Federal Register Vol. 80, No.36,

On June 3, 2014, DOE published a final rule for walk-in coolers and walk-in freezers in which DOE amended the energy conservation standards for certain walk-in cooler and walk-in freezer components. Those standards were determined by DOE to be technologically feasible and economically justified and would result in the significant conservation of energy. The Energy Conservation and Policy Act of 1975 (42 U.S.C.6291, et seq; “EPCA”), Public Law 94-163, requires that the Attorney General make a determination and analysis of the impact, if any, of any lessening of competition likely to result from a proposed standard, within 60 days of publication. (42 U.S.C. 6295(o)(2)(B)(ii)) EPCA also requires that DOE publish the determination and analysis in the Federal Register. Id.

DOE received the determination in response to the September 11, 2013 NOPR from the Attorney General and the U.S. Department of Justice on November 13, 2013. Accordingly, DOE is publishing that determination in today's notice.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all CFM CFM56-7B series turbofan engines. The NPRM published in the Federal Register on October 2, 2014 (79 FR 59467). The NPRM was prompted by reports of dual-engine thrust instability events on CFM56-7B turbofan engines that resulted in overspeed and IFSD of one engine. These resulted from water-borne contamination of the fuel being supplied to the engine which had an adverse effect on the response of the fuel metering valve (FMV) in the hydro-mechanical unit (HMU). CFM has modified its FADEC software to compensate for compromised fuel within the HMU and improved the response of the FMV, thereby mitigating these thrust instability events. The NPRM proposed to require modification of the engine by removing FADEC software, version 7.B.V4 or earlier, installed in the EECs on CFM56-7B engines. We are issuing this AD to prevent a thrust instability event, which could lead to overspeed and IFSD of one or more engines, loss of thrust control, damage to the engine, and damage to the airplane.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM (79 FR 59467, October 2, 2014) and the FAA's response to each comment.

Delta Air Lines (DAL) and American Air Lines (AAL) requested that we change wording in the AD to emphasize installation of an eligible software standard rather than removal of the ineligible software standard. They suggested that we add this sentence to compliance paragraph (e): “Within 6 months of the effective date of this AD, modify the engine by installing FADEC software version 7.B.W, released by CFM Service Bulletins 73-0203 and 73-0204, or later approved software versions.” DAL and AAL state that the Boeing 737NG Aircraft Maintenance Manual does not contain a removal step but rather guides how to overwrite previous software with eligible software.

We disagree. The purpose of this AD is to require removal of software standard 7.B.V4, or earlier, to correct the unsafe condition. Overwriting a previously installed software standard with a software standard eligible for installation is an acceptable method for removing an affected software standard. We did not change this AD.

DAL and AAL requested that we revise paragraph (h)(2) of FAA AD 2012-05-02 (77 FR 20511, April 5, 2012) (“AD 2012-05-02”) to state that EEC software standard 7.B.W or later is required. AD 2012-05-02 requires inspection and modification to the Boeing 737NG thrust reversers, and also requires, in paragraph (h)(2), installation of software standard 7.B.R3 on affected engines. Since AD 2012-05-02 was issued, new versions of software have been released, requiring alternative methods of compliance (AMOCs) to allow installation of versions later than software standard 7.B.R3. The requested change to AD 2012-05-02 would bring AD 2012-05-02 and this AD into agreement on the required airplane configuration.

We disagree. The current version of the software standard, 7.B.W, also addresses the thrust reverser unsafe condition and is approved as an AMOC for AD 2012-05-02. We did not change this AD.

The Boeing Company (Boeing) and CFM requested that we change the wording of the unsafe condition to “We are proposing this AD to mitigate characteristics of a thrust instability event; without mitigation, thrust instability events could potentially lead to engine overspeed and IFSD of one or more engines, loss of thrust control, and damage to the airplane.” The commenters state that the EEC cannot prevent the occurrence of the events, but it can effectively mitigate the characteristics of the events.

We disagree. While the work to prevent the root cause of fuel contamination continues, the purpose of the FADEC software and this AD is to prevent the events described in the unsafe condition. We did not change this AD.

CFM and Boeing requested that we change the wording of two sentences in the Description paragraph to “These resulted from water-borne contamination of the fuel being supplied to the engine which had an adverse effect on the response of the FMV in the HMU. CFM has modified its FADEC software to compensate for compromised fuel within the HMU and improve the response of the fuel control valve, thereby mitigating these thrust instability events.”

We agree. We changed the wording of the two sentences in the Description paragraph to be more correct and accurate.

Boeing requested, for clarity, that in the Relevant Service Information paragraph of the preamble we add the words “post 7.B.V4” to describe the FADEC software. Boeing requested that the changed sentence read: “The SBs describe the procedures for the introduction of new FADEC software, post 7.B.V4, for the EECs.”

We disagree. The information in this AD provides the necessary information for compliance. No additional clarification is required. Furthermore, the Relevant Service Information paragraph, which appeared in the preamble of the NPRM (79 FR 59467, October 2, 2014), does not appear in this AD. We did not change this AD.

CFM requested that we change all references to the software standard throughout this AD from “7BV4” to “7.B.V4” because that is the correct way to reference the software standard.

We agree. We changed all references to the software standard throughout this AD to the correct nomenclature.

Boeing requested that for clarity we include in this AD a table that would show the software versions, by part number, that should be removed as a result of this AD.

We disagree. The information in this AD provides the necessary information for compliance. No additional clarification is required. We did not change this AD.

In our review of the NPRM, we found that we failed to include the prohibition against operating any aircraft configured with one engine with FADEC software version 7.B.V4 or earlier, installed, and the other engine with an eligible FADEC software version installed. This prohibition is in SB CFM Service Bulletin (SB) No. CFM56-7B S/B 73-0203, dated June 9, 2014 and CFM No. SB CFM56-7B S/B 73-0204, dated June 9, 2014. We added the prohibition to this AD.

One anonymous commenter expressed agreement with this AD.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously. We have determined that these minor changes:

• Αre consistent with the intent that was proposed in the NPRM (79 FR 59467, October 2, 2014) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (79 FR 59467, October 2, 2014).

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.

We estimate that this AD would affect about 2,921 engines installed on airplanes of U.S. registry. We also estimate that it would take about 1 hour per engine to comply with this AD. The average labor rate is $85 per hour. Parts cost is zero. Based on these figures, we estimate the cost of this AD on U.S. operators to be $248,285.

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

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

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

For the reasons discussed above, I certify that this AD:

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction, and

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

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

This AD is a final rule that involves requirements affecting flight safety, and we did not provide you with notice and an opportunity to provide your comments prior to it becoming effective. However, we invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that resulted from adopting this AD. The most helpful comments reference a specific portion of the AD, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit them only one time. We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this rulemaking during the comment period. We will consider all the comments we receive and may conduct additional rulemaking based on those comments.

We are adopting a new AD for Bell Model 412 and 412EP helicopters with an inverter part number (P/N) 412-375-079-101 or P/N 412-375-079-103 with a serial number 29145 or larger. This AD limits operations to VFR and prohibits night operations by adding a restriction to the RFM and installing a placard in full view of the pilots. This AD is prompted by at least 30 failures of certain inverters; most have resulted in smoke in the cockpit. The root cause of the failures is still under investigation by Bell and Avionics Instruments LLC, the manufacturer of the inverters. The consequence of one failed inverter has the potential of allowing smoke in the cockpit, making it difficult to find a safe landing site at night or in instrument meteorological conditions. If both inverters fail, the pilot will lose primary flight and navigation displays, alternating current powered engine and transmission indicators, and autopilot. The RFM emergency procedure for dual inverter failure is to land as soon as practicable or fly VFR. The RFM emergency procedure for smoke in the cabin is to land as soon as possible. Until a new design is available, restricting flight operations to VFR and daytime increases the likelihood of a prompt safe landing.

We are issuing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of these same type designs.

Bell issued Alert Service Bulletin 412-13-156, dated April 25, 2013 (ASB), which specifies inspecting part-numbered 412-375-079-101 inverters and either repairing each inverter or replacing it with inverter P/N 412-375-079-103 to prevent failure. This ASB does not correct the unsafe condition identified in this AD. The specific cause of the inverter failures has not been verified, and since Bell issued the ASB, the failures have continued.

This AD requires, within 5 hours time-in-service, limiting operations to VFR and prohibiting night operations by revising the Limitations section of the RFM and by installing a placard in the cockpit in full view of the pilots.

We consider this AD to be an interim action. The design approval holder is currently developing a modification that will address the unsafe condition identified in this AD. Once this modification is developed, approved, and available, we might consider additional rulemaking.

We estimate that this AD will affect 88 helicopters of U.S. Registry.

We estimate that operators may incur the following costs in order to comply with this AD. Labor costs are $85 per work hour. We estimate a minimal amount of time to revise the RFM and to install a placard. The required parts are $10 for a placard. Based on these requirements, the cost will be $10 per helicopter and $880 for the U.S. fleet.

Providing an opportunity for public comments before adopting these AD requirements would delay implementing the safety actions needed to correct this known unsafe condition. Therefore, we find that the risk to the flying public justifies waiving notice and comment before adopting this rule because the required corrective actions must be done within 5 hours time-in-service.

Since an unsafe condition exists that requires the immediate adoption of this AD, we determined that notice and opportunity for public comment before issuing this AD are impracticable and contrary to the public interest and that good cause exists for making this amendment effective in less than 30 days.

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

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

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

For the reasons discussed, I certify that this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

1. Pursuant to section 215(d) of the Federal Power Act (FPA),1 the Commission approves Reliability Standard MOD-031-1 (Demand and Energy Data) developed by the North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization (ERO). Reliability Standard MOD-031-1 provides authority for planners and operators to collect demand, energy and related data to support reliability studies and assessments. In addition, the Commission approves NERC's proposed definitions for the terms Demand Side Management and Total Internal Demand. The Commission also approves the associated implementation plan, violation risk factors and violation severity levels, and NERC's proposed retirement of the currently-effective Reliability Standards MOD-016-1.1, MOD-017-0.1, MOD-018-0, MOD-019-0.1, and MOD-021-1 (Existing MOD C Standards).

2. Further, pursuant to section 215(d)(5) of the FPA, the Commission directs NERC to (1) develop a modification to Reliability Standard MOD-031-1 to clarify certain obligations to provide data to the Regional Entity and (2) consider the compliance obligations of an applicable entity upon receipt of a data request that seeks confidential information.

3. Section 215 of the FPA requires a Commission-certified ERO to develop mandatory and enforceable Reliability Standards, which are subject to Commission review and approval. Once approved, the Reliability Standards are enforced by the ERO, subject to Commission oversight, or by the Commission independently. In 2006, NERC submitted the initial version of Reliability Standards MOD-016-1.1, MOD-017-0.1, MOD-018-0, MOD-019-0.1, MOD-020-0, and MOD-021-1. The Existing MOD C Standards were designed to help ensure that historical and forecasted demand and energy data are available for past event validation and future system assessment. In particular, the Existing MOD C Standards, along with Reliability Standard MOD-020-0, require the collection of actual and forecast demand data necessary to analyze the resource needs to serve peak demand while maintaining a sufficient margin to address operating events. In Order No. 693, the Commission approved the Existing MOD C Standards and Reliability Standard MOD-020-0.2 In addition, the Commission directed NERC to develop certain modifications to the standards.

4. In its petition, NERC stated that Reliability Standard MOD-031-1 will provide planners and operators access to actual and forecast demand and energy data, as well as other related information, needed to perform resource adequacy studies.3 NERC explained that the proposed Reliability Standard also supports the continued development of the reliability assessments prepared by NERC. NERC stated that the proposed Reliability Standard improves the Existing MOD C Standards by: (1) Streamlining them to clarify data collection requirements; (2) including transmission planners as applicable entities that must report demand and energy data; (3) requiring applicable entities to report weather normalized annual peak hour actual demand data from the previous year to allow for meaningful comparison with forecasted values; and (4) requiring applicable entities to provide an explanation of how their forecasts compare to actual prior year data.4

5. Reliability Standard MOD-031-1 contains four requirements. Requirement R1 provides that each planning coordinator or balancing authority that identifies a need for the collection of demand and energy data must develop and issue a data request for such data to the relevant entities in its area. The requirement mandates that the data request identify: (i) The entities responsible for providing the data; (ii) the data to be provided by each entity; and (iii) the schedule for providing the data. Requirement R2 obligates the entities identified in a Requirement R1 data request to provide the requested data to their planning coordinator or balancing authority. Requirement R3 requires that the planning coordinator or the balancing authority provide the data collected under Requirement R2 to their Regional Entity, if requested, to facilitate NERC's development of reliability assessments. Requirement R4 requires entities to share their demand and energy data with any applicable entity that demonstrates a reliability need for such data.5

6. On September 18, 2014, the Commission issued a Notice of Proposed Rulemaking (NOPR) proposing to approve Reliability Standard MOD-031-1 as just, reasonable, not unduly discriminatory or preferential, and in the public interest. The Commission also requested comments on the collection of demand and energy data. Specifically, the Commission sought comments on: (1) The Commission's understanding that while a planning coordinator or balancing authority may collect demand and energy forecast data under a tariff or other arrangement, the planning coordinator or balancing authority always retains the option to seek the necessary data through a Requirement R1 data request if, for example, the data are not forthcoming through other means; and (2) whether a planning coordinator or balancing authority that receives data through alternative mechanisms remains obligated to provide such data (i.e., within the scope of Requirement R1) to a Regional Entity upon request, as set forth in Requirement R3.

7. Comments on the NOPR were submitted by NERC, Edison Electric Institute (EEI), ISO New England, Inc. (ISO New England), International Transmission Company d/b/a ITCTransmission, Michigan Electric Transmission Company, LLC, ITC Midwest LLC, and ITC Great Plains, LLC (collectively, “ITC Companies”), PacifiCorp, and Idaho Power Company (Idaho Power).

8. NERC, EEI, ISO New England support the Commission's proposed approval of MOD-031-1, and ITC Companies “does not object” to the standard. NERC and other commenters provide responses to the Commission's questions regarding the collection of demand and energy data, as discussed below.

9. NERC, EEI, Idaho Power, and ISO New England confirm the Commission's understanding that the planning coordinator or balancing authority retains the option to seek the necessary data through a Requirement R1 data request. NERC states that the Reliability Standard provides planning coordinators and balancing authorities the authority to issue data requests to compel applicable entities to provide the demand and energy data necessary to conduct reliability assessments. According to NERC, the Reliability Standard does not require planning coordinators and balancing authorities to issue such data requests if they have alternative means of obtaining or developing that data but planning coordinators and balancing authorities may always use the authority provided by the Reliability Standard as a backstop to ensure they obtain complete and accurate data.

10. With respect to the issue of whether a planning coordinator or balancing authority that receives data through alternative mechanisms remains obligated to provide such data to a Regional Entity upon request, NERC states that the intent of Requirement R3 was to require all planning coordinators and balancing authorities to provide the necessary demand and energy data to their respective Regional Entities to support the ERO development of seasonal and long-term reliability assessments. NERC commits to modifying the language of Requirement R3 in its standard development process to clarify that planning coordinators and balancing authorities must provide their demand and energy data to their Regional Entity, upon request, whether that data is collected pursuant to the proposed Reliability Standard or through alternative arrangements.

11. With regard to the Commission's question about the obligations of a planning coordinator or balancing authority to share data gathered or obtained through alternative mechanisms, EEI comments that there is no obligation to require a planning coordinator or balancing authority to share such data in a similar manner as required by Requirement R3. EEI adds that it is not aware of any reason that might motivate independent system operators (ISOs) or regional transmission organizations (RTOs) (in their role as planning coordinators or balancing authorities) to withhold such information from the Regional Entity. PacifiCorp agrees with EEI on this issue and favors a finding that Requirement R3 should not apply if the planning coordinator or balancing authority receives data through alternative means.

12. In contrast, Idaho Power and ISO New England assert that a planning coordinator or balancing authority that receives data within the scope of Requirement R1 through alternative mechanisms (as opposed to a data request) remains obligated to provide the data to a Regional Entity upon request pursuant to Requirement R3.

13. EEI also requests that the Commission clarify potential conflicts between a transmission provider's obligation to provide data under Reliability Standard MOD-031-1 and its confidentiality obligations under the Open Access Transmission Tariff (OATT) or other confidentiality or nondisclosure restrictions. ITC Companies raises a concern with the inclusion of transmission planners as entities from whom the types of data specified may be requested because, according to ITC Companies, many transmission planners have delegated the collection of data to the ISO or RTO in which they are located.

14. Pursuant to section 215(d)(2) of the FPA, the Commission approves Reliability Standard MOD-031-1 as just, reasonable, not unduly discriminatory or preferential, and in the public interest. We also approve the new and modified glossary definitions, implementation plan, associated violation risk factors and violation severity levels as well as the retirement of the Existing MOD C Standards. Reliability Standard MOD-031-1 should continue to provide planners and operators access to complete and accurate demand and energy data to allow such entities to conduct their own resource adequacy analyses to serve peak demand. As noted above, NERC, EEI, and ISO New England support approval of MOD-031-1, and no commenters oppose approval. ITC Companies “does not object” to the standard and “concurs with the Commission that MOD-031-1 will meaningfully enhance the ability of transmission planners and operators to conduct resource adequacy analyses and plan for peak load conditions.” 6

15. We also find that the Reliability Standard should provide for consistent documentation and information sharing practices for demand and energy data, and promotes efficient planning practices across the industry and supports the identification of needed system reinforcements. Further, the Commission finds that Reliability Standard MOD-031-1 improves the Existing MOD C Standards by providing applicable entities the authority to collect demand and energy data, and related information, to support reliability assessments and also includes transmission planners as applicable entities that must report demand and energy data.

16. Further, as discussed below, we direct NERC to (1) develop a modification to Reliability Standard MOD-031-1 to clarify certain obligations to provide data to the Regional Entity and (2) consider the compliance obligations of an applicable entity upon receipt of a data request that seeks confidential information.

17. As discussed above, the Commission sought comment in the NOPR on several questions in connection with the collection of demand and energy data. With regard to the responsive comments on the NOPR question regarding the collection of data through mechanisms other than data requests, the Commission accepts the explanation provided by NERC and other commenters that, while a planning coordinator or balancing authority may collect demand and energy forecast data under a tariff or other arrangement, the planning coordinator or balancing authority always retains the option to seek the necessary data through a Requirement R1 data request if, for example, the data are not forthcoming through other means.

18. Further, the Commission raised a concern in the NOPR regarding whether a planning coordinator or balancing authority that receives data “through alternative mechanisms” remains obligated to provide such data (i.e., within the scope of Requirement R1) to a Regional Entity upon request, as set forth in Requirement R3. We accept NERC's explanation that the “intent of Requirement R3 was to require all planning coordinators and balancing authorities to provide the necessary demand and energy data to their respective Regional Entities to support the [ERO]'s development of seasonal and long-term reliability assessments,” although “a strict reading” of Requirement R3 “indicates that it applies only to data collected pursuant to a data request issued under this Reliability Standard.” 7 NERC has the statutory responsibility to conduct periodic assessments of the reliability and adequacy of the Bulk-Power System, and we believe that it is incumbent on users, owners and operators subject to compliance with section 215 of the FPA to provide the necessary data to support such assessments.8 Accordingly, pursuant to section 215(d)(5) of the FPA and consistent with NERC's comments,9 we direct NERC to develop a modification to MOD-031-1 through the standards development process to clarify that planning coordinators and balancing authorities must provide demand and energy data upon request of a Regional Entity, as necessary to support NERC's development of seasonal and long-term reliability assessments.

19. EEI seeks Commission clarification of a “potential conflict” between a transmission provider's obligation to provide data under MOD-031-1 and the transmission provider's confidentiality obligations under an OATT or other confidentiality restrictions.10 Under MOD-031-1, Requirement R2, an applicable entity must provide data requested by its planning coordinator or balancing authority in accordance with the Requirement R1 data request provision. EEI notes that, under Requirement R4, an entity has 45 days to respond to a written request for data. Further, under Requirement 4.1, if an entity does not provide requested data because, inter alia, “providing the data would conflict with the Applicable Entity's confidentiality, regulatory or security requirements, the Applicable Entity shall, within 30 calendar days of the written request, provide a written response to the requesting entity specifying the data that is not being provided and on what basis.” According to EEI, it is unclear “at what point a transmission provider's obligation to `cooperate' with the other Party in the formation of a confidentiality agreement or protective order ends, and its obligation as an Applicable Entity to disclose the requested information under either Requirements R1 or R4 begins.” 11

20. Requirement R1 specifies the planning coordinator or balancing authority shall issue a “data request to applicable entities in its area.” Applicable entities that are subject to providing data pursuant to Requirement R2 are transmission planners, balancing authorities, load-serving entities, and distribution providers. The transmission providers discussed by EEI may, in fact, be registered as one or more of the NERC functional entities that make up the applicable entities list in MOD-031-1. Requirement R4 includes provisions for an applicable entity to follow if a conflict arises. On this basis, the Reliability Standard appears to be clear. However, EEI's concern that MOD-031-1 is not clear regarding the compliance obligations of an applicable entity when required to provide data to a balancing authority or planning coordinator pursuant to a data request under the standard may have merit. Further, it may be possible in some circumstances, depending on the terms of the confidentiality provision at play, to provide data pursuant to a non-disclosure agreement. Therefore, rather than attempting to provide the clarification requested by EEI, the Commission directs NERC to consider EEI's concern regarding the compliance obligations of an applicable entity upon receipt of a data request that seeks confidential information in the standard development process when it addresses the directive to clarify that planning coordinators and balancing authorities must provide demand and energy data upon request of a Regional Entity.12

21. ITC Companies raises a concern with the inclusion of transmission planners as listed entities from whom the types of data specified may be requested because, according to ITC Companies, many transmission planners have delegated the collection of data to the ISO or RTO in which they are located. ITC Companies requests that the Commission recognize that agreements governing the reporting of demand and energy data such as those existing between ITC's operating subsidiaries and the ISOs/RTOs in which each operates are common, and thus provide that a transmission planner having such an arrangement with an ISO/RTO will be in compliance with data requests it receives under the Requirements R1 and R4. While the language of particular agreements is beyond the scope of the immediate proceeding, we agree with ITC Companies that Requirement R1 provides the flexibility to collect energy data through alternative mechanisms.13

22. The Paperwork Reduction Act (PRA) 14 requires each federal agency to seek and obtain Office of Management and Budget (OMB) approval before undertaking a collection of information directed to ten or more persons or contained in a rule of general applicability. OMB regulations require approval of certain information collection requirements imposed by agency rules.15 Upon approval of a collection(s) of information, OMB will assign an OMB control number and an expiration date. Respondents subject to the filing requirements of an agency rule will not be penalized for failing to respond to these collections of information unless the collections of information display a valid OMB control number.

23. Through issuance of this Final Rule, the Commission approves Reliability Standard MOD-031-1. As stated above, the Existing MOD C Standards were approved by the Commission in Order No. 693. All information collection estimates associated with the collection of demand and energy data and subsequent retention were assessed in Order No. 693 and will not be repeated here. The Reliability Standard expands the actual data to be submitted in two areas: (1) Weather normalized annual peak hour actual demand for the prior calendar year if this demand varies due to weather-related conditions (e.g., temperature, humidity or wind speed); and (2) summaries detailed in Requirement R1, Subparts 1.5.4 and 1.5.5. The additional data and summaries will increase reporting and preparation time for some applicable entities. Most entities already normalize their actual demand data based on weather. However, some entities may have a one-time cost of determining the method to “weather normalize” the actual demand data. Accordingly, the information collection costs will consist of an annual cost for all applicable entities and, for a small percentage, additional costs will occur during the first year of implementation.

Public Reporting Burden: Reliability Standard MOD-031-1 requires each “Applicable Entity” to provide the data requested by its planning coordinator or balancing authority in accordance with the data request issued pursuant to Requirement R1.16 Our estimate below regarding the number of respondents is based on the NERC Compliance Registry as of July 31, 2014. According to the NERC Compliance Registry, NERC has registered 478 distribution providers, 469 load-serving entities, 179 transmission planners and 107 balancing authorities. However, under NERC's compliance registration program, entities may be registered for multiple functions, so these numbers incorporate some double counting. The total number of unique entities that may be identified as a data provider (e.g. applicable entity) in accordance with Reliability Standard MOD-031-1 will be approximately 561 entities registered in the United States as a distribution provider, load-serving entity, transmission planner and/or balancing authority.17 The Commission estimates the annual reporting burden and cost as follows:

Title: FERC-725L, Mandatory Reliability Standards for the Bulk-Power System: MOD Reliability Standards.

Action: Final rule.

OMB Control No: 1902-0261.

Respondents: Businesses or other for-profit institutions; not-for-profit institutions.

Frequency of Responses: One-time and ongoing.

Necessity of the Information: Reliability Standard MOD-031-1 implements the Congressional mandate of the Energy Policy Act of 2005 to develop mandatory and enforceable Reliability Standards to better ensure the reliability of the nation's Bulk-Power System. Specifically, the purpose of the Reliability Standard is to provide authority for applicable entities to collect demand, energy and related data to support reliability studies and assessments and to enumerate the responsibilities and obligations of requestors and respondents of that data.

Internal Review: The Commission has reviewed the requirements pertaining to the Reliability Standard for the Bulk-Power System and determined that the approved requirements are necessary to meet the statutory provisions of the Energy Policy Act of 2005. These requirements conform to the Commission's plan for efficient information collection, communication and management within the energy industry. The Commission has assured itself, by means of internal review, that there is specific, objective support for the burden estimates associated with the information requirements.

Interested persons may obtain information on the reporting requirements by contacting: Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director, email: [email protected], Phone: (202) 502-8663, fax: (202) 273-0873]. Comments on the requirements of this rule may also be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503 [Attention: Desk Officer for the Federal Energy Regulatory Commission]. For security reasons, comments should be sent by email to OMB at [email protected]. Comments submitted to OMB should refer to FERC-725L and OMB Control No. 1902-0261.

24. The Regulatory Flexibility Act of 1980 (RFA) 21 generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities.

25. The Small Business Administration (SBA) revised its size standard (effective January 22, 2014) for electric utilities from a standard based on megawatt hours to a standard based on the number of employees, including affiliates.22 Under SBA's new size standards, transmission owners and transmission operators likely come under the following category and associated size threshold: Electric bulk power transmission and control, at 500 employees.23 The Reliability Standard applies to 561 entities. Comparison of the applicable entities with the Commission's small business data indicates that approximately 249 are small entities.24 Of these, the Commission estimates that approximately five percent, or twelve of these small entities expect to be affected by the new requirements of the proposed Reliability Standard. The Commission estimates that the small entities that will be affected by Reliability Standard MOD-031-1 will incur one-time compliance costs ranging up to $14,309 (i.e. the cost of determining the method of weather normalizing annual peak hour actual demand), plus the annual development of summary narratives in accordance with Requirement R1, Subparts 1.5.4 and 1.5.5, resulting in costs of $477.

26. Accordingly, the Commission certifies that the Reliability Standard will not have a significant economic impact on a substantial number of small entities.

27. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.25 The Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment. Included in the exclusion are rules that are clarifying, corrective, or procedural or that do not substantially change the effect of the regulations being amended.26 The actions proposed herein fall within this categorical exclusion in the Commission's regulations.

28. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page (http://www.ferc.gov) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 20426.

29. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.

30. User assistance is available for eLibrary and the Commission's Web site during normal business hours from the Commission's Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at [email protected], or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. Email the Public Reference Room at [email protected].

31. These regulations are effective April 27, 2015. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule is not “major rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996.

The Oregon Department of Transportation requested that the U.S. 101 Umpqua River drawbridge, near Reedsport Oregon, remain in the closed-to-navigation position to facilitate steel bracing and stanchion repair. The U.S. 101 Bridge crosses the Umpqua River at mile 11.1 and provides 36 feet of vertical clearance above mean high water when in the closed position. Currently, the U.S. 101 Umpqua River Bridge is operating under a Temporary Final Rule (TFR), 33 CFR 117.898(d), 78 FR 70222, that allows the bridge to open once at 7 a.m. and once at 6 p.m., if an opening is requested at least six hours in advance. This TFR is effective from December 1, 2013 to September 30, 2015.

This deviation period is from 6 a.m. on February 23, 2015 to 11 p.m. March 6, 2015. The deviation allows the U.S. 101 Umpqua River Bridge, mile 11.1, to remain in the closed-to-navigation position and need not open for maritime traffic from 6 a.m. on February 23, 2015 to 11 p.m. March 06, 2015, except that, in approximately the second week of the project, the bridge will open at 7 a.m. and 6 p.m. on one day only if a minimum of 6 hours advanced notice is given. Mariners needing an opening, approximately half way through this project, are requested to coordinate with the bridge repair Project Inspector, Don Hyatt, at 541-297-8804, with as much advanced notice as possible.

Waterway usage on this stretch of the Umpqua River includes vessels ranging from occasional commercial tug and barge to small pleasure craft. Mariners will be notified and kept informed of the bridge's operational status via the Coast Guard Notice to Mariners publication and Broadcast Notice to Mariners as appropriate. The draw span will not be able to open for emergencies and there is no immediate alternate route for vessels to pass. Vessels which do not require an opening of the bridge may continue to transit beneath the bridge during this repair period.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35.

On May 9, 2014, VA published a proposed rule in the Federal Register, at 79 FR 26669, to amend its regulations concerning the Supportive Services for Veterans Families (SSVF) program. Under authority provided by 38 U.S.C. 2044, VA has offered grants to eligible entities, identified in the regulations, that provide supportive services to very low-income veterans and families who are at risk for becoming homeless or who, in some cases, have recently become homeless. The program has been a tremendous success, providing services to over 62,000 participants in fiscal year (FY) 2013, 20,000 more than projected. To date, over 80 percent of those discharged from SSVF have been placed in or saved their permanent housing. VA received 27 comments on the rule, and many of them supported the proposed changes in whole or in part. This final rule adopts the proposed rule with changes as discussed below.

Several commenters offered suggestions regarding the definition of various terms. The most common recommendation was to amend the definition of the term “homeless.” Several of these comments recommended that VA establish different standards for homelessness in urban and rural areas. However, “homeless” is a term defined in statute. In 38 U.S.C. 2044(f)(3), the term “homeless” is defined as having the same meaning given that term in section 103 of the McKinney-Vento Homelessness Assistance Act, codified at 42 U.S.C. 11302, which does not differentiate between urban and rural areas. Consequently, VA lacks the authority to vary the definition of “homeless” between urban and rural areas. Even if VA did have authority to apply different definitions for different areas, one of the aims for the proposed rule was to adopt a common definition that would be used by both VA and the Department of Housing and Urban Development (HUD), which similarly does not contemplate a difference between urban and rural areas in its regulatory definition of “homeless.” See 24 CFR 576.2. Use of a common definition simplifies operations for community providers and ensures access to a range of services from both Departments. This goal was supported by several commenters, who endorsed the adoption of a common definition. VA agrees with these commenters and is not making a change to the definition of homeless in this final rule.

The SSVF program does allow for some variation between urban and rural areas, and to the extent permitted by statute at 38 U.S.C. 2044(a)(5) and 2044(f)(6)(C), VA encourages community providers to consider the local conditions and needs of veterans in their community when developing programs and delivering services. VA can also use Notices of Funding Availability (NOFA) to emphasize areas where SSVF recipients should concentrate resources or support, and VA believes the NOFA process provides sufficient flexibility to address the needs of urban and rural veterans alike.

One commenter suggested the definition of homeless be revised to match that used in the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act, Public Law 111-22. The changes to the definition of homeless enacted with the HEARTH Act are codified at 42 U.S.C. 11302, which is the same definition VA uses based on 38 U.S.C. 2044(f)(3). VA believes HUD's implementing regulations, at 24 CFR 576.2, take into account the recent changes in law and provide the best source for a reference to homelessness because it will ensure a common Federal definition for homeless benefits. Another commenter suggested that HUD's definition at 24 CFR 576.2 was out of date and antiquated, and suggested that VA should emphasize that veterans who are at-risk for homelessness should be eligible. VA's definition of “homeless” includes those who are at-risk for homelessness, and in each NOFA, VA identifies the prevention of homelessness among those who are at risk as the first category of eligible persons. Additionally, HUD's regulations are used to implement the Homelessness Prevention and Rapid Rehousing Program and the Emergency Solutions Grants Program, which are designed to assist beneficiaries who are homeless or at risk for homelessness by coordinating the provision of services and short-term housing. VA is therefore not making a change based on these comments.

Another commenter noted that while HUD's definition of “homeless” does not take into account the length of time between homeless episodes when defining chronically homeless, VA should develop a clearer definition for chronically homeless as it relates to other VA homeless assistance programs. However, and as the commenter notes, the SSVF program is not designed to address the problems of the chronically homeless. Additionally, VA believes maintaining a common definition with HUD is important to ensure that providers are using a term with a common meaning when providing services to homeless veterans. VA is not making a change based on this comment.

One issue also concerning the definition of “homeless” was whether persons temporarily residing with others (“couch surfing”) are included in the definition. This issue was raised by several commenters, some of whom came to opposite conclusions on the matter. To clarify, so-called couch surfers are not literally “homeless,” as the term is used by HUD and VA, but they are at risk of homelessness, and hence could still be eligible for benefits through the SSVF program. VA annually produces a NOFA to advise interested parties to apply for SSVF funding, and in the NOFA, VA describes different categories for funding and support. Category 1 refers to prevention, and entities providing services to “couch surfers” would be assisting persons at risk for homelessness, and hence would qualify.

VA also received a comment recommending a revised definition for the term “permanent housing” to refer to housing without a designated length of stay. VA agrees with this comment and is revising the definition of permanent housing accordingly to clarify that an undesignated length of stay is one where an individual or family has a lease that is renewable and terminable only for cause. This change will ensure that homeless veterans with permanent housing will have full tenancy rights under the law and would ensure that they cannot be placed into settings that SSVF is not intended to support, such as transitional housing or institutional care facilities.

We also received two recommendations to add a definition of “rapid rehousing.” Both commenters believed that adding this definition would assist grantees by providing a better understanding of the principal mission of SSVF. We agree, and are adopting the definition of “rapid re-housing” recommended by one of the commenters. Both commenters offered recommendations, and VA is selecting the proposal with a more robust and well-developed definition. That definition will provide that “rapid re-housing” is an intervention designed to help individuals and families quickly exit homelessness and return to permanent housing. It will emphasize that rapid re-housing is provided without preconditions (such as employment, income, absence of criminal record, or sobriety), and that resources and services should be tailored to the unique needs of the household. It will clarify that there are three goals associated with rapid re-housing: Identifying housing, providing rent and move-in financial assistance, and case management and services. We also state that while a rapid re-housing program must have all three core components available, it is not required that a single entity provide all three services nor that a household utilize them all. Although this term is not used in these regulations, it is a term that is commonly used in NOFAs and administration of the SSVF program.

Finally, we received one comment recommending we amend the definition for the term “veteran.” While 38 U.S.C. 2044 does not include a definition for the word “veteran,” this term is defined in statute at 38 U.S.C. 101(2). VA is not making a change based on this comment.

Another related issue raised by several commenters dealt with eligibility for SSVF services. One commenter recommended that children and former spouses of veterans be eligible for benefits through the SSVF program. VA does not have authority to provide assistance to such persons unless they are part of a “veteran family,” which is defined in 38 U.S.C. 2044(f)(7) to include “a veteran who is a single person and a family in which the head of the household or the spouse of the head of the household is a veteran.” The term spouse is defined at 38 U.S.C. 101(31), and does not include divorcees. VA is not making a change based on these comments.

One commenter expressed support for the “but for” test used to determine a veteran's eligibility for assistance from SSVF, but encouraged VA to adopt a mandatory assessment for application in VA's screening requirements to ensure consistent and intelligent application of this standard. Another commenter suggested that such guidance could be provided through a guidebook or through SSVF University. The “but for” test determines eligibility by asking if a veteran would be homeless if SSVF services were not being provided. This standard is used in HUD's programs, and ensures that recipients are not determined to be ineligible for a program's benefits upon receiving such benefits. VA does not believe it should articulate additional requirements in regulations. VA has published an SSVF Program Guide (updated March 31, 2014, available online at: http://www.va.gov/HOMELESS/ssvf/docs/SSVFUniversity/SSVF_Program_Guide_March31_2014.pdf) that provides guidance to SSVF recipients to consider when applying the “but for” test, and VA's NOFAs provide further guidance as well. Indeed, another commenter supported adoption of the “but for” test and specifically noted that the next SSVF NOFA would offer necessary guidance in this area. As this commenter assumed, VA will update its guidance in the next NOFA we issue to reflect the changes made by this regulation. VA staff is also available to assist recipients in making these determinations when appropriate. VA is concerned that if it provided further guidance in regulation, it could produce a national standard that cannot be adjusted to account for local variations, and that hence would be inadequate for serving homeless veterans and their families in at least some communities. VA is not making a change from the proposed rule based on this comment.

Another commenter suggested that grantees should focus their resources on the lowest-income veterans, and that programs with such a focus tend to have the greatest results in terms of reducing homelessness. VA agrees and believes that the new requirement for grantees to identify extremely low-income veterans and target resources to this population will have a positive effect. Another commenter recommended that VA pilot this approach, rather than establish a common requirement across the country, to ensure that local variables are taken into account. VA's definition of extremely low-income veteran family focuses on the area median income (AMI) specifically so that differences in income and cost of living can be taken into account. Additionally, grantees are located in the communities they serve and are uniquely equipped to address the needs of the local homeless population. VA is not making any changes based on these comments.

VA received several comments concerning VA's proposed standard in § 62.34(f), which would have limited SSVF emergency housing assistance to situations where permanent housing has been identified. In the supplemental information of the proposed rule, VA stated that permanent housing must be both identified and secured. These commenters expressed concern that the requirement that such housing be “secured” could result in homeless veterans having no short-term assistance, and would be inconsistent with the “housing first” model of the program. VA agrees with these concerns and is eliminating the requirement that such housing be secured. Under the revised provision, it will be sufficient to generally identify a housing unit to provide emergency housing assistance, as long as the other requirements of § 62.34 are satisfied.

VA also proposed that homeless veterans could receive up to 72 hours of emergency housing assistance if no identified housing is available. In recognition of a comment that 72 hours may not always be enough time to secure housing for a single veteran, VA is including a new provision that will allow for continued provision of emergency housing assistance when the grantee can certify that no other housing is available. For example, if a grantee can certify that no beds are available in a Grant and Per Diem (GPD) residence or a Health Care for Homeless Veterans (HCHV) residential program, the grantee can continue to provide emergency assistance to a homeless veteran through the SSVF program to ensure the veteran has a place to stay. VA is also extending the period of time in which a veteran and his or her spouse with dependent(s) can receive emergency housing assistance from 30 days to 45 days. We believe that by including this flexibility, more homeless veterans and their families will avoid a relapse into homelessness while waiting for permanent housing.

One commenter suggested that extremely low-income veteran families may need extended assistance, but that such extensions should be determined for each individual family through routine reassessments. VA notes that SSVF grantees decide the type and amount of assistance to offer participants, and that they can provide sustained support when appropriate. VA believes that the latitude provided for extremely low income families in the proposed rule is appropriate, and that no further changes are needed as a result of this comment.

Another commenter suggested that veterans who are in a GPD program for more than 30 days should be able to receive assistance through the SSVF program. VA notes that such veterans, if they otherwise meet the eligibility criteria for the SSVF program, may receive services from both programs. SSVF is intended to provide rapid re-housing assistance through a short-term, focused intervention. As long as the assistance that GPD participants require is consistent with this mission and the veteran meets established eligibility criteria, SSVF grantees should not hesitate to provide services to them. VA is not making a change based on this comment.

Another commenter suggested that the proposed rule would mean that service-connected disabled women veterans would not be eligible for services from the SSVF program if they did not have a spouse or minor dependents. This is not a correct reading of the rule. A veteran family, as defined in § 62.2, includes a veteran who is a single person. Nothing in the proposed rule would change this standard, and as a result, VA is not making a change based on this comment.

Finally, one commenter recommended that VA only include two categories of eligible veterans under § 62.11: Those needing prevention and those seeking rapid re-housing. While these are the two primary forms of assistance, VA believes the three criteria identified in § 62.11 represent the best description of eligible veterans, and therefore, VA is making no changes based on this comment.

Several commenters provided recommendations concerning the types of services that SSVF assistance should be able to provide. One commenter recommended that emergency housing assistance be available for up to 9 months during any 12 month period to ensure that families are able to resolve crises that could otherwise result in them becoming homeless. The proposed rule would allow for this extension, so we are not making any changes based on this comment.

Commenters recommended that VA create a separate category of assistance to cover a reasonable broker's fee for finding and arranging permanent housing. The commenters explained that broker's fees are often necessary in high population density areas, such as New York City or Los Angeles, and that fees can sometimes use the entire available amount of housing stability assistance. VA agrees with these comments and is including a new paragraph (e)(3) under § 62.34 to cover the category of assistance that would specifically allow for provision of a reasonable broker's fee when appropriate.

Another commenter urged VA to allow SSVF funds to pay for emergent medical or dental needs and medication. We do not believe we have authority to allow grant recipients to provide financial assistance for such purposes, and as a result, are not making a change based on this comment. The supportive services VA can provide are identified at 38 U.S.C. 2044(b), and paragraph (b)(1)(D) of section 2044 only permits VA to offer “assistance in obtaining and coordinating the provision of other public benefits . . . including—(i) health care services (including obtaining health insurance).” In this context, VA interprets the statute to only authorize making funds available for coordinating and obtaining health care services from other providers, not to pay for or furnish such care or services. Eligible veterans may receive health care through VA medical facilities to address their medical needs.

One commenter suggested VA allow increased flexibility for child care services. The commenter noted that veteran families can have a multitude of compositions, and that there may not be adequate community resources to support a child after school. VA understands that different families and children have different needs, but we believe it is necessary that we establish some standards to ensure that services are not provided for children who do not require child care. We believe that 13 is an appropriate age to draw that line, as children over that age are generally considered capable of taking care of themselves for short periods of time that would otherwise require supervision or care. Removing the age limit could allow misuse of these benefits, which would result in fewer resources being available to assist homeless veterans and their families.

Another commenter recommended that VA ensure that basic air conditioning and heating should be an allowable expense in certain situations. VA believes that the proposed revisions would allow this when appropriate. In § 62.36(f), which cites to HUD's regulations at 24 CFR 583.300(b), we establish standards of habitability. HUD's regulations provide in 24 CFR 583.300(b)(7) that “[t]he housing must have adequate heating and/or cooling facilities in proper operating condition.” If the residence requires but lacks heating or cooling based on the local climate, it would not be eligible for housing. As a result, VA is not making a change based on this comment.

One commenter stated that women veterans look for, but are not finding, additional assistance from other VA, Federal, state, or local programs. VA currently requires SSVF grantees to coordinate access for other public benefits, and our reviews of these programs indicate that such coordination is taking place. As a result, we are not making any changes from this comment.

Another commenter suggested that the proposed changes to general housing stability assistance are acceptable if the limits identified in the rule are followed. VA intends to ensure that SSVF grantees adhere to the requirements of the program, and is not making a change based on this comment.

Several commenters recommended that SSVF funding should be available to assist homeowners. One commenter provided several scenarios in which a homeowner should qualify for financial assistance, including when the home's value is below the local average, when the home is uneconomical based on the potential sale price versus the demolition cost, when the home's tax value is less than 100% of the area median income, or when relocating the veteran would increase the risk for homelessness. This commenter argued that because poverty is often inter-generational, VA should provide greater flexibility to assist homeowners.

VA agrees that poverty and homelessness can impact multiple generations of a family, and that is why it has supported the SSVF program, which provides assistance to a veteran's family to help prevent and escape from homelessness. VA also notes that homeowners are eligible under § 62.11(a) if they would be lacking a fixed, regular, and adequate nighttime residence but for the grantee's assistance. Under the proposed rule at § 62.38(a), SSVF grant recipients could assist homeowners in a number of ways, but could not provide mortgage assistance. Homeowners often require substantial assistance to cover costs or fees associated with a mortgage, and hence would require a greater share of resources than renters or leasers of property, resulting in an uneven distribution of assistance. Additionally, there are many programs at the Federal, state, and local levels to assist homeowners with their mortgages. Also, there is little evidence that homeowners become homeless upon losing a property. VA can ensure more persons receive support through the SSVF program by excluding mortgage costs from eligible financial assistance. Consequently, VA is not making a change to allow for financial assistance to cover costs associated with a mortgage.

One commenter asked VA to clarify what “other costs associated with home ownership” includes. This was a phrase we used in the supplemental information of the proposed rule to describe § 62.38(a). That paragraph says that SSVF funds may not be used to pay for “mortgage costs or costs needed by homeowners to assist with any fees, taxes, or other costs of refinancing.” We believe this language is clear and refers to costs associated with paying a security interest or tax assessment for real property, and we are not making a change based on this comment.

One commenter suggested that SSVF funds be made available to cover the cost of home repairs or alterations. VA does not believe this would be an appropriate use of SSVF funds for the same reason that mortgage costs are not included. SSVF is not a capital grant program, and other programs, such as Adapted Housing grants overseen by the Veterans Benefits Administration, already provide this service. VA is not making a change based on this comment.

One commenter suggested that VA should specifically state that legal assistance can be made available to resolve transportation issues. We agree that difficulty securing transportation resulting from the lack of a driver's license can be an obstacle to escaping homelessness. While we believe the proposed rule would have allowed for this, VA is making a minor revision to § 62.33(g) to specifically note that authorized legal assistance also includes assistance such as the lack of a driver's license.

One commenter expressed concern with extending the period of Temporary Financial Assistance (TFA) because it could foster more reliance on the program. As explained in the proposed rule, VA received feedback from grantees suggesting that veteran families at lower levels of income are more difficult to reach and require more resources for interventions to succeed. Based on this feedback, we believe that the increased benefit amounts will help ensure that grantees can be successful in supporting extremely low-income veteran families while minimizing the risk that veteran families become dependent on such assistance over the long term. As a result, VA is making no changes based on this comment.

Another commenter recommended that providers be authorized to make emergency housing assistance available once every 2 years instead of once every 3 years, as it is not unusual for a person who is homeless, formerly homeless, or at risk of homelessness to face another crisis that would require emergency assistance within a 2 year period of initially receiving support. VA agrees with this comment, and is changing the 3 year standard proposed in § 62.33 and 34 to now permit such assistance no more than once every 2 years. These revisions include changes to § 62.34(c)(1)-(2), which were not previously identified in the proposed rule but which would be inconsistent given these changes.

Another commenter noted that limitations on the use of general housing stability assistance funds is appropriate, so long as the limits in the rule are followed, and VA intends to do so. We are not making a change based on this comment.

Finally, one commenter suggested that caps on TFA for otherwise eligible families fleeing domestic violence should be lifted in the event that a new episode of domestic violence occurs. The commenter noted that this change would allow SSVF grantees to serve the immediate needs of households fleeing domestic violence. VA agrees with this recommendation and is including a provision in a new paragraph (e) of § 62.35 that would allow families experiencing domestic violence to receive additional TFA resources. This would apply even if the veteran was the aggressor in the situation. Under the law, a veteran family is defined to include a veteran who is a single person, and a family in which the head of household or the spouse of the head of household is a veteran. 38 U.S.C. 2044(f)(7). Through regulation, VA has interpreted this to authorize support if a veteran becomes absent from a household or dies while other members of the veteran family are receiving supportive services for a grace period, not to exceed 1 year, following the absence or death of the veteran. 38 CFR 62.35(c). In the event a participant becomes ineligible to receive supportive services under this Program, the grantee must provide the participant with information on other available programs or resources. 38 CFR 62.35(d). VA would apply these same principles and practices to cases of domestic violence. Families experiencing domestic violence should not be forced to remain in a volatile situation that can contribute to continued homelessness. VA is additionally revising the provisions concerning TFA to specifically authorize additional allocations in the event of a subsequent episode of domestic violence. Receipt of such support would reset the time period during which a family could not receive services under § 62.34; for example, under § 62.34(b)(1), a participant may receive payments for utilities for a maximum of 10 months during a 2-year period, and the 2-year period would be re-started after providing additional assistance under § 62.35(e) for a family fleeing domestic violence. It is important to understand that these benefits will be provided on a temporary basis and grantees should work to connect the family with other resources within the Continuum of Care. In addition, these benefits will only be available for families who are already receiving supportive services through this Program. If a family has previously left the household of an eligible veteran and seeks services from this Program, VA would not be able to provide support.

In developing the final rule, VA identified an area of potential confusion or conflict. In proposed § 62.34(a)(1), VA proposed allowing for rental assistance to be used to pay for penalties or fees incurred and required to be paid by the participant under an existing lease or court order. In proposed § 62.38(g), VA proposed prohibiting grantees from using supportive services grant funds to pay for court-ordered judgments or fines. These provisions could be read in conflict, but were not intended to be. To remove any confusion, VA is modifying § 62.38(g) to prohibit the use of funds to pay for court-ordered judgments, except when such payments are authorized under § 62.34(a)(1). This revision is purely technical and will clarify VA's original intent.

Several commenters raised questions or offered recommendations on the logistics and operations of the SSVF program. One asked if the proposed revisions would prohibit a participating organization from reviewing the classification of participants to determine in which category they should be placed. The rule only requires that a reclassification occur once every 3 years, but it does not prohibit a review more often than that, so if a provider wanted to review these classifications more frequently, they would be free to do so. VA is not making a change based on this comment.

One commenter, in noting the proposed changes, suggested that the percentage of funds allocated for homelessness prevention should be increased to support extremely low-income veteran families, case management services, and other supportive services. Determinations regarding the allocation of funds are outside the scope of this rule, as they are announced in each year's NOFA. Future NOFAs will consider the changes made by this rule when allocating resources. The same commenter suggested that grant recipients in the same geographic area will coordinate outreach efforts to identify appropriate veteran families. This is a stated expectation for the program already, and VA agrees with this approach wholeheartedly. Such a strategy will ensure that assistance is available for more veterans in a given area. VA is not making a change based on this comment.

One commenter also recommended that VA provide more HUD-VA Supportive Housing (HUD-VASH) vouchers to assist veterans in securing housing. This comment is outside the scope of this rulemaking, and the number of the HUD-VASH vouchers issued each year is determined based on the availability of appropriations. As a result, VA is not making a change based on this comment.

Two commenters suggested that participation in a Continuum of Care's (CoC) coordinated assessment system should be required for participating grantees. VA agrees with this recommendation, and adopts the specific language provided by one commenter in this area as a new paragraph (g) in § 62.36. Specifically, VA will require grantees to participate in the “development, implementation, and ongoing operations of their local Continuum of Care's coordinated assessment system, or equivalent, as described in the McKinney-Vento Act as amended by the HEARTH Act.” Many providers under the SSVF program are already familiar with participating in these efforts, and VA agrees with the commenters that this will compel greater collaboration among VA, HUD, and CoC partners and strengthen VA's oversight of coordination activities among all grantees and their communities.

Another commenter recommended that VA allow SSVF administrators to exceed identified limits on the amount of assistance that can be provided in a limited number of cases. While VA understands the point that some special cases may require assistance in excess of the limits, allowing exceptions to these limits would be counterproductive by encouraging high resource use to a small number of veterans at the expense of providing assistance to a larger number of veterans. Moreover, these exceptions could ultimately render the rule meaningless, and the administrative burden for tracking or approving such exceptions would divert resources from assisting homeless veterans. As a result, VA is not making changes based on this comment.

Another commenter offered a similar recommendation by suggesting that rather than establishing maximum amounts of financial assistance that can be offered over a set period of time (e.g., no more than $1,500 per 2-year period for general housing stability under § 62.34(e)(2)), VA should allow smaller amounts of assistance over a longer period of time. We believe that such a system would be extremely difficult to administer and would provide limited benefits for veterans. SSVF grantees would have to track every allocation made to every veteran family for every purpose to determine if such allocations were in excess of the authorized amount over an extended period of time. This would require greater overhead expenses, which would detract from the amount made available to homeless veterans.

One commenter expressed concern that funds distributed through the SSVF program were being provided to grantees in the Atlanta metro area who were not using these resources to provide assistance to homeless veterans. The commenter asked that no funding be provided to these entities until after there has been a formal investigation by the Office of Inspector General (OIG). VA takes seriously any concerns about the allocation of available resources. OIG recently completed an audit of the SSVF program (“Audit of the Supportive Services for Veterans Families Program,” OIG Report 13-01959-109, published March 31, 2014) and found that it has “adequate financial controls in place that are working as intended to provide reasonable assurance that funds are appropriately expended by grantees.” VA forwarded this comment to the OIG, which has authority to determine whether it will conduct a review. If OIG investigates and finds there are or were issues, we will take appropriate corrective action to ensure that resources are used for authorized purposes only.

Based on the rationale set forth in the preamble to the proposed rule and in this preamble, VA is adopting the proposed rule as a final rule, with the above stated changes.

Title 38 of the Code of Federal Regulations, as revised by this final rulemaking, represents VA's implementation of its legal authority on this subject. Other than future amendments to this regulation or governing statutes, no contrary guidance or procedures are authorized. All existing or subsequent VA guidance must be read to conform with this rulemaking if possible or, if not possible, such guidance is superseded by this rulemaking.

Although this action contains provisions constituting collections of information, at 38 CFR 62.20, 62.36, and 62.60, under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521), no new or proposed revised collections of information are associated with this final rule. The information collection requirements for §§ 62.20, 62.36, and 62.60 are currently approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 2900-0757.

In § 62.20(a), we state that the collection of information must include a description of how the applicant will ensure that the program is targeted to very-low income families. Under the current OMB-approved application, VA Form 10-10072, VA requires the applicant to “[d]escribe the proposed outreach and referral plan to identify and assist eligible very low-income Veteran families who are most in need of supportive services.” The current application specifies that the response should include an explanation of the “[i]dentification of target population(s) to be served.” Because this specific question on the application correlates directly with the requirement that we are adding in § 62.20(a), the information collection and corresponding burden hours remain unchanged.

In a final rule published on November 10, 2010, we stated that OMB had approved collections of information contained in, inter alia, § 62.36(c). 75 FR 68975, 68979-80, Nov. 10, 2010. In both the proposed and final regulation, a collection also appeared in § 62.36(a). That collection required grantees to classify all participants and verify and document participant eligibility at least once every 3 months. The verification of eligibility is reflected on VA Form 10-0508b, one of the forms approved by OMB and assigned OMB control number 2900-0757, which requires quarterly reports of detailed information and data on participant screenings and compliance with all SSVF requirements. However, the requirement to reclassify participants every 3 months was not contained on that form. In § 62.36(a), we remove the requirement that grantees reclassify participant eligibility every 3 months; however, we retain the requirement that the grantee certify participant eligibility. Therefore, although we are amending the collection that appears at § 62.36(a), the amendment will not result in a change to the form. Moreover, although we omitted specific reference to § 62.36(a) in the final rulemaking published on November 10, 2010, we did in fact seek approval for the collection requirements in VA Form 10-0508b, which appear in this rule. Therefore, we do not believe that this rulemaking contains amendments to collections approved under OMB control number 2900-0757.

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This final rule will only impact those entities that choose to participate in SSVF. Small entity applicants will not be affected to a greater extent than large entity applicants. Small entities must elect to participate, and it is considered a benefit to those who choose to apply. To the extent this final rule will have any impact on small entities, it will not have an impact on a substantial number of small entities. In FY 2013, 151 organizations successfully submitted applications for SSVF funding and would be effected by this rule. The changes described in this rule should have a positive impact compared to the existing rule, as changes will generally aid grantees in providing service and thereby reduce time demands. On this basis, the Secretary certifies that the adoption of this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” requires review by OMB, unless OMB waives such review, as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been determined not to be a significant regulatory action under Executive Order 12866. VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of the rulemaking and its impact analysis are available on VA's Web site at http://www.va.gov/orpm/, by following the link for VA Regulations Published from FY 2004 to FYTD.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This final rule will have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.009, Veterans Medical Care Benefits, and 64.033, VA Supportive Services for Veteran Families Program.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Jose D. Riojas, Chief of Staff, approved this document on February 12, 2015, for publication.

For the reasons set out in the preamble, the Department of Veterans Affairs amends 38 CFR part 62 as follows:

Throughout this document “we,” “us,” or “our” refers to EPA.

EPA is providing notice that it is delegating authority for implementation and enforcement of certain NSPS to LDEQ. EPA is also taking direct final action to approve the delegation of certain NESHAPs to LDEQ. With this delegation, LDEQ has the primary responsibility to implement and enforce the delegated standards.

Section 111(c)(1) of the Clean Air Act (CAA) authorizes EPA to delegate authority to any state agency which submits adequate regulatory procedures for implementation and enforcement of the NSPS program. The NSPS standards are codified at 40 CFR part 60.

Section 112(l) of the CAA and 40 CFR part 63, subpart E, authorizes EPA to delegate authority to any state or local agency which submits an adequate regulatory program for implementation and enforcement of emission standards for hazardous air pollutants. The hazardous air pollutant standards are codified at 40 CFR parts 61 and 63.

In order to receive delegation of NSPS, a state must develop and submit to the EPA a procedure for implementing and enforcing the NSPS in the state, and their regulations and resources must be adequate for the implementation and enforcement of the NSPS. EPA initially approved Louisiana's program for the delegation of NSPS on February 22, 1982 (47 FR 07665). EPA reviewed the laws of the State and the rules and regulations of the Louisiana Department of Natural Resources (now the LDEQ) and determined the State's procedures, regulations and resources adequate for the implementation and enforcement of the NSPS program. This action notifies the public that EPA is updating LDEQ's delegation to implement and enforce certain additional NSPS.

As to the NESHAP standards in 40 CFR parts 61 and 63, section 112(l)(5) of the CAA enables EPA to approve state air toxics programs or rules to operate in place of the Federal air toxics program or rules. 40 CFR part 63, subpart E governs EPA's approval of State programs or rules under section 112(l).

EPA will approve the State's submittal of a program for implementation and enforcement of the NESHAPs if we find that:

(1) The State program is “no less stringent” than the corresponding Federal program or rule;

(2) The State has adequate authority and resources to implement the program;

(3) The schedule for implementation and compliance is sufficiently expeditious; and

(4) The program otherwise complies with Federal guidance.

In order to obtain approval of its program to implement and enforce Federal section 112 rules as promulgated without changes (straight delegation), a State must demonstrate that it meets the approval criteria of 40 CFR 63.91(d). 40 CFR 63.91(d)(3) provides that interim or final Title V program approval will satisfy the criteria of 40 CFR 63.91(d) for part 70 sources (sources required to obtain operating permits pursuant to Title V of the Clean Air Act).

As to the NSPS standards in 40 CFR part 60, LDEQ adopted the Federal standards via incorporation by reference. The LDEQ regulations are, therefore, at least as stringent as EPA's rules. See 40 CFR 60.10(a). Also, in the EPA initial approval of NSPS delegation, we determined that the State developed procedures for implementing and enforcing the NSPS in the State, and that the State's regulations and resources are adequate for the implementation and enforcement of the NSPS program. See 47 FR 07665 (February 22, 1982).

As to the NESHAP standards in 40 CFR parts 61 and 63, as part of its Title V submission LDEQ stated that it intended to use the mechanism of incorporation by reference to adopt unchanged Federal section 112 standards into its regulations. This commitment applied to both existing and future standards as they applied to part 70 sources. EPA's final interim approval of Louisiana's Title V operating permits program delegated the authority to implement certain NESHAPs to the State. See 60 FR 17750 (April 7, 1995). EPA promulgated final full approval of the State's operating permits program on September 12, 1995. See 60 FR 42296. These interim and final title V program approvals satisfy the upfront approval criteria of 40 CFR 63.91(d). Under 40 CFR 63.91(d)(2), once a state has satisfied the up-front approval criteria, it needs only to reference the previous demonstration and reaffirm that it still meets the criteria for any subsequent submittals for delegation of the section 112 standards. LDEQ has affirmed that it still meets the up-front approval criteria.

By letter dated November 30, 2010, EPA received a request from Louisiana to update LDEQ's NSPS delegation and NESHAPs delegation. With certain exceptions noted in section VI below, LDEQ's request included NSPS in 40 CFR part 60, and NESHAPs in 40 CFR part 61 and 63, as amended between July 2, 2008 and July 1, 2009.

By letter dated May 28, 2013, EPA received a second request from Louisiana to update LDEQ's NSPS delegation. Louisiana's request only included NSPS in 40 CFR part 60, subpart OOOO, Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution, as promulgated by EPA on August 16, 2012 (77 FR 49490).

By letter dated June 21, 2013, EPA received a third request from Louisiana to update LDEQ's NSPS delegation and NESHAPs delegation. With certain exceptions noted in section VI below, Louisiana's request included NSPS in 40 CFR part 60, and NESHAPs in 40 CFR parts 61 and 63, as amended between July 2, 2009 and July 1, 2012.

By letter dated August 28, 2014, EPA received a fourth request from Louisiana to update LDEQ's NSPS delegation and NESHAPs delegation. With certain exceptions noted in section VI below, Louisiana's request included NSPS in 40 CFR part 60, and NESHAPs in 40 CFR part 61 and 63, as amended between July 2, 2012 and July 1, 2013.

The following part 60, 61 and 63 authorities listed below are not delegated. All of the inquiries and requests concerning implementation and enforcement of the excluded standards in the State of Louisiana should be directed to the EPA Region 6 Office.

• 40 CFR part 60, subpart AAA (Standards of Performance for New Residential Wood Heaters);

• 40 CFR part 61, subpart B (National Emission Standards for Radon Emissions from Underground Uranium Mines);

• 40 CFR part 61, subpart H (National Emission Standards for Emissions of Radionuclides Other Than Radon From Department of Energy Facilities);

• 40 CFR part 61, subpart I (National Emission Standards for Radionuclide Emissions from Federal Facilities Other Than Nuclear Regulatory Commission Licensees and Not Covered by Subpart H);

• 40 CFR part 61, subpart K (National Emission Standards for Radionuclide Emissions from Elemental Phosphorus Plants);

• 40 CFR part 61, subpart Q (National Emission Standards for Radon Emissions from Department of Energy facilities);

• 40 CFR part 61, subpart R (National Emission Standards for Radon Emissions from Phosphogypsum Stacks);

• 40 CFR part 61, subpart T (National Emission Standards for Radon Emissions from the Disposal of Uranium Mill Tailings); and

• 40 CFR part 61, subpart W (National Emission Standards for Radon Emissions from Operating Mill Tailings).

In addition, EPA cannot delegate to a State any of the Category II Subpart A authorities set forth in 40 CFR 63.91(g)(2). These include the following provisions: § 63.6(g), Approval of Alternative Non-Opacity Standards; § 63.6(h)(9), Approval of Alternative Opacity Standards; § 63.7(e)(2)(ii) and (f), Approval of Major Alternatives to Test Methods; § 63.8(f), Approval of Major Alternatives to Monitoring; and § 63.10(f), Approval of Major Alternatives to Recordkeeping and Reporting. Also, some Part 63 standards have certain provisions that cannot be delegated to the States. Therefore, any Part 63 standard that EPA is delegating to LDEQ that provides that certain authorities cannot be delegated are retained by EPA and not delegated. Furthermore, no authorities are delegated that require rulemaking in the Federal Register to implement, or where Federal overview is the only way to ensure national consistency in the application of the standards or requirements of CAA section 112. Finally, section 112(r), the accidental release program authority, is not being delegated by this approval.

In addition, this delegation to LDEQ to implement and enforce certain NSPS and NESHAPs does not extend to sources or activities located in Indian country, as defined in 18 U.S.C. 1151. Under this definition, EPA treats as reservations, trust lands validly set aside for the use of a Tribe even if the trust lands have not been formally designated as a reservation. Consistent with previous federal program approvals or delegations, EPA will continue to implement the NSPS and NESHAPs in Indian country because LDEQ has not submitted information to demonstrate authority over sources and activities located within the exterior boundaries of Indian reservations and other areas in Indian country.

In approving the NSPS delegation, LDEQ will obtain concurrence from EPA on any matter involving the interpretation of section 111 of the CAA or 40 CFR part 60 to the extent that application, implementation, administration, or enforcement of these provisions have not been covered by prior EPA determinations or guidance. See 47 FR 07665 (February 22, 1982).

In approving the NESHAPs delegation, LDEQ will obtain concurrence from EPA on any matter involving the interpretation of section 112 of the CAA or 40 CFR parts 61 and 63 to the extent that application, implementation, administration, or enforcement of these provisions have not been covered by prior EPA determinations or guidance.

We retain the right, as provided by CAA section 111(c)(2), to enforce any applicable emission standard or requirement under section 111.

We retain the right, as provided by CAA section 112(l)(7), to enforce any applicable emission standard or requirement under section 112. EPA also has the authority to make certain decisions under the General Provisions (subpart A) of part 63. We are granting LDEQ some of these authorities, and retaining others, as explained in sections V and VI above. In addition, EPA may review and disapprove State determinations and subsequently require corrections. (See 40 CFR 63.91(g) and 65 FR 55810, 55823, September 14, 2000, as amended at 70 FR 59887, October 13, 2005; 72 FR 27443, May 16, 2007.)

Furthermore, we retain any authority in an individual emission standard that may not be delegated according to provisions of the standard. Also, listed in the footnotes of the part 63 delegation table at the end of this rule are the authorities that cannot be delegated to any State or local agency which we therefore retain.

Finally, we retain the authorities stated in the original delegation agreement. See 47 FR 07665 (February 22, 1982).

Under 40 CFR 60.4(b), all notifications under NSPS must be sent to both EPA and to LDEQ. Please send notifications and reports to Chief, Air/Toxics Inspection and Coordination Branch at the EPA Region 6 office.

LDEQ must provide any additional compliance related information to EPA, Region 6, Office of Enforcement and Compliance Assurance, within 45 days of a request under 40 CFR 63.96(a). In receiving delegation for specific General Provisions authorities, LDEQ must submit to EPA Region 6, on a semi-annual basis, copies of determinations issued under these authorities. For 40 CFR parts 61 and 63 standards, these determinations include: Section 63.1, Applicability Determinations; Section 63.6(e), Operation and Maintenance Requirements—Responsibility for Determining Compliance; Section 63.6(f), Compliance with Non-Opacity Standards—Responsibility for Determining Compliance; Section 63.6(h), Compliance with Opacity and Visible Emissions Standards—Responsibility for Determining Compliance; Sections 63.7(c)(2)(i) and (d), Approval of Site-Specific Test Plans; Section 63.7(e)(2)(i), Approval of Minor Alternatives to Test Methods; Section 63.7(e)(2)(ii) and (f), Approval of Intermediate Alternatives to Test Methods; Section 63.7(e)(iii), Approval of Shorter Sampling Times and Volumes When Necessitated by Process Variables or Other Factors; Sections 63.7(e)(2)(iv), (h)(2), and (h)(3), Waiver of Performance Testing; Sections 63.8(c)(1) and (e)(1), Approval of Site-Specific Performance Evaluation (Monitoring) Test Plans; Section 63.8(f), Approval of Minor Alternatives to Monitoring; Section 63.8(f), Approval of Intermediate Alternatives to Monitoring; Section 63.9 and 63.10, Approval of Adjustments to Time Periods for Submitting Reports; Section 63.10(f), Approval of Minor Alternatives to Recordkeeping and Reporting; Section 63.7(a)(4), Extension of Performance Test Deadline.

EPA must oversee LDEQ's decisions to ensure the delegated authorities are being adequately implemented and enforced. We will integrate oversight of the delegated authorities into the existing mechanisms and resources for oversight currently in place. If, during oversight, we determine that LDEQ made decisions that decreased the stringency of the delegated standards, then LDEQ shall be required to take corrective actions and the source(s) affected by the decisions will be notified, as required by 40 CFR 63.91(g)(1)(ii). We will initiate withdrawal of the program or rule if the corrective actions taken are insufficient. Also see 47 FR 07665 (February 22, 1982).

All of the information required pursuant to the Federal NSPS and NESHAPs (40 CFR parts 60, 61 and 63) should be submitted by sources located outside of Indian country directly to the LDEQ at the following address: Louisiana Department of Environmental Quality, PO Box 4301, Baton Rouge, Louisiana 70821-4301. The LDEQ is the primary point of contact with respect to delegated NSPS and NESHAPs. Sources do not need to send a copy to EPA. EPA Region 6 waives the requirement that notifications and reports for delegated standards be submitted to EPA in addition to LDEQ, in accordance with 40 CFR 63.9(a)(4)(ii) and 63.10(a)(4)(ii). Also, see 51 FR 20648 (June 6, 1986). For those standards that are not delegated, sources must continue to submit all appropriate information to EPA.

In the future, LDEQ will only need to send a letter of request to update their delegation to EPA, Region 6, for those NSPS which they have adopted by reference. EPA will amend the relevant portions of the Code of Federal Regulations showing which NSPS standards have been delegated to LDEQ. Also, in the future, LDEQ will only need to send a letter of request for approval to EPA, Region 6, for those NESHAPs regulations that LDEQ has adopted by reference. The letter must reference the previous up-front approval demonstration and reaffirm that it still meets the up-front approval criteria. We will respond in writing to the request stating that the request for delegation is either granted or denied. A Federal Register action will be published to inform the public and affected sources of the delegation, indicate where source notifications and reports should be sent, and to amend the relevant portions of the Code of Federal Regulations showing which NESHAP standards have been delegated to LDEQ.

The public was provided the opportunity to comment on the proposed approval of the program and mechanism for delegation of section 112 standards, as they apply to part 70 sources, on August 24, 1994, for the proposed interim approval of LDEQ's Title V operating permits program; and on April 7, 1995, for the proposed final approval of LDEQ's Title V operating permits program. In EPA's final full approval of Louisiana's Operating Permits Program (60 FR 47296), the EPA discussed the public comments on the proposed final delegation of the Title V operating permits program. In today's action, the public is given the opportunity to comment on the approval of LDEQ's request for delegation of authority to implement and enforce certain section 112 standards for all sources (both part 70 and non-part 70 sources) which have been adopted by reference into Louisiana's state regulations. However, the Agency views the approval of these requests as a noncontroversial action and anticipates no adverse comments. Therefore, EPA is publishing this rule without prior proposal. However, in the “Proposed Rules” section of today's Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the program and NESHAPs delegation of authority described in this action if adverse comments are received. This action will be effective April 27, 2015 without further notice unless the Agency receives relevant adverse comments by March 26, 2015.

If EPA receives relevant adverse comments, we will publish a timely withdrawal in the Federal Register informing the public the rule will not take effect with respect to the updated NESHAPs delegation. We will address all public comments in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if we receive relevant adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of a relevant adverse comment.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the delegation is not approved to apply in Indian country located in the State, and the EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law. This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state request to receive delegation of certain Federal standards, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing delegation submissions, EPA's role is to approve submissions, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a delegation submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA to use VCS in place of a delegation submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 27, 2015. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

For the reasons stated in the preamble, 40 CFR parts 60, 61, and 63 are amended as follows:

Throughout this document “we,” “us,” and “our” refers to EPA.

EPA is taking direct final action to approve the delegation of certain NESHAPs to ODEQ. With this delegation, ODEQ has the primary responsibility to implement and enforce the delegated standards.

Section 112(l) of the CAA, and 40 CFR part 63, subpart E, authorize EPA to delegate authority to any State or local agency which submits adequate regulatory procedures for implementation and enforcement of emission standards for hazardous air pollutants. The hazardous air pollutant standards are codified at 40 CFR parts 61 and 63.

Section 112(l)(5) of the CAA enables EPA to approve state air toxics programs or rules to operate in place of the Federal air toxics program or rules. 40 CFR part 63, subpart E governs EPA's approval of State rules or programs under section 112(l).

EPA will approve an air toxics program if we find that:

(1) The State program is “no less stringent” than the corresponding Federal program or rule;

(2) The State has adequate authority and resources to implement the program;

(3) The schedule for implementation and compliance is sufficiently expeditious; and

(4) The program otherwise complies with Federal guidance.

In order to obtain approval of its program to implement and enforce Federal section 112 rules as promulgated without changes (straight delegation), a state must demonstrate that it meets the approval criteria of 40 CFR 63.91(d). 40 CFR 63.91(d)(3) provides that interim or final Title V program approval will satisfy the criteria of 40 CFR 63.91(d) for part 70 sources (sources required to obtain operating permits pursuant to Title V of the Clean Air Act).

As to the NESHAPs standards in 40 CFR parts 61 and 63, as part of its Title V submission ODEQ stated that it intended to use the mechanism of incorporation by reference to adopt unchanged Federal section 112 into its regulations. This commitment applied to both existing and future standards as they applied to part 70 sources. EPA's final interim approval of Oklahoma's Title V operating permits program delegated the authority to implement certain NESHAPs on February 5, 1996 (61 FR 4220). On December 5, 2001, EPA granted final full approval of the State's operating permits program (66 FR 63170). These interim and final Title V program approvals satisfy the upfront approval criteria of 40 CFR 63.91(d). Under 40 CFR 63.91(d)(2), once a State has satisfied up-front approval criteria, it needs only to reference the previous demonstration and reaffirm that it still meets the criteria for any subsequent submittals of the section 112 standards. ODEQ has affirmed that it still meets the up-front approval criteria.

By letter dated January 11, 2008, ODEQ requested EPA to update its existing NESHAP delegation. With certain exceptions noted in section VI below, Oklahoma's request included NESHAPs in 40 CFR part 61 and 40 CFR part 63. ODEQ's request included newly incorporated NESHAPs promulgated by EPA and amendments to existing standards currently delegated, as amended between September 2, 2004 and September 1, 2006. These NESHAPs were adopted by the ODEQ on March 27, 2007, and became effective on June 15, 2007.

The following part 61 and 63 authorities listed below are not delegated. All of the inquiries and requests concerning implementation and enforcement of the excluded standards in the State of Oklahoma should be directed to the EPA Region 6 Office.

• 40 CFR part 61, subpart B (National Emission Standards for Radon Emissions from Underground Uranium Mines);

• 40 CFR part 61, subpart H (National Emission Standards for Emissions of Radionuclides Other Than Radon From Department of Energy Facilities);

• 40 CFR part 61, subpart I (National Emission Standards for Radionuclide Emissions from Federal Facilities Other Than Nuclear Regulatory Commission Licensees and Not Covered by Subpart H);

• 40 CFR part 61, subpart K (National Emission Standards for Radionuclide Emissions from Elemental Phosphorus Plants);

• 40 CFR part 61, subpart Q (National Emission Standards for Radon Emissions from Department of Energy facilities);

• 40 CFR part 61, subpart R (National Emission Standards for Radon Emissions from Phosphogypsum Stacks);

• 40 CFR part 61, subpart T (National Emission Standards for Radon Emissions from the Disposal of Uranium Mill Tailings); and

• 40 CFR part 61, subpart W (National Emission Standards for Radon Emissions from Operating Mill Tailings).

In addition, EPA cannot delegate to a State any of the Category II Subpart A authorities set forth in 40 CFR 63.91(g) (2). These include the following provisions: § 63.6(g), Approval of Alternative Non-Opacity Standards; § 63.6(h)(9), Approval of Alternative Opacity Standards; § 63.7(e)(2)(ii) and (f), Approval of Major Alternatives to Test Methods; § 63.8(f), Approval of Major Alternatives to Monitoring; and § 63.10(f), Approval of Major Alternatives to Recordkeeping and Reporting. In addition, some Part 63 standards have certain provisions that cannot be delegated to the States. Therefore, any Part 63 standard that provides that certain authorities cannot be delegated are retained by EPA and not delegated to ODEQ. Furthermore, no authorities are delegated that require rulemaking in the Federal Register to implement, or where Federal overview is the only way to ensure national consistency in the application of the standards or requirements of CAA section 112. Finally, section 112(r), the accidental release program authority, is not being delegated by this approval.

In addition, this delegation to ODEQ to implement and enforce certain NESHAPs does not extend to sources or activities located in Indian country, as defined in 18 U.S.C. 1151. Under this definition, EPA treats as reservations, trust lands validly set aside for the use of a Tribe even if the trust lands have not been formally designated as a reservation. Consistent with previous federal program approvals or delegations, EPA will continue to implement the NESHAPs in Indian country because ODEQ has not submitted information to demonstrate authority over sources and activities located within the exterior boundaries of Indian reservations and other areas in Indian country.1

In approving this delegation, ODEQ will obtain concurrence from EPA on any matter involving the interpretation of section 112 of the CAA or 40 CFR parts 61 and 63 to the extent that implementation, administration, or enforcement of these sections have not been covered by EPA determinations or guidance.

We retain the right, as provided by CAA section 112(l)(7), to enforce any applicable emission standard or requirement under section 112. EPA also has the authority to make certain decisions under the General Provisions (subpart A) of part 63. We are granting ODEQ some of these authorities, and retaining others, as explained in sections V and VI above. In addition, EPA may review and disapprove of State determinations and subsequently require corrections. (See 40 CFR 63.91(g) and 65 FR 55810, 55823, September 14, 2000, as amended at 70 FR 59887, October 13, 2005; 72 FR 27443, May 16, 2007.)

Furthermore, we retain any authority in an individual emission standard that may not be delegated according to provisions of the standard. Also, listed in the footnotes of the part 63 delegation table at the end of this rule are the authorities that cannot be delegated to any State or local agency which we therefore retain.

ODEQ must provide any additional compliance related information to EPA, Region 6, Office of Enforcement and Compliance Assurance within 45 days of a request under 40 CFR 63.96(a). In receiving delegation for specific General Provisions authorities, ODEQ must submit to EPA Region 6 on a semi-annual basis, copies of determinations issued under these authorities. For parts 61 and 63 standards, these determinations include: Section 63.1, Applicability Determinations; Section 63.6(e), Operation and Maintenance Requirements—Responsibility for Determining Compliance; Section 63.6(f), Compliance with Non-Opacity Standards—Responsibility for Determining Compliance; Section 63.6(h), Compliance with Opacity and Visible Emissions Standards—Responsibility for Determining Compliance; Sections 63.7(c)(2)(i) and (d), Approval of Site-Specific Test Plans; Section 63.7(e)(2)(i), Approval of Minor Alternatives to Test Methods; Section 63.7(e)(2)(ii) and (f), Approval of Intermediate Alternatives to Test Methods; Section 63.7(e)(iii), Approval of Shorter Sampling Times and Volumes When Necessitated by Process Variables or Other Factors; Sections 63.7(e)(2)(iv), (h)(2), and (h)(3), Waiver of Performance Testing; Sections 63.8(c)(1) and (e)(1), Approval of Site-Specific Performance Evaluation (Monitoring) Test Plans; Section 63.8(f), Approval of Minor Alternatives to Monitoring; Section 63.8(f), Approval of Intermediate Alternatives to Monitoring; Section 63.9 and 63.10, Approval of Adjustments to Time Periods for Submitting Reports; Section 63.10(f), Approval of Minor Alternatives to Recordkeeping and Reporting; Section 63.7(a)(4), Extension of Performance Test Deadline.

EPA must oversee ODEQ's decisions to ensure the delegated authorities are being adequately implemented and enforced. We will integrate oversight of the delegated authorities into the existing mechanisms and resources for oversight currently in place. If, during oversight, we determine that ODEQ made decisions that decreased the stringency of the delegated standards, then ODEQ shall be required to take corrective actions and the source(s) affected by the decisions will be notified, as required by 40 CFR 63.91(g)(1)(ii). We will initiate withdrawal of the program or rule if the corrective actions taken are insufficient.

All of the information required pursuant to the general provisions and the relevant subpart of the Federal NESHAPs (40 CFR parts 61 and 63) should be submitted by sources located outside of Indian country, directly to the ODEQ at the following address: Oklahoma Department of Environmental Quality, 707 North Robinson, P.O. Box 1677, Oklahoma City, Oklahoma 73101-1677. The ODEQ is the primary point of contact with respect to delegated NESHAPs. Sources do not need to send a copy to EPA. EPA Region 6 waives the requirement that notifications and reports for delegated standards be submitted to EPA in addition to ODEQ in accordance with 40 CFR 63.9(a)(4)(ii) and 63.10(a)(4)(ii). For those standards that are not delegated, sources must continue to submit all appropriate information to EPA.

In the future, ODEQ will only need to send a letter of request for approval to EPA, Region 6, for NESHAP regulations that ODEQ has adopted by reference. The letter must reference the previous up-front approval demonstration and reaffirm that it still meets the up-front approval criteria. We will respond in writing to the request stating that the request for delegation is either granted or denied. A Federal Register action will be published to inform the public and affected sources of the delegation, indicate where source notifications and reports should be sent, and to amend the relevant portions of the Code of Federal Regulations showing which NESHAPs standards have been delegated to ODEQ.

The public was provided the opportunity to comment on the proposed approval of the program and mechanism for delegation of section 112 standards, as they apply to part 70 sources, on March 10, 1995, for the proposed interim approval of ODEQ's operating permits program. (60 FR 13088). In EPA's final full approval of ODEQ's operating permits program on February 5, 1996 (61 FR 4220), EPA discussed that no adverse comments were received from the public on the proposed final delegation of the operating permits program. In today's action, the public is given the opportunity to comment on the approval of ODEQ's request for delegation of authority to implement and enforce certain section 112 standards for all sources (both part 70 and non-part 70 sources) which have been adopted by reference into Oklahoma's state regulations. However, the Agency views the approval of this request as a noncontroversial action and anticipates no adverse comments. Therefore, EPA is publishing this rule without prior proposal. However, in the “Proposed Rules” section of today's Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the program and delegation of authority described in this action if adverse comments are received. This action will be effective April 27, 2015 without further notice unless the Agency receives relevant adverse comments by March 26, 2015.

If EPA receives relevant adverse comments, we will publish a timely withdrawal in the Federal Register informing the public the rule will not take effect. We will address all public comments in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if we receive relevant adverse comment on an amendment, paragraph, or section of the rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of a relevant adverse comment.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the delegation is not approved to apply in Indian country located in the State, and the EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law. This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state request to receive delegation of certain Federal standards, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing delegation submissions, EPA's role is to approve submissions provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a delegation submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA to use VCS in place of a delegation submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 27, 2015. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, 40 CFR parts 61 and 63 are amended as follows:

I. Background

In FR Doc. 2014-26146 of November 10, 2014 (79 FR 66770) (hereinafter referred to as the CY 2015 OPPS/ASC final rule with comment period), there were a number of technical errors that are discussed in the Summary of Errors, and further identified and corrected in the Correction of Errors section below. The provisions in this correction notice are applicable to payments for services furnished on or after January 1, 2015, and, therefore, are treated as if they had been included in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66770) appearing in the November 10, 2014 Federal Register.

In the CY 2015 OPPS/ASC final rule with comment period, for the OPPS cancer hospital payment adjustment (79 FR 66831 through 66832), we finalized a target payment-to-cost ratio (PCR) of 0.89. This target PCR is equal to the weighted average PCR for the other OPPS hospitals included in this dataset (see 79 FR 66832 for more details on the hospitals included in this dataset). Under our longstanding policy, outlier payments are included in the calculation of the weighted average PCR (or “target PCR”) for these hospitals. We have since determined that some outlier payments were not included in the cost report data we used to calculate the target PCR. We have corrected this error and included these outlier payments in the target PCR calculation, which results in a target PCR equal to 0.90 for each cancer hospital.

In addition to identifying the error in calculating the target PCR because of missing outlier payments, we determined that certain outlier payments were similarly not included in our calculations for estimated cancer hospital PCRs. We have now corrected this error and included these outlier payments in determining the estimated cancer hospital PCRs. As a result of correcting these two technical errors, the estimated total cancer hospital payment adjustments, which are based on the difference between estimated cancer hospital PCRs and the target PCR is also being corrected in this notice. The revisions to the target PCR and estimated cancer hospital PCRs have decreased our estimate of total cancer hospital payment adjustments by $18.6 million.

OPPS cancer hospital payment adjustment payments are budget neutral; therefore, we are updating the budget neutrality adjustment to the OPPS conversion factor for the differential in estimated total cancer hospital payment adjustments of $18.6 million. This additional $18.6 million increases the conversion factor from $74.144 to $74.173, which will slightly increase payment rates for most ambulatory payment classifications (APCs). These revised APC payment rates are reflected in the attached Addenda.

We are also making technical corrections to certain healthcare common procedure coding system (HCPCS) codes that appeared in Table 36—HCPCS Codes to Which the CY 2015 Drug-Specific Packaging Determination Methodology Applies (79 FR 66889). Specifically, we are correcting the CY 2015 OPPS status indicators (SI) for HCPCS codes J1070, J1080, J2271, J3120, and J3130 from “N” to “D” to accurately indicate that these codes were deleted on December 31, 2014, and should not have appeared in Table 36. These codes were correctly assigned to OPPS SI “D” in the OPPS Addendum B that was released with the CY 2015 OPPS/ASC final rule. In addition, HCPCS codes J1440 and J1441 were deleted on December 31, 2013, and should not have appeared in Table 36. HCPCS codes J1440 and J1441 were not listed in the OPPS Addendum B that was released with the CY 2015 OPPS/ASC final rule.

Also, in Addendum B of the CY 2015 OPPS/ASC final rule with comment period, HCPCS code J7180 (Factor xiii anti-hem factor) was incorrectly assigned a status indicator “N”. Because HCPCS code J7180 is a separately payable drug, we have corrected this error and assigned status indicator “K” and APC 1416. This correction is included in the revised OPPS Addendum B which is posted to the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

ASC payment rates are based on the OPPS relative payment weights for the majority of covered surgical procedures and covered ancillary services. For some items, such as device-intensive procedures, the ASC payment rates also take into account the OPPS conversion factor and payment rates. Therefore, corrections to the CY 2015 OPPS conversion factor and payment rates affect the CY 2015 ASC payment rates.

To account for geographic wage variation, individual ASC payments are adjusted by applying the pre-floor and pre-reclassified inpatient prospective payment system (IPPS) hospital wage indexes to the labor-related share, which is 50 percent of the ASC payment amount. In other words, the wage index for an ASC is the pre-floor and pre-reclassified IPPS hospital wage index of the CBSA that maps to the CBSA where the ASC is located. The FY 2015 IPPS hospital wage indexes reflect new Office of Management and Budget (OMB) labor market area delineations; therefore, the CY 2015 final ASC wage indexes reflect the new OMB delineations. However, as described in the CY 2015 OPPS/ASC final rule (79 FR 66935 through 66937), we finalized a policy to apply a one-year blended wage index for all ASCs that will experience any decrease in their actual wage index exclusively due to the implementation of the new OMB delineations. Specifically, for ASCs where the CY 2015 ASC wage index with the CY 2015 Core-Based Statistical Areas (CBSAs) is lower than with the CY 2014 CBSAs, the CY 2015 ASC wage index is 50 percent of the ASC wage index based on the CY 2014 CBSA and 50 percent of the ASC wage index based on the new CY 2015 CBSA. We have since determined that the transitional wage index for CY 2015 was calculated incorrectly. We have now recalculated the CY 2015 ASC wage index per the policy finalized in the CY 2015 OPPS/ASC final rule with comment period.

Due to these corrections, the final CY 2015 ASC wage index budget neutrality adjustment changes from 0.9998, as originally published (79 FR 66939 and 67023), to 0.9995. Using the final corrected wage index budget neutrality adjustment, the final CY 2015 ASC conversion factor changes from $44.071, as originally published (79 FR 66939, 66940, and 67023), to $44.058. The final CY 2015 ASC conversion factor for ASCs that do not meet the requirements of the ASC Quality Reporting Program changes from $43.202, as originally published (79 FR 66939), to $43.189.

The final CY 2015 ASC rates and indicators for certain office-based covered surgical procedures and certain covered ancillary services were impacted due to corrections to the final CY 2015 Medicare Physician Fee Schedule (MPFS) rates. We note that we expect to issue the CY 2015 MPFS corrections in a separate Federal Register document in the near future. For covered office-based surgical procedures, covered ancillary radiology services (except certain nuclear medicine procedures and radiology procedures that use contrast agents), and certain covered ancillary diagnostic tests, the payment rate is the lower of the amount calculated using the ASC standard ratesetting methodology and the MPFS nonfacility practice expense relative value unit-based amount effective January 1, 2015. The corrections discussed in the MPFS correcting document affected some of the final payment indicators and rates for these covered surgical procedures and covered ancillary services. As such, we have corrected these payment indicators and rates based upon the MPFS corrections discussed in the MPFS correcting document. As stated in the preamble and addenda to the CY 2015 OPPS/ASC final rule with comment period (79 FR 66922, 66923, 66931, 66934, and 66939), the ASC payment indicators and rates do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015 under current law. Updates to the ASC rates and payment indicators effective April 1, 2015 will be included in the April 2015 quarterly ASC addenda posted on the CMS Web site.

We are making several minor technical corrections to the OPPS addenda. First, as a result of the cancer hospital payment adjustment correction and subsequent budget neutrality adjustment corrections, we have updated Addenda A, B, and C to reflect corrected APC payment rates.

Secondly, CPT codes 88342, 88344, and 88366, were incorrectly assigned to OPPS SI “E” and “N”. Because these services may be separately payable in certain instances, we have corrected this error. Specifically, we are correcting the OPPS SI and APC assignments for CPT code 88342 to “Q1” and APC 0433; for CPT code 88344 to “Q1” and APC 0433; and for CPT code 88366 to “Q1” and APC 0342. We have updated OPPS Addendum B to reflect these corrected SIs.

Further, the 24 codes listed below were assigned to incorrect OPPS SIs. The correct OPPS SIs are listed in the table below. Because these changes were too late to include in the January 2015 Integrated Outpatient Code Editor (IOCE), they will be included in the April 2015 IOCE update retroactive to January 1, 2015.

We are correcting the OPPS SI for CPT code 0356T to “Q1” since this is the SI assigned to APC 0698. In addition, we are correcting the OPPS SI for CPT codes 86592 through 87850 to “A” to indicate that these preventive services are paid separately in another Medicare payment system other than the OPPS. Further, we are correcting the OPPS SI for CPT codes 88380, 88381, and 88387 to “N” to indicate that these services are packaged. We are also correcting the OPPS SI for CPT code 93895 to “E” to indicate that this service is non-covered. We are correcting the OPPS SI for HCPCS codes G0461 and G0462 to “D” to indicate that these codes were deleted on December 31, 2014. Also, we are correcting the OPPS SI for HCPCS codes V2760, V2762, V2786, and V2797 to “E” to indicate that these items are non-covered under the OPPS.

To view the corrected CY 2015 OPPS payment rates that result from these technical corrections, we refer readers to the Addenda and supporting files that are posted on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Select “CMS-1613-CN” from the list of regulations. All corrected Addenda for this correcting document are contained in the zipped folder titled “2015 OPPS Final Rule Addenda” at the bottom of the page for CMS-1613-CN.

As a result of the technical corrections described in Section II.B. and IV. of this correction notice, we have updated Addenda AA and BB to reflect the final corrected payment rates and indicators for CY 2015 for ASC covered surgical procedures and covered ancillary services. To view the corrected final CY 2015 ASC payment rates and indicators that result from these technical corrections, we refer readers to the Addenda and supporting files that are posted on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html. Select “CMS-1613-CN” from the list of regulations. All corrected ASC addenda for this correcting document are contained in the zipped folder entitled “Addendum AA, BB, DD1, DD2, and EE” at the bottom of the page for CMS-1613-CN. The corrected final CY 2015 ASC wage index file and updated public use files are also posted on this Web page.

Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), the agency is required to publish a notice of the proposed rule in the Federal Register before the provisions of a rule take effect. Similarly, section 1871(b)(1) of the Act requires the Secretary to provide for notice of the proposed rule in the Federal Register and provide a period of not less than 60 days for public comment. In addition, section 553(d) of the APA, and section 1871(e)(1)(B)(i) of the Act mandate a 30-day delay in effective date after issuance or publication of a rule. Sections 553(b)(B) and 553(d)(3) of the APA provide for exceptions from the notice and comment and delay in effective date APA requirements; in cases in which these exceptions apply, sections 1871(b)(2)(C) and 1871(e)(1)(B)(ii) of the Act provide exceptions from the notice and 60-day comment period and delay in effective date requirements of the Act as well. Section 553(b)(B) of the APA and section 1871(b)(2)(C) of the Act authorize an agency to dispense with normal rulemaking requirements for good cause if the agency makes a finding that the notice and comment process are impracticable, unnecessary, or contrary to the public interest. In addition, both section 553(d)(3) of the APA and section 1871(e)(1)(B)(ii) of the Act allow the agency to avoid the 30-day delay in effective date where such delay is contrary to the public interest and an agency includes a statement of support.

In our view, this correcting document does not constitute a rulemaking that would be subject to these requirements. This correcting document corrects technical errors in the preamble, addenda, payment rates, and tables included or referenced in the CY 2015 OPPS/ASC final rule with comment period. The corrections contained in this document are consistent with, and do not make substantive changes to, the policies and payment methodologies that were adopted subjected to notice and comment procedures in the CY 2015 OPPS/ASC final rule with comment period. As a result, the corrections made through this correcting document are intended to ensure that the CY 2015 OPPS/ASC final rule with comment period accurately reflects the policies adopted in that rule.

Even if this were a rulemaking to which the notice and comment and delayed effective date requirements applied, we find that there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the corrections in this document into the CY 2015 OPPS/ASC final rule with comment period or delaying the effective date would be contrary to the public interest because it is in the public's interest for providers and suppliers to receive appropriate payments in as timely a manner as possible, and to ensure that the CY 2015 OPPS/ASC final rule with comment period accurately reflects our policies as of the date they take effect and are applicable. Further, such procedures would be unnecessary, because we are not altering the payment methodologies or policies, but rather, we are simply correctly implementing the policies that we previously proposed, received comment on, and subsequently finalized. This correcting document is intended solely to ensure that the CY 2015 OPPS/ASC final rule with comment period accurately reflects these payment methodologies and policies. For these reasons, we believe we have good cause to waive the notice and comment and effective date requirements.

In FR Doc. 2014-26146 of November 10, 2014 (79 FR 66770), make the following corrections:

1. On page 66776, second column, second bullet, lines 11 and 17, the figure “0.89” is corrected to read “0.90”.

2. On page 66777, third column, first paragraph under column heading (4), line 11, the figure “2.3” is corrected to read “2.4”.

3. On page 66825,

a. Second column,

(1) First partial paragraph, lines 6 through 14, remove the last two sentences of the paragraph and add the following sentence in its place: “The CY 2015 estimated cancer hospital payment adjustments result in a budget neutral adjustment factor of 1.0004 to the conversion factor for the cancer hospital payment adjustment.”

(2) Second full paragraph,

(a) Line 17, the figure “$72.692” is corrected to read “$72.690”.

(b) Line 19, the figure “−$1.484” is corrected to read “−$1.483”.

b. Third column,

(1) First full paragraph, line 13, the figure “$72.661” is corrected to read “$72.690”.

(2) Last paragraph, line 10, the figure “$74.144” is corrected to read “$74.173”.

4. On page 66826, first column, first partial paragraph,

(a) Line 2, the figure “1.0000” is corrected to read “1.0004”.

(b) Line 7, the figure “$74.144” is corrected to read “$74.173”.

5. On page 66832,

a. First column, first partial paragraph,

(1) Line 3, the figure “89” is corrected to read “90”.

(2) Lines 5 and 11, the figure “0.89” is corrected to read “0.90”.

b. Second column,

(1) First partial paragraph, line 4, the figure “0.89” is corrected to read “0.90”.

(2) First full paragraph, lines 4 and 9, the figure “0.89 is corrected to read “0.90”.

c. Third column, first partial paragraph,

(1) Line 3, the figure “89” is corrected to read “90”.

(2) Lines 5 and 11, the figure “0.89” is corrected to read “0.90”.

d. Table 14—Estimated CY 2015 Hospital-Specific Payment Adjustment For Cancer Hospitals To Be Provided At Cost Report Settlement, the table is corrected to read as follows:

6. On page 66889, Table 36—HCPCS Codes To Which The CY 2015 Drug-Specific Packaging Determination Methodology Applies, the table is corrected to read as follows:

7. On page 66917, third column, remove the first full paragraph and add the following paragraph in its place: “For the new Category III CPT codes implemented in July 2014 through the quarterly update CR, as shown below in Table 43, we are not finalizing the “Z2” payment indicator that we proposed for CPT codes 0348T, 0349T, and 0350T or the “R2” payment indicator that we proposed for CPT code 0356T. For CY 2015, these codes will be conditionally packaged under the OPPS when provided with a significant procedure (status indicator “Q1”). With the exception of device removal procedures (as discussed in section XII.D.1.b. of this final rule with comment period), HCPCS codes that are conditionally packaged under the OPPS are always packaged (payment indicator “N1”) under the ASC payment system. Therefore, the final CY 2015 ASC payment indicator for CPT codes 0348T, 0349T, 0350T, and 0356T is “N1” for CY 2015.

8. On page 66918, Table 43—New Category III CPT Codes for Covered Surgical Procedures or Covered Ancillary Services Implemented in July 2014, the table is corrected to read as follows:

9. On page 66939,

a. Second column, last paragraph, line 10, the figure “0.9998” is corrected to read “0.9995”.

b. Third column, first partial paragraph,

(1) Line 6, the figure “$44.071” is corrected to read “$44.058”.

(2) Line 11, the figure “0.9998” is corrected to read “0.9995”.

(3) Line 21, the figure “$43.202” is corrected to read “$43.189”.

(4) Line 26, the figure “0.9998” is corrected to read “0.9995”.

10. On page 66940, first column, second full paragraph, line 6, the figure “$44.071” is corrected to read “$44.058”.

11. On page 66962, second column, first full paragraph,

a. Line 12, the figure “$72.661” is corrected to read “$72.690”.

b. Line 14, the figure “$74.144” is corrected to read “$74.173”.

12. On page 67019,

a. Second column, first paragraph,

(1) Line 3, the figure “(4,006)” is corrected to read “(4,007)”.

(2) Line 31, the figure “(3,871)” is corrected to read “(3,782)”.

b. Third column, remove the entire fourth paragraph, which begins with “There is no difference in impact” and add the following paragraph in its place: “The impacts reflect slightly smaller total cancer hospital payment adjustments as a result of the updated target PCR and updated estimated cancer hospital PCRs for 2015.”

13. On page 67020,

a. First column, first full paragraph under column 5 heading,

(1) Line 10, the figures “3.4 and 4.2” are corrected to read “3.5 and 4.3” respectively. (2) Line 14, the figure “3.2” is corrected to read “3.3”.

b. Second column, first partial paragraph, line 9, the figure “$74.144” is corrected to read “$74.173”.

c. Third column,

(1) First partial paragraph, last line, the figure “2.3” is corrected to read “2.4”.

(2) First full paragraph, line 11, the figures “0.9 to 2.1” are corrected to read “1.0 to 2.2” respectively.

(3) Second full paragraph, line 4, the figure “3.1” is corrected to read “3.2”.

(4) Last paragraph,

(a) Line 7, the figure “1.7” is corrected to read “1.8”.

(b) Line 9, the figure “2.1” is corrected to read “2.2”.

14. On pages 67020 through 67022, Table 49—Estimated Impact of the CY 2015 Changes for the Hospital Outpatient Prospective Payment System, the table is corrected to read as follows:

15. On page 67022, second column, first full paragraph,

a. Line 13, the figure “1.7” is corrected to read “1.8”.

b. Line 16, the figure “1.7” is corrected to read “1.8”.

c. Line 19, the figure “−0.4” is corrected to read “−0.5”.

16. On page 67023, second column, first partial paragraph,

a. Line 12, the figure “0.9998” is corrected to read “0.9995”.

b. Last line, the figure “$44.071” is corrected to read “$44.058”.

17. On page 67024, third column (top third of the page above Table 50), first partial paragraph, line 1, replace “9” with “11”.

18. On pages 67024 through 67025, Table 51—Estimated Impact of the CY 2015 Update to the ASC Payment System on Aggregate Payments for Selected Procedures, the table is corrected to read as follows:

To assist the reader, the following acronyms are used in this document.

The Patient Protection and Affordable Care Act (Pub. L. 111-148, enacted on March 23, 2010), together with the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30, 2010) (collectively referred as the Affordable Care Act) provides for the establishment of Affordable Insurance Exchanges (Exchanges, also called the Health Insurance Marketplace) that provide access to affordable health insurance coverage offered by qualified health plans (QHPs). Individuals who enroll, or whose family member enrolls, in a QHP cannot be eligible for health coverage under other federally supported health benefits programs or through affordable employer-sponsored insurance coverage and have incomes above 100 percent but no more than 400 percent of the federal poverty line (FPL), or have income below that level but be lawfully present non-citizens ineligible for Medicaid because of immigration status. Individuals enrolled through Marketplaces in coverage offered by QHPs may qualify for the federal premium tax credit (PTC) or federally-funded cost-sharing reductions (CSRs) based on their household income, to make coverage affordable.

In the states that elect to operate a Basic Health Program (BHP), BHP will make affordable health benefits coverage available for individuals under age 65 with household incomes between 133 percent and 200 percent of the FPL who are not otherwise eligible for Medicaid, the Children's Health Insurance Program (CHIP), or affordable employer-sponsored coverage. (For those states that have expanded Medicaid coverage under section 1902(a)(10)(A)(i)(VIII) of the Social Security Act (the Act), the lower income threshold for BHP eligibility is effectively 138 percent due to the application of a required 5 percent income disregard in determining the upper limits of Medicaid income eligibility (section 1902(e)(14)(I) of the Act).) Federal funding will be available for BHP based on the amount of PTC and CSRs that BHP enrollees would have received had they been enrolled in QHPs through Marketplaces.

In the March 12, 2014 Federal Register (79 FR 14112), we published a final rule entitled the “Basic Health Program; State Administration of Basic Health Programs; Eligibility and Enrollment in Standard Health Plans; Essential Health Benefits in Standard Health Plans; Performance Standards for Basic Health Programs; Premium and Cost Sharing for Basic Health Programs; Federal Funding Process; Trust Fund and Financial Integrity” (hereinafter referred to as the BHP final rule) implementing section 1331 of the Affordable Care Act), which directs the establishment of BHP. The BHP final rule establishes the standards for state and federal administration of BHP, including provisions regarding eligibility and enrollment, benefits, cost-sharing requirements and oversight activities. While the BHP final rule codifies the overall statutory requirements and basic procedural framework for the funding methodology, it does not contain the specific information necessary to determine federal payments. We anticipated that the methodology would be based on data and assumptions that would reflect ongoing operations and experience of BHP programs, as well as the operation of the Marketplaces. For this reason, the BHP final rule indicated that the development and publication of the funding methodology, including any data sources, would be addressed in a separate annual BHP Payment Notice.

In the BHP final rule, we specified that the BHP Payment Notice process would include the annual publication of both a proposed and final BHP Payment Notice. The proposed BHP Payment Notice would be published in the Federal Register each October, and would describe the proposed methodology for the upcoming BHP program year, including how the Secretary considered the factors specified in section 1331(d)(3) of the Affordable Care Act, along with the proposed data sources used to determine the federal BHP payment rates. The final BHP Payment Notice would be published in the Federal Register in February, and would include the final BHP funding methodology, as well as the federal BHP payment rates for the next BHP program year. For example, payment rates published in February 2015 would apply to BHP program year 2016, beginning in January 2016. As discussed in section III.C of this methodology, state data needed to calculate the federal BHP payment rates for the final BHP Payment Notice must be submitted to CMS.

As described in the BHP final rule, once the final methodology has been published, we will only make modifications to the BHP funding methodology on a prospective basis with limited exceptions. The BHP final rule provided that retrospective adjustments to the state's BHP payment amount may occur to the extent that the prevailing BHP funding methodology for a given program year permits adjustments to a state's federal BHP payment amount due to insufficient data for prospective determination of the relevant factors specified in the payment notice. Additional adjustments could be made to the payment rates to correct errors in applying the methodology (such as mathematical errors).

Under section 1331(d)(3)(ii) of the Affordable Care Act, the funding methodology and payment rates are expressed as an amount per BHP enrollee for each month of enrollment. These payment rates may vary based on categories or classes of enrollees. Actual payment to a state would depend on the actual enrollment in coverage through the state BHP. A state that is approved to implement BHP must provide data showing quarterly enrollment in the various federal BHP payment rate cells. The data submission requirements associated with this will be published subsequent to the proposed methodology.

The following sections, arranged by subject area, include a summary of the public comments that we received, and our responses. For a complete and full description of the BHP proposed funding methodology, see the “Basic Health Program; Federal Funding Methodology for Program Year 2016” proposed methodology published in the October 23, 2014 Federal Register (79 FR 63363).

We received a total of 3 timely comments from individuals and groups advocating on behalf of consumers and health care providers. The public comments received ranged from general support or opposition to the proposed methodology and BHP to specific comments regarding the proposed methodological factors.

In the October 23, 2014 (79 FR 63363) proposed methodology, we specified the methodology of how the federal BHP payments would be calculated. For specific discussions, please refer to the October 23, 2014 proposed methodology (79 FR 63363).

We received the following comments on the background information included in the proposed methodology:

Comment: Some commenters expressed general opposition to BHP and the payment methodology.

Response: The comments were outside the scope of the BHP program and payment methodology.

Final Decision: After careful consideration of the public comments, we are finalizing our proposed methodology for how the federal BHP payments will be calculated.

We proposed in the overview of the funding methodology to calculate the PTC and CSR as consistently as possible and in general alignment with the methodology used by Marketplaces to calculate the advance payments of the PTC and CSR, and by the Internal Revenue Service (IRS) to calculate the final PTC. We proposed in this section four equations that comprise the overall BHP funding methodology. For specific discussions, please refer to the October 23, 2014 proposed methodology (79 FR 63363).

We received no comments regarding the overview of the funding methodology and calculation of the payment amount. We are finalizing the BHP overview of the funding methodology and the payment amount for FY 2016.

In this section, we proposed that a state implementing BHP provide us with an estimate of the number of BHP enrollees it will enroll in the upcoming BHP program, by applicable rate cell, to determine the federal BHP payment amounts. For each state, we proposed using rate cells that separate the BHP population into separate cells based on the following five factors: age; geographic rating area; coverage status; household size; and income. For specific discussions, please refer to the October 23, 2014 proposed methodology (79 FR 63363).

We received the following comment on the proposed rate cells:

Comment: One commenter expressed concern that defining geographic rating areas as counties would not capture potential differences in health care costs and qualified health plan premiums in different parts of the county, and recommended defining the rating area by zip code instead.

Response: We believe that this is unlikely to have a significant impact on the federal BHP payment. In addition, we believe that it would make state operation of the program substantially more challenging.

Final Decision: After careful consideration of the comments, we are finalizing the criteria and definitions of the rate cells to determine the federal BHP payment amounts for FY 2016.

We proposed in this section to use, to the extent possible, data submitted to the federal government by QHP issuers seeking to offer coverage through a Marketplace to determine the federal BHP payment cell rates. However, in states operating a State Based Marketplace (SBM), we proposed that such states submit required data for CMS to calculate the federal BHP payment rates in those states. For specific discussions, please refer to the October 23, 2014 proposed methodology (79 FR 63363).

We did not receive any comments on the “Sources and State Data Considerations” section and are finalizing the BHP methodology as proposed.

In this section, we proposed 11 specific variables to use in the payment equations that comprise the overall BHP funding methodology. (10 variables are described in section III.D of this document, and the premium trend factor is described in section III.F.) For each proposed variable, we included a discussion on the assumptions and data sources used in developing the variables. For specific discussions, please refer to the October 23, 2014 proposed methodology (79 FR 63363).

We did not receive any comments on the “Specific Variables Used in Payment Equations” section and are finalizing the BHP methodology as proposed.

We proposed to make several adjustments for American Indians and Alaska Natives when calculating the CSR portion of the federal BHP payment rate to be consistent with the Marketplace rules. For specific discussions, please refer to the October 23, 2014 proposed methodology (79 FR 63363).

We did not receive any comments on the “Adjustments for American Indians and Alaska Natives” section and are finalizing the BHP methodology as proposed.

In this section, we proposed to provide states implementing BHP with the option to use the 2015 QHP premiums multiplied by a premium trend factor to calculate the federal BHP payment rates instead of using the 2016 QHP premiums. For specific discussions, please refer to the October 23, 2014 proposed methodology (79 FR 63363).

We did not receive any comments on the “State Option to Use 2015 QHP Premiums for BHP Payments” section and are finalizing the BHP methodology as proposed.

In this section, we proposed to provide states implementing BHP the option to develop a methodology to account for the impact that including the BHP population in the Marketplace would have had on QHP premiums based on any differences in health status between the BHP population and persons enrolled through the Marketplace. For specific discussions, please refer to the October 23, 2014 proposed methodology (79 FR 63363).

We did not receive any comments on the “State Option to Include Retrospective State-specific Health Risk Adjustment in Certified Methodology” section and are finalizing the BHP methodology as proposed.

Section 1331(d)(3) of the Affordable Care Act directs the Secretary to consider several factors when determining the federal BHP payment amount, which, as specified in the statute, must equal 95 percent of the value of the PTC and CSRs that BHP enrollees would have been provided had they enrolled in a QHP through a Marketplace. Thus, the BHP funding methodology is designed to calculate the PTC and CSRs as consistently as possible and in general alignment with the methodology used by Marketplaces to calculate the advance payments of the PTC and CSRs, and by the IRS to calculate final PTCs. In general, we rely on values for factors in the payment methodology specified in statute or other regulations as available, and we have developed values for other factors not otherwise specified in statute, or previously calculated in other regulations, to simulate the values of the PTC and CSRs that BHP enrollees would have received if they had enrolled in QHPs offered through a Marketplace. In accordance with section 1331(d)(3)(A)(iii) of the Affordable Care Act, the final funding methodology must be certified by CMS' Chief Actuary, in consultation with the Office of Tax Analysis (OTA) of the Department of the Treasury, as having met the requirements of section 1331(d)(3)(A)(ii) of the Affordable Care Act.

Section 1331(d)(3)(A)(ii) of the Affordable Care Act specifies that the payment determination “shall take into account all relevant factors necessary to determine the value of the premium tax credits and cost-sharing reductions that would have been provided to eligible individuals . . . including the age and income of the enrollee, whether the enrollment is for self-only or family coverage, geographic differences in average spending for health care across rating areas, the health status of the enrollee for purposes of determining risk adjustment payments and reinsurance payments that would have been made if the enrollee had enrolled in a qualified health plan through a Marketplace, and whether any reconciliation of the credit or cost-sharing reductions would have occurred if the enrollee had been so enrolled.” The payment methodology takes each of these factors into account. This methodology is the same as the 2015 payment methodology, with updated values but no changes in methods.

We have developed a methodology that the total federal BHP payment amount would be based on multiple “rate cells” in each state. Each “rate cell” represents a unique combination of age range, geographic area, coverage category (for example, self-only or two-adult coverage through BHP), household size, and income range as a percentage of FPL. Thus, there are distinct rate cells for individuals in each coverage category within a particular age range who reside in a specific geographic area and are in households of the same size and income range. We note that the development of the BHP payment rates will be consistent with each state's rules on age rating. Thus, in the case of a state that does not use age as a rating factor on the Marketplace, the BHP payment rates would not vary by age.

The rate for each rate cell will be calculated in two parts. The first part (as described in Equation (1)) will equal 95 percent of the estimated PTC that would have been paid if a BHP enrollee in that rate cell had instead enrolled in a QHP in the Marketplace. The second part (as described in Equation (2)) will equal 95 percent of the estimated CSR payment that would have been made if a BHP enrollee in that rate cell had instead enrolled in a QHP in the Marketplace. These 2 parts will be added together and the total rate for that rate cell will be equal to the sum of the PTC and CSR rates.

To calculate the total federal BHP payment, Equation (1) will be used to calculate the estimated PTC for individuals in each rate cell and Equation (2) will be used to calculate the estimated CSR payments for individuals in each rate cell. By applying the equations separately to rate cells based on age, income and other factors, we effectively take those factors into account in the calculation. In addition, the equations take into account additional relevant variables that are needed to determine the estimated PTC and CSR payments for individuals in each rate cell. Each of the variables in the equations is defined below, and further detail is provided later in this section of the payment notice.

In addition, we describe how we will calculate the adjusted reference premium (described later in this section of the payment methodology) that is used in Equations (1) and (2). This is defined in Equation (3a) and Equation (3b).

The estimated PTC, on a per enrollee basis, will be calculated for each rate cell for each state based on age range, geographic area, coverage category, household size, and income range. The PTC portion of the rate will be calculated in a manner consistent with the methodology used to calculate the PTC for persons enrolled in a QHP, with 3 adjustments. First, the PTC portion of the rate for each rate cell will represent the mean, or average, expected PTC that all persons in the rate cell would receive, rather than being calculated for each individual enrollee. Second, the reference premium used to calculate the PTC (described in more detail later in the section) will be adjusted for BHP population health status, and in the case of a state that elects to use 2015 premiums for the basis of the BHP federal payment, for the projected change in the premium from the 2015 to 2016, to which the rates announced in the final payment methodology would apply. These adjustments are described in Equation (3a) and Equation (3b). Third, the PTC will be adjusted prospectively to reflect the mean, or average, net expected impact of income reconciliation on the combination of all persons enrolled in BHP; this adjustment, as described in section III.D.5 of this methodology, will account for the impact on the PTC that would have occurred had such reconciliation been performed. Finally, the rate is multiplied by 95 percent, consistent with section 1331(d)(3)(A)(i) of the Affordable Care Act. We note that in the situation where the average income contribution of an enrollee would exceed the adjusted reference premium, we will calculate the PTC to be equal to 0 and would not allow the value of the PTC to be negative.

Consistent with this description, equation (1) is defined as:

The CSR portion of the rate will be calculated for each rate cell for each state based on age range, geographic area, coverage category, household size, and income range defined as a percentage of FPL. The CSR portion of the rate will be calculated in a manner consistent with the methodology used to calculate the CSR advance payments for persons enrolled in a QHP, as described in the final rule we published in the Federal Register on March 11, 2014 entitled “HHS Notice of Benefit and Payment Parameters for 2015” final rule (79 FR 13744), with 3 principal adjustments. (We will make a separate calculation that includes different adjustments for American Indian/Alaska Native BHP enrollees, as described in section III.D.1 of this methodology.) For the first adjustment, the CSR rate, like the PTC rate, will represent the mean expected CSR subsidy that would be paid on behalf of all persons in the rate cell, rather than being calculated for each individual enrollee. Second, this calculation will be based on the adjusted reference premium, as described in section III.A.3 of this methodology. Third, this equation uses an adjusted reference premium that reflects premiums charged to non-tobacco users, rather than the actual premium that is charged to tobacco users to calculate CSR advance payments for tobacco users enrolled in a QHP. Accordingly, the equation includes a tobacco rating adjustment factor that would account for BHP enrollees' estimated tobacco-related health costs that are outside the premium charged to non-tobacco-users. Finally, the rate will be multiplied by 95 percent, as provided in section 1331(d)(3)(A)(i) of the Affordable Care Act.

Consistent with the methodology described above, equation (2) is defined as:

As part of these calculations for both the PTC and CSR components, the value of the adjusted reference premium as described below. Consistent with the approach last year, we will allow states to choose between using the actual 2016 QHP premiums or the 2015 QHP premiums multiplied by the premium trend factor (as described in section III.F of this methodology). Therefore, we describe below how we would calculate the adjusted reference premium under each option.

In the case of a state that elects to use the reference premium based on the 2016 premiums, we will calculate the value of the adjusted reference premium as specified in Equation (3a). The adjusted reference premium will be equal to the reference premium, which will be based on the second lowest cost silver plan premium in 2016, multiplied by the BHP population health factor (described in section III.D of this methodology), which will reflect the projected impact that enrolling BHP-eligible individuals in QHPs on a Marketplace would have had on the average QHP premium.

In the case of a state that elects to use the reference premium based on the 2015 premiums (as described in section III.F of this methodology), we will calculate the value of the adjusted reference premium as specified in Equation (3b). The adjusted reference premium will be equal to the reference premium, which will be based on the second lowest cost silver plan premium in 2015, multiplied by the BHP population health factor (described in section III.D of this methodology), which will reflect the projected impact that enrolling BHP-eligible individuals in QHPs on a Marketplace would have had on the average QHP premium, and by the premium trend factor, which will reflect the projected change in the premium level between 2015 and 2016 (including the estimated impact of changes resulting from the transitional reinsurance program established in section 1341 of the Affordable Care Act).

In general, the rate for each rate cell will be multiplied by the number of BHP enrollees in that cell (that is, the number of enrollees that meet the criteria for each rate cell) to calculate the total monthly BHP payment. This calculation is shown in Equation 4 below.

We will require that a state implementing BHP provide us an estimate of the number of BHP enrollees it projects will enroll in the upcoming BHP program year, by applicable rate cell, prior to the first quarter of program operations. Upon our approval of such estimates as reasonable, they will be used to calculate the prospective payment for the first and subsequent quarters of program operation until the state has provided us actual enrollment data. These data will be required to calculate the final BHP payment amount, and make any necessary reconciliation adjustments to the prior quarters' prospective payment amounts due to differences between projected and actual enrollment. In subsequent quarters, quarterly deposits to the state's trust fund will be based on the most recent actual enrollment data submitted to us. Procedures will ensure that federal payments to a state reflect actual BHP enrollment during a year, within each applicable category, and prospectively determined federal payment rates for each category of BHP enrollment, with such categories defined in terms of age range, geographic area, coverage status, household size, and income range, as explained above.

We will require the use of certain rate cells as part of the methodology. For each state, we will use rate cells that separate the BHP population into separate cells based on the five factors described below.

Factor 1—Age: We will separate enrollees into rate cells by age, using the following age ranges that capture the widest variations in premiums under HHS's Default Age Curve: 1

• Ages 0-20.

• Ages 21-34.

• Ages 35-44.

• Ages 45-54.

• Ages 55-64.

Factor 2—Geographic area: For each state, we will separate enrollees into rate cells by geographic areas within which a single reference premium is charged by QHPs offered through the state's Marketplace. Multiple, non-contiguous geographic areas will be incorporated within a single cell, so long as those areas share a common reference premium.2

Factor 3—Coverage status: We will separate enrollees into rate cells by coverage status, reflecting whether an individual is enrolled in self-only coverage or persons are enrolled in family coverage through BHP, as provided in section 1331(d)(3)(A)(ii) of the Affordable Care Act. Among recipients of family coverage through BHP, separate rate cells, as explained below, will apply based on whether such coverage involves two adults alone or whether it involves children.

Factor 4—Household size: We will separate enrollees into rate cells by household size that states use to determine BHP enrollees' income as a percentage of the FPL under 42 CFR 600.320. We will require separate rate cells for several specific household sizes. For each additional member above the largest specified size, we will publish instructions for how we will develop additional rate cells and calculate an appropriate payment rate based on data for the rate cell with the closest specified household size. We will publish separate rate cells for household sizes of 1, 2, 3, 4, and 5, as unpublished analyses of American Community Survey data conducted by the Urban Institute, which take into account unaccepted offers of employer-sponsored insurance, as well as income, Medicaid and CHIP eligibility, citizenship and immigration status, and current health coverage status, find that less than 1 percent of all BHP-eligible persons live in households of size 5 or greater.

Factor 5—Income: For households of each applicable size, we will create separate rate cells by income range, as a percentage of FPL. The PTC that a person would receive if enrolled in a QHP varies by income, both in level and as a ratio to the FPL, and the CSR varies by income as a percentage of FPL. Thus, separate rate cells will be used to calculate federal BHP payment rates to reflect different bands of income measured as a percentage of FPL. We will use the following income ranges, measured as a ratio to the FPL:

• 0 to 50 percent of the FPL.

• 51 to 100 percent of the FPL.

• 101 to 138 percent of the FPL.3

• 139 to 150 percent of the FPL.

• 151 to 175 percent of the FPL.

• 176 to 200 percent of the FPL.

These rate cells will only be used to calculate the federal BHP payment amount. A state implementing BHP will not be required to use these rate cells or any of the factors in these rate cells as part of the state payment to the standard health plans participating in BHP or to help define BHP enrollees' covered benefits, premium costs, or out-of-pocket cost-sharing levels.

We will use averages to define federal payment rates, both for income ranges and age ranges, rather than varying such rates to correspond to each individual BHP enrollee's age and income level. We believe that this approach will increase the administrative feasibility of making federal BHP payments and reduce the likelihood of inadvertently erroneous payments resulting from highly complex methodologies. We believe that this approach will not significantly change federal payment amounts, since within applicable ranges; the BHP-eligible population is distributed relatively evenly.

To the extent possible, we will use data submitted to the federal government by QHP issuers seeking to offer coverage through a Marketplace to perform the calculations that determine federal BHP payment cell rates.

States operating a State Based Marketplace in the individual market, however, must provide certain data, including premiums for second lowest cost silver plans, by geographic area, in order for CMS to calculate the federal BHP payment rates in those states. We will require that a state operating a State Based Marketplace and interested in obtaining the applicable federal BHP payment rates for its state must submit such data accurately, completely, and as specified by CMS, by no later than October 15, 2015, for CMS to calculate the applicable rates for 2016. If additional state data (that is, in addition to the second lowest cost silver plan premium data) are needed to determine the federal BHP payment rate, such data must be submitted in a timely manner, and in a format specified by CMS to support the development and timely release of annual BHP payment notices. The specifications for data collection to support the development of BHP payment rates for 2016 were published in CMS guidance and are available at http://www.medicaid.gov/Federal-Policy-Guidance/Federal-Policy-Guidance.html.

If a state operating a SBM provides the necessary data accurately, completely, and as specified by CMS, but after the date specified above, we anticipate publishing federal payment rates for such a state in a subsequent Payment Notice. As noted in the BHP final rule, a state may elect to implement its BHP after a program year has begun. In such an instance, we require that the state, if operating a SBM, submit its data no later than 30 days after the Blueprint submission for CMS to calculate the applicable federal payment rates. We further require that the BHP Blueprint itself must be submitted for Secretarial certification with an effective date of no sooner than 120 days after submission of the BHP Blueprint. In addition, the state must ensure that its Blueprint includes a detailed description of how the state will coordinate with other insurance affordability programs to transition and transfer BHP-eligible individuals out of their existing QHP coverage, consistent with the requirements set forth in 42 CFR 600.330 and 600.425. We believe that this 120-day period is necessary to establish the requisite administrative structures and ensure that all statutory and regulatory requirements are satisfied.

To calculate the estimated PTC that would be paid if individuals enrolled in QHPs through the Marketplace, we must calculate a reference premium (RP) because the PTC is based, in part, on the premiums for the applicable second lowest cost silver plan as explained in section III.C.4 of this methodology, regarding the Premium Tax Credit Formula (PTCF). Accordingly, for the purposes of calculating the BHP payment rates, the reference premium, in accordance with 26 U.S.C. 36B(b)(3)(C), is defined as the adjusted monthly premium for an applicable second lowest cost silver plan. The applicable second lowest cost silver plan is defined in 26 U.S.C. 36B(b)(3)(B) as the second lowest cost silver plan of the individual market in the rating area in which the taxpayer resides, which is offered through the same Marketplace. We will use the adjusted monthly premium for an applicable second lowest cost silver plan in 2016 as the reference premium (except in the case of a state that elects to use the 2015 premium as the basis for the federal BHP payment, as described in section III.F of this methodology).

The reference premium will be the premium applicable to non-tobacco users. This is consistent with the provision in 26 U.S.C. 36B(b)(3)(C) that bases the PTC on premiums that are adjusted for age alone, without regard to tobacco use, even for states that allow insurers to vary premiums based on tobacco use pursuant to 42 U.S.C. 300gg(a)(1)(A)(iv).

Consistent with the policy set forth in 26 CFR 1.36B-3(f)(6) to calculate the PTC for those enrolled in a QHP through a Marketplace, we will not update the payment methodology, and subsequently the federal BHP payment rates, in the event that the second lowest cost silver plan used as the reference premium, or the lowest cost silver plan, changes (that is, terminates or closes enrollment during the year).

The applicable second lowest cost silver plan premium will be included in the BHP payment methodology by age range, geographic area, and self-only or applicable category of family coverage obtained through BHP.

American Indians and Alaska Natives in households with incomes below 300 percent of the FPL are eligible for a full cost sharing subsidy regardless of the plan they select (as described in sections 1402(d) and 2901(a) of the Affordable Care Act). We assume that American Indians and Alaska Natives would be more likely to enroll in bronze plans as a result; thus, for American Indian/Alaska Native BHP enrollees, we will use the lowest cost bronze plan as the basis for the reference premium for the purposes of calculating the CSR portion (but not the PTC portion) of the federal BHP payment as described further in section III.E of this methodology.

The applicable age bracket will be one dimension of each rate cell. We will assume a uniform distribution of ages and estimate the average premium amount within each rate cell. We believe that assuming a uniform distribution of ages within these ranges is a reasonable approach and would produce a reliable determination of the PTC and CSR components. We also believe this approach would avoid potential inaccuracies that could otherwise occur in relatively small payment cells if age distribution were measured by the number of persons eligible or enrolled.

We will use geographic areas based on the rating areas used in the Marketplaces. We will define each geographic area so that the reference premium is the same throughout the geographic area. When the reference premium varies within a rating area, we will define geographic areas as aggregations of counties with the same reference premium. Although plans are allowed to serve geographic areas smaller than counties after obtaining our approval, no geographic area, for purposes of defining BHP payment rate cells, will be smaller than a county. We do not believe that this assumption will have a significant impact on federal payment levels and it would likely simplify both the calculation of BHP payment rates and the operation of BHP.

Finally, in terms of the coverage category, federal payment rates will only recognize self-only and two-adult coverage, with exceptions that account for children who are potentially eligible for BHP. First, in states that set the upper income threshold for children's Medicaid and CHIP eligibility below 200 percent of FPL (based on modified adjusted gross income), children in households with incomes between that threshold and 200 percent of FPL would be potentially eligible for BHP. Currently, the only states in this category are Arizona, Idaho, and North Dakota.4 Second, BHP would include lawfully present immigrant children with incomes at or below 200 percent of FPL in states that have not exercised the option under the sections 1903(v)(4)(A)(ii) and 2107(e)(1)(E) of the Act to qualify all otherwise eligible, lawfully present immigrant children for Medicaid and CHIP. States that fall within these exceptions would be identified based on their Medicaid and CHIP State Plans, and the rate cells would include appropriate categories of BHP family coverage for children. In other states, BHP eligibility will generally be restricted to adults, since children who are citizens or lawfully present immigrants and who live in households with incomes at or below 200 percent of FPL will qualify for Medicaid or CHIP and thus be ineligible for BHP under section 1331(e)(1)(C) of the Affordable Care Act, which limits BHP to individuals who are ineligible for minimum essential coverage (as defined in section 5000A(f) of the Internal Revenue Code of 1986).

We include the population health factor in the methodology to account for the potential differences in the average health status between BHP enrollees and persons enrolled in the Marketplace. To the extent that BHP enrollees would have been enrolled in the Marketplace in the absence of BHP in a state, the inclusion of those BHP enrollees in the Marketplace may affect the average health status of the overall population and the expected QHP premiums.

We currently do not believe that there is evidence that the BHP population would have better or poorer health status than the Marketplace population. At this time, there is a lack of experience available in the Marketplace that limits the ability to analyze the health differences between these groups of enrollees. In addition, differences in population health may vary across states. Thus, at this time, we believe that it is not feasible to develop a methodology to make a prospective adjustment to the population health factor that is reliably accurate.

Given these analytic challenges and the limited data about Marketplace coverage and the characteristics of BHP-eligible consumers that will be available by the time we establish federal payment rates for 2016, we believe that the most appropriate adjustment for 2016 would be 1.00.

In the 2015 payment methodology, we included an option for states to include a retrospective population health status adjustment. Similarly, we will provide the states with the same option for the 2016 payment methodology, as described further in section III.G of this methodology, to include a retrospective population health status adjustment in the certified methodology, which is subject to CMS review and approval.

While the statute requires consideration of risk adjustment payments and reinsurance payments insofar as they would have affected the PTC and CSRs that would have been provided to BHP-eligible individuals had they enrolled in QHPs, we will not require that a BHP program's standard health plans receive such payments. As explained in the BHP final rule, BHP standard health plans are not included in the risk adjustment program operated by HHS on behalf of states. Further, standard health plans do not qualify for payments from the transitional reinsurance program established under section 1341 of the Affordable Care Act.5 To the extent that a state operating a BHP determines that, because of the distinctive risk profile of BHP-eligible consumers, BHP standard health plans should be included in mechanisms that share risk with other plans in the state's individual market, the state would need to use other methods for achieving this goal.

Household income is a significant determinant of the amount of the PTC and CSRs that are provided for persons enrolled in a QHP through the Marketplace. Accordingly, the BHP payment methodology incorporates income into the calculations of the payment rates through the use of income-based rate cells. We define income in accordance with the definition of modified adjusted gross income in 26 U.S.C. 36B(d)(2)(B) and consistent with the definition in 45 CFR 155.300. Income would be measured relative to the FPL, which is updated periodically in the Federal Register by the Secretary under the authority of 42 U.S.C. 9902(2), based on annual changes in the consumer price index for all urban consumers (CPI-U). In this methodology, household size and income as a percentage of FPL would be used as factors in developing the rate cells. We will use the following income ranges measured as a percentage of FPL: 6

• 0-50 percent.

• 51-100 percent.

• 101-138 percent.

• 139-150 percent.

• 151-175 percent.

• 176-200 percent.

We will assume a uniform income distribution for each federal BHP payment cell. We believe that assuming a uniform income distribution for the income ranges would be reasonably accurate for the purposes of calculating the PTC and CSR components of the BHP payment and would avoid potential errors that could result if other sources of data were used to estimate the specific income distribution of persons who are eligible for or enrolled in BHP within rate cells that may be relatively small. Thus, when calculating the mean, or average, PTC for a rate cell, we will calculate the value of the PTC at each one percentage point interval of the income range for each federal BHP payment cell and then calculate the average of the PTC across all intervals. This calculation will rely on the PTC formula described below in section III.4 of this methodology.

As the PTC for persons enrolled in QHPs will be calculated based on their income during the open enrollment period, and that income will be measured against the FPL at that time, we will adjust the FPL by multiplying the FPL by a projected increase in the CPI-U between the time that the BHP payment rates are published and the QHP open enrollment period, if the FPL is expected to be updated during that time. The projected increase in the CPI-U would be based on the intermediate inflation forecasts from the most recent OASDI and Medicare Trustees Reports.7

The PTC amount for a person enrolled in a QHP through a Marketplace is calculated in accordance with the methodology described in 26 U.S.C. 36B(b)(2). The amount is equal to the lesser of the premium for the plan in which the person or household enrolls (the enrollment premiums) or adjusted premium for the applicable second lowest cost silver plan minus the contribution amount.

In Equation 1 described in section III.A.1 of this methodology, we will use the formula described in 26 U.S.C. 36B(b) to calculate the contribution amount, which is needed to estimate the PTC for a person enrolled in a QHP on a Marketplace. This formula determines the contribution amount as a percentage of household income. The percentage is based on the FPL for the household income and family size, and is shown in the schedule specified in 26 U.S.C. 36B(b)(3)(A) and shown below. The difference between the contribution amount and the adjusted monthly premium for the applicable second lowest cost silver plan is the estimated amount of the PTC that would be provided for the enrollee (assuming that this amount is less than the enrollment premiums).

The applicable percentage is defined in 26 U.S.C. 36B(b)(3)(A) and 26 CFR 1.36B-3(g) as the percentage that applies to a taxpayer's household income that is within an income tier specified in the table, increasing on a sliding scale in a linear manner from an initial premium percentage to a final premium percentage specified in the table (see Table 1):

These are the applicable percentages for CY 2015. The applicable percentages will be updated in future years in accordance with 26 U.S.C. 36B(b)(3)(A)(ii).

For persons enrolled in a QHP through a Marketplace who receive an advance payment of the premium tax credit (APTC), there will be an annual reconciliation following the end of the year to compare the advance payments to the correct amount of PTC based on household circumstances shown on the federal income tax return. Any difference between the latter amounts and the advance payments made during the year would either be paid to the taxpayer (if too little APTC was paid) or charged to the taxpayer as additional tax (if too much APTC was made, subject to any limitations in statute or regulation), as provided in 26 U.S.C. 36B(f).

Section 1331(e)(2) of the Affordable Care Act specifies that an individual eligible for BHP may not be treated as a qualified individual under section 1312 eligible for enrollment in a QHP offered through a Marketplace. We are defining “eligible” to mean anyone for whom the state agency or the Exchange assesses or determines, based on the single streamlined application or renewal form, as eligible for enrollment in the BHP. Because enrollment in a QHP is a requirement for PTC for the enrolled individual's coverage, individuals determined or assessed as eligible for a BHP are not eligible to receive APTC assistance for coverage in the Marketplace. Because they do not receive APTC assistance, BHP enrollees, on whom the 2016 payment methodology is based, are not subject to the same income reconciliation as Marketplace consumers. Nonetheless, there may still be differences between a BHP enrollee's household income reported at the beginning of the year and the actual income over the year. These may include small changes (reflecting changes in hourly wage rates, hours worked per week, and other fluctuations in income during the year) and large changes (reflecting significant changes in employment status, hourly wage rates, or substantial fluctuations in income). There may also be changes in household composition. Thus, we believe that using unadjusted income as reported prior to the BHP program year may result in calculations of estimated PTC that are inconsistent with the actual incomes of BHP enrollees during the year. Even if the BHP program adjusts household income determinations and corresponding claims of federal payment amounts based on household reports during the year or data from third-party sources, such adjustments may not fully capture the effects of tax reconciliation that BHP enrollees would have experienced had they been enrolled in a QHP through a Marketplace and received APTC assistance.

Therefore, we are including in Equation 1 an income adjustment factor that would account for the difference between calculating estimated PTC using: (a) Income relative to FPL as determined at initial application and potentially revised mid-year, under 600.320, for purposes of determining BHP eligibility and claiming federal BHP payments; and (b) actual income relative to FPL received during the plan year, as it would be reflected on individual federal income tax returns. This adjustment will prospectively estimate the average effect of income reconciliation aggregated across the BHP population had those BHP enrollees been subject to tax reconciliation after receiving APTC assistance for coverage provided through QHPs. For 2016, we will estimate reconciliation effects based on tax data for 2 years, reflecting income and tax unit composition changes over time among BHP-eligible individuals.

The OTA maintains a model that combines detailed tax and other data, including Marketplace enrollment and PTC claimed, to project Marketplace premiums, enrollment, and tax credits. For each enrollee, this model compares the APTC based on household income and family size estimated at the point of enrollment with the PTC based on household income and family size reported at the end of the tax year. The former reflects the determination using enrollee information furnished by the applicant and tax data furnished by the IRS. The latter would reflect the PTC eligibility based on information on the tax return, which would have been determined if the individual had not enrolled in BHP. The ratio of the reconciled PTC to the initial estimation of PTC will be used as the income reconciliation factor in Equation (1) for estimating the PTC portion of the BHP payment rate.

For 2016, OTA has estimated that the income reconciliation factor for states that have implemented the Medicaid eligibility expansion to cover adults up to 133 percent of the FPL will be 100.25 percent, and for states that have not implemented the Medicaid eligibility expansion and do not cover adults up to 133 percent of the FPL will be 100.24 percent. For 2015, we used the average of the factors for the two groups of states. For 2016, the values of the factors for the two groups of states are within 0.01 percentage point of each other. Because the values are within 0.01 percentage point, we will use the greater of two factors (100.25 percent) rather than the average.

As previously described, the reference premium is estimated, for purposes of determining both the PTC and related federal BHP payments, based on premiums charged for non-tobacco users, including in states that allow premium variations based on tobacco use, as provided in 42 U.S.C. 300gg (a)(1)(A)(iv). In contrast, as described in 45 CFR 156.430, the CSR advance payments are based on the total premium for a policy, including any adjustment for tobacco use. Accordingly, we will incorporate a tobacco rating adjustment factor into Equation 2 that reflects the average percentage increase in health care costs that results from tobacco use among the BHP-eligible population and that would not be reflected in the premium charged to non-users. This factor will also take into account the estimated proportion of tobacco users among BHP-eligible consumers.

To estimate the average effect of tobacco use on health care costs (not reflected in the premium charged to non-users), we will calculate the ratio between premiums that silver level QHPs charge for tobacco users to the premiums they charge for non-tobacco users at selected ages. To calculate estimated proportions of tobacco users, we will use data from the Centers for Disease Control and Prevention (CDC) to estimate tobacco utilization rates by state and relevant population characteristic.8 For each state, we will calculate the tobacco usage rate based on the percentage of persons by age who use cigarettes and the percentage of persons by age that use smokeless tobacco, and calculate the utilization rate by adding the two rates together. The data is available for 3 age intervals: 18-24; 25-44; and 45-64. For the BHP payment rate cell for persons ages 21-34, we will calculate the factor as (4/14 * the utilization rate of 18-24 year olds) plus (10/14 * the utilization rate of 25-44 year olds), which would be the weighted average of tobacco usage for persons 21-34 assuming a uniform distribution of ages; for all other age ranges used for the rate cells, we will use the age range in the CDC data in which the BHP payment rate cell age range is contained.

We will provide tobacco rating factors that may vary by age and by geographic area within each state. To the extent that the second lowest cost silver plans have a different ratio of tobacco user rates to non-tobacco user rates in different geographic areas, the tobacco rating adjustment factor may differ across geographic areas within a state. In addition, to the extent that the second lowest cost silver plan has a different ratio of tobacco user rates to non-tobacco user rates by age, or that there is a different prevalence of tobacco use by age, the tobacco rating adjustment factor may differ by age.

The Factor for Removing Administrative Costs represents the average proportion of the total premium that covers allowed health benefits, and we include this factor in our calculation of estimated CSRs in Equation 2. The product of the reference premium and the Factor for Removing Administrative Costs would approximate the estimated amount of Essential Health Benefit (EHB) claims that would be expected to be paid by the plan. This step is needed because the premium also covers such costs as taxes, fees, and QHP administrative expenses. We are setting this factor equal to 0.80, which is the same percentage for the factor to remove administrative costs for calculating CSR advance payments for established in the 2015 HHS Notice of Benefit and Payment Parameters.

The actuarial value is defined as the percentage paid by a health plan of the total allowed costs of benefits, as defined under 45 CFR 156.20. (For example, if the average health care costs for enrollees in a health insurance plan were $1,000 and that plan has an actuarial value of 70 percent, the plan would be expected to pay on average $700 ($1,000 × 0.70) for health care costs per enrollee, on average.) By dividing such estimated costs by the actuarial value in the methodology, we will calculate the estimated amount of total EHB-allowed claims, including both the portion of such claims paid by the plan and the portion paid by the consumer for in-network care. (To continue with that same example, we would divide the plan's expected $700 payment of the person's EHB-allowed claims by the plan's 70 percent actuarial value to ascertain that the total amount of EHB-allowed claims, including amounts paid by the consumer, is $1,000.)

For the purposes of calculating the CSR rate in Equation 2, we will use the standard actuarial value of the silver level plans in the individual market, which is equal to 70 percent.

The induced utilization factor will be used as a factor in calculating estimated CSRs in Equation 2 to account for the increase in health care service utilization associated with a reduction in the level of cost sharing a QHP enrollee would have to pay, based on the cost-sharing reduction subsidies provided to enrollees.

The 2015 HHS Notice of Benefit and Payment Parameters provided induced utilization factors for the purposes of calculating cost-sharing reduction advance payments for 2015. In that rule, the induced utilization factors for silver plan variations ranged from 1.00 to 1.12, depending on income. Using those utilization factors, the induced utilization factor for all persons who would qualify for BHP based on their household income as a percentage of FPL is 1.12; this would include persons with household income between 100 percent and 200 percent of FPL, lawfully present non-citizens below 100 percent of FPL who are ineligible for Medicaid because of immigration status, and persons with household income under 300 percent of FPL, not subject to any cost-sharing. Thus, consistent with last year, we will set the induced utilization factor equal to 1.12 for the BHP payment methodology.

The increase in actuarial value would account for the impact of the cost-sharing reduction subsidies on the relative amount of EHB claims that would be covered for or paid by eligible persons, and we include it as a factor in calculating estimated CSRs inEquation 2.

The actuarial values of QHPs for persons eligible for cost-sharing reduction subsidies are defined in 45 CFR 156.420(a), and eligibility for such subsidies is defined in 45 CFR 155.305(g)(2)(i) through (iii). For QHP enrollees with household incomes between 100 percent and 150 percent of FPL, and those below 100 percent of FPL who are ineligible for Medicaid because of their immigration status, CSRs increase the actuarial value of a QHP silver plan from 70 percent to 94 percent. For QHP enrollees with household incomes between 150 percent and 200 percent of FPL, CSRs increase the actuarial value of a QHP silver plan from 70 percent to 87 percent.

We will apply this factor by subtracting the standard AV from the higher AV allowed by the applicable cost-sharing reduction. For BHP enrollees with household incomes at or below 150 percent of FPL, this factor will be 0.24 (94 percent minus 70 percent); for BHP enrollees with household incomes more than 150 percent but not more than 200 percent of FPL, this factor will be 0.17 (87 percent minus 70 percent).

There are several exceptions made for American Indians and Alaska Natives enrolled in QHPs through a Marketplace to calculate the PTC and CSRs. Thus, we will make adjustments to the payment methodology described above to be consistent with the Marketplace rules.

We will make the following adjustments:

1. The adjusted reference premium for use in the CSR portion of the rate will be the lowest cost bronze plan instead of the second lowest cost silver plan, with the same adjustment for the population health factor (and in the case of a state that elects to use the 2015 premiums as the basis of the federal BHP payment, the same adjustment for the premium trend factor). American Indians and Alaska Natives are eligible for CSRs with any metal level plan, and thus we believe that eligible persons would be more likely to select a bronze level plan instead of a silver level plan. (It is important to note that the assumption that American Indians and Alaska Natives would enroll in a bronze plan would not necessarily change the PTC, as the PTC amount calculated as part of the BHP payment methodology is the maximum possible PTC payment, which is always based on the applicable second lowest cost silver plan. In actuality, the PTC payment that would be made in for an individual enrolled in a QHP cannot exceed the total premium. It is possible that some bronze plan premiums would be less than the maximum PTC payment, but we have not made any adjustment in the methodology for this. We believe that this assumption would have a negligible impact on the BHP payment.)

2. The actuarial value for use in the CSR portion of the rate will be 0.60 instead of 0.70, which is consistent with the actuarial value of a bronze level plan.

3. The induced utilization factor for use in the CSR portion of the rate will be 1.15, which is consistent with the 2015 HHS Notice of Benefit and Payment Parameters induced utilization factor for calculating advance CSR payments for persons enrolled in bronze level plans and eligible for CSRs up to 100 percent of actuarial value.

4. The change in the actuarial value for use in the CSR portion of the rate will be 0.40. This reflects the increase from 60 percent actuarial value of the bronze plan to 100 percent actuarial value, as American Indians and Alaska Natives are eligible to receive CSRs up to 100 percent of actuarial value.

In the interest of allowing states greater certainty in the total BHP federal payments for 2016, we will provide states the option to have their final 2016 federal BHP payment rates calculated using the projected 2016 adjusted reference premium (that is, using 2015 premium data multiplied by the premium trend factor defined below), as described in Equation (3b).

For a state that elects to use the 2015 premium as the basis for the 2016 BHP federal payment, the state must inform CMS no later than May 15, 2015.

For Equation (3b), we define the premium trend factor as follows:

Premium Trend Factor (PTF): In Equation (3b), we calculate an adjusted reference premium (ARP) based on the application of certain relevant variables to the RP, including a PTF. In the case of a state that would elect to use the 2015 premiums as the basis for determining the BHP payment, it would be appropriate to apply a factor that would account for the change in health care costs between the year of the premium data and the BHP plan year. We define this as the premium trend factor in the BHP payment methodology. This factor will approximate the change in health care costs per enrollee, which would include, but not be limited to, changes in the price of health care services and changes in the utilization of health care services. This provides an estimate of the adjusted monthly premium for the applicable second lowest cost silver plan that would be more accurate and reflective of health care costs in the BHP program year, which will be the year following issuance of the final federal payment notice. In addition, we believe that it would be appropriate to adjust the trend factor for the estimated impact of changes to the transitional reinsurance program on the average QHP premium.

We will use the annual growth rate in private health insurance expenditures per enrollee from the National Health Expenditure projections, developed by CMS' Office of the Actuary (http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html, Table 17—Health Insurance Enrollment and Enrollment Growth Rates). For 2016, the projected increase in private health insurance premiums per enrollee is 3.9 percent.

The adjustment for changes in the transitional reinsurance program is developed from analysis by CMS' Center for Consumer Information and Insurance Oversight (CCIIO). In unpublished analysis, CCIIO estimated that the transitional reinsurance program would reduce QHP premiums in 2015 on average by 7.9 percent and in 2016 by 4.4 percent, as the amount of funding in the reinsurance program decreases. Based on these analyses, we estimate that the changes in the transitional reinsurance program would lead to an increase of 3.8 percent in average QHP premiums between 2015 and 2016: (1−0.044)/(1−0.079)−1 = 3.8 percent.

Combining these two factors together, we calculate that the premium trend factor for 2016 would be 7.8 percent (1 + 0.039) × (1 + 0.038)−1 = 7.8 percent.

States may want to consider that the increase in premiums for QHPs from 2015 to 2016 may differ from the premium trend factor developed for the BHP funding methodology for several reasons. In particular, states may want to consider that the second lowest cost silver plan for 2015 may not be the same as the second lowest cost silver plan in 2016. This may lead to the premium trend factor being greater than or less than the actual change in the premium of the second lowest cost silver plan in 2015 compared to the premium of the second lowest cost silver plan in 2016.

To determine whether the potential difference in health status between BHP enrollees and consumers in the Marketplace would affect the PTC, CSRs, risk adjustment and reinsurance payments that would have otherwise been made had BHP enrollees been enrolled in coverage on the Marketplace, we will provide states implementing the BHP the option to propose and to implement, as part of the certified methodology, a retrospective adjustment to the federal BHP payments to reflect the actual value that would be assigned to the population health factor (or risk adjustment) based on data accumulated during program year 2016 for each rate cell.

We acknowledge that there is uncertainty with respect to this factor due to the lack of experience of QHPs on the Marketplace and other payments related to the Marketplace, which is why, absent a state election, we will use a value for the population health factor to determine a prospective payment rate which assumes no difference in the health status of BHP enrollees and QHP enrollees. There is considerable uncertainty regarding whether the BHP enrollees will pose a greater risk or a lesser risk compared to the QHP enrollees, how to best measure such risk, and the potential effect such risk would have had on PTC, CSRs, risk adjustment and reinsurance payments that would have otherwise been made had BHP enrollees been enrolled in coverage on the Marketplace. To the extent, however, that a state would develop an approved protocol to collect data and effectively measure the relative risk and the effect on federal payments, we will permit a retrospective adjustment that would measure the actual difference in risk between the two populations to be incorporated into the certified BHP payment methodology and used to adjust payments in the previous year.

For a state electing the option to implement a retrospective population health status adjustment, we require that the state submit a proposed protocol to CMS, which will be subject to approval by CMS and would be required to be certified by CMS' Chief Actuary, in consultation with the OTA, as part of the BHP payment methodology. We described the protocol for the population health status adjustment in guidance in Considerations for Health Risk Adjustment in the Basic Health Program in Program Year 2015 (http://www.medicaid.gov/Basic-Health-Program/Downloads/Risk-Adjustment-and-BHP-White-Paper.pdf). We require a state to submit its proposed protocol by August 1, 2015 for CMS approval. This submission must include descriptions of how the state would collect the necessary data to determine the adjustment, including any contracting contingences that may be in place with participating standard health plan issuers. We will provide technical assistance to states as they develop their protocols. In order to implement the population health status, we must approve the state's protocol no later than December 31, 2015. Finally, the state will be required to complete the population health status adjustment at the end of 2016 based on the approved protocol. After the end of the 2016 program year, and once data is made available, we will review the state's findings, consistent with the approved protocol, and make any necessary adjustments to the state's federal BHP payment amount. If we determine that the federal BHP payments were less than they would have been using the final adjustment factor, we would apply the difference to the state's quarterly BHP trust fund deposit. If we determine that the federal BHP payments were more than they would have been using the final reconciled factor, we would subtract the difference from the next quarterly BHP payment to the state.

The 2016 funding methodology is unchanged from the 2015 final methodology that published on March 12, 2014 (79 FR 13887). The 2016 methodology does not impose any new or revised reporting, recordkeeping, or third-party disclosure requirements, and therefore, does not require additional OMB review under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The methodology's information collection requirements and burden estimates are approved by OMB under control number 0938-1218 (CMS-10510).

Consistent with the Basic Health Program's proposed and final rules (September 25, 2013 at 78 FR 59122 and March 12, 2014 at 79 FR 14112, respectively) we continue to estimate less than 10 annual respondents for completing the Blueprint. Consequently, the Blueprint is exempt from formal OMB review and approval under 5 CFR 1320.3(c).

Finally, this action does not impose any additional reporting, recordkeeping, or third-party disclosure requirements on qualified health plans or on states operating State Based Marketplaces.

We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 1995) (UMRA), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)).

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). As noted in the BHP final rule, BHP provides states the flexibility to establish an alternative coverage program for low-income individuals who would otherwise be eligible to purchase coverage through the Marketplace. We are uncertain as to whether the effects of the final rulemaking, and subsequently, this methodology, will be “economically significant” as measured by the $100 million threshold, and hence not a major rule under the Congressional Review Act. The impact may depend on several factors, including the number of and which particular states choose to implement or continue BHP in 2016, the level of QHP premiums in 2015 and 2016, the number of enrollees in BHP, and the other coverage options for persons who would be eligible for BHP. In particular, while we generally expect that many enrollees would have otherwise been enrolled in a QHP through the Marketplace, some persons may have been eligible for Medicaid under a waiver or a state health coverage program. For those who would have enrolled in a QHP and thus would have received PTCs or CSRs, the federal expenditures for BHP would be expected to be more than offset by a reduction in federal expenditures for PTCs and CSRs. For those who would have been enrolled in Medicaid, there would likely be a smaller offset in federal expenditures (to account for the federal share of Medicaid expenditures), and for those who would have been covered in non-federal programs or would have been uninsured, there likely would be an increase in federal expenditures. In accordance with the provisions of Executive Order 12866, this methodology was reviewed by the Office of Management and Budget.

Section 1331 of the Affordable Care Act (codified at 42 U.S.C. 18051) requires the Secretary to establish a BHP, and section (d)(1) specifically provides that if the Secretary finds that a state “meets the requirements of the program established under section (a) [of section 1331 of the Affordable Care Act], the Secretary shall transfer to the State” federal BHP payments described in section (d)(3). This methodology provides for the funding methodology to determine the federal BHP payment amounts required to implement these provisions in program year 2016.

Many of the factors in this methodology are specified in statute; therefore, we are limited in the alternative approaches we could consider. One area in which we had a choice was in selecting the data sources used to determine the factors included in the methodology. Except for state-specific reference premiums and enrollment data, we are using national rather than state-specific data. This is due to the lack of currently available state-specific data needed to develop the majority of the factors included in the methodology. We believe the national data will produce sufficiently accurate determinations of payment rates. In addition, we believe that this approach will be less burdensome on states. To reference premiums and enrollment data, we are using state-specific data rather than national data as we believe state-specific data will produce more accurate determinations than national averages.

In addition, we considered whether or not to provide states the option to develop a protocol for a retrospective adjustment to the population health factor in 2016 as we did in the 2015 payment methodology. We believe that providing this option again in 2016 is appropriate and likely to improve the accuracy of the final payments.

We also considered whether or not to require the use of 2015 or 2016 QHP premiums to develop the 2016 federal BHP payment rates. We believe that the payment rates can still be developed accurately using either the 2015 or 2016 QHP premiums and that it is appropriate to provide the states the option, given the interests and specific considerations each state may have in operating the BHP.

The provisions of this methodology are designed to determine the amount of funds that will be transferred to states offering coverage through a BHP rather than to individuals eligible for premium and cost-sharing reductions for coverage purchased on the Marketplace. We are uncertain what the total federal BHP payment amounts to states will be as these amounts will vary from state to state due to the varying nature of state composition. For example, total federal BHP payment amounts may be greater in more populous states simply by virtue of the fact that they have a larger BHP-eligible population and total payment amounts are based on actual enrollment. Alternatively, total federal BHP payment amounts may be lower in states with a younger BHP-eligible population as the reference premium used to calculate the federal BHP payment will be lower relative to older BHP enrollees. While state composition will cause total federal BHP payment amounts to vary from state to state, we believe that the methodology accounts for these variations to ensure accurate BHP payment transfers are made to each state.

Section 202 of the UMRA requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation, by state, local, or tribal governments, in the aggregate, or by the private sector. In 2014, that threshold is approximately $141 million. States have the option, but are not required, to establish a BHP. Further, the methodology would establish federal payment rates without requiring states to provide the Secretary with any data not already required by other provisions of the Affordable Care Act or its implementing regulations. Thus, this payment methodology does not mandate expenditures by state governments, local governments, or tribal governments.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) requires agencies to prepare an initial regulatory flexibility analysis to describe the impact of the proposed rule on small entities, unless the head of the agency can certify that the rule will not have a significant economic impact on a substantial number of small entities. The Act generally defines a “small entity” as (1) a proprietary firm meeting the size standards of the Small Business Administration (SBA); (2) a not-for-profit organization that is not dominant in its field; or (3) a small government jurisdiction with a population of less than 50,000. Individuals and states are not included in the definition of a small entity. Few of the entities that meet the definition of a small entity as that term is used in the RFA would be impacted directly by this methodology.

Because this methodology is focused on the funding methodology that will be used to determine federal BHP payment rates, it does not contain provisions that would have a significant direct impact on hospitals, and other health care providers that are designated as small entities under the RFA. We cannot determine whether this methodology would have a significant economic impact on a substantial number of small entities.

Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a may have a significant economic impact on the operations of a substantial number of small rural hospitals. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. As indicated in the preceding discussion, there may be indirect positive effects from reductions in uncompensated care. Again, we cannot determine whether this methodology would have a significant economic impact on a substantial number of small rural hospitals, and we request public comment on this issue.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct effects on states, preempts state law, or otherwise has federalism implications. The BHP is entirely optional for states, and if implemented in a state, provides access to a pool of funding that would not otherwise be available to the state.

The Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111- 152), together known as the Affordable Care Act, provides for the establishment of Affordable Insurance Exchanges, or “Exchanges” (also called Health Insurance Marketplaces, or “Marketplaces”), where individuals and small businesses can purchase qualified coverage. The Exchanges provide competitive marketplaces for individuals and small employers to compare available private health insurance options based on price, quality, and other factors. The Exchanges enhance competition in the health insurance market, improve choice of affordable health insurance, and give individuals and small businesses purchasing power comparable to that of large businesses. The Multi-State Plan (MSP) Program was created pursuant to section 1334 of the Affordable Care Act to increase competition by offering high-quality health insurance coverage sold in multiple States on the Exchanges. The U.S. Office of Personnel Management (OPM) is issuing this final rule to modify the standards set forth for the MSP Program under 45 CFR Part 800 that was published as a final rule on March 11, 2013 (78 FR 15560). This rule clarifies OPM's intent in administering the Program, as well as makes regulatory changes in order to expand issuer participation and offerings in the Program to meet the goal of increasing competition.

Section 1334 of the Affordable Care Act created the Multi-State Plan (MSP) Program to foster competition in the health insurance markets on the Exchanges (also called Health Insurance Exchanges or Marketplaces) based on price, quality, and benefit delivery. The Affordable Care Act directs the U.S. Office of Personnel Management (OPM) to contract with private health insurance issuers to offer at least two MSP options on each of the Exchanges in the States and the District of Columbia.1 The law allows MSP issuers to phase in coverage.2

In the 2014 plan year, OPM contracted with one group of issuers to offer more than 150 MSP options in 31 States, including the District of Columbia. Approximately 371,000 individuals enrolled in an MSP option in 2014. For plan year 2015, OPM entered into contract with a second group of issuers, and MSP coverage expanded to 36 States. The Program currently offers more than 200 MSP options through the Exchanges to further competition and expand choices available to individuals, families, and small businesses.

This rule builds on the MSP Program final rule published March 11, 2013.3 Changes to the regulations include clarifications to the process by which OPM administers the MSP Program, pursuant to section 1334 of the Affordable Care Act, and revisions to the standards and requirements applicable to MSP options and MSP issuers.

OPM published a proposed rule on November 24, 2014 (79 FR 69802), to modify standards related to the implementation of the MSP Program at part 800 of title 45, Code of Federal Regulations. The comment period for the proposed rule closed December 24, 2014. OPM received 43 comments from a broad range of stakeholders, including States, health insurance issuers, health care provider associations, pharmaceutical companies, and consumer groups.

While most of the comments were related to the proposed modifications addressed in the rule, a small number of the comments were on areas of the regulations for which we did not propose changes or request comment.

A summary of the comments we received follows, along with our responses and changes to the proposed regulations in light of the comments. In addition, we are making some minor technical and editorial changes to the proposed regulations to correct errors and improve clarity and readability. Comments submitted on sections of the regulations that we did not propose to change are outside the scope of this rulemaking and are not addressed here.

Comments: Some commenters contended that the 30-day comment period did not provide sufficient time to provide feedback.

Response: OPM values the participation of a broad array of diverse stakeholders. In addition to the proposed rule, we continue to seek input and guidance from numerous stakeholders, including the National Association of Insurance Commissioners (NAIC), States, tribal governments, consumer advocates, health insurance issuers, labor organizations, health care provider associations, and trade groups.

We sought comments on two proposed definitions for the MSP Program. Specifically, we proposed to add the definition for “Multi-State Plan option,” which may also be referred to as “MSP option.” We also proposed to remove the definition of “Multi-State Plan” because the term “Multi-State Plan option” is more precise and avoids the confusion of the varying definitions of the word “plan” in the context of health insurance. We also proposed to add a definition for “State-level issuer” as a health insurance issuer designated by the MSP issuer to offer an MSP option or MSP options. OPM invited comments on the proposed changes to the definitions under 45 CFR 800.20 as well as any comments on the current definition for “group of issuers.” OPM received no comments on the definition of “State-level issuer,” and we will adopt the definition as proposed.

Comments: OPM received comments that were generally supportive of adding the proposed definition of “MSP option.” One of these commenters asked that we replace “package of benefits” with the term “product” as it is defined in 45 CFR 144.103. We did not receive comments on removing the definition “Multi-State Plan.”

Response: OPM will finalize the definition of “MSP option” as proposed and will remove “Multi-State Plan.” The definition of “MSP option” will ensure consistency within the MSP Program and avoid confusion with definitions from programs outside of OPM.

Comments: Commenters responded to our call for feedback on the definition of “Group of Issuers” in § 800.20. The commenters were generally opposed to expanding “Group of Issuers” to include alternative structures and requested further clarification from OPM. Some commenters were supportive of interpreting the definition of “Group of Issuers” to attract additional issuers to the MSP Program.

Response: OPM did not propose any changes to the “group of issuers” definition, and we appreciate the comments received. It was OPM's intention in the proposed rule to clarify that a group of issuers may come together in the MSP Program either by common control and ownership or by using a nationally licensed service mark. OPM recognizes there are a number of ways to organize using a nationally licensed service mark, and looks forward to working with current and potential MSP issuers who decide to come together under either one of these two options in the MSP Program.

Section 1334(e) of the Affordable Care Act provides for OPM to allow issuers to phase in their participation in the MSP Program. Under § 800.104(a), OPM requested comment on how we may expand participation in the Program to meet the goal of increasing competition while balancing consumers' needs. Specifically, we asked for comment on the timeframes and other appropriate parameters within which an MSP issuer could reasonably expand participation in the Program. We did not propose any changes to the regulatory text for § 800.104(a). In clarifying the status of the Program and how we are implementing the standards set under § 800.104, we proposed to delete the standard for an MSP issuer to submit a plan to become statewide in § 800.104(b), and add a requirement that the MSP issuer service area for MSP coverage shall be greater than or equal to any service area proposed by the issuer for QHP coverage. Under § 800.104(c), we solicited comment on when MSP issuers should be required to participate on a Small Business Health Options Program (SHOP). Based on the comments received, the changes to § 800.104(b) will be accepted as proposed.

Comments: Some commenters commended OPM for clarifying § 800.104(a) of the rule and promoting increased flexibility on standards for coverage areas and geographic requirements, as it will attract issuers to the Program and promote competition. Other commenters urged OPM to encourage new and existing MSP issuers to offer plans that are national in scope and coverage.

Response: Through our continued engagement with current and potential MSP issuers, OPM has heard significant concerns about the challenges of rapidly expanding MSP coverage both within and across State lines. OPM agrees that increased flexibility around the schedule to expand to each Exchange in every State will help the MSP Program meet its goal of increasing competition while balancing consumers' needs for coverage. OPM intends to ensure that MSP coverage is available as expansively and as soon as practicable. We work closely with current and potential MSP issuers to address any operational challenges they may face in order to expand MSP coverage nationally or establish reciprocity.

Comments: Some commenters expressed that any potential MSP issuers should be held to the same standards as an MSP issuer who participated in the Program during the first year of operations. These commenters requested OPM set minimum threshold standards for participation, such as timeframes for expanding coverage and minimum standards for coverage areas.

Response: Since the first year of operations for the MSP Program, OPM consistently has applied the same standards to all current and potential MSP issuers, and we will continue to do so going forward. We are not making any changes to the text at this time.

Comment: Commenters disagreed with OPM's interpretation of 1334(b) and (e) stating that neither of the MSP issuers currently under contract with OPM meets the statutory requirements to participate in the Program.

Response: We respectfully disagree with the commenter. Section 1334 sets forth standards to guide the exercise of OPM's contracting authority, noting that section 1334(b)(1) contemplates offering coverage in every State and the District of Columbia, and outlines a framework within which participation in the MSP Program is a feasible and attractive business activity. Such standards include the provisions under subsections (b) and (e) on offering coverage in every State.

Comments: Many commenters supported OPM's proposal to delete the standard for an MSP issuer to submit a plan to become statewide and instead negotiate directly with MSP issuers to expand coverage based on business factors and consumers' needs. Commenters suggested that requiring a specific plan to become statewide may discourage participation in the Program, and flexibility on meeting geographic coverage standards would encourage competition. These commenters also commended OPM on efforts to evaluate MSP issuers' proposed service areas to ensure they are established without discrimination. Other commenters opposed the proposal and sought additional standards.

Response: OPM is committed to statewide coverage, but is sensitive to requirements that may discourage participation in the Program or does not serve the goal of promoting competition on the Exchanges. OPM will assess consumers' needs for coverage, including ensuring that MSP issuers' proposed service areas have been established without regard to racial, ethnic, language, or health status-related factors listed in section 2705(a) of the PHS Act, or other factors that exclude specific high-utilizing, high-cost, or medically underserved populations.

Comments: Commenters opposed the proposed change to the regulatory text to delete a plan for reaching statewide MSP coverage, stating that OPM should establish minimum thresholds for expected MSP coverage areas within a State. The commenter suggested OPM set a standard to require coverage as broadly as the area in which the issuer is licensed to sell coverage in a State, equal to any coverage offered as a Qualified Health Plan (QHP), or alternatively, a percent of population or geographic area. Similarly, other commenters recommended OPM require coverage of 75% of the State's counties or other geographic area.

Response: OPM is committed to a goal of statewide coverage in the MSP Program, and intends to continue working with current and potential MSP issuers to develop productive and ambitious approaches to achieving statewide coverage. OPM believes that our standard for an MSP issuer who offers both MSP options and QHPs to provide an MSP service area that is equal to or greater than the issuer's QHP service area is adequate and reasonable to ensure broad MSP coverage. We appreciate the specific examples of other minimum MSP standards for coverage areas. At this time, we will finalize § 800.104(b) as proposed maintaining the standard of an MSP coverage area to be equal to or greater than the coverage area proposed by the same issuer for their QHP service area.

Some commenters recommended OPM continue to implement SHOP participation standards consistent with standards set by U.S. Department of Health and Human Services (HHS) for a Federally-facilitated SHOP or, where applicable, standards set by State-based Exchanges for SHOP participation requirements that apply to QHP issuers. Other comments suggested that the MSP Program is not mature enough to require MSP issuers to participate in a SHOP at this time.

Response: In light of these comments, OPM intends to continue its flexibility in SHOP participation for MSP issuers in § 800.104(c). MSP issuers must meet the same standards for SHOP participation set for QHP issuers, including the requirements of 45 CFR 156.200(g) and any standards for issuers participating on a State-based SHOP. An MSP issuer may meet the requirements of 45 CFR 156.200(g)(3) if a State-level issuer or any other issuer in the same issuer group affiliated with an MSP issuer provides coverage on a Federally-facilitated SHOP. We discussed this policy in-depth in the March 2013 final rule.4

In § 800.105(b), OPM proposed a change that would allow an MSP issuer to make essential health benefits (EHB)-benchmark selections on a State-by-State basis. The issuer would also be able to offer two or more MSP options in each State. For example, one option could use the State-selected EHB-benchmark, and one could use the OPM-selected EHB-benchmark. OPM proposed this change to allow for more flexibility to attract issuers to the MSP Program with the expectation of expanding competition on the Exchanges. This flexibility could facilitate coalition building across issuers in different States, so that issuers can work together toward MSP options that meet the MSP Program standards.

In § 800.105(c)(3), OPM proposed to clarify the policy on formularies with an OPM-selected EHB-benchmark plan. Under the proposed rule, OPM would allow the MSP issuer to manage formularies around the needs of actual or anticipated enrollees. As part of this proposal, OPM pointed to the current practice in the Federal Employees Health Benefits (FEHB) Program of negotiating formularies and also considered the option of substituting the formulary from the State-selected EHB-benchmark plan. OPM noted that, even with this change, OPM would still ensure compliance with any HHS standards related to drug formularies for QHPs and assurance that the formularies are not discriminatory. OPM also noted that this would allow MSP issuers to propose plans built around the needs of enrollees, subject to approval by OPM.

In the renumbered § 800.105(c)(4), OPM proposed a change to apply a Federal definition of habilitative services and devices, should HHS choose to define the term. In response to comments, in this final rule OPM will revert back to the term we used in our final rule published March 2013, “habilitative services and devices,” to ensure consistency with the recently published HHS Notice of Benefit and Payment Parameters for 2016.5

In § 800.105(d), OPM did not propose any change to the regulation. However, the preamble noted that OPM also plans to review an MSP issuer's package of benefits for discriminatory benefit design and intends to work closely with States and HHS to identify and investigate any potentially discriminatory or otherwise noncompliant benefit designs in MSP options.

In § 800.105(e), OPM proposed to change “assume” to “defray” to align with the language in section 1334(c)(2) of the Affordable Care Act.

Comments: We received comments on the proposed changes to § 800.105(b), which describes the EHB-benchmark policy, from a broad range of stakeholders. Some comments opposing the change cited consumer confusion while others raised concerns about an unlevel playing field between MSP issuers and QHP issuers or administrative efficiency. In contrast, other commenters supported the proposed changes, and highlighted the opportunity to increase competition in the MSP Program as well as additional choices for consumers. Commenters also highlighted that the change would allow issuers the flexibility needed to fulfill the goals of the Affordable Care Act.

Response: While we understand the concerns about adverse selection and consumer confusion, we have not seen nor are we aware of any compelling evidence that multiple EHB-benchmarks would cause these issues.

With the opportunity to use substitutions as well as expand benefits beyond the EHB-benchmark or EHB categories, there is already variation among plans available to consumers.

Additionally, under the framework that applied in the first two years of the Program, we were already reviewing MSP options using each State's EHB-benchmark. Even if the OPM-selected EHB-benchmark plan was not used in every State, there may be some administrative efficiency gained in the overlap.

We note that these changes only allow an MSP issuer to propose these types of packages. OPM still retains the authority to approve the package of benefits in § 800.105(d). OPM will scrutinize all proposals for evidence of discriminatory benefit designs and other issues of noncompliance. Keeping potential issues in mind, we are finalizing the changes as proposed in order to increase opportunities for competition in the MSP Program and create the potential for more choices for consumers.

Comments: We also received comments that focused on the need to maintain benefit standards and protections under any approach. These comments highlighted potential issues or vulnerabilities in need of consumer protection and identified key strategies for addressing them.

Response: We appreciate the feedback provided by these stakeholders and will take this information under consideration as it relates to our review process. We are not making any further changes to § 800.105(b), but may use the comments to inform MSP Program operations or in drafting Program guidance in the future.

Comments: We received comments on the proposed changes to § 800.105(c)(3) to the formulary requirements with an OPM-selected EHB-benchmark plan from a variety of stakeholders. Commenters were generally supportive, interpreting the changes as OPM prioritizing the review of formularies proposed by MSP issuers.

Other commenters raised concerns about consumer confusion and potential misalignment of medical and drug benefits

Response: We appreciate the broad support from commenters on our proposal as well as their acknowledgement that OPM is prioritizing formulary review. While we understand concerns about the changes to the formulary requirements, including negotiating a formulary or using the formulary from the State-selected EHB-benchmark plan, we do not have any compelling evidence that this would cause consumer confusion or gaps in coverage between medical and drug benefits. OPM intends to use any tools, including the USP category and class count framework, created by HHS to analyze the formulary and inform our negotiations or evaluation of the formulary from the State-selected EHB-benchmark plan. Additionally, we intend to use our discretion in approval of a package of benefits and during any negotiations to identify and remedy gaps between medical and drug benefits. We appreciate the concerns that were raised, but believe we can use the review process to mitigate them, offering more flexibility and consumer choice.

Comments: Commenters asked to ensure that proposed formularies meet the requirements of section 2713 of the PHS Act and are compliant with other applicable standards. Other commenters that was supportive of the change asked for a similar change to be applied to State-selected EHB-benchmark plans.

Response: OPM has already identified in § 800.102 the requirement to comply with part A of title XXVII of the PHS Act and has also identified in § 800.105(d) that OPM approval of a proposed package of benefits, including the formulary, will include a review against standards set by HHS and OPM. For example, this would include the USP category and class count framework and the use of a pharmacy and therapeutics committee for formulary development as it applies to QHP issuers. Based on the comments we received and our analysis, we are finalizing § 800.105(c)(3) with no changes.

Comments: We received comments on the proposed changes to apply a Federal definition of habilitative services from a variety of stakeholders. Some commenters supported the change. Others recommended OPM modify and expand the definition proposed by HHS and requested OPM address habilitative devices or make provisions for specific types of services or devices. Commenters also asked for illustrative lists of habilitative services. Finally, the comments requested that the Federal definition be treated as a Federal floor.

Response: OPM is deferring to HHS on the substance and role of the Federal definition. In keeping with the HHS Notice of Benefit and Payment Parameters for 2016, we are now using the term “habilitative services and devices” in order to remain consistent and address the concerns raised by several commenters. We defer to HHS in determining the standards applicable under its definition of habilitative services and devices. It is not OPM's intention to allow the MSP issuer to choose between State and Federal definitions if both exist for a given State. In the finalized version of § 800.105(c)(4), OPM is taking the opportunity to add clarity to the paragraph in explaining when a State definition of habilitative services and devices applies and when a Federal definition applies. In the final § 800.105(c)(4), the Federal definition is set as the floor, consistent with the HHS Notice of Benefit and Payment Parameters for 2016. The State retains the flexibility to apply standards or a definition that does not conflict with the Federal definition. Finally, we continue to reserve authority for OPM to define habilitative services and devices for an OPM-selected EHB-benchmark plan absent a State or Federal definition.

Comments: We received comments on the issue of non-discrimination and OPM's review of MSP options as it relates to § 800.105(d). Commenters generally supported the proposal and asked for OPM to identify examples of discriminatory benefit designs, and one asked OPM to set specific standards for review in the regulation.

Response: OPM identified the requirement to comply with Federal law in § 800.102 and also identified related HHS standards against which MSP issuers and MSP options will be evaluated in § 800.105(d). At this time, we believe we have the authority necessary to apply and modify standards for non-discrimination, updating and adapting our review as we continue to learn about discriminatory benefit designs. In practice, we will align our review for non-discriminatory benefit designs with HHS.

We did not receive any comments on the proposed change to § 800.105(e). Therefore, we are adopting the proposed § 800.105(e) as final.

In § 800.105(c)(1), we are removing the reference to (c)(4) and replacing it with a reference to (c)(5) in § 800.105(c)(1) to correct an internal cross reference.

OPM has authority to collect MSP Program user fees, and continues to preserve its discretion to collect an MSP Program user fee. In the proposed rule, we clarified that OPM may begin collecting the fee as early as plan year 2015. OPM intends to use the MSP assessment or user fee to fund OPM's functions for administration of the Program, including but not limited to entering into contracts with, certifying, recertifying, decertifying, overseeing MSP options and MSP issuers for that plan year, and audits and investigations performed by OPM's Office of Inspector General related to the MSP Program. In the Federally-facilitated Exchanges, OPM is coordinating with HHS regarding the collection of user fees, so that issuers would not be affected operationally. We proposed to revise the regulatory text to allow for flexibility in the process for collecting MSP Program assessments or user fees. We also solicited comments on the process for collecting user fees in the State-based Exchanges and the general use of any fees collected by OPM.

Comments: Some commenters were opposed to the imposition of user fees in State-based Exchanges citing operational challenges in collecting fees.

Response: We have considered the comments received and agree that operational complexities for collecting any user fee from MSP issuers on State-based Exchanges exist. We will not be collecting or imposing user fees on MSP issuers operating on State-based Exchanges in plan year 2016. Therefore, the changes to § 800.108 will be accepted as proposed.

In § 800.109(b), OPM proposed to codify the requirement that MSP issuers must comply with any additional provider directory standards that may be set by HHS.

Comments: Commenters generally supported the proposed change, noting that incorporating HHS standards for provider directories would improve the quality of information consumers receive. Some commenters suggested OPM defer to State requirements where they exist.

Response: It has been OPM's intention that an MSP issuer comply with appropriate Federal, and where applicable, State requirements for provider directories. OPM did not intend for the proposed changes to § 800.109(b) to alter that framework. After further consideration of the proposed change to subsection (b), we decided that the proposed language is unnecessary. We are, therefore, removing the proposed addition to subsection (b) from the regulatory text. Again, we intend for MSP issuers to comply with any additional regulations promulgated by HHS for QHP issuers, and where applicable, State requirements for provider directories.

In the proposed rule, we proposed to revise the reference to the specific section in the Code of Federal Regulations to 45 CFR 156.275(a)(1) to be more precise. We received no comments on this proposed change, and are finalizing the text as proposed.

In § 800.115, we proposed to revise the regulatory text to clarify that all areas listed under section 1324(b) of the Affordable Care Act are subject to § 800.114. In addition, we made a technical correction to § 800.115(l) to change a reference to 45 CFR part 162 to 45 CFR part 164. We received no comments on these changes and are finalizing as proposed.

In subpart D of 45 CFR part 800, OPM set forth procedures for processing and evaluating applications from issuers seeking participation in the MSP Program. Subpart D also establishes processes pertaining to executing contracts to offer MSP coverage. In particular, this subpart includes sections that address an application process, review of applications, MSP Program contracting, term of a contract, contract renewal process, and nonrenewal. OPM did not receive any comments pertaining to this subpart, except for § 800.301. We are finalizing Subpart D as proposed.

In § 800.301, OPM proposed a technical correction that it would consider annual applications from health insurance issuers to participate in the MSP Program. We also specified that an existing MSP issuer could submit a renewal application to OPM annually. This correction is intended to clarify the distinction between new and renewal applications.

Comment: Commenters recommended that renewal applicants should be required to complete a full (not streamlined) application.

Response: Renewal applications require comprehensive and detailed responses to adequately inform OPM about whether to renew its contract with the issuer. OPM has, and will continue to use its experience in the FEHB Program to inform and guide its contracting process with MSP issuers to the extent such experience is applicable to the individual and small group markets within which the MSP Program operates. We are finalizing our proposal.

In subpart E of 45 CFR part 800, OPM set forth standards and requirements with which MSP issuers must comply. This subpart also contains a non-exhaustive list of actions OPM may utilize in instances of non-compliance and the process by which OPM may reconsider any compliance actions we decide to take. In particular, this subpart includes sections regarding contract performance, contract quality assurance, fraud and abuse, compliance actions, and reconsideration of compliance actions. OPM did not receive any comments pertaining to this subpart, except for § 800.404. We are finalizing Subpart E as proposed.

In § 800.404(a)(4), OPM proposed to clarify that we may initiate a compliance action against an MSP issuer for violations of applicable law or the terms of its contract pursuant to OPM's authority under §§ 800.102 and 800.114. In § 800.404(b)(2), OPM clarified that compliance actions may include withdrawal of certification of an MSP option or options. We also added nonrenewal of participation as a compliance action in order to be consistent with the new paragraph under § 800.306(a)(2). In § 800.404(d), OPM clarified that requirements pertaining to notices to enrollees are triggered when one of the following occurs: The MSP Program contract is terminated, OPM withdraws certification of an MSP option, or if a State-level issuer's participation is not renewed.

Comment: Commenters suggested that OPM should establish a Federal standard to ensure a seamless transition for enrollees when a plan is terminated or an enrollee is transferred to another issuer and enrolled in a new plan.

Response: To the extent that the MSP issuer is providing health insurance coverage in a Federally-facilitated Exchange, Federal requirements regarding notice to enrollees must be followed. MSP coverage offered in a State-based Exchange must meet the requirements of that specific State or Exchange to the extent there is no conflict with Federal law. This delineation is consistent with the approach for applicable requirements across the MSP Program. Therefore, we are adopting this section as final, with no changes.

In subpart G of 45 CFR part 800, OPM set forth requirements pertaining to coverage and disclosure of non-excepted abortion services and data-sharing with State entities.

We proposed adding a new paragraph (c) to § 800.602 that would require an MSP issuer to provide notice of coverage or exclusion of non-excepted abortion services in an MSP option. Under our proposal, an MSP issuer must disclose to consumers prior to enrollment the exclusion of non-excepted abortion services in a State where coverage of such abortion services is permitted by State law. We also proposed that if an MSP issuer provides an MSP option that covers non-excepted abortion services, in addition to an MSP option that excludes coverage, notice of coverage would also need to be provided to consumers prior to enrollment. Finally, OPM reserved the authority to review and approve these MSP notices and materials. OPM requested comments on the form and manner of these disclosures.

Comments: In general, commenters supported the proposed notice requirements. However, commenters expressed concern that consumers would receive notice that an MSP option excludes coverage of non-excepted abortion services only if the MSP option is offered in a State that permits coverage of non-excepted abortion services. Commenters argued that consumers may not know if their State permits coverage of non-excepted abortion services.

Response: We agree that it is in the best interests of consumers for an MSP issuer to provide notice if an MSP option excludes non-excepted abortion services from coverage in every State, not just the States that would permit coverage of such services. We have amended the regulatory text to reflect this change.

Comments: Commenters also generally supported our proposal that an MSP issuer who offers an MSP option with coverage of non-excepted abortion services must provide notice of coverage of such services to consumers. We proposed that MSP issuers must provide this notice of coverage in a manner consistent with 45 CFR 147.200(a)(3) to meet the requirements of 45 CFR 156.280(f). Commenters offered a variety of suggestions on the form and manner of notices of coverage of non-excepted abortion services.

Response: We believe adding the disclosure and notice requirements will assist consumers in making informed decisions about their coverage options. Consumers should have accurate information on an MSP option's covered benefits, exclusions, and limitations. Therefore, we are finalizing this section as proposed, with changes to improve readability and clarity.

OPM proposed this new section to clarify that OPM may use its discretion and authority to disclose information to State entities, including State Departments of Insurance and Exchanges, in order to keep such entities informed about the MSP Program and its issuers.

Comments: Commenters expressed concern that the language in the new section gives OPM but not States discretion to withhold information. Others supported the language in the new section, indicating that it will assist States in being better primary regulators.

Response: This section has been added to the rule to make it easier for States to obtain information from OPM on the MSP Program. This provision does not address disclosure of information from States to OPM, and therefore, this provision does not dictate information that a State may or may not withhold from OPM. We are finalizing this section as proposed.

OPM has examined the impact of this proposed rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993) and Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in any 1 year adjusted for inflation). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more in any one year or adversely affect in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal government or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866.

OPM will continue to generally operate the MSP Program as it previously had in plan year 2014. The regulatory changes in this final rule are for purposes of policy clarification, and any changes will have minimal impact on the administration of the Program. Administrative costs of the rule are generated both within OPM and by issuers offering MSP options. The costs that MSP issuers may incur are the same as those of QHPs, and as stated in 45 CFR part 156, will include: Accreditation, network adequacy standards, and quality reporting. The costs associated with MSP certification offset the costs that issuers would face were they to be certified by the State, or HHS on behalf of the State, to offer QHPs through the Exchange. For the 2014 plan year, there are approximately 371,000 consumers enrolled in MSP options and with an estimated average monthly premium of $350, premiums collected by MSP issuers for consumers enrolled in MSP options are approximately $1.4 billion this year. While the overall regulation and Program have a significant economic impact, this final rule provides for no substantial changes to the Program and is not economically significant.

We received one comment suggesting that the proposed rule could potentially have an economic impact of $100 million or more per year. The commenter recommended OPM perform a full regulatory impact analysis.

Based on the analysis presented in our proposed rule and acknowledged above, the economic impact of this rule is not expected to exceed the $100 million threshold.

The Paperwork Reduction Act of 1995 6 requires that the U.S. Office of Management and Budget (OMB) approve all collections of information by a Federal agency from the public before they can be implemented. Respondents are not required to respond to any collection of information unless it displays a current valid OMB control number. OPM is not requiring any additional collections from MSP issuers or applicants seeking to become MSP issuers in this final rule. OPM continues to expect fewer than ten responsible entities to respond to all of the collections noted above. For that reason alone, the existing collections are exempt from the Paperwork Reduction Act.7

The Regulatory Flexibility Act (RFA) 8 requires agencies to prepare an initial regulatory flexibility analysis to describe the impact of a rule on small entities, unless the head of the agency can certify that the rule would not have a significant economic impact on a substantial number of small entities. The RFA generally defines a “small entity” as—(1) A proprietary firm meeting the size standards of the Small Business Administration (SBA); (2) a not-for-profit organization that is not dominant in its field; or (3) a small government jurisdiction with a population of less than 50,000. States and individuals are not included in the definition of “small entity.”

The RFA requires agencies to analyze options for regulatory relief of small businesses, if a proposed rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, small non-profit organizations, and small government jurisdictions. Small businesses are those with sizes below thresholds established by the SBA. With respect to most health insurers, the SBA size standard is $38.5 million in annual receipts.9 Issuers could possibly be classified in 621491 (HMO Medical Centers) and, if this is the case, the SBA size standard would be $32.5 million or less.

OPM does not think that small businesses with annual receipts less than $38.5 million would likely have sufficient economies of scale to become MSP issuers or be part of a group of MSP issuers. Similarly, while the Director must enter into an MSP Program contract with at least one non-profit entity, OPM does not think that small non-profit organizations would likely have sufficient economies of scale to become MSP issuers or be part of a group of MSP issuers. OPM does not think that this final rule would have a significant economic impact on a substantial number of small businesses with annual receipts less than $38.5 million, because there are only a few health insurance issuers that could be considered small businesses. Moreover, while the Director must enter into an MSP contract with at least one non-profit entity, OPM does not think that this final rule would have a significant economic impact on a substantial number of small non-profit organizations, because few health insurance issuers are small non-profit organizations.

OPM incorporates by reference previous analysis by HHS, which provides some insight into the number of health insurance issuers that could be small entities. Based on HHS data from Medical Loss Ratio (MLR) annual report submissions for the 2013 MLR reporting year, approximately 141 out of 500 issuers of health insurance coverage nationwide had total premium revenues of $38.5 million or less.10 HHS estimates this data may overstate the actual number of small health insurance companies, since 77 percent of these small companies belong to larger holding groups, and many if not all of these small companies are likely to have non-health lines of business that would result in their revenues exceeding $38.5 million. OPM concurs with this HHS analysis, and, thus, does not think that this final rule would have a significant economic impact on a substantial number of small entities.

Based on the foregoing, OPM is not preparing an analysis for the RFA because OPM has determined, and the Director certifies, that this final rule would not have a significant economic impact on a substantial number of small entities.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 11 requires that agencies assess anticipated costs and benefits, and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. In 2015, that threshold is approximately $154 million. UMRA does not address the total cost of a rule. Rather, it focuses on certain categories of costs, mainly those “Federal mandate” costs resulting from: (1) Imposing enforceable duties on State, local, or tribal governments, or on the private sector; or (2) increasing the stringency of conditions in, or decreasing the funding of, State, local, or tribal governments under entitlement programs.

This final rule does not place any Federal mandates on State, local, or Tribal governments, or on the private sector. This final rule would modify the MSP Program, a voluntary Federal program that provides health insurance issuers the opportunity to contract with OPM to offer MSP options on the Exchanges. Section 3 of UMRA excludes from the definition of “Federal mandate” duties that arise from participation in a voluntary Federal program. Accordingly, no analysis under UMRA is required.

Executive Order 13132 outlines fundamental principles of federalism, and requires the adherence to specific criteria by Federal agencies in the process of their formulation and implementation of policies that have “substantial direct effects” on the States, the relationship between the national government and States, or on the distribution of power and responsibilities among the various levels of government. Federal agencies promulgating regulations that have these federalism implications must consult with State and local officials, and describe the extent of their consultation and the nature of the concerns of State and local officials in the preamble to the regulation.

This final rule has federalism implications because it has direct effects on the States, the relationship between the national government and States, or on the distribution of power and responsibilities among various levels of government. However, these sections of the regulation were not modified.

In compliance with the requirement of Executive Order 13132 that agencies examine closely any policies that may have federalism implications or limit the policy making discretion of the States, OPM has engaged in efforts to consult with and work cooperatively with affected State and local officials, including attending meetings of the NAIC and consulting with State insurance officials on an individual basis. It is expected OPM will continue to act in a similar fashion in enforcing the Affordable Care Act requirements. Throughout the process of administering the MSP Program and developing this final regulation, OPM has attempted to balance the States' interests in regulating health insurance issuers, and the statutory requirement to provide two MSP options in all Exchanges in the each States and the District of Columbia. By doing so, it is OPM's view that it has complied with the requirements of Executive Order 13132.

Pursuant to the requirements set forth in section 8(a) of Executive Order 13132, and by the signature affixed to this final regulation, OPM certifies that it has complied with the requirements of Executive Order 13132 for the attached regulation in a meaningful and timely manner.

This final rule is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), which specifies that before a rule can take effect, the Federal agency promulgating the rule must submit to each House of Congress and to the Comptroller General a report containing a copy of the rule along with other specified information. In accordance with this requirement, OPM has transmitted this rule to Congress and the Comptroller General for review.

Accordingly, the U.S. Office of Personnel Management is republishing part 800 to title 45, Code of Federal Regulations, as follows: