interpretation, noting that § 795.100 of that person under the FLSA, and that Department should simply use its only rescinds earlier WHD guidance the Act’s wage and hour requirements proposed regulations in 29 CFR 795.100, addressing independent contractor do not apply with respect to a person’s et seq., to determine employee status independent contractors. See 85 FR under MSPA, and repeal [29 CFR 16See, e.g., Pharm. Research & Mfrs. of Am. v. 60638–39. Proposed 795.105(a) 500.20(h)] as duplicative.’’). Relatedly, FTC, 790 F.3d 198, 203 (D.C. Cir. 2015) (affirming similarly explained that the Texas RioGrande Legal Aid (TRLA), that agency had discretion to ‘‘proceeding recordkeeping obligations for employers incrementally’’ in promulgating rules that were which expressed opposition to the directed to one industry but no others); Inv. Co. under section 11 of the Act do not apply proposed rule, asserted that ‘‘the Inst. v. Commodity Futures Trading Comm’n, 720 to a person with respect to services proposed rule will lead to considerable F.3d 370, 378 (D.C. 2013) (observing that ‘‘[n]othing received from an independent confusion among both employers and prohibits Federal agencies from moving in an contractor. Id. incremental manner’’ (quoting FCC v. Fox workers . . . because the proposed rule Television Stations, Inc., 556 U.S. 502, 522 (2009)); The vast majority of substantive at odds with the Department’s [MSPA] City of Las Vegas v. Lujan, 891 F.2d 927,935 (D.C. comments agreed with proposed regulations,’’ but opined that any effort Cir. 1989) (noting that ‘‘agencies have great § 795.105(a). One anonymous discretion to treat a problem partially’’). commenter suggested that the to revise 29 CFR 500.20(h) ‘‘would be in 17 Similar to the MSPA regulation at 29 CFR Department interpret the FLSA’s direct contravention of Congressional 500.20(h)(4), a regulation promulgated by the directives regarding the interpretation of Department’s Veterans’ Employment & Training minimum wage and overtime pay the MSPA.’’ Service (VETS) at 20 CFR 1002.44 articulates a six- requirements to apply to independent As noted in the NPRM preamble, the factor balancing test based on the tests used by contractors because the Act’s courts under the FLSA for determining whether an Department acknowledges that MSPA individual is an employee or an independent ‘‘declaration of policy’’ at 29 U.S.C. 202 adopts by reference the FLSA’s contractor under the Uniformed Services ‘‘suggests the purpose of the FLSA is to definition of ‘‘employ,’’ see 18 U.S.C. Employment and Reemployment Rights Act protect workers.’’ The Department does 1802(5), and that 29 CFR 500.20(h)(4) (USERRA). See 70 FR 75254 (‘‘The independent not adopt this interpretation because contractor provision in this rule is based on considers ‘‘whether or not an Congress’s intent that USERRA’s definition of Federal courts of appeals have independent contractor or employment ‘employee’ be interpreted in the same expansive uniformly held, and the Department has relationship exists under the Fair Labor manner as the term is defined under the [FSLA].’’ consistently maintained, that ‘‘FLSA Standards Act’’ to interpret independent (citing H.R. Rep. No. 103–65, Pt. I, at 29 (1993); S. wage and hour requirements do not Rep. No. 103–58, at 40 (1993))). Consistent with this contractor status under MSPA. At this rulemaking’s incremental focus of the FLSA apply to true independent contractors.’’ time, however, the Department does not context, the Department declines to amend 20 CFR Karlson, 860 F.3d at 1092; see also, e.g., see a compelling need to revise 29 CFR 1002.44 at this time. Parrish, 917 F.3d at 384; Saleem, 854

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F.3d at 139–40; Express Sixty-Minutes The Department did not receive any NRF stated that the economic reality test Delivery, 161 F.3d at 305; see also substantive comments disputing this ‘‘is the proper basis for distinguishing Portland Terminal, 330 U.S. at 152 distinction between employee and independent contractors from (holding that the FLSA ‘‘was obviously independent contractor classification employees under the FLSA as not intended to stamp all persons as under the Act. articulated by the U.S. Supreme Court.’’ employees’’). The Department observed in the ATA) found that the economic NPRM preamble that some courts have dependence framework ‘‘comports with C. Adopting the Economic Reality Test relied on a worker’s entrepreneurship a thoughtful reading of decades of court To Determine a Worker’s Employee or with respect to one type of work to precedent.’’ See also Americans for Independent Contractor Status Under conclude that the worker was also in Prosperity Foundation; Cetera Financial the Act business for him- or herself in a second, Group; Center for Workplace Proposed § 795.105(b) would adopt unrelated type of work. See, e.g., Compliance (‘‘DOL is correct to propose the economic reality test to determine a Parrish, 917 F.3d at 384 (considering using the economic dependence worker’s status as an employee or an ‘‘plaintiff’s enterprise, such as the goat standard for determining whether an independent contractor under the Act. farm, as part of the overall analysis of individual is an employee or As the proposal explained, the inquiry how dependent plaintiffs were on independent contractor’’). of whether an individual is an employee [defendant]’’ for working as The majority of commenters agreed or independent contractor under the Act consultants); Thibault, 612 F.3d at 849 with the Department’s proposal to adopt is whether, as a matter of economic (concluding that plaintiff was an the economic reality test using the reality, the individual is economically independent contractor as a cable above-mentioned definition of economic dependent on the potential employer for splicer in part because he managed dependence, including commenters that work. See 85 FR 60611; see also Pilgrim unrelated commercial operations and were generally critical of the proposed Equip., 527 F.2d at 1311 (‘‘It is properties in a different state). This rule. For example, the State AGs dependence that indicates employee approach is inconsistent with the approvingly stated that ‘‘[f]or nearly status.’’). The proposal and this final Supreme Court’s instruction that the three-quarters of a century, the Supreme rule provide further clarity as to the economic reality analysis be limited to Court has held that whether a worker is economic reality test’s touchstone— ‘‘the claimed independent operation.’’ a covered ‘‘employee’’ under the FLSA economic dependence. Silk, 331 U.S. at 716. Thus, the relevant is governed by the economic reality The NPRM preamble explained that question in this context is whether the test.’’ See also National Employment clarifying the test requires putting the worker providing certain service to a Law Project (NELP); Signatory Wall and question of economic dependence in the potential employer is an entrepreneur Ceiling Contractors Alliance (SWACCA) proper context. ‘‘Economic dependence ‘‘in that line of business.’’ Mr. W (recommending adopting an economic is not conditioned reliance on an Fireworks, 814 F.2d at 1054. Otherwise, reality test with a different number of alleged employer for one’s primary businesses must make worker factors). While objecting commenters source of income, for the necessities of classification decisions based on facts challenged various aspects of the life.’’ Mr. W Fireworks, 814 F.2d at 1054. outside the working relationship.19 proposed rule, they did not dispute the Rather, courts have framed the question At bottom, the phrase ‘‘economic sharpened explanation of the economic as ‘‘ ‘whether, as a matter of economic dependence’’ may mean many different dependence inquiry. Commenters, both supportive and objecting, made a reality, the workers depend upon things. But in the context of the number of thoughtful suggestions, someone else’s business for the economic reality test, ‘‘economic opportunity to render service or are in which are addressed below. dependence’’ is best understood in The Administrative Law Clinic at the business for themselves.’ ’’ Saleem, 854 terms of what it is not. The phrase F.3d at 139 (quoting Superior Care, 840 Antonin Scalia Law School suggested excludes individuals who, as a matter of further clarifying the test by adding F.2d at 1059). This conception of economic reality, are in business for economic dependence comports with ‘‘[a]n individual is not an ‘employee’ themselves. Such individuals work for merely because he or she is the FLSA’s definition of employ as themselves rather than at the sufferance ‘‘includ[ing] to suffer or permit to economically dependent in some way or permission of a potential employer, on the potential employer.’’ Such work.’’ See 29 U.S.C. 203(g). An see 29 U.S.C. 203(g), and thus are not individual who depends on a potential additional language may be redundant dependent on that potential employer in § 795.105(b) because that section employer for work is able to work only for work. Section 795.105(b) therefore by the sufferance or permission of the already articulates economic recognizes the principle that, as a matter dependence as dependence on a potential employer. Such an individual of economic reality, workers who are in is therefore an employee under the Act. potential employer for work, as opposed business for themselves with respect to to being in business for oneself. As In contrast, an independent contractor work being performed are independent does not work at the sufferance or explained above, other forms of contractors for that work. dependence, such as dependence on permission of others because, as a Many commenters supported the matter of economic reality, he or she is income or subsistence, do not count. Department’s decision to implement the However, given how important it is to in business for him- or herself. In other economic reality test applying the words, an independent contractor is an apply the correct concept of economic above-described approach to economic dependence, the Department believes entrepreneur who works for him- or dependence. WPI applauded the herself, as opposed to for an employer.18 this point bears emphasis through a ‘‘decision to retain the long-standing concrete, fact-specific example in the economic reality test while sharpening 18 The Department’s prior guidance has stated regulatory text. The Department is thus that ‘‘an employee, as distinguished from a person the factors used to apply that test.’’ The adding an example in § 795.115 to who is engaged in a business of his or her own, is demonstrate that a different form of one who, as a matter of economic reality, follows someone who ‘‘follows the usual path of an dependence, i.e., dependence of income the usual path of an employee.’’ Fact Sheet #13; see employee’’ is circular and unhelpful. also WHD Opinion Letter FLSA–795 (Sept. 30, 19 It is possible for a worker to be an employee or subsistence, is not a relevant 1964). Upon consideration, however, the in one line of business and an independent consideration in the economic reality Department believes that describing an employee as contractor in another. test.

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A number of individual commenters Independent Business (NFIB), urged the 16, 60639. Lastly, the Department who generally support this rule Department to adopt the common law proposed to reframe the ‘‘whether the requested that the Department allow standard used to distinguish between service rendered is an integral part of workers who voluntarily agree to be employees and independent contractors the alleged employer’s business’’ factor independent contractors to be classified under the Internal Revenue Code and in accordance with the Supreme Court’s as such, regardless of other facts. For other Federal laws. These requests are original inquiry in Rutherford Food, 331 example, Farren and Mitchell urged the addressed in the discussion of U.S. at 729, of whether the work is ‘‘part Department to ‘‘allow the parties regulatory alternatives in Section VI, of an integrated unit of production.’’ See themselves to explicitly define the which explains why the Department is 85 FR 60616–18, 60639.20 nature of their labor relationship,’’ not adopting either the common law Proposed § 795.105(c) further aimed asserting that such an approach would control test or the ABC test for to improve the certainty and respect worker autonomy, maximize employment under the FLSA. predictability of the test by focusing it legal certainty, and promote greater For the reasons discussed above, the on two core factors: (1) The nature and flexibility in work arrangements. This Department adopts § 795.105(b) as degree of the worker’s control over the requested approach would allow proposed to adopt the economic realty work; and (2) the worker’s opportunity voluntary agreements to supersede the test to determine whether an individual for profit or loss. The proposed rule economic reality test in determining is an employee or independent explained that if both proposed core classification as an employee or contractor under the FLSA. Under that factors point towards the same independent contractor. The Supreme test, an individual is an employee if he classification—whether employee or Court, however, held in Tony & Susan or she is dependent on an employer for independent contractor—there is a Alamo, 471 U.S. at 302, that the FLSA work, and is an independent contractor substantial likelihood that that must be ‘‘applied even to those who if that he or she is, as a matter of classification is appropriate. See 85 FR would decline its protections.’’ In other economic reality, in business for him- or 60618–20, 60639. words, an individual may not waive herself. The following discussion addresses application of the Act through voluntary D. Applying the Economic Reality commenter feedback on the five agreement. See Barrentine v. Arkansas- Factors To Determine a Worker’s proposed economic reality factors. Best Freight Sys., Inc., 450 U.S. 728, 740 Independent Contractor or Employee 1. The ‘‘Nature and Degree of the (1981) (‘‘FLSA rights cannot be abridged Status by contract or otherwise waived, Individual’s Control Over the Work’’ because this would ‘nullify the Proposed § 795.105(c) explained that Factor purposes’ of the statute and thwart the certain nonexclusive economic reality The first core factor identified in the legislative policies it was designed to factors guide the determination of proposed regulatory text was the effectuate.’’) (quoting Brooklyn Savings whether an individual is, on one hand, ‘‘nature and degree of the individual’s Bank v. O’Neil, 324 U.S. 697, 707 economically dependent on a potential control over the work.’’ 85 FR 60639. (1945)); Lauritzen, 835 F.2d at 1544–45 employer for work and therefore an Proposed § 795.105(d)(1)(i) explained (‘‘The FLSA is designed to defeat rather employee or, on the other hand, in that this factor ‘‘weighs towards the than implement contractual business for him- or herself and individual being an independent arrangements. If employees voluntarily therefore an independent contractor. contractor to the extent the individual, contract to accept $2.00 per hour, the See 85 FR 60639. These factors were as opposed to the potential employer, agreement is ineffectual.’’) (Easterbrook listed in proposed § 795.105(d), based exercises substantial control over key J., concurring). Because this request on the factors currently used by the aspects of the performance of the work, would contradict this precedent by Department and most Federal courts of such as by setting his or her own allowing the possibility of workers who appeals, with certain proposed schedule, by selecting his or her are employees under the facts and law reformulations. Id. projects, and/or through the ability to to waive the FLSA’s protections by First, the Department proposed to work for others, which might include classifying themselves as independent follow the Second Circuit’s approach of the potential employer’s competitors.’’ contractors, the Department declines to analyzing the worker’s investment as Proposed § 795.105(d)(1)(i) further implement it in the final rule. part of the opportunity factor. The explained that, in contrast, this factor Some commenters, including the combined factor asked whether the ‘‘weighs in favor of the individual being Minnesota State Building & worker has an opportunity to earn an employee under the Act to the extent Construction Trades Council, PJC, and profits or incur losses based on his or the potential employer, as opposed to SWRCC, suggested that the rule include her exercise of initiative or management the individual, exercises substantial a presumption of employee status. The of investments. See 85 FR 60613–15, control over key aspects of the Supreme Court has said and the 60639. Second, the Department performance of the work, such as by Department agrees that this is a totality proposed to clarify that the ‘‘skill controlling the individual’s schedule or of the circumstances analysis, based on required’’ factor originally articulated by workload and/or by directly or the facts. The Department thus declines the Supreme Court should be used, as indirectly requiring the individual to to create a presumption in favor of opposed to the ‘‘skill and initiative’’ employee status. factor currently used in some circuits, 20 Consistent with WHD Opinion Letter NELA, Farmworker Justice (FJ), and because considering initiative as part of FLSA2019–6, the Department’s proposal did not several other commenters requested that the skill factor creates unnecessary and include the ‘‘independent business organization’’ the Department abandon the economic confusing overlaps with the control and factor mentioned in Fact Sheet #13. The opinion letter explained that the ‘‘independent business reality test in favor of the ABC test opportunity factors. See 85 FR 60615, organization’’ factor was ‘‘[e]ncompassed within’’ adopted by the California Supreme 60639. Third, the Department proposed the other factors. Because the ultimate inquiry of Court in Dynamex Operations West v. to further reduce overlap by analyzing the economic dependence test is whether workers Superior Court, 416 P.3d 1 (2018). By the exclusivity of the relationship as a are ‘‘in business for themselves,’’ Saleem, 854 F.3d at 139, analyzing the worker’s degree of contrast, other commenters, such as the part of the control factor only, as ‘‘independent business organization’’ restates the American Society of Travel Advisors opposed to both the control and inquiry and adds little, if anything, to the analysis (ASTA) and National Federation of permanence factors. See 85 FR 60615– that is not already covered by the other factors.

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work exclusively for the potential regarding [the control factor] is neutral.’’ indicate a focus on either the individual employer.’’ In addition, the proposal Mr. Reibstein suggested that the title be worker or the potential employer. stated that the following actions by the changed from the ‘‘nature and degree of Mr. Reibstein also suggested that the potential employer ‘‘do[ ] not the individual’s control over the work’’ control factor ‘‘should be drafted in a constitute control that makes the to the ‘‘nature and degree of each party’s manner that focuses attention on the key individual more or less likely to be an control over the work.’’ Finally, WPI to control, which is control over the employee under the Act’’: ‘‘[r]equiring expected that some commenters would manner and means by which the work the individual to comply with specific object to the Department’s proposed in question is performed.’’ He asserted legal obligations, satisfy health and articulation of the control factor, and it that, as proposed, the control section ‘‘is safety standards, carry insurance, meet supported the Department’s approach ambiguous at best and may be contractually agreed-upon deadlines or by saying that ‘‘the economic reality test misleading at worst,’’ and suggested that quality control standards, or satisfy focuses on the individual—whether the ‘‘control over the work’’ should be other similar terms that are typical of individual is economically dependent changed to ‘‘control over the contractual relationships between on another business or in business for performance of the work, particularly businesses (as opposed to employment him or herself,’’ and that, ‘‘[t]hus, the how the work is to be performed.’’ The relationships).’’ Numerous commenters focus of each factor should also be on Department, however, prefers to retain requested changes to the proposed the economic realities of the individual, the ‘‘control over the work’’ articulation. control section regarding (1) the not the businesses with which [he or It is purposefully broad to encompass perspective from which control is she] contracts.’’ See also CPIE various different types of control that framed; (2) the examples of control that (supporting ‘‘the NPRM’s articulation of the individual worker and the potential are relevant to the economic this factor’’). employer may exercise over the working dependence inquiry; and (3) examples Notwithstanding differing commenter relationship. Moreover, the Department of control that are not. preferences over the primary agrees that who controls the manner and articulation of the control factor, the means by which the work is performed a. Responses to Requests Regarding the is a key component of the control Framing of Control proposed (and final) regulatory text at § 795.105(d)(1)(i) discusses both the analysis, and the Department believes Some commenters asserted that the individual worker’s control and the that both the proposed and final control factor should focus on the potential employer’s control.21 This regulatory text reflect the importance of potential employer’s substantial control approach is consistent with that of the manner and means by which the over the worker instead of the worker’s courts, which also generally consider work is performed. substantial control over the work. For both the individual’s control and the example, the State AGs said that the b. Responses to Comments Regarding potential employer’s control. See, e.g., ‘‘proposed control factor incorrectly Examples of Relevant Control Razak, 951 F.3d at 142; Hobbs, 946 F.3d focuses on the worker’s control over the A number of comments addressed the at 829; Saleem, 854 F.3d at 144–45; work’’ and that ‘‘[w]ell-established proposed regulatory text’s three non- Karlson, 860 F.3d at 1096. The precedent makes clear that the proper exhaustive examples of control that may Department explained in the NPRM focus is the employer’s control over the indicate employee or independent preamble that whether the control factor worker.’’ According to NELA, ‘‘the contractor status, which were setting is articulated with reference to the control analysis has historically been, schedules, selecting projects, and and should continue to be, on the individual worker’s control or the working exclusively for the employer or control that the employer has over the potential employer’s control is a working for others. employee, not that the employee has ‘‘distinction . . . of no consequence,’’ Several commenters sought over their work.’’ NELA added that the and that both ‘‘the nature and degree of clarification that these examples may Department ‘‘cannot deny that its control over the work by the worker and not always be probative of an proposal casts the control inquiry by the potential employer are employment or independent contracting differently than the Supreme Court, considered to determine whether relationship. For instance, NRF stated courts of appeals, and the Department control indicates employee or ‘‘there may be limits on schedules that have in the past.’’ And the United independent contractor status.’’ 85 FR are consistent with business Brotherhood of Carpenters and Joiners 60612 n.34. The Department reaffirms relationships that should not be treated of America stated that the proposal’s that statement now and reiterates that as impacting the analysis,’’ such as ‘‘focus on the individual’s control over both the worker’s control and the delivery workers who can deliver only the work turns the ‘suffer or permit’ potential employer’s control should be during the restaurant’s operating hours standard on its head’’ because that considered. To remove any ambiguity and a retailer that arranges for after- standard ‘‘references the purported on this point, the Department has hours cleaning services. The employer’s behavior—not the worker’s.’’ modified the title of subsection Department agrees that there are See also Northern California Carpenters 795.105(d)(1)(i) to ‘‘[t]he nature and examples of impacts on a workers Regional Council (noting that ‘‘[b]ecause degree of control over the work,’’ schedule that are not probative of the the ‘nature and degree of the removing the proposed rule’s reference type of control that indicates economic individual’s control over the work’ . . . to ‘‘the individual’s control over the dependence and that NRF has identified focuses on the individual’s control, as work.’’ This revised articulation is two such examples by pointing to the opposed to the employer’s control, the closer to the Supreme Court’s fact that a delivery worker can deliver factor skews towards most skilled description of the economic reality test’s for a restaurant only when the tradespeople being classified as control factor in Silk, 331 U.S. at 716 restaurant is open and a cleaning worker independent cont[r]actors’’). Relatedly, (‘‘degrees of control’’), which does not can clean a retailer only when it is attorney Richard Reibstein suggested closed. But the Department does not that the title of the control subsection 21 As Mr. Reibstein acknowledged, the proposed think any change to the regulatory text regulatory text beyond the title of the control ‘‘be re-drafted in a manner that does not section was written in a ‘‘neutral’’ manner. The is warranted to clarify this point, as the suggest it favors independent contractor final regulatory text is written in a similarly neutral regulatory text merely provides a few status because the remaining text manner. examples of facets of control that may—

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or may not—be probative in any given can only wreak havoc with the available to a worker to offer their case depending on the facts. NHDA established common law of FLSA services; the worker’s control over sought clarification of the working for employer/employee relationships.’’ where certain aspects of the services can others example because, in its view, ‘‘it However, the examples of types of be performed where the subparts do not is not enough for the individual to claim control identified in the proposal were change the results provided by the he/she never turned down projects or not an attempt to narrow or limit the worker; and the worker’s discretion to never worked for others. Rather, the control factor analysis. The Department use the services of others to perform the individual must demonstrate some cannot provide an exhaustive list of work in whole or in part, or to support action, implementation, or execution (in types of control and so instead focused the worker’s performance of services other words, act or conduct) by the on several key examples of types of (including performing some of the potential employer that prevented the control. Any type of control over the contracted work and/or performing individual from turning down projects work by the individual worker or the supporting services such as accounting, or working for others.’’ In response, the potential employer may be considered. legal, administrative, or financial Department notes its statement in the Such considerations should not be services to support the worker or NPRM preamble that ‘‘a potential ‘‘mechanical,’’ Saleem, 854 F.3d at 140, services to support equipment or tools employer may exercise substantial and instead must focus on whether the used by the worker to perform services). control, for example, where it explicitly control exercised by either the UPS stated that the proposal ‘‘fails to requires an exclusive working individual or the potential employer provide examples beyond controlling relationship or where it imposes answers the ultimate inquiry of the worker’s schedule or workload and restrictions that effectively prevent an ‘‘whether the individual is, as a matter restricting the worker’s ability to work individual from working with others.’’ of economic reality, in business for with other entities,’’ and that ‘‘courts 85 FR 60613 (citing cases where the himself,’’ as opposed to being have properly widened the lens when employer’s schedule made it economically dependent on the assessing control, looking at factors such ‘‘impossible’’ or ‘‘practically potential employer for work. In any as background checks, authority to hire impossible’’ for the worker to work for event, as explained below, the and fire, training, advertising, licensing, others). Where a worker could work for Department is clarifying types of control uniforms, monitoring, supervision, others, meaning the potential employer that may be relevant to the analysis. evaluation, and discipline.’’ is not explicitly or effectively Numerous other commenters Farmworker Justice commented that the preventing the worker from doing so, suggested the addition of dozens of proposal did ‘‘not acknowledge other the worker retains control over this examples of types of control that examples of employer control that aspect of his or her work. That he or she indicate employee or independent unquestionably shape a worker’s exercises this control by choosing to contractor status. For example, WPI experience and performance of daily work only for one potential employer suggested that the following types of tasks’’ and provided as examples does not necessarily shift the control to control by the individual worker are ‘‘[r]equirements about how a worker the potential employer. Further, the indicative of independent contractor must dress, what language or tone she parties’ actions, including whether the status: Controlling whether to work at may use in a professional setting, or potential employer enforced an explicit all; controlling the location of where to what prices she must charge bar on working for others or has perform the work; controlling how the customers.’’ Likewise, Sen. Sherrod imposed working conditions that make work is performed; setting prices or Brown and 22 other senators doing so impracticable, are stronger choosing between work opportunities commented that the proposal ‘‘ignore[s] evidence of control than contractual or based on prices; and hiring employees other critical matters of control that an theoretical ability or inability to control or engaging subcontractors. It suggested, employer typically exercises or retains this aspect of the working conversely, that the following types of the right to, including setting the rate of relationship.22 control by the potential employer are pay and the manner in which the work Some commenters interpreted the few indicative of employee status: Requiring must be performed and disciplining examples of control in the proposal as the individual worker to comply with workers who do not meet their an effort to limit the types of control company specific procedures regarding standards.’’ And Human Rights Watch that may be considered. For example, how the work is performed; requiring a commented that the proposed control Farmworker Justice stated that the set schedule or minimum hours; factor ‘‘potentially omits other ways that proposal ‘‘improperly and erroneously controlling when the individual can gig companies control their workers, tries to narrow the relevant take meal and rest breaks; and such as the ways in which they considerations for the [control] factor.’’ controlling when the individual can unilaterally change the formula for According to Edward Tuddenham, the take time off. CWI recommended calculating base earnings, the setting of proposal ‘‘lists some ‘key’ elements of addition of the following as examples of default tip options, and restrictions on control that . . . may have little or no the individual worker’s control over the the range of assignments that are offered significance whatsoever’’ and ‘‘[s]uch a work that are indicative of independent to workers at a specific time or in a rigid approach to the question of control contractor status: The worker’s ability to specific locale.’’ Other commenters provided various industry-specific 22 make decisions with respect to the The Department received related feedback from examples that they viewed as indicative commenters asking for proposed § 795.110 to details of how the work is performed, discount the relevance of voluntary worker including the staging and sequencing of of control by the individual worker or practices (e.g., choosing to work exclusively for one aspects of the work; the worker’s the potential employer. business, declining to negotiate prices, etc.); as The Department has considered the explained in greater detail in Section IV(F), coercive selection of supplies, tools, or behavior by a potential employer (e.g., vigilant equipment to be used (or not used) by various comments regarding additional enforcement of a non-compete clause, punishing the worker; the worker’s control over examples of types of control that can be workers for turning down available work, etc.) when the work is conducted (e.g., indicative of employee or independent constitutes stronger evidence of employment status contractor status and declines to make than such voluntary worker practices, but is not a worker flexibility in start and end times) prerequisite for such worker practices to have where flexibility exists in the result to changes to the proposed regulatory text import under the FLSA’s economic reality test. be accomplished or the time periods in response. While this preamble and

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the regulatory test cannot (and should workers should do the work,24 and the c. Responses to Comments Regarding not) address each and every potential potential employer’s allowing the Examples of Requirements That Are Not scenario and example, they clarify and workers broad discretion in the manner Probative 25 articulate principles related to the in which to complete their work Despite the final rule’s broad control factor that can be applied to an indicated substantial control over the articulation of the control factor, not array of fact patterns as they arise. work by the workers. Finally, the every requirement or limitation on the As an initial matter, a number of Department agrees that the various means of doing business constitutes commenters’ examples fall within the examples of types of control identified control for the purpose of analyzing general categories of control already by the commenters above may, at least whether a worker is an employee under identified in the regulatory text. For in some factual circumstances, be the FLSA. The proposed regulatory text example, the worker’s controlling relevant to the control analysis. contained examples of requirements by whether to work at all, controlling when Ultimately, however, it is not a potential employer that do not the work is conducted, and choosing possible—and would be constitute control and thus are not between work opportunities based on counterproductive—to identify in the probative to the ultimate inquiry of prices are all examples of the worker’s regulatory text every type of control whether the individual is, as a matter of setting his or her schedule or selecting (especially industry-specific types of economic reality, in business for his or her projects, which the regulatory control) that can be relevant when himself. These are requirements to text identifies as examples of the determining under the FLSA whether a ‘‘comply with specific legal obligations, worker’s control over the work. worker is an employee or independent satisfy health and safety standards, carry Similarly, the potential employer’s contractor. As explained above, the insurance, meet contractually agreed- requiring a set schedule or minimum Department purposefully articulated the upon deadlines or quality control hours, controlling when the individual control analysis in a general manner to standards, or satisfy other similar terms can take meal and rest breaks, encompass various different types of that are typical of contractual controlling when the individual can control that the individual worker and relationships between businesses (as take time off, and restricting the range the potential employer may exercise opposed to employment relationships).’’ of assignments that are offered to the over the working relationship, and to In other words, insisting on adherence worker are all examples of the potential avoid any unintended inferences to certain rules to which the worker is employer’s control over the worker’s regarding omitted types of control. already legally bound would not make schedule, workload, or both, which the Accordingly, any type of control over the worker more or less likely to be an regulatory text identifies as examples of the work by the individual worker or employee. the potential employer’s control over the potential employer may be NELA challenged the Department’s the work. considered, although some types of ‘‘claims that case law supports this Moreover, as explained in the NPRM control are not probative of economic approach’’ and asserted that ‘‘[t]he preamble, the Department is concerned dependence as set forth in the final majority view among courts . . . is that that application of the economic reality regulatory text (and discussed below). evidence of a business compelling its factors has resulted in certain overlaps The Owner-Operator Independent workers to comply with certain legal between the factors. See 85 FR 60607– Drivers Association (OOIDA) objected obligations or customer requirements is 08 (identifying ways in which the that the proposal ‘‘offers no guidance on probative of control over the work former skill/initiative, permanence, and how’’ the examples of types of control relationship’’ (citing Scantland v. Jeffry ‘‘integral’’ factors considered control). ‘‘should be weighed against each other’’ Knight, Inc., 721 F.3d 1308, 1316 (11th Consistent with that discussion and in and asked whether the Department Cir. 2013), among other cases). NELA the interest of further clarification, the intends ‘‘that a worker must satisfy all added that ‘‘[c]ourts have routinely held Department reiterates that the worker’s of the criteria that it mentions in order that employer guidelines put in place to ability to exercise significant initiative, to be an independent contractor,’’ or if ensure that workers conform with the whether the potential employer directly there is ‘‘some other balance when law or follow safety regulations or indirectly requires the worker to evaluating this factor.’’ OOIDA noted constitute control over employees’’ work exclusively for it, and the that although the proposal stated that no (citing Narayan v. EGL, Inc., 616 F.3d potential employer’s ability to compel single factor of the economic reality test 895, 902 (9th Cir. 2010), among other the worker’s attendance to work on a is dispositive, ‘‘it does not offer the cases). The National Women’s Law consistent basis or otherwise closely same clarification when considering the Center similarly stated that ‘‘courts have supervise and manage performance of details within a single factor.’’ As regularly rejected arguments that the work are examples of relevant types explained above, any type of control external requirements imposed by the of control and are part of the control over the work by the individual worker defendant company’s customers are analysis. And as stated above, the or the potential employer may be irrelevant to the right to control factor’’ Department agrees that who controls the considered to the extent it is probative (citing cases). NELP asserted that the manner and means by which the work as to whether the individual is, as a Department’s ‘‘attempts to take away is performed is a key component of the matter of economic reality, in business consideration of certain employer control analysis. In addition, the for himself, as opposed to being controls based on the source of the Department approvingly cited in the economically dependent on the control’’ is ‘‘nonsense’’ because ‘‘if NPRM preamble cases in which the potential employer for work. No single legislators or regulators have placed an workers’ ability to accept or reject example of control, if present or not obligation on employers to comply with projects or deliveries without negative present, is necessarily dispositive as to certain laws, that makes the worker less repercussions or retaliation,23 the whether the control factor indicates independent and more dependent on potential employer’s lack of close economic dependence. The examples that employer, and this should be supervision or specifications how the are simply that: Examples. accorded weight.’’ AFL–CIO commented 23 See 85 FR 60612 n.35 (citing Parrish, 917 F.3d 24 See id. (citing Thibault, 612 F.3d at 847). that the ‘‘categorical exclusion of at 382; Express Sixty-Minutes Delivery, 161 F.3d at 25 See 85 FR 60612–13 (citing Mid-Atl. evidence of control based solely on the 303). Installation, 16 F. App’x at 106). reasons why the employer exercises the

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control is both irrational and contrary to employees, imposing the requirement is the workers ‘‘for failing to comply with Supreme Court precedent and Congress’ not probative. See Parrish, 917 F.3d at various local regulations or with intent.’’ And the United Brotherhood of 379 (‘‘although requiring safety training technical specifications demonstrates Carpenters and Joiners of America and drug testing is an exercise of control the type of control characteristic of an asserted that the Department’s proposal in the most basic sense of the word, . . . employment relationship,’’ and noting would ‘‘create[ ] a gaping hole that is [r]equiring . . . safety training and drug that withholding money in such fertile ground for exploitation by testing, when working at an oil-drilling circumstances is common in contractual irresponsible employers like the ones site, is not the type of control that relationships); cf. Mr. W Fireworks, 814 we find in the construction industry.’’ counsels in favor of employee status.’’). F.2d at 1048 (finding that, because a On the other hand, the Coalition to The Scantland court’s discussion of scheduling requirement was imposed by Promote Independent Entrepreneurs the control factor included the fact that the potential employer and not by state ‘‘strongly agree[d]’’ with this proposal ‘‘[t]echnicians could also be . . . fired, law, it suggested control over the and ‘‘agree[d] that these types of for consistently misbilling, fraudulently workers). And courts have reached requirements frequently apply to work billing, stealing, . . . [and] having analogous conclusions in joint employer performed by employees and consistently low quality control ratings’’ cases. See, e.g., Zheng v. Liberty Apparel independent contractors alike and thus as evidence that the control factor Co. Inc., 355 F.3d 61, 75 (2d Cir. 2003) are not probative of whether an weighed in favored employee (finding that control with respect to individual is economically dependent classification. 721 F.3d at 1314 (11th ‘‘contractual warranties of quality and on a company.’’ In addition, NRF Cir. 2013).26 However, employees and time of delivery has no bearing on the asserted that ‘‘this clarification is independent contractors alike are joint employment inquiry’’ because important, as there is a difference routinely terminated for fraud, theft, such control is ‘‘perfectly consistent between ‘control’ and ‘quality control’ and substandard work. Such dismissal with a typical, legitimate subcontracting and/or other performance standards.’’ are therefore not probative as to whether relationship’’); Moreau v. Air France, And the Independent Bakers and the dismissed workers were in 356 F.3d 942, 950–51 (9th Cir. 2003) Association ‘‘strongly support[ed] the business for themselves, as opposed to (noting that control exercised by proposed clarification that requiring an being economically dependent on the potential joint employer over individual to comply with specific legal potential employer. In contrast, contractor’s employees to ‘‘ensure obligations typical of business dismissals for failing to work mandatory compliance with various safety and relationships would not constitute hours or for disregarding close security regulations’’ is ‘‘qualitatively evidence of control or make an supervision would be probative because different’’ from control that indicates individual more or less likely to be an mandatory hours and close supervision employer status). employee.’’ See also SHRM are typically not imposed on In addition to the supportive case law, (‘‘support[ing] the [p]roposed . . . individuals who are in business for recognition that contracting parties the extent to which courts take differing themselves. At bottom, the question of approaches to the probative value of should be able to build compliance ‘‘why’’ workers were dismissed matters with, for example, specific legal such requirements is yet another a great deal. example of the need identified by the obligations, satisfy health and safety In any event, Scantland’s reasoning standards, and the carrying of insurance Department for a clear and uniform appears to be in the minority among standard under the FLSA to distinguish into the contractual relationship’’). 27 courts of appeals. As explained in the between employees and independent The Department understands that NPRM preamble, other courts have some courts have found requirements contractors. Moreover, the Department concluded that requiring such types of believes that these types of requirements that workers comply with specific legal compliance is not probative of an obligations or meet quality control are generally imposed by employers on employment relationship. See, e.g., both employees and independent standards to be indicative of employee Parrish 917 F.3d at 379; Iontchev v. status. In particular, the Eleventh contractors (as some commenters AAA Cab Serv., Inc., 685 F. App’x 548, indicated). Employers expect and often Circuit in Scantland stated that it 550 (9th Cir. 2017) (noting that the examines ‘‘the nature and degree of the require all of their workers to, for potential employer’s ‘‘disciplinary example, comply with the law, satisfy alleged employer’s control, not why the policy primarily enforced the Airport’s alleged employer exercised such health and safety standards, and meet rules and [the city’s] regulations deadlines and quality standards. Thus, control’’ and that ‘‘a company must hire governing the [drivers’] operations and employees, not independent the existence of the requirements conduct’’ in finding that the potential themselves are not probative of whether contractors’’ if ‘‘the nature of [its] employer ‘‘had relatively little control business requires [the] company to exert the worker is an employee or over the manner in which the [d]rivers independent contractor. Other indicia of control over workers to the extent that performed their work’’); Mid-Atl. [the defendant] has allegedly done.’’ 721 control over the work, including the Installation, 16 F. App’x at 106 indicia of control identified in the final F.3d at 1316. The Scantland court (rejecting an argument that backcharging correctly recognized that the ultimate regulatory text, are more probative of inquiry in the economic reality test is the worker’s economic dependence or 26 The court also relied on the employers’ close ‘‘whether an individual is in business supervision, control over schedules, and ability to independence. Accordingly, the for himself or is dependent upon prevent technicians from hiring helpers or working Department retains in the final finding employment in the business of for others to conclude that the control factors regulatory text’s statement that others.’’ 721 F.3d at 1312 (quotation weighed in favor of employee classification. requirements by the potential employer Scantland, 721 F.3d at 1314–15. marks omitted). But to answer that 27 In Narayan, the Ninth Circuit applied that the worker ‘‘comply with specific question it is necessary to consider California law—not the FLSA—and merely recited legal obligations, satisfy health and ‘‘why’’ the potential employer imposed requirements imposed by the potential employer to safety standards, carry insurance, meet a requirement. If the reason for a comply with certain legal obligations among a contractually agreed-upon deadlines or litany of examples of control that precluded requirement applies equally to summary judgment on the employee versus quality control standards, or satisfy individuals who are in business for independent contractor issue in that case. See 616 other similar terms that are typical of themselves and those who are F.3d at 900–02. contractual relationships between

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businesses (as opposed to employment obvious benefits for employers, workers, WPI (asserting that the potential relationships)’’ are not ‘‘control that and society generally. employer’s practice or ability to do the makes the individual more or less likely Other commenters expressed support following are not probative: Requiring to be an employee under the Act.’’ for the Department’s proposal to carve the individual to comply with or pass Although the ATA ‘‘strongly agrees’’ out from the control analysis the down contractual and legal obligations with the Department’s proposal that identified employer actions toward to subcontractors and employees; requirements by the potential employer individual workers, but also requested requiring the individual to comply with that the worker ‘‘comply with specific that the Department expand its proposal customer requirements; tracking and legal obligations’’ would not be ‘‘control by identifying many additional monitoring data related to the that makes the individual more or less employer requirements as not types of individual; providing the individual likely to be an employee under the Act,’’ control that make the individual more with market data on pricing; it suggested that ‘‘specific’’ be changed or less likely to be an employee under establishing default pricing that the to ‘‘any’’ in the final regulatory text. the Act. For example, SHRM asserted individual may change; providing the ATA explained that referring to that ‘‘the Final Rule must emphasize individual with information related to ‘‘specific’’ legal obligations ‘‘may that all workers, regardless of their the establishment or running of a unfortunately result in a great deal of formal employment status, should be business; providing the individual with litigation over whether any particular able to benefit from the training, emergency assistance (e.g., protective aspect of a contract is ‘specifically’ resources, and positive workplace equipment during a public-health mandated by law.’’ It cited, as examples, practices as those who are directly crisis); and complying with Federal, laws that impose general safety employed in the same workplace,’’ and state or locals laws related to a standards with which employers it gave examples of workplace trainings contracting relationship). Likewise, the determine the specifics of how to and audit measures. The U.S. Chamber Financial Services Institute requested comply. See also NHDA (‘‘The proposal of Commerce stated that the Department that the Department carve out from the carves out compliance with specific ‘‘should expand this concept’’ and control analysis requirements that legal obligations. However, not all legal ‘‘explicitly state that workers and ‘‘Independent Broker-Dealers’’ (IBDs) obligations are specific, making other businesses should not be discouraged place on their ‘‘financial advisors’’ to language in the proposal unnecessarily from incorporating terms (and audit and ‘‘comply with requirements imposed by problematic.’’). other certification processes) into their FINRA, the SEC, and state securities After careful consideration, the relationship that support sound, lawful, regulators’’ and exclusivity Department declines to adopt the safe work practices.’’ It suggested the requirements that IBDs place on their suggested change. As an initial matter, following examples of such terms: financial advisors to comply with ‘‘the the Department used the ‘‘specific legal ‘‘Incorporation of an obligation that the extensive supervisory obligations obligations’’ language in its recent Joint work be performed pursuant to imposed by the SEC and FINRA.’’ Employer Status under the Fair Labor acceptable professional, industry and OOIDA also expressed concerns about Standards Act final rule. See 85 FR 2859 customer service standards, as well as exclusivity requirements and sought (finalizing 29 CFR 791.2(d)(3)).28 The commonly accepted safety, ethics, clarification that a potential employer’s Department noted there that the licensure and other standards and compliance with ‘‘Federal regulations obligations include compliance with the recommendations (such as compliance requir[ing] that an owner-operator FLSA or other similar laws, sexual with limitations or control imposed or lease[ ] his or her equipment exclusively harassment policies, background necessitated by law, regulation, order or to a carrier for the duration of the lease’’ checks, or workplace safety practices ordinance).’’ See also Seyfarth Shaw not affect the control analysis. Finally, and protocols. See id. The Department (requesting that the following employer CPIE asked the Department to ‘‘make did not intend a high degree of actions toward workers be excluded clear that duties or requirements specificity there and intends the same from the control analysis: ‘‘(1) imposed by any third party, whether it meaning here. Moreover, a potential compliance with professional be a government agency or a third-party employer’s requirement that a worker obligations and ethics standards; (2) customer, . . . be disregarded’’ when comply with legal obligations without compliance with regulatory obligations, applying the control factor. See also any further specificity as to the law or including over health and safety; (3) NHDA (‘‘[C]ontrol weighing in favor of the actual obligations is unlikely to be compliance with other published employee status should be control probative of control in the first place. industry standards; (4) compliance with exercised by the potential employer that Accordingly, retaining the word applicable local, state, and national originates with the potential employer ‘‘specific’’ is consistent with the licensure standards and rules; and (5) and does not originate from outside, Department’s position that, although additional contractual term examples of 29 independent forces or circumstances, requiring workers to comply with legal agreed upon results and deadlines’’); such as customer requirements or obligations could be some manner of governmental regulations.’’). 29 In a separate section of its comment, Seyfarth control, such requirements reflect the Shaw recommended that the Department state that The Department does not agree with applicable legal regime more than the the following are not evidence of a potential CPIE that any requirement stemming potential employer’s control, and employer’s control over the work of the worker: The from ‘‘duties or requirements imposed encouraging such requirements in business provides information regarding the final by any third party’’ be ‘‘disregarded’’ or result to be accomplished by the worker; the contractual work relationships has business provides customer specifications/details with NHDA that only control ‘‘that and feedback relating to the work (including originates with the potential employer’’ 28 The Department’s Joint Employer final rule was requesting confirmation that the customer feedback can indicate employee status. This is mostly vacated by the U.S. District Court for the has been addressed); the business provides time because a third party may explicitly or Southern District of New York for reasons unrelated frames within which services can be provided in to the ‘‘specific legal obligations’’ language. See light of the services contracted for, and/or the time impliedly encourage businesses to New York v. Scalia, No. 1:20–cv–1689–GHW, 2020 sensitivity or perishable nature of the services/ WL 5370871 (S.D.N.Y. Sept. 8, 2020). The products; the business’ right to enforce contractual relating to the services; and the business pays the Department appealed the decision to the U.S. Court obligations; the business provides the worker worker by the hour where it is customary in the of Appeals for the Second Circuit on November 6, suggestions, recommendations, guidance, and/or particular business/trade to do so (e.g., attorneys, 2020. tips that are not mandated but informational physical trainers).

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impose requirements on workers that published industry standards; status. For example, payment of signify employee classification. For agreements to comply with applicable proceeds owed into a worker’s own example, clients of a home cleaning local, state, and national licensure health plan or retirement account would company may prefer that the company’s standards and rules; and agreed upon not indicate an employment workers wear uniforms, use the same results and deadlines). Other requested relationship. This is because it is equipment, and be closely supervised. additions are narrow or industry- reasonable for an independent Imposing such requirements, even to specific in nature, and the Department contractor to have a personal health or satisfy client preferences, makes the prefers general guidance that may be retirement plan, and the precise method workers more likely to be classified as used by as many employers and workers of compensation—whether cash, employees because those requirements as possible. contributions to an account, or some are inconsistent with the workers being In any event, it is not possible to other method—is not relevant to the in business for themselves. A company identify in the regulation every question of economic dependence. may also require that workers it hires employer requirement that is not the However, providing a worker with the perform timely and high-quality work, type of control that makes the same employer-provided health or as clients surely prefer. But individual more or less likely to be an retirement plans on the terms that a contractually agreed-upon deadlines employee under the Act. The regulatory business also gives its own employees and quality standards do not signify text accounts for this with a broader may indicate the worker is not an employee classification because final category: Requiring the worker to independent contractor but rather an independent businesses routinely agree ‘‘satisfy other similar terms that are employee. Certain other benefits could to meet deadlines and quality standards typical of contractual relationships also suggest employee status. For as part of their businesses. between businesses (as opposed to example, sick or other paid leave, In response to comments requesting employment relationships).’’ This especially the potential employer’s that the Department identify many category recognizes that contractual administration and authorization of the additional employer requirements as not work relationships currently vary and leave, could be indicative of the types of control that make the will evolve going forward, and provides potential employer’s control over the individual more or less likely to be an that additional employer requirements worker’s schedule. Finally, offering a employee under the Act, the that are not expressly identified in the bonus to a worker may or may not be Department declines to change its regulatory text but which are similar to indicative of employee status. For proposed regulatory text. As an initial those identified and are typical of such example, a worker’s participation in a matter, many of the requested additions relationships do ‘‘not constitute control bonus or profit sharing plan in which he are already covered by the proposed that makes the individual more or less or she receives a bonus depending on text. For example, the following likely to be an employee under the Act.’’ the employer’s, a division of the requested additions are requirements to SHRM requested that the Department employer’s, or his or her own ‘‘comply with specific legal obligations’’ exclude from the control analysis the performance over a period of time could and thus already covered: Requirements offering of benefits such as ‘‘health limit the worker’s ability to affect his or to comply with limitations or control insurance, bonuses, or retirement her profit or loss through initiative or imposed or necessitated by law, savings.’’ According to SHRM, ‘‘the investment—suggesting economic regulation, order, or ordinance; modern workplace would suffer if dependence and thus employee status. regulatory obligations; Federal, state, or businesses were effectively barred from But a contractual agreement to provide local laws related to a contracting providing workplace enhancements that a worker with a fixed bonus if the relationship; requirements imposed by all workers should enjoy like healthcare worker completes a job by a certain FINRA, the SEC, and state securities or retirement savings.’’ Other deadline or completes a certain number regulators; and Federal regulations commenters made overlapping requests, of tasks over a fixed period is typical of requiring that an owner-operator lease although not necessarily in the context contractual relationships between his or her equipment exclusively to a of applying the control factor. For businesses and itself does not make the carrier for the duration of the lease.30 example, TechNet requested that the worker more or less likely to be an Other requested additions may fall into Department add a ‘‘safe harbor’’ stating employee under the Act. Even if, based the ‘‘satisfy health and safety standards’’ that ‘‘a worker does not lose his or her on the circumstances of a particular category (for example: Requiring that independent status solely because a case, the provision of certain health, the work be performed pursuant to network platform provides the worker retirement, or other benefits suggests commonly accepted safety standards; with emergency aid or benefits allowed classification as an employee, that fact and providing the individual emergency or required under state law.’’ Similarly, is not determinative by itself because assistance such as protective equipment WPI requested a general ‘‘safe harbor’’ other facts and factors must also be during a public-health crisis) or the with respect to the provision of considered. ‘‘meet contractually agreed-upon ‘‘protections or benefits as allowed or deadlines or quality control standards’’ required by Federal, state or local laws, 2. The ‘‘Opportunity for Profit or Loss’’ category (for example: Agreements that including but not limited to minimum Factor the work be performed pursuant to guaranteed earnings, health insurance, The second core factor identified in acceptable professional, industry, or retirement benefits, health or retirement the proposed regulatory text was the subsidies, life insurance, workers ‘‘individual’s opportunity for profit or 30 Uber requested that the Department clarify that compensation or similar insurance, loss.’’ 85 FR 60639. This factor, background checks are not an indicia of control: unemployment insurance, sick or other included at proposed § 795.105(d)(1)(ii), ‘‘Where a business is required by law to engage in ‘‘weighs towards the individual being certain activities (such as screening potential paid leave, training and expense workers for violent crime history), the Department reimbursement.’’ an independent contractor to the extent should make clear that this required screening is The Department declines to change the individual has an opportunity to not an indicia of control.’’ However, requiring a the regulatory text in response to these earn profits or incur losses based on his worker to undergo and pass a background check comments. The offering of health, or her exercise of initiative (such as when the law requires it falls in the ‘‘comply with specific legal obligations’’ category. No further retirement, and other benefits is not managerial skill or business acumen or clarification is necessary. necessarily indicative of employment judgment) or management of his or her

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investment in or capital expenditure on, more likely to be dependent on the and non-duplicative analysis for for example, helpers or equipment or company,’’ but that the Department’s determining employee versus material to further his or her work.’’ proposal ‘‘ignores that reality’’ by independent contractor status. In sum, Proposed § 795.105(d)(1)(ii) further suggesting that initiative and investment the individual worker’s meaningful explained that, ‘‘[w]hile the effects of ‘‘are on equal footing.’’ NELP stated capital investments may evince the individual’s exercise of initiative that, although opportunity for profit or opportunity for profit or loss: and management of investment are both loss and investment ‘‘are linked, they ‘‘[e]conomic investment, by definition, considered under this factor, the are hardly duplicative and separately creates the opportunity for loss, [and] individual does not need to have an serve as useful indicia of an entity’s investors take such a risk with an eye to opportunity for profit or loss based on status under the FLSA, as the Supreme profit.’’ Saleem, 854 F.3d at 145 n.29; both for this factor to weigh towards the Court’s tests note.’’ see also Superior Care, 840 F.2d at 1060 individual being an independent On the other hand, some commenters (identifying ‘‘the workers’ opportunity contractor.’’ In addition, under the supported the proposal to consider for profit or loss and their investment in proposal, this factor ‘‘weighs towards investment in the opportunity factor. the business’’ as a single factor). the individual being an employee to the For example, according to WPI, ‘‘[t]he Moreover, considering investment as extent the individual is unable to affect Department’s proposal to combine part of opportunity for profit or loss is his or her earnings or is only able to do [opportunity for profit or loss] with an consistent with the Supreme Court’s so by working more hours or more individual’s investment in facilities and opinion in Silk which articulated the efficiently.’’ Numerous comments were equipment, following Second Circuit two factors separately but analyzed submitted regarding the proposals to precedent, is a welcome change that them together. In particular, the Court analyze investment through the lens of will bring clarity and reduce overlap.’’ found that coal unloaders were opportunity for profit or loss and to It added that ‘‘[w]ise decisions about employees because they had ‘‘no focus that analysis on the worker’s investments are perhaps the clearest opportunity to gain or lose except from investment rather than comparing the path to increasing profits or suffering the work of their hands and [ ] simple worker’s investment to the potential losses.’’ CPIE supported the proposed tools,’’ while truck drivers who invested employer’s investment. One commenter ‘‘adoption of the Second Circuit’s in their own vehicles had ‘‘opportunity requested eliminating this factor approach of combining the factors for profit from sound management’’ of altogether, and several commenters ‘opportunity for profit or loss’ and that investment by, for instance, hauling requested changes to the other aspects ‘investment,’ and not treating them as for different customers. Id. at 719. Thus, of the proposed opportunity factor separate factors.’’ According to CPIE, the it framed the analysis as whether section. proposal ‘‘better captures both the workers are more like unloaders whose manufacturing-based independent profits were based solely on ‘‘the work a. Whether To Analyze Investment contractor (who likely has a tangible of their hands and [ ] simple tools’’ or Through the Lens of Opportunity for capital business investment) and the the drivers whose profits depended on Profit or Loss new-economy independent contractor their initiative and investments. See id. Some commenters opposed the (who likely does not).’’ As the Court explained decades ago and proposal to consider the individual Having carefully considered the as the Second Circuit noted much more worker’s ‘‘management of his or her comments on this issue, the Department recently in Saleem, investment is a investment in or capital expenditure on, adopts its proposal, consistent with pathway to opportunity for profit or for example, helpers or equipment or Second Circuit case law, to consider loss. material to further his or her work’’ as investment as part of the opportunity In response to NELA and likeminded part of the opportunity factor. For factor. Some courts have acknowledged commenters’ concern that employers example, NELA stated that a worker’s that the two concepts are related while may require significant investments by investment has ‘‘been a critically still keeping the factors separate. See their workers to avoid employee status, important factor in the economic McFeeley, 825 F.3d at 243; Lauritzen, the Department reiterates that the realities test analysis’’ and that 835 F.2d at 1537. Other courts do not investment must be capital in nature ‘‘[d]iscounting this important piece of expressly acknowledge that they are and consistent with the worker being in the economic reality test, as the related but consider investment when business for him/herself for the Department has done here, plainly evaluating opportunity for profit or investment to indicate an opportunity makes it easier for businesses to require loss—resulting in unnecessary and for profit or loss. Senator Sherrod workers to make significant financial duplicative analysis of the same facts Brown and 22 other senators stated that investments without risking a finding of under two factors. See, e.g., Mid-Atl. ‘‘[r]equiring [workers] to purchase a employee status.’’ The State AGs Installation, 16 F. App’x at 106–07 franchise or their own equipment, similarly commented that the proposed (finding that the worker’s capital including a vehicle’’ or otherwise ‘‘take approach of considering investment investments in tools, equipment, and a on financial risk as a condition of only in the context of opportunity for truck indicated independent contractor employment does not convert an profit or loss ‘‘inappropriately status under both the opportunity and employee into an independent subordinates the investment factor to the investment factors). And contractor under the FLSA.’’ While no the opportunity for profit or loss’’ factor. consideration of investment separately single fact or factor may ‘‘convert an According to the State AGs, ‘‘[c]ourts has caused other courts to discuss the employee into an independent consider both factors, often together, but worker’s involvement in outside contractor,’’ the prospect of financial investment ‘is, itself, indicative of businesses in the context of opportunity risk and reward plays an important role independent contractor status’ for profit or loss. See, e.g., Parrish, 917 in distinguishing ‘‘wage earners toiling especially in smaller businesses’’ F.3d at 384 (considering consultant’s for a living’’ from ‘‘independent (quoting Saleem v. Corp. Transp. Group, management of a goat farm). After entrepreneurs seeking a return on their Ltd., 854 F.3d 131, 144 n.29 (2d Cir. considering these varying approaches, risky capital investments.’’ Mr. W. 2017)). UPS said that ‘‘workers [who] the Department believes that adopting Fireworks, 814 F.2d at 1051. Moreover, make little or no monetary investment the Second Circuit’s approach best it matters why certain investments are toward completion of the work . . . are furthers the Department’s goal: A clear required. If certain capital investments

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are necessary to perform the job for significant investments may still be dependence,’’ but instead ‘‘merely which the contractor is hired, then independent contractors: ‘‘while the highlights the obvious and unhelpful requiring a contractor to make such presence of significant capital fact that individual workers—whether investments would be consistent with investment is still probative, its absence employees or independent contractors— the contractor being in business for him- may be less so in more knowledge-based likely have fewer resources than or herself. For example, a company that occupations and industries. Indeed, businesses’’ that, for example, maintain hires independent contractors to haul technological advances enable, for corporate offices. Id. (citing cases). The freight may obviously require that example, freelance journalists, graphic Department received a number of drivers bring their own vehicles. Silk designers, or consultants to be comments addressing its proposed 331 U.S at 719. In contrast, a entrepreneurs with little more than a rejection of the relative investment requirement to ‘‘invest’’ in specific, personal computer and smartphone.’’ 85 approach. company-provided equipment would FR 60609 (citing Faludi v. U.S. Shale For example, UPS stated that the not be consistent with the worker being Sols., L.L.C., 950 F.3d 269, 276 (5th Cir. Department’s proposal ‘‘undervalues in business for him- or herself, and may 2020)); see also Meyer v. United States comparative analysis of investment’’ constitute a consideration under the Tennis Ass’n, 607 F. App’x 121, 123 (2d and noted that courts ‘‘have evaluated control factor that points towards Cir. 2015) (concluding that workers who investment comparatively—correctly employee status. See Scantland, 721 invested little were independent measuring the worker’s investment F.3d at 1318 (concluding that contractors primarily because of their against the company’s’’ (citing cases). technicians’ ‘‘expenditures [in control over the work and their NELA added that ‘‘comparing workers’ equipment and materials] detract little initiative); Lauritzen, 835 F.2d at 1540– investments to the employer’s from the[ir] economic dependence on 41 (Easterbrook, J. concurring) investments’’ has been ‘‘a critically Knight’’ in part because ‘‘many (‘‘[P]ossess[ing] little or no physical important factor in the economic technicians purchased specialty tools capital . . . is true of many workers we realities test analysis’’ and ‘‘must be from Knight directly via payroll would call independent contractors. done in the context of the working withholdings’’). As such, OOIDA’s Think of lawyers, many of whom do not relationship.’’ TRLA objected that ‘‘the concern ‘‘that any requirement that a even own books. The bar sells human proposed test does not include the Fifth worker must purchase services or capital rather than physical capital, but Circuit’s ‘extent of the relative equipment from the business for which this does not imply that lawyers are investments of the worker and alleged they work [w]ould weigh in favor of ‘employees’ of their clients under the employer’ factor’’ and asserted that, employee status’’ is misplaced. See also FLSA.’’).32 while its usefulness may vary SWRCC (‘‘[T]his standard would ‘‘depending on the facts of individual b. Whether To Analyze the Worker’s provide a perverse incentive for cases,’’ ‘‘its wholesale exclusion from Investment or Compare the Worker’s companies to require putative the test factors is not warranted, Investment With That of the Potential employees to maintain their own especially given the Supreme Court’s Employer equipment in an effort to steer those caution against an exhaustive list’’ employees to independent contractor The Department noted in the NPRM (citing Silk, 331 U.S. at 716). The status.’’). Consistent with the economic preamble that, when considering Southwest Regional Council of dependence inquiry, an investment investment, some courts use ‘‘a side-by- Carpenters described the relative must indicate an independent business side comparison method’’ that directly investment approach as simple and by the worker, as opposed to merely compares the worker’s individual efficient by ‘‘lining up the expenses being required by the potential investment to the investment by the between worker and company’’ and thus employer, for it to indicate an potential employer. See 85 FR 60614 ‘‘advanc[ing] the key interest of all opportunity for profit or loss. (citing cases). The Department parties concerned with the In response to the State AGs, the explained that ‘‘such a ‘side-by-side predictability of this part of the Department’s approach does not comparison method’ does not illuminate independent contractor test.’’ According subordinate investment; it can still the ultimate question of economic to the Pacific Northwest Regional separately indicate independent Council of Carpenters, the Department contractor status as they suggest. 32 LocumTenens, an online company that acted ‘‘arbitrarily’’ in proposing to Finally, the Department’s approach is specializes in the temporary placement of eliminate consideration of relative physicians and other health clinicians, requested not contrary to UPS’ assertion that that the Department eliminate from the economic investments and asserted that, because workers who make little or no reality test consideration of whether an individual ‘‘virtually every craftsperson who works investment ‘‘are more likely to be has an opportunity for profit or loss. According to in the various carpentry trades owns his dependent’’ on the potential LocumTenens, its physicians and clinicians who or her own tools,’’ the proposal would 31 provide temporary healthcare services ‘‘do not have employer. Workers who make little or an obvious investment or opportunity for profit make ‘‘all of those individuals more no investment are more likely to be when they step in’’ for another physician or susceptible to being classified as’’ employees than workers who make clinician. However, as explained later, the independent contractors regardless significant investments, but of course, Department believes that opportunity for profit or whether the investment is small or loss is very predictive of a worker’s status as an extensive. such a worker’s ultimate status as an employee or independent contractor. In addition, employee or independent contractor the rule requires a worker to exercise personal Other commenters supported the will also depend on other factors. As the initiative or manage capital investments, but not Department’s proposed position. For Department explained in the NPRM necessarily both, for the opportunity factor to example, the ATA, the Arkansas indicate independent contractor status. In other Trucking Association, NHDA, and preamble, workers who do not make words, an absence of capital investment does not prevent an individual from having an opportunity Scopelitis, Garvin, Light, Hanson & 31 The American Society of Travel Advisors for profit or loss, because such opportunity can be Feary (on behalf of various disagreed at least in part, commenting that based on the individual’s initiative. Nor does such transportation companies) each agreed ‘‘workers in many service industries may make only absence necessarily prevent an individual from with the Department’s proposal ‘‘that a minimal investment in equipment or materials being properly classified an independent and in such situations this consideration, by itself, contractor, particularly in knowledge-based the relative investment test fashioned by should not be taken to weigh in favor of employee industries such as medicine where human capital the Fifth Circuit ‘does not illuminate the status.’’ matters more than physical capital. ultimate question of economic

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dependence’ ’’ (quoting 85 FR 60614). other evidence). In sum, comparing the investment) that largely determine that TechNet explained that ‘‘the relative relative investments does not illuminate outcome. While profits are hardly sizes of the parties’ investments’’ are not the worker’s economic dependence or guaranteed for anyone in business for relevant to the analysis, asserting that independence. By contrast, as explained him/herself, the text at ‘‘[l]arge businesses may contract with herein, analyzing the extent to which § 795.105(d)(1)(ii) makes clear that small businesses,’’ make investments the individual worker has an independent contractors typically that ‘‘typically exceed their smaller opportunity for profit or loss because of ‘‘exercise . . . initiative’’ and/or partners’ investments by orders of his or her investment in, or capital ‘‘manag[e] . . . investment,’’ (emphasis magnitude . . . because of their size,’’ expenditure on, helpers or equipment or added). Thus, a lack of profit viewed in and ‘‘not endanger [their] partners’ material to further his or her work is hindsight says little about a worker’s independence merely because [they are] probative of the worker’s economic economic independence; instead, the bigger than [their partners] are.’’ CPIE dependence or independence. focus is the degree to which the worker actually exercised initiative or actually stated that ‘‘the determinative inquiry c. Other Comments Concerning the managed investments. A worker’s relative to investment should be Opportunity Factor whether the individual has a sufficient theoretical ability to, for example, investment in his or her trade or WFCA agreed that ‘‘an evaluation of exercise initiative is weaker evidence business as to enable the individual to a worker’s investment and capital than the worker’s actual practices. See operate independently,’’ asserting that expenditures are relevant factors in e.g., Sureway Cleaners, 656 F.2d at 1371 ‘‘[t]he investment of a potential client determining whether he or she is an (‘‘[T]he fact that Sureway’s ‘agents’ has no discernible relevance to this independent contractor’’ and suggested possess, in theory, the power to set inquiry.’’ See also WFCA (‘‘The issue is including of ‘‘a definition of what prices . . . and advertise to a limited whether a worker invested in his or her constitutes an investment or capital extent on their own is overshadowed by business, not how that investment expense.’’ WFCA suggested the the fact that in reality the ‘agents’ . . . compares to the employing company’s following: ‘‘Investments and capital charge the same prices, and rely in the investment.’’). expenditure shall include: The purchase main on Sureway for advertising.’’). or rental of tools, equipment, material, However, a worker’s conscious decision Having carefully considered the and office or work facilities; the to not make a particular investment comments, the Department reaffirms its payment for marketing and (especially when choosing among a position that comparing the individual administrative expenses; the payment of range of investments) or to not take a worker’s investment to the potential costs incurred hiring or using other particular action (especially when employer’s investment should not be workers; and similar expenditures.’’ choosing among a range of options) may part of the analysis of investment. However, the regulatory text already constitute an affirmative exercise of Comparing their respective investments identifies investment in ‘‘helpers or initiative to consider among others does little more than compare their equipment or material’’ as relevant, and when evaluating opportunity for profit respective sizes and resources. In the ‘‘for example’’ preceding them in the or loss. In sum, in the context of the Hopkins v. Cornerstone America, 545 regulatory text makes clear that the list opportunity factor, the focus is the F.3d 338, 344 (5th Cir. 2008), it was of is non-exhaustive. The Department individual worker’s opportunity for course ‘‘clear that [the insurance believes that general and non- profit or loss, as shown by meaningful company’s] investment—including exhaustive examples are more helpful investments or the exercise of personal maintaining corporate offices, printing than trying to precisely identify as many initiative; actual profits or losses are less brochures and contracts, providing examples of relevant investments as relevant. accounting services, and developing and possible. OOIDA expressed ‘‘concern[ ] that the underwriting insurance products— NRF commented that ‘‘it is important timeline for determining profit or loss is outweighs the personal investment of to emphasize that it is the ‘opportunity’ not clarified in the NPRM’’ and any one Sales Leader.’’ The court, or ‘ability’ to earn profits or incur losses explained that certain ‘‘[m]otor carriers however, never explained how this fact based on investment and/or initiative, that take advantage of drivers through a indicated the Sales Leaders’ economic as opposed to the actual level of lease-purchase agreement are likely to dependence. See id. Tellingly, when investment or initiative shown by the argue that a driver’s opportunity for summing up the entirety of the facts and individual.’’ Relatedly, NRF expressed profit is merely a few years in the analyzing whether the workers were concern whether this factor squares future, and that this full timeline must economically dependent on the with the discussion in proposed be considered.’’ The Department agrees insurance company as a matter of § 795.110 that the actual practice of the with OOIDA that ‘‘[t]his is a fallacy’’; economic reality, the court did not even parties involved is more relevant than the opportunity for profit or loss must mention the insurance company’s larger what may be contractually or be reasonably current to indicate investment. See id. at 346. And in theoretically possible, asserting that independent contractor status. Karlson, 860 F.3d at 1096, the court ‘‘the fact that someone might not engage Regarding the Department’s proposal found that comparing the worker’s in certain practices or take on certain to include initiative as a consideration investment with the potential risks that would further impact the level in the opportunity factor, NRF agreed employer’s total operating expenses had of profit or loss should not result in a that ‘‘[t]he ability to impact profits or little relevance because ‘‘[l]arge finding that the individual is not an losses also may be dependent on corporations can hire independent independent contractor, unless that business acumen and managerial skills, contractors, and small businesses can person is prevented from doing so by regardless of the ‘skill level’ of the work hire employees.’’ Cf. Parrish, 917 F.3d at the entity with whom the individual or the level of investment.’’ NRF added 383 (comparing relative investments, contracts.’’ Here, the Department that ‘‘identifying ‘business acumen’ or but noting that ‘‘[o]bviously, [the oil believes that NRF is conflating the ‘management skill’ as part of the profit drilling company] invested more money ultimate outcome of independent or loss factor is appropriate and at a drill site compared to each entrepreneurship (profit or loss) with consistent with the FLSA.’’ Senator plaintiff’s investments’’ and according the actions indicative of Sherrod Brown and 22 other senators the factor little weight in light of the entrepreneurship (initiative and/or disagreed, commenting: ‘‘Just because

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employees can increase their wages by contractor because he or she can use profit or loss is determined largely on exercising skill or initiative does not initiative to affect his or her opportunity his or her skill, initiative, ability to cut mean they are running a separate, for profit or loss but maintains that yet costs, and understanding of the courier independent business, particularly if initiative is indicative of—or weighs business,’’ observing that ‘‘drivers who they cannot pass along costs to towards—independent contractor status made the most money appeared to be customers.’’ They added that ‘‘[t]he rule in the multifactor analysis. And the the most experienced and most does not include additional, critical Department agrees that a worker’s concerned with efficiency, while the considerations of skill and initiative that ability to cut costs, including by passing less successful drivers tended to be are necessary to define an employment them along to customers, is relevant to inexperienced and less concerned with relationship.’’ And Seyfarth Shaw determining initiative. See Express efficiency.’’ Express Sixty-Minutes requested that the Department state that Sixty-Minutes Delivery, 161 F.3d at 304. Delivery Serv. 161 F.3d at 304. To avoid ‘‘a worker’s business acumen is to be Finally, the Department agrees with confusion between multiple potential interpreted to cover acumen relevant to Seyfarth Shaw that a worker’s business meanings of ‘‘more efficiently,’’ the the wide range of business endeavors in acumen can ‘‘cover acumen relevant to Department is revising the U.S. economy, including, for the wide range of business endeavors in § 795.105(d)(2)(ii) to replace that term example: Sales, managerial, customer the U.S. economy’’—initiative is not with ‘‘faster.’’ Relatedly, ATA and other service, marketing, distribution, limited to or automatically present in transportation commenters objected to communications, and other any particular type of job. the Department’s statements in the professional, trade, technical, and other Regarding the last sentence of the NPRM preamble that ‘‘[w]orkers who learned skills, as well as other unique proposed opportunity factor regulatory are paid on a piece-rate basis are an business abilities and acumen, text (‘‘This factor weighs towards the example of workers who . . . lack including acumen that impacts a individual being an employee to the meaningful opportunity for profit or worker’s ability to profitably run their extent the individual is unable to affect loss.’’ They asserted that the statements own independent business.’’ his or her earnings or is only able to do may result in some judges refraining from engaging in the actual analysis set Having carefully considered the so by working more hours or more forth in the rule as to opportunity for comments, the Department continues to efficiently.’’), WFCA expressed the profit or loss. They further asserted that believe that a worker’s initiative, such concern that the sentence means that a truck drivers paid on a piece-rate basis as managerial skill or business acumen worker who starts his or her own may be independent contractors based or judgment, is an appropriate measure business and seeks to develop on their management decisions or of a worker’s opportunity to earn profits efficiencies in so doing will be an ability to cut costs. The Department’s or incur losses. See, e.g., Karlson, 860 employee under the analysis. WFCA statements in the NPRM preamble F.3d at 1094–95 (discussing how the suggested that the sentence be deleted. regarding workers paid on a piece-rate worker’s decisions and choices WPI also asked that the last sentence be basis were general observations regarding assignments and customers deleted because ‘‘[a]n individual who supported by case law 33 and not a affected his profits); Saleem, 854 F.3d at uses initiative, skill or judgment to categorical rule or the complete perform a job more efficiently can 145 (noting in support of independent analysis. The fact that a worker is paid contractor status that the degree to generate greater profits, even if on a piece-rate basis set by the potential which the worker’s relationship with compensated by the hour or piece rate.’’ employer does not indicate an the potential employer ‘‘yielded returns It asserted: ‘‘The ability to use opportunity for profit or loss, but was a function . . . of the business managerial skill, expertise, market whether that worker has an opportunity acumen of each [worker]’’); McFeeley, experience, or business acumen to for profit or loss indicative of 825 F.3d at 243 (‘‘The more the worker’s perform work more efficiently is independent contractor status is earnings depend on his own managerial indicative of independent contractor determined by a fuller analysis of the capacity rather than the company’s . . . status.’’ The Department agrees that worker’s circumstances. the less the worker is economically such use of initiative can indicate Some commenters requested dependent on the business and the more independent contractor status when it additional examples that are indicative he is in business for himself and hence affects opportunity for profit or loss. an independent contractor.’’) (internal The word ‘‘efficiently’’ was used in 33 See Goldberg v. Whitaker House Co-op., Inc., quotation marks omitted); Express Sixty- proposed § 795.105(d)(2)(ii) to mean 366 U.S. 28, 33 (1961) (plaintiffs who manufactured Minutes Delivery, 161 F.3d at 304 working faster to perform rote tasks knitted goods at home were employees under the FLSA, in part, because ‘‘[t]he management fixes the (agreeing with district court that more quickly. See 85 FR 60614 n.38 piece rates at which they work’’); Rutherford Food, ‘‘driver’s profit or loss is determined (identifying piece-rate workers as ‘‘an 331 U.S. at 730 (because workers’ earnings largely on his or her skill, initiative, example of workers who are able to ‘‘depended upon the efficiency of their work, it was ability to cut costs, and understanding affect their earnings only through more like piecework than an enterprise that actually depended for success upon the initiative, judgment of the courier business’’); WHD Opinion working more hours or more or foresight of the typical independent contractor’’); Letter FLSA2019–6 at 6 (‘‘These efficiently.’’). Higher earnings that result Hodgson v. Cactus Craft of Arizona, 481 F.2d 464, opportunities typically exist where the solely from this ‘‘working faster’’ 467 (9th Cir. 1973) (persons who manufacture worker receives additional concept of efficiency do not by novelty and souvenir gift items at homes and were compensated at a piece rate were employees under compensation based, not [merely] on themselves indicate independent the FLSA). And in Donovan v. DialAmerica greater efficiency, but on the exercise of contractor status. However, as WFCA Marketing, Inc., the court held that homeworkers initiative, judgment, or foresight.’’). and WPI note, efficiency may also mean who were paid on a piece-rate basis to perform the Commenters did not seriously dispute effective management based on business simple service of researching telephone numbers were employees who lacked meaningful the relevance of initiative to a worker’s acumen, which is indicative of being in opportunity for profit or loss. See 757 F.2d 1376, opportunity for profit or loss. In business for oneself if it results in 1385 (3rd Cir. 1985). In contrast, distributors who response to the comment by Senator increased earnings. For instance, the recruited and managed researchers and were paid Sherrod Brown and 22 other senators, Fifth Circuit found that the opportunity based on the productivity of those they managed were independent contractors, in part, because the Department agrees that a worker is factor ‘‘points towards independent distributors’ earnings depended on ‘‘business-like not necessarily an independent contractor status’’ where ‘‘a driver’s initiative.’’ Id. at 1387.

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of an opportunity for profit or loss requested that the final rule make ‘‘the examples: ‘‘He or she has to re-do work (many of the suggested examples following explicit statements regarding that is not consistent with industry overlapped with each other). TechNet facts that do not support a finding of standards or does not meet a customer’s asked for ‘‘concrete examples’’ and dependency: [w]orkers may experience expectations; is potentially liable to the suggested the following: ‘‘[d]rivers who financial losses as a result of potential employer in the event his or can set their own hours, choose which cancellations of their service or the her actions or inactions cause harm or jobs to accept or reject, and use their provision of service that does not meet legal expense to the potential employer; judgment in how to best complete jobs,’’ customer expectations when the worker or fails to render services in a cost- as well as ‘‘[a]pp-based opportunities— has flexibility to choose between work efficient manner by not managing including opportunities to provide opportunities; and [e]ven if the business expenses or investing far too much time personal transportation, parcel sets the price of goods provided by the on activities that are unproductive.’’ deliveries, shopping services, or food worker, that does not negate the The Department has considered the delivery, among other types of service.’’ worker’s initiative when the worker various requests for additional examples The U.S. Chamber of Commerce offered controls the amount of time, when, and of initiative and investment that can eleven ‘‘additional examples of a where they provide the services as well indicate a worker’s opportunity for worker’s initiative or investment that as the amount of the same service they profit or loss, but declines to change to may impact a worker’s profit or loss.’’ 34 chose to provide.’’ Seyfarth Shaw asked the proposed regulatory text. The The U.S. Chamber of Commerce also the Department to ‘‘expand upon the regulatory text already broadly describes suggested ‘‘examples of fact situations examples of ways that workers impact initiative as including managerial skill which are neutral in the analysis of their own profitability as well as their and business acumen or judgment, and whether the worker controls their losses (by impacting their profits and explains that investment is the worker’s profits and losses.’’ 35 SHRM requested their costs)’’ and to include numerous management of his or her investment in numerous ‘‘additional examples of examples.37 And Mr. Reibstein or capital expenditure on, for example, worker investment and initiative that commented that ‘‘[e]xamples of loss helpers or equipment or material to impact profit and loss.’’ 36 SHRM also should be identified . . . so it is clear further his or her work. Many of the [that this factor] does not focus only on suggested examples seem to fall into one 34 The U.S. Chamber of Commerce’s suggested profit.’’ He offered the following of these categories, and some of them examples were: ‘‘(1) The worker’s own decision- effectively repeat concepts already making with respect to the details and means by which they make use of, secure, and pay helpers, opportunities offered that impact profit and loss; identified in the regulatory text— substitutes, and related labor or specialties . . . (2) [t]he worker’s losses suffered from receipt of especially the ones involving helpers, The worker’s own decision-making with respect to customer complaints where the worker’s results were below customer or contractual expectations; tools, supplies, and equipment. The the details and means by which they purchase, rent, Department does not believe that (even or otherwise obtain and use tools . . . ; (3) The [t]he worker’s decisions in avoiding liquidated worker’s own decision-making with respect to the damages charges or indemnification obligations in after culling out all of the overlap) details and means by which they purchase or the parties’ agreement; [t]he worker’s own decision- additional examples of initiative and otherwise obtain and use supplies . . . ; (4) The making on whether to use other workers or services as helpers or substitutes as well as the use of related investment would benefit employers or worker’s own decision-making with respect to the workers. It is not possible or productive details and means by which they purchase, rent, or labor or specialties to assist in either the services otherwise obtain and use equipment . . . ; (5) The provided, the tools and equipment used, or the to seek to identify in the regulatory text worker’s initiative and decisions they implement in maintenance of the worker’s business structure; every example of initiative and connection with their own performance of services [t]he worker’s acumen regarding the delivery of investment that may be relevant to the through higher service fees, incentives, charges, and services/products that result in enhanced profits other ways; (6) The worker’s initiative to invest in through tips and other incentives; [t]he worker’s opportunity for profit or loss analysis. the development of skills, competencies, and trades decision-making regarding the details and means by The Department purposefully described . . . ; (7) The worker’s expertise in delivery of which they obtain supplies, tools, and equipment both initiative and investment in a services/products that result in enhanced profits, for use in their business, including choices broad and general manner to provide for example through tips and other incentives as a regarding from whom to purchase these goods, how result of providing quality customer service; (8) The much of the goods are obtained at any one time, the helpful guidance to as many employers worker’s losses incurred as a result of customer quality of the goods, and the negotiated prices and workers as possible. The complaints or other charges where the worker’s regarding said goods; and [t]he worker’s decision- Department believes that this approach, results were below customer or contractual making regarding investment in skills they deem along with the further clarification expectations and obligations; (9) The worker’s necessary to achieve the desired results from their flexibility to choose amongst work opportunities work, including education, certificates, or classes.’’ provided throughout this preamble offered that impact profits and losses; (10) The 37 Seyfarth Shaw’s suggested examples were section as well as the examples added worker’s contractual or other losses if they do not ‘‘[t]he worker’s own decision-making regarding the in § 795.115, will be more helpful and provide the accepted services or the worker use of helpers, substitutes, and related labor or provides substandard services, and are engaged to specialties to assist in the services provided, the functional for employers and workers as provide time-sensitive, often perishable services tools and equipment used, or the maintenance of they apply the analysis. and products; and (11) The worker’s avoidance of the worker’s business structure . . . to the extent liquidated damages charges or indemnification those decisions impact the worker’s costs and 3. The ‘‘Skill Required’’ Factor obligations in the parties’ agreement relating to overall profitability; [t]he worker’s initiative and the In the NPRM, the Department various provisions, including material breaches of decisions they implement in connection with the the parties’ agreement.’’ performance of services and/or capital expenditures identified three other factors that may 35 These suggested examples were: ‘‘(1) The on equipment, supplies, and tools . . . ; [t]he serve as ‘‘additional guideposts’’ in the business pays the worker by the hour where it is worker’s initiative to invest in the development of analysis to determine whether a worker customary in the particular business/trade to do so skills, competencies, and trades (including is an employee or independent (e.g., attorneys, physical trainers); (2) The business education, training, licenses, certifications, and sets the price of goods and services offered by a classes) . . . ; [t]he worker’s expertise in delivery contractor. The first of these other worker to customers where the worker controls the of services/products that result in enhanced profits factors, included at proposed amount of time, date and place they provide the through tips and other incentives as a result of great § 795.105(d)(2)(i), is the amount of skill services as well as the amount of services they customer service and exceptional skills, for required for the work. 85 FR 60639. The choose to provide and the price is set to facilitate example[; t]he worker’s losses incurred as a result the time sensitive transaction as a result of the time of customer complaint or other charges where the Department’s proposed regulatory text sensitive or perishable nature of the service the worker’s results were below customer or contractual stated that this factor would weigh in customer desires[;] and (3) The business’s expectations and obligations; and [t]he worker’s favor of the individual being an facilitation of payments from the customer to the avoidance of liquidated damages charges or independent contractor to the extent the worker.’’ indemnification obligations in the parties’ 36 SHRM’s suggested examples were: ‘‘[t]he agreement relating to various provisions, including work at issue requires specialized worker’s decisions in choosing amongst material breaches of the parties’ agreement.’’ training or skill that the potential

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employer does not provide; conversely, a relevant factor in some but not all ‘‘[p]ipe welding, unlike other types of the factor would weigh in favor of the instances.’’ Reibstein. welding, requires specialized skills’’). individual being an employee to the After considering these comments, the The Department also declines to adjust extent the work at issue requires no Department declines both the request to the regulatory text to directly address specialized training or skill and/or the eliminate this factor from consideration who provides the training because such individual is dependent upon the entirely and the request to include it as facts are not necessarily probative in potential employer to equip him or her part of the opportunity factor. The every circumstance; the Department with any skills or training necessary to Department agrees with commenters notes, however, that it can be suggests perform the job. As explained in the that the concepts of initiative and employee status if a worker receives all NPRM, the Department proposed to judgment are sufficiently analyzed in specialized skills from the employer. clarify that this factor should focus on multiple ways under the control and See, e.g., Keller, 781 F.3d at 809 the amount of skill required because opportunity core factors, but believes (explaining that if ‘‘the company importing aspects of the control factor that longstanding case law militates in provides all workers with the skills into the skill factor has diluted the favor of considering this additional necessary to perform the job,’’ that consideration of actual skill to the point factor—skill required—when relevant suggests employee status); Scantland, of near irrelevance, and such dilution under the particular circumstances of 721 F.3d at 1318; Hughes v. Family Life generates confusion regarding the each situation. As explained in the Care Inc., 117 F. Supp. 3d 1365, 1372 relevance and weight of the worker’s NPRM, the Supreme Court articulated (N.D. Fla. 2015) (‘‘The relevant inquiry skill in evaluating economic the factor as ‘‘skill required’’ in Silk, 331 [for the skill factor] is whether [the dependence. U.S. at 716, and multiple courts of worker] is dependent upon [the Employer representatives were appeals continue to consider as ‘‘the company] to equip her with the skills generally supportive of the degree of skill required to perform the necessary to perform her job.’’). This is Department’s clarification and work.’’ Paragon Contractors, 884 F.3d at because an individual who is in relegation of this factor as an 1235; see also Iontchev, 685 F. App’x at business for him- or herself typically ‘‘additional guidepost’’ but provided 550; Keller, 781 F.3d at 807. The brings his or her own skills to the job, additional commentary and requests for Department believes that sharpening rather than relying on the client to modification. Several commenters this factor to focus solely on skill provide training. suggested that this factor be eliminated clarifies the analysis. Moreover, While the WFCA generally supports analyzing the worker’s ability to this factor, it also requested that the entirely. The National Restaurant exercise initiative under the control Department include examples of Association commented that this factor factor, a core factor that is given more specialized training or skill that focused ‘‘does not add much clarity to the weight than the skill factor, on indicators such as certifications and analysis’’ and ‘‘unnecessarily appropriately reflects that that the licensing. Scopelitis, Garvin, Light, discriminates against individuals who presence or absence of initiative is Hanson & Feary, a law firm commenting operate businesses that do not require usually more important than the on behalf of several unnamed advanced degrees.’’ WPI stated that presence or absence of skill. Similarly, transportation providers, agreed that ‘‘[s]o narrowed, this factor has little the effect of the worker’s initiative is credentials such as testing to earn a probative value in determining analyzed under the opportunity factor, Commercial Driver’s License can economic dependence and should be another core factor that, for the reasons demonstrate specialized skill, but also eliminated as a separate factor.’’ explained above, is usually more noted that skills needed to successfully Other commenters suggested that the probative than the skill factor. operate a business should also be factor be included within the core, Commenters such as the National considered specialized skills to help ‘‘profit and loss’’ factor or otherwise Restaurant Association and NRF distinguish independent contractors minimized. CWI suggested that the suggested that the regulation should from employees. The Department notes factor be incorporated into the profit focus not on whether the skill required that the opportunity factor already and loss factor because ‘‘[w]here is specialized, but rather the extent to considers whether workers have an specialized skills are required to which a worker relies on the potential opportunity for profit or loss based on perform work, workers unquestionably employer for training needed to perform their business acumen or managerial have taken the initiative to invest time the work. The Wood Flooring Covering expertise. It would be redundant to and money into developing those Association, however, stated that the analyze ‘‘skills needed to successfully skills.’’ SHRM and U.S. Chamber of regulation as proposed may create operate a business’’ as part of the skill Commerce agreed that this factor should unintended limits on training and factor. As to requests for examples or not be a stand-alone factor, but rather employers should not be discouraged additional clarification as to what should be incorporated into the from funding needed training for constitutes ‘‘specialized’’ skills, the opportunity factor, to ensure that workers, particularly in view of its Department agrees that credentials such workers who desire the flexibility and industry’s labor shortage. With respect as certifications and licenses can be freedom of independent contractor to these requests, the Department helpful indicators of specialized skill, status—but who provide services that declines to eliminate the modifier though they are by no means the only may not require specialized training— ‘‘specialized’’ from the regulation. This indicators of such skill. The Department are not negatively impacted. See also type of consideration is supported by does not believe any change to the WFCA (requesting that lack of skill discussions of this factor in case law. regulatory text to clarify this point is should not weigh in favor of the worker See, e.g., Simpkins v. DuPage Hous. warranted, however. being an employee). Commenters also Auth., 893 F.3d 962, 966 (7th Cir. 2018) Employee representatives such as the stated that this additional factor should (‘‘whether Simpkins had specialized AFL–CIO expressed concern that de- be minimized further in the analysis, skills, as well as the extent to which he emphasizing the skill factor would commenting that the factor places too employed them in performing his work, ‘‘place considerable competitive much emphasis on the importance of are [material] issues’’); Carrell v. pressure on law-abiding employers skill, and requested that ‘‘the final rule Sunland Const., Inc., 998 F.2d 330, 333 employing employees at the bottom of should at least indicate that this may be (5th Cir. 1993) (finding it relevant that the wage scale, thus undermining the

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national minimum wage standard.’’ The potential employer. The Department employment contracts. Or a potential AFL–CIO further asserted that the proposed that this factor would weigh employer may have a long-term proposed regulation would make it in favor of the individual being an relationship reflected in several short- more likely that unskilled workers such independent contractor to the extent the term contracts. The Department has as home care workers, delivery drivers, work relationship is by design definite therefore retained the proposed and janitors will be classified as in duration or sporadic, which may regulatory text because, although independent contractors, and thus such include regularly occurring fixed indefiniteness is a stronger indicator of workers will be unprotected by the periods of work, although the seasonal permanence, the length of a working FLSA’s minimum wage and overtime nature of work by itself would not relationship is still relevant to this pay standards. See AFL–CIO. The necessarily indicate independent factor. National Employment Lawyers contractor classification. In particular, One commenter urged the Department Association (NELA) commented that the the Department explained that the to consider the exclusivity of a Department’s proposed regulation seasonal nature of work would not relationship as part of the permanence ‘‘seeks to constrict and demote’’ the skill indicate independent contractor status factor, an approach taken by some factor, and, relying on case law, noted where the worker’s position is courts. Specifically, CPIE commented that ‘‘courts typically assess whether permanent for the duration of the that permanence does not indicate an workers are required to use specialized relevant season and where the worker employment relationship unless it is skills, beyond those typically acquired has done the same work for multiple due to the potential employer’s through occupational or technical seasons. See Paragon Contractors, 884 requirement of exclusivity rather than training, in an independent way to F.3d at 1236–37. The proposal also the worker’s choice. The Department perform their job’’ but that this factor, provided that this factor would weigh in agrees that exclusivity most strongly ‘‘which often favors employee status, favor of the individual being an indicates an employment relationship does not suit the Department’s employee to the extent the work when the exclusivity is required by the purposes.’’ relationship is instead by design potential employer. However, as the Regarding farmworkers specifically, indefinite in duration or continuous. As Department discussed in the NPRM, an TRLA stated that whether the services noted in the NPRM, courts and the exclusivity requirement more strongly rendered by an employee require special Department routinely consider this relates to the control exercised over the skills has often been probative in the factor when applying the economic worker than the permanence of the farm labor context, and that by largely reality analysis under the FLSA to relationship. As explained in the eliminating consideration of this factor, determine employee or independent discussion of the control factor, that the proposed rule makes the proper contractor status. See, e.g., WHD factor already considers whether a classification of farmworkers harder to Opinion Letter FLSA2019–6 at 4; Razak, worker has freedom to pursue external determine. See Texas Rio Grande Legal 951 F.3d at 142; Hobbs, 946 F.3d at 829; opportunities by working for others, Aid. This ‘‘will lead to more Karlson, 860 F.3d at 1092–93; McFeeley, including a potential employer’s rivals. farmworkers being classified as 825 F.3d at 241; Keller, 781 F.3d at 807; See, e.g., Freund, 185 F. App’x at 783 independent contractors, thereby Scantland, 721 F.3d at 1312. (affirming district court’s finding that denying the protections of the FLSA to Multiple commenters urged the ‘‘Hi–Tech exerted very little control one of the most vulnerable classes of Department to focus this factor further over Mr. Freund,’’ in part, because workers’’; moreover, ‘‘[t]o the extent that on the indefiniteness of a working ‘‘Freund was free to perform the proposed rule purports to be relationship. For example, the U.S. installations for other companies’’).38 descriptive of the current state of the Chamber of Commerce commented that The same concept of exclusivity is then law, it is flatly inaccurate.’’ independent contractors often enter into re-analyzed as part of the permanence The Department has considered these multiple, long-term contracts with the factor. Compare id. (‘‘Freund’s comments but continues to believe that same business. It suggested that the relationship with Hi–Tech was not one its proposal with respect to this factor Department clarify that such contracts with a significant degree of permanence is logical and helpful. Although many do not indicate employee status merely . . . [because] Freund was able to take courts consider the skill factor, courts because of their length, but that only jobs from other installation brokers.’’), appear to find the core factors to be contracts of an indefinite length would with Scantland, 721 F.3d at 1319 more dispositive than the skill factor be indicative of employee status. CWI (finding installation technicians’ when such factors conflict. See 85 FR similarly requested that this factor focus relationships with the potential 60621–22 (listing cases). Continuing to only on the length of the relationship as employer were permanent because they take it into account, but not as one of reflected in contractual agreements, ‘‘could not work for other companies’’). the core factors, adds clarity to the regardless of how long the relationship Such duplicative analysis of exclusivity economic realities test. The is in reality. under the permanence factor, however, Department’s formulation of the test The Department considered adding is not supported by the Supreme Court’s does not preclude the possibility that in clarifying language to the regulation original articulation of that factor in some circumstances, such as with indicating that a relationship whose Silk. See 331 U.S. at 716 (analyzing the respect to farmworkers, that this factor length is indefinite is more indicative of could be particularly probative. employee status than a relationship that 38 In addition, as also noted in the NPRM, the The Department adopts is merely long. However, because the opportunity factor considers whether a worker’s § 795.105(d)(2)(i) as proposed. focus of the economic realities test is decisions to work for others affects profits or losses. not on technical formalities, it may be See, e.g., Freund, 185 F. App’x at 783 (affirming the 4. The ‘‘Permanence of the Working that a long relationship could be district court’s finding that the ‘‘looseness of the Relationship’’ Factor relationship between Hi–Tech and Freund evidence of permanence despite a permitted him great ability to profit,’’ in part, The second additional guidepost contract with a definite end. For because ‘‘Freund could have accepted installation factor, described in the regulatory text at example, an employer may have a jobs from other companies.’’). The Department does not believe this consideration overlaps with the § 795.105(d)(2)(ii), is the degree of permanent relationship with an control factor. While the control factor concerns the permanence of the working relationship employee despite requiring the ability to work for others, the opportunity factor between the individual and the employee to enter into annual concerns the effects of doing so.

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‘‘regularity’’ of unloaders’ work); id. at and the FLSA’s definition of ‘‘employ’’ proposed regulatory text further 719 (analyzing truck drivers’ ability to includes to passively ‘‘suffer or permit explained that this factor would weigh work ‘‘for any customer’’ as an aspect of to work.’’ 29 U.S.C. 203(g). A long-term in favor of an individual being an ‘‘the control exercised’’ but not relationship is always the result of independent contractor to the extent his permanence); see also 12 FR 7967 choices by both the potential employer or her work is segregable from the (describing the permanence factor as and the worker, but it is sometimes a potential employer’s production pertaining to ‘‘continuity of the helpful indicator of employee status. process. The Department proposed to relation’’ but with no reference to Edward Tuddenham urged the clarify that this factor is different from exclusivity). Nor is the concept of Department to give examples the concept of the importance or exclusivity part of the common relationships that may or may not be centrality of the individual’s work to the understanding of the word viewed as permanent, such as a contract potential employer’s business. ‘‘permanent.’’ 39 In a similar vein to the that is repeatedly renewed or an As noted in the NPRM, the Department’s analysis of the concept of industry that is generally itinerant. Department and courts outside of the initiative, the Department believes Although the Department has added one Fifth Circuit have typically articulated analysis of exclusivity as part of the example regarding this factor to new the sixth factor of the economic reality permanence factor dilutes the § 795.115 to help illustrate how the test as ‘‘the extent to which services significance of actual permanence factor is to be considered, the rendered are an integral part of the within that factor, blurs the lines Department does not believe it is [potential employer’s] business.’’ WHD between the economic reality factors, possible to address all of the possible Fact Sheet #13. Under this articulation, and creates confusion by incorporating working relationships and contractual the ‘‘integral part’’ factor considers ‘‘the a concept that is distinct from arrangements in a useful fashion. importance of the services rendered to permanence. Certain general principles should the company’s business.’’ McFeeley, 825 Because the worker’s ability to work inform any analysis of work F.3d at 244. In line with this thinking, for others is already analyzed as part of relationships. The Department reiterates courts generally state that this factor the control factor, proposed that it is not contractual formalities that favors employee status if the work § 795.105(d)(2)(ii) articulated the are relevant to the inquiry, but performed is so important that it is permanence factor without referencing economic reality. A potential central to or at ‘‘[t]he heart of [the the exclusivity of the relationship employer’s attempts to use contractual potential employer’s] business.’’ Werner between the worker and potential technicalities to label a relationship as v. Bell Family Med. Ctr., Inc., 529 F. employer, and the Department retains temporary even though it is indefinite in App’x 541, 545 (6th Cir. 2013); see also the same language in the final rule. reality should not affect whether this Baker, 137 F.3d at 1443 (‘‘[R]ig welders’ Commenters also requested that the factor indicates employee or work is an important, and indeed Department clarify that long-term independent contractor status. Again, integral, component of oil and gas relationships that are based on the this factor will not always be probative, pipeline construction work.’’); workers’ choice to continue working for and, for example, in certain industries Lauritzen, 835 F.2d at 1537–38 the same business rather than the where employees are often employed for (‘‘[P]icking the pickles is a necessary potential employer’s requirements short periods, a short term of and integral part of the pickle should not indicate employee status employment would not indicate business[.]’’); DialAmerica, 757 F.2d at under this factor. NRF commented that independent contractor status. 1385 (‘‘[W]orkers are more likely to be an independent contractor may choose SWCCA pointed out that a recent ‘employees’ under the FLSA if they to focus on a particular client for WHD opinion letter included language perform the primary work of the alleged reasons of the contractor’s own rather stating that ‘‘the existence of a long-term employer.’’). than the client’s requirements, working relationship may indirectly The Department explained in the suggesting that the worker’s choice does indicate permanence.’’ WHD Opinion NPRM that it is concerned that this not indicate employee status. The Letter FLSA 2019–06 (April 29, 2019). focus on importance or centrality Department does not believe that further The Alliance requested that this departs from the Supreme Court’s explanation in the regulatory text is language be added to § 795.105(d)(2)(ii). original articulation of the economic necessary, though it agrees that a long- Though the quoted language and the reality test, has limited probative value term relationship may not always case law from which it is drawn remain regarding the ultimate question of indicate an employee relationship. This useful guidance for employers, the economic dependence, and may be factor is not always probative to the Department does not believe it is misleading in some instances. As such, analysis, and the scenarios described by necessary to add this language to the the Department proposed that the commenters may be situations regulation, which already indicates that § 795.105(d)(2)(iii) would clarify that where the length of the relationship is a long-term relationship points toward the ‘‘integral part’’ factor should instead not a useful indicator. However, an employment relationship. consider ‘‘whether the work is part of an explicitly stating that a relationship is Accordingly, the Department finalizes integrated unit of production,’’ which not permanent whenever the worker § 795.105(d)(2)(ii) as proposed. aligns with the Supreme Court’s analysis in Rutherford Food, 331 U.S. at chooses for it to be long-term is not 5. The ‘‘Integrated Unit’’ Factor accurate. After all, every employee to 729. The final additional guidepost factor, Many commenters representing some extent chooses whether to described in § 795.105(d)(2)(iii), is workers urged the Department to retain continue working for their employer, whether the work is part of an the ‘‘integral part’’ factor used by courts 39 See Merriam-Webster Dictionary, https:// integrated unit of production. The as part of the economic realities test, www.merriam-webster.com/dictionary/permanent Department proposed that this factor rather than replacing it with the (defining permanent as ‘‘continuing or enduring would weigh in favor of the individual ‘‘integrated unit’’ factor articulated in without fundamental or marked change’’); see also being an employee to the extent his or the proposed rule. This ‘‘integral part’’ Oxford American Dictionary 1980 (defining permanent as ‘‘lasting or meant to last her work is a component of the potential factor would consider the importance or indefinitely’’); Merriam-Webster Pocket Dictionary employer’s integrated production centrality of the work performed to the 1947 (defining permanent as ‘‘Lasting; enduring’’). process for a good or service. The purported employer’s business. In

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particular, several commenters, the ‘‘integral part’’ factor in 1387. This higher rate of misalignment including United Food and Commercial subregulatory guidance in the 1950s. is precisely what Judge Easterbrook’s Workers, Senator Patty Murray, and the See WHD Opinion Letter (Aug. 13, criticism would have predicted: If State AGs contended that removing the 1954); WHD Opinion Letter (Feb. 8, ‘‘[e]verything the employer does is ‘‘integral’’ factor would be contrary to 1956).40 And circuit courts in the 1980s ‘integral,’ ’’ that factor would point established circuit court precedent. The began referring to it as the ‘‘integral towards employee status for workers UFCW asserted that ‘‘[w]hether a part’’ factor and analyzing it in terms of who are employees, but also for workers worker’s service is an integral part of the the ‘‘importance’’ of the work to the who are independent contractors. company’s business may not be a potential employer. See, e.g., Lauritzen, The NPRM further explained that ‘‘the relevant factor in all situations, but it 835 F.2d 1529, 1534–35; DialAmerica relative importance of the worker’s task may be in some and some courts have Mktg., 757 F.2d at 1386. to the business of the potential found value in analyzing this fact.’’ It The NPRM explained the reasons that employer says nothing about whether commented that if the Department the Department now believes the the worker economically depends on stated that integrality is not relevant to Supreme Court’s original ‘‘integrated that business for work.’’ 85 FR 60617. the economic realities test, the unit’’ formulation is more probative While some courts assumed that Department’s proposed rule would than the ‘‘integral part’’ (meaning business may desire to exert more unduly limit the inquiry. One ‘‘important’’) approach. As Judge control over workers who provide commenter, the Greenlining Institute, Easterbrook pointed out in his important services, there is no need to commented that eliminating an concurrence in Lauritzen, ‘‘[e]verything use importance as an indirect proxy for ‘‘integral part’’ factor disfavors workers the employer does is ‘integral’ to its control because control is already a ‘‘performing physical tasks instead of business—why else do it?’’ Lauritzen, separate factor. Id. (citing Dataphase, stereotypically ‘intellectual’ pursuits,’’ 835 F.2d at 1541 (Easterbrook J., 781 F. Supp. at 735, and Barnard Const., who are disproportionately racial or concurring); see also Zheng, 355 F.3d at 860 F. Supp. at 777, aff’d sub nom. ethnic minorities. 73 (cautioning in the joint employer Baker v. Flint Eng’g & Const. Co., 137 Many commenters agreed with the context that interpreting the factor to F.3d 1436 (10th Cir. 1998)). And this Department’s proposal to eliminate the focus on importance ‘‘could be said to assumption may not always be valid. ‘‘integral part’’ factor or any similar be implicated in every subcontracting Modern manufacturers, for example, factor focused on the importance of the relationship, because all subcontractors commonly assemble critical parts and work. The U.S. Chamber of Commerce, perform a function that a general components that are produced and for example, commented, ‘‘In today’s contractor deems ‘integral’ to a product delivered by wholly separate companies economy, independent workers provide or a service’’). through contract rather than services in all aspects of the economy The Department’s review of appellate employment arrangements. And low and all aspects of individual businesses, cases since 1975 involving independent transaction costs in many of today’s including core and non-core functions, contractor disputes under the FLSA industries make it cost-effective for as well as in the same or different lines supports this criticism. The Department firms to hire contractors to perform of business.’’ The Society for Human generally found that, in cases where the routine tasks. Resource Management similarly ‘‘integral part’’ factor was addressed, the The Department considered salvaging commented that the ‘‘analysis factor aligned with the ultimate the ‘‘integral part’’ factor by concerning the ‘integrated unit’ factor classification when the ultimate deemphasizing ‘‘integral’’ and should not focus on the ‘importance of classification was employee.41 However, emphasizing ‘‘part.’’ Instead of focusing services’ provided.’’ courts’ analyses of the ‘‘integral part’’ on whether the work is important ‘‘to’’ Though circuit courts have applied an factor—again, if it was analyzed at a potential employer’s business, the ‘‘integral part’’ factor, it was not one of all 42—were misaligned more frequently factor would focus on whether the work the factors analyzed by the Supreme than they were aligned with the is an important ‘‘part’’ of that business. Court in Rutherford Food. Rather, the ultimate classification when the This approach would more closely align Court considered whether the worker ultimate classification was independent with how ‘‘integral part’’ was used by was part of an ‘‘integrated unit of contractor status. Compare Iontchev, the Supreme Court in Silk, which asked production,’’ 331 U.S. at 729, as this 685 F. App’x at 551; Meyer, 607 F. whether workers were ‘‘an integral part final rule does. The Department believes App’x at 123; Freund, 185 F. App’x at of [defendants’] businesses,’’ as opposed that circuit courts—and even the 784–85; Mid-Atl. Installation, 16 F. to operating their own businesses. 331 Department itself—have deviated from App’x at 107–08; Brandel, 736 F.2d at U.S. 716. But as the NPRM noted, the the Supreme Court’s guidance and, in 1120, with Werner, 529 F. App’x at 545– Silk Court framed that question as the doing so, have introduced an ‘‘integral 46; DialAmerica Mktg., 757 F.2d at ultimate inquiry, and not as a factor that part’’ factor that can be misleading. As is useful to guide the inquiry. See 85 FR explained in the NPRM, the ‘‘integral 40 A 2002 opinion letter interpreted the factor to 60616 n.41. Asking whether a worker is part’’ factor was not one of the distinct focus on the importance of the work, explaining part of—integral or otherwise—a factors identified in Silk as being that ‘‘[w]hen workers play a crucial role in a potential employer’s business is not company’s operation, they are more likely to be ‘‘important for decision.’’ 331 U.S. at employees than independent contractors.’’ WHD useful because it simply restates the 716. The ‘‘integrated unit’’ factor instead Opinion Letter, 2002 WL 32406602, at *3 (Sept. 5, ultimate inquiry: If a worker were part derives from Rutherford Food, where 2002). However, the Department’s most recent of the potential employer’s business, the Supreme Court observed that the opinion letter on this subject characterized the then he or she could not be in business factor as ‘‘the extent of the integration of the work at issue was ‘‘part of an integrated worker’s services into the potential employer’s for him- or herself and therefore would unit of production’’ in the potential business.’’ WHD Opinion Letter FLSA2019–6 at 6 be economically dependent. As an employer’s business and concluded that (emphasis added). added complication, new technologies workers were employees in part because 41 The only appellate case the Department found have led to the emergence of platform they ‘‘work[ed] alongside admitted of misalignment in this scenario is Paragon companies that connect consumers Contractors, 884 F.3d at 1237–38. employees of the plant operator at their 42 As explained elsewhere, the Fifth Circuit does directly with service providers, and it is tasks.’’ 331 U.S. at 729. As the NPRM not usually consider the ‘‘integral part’’ factor in its often difficult to determine whether explained, the Department began using analysis. those platform companies are in

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business of supporting service Another group of commenters integrated into the employer’s own providers’ own businesses or are in the suggested that the factor should include production process is not part of an business of hiring service providers to an explicit consideration of the location integrated unit of production. Multiple serve customers. Compare Razak, 951 of the work performed. The U.S. businesses, including independent F.3d at 147 n.12 (‘‘We also believe Chamber of Commerce, for example, contractors, may perform steps in the [there] could be a disputed material suggested that the factor should same supply chain. fact’’ whether Uber is ‘‘a technology consider whether the worker is Some commenters suggested that the company that supports drivers’ performing work ‘‘the majority of which description of this factor in the transportation businesses, and not a is performed off the physical premises preamble should define the scope of the transportation company that employs of the business.’’ ‘‘unified purpose’’ toward which the drivers.’’), with O’Connor v. Uber Whether the work is performed on the potential employer’s processes work. Techs., Inc., 82 F. Supp. 3d 1133, 1153 business’s physical premises may be a WPI requested that the Department (N.D. Cal. 2015) (‘‘it is clear that Uber consideration under the ‘‘integrated clarify that the ‘‘unified purpose’’ is most certainly a transportation unit’’ factor, as it may indicate the cannot be broader than the potential company’’). For the reasons explained, extent to which the worker is part of an employer’s ‘‘core or primary business the final rule retains the ‘‘integrated integrated unit of production. However, purpose.’’ On the other hand, unit’’ approach. the Department does not believe it is Farmworker Justice urged a broad The Department does not share the necessary to include this consideration definition of ‘‘unified purpose’’ to Greenlining Institute’s concern that the as an explicit part of the ‘‘integrated prevent gamesmanship by which an final rule’s ‘‘integrated unit’’ factor unit’’ factor. Many businesses have no employer may attempt to artificially would result in workers who perform physical location but nevertheless separate its production process into ‘‘physical tasks’’ being classified as employ employees. In other instances, separate units in order to claim that they independent contractors more than an employee may be part of an are segregable rather than parts of a workers who perform white collar, integrated unit despite performing work unified whole. It cited a hypothetical ‘‘intellectual’’ work. Meat deboning is a at a different location than other tomato farmer who could label its physical task, but deboners were found employees. See, e.g., Goldberg v. tomato harvesters as a separate unit to be part of an integrated unit of Whitaker House Cooperative, Inc., 366 rather than as part of the process of production in Rutherford Food. 331 U.S. US 28, 32 (1961) (holding that workers growing tomatoes. who produced copies of a sample The Department rejects these at 729. On the other hand, freelance product at home were employees). Some suggestions, because the final rule’s writers perform a white collar task, but workers perform work on a business’s rejection of the ‘‘integral part’’ factor they generally are not integrated into a physical premises but perform discrete, and the question of ‘‘importance’’ or publication’s production process segregable services unrelated to any ‘‘centrality’’ makes clear that the because they are not involved in, for integrated process or unified purpose. relevant facts are the integration of the instance, assigning, editing, or Thus, although the location of the work worker into the potential employer’s determining the layout of articles. Both may be a fact that is relevant to the production processes, rather than the white collar and physical labor jobs may ‘‘integrated unit’’ factor, it is not so nature of the work performed. As be part of an integrated unit of probative that it would be useful to explained above, identifying the ‘‘core production. The Department has added elevate it above other facts that may be or primary business purpose’’ is not a one example in new § 795.115 showing more relevant in a particular case. useful inquiry in the modern economy. that a newspaper editor—who performs Several commenters asked that the Falling transaction costs and other primarily white collar tasks—may be Department clarify that the relevant factors described above allow part of an integrated unit of production. inquiry is whether the worker is part of businesses to hire independent Another commenter, the Arkansas an integrated unit of production that is contractors to carry out tasks that are Trucking Association, agreed that the part of the potential employer’s own part of the businesses’ core functions, ‘‘integrated unit’’ factor was superior to processes rather than part of a broader while keeping those functions separate ‘‘integral part,’’ but suggested an supply chain. NRF suggested clarifying from its own production processes. At alternative formulation based on language that would ‘‘expressly state the same time, seemingly peripheral whether the business’s activities would that merely serving as a link in the functions may be integrated into an cease or be severely impacted by the chain of a company’s provision of goods employer’s own processes, indicating absence of the worker. However, this or services’’ does not indicate employee employee status. What matters is the approach has the same limitations as the status. It suggested that such language extent of such integration rather than approaches that emphasize would make it clear that this factor does the importance or centrality of the ‘‘importance.’’ Almost every worker not indicate employee status where a functions performed, which the performs work that is in some sense worker is merely one, segregable step in Department does not find to be a useful important to the business that has hired the process of delivering a product to a indicator of employee or independent the worker; otherwise, the business consumer. contractor status. would not hire the worker. Moreover, as The Department does not believe such As noted in the NPRM, the explained in the NPRM, easily-replaced a clarification is needed, because the Department recognizes that it may be workers are often more dependent on a text of the final rule states that this difficult to determine the extent to particular business for work precisely factor points toward employee status which a worker is part of an integrated because they are so easily replaced. only when the worker performs ‘‘a unit of production. For this reason, this Focusing on the impact of a worker’s component of the potential employer’s factor is not always useful to the absence turns the economic dependence integrated production process.’’ The economic realities inquiry, and it is less analysis on its head by essentially relevant process is the potential likely than the core factors to be looking at the business’s dependence on employer’s process, not the broader determinative. For example, this factor the worker. As a result, it sends supply chain. A worker who performs a would not indicate independent misleading signals about employee segregable step in the process of contractor status for Farmworker status. delivering a product but who is not Justice’s hypothetical tomato harvesters

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merely because the farmer artificially potential employer’s business model. income and the size of the hiring labeled them a separate unit. As has Moreover, contractual formalities such company, are not relevant. These been the case since the concepts as a buy/sell agreement or contracts unlisted factors are less probative than underlying the economic realities test formed using multi-sided platforms the core factors listed in § 795.105(d)(1), was articulated, the test does not could memorialize either employment while their precise weight depends on depend on labels assigned to workers. or independent contractor the circumstances of each case and is Rutherford Food, 331 U.S. at 729 arrangements; the determination would unlikely to outweigh either of the core (‘‘Where the work done, in its essence, not depend on the labels assigned but factors . follows the usual path of an employee, on the various economic realities E. Focusing the Economic Reality Test putting on an ‘independent contractor’ factors, including the worker’s on Two Core Factors label does not take the worker from the integration into the potential employer’s protection of the Act.’’). The factor may production process. Proposed § 795.105(c) was intended to indicate either employee or That said, as explained elsewhere in improve the certainty and predictability independent contractor status based on this preamble, although the Department of the economic reality test by focusing the extent to which the harvesters are cannot address all industries or all the test on two core factors: (1) The integrated into the farmer’s production possible factual scenarios, it does nature and degree of the worker’s process as a matter of fact, but most appreciate that examples are helpful to control over the work; and (2) the likely the ultimate determination would understanding how each factor operates. worker’s opportunity for profit or loss. depend more on other factors, such as The new regulatory provision added in This focus is an important corollary of control and opportunity for profit or this final rule to further illustrate the sharpened definition of economic loss. several factors, § 795.115, includes two dependence to include individuals who WPI also suggested that the examples specifically meant to are dependent on a potential employer Department clarify language in the demonstrate how facts about whether a for work and to exclude individuals preamble to the proposed rule stating worker is part of an integrated unit of who are in business for themselves. The that employee status would be indicated production should be considered as part NPRM explained that these core factors, for a worker who performs work closely of the employment relationship listed in proposed § 795.105(d)(1), drive alongside conceded employees. WPI analysis. at the heart of what is meant by being expressed concern that this language For the reasons explained, the in business for oneself: Such a person could wrongly imply that a worker Department finalizes § 795.105(d)(2)(iii) typically controls the work performed in performing different tasks than the as proposed. his or her business and enjoys a conceded employees but in close meaningful opportunity for profit or risk proximity to them would indicate 6. Additional Unlisted Factors of loss through personal initiative or employee status. The Department does The National Restaurant Association investment. The other economic reality not believe such clarification is stated that facts and factors not listed in factors—skill, permanence, and necessary, because the preamble stated § 795.105(d) may be relevant to the integration—are also relevant as to that employee status is indicated where question of economic dependence even whether an individual is in business for the worker ‘‘performs identical or though they would not be as probative him- or herself. But they are less closely interrelated tasks as those as the two core factors. This commenter probative to that determination. For employees.’’ In other words, WPI is expressed concern that future courts instance, it is not uncommon for correct that if a worker works physically may ignore these unlisted but comparatively high skilled close to conceded employees but potentially relevant considerations in individuals—such as software performs unrelated tasks, that fact alone response to this rulemaking and engineers—to work as employees, and would not indicate employee status. requested that the Department revise the for comparatively low skill Finally, many commenters requested regulatory text to explicitly recognize individuals—such as drivers—to be in that the Department add examples that unlisted factors may be relevant. business for themselves. See, e.g., explaining how this factor would apply While proposed § 795.105(c) already Saleem, 854 F 3d at 140; Express Sixty- to specific industries, including states that the five factors listed in Minutes Delivery, 161 F.3d at 306. In trucking, construction, financial § 795.105(d) are ‘‘not exhaustive,’’ 43 the contrast, ‘‘[i]n ordinary circumstances, advising, and personal shopping. Others Department agrees that it may be helpful an individual ‘who is in business for wanted examples to address certain to make this point more explicit. The him- or herself’ will have meaningful types of contractual arrangements, such Department is thus adding control over the work performed and a as multi-sided platforms, franchisees, § 795.105(d)(2)(iv), which states that meaningful opportunity to profit (or risk and buy/sell agreements. In response to additional factors not listed in loss).’’ 85 FR 60618. As such, ‘‘it is not these requests, the Department notes § 795.105(d) may be relevant to possible to properly assess whether that the facts that inform the ‘‘integrated determine whether an individual is an workers are in business for themselves unit’’ factor are too circumstance- employee or an independent contractor or are instead dependent on another’s specific to apply blanket statements to under the FLSA. As with any fact or business without analyzing their control entire industries or broad types of factor, such additional factors are over the work and profit or loss employment arrangements. Any relevant only to the extent that they opportunities.’’ Id. particular task that is common in a help answer whether the individual is The NPRM further explained that particular industry may be performed in in business for him- or herself, as focusing on the two core factors is also one instance by a worker who is part of opposed to being economically supported by the Department’s review an integrated unit of production or by a dependent on an employer for work. of case law. The NPRM presented a segregable unit. In other words, this Factors that do not bear on this remarkably consistent trend based on factor may point in a different direction question, such as whether an individual the Department’s review of the results of for workers who perform similar duties has alternate sources of wealth or appellate decisions since 1975 applying in the same industry but who are more the economic reality test. Among those or less integrated into their potential 43 See Silk, 331 U.S. at 716 (‘‘No one [factor] is cases, the classification favored by the employer’s processes based on the controlling nor is the list complete.’’). control factor aligned with the worker’s

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ultimate classification in all except a precedent, and well-reasoned courts of Department responds to each of the handful where the opportunity factor appeals’ decisions.’’ The American above concerns below, and then pointed in the opposite direction. And Bakers Association (ABA) likewise addresses other requests relating to the the classification favored by the ‘‘supports the Department’s position focus on the two factors. opportunity factor aligned with the that the two most probative ‘core’ 1. Focusing on Two Core Factors is ultimate classification in every case.44 factors for determining independent Consistent With the Economic Reality These two findings imply that whenever contractor status under the FLSA are the Test the control and opportunity factors both degree and nature of an individual’s pointed to the same classification— control over their work, and the Many commenters contended that whether employee or independent opportunity for profit (or loss).’’ See emphasizing core factors over others contractor—that was the court’s also, e.g., ATA; CPIE; National would violate a requirement that conclusion regarding the worker’s Restaurant Association; SHRM. Even economic reality factors be unweighted ultimate classification.45 See 85 FR one commenter who did not generally or weighted equally. According to 60619. In other words, the Department support this rulemaking ‘‘agreed with SWACCA, ‘‘[t]he proposed weighted did not uncover a single court decision the Department that the two main rule is a novel concept and a departure where the combined weight of the factors, control and opportunity for from existing caselaw.’’ See also, e.g., control and opportunity factors was profit or loss, should be given greater NELA (objecting to ‘‘emphasizing outweighed by the other economic weight.’’ Owner-Operator Independent certain factors over what should be the reality factors. In contrast, the Driver Association (OOIDA). ‘ultimate inquiry’ ’’). FTC Commissioner classification supported by other Many commenters objected to Slaughter likewise objected that ‘‘[t]he economic reality factors was focusing on the two core factors. Proposal takes the Supreme Court’s five occasionally misaligned with the Broadly speaking, they raised three factor test, where all five factors are worker’s ultimate classification, interrelated concerns. First, commenters given equal weight, and narrows it particularly when the control factor, the contended that elevating the two core down to focus on only two [core] opportunity factor, or both, favored a factors is inconsistent with the factors.’’ See also Appleseed Center different classification. See id. at 60621. economic reality test, which they (‘‘[A]ll are given equal weight.’’); The NPRM thus provided that, given asserted requires that factors be either Senator Patty Murray (suggesting that their greater probative value, if both unweighted or weighted equally. See, ‘‘DOL afford [factors] equal weight’’). proposed core factors point towards the e.g., NELP (objecting to ‘‘elevating two NELP appeared to agree with the same classification—whether employee narrow ‘core’ factors’’); SWACCA; Department that the economic reality or independent contractor—there is a Commissioner Slaughter of the Federal test may focus on certain factors over substantial likelihood that is the Trade Commission (FTC). Second, others, but asserted that ‘‘the factor of individual’s correct classification. This commenters contended that focusing on integration into the business of another is because it is quite unlikely for the two core factors would narrow the scope should be weighed heavily,’’ rather than other, less probative factors to outweigh of who is an employee (as opposed to the proposed rule’s two core factors. the combined weight of the core factors. an independent contractor) under the Several commenters further relied on an In other words, where the two core FLSA. See, e.g., NELP (‘‘The NPRM age discrimination case to contend that factors align, the bulk of the analysis is narrows the FLSA test for employee the economic reality test ‘‘cannot be complete, and anyone who is assessing coverage[.]’’); State AGs (‘‘The Proposed rigidly applied’’ and that ‘‘[i]t is the classification may approach the Rule’s interpretation of [employment impossible to assign to each of these remaining factors and circumstances under] the FLSA is unlawfully factors a specific and invariably applied with skepticism, as only in unusual narrow.’’); Appleseed Center (‘‘The weight.’’ NELP (quoting Hickley v. Arkla cases would such considerations Department of Labor is trying to Indus., Inc., 699 F.2d 748, 752 (5th Cir. outweigh the combination of the two impermissibly narrow this definition’’); 1983)); see also Michigan Regional core factors. NCFW (objecting to ‘‘agency’s proposed Council of Carpenters (MRCC) (same). Numerous commenters welcomed attempt to narrow the definition of The Department disagrees that the proposed § 795.105(c)’s sharpening of employee’’). Third, commenters asserted economic reality test requires factors to the economic reality test by recognizing that focusing on two core factors would be unweighted or equally weighted. the two core factors’ greater probative impermissibly restrict the set of Each time the Department or a court value on whether an individual is in circumstances that may be considered applies the test, it must balance business for him- or herself. For when assessing whether a worker is an potentially competing factors based on instance, the U.S. Chamber of employee or independent contractor their respective probative value to the Commerce stated that ‘‘[t]he ultimate inquiry of economic Department’s straightforward focus on under the FLSA. TRLA (‘‘proposed reformulation would eliminate . . . any dependence. In the very case that two core factors presents a concise announced the economic reality factors, interpretation of ‘economic dependency’ consideration of [the skill and permanence] factors’’); NELA (objecting the Supreme Court listed five factors grounded in the Act’s statutory that are ‘‘important for decision’’ but definition of ‘employ’ and ‘employer,’ to ‘‘a narrow, control-dominated consistent with Supreme Court inquiry’’); State AGs (objecting to proposed rule because it ‘‘narrows breadth of these two concepts are not always 46 logically related. For instance, the ABC test states 44 This is not to imply that the opportunity factor several areas of inquiry.’’). The that a worker is an employee unless the hiring party necessarily aligns with the ultimate classification, can establish that three criteria are met, see, e.g., but rather that the Department is not aware of an 46 There are two distinct concepts within the Dynamex, 416 P.3d at 35; thus, the ABC test appellate case in which misalignment occurred. economic reality test—and any test for employment considers a relatively narrow set of circumstances 45 The only cases in which an appellate court’s status—that can be broad or narrow. The first while imposing a broad standard for employment. ruling on a worker’s classification was contrary to concept is the test’s standard for employment, While most commenters that objected to the the court’s conclusions as to the control factor were which is economic dependence. See Bartels, 332 narrowing of the economic reality test did not cases in which the opportunity factor pointed in the U.S. at 130. The second concept is the set of present the standard of employment and opposite direction. See 85 FR 60619 (citing Paragon circumstances that may be considered as part of the circumstance that may be considered as separate Contractors, 884 F.3d at 1235–36, and Cromwell, test, which is the ‘‘circumstances of the whole concepts, the Department addresses them 348 F. App’x at 61). activity.’’ See Rutherford Food, 331 U.S at 730. The separately.

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did not treat them equally. Silk, 331 the Eight Circuit recently emphasized a 60619. Among the appellate decisions U.S. at 716. It instead emphasized the process server’s ability to determine his since 1975 that the Department most probative factors, while de- own profits by controlling hours, which reviewed, whenever the control factor emphasizing less probative ones in that assignments to take, and for which and the opportunity factor both pointed case. The Court focused on the fact that company to work, to affirm a jury towards the same classification— coal unloaders ‘‘had no opportunity to verdict that he was an independent whether employee or independent gain or lose’’ to conclude they were contractor. See Karlson, 860 F.3d at contractor—that was the worker’s employees under the SSA, while 1095. ultimate classification. Put another way: explaining the fact ‘‘[t]hat the unloaders Courts have repeatedly warned In those cases where the control factor did not work regularly was not against the ‘‘mechanical application’’ of and opportunity factor aligned, had the significant.’’ Id. at 717–18. The Court the economic reality factors when courts hypothetically limited their further focused on ‘‘the control determining whether an individual is an analysis to just those two factors, it exercised [and] the opportunity for employee or independent contractor. appears to the Department that the profit from sound management’’ to See, e.g., Saleem, 854 F.3d at 139; overall results would have been the conclude that truck drivers were Superior Care, 840 F.2d at 1059. Rather, same. One commenter attempted to independent contractors, without the factors should be analyzed with the dispute this finding. TRLA asserted that, discussing any of the other economic aim of answering the ultimate inquiry in the following four cases, farmworkers reality factors. Id. at 719. Similarly, the under the FLSA: ‘‘Whether an who were found to be employees ‘‘might Court in Whitaker House concluded that individual is ‘in business for himself’ or be reclassified as independent workers at issue in that case were is ‘dependent upon finding employment contractors based on the NPRM’s two employees based primary on in the business of others.’ ’’ Scantland, core factors:’’ Driscoll, 603 F.2d 748; considerations relating to control (e.g., 721 F.3d at 1312 (quoting Mednick, 508 Lauritzen, 835 F.2d 1529; Perez v. the workers were ‘‘regimented under F.2d at 301–02). Commenters who Howes, 7 F. Supp. 3d 715 (W.D. Mich. one organization, manufacturing what object to focusing on the two core 2014); and Cavazos v. Foster, 822 F. the organization desires’’) and factors do not dispute this principle, Supp. 438 (W.D. Mich. 1993). However, opportunity for profit (e.g., the workers and some affirmatively support it. For the court in each of these cases actually were ‘‘receiving the [piece rate] instance, NELA and the State AGs both concluded that the control and compensation the organization dictates’’ stated that economic reality ‘‘factors ‘are opportunity factors both favored rather than ‘‘selling their products on aids—tools to be used to gauge the employee classification,50 and thus the the market for whatever price they can degree of dependence of alleged farmworkers would have been found to command’’). 366 U.S. at 32–33. employees on the business with which be employees even if those courts had As discussed in the NPRM, courts of they are connected’ ’’ (quoting Pilgrim hypothetically based is decision solely appeals also emphasized facts and Equip., 527 F.2d at 1311). NELA on the core factors. These cases factors that are more probative of the nonetheless believed that it would be therefore reinforce the Department’s economic dependence inquiry. See 85 inappropriate to ‘‘emphasiz[e] certain conclusion that the control and FR 60620. In Saleem, the Second Circuit factors over what should be the opportunity factors have been focused on facts relating to drivers’ ‘ultimate inquiry’: The worker’s consistently afforded significant weight control over their work and their economic dependence on the putative in the economic dependence inquiry. opportunity for profit or loss based on employer.’’ Emphasizing certain factors, The consistent empirical trend initiative or investment to conclude that however, would dilute the ultimate indicating that the control and they were independent contractors.47 inquiry of economic dependence only if opportunity factors have been afforded 854 F.3d at 138–39; see also Agerbrink those factors were less probative of v. Model Service LLC, 787 F. App’x 22, economic dependence than others. In with Defendants, both its length and the ‘regularity’ 25–27 (2d Cir. 2019) (denying summary of work was entirely of Plaintiffs’ choosing.’’ 854 F. contrast, emphasizing factors that are 3d at 147 (citation omitted). When discussing ‘‘the judgement based solely on disputed more probative would not dilute but use of special skills,’’ the court in Selker Brothers facts regarding plaintiff’s ‘‘control over rather focus the analysis on the ultimate similarly explained that, ‘‘[g]iven the degree of her work schedule, whether she had the inquiry under the FLSA. If NELA and control exercised by Selker over the day-to-day ability to negotiate her pay rate, and, operations of the stations, this criterion cannot be the State AGs are correct that the said to support a conclusion of independent relatedly, her ability to accept or decline economic reality factors must be ‘‘used contractor status.’’ 949 F.2d at 1295. work’’). The Third Circuit in Razak v. to gauge the degree of dependence,’’ 50 Driscoll, 603 F.2d at 755 (‘‘The appellants’ Uber Technologies took a similar then focusing on factors that are more affidavits, which must be taken as true for summary approach by emphasizing disputed facts judgment purposes, plainly disclose that probative measures of economic [defendant] possesses substantial control over regarding ‘‘whether Uber exercises dependence is not only permitted but important aspects of the appellants’ work’’); id. control over drivers’’ ’ and had ‘‘the preferred. (‘‘The appellants’ opportunity for profit or loss opportunity for profit or loss depending The Department’s review of case law appears to depend more upon the managerial skills on managerial skill’’ to deny summary indicates that courts of appeals have of [defendant]’’); Lauritzen, 835 F.2d at 1536 (‘‘The 48 defendants exercise pervasive control over the judgment. 951 F.3d at 145–47. And effectively been affording the control operation as a whole.’’); id. (‘‘The Sixth Circuit [in and opportunity factors greater weight, a prior case] found that the migrant workers had the 47 In particular, the Saleem court focused on: even if they did not always explicitly opportunity to increase their profits through the drivers’ ‘‘considerable discretion in choosing the 49 management of their pickle fields....We do not nature and parameters of their relationship with the acknowledge doing so. See 85 FR agree.’’); Howes 7 F. Supp. 3d at 726, aff’d sub nom. defendant,’’ ‘‘significant control over essential Perez v. D. Howes LLC, 790 F.3d 681 (6th Cir. 2015); determinants of profits in [the] business,’’ how they offline, and on the other hand, Plaintiffs can drive (‘‘Accordingly, [the control] factor weighs in favor ‘‘invested heavily in their driving businesses,’’ and whenever they choose to turn on the Driver App, of a finding that the workers were employees.’’); id. the ‘‘ability to choose how much work to perform.’’ with no minimum amount of driving time (‘‘[W]orkers could simply increase their wages by 854 F.3d at 137–49. required.’’ 951 F.3d at 147 n.12. working longer, harder, and smarter—this does not 48 The Razak decision also briefly addressed 49 Some courts have explicitly acknowledged that constitute an opportunity for profit.’’); Cavazos, 822 other factors, including a footnote on the ‘‘integral’’ facts related to the control factor were more F. Supp. at 442 (‘‘Their lack of control supports factor and a discussion that was nominally about probative than facts related to other factors. For plaintiffs’ claim that they are employees.’’); id. at the permanence factor but actually concerned instance, the court in Saleem stated that ‘‘whatever 443 (noting that the work relationship ‘‘does not control: ‘‘On one hand, Uber can take drivers ‘the permanence or duration’ of Plaintiffs’ affiliation afford plaintiffs an opportunity for profits’’).

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greater weight should be unsurprising determine whether an individual is in a subtle but important distinction that given their greater probative value. As business for him- or herself. The was not fully reflected in the NPRM’s the NPRM explained, those two factors Department therefore declines to create language between a factor’s probative ‘‘strike at the core’’ of what it means to and give greater weight to NELP’s value as a general matter and its specific be in business for oneself, 85 FR 60612, concept of the ‘‘integration factor’’ and weight in a particular case. Probative and therefore they are more probative of continues to believe that the control and value refers to the extent to which a the ultimate inquiry under the FLSA: opportunity factors are the most factor encapsulates types of facts that ‘‘whether an individual is ‘in business probative as to whether an individual is illuminate the ultimate inquiry of for himself’ or is ‘dependent upon in business for him- or herself as a whether workers are in business for finding employment in the business of matter of economic reality. themselves, as opposed to being others.’ ’’ Scantland, 721 F.3d at 1312 NELP and MRCC quoted dicta from an dependent on an employer for work. (quoting Mednick, 508 F.2d at 301–02). age-discrimination case that ‘‘[i]t is The weight assigned to a factor in a No commenters offered a persuasive impossible to assign to each of [the particular case refers to how strongly counterargument to the commonsense economic reality] factors a specific and specific facts within the factor, on logic that, when determining whether invariably applied weight.’’ Hickley, 699 balance, favors a particular an individual is in business for him- or F.2d at 752.52 This proposed rule, classification. Considerations within a herself, the extent of the individual’s however, does not run afoul of Hickley’s core factor may have significant control over his or her work is more dicta. As an initial matter, neither core probative value even though that factor, useful information than, for example, factor individually has ‘‘a specific and on balance, does not weigh heavily the skill required for that work. Nor did invariably applied weight’’ because the towards a classification in a specific any commenters effectively rebut that proposed rule does not state that one case. The Department therefore revises the extent of an individual’s ability to necessarily outweighs the other. The § 795.105(c) to more clearly distinguish earn profits (or suffers losses) through Department nonetheless recognizes that between a core factor’s probative value initiative or investment is more useful proposed § 795.105(c)’ statement that as a general matter and its’ weight in a information than, for example, how long ‘‘each [core factor] is afforded greater specific case and to clarify that the core that individual has worked for a weight in the analysis than is any other factors’ greater probative value means particular company. factor’’ may be overly rigid. For reasons that they typically (but not necessarily) NELP appeared to agree with the explained above, certain types of facts— carry greater weight . Thus it should be Department that emphasis should be i.e., those falling within the control and clear that the rule does not assign any given to factors that are most probative opportunity factors—are more probative factor a specific or invariable weight. In to the ultimate inquiry of whether an than others regarding whether an contrast, the approach favored by some individual is in business for him- or individual is in business for him- or commenters, including the Appleseed herself, but disagrees as to what those herself. But that does not necessarily Center and Commission Slaughter, to factors should be. In particular, NELP mean the control or opportunity factors give each factor ‘‘equal weight’’ would asserted that ‘‘the factor of integration are entitle to greater weight in all cases. ‘‘assign to each of the factors a specific into the business of another should be For example, it may be the case that, and invariably applied weight.’’ weighed heavily and in fact is after all the circumstances have been Hickley, 699 F.2d at 752. ultimately the test. If the work is considered, a core factor does not weigh At bottom, the final rule’s focus on integrated this leads to the conclusion very strongly towards a particular two core factors thus does not depart that the worker is not independently classification because considerations from the economic reality test—it running a business.’’ 51 within that factor point in different merely elucidates the factors’ respective NELP correctly defines the economic directions. See Cromwell, 348 F. App’x probative values that have always dependence inquiry as ‘‘whether a at 61 (finding that ‘‘defendants here did existed but never been explained. Cf. person is in business for themselves and not control the details of how the Lauritzen, 835 F.2d at 1539 (‘‘Why keep therefore independent, or works instead plaintiffs performed their assign jobs’’ [employers] in the dark about the legal in the business of another and but did have ‘‘complete control over consequences of their deeds.’’ dependent on that business for work.’’ [their] schedule and pay’’). A core factor (Easterbrook, J., concurring)). As If a worker is economically dependent could even be at equipoise, in which explained in more detail below, on an employer for work, the worker is case it would not weigh at all in favor providing such clarification for the not in business for him- or herself. of a classification. See Johnson, 371 F. regulated community would not narrow NELP then defines the ‘‘integration 3d at 730 (concluding that competing the scope of who is an FLSA employee factor’’ to mean the exact same thing: ‘‘If facts regarding plaintiffs’ opportunity as opposed to an independent the work is integrated this leads to the for profit or loss meant that the ‘‘jury contractor. Nor would it narrow the conclusion that the worker is not could have viewed this factor as not circumstances that may be considered favoring either side’’). In short, there is independently running a business.’’ under the economic reality test. NELP is correct that, when defined as 2. The Proposed Rule Would Not 52 The court in Hickley applied the economic such, ‘‘the factor of integration . . . in reality test in the context of the Age Discrimination Narrow the Standard for FLSA fact is the ultimate test,’’ but that factor in Employment Act of 1967, 29 U.S.C. 621–34, Employment would not be helpful in ascertaining a without opining whether that was the correct test A number of commenters argued that worker’s employment status because it under the ADEA. 699 F.2d at 752 (‘‘Finding . . . there was no evidence . . . that Hickey was an focusing the economic reality test on the simply restates the question. The employee under the more liberal ‘economic control and opportunity factors would Department, courts, and the regulated realities’ test used in FLSA cases, [but] express[ing] narrow the standard for employment community would still have to no opinion on whether it or one of the tests used in Title VII cases should ultimately be used to under the FLSA. The FLSA defines determine which factors to analyze to determine employee status in ADEA cases.’’). ‘‘employ’’ as including ‘‘to suffer or Hickley’s ‘‘specific and invariably applied weight’’ permit to work,’’ 29 U.S.C. 203(g), and 51 According to NELP, this language is a quotation dicta appears in one FLSA case, Parrish, 719 F.3d these commenters argued this definition from AI 2015–1 that was withdrawn in 2017. But at 380, as a see also parenthetical to support the that withdrawn guidance does not contain the proposition that economic reality factors should not should be interpreted to provide broad quoted language. be applied mechanically. coverage in light of the Act’s remedial

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purpose. See, e.g., AFL–CIO; NELA; Navarro, 138 S. Ct. 1134, 1142 (2018) that indicates employee status’’ (quoting NELP; Senator Patty Murray; State AGs. (Encino II) (warning against relying on Usery, 527 F.2d at 1311). And the State Most of these commenters argued that ‘‘flawed premise that the FLSA AGs explain that ‘‘[t]he ultimate the proposed rule is incompatible with ‘pursues’ its remedial purpose ‘at all concern is whether, as a matter of the Act’s broad definition of costs’’’ when interpreting the Act). economic reality, the workers depend employment because focusing on the Ultimately, ‘‘[t]he test of employment on someone else’s business . . . or are control factor would effectively adopt under the Act is one of ‘economic in business for themselves’’ (quoting the narrower scope of employment reality.’’’ Tony & Susan Alamo, 471 U.S. Superior Care, 840 F.2d at 1059). under the common law control test. One at 301 (quoting Whitaker House, 366 Most commenters who objected to commenter, however, had a different U.S. at 33)). This rule applies such a test focusing the economic reality test on the view: UPS argued that the proposed rule and does so with sufficient breadth two core factors were concerned that would adopt a narrower standard for consistent with the Act’s remedial such an approach would narrow FLSA employment by giving the control factor purpose. employment to the common law too little weight. While the phrase ‘‘economic reality’’ standard. For instance, NELA stated that Discussing the proposed rule’s is on its face no clearer than the ‘‘suffer ‘‘[b]y affording the control factor greater consistency with the FLSA’s standard or permit’’ language, see Lauritzen, 835 weight in the economic reality analysis, for employment first requires an F.2d at 1539 (Easterbrook J., the Department slides back toward the understanding of the Act’s definitions. concurring), decades of case law has common law agency test.’’ See, e.g., Commenters point out that the Act refined its meaning. The Court AFL–CIO (‘‘[T]he proposed rule defines ‘‘employ’’ as including ‘‘to determined that employees include effectively collapses the FLSA’s suffer or permit to work,’’ 29 U.S.C. ‘‘those who as a matter of economic definition into the common law 203(g), but the Supreme Court has reality are dependent upon the business definition by giving primacy and observed that, although broad, the Act’s to which they render service.’’ Bartels, controlling weight to the two factors of definitions are not clear regarding the 332 U.S. at 130. Courts of appeals have control and opportunity for profit and scope of relationships that are included. subsequently used Bartels’s concept of loss.’’). The implied logic behind this Rutherford Food, 331 U.S. at 728 economic dependence to determine concern is that if one test gives greater (‘‘[T]here is in the [FLSA’s text] no employment under the FLSA. See, e.g., weight to a factor that is also given definition that solves problems as to the Saleem, 854 F.3d at 139; Mr. W greater weight by a second test, the two limits of the employer-employee Fireworks, 814 F.2d at 1054; tests necessarily have an equal scope of relationship under the Act.’’). Courts of DialAmerica, 757 F.2d at 1385. Thus, employment. But that does not follow. appeals have likewise found the the courts have interpreted the scope of A comparison with the ABC test is definitions not to clearly indicate the employment under the Act’s definition illustrative. That test creates a precise contours of FLSA employment. to include any individual who is presumption of employee status, which See, e.g., Solis v. Laurelbrook ‘‘dependent upon finding employment can be overridden only if all three Sanitarium & Sch., Inc., 642 F.3d 518, in the business of others,’’ and to factors are established. One of the ABC 522 (6th Cir. 2011); Steelman v. Hirsch, exclude any individual who is ‘‘in test’s factors is ‘‘whether the worker is 473 F.3d 124, 128 (4th Cir. 2007). business for himself.’’ Scantland, 721 free from the control and direction of As commenters also noted, the F.3d at 1312.53 However, as noted in the the hiring entity.’’ This factor is given Supreme Court relied on the FLSA’s need for rulemaking discussion, this dispositive weight under certain purpose and legislative history to principle has not always been applied circumstances: If the worker is interpret the ‘‘suffer and permit’’ consistently. controlled by the hiring party, then he language to encompass a more inclusive The Department agrees with this or she is automatically an employee, definition of employment than that of interpretation and further believes that regardless of other considerations. The the common law. Rutherford Food, 331 the economic dependence standard common law control test also gives U.S. at 727 (affirming that FLSA developed by courts comports with the control dispositive weight. While both employment is not limited to the ‘‘suffer or permit’’ statutory text. As the tests afford control greater weight than ‘‘common law test of control, as the act NPRM explained: ‘‘An individual who the economic reality test, one test (ABC) concerns itself with the correction of depends on a potential employer for has a broader scope of employment than economic evils through remedies which work is an employee whom the the economic reality test and the other were unknown at common law’’); see employer suffers or permits to work. In (common law) has a narrower scope. also Darden, 503 U.S. at 326. The contrast, an independent contractor The relative weight attached to a Supreme Court has ‘‘consistently does not work at the sufferance or particular factor does not, by itself, construed the Act liberally in permission of an employer because, as determine whether the ultimate scope of recognition that broad coverage is a matter of economic reality, he or she employment is broad or narrow. essential to accomplish [its] goal,’’ Tony is in business for him- or herself.’’ 85 FR Accordingly, it is not possible to & Susan Alamo, 471 U.S. at 296, but at 60606 (citing Saleem, 854 F.3d at 139). compare the breadth of the standards for the same time, the Court also recognized Commenters generally agreed that employment used by two tests simply that the ‘‘suffer or permit’’ definition employee versus independent by comparing the weight attached to a ‘‘does have its limits.’’ Id. at 295; see contractor status under the FLSA is shared factor. Rather, it is necessary to also Portland Terminal, 330 U.S. at 152 determined by the worker’s economic consider how each test’s factors are (‘‘The definition ‘suffer or permit to dependence, and several of the above- actually applied. work’ was obviously not intended to mentioned commenters affirmatively Under the common law control test, stamp all persons as employees.’’). No supported this standard. For example, control is the ultimate inquiry: If an court has suggested that applying such NELA stated that ‘‘[i]t is dependence individual controls the work, then he or limits (including the limit that bona fide she would be an independent contractor independent contractors are not 53 Courts apply this economic dependence rather than an employee. However, such employees under the Act) cannot be standard for employment in the employee-versus- control by itself would be insufficient to independent contractor context, but use different reconciled with the Act’s remedial approaches in other contexts. See, e.g., Glatt v. Fox establish the worker as an independent purpose. Cf. Encino Motorcars, LLC v. Searchlight Pictures, 811 F.3d 528 (2d Cir. 2016). contractor under the Department’s rule.

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Other considerations, including the classified as an ‘independent contractor’ also be probative as part of the second core factor of opportunity for even when the common-law control circumstances of the whole activity’’). profit or loss, can outweigh the control factor indicated employee status.’’ The While all circumstances must be factor and result in a classification of potential for such an outcome implies considered, it does not follow that all employee status. That is precisely what that FLSA employment may be circumstances or categories of happened in Paragon Contractors, narrower than the common law circumstance, i.e., factors, must also be wherein the control and integral part standard in certain circumstances. ‘‘given equal weight.’’ See e.g., FTC factors weighed in favor of independent As an initial matter, UPS’s concern Commissioner Slaughter; Appleseed contractor classification but the court that the control factor may be Center. Assigning one factor less weight nonetheless held that the worker was an outweighed by other considerations than another does not restrict the employee because the remaining factors, even when it indicates employee status circumstances being considered because including opportunity for profit or loss, also applies to every prior articulation the very act of determining relative favored classification as an employee. of the economic reality test—indeed weight requires considering both See 884 F.3d at 1238. And even if the more so—because none of them gave the factors. individual both controls the work and control factor greater weight, much less As explained above, each factor has a meaningful opportunity for profit dispositive weight. The rule addresses should be analyzed in accordance with or loss, he or she still would not UPS’s concern because it explicitly its probative value to the ultimate necessarily be classified as an identifies control as a core factor that is inquiry of whether an individual is in independent contractor under the less likely to be outweighed by other business for him or her-self. To be sure, Department’s rule because other factors factors. More importantly, UPS’s the specific weight of the factors may outweigh those two core factors in concern could materialize only if the depends on specific circumstances. The rare cases. In short, because the ultimate control factor were balanced against control and opportunity factors are inquiry under the common law control other factors without regard for the nonetheless more probative than other test is the worker’s right to control the ultimate inquiry for FLSA employment. factors in determining whether an manner and means by which the work Courts have cautioned against such individual is in business for him- or is performed, such control by the ‘‘mechanical application’’ of the herself. As such, it is appropriate to worker disqualifies the worker from economic reality factors and have recognize, as the proposed rule does, being an employee under that test, but instead instructed that all factors should that these two more probative factors more is needed under the rule’s guide the analysis of whether the should typically carry greater weight articulation of the economic reality test individual is in business for him or than other factors. Doing so would not, because economic dependence is the herself or is dependent on others for as TRLA contends, ‘‘eliminate . . . any ultimate inquiry. Thus, the rule’s work. See, e.g., Saleem, 854 F.3d at 140. consideration of [other] factors that have standard for employment remains For these reasons, the Department does often been regarded as probative in the broader than the common law standard. not share UPS’s concern that not giving farm labor context.’’ The proposed rule Nor does the rule ‘‘slide[ ] back toward dispositive weight to the control factor explicitly permits other factors to the common law agency test,’’ as NELA results in a standard for employment outweigh the two core factors if the contends, or otherwise narrow the that is narrower than the common law.54 specific circumstances of the case— whether in the farm labor context or standard of employment under the 3. The Rulemaking Will Not Restrict the FLSA. As explained above, the standard another contexts—warrants such a Range of Considerations Within result. In order to determine whether for determining whether an individual Economic Reality Test the combined weight of the two core is an employee under the FLSA or an A number of commenters contend factors are outweighed or not by other independent contractor has always been that the proposed rule’s focus on the factors, it is necessary to consider both economic dependence. The two core two core factors is inconsistent with sets of factors. Nor would it make any factors are more probative than other case law requiring the ‘‘circumstances of ‘‘single factor determinative by itself.’’ factors regarding whether an individual the whole activity’’ to be considered as Hopkins, 545 F.3d at 343. Neither of the is in business for him- or herself, as part of the inquiry into economic core factors can be ‘‘determinative by opposed to being dependent on an dependence. State AGs (quoting itself’’ because there is a second core employer for work. Neither NELA nor Rutherford Food, 331 U.S. at 730); see factor against which each is balanced. likeminded commenters dispute this also, e.g., NELA (‘‘The economic reality Even when both core factors align, they specific claim. NELA further recognized inquiry therefore cannot be answered are not ‘‘controlling’’ because their that economic reality factors must be without ‘employ[ing] a totality-of-the- combined weight can still be ‘‘used to gauge the degree of circumstances approach.’ ’’ (quoting outweighed by other considerations. dependence.’’ If so, the test should focus Baker, 137 F.3d at 1441)); see also on core factors that are more probative 4. Other Comments Regarding the Focus Senator Patty Murray (‘‘No one test measures of dependence. Doing on the Two Core Factors factor is controlling, nor is the list otherwise would serve no purpose other exhaustive.’’); TRLA (same). PAM and Global Tranz requested that than to make regulations more The Department agrees with the Department create a ‘‘bright-line confusing, thereby reducing compliance commenters that the circumstances of test’’ that ‘‘would be limited to the two and driving up the transaction cost of a the whole activity should be considered ‘core factors’ already identified in the lawful business practice. as part of the economic reality inquiry. Proposed Rule: (1) the nature and degree UPS expressed the opposite concern See 85 FR 60621 (‘‘Other factors may of the individual’s control over the as NELA and likeminded commenters, work, and (2) the individual’s asserting that the proposed rule did not 54 In any event, courts have foreclosed UPS’s opportunity for profit or loss.’’ See also give enough weight to the control factor. requested remedy of giving the control factor Cetera Financial Group (CFG) (‘‘we According to UPS, treating control as a dispositive weight to determine employee status. believe it would be appropriate for the See, e.g., Silk, 331 U.S. at 716 (‘‘No one factor is factor to be balanced rather than giving controlling); Keller, 781 F.3d at 807 (‘‘No one factor Department to limit the criteria it dispositive weight ‘‘leaves open the is determinative.’’); Baker, 37 F.3d at 1440 (‘‘None employed in the economic dependence possibility that a worker could be of the factors alone is dispositive.’’). analysis to the two Core factors and

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eliminate the others’’). According to state that if the two core factors point invariable relative weight between the these commenters, a two-factor test towards the same classification, there is two core factors. would be even clearer and simpler than no need to consider any other factors. Several commenters requested that the proposal to focus the test on the two See e.g., NRF (‘‘if both of the core factors the Department revise § 795.105(c) to core factors, while still considering point in the same direction, then a court establish a rebuttable presumption of other factors. Other commenters may consider only those two factors and employee or independent contractor requested that the Department eliminate end the analysis without examining the status if both core factors indicate the one or more of the non-core factors three additional possible factors same classification. Such a presumption listed in § 795.105(d)(2) from the identified by DOL’’); SHRM (requesting would be rebuttable only by economic reality test because such revision ‘‘to ensure that if the Core ‘‘substantial evidence to the contrary factors have little to no probative value Factors indicate the same status of the under all three [other factors].’’ ATA. in some circumstance, and may worker, no further analysis is According to ATA, a rebuttable sometimes send misleading signals necessary’’). According to the SHRM, presumption ‘‘[w]ould further reduce regarding an individual’s classification. such an approach would ‘‘create clear the possibility of courts unnecessarily CWI and the National Restaurant expectations and stable grounds to build and potentially selectively applying and Association asked the Department to working relationships.’’ weighing the three additional factors for eliminate the skill required factor; The Department believes that the preferred policy outcomes, which has SHRM and the U.S. Chamber of economic reality test cannot be rigidly been a concern with regard to the Commerce were among several applied and concludes that its approach current test in some instances.’’ As the commenters who suggested that the of giving certain factors greater weight NPRM explained, the Department Department eliminate the permanence and other factors lesser weight while considered but did not propose a factor; and ATA, NDHA, and others retaining flexibility as to the degree of rebuttable presumption based on requested eliminating the integrated weight depending on the facts of the alignment of the two core factors unit factor. case best accounts for all of the because it was concerned a formal The Department believes that the two circumstances that work relationships presumption may be needlessly core factors of control and opportunity present. Commenters’ requests would complex or burdensome. See 85 FR are always probative as to whether an require the Department to state that the 60621. The Department further believes individual is in business for him- or combined probative value of the two that emphasizing the importance of the herself. The Department further agrees core factors—whatever that might be— two core factors provides sufficient with the above commenters that the always outweighs the combined clarity. As such, the Department other factors are less probative and may probative value of other factors. The declines to adopt a presumption-based have little to no probative value in some Department believes that will usually be framework. circumstances. See, e.g., Silk, 331 U.S. the case, but does not rule out the CWI requested that the ‘‘the Final at 718 (‘‘That the unloaders did not possibility that, in some circumstances, Rule spell out specifically that each of work regularly is not significant.’’). the core factors could be outweighed by the Core Factors should be analyzed However, ‘‘circumstances of the whole particularly probative facts related to independently of the other, without activity should be examined’’ as part of other factors. overlap.’’ The Department agrees with the economic reality test, meaning that Several commenters effectively CWI that overlaps between economic the other factors should be considered requested that the Department assign a reality factors, core or otherwise, should in all cases even if they are not always specific relative weight to one core be minimized. As discussed in the probative once considered. DialAmerica factor as compared to the other. CWI NPRM and in this preamble, reducing Mktg., Inc., 757 F.2d at 1382. If a factor requested that the Department always such overlap is one of the reasons for is probative in some situations but not weigh the two core factors equally, this rulemaking. That said, the in others, there is still a need to while the HR Policy Institute requested Department believes specific regulatory consider that factor to determine that the control factor always be given instructions against overlapping whether it is probative in a particular greater weight than the opportunity analysis of the two core factors is not case. Eliminating the non-core factors factor. The Department declines to necessary and may be confusing. The from consideration would therefore be implement both requests. The Department believes proposed warranted only if those factors lacked Department’s review of U.S. Courts of § 795.105(d)(1) articulates the two core probative value in all circumstances— Appeals cases since 1975 did not factors without apparent overlap, and that is, if there was never a need to even indicate that the control and CWI does not identity any specific consider whether they had probative opportunity factors should be weighed considerations that risk being analyzed value. equally. Nor did that review indicate under both factors. Language in the Because non-core factors are probative that the control factor should always regulatory text warning against in many circumstances, the Department outweigh the opportunity factor. Indeed, overlapping analysis may therefore believes it would be inappropriate to in the few cases reviewed by the confuse members of the regulated eliminate them. In response to Department where the control and community by priming them to look for commenters’ concern that non-core opportunity factors pointed towards potential overlapping considerations factors may not always be probative, the different classifications, the ultimate when there are none. The Department Department is making non-substantive classification aligned with the therefore declines to add CWI’s revisions to clarify that the two core opportunity for factor. See 85 FR 60619 requested language. factors are always probative as to (citing Paragon Contractors, 884 F.3d at In summary, the economic reality test whether an individual is in business for 1235–36, and Cromwell, 348 F. App’x at examines the circumstances of the him- or herself, but there may be 61). Ultimately, the Department is whole activity to determine whether an circumstances where one or more of the confident in its conclusion that the two individual is in business for him- or non-core factors, upon consideration, core factors are more probative than all herself, as opposed to being has little or no probative value. other factors and that framework is economically deponent on others for Several commenters requested that logical, as described above. But the work. Not all facts or factors are equally the Department revise § 795.105(c) to Department declines to assign an probative (if they are probative at all) as

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to whether, as a matter of economic whether a significant segment of the owner operator a route both find reality, an individual is in business for industry has traditionally treated similar beneficial in order to ensure that the him- or herself. Treating them all as workers as independent contractors or independent owner operator performs equal would not focus the inquiry on employees.’’ services for other motor carriers.’’). economic dependence, but rather would No worker advocacy organizations Others asserted that considering distort that analysis. In contrast, specifically commented in support of voluntary worker practices would lead highlighting factors that are more the provision, but several groups, to classification discrepancies between probative would sharpen the test’s focus including NELA, the Pacific Northwest workers with similar contractual on economic dependence. Regional Council of Carpenters, and the freedoms. See NRF; SHRM. The NPRM presented reasoning and Public Justice Center, quoted Judge Some business commenters were evidence based on the Department’s Frank Easterbrook’s observation from flatly opposed to proposed § 795.110. review of case law indicating that Lauritzen, 835 F.2d at 1545, that ‘‘[t]he SHRM wrote that ‘‘[a] focus on ‘practice’ control and opportunity factors are more FLSA is designed to defeat rather than as opposed to the contractual ‘rights,’ of probative to whether an individual is in implement contractual arrangements.’’ the parties . . . unnecessarily de- business for him- or herself, as opposed The International Brotherhood of emphasizes voluntariness of the to being economically dependent. While Teamsters similarly asserted that contract itself and places ambiguity over not all commenters agree with this Congress ‘‘chose to define ‘employment’ parties’ negotiations.’’ The Customized approach, commenters who object to it in a manner that would allow the Act Logistics and Delivery Association have not convinced the Department to to be applied flexibly so that employers objected that worker classifications change its original assessment. The could not simply recalibrate their could turn on voluntary worker Department therefore believes that it is contractual arrangements with workers practices that a business may not know appropriate to focus the economic to evade coverage.’’ Finally, NELP and about (e.g., whether particular workers reality test on the two core factors that 32 other organizations quoted Judge perform labor for other companies), are more probative to the test’s ultimate Learned Hand’s observation from Lehigh asserting that proposed § 795.110 inquiry. Such focus appropriately Valley Coal Co. v. Yensavage, 218 F. ‘‘essentially shift[s] the burden of proof guides how factors should be balanced, 547 (2d Cir. 1914), cert. denied, 235 U.S. to the alleged employer to establish a while retaining flexibility in the test. 705 (1915), that employment statutes worker’s status as an IC’’ and ‘‘could from the early 20th century were force mass reclassifications of ICs for F. Proposed Guidance Regarding the intended to ‘‘upset the freedom of motor carriers, and many other Primacy of Actual Practice contract’’ between workers and industries.’’ Proposed § 795.110 stated that the businesses. Id. at 553. Finally, several commenters actual practice of the parties involved— Some business commenters expressed representing workers, as well as Senator both of the worker (or workers) at issue general support for proposed § 795.110, Patty Murray and the State AGs, voiced and of the potential employer—is more but requested edits to discount the opposition to proposed § 795.110 on the relevant than what may be contractually relevance of voluntary choices on the basis that emphasizing the primacy of or theoretically possible. The proposed part of an individual worker that an alleged employer’s practices would rule explained that this principle is implicate one or more of the economic establish an employee classification derived from the Supreme Court’s reality factors described in proposed standard impermissibly narrower than holding that ‘‘ ‘economic reality’ rather § 795.105(d), such as choosing to work the common law, which evaluates an than ‘technical concepts’ is to be the test exclusively for one business, accepting alleged employer’s ‘‘right to control.’’ 55 of employment’’ under the FLSA. all available work assignments from the In this regard, the State AGs compared Whitaker House, 366 U.S. at 33; see also business, or declining to negotiate proposed § 795.110 to the Department’s Tony & Susan Alamo, 471 U.S. at 301 prices. See, e.g., American Bakers interpretation in its recent Joint (‘‘The test of employment under the Association; ATA; New Jersey Employer final rule that ‘‘[a] potential [FLSA] is one of ‘economic reality’ ’’ Warehousemen & Movers Association joint employer must actually exercise— (citing Whitaker House, 366 U.S. at 33)). (NJWMA); NRF; Private Care directly or indirectly—one or more . . . Several commenters expressed Association; Scopelitis, Garvin, Light, indicia of control to be jointly liable’’ support for proposed § 795.110. For Hanson & Feary; U.S. Chamber of (85 FR 2859). Winebrake & Santillo, LLC example, ATA wrote that ‘‘[t]he general Commerce (‘‘[T]he Chamber urges the asserted that proposed § 795.110 principle also is almost black letter Department clarify that so long as a conflicts with a statement from a recent law—substance is always more business does not take actions to Third Circuit opinion that ‘‘actual important than form—under virtually foreclose an individual from exercising control of the manner of work is not every regulation WHD enforces.’’ The certain rights, that the individual’s essential; rather, it is the right to control Center for Workplace Compliance choice to not exercise those rights does which is determinative,’’ Razak, 951 described the language as ‘‘consistent not diminish their indicia of F.3d at 145, while Edward. Tuddenham with historical interpretation of the independence in the relationship.’’). commented that ‘‘[a]ll of the cases [the economic reality test by Federal courts Some of these commenters asserted that Department cited in its NPRM] to and DOL.’’ Other commenters allowing voluntary worker practices to support the primacy of ‘actual practice’ complimented the proposal with little influence classification outcomes would are referring to the actual practices of or no further explanation, see NHDA; lead to costly and inefficient business workers and are not discussing analysis New Jersey Civil Justice Institute; WPI, decisions. See Dart Transit Company of employer controls.’’ In rejecting the while HR Policy Association urged the (‘‘[T]he practical effect of [proposed proposed rule’s distinction between a final rule to go further by entirely § 795.110] is to require independent potential employer’s contractual disregarding the relevance of contractors to arbitrarily switch routes unexercised contractual or theoretical and carriers . . . simply in order to 55 Restatement (Second) of Agency § 2(3); see also possibilities. WFCA supported proposed preserve their independent status’’); Commun. for Non-Violence v. Reid, 490 U.S. 730, 751 (1989) (describing ‘‘the hiring party’s right to § 795.110, but asked the Department to Minnesota Trucking Association (‘‘In control the manner and means by which the elaborate in the final rule that ‘‘best effect, the motor carrier would have to product is accomplished’’ as the overarching focus indicator of the actual practices is restrict offering to the independent of the common law standard).

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authority to control workers and control contract terms. The controlling It is true that, under the economic that they actually exercise, Senator economic realities are reflected by the reality test, some workers subject to a Murray asserted that contractual way one actually acts.’’ (citations potential employer’s ‘‘right to control’’ authority ‘‘provides a potential omitted)). Moreover, as some may nevertheless qualify as bona fide employer an incredible amount of de commenters pointed out, prioritizing independent contractors for other facto control over a worker . . . substance over form is consistent with reasons. To the extent that this excludes induc[ing] a worker to perform the work the Department’s general interpretation some workers who might qualify as in the manner the employer prefers, and enforcement of the FLSA. See, e.g., ‘‘employees’’ under a traditional suggests, recommends, or hints at, even 29 CFR 541.2 (‘‘A job title alone is common law test,59 this is the logical if the employer does not ever command insufficient to establish the exempt outcome of a multifactor test where ‘‘no it.’’ See also State AGs (‘‘[R]eserved status of an employee.’’); 29 CFR one [factor] is controlling.’’ Silk, 331 authority in an agreement, like the 541.603(a) (providing that employers U.S. at 716; see also, e.g., Selker Bros., looming sword of Damocles, will often violate the salary basis requirement for 949 F.2d at 1293 (‘‘It is a well- influence what the parties do[.]’’). certain employees exempt under Sec. established principle that . . . neither The Department has carefully 13(a)(1) of the Act only when they the presence nor the absence of any considered the views and arguments demonstrate ‘‘an actual practice of particular factor is dispositive.’’). expressed by commenters and decided making improper deductions’’); 58 29 Moreover, the Supreme Court arrived at to implement § 795.110 as proposed. As CFR 778.414 (‘‘[W]hether a contract precisely this outcome in two of its emphasized in the NPRM, and as the which purports to qualify an employee seminal cases applying the economic plain language of § 795.110 makes clear, for exemption under section 7(f) meets reality test. unexercised powers, rights, and the requirements . . . will in all cases First, in Silk, the Court evaluated the freedoms are not irrelevant in depend not merely on the wording of employment status of owner-operator determining the employment status of the contract but upon the actual practice truck drivers who contracted to perform workers under the economic reality of the parties thereunder.’’). services exclusively for a motor carrier 56 test; such possibilities are merely less The Department disagrees with company, subject to a ‘‘manual of relevant than powers, rights, and commenters who assert that prioritizing instructions . . . purport[ing] to freedoms which are actually exercised regulate in detail the conduct of the 57 the actual practice of the parties under the economic reality test. involved makes the economic reality truckmen in the performance of their Affording equal relevance to reserved test impermissibly narrower than the duties.’’ 331 U.S. at 709–710. Before control and control that is actually reaching its own conclusion, the Court common law control test. In many exercised—by either party—would excerpted an analysis from the appellate instances, the actual practices of the ignore the Supreme Court’s command to court below noting that, ‘‘[w]hile many parties will establish the existence of an focus on the ‘‘reality’’ of the work provisions of the manual, if strictly employment relationship despite what a arrangement, Silk, 331 U.S. at 713, enforced, would go far to establish an ‘‘skillfully devised’’ contract might which places a greater importance on employer-employee relationship suggest on paper. Silk, 331 U.S. at 715; what actually happens than what a between the Company and its truckmen see, e.g., Scantland, 721 F.3d at 1313– contract suggests may happen. Several . . . there was evidence to justify the 14 (‘‘Though plaintiffs’ ‘Independent Federal courts of appeals decisions have [district] court’s disregarding of it,’’ Contractor Service Agreements’ explicitly made this observation. See, including testimony that the manual e.g., Saleem, 854 F.3d at 142 provided that they could ‘decline any was ‘‘impractical and was not adhered (‘‘[P]ursuant to the economic reality test, work assignments,’ plaintiffs testified to.’’ Id. at 716 n.11 (quoting Greyvan it is not what [Plaintiffs] could have that they could not reject a route or a Lines v. Harrison, 156 F.2d 412, 415 (7th done that counts, but as a matter of work order within their route without Cir. 1946)). Although the Court economic reality what they actually do threat of termination or being refused acknowledged ‘‘cases . . . where driver- that is dispositive.’’) (citations omitted); work in the following days.’’); Hobbs, owners of trucks or wagons have been Parrish, 917 F.3d at 387 (‘‘The analysis 946 F.3d at 833 (dismissing the fact that held employees in accident suits at tort’’ is focused on economic reality, not welders determined to be employees (under the common law), the Court said economic hypotheticals.’’); Scantland, ‘‘could hypothetically negotiate their it ‘‘agree[d] with the decisions below’’ 721 F.3d at 1311 (‘‘It is not significant rate of pay’’). In any event, because the that the owner-operator truck drivers how one ‘could have’ acted under the ultimate inquiry of the economic reality were independent contractors, as ‘‘the test is ‘‘economic dependence,’’ the test total situation, including . . . the 56 Entirely disregarding unexercised contractual ensures coverage over more workers in control exercised . . . marks these rights and authorities would not be consistent with the aggregate than the common law driver-owners as independent the Supreme Court’s instruction in Rutherford Food control test, notwithstanding its more contractors.’’ Id. at 718–19 (emphasis to evaluate ‘‘the circumstances of the whole nuanced interpretation of the control activity.’’ 331 U.S. at 730; see also Mid-Atl. added). Installation, 16 F. App’x at 107 (determining that factor itself. See Silk, 331 U.S. at 716 The Court in Bartels, even more cable installers were independent contractors in (listing ‘‘degrees of control’’ as one of clearly illustrated of how the economic part because they had a ‘‘right to employ [their several non-dispositive factors in the own] workers’’); Keller, 781 F.3d at 813 (citing as reality test’s emphasis on actual practice relevant ‘‘the fact that Miri never explicitly economic reality test) (emphasis added). may indicate independent contractor. prohibited Keller from performing installation There, the Court found that band services for other companies’’ and finding ‘‘a 58 In a 2004 final rule amending this language, the members were not employees of a material dispute as to whether Keller could have Department rejected commenter arguments that the increased his profitability had he improved his mere existence of a policy permitting improper public dance hall that hired them for efficiency or requested more assignments’’). deductions should disqualify an employer from 57 In this respect, § 795.110’s emphasis on actual claiming the Section 13(a)(1) exemption for salaried 59 See Commun. for Non-Violence v. Reid, 490 practice differs from the treatment of control in the employees whose earnings and job duties otherwise U.S. 730, 751 (1989) (‘‘In determining whether a Department’s partially invalidated Joint Employer qualify for exemption. ‘‘[Such an] approach . . . hired party is an employee under the general rule, which provided that ‘‘[a] potential joint would provide a windfall to employees who have common law of agency, we consider the hiring employer must actually exercise—directly or not even arguably been harmed by a ‘policy’ that party’s right to control the manner and means by indirectly—one or more . . . indicia of control to a manager has never applied and may never intend which the product is accomplished.’’) (emphasis be jointly liable.’’ 85 FR 2859 (emphasis added). to apply[.]’’ 69 FR 22122, 22180. added).

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short-term gigs, despite a contract defendant] scheduled [the worker’s] distinction, though important, is not provision stipulating that the dance hall installation appointments made it controlling. It is the total situation . . . ‘‘shall at all times have complete control impossible for [the worker] to provide that marks these driver-owners as of the services which the [band installation services for other independent contractors.’’). members] will render under the companies.’’). To be sure, the In summary, finalized § 795.110’s specifications of this contract.’’ 332 U.S. Department agrees that coercive emphasis on the actual practices of the at 128. Again applying the economic behavior by a potential employer (e.g., parties involved is not a one-way reality test, the Court noted that a vigilant enforcement of a non-compete ratchet, applying selectively either for or worker’s employment status ‘‘was not to clause, punishing workers for turning against a finding of independent be determined solely by the idea of down available work, etc.) constitutes contractor status. Instead, as the control which an alleged employer may stronger evidence of employment status examples in § 795.110 illustrate, the or could exercise over the details of the than voluntary worker practices (e.g., principle applies to every potentially service rendered to his business by the the mere existence of an exclusive work relevant factor, and can weigh in favor worker or workers.’’ Id. at 130 arrangement, the fact that a worker of either an employee or independent (emphasis added). While the Court rarely turn down available work, etc.), contractor relationship. In some cases, made clear that other economic reality but coercive action on the part of the the actual practice of the parties factors (e.g., skill, permanence, profit) potential employer is not a prerequisite involved may suggest that the worker or indicated that the band members were for such worker practices to have workers are employees. See, e.g., independent contractors, id. at 132, the import. Sureway Cleaners, 656 F.2d at 1371 (‘‘[T]he fact that Sureway’s ‘agents’ Court implicitly found that the control The Department believes that possess, in theory, the power to set factor did as well, noting that it was the commenters’ concerns that proposed prices, determine their own hours, and band leader (and not the dance hall) § 795.110 will cause workers with advertise to a limited extent on their which ‘‘organizes and trains the band similar contractual freedoms to be own is overshadowed by the fact that in . . . [and] selects [its] members.’’ Id. at classified differently are overstated. reality the ‘agents’ work the same hours, 132. In other words, notwithstanding Consistent with evaluating the ‘‘the charge the same prices, and rely in the the dance hall’s contractual authority to circumstances of the whole activity’’ in main on Sureway for advertising.’’); ‘‘complete[ly] control’’ the band a work arrangement, Rutherford Food, members, the actual practice of the DialAmerica, 757 F.2d at 1387 331 U.S. at 730, courts have often (concluding that evidence showing parties made clear that the band considered the rights and practices of members themselves controlled the workers were not doing similar work for similarly situated workers affiliated any other businesses ‘‘although they work, as a matter of economic reality. with a particular business, arriving at a Contrary to the argument put forth by were free to do so’’ indicates employee single classification outcome for the several worker advocacy commenters, status). In other cases, it may suggest group of workers at issue. See, e.g., the outcome and reasoning of the that the worker or workers at issue are Freund, 185 F. App’x. at 784 (finding Supreme Court’s decisions in Silk and independent contractors. See Saleem, independent contractor status in part Bartels show that the common law 854 F.3d at 143 (concluding that black- because ‘‘although Freund did not hire control test does not establish an car drivers were independent any workers, other of Hi-Tech’s irreducible baseline of worker coverage contractors in part because ‘‘many installers did’’); Express Sixty-Minutes for the broader economic reality test Plaintiffs . . . picked up passengers via Delivery, 161 F.3d at 305 (finding applied under the FLSA. In other words, street hail, despite TLC’s (apparently independent contractor status in part while the economic reality test is broad under-enforced) prohibition of this because ‘‘[t]he majority of drivers work in the sense that it covers more workers practice’’); see also Silk, 331 U.S. at for Express for a short period of time’’); as a general matter, it does not 718–19; Bartels, 332 U.S. at 129. Section cf. Mr. W Fireworks, 814 F.2d at 1048– necessarily include every worker 795.110’s focus on actual practice is a 51 (finding employee status in part considered an employee under the neutral interpretive principle, consistent because ‘‘the overwhelming majority of common law. with the way courts and the Department operators did not engage in independent At the same time, the Department have long applied the FLSA’s economic advertising’’ and ‘‘the vast majority of disagrees with the interpretation reality test. Accordingly, and contrary to operators made only minor investments suggested by various business the concerns expressed by some in the business’’). Even where commenters that only worker practices commenters, it should not disrupt meaningful factual differences exist which are affirmatively coerced by a specific industries or result in between workers, courts may separate potential employer may indicate substantial worker reclassifications in them into multiple groups for separate employee status. Such a reading either direction (i.e., from employee to collective analyses instead of making conflicts with the definition of independent contractor status, or vice individualized determinations. See, e.g., ‘‘employ’’ in section 3(g) of the Act, versa). Off Duty Police, 915 F.3d at 1055–1062 which makes clear that the FLSA was (separate collective analyses of ‘‘sworn G. Other Comments intended to cover employers who officers’’ and ‘‘nonsworn officers’’ who Many substantive comments were not passively ‘‘suffer or permit’’ work from provide security and traffic control directed towards a specific provision of individuals.60 Accordingly, courts services); DialAmerica, 757 F.2d at the proposed rule but rather the rule as applying the economic reality test have 1383–88 (separate collective analyses of a whole. These comments addressed the not hesitated to consider voluntary home researchers and distributors). following topics: (1) Whether the worker practices where such practices Judicial application of the economic proposed rule would create confusion or indicate economic dependence. See reality test to groups of workers has clarity for the regulated community; (2) Keller, 781 F.3d at 814 (‘‘[A] reasonable shown that classification outcomes whether the proposed rule would jury could find that the way that [the cannot turn on one factor alone. See, exacerbate or ameliorate 60 29 U.S.C. 203(g). See also 83 C.J.S. Suffer e.g., Silk, 331 U.S. at 719 (‘‘In one misclassification of employees; (3) (1953) (‘‘[T]o suffer work requires no affirmative act instance they haul for a single business, whether the rule is consistent with the by a putative employer.’’). in the other for any customer. The FLSA’s purpose; (4) whether

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Congressional inaction prohibits this define ‘an integrated unit of the misclassification of employees as rulemaking; and (5) whether the production.’ ’’ independent contractors. See, e.g., Equal Department may depart from its prior The Department continues to believe Justice Center; Employee Rights Center; practice. that the rule will improve clarity NELP; State AGs; TRLA. According to because it clarifies the meaning of these commenters, the proposed rule 1. Whether the Rulemaking Will Create economic dependence, which would make it easier for an Confusion or Clarity determines FLSA employment, and unscrupulous employer to classify its Commenters from the business and aligns the economic reality test to more employees as independent contractors, freelance community generally accurately analyze that concept by, and they cite statistics that purport to expressed the view that the proposed among other things, highlighting the show high rates of misclassification in rule would improve clarity regarding two core factors that are most probative support of that contention. Several other which workers are independent to the inquiry. The rule does not depart commenters took the opposite position contractors versus employees under the from the statutory text, which courts and asserted, for example, that FLSA. For example, the U.S. Chamber of have interpreted to define FLSA ‘‘[c]larifying the application of the test Commerce stated that ‘‘[t]he Proposed employment based on the concept of for independent contractor status will Rule would provide long-awaited and economic dependence on which this promote compliance with labor much needed structure and clarity to rule focuses. Nor does the rule depart standards under the FLSA and, in turn, the evaluation of worker relationships from any Supreme Court precedent reduce worker misclassification.’’ under the Act.’’ SHRM agreed that because it continues to consider the Opportunity Solutions Project (OSP); ‘‘[t]he Proposed Rule is necessary to circumstances of the activity as a whole see also, e.g., TCA (‘‘[t]he increased provide certainty and consistency to to analyze whether workers, as a matter clarity provided by the [proposed rule] businesses and workers.’’ See also CWI; of economic reality, depend on another would likely lead to reduced WPI; ATA; NRF; National Restaurant business for work, or are in business for misclassification.’’); IAW (‘‘This rule Association. Freelancers and groups that themselves. The Department further will clear up misclassifications’’); represent them echoed this message, disagrees with the State AGs that the Financial Services Institute (‘‘we agree with the CPIE, for instance, stating that rule departs from the ‘‘established that it will reduce worker ‘‘[w]e believe the proposed guidance application of the economic reality misclassification and litigation’’). These would provide greater clarity and test.’’ The final rule takes into account commenters also presented reports that predictability in the application of the facts and factors that have historically dispute the widespread occurrence of ‘economic realities’ test to independent been part of the economic reality test, misclassification. See, e.g. CWI; U.S. entrepreneurs and their clients.’’ See and decades of appellate decisions Chamber of Commerce; WPI. indicating that the two core factors also Fight for Freelancers. Individual FLSA employee versus independent commenters who identified themselves frequently align with the ultimate determination of economic dependence contractor status is determined in terms as freelancers or small business owners or lack thereof. See 85 FR 60619–21. As of economic dependence. overwhelmingly agreed that the rule one comment stated, the rulemaking Misclassification occurs when an would improve legal clarity. For ‘‘synthesizes previous understandings of individual who is economically example, one individual commenter the independent contractor rule,’’ as dependent on a business is classified by who believed that ‘‘independent opposed to departing from them. See that business as an independent contracting . . . kept [her] family afloat Farren and Mitchell. contractor and treated as such. This can when [she] unexpectedly became a The Department does not believe this occur inadvertently because the single mom’’ stated that ‘‘[t]his final rule will cause confusion regarding business misunderstands the concept of proposed rule is simple to understand the labor exemption to antitrust laws economic dependence or incorrectly and provides necessary clarity for both because, as explained by FTC analyzes factors to assess the concept. It employers and individuals like myself Commissioner Slaughter, that can also occur intentionally. This final that want to engage in freelancing.’’ exemption is governed ‘‘[u]nder the rule clearly defines economic Another individual who identified Clayton Act and the Norris-La Guardia dependence and explains how to assess himself as a small business owner Act.’’ In contrast, this rule’s application facts and factors to evaluate whether believed that ‘‘[t]he regulations is limited to the FLSA, and therefore, that dependence exists. It discards proposed seem to provide clarity for would not affect the labor exemption to misleading and confusing determining an individual’s status as an antitrust laws established by other interpretations of that concept employee or independent contractor statutes. Finally, for reasons explained developed over the years and under the Fair Labor Standards Act.’’ in the NPRM and this preamble, the emphasizes the essential aspects. A Some government and union Department believes this rule’s clearer test means more businesses will commenters took the opposite view. The articulation of the ‘‘integrated unit’’ is better understand their obligations State AGs, for instance, asserted that clearer than the prior ‘‘integral part’’ under the FLSA and thereby ‘‘this rule will create confusion, not articulation. For added clarity, the inadvertently misclassify fewer workers. clarity’’ in part because they believe it Department added a pair of examples in As one commenter who identified ‘‘departs from the statutory text and § 795.115 to further illustrate himself as a small business owner Supreme Court precedent and is application of the ‘‘integrated unit’’ explained: ‘‘We want to comply [with contrary to established application of factor. the FLSA] but we need guidance that the economic reality test.’’ FTC For these reasons, the Department allows us to know how to comply.’’ A Commissioner Slaughter expressed believes the final rule will result in clearer test also means more workers concern that the proposed rule would greater clarity. will understand their rights under the ‘‘create legal confusion around the labor FLSA and thereby will be better exemption to the antitrust laws.’’ The 2. Whether the Rulemaking Exacerbates positioned to combat intentional AFL–CIO argued that ‘‘the proposal is or Ameliorates Misclassification misclassification through, for example, likely to increase rather than decrease Many commenters expressed concern private litigation or complaints to the confusion because it does not clearly that the proposed rule would exacerbate Department. Unscrupulous employers

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may also be deterred from intentional than economic dependence.61 economically dependent on an misclassification in the first place if Commenters that supported the employer for work have sacrificed workers better understand their legal proposed rule pointed that the FLSA is ‘‘freedom and talents to the use of rights. For these reasons, the not intended to cover all workers and profits of others,’’ and therefore are Department believes the final rule is that ‘‘Congress intended to cut off [the covered by the Act as employees. But likely to reduce both inadvertent and FLSA’s] coverage at a certain point to independent contractors use their intentional FLSA misclassification. preserve the freedom of workers to ‘‘freedom and talents’’ to operate their While several commenters asserted operate as independent contractors.’’ own businesses, and thus fall outside of that the proposed rule will facilitate Scalia School; see also WPI (‘‘Nothing in the FLSA’s coverage. See Saleem, 854 misclassification, the Department does the text or legislative history of any F.3d 131, 139–40 (2d Cir. 2017) (noting not agree. The Department’s final rule Federal employment law indicates that that independent contractors are makes clear that a business may classify Congress intended to supplant or separate from employees in the context a worker as an independent contractor displace independent work and require of the FLSA); Karlson, 860 F.3d 1089, with greater confidence if the worker instead for all workers to be 1092 (8th Cir. 2017) (‘‘FLSA wage and has control over key aspects of the work employees.’’). hour requirements do not apply to true and a meaningful opportunity for profit The Supreme Court has cautioned independent contractors.’’); Scantland, or loss based on initiative or investment. against the ‘‘flawed premise that the 721 F.3d at 1311 (‘‘[The Act’s] ‘broad’ Except in unusual cases, a worker who FLSA ‘pursues’ its remedial purpose ‘at definitions do not, however, bring enjoys substantial control over the work all costs’ ’’ when interpreting the Act. ‘independent contractors’ within the and has opportunity for profit in Encino, 138 S. Ct. at 1142. The Encino FLSA’s ambit.’’); Hopkins, 545 F.3d at abundant measures is, as a matter of II Court rejected the principle that 342 (observing that the ‘‘FLSA applies economic reality, in business for him- or FLSA’s remedial purpose required to employees but not to independent herself, and thus properly classified as exemptions to be narrowly construed, contractors’’). an independent contractor. The rule id, and courts of appeal have followed The Department believes the line thus makes it easier for a business and that logic to reject the corollary between economically dependent its workers to structure their work principle, articulated above by NELA, workers who are covered by the FLSA arrangements to create bona fide that the Act’s remedial purpose requires and independent contractors who are independent contractor relationships. its coverage to be construed broadly. See not comports with the Act’s purpose to But that effect of the final rule will help Sec’y United States Dep’t of Labor v. ‘‘protect all covered workers from avoid misclassification, not encourage Bristol Excavating, Inc., 935 F.3d 122, substandard wages and oppressive it. 135 (3d Cir. 2019) (rejecting broad working hours.’’ Barrentine, 450 U.S. at As discussed in greater detail in the reading of the FLSA based its remedial 739. Independent contractors who are in RIA at Section VI(D)(6), the Department purpose); Diaz v. Longcore, 751 F. business for themselves do not need has concerns regarding the reliability of App’x 755, 758 (6th Cir. 2018) (same). protection against ‘‘oppressive working statistics cited by commenters regarding Rather, ‘‘ ‘a fair reading’ of the FLSA, hours’’ because they are not the prevalence of misclassification. neither narrow nor broad, is what is economically dependent on any Even assuming commenters’ statistics called for.’’ Bristol, 935 F.3d at 135 employer who could oppress them. Nor are accurate, however, they would (quoting Encino, 138 S. Ct. at 1142); do they need protection from merely estimate the current rate of Diaz, 751 F. App’x at 758 (‘‘We must ‘‘substandard wages’’ because they are misclassification rather than how that instead give the FLSA a ‘fair’ not economically dependent on an rate would change as a result of this interpretation.’’). employer that sets wages. Forcing rule. Insofar as the final rule will reduce ‘‘The principal congressional purpose workers who are in business of misclassification, these statistics make in enacting the Fair Labor Standards Act themselves into the FLSA’s coverage this rulemaking even more urgent. of 1938 was to protect all covered would not protect them, and would For the above reasons, the Department workers from substandard wages and instead unduly restrict their ability to believes this rule will ameliorate rather oppressive working hours.’’ Barrentine operate their own businesses. Indeed, than exacerbate misclassification of v. Arkansas-Best Freight Sys., Inc., 450 numerous individuals who identified as employees under the FLSA. U.S. 728, 739 (1981) (emphasis added). freelancers or independent contractors 3. Whether the Rulemaking Is The Supreme Court, however, has long commented that being classified as an Consistent With the FLSA’s Remedial recognized held that the FLSA ‘‘was employee would undermine their ability to operate their own business. For Purpose obviously not intended to stamp all persons as employees.’’ Portland example, one freelance translator A number of commenters asserted Terminal Co., 330 U.S. at 152. As the lamented that ‘‘many of my clients that this rule ‘‘conflicts with the FLSA’s State AGs stated, the ‘‘the FLSA must be became unwilling to work with me’’ remedial purposes of protecting interpreted with its ‘remedial and when a state law required her to be workers.’’ State AGs; see also, e.g., humanitarian purpose . . . purpose’ in classified as clients’ employee. Another Pacific Northwest Council of Carpenters mind to protect ‘those who sacrifices a commenter identified himself ‘‘[a]s a (‘‘the Proposed Rule . . . is contrary to full measure of their freedom and self employed professional [who] do[es] the statutory definitions and remedial talents to the use and profit of others.’ ’’ NOT want to be forced into purpose of the FLSA’’). NELP, for State AGs (quoting Tenn. Coal, Iron. R. employment.’’ As a final illustrative instance, stated that ‘‘DOL’s proposed Co. v. Muscoda Local No. 123, 321 U.S. example, another commenter stated that test would leave behind workers in high 590, 598 (1944)). Workers who are ‘‘I have no desire to be an employee growth sectors with high rates of wage .... If I was required to be an theft, contrary to the purposes of the 61 NELA specifically urged the Department to employee, I would no longer be able to FLSA.’’ And NELA indicated that, adopt the ‘‘ABC’’ test to determine whether a make money for my family from my because ‘‘the FLSA is a remedial worker is an independent contractor or an home on my own schedule.’’ employee under the FLSA. The Regulatory statute’’ its coverage should be Alternative discussion at Section VI(G) provide The Supreme Court has explained construed liberally to adopt a standard further explanation why the Department is not that the FLSA’s ‘‘exemptions are as for employment that is even broader adopting that test. much a part of the FLSA’s purpose as

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the [Act’s] requirement[s].’’ Encino, 138 interpretive process.’’ Central Bank of should be analyzed when answering S. Ct. at 1134. By the same logic, Denver, N.A. v. First Interstate Bank of that ultimate inquiry. respecting the independence of workers Denver, N. A., 511 U.S. 164, 187 (1994). The Department acknowledges that whom the FLSA does not cover is as ‘‘And when . . . Congress has not the rule’s focus on two core factors that much a part of the Act’s purpose as comprehensively revised a statutory are most probative to that ultimate extending the Act’s coverage to workers scheme but has made only isolated inquiry is different from how the who need its protection. Denying FLSA amendments, [the Court has] spoken Department articulated the economic coverage to workers who are more bluntly: ‘It is impossible to assert reality test in the past. ‘‘Agencies are economically dependent on an with any degree of assurance that free to change their existing policies as employer for work would result in congressional failure to act represents long as they provide a reasoned workers loosing needed protection affirmative congressional approval of explanation for the change.’’ Encino ‘‘from substandard wages and the Court’s statutory interpretation.’ ’’ Motorcars, LLC v. Navarro, 136 S. Ct. oppressive working hours.’’ Barrentine, Alexander v. Sandoval, 532 U.S. 275, 2117, 2125 (2016). The Department has 450 U.S. at 739. But extending the Act’s 292, (2001) (quoting Patterson v. explained its reasoning for focusing the coverage to workers who, as a matter of McLean Credit Union, 491 U.S. 164, 175 economic reality test on two core factors economic reality, are in business for n.1 (1989)). Congress has not throughout the NPRM and this themselves would unduly restrict ‘‘comprehensively revised’’ the Act’s preamble. The Department further independent workers who neither need statutory scheme in a manner that acknowledges that the rule lists nor benefit from the Act’s provisions. would indicate Congressional approval economic reality factors in § 795.105(d) This rule sharpens the distinction of a judicially created six-factor test as that correspond with how the between these two categories of worker the standard for FLSA employment. Department has articulated those factors and thereby furthers the Act’s purpose Even if some insight could be gleaned in the past, with a few modifications. to protect employee who need from Congressional inaction, that The Department explained its reasons protection without burdening insight would not support ratifying a for these modifications in the NPRM independent contractors who do not. specific and definitive six-factor test and in this preamble. This rule does not because there has never been a uniform improperly depart from the 4. Whether Congressional Inaction test for Congress to ratify. The Supreme Department’s prior positions. Prohibits This Rulemaking Court has never articulated a six-factor H. Examples The American Federation of State, test, and courts of appeals articulate the County, and Municipal Employees, test differently. As discussed earlier, the As discussed above, many AFL–CIO (AFSCME) asserted that, Second Circuit combines two of the commenters requested that the ‘‘[b]ecause Congress has legislatively factors. The Fifth Circuit omits one regulatory text contain examples of how ratified the existing six-factor Economic factor, while the remaining circuits use the economic reality test would apply in Reality test, the Secretary and a sixth, ‘‘integral part’’ factor that the context of their specific industries or Administrator are powerless to alter the departs from the Supreme Court’s practices. The Department, however, standard. This also means the Proposed consideration of ‘‘integrated unit of prefers to adopt generally applicable Rule would fail the first step of the production.’’ Some circuits analyze a principles as opposed to attempting to Chevron deference analysis and would ‘‘skill and initiative’’ factor, while provide guidance for every potential be entitled to no deference by the others consider just ‘‘skill required.’’ scenario. The later approach would courts.’’ According to AFSCME, ‘‘when Some circuits analyze the investment require the regulation be drafted as an Congress re-enacts a statute without factor by comparing the dollar value of exhaustive treatise that is neither change, it is presumed to be aware of the worker’s investment against that of accessible nor helpful for most members administrative and judicial the hiring entity, while others analyze of the regulated community. It would interpretation of that statute and to have whether the worker’s investment creates also invariably omit many important adopted those interpretations.’’ Based opportunities for profit or loss. Simply types of circumstances and be more on this principle, AFSCME reasoned put, there is no single test that Congress difficult to adapt to future industries that, because Congress did not revise the could have impliedly ratified, nor did and practices that neither the definition of ‘‘employ’’ when it AFSCME suggest one. Department nor commenters could have amended the FLSA in 1966, it must For these reasons, Congress’s inaction conceived. have adopted the ‘‘integrated unit of does not demonstrate that it ratified a While the Department cannot provide production’’ factor articulated in specific six-factor economic reality test. examples for every conceivable Rutherford Food, 331. U.S. 730. scenario, it is adding § 795.115 to Additionally, AFSCME asserted that 5. Whether the Rulemaking Improperly provide six illustrative examples that Congress’s 1983 decision to adopt the Departs From Prior Practice involve a variety of industries and FLSA’s definition of ‘‘employ’’ without Several commenters, including NELA, specific facts. Due to the complexities of revision in MSPA indicates that contended that the proposed rule would balancing multiple factors that Congress implicitly adopted the ‘‘six- be an improper departure from the encompass countless facts that are part factor test [that] was well embedded as Department’s prior practice. The rule is of the totality of the circumstances, the the interpretation of the FLSA’s consistent with the Department’s prior Department does not believe it would be ‘employ.’ ’’ position that the ultimate inquiry for helpful to provide examples that make AFSCME’s ratification argument is determining employee versus conclusions regarding workers’ ultimate based entirely on the fact that Congress independent contractor status under the classifications. Rather, each illustrative has not amended the FLSA’s definition FLSA is whether an individual is, as a example focuses on the classification of ‘‘employ.’’ The Supreme Court, matter of economic reality, favored by a specific economic reality however, has ‘‘criticized . . . reliance economically dependent on another for factor within the context of the fact- on congressional inaction’’ as a tool of work or is instead in business for him- specific scenario. The first example statutory interpretation, cautioning that, or herself. The rule is further consistent concerns the control factor in the ‘‘[a]s a general matter . . . these with the Department’s longstanding context of the long-haul transportation arguments deserve little weight in the position that all economic reality factors industry. The second example concerns

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the opportunity factor in the context of those burdens. In the NPRM, the impose the least burden on society, the gig economy. The third example Department invited public comment on consistent with obtaining the regulatory concerns the opportunity factor in the its determination that the proposal did objectives; and that, in choosing among context of the construction industry and not contain a collection of information alternative regulatory approaches, the clarifies the concept of economic subject to OMB approval under the agency has selected those approaches dependence. The fourth example PRA. A few commenters, while not that maximize net benefits. Executive concerns the permanence factor within referencing the PRA directly, discussed Order 13563 recognizes that some costs the context of a seasonal hospitality records in their public comments. and benefits are difficult to quantify and industry. The fifth example concerns However, this was merely to note provides that, when appropriate and the reframed ‘‘integrated unit’’ factor agreement that section 11 of the FLSA permitted by law, agencies may within the context of the journalism does not require the keeping of records consider and discuss qualitatively industry. The sixth example also regarding workers who are independent values that are difficult or impossible to concerns the new ‘‘integrated unit’’ contractors. This final rule does not quantify, including equity, human factor within the context of the contain a collection of information dignity, fairness, and distributive journalism industry and is designed to subject to OMB approval under the impacts. work with the fifth example to elucidate PRA. B. Overview of Analysis the distinction between when this factor VI. Executive Order 12866, Regulatory favors classification as an employee The Department believes this rule is Planning and Review; and Executive versus independent contractor. likely to improve the welfare of both Order 13563, Improved Regulation and workers and businesses on the whole. I. Severability Regulatory Review With respect to businesses, the The Department proposed to include A. Introduction Department believes that the improved a severability provision in part 795 so clarity offered by the rule will increase Under Executive Order 12866, OMB’s that, if one or more of the provisions of the efficiency of the labor market, Office of Information and Regulatory part 795 is held invalid or stayed allowing businesses to be more Affairs determines whether a regulatory pending further agency action, the productive and decreasing their action is significant and, therefore, remaining provisions would remain litigation burden. With respect to subject to the requirements of the effective and operative. The Department workers, broadly speaking, this rule is Executive Order and OMB review.62 likely to have four categories of did not receive any comments on this Section 3(f) of Executive Order 12866 provision, and finalizes it as proposed. potential effects. defines a ‘‘significant regulatory action’’ First, this rulemaking makes it easier J. Amendments to Existing Regulatory as a regulatory action that is likely to for the millions of individuals who Provisions at §§ 780.330(b) and result in a rule that may: (1) Have an currently work as independent 788.16(a) annual effect on the economy of $100 contractors and those who hire them to Finally, in addition to the proposed million or more, or adversely affect in comply with the law. See Farren and addition of part 795, the Department a material way a sector of the economy, Mitchell (‘‘The proposed rule will likely proposed to amend existing regulatory productivity, competition, jobs, the reduce the cost of complying with the provisions addressing independent environment, public health or safety, or relevant Federal regulations.’’). contractor status under the FLSA in state, local or tribal governments or Compliance cost savings will be shared communities (also referred to as narrower contexts at 29 CFR 780.330(b) between the independent contractors economically significant); (2) create (tenants and sharecroppers) and 29 CFR and businesses for which they work. Id. serious inconsistency or otherwise 788.16(a) (certain forestry and logging (‘‘labor regulations are generally paid for interfere with an action taken or workers). Specifically, the Department by reductions in workers’ total planned by another agency; (3) proposed to replace descriptions of the compensation’’). materially alter the budgetary impact of six economic reality factors WHD has Second, as explained above, the legal entitlements, grants, user fees or loan historically used to evaluate clarity from this rule is likely to reduce programs or the rights and obligations of independent contractor status under the occurrences of misclassification by recipients thereof; or (4) raise novel FLSA with a cross-reference to the enabling firms and workers to better legal or policy issues arising out of legal understand their respective obligations guidance provided in new part 795. mandates, the President’s priorities, or While some commenters invoked the and rights under the FLSA. The the principles set forth in the Executive Department agrees with commenters existing provisions at §§ 780.330(b) and Order. Because the annual effect of this 788.16(a) to justify opposition to that misclassification harms workers rule is estimated to be greater than $100 and believes this rule will reduce those proposed part 795, the Department did million, this rule will be economically not receive any commenter feedback harms by facilitating compliance. significant under section 3(f) of Third, legal clarity may encourage regarding the proposed amendment of Executive Order 12866.63 these provisions. Accordingly, the firms to create independent contractor Executive Order 13563 directs arrangements for roles that did not Department finalizes amendments to agencies to, among other things, propose these provisions as proposed. previously exist, which may attract or adopt a regulation only upon a workers who otherwise would not work V. Paperwork Reduction Act reasoned determination that its benefits in that field. Such job creation The Paperwork Reduction Act of 1995 justify its costs; that it is tailored to unambiguously benefits workers and (PRA), 44 U.S.C. 3501 et seq., and its firms alike. See Dr. Liya Palagashvili 62 See 58 FR 51735 (Sept. 30, 1993). attendant regulations, 5 CFR part 1320, 63 The entirety of the estimated costs from this (‘‘[W]e got the impression from our require the Department to consider the deregulatory action, which exceed the $100 million interviews that the primary concern for agency’s need for its information threshold and relate strictly to familiarization, fall startups in terms of labor regulation or collections, their practical utility, the in the first year alone. The Department’s Regulatory policy is mostly with regulation of Impact Analysis further explains that these one-year impact of paperwork and other costs are more than offset by continuing annual independent contractors.’’), and Fuller information collection burdens imposed cost-savings of $495.8 million per year, accruing to et al. (‘‘[M]ore than two-thirds of on the public, and how to minimize the same parties that face the familiarization costs. [women with advanced degrees or high-

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honors BAs] who drop out of the categories of potential impacts. In workers for whom these assumptions workforce would not have done so if particular, the Department believes that may not apply is those workers paid the they’d had access to more-flexible job significant uncertainty surrounds any minimum wage, and whose positions arrangements.’’).64 attempt to quantify the number or already resemble characteristics of Fourth, as a result of the improved nature of new independent contractor independent contractors. Workers clarity of the rule, businesses might relationships that could arise as a result earning the minimum wage may lack convert existing positions from of this rule. Although the Department the bargaining power to fully offset the employee to independent contractor. assumes that there will be an increase adverse effects triggered by the job This rule provides the most legal in the number of independent conversion; however, independent certainty to employers classifying a contracting relationships, the contractor status often carries worker as an independent contractor if Department did not attempt to put a flexibilities that may further offset some the worker substantially controls the specific number on this figure and did of these effects, albeit non-monetarily. work and has a meaningful opportunity not attempt to estimate how new Further, on one hand, these workers for profit or loss based on initiative or independent contractors might differ likely do not have extensive benefits investment. As such, a job conversion from existing independent contractors. coverage, but on the other hand, they attributable to the legal clarity provided The Department is uncertain with may qualify for access to benefits from by this rule is likely to satisfy the respect to several key questions, other means. There are approximately control and opportunity criteria.65 including how many new workers will 370,000 workers over the age of 19 who Businesses could reclassify existing be added and what their characteristics earn the minimum wage, which employees as independent contractors will be, how many existing employee represents 0.24 percent of the by modifying their working relationship relationships may be converted to workforce. It is unclear how many of under the criteria of this rule, and independent contractor status, and these jobs could be converted to would only be expected to do so upon which industries, type or sizes of independent contractor status without determination that the clarity provided employers would be most impacted. material modifications to the position or by this rule materially shifts the balance Absent these data, the Department is not substantive negotiation on overall of tradeoffs. Business could also well positioned to generate a compensation, but it is not likely to be reclassify positions because the constructive estimate or model of many. Further, many of these workers increased clarity of the rule confirms impact on the change in independent may have access to health insurance that their workers are actually already contracting relationships due to the coverage via a spouse or partner, a effectively independent contractors rule. Notwithstanding, the Department parent, or a government program because their workers have substantial quantified certain other impacts (Medicaid, Medicare, Tricare, etc.). For control over the work and have an associated with the final rule, including these reasons, the Department does not 66 opportunity for profit. Any benefit to those to current independent expect there to be many current businesses of modified classifications contractors and businesses where employees whose positions are would need to outweigh the costs, sufficient data and theory afforded converted to independent contractor including any autonomy they cede to greater confidence in the resulting relationships without meaningful ability workers in such arrangements and any estimates. to influence the terms of the new costs associated with implementation or Regarding the employees who may be position in a way that mitigates modifying the classification itself, and negatively impacted by this rule, the deleterious impacts of the resulting such a relationship would need to be Department has ascertained certain tradeoffs. compatible with their business models. characteristics that it expects will be The Department estimates there were Further, generally speaking, workers representative across this group. This 10.6 million workers who worked at any have a choice of whether to agree to the rule provides a sharpening of the given time as independent contractors new independent contractor economic realities test, which is a as their primary jobs in the United arrangement. The overall effect of job marginal change that may impact firms’ States in 2017 (6.9 percent of all conversion on workers is ambiguous assessment of legal risk, leading to an workers), the most recent year of data and could vary from worker to worker, increased chance that some employers available. Including independent as discussed in more detail in section will choose to reclassify certain contracting on secondary jobs results in VI(D)(7) below. Impacts resulting from positions from employee to independent an estimate of 18.9 million independent litigation avoidance due to increased contractor relationships. Because this contractors (12.3 percent of all workers). clarity are discussed in section VI(F)(2). analysis attempts to quantify the The Department discusses other studies The Department did not attempt to marginal impacts of this rule, if the only estimating the total number of quantify all aspects of these four change is increased legal clarity, any independent contractors, ranging from resulting change in classification will 64 6.1 percent to 14.1 percent of workers Joseph B. Fuller, et al., Rethinking the On- most likely be limited to workers who Demand Workforce, Harvard Business Review (Oct. (see Table 2 in VI.C.2). Due to already possess characteristics 20, 2020). uncertainties regarding magnitude and 65 associated with independent contractor Section 795.105(c) indicates that a worker who other factors, the Department has not lacks both control and opportunity is most likely an status, including control and quantified the potential change to the employee. As such, the Department believes this opportunity for profit or loss.67 Due to aggregate number of independent rule would discourage employers from converting the customary negotiation between such workers from employee to independent contractors that may occur as a result of firms and workers, most workers whose contractor status. Section 795.105(c) would not give this rule. Furthermore, the Department’s an employer sufficient confidence that it could positions are converted will be in a analysis relies on data collected prior to change the classification of a worker who has only position to influence the tradeoffs 2020, which reflects the state of the control but not opportunity, or vice versa. between employee and independent 66 The Department notes that the final rule does economy prior to the COVID–19 contractor status. The one group of not, by its operation, change the classification of pandemic. The Department any employee. Notwithstanding the assertions of several commentators, as explained throughout the 67 For greater discussion on this and other points acknowledges that data on independent analysis, the rule does not narrow the definition of in this summary, please see Section XXXX on Job contractors could look different during who is an employee under the FLSA. Conversion. the pandemic and following its

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economic effects, but does not yet have clarity to be $447.1 million per year, and the total costs in $2016, discounted information to determine how the and cost savings due to reduced over a perpetual time horizon using a 7 number of independent contractors litigation to be $48.7 million per year. percent discount rate beginning in 2021 could change nor whether these changes This results in a 10-year annualized net when the rule will take effect. This would be lasting or a near term market cost savings of $452.4 million using a 3 results in an annualized net cost savings distortion.68 percent discount rate and $443.0 over a perpetual time horizon of $315.5 The Department estimates regulatory million using a 7 percent discount million.70 Other anticipated costs, 69 familiarization costs to be $370.9 rate. For purposes of Executive Order benefits, and cost savings are discussed million in the first year. The Department 13771, the Department calculated the qualitatively. estimates cost savings due to increased difference between the total cost savings

TABLE 1—SUMMARY OF RULE IMPACTS [$2019 Millions]

Annualized values a Impact Year 1 Years 2–10 7% Discount 3% Discount

Regulatory Familiarization Costs: Establishments ...... $152.3 $0.0 $21.7 $17.9 Independent Contractors ...... 218.6 0.0 31.1 25.6

Total ...... 370.9 0.0 52.8 43.5 Cost Savings from Increased Clarity: Employers ...... 369.0 369.0 369.0 369.0 Independent Contractors ...... 78.1 78.1 78.1 78.1

Total ...... 447.1 447.1 447.1 447.1 Cost Savings from Reduced Litigation ...... 48.7 48.7 48.7 48.7 Total Cost Savings...... 495.8 495.8 495.8 495.8 Net Cost Savings (Cost Savings—Costs) ...... 125.0 495.8 443.0 452.4 a Annualized over 10-years.

C. Independent Contractors: Size and the Current Population Survey (CPS) week. However, while the Department Demographics Contingent Worker Supplement (CWS) refers to the CWS measure of offers an appropriate lower bound for independent contractors throughout this The Department extrapolated from the number of independent contractors; analysis, due to the survey’s design it U.S. Census Bureau data to estimate that however, there are potential biases in should be uniformly recognized as there are 15.6 to 22.1 million these data that will be noted. representing a constrained subsection of individuals who work as independent Additionally, estimates from other the entire independent contractor pool. contractors as either a primary or sources will be presented to Due to its clear methodological secondary job. This estimated figure demonstrate the potential range. constraints, the CWS measure should be could be higher or lower depending on The U.S. Census Bureau conducts the differentiated from other, more different data sources and CPS and it is published monthly by the comprehensive measures. methodologies discussed below. The Bureau of Labor Statistics (BLS). The The BLS’s estimate of independent Department used the median of the sample includes approximately 60,000 contractors includes ‘‘[w]orkers who are above range, 18.9 million, for its households and is nationally identified as independent contractors, estimates to avoid overestimation by representative. Periodically since 1995, independent consultants, or freelance accounting for a number of criteria, and most recently in 2017, the CPS has workers, regardless of whether they are which are presented in this section. included a supplement to the May self-employed or wage and salary 1. Current Number of Independent survey to collect data on contingent and workers.’’ BLS asks two questions to Contractors alternative employment arrangements. identify independent contractors: 72 Based on the CWS, there were 10.6 • Workers reporting that they are self- The Department estimated the million independent contractors in employed are asked: ‘‘Are you self- number of independent contractors. 2017, amounting to 6.9 percent of employed as an independent contractor, There are a variety of estimates of the workers.71 The CWS measures those independent consultant, freelance number of independent contractors who say that their independent worker, or something else (such as a spanning a wide range depending on contractor job is their primary job and shop or restaurant owner)?’’ (9.0 million methodologies and how the population that they worked at the independent independent contractors.) We refer to is defined. The Department believes that contractor job in the survey’s reference these workers as ‘‘self-employed

68 Recent studies and news reports suggest that Employees become New Entrepreneurs, Wall Street 70 $332.9 million¥$17.4 million = $315.5 more individuals are working under freelance or Journal, Nov. 18, 2020; Uri Berliner, Jobs in the million. Per OMB guidelines, Executive Order independent contractor arrangements during the Pandemic: More Are Freelance and may stay that 13771 data is represented in 2016 dollars, inflation- pandemic. See, e.g., Press Release, New Upword way forever, NPR, Sep. 16, 2020; Jon Younger, A adjusted for when the rule will take effect. Study Finds 36% of the U.S. Workforce Freelance New Payoneer Report Shows Covid 19 is 71 Bureau of Labor Statistics, ‘‘Contingent and Amid the COVID–19 Pandemic, Sep. 15, 2020, Accelerating Freelance Growth, Forbes, Sep. 1., Alternative Employment Arrangements—May available at https://www.upwork.com/press/ 2020. 2017,’’ USDL–18–0942 (June 7, 2018), https:// releases/new-upwork-study-finds-36-of-the-us- www.bls.gov/news.release/pdf/conemp.pdf. 69 Discount rates are directed by OMB. See workforce-freelance-amid-the-covid-19-pandemic; 72 The variables used are PES8IC=1 for self- Kim Mackrael, In the Covid Economy, Laid-Off Circular A–4, OMB (Sept. 17, 2003). employed and PES7=1 for other workers.

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independent contractors’’ in the primary source of income.76 Applying 1099 work in 2016. The prevalence of remainder of the analysis. that estimate to the 10.6 million lower annual earnings implies that most • Workers reporting that they are independent contractors from the CWS workers who received a 1099 did not wage and salary workers are asked: results in an estimated 15.6 million work as an independent contractor ‘‘Last week, were you working as an independent contractors (10.6 million ÷ every week.80 independent contractor, an independent 0.68). The CWS also uses proxy responses, consultant, or a freelance worker? That The Coalition for Workforce which may underestimate the number of is, someone who obtains customers on Innovation (CWI) submitted a survey independent contractors. The RAND their own to provide a product or they conducted of 600 self-identified American Life Panel (ALP) survey service.’’ (1.6 million independent independent contractors. The survey conducted a supplement in 2015 to contractors.) We refer to these workers found that independent contracting is mimic the CWS questionnaire, but used as ‘‘other independent contractors’’ in the primary source of income for 71 self-responses only. The results of the 77 the remainder of the analysis. percent of respondents. This is survey were summarized by Katz and consistent with the prior estimate from 81 It is important to note that Krueger (2018). This survey found that Washington State. Applying this independent contractors are identified independent contractors comprise 7.2 estimate to the 10.6 million primary 82 in the CWS in the context of the percent of workers. Katz and Krueger independent contractors estimated from respondent’s ‘‘main’’ job (i.e., the job identified that the 0.5 percentage point 73 the CWS, results in 14.9 million difference in magnitude between the with the most hours). Therefore, the ÷ independent contractors (10.6 million CWS and the ALP was due to both estimate of independent contractors 0.71). does not include those who may be cyclical conditions, and the lack of The CWS’s large sample size results proxy responses in the ALP.83 defined as an employee for their in small sampling error. However, the primary job, but may work as an Therefore, the Department believes a questionnaire’s design may result in reasonable upper-bound on the independent contractor for a secondary some non-sampling error. For example, 74 potential bias due to the use of proxy or tertiary job. For example, Lim et al. one potential source of bias is that the (2019) estimate that independent responses in the CWS is 0.5 percentage CWS only considers independent 84 85 contracting work is the primary source points (7.2 versus 6.7). contractors during a single point in Another potential source of bias in the of income for 48 percent of independent time—the survey week (generally the contractors.75 Applying this estimate to CWS is that some respondents may not week prior to the interview). self-identify as independent contractors, the 10.6 million independent These numbers will thus and others who self-identify may contractors estimated from the CWS, underestimate the prevalence of themselves be improperly classified. results in 22.1 million independent independent contracting over a longer There are reasons to believe that some contractors (10.6 million ÷ 0.48). timeframe, which may better capture the workers, who are legally considered Alternatively, a survey of independent size of the population.78 For example, independent contractors, would not contractors in Washington found that 68 Farrell and Greig (2016) used a percent of respondents reported that randomized sample of 1 million Chase self-identify as such. For example, if the independent contract work was their customers to estimate prevalence of the worker has only one employer/client, or Online Platform Economy.79 They did not actively pursue the employer/ client, then they may not agree that they 73 While self-employed independent contractors found that ‘‘[a]lthough 1 percent of are identified by the worker’s main job, other adults earned income from the Online ‘‘[obtain] customers on their own to independent contractors answered yes to the CWS Platform Economy in a given month, provide a product or service.’’ question about working as an independent Additionally, individuals who do only contractor last week. Although the survey question more than 4 percent participated over does not ask explicitly about the respondent’s main the three-year period.’’ Additionally, 80 job, it follows questions asked in reference to the Collins et al. (2019) examined tax data B. Collins, A. Garin, E. Jackson, D. Koustas, and respondent’s main job. M. Payne, ‘‘Is Gig Work Replacing Traditional from 2000 through 2016 and found that Employment? Evidence from Two Decades of Tax 74 Even among independent contractors, failure to Returns,’’ IRS SOI Joint Statistical Research report multiple jobs in response to survey questions the number of workers who filed a form Program (2019) (unpublished paper), https:// is common. For example, Katz and Krueger (2019) 1099 grew substantially over that www.irs.gov/pub/irs-soi/ asked Amazon Mechanical Turk participants the period, and that fewer than half of these 19rpgigworkreplacingtraditionalemployment.pdf. CPS-style question ‘‘Last week did you have more workers earned more than $2,500 from 81 than one job or business, including part time, See Katz and Krueger (2018), supra note 12. evening or weekend work?’’ In total, 39 percent of 82 Id. at 49. The estimate is 9.6 percent without respondents responded affirmatively. However, 76 Washington Department of Commerce, correcting for overrepresentation of self-employed these participants were asked the follow-up ‘‘Independent Contractor Study,’’ p. 21 (Jul. 2019), workers or multiple job holders. Id. at 31. question ‘‘Did you work on any gigs, HITs or other https://deptofcommerce.app.box.com/v/ 83 Id. at Addendum (‘‘Reconciling the 2017 BLS small paid jobs last week that you did not include independent-contractor-study. Contingent Worker Survey’’). in your response to the previous question?’’ After 77 Coalition for Workforce Innovation. ‘‘National 84 Note that they estimate 6.7 percent of employed this question, which differs from the CPS, 61 Survey of 600 Self-Identified Independent workers are independent contractors using the percent of those who indicated that they did not Contractors’’ (January 2020), https:// CWS, as opposed to 6.9 percent as estimated by the hold multiple jobs on the CPS-style question rilastagemedia.blob.core.windows.net/rila-web/ BLS. This difference is attributable to changes to the acknowledged that they failed to report other work rila.web/media/media/pdfs/letters%20to%20hill/ sample to create consistency. in the previous week. As Katz and Krueger write, hr/cwi-report-final.pdf. 85 In addition to the use of proxy responses, this ‘‘If these workers are added to the multiple job 78 In any given week, the total number of difference is also due to cyclical conditions. The holders, the percent of workers who are multiple independent contractors would have been roughly impacts of these two are not disaggregated for job holders would almost double from 39 percent the same, but the identity of the individuals who independent contractors, but if we applied the to 77 percent.’’ See L. Katz and A. Krueger, do it for less than the full year would likely vary. relative sizes reported for all alternative work ‘‘Understanding Trends in Alternative Work Thus, the number of unique individuals who work arrangements, we would get 0.36 percentage point Arrangements in the United States,’’ RSF: The at some point in a year as independent contractors difference due to proxy responses. Additionally, it Russell Sage Foundation Journal of the Social would exceed the number of independent should be noted that this may not entirely be a bias. Sciences 5(5), p. 132–46 (2019). contractors who work within any one-week period It stems from differences in independent 75 K. Lim, A. Miller, M. Risch, and E. Wilking, as independent contractors. contracting reported by proxy respondents and ‘‘Independent Contractors in the U.S.: New Trends 79 D. Farrell and F. Greig, ‘‘Paychecks, Paydays, actual respondents. As Katz and Krueger explain, from 15 years of Administrative Tax Data,’’ and the Online Platform,’’ JPMorgan Chase Institute this difference may be due to a ‘‘mode’’ bias or Department of Treasury, p. 61 (Jul. 2019), https:// (2016), https://papers.ssrn.com/sol3/ proxy respondents may be less likely to be www.irs.gov/pub/irs-soi/19rpindcontractorinus.pdf. papers.cfm?abstract_id=2911293. independent contractors. Id. at Addendum p. 4.

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informal work may not view themselves proportions of workers who are Jackson et al. (2017) 92 and Lim et al. as independent contractors.86 This independent contractors on secondary (2019) 93 use tax information to estimate population could be substantial. or otherwise excluded jobs produces the prevalence of independent Abraham and Houseman (2019) estimates of 15.6 million and 22.1 contracting. In general, studies using tax confirmed this in their examination of million. The Department uses the data tend to show an increase in the Survey of Household Economics and average of these two estimates, 18.9 prevalence of independent contracting Decision-making. They found that 28 million, as the estimated total number of over time. The use of tax data has some percent of respondents reported doing workers working as independent advantages and disadvantages over informal work for money over the past contractors in any job at a given time. survey data. Advantages include large month.87 Conversely, some workers Given the prevalence of independent sample sizes, the ability to link who are improperly classified by their contractors who work sporadically and information reported on different employers as independent contractors earn minimal income, adjusting the records, the reduction in certain biases may answer in the affirmative, despite estimate according to these sources such as reporting bias, records of all not truly being independent contractors. captures some of this population. It is activity throughout the calendar year The prevalence of misclassification is likely that this figure is still an (the CWS only references one week), unknown, but it likely occurs across underestimate of the true independent and inclusion of both primary and numerous sectors in the economy.88 contractor pool. secondary independent contractors. Because reliable data on the potential 2. Range of Estimates in the Literature Disadvantages are that independent magnitude of these biases are contractor status needs to be inferred; unavailable, and so the net direction of To further consider the range of the biases is unknown, the Department estimates available, the Department there is likely an underreporting bias has not attempted to calculate how conducted a literature review, the (i.e., some workers do not file taxes); these biases may impact the estimated findings of which are presented in Table researchers are generally trying to match number of independent contractors. 2. Other studies were also considered the IRS definition of independent Because the CWS estimate represents but are excluded from this table because contractor, which does not mirror the only the number of workers who the study populations were broader than scope of independent contractors under worked as independent contractors on just independent contractors or limited the FLSA; and the estimates include their primary job during the survey to one state.89 The RAND ALP 90 and the misclassified independent contractors.94 reference week, the Department applied General Social Survey’s (GSS’s) Quality A major disadvantage of using tax data the research literature and adjusted this of Worklife (QWL) 91 supplement are for this analysis is that the detailed measure to include workers who are widely cited alternative estimates. source data are not publicly available independent contractors in a secondary However, the Department chose to use and thus the analyses cannot be directly job or who were excluded from the CWS sources with significantly larger sample verified or adjusted as necessary (e.g., to estimate due to other factors. As noted sizes and more recent data for the describe characteristics of independent above, integrating the estimated primary estimate. contractors, etc.).

TABLE 2—SUMMARY OF ESTIMATES OF INDEPENDENT CONTRACTING

a Percent of workers Source Method Definition (%) Sample size Year

CPS CWS...... Survey .... Independent contractor, consultant or 6.9 50,392 ...... 2017 freelance worker (main only). ALP ...... Survey .... Independent contractor, consultant or 7.2 6,028 ...... 2015 freelance worker (main only).

86 The Department believes that including data on (‘‘Although the national extent of employee Implications of Regional, Economic, and informal work is useful when discussing the misclassification is unknown, earlier national Demographic Trends,’’ American Action Forum magnitude of independent contracting, although not studies and more recent, though not (2017), https://www.americanactionforum.org/ all informal work is done by independent comprehensive, studies suggest that employee research/gig-economy-research-policy-implications- contractors. The Survey of Household Economics misclassification could be a significant problem regional-economic-demographic-trends/ and Decision-making asked respondents whether with adverse consequences.’’). #ixzz5IpbJp79a; Dourado and Koopman, they engaged in informal work sometime in the 89 Including, but not limited to: McKinsey Global ‘‘Evaluating the Growth of the 1099 Workforce,’’ prior month. It categorized informal work into three Institute, ‘‘Independent Work: Choice, Necessity, Mercatus Center (2015), https://www.mercatus.org/ broad categories: Personal services, on-line and the Gig Economy’’ (2016), https:// publication/evaluating-growth-1099-workforce. activities, and off-line sales and other activities, www.mckinsey.com/featured-insights/employment- 90 which is broader than the scope of independent and-growth/independent-work-choice-necessity- See Katz and Krueger (2018), supra note 12. contractors. These categories include activities like and-the-gig-economy; Kelly Services, ‘‘Agents of 91 See Abraham et al. (2018), supra note 89, Table house sitting, selling goods online through sites like Change’’ (2015), https://www.kellyservices.com/ 4. eBay or craigslist, or selling goods at a garage sale. global/siteassets/3-kelly-global-services/ 92 E. Jackson, A. Looney, and S. Ramnath, ‘‘The The Department acknowledges that the data uploadedfiles/3-kelly_global_services/content/ Rise of Alternative Work Arrangements: Evidence discussed in this study might not be a one-to-one sectionless_pages/kocg1047720freeagent and Implications for Tax Filing and Benefit match with independent contracting, but it 20whitepaper20210x21020final2.pdf; Robles and Coverage,’’ OTA Working Paper 114 (2017), https:// nonetheless provides useful data for this purpose. McGee, ‘‘Exploring Online and Offline Informal www.treasury.gov/resource-center/tax-policy/tax- 87 K. Abraham, and S. Houseman. ‘‘Making Ends Work: Findings from the Enterprising and Informal analysis/Documents/WP-114.pdf. Meet: The Role of Informal Work in Supplementing Work Activities (EIWA) Survey’’ (2016); Upwork, 93 Lim et al., supra note 75. Americans’ Income.’’ RSF: The Russell Sage ‘‘Freelancing in America’’ (2019); Washington 94 Foundation Journal of the Social Sciences 5(5): Department of Commerce, supra note 76; Farrell In comparison to household survey data, tax 110–31 (2019), https://www.aeaweb.org/conference/ and Greig, supra note 79; MBO Partners, ‘‘State of data may reduce certain types of biases (such as 2019/preliminary/paper/QreAaS2h. Independence in America’’ (2016); Abraham et al., recall bias) while increasing other types (such as 88 See, e.g., U.S. Gov’t Accountability Off., GAO– ‘‘Measuring the Gig Economy: Current Knowledge underreporting bias). Because the Department is 09–717, Employee Misclassification: Improved and Open Issues’’ (2018), https://www.nber.org/ unable to quantify this tradeoff, it could not Coordination, Outreach, and Targeting Could Better papers/w24950; Collins et al. (2019), supra note 80; determine whether, on balance, survey or tax data Ensure Detection and Prevention 10 (2008) Gitis et al., ‘‘The Gig Economy: Research and Policy are more reliable.

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TABLE 2—SUMMARY OF ESTIMATES OF INDEPENDENT CONTRACTING—Continued

a Percent of workers Source Method Definition (%) Sample size Year

GSS QWL...... Survey .... Independent contractor, consultant or 14.1 2,538 ...... 2014 freelancer (main only). Jackson et al Tax data Independent contractor, household b 6.1 ∼5.9 million c ...... 2014 worker. Lim et al ...... Tax data Independent contractor ...... 8.1 1% of 1099–MISC and 5% of 1099–K ... 2016 a The survey data only identify independent contractors on their main job. Jackson et al. include independent contractors as long as at least 15 percent of their earnings were from self-employment income; thus, this population is broader. If Jackson et al.’s estimate is adjusted to exclude those who are primary wage earners, the rate is 4.0 percent. Lim et al. include independent contractors on all jobs. If Lim et al.’s estimate is ad- justed to only those who receive a majority of their labor income from independent contracting, the rate is 3.9 percent. b Summation of (1) 2,132,800 filers with earnings from both wages and sole proprietorships and expenses less than $5,000, (2) 4,125,200 pri- marily sole proprietorships and with less than $5,000 in expenses, and (3) 3,416,300 primarily wage earners. c Estimate based on a 10 percent sample of self-employed workers and a 1 percent sample of W–2 recipients.

3. Demographics of Independent black workers are somewhat arrangement. The Department has not Contractors underrepresented (comprising 9 percent attempted to estimate the magnitude of 97 The Department reviewed and 13 percent, respectively). The this change, primarily because there are demographic information on opposite trends emerge when evaluating not objective tools for quantifying the independent contractors using the CWS, informal work, where racial minorities clarity, simplification, and enhanced which, as stated above, only measures participate at a higher rate than white probative value of the Department’s those who say that their independent workers.98 Primary independent proposals for sharpening and focusing contractor job is their primary job and contractors are spread across the the economic reality test.100 Several that they worked at the independent educational spectrum, with no group commenters assumed the increase in contractor job in the survey’s reference especially overrepresented. The same independent contractors would be 5 week. According to the CWS, these trend in education attainment holds for percent, although none provided primary independent contractors are workers who participate in informal substantive support to bolster the most prevalent in the construction and work.99 assumption. See EPI, Washington Center. Due to the lack of certainty and professional and business services D. Potential Transfers industries. These two industries employ data to support a reliable estimate, the 44 percent of primary independent Given the current universe of Department does not attempt to estimate contractors. Independent contractors independent contractors and the the increase in independent contractor tend to be older and predominately possibility that more individuals may relationships that would result due to male (65 percent). Millennials have a become independent contractors after this rule. Therefore, potential transfers significantly lower prevalence of the rule is finalized, the Department are discussed qualitatively with some primary independent contracting than here identifies the possible transfers numbers presented on a per worker older generations: 3.6 percent for among workers and between workers basis. Potential transfers may result Millennials compared to 6.0 percent for and businesses, which may occur. These from differences in benefits, tax Generation X and 8.8 percent for Baby transfer effects are discussed liabilities, and earnings between Boomers and Matures.95 However, qualitatively and include effects relating employees and independent contractors. surveys suggest that this trend is to employer provided benefits, tax Although employment benefits could reversed when secondary independent liability, earnings, minimum wage and decrease, and tax liabilities could contractors, or those who did informal overtime pay, accurate classification of increase, the Department believes the work as independent contractors, are workers, and conversions of employee net impact on total compensation included. These divergent data suggest jobs to independent contractor jobs. should be small in either direction. that younger workers are more likely to In evaluating potential transfers that Furthermore, to attract qualified use contractor work sporadically and/or could be occasioned by the rule, the workers, companies must offer for supplemental income.96 White Department notes at the outset that the competitive compensation. Therefore, workers are somewhat overrepresented substantive effect of the rule is not among primary independent intended to favor independent 100 Another uncertainty limiting the Department’s contractors; they comprise 85 percent of contractor or employee classification ability to quantify the possible increase in this population but only 79 percent of relative to the status quo of the independent contracting is the nature and effect of Department’s existing guidance and state wage and hour laws. Some states, such as the population of workers. Conversely, California, have laws that place more stringent precedent from courts. However, the limitations on who may qualify as independent 95 The Department used the generational Department assumes in this RIA that the contractors than the FLSA. See Cal. Labor Code breakdown used in the MBO Partner’s 2017 report, increased legal certainty associated with 2775 (establishing a demanding ‘‘ABC’’ test ‘‘The State of Independence in America.’’ this final rule could lead to an increase applicable to most workers when determining ‘‘Millennials’’ were defined as individuals born independent contractor status under California 1980–1996, ‘‘Generation X’’ were defined as in the number of independent law). Because the FLSA does not preclude states individuals born 1965–1980, and ‘‘Baby Boomers contractor arrangements by reducing the and localities from establishing broader wage and and Matures’’ were defined as individuals born transaction and compliance costs hour protections than those that exist under the before 1965. inherent in structuring such an FLSA, see 29 U.S.C. 218(a), workers in some states 96 Abraham and Houseman (2019), supra note 87, may be unaffected by this final rule. However, find that informal work decreases as a worker’s age because the Department is not well positioned to 97 increases. Among 18 to 24 years olds, 41.3 percent These numbers are based on the respondents interpret the precise scope of each state’s wage and did informal work over the past month. The rate fell who state that their race is ‘‘white only’’ or ‘‘black hour laws, the Department is unable to definitively to 25.7 percent for 45 to 54 year olds, and 13.4 only’’ as opposed to identifying as multi-racial. determine the degree to which workers in particular percent for those 75 years and older. See also 98 Abraham and Houseman (2019), supra note 87. states would or would not be affected by this final Upwork (2019), supra note 89. 99 Id. rule.

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for workers in a competitive labor U.S., McKinsey Global Institute found who included assumptions of growing market, any reduction in benefits and that 15 percent of those not working are numbers of independent contractors increase in taxes are expected to be interested in becoming an independent also assumed that those workers were offset by higher base earnings. This contractor as their primary job.103 drawn from the existing pool of concept is discussed further below in Attracting these individuals to join the employees, not from the otherwise the Earnings section. labor force would be classified as a unemployed or those outside the labor Assuming that independent societal benefit, rather than a transfer. market.105 The Washington Center for contractor arrangements increase These impacts are evaluated more fully Equitable Growth (Washington Center), following this final rule, it is unclear the below as part of the discussion on Cost for instance, simply assumed a 5 extent to which this would occur as a Savings and Benefits. percent increase in the number of result of current employees being The Department requested comments independent contractors (corresponding subsequently classified as independent on its assumption that use of to an equivalent decline in contractors or as a result of the hiring of independent contractors will increase if employees); 106 however, it neither new workers as independent the proposed rule is finalized. Most provided explanation why that contractors. This will have implications commenters took the view that, percentage was reasonable nor justified for transfers. If current employees consistent with the Department’s its assumption that the percentage change classifications, then there may assumption, the final rule will lead to would entirely represent a shift of be transfers. Employers could change an increase in the number and existing employment relationships to the classification of current employees proportion of workers who are independent contractor relationships. only if those workers could already have independent contractors. Some Many commenters asserting and been classified as independent commenters, such as the Signatory Wall estimating a sizable shift from contractors or if the working conditions and Ceiling Contractors Alliance employment to independent contracting are modified such that the relationship (SWACCA) and other construction relationships seem to have based their becomes a true independent contractor workers’ unions commented that the estimates on the false impression that relationship, assuming doing so is rule could lead to increases in the the final rule would narrow the FLSA consistent with any applicable percentage of independent contractors scope of employment. As explained employment contracts, collective in the workforce by narrowing the above, this is not the case—the final rule bargaining agreement, or other standard for FLSA employment. But as does not shift the definition of who is applicable laws.101 Lim et al. (2019) explained above in Section IV(E)(2) and an employee under the FLSA. Any shift, found in the status quo that there was later in the discussion of regulatory the Department believes, would have to ‘‘little evidence that firms are alternatives in Section VI(G)(2), the final result from increased certainty, reduced increasingly reclassifying existing rule does not narrow or expand the overhead, and reduced employee relationships as [independent standard for FLSA employment. Rather, misclassification. Conversely, the contractor] relationships,’’ however, the Department agrees with many Americans for Prosperity Foundation they found that ‘‘firms are hiring more commenters representing businesses (AFPF) agreed with the Department’s new workers as [independent and freelance workers that the final rule decision to not quantify potential contractors] rather than as serves only to make that standard changes in the aggregate number of employees.’’ 102 The Department does clearer, enabling businesses and independent contractors and supported not anticipate this phenomenon will individuals to structure their work the Department’s analysis. cease occurring in the presence of the relationships to comply with the law. The Department continues to believe final rule. As discussed below, the See Section III (discussing commenter that the necessary data and information limited number of businesses with feedback). While this could lead to a are not available to quantify either any employees whose roles would meet the greater incidence of independent shift in independent contracting away requirements to be independent contracting—as businesses and workers from employee relationships or the contractors likely face incentives to will be able to more freely adopt number of new independent contractors maintain the status quo for those independent worker arrangements who may enter the workforce in workers, but there will likely be some without fear of FLSA liability—the final response to the rule and the impact of degree of innovation in the labor market rule does not narrow the standard for such a shift on workers and businesses. 104 in response to the rule that compounds FLSA employment. As explained in the NPRM, any attempt Some commenters disagreed with the the current trend towards greater to produce a useful estimate for the Department’s decision not to numbers of independent contractors. impact of an increase in independent specifically quantify a change in the For more discussion on how employees contractors requires ascertaining a number of independent contractors. may be affected by transfers, see the Job Furthermore, most of the commenters Conversion discussion in Section 105 Some commenters and reports (See e.g., VI(D)(7). Palagashvili; Fuller et al.,) cited data that indicate 103 McKinsey Global Institute, supra note 89 at increased regulatory clarity would likely result in By decreasing uncertainty and thus 71. workers entering the workforce due to the greater potentially opening new opportunities 104 The fact that the final rule is not an expansion flexibility and control provided by independent for firms, companies may hire or narrowing of the FLSA’s scope of employment contracting relationships. This would expand the independent contractors who they is not to say that courts have never in the past workforce rather than transfer workers between otherwise would not have hired. In this misapplied the economic reality test in particular classifications. cases. For example, some courts have expressly 106 EPI, Washington Center, and other case, there may be a decrease in disagreed on the meaning of the ‘‘integral/ commenters who use this 5 percent estimate unemployment, an increase in the size integrated’’ factor in the test. The existence of assume the entire increase to independent of the labor force, or both. In a study of seemingly contradictory and inconsistent case law contractors consists of workers whose overall respondents from both Europe and the is one of the reasons why the Department sees a compensation will decline and whose jobs need to issue this final rule. However, as discussed otherwise remain the same. See EPI (characterizing extensively above, the Department believes that the converted workers as having ‘‘the same job for 101 Under the final rule, a worker may be statement of the economic reality test in the final substantially less compensation’’). The Department classified only if the job meets the requirements of rule is consistent with precedent and the FLSA as finds this highly unlikely. For more discussion on section 795.105. a whole, even if it is in tension with particular this topic, see the Job Conversion topic in Section 102 Lim et al., supra note 75 at 3. cases. II.D.6.

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number of additional variables, fulltime workforce, noting that ‘‘Early independent contractors because including how this reduction in signs suggest that Covid–19 will also independent contractors generally do administrative overhead and speed up this shift.’’ 108 It is also not receive these benefits directly misclassification would impact supported by a range of recent news (although independent contractors are independent contracting. See 85 FR reports indicating that freelance able to purchase at least some of these 60626. The approach taken by some opportunities provide an important path benefits for themselves and, as commenters of simply choosing a for individuals to return to the explained in the preamble, the offering number without support and applying it workforce who lost their jobs due to the of health, retirement, and other benefits across the entire economy, given the pandemic.109 Women Employed to workers is not necessarily indicative extremely large number of employment claimed that this rule will degrade jobs, of employee status). Employer-provided relationships in the United States, the and that doing so in the midst of a benefits are often a significant share of differences in how a worker may value pandemic would be harmful, basing this workers’ compensation. According to certain ‘‘benefits,’’ 107 and the unique claim on assumptions that this rule the BLS’s Employer Costs for Employee relationships between different types of would ‘‘undermine the FLSA’’ and Compensation (ECEC), the value of independent contractors and different increase misclassification of workers. employer benefits that directly benefit businesses, could create a misleading But as explained above, this rule does employees average 21 percent of total and uncertain estimate of the impact of not undermine the FLSA; it sharpens compensation.111 The Department notes the rule without lending any additional the focus of the economic reality test that this 21 percent figure is an average clarity because of the lack of the basis and clarifies the meaning of economic for all employees and may not be for such a figure and likely differences dependence that courts, the Department, representative of the subset of between the current independent and most commenters agree is the employees whose classification may be contractor population and the standard for employment under the Act. impacted by this rule. Since the 21 population likely to arise as a result of This clearer standard is likely to reduce percent figure includes paid leave (7.2 this rule. Since commenters, including rather than increase occurrences of percentage points) and retirement those in support and those in misclassification. benefits (5.3 percentage points), and opposition, did not proffer sufficient workers may value these benefits at very 2. Employer Provided Benefits data upon which to build more accurate different levels, applying these elements assumptions, the Department has not In the context of transfers, the does not seem reasonable in the context attempted to quantify this impact. Department attempted to evaluate how of this analysis.112 1. Impact of COVID–19 on the Rule an increase in independent contracting The Department used the CWS to relationships could affect employer compare prevalence of health insurance The Department also requested data provided benefits. Although this rule and retirement benefits across and comment on the possible impacts only addresses workers’ independent employees and independent contractors resulting from the COVID–19 pandemic contractor status under the FLSA, the to produce a highly generalized picture. as it relates to the composition of the Department assumes in this analysis However, it should be noted that these labor market, the share and scope of that employers are likely to keep the two populations may differ in other independent contractors in the status of most workers the same across ways than just their employment workforce, and any associated wage all benefits and requirements.110 To the classification and the particular effects. Several commenters noted the extent that employers currently provide elements of their compensation importance of independent contracting employees benefits such as health packages discussed in the preceding in weathering the pandemic. For insurance, retirement contributions, and paragraph which may impact benefit example, the Center for Growth and paid time off, these would likely amounts. For instance, an employee Opportunity at Utah State University decrease with an increase in the use of shifting to independent contractor status (CGO) wrote that the benefits of who already receives health benefits independent contracting ‘‘are likely to 108 Fuller, et al., supra note 64 (‘‘Many freelance through a partner’s benefit plan would grow if the United States labor market platforms offer access to workers from around the not be impacted by losing heath benefit adapts to the recession spurred by the world with a wide variety of skills, and payment is often per completed task. Covid-19 is accelerating eligibility. Additionally, lower benefits COVID–19 pandemic similarly as it did the move toward these platforms. . ..’’); see also may be offset by increased base pay to to the financial crisis of 2008.’’ They Press Release, New Upwork Study Finds 36% of the attract workers because workers note that during an economic downturn, U.S. Workforce Freelance Amid the COVID–19 consider the full package of pay and workers can turn to alternative work Pandemic, Sep. 15, 2020, available at https:// www.upwork.com/press/releases/new-upwork- benefits when accepting a job. arrangements such as independent study-finds-36-of-the-us-workforce-freelance-amid- According to the CWS’s relatively contracting to supplement their income. the-covid-19-pandemic. narrow definition of independent The view is supported by a recent 109 See, e.g., Kim Mackrael, In the Covid contractor: Harvard Business Review article that Economy, Laid-Off Employees become New describes how firms have increasingly Entrepreneurs, Wall Street Journal, Nov. 18, 2020; Uri Berliner, Jobs in the Pandemic: More Are 111 BLS, ‘‘Employer Costs for Employee relied on freelancing and platforms that Freelance and may stay that way forever, NPR, Sep. Compensation News Release’’ (Sept. 2019), https:// allow access to the growing supply of 16, 2020; Jon Younger, A New Payoneer Report www.bls.gov/news.release/archives/ecec_ on-demand workers to identify Shows Covid 19 is Accelerating Freelance Growth, 12182019.htm. For Civilian Workers, this includes innovative solutions more flexibly and Forbes, Sep. 1. 2020. paid leave ($2.68), insurance ($3.22), and retirement 110 Courts have noted that the FLSA has the and savings benefits ($1.96). It does not include quickly than relying solely on their broadest conception of employment under Federal overtime and premium pay, shift differential pay, law. See, e.g., Darden, 503 U.S. at 326. To the extent nonproduction bonuses, or legally required 107 If, for example, a state mandates that that businesses making employment status benefits. Calculated as ($2.68 + $3.22 + $1.96)/ employees receive paid parental leave, but the determinations base their decisions on the most $37.03. worker does not have and intends not to have demanding Federal standard, a rulemaking 112 The average economy-wide provision of children, this ‘‘benefit’’ is of no value to that addressing the FLSA’s distinction between insurance benefits, which represent 8.7 percentage worker. Estimating how an individual worker employees and independent contractors may affect points of the 21 percent figure, is also likely to be values a particular ‘‘benefit’’ or even a tax liability the businesses’ classification decisions for purposes an overestimate for the average percentage of would require a worker-by-worker analysis for of benefits and legal requirements under other compensation offered to the workers most likely to which the Department lacks necessary data. Federal and state laws. be impacted by this rule.

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• 79.4 percent of self-employed Commerce pointed out, many such as the Washington Center cited a independent contractors have health independent contractors would not be study showing that independent insurance. Most of these workers either eligible for benefits even if they were contractors are ‘‘less likely . . . to make purchased insurance on their own (31.5 employees due to the short-term and/or contributions to a retirement percent) or have access through their part-time nature of such an employment account.’’ 117 However, that study spouse (28.6 percent). relationship. narrowly defines retirement accounts to • 80.7 percent of other independent Women Employed noted that the include ‘‘employer-sponsored plans’’ contractors have health insurance. although the Department showed high while excluding other common long- There are three main ways these rates of health insurance among term saving methods, which biases the workers receive health insurance: independent contractors in general, the comparison between independent Through their spouse (25.1 percent), Department did not show that low-wage contractors and employees. This through an employer (24.2), or on their independent contractors have access to hampers the ability to substantively own (20.1 percent). health insurance. In response, the compare this commenter’s position with • 88.3 percent of employees have Department compared health insurance those of other commenters, such as CWI health insurance. Most of these workers rates for workers earning less than $15 and WPI, listed above. receive health insurance through their per hour and found that 71.0 percent of Some commenters asserted the work (64.1 percent). Furthermore, such independent contractors have Department should quantify the impact according to the ECEC, employers pay health insurance compared with 78.5 of the rule on benefits such as health on average 12 percent of an employee’s percent of such employees. Health insurance and retirement savings. This base compensation in health insurance insurance rates are lower for both includes a letter from 107 U.S. premiums. independent contractors and employees Representatives and separate letters Several commenters estimated the when limited to low-wage workers. from Rep. Donald Norcross and Rep. prevalence of health insurance among However, the gap in coverage between Pramila Jayapal. The Texas RioGrande independent contractors. In early 2020, low-wage employees and independent Legal Aid (TRLA) claimed that because CWI commissioned a national survey of contractors remains comparable to that the Department did not estimate the 600 self-identified independent for all workers: 7.5 percentage points for ‘‘financial impact on the health and contractors. Their survey found that 84 low-wage workers compared to 8.1 retirement accounts of workers’’ it percent of independent contractors have percentage points for all workers. violated the Administrative Procedure healthcare coverage.113 The Workplace A major source of retirement savings Act. However, the Department does not Policy Institute of Littler Mendelson, is employer sponsored retirement believe that these impacts could be P.C. (WPI) pointed to a study that found accounts. According to the CWS, 55.5 usefully quantified. First, quantifying about 90 percent of gig workers have percent of employees have a retirement these impacts necessarily requires health insurance.114 The study also account with their current employer; in estimating any increase in the found that less than one-third of 1099– addition, the ECEC found that prevalence of independent contracting MISC workers purchase their own employers pay 5.3 percent of relationships. As explained previously, health insurance, ‘‘and most indicate employees’ total compensation in the Department does not believe that that health insurance does not affect retirement benefits on average ($1.96/ this figure can be meaningfully their decision to work as an $37.03). If a worker shifts from estimated. Second, classification under independent contractor.’’ It also notes employee to independent contractor the FLSA does not directly determine that the businesses interviewed believe status, that worker may no longer whether workers qualify for these that workers may have ‘‘made an receive employer-provided retirement benefit programs, and as such, it is economic decision with their spouse— benefits, but may choose alternate difficult to assess how the specific where one spouse works without personal investment options. As with workers who are converted from benefits for higher pay and the other health insurance, it is not clear whether employee to independent contractor receives lower pay with benefits— retirement savings for such a worker status under the FLSA could have their resulting in a higher total income and would increase or decrease, but such a individual benefits affected. If an health benefits for the household.’’ worker would likely need to take a more employer provides health and From these data, it is unclear exactly active role in saving for retirement vis- retirement benefits to employees, but how health insurance coverage would a`-vis an employee with an employer- does not provide them to the same change if the number of independent sponsored retirement plan.115 workers upon conversion of the contractors increased, but the data Commenters pointed out that positions into independent contractor suggest that independent contractors, on independent contractors generally have relationships, overall compensation will average, may be less likely to have retirement accounts. CWIs survey of be negatively impacted unless offset by health insurance coverage. That said, independent contractors found that 73 sufficiently higher earnings. However, employment is not a guarantee of health percent have a retirement savings plan. this could happen only in non- insurance, nor do independent The WPI pointed to a study by T. Rowe competitive labor markets in which contractors generally lack health Price that found that more than half of employers have the ability to set insurance. Additionally, simply independent contractors are saving for compensation without regard for worker 116 comparing rates between independent retirement. Conversely, commenters preferences. While some employers may contractors and employees may be desire to save the costs of providing 115 Access to such benefits might be similar for certain benefits to employees by misleading. As the U.S. Chamber of both employees and independent contractors, but it is unlikely that the business will contribute similar engaging independent contractors, if the 113 Coalition for Workforce Innovation (2020), sums to benefits for an independent contractor and relevant labor markets are even supra note 77. employee. somewhat competitive, they likely will 114 A. Yildirmaz, M. Goldar, S. Klein, 116 T. Rowe Price, ‘‘Press Release: The Majority of need to increase monetary ‘‘Illuminating the Shadow Workforce: Insights Into Independent Workers are Actively Saving for the Gig Workforce in Businesses,’’ ADP Research Retirement’’ (March 25, 2019), https:// compensation, give up, for example, Institute (February 2020), https://www.adpri.org/ www.troweprice.com/corporate/en/press/t-rowe- research/illuminating-the-shadow-workforce/ price-the-majority-of-independent-workersare- 117 Jackson, Looney, and Ramnath (2017), supra ?release=illuminating-the-shadow-workforce-2020. actively-.html note 92.

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certain elements of control (i.e., non- contractors. Employers will not pay to accurately measure and capture in pecuniary compensation), or both to payroll taxes for work transferred to datasets due to their high variability recruit workers for providing the same workers classified as independent worker to worker and ambiguity of work. The impacts of the rule would not contractors and market forces could sorting across economic sectors. be uniform across workers, especially compel them to pass the full wage (wage Without access to such data, the with respect to those workers that may + payroll tax) to the independent Department did not attempt to quantify become independent contractors. contractors. That is not the only reason the cost of changes in coverage or Furthermore and as explained further in we expect independent contractors will whether the net effect is a benefit or Section VI(D)(7), the Department earn higher hourly earnings, but is the cost. believes the ability for firms to deny focus here. For discussion on other benefits by converting their workers into expected wage effects, see Section 4. Earnings independent contractors is constrained. VI(D)(4) below. Potential transfers could also occur Companies also cover unemployment 3. Tax Liability through changes to earnings as a result insurance and workers’ compensation of an increase in independent Another potentially important source taxes for their employees. Independent contracting. These transfers could occur of transfers affected by the prevalence of contractors may choose to pay for if workers who were employees independent contracting is tax liability. comparable insurance protection offered experience a change in earnings by Payroll tax liability is generally divided in the private market, but are not becoming independent contractors, or if between the employer and the employee obligated to. The resulting regulatory workers who are out of the labor market in the United States. Most economists effect (experienced as savings, either by enter in order to become independent believe that the ‘‘incidence’’ of the companies or employees, depending on contractors. Although the minimum payroll tax, regardless of liability, falls who ultimately bears the cost of the tax) 118 wage and overtime pay requirements of on the employee. As self-employed combines societal cost savings (the the FLSA would no longer apply to workers, independent contractors are lessened administrative cost of workers who shift from employee status legally obligated to pay both the incrementally lower participation in to independent contractor status, as employee and employer shares of the unemployment insurance and workers’ discussed below, this does not Federal Insurance Contributions Act compensation programs) and transfers sufficiently explain the potential (FICA) taxes. Thus, if workers’ (from individuals whose unemployment transfers that could occur as a result of classifications change from employees insurance or workers’ compensation such a shift. Furthermore, the to independent contractors, there may payments decline, to entities paying less Department anticipates an increase in be a transfer in Federal tax liabilities in taxes). Independent contractors may labor force activity, but for the reasons from employers to workers (regardless recoup some or all of the employer stated above, the Department does not of whether this affects the actual cost of portion of these taxes and insurance attempt to quantify the magnitude of these taxes to the worker). These payroll premiums in the form of increased any increase or decrease in earnings as taxes include: 119 wages. This rule could decrease a result of increased labor force activity. • Social Security tax: The 6.2 percent employers’ tax liabilities and increase employer component (half of the 12.4 independent contractors’ take-home If currently unemployed workers or percent total).120 compensation. However, there are costs individuals who are out of the labor • Medicare tax: The 1.45 percent to independent contractors if they are market become independent contractors employer component (half of the 2.9 out of work or injured or ill on the job due to this rule, their earnings will percent total).121 because they no longer are protected, increase as they currently have no work- In sum, vis-a`-vis an employee, unless they purchase their own private related earnings other than possibly independent contractors are legally insurance.122 Many of these impacts unemployment benefits. The impact on responsible for an additional 7.65 will depend on the individual risk earnings is more ambiguous if percent of their earnings in FICA taxes tolerances of the workers. It is likely employees’ classifications change to (less the applicable tax deduction for that workers who are more comfortable independent contractors. In theory, this additional payment). However, any taking risks will be attracted to the because independent contractors likely tax-related transfers from employers to potentially higher take-home prefer to have at least similar levels of workers would likely be offset by higher compensation of independent contractor total compensation as they would earn wages employers pay independent status, while workers who are risk if they were employees, companies averse will likely prefer the would likely have to pay more per hour 118 The share of payroll taxes borne by employees predictability of traditional employee to independent contractors than to versus firms is unknown but economists generally employees because independent believe that employer payroll taxes are partially-to- relationships. It is uncertain how the completely shifted to employees in the long run. universe of workers is dispersed, contractors generally do not receive For a detailed review of the literature see J. beyond theoretical generalizations. It is company-provided benefits and have Deslauriers, B. Dostie, R. Gagne´, and J. Pare´, further unclear how workers’ risk higher tax liabilities. Data show an ‘‘Estimating the Impacts of Payroll Taxes: Evidence hourly wage premium for independent from Canadian Employer-Employee Tax Data,’’ IZA preferences will be distributed across Institute of Labor Economics Discussion Paper the market for insurance products. The contractors when comparing unadjusted Series IZA DP No. 11598 (June 2018), http:// Department was not able to identify mean averages. But as the analysis ftp.iza.org/dp11598.pdf. Further information is economy-wide distributional data on below illustrates, when controlling for available by the Tax Foundation, https:// certain differences in worker taxfoundation.org/what-are-payroll-taxes-and-who- worker preferences and projected pays-them/. purchasing dynamics. That is likely characteristics, this expected wage 119 Internal Revenue Service, ‘‘Publication 15, because worker preferences are difficult premium may not always be observable (Circular E), Employer’s Tax Guide’’ (Dec. 23, 2019), at a statistically significant level. It https://www.irs.gov/pub/irs-pdf/p15.pdf. 122 The Department did not undertake to should be noted, however, that these 120 The social security tax has a wage base limit comprehensively review state law on estimates do not attempt to incorporate of $137,700 in 2020. unemployment insurance in this area, but notes that the value of flexibility and satisfaction 121 An additional Medicare Tax of 0.9 percent some states do not use the economic reality test to applies to wages paid in excess of $200,000 in a determine which individuals are covered by state that many independent contractors cite calendar year for individual filers. unemployment insurance. as key factors in their preference of

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independent contracting arrangements contractors earned an average of $27.43 One potential reason for the variance over traditional employment. per hour, and other independent among the estimates for independent Comparing the average earnings, contractors earned an average of $26.71 contractor wages could be error in the hourly wages, and hours of current per hour (the average hourly wage is measurement of independent contractor employees and independent contractors $27.29 when combining the two types of status and earnings, a factor that is may provide some indication of the independent contractors).127 Katz and present throughout every analysis in impact on wages of a worker who Krueger conducted similar hourly this area. As a recent analysis transitions from an employee to earnings estimates based on 2005 CWS concluded, ‘‘different data sources independent contractor classification. A and 2015 ALP data. Their analysis of the provide quite different answers to the regression analysis that controls for 2005 CWS data indicated that ‘‘[b]efore simple question of what is the level and observable differences between conditioning on covariates, the 2005 trend of self-employment in the U.S. independent contractors and employees and 2015 results are similar: freelancers economy,’’ which suggest substantial may help isolate the impact on earning, and contract workers are paid more per measurement error in at least some data hourly wages, and usual hours of being hour than traditional employees.’’ 128 sources.132 As noted above, reporting an independent contractor. Katz and When controlling for education, errors by survey respondents may Krueger (2018) 123 regressed the natural potential experience, potential contribute to measurement error in CWS log of hourly wages on independent experience squared, race, ethnicity, sex data.133 Additionally, CWS questions contractor status,124 occupation, sex, and occupation, independent ‘‘were asked only about people who had potential experience, potential contractors’ higher hourly wages in the already been identified as employed in experience squared, education, race, 2005 CWS data remained higher but response to the survey’s standard and ethnicity. They use the 2005 CWS were not statistically significant. But employment questions and only about and the 2015 RAND ALP (the 2017 CWS Katz and Krueger’s analysis of the 2015 their main jobs,’’ and therefore may was not available at the time of their ALP data under the same specifications miss important segments of the analysis). The Department conducted a found that primary independent population. BLS has recently similar regression using the 2017 CWS. contractors earned more per hour than acknowledged limitations in the 2017 In both Katz and Krueger’s regression traditional employees, and the estimates CWS survey in response to a GAO audit results and the Department’s were statistically significant.129 and is reevaluating how it would calculations, the following outlying Conceptually, the Department expects measure independent contractors in the values were removed: Workers reporting that independent contractors would future.134 earning less than $50 per week, less earn more per hour than traditional Another potential bias in the than $1 per hour, or more than $1,000 employees in base compensation as an Department’s results could be due to the per hour.125 offset to employer-provided benefits and exclusion of relevant explanatory The Department combined the CWS increases in tax liabilities. Katz and variables from the model specification, data on usual earnings per week and Krueger’s analysis of the 2015 RAND including the omission of observable hours worked per week to estimate ALP data appears to support this variables that correlate with hourly hourly wage rates to normalize the prediction.130 However, they earnings. For example, the Department’s comparison between independent recommend caution in interpreting the analysis of 2017 CWS data used 22 contractors and employees.126 The estimates from the ALP due to the Department found that independent relatively small sample size. Their https://www.mbopartners.com/state-of- contractors tend to earn more per hour: analysis of the 2005 CWS data and the independence/; Chen et al., ‘‘The Value of Flexible Employees earned an average of $24.07 Work: Evidence from Uber Drivers,’’ Journal of Department’s similar analysis of 2017 Political Economy 127:6, 2735–794 (2019); He, H. per hour, self-employed independent CWS data did not show a statistically et al., ‘‘Do Workers Value Flexible Jobs? A Field significant difference. But as previously Experiment,’’ NBER Working Paper No. w25423, 123 See Katz and Krueger (2018), supra note 12. noted, comparing current employees to (2019), https://ssrn.com/abstract=3311395; 124 On-call workers, temporary help agency current primary independent McKinsey Global Institute, supra note 89; Upwork workers, and workers provided by contract firms (2019), supra note 89. are excluded from the base group of ‘‘traditional’’ contractors may not be indicative of 132 Abraham et al. (2018), supra note 89 at 15. employees. how earnings would change for current Generally, ‘‘[h]ousehold surveys consistently show 125 Choice of exclusionary criteria from Katz and employees who became independent lower levels of self-employment than tax data and Krueger (2018), supra note 12. a relatively flat or declining long-term trend in self- contractors. Nor do such wage-based employment as contrasted with the upward trend 126 The CWS data, based on its relatively narrow comparisons reflect the non-pecuniary definition of independent contractors, indicated that is evident in tax data.’’ Id.; see also id. at 45. 133 that employees worked more hours per week in attributes of employees and ‘‘For example, a household survey respondent comparison to primary independent contractors. independent contractors.131 might fail to mention informal work that they do The Department found that 81 percent of employees not think of as a job, something that further probing might uncover. To take another example, a worked full-time, compared to 72 percent for self- 127 The Department followed Katz and Krueger’s household member who is doing work for a employed independent contractors and 69 percent methodology in excluding observations with for other independent contractors. Katz and Krueger business may be reported as an employee of that weekly earnings less than $50, hourly wages less business, even in cases where further probing might similarly found that independent contractors work than $1, or with hourly wages above $1,000. fewer hours per week than employees (statistically reveal that the person is in fact an independent Additionally, workers with weekly earnings above contractor or freelancer.’’ Id. at 15. significant at the 1 percent level of significance in $2,885 are topcoded at $2,885. Weekly earnings are 134 Specifically, BLS recognized that: (1) The all specifications with both datasets). Despite used to calculate imputed hourly wages. working fewer hours per week than employees, self- ‘‘CWS measures only respondents’ main jobs . . ., 128 Id. at 19. employed independent contractors earned more per thus potentially missing workers with 129 week on average ($980 per week compared to $943 Id. at 34. nontraditional second or supplementary income per week). Other independent contractors, on 130 See Katz and Kreuger (2018), supra note 12 at jobs’’; (2) ‘‘CWS only asks respondents about their average, worked fewer hours per week and earned 20 (‘‘A positive hourly wage premium for work in the past week and may fail to capture less per week than employees ($869 per week independent contractors could reflect a seasonal workers or workers that supplement their compared to $943 per week). Given the difference compensating differential for lower benefits and the income with occasional work’’; and (3) ‘‘added between hours worked by primary independent need to pay self-employment taxes.’’). questions regarding electronically-mediated contractors and employees, and the appeal of 131 In particular, at least some research reveals employment resulted in a large number of false flexibility cited by many independent contractors, significant non-pecuniary advantages to positive answers.’’ Government Accountability average weekly earnings may be an inadequate independent contracting, including through Office, Contingent Workforce: BLS is Reassessing measure. Accordingly, the Department’s analysis increased job satisfaction. See ‘‘The State of Measurement of Nontraditional Workers, Jan. 29, focuses on hourly wages. Independence in America,’’ MBO Partners (2019), 2019, https://www.gao.gov/assets/700/696643.pdf.

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occupation dummy variables but did contractors earn an earnings premium. not adequately address the not control for a worker’s job position Other commenters cited evidence misclassification of workers, and within any of the occupations (although purporting to show that workers posited this would impose costs. In each it did control for ‘‘potential misclassified as independent case, the commenter did not experience’’). However, as the contractors earn less than employees. demonstrate how the rule would Department’s guidance indicates, a Much of this evidence, however, relates increase the frequency of statistical comparison of earnings only to total take-home pay, which may misclassification. North America’s between workers generally must control reflect mere variation in hours-worked, Building Trades Unions made similar for ‘‘job level or grade’’ in addition to rather than indicate any relation to the claims. Its comment cited a number of experience to ensure the comparison is existence of an earnings premium. Some studies, including a GAO study finding for workers in similar jobs.135 If, other evidence on lower earnings relates contingent workers (workers who lack hypothetically, independent contractors to misclassified workers—but the final an explicit or implicit contract for long- on average have lower job levels (or rule is expected to reduce term employment, but who can be equivalents) than traditional employees misclassifications by increasing employees or independent contractors within each occupation,136 the certainty, and as explained further under the FLSA) have lower earnings Department’s analysis would not be below, the Department does not believe than those who are not contingent comparing the hourly earnings of that evidence relating to misclassified workers; a DC Office of Attorney primary independent contractors and workers is applicable to the General study that estimated employees who have the same jobs. independent contracting population as a misclassified construction workers in Instead, the Department would be whole. For example, the Coalition of DC may earn 11.5 percent less in take- comparing a population of relatively State Attorneys General, Cities, and home pay than employees, based on low-level independent contractors with Municipal Agencies (State AGs) cited implied findings that result from a a population that includes both low- recent state data on awards to workers series of selected assumptions; and a and high-level employees. who were misclassified and evidence sampling of studies on construction The existence of unobservable that the misclassified workers face workers that claimed significant losses differences between independent higher rates of wage theft and wage in net pay for construction workers contractors and employees that are suppression.138 139 They additionally misclassified as independent correlated with earnings, such as cited evidence produced by another contractors compared to employees.141 productivity, skill, and preference for critical commenter of this rule, the The United Brotherhood of Carpenters flexibility also bias comparison of National Employment Law Project and Joiners of America asserted that hourly earnings. For example, (NELP), that the State AGs claimed many construction companies independent contractors may be on shows that once controls are misclassify workers as independent average more willing than employees to implemented to account for taxes, contractors in order to pay them less trade monetary compensation for business expenses, and legal risks, than employees and cited estimates of increased workplace flexibility that may workers who have been misclassified as the magnitude of the difference, and accompany independent contractor independent contractors often earn claims that the Department’s rule ‘‘does 142 status, which would obscure the significantly less than similar workers nothing to stem the abuse.’’ observability of an earnings premium paid as employees.140 The Department Commenter Matt Brown cited a for independent contractors.137 Non- expects the rule to reduce Washington Center report that claims pecuniary benefits of independent misclassification, which based on these low- and middle-wage gig workers make 143 contracting, often including workplace above commenters’ analyses will result less than comparable employees. The flexibility, may impact the occurrence of in significant cost savings. same commenter noted that, applied an earnings premium, measured strictly A number of other commenters made appropriately, ‘‘Independent contracting in monetary terms, but may contribute similar claims that the Department did is a critical part of the economy.’’ NELP to workers’ evaluation of the merits of and the National Women’s Law Center in engaging as independent contractors. 138 California Labor Commissioner’s Office, 2017– (NWLC) cited a study, notably from a 2018 Fiscal Year Report on the Effectiveness of the Independent contractors’ hourly report for New York’s taxi and Bureau of Field Enforcement (2018), https:// limousine industry, claiming that while earnings premium may be best observed www.dir.ca.gov/dlse/BOFE_LegReport2018.pdf. at the margin, such as comparing a Massachusetts Council on the Underground independent contractors in New York in worker’s behavior when deciding Economy, 2017 Annual Report, (2017), https:// a subset of industries (construction, www.mass.gov/doc/cue-annual-report-2017-0/ retail, personal care, and others) between two similar positions, one as an download. Written Testimony of Jennifer L. Berrier, employee and one as an independent Deputy Secretary, Department of Labor & Industry 141 U.S. Government Accountability Office, Before the House Labor & Industry Committee contractor. However, the Department ‘‘Contingent Workforce,’’ GAO–15–168R. DC, (April 29, 2019). could not find data on such situations (2018). Office of Attorney General, ‘‘Illegal Worker 139 to allow for an economy-wide estimate, C. Ruckelshaus and C. Gao, ‘‘Who’s the Boss: Misclassification: Payroll Fraud in the District’s Restoring Accountability for Labor Standards in Construction Industry,’’ (2019). Ormiston, R., nor did commenters provide such data. Outsourced Work,’’ National Employment Law Belman, D., Brockman, J., and M. Hinkel, Some commenters expressed concern Project, 9–27, (2014), https://www.nelp.org/wp- ‘‘Rebuilding Residential Construction,’’ in Creating that the Department did not sufficiently content/uploads/2015/02/Whos-the-Boss-Restoring- Good Jobs: An Industry-Based Strategy 75, 80 (Paul justify its claim that independent Accountability-Labor-Standards-Outsourced-Work- Osterman ed., MIT Press 2020). Report.pdf. 142 R. Ormiston et al. (2020), supra note 141. Liu, 140 S. Leberstein and C. Ruckelshaus, Y.Y., Flaming, D. and P. Burns, ‘‘Sinking 135 Department of Labor, Office of Federal ‘‘Independent Contractor vs. Employee: Why Underground: The Growing Informal Economy in Contracting Compliance Programs, Directive 2018– Independent Contractor Misclassification Matters California Construction,’’ Economic Roundtable, 2 5, (Aug. 24, 2018), https://www.dol.gov/agencies/ and What We Can Do to Stop It,’’ National (2014), https://economicrt.org/publication/sinking- ofccp/directives/2018-05#ftn.id10. Employment Law Project, (2016), https:// underground. 136 For example, because individuals working in s27147.pcdn.co/wp-content/uploads/Policy-Brief- 143 C. Husak, ‘‘How U.S. Companies Harm that occupation as independent contractors are less Independent-Contractor-vs-Employee.pdf. Bureau Workers by Making them Independent likely to be in positions with managerial of Labor Statistics, ‘‘Contingent and Alternative Contractors,’’ Washington Center for Equitable responsibilities over other workers than are Employment Arrangements—May 2017,’’ (2018), Growth, (2019), https://equitablegrowth.org/how-u- employees. https://www.bls.gov/news.release/archives/ s-companies-harm-workers-by-making-them- 137 He, H. et al. (2019), supra note 131. conemp_06072018.htm. independent-contractors/.

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experienced positive wage growth, they of independent contractors. The non- by this rule.146 Employing economy- had lower increases in their real annual representative data sources preclude wide averages to compare niche subsets earnings from 2013 to 2018 than the widespread applicability. Further, these of the economy is not a sound approach. counterpart employees.144 PA L&I commenters and their cited sources As such, it is inappropriate to assume, claimed that the Department provided largely focused on misclassified as SWACCA did, that the average ‘‘no evidence’’ to support other claims workers, who are defined as workers employee who is converted to about compensation premiums. unlawfully classified as independent independent contractor status as a result However, the Department offered a contractors in order to limit employers’ of the rule would gain the same earnings significant data-backed rationale for monetary and legal liabilities. Selection premium enjoyed by the average those sections, and in fact notes that PA economy-wide independent contractor, bias causes the estimates of the impacts L&I’s own comment refers to some of or lose benefits equal to the benefits on this group to be unreliable; the these sources in its critique, though it enjoyed by the average economy-wide offers no data of its own. Some sample likely includes illicit actors. The employee. The Department believes that commenters asserted that companies Department recognizes that some illicit many workers who are most likely to be make workers independent contractors actors intentionally evade the law, but converted due to this rule likely do not specifically because they can pay them its analysis of this rule’s impact presently receive benefits or, if they do less due to a lack of bargaining power, naturally focuses on employers, receive fringe benefits, their value (both but they do not offer substantive data to employees, and independent contractors as measured by the worker and as an demonstrate that this is the case that would follow the rule to the best of absolute cost to the employer) falls throughout the economy. Since the their ability. While these comments and below the economy-wide average.147 failure to pay misclassified workers the the sources upon which they rely Due to the highly individualized wages that are due them is already highlight important worker issues, the impacts that vary across numerous prohibited by law, the Department non-representative data presented undefined variables (risk tolerances; determined comments on the topic fall cannot be extrapolated to the universe specifics regarding level of position, outside the scope of this rule and of individuals classified as independent industry, location; access to other means analysis. As stated elsewhere, the contractors, for whom the literature of benefits provision; etc.), the Department expects that offers strong evidence of an earnings Department did not attempt to quantify misclassification will be reduced premium. such an impact. Considered because of this rule. Further, because qualitatively, the Department notes that meeting the proper standards for Some commenters provided specific employees who make more than the legitimate independent contracting will concerns with the Department’s minimum wage implicitly display a generally entail a substantively different numbers. SWACCA disputes the measure of bargaining power because relationship between a worker and a Department’s justification of the their employer could lawfully reduce business beyond a simple change in assertion that independent contractors their wages but has not. If employees classification, and no commenters nor earn more than employees because the have bargaining power—meaning labor the Department’s own review of past unconditional mean hourly rate of market conditions require employers to court cases yielded any examples of this independent contractors is higher than account for workers’ preferences— they phenomenon in practice, the the unconditional mean hourly rate of would be positioned to negotiate an Department has not attempted to employees. They note that the 11 to 14 earnings premium that could offset a quantify it. For most discussion, see the percent higher hourly wage ($26.71 and reduction in benefits that may result Job Conversion discussion at Section $27.43 per hour for independent from being converted to independent (VI)(D)(7). contractors versus $24.07 per hour for contractors, which may be higher or The data employed in the comments employees) is insufficient to cover the lower than the economy-wide average. and the reports commenters cite to average of 21 percent of total Similarly, a worker without bargaining support their claims on impacts to compensation that employees receive in power would be unlikely to receive the earnings are not strictly based on 11 to 14 percent earnings premium if employer-provided benefits. While independent contractors. In fact, several converted from employee to SWACCA correctly identified that the of them focus explicitly on contingent independent contractor status—but such hourly wage premium independent workers, who are defined as ‘‘persons no-bargaining-power employees are also who do not expect their jobs to last or contractors enjoy economy-wide may be much less likely to have any company- who report that their jobs are less than employer’s total cost of provided benefits to lose as a result of temporary.’’ 145 These persons can be providing benefits, such a comparison the conversion. Ultimately, there is no employees or independent contractors, may not accurately reflect the value the reason to believe employees whose and may not include all independent employee places on the employer- classification may be affected by the contractors, depending on the nature of provided benefits. If, for example, a rule are likely to have the same benefits the contractor’s work. Estimates based worker already has access to health as an average employee or, if converted on these definitions are not useful for insurance as a military veteran, that to independent contractors, would the purpose of evaluating the universe worker will not value the employer’s receive the same earnings premium that provision of health insurance. Further, the average independent contractor has 144 J.A. Parrott and M. Reich, ‘‘An Earnings even assuming the worker values these over the average employee. As Standard for New York City’s App-based Drivers: Economic Analysis and Policy Assessment,’’ Report benefits at the same level as the explained below further in Section for the New York City Taxi and Limousine employer’s cost for the benefits, the Commission, (2018), https:// analysis cited earnings premiums and 146 The 11 to 14 percent earnings premium for static1.squarespace.com/static/ independent contractors is also an economy-wide 53ee4f0be4b015b9c3690d84/t/ benefits which are based on all finding. 5b3a3aaa0e2e72ca74079142/1530542764109/ employees and independent contractors 147 The Department expects that many new Parrott- in the economy and may not reflect the independent contractor jobs will be created due to Reich+NYC+App+Drivers+TLC+Jul+2018jul1.pdf. narrower universe of employees whose this rule, but does not anticipate many existing 145 BLS, https://www.bls.gov/news.release/ employee positions to be converted to independent conemp.nr0.htm. classification is most likely be affected contractor relationships because of it.

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VI(D)(7), the Department expects that applied to the self-employed (under meaningful number of workers who most workers whose classification may which category independent contractors would get more satisfaction from doing be affected by this rule will have a fall).149 Manning states, ‘‘In this book it the same job for substantially less measure of bargaining power that could is assumed that firms set wages. This is compensation as an independent allow them to offset reductions in a more appropriate assumption in some contractor than for substantially more benefits with higher earnings, better labour markets than others. For compensation as a payroll employee.’’ working conditions, or both. example, it would not seem to be But this statement exposes what appears The Washington Center asserted that appropriate [. . .] for the self- to be a flawed assumption in EPI’s the population of independent employed.’’ 150 The sources that EPI analysis. Under the economic reality contractors is very diverse and that cites thus do not support its ultimate test, an employee typically cannot comparing mean wages is not conclusion. Rather, EPI’s possess the ‘‘same job’’ as an appropriate, expounding that the methodological assumptions appear to independent contractor. Rather, for the independent contractor market includes run counter to a widely-cited source worker to be classified as an both high-wage workers with adequate that EPI itself relies on. Finally, the EPI independent contractor, the worker bargaining power and low-wage workers analysis also relied on firms’ wage- must, on the whole, possess the with little bargaining power. The setting power to be absolute, that labor characteristics of an independent commenter did not explain how this supply is perfectly inelastic. EPI’s contractor, which often include point meaningfully applies to the analysis proceeds from the premise that meaningful control over the work or Department’s analysis, which addressed ‘‘perfect competition is rare,’’ but then meaningful opportunity for profit. EPI’s the diversity of the labor market in its jumps to the claim that ‘‘most labor analysis assumes, however, that the regression specifications, controlling for markets do not function competitively,’’ employer can and will simply reclassify many more variables than simply and that worker are particularly ‘‘likely a worker as an independent contractor income. Nonetheless, in response to this to lack the power to bargain for higher without regard for the features of the comment the Department conducted wages to compensate for their loss of working relationship. two additional regression analyses as a benefits and increase in taxes when they EPI’s analysis considers only proxy for the labor market for low-wage become independent contractors.’’ monetary compensation as part of the workers. The results were largely However, each of the sources the EPI ‘‘value of a job to a worker.’’ In the May consistent with the initial conclusions cites for this proposition, which are 2017 Contingent Worker Supplement presented in the NPRM. The discussed above, clearly show that firms (CWS) to the Current Population Survey Department ran its regression model do not possess or exert such absolute (CPS) workers classified as independent including only low-education workers wage-setting power. These flaws contractors were asked about their (a high school diploma or less). In this fundamentally undermine EPI’s preferences toward employment case, independent contractors had an estimates and yet go unaddressed by EPI arrangement. Their responses are average wage about 9 percent higher, and other commenters that reference indicative of non-monetary value and the results were statistically EPI’s estimates. The Department, derived from independent contractor significant. The Department also ran a therefore, declined to integrate these status. When asked, ‘‘Would you prefer regression including only workers in unreliable estimates into its analysis to work for someone else?’’ independent low-wage occupations (12 occupations due to such methodological concerns. contractors resoundingly stated ‘‘No’’ with mean hourly rate less than the EPI’s analysis states that ‘‘it is over ‘‘Yes’’ by a ratio of nearly 8 to 1. overall mean), for which the coefficient difficult to imagine that there are a Furthermore, the two most noted on independent contractor was positive, responses to the question, ‘‘What is the although small.148 149 EPI cites three sources alongside its claim, main reason you are self-employed/an Manning (2003), Dube et al. (2018), and a literature The Economic Policy Institute (EPI) review by the Washington Center, which also independent contractor?’’ were estimated annual transfers from workers submitted a comment opposing this rule. The ‘‘Flexibility of schedule’’ and ‘‘Enjoys to employers of $3.3 billion in Manning book is cited by both other commenters, being own boss/independent.’’ It is supplemental pay, paid leave, insurance with the Washington Center’s analysis drawing on it in numerous sections of its review as evident that most independent and retirement benefits, and the fundamental support. The Dube et al study focused contractors strongly value the non- employer share of Social Security and exclusively on users of a specific online task portal pecuniary compensation they receive. Medicare taxes. Its estimate is based on (Amazon Mechanical Turk), which is a niche EPI does not address how these non- the primary assumptions that (1) market of independent contractors and is a marketplace accessible to 49 countries, which pecuniary benefits factor into worker employees reclassified as independent makes it difficult to apply the findings with compensation. contractors will be paid the same in confidence to the U.S. market and the whole Arguing against the Department’s nominal wages and (2) there will be an independent contractor universe. The Washington inclusion of flexibility and satisfaction Center citation was a literature review of work in increase of 5 percent in the number of the field of monopsony in labor markets; its as important non-pecuniary independent contractors. EPI states that findings did not offer direct applications to the compensation factors in the NPRM, EPI the first assumption is based on sources independent contractor universe. Furthermore, its states that ‘‘employers are able to demonstrating that perfect competition review concluded, ‘‘our results provide evidence on the elasticity of labor supply to the firm and the provide a huge amount of flexibility to in labor markets is rare, a claim stated implied degree of firms’ wage-setting power, but not payroll employees if they choose to; the by several other commenters. However, necessarily whether the firms are able to exercise ‘inherent’ tradeoff between flexibility Alan Manning, the author of the this power,’’ explaining that it appears other forces and payroll employment is greatly rein in firms’ wage-setting power to some degree. foundational source referenced to make 151 150 A. Manning, Monopsony in Motion: Imperfect exaggerated.’’ this case (cited by EPI, sources cited by Competition in Labor Markets, Princeton, N.J.: EPI in the same section, and other Princeton University Press, (2003). A. Sokolova and 151 Some sources have argued that businesses, in commenters), explicitly caveats that the T. Sorensen, ‘‘Monopsony in Labor Markets: A fact, use scheduling in a way that negatively affect Meta-Analysis,’’ Washington Center for Equitable worker flexibility. See e.g., L. Golden, ‘‘Irregular wage-setting assumption should not be Growth, (February 2020). A. Dube, J. Jacobs, S. Work Scheduling and Its Consequences,’’ Economic Naidu, and S. Suri, ‘‘Monopsony in Online Labor Policy Institute, (April 2015), https://files.epi.org/ 148 The result is statistically significant at the 90 Markets,’’ American Economic Review: Insights pdf/82524.pdf (‘‘Facilitated by new software percent confidence level but not at the 95 percent 2(1): 33–46 (March 2020), https://www.aeaweb.org/ technology, many employers are adopting a human level. articles?id=10.1257/aeri.20180150. resource strategy of hiring a cadre of part-time

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EPI’s argument is less than persuasive of transfers from workers to employers hour (8 percent for self-employed for a number of reasons. First, is an estimate of the gross transfer independent contractors, 5 percent for economists have long recognized that without taking into account that the other independent contractors, and 2 workers value leisure as well as the independent contractors also have the percent for employees). remuneration of labor. As such, any ability to deduct some of their Several commenters highlighted this worker selecting between jobs is likely additional expenses on their income possibility that independent contractors to consider the flexibility of work taxes and thus is not a comprehensive could earn below the minimum wage. schedules, the compensation package, comparison of the net earnings of The Washington Center cited a report by fringe benefits, and a host of non- employees and independent contractors. the Center of American Progress that pecuniary compensation factors when EPI’s estimate is based on applying a net estimated that almost 10 percent of deciding both whether to work at a loss in income for every new independent contractors earn less than particular company and how many independent contractor, yet the data the Federal minimum wage.153 hours to spend working at that resoundingly show that workers pursue Representative Mark Takano pointed to company. Second, the fact that some independent contract work voluntarily literature finding that in California and employees have flexibility does not and in vast numbers, suggesting that New York many gig drivers receive imply that those employees do not value other factors, unmentioned by the significantly less than the state the flexibility or that greater flexibility commenter, are significant to worker minimum wage.154 A letter from 107 is not something employees would trade decisions in this field. EPI nonetheless U.S. Representatives referenced an for lower compensation. Third, in many assumes a blanket negative impact will instance where the Wage and Hour jobs, employee flexibility is necessarily be felt economy-wide for all new Division (WHD) recovered roughly limited because the business requires a independent contractors—an $250,000 in unpaid overtime and certain number of employees working assumption the Department believes is minimum wages for 75 workers together to accomplish a task, and so unsupportable in the face of the existing misclassified as independent granting significant flexibility to evidence. contractors by a cleaning company.155 employees would result in less Ultimately, based on the assumption EPI stated in its comment, ‘‘The workers productivity for the business which that the final rule will increase most likely to be affected by this rule are would likely result in lower independent contracting arrangements, workers in lower-wage occupations in compensation for the workers. Fourth, the Department acknowledges that there labor-intensive industries, such as some employers do offer employees may be transfers between employers and delivery workers, transportation flexibility, but often that flexibility employees, and some of those transfers workers like taxi drivers and some comes at a cost to the workers (of note, may come about as a result of changes truckers, logistics workers including payroll employees generally have less in earnings. However, for the reasons warehouse workers, home care workers, control over their own schedules than stated above, the Department does not housecleaners, construction laborers similarly-situated independent believe that these transfers can be and carpenters, agricultural workers, contractors). quantified with a reasonable degree of janitors, call center workers, and staffing EPI, however, fails to explain why an certainty for purposes of this rule. The agency workers in lower-paid employer would, all things equal, allow Department also does not believe that placements.’’ However, EPI did not its employees to work for direct independent contracting roles are provide a source for this important competitors, let them choose usefully compared by focusing solely on assumption, and the Department was assignments, or set their own hours. The earnings to employee roles—under the unable to verify EPI’s assertion in the point of hiring employees is to have economic reality test embraced by the Department’s own research. The nature workers that an employer can call upon final rule, control and an opportunity of the work done by workers across the and direct to perform desired tasks, as for profit are core considerations for diverse fields EPI identified is opposed to contractors who operate determining who is an independent uncertain, although many roles in the their own businesses. While some contractor. The Department believes employers may provide a measure of that these factors are often valued by 153 K. Walter and K. Bahn, ‘‘Raising Pay and flexibility they generally would not offer workers in ways that are difficult to Providing Benefits for Workers in a Disruptive the same degree of flexibility enjoyed by quantify. Furthermore, the Department Economy.’’ Washington: Center for American Progress (2017), https://www.americanprogress.org/ individuals who are in business for believes that workers as a whole will issues/economy/reports/2017/10/13/440483/ themselves. The Department believes, benefit from this rule, both from raising-pay-providing-benefits-workers-disruptive- based on data in the CWS survey and increased labor force participation as a economy/. beyond, that independent contractors result of the enhanced certainty 154 M. Reich. ‘‘Pay, Passengers and Profits: Effects experience significantly more flexibility provided by the rule, and from the of Employee Status for California TNC Drivers.’’ University of California, Berkeley (October 5, 2020), than employees and that such a feature substantial other benefits detailed https://irle.berkeley.edu/files/2020/10/Pay- is a core motivator.152 below. Passengers-and-Profits.pdf; L. Moe, et al. ‘‘The The Department notes several other Magnitude of Low-Paid Gig and Independent 5. Minimum Wage and Overtime Pay key weaknesses in EPI’s estimate that Contract Work in New York State,’’ The New As noted above, an additional School Center for New York City Affairs (February undermine its assertions. EPI’s estimate 2020), https://static1.squarespace.com/static/ consideration in the discussion of 53ee4f0be4b015b9c3690d84/t/ employees whose work schedules are modified, transfers is that minimum wage and 5e424affd767af4f34c0d9a9/1581402883035/ often on short notice, to match the employer’s overtime pay requirements would no Feb112020_GigReport.pdf. staffing with customer demand at the moment.’’). longer apply if workers shift from 155 ‘‘Skokie Cleaning Business Must Pay $500K In 152 Bureau of Labor Statistics, ‘‘Contingent and Unpaid Wages, Damages to Workers,’’ Alternative Employment Arrangements—May employee status to independent CHICAGO.CBSLOCAL.COM (May 5, 2012), https:// 2017,’’ USDL–18–0942 (June 7, 2018), https:// contractor status. The 2017 CWS data chicago.cbslocal.com/2012/05/05/skokie-cleaning- www.bls.gov/news.release/pdf/conemp.pdf. MBO indicate that, before conditioning on business-must-pay-500k-in-unpaid-wages-damages- Partners, The State of Independence in America: covariates, primary independent to-workers/. The Department believes that 2018: The New Normal, 2018, 7. James Manyika et misclassification is an important concern that the al., Independent Work: Choice, Necessity, and the contractors are more likely than rule addresses, and that the rule will reduce the Gig Economy (New York: McKinsey Global employees to report earning less than ability of employers to misclassify its workers by Institute, October 2016). the FLSA minimum wage of $7.25 per rendering the test more clear and understandable.

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above fields could lack features that will clear up misclassifications’’); methods.’’ 160 Thus, even ‘‘random’’ would facilitate a position conversion to Financial Services Institute (‘‘we agree audits are not necessarily representative independent contractor status. that it will reduce worker because they target industries with high With respect to overtime, CWS has misclassification and litigation’’). Other rates of misclassification. Because further indicated that, before commenters believe this rule may make audits focus on groups of businesses or conditioning on covariates, primary it easier for employers to misclassify industries in which misclassification independent contractors are more likely employees as independent contractors. rates are the highest, their results would to work overtime or extra hours beyond See, e.g., Equal Justice Center; Employee not support generalized conclusions what they usually work at their main job Rights Center; NELP; State AGs; TRLA. regarding the wider population. As (30 percent for self-employed These commenters cited reports such, the reports’ generalized independent contractors and 19 percent purporting to show extremely high rates conclusion lack reliable and for other independent contractors versus of misclassification. For example, a representative evidence, and are almost 18 percent for employees). The 2020 NELP report cited by many certainly significant overestimates. Department was unable to determine commenters reviewed state audits and Second, the audit data cited by NELP whether these differences were the concluded that ‘‘these state reports and others do not necessarily focus on result of differences in worker show that 10 to 30 percent of employers misclassification of employees as classification, as opposed to other (or more) misclassify their employees as independent contractors; some states’ factors. The Department has cited many independent contractors.’’ 156 The data are evaluated based on prevalence sources throughout this analysis that Washington Center also cited a study of employer violations, which is not point to a wide range of income for conducted by the Department of Labor representative of percentages of workers independent contractors, and does not in 2000 to claim that ‘‘between 10 misclassified as independent believe that this rule will be especially percent and 30 percent of employers contractors. For example, the 2020 applicable to any particular income audited in 9 states misclassified workers NELP report appears to state that audits segment of independent contractors. as independent contractors.’’ 157 conducted by Ohio found a Accordingly, the Department believes it misclassification rate of 45 percent, but These estimates, however, appear to prudent to rely on the numerous sources the cited Ohio report stated otherwise. be unreliable for at least two reasons. it has drawn on in the development of The report explained that the audits First, they make generalized this rule, rather than to focus on any searched for unemployment insurance conclusions regarding rates of particular slice of the income violations, not just misclassifications, distribution. And while independent misclassification using non- and that ‘‘45% of the audits produce contractors are not, by definition, representative audit data. For example, findings, in many cases for workers subject to the minimum wage the Department’s 2000 study cited by misclassification.’’ 161 In other words, requirements of the FLSA, none of the the Washington Center states that audits the Ohio audits found 45% of audited evidence cited by commenters suggests were ‘‘selected on a targeted basis employers failed to comply with some that the final rule is likely to because of some prior evidence of unemployment insurance requirement, 158 significantly impact this issue, and if so, possible non-compliance.’’ The 2020 with an unspecified subset committing to what extent. Accordingly, the NELP report likewise explained that misclassification. This and other Department did not attempt to quantify ‘‘[m]ost studies [on misclassification] misunderstandings of state audit these potential transfers. rely on audit data from unemployment findings may result in a misleading insurance and workers’ compensation estimate of the frequency with which 6. Misclassification 159 audits, targeted or random.’’ As a employers misclassify employees as Many commenters expressed 2015 EPI report explained, ‘‘[a]udit independent contractors. Furthermore, concerns regarding misclassification of methods vary across states in the extent the reporting is based on employees as independent contractors, to which they target employers for misclassification (or other issues, as which occurs when an individual who audit: They can base the audits on documented above) on a per employer is economically dependent on an specific criteria (e.g., a record of prior basis. The employer rate of employer is classified by that employer violation), or use a random sample of misclassification may not necessarily as an independent contractor. FLSA employers within industries prone to correspond to the rate of employee misclassification may be inadvertent or misclassification, or a mix of both misclassification. For example, if an intentional and its direct effects could employer employs 100 employees and include a transfer from the worker to the 156 NELP, Independent Contractor misclassifies only one of them, the employer if the employer fails to pay Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, Oct. 2020, employer is recorded as a misclassifying minimum wage and overtime pay to 162 available at https://www.nelp.org/publication/ employer in the aggregated results. which the worker is entitled. independent-contractor-misclassification-imposes- Conversely, reducing misclassification huge-costs-workers-Federal-state-treasuries-update- 160 Employment Policy Institute. Carre, Francoise, could result in a transfer from october-2020. (In)dependent Contractor Misclassification. https:// employers to workers. 157 Lalith de Silva, Adrian Millett, Dominic www.epi.org/publication/independent-contractor- Several commenters believe that Rotondi, and William F. Sullivan, ‘‘Independent misclassification. Contractors: Prevalence and Implications for 161 Report of the Ohio Attorney General on the ‘‘[c]larifying the application of the test Unemployment Insurance Programs’’ Report of Economic Impact of Misclassified Workers for State for independent contractor status will Planmatics, Inc., for U.S. Department of Labor and Local Governments in Ohio 16–17 (Feb. 18, promote compliance with labor Employment and Training Administration (2000), 2009), available at https://iiiffc.org/images/pdf/ standards under the FLSA and, in turn, available at https://wdr.doleta.gov/owsdrr/00-5/00- employee_classification/OH%20AG%20Rpt%20on 5.pdf. %20Misclass.Workers.2009.pdf. reduce worker misclassification.’’ 158 Id. (emphasis added). 162 If 11 percent of businesses misclassify only Opportunity Solutions Project (OSP); 159 NELP, Independent Contractor one worker as an independent contractor, there are see also, e.g., Truckload Carriers Misclassification Imposes Huge Costs on Workers 100 businesses, and each employer has 20 workers, Association (‘‘[t]he increased clarity and Federal and State Treasuries, Policy Brief Oct. then the total percentage of these misclassified 2020, available at https://www.nelp.org/ workers is actually 0.5 percent. To find that 11 provided by the [proposed rule] would publication/independent-contractor- percent of workers are misclassified as independent likely lead to reduced misclassification-imposes-huge-costs-workers- contractors, all of the businesses who misclassified misclassification.’’); IAW (‘‘This rule Federal-state-treasuries-update-october-2020/. workers as independent contractors would need to

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This binary approach to data collection achieving the desired clarity and may provide more than ‘‘access to a on a per employer basis prevents a certainty.’’ A clearer test also means steady income and benefits.’’ 164 Such disambiguation to analyze the actual more workers will better understand an individual may, for example, number of misclassified workers in the their rights under the FLSA and can discount the value of certain types of labor force. This phenomenon is present defend those rights through private compensation associated with employee is another study conducted by the litigation or complaints to the classification, such as health insurance, Wisconsin Department of Revenue cited Department, which should deter that he or she might already enjoy from by NELP, which claimed that ‘‘In 2018, unscrupulous employers from a different source. The individual may 44% of audited employers were found intentionally misclassifying them. also simply prefer to trade overall to be misclassifying workers.’’ 163 In summary, the Department believes compensation for the greater flexibility However, that data seems to be that the simplicity and clarity this rule that often accompanies independent misleading for multiple reasons. First, provides will reduce both inadvertent contractor roles. Thus, the lower paid the quotation does not appear to match and intentional misclassification, which converted new jobs do not necessarily the cited source. Appendix 2 of the could produce transfers from employers reduce such workers’ welfare because Wisconsin Workforce Report states that to employees who are more likely to be they could offer tradeoffs that may be in 2019 the ‘‘percentage of audited correctly classified and given minimum preferable to the workers who are most employers with misclassified workers’’ wage and overtime pay. The Department likely to sort themselves into those was 33.3 percent (divergent from the is unable to calculate the exact transfer positions. On balance, the Department ‘‘44 percent’’ that NELP stated). Second, amount because it lacks reliable metrics believes conversion of new jobs will the number of businesses found to be on, for example, the existing have an overall positive impact on misclassifying workers does not address misclassification rates in the general workers. how many workers were misclassified. economy, the precise extent to which The second category of job conversion The percentage of workers misclassified this rule improves legal clarity, and how discussed above occurs when employers was 10.6, across all of the audited firms will respond to that clarity. modify their working relationship with existing employees such that they are employers, which is much smaller than 7. Job Conversion either 33 or 44 percent. Finally, all of rendered independent contractors under these estimates are compounded by the Many commentators expressed this rule. As explained above, to act on targeting bias described earlier, namely concerns that the rule would cause the legal certainty provided by this rule, that the results only reflect businesses businesses to reclassify their workers as the converted position likely would specifically targeted for audits, which independent contractors, causing those have to provide the worker with presents only a partial picture of the workers to lose the benefits of the FLSA substantial control over the work and a incidence of such misclassification with little gain in return. See, e.g., meaningful opportunity for profit or economy-wide. Washington Center (asserting that loss. The Department believes such Ultimately, and as explained above in ‘‘independent contractors tend to be conversions will be less common than Section VI(G)(2), commenters’ estimates worse-off than their wage-and-salary conversion of future positions because regarding current rates of counterparts’’); National Women’s Law the marginal cost of restructuring an misclassification—whether accurate or Center (‘‘if finalized, this rule will cost existing work arrangement is greater not—have little bearing on how workers . . . in the form of reduced than altering the arrangement of an misclassification rates are likely to compensation’’); EPI (estimating that unfilled position. And such change as a result of this rule. This rule converted ‘‘workers would lose $6,963 restructuring would disrupt the establishes a clearer test for when a per year’’). Some of these issues are preexisting working relationships, worker is an independent contractor discussed above. For example, the which risks negatively impacting rather than an employee under the Department discussed possible earnings worker morale, productivity, and FLSA. As such, it would reduce effects of workers converting from retention. Nonetheless, some conversion inadvertent misclassification by employee to independent contractor of existing positions may occur, and employers who are confused by the extensively in this section VI(D) and some converted workers may prefer the prior test, particularly small businesses concluded it could not definitively additional flexibility and earn more by that lack resources to hire expensive determine whether overall taking advantage of the opportunity for attorneys. For example, one small compensation—i.e., earnings plus profit or loss that may accompany the business owner commented to explain benefits—for a job that is converted conversion. The effect of the rule would that ‘‘the ability to understand and from employee to independent be positive for these workers. Other properly determine worker status under contractor classification in response to converted workers may prefer the the FSLA is paramount for small this rule is likely to rise or fall on security, stability, and other features of businesses who cannot afford the cost of average. Regardless, the Department an employment relationship or earn less litigation . . . I believe that with the acknowledges that whether the overall due to, for example, reduction of proper transparency within the effect of job conversion is likely to be, employer-provided benefits, regulations, the better the outcome not on balance, positive depends on the employment taxes, and loss of the only for small businesses, but the individual, reclassified worker, the FLSA’s minimum wage and overtime worker, and ultimately the care unique circumstances of the business, pay. The effect of the rule would be recipient. We want to comply, and I and whether or not the working negative for these converted workers, have confidence that the proposed [rule] conditions were changed in order to but, as explained above, the Department . . . will be highly effective in reclassify the worker. believes this type of conversion will be If the converted position is an entirely rare. have misclassified 100 percent of their workforce as new position, it is more likely to be Finally, an employer may reclassify independent contractors. filled by one of the many individuals an existing employee position to an 163 Wisconsin Department of Workforce who desire to work as an independent Development, Payroll Fraud and Worker independent contractor position Misclassification Report 16 (2020), available at: contractor, for example because they https://dwd.wisconsin.gov/misclassification/pdf/ value the ‘‘flexibility to choose when 164 See Coalition for Workforce Innovation (2020), 2019-2020-misclassification-task-force-report.pdf. and where to work’’ that the position supra note 77.

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without meaningfully changing the not afforded non-pecuniary benefits, for Second and as explained above, the nature of the job in response to the example additional flexibility, in converted worker whose job remains added legal clarity provided by this return.167 EPI and likeminded unchanged is likely to already have rule. Employers could be most confident commenters believe these workers substantial control over the work and a of such reclassification under this rule would be ‘‘doing the same job for meaningful opportunity for profit or loss if the preexisting job already provided substantially less compensation as an such that he or she can be classified as the worker with substantial control over independent contractor,’’ and that this independent contractor with the most the work and a meaningful opportunity class of worker comprises the majority legal certainty this rule can provide. for profit or loss. The Department or even all of the workers impacted by The Department was unable to believes this phenomenon is likely to be this rule. The Department agrees that determine how many of the 370,000 rare because the current position would some workers could be impacted in this current minimum wage employees also have to be held by an individual who manner, but believes such occasions are meet these two criteria, although it is in business for him- or herself as an likely to be rare because two necessary expects the number to be low. The economic reality but is nonetheless conditions limit the number of such Department attempted to identify presently classified as an employee. workers. examples of minimum wage employees While many commenters warned that First, in order for conversion to have who enjoy substantial control over their economically dependent employees an unambiguously negative affect, a work and a meaningful opportunity for may be improperly classified as converted worker’s overall profit or loss, but was unable to do so. independent contractors, none compensation must be at the minimum Nor did commenters provide specific expressed concern that there is wage. Generally, firms impacted by the data or examples of minimum wage widespread classification of individuals rule can already directly reduce wages employees who would meet these who are in business for themselves as and benefits of their employees—they criteria. Several commenters argued that employees.165 Such employees may do not need to convert those employees the Department failed to adequately nonetheless exist and be converted into to independent contractor to achieve consider the effects of these possible independent contractors as a result of these labor cost savings. However, most conversions from employee to this rule. Features of these converted firms do not reduce their employees’ independent contractor, or the potential workers’ work, for example the level of compensation due to the risk of negative effects of misclassification on flexibility and stability, would remain lowering morale, reducing productivity, workers. NELA, for instance, asserted unchanged because the job remains the and causing turnover. That is to say, the that the NPRM’s cost-benefit analysis same. Firms could potentially reclassify labor markets in which most firms focused solely on companies rather than existing workers who are already in operate prevents them from setting workers and further claimed that the business for themselves in a manner compensation without regard for worker Department ‘‘ignores the massive cost to that reduces overall compensation, but preferences. The Department believes misclassified workers.’’ Other their ability do to so would be that a firms’ ability and willingness to commenters stated that the final rule constrained because such reduction reduce its employees’ compensation is would harm workers by either could negatively impact worker morale, shaped by the tradeoff between labor increasing the rate of misclassification productivity, and retention.166 savings, on one hand, and the risk of or by allowing employers to reduce Nonetheless, the sharpening of the lower productivity and higher turnover, wages and benefits of employees who economic reality test may negatively on the other. Clarifying the legal are converted into independent requirement for firms to convert a contractors. See, e.g., Washington impact some current employees who position from employee to independent Center for Equitable Growth could be reclassified as independent contractor status would not make firms (Washington Center) (asserting that contractors in a manner that results in any more willing or able to reduce ‘‘independent contractors tend to be reduced overall compensation but are compensation unless the worker was worse-off than their wage-and-salary already earning the minimum wage and counterparts’’); Appleseed Center 165 Commenters in the business and freelancer community indicated that—rather than classify receiving no benefits. According to BLS, (expressing concern that rule ‘‘will harm independent entrepreneurs as employee in response based on CPS data, in 2017 there were workers across a broad spectrum, [but] to legal uncertainty regarding classification— 370,000 adult 168 employees paid at the will have a disproportionate impact on business simply decline to do business with those minimum wage, which comprise 0.24 Black and Hispanic workers who are entrepreneurs in the first place. See, e.g., ASTA 169 (‘‘The prospect of inconsistent determinations has percent of the U.S. labor force. overrepresented in the low-paying jobs had a chilling effect on the growth of businesses in where independent contractor industries reliant on contract workers which has 167 Employers and employees could make similar misclassification is common’’); National resulted in fewer opportunities for individuals who conversions to independent contractor status for Women Law Center (‘‘if finalized, this choose to offer their services as independent reasons outside the sharpening of the economic entrepreneurs.’’); CPIE (‘‘uncertainty associated reality test this rule provides. Such shifts would not rule will cost workers . . . in the form with worker classification under the FLSA . . . be identified as impacts in this analysis because the of reduced compensation’’); EPI discourages companies from doing business with impetus for such conversion is due to factors other (estimating that individual ‘‘workers independent entrepreneurs’’). The effects described than this rule. would lose $6,963 per year’’). by these commenters are unsurprising. For 168 This figure excludes workers under the age of As is explained in greater detail example, it makes little sense for a business to 19. If excluding workers under the age of 24, this classify a worker as an employee, thus obligating figure drops over 40 percent to 221,000. This figure below, the Department disagrees with themselves to pay a premium rate for overtime work does not include workers who make less than the these comments that the rule will under the FLSA, if it is the worker and not the minimum wage, a vast majority of whom work in broadly harm workers. The Department business who determines how many hours to work the restaurant industry and receive tips for their agrees with the numerous commenters, each week. Rather, the business likely would either work. The average earnings of a restaurant worker not hire the worker at all or hire him or her as an who receives tips is significantly above the including nearly all individual employee but insist on controlling hours worked. minimum wage. The figure includes part time commenters who self-identified as 166 Most firms can already reduce the overall workers, who would not likely receive overtime freelancer workers, who asserted that compensation of their employees whose wages compensation due to the limited number of hours the rule would encourage flexible work exceed the minimum wage through more direct they work. means than reclassification as independent 169 In 2017, there were approximately arrangements and thereby create contractors but do not do so because of risks 152,000,000 workers in the U.S., according to the meaningful—though not easily regarding morale, productivity, and retention. U.S. Bureau of Labor Statistics. measurable— value for workers. One

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commenter explained that ‘‘[b]eing an nor its underlying business model, both outside experts to evaluate the rule and independent worker allows for me to do of which would likely negatively impact relay the relevant information to their what I can as a single mother, have productivity. organization (e.g., a chamber of flexibility.’’ Another stated that In summary, the most common commerce). The Department used the ‘‘[f]reelancing has afforded me categories of job conversions—e.g., new number of establishments to estimate independence and flexibility and the positions—are likely to positively the fundamental pool of regulated opportunity to be a productive member impact workers. And the category of job entities—which is larger than the of society, and do my best work.’’ As a conversions that is likely to produce number of firms. This assumes that final illustrative example, another negative impacts—i.e., reclassification regulatory familiarization occurs at both commenter asserted that ‘‘[t]he primary of workers without changes to the job— the headquarters and establishment value for myself as an independent is most likely the rarest. For these levels. contractor for my services is the reasons, the Department believes There may be differences in freedom to negotiate, to choose, and the benefits to workers from job conversions familiarization cost by the size of freedom to limit what services I provide, will, on balance, exceed costs. establishments; however, the analysis does not compute different costs for the days, and hours of work, and the E. Costs price of my labor, unencumbered by the establishments of different sizes. less flexible but more secure employer The Department considered several Furthermore, the analysis does not employee relationship.’’ Although some costs in evaluating the rule. The revise down for states where the laws workers in positions converted from Department quantified regulatory may more stringently limit who employees to independent contractor familiarization costs and estimated that qualifies as an independent contractor relationships may receive fewer benefits they will total $370.9 million in Year 1. (such as California) and thus the new traditionally associated with Other potential costs, including those rule will have little to no effect on classification as employees, the raised by commentators, were not classifications. To estimate the number Department believes that this would quantified, for reasons explained in the of establishments incurring regulatory likely be infrequent and their net effect sections that follow. familiarization costs, the Department began by using the Statistics of U.S. would not necessarily be negative.170 1. Regulatory Familiarization Costs Moreover, the Department believes any Businesses (SUSB) to define the total Regulatory familiarization costs negative effects would be outweighed by pool of establishments in the United represent direct costs to businesses and 172 the significant value the rule delivers to States. In 2017, the most recent year current independent contractors other workers and businesses by available, there were 7.86 million associated with reviewing the new clarifying, simplifying, and reducing establishments. These data were regulation. To estimate the total transaction costs around independent supplemented with the 2017 Census of regulatory familiarization costs, the contractor arrangements. Government that reports 90,075 local Department used (1) the number of No commenter provided evidence or government entities, and 51 state and establishments, government entities, 173 specific cases in which individuals or Federal government entities. The and current independent contractors; (2) types of workers would, as a result of total number of establishments and the wage rates for the employees and for this rule, be converted from employees governments in the universe used for the independent contractors reviewing to independent contractors. Because the this analysis is 7,950,800. the rule; and (3) the number of hours The applicable universe used by the rule does not change the classification that it estimates employers and Department for assessing familiarization of any employee, any jobs converted independent contractors will spend costs of this final rule is all without meaningful change would have reviewing the rule. This section presents establishments that engage independent had to already have satisfied the the calculation for establishments first contractors, which is a subset of the requirements of bona fide independent and then the calculation for universe of all establishments. In its contracting arrangements under this independent contractors. analyses, the Department estimates the rule, with the only change likely being For a rule like this one, it is not clear impact of regulatory familiarization a lower assessed litigation risk for whether regulatory familiarization costs based upon assessment of the regulated certain businesses. While the number of are a function of the number of universe. In several recent rulemakings, workers for whom reclassification establishments or the number of the Department estimated that the occurs without bringing them firms.171 Presumably, the headquarters regulated universe comprised all meaningful benefits may not be zero, the of a firm will conduct the regulatory establishments because the rules were Department believes such cases will be review for businesses with multiple broadly applicable to every employer.174 rare exceptions. Even if the locations, and also may require some For those rules, the Department classification of a worker were to locations to familiarize themselves with estimated familiarization costs by change, the business could face market the regulation at the establishment level. assuming each establishment would forces that would likely hold overall Other firms may either review the rule review each rule. Because this final rule compensation steady. Furthermore, to consolidate key takeaways for their affects only some establishments, i.e., businesses would need to take caution affiliates or they may rely entirely on that any new contract relationship 172 U.S. Census Bureau, 2017 SUSB Annual Data would neither damage worker relations 171 An establishment is commonly understood as Tables by Establishment Industry. https:// a single economic unit, such as a farm, a mine, a www.census.gov/data/tables/2017/econ/susb/2017- 170 As explained in more detailed above, this is factory, or a store, that produces goods or services. susb-annual.html. because most workers can be converted from Establishments are typically at one physical 173 U.S. Census Bureau, 2017 Census of employee into independent contractor classification location and engaged in one, or predominantly one, Governments. https://www.census.gov/data/tables/ only if they are provided with greater control over type of economic activity for which a single 2017/econ/gus/2017-governments.html. their work and opportunity for profit or loss based industrial classification may be applied. An 174 These include Joint Employer Status under the on their initiative or investment. Such flexibility establishment contrasts with a firm, or a company, Fair Labor Standards Act; Defining and Delimiting and entrepreneurial opportunities may be more which is a business and may consist of one or more the Exemptions for Executive, Administrative, valuable to such workers than potential reduction establishments. See BLS, ‘‘Quarterly Census of Professional, Outside Sales and Computer in benefits associated with classification as Employment and Wages: Concepts,’’ https:// Employees; and Regular Rate Under the Fair Labor employees. www.bls.gov/opub/hom/cew/concepts.htm. Standards Act.

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those that currently or may in short hire independent contractors is doing so rule change published by the order face an independent contractor because the firm believes the new Department, worker advocacy groups, versus employee classification relationship will be beneficial to itself media outlets, and accountancy and determination, the Department and the independent contractor also consultancy firms, as has occurred with accordingly reduces the estimated pool believes that the new relationship will other rulemakings. Furthermore, the to better estimate the establishments be beneficial to him or herself. Such a repercussions for independent affected by the rule by assessing situation would result in net benefits to contractors are smaller (i.e., the regulatory familiarity costs only for the employer that more than fully litigation costs, damages, and penalties those establishments that engage compensate for any familiarization associated with misclassification tend to independent contractors. costs. Notably, and for comparability in fall on establishments).178 This time is In 2019, Lim et al. used extensive IRS estimates, the Department does not add valued at $46.36, which is the mean data to model the independent these potential firms to the Benefits hourly wage rate for independent contractor market, finding that 34.7 section either. contractors in the CWS, $27.27, with an percent of firms hire independent The Department assumes that a additional 46 percent benefits and 17 contractors.175 These data are based on Compensation, Benefits, and Job percent for overhead, then updated to annual tax filings, so the dataset Analysis Specialist (SOC 13–1141) (or a 2019 dollars. Therefore, regulatory includes firms that may contract for staff member in a similar position) will familiarization costs to independent only parts of a year. The 34.7 percent of review the rule.177 According to the contractors in Year 1 are estimated to be establishments provides a figure of Occupational Employment Statistics $218.6 million ($46.36 × 15 minutes × 2,758,928, which forms the foundation (OES), these workers had a mean wage 18.9 million). of the multiplier used in this analysis. of $33.58 per hour in 2019 (most recent The estimate of 18.9 million The Department did not estimate data available). Given the proposed independent contractors captures the familiarization costs for companies that clarification to the Department’s universe of workers over a one-year may decide to work with independent interpretation of who is an employee period. Using this figure for the overall contractors only after the new rule is and who is an independent contractor cost estimate results in an artificially finalized, because they would need to under the FLSA, the Department high value because it includes workers familiarize themselves with the current assumes that it will take on average who would have otherwise been legal framework even in the absence of about 1 hour to review the rule as included in the baseline case without this rule.176 Although firms that do not proposed. The Department believes that the rule and thus spent time currently use independent contractors an hour, on average, is appropriate, familiarizing themselves with the legal are not counted in this universe of because while some establishments will framework in the matter of course, employers, to allow for an error margin, spend longer than one hour to review without incurring a supplementary cost. the Department is using a rounded 35 the rule, many establishments may rely Furthermore, the Department believes percent of the total number of on third-party summaries of the changes that it is probable that independent establishments defined above or spend little or no time reviewing the contractors would review the regulation (7,950,800), resulting in 2,782,780 rule. Assuming benefits are paid at a only when they had reason to believe establishments estimated to incur rate of 46 percent of the base wage, and that the benefits would outweigh the familiarization costs. overhead costs are 17 percent of the costs incurred in familiarizing The Pennsylvania Department of base wage, the reviewer’s effective themselves with the rule, and since this Labor & Industry (PA L&I) commented hourly rate is $54.74; thus, the average analysis does not attempt to calculate that the Department underestimated the cost per establishment conducting those economic benefits it is possible cost of the rule by failing to include regulatory familiarization is $54.74. that the costs presented in this section businesses that are newly incentivized Therefore, regulatory familiarization are overestimated.179 to consider reclassifying workers to costs to businesses in Year 1 are The total one-time regulatory independent contractors. As stated estimated to be $152.3 million ($54.74 familiarization costs for establishments above, even without the new rule any × 2,782,780) in 2019 dollars. and independent contractors are firm that does not currently engage any For regulatory familiarization costs for estimated to be $370.9 million. independent contractors but chooses to independent contractors, the Regulatory familiarization costs in do so in the future would have already Department used its estimate of 18.9 future years are assumed to be de had to familiarize itself in the baseline million independent contractors and minimis. Similar to the baseline case for case, so this rule does not impact those assumed each independent contractor employers, independent contractors firms. Since the commenter’s point is will spend 15 minutes to review the would continue to familiarize premised on the fact that the firm may regulation. The average time spent by themselves with the applicable legal be incentivized to investigate the independent contractors is estimated to framework in the absence of the rule, so regulation, it would be reasonable to be smaller than for establishments. This this rulemaking—anticipated to provide assume that any firm without difference is in part because the more clarity—is not expected to impose independent contractors that reviews Department believes independent costs after the first year.180 This the new rule and ultimately decides to contractors are likely to rely on summaries of the key elements of the 178 An independent contractor that hires 175 Table 10: Firm sample summary statistics by independent contractors would already be captured year (2001–2015), https://www.irs.gov/pub/irs-soi/ 177 A Compensation/Benefits Specialist ensures in the ‘‘establishment’’ calculation. 19rpindcontractorinus.pdf. company compliance with Federal and state laws, 179 For example, independent contractors in states 176 An added dimension is that the final rule is including reporting requirements; evaluates job with classification frameworks that are known to be expected to provide significant clarity, which positions, determining classification, exempt or more stringent than the existing FLSA classification would result in time and cost savings (net of non-exempt status, and salary; plans, develops, framework, such as in California, may not review regulatory familiarization costs) for those outside evaluates, improves, and communicates methods the rule since it would be unlikely to affect their the pool of firms with existing independent and techniques for selecting, promoting, classification. contractor relationships. These (net) cost savings compensating, evaluating, and training workers. See 180 As explained below, the Department considers are not included in this analysis, consistent with BLS, ‘‘13–1141 Compensation, Benefits, and Job that the regulation may produce benefits along this this analysis’ treatment of resulting growth in the Analysis Specialists,’’ https://www.bls.gov/oes/ dimension in future years by simplifying the independent contractor universe. current/oes131141.htm. regulatory environment.

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amounts to a 10-year annualized cost of raised and discusses the qualitative that independent contractors cannot $43.5 million at a discount rate of 3 merits, but does not quantify estimates adequately assess their risks, needs, and percent or $52.8 million at a discount for inclusion in its top line figures.182 goals. Furthermore, these commentators rate of 7 percent. Detailed explanations are presented in seem to assume that the listed features SWACCA commented that regulatory each category below, including could be obtained by workers with no familiarization costs were discussion of the range of uncertainties cost to the worker. The Department does underestimated because they ‘‘would and data limitations identified. not agree with such assessments. The not only be imposed upon adoption of a. Additional Impacts to Workers Independent Women’s Forum stated a final rule but would be ongoing as that the flexibility afforded by Several commenters asserted that the stakeholders begin to understand independent contracting is especially whether and how it will be applied.’’ NPRM’s discussion of costs did not ‘‘crucial for women who are the primary Additionally, they asserted the costs for include a discussion of effects on caregivers in their households.’’ businesses to familiarize themselves workers beyond minimum wage and with the new guidance would exceed overtime pay. Ironworkers Local Union Palagashvili; Independent Women’s the cost of familiarization for the 7 stressed the importance of benefits Forum (‘‘Women find independent existing guidance, a claim that the such as workers’ compensation for the contracting appealing because of the commenter did not substantiate with dangerous nature of the work of their flexibility, autonomy, and freedom it data. The Department disagrees with members and other construction provides.’’). Nor did individual this assertion. The rule is expected to workers. The Center for Law and Social freelancer commenters, who repeatedly reduce the time spent analyzing how the Policy (CLASP) noted that the rule affirmed their ability to make rational economic reality test’s factors interact. could also impact other benefits based decisions for themselves and their own Accordingly, the Department reiterates on the FLSA’s definition of businesses. One such commenter stated that incremental regulatory employment, such as access to paid sick that ‘‘I prefer the option to make my familiarization costs in future years are leave in general and under the Families own schedule and decide how I want to expected to be de minimis. First Coronavirus Response Act proceed in making my money at my A number of commenters expressed (FFCRA). The Washington Center, own discretion.’’ Another explained support for the cost estimates. The CGO among others, contended it may also that, ‘‘[a]s an independent contractor I states that, ‘‘As currently written, the impact workers’ rights to join a union. am free to choose when and where I proposed rule carefully quantifies the The International Brotherhood of work. This is important to me as a cost savings of reduced litigation and Teamsters commented that the caregiver for elderly relatives.’’ As a increased clarity.’’ AFPF posited that, if liquidated damages remedy for willful final illustrative example, a freelancer anything, the calculations would tend to or bad faith violations of the FLSA is stated that ‘‘I have chosen this reflect ‘‘an overstatement of regulatory not available to workers who are profession because of the freedom and familiarization costs.’’ classified as independent contractors. flexibility it affords me. I also can earn Other commenters asserted that 2. Other Costs 181 more freelancing than I could working independent contractors are also not It is possible this rule will result in protected by the Federal anti- in a similar full-time job [. . .]. I am a costs beyond the above described discrimination and health and safety far better judge of what is good for me familiarization costs. In the NPRM, the statutes, and that the Department failed than a politician in Washington.’’ Department invited comments and data to consider this effect.183 Independent workers are a bedrock of on potential other costs of this rule. The These potential impacts do not the U.S. economy and are acutely aware Department received comments change the Department’s overarching of their own values and needs. responsive to these requests which view that workers as a whole will be Fundamental to being an independent generally fell into seven categories: better off as a result of this rule, even contractor is the ability to control one’s Impacts to workers; impacts to tax if some workers may not be better off. own work, which enables workers to be revenues; impacts on competition; Generally speaking, the above the deciding factor in accepting or impacts on income inequality and to commenters raise points that declining work that may be risky or not minorities and women; tax filing; fundamentally rest on the assumption as rewarding. The commenters above implementation; and impacts on income did not cite or offer data to support their stability. The Department evaluated all 182 In some cases, commenters raised points that assumption that employees covered by of the potential costs that were may very well impact certain individuals in the FLSA are intrinsically better off identified, and examined many of the specialized circumstances, but which are not, when aggregated across the economy as a whole, compared to genuine independent citations provided. In general, the cumulatively significant or representative. contractors who are not covered by the commenters did not provide ample data 183 The Department has not conducted a thorough FLSA. Several commenters, notably or other evidence to support their review of discrimination law at the Federal or state CLASP and NWLC, who submitted claims, and, upon review, the level for the purposes of this rulemaking, but notes that independent contractors are protected by at comments related to the pandemic do Department was unable to confirm or least some Federal anti-discrimination laws. See, not address the abundant data substantiate the proposed cost e.g., 42 U.S.C. 1981. Further, the scope of these laws demonstrating that access to categories in its own research. is not dependent on employee status under the Therefore, in this section of the analysis, FLSA. See, e.g., Gulino v. New York State Educ. independent contracting has been the Department addresses the points Dep’t, 460 F.3d 361, 379 (2d Cir. 2006) (‘‘[T]he essential for many workers attempting Supreme Court has given us guidelines for to balance responsibilities, especially discerning the existence of an employment 181 Various commenters to the NPRM raised relationship [in the race-discrimination context]: for women and caregivers. Accordingly, points that they considered ‘‘costs,’’ although those Traditional indicators of employment under the to the extent the final rule will increase points may more accurately be defined as transfers common law of agency.’’); Weary v. Cochran, 377 the frequency of independent under Executive Order 12866. To clearly address F.3d 522, 524 (6th Cir. 2004) (‘‘[T]he proper test to these points, the Department decided to address the apply in determining whether a hired party is an contracting, the Department believes following areas with the language used by employee or an independent contractor under the that workers will, on net, benefit from commenters. For further discussion of related [Age Discrimination in Employment] Act is the that option. impacts, please see the Potential Transfers section. ‘common law agency test.’ ’’).

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b. Impacts to Tax Revenue and Public through the Pandemic Unemployment misclassification is erroneously Assistance Assistance (PUA) program. SWACCA compared to independent contractors. Some commenters asserted that the noted that more than 11 million self- Further, the majority of these estimates rule will either reduce tax revenue or employed individuals have received of lost revenue are due to an assumption 185 increase public assistance. For example, assistance from PUA. The nationwide that freelance workers do not report some commenters pointed out that low- response to the COVID–19 pandemic their full earnings, which is a criminal income workers who are classified as was intentionally robust. PUA offense. A letter from seven independent contractors are often forced assistance was funded by Congress in Congressional Representatives cited a to rely on public assistance programs. the CARES Act. 1984 IRS estimate that misclassification The UFCW cites a study finding 15 Several commenters noted that any cost the Federal government $3.72 percent of platform workers in the San shift from employees to independent billion (adjusted to 2019 dollars), nearly Francisco area receive some form of contractors will result in lost tax 60 percent of which was from public support (e.g. food stamps, revenue. Specifically, the Michigan misclassified workers failing to pay housing assistance) and 30 percent were Regional Council of Carpenters cites income taxes and the remainder was on state public-access health estimates of the loss in taxes in due to failure to pay taxes used to fund insurance.184 This report did not, Michigan and other states due to social insurance programs. Once again, however, compare this finding with the misclassification.186 Notably, this comment failed to meaningfully extent to which low-income employees misclassified workers are not the same explain how the studies it cites can be rely on public assistance. The as independent contractors. In fact, this extrapolated across independent Department notes that public assistance rule clarifies the classification of contractors. is available to low-income individual workers and is expected to result in The Department notes that certain whether they are employees or fewer total cases of misclassified employer required taxes, such as independent contractors. An increase in workers. The Department does not agree unemployment insurance and workers’ independent contracting will not with the assumptions about the U.S. compensation, are not required for necessarily lead to increased public labor market held by commenters to this independent contractors, and thus the assistance expenditures. To the rule that reference studies on the cost of associated tax revenue will decrease if contrary, if independent contracting, misclassified workers. EPI estimated more individuals choose to work as even at a low income, is the alternative that the increase in workers classified as independent contractors. However, the to unemployment or nonparticipation in independent contractors will lead to a lack of transfer means that the worker the labor force, then it would reduce transfer of at least $750 million annually keeps more money, which may be saved means-tested public assistance from social insurance funds. EPI’s to provide for periods of expenditures. Several individual estimate is predicated on an assumption unemployment. Additionally, these are commenters suggested that they would that eligibility for independent transfer programs where the benefits are not be working at all but for contractors to receive unemployment paid to the workers who pay into the independent contractor opportunities. benefits ‘‘will occur in future program through their employers. Thus, One commenter said, ‘‘I am an recessions.’’ The unprecedented CARES if independent contractors are not independent contractor, i.e. business Act funded unemployment benefits eligible to participate in these program, owner; I am self-employed. I would not through PUA for the first time in government expenditures would also be able to work in any capacity, other history. EPI’s entire estimate rests on decrease. Therefore, providing than self-employed.’’ Another such unprecedented relief becoming unemployment benefit or workers’ explained, ‘‘I am 71 years old and commonplace, a view which the compensation to independent cannot (and will not) take regular Department does not share. The contractors is generally not a cost to employment. Earning an income from Washington Center cites a study by state and local governments. To my home is safer, more effective and Harvard Law School’s Labor and demonstrate, consider unemployment more satisfying.’’ As a final illustrative Worklife program that ‘‘found that programs, which are a type of insurance. example, a woman explained that ‘‘[a]s between 2013 and 2017, the state of Reduced unemployment taxes are a single mother trying to go back to Washington lost $152 million in generally offset by reduced school I have day and night classes. unemployment taxes and the Federal unemployment benefits. The only direct Having a regular job during this time be government lost $299 million in payroll cost would be if workers who no longer [sic] very challenging to meet my school taxes due to worker misclassification in pay into these programs continue to hours.’’ Thus, making it easier for the state.’’ 187 Again, worker receive benefits. These direct costs are individuals to work as independent expected to be small. contractors may reduce the burden on 185 Unemployment Insurance Weekly Claims Government revenue from other taxes, Report (October 15, 2020), https://oui.doleta.gov/ public assistance. Furthermore, since such as income and Medicare taxes, press/2020/101520.pdf. may go up or down as a result of this this RIA focuses on the changes at the 186 D. Belman and R. Block, ‘‘Informing the margin based on increased clarity of the Debate: The Social and Economic Costs of rulemaking depending on the total classification factors, the concerns Misclassification in the Michigan Construction income of employers, employees, and raised by the studies cited by these Industry,’’ Institute for Public Policy and Social independent contractors. However, a Research, Michigan State University (2008), http:// decrease in tax revenue due to a failure commenters would not necessarily ippsr.msu.edu/publications/ARMisClass.pdf. F. apply to those this rule impacts. Carre, ‘‘(In)dependent Contractor of some independent contractors to fully Several commenters noted that Misclassification,’’ EPI Briefing Paper #403 (June 8, pay their required taxes is not a cost taxpayers funded unemployment 2015), https://files.epi.org/pdf/87595.pdf. O. Cooke, attributable to the Department’s D. Figart, J. Froonjian, and K. Sloane, ‘‘The rulemaking revising the standards for payments for independent contractors Underground Construction Economy in New Jersey,’’ Stockton University (2016), https:// independent contractor status under a 184 C. Benner, E. Johansson, K. Feng, and H. Witt. www.mcofnj.org/wp-content/uploads/2018/05/ ‘‘On-Demand and On the Edge: Ride-Hailing & Underground-Construction-Economy-Summary- Harvard Law School Labor and Worklife Program Delivery Workers in San Francisco’’ (May 5, 2020), June-2016.pdf. (2019), https://lwp.law.harvard.edu/news/worker- https://transform.ucsc.edu/on-demand-and-on-the- 187 L. Xu and M. Erlich, ‘‘Economic Consequences misclassification-washington-state-leads-millions- edge. of Misclassification in the State of Washington.’’ revenue-losses-new-harvard-report.

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Federal law separate and apart from any d. Income Inequality and Impacts on the gig economy, a recent NBER study tax law. Minorities and Women found that the gender wage gap among Finally, the Department notes that Some commenters asserted that the on-demand rideshare workers is lower overall state and local tax revenue may rule could increase racial and gender than that of the rest of the economy and increase as a result of the efficiency and income inequality. NWLC wrote that is ‘‘entirely attributed’’ to differences in experience and preferences.193 The flexibility this rule promotes. The additional protections other than NBER study specifically found that Department believes that legal clarity minimum wage and overtime pay afforded by the FLSA were particularly ‘‘discrimination is not creating a gender provided by this rule will result in, gap in this setting,’’ and ‘‘no other paper among other things, lower regulatory important for working women, such as ‘‘employer obligations to accommodate has ever estimated such a precise ‘zero’ compliance and litigation costs, more 194 breastfeeding workers’’ 189 and gender gap in any setting.’’ Several efficient and innovative work commenters cited other studies that arrangements, and new jobs for ‘‘protections against pay discrimination.’’ The Washington document measurable benefits of individuals who otherwise would not independent contractor opportunities work. All of this could increase firms’ Center cited a study on outsourcing that it believed shows independent for women. Dr. Liya Palagashvili profits and workers’ incomes, which contracting ‘‘has contributed to provided a lengthy review of the results in a larger pool from which state increased wage inequality in the United literature on the beneficial impacts of and local taxes are drawn. The overall States.’’ 190 But the cited study actually independent contract work for women. positive effect on state and local tax found something different: ‘‘the She cited a study that finds that women revenue may dwarf, for example, any increased concentration of typically are the main caregivers at home, and 96 reduction in unemployment insurance low-wage occupations over time can be percent of women ‘‘indicate that the or workers compensation taxes. The explained by changes in the primary benefit of engaging in platform- Department, however, declines to characteristics of establishments economy work is the flexible working hours.’’ See also Independent Women’s quantify net effects on state and local employing these occupations.’’ 191 In Forum (‘‘Women find independent tax revenue because it believe any such other words, the study linked wage contracting appealing because of the attempt to do so would require too inequality to employers outsourcing flexibility, autonomy, and freedom it many assumptions. jobs to other employers that paid lower provides.’’). A McKinsey Global wages, and made no attempt to isolate c. Fair Competition Institute study, discussed in an earlier the effects of independent contracting. section, found that independent work The evidence discussed in this analysis Several commenters stated that offers caregivers, who are shows that independent contractors expanding the scope of independent predominantly women, access to often earn more than their employee contractors will ‘‘fuel a race to the economic opportunity they would bottom,’’ where companies will feel counterparts further undermines the otherwise not have, concluding that pressure to classify workers as commenter’s assertion. ‘‘[t]his type of flexibility can ease the UFCW wrote that ‘‘[t]he proposed independent contractor to reduce labor burden on financially stressed regulation fails to address its potential costs in order to compete in their households facing logistical impact on people of color who are market. UPS claimed that companies challenges.’’ Dr. Palagashvili cited overrepresented in low-wage misclassifying workers as independent numerous other studies that are independent contractor positions such contractors externalize their costs and consistent in their findings: Women are as app-based platform work.’’ This rule hurt other businesses through unfair very much attracted to work competition.188 The Department clarifies for app-based platforms how to arrangements that offer flexibility, believes that this will be unlikely properly classify workers, thereby including one that finds ‘‘75 percent of reducing regulatory compliance, because the risks of losing workers self-identified homemakers, or stay-at- litigation, and transaction costs. Some of likely prevents businesses from home mothers in the United States, these cost savings could be shared by reducing overall compensation, which indicated they would be likely to return app-based workers in the form of includes the fully burdened wage rate to work if they were to have flexible increased earnings, bonuses, or more job (i.e., with taxes and benefits included). options.’’ These studies offer data based opportunities.192 To the extent that Any decrease in compensation below on primary research, and several certain racial groups make up a this level would likely result in firms sources are based on economy-wide disproportionate share of app-based survey data. not being able to hire adequate labor workers, those groups will also enjoy a (either quantity or quality). This rule Dr. Palagashvili’s comments are disproportionate share of benefits. supported by many individual women does not, as some commenters claimed, Regarding gender-based inequality in expand the scope of permissible who commented to affirm that independent contracting provides independent contracting arrangements 189 Independent contractor relationships provide necessary flexibility to balance their but rather clarifies and sharpens the test flexibility to accommodate individual worker work and life priorities. One woman for determining proper classification, needs, such as child care and breastfeeding. 190 explained that ‘‘[a]s a work-at-home which is expected to benefit both Including E. Handwerker and others. ‘‘Increased Concentration of Occupations, mom, I ramped up my business to workers and firms. Outsourcing, and Growing Wage Inequality in the coincide with the time I had available United States,’’ (2015), https:// while raising my kids. I worked during 188 www.semanticscholar.org/paper/Increased- UPS does not use independent contractors for their nap times, and then added more some of the roles or occupations that its largest Concentration-of-Occupations%2C-and-Growing- competitor, FedEx, does. FedEx relies heavily on Handwerker-Abraham/ hours as they went to school.’’ Another independent contractors for its business model, and f7d0d2c9cfcbf53f961bb07a2542abefe4be84c0?p2df. recently won a legal case against the National Labor 191 Id. at 13 (emphasis added). 193 Cody Cook, et al., The Gender Earnings Gap Relations Board, in which the court found that 192 If, for example, the platform were to transfer in the Gig Economy: Evidence From Over a Million certain FedEx drivers were legitimately classified as some of these increased earnings to consumers in Rideshare Drivers, NBER Working Paper No. 24732, independent contractors under the NLRA. See the form of discounts, the demand quantity for the June 2018, available at https://www.nber.org/ FedEx Home Delivery v. NLRB, 893 F.3d 1123No. services (and thus the job opportunities for the ICs) system/files/working_papers/w24732/w24732.pdf. 14–1196 (D.C. Cir. 2017). could increase. 194 Id. at 14.

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stated, ‘‘I have been a military spouse interest, noting that for those workers a point that has been presented by for 17 years and the ability to work as that choose to pursue work as an hundreds of academics.198 Additionally, an independent contractor has been independent contractor, as opposed to some literature indicates that many invaluable to my family. Through every an employee, and file taxes as such it independent contractors value move, my job comes with me; all I need can be assumed that they have correctly flexibility over income stability. CWI is a computer and access to the internet. determined for themselves that the submitted a survey they conducted that Had I been forced to find a new job with benefits outweigh the costs, including found 61 percent of independent each [change of station], our family any costs associated with increased time contractors prefer the ‘‘flexibility to would have had some very tough spent on tax filings.196 choose when and where to work’’ over times.’’ As a final illustrative example, ‘‘having access to a steady income and f. Implementation Costs a woman informed the Department that, benefits.’’ 199 ‘‘I have been an independent contractor The PA L&I asserted that the F. Cost Savings for more than 3 decades; it helped me Department ‘‘provided zero estimates as a single mother and now it helps me for the cost of actual implementation of This final rule is expected to result in help the kids with my granddaughter.’’ the regulation.’’ PA L&I also claimed cost savings to firms and workers. While The Department agrees with the above that implementation costs include the Department believes that there are commenters and data indicating that reclassifying current workers and multiple areas where firms and workers women would benefit from greater identifying the employment status of may experience cost savings, the access to independent contracting new hires. Concerning the first, the Department has quantified only two: opportunities. By clarifying how Department maintains that workers will The cost savings from increased clarity workers can be properly classified as an only be reclassified when the benefits to and reduced litigation. The Department independent contractor, this rule businesses outweigh the costs. estimates that annual cost savings promotes the formation of such Concerning the later, the Department associated with this rule would be opportunities. believes there will be a cost savings $495.9 million ($447.2 million in when new employment relationships increased clarity + $48.7 million in e. Tax Filing Costs must be analyzed (see following section avoided litigation costs). Other areas of The AFL–CIO and the Washington on cost savings). The Department anticipated cost savings were not Center commented that independent believes the implementation costs will estimated due to uncertainties or data contractors have more time-intensive be de minimis. limitations. The Department believe the accounting and tax filing processes, and rule will result in the following g. Income Stability the Department should address these additional cost savings, which are costs. The Washington Center claims Several commenters asserted that discussed qualitatively: Making labor that it is inappropriate to quantify time independent contracting is associated market more efficient; improving worker savings from increased clarity but not to with more volatile earnings. The autonomy satisfaction; providing an quantify the increased time necessary to Washington Center asserted that income alternate source of income for some file taxes, which they estimate to stability is important for these workers workers during the pandemic; and amount to $832.3 million annually. and their families. UFCW cited facilitating independent contractors’ Even assuming independent contractors literature finding that inconsistent ability to work for multiple customers. spent more on their tax filings than earnings are one of the most reported While public comments specific to employees, the Washington Center’s disadvantages to gig work.197 parts of the calculations are addressed at estimate is based on average costs for all The Department agrees that income the corresponding location throughout business filers in the country, drawn volatility may be problematic for some this section, some commenters from the IRS’s ‘‘Estimated Average workers and may require better money submitted general comments about the Taxpayer Burden for Individuals by management to smooth consumption cost savings estimates. Several Activity’’ Table in its 2019 instructions over periods of higher and lower commenters offered supportive on form 1040.195 This group of business income. However, as stated above, the comments. The CGO said that ‘‘the filers includes anyone with income from Department assumes that market actors proposed rule carefully quantifies the rental property, royalties, S corporation operate in their own best interest, and cost savings of reduced litigation and earnings, farming, and other business if a worker chooses to pursue work as increased clarity.’’ The AFPF also ventures, which dramatically expands an independent contractor, as opposed expressed support but suggested that the scope beyond independent to an employee, it can be assumed that cost-savings may be underestimated. contractors. The Washington Center the worker has determined for himself Conversely, other commenters objected neither attempts to adjust for this or herself that the benefits outweigh the to the estimated cost savings, including overestimate nor explain how one might costs. The Department also believes that it was inappropriate to quantify the disentangle the conflated grouping, so income security is best achieved by potential cost savings from this rule but the Department was unable to assess removing barriers that prevent laid-off not quantify the costs to workers. whether a real impact can be expected. Americans from finding paid work, Representative Pramila Jayapal asserted The Department noted in the NPRM that including as independent contractors. that the Department’s analysis did not it did not attempt to quantify the This lesson may be more important in include ‘‘any serious, fact-based numerous benefits that it expects from the wake of the COVID–19 emergency, argument as to why this rules change the increased clarity regarding would be of benefit to the workers who classification. Instead, it assumed that 196 All workers are required to file with the IRS would be most impacted by this rule regardless of classification. The time and cost of tax market actors operate in their own best filing is highly dependent on the individual change.’’ Other commenters offered circumstances of the workers. The Department equivocal comments, including one 195 Based on the difference in estimates of believes workers are able to best assess the costs burdens for businesses and nonbusinesses from the and benefits of tax filing. 198 See 151 Ph.D. Economists and Political table ‘‘Estimated Average Taxpayer Burden for 197 Prudential Research, ‘‘Gig Workers in Scientists in California, ‘‘Open Letter to Suspend Individuals by Activity’’ in U.S. Internal Revenue America’’ (2017), https://www.prudential.com/ California AB–5’’ (April 14, 2020). Services, ‘‘1040 and 1040–SR Instructions,’’ p. 101, media/managed/documents/rp/Gig_Economy_ 199 Coalition for Workforce Innovation (2020), (2019), https://www.irs.gov/pub/irs-pdf/i1040gi.pdf. Whitepaper.pdf. supra note 77.

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individual who noted that ‘‘point made clarifying the classification process. To the first time or return to it. This churn about less litigation is a valid one,’’ but quantify this benefit, the following is not explicitly estimated for use in this countered that the ‘‘cost-savings pointed variables need to be defined and analysis, but it provides a qualitative out seem to fall only on the side of the estimated: (1) The number of new rationale for not attempting to taper the business/employer.’’ employer-worker relationships being expected size of the independent assessed to determine the appropriate 1. Increased Clarity contractor universe over time. classification; (2) the amount of time This final rule is expected to increase A subset of new independent saved per assessment; and (3) an average contractor relationships may have time clarity concerning whether a worker is wage rate for the time spent. The savings associated with the final rule. classified as an employee or as an Department estimates this will result in Such a reduction is difficult to quantify independent contractor under the FLSA. a $447.2 million in savings annually. This would reduce the burden faced by The Department began with its because it is unclear how many employers, potential employers, and estimate of the number of current establishments and independent workers in understanding the independent contractors as the basis for contractors will realize benefits of distinction and how the working estimating the number of new increased clarity. It is also possible that relationship should be classified. It is relationships. As discussed in section the increased clarity of the classification unclear exactly how much time would VI(C), according to the CWS, there are process will lead to compound effects be saved, but the Department provides 10.6 million workers who are that generate far greater benefits over some quantitative estimates to provide a independent contractors on their time. Nonetheless, because it is possible sense of the magnitude. primary job. Adjusting this figure to that only a subset of contracts would The importance of increased clarity is account for independent contractors on receive the cost savings associated with noted by a study coauthored and cited their secondary job results in 18.9 increased clarity, the Department has by the Society for Human Resource million independent contractors. reduced the number of contracts in the Management (SHRM) that found human According to Lim et al. (2019), in 2016 estimate by 25 percent. This results in resources professionals’ largest the average number of 1099–MISC forms 20.2 million contracts with cost savings challenge concerning external workers issued per independent contractor was to both the employer and the that they would like to see resolved is 1.43. Therefore, the Department independent contractor.205 the legal ambiguity regarding the use assumes the average independent In her comment, Representative and management of external workers.200 contractor has 1.43 jobs per year.202 Pramila Jayapal questioned the breadth Commenters from the business This number does not account for the of the time savings benefit. She claimed community agreed with the Department workers who do not file taxes, a that the only beneficiaries of this that the rule would improve legal recognized limitation in the cited study. rulemaking would be large, repeat clarity. See, e.g., U.S. Chamber of Because it is unclear whether those who players that frequently misclassify Commerce; CWI; WPI; ATA; NRF; do not file taxes would have a higher or workers. It is unclear what data National Restaurant Association. Groups lower number of jobs per year, the Representative Jayapal relied on to come that represent freelancers and Department does not believe that this to this conclusion. Furthermore, individual freelancers who commented limitation biases the estimate in either Representative Jayapal largely ignores also believe this rule would improve direction. Multiplying these two the millions of properly classified legal clarity. See, e.g., CPIE; Fight for numbers results in an estimated 27.0 independent contractors that will million new independent contractor Freelancers. However, several benefit from added regulatory clarity. commenters dispute the Department’s relationships each year.203 The independent contracting sector is The Department disagrees that the cost claim that the rule will increase clarity, savings benefits will be limited to large, with some focusing on specific characterized by churn. In their annual State of Independence in America 2019 repeat players. Other comments concur industries. The TRLA stated that ‘‘the with the Department’s view, supported proposed rule unnecessarily muddies report, MBO Partners, a leading American staffing firm, finds that 47.8 by data-backed arguments that the the waters with respect to the farm labor expect the rule to enable access to market’’ because they believe it percent of U.S. adults reported working as an independent contractor at some flexible work for caregivers responding contradicts ‘‘Federal courts’ to the pandemic, enable workers to interpretation of a Federal statute.’’ The point in their career; they estimate that readily supplement their income, and State AGs also stated this rule will figure will reach 53 percent in the next unlock the potential of the growing tech create confusion because ‘‘many five years.204 This fits with the range of sector. Farren and Mitchell, of the jurisdictions have applied the economic estimates for the size of the independent Mercatus Center, assert that the rule, reality test’’ to distinguish between contractor universe presented in section ‘‘builds on existing precedent and employees and independent contractors VI(C). Thus, it is assumed that over the serves largely as a synthesis and for decades.201 ten-year time horizon of this analysis, The Department expects this rule to millions of Americans will choose clarification of previous economic produce beneficial cost savings by independent contractor work either for reality tests, rather than implementing any sort of radical change,’’ adding that 200 SHRM and SAP SuccessFactors. ‘‘Want Your 202 Lim et al., supra note 75, at 61. independent contractors will likely Business to Thrive? Cultivate Your External Talent’’ 203 The Department did not incorporate estimates ‘‘develop more productive economic (2019), https://www.shrm.org/hr-today/trends-and- of potential growth in independent contracting due relationships.’’ forecasting/research-and-surveys/pages/external- to uncertainty. For example, the trend in workers.aspx. independent contracting varies significantly based Per each new contract with time 201 While state-imposed requirements may on the source. Additionally, the impact of this rule savings, the Department has assumed influence the use of flexibilities provided by this on the prevalence of independent contracting is that employers would save 20 minutes rule, and could impact the number of entities and uncertain. Lastly, state laws, such as those in of time and independent contractors workers affected, the Department does not possess California discussed below, may have significant the requisite data to estimate the number of states impacts on the prevalence of independent that would implement measures or the magnitude contracting, which would make historical growth 205 18.9 million independent contractors × 1.43 of their impact on the universe of independent rates potentially inappropriate. contracts per year × (1¥0.25 possible reduction in contractors considered in this analysis. 204 MBO Partners (2019), supra note 131. clarity benefits) = 20.2 million.

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would save 5 minutes.206 These contractors, this time is valued at $46.36 hiring independent contractors for the numbers are small because they per hour (mean wage rate for first time. The Department did not represent the marginal time savings for independent contractors in the CWS of quantify this benefit due to uncertainty each contract, not the entire time $27.29 with the amount of benefits and and the difficulty of determining necessary to identify whether an overhead paid by employers for reliable variables for the number of new independent contractor relationship employees, then adjusted to 2019 relationships that might occur due to holds. dollars using the GDP deflator). the rule. However, such benefits are The Washington Center commented, Using these numbers, the Department expected to be real and significant. ‘‘[t]here is no transparency into what estimates that employers will save surveys or studies were used to quantify $369.0 million annually and 2. Reduced Litigation independent contractors will save $78.1 the current amount of time individuals The changes included in this rule are and businesses currently spend on million annually due to increased expected to result in decreased litigation independent contractor regulatory clarity (Table 3). In sum, this is due to increased clarity and reduced familiarization. Further, there was no estimated to be a $447.1 million savings. misclassification. The methodology of attempt to explain with any degree of The Department assumes the parameters this section mirrors previous final rules accuracy how this rule will change that used in this cost savings estimate will promulgated in recent years.208 The rule time spent.’’ The Washington Center remain constant over time. This would clarify to stakeholders how to seems to misunderstand the analysis assumes no growth in independent distinguish between employees and presented. The time savings variables contracting, no real wage growth, and independent contractors under the Act. are estimates of how the clarity no subsequent innovation in the The increased clarity is expected to provided in the rule will facilitate the employer-worker relationship. These result in fewer independent contractor contracting process. Estimating assumptions facilitate simplicity of misclassification legal disputes, and administrative time spend due to calculation.207 The annualized savings lower litigation costs. The Department comply with government laws and over both a 10-year horizon and in estimates that $48.7 million in litigation regulations is a typical component of perpetuity, with both the 3 percent and costs related to independent contractor economic analyses and is often 7 percent discount rates is $447.1 disputes will be avoided per year as a informed by consultation with subject million. result of this rule. This may be a lower- matter experts. The Department bound estimate, reasons for which are requested data to further refine its TABLE 3—COST SAVINGS FOR IN- described in more detail below. estimate, but did not receive any. CREASED CLARITY TO EMPLOYERS Notwithstanding, numerous AND INDEPENDENT CONTRACTORS The Department estimates litigation commenters expressed support of the cost savings as being equal to an analysis the Department presented. Parameter Value estimate of the number of cases avoided The UFCW believes that there will be as a result of the rule multiplied by the Number of new relationships (per an increase in time to assess year): average litigation cost per case. employment status because employers Independent contractors ...... 18,858,000 Number of Cases Avoided and independent contractors will now Number of jobs per contractor ..... 1.43 New independent contractor jobs 26,966,940 evaluate the classification under both Adjustment factor ...... 75% According to the Public Access to current precedent and the definition Court Records (PACER) system, there laid out in this rule; ‘‘courts may decide Total ...... 20,225,205 were 7,238 Federal cases relating to the to ignore the DOL’s new interpretation, 209 Time savings per job (minutes): FLSA closed in 2019. The meaning that companies and workers Employers ...... 20 Department estimates that 9.4 percent of would now analyze their FLSA Independent contractors ...... 5 these cases relate to independent independent contractor determinations Value of time: contractor status.210 under current precedent and also the Employers ...... $54.74 Independent contractors ...... $46.36 For the NPRM, to determine this agency’s proposed non-binding new Total savings: percentage of cases relating to test.’’ The Department disagrees that Employers ...... $369,011,556 Independent contractors ...... $78,137,248 independent contracting, the courts will ignore the final rule. The Department reviewed a previous RIA already includes a familiarization Total ...... $447,148,804 random sample of FLSA cases closed in cost for the new rule, and, in the 2014.211 For this final rule, the baseline, establishments are assumed to In addition to increased clarity when be familiar with the status quo assessing whether each relationship 208 For example, the Department applied a similar environment. Accordingly, additional qualifies as an independent contractor approach to litigation costs in the 2019 final rule costs as stated in this comment are or employment relationship, there may Defining and Delimiting the Exemptions for likely to be insignificant. Executive, Administrative, Professional, Outside also be upfront time savings for new Sales and Computer Employees, 81 FR 51230 To estimate the cost savings due to entrants who must familiarize (2019). the increased clarity this rule provides, themselves with the standard for being 209 Downloaded from Public Access to Court the Department applies the following an employee as compared to an Electronic Records (PACER). estimates. For employers, this time is independent contractor, and who now 210 PACER does not provide a granular valued at a loaded hourly wage rate of classification of FLSA case types to identify the have clearer guidance to aid in that number of cases specific to independent contractor $54.74. This is the mean hourly rate of understanding. This would apply to disputes, so the Department performed a keyword Compensation, Benefits & Job Analysis new independent contractors, new analysis with spot checking of a random sample of Specialists (13–1141) from the OES establishments, and current 500 cases closed in 2019, determining that 9.4 multiplied by 1.63 to account for percent of cases were related to independent establishments that are considering contractor status (47/500 = 9.4 percent). benefits and overhead. For independent 211 The Department used data from 2014 already 207 By applying these assumptions to the obtained for use in the analyses performed for the 206 These time savings are based on a 33 percent Department’s estimates, instead of incorporating 2019 overtime and regular rate final rules. See 84 assumed reduction in the estimated familiarization anticipated growth and innovation impacts, the FR 51230, 51280–81 (reduced litigation estimate for time per contract for both independent contractors results may be an underestimate of total cost the final rule updating the FLSA’s white collar (15 minutes) and employers (1 hour). savings. exemptions at 29 CFR part 541); 84 FR 68736,

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Department updated its dataset, using a looked at records of court filings in the require reasonable certainty regarding sample that included 500 cases closed Westlaw Case Evaluator tool and on the worker’s classification as an in 2019. Of those cases, the Department PACER to ascertain how much plaintiffs independent contractor. The current identified 47 cases within this sample in these cases were paid for attorney legal uncertainty may deter businesses that related to independent contractor fees, administrative fees, and/or other from offering these arrangements or status. This ratio was applied to the costs, apart from any monetary damages developing them in the first place.218 If 7,238 FLSA cases closed in 2019 to attributable to the alleged FLSA so, the result would be economic estimate 680 cases related to violations. After determining the deadweight loss: Legal uncertainty independent contractor status. The plaintiff’s total litigation costs for each prevents mutually beneficial Department assumes that the increased case, the Department then doubled the independent contractor arrangements. clarity of the rule would reduce the figures to account for litigation costs This final rule may produce cost savings number of Federal FLSA cases involving that the defendant employers incurred. by reducing deadweight loss. independent contractor classification According to this analysis, the average Nonetheless, due to the abundance of disputes by 10 percent as stakeholders litigation cost for FLSA cases concluded variables at play, the Department has would better understand and be better between 2012 and 2015 was $654,182. not attempted to quantify the precise able to agree on classification Adjusting for inflation, using the GDP amount of that reduction. determinations without having to deflator, results in a value of $715,637 The CGO concurred in its public litigate.212 Multiplying these variables in 2019 dollars.215 comment, emphasizing that an results in an estimated 68 cases related Applying these figures to the important benefit of this rule will likely to independent contractor disputes estimated 68 cases that could be be increased labor market flexibility. avoided annually. This estimate of the prevented each year due to this They note that ‘‘most labor models reduction in the number of independent rulemaking, the Department estimates suggest flexibility is crucial in allowing contractor disputes filed does not take that avoided litigation costs resulting labor markets to efficiently match into account any reduction in the from the rule total $48.7 million per workers with jobs, spur number of FLSA cases related to year (2019 dollars).216 217 entrepreneurship, and act as an important source of countercyclical independent contractor disputes heard 3. Improved Labor Market Conditions in state courts (e.g., where the state has income during a recession.’’ They cite a adopted the FLSA standards for The Department anticipates the final study showing that a 10 percent classifying workers), nor does it take rule will produce benefits by reducing increase in the freelance workforce is into account any reduction in filings uncertainty and improving labor market correlated with a 1 percent increase in resolved before litigation or by conditions. Removing uncertainty entrepreneurial activity.219 Similarly, alternative dispute resolution, neither of improves labor market efficiency by CWI submitted their report that finds which are captured in PACER data. reducing deadweight loss. As discussed independent workers ‘‘can be an in the need for rulemaking, the important part of improving business Average Litigation Cost per Case Department believes emerging and performance, such as by increasing The Department applied a previous innovative economic arrangements that speed to market, increasing estimate of litigation costs of $654,182 benefit both workers and business organizational agility, improving overall per case. To obtain this estimate, the financial performance, and allowing Department conducted a search for with independent contracting. Although the initial firms to compete in a digital world FLSA cases concluded between 2012 search yielded 64 responsive cases, the Department excluded one duplicate case, one case resolving where increasingly relevant, highly- 220 and 2015 in the Westlaw Case Evaluator litigation costs through a confidential settlement skilled talent is in short-supply.’’ By tool and on PACER and identified 56 agreement, and six cases where the defendant decreasing uncertainty and thus cases that contained sufficient litigation employer(s) ultimately prevailed. Because the FLSA potentially opening new opportunities cost information to estimate the average only entitles prevailing plaintiffs to litigation cost for firms, this final rule may encourage 213 214 awards, information about litigation costs was only costs of litigation. The Department available for the remaining 56 FLSA cases that companies to hire independent ended in settlement agreements or court verdicts contractors whom they otherwise would 68767–68 (reduced litigation estimate for the final favoring the plaintiff employees. not have hired. Eisenach (2010) outlines rule updating the FLSA’s ‘‘regular rate’’ regulations 215 This average litigation cost per case may the potential costs of curtailing at 29 CFR part 778). underestimate total average costs because some 221 212 This aligns with the methodology the attorneys representing FLSA plaintiffs may take a independent contracting. If Department has applied in a number of rulemakings contingency fee atop their statutorily awarded fees (See e.g., Regular Rate Under the Fair Labor and costs. 218 See Griffin Toronjo Pivateau, The Prism of Standards Act), and in the NPRM for this rule. In 216 Using the median litigation cost, rather than Entrepreneurship: Creating A New Lens for Worker each rulemaking with this assumption, the the mean, results in a value of $122,341 (2019 Classification, 70 Baylor L. Rev. 595, 628 (2018) Department requested comments and data on this dollars) per case, which for the estimated 68 annual (‘‘The continued demand for innovative work point, which yielded no substantive data or cases produces a total annual litigation cost savings solutions requires a new classification test. Without critiques on its merit. Therefore, the Department of $8.3 million. However, the median values do not clarification, parties will be unwilling to engage in believes this is an appropriate assumption in this adequately capture the magnitude of the impact new or innovative work arrangements.’’); see also R. analysis. resulting from the large-scale litigation cases that Hollrah and P. Hollrah, ‘‘The Time Has Come for 213 Litigation costs are not tracked in a systematic are expected to benefit from the clarity provided in Congress to Finish Its Work on Harmonizing the way by any publicly available source. Individual this final rule. Therefore, the mean average is used Definition of ‘Employee,’ ’’ J. L. & Pol’y 26(2), p. 439 case records are available through various sources for this analysis. (2018), https://brooklynworks.brooklaw.edu/jlp/ (e.g. PACER and Westlaw), but litigation costs are 217 The Department’s approach to estimating vol26/iss2/1/. often not reported because of undisclosed litigation cost savings takes into account the impact 219 A. Burke, I. Zawwar, and S. Hussels. ‘‘Do settlement agreements or because attorney fees are of the rule on the number of relevant cases filed. Freelance Independent Contractors Promote not included in verdict judgements. However, The approach does not take into account the impact Entrepreneurship?’’ Small Business Economics because the FLSA entitles prevailing plaintiffs to of the rule on promoting settlements in the future 55(2), 415–27 (2019), https://doi.org/10.1007/ litigation cost awards, the Department was able to among cases that are filed. Clarifying a rule may s11187-019-00242-w. ascertain costs for 56 relevant cases. increase the settlement rate among cases filed, 220 J. Langenfeld and C. Ring. ‘‘Analysis of 214 The 56 cases used for this analysis were reducing litigation costs further (see Gelbach, J., Literature on Technology and Alternative retrieved from Westlaw’s Case Evaluator database ‘‘The Reduced Form of Litigation Models and the Workforce Arrangements.’’ Ankura (October 2020). using a keyword search for case summaries between Plaintiff’s Win Rate,’’ J. Law & Economics 61(1), 221 J. Eisenach, ‘‘The Role of Independent 2012 and 2015 mentioning the terms ‘‘FLSA’’ and (2018), https://www.journals.uchicago.edu/doi/ Contractors in The U.S. Economy,’’ Navigant ‘‘fees.’’ This was not limited to cases associated 10.1086/699151). Continued

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independent contracting is expanded She also emphasized the importance of mobile customer-service-focused due to this rule, this could generate of independent contracting to startup delivery applications ‘‘reduces the benefits that may include: firms. She references her work opportunity for productivity-enhancing • Increased job creation and small conducting interviews and a survey of innovation.’’ Further, even the example business formation. technology startup executives. During ignores that efficiencies will likely be • Increased competition and these interviews they found that ‘‘71 gained over time as the independent decreased prices. percent of startups relied on contractor fulfils additional orders each • A more flexible and dynamic work independent contractors and thought it day, week, and month. The Department force, where workers are able to more was necessary to use contract labor does not believe that these commenters easily move to locations or to employers during their early stages.’’ Independent provided reliable data to revise its where their labor and skills are needed. contractors are important to startups analysis, especially in light of the data Eisenach explains several channels because ‘‘during unpredictable times, provided to its support by other through which these efficiency gains when startups are trying to find their commenters. market and build their product, they may be achieved. First, by avoiding 4. Improved Worker Satisfaction and need flexible labor and need to be able some fixed employment costs, it is Flexibility easier for firms to adjust their labor to hire and fire easily.’’ needs based on fluctuations in demand. Several commenters disagreed that The Department believes this rulemaking may also result in greater Second, by using pay-for-preference, the rule would improve outcomes in the autonomy and job satisfaction for independent contractors are labor market. FTC Commissioner workers. Several surveys have shown incentivized to increase production and Rebecca Kelly Slaughter commented that independent contractors have high quality. Third, ‘‘contracting can be an that it is inappropriate to conclude ‘‘that job satisfaction.224 Using the CWS, important mechanism for overcoming ‘competition will increase and prices which only considers primary, active legal and regulatory barriers to will decrease’ when more workers are contractors, the Department estimates economically efficient employment classified as independent contractors’’ that of independent contractors with arrangements.’’ The analysis of these because, according to the commenter, valid responses, 83 percent prefer their benefits assumes that businesses, the only support offered in the NPRM current arrangement rather than being especially in other industries, would was a 2010 non-peer-reviewed article providing little evidence of this claim. an employee, compared with only 9 like to increase their use of independent The Department maintains that percent who would prefer an contractors, but have refrained from economic laws generally apply to labor employment arrangement (the doing so because of uncertainty markets, and that as supply increases remaining 8 percent responded that it regarding who can appropriately be then prices can be expected to decrease. depends). engaged as an independent contractor UFCW contested the Department’s claim Additionally, the main reasons under the FLSA. Conversely, significant that this rule will lead to increased individuals work as independent use of independent contractors may not productivity. They presented an contractors demonstrate that being an be suitable for all industries, thus example of how independent independent contractor often has limiting the growth in its utilization. contracting hurts efficiency: ‘‘Instead of valuable benefits. The 2017 CWS asked, Some commenters agreed that ecommerce fulfil[l]ment carried out by a ‘‘What is the main reason you are self- expanding independent contracting can team of output-optimizing role players, employed/an independent contractor?’’ lead to employment gains. For example, the ‘independent contractor’ item The two most popular reasons were (1) Dr. Palagashvili discussed the literature selection and packing is carried out by being their own boss, and (2) scheduling showing how restricting independent the same individual who does the flexibility.225 In fact, these two choices contracting can lead to loss of jobs. This delivery, adding unnecessary and time were each selected over three times final rule, by expanding independent consuming steps to the process. The more often than any of the other contracting, could conversely increase ‘independent contractor’ must first park options.226 Additionally, McKinsey employment. She also noted the his or her car, walk into the store, orient Global Institute found that importance of independent contracting him or herself to the store layout, select ‘‘[i]ndependent workers report higher for unemployed workers, referencing a and pack the items, transact the levels of satisfaction on many aspects of paper that found workers who ‘‘suffered payment, then carry the packed items their work life than traditional a spell of unemployment are 7 to 17 back to the car.’’ The Department does workers.’’ 227 The McKinsey Global percentage points more likely than not think UFCW’s claims are valid Institute examined workers who work observationally similar workers to be across the incredibly dynamic range of employed in an alternative work independent contractor jobs, and further 224 See, e.g., MBO Partners (2019), supra note 131. arrangement when surveyed 1 to 2.5 questions UFCW’s unsupported 225 The Department used PES26IC to identify years later.’’ 222 223 preferred work arrangement and PES26IR to assertion that the expansive emergence identify the reason they work as an independent contractor. Economics (2010), https://papers.ssrn.com/sol3/ 226 _ from such coverage or value such coverage The third most commonly selected reason was papers.cfm?abstract id=1717932. compared to other compensation. In fact, in some ‘‘Money is better,’’ supporting the Department’s 222 L. Katz and A. Krueger, ‘‘The Role of cases workers may be able to strike a better deal view that monetary and non-pecuniary benefits are Unemployment in the Rise in Alternative Work with a business than would be provided under the central motivations of most independent Arrangements,’’ American Economic Review, terms of an employee relationship that operates contractors. 107(5), p. 388 (2017), https://www.aeaweb.org/ under the associated mandates. Such as in a 227 McKinsey Global Institute, supra note 89 at articles?id=10.1257/aer.p20171092. situation where a worker has clusters of available 11. A 2009 Pew survey similarly found that self- 223 It should be noted that government-mandated time to work punctuated by extended periods of employed workers are ‘‘significantly more satisfied coverage is not free. The total value that a worker inability to work, such as a long-haul shipper who with their jobs than other workers.’’ Rich Morin, provides a business must be at least as large as the spends a month at sea and then a month at home ‘‘Job Satisfaction among the Self-Employed,’’ Pew wage, any provided benefits, and government (state or a divorced parent who has five kids to care for Research Center, (September 2009), http:// or Federal) mandates combined. Congress and/or every other week but is fully available on the off pewsocialtrends.org/pubs/743/job-satisfaction- state governments may conclude that the value of weeks to work as many hours as needed. In these highest-among-self-employed. In particular, 39 mandating certain coverages outweighs the costs of cases, independent contractor relationships may be percent of self-employed workers reported being such coverage, but that does not necessarily mean pivotal in mutually benefiting workers and business ‘‘completely satisfied’’ with their jobs, compared that all covered workers receive significant benefits owners. with 28 percent of employees. Id.

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independently by choice and those who pecuniary benefits like flexibility are current process for determining worker do so by necessity (such as needing very important to workers and should classification. supplemental income) and found that receive adequate attention in this RIA. UFCW used a 2017 report from both groups report being happy with the Research has shown that flexibility is a Prudential Research, specifically flexibility and autonomy of their criterion workers consider when regarding gig workers, to dispute the work.228 Similarly, Kelly Services found evaluating job offers.233 Department’s claim that independent that ‘‘free agents’’—i.e., workers who The PA L&I wrote that it is contractors are more satisfied than ‘‘derive their primary income from inappropriate to present flexibility for employees. UFCW excerpted from the independent work and actively prefer independent contractors as a report that, ‘‘on-demand independent it’’—report higher satisfaction than ‘‘replacement for lower wages and no contractors who work full-time hours traditional workers concerning overall benefits.’’ PA L&I also stated that the are less satisfied with their current work employment situation; work-life Department does not discuss situation than full-time employees (44 balance; opportunities to expand skills; independent contractors’ counteracting percent vs. 55 percent).’’ 235 However, and opportunities to advance career.229 loss of stability in income, location of the commenter did not include all of the Many commenters agreed that the work, and frequency and schedule of findings in the source it cited; the same scheduling flexibility afforded to work and instead simply ‘‘presumes that Prudential study notes that for gig independent contractors is of workers prize flexibility over stability’’ workers who also have other jobs, their importance to many of these workers. without citing any evidence. The job satisfaction rate is 86 percent. WPI pointed out that many independent Department notes that it examined Notably, UFCW focused on gig workers contractors require flexibility to balance numerous studies that directly address, in its comment, but conflates such work and other obligations. They cite a and provide evidence regarding, the workers with the entire universe of recent report that found ‘‘48 percent of tradeoffs many independent contractors independent contractors. The freelancers report being caregivers, voluntarily make to attain flexibility. To Department acknowledges that although while 33 percent report having a that point, a survey submitted by CWI there may be lower job satisfaction for disability in their household.’’ 230 Dr. found 61 percent of independent some subsets of independent Palagashvili discussed the significance contractors prefer the ‘‘flexibility to contractors, studies that consider all of independent contracting work for choose when and where to work’’ over independent contractors generally find women, who tend to be the primary ‘‘having access to a steady income and that independent contractors report caregiver, and thus value scheduling benefits.’’ 234 Additionally, the workers similar or higher job satisfaction than flexibility. She cited several papers who value flexibility will be the ones employees. For example, CWI submitted demonstrating the importance of drawn to those independent contracting a survey they conducted finding that 94 flexible work arrangements for women. arrangements that provide flexibility. percent of independent workers are For example, a survey by HyperWallet The Washington Center posited that satisfied with their work 236 found that ‘‘96 percent of women in many industries, such as trucking arrangements. indicate that the primary benefit of and deliveries, the flexibility benefits By clarifying that control and engaging in platform-economy work is for independent contractors are small opportunity for profit or loss are the the flexible working hours.231 SHRM because workers often do not have core economic reality factors, this final pointed to their survey that found that control over their routes or work hours. rule is likely to encourage the creation 49 percent of external workers chose This was echoed by the UFCW, who of independent contractor jobs that that work arrangement for the ability to pointed out that in retail the use of just- provide autonomy and entrepreneurial opportunities that many workers find set their own hours.232 in-time scheduling limits the scheduling Conversely, other commenters flexibility for workers classified as satisfying. For the same reason, this asserted that valuing flexibility is not independent contractors. The final rule likely will diminish the relevant as a benefit to a worker who is Department acknowledges that the incidence of independent contractor classified as an independent contractor. flexibility benefits may differ across jobs that lack these widely desired The Department believes that non- industries, but that they tend to exist in characteristics. Thus, the Department all industries to some degree. expects this final rule to result in more independent contractor opportunities 228 McKinsey Global Institute, supra note 89 at UFCW contended that although 10. The McKinsey survey found that, while ‘‘those current independent contractors may be which bring with them autonomy and working independently out of necessity report satisfied with their employment status, job satisfaction. The benefits of worker being happier with the flexibility and content of the this will not necessarily hold for newly autonomy and satisfaction obviously work,’’ they also report being ‘‘less satisfied with ‘‘are difficult or impossible to quantify,’’ their level of income level and their income classified workers. The Department security.’’ Id. The Department believes this acknowledges that new independent but they nonetheless merit rulemaking is unlikely to negatively impact the contractors may differ from current consideration. average income level of such workers by independent contractors but lacks any encouraging independent contractor opportunities. 5. Income Smoothing data to show how their satisfaction As discussed above, there are data indicating that Several commenters asserted that independent contractors, on average, may earn levels would differ. Lacking such data, higher hourly wages than employees. Nor is which commenters did not provide, the independent contracting plays a key rulemaking likely to negatively impact workers’ best predictor of job satisfaction for new role in smoothing income during income security, on average (see Section independent contractors is job recessions by providing an alternative VI(E)(2)(viii)). source of income. Commenters cited to 229 Kelly Services (2015), supra note 89. satisfaction among current independent 230 a JPMorgan Chase Institute study that Upwork, Freelance Forward 2020: The U.S. contractors. Further, the Department 237 Independent Workforce Report (September 2020). notes, as explained above, that this rule makes this case. Other commenters 231 HyperWallet. ‘‘The Future of Gig Work Is will not directly reclassify any workers Female: A Study on the Behaviors and Career 235 Prudential Research (2017), supra note. Aspirations of Women in the Gig Economy,’’ (2017), but rather provides clarity regarding the 236 Coalition for Workforce Innovation (2020), https://www.hyperwallet.com/app/uploads/HW_ supra note. The_Future_of_Gig_Work_is_Female.pdf. 233 He, H. et al. (2019), supra note 131. 237 D. Farrell, F. Greig, and A. Hamoudi, ‘‘The 232 SHRM and SAP SuccessFactors (2019), supra 234 Coalition for Workforce Innovation (2020), Online Platform Economy in 27 Metro Areas: note 200. supra note. Continued

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held the opposite view and highlighted point, however, was not substantiated alternatives are the same as those the economic downturn related to by data showing that such a critique can analyzed in the NPRM,246 listed below COVID–19. For example, the Center for effectively be applied across the in order from least to most restrictive of Innovation in Worker Organization universe of millions of independent independent contracting: 247 claimed that high unemployment contractors who cite flexibility as a core (1) Codification of the common law increases the likelihood that employers motivator. And as explained in Sections control test, which applies in fail to pay minimum wage. Because this III(A) and IV(C), courts have repeatedly distinguishing between employees and rule is focused on independent explained that need for income is not independent contractors under various contractors, even assuming the premise the correct legal lens through which to other Federal laws; 248 of the comment from the Center for analyze whether a worker is an (2) Codification of the traditional six- Innovation in Worker Organization is independent contractor or employee factor ‘‘economic reality’’ balancing test, correct, this concern does not directly under the FLSA.240 Lastly, she noted as recently articulated in WHD Opinion apply. Further, this commenter did not that ‘‘Uber has been known to Letter FLSA2019–6; and provide clear evidence that independent discourage multi-apping by monitoring (3) Codification of the ‘‘ABC’’ test, as contracting does not help workers whether drivers were logging into more adopted by the California Supreme supplement their income. than one platform simultaneously and Court in Dynamex Operations W., Inc. v. penalizing those that did not 6. Opportunities To Work for Multiple Superior Court, 416 P.3d 1 (Cal. exclusively take Uber customers.’’ 241 249 Customers 2018). Under this rule, Uber’s monitoring and In the NPRM, the Department noted Although the Department believes that controlling certain drivers’ ability to legal limitations preclude adoption of that independent contractors may more multi-app would be a consideration easily work for multiple companies the ‘‘common law’’ and ‘‘ABC’’ test under the control factors of the alternatives listed above, the simultaneously. The Washington Center economic reality test as applied to those disputed this claim, asserting that Department notes that Congress is drivers. See Razak, 951 F.3d at 145–46 presently considering separate bills that ‘‘economists have found that about 75 (including drivers’ contention ‘‘that percent of workers receiving non- would amend the FLSA to adopt these while ‘online’ for Uber, they cannot also 250 employee compensation are tied to one alternatives, and accordingly presents accept rides through other platforms’’ in them for the benefit of the public as employer’’ and the likelihood of being list of ‘‘disputed facts regarding recommended by OMB guidance.251 All tied to a single employer is similar for control’’). But it appears that the wage earners and contractors.238 But the majority of rideshare drivers are able to 246 See 85 FR 60634 (discussing regulatory economists whom the Washington multi-app.242 The Department believes alternative to the proposed rule). Center cites in support of their assertion that economy-wide data reveal that 247 OMB guidance advises that, where possible, explicitly noted that the independent many independent contractors hold agencies should analyze at least one ‘‘more contractors in their study ‘‘include[ ] multiple jobs,243 and they resoundingly stringent option’’ and one ‘‘less stringent option’’ to those who are primarily employed at a the proposed approach. OMB Circular A–4 at 16. prize the flexibility to work when, 248 See 26 U.S.C. 3121(d)(2) (generally defining W2 job, and vice versa.’’ 239 This overlap 244 where, and how they choose. the term ‘‘employee’’ under the Internal Revenue prevents meaningful comparisons Code as ‘‘any individual who, under the usual between independent contractors and G. Regulatory Alternatives common law rules applicable in determining the W2 employees for the purpose of this Pursuant to its obligations under employer-employee relationship, has the status of RIA. Rebecca Kelly Slaughter, a 245 an employee’’); 42 U.S.C. 410(j) (similarly defining Executive Order 12866, the ‘‘employee’’ under the Social Security Act); see Commissioner at the FTC wrote: Department assessed three regulatory also, e.g., Community for Creative Non-Violence v. ‘‘Independent contractor status is not alternatives to the standard promulgated Reid, 490 U.S. 730, 751 (1989) (applying what allows a worker to work for two in this final rule. These three ‘‘principles of general common law of agency’’ to rivals. Indeed, many hourly workers are determine ‘‘whether . . . work was prepared by an employee or an independent contractor’’ under the employed at more than one job, 240 See, e.g., Halferty, 821 F.2d at 268 (‘‘[I]t is not Copyright Act of 1976); Darden, 503 U.S. 318 including for two employers who are dependence in the sense that one could not survive (holding that ‘‘a common-law test’’ should resolve rivals in the same industry.’’ without the income from the job that we examine, employee/independent contractor disputes under but dependence for continued employment’’); ERISA). Commissioner Slaughter gave an DialAmerica, 757 F.2d at 1385 (‘‘The economic- example of a worker who holds two jobs 249 See also Hargrove v. Sleepy’s, LLC, 106 A.3d dependence aspect of the [economic reality] test 449, 465 (N.J. 2015) (extending the ABC test to state at competing fast food restaurants, but does not concern whether the workers at issue wage claims in New Jersey). depend on the money they earn for obtaining the this does not undermine the 250 The Modern Worker Empowerment Act, H.R. necessities of life.’’). Department’s discussion of independent 4069, 116th Cong. (2019) (introduced by Rep. Elise 241 Commissioner Slaughter cited a note contractors being able to use mobile Stefanik), would amend Sec. 3(e) of the FLSA submitted as background material for an OECD statute to clarify that the term ‘‘employee’’ is applications to pick which tasks they meeting and a law review article to support this ‘‘determined under the usual common law rules (as choose to perform in real time on a job- contention. See M. Steinbaum, Monopsony and the applied for purposes of section 3121(d) of the by-job basis. That fast food worker Business Model of Gig Economy Platforms, OECD Internal Revenue Code of 1986).’’ See also S. 2973, 7 (Sept. 17, 2020), https://one.oecd.org/document/ 116th Cong. (2019) (companion Senate bill cannot always decide which job he DAF/COMP/WD(2019)66/en/pdf; M. Steinbaum, wants to work for each shift of the day. introduced by Sen. Tim Scott). By contrast, the ‘‘Antitrust, the Gig Economy, and Labor Market Worker Flexibility and Small Business Protection Additionally, Slaughter commented that Power,’’ 82 Law and Contemp. Probs. 45, 55 (2019), Act, H.R. 8375, 116th Cong. (2020) (introduced by working for multiple employers may https://scholarship.law.duke.edu/cgi/ Rep. Rosa DeLauro) would, among other provisions, demonstrate a worker’s need to hold viewcontent.cgi?article=4918&context=lcp. amend the FLSA and other labor statutes to clarify 242 See This App Lets Drivers Juggle Competing multiple jobs to pay bills rather than that ‘‘[a]n individual performing any labor for Uber and Lyft Rides, Wired (Feb. 15, 2018) remuneration shall be considered an employee and being indicative of flexibility. This (estimating that over 70 percent of rideshare drivers not an independent contractor’’ unless such multi-app), https://www.wired.com/story/this-app- individual passes the ‘‘ABC’’ test discussed in this JPMorgan Chase Institute,’’ JPMorgan Chase lets-drivers-juggle-competing-uber-and-lyft-rides/. analysis. See also S. 4738, 116th Cong. (2020) Institute (2019), https://www.jpmorganchase.com/ 243 Lim et al., supra note 75, at 61. (companion bill introduced by Senators Patty institute/research/labor-markets/report-ope- 244 See the May 2017 CWS supplement to the Murray and Sherrod Brown). cities.htm. CPS. 251 OMB Circular A–4 advises that agencies 238 Collins et al. (2019), supra note 80. 245 Exec. Order No. 12866 § 6(a)(3)(C)(iii), 58 FR ‘‘should discuss the statutory requirements that 239 Id. at 14 n.7. 51741. affect the selection of regulatory approach. If legal

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three regulatory alternatives are contracting arrangements than the that ‘‘the simplest means to accomplish analyzed in qualitative terms, due to economic reality test, which more [a uniform classification standard under data constraints and inherent broadly examines the economic Federal law] would be to revise the uncertainty in measuring the exact dependence of the worker. See, e.g., FLSA, either legislatively or through stringency of multi-factor legal tests and Diggs v. Harris Hospital-Methodist, Inc., regulation, to replace the economic likely responses from the regulated 847 F.2d 270, 272 n.1 (5th Cir. 1988) reality test with the right of control community. The Department (observing that ‘‘[t]he ‘economic test.’’ While appearing to support the appreciates the feedback it received on realities’ test is a more expansive common law control test on substance, these regulatory alternatives from standard for determining employee the Workplace Policy Institute warned commenters, which is described and status’’ than the common law control that ‘‘any attempt by the Department to addressed below. test). Thus, if a common law control test depart from the economic reality test determined independent contractor 1. Codifying a Common Law Control likely would result in a successful legal status under the FLSA, it is possible that Test challenge to this rulemaking,’’ some workers presently classified as expressing support for the Department’s The least stringent alternative to the FLSA employees could be reclassified proposed economic reality test ‘‘in the final rule’s streamlined ‘‘economic as independent contractors, increasing spirit of ‘don’t let the perfect be the reality’’ test would be to adopt a the overall number of independent enemy of the good.’ ’’ See also Dr. common law control test, as is generally contractors and reducing the overall Palagashvili (‘‘[A]lthough the DOL is used to determine independent number of employees. The Department constrained in adopting a common law contractor classification questions is unable to estimate the exact control test, I suggest that lawmakers arising under the Internal Revenue Code magnitude of such a reclassification amend the FLSA to allow for 252 and various other Federal laws. The effect, but believes that the vast majority codification thereof.’’). By contrast, the overarching focus of the common law of FLSA employees would remain FLSA National Federation of Independent control test is ‘‘the hiring party’s right employees even under a common law Business (NFIB) criticized the to control the manner and means by control test. Department’s conclusion in the NPRM which [work] is accomplished,’’ Reid, As discussed in the NPRM, codifying that it lacks the legal authority to 490 U.S. at 751, but the Supreme Court a common law control test that is used implement a common law standard has explained that ‘‘other factors for purposes of at least some other through rulemaking as ‘‘unfortunate’’ relevant to the inquiry [include] the Federal statutes would create a simpler and ‘‘questionable.’’ skill required; the source of the legal regime for regulated entities The Department appreciates the instrumentalities and tools; the location interested in receiving services from an policy appeal of establishing a uniform of the work; the duration of the parties’ independent contractor, thereby Federal classification standard, and relationship; whether the hiring party reducing confusion, compliance costs, understands that the standard most has the right to assign additional and legal risk for entities interested in familiar to the regulated community is projects to the hired party; the extent of doing business with independent likely the common law control test used the hired party’s discretion over when contractors. Entities would not have to for tax and other purposes. However, and how long to work; the method of understand and apply a different such an approach would be inconsistent payment; the hired party’s role in hiring employment classification standard for with the Supreme Court’s statement that and paying assistants; whether the work FLSA purposes. Thus, adopting the FLSA employment is more inclusive is part of the regular business of the common law control test would likely than the common law control test. See, hiring party; whether the hiring party is increase perpetual cost savings for e.g., Walling v. Portland Terminal Co., in business; the provision of employee regulated entities attributable to 330 U.S. 148, 150 (1947) (‘‘[I]n benefits; and the tax treatment of the improved clarity and reduced litigation determining who are ‘employees under hired party.’’ Id. at 751–52. as compared to the final rule. It could, the [FLSA], common law employee Although the common law control on the other hand, impose burdens on categories . . . are not of controlling test considers many of the same factors workers who might prefer to be significance.’’). The overwhelming as those identified in the final rule’s employees subject to FLSA protections. majority of commenters who mentioned ‘‘economic reality’’ test (e.g., skill, Moreover, the Supreme Court has the common law standard in their length of the working relationship, the interpreted the ‘‘suffer or permit’’ comment, including business source of equipment and materials, etc.), language in section 3(g) of the FLSA as commenters inclined to favor the courts generally recognize that, because establishing a broader definition of relative permissiveness of a common of its focus on control, the common law employment than the common law. See, law standard, expressed agreement with test is more permissive of independent e.g., Darden, 503 U.S. at 326; Portland Terminal Co., 330 at 150–51. that conclusion. constraints prevent the selection of a regulatory A handful of business commenters 2. Codifying the Six-Factor ‘‘Economic action that best satisfies the philosophy and addressed the merits of the common law Reality’’ Balancing Test principles of Executive Order 12866, [agencies] control test as a regulatory alternative. should identify these constraints and estimate their In a joint comment, Vanliner Insurance As discussed earlier in section II(B), opportunity cost. Such information may be useful to Congress under the Regulatory Right-to-Know Company and the Great American WHD has long applied a multifactor Act.’’ Trucking Division implicitly requested ‘‘economic reality’’ balancing test to 252 See supra note 248. The Supreme Court has adoption of the common law standard distinguish between employees and explained that the common law standard of presently used under the National Labor independent contractors in enforcement employment applies by default under Federal law actions and subregulatory guidance. The ‘‘unless [Congress] clearly indicates otherwise.’’ Relations Act (NLRA) and the Social Darden, 503 U.S. at 325; see also Community for Security Act (SSA), as they urged the six factors in WHD’s multifactor Creative Non-Violence v. Reid, 490 US 730, 739–40 Department to ‘‘foster efficiency and balancing test, as recently articulated in (1989) (‘‘[W]hen Congress has used the term consistency by creating uniformity for WHD Opinion Letter FLSA2019–6, are ‘employee’ without defining it, we have concluded as follows: that Congress intended to describe the conventional compliance with the FLSA, the [NLRA], master-servant relationship as understood by and the [SSA].’’ The American Society (1) The nature and degree of the common-law agency doctrine.’’). of Travel Advisors, Inc. (ASTA) asserted potential employer’s control;

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(2) The permanency of the worker’s test would not reduce initial regulatory regulatory familiarization costs relationship with the potential familiarization costs or provide greater compared to the streamlined test employer; per-contract cost savings compared to adopted in this final rule would likely (3) The amount of the worker’s the proposed rule, see 85 FR 60635, be minimal. By contrast, and as we investment in facilities, equipment, or arguing that this assumption ‘‘overlooks explained in the NPRM, codification of helpers; the fact that codifying the six-factor the traditional six-factor balancing test (4) The amount of skill, initiative, balancing test would simply incorporate would yield smaller recurring benefits judgment, or foresight required for the what is now subregulatory guidance at and cost savings over the long term, as worker’s services; the regulatory level.’’ Finally, NELP, the Department continues to believe in (5) The worker’s opportunities for NWLC, and the State AGs asserted that the added clarity of an appropriately profit or loss; and the Department has no legal authority to weighted test with less overlapping (6) The extent of integration of the promulgate any regulatory standard redundancy. worker’s services into the potential except the traditional six-factor The Department further believes that employer’s business. balancing test, citing to Kimble v. reinstatement of AI 2015–1’s specific WHD Opinion Letter FLSA2019–6 at 4 Marvel Entm’t, LLC, 576 U.S. 446 (2015), articulation of the six-factor test would (citing Rutherford Food, 331 U.S. at 730, for the proposition that the six-factor be inappropriate because that and Silk, 331 U.S. at 716). balancing test derived from Silk and withdrawn guidance exacerbates the As discussed in the NPRM, the Rutherford Food has effectively become very shortcomings that this rule Department believes that this six-factor part of the FLSA’s ‘‘statutory scheme.’’ remedies. As discussed in Section III(A), balancing test is neither more nor less See id. at 456 (‘‘All [of the Supreme the first such shortcoming is the need permissive of independent contractor Court’s] interpretive decisions, in for consistent application of economic relationships as compared to the whatever way reasoned, effectively dependence. While the AI 2015–1 streamlined test finalized in this become part of the statutory scheme, correctly stated that ‘‘[t]he ultimate rulemaking. Both tests describe the subject (just like the rest) to inquiry under the FLSA is whether the ‘‘economic dependence’’ of the worker congressional change.’’). worker is economically dependent on While the Department agrees with at issue as the ultimate inquiry; both the employer or truly in business for NELP, NWLC, and the State AGs that emphasize the primacy of actual him or herself,’’ it failed to apply that Supreme Court precedent requires concept consistently. Notably, it practice over contractual or theoretical application of an ‘‘economic reality’’ possibilities (i.e., the ‘‘economic reality’’ explained that the investment factor test to evaluate independent contractor should be analyzed by comparing the of the work arrangement); and both claims under the FLSA, we disagree that evaluate the same set of underlying amount of the worker’s investments the Court has definitively prescribed the with the amount the potential employer factors, notwithstanding an emphasis specific components of such a test. As and consolidation of certain factors invests because ‘‘[i]f the worker’s explained earlier, courts in different investment is relatively minor, that under this rule’s streamlined test. Federal circuits have articulated the Notably, like § 795.105(d)(1)(i) of the suggests that the worker and the number and nature of relevant factors in [potential] employer are not on similar final rule, WHD Opinion Letter different ways, so any formulation FLSA2019–6 advised that certain safety footings and that the worker may be endorsed by the Department would be at economically dependent on the measures and quality control standards least marginally ‘‘novel’’ to courts and do not constitute ‘‘control’’ indicative of employer.’’ But the correct concept of affected stakeholders across economic dependence is not an inquiry an FLSA employment relationship. See jurisdictions in some respect. Moreover, id. at 8 n.4. However, the Department into whether two entities are on a many commenters are overstating the ‘‘similar footing,’’ but rather whether an explained in the NPRM that the six- degree to which the standard finalized factor balancing test used by WHD and individual is in business for him- or in this rule meaningfully departs from 253 most courts, with some significant herself. Such an approach to the existing precedent. If anything, by investment factor is misleading by variations, would benefit from elevating the two factors that are most clarification, sharpening, and placing the focus on the worker’s probative to what courts have financial means instead of the worker’s streamlining. established as the ultimate inquiry of A number of commenters urged the relationship with the purported the test—i.e., whether workers ‘‘are in employer. Several cases explicitly or Department to codify a six-factor business for themselves,’’ Saleem, 854 balancing test. Several commenters, implicitly reject the ‘‘similar footing’’ F.3d at 139—the Department’s approach analysis, most plainly because including NELP, Eastern Atlantic States is more faithful to courts’ instruction Regional Council of Carpenters independent contractors routinely work that the factors ‘‘must be applied with for companies with whom they are not (EASRCC), and the United Brotherhood that ultimate notion in mind.’’ Usery, on a ‘‘similar footing.’’ See Karlson, 860 of Carpenters, specifically requested 527 F.2d at 1311. Moreover, because the F.3d at 1096 (‘‘Large corporations can that the Department reinstate AI 2015– Department’s analysis of appellate case hire independent contractors’’). The 1, which was withdrawn in 2017. law since 1975 has found workers’ ‘‘similar footing’’ concept of economic SWACCA asserted that ‘‘codification of control and opportunity for profit or dependence is also inconsistent with the six-factor balancing test may well loss to be most predictive of a worker’s the Supreme Court’s analysis in Silk, achieve more consistency of application classification status, the finalized 331 U.S. 718, which found that truck from the courts as it pushes them to standard provides more accurate drivers who invested in their own develop their similar precedents to align guidance. with the Department’s views,’’ To the extent that some businesses vehicles were independent contractors criticizing the proposed rule as ‘‘a novel and independent contractors familiar who transported coal for a coal weighted test that will result in more with the Department’s earlier company. The Court did not compare litigation and less certain outcomes[.]’’ subregulatory guidance might spend 253 The Department is also concerned that the SWACCA also disputed the less time reviewing new regulatory phrase ‘‘similar footing’’ lacks a clear meaning and Department’s assumption in the NPRM language on the topic under this therefore may be confusing to the regulated that codifying the six-factor balancing alternative, any reduction in initial community.

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the relative investment of the drivers multifactor test by blurring the lines independent contractor statuses.254 As with that of the coal company or ask between factors. One type of overlap described by the California Supreme whether they were on a ‘‘similar highlighted by the NPRM is the Court in Dynamex, ‘‘[t]he ABC test footing’’—they obviously were not. importation of the analysis of initiative presumptively considers all workers to Instead, the Court ruled that the drivers and business judgment, which are be employees, and permits workers to were independent contractors, in part already part of the control and be classified as independent contractors because they had ‘‘the opportunity for opportunity factors, into the skill factor, only if the hiring business demonstrates profit from sound management’’ of their thus ‘‘dilut[ing] the consideration of that the worker in question satisfies investment. Id. at 719. What matters is actual skill to the point of irrelevance.’’ each of three conditions: (a) That the not the relative size of a worker’s 85 FR 60607. Id. AI 2015–1 reinforces worker is free from the control and investment, but whether the worker has this problem by focusing the skill factor direction of the hirer in connection with a meaningful opportunity for profit or entirely on initiative and business the performance of the work, both under loss based on that investment. judgment, thus eliminating the contract for the performance of the The second shortcoming discussed at consideration of skill: ‘‘A worker’s work and in fact; and (b) that the worker Section III(B) is the need for guidance business skills, judgment, and initiative, performs work that is outside the usual regarding which economic reality not his or her technical skills, will aid course of the hiring entity’s business; factors are more probative. AI 2015–1 in determining whether the worker is and (c) that the worker is customarily exacerbates this shortcoming by economically independent.’’ The engaged in an independently relegating the more probative control withdrawn guidance makes clear that it established trade, occupation, or factor while elevating the less probative is not simply that skill matters less than business of the same nature as that ‘‘integral part’’ factor. In particular, AI– initiative, but that skill matters not at involved in the work performed.’’ 416 2015 stated that ‘‘[t]he control factor all, because it unequivocally states that P.3d at 34.255 In justifying the adoption should not overtake the other factors of ‘‘specialized skill do not indicate that of such a stringent test, the Dynamex the economic realities test.’’ Such workers are in business for themselves.’’ court noted the existence of an guidance is plainly inconsistent with This categorical statement, however, is ‘‘exceptionally broad suffer or permit to cases in which control explicitly supported by more circumspect case work standard’’ in California’s wage and ‘‘overtakes’’ other factors. See, e.g., law explaining that ‘‘skill is not itself hour statute, id. at 31,256 as well as ‘‘the Saleem; 854 F.3d at 147 (‘‘whatever ‘the indicative of independent contractor more general principle that wage orders permanence or duration’ of Plaintiffs’ status.’’ AI 2015–1 (quoting Superior are the type of remedial legislation that affiliation with Defendants, both its Care, 84 F.2d at 1060 (emphasis must be liberally construed in a manner length and the ‘regularity’ of work was added)); see also id. (‘‘the use of special that serves its remedial purposes.’’ Id. at entirely of Plaintiffs’ choosing’’ (citation skills is not itself indicative of 32. omitted)); Selker Bros. 84 F.3d at 147 independent contractor status’’ (quoting On its face, California’s ABC test is far (‘‘Given the degree of control exercised Selker Bros. 949 F.d at 1295) (emphasis more restrictive of independent by Selker over the day-to-day operations added)). AI 2015–1’s categorical contracting arrangements than any of the stations, this [use of special skills] position is also at odds with the formulation of an ‘‘economic reality’’ cannot be said to support a conclusion Supreme Court’s instruction in Silk that of independent contractor status.’’). 254 See Dynamex, 416 P.3d 1; Assembly Bill ‘‘skill required’’ may be ‘‘important for (‘‘A.B.’’) 5, Ch. 296, 2019–2020 Reg. Sess. (Cal. Deemphasizing the control factor is also decision.’’ 331 U.S. at 716; see also at odds with commonsense logic; 2019) (codifying the ABC test articulated in Simpkins, 893 F.3d at 966 (‘‘whether Dynamex); A.B. 2257, Ch. 38, 2019–2020 Reg. Sess. control over the work seems to be Simpkins had specialized skills, as well (Cal. 2020) (exempting certain professions, extremely probative as to whether an as the extent to which he employed occupations, and industries from the ABC test that individual is in business for him- or A.B. 5 had codified). The ABC test originated in them in performing his work, are herself. In addition to de-emphasizing a state unemployment insurance statutes, but some [material] issues’’). state courts and legislatures have recently extended highly probative factor, AI–2015 also the test to govern employee/independent contractor states that ‘‘[c]ourts have found the Further, reinstating AI 2015–1 or otherwise adopting a six-factor test with disputes under state wage and hour laws. See Keith ‘integral’ factor to be compelling,’’ citing Cunningham-Parmeter, Gig-Dependence: Finding Snell, 875 F.2d at 811 and Lauritzen, overlapping factors and without the Real Independent Contractors of Platform Work, F.2d at 1537–38 for support. But both guidance regarding the factors’ relative 39 N. Ill. U. L. Rev. 379, 408–11 (2019) (discussing probative value would negate the the origins and recent expansion of the ABC test). cited cases actually analyzed the 255 overall beneficial effects that would California’s ABC test is slightly more stringent ‘‘integral part’’ factor as an afterthought: than versions of the ABC test adopted (or presently Each devoted only a few conclusory likely result from this rule, which are under consideration) in other states. For example, sentences to this factor after more in discussed above. New Jersey provides that a hiring entity may satisfy the ABC test’s ‘‘B’’ prong by establishing either: (1) depth analysis of the other factors Snell, For these reasons, the Department declines commenters’ requests to That the work provided is outside the usual course 875 F.2d at 811 and Lauritzen, 835 F.2d of the business for which the work is performed, or at 1537–38. The ‘‘integral part’’ factor reinstate AI 2015–1.The Department (2) that the work performed is outside all the places falls short of even an afterthought in the further notes that, unlike this rule, AI of business of the hiring entity. N.J. Stat. Ann. Fifth Circuit, which typically does not 2015–1 was issued without notice and § 43:21–19(i)(6)(A–C). The Department has chosen comment and thus did not benefit from to analyze California’s ABC test as a regulatory analyze it at all. As explained in Section alternative because businesses subject to multiple IV(D)(5), the ‘‘integral part’’ factor—as helpful input from the regulated standards, including nationwide businesses, are used in AI 2015–1 to mean a worker’s community. likely to comply with the most demanding standard if they wish to make consistent classification importance to a business—is not 3. Codifying California’s ‘‘ABC’’ Test determinations. supported by Supreme Court precedent 256 See Cal. Code Regs., tit. 8, § 11090, subd. 2(D) and may send misleading signals in The most stringent regulatory (‘‘‘Employ’ means to engage, suffer, or permit to many cases. alternative to the Department’s work.’’). The Dynamex court noted that California’s The third shortcoming discussed at proposed rule would be to codify the adoption of the ‘‘suffer or permit to work’’ standard ‘‘ABC’’ test recently adopted under predated the enactment of the FLSA and was Section III(C) is overlaps between therefore ‘‘not intended to embrace the Federal economic reality factors, which California’s state wage and hour law to economic reality test’’ that subsequently developed. undermines the structural benefits of a distinguish between employee/ 416 P.3d at 35.

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balancing test, including the proposed reduce unlawful misclassification of Translators & Interpreters of California rule. Whereas no single factor employees as independent contractors. (CoPTIC) (‘‘[A.B. 5] posed an existential necessarily disqualifies a worker from See, e.g., Matt Brown; National threat to the survival of our independent contractor status under an Domestic Workers Alliance; Public profession.’’); Intermodal Association of economic reality test, each of the ABC Justice Center; SEIU. Numerous North America (IANA)) (‘‘The ABC test test’s three factors may alone disqualify commenters asserted that the ABC test, essentially eliminates the independent the worker from independent contractor with its three individually contractor model for motor carriers status. Thus, the NPRM stated that determinative factors, was also the involved in intermodal drayage.’’). adoption of an ABC test to govern clearest and most predictable approach Several commenters invoked the independent contractor status under the considered. See, e.g., International numerous exemptions to the ABC test FLSA would directly result in a large- Brotherhood of Teamsters; Writers that California lawmakers initially scale reclassification of many workers Guild of America, East, AFL–CIO. New adopted in A.B. 5 and subsequently presently classified as independent York University’s People’s Parity Project expanded in A.B. 2257 as evidence of contractors into FLSA-covered argued that ‘‘[g]iven the importance of the standard’s overreach. See, e.g., employees, particularly those in the California market to the national California Chamber of Commerce industries that depend on independent economy and the fact that it follows the (‘‘During the first few months of the contracting arrangements within the more stringent ABC standard, any 2020 Legislative Session, more than 30 ‘‘usual course of the hiring entity’s business that wishes to operate in bills were introduced to add a myriad of business.’’ Dynamex, 416 P.3d at 34. California, and any national business, exemptions to the ABC test.... As a While some independent contractors will have economic motivation to follow result of the adoption of AB 2257, might benefit from reclassification by the ABC standard.’’ NELA similarly which was signed into law in newly receiving overtime pay or a disputed concerns that adoption of the September, there are now 109 guaranteed minimum wage, these ABC test would be unduly disruptive, exemptions to the ABC test.’’); Rep. workers might also experience a asserting that Massachusetts wage and Virginia Foxx et al. (‘‘Rather than setting reduction in work hours or diminished hour law has used an ABC test since a dependable and workable standard, scheduling flexibility as their new 2004 and that ‘‘[m]any other states, the AB 5 framework results in arbitrary employers attempt to avoid incurring including New Jersey, Illinois, treatment of industries based on additional expenses for overtime work. Connecticut, and Hawaii, use an ABC political considerations to the detriment Others workers, particularly off-site test for certain [other] purposes, and of workers.’’); Joint Comment of PLF, workers who operate free from the have similarly suffered no disruption to ASJA, and NPPA (‘‘If a law requires business’ direct control and supervision, their economies.’’ Finally, regarding the dozens of exceptions to avoid might see their work arrangements Department’s legal authority to adopt destroying the careers of successful terminated by businesses unwilling or the ABC test, NELA asserted that ‘‘none independent professionals, it is a strong unable to assume the financial burden of the cases on which the Department indication that the law’s basic and legal risk of the FLSA’s overtime relies suggest that the multi-factor test is premise—the ABC test—is flawed.’’). pay requirement. After highlighting the only way to test ‘economic reality’ Some individual freelancers, including some of the reports of adverse or that the ABC test ignores ‘economic writer Karen Kroll, filmmaker/actor consequences experienced by workers reality.’ ’’ Margarita Reyes, unspecified and businesses in California following A diverse array of commenters voiced professional Chun Fung Kevin Chiu, the passage A.B. 5, the Department strong opposition to adopting an ABC and unspecified professional Carola concluded that adopting the ABC test as test under the FLSA, including law Berger, asserted that the ABC test is the FLSA’s generally applicable firms, trade associations, advocacy falsely premised on the assumption that standard for distinguishing employees organizations, academics, and all independent contractors, or at least from independent contractors would be individual freelancers. Several those who provide services in a client’s unduly restrictive and disruptive to the commenters dedicated the entirety or usual course of business, feel exploited economy. Finally, as a matter of law, the vast majority of their comment towards and would prefer to be employees. The Department asserted that adoption of criticizing California’s ABC test. See, Independent Women’s Forum and Dr. California’s ABC test would be e.g., American Consumer Institute Palagashvili asserted that the ABC test inconsistent with the more flexible Center for Citizen Research (ACI); Fight implemented in California economic reality test adopted by the for Freelancers USA; Institute for the disproportionately burdened female Supreme Court, as it would cover American Worker; Joint Comment of the workers with caregiving responsibilities, workers who have been held by the Pacific Legal Foundation (PLF), the who are less able to find adequately Supreme Court to be independent American Society of Journalists and flexible work schedules through contractors under the economic reality Authors, Inc. (ASJA), and the National traditional employment. Finally, some test. See Silk, 331 U.S. at 719; Bartels, Press Photographers Association commenters agreed with the 332 U.S. at 130. (NPPA); Dr. Palagashvili; The People v. Department’s conclusion in the NPRM The Department received a large AB5. The primary objection voiced by that Supreme Court precedent precludes volume of commenter feedback on the commenters critical of the ABC test the Department from adopting an ABC merits of California’s ABC test. While regarded the disruptive economic effects test under the FLSA. See NRF; FMI— the majority of these comments were of implementing such a stringent The Food Industry Association. highly critical of the standard, it did standard, with several asserting that an After reviewing commenter feedback, have several supporters. Commenters in ABC test would devastate their industry. the Department continues to believe that favor of the ABC test asserted that, as See, e.g., American Council of Life the ABC test would be infeasible, the regulatory alternative most Insurers (‘‘Thousands of jobs would difficult to administer, and disruptive to restrictive of independent contracting likely have been lost had the California the economy if adopted as the FLSA considered by the Department, it would legislature failed to create [an standard. The weight of data, best effectuate Congress’ intent to exemption for insurance arguments, and anecdotes that extend FLSA coverage broadly and professionals].’’); Coalition of Practicing commenters shared about the ABC test’s

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effects in California support the NPRM’s undue disruption under that standard. NELA contended that ‘‘an ABC test is conclusion that adopting an ABC test NELA contended that adoption of the more faithful to the broad, remedial would have unacceptably disruptive ABC test by Massachusetts has not led purpose of the FLSA.’’ According to economic effects. For instance, a self- to the same type of disruption NELA, ‘‘[a]t its core, the FLSA is a employed ‘‘professional handyman with experienced in California, which is remedial statute’’ and therefore, the technical skills in furniture assembly disputed by some commenters from Department should interpret the FLSA’s and home repair’’ stated that ‘‘[a]s a Massachusetts. See e.g., New Jobs for standard of employment to be broader California resident, it has been Massachusetts; IFA; Fight for than economic dependence. However, concerning to watch the way AB–5 has Freelancers. But even if NELA were the Supreme Court warned against affected our state. I don’t believe correct, a nationwide ABC test would relying on ‘‘flawed premise that the legislators should make decisions that still disrupt California, the state with FLSA ‘pursues’ its remedial purpose ‘at make it harder for people like me to find the largest population and economy, all costs’ ’’ when interpreting the Act. work and earn a living the way we want and likely many others. In the Encino, 138 S. Ct. at 1142; see also to.’’ A medical translator stated that Department’s view, the fact that a legal Bristol, 935 F.3d 122 (‘‘ ‘[A] fair reading’ ‘‘ABC test simply doesn’t work in my standard may be disruptive in only of the FLSA, neither narrow nor broad, field and it is not a fair standard to some states (e.g., California) but not is what is called for.’’ (quoting Encino, measure my situation. The original AB5 others (e.g., Massachusetts) is not a 138 S. Ct. at 1142)); Diaz, 751 F. App’x law in California was destructive to the persuasive reason for nationwide at, 758 (rejecting request to interpret livelihood of many of my colleagues in adoption. FLSA provisions to provide ‘‘broad’’ that state.’’ And as a final illustrative Additionally, the Department coverage because ‘‘[w]e must instead example, a freelance journalist in continues to believe that it lacks legal give the FLSA a ‘fair’ interpretation.’’). California characterized that state’s authority to adopt the ABC test under Furthermore, even if remedial statutes adoption of the ABC test as an ‘‘attempt the FLSA because that test is far too should be liberally construed, the ABC to legislate an entire class of rigid and restrictive of independent test still runs afoul of the Supreme entrepreneurs out of business.’’ See contracting arrangements. As a Court’s stated limits on the extent of the FLSA’s definition of employment, as also, e.g., People vs. AB5; Fight for threshold matter, each of the ABC test’s explained above. As such, the Freelancers; NPPA; WPI. three independently determinative Department may not (and no court has Moreover, as commenters pointed out, factors would contradict binding ever suggested that it could) replace the the numerous exemptions initially and Supreme Court precedent applying the economic reality test with the ABC test subsequently passed by the California economic reality test, where ‘‘[n]o one to be faithful to the FLSA’s remedial legislature indicate the ABC test’s [factor] is controlling.’’ Silk, 331 U.S. at inadequacy as a generally applicable purpose. 716. In particular, the test’s ‘‘B’’ prong— In sum, legal constraints and the standard, as well as its unpopularity denying independent contractor status with affected stakeholders. An ‘‘owner disruptive economic effects of adopting unless the contractor ‘‘performs work the ABC test in the FLSA context. As we of a small, one-woman business in that is outside the usual course of the California’’ explained in her comment stated in the NPRM, the Department hiring entity’s business’’—would engaged in this rulemaking to clarify the that ‘‘[t]he absurdity and overreach of contradict the Court’s recognition in AB5 is evidenced by the numerous existing standard, not to radically Silk that ‘‘[f]ew businesses are so transform it. attempts at clean-up bills in California completely integrated that they can (SB 875, SB 1039, SB 900, AB 1850, AB themselves produce the raw material, H. Summary of Impacts 2257 . . .) that clogged the CA manufacture and distribute the finished In summary, the Department believes legislative landscape for months, product to the ultimate consumer that this rule will increase clarity culminating in the now adopted AB without assistance from independent regarding whether a worker is classified 2257, which lists too many exemptions contractors.’’ 331 U.S. at 714; see also as an employee or an independent to count.’’ The recent passage of the Rutherford Food, 331 U.S. at 729 contractor under the FLSA. This clarity high-profile Proposition 22 ballot (recognizing that ‘‘[t]here may be could result in an increased use of 257 initiative in California, which independent contractors who take part independent contractors. The costs and occurred shortly after the end of the in [the] production or distribution’’ of a benefits to a worker being classified as comment period for this rulemaking and hiring party). Indeed, application of an independent contractor are discussed exempted numerous gig workers from California’s ABC test would result in throughout this analysis, and are the ABC test, is further evidence in this different classification outcomes than summarized below. regard. those the Supreme Court arrived at The Department believes that there While California retains the ABC test applying the economic reality test in are real benefits to the use of for some industries but not others, the Silk, 331 U.S. at 719 (ruling that independent contractor status, for both Department is required to apply the truckers who were ‘‘an integral part of workers and employers. Independent FLSA consistently for all covered the businesses of retailing coal or contractors generally have greater industries (absent explicit statutory transporting freight’’ were independent autonomy and more flexibility in their authority to do otherwise). Thus, if the contractors), and Bartels, 332 U.S. at 130 hours, providing them more control Department adopted the ABC test, that (concluding that musicians were over the management of their time. The standard would apply to virtually all independent contractors rather than use of independent contracting for industries nationwide, including employees of the music hall where they employers allows for a more flexible numerous industries that the played). Absent revised guidance from and dynamic workforce, where workers Californian legislature and voters the Supreme Court or Congressional provide labor and skills where and exempted because they would suffer legislation amending the FLSA statute, when they are needed. Independent the Department continues to believe that contractors may more easily work for 257 See Kate Conger, ‘‘Uber and Lyft Drivers in multiple companies simultaneously, California Will Remain Contractors,’’ NY Times it lacks the legal authority to implement (Nov. 4, 2020), https://www.nytimes.com/2020/11/ a California-style ‘‘ABC’’ test through have more control over their labor- 04/technology/california-uber-lyft-prop-22.html. administrative rulemaking. leisure balance, and more explicitly

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define the nature of their work. businesses, not-for-profit organizations, clarification to the Department’s Independent contractors also appear to and small governmental jurisdictions. interpretation of who is an employee have higher job satisfaction. Accordingly, the Department examined and who is an independent contractor An increase in the number of job the regulatory requirements of this final under the FLSA, the Department openings for independent contractors rule to determine whether they would assumes that it will take on average can also have benefits for the economy have a significant economic impact on about 1 hour to review the rule as as a whole. Increased job creation and a substantial number of small entities. proposed. The Department believes that enhanced flexibility in work Because both costs and cost savings are an hour, on average, is appropriate, arrangements are critical benefits during minimal for small business entities, the because while some establishments will periods of economic uncertainty, such Department certifies that this final rule spend longer than one hour to review as the current COVID–19 pandemic. will not have a significant economic the rule, many establishments may rely There are also certain challenges that impact on a substantial number of small on third-party summaries of the changes face independent contractors compared entities. or spend little or no time reviewing the to employees subject to the FLSA. The Department used the Small rule. Assuming benefits are paid at a Independent contractors are not subject Business Administration size standards, rate of 46 percent of the base wage, and to the protections of the FLSA, such as which determine whether a business overhead costs are 17 percent of the minimum wage and overtime pay. qualifies for small-business status, to base wage, the reviewer’s effective Independent contractors generally do estimate the number of small hourly rate is $54.74; thus, the average not receive the same employer-provided entities.259 260 The Department then cost per establishment conducting benefits as employees, such as health applied these thresholds to the U.S. regulatory familiarization is $54.74. The insurance, retirement contributions, and Census Bureau’s 2012 Economic Census per-entity rule familiarization cost for paid time off.258 Independent to obtain the number of establishments independent contractors, some of whom contractors may have a higher tax with employment or sales/receipts would be small businesses, is $11.59, or liability than employees, as they are below the small business threshold in the fully loaded mean hourly wage of legally obligated to pay both the the industry.261 These ratios of small to independent contractors in the CWS employee and employer shares of the large establishments were then applied ($46.36) multiplied by 0.25 hour. The Federal Insurance Contributions Act to the more recent 2017 Economic Department believes that 15 minutes, on (FICA) taxes. However, economists Census data on number of average, is appropriate, because while recognize that payroll taxes generally establishments.262 Next, the Department some independent contractors will are subtracted from the wage rate of estimated the number of small spend longer than one hour to review employees. Employers also cover governments, defined as having the rule, many will spend little or no unemployment insurance and workers’ population less than 50,000, from the time reviewing the rule. compensation taxes for their employees. 2017 Census of Governments.263 In The cost savings due to increased These costs are also components of total, the Department estimated there clarity estimated per year for each small businesses’ worker costs, and employee are 6.4 million small establishments or business employer is $18.25, or the fully wages are expected to reflect that governments. loaded mean hourly wage of a accordingly. Independent contractors do The Department assumes that a Compensation, Benefits, and Job not pay these taxes nor are they Compensation, Benefits, and Job Analysis Specialist multiplied by 0.33 generally protected by these insurance Analysis Specialist (SOC 13–1141) (or a hours. The cost savings due to increased staff member in a similar position) will clarity for each independent contractor, programs, but there are private 264 insurance companies that offer review the rule. According to the some of whom would be a small equivalent coverage. Occupational Employment Statistics business, is $4.14 per year, or the fully Because the Department does not (OES), these workers had a mean wage loaded mean hourly wage of know how many workers may shift from of $33.58 per hour in 2019 (most recent independent contractors in the CWS employee status to independent data available). Given the proposed multiplied by 0.89 hours.265 Because contractor status, or how many people regulatory familiarization is a one-time 259 SBA, Summary of Size Standards by Industry who were previously unemployed or Sector, 2017, www.sba.gov/document/support— cost and the cost savings from clarity out of the labor force will gain work as table-size-standards. recur each year, the Department expects an independent contractor, these costs 260 The most recent size standards were issued in cost savings to outweigh regulatory and benefits have not been quantified. 2019. However, the Department used the 2017 familiarization costs in the long run. standards for consistency with the older Economic Because both costs and cost savings are VII. Regulatory Flexibility Act Census data. 261 The 2012 data are the most recently available minimal for small business entities, and The Regulatory Flexibility Act of 1980 with revenue data. well below one percent of their gross (RFA), 5 U.S.C. 601 et seq., as amended 262 For this analysis, the Department excluded annual revenues, which is typically at by the Small Business Regulatory independent contractors who are not registered as least $100,000 per year for the smallest Enforcement Fairness Act of 1996, small businesses, and who are generally not captured in the Economic Census, from the businesses, the Department certifies that Public Law 104–121 (1996), requires calculation of small establishments. this final rule will not have a significant Federal agencies engaged in rulemaking 263 2017 Census of Governments. https:// economic impact on a substantial to consider the impact of their proposals www.census.gov/data/tables/2017/econ/gus/2017- number of small entities. on small entities, consider alternatives governments.html. There is some evidence that small to minimize that impact, and solicit 264 A Compensation/Benefits Specialist ensures company compliance with Federal and state laws, firms use independent contractors for a public comment on their analyses. The including reporting requirements; evaluates job greater proportion of their workforce RFA requires the assessment of the positions, determining classification, exempt or than large firms.266 If so, then it may be impact of a regulation on a wide range non-exempt status, and salary; plans, develops, reasonable to assume that the increased evaluates, improves, and communicates methods of small entities, including small and techniques for selecting, promoting, compensating, evaluating, and training workers. See 265 Note that the NPRM reported $3.86 which is 258 In some situations, independent contractors BLS, ‘‘13–1141 Compensation, Benefits, and Job the cost per job, rather than the cost per may be provided with benefits similar to those Analysis Specialists,’’ https://www.bls.gov/oes/ independent contractor. provided to employees. current/oes131141.htm. 266 Lim et al, supra note 75 at 51.

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use of independent contractors may also reasonable alternatives and select, or have any measurable effect on the favor smaller companies. In which case, explain the non-selection, of the least economy. costs and benefits and cost savings may costly, most cost-effective, or least Many commenters claim that the rule be larger for these small firms. Because burdensome alternative. will result in costs to Federal and state benefits and cost savings are expected to governments in the form of increased A. Authorizing Legislation outweigh costs, the Department does not public assistance and decreased tax expect this rule will result in an undue This final rule is issued pursuant to revenue. The Department discussed hardship for small businesses. the Fair Labor Standards Act, 29 U.S.C. these potential costs in the RIA and AFL–CIO disagreed with including 201, et seq. directs the reader to Section VI(E)(2)(ii). cost savings from increased clarity for The State AGs stated that the independent contractors. They argue B. Assessment of Costs and Benefits Department failed to include the that ‘‘the independent contractors at For purposes of the UMRA, this rule increased administrative and issue—those who falls [sic] close to the includes a Federal mandate that is enforcement costs to states due to the line separating independent contractors expected to result in increased change in the standard for determining from employees are not themselves expenditures by the private sector of independent contractor status under the employers, they provide services solely more than $156 million in at least one FLSA. They wrote that states ‘‘would as individuals and they have no need to year, but will not result in increased need to invest time and resources into determine if they are themselves expenditures by state, local, and tribal training agency employees and independent contractors.’’ They governments, in the aggregate, of $156 educating the public,’’ particularly in additionally stated that the analysis million or more in any one year. states with laws that are more restrictive failed to include compliance costs for Based on the cost analysis from this than the economic reality test. States do the new small businesses created—the final rule, the Department determined not enforce Federal laws and therefore workers newly classified as that it will result in Year 1 total costs have no need to train their personnel in independent contractors. Specifically, for state and local governments totaling the enforcement of the FLSA or the these new independent contractors will $1.7 million, all for regulatory Department’s regulations. There is also have increased regulatory burden due to familiarization. There will be no no need for states to be ‘‘educating’’ the additional accounting and tax filing additional costs incurred in subsequent public about FLSA regulations—aside costs. The Department believes it did years. from pointing out that Federal law may address this because workers who The Department determined that the impose different requirements than state choose to pursue independent rule will result in Year 1 total costs for labor laws. Finally, under the nation’s contractor roles will not take them the private sector of $369.2 million, all federalist system, states may and often unless they believe the gains will offset of them incurred for regulatory do enact and enforce labor standards the costs. familiarization. The Department and are more restrictive than Federal The AFL–CIO asserts that the included all independent contractors in standards. A state’s decision to do so, Department failed to conduct the the private sector total regulatory however, rests with the state because no outreach to small businesses as required familiarization costs. There will be no state is forced to enact labor standards by Section 609(a) of the RFA. The additional costs incurred in subsequent that are stricter than the Federal Department notes that these years. standard. Any costs associated with requirements only apply when the rule UMRA requires agencies to estimate implementing a stricter standard, will have a significant economic impact the effect of a regulation on the national including training and education, reflect on a substantial number of small economy if such estimates are the free choice of the individual state, entities, which is not the case for this reasonably feasible and the effect is and not the existence of a different rulemaking. relevant and material.269 However, OMB Federal standard. As such, costs that a state choose to bear in enacting and VIII. Unfunded Mandates Reform Act guidance on this requirement notes that enforcing their own laws are the result Analysis such macroeconomic effects tend to be of the state’s own decision, and are The Unfunded Mandates Reform Act measurable in nationwide econometric models only if the economic effect of outside the scope of the unfunded of 1995 (UMRA) 267 requires agencies to mandate concept. prepare a written statement for rules the regulation reaches 0.25 percent to with a Federal mandate that may result 0.5 percent of Gross Domestic Product C. Least Burdensome Option Explained in increased expenditures by state, (GDP), or in the range of $53.6 billion 270 The Department believes that it has local, and tribal governments, in the to $107.2 billion (using 2019 GDP). A chosen the least burdensome but still aggregate, or by the private sector, of regulation with a smaller aggregate cost-effective methodology to clarify the $156 million ($100 million in 1995 effect is not likely to have a measurable FLSA’s distinction between employees dollars adjusted for inflation) or more in effect in macroeconomic terms, unless it and independent contractors. Although at least one year.268 This statement is highly focused on a particular the regulation will impose costs for must: (1) Identify the authorizing geographic region or economic sector, regulatory familiarization, the legislation; (2) present the estimated which is not the case with this rule. Department believes that its proposal costs and benefits of the rule and, to the The Department’s RIA estimates that would reduce the overall burden on extent that such estimates are feasible the total costs of the final rule will be organizations by simplifying and and relevant, its estimated effects on the $369.2 million. Given OMB’s guidance, clarifying the analysis for determining national economy; (3) summarize and the Department has determined that a whether a worker is classified as an evaluate state, local, and tribal full macroeconomic analysis is not employee or an independent contractor government input; and (4) identify likely to show that these costs would under the FLSA. The Department believes that, after familiarization, this 267 See 2 U.S.C. 1501. 269 See 2 U.S.C. 1532(a)(4). rule will reduce the time spent by 270 268 Calculated using growth in the Gross Domestic According to the Bureau of Economic organizations to determine whether a Product deflator from 1995 to 2019. Bureau of Analysis, 2019 GDP was $21.43 trillion. https:// Economic Analysis. Table 1.1.9. Implicit Price www.bea.gov/system/files/2020-02/gdp4q19_2nd_ worker is an independent contractor. Deflators for Gross Domestic Product. 0.pdf. Moreover, the additional clarification

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could promote innovation and certainty § 788.16 Employment relationship. employer’s employee under the Act. As in business relationships. The AFPF (a) In determining whether such, sections 6, 7, and 11 of the Act, agreed ‘‘that the Department has individuals are employees or which impose obligations on employers adequately analyzed potential independent contractors, the criteria regarding their employees, are alternatives as well as selected the least laid down in §§ 795.100 through inapplicable. Accordingly, the Act does burdensome option under the Unfunded 795.110 of this chapter are used. not require a potential employer to pay Mandates Reform Act of 1995.’’ * * * * * an independent contractor either the minimum wage or overtime pay under IX. Effects on Families ■ 5. Add part 795 to subchapter B to read as follows: sections 6 or 7. Nor does section 11 of The undersigned hereby certifies that the Act require a potential employer to the proposed rule would not adversely PART 795—EMPLOYEE OR keep records regarding an independent affect the well-being of families, as INDEPENDENT CONTRACTOR contractor’s activities. discussed under section 654 of the CLASSIFICATION UNDER THE FAIR (b) Economic dependence as the Treasury and General Government LABOR STANDARDS ACT ultimate inquiry. An ‘‘employee’’ under Appropriations Act, 1999. the Act is an individual whom an Sec. employer suffers, permits, or otherwise List of Subjects 795.100 Introductory statement. employs to work. 29 U.S.C. 203(e)(1), 29 CFR Part 780 795.105 Determining employee and (g). An employer suffers or permits an independent contractor classification individual to work as an employee if, as Agriculture, Child labor, Wages. under the FLSA. a matter of economic reality, the 29 CFR Part 788 795.110 Primacy of actual practice. 795.115 Examples of analyzing economic individual is economically dependent Forests and forest products, Wages. reality factors. on that employer for work. Rutherford 795.120 Severability. Food Corp. v. McComb, 331 U.S. 722, 29 CFR Part 795 Authority: 52 Stat. 1060, as amended; 29 727 (1947); Bartels v. Birmingham, 332 Employment, Wages. U.S.C. 201–219. U.S. 126, 130 (1947). An individual is Signed at Washington, DC, this 31st day of an independent contractor, as December, 2020. § 795.100 Introductory statement. distinguished from an ‘‘employee’’ Cheryl M. Stanton, This part contains the Department of under the Act, if the individual is, as a Administrator, Wage and Hour Division. Labor’s general interpretations of the matter of economic reality, in business text governing individuals’ for him- or herself. For the reasons set out in the classification as employees or (c) Determining economic preamble, the Department of Labor independent contractors under the Fair dependence. The economic reality amends 29 CFR chapter V as follows: Labor Standards Act (FLSA or Act). See factors in paragraph (d) of this section 29 U.S.C. 201–19. The Administrator of guide the determination of whether the PART 780—EXEMPTIONS the Wage and Hour Division will use relationship between an individual and APPLICABLE TO AGRICULTURE, these interpretations to guide the a potential employer is one of economic PROCESSING OF AGRICULTURAL performance of his or her duties under dependence and therefore whether an COMMODITIES, AND RELATED the Act, and intends the interpretations individual is properly classified as an SUBJECTS UNDER THE FAIR LABOR to be used by employers, employees, employee or independent contractor. STANDARDS ACT and courts to understand employers’ These factors are not exhaustive, and no ■ 1. The authority citation for part 780 obligations and employees’ rights under single factor is dispositive. However, the two core factors listed in paragraph continues to read as follows: the Act. To the extent that prior administrative rulings, interpretations, (d)(1) of this section are the most Authority: Secs. 1–19, 52 Stat. 1060, as probative as to whether or not an amended; 29 U.S.C. 201–219. practices, or enforcement policies relating to classification as an employee individual is an economically ■ 2. Amend § 780.330 by revising or independent contractor under the Act dependent ‘‘employee,’’ 29 U.S.C. paragraph (b) to read as follows: are inconsistent or in conflict with the 203(e)(1), and each therefore typically interpretations stated in this part, they carries greater weight in the analysis § 780.330 Sharecroppers and tenant than any other factor. Given these two farmers. are hereby rescinded. The interpretations stated in this part may be core factors’ greater probative value, if * * * * * they both point towards the same (b) In determining whether such relied upon in accordance with section 10 of the Portal-to-Portal Act, 29 U.S.C. classification, whether employee or individuals are employees or independent contractor, there is a independent contractors, the criteria 251–262, notwithstanding that after any such act or omission in the course of substantial likelihood that is the laid down in §§ 795.100 through individual’s accurate classification. This 795.110 of this chapter are used. such reliance, any such interpretation in this part ‘‘is modified or rescinded or is is because other factors are less * * * * * determined by judicial authority to be probative and, in some cases, may not be probative at all, and thus are highly PART 788—FORESTRY OR LOGGING invalid or of no legal effect.’’ 29 U.S.C. 259. unlikely, either individually or OPERATIONS IN WHICH NOT MORE collectively, to outweigh the combined THAN EIGHT EMPLOYEES ARE § 795.105 Determining employee and probative value of the two core factors. EMPLOYED independent contractor classification under (d) Economic reality factors—(1) Core the FLSA. factors—(i) The nature and degree of ■ 3. The authority citation for part 788 (a) Independent contractors are not control over the work. This factor continues to read as follows: employees under the Act. An individual weighs towards the individual being an Authority: Secs. 1–19, 52 Stat. 1060, as who renders services to a potential independent contractor to the extent the amended; 29 U.S.C. 201–219. employer—i.e., a putative employer or individual, as opposed to the potential ■ 4. Amend § 788.16 by revising alleged employer—as an independent employer, exercises substantial control paragraph (a) to read as follows: contractor is not that potential over key aspects of the performance of

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the work, such as by setting his or her This factor weighs in favor of the a logistics company. The owner- own schedule, by selecting his or her individual being an independent operator substantially controls the key projects, and/or through the ability to contractor to the extent the work aspects of the work. However, the work for others, which might include relationship is by design definite in logistics company has installed, at its the potential employer’s competitors. In duration or sporadic, which may own expense, a device that limits the contrast, this factor weighs in favor of include regularly occurring fixed maximum speed of the owner-operator’s the individual being an employee under periods of work, although the seasonal vehicle and monitors the speed through the Act to the extent the potential nature of work by itself would not GPS. The company limits the owner- employer, as opposed to the individual, necessarily indicate independent operator’s speed in order to comply exercises substantial control over key contractor classification. This factor with federally mandated motor carrier aspects of the performance of the work, weighs in favor of the individual being safety regulations and to ensure that she such as by controlling the individual’s an employee to the extent the work complies with local traffic laws. The schedule or workload and/or by directly relationship is instead by design company also requires the owner- or indirectly requiring the individual to indefinite in duration or continuous. operator to meet certain contractually work exclusively for the potential (iii) Whether the work is part of an agreed-upon delivery deadlines, and her employer. Requiring the individual to integrated unit of production. This contract includes agreed-upon comply with specific legal obligations, factor weighs in favor of the individual incentives for meeting, and penalties for satisfy health and safety standards, carry being an employee to the extent his or missing, the deadlines. insurance, meet contractually agreed- her work is a component of the potential (ii) Application. The owner-operator upon deadlines or quality control employer’s integrated production exercises substantial control over key standards, or satisfy other similar terms process for a good or service. This factor aspects of her work, indicating that are typical of contractual weighs in favor of an individual being independent contractor status. The fact relationships between businesses (as an independent contractor to the extent that the company has installed a device opposed to employment relationships) his or her work is segregable from the that limits and monitors the speed of the does not constitute control that makes potential employer’s production owner-operator’s vehicle does not the individual more or less likely to be process. This factor is different from the change the above conclusion. This an employee under the Act. concept of the importance or centrality measure is implemented in order to (ii) The individual’s opportunity for of the individual’s work to the potential comply with specific legal obligations profit or loss. This factor weighs employer’s business. and to ensure safety, and thus under towards the individual being an (iv) Additional factors. Additional § 795.105(d)(1)(i) would not constitute independent contractor to the extent the factors may be relevant in determining control that makes the owner-operator individual has an opportunity to earn whether an individual is an employee or more or less likely to be an employee profits or incur losses based on his or independent contractor for purposes of under the Act. The contractually agreed- her exercise of initiative (such as the FLSA, but only if the factors in some upon delivery deadlines, incentives, managerial skill or business acumen or way indicate whether the individual is and penalties are typical of contractual judgment) or management of his or her in business for him- or herself, as relationships between businesses and investment in or capital expenditure on, opposed to being economically likewise would not constitute control for example, helpers or equipment or dependent on the potential employer for that makes the owner-operator more or material to further his or her work. work. less likely to be an employee under the While the effects of the individual’s Act. exercise of initiative and management of § 795.110 Primacy of actual practice. (2)(i) Example. An individual accepts investment are both considered under In evaluating the individual’s assignments from a company that this factor, the individual does not need economic dependence on the potential provides an app-based service linking to have an opportunity for profit or loss employer, the actual practice of the those who need home-repair work with based on both for this factor to weigh parties involved is more relevant than those who perform home-repair work. towards the individual being an what may be contractually or The individual is able to meaningful independent contractor. This factor theoretically possible. For example, an increase his earnings by exercising weighs towards the individual being an individual’s theoretical abilities to initiative and business acumen and by employee to the extent the individual is negotiate prices or to work for investing in his own equipment. The unable to affect his or her earnings or is competing businesses are less company, however, has invested only able to do so by working more meaningful if, as a practical matter, the millions of dollars in developing and hours or faster. individual is prevented from exercising maintaining the app, marketing itself, (2) Other factors—(i) The amount of such rights. Likewise, a business’ maintaining the security of information skill required for the work. This factor contractual authority to supervise or submitted by actual and prospective weighs in favor of the individual being discipline an individual may be of little customers and workers, and monitoring an independent contractor to the extent relevance if in practice the business customer satisfaction with the work the work at issue requires specialized never exercises such authority. performed. training or skill that the potential (ii) Application. The opportunity for employer does not provide. This factor § 795.115 Examples of analyzing economic profit or loss factor favors independent weighs in favor of the individual being reality factors. contractor status for the individual, an employee to the extent the work at (a) The following illustrative despite the substantial difference in the issue requires no specialized training or examples demonstrate how the factors monetary value of the investments made skill and/or the individual is dependent listed in § 795.105(d) may be analyzed by each party. While the company may upon the potential employer to equip under the facts presented and are have invested substantially more in its him or her with any skills or training limited to substantially similar factual business, the value of that investment is necessary to perform the job. situations. not relevant in determining whether the (ii) The degree of permanence of the (b)(1)(i) Example. An individual is the individual has a meaningful working relationship between the owner and operator of a tractor-trailer opportunity for profit or loss through individual and the potential employer. and performs transportation services for his initiative, investment, or both.

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(3)(i) Example. An individual worker industry and is thus not indicative of a journalist sometimes corresponds with works full time performing home sporadic relationship. The fact that the the newspaper’s editor regarding what renovation and repair services for a housekeeper returns to his prior to write about or regarding revisions to residential construction company. She position each new season indicates that the articles that he submits, but he does is also the part owner of a food truck, his relationship with ski resort does not not otherwise communicate or work which she operates on weekends. In end and is indefinite as a matter of with any of the newspaper’s employees. performing the construction work, the economic reality. The journalist never assigns articles to worker is paid a fixed hourly rate, and (5)(i) Example. An editor works part- others nor does he review or revise the company determines how many and time for a newspaper. The editor works articles that others submit. He is not which tasks she performs. Her food from home and is responsible for responsible for determining where his truck recently became very popular and assigning and reviewing many articles article or any other articles appear in the has generated substantial profits for her. published by the newspaper. Sometimes newspaper’s print and online editions. (ii) Application. With regard to the she also writes or rewrites articles. The construction work, the worker does not editor is responsible for determining the (ii) Application. The journalist is not have a meaningful opportunity for profit layout and order in which all articles part of an integrated unit of production or loss based on her exercise of appear in the newspaper’s print and of the newspaper, indicating initiative or investment, indicating online editions. She makes assignment independent contractor status. His work employee status. She is unable to profit, and lay-out decisions in coordination is limited to the specific articles that he i.e., increase her earnings, by exercising with several full-time editors who make submits and is completely segregated initiative or managing investments similar decisions with respect to from other parts of the newspaper’s because she is paid a fixed hourly rate different articles in the same publication processes that serve its specific, unified and the company determines the and who are employees of the purpose of producing newspapers. It is assignment of work. While she earns newspaper. not relevant in analyzing this factor that substantial profits through her food (ii) Application. The editor is part of the writing of articles is an important truck, that is a separate business from an integrated unit of production of the part of producing newspapers. Likewise, her work in the construction industry, newspaper because she is involved in the fact that he works at home does not and therefore is not relevant to the the entire production process of the strongly indicate either status, because question of whether she is an employee newspaper, including assigning, the nature of the journalist’s work is of the construction company or in reviewing, drafting, and laying out such that the physical location where it business for herself in the construction articles. This factor points in the is performed is largely irrelevant. industry. direction of her being an employee of (4)(i) Example. A housekeeper works the newspaper. This conclusion is § 795.120 Severability. for a ski resort every winter. At the end further supported by the fact that the If any provision of this part is held to of each winter, he stops working for the editor performs the same work as be invalid or unenforceable by its terms, ski resort because the resort shuts down. employees of the newspaper in or as applied to any person or At the beginning of each of the past coordination with those employees. The circumstance, or stayed pending further fact that she does not physically work several winters, the housekeeper agency action, the provision shall be returned to his prior position at the ski at the newspaper’s office does not construed so as to continue to give the resort without formally applying or outweigh these more probative maximum effect to the provision interviewing. considerations of the integrated unit permitted by law, unless such holding (ii) Application. The housekeeper has factor. a long-term and indefinite work (6)(i) Example. A journalist writes shall be one of utter invalidity or relationship with the ski resort under articles for a newspaper on a freelance unenforceability, in which event the the permanence factor, which weighs in basis. The journalist does not have an provision shall be severable from this favor of classification as an employee. office and generally works from home. part and shall not affect the remainder That his periods of working for the ski He submits an article to the newspaper thereof. resort end at the end of each winter is once every 2 to 3 weeks, which the [FR Doc. 2020–29274 Filed 1–6–21; 8:45 am] a result of the seasonal nature of the ski newspaper may accept or reject. The BILLING CODE 4510–27–P

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Reader Aids Federal Register Vol. 86, No. 4 Thursday, January 7, 2021

CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING JANUARY

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. Proposed Rules: Presidential Documents 3 CFR 1301...... 1030 Executive orders and proclamations 741–6000 Proclamations: 1309...... 1030 The United States Government Manual 741–6000 10129...... 215 1321...... 1030 10130...... 413 Other Services 10131...... 417 22 CFR Electronic and on-line services (voice) 741–6020 Executive Orders: 212...... 250 Privacy Act Compilation 741–6050 13969...... 219 13970...... 421 25 CFR ELECTRONIC RESEARCH Administrative Orders: Proposed Rules: Presidential Permits: 15...... 1037 World Wide Web Permit of December 31, 2020 ...... 435 26 CFR Full text of the daily Federal Register, CFR and other publications is located at: www.govinfo.gov. 6 CFR 1 ...... 254, 464, 810 Federal Register information and research tools, including Public Proposed Rules: 29 CFR Inspection List and electronic text are located at: 27...... 495 18...... 1 www.federalregister.gov. 7 CFR 503...... 1 E-mail 780...... 1168 760...... 439 788...... 1168 FEDREGTOC (Daily Federal Register Table of Contents Electronic 271...... 358 795...... 1168 Mailing List) is an open e-mail service that provides subscribers 273...... 358 Proposed Rules: with a digital form of the Federal Register Table of Contents. The 10 CFR 18...... 29 digital form of the Federal Register Table of Contents includes 503...... 29 HTML and PDF links to the full text of each document. 431...... 4 To join or leave, go to https://public.govdelivery.com/accounts/ 1061...... 451 32 CFR Proposed Rules: USGPOOFR/subscriber/new, enter your email address, then Proposed Rules: 50...... 1022 follow the instructions to join, leave, or manage your 158...... 1063 subscription. 12 CFR 310...... 498 PENS (Public Law Electronic Notification Service) is an e-mail 3...... 708 33 CFR service that notifies subscribers of recently enacted laws. 217...... 708 To subscribe, go to http://listserv.gsa.gov/archives/publaws-l.html 252...... 708 Proposed Rules: and select Join or leave the list (or change settings); then follow 324...... 708 165...... 32 the instructions. 620...... 223 37 CFR FEDREGTOC and PENS are mailing lists only. We cannot 747...... 933 Proposed Rules: respond to specific inquiries. 14 CFR 401...... 35 Reference questions. Send questions and comments about the 39...... 458 404...... 35 Federal Register system to: [email protected] 97...... 25, 27 The Federal Register staff cannot interpret specific documents or 39 CFR regulations. 15 CFR Proposed Rules: 710...... 936 111...... 1080 FEDERAL REGISTER PAGES AND DATE, JANUARY 712...... 936 742...... 944 40 CFR 1–222...... 4 745...... 936 30...... 469 223–412...... 5 774...... 461, 944 52...... 971 413–932...... 6 282...... 977 17 CFR 933–1248...... 7 745...... 983 23...... 223, 229 751 ...... 866, 880, 894, 911, 922 39...... 949 Proposed Rules: 140...... 949 281...... 1081 210...... 748 282...... 1081 270...... 748 43 CFR 20 CFR Proposed Rules: 655...... 1 30...... 1037 Proposed Rules: 655...... 29 47 CFR 0...... 44 21 CFR 54...... 994 101...... 462 64...... 44

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48 CFR 49 CFR 50 CFR Proposed Rules: 300...... 279 Ch. VII...... 493 Proposed Rules: 10...... 1134 571...... 47 17...... 192

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Act (Dec. 31, 2020; 134 Stat. Entanglements Act (Dec. 31, Commission Amendments Act 3325) 2020; 134 Stat. 3362) of 2020 (Dec. 31, 2020; 134 LIST OF PUBLIC LAWS S. 914/P.L. 116–271 S. 2174/P.L. 116–277 Stat. 3386) Missing Persons and This is a continuing list of Coordinated Ocean Unidentified Remains Act of Last List January 6, 2021 public bills from the current Observations and Research 2019 (Dec. 31, 2020; 134 session of Congress which Act of 2020 (Dec. 31, 2020; Stat. 3368) have become Federal laws. 134 Stat. 3331) This list is also available S. 979/P.L. 116–272 S. 2216/P.L. 116–278 online at https:// Federal Advance Contracts Transparency and Effective Public Laws Electronic www.archives.gov/federal- Enhancement Act (Dec. 31, Accountability Measures for Notification Service register/laws. 2020; 134 Stat. 3349) Veteran Caregivers Act (Dec. (PENS) 31, 2020; 134 Stat. 3373) S. 1130/P.L. 116–273 The text of laws is not S. 2683/P.L. 116–279 Scarlett’s Sunshine on Sudden published in the Federal Child Care Protection Register but may be ordered Unexpected Death Act (Dec. Improvement Act of 2020 PENS is a free email in ‘‘slip law’’ (individual 31, 2020; 134 Stat. 3352) (Dec. 31, 2020; 134 Stat. notification service of newly pamphlet) form from the S. 1342/P.L. 116–274 3376) enacted public laws. To Superintendent of Documents, Great Lakes Environmental S. 2730/P.L. 116–280 subscribe, go to https:// U.S. Government Publishing Sensitivity Index Act of 2020 Drone Advisory Committee for listserv.gsa.gov/cgi-bin/ Office, Washington, DC 20402 (Dec. 31, 2020; 134 Stat. the 21st Century Act (Dec. 31, wa.exe?SUBED1=PUBLAWS- (phone, 202–512–1808). The 3356) 2020; 134 Stat. 3379) L&A=1 text will also be made S. 1694/P.L. 116–275 available at https:// S. 3312/P.L. 116–281 One Small Step to Protect www.govinfo.gov. Some laws Crisis Stabilization and Note: This service is strictly Human Heritage in Space Act may not yet be available. Community Reentry Act of for email notification of new (Dec. 31, 2020; 134 Stat. 2020 (Dec. 31, 2020; 134 laws. The text of laws is not S. 461/P.L. 116–270 3358) Stat. 3381) available through this service. HBCU Propelling Agency S. 1869/P.L. 116–276 S. 3989/P.L. 116–282 PENS cannot respond to Relationships Towards a New Secure Federal Leases from United States specific inquiries sent to this Era of Results for Students Espionage And Suspicious Semiquincentennial address.

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