Federal Register Vol. 81, No.173,

CIGIE is issuing this proposed rule to provide the procedures and guidelines under which CIGIE will implement the Privacy Act.

In 2008, Congress established CIGIE as an independent entity within the executive branch in order to address integrity, economy, and effectiveness issues that transcend individual Government agencies; and increase the professionalism and effectiveness of personnel by developing policies, standards, and approaches to aid in the establishment of a well-trained and highly skilled workforce in the offices of the Inspectors General (OIG). CIGIE's membership is comprised of all Inspectors General whose offices are established under section 2 or section 8G of the Inspector General Act of 1978, Public Law 95-452, 92 Stat. 1101 (codified as amended at 5 U.S.C. app) (Inspector General Act) (i.e., those Inspectors General that are Presidentially-appointed/Senate-confirmed and those that are appointed by agency heads) as well as the Controller of the Office of Federal Financial Management, a designated official of the Federal Bureau of Investigation (FBI), the Director of the Office of Government Ethics, the Special Counsel of the Office of Special Counsel, the Deputy Director of the Office of Personnel Management, the Deputy Director for Management of the Office of Management and Budget (OMB), and the Inspectors General for the Intelligence Community, Central Intelligence Agency, Library of Congress, Capitol Police, Government Publishing Office, Government Accountability Office, and Architect of the Capitol. The Deputy Director for Management of OMB serves as the Executive Chairperson of CIGIE.

Section 11(d) of the Inspector General Act mandates that CIGIE have an Integrity Committee (IC), which shall receive, review, and refer for investigation allegations of wrongdoing that are made against Inspectors General and designated staff members of the various OIGs. Pursuant to section 11(d)(2)(A) of the Inspector General Act, all records received or created by the IC in fulfilling its responsibilities are collected and maintained separately as IC records by the official of the FBI serving on the IC. As of the issuance of this proposed rule, all such records are maintained in FBI's Central Records System and are subject to the system of records notices and the Privacy Act policies and regulations applicable to that system. See 28 CFR part 16, subpart D. Accordingly, unless otherwise specifically stated, the regulations published below do not apply to records maintained by the IC.

In promulgating this rule, CIGIE has adhered to the regulatory philosophy and the applicable principles of regulation set forth in section 1 of Executive Order 12866, Regulatory Planning and Review. The Office of Management and Budget has determined that this rule is not “significant” under Executive Order 12866.

These proposed regulations will not have a significant economic impact on a substantial number of small entities. Therefore, a regulatory flexibility analysis as provided by the Regulatory Flexibility Act, as amended, is not required.

These proposed regulations impose no additional reporting and recordkeeping requirements. Therefore, clearance by OMB is not required.

This rule does not have Federalism implications, as set forth in Executive Order 13132. It will 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.

I. Background

The Gramm-Leach-Bliley Act (“G-L-B Act” or “Act”) was enacted in 1999 to reform and modernize the banking industry by eliminating existing barriers between banking and commerce. The Act permits banks to engage in a broad range of activities, including insurance and securities brokering, with new affiliated entities. Subtitle A of Title V of the Act, captioned “Disclosure of Nonpublic Personal Information,” limits the instances in which a financial institution may disclose nonpublic personal information about a consumer to nonaffiliated third parties, and requires a financial institution to disclose certain information sharing practices. In 2000, the Commission issued a final rule that implemented Subtitle A as it relates to these requirements (hereinafter “Privacy Rule”).

Subtitle A of Title V also required the Commission and other federal agencies to establish standards for financial institutions relating to administrative, technical, and physical safeguards for certain information. See 15 U.S.C. secs. 6801(b), 6805(b)(2).

Pursuant to the Act's directive, the Commission promulgated the Safeguards Rule in 2002. The Safeguards Rule applies to all “financial institutions” over which the Commission has jurisdiction. The Safeguards Rule uses the definition of “financial institution” from the Privacy Rule.1 The Privacy Rule defines “financial institution” as “any institution the business of which is engaging in financial activities as described in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)). An institution significantly engaged in financial activities is a financial institution.” 2 The term “financial activities” includes not only a number of traditional financial activities specified in 12 U.S.C. 1843(k), but also those activities found by the Federal Reserve Board (“the Fed”) to be closely related to banking by regulation “in effect on the date of the enactment” of the G-L-B Act.3

When promulgating the Privacy Rule, the Commission determined to include as “financial activities” only those activities that the Fed found to be “financial in nature,” and not to include those activities that the Fed found to be “incidental” or “complementary” to financial activities.4 Other agencies included “incidental” activities when promulgating their rules. In addition, the Commission decided that activities that were determined to be financial in nature after the enactment of the G-L-B Act would not be automatically included in its Privacy Rule; rather, the Commission would have to take additional action to include them. The effect of these two decisions was to limit the activities covered by the Commission's rules to those set out in 12 CFR 225.28 as it existed in 1999. As indicated below, the Commission seeks comment on whether the Safeguards Rule should be amended to include either (1) “incidental” activities, or (2) activities determined after 1999 to be financial in nature or “incidental” to financial activities.

The Safeguards Rule applies to the handling of “customer information” by financial institutions. “Customer information” is defined as “any record containing nonpublic personal information . . . about a customer of a financial institution, whether in paper, electronic, or other form” that is “handled or maintained by or on behalf of” a financial institution or its affiliates.5 The Rule does not apply to all consumer information handled by a financial institution; it applies only to the information of customers, which are consumers that have a continuing relationship with a financial institution that provides one or more financial products or services to be used primarily for personal, family, or household purposes.6 The Rule is not limited to protecting a financial institution's own customers, but also applies to all customer information in the financial institution's possession, including information about the customers of other financial institutions.7

The Safeguards Rule requires financial institutions to develop, implement, and maintain a comprehensive information security program.8 An information security program consists of the administrative, technical, or physical safeguards the financial institution uses to access, collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle customer information.9 The information security program must be written in one or more readily accessible parts and contain administrative, technical, and physical safeguards.10 The safeguards must be appropriate to the size and complexity of the financial institution, the nature and scope of its activities, and the sensitivity of any customer information at issue.11 The safeguards must also be reasonably designed to insure the security and confidentiality of customer information, protect against any anticipated threats or hazards to the security or integrity of the information, and protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.12

In order to develop, implement, and maintain its information security program, a financial institution must identify reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of customer information that could result in the unauthorized disclosure, misuse, alteration, destruction, or other compromise of such information, including in the areas of: (1) Employee training and management; (2) information systems, including network and software design, as well as information processing, storage, transmission, and disposal; and (3) detecting, preventing, and responding to attacks, intrusions, or other systems failures.13 The financial institution must then design and implement information safeguards to control the risks identified through the risk assessment, and regularly test or otherwise monitor the effectiveness of the safeguards' key controls, systems, and procedures.14 The financial institution is also required to evaluate and adjust its information security program in light of the results of this testing and monitoring, as well as any material changes in its operations or business arrangements, or any other circumstances that it knows or has reason to know may have a material impact on its information security program.15 The financial institution must also designate an employee or employees to coordinate the information security program.16

The Safeguards Rule also requires financial institutions to take reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards for customer information and require those service providers by contract to implement and maintain such safeguards.17

The Safeguards Rule became effective on May 23, 2003.

The Commission periodically reviews all of its rules and guides. These reviews seek information about the costs and benefits of the agency's rules and guides, and their regulatory and economic impact. The information obtained assists the Commission in identifying those rules and guides that warrant modification or rescission. Therefore, the Commission solicits comments on, among other things, the economic impact and benefits of the Rule; possible conflict between the Rule and state, local, or other federal laws or regulations; and the effect on the Rule of any technological, economic, or other industry changes.

The Commission requests written comment on any or all of the following questions. These questions are designed to assist the public and should not be construed as a limitation on the issues about which public comment may be submitted. The Commission requests that responses to its questions be as specific as possible, including a reference to the question being answered, and refer to empirical data or other evidence upon which the comment is based whenever available and appropriate. Please also provide evidence of the prevalence of any unfair acts or practices that any proposed modification would address.

1. Is there a continuing need for specific provisions of the Rule? Why or why not?

2. What benefits has the Rule provided to consumers? What evidence supports the asserted benefits?

3. What modifications, if any, should be made to the Rule to increase its benefits to consumers?

a. What evidence supports the proposed modifications?

b. How would these modifications affect the costs the Rule imposes on businesses, including small businesses?

4. What significant costs, if any, has the Rule imposed on consumers? What evidence supports the asserted costs?

5. What modifications, if any, should be made to the Rule to reduce any costs imposed on consumers?

a. What evidence supports the proposed modifications?

b. How would these modifications affect the benefits provided by the Rule?

6. What benefits, if any, has the Rule provided to businesses, including small businesses? What evidence supports the asserted benefits?

7. What modifications, if any, should be made to the Rule to increase its benefits to businesses, including small businesses?

a. What evidence supports the proposed modifications?

b. How would these modifications affect the costs the Rule imposes on businesses, including small businesses?

c. How would these modifications affect the benefits to consumers?

8. What significant costs, if any, including costs of compliance, has the Rule imposed on businesses, including small businesses? What evidence supports the asserted costs?

9. What modifications, if any, should be made to the Rule to reduce the costs imposed on businesses, including small businesses?

a. What evidence supports the proposed modifications?

b. How would these modifications affect the benefits provided by the Rule?

10. What evidence is available concerning the degree of industry compliance with the Rule?

11. What modifications, if any, should be made to the Rule to account for changes in relevant technology or economic conditions? What evidence supports the proposed modifications?

12. Does the Rule overlap or conflict with other federal, state, or local laws or regulations? If so, how?

a. What evidence supports the asserted conflicts?

b. With reference to the asserted conflicts, should the Rule be modified? If so, why, and how? If not, why not?

1. Should the elements of an information security program include a response plan in the event of a breach that affects the security, integrity, or confidentiality of customer information? Why or why not? If so, what should such a plan contain?

a. What evidence supports such a modification?

b. How would this modification affect the costs the Rule imposes on businesses, including small businesses?

c. How would this modification affect the benefits to businesses?

d. How would this modification affect the costs the Rule imposes on consumers?

e. How would this modification affect the benefits to consumers?

2. Should the Rule be modified to include more specific and prescriptive requirements for information security plans? Why or why not? If so, what requirements should be included and what sources should they be drawn from?

a. What evidence supports such a modification?

b. How would this modification affect the costs the Rule imposes on businesses, including small businesses?

c. How would this modification affect the benefits to businesses?

d. How would this modification affect the costs the Rule imposes on consumers?

e. How would this modification affect the benefits to consumers?

3. Should the Rule be modified to reference or incorporate any other information security standards or frameworks, such as the National Institute of Standards and Technology's Cybersecurity Framework or the Payment Card Industry Data Security Standards? If so, which standards should be incorporated or referenced and how should they by referenced or incorporated by the Rule?

a. What evidence supports such a modification?

b. How would this modification affect the costs the Rule imposes on businesses, including small businesses?

c. How would this modification affect the benefits to businesses?

d. How would this modification affect the costs the Rule imposes on consumers?

e. How would this modification affect the benefits to consumers?

4. For the purpose of clarity, should the Rule be modified to include its own definitions of terms, such as “financial institution”, rather than incorporating the definitions found in the Privacy Rule?

a. What evidence supports such a modification?

b. How would this modification affect the costs the Rule imposes on businesses, including small businesses?

c. How would this modification affect the benefits to businesses?

d. How would this modification affect the costs the Rule imposes on consumers?

e. How would this modification affect the benefits to consumers?

5. The current Safeguards Rule incorporates the Privacy Rule's definition of “financial institutions” as entities that are significantly engaged in financial activities, including activities found to be closely related to banking by regulation or order in effect at the time of enactment of the G-L-B Act. Should the Safeguards Rule's definition of “financial institution” be modified to also include entities that are significantly engaged in activities that the Federal Reserve Board has found to be incidental to financial activities? Should it also include activities that have been found to be closely related to banking or incidental to financial activities by regulation or order in effect after the enactment of the G-L-B Act? 18 If so, should all such activities be included in the modified definition? What evidence supports such a modification?

a. How would this modification affect the costs the Rule imposes on businesses, including small businesses?

b. How would this modification affect the benefits to businesses?

c. How would this modification affect the costs the Rule imposes on consumers?

d. How would this modification affect the benefits to consumers?

You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before November 7, 2016. Write “Safeguards Rule, 16 CFR 314, Matter No. P145407” on the comment. Your comment, including your name and your state, will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at https://www.ftc.gov/policy/public-comments. As a matter of discretion, the Commission tries to remove individuals' home contact information from comments before placing them on the Commission Web site. Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, such as a Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or payment card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, such as medical records or other individually identifiable health information.

In addition, do not include any “[t]rade secret or any commercial or financial information which is . . . privileged or confidential,” as discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.

If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you must follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comments to be withheld from the public record. Your comment will be kept confidential only if the FTC General Counsel grants your request in accordance with the law and the public interest.

Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comment online. To make sure that the Commission considers your online comment, you must file it at https://ftcpublic.commentworks.com/ftc/safeguardsrulenprm by following the instructions on the web-based form. If this document appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.

If you file your comment on paper, write “Safeguards Rule, 16 CFR 314, Matter No. P145407” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex B), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex B), Washington, DC 20024.

Visit the Commission Web site at http://www.ftc.gov to read this document and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before November 7, 2016. For information on the Commission's privacy policy, including routine uses permitted by the Privacy Act, see http://www.ftc.gov/ftc/privacy.htm.

Any final order will be published in the Federal Register and may not be effective prior to October 7, 2016.

The Drug Enforcement Administration (DEA) implements and enforces titles II and III of the Comprehensive Drug Abuse Prevention and Control Act of 1970, as amended. 21 U.S.C. 801-971. Titles II and III are referred to as the “Controlled Substances Act” and the “Controlled Substances Import and Export Act,” respectively, and are collectively referred to as the “Controlled Substances Act” or the “CSA” for the purpose of this action. The DEA publishes the implementing regulations for these statutes in title 21 of the Code of Federal Regulations (CFR), chapter II. The CSA and its implementing regulations are designed to prevent, detect, and eliminate the diversion of controlled substances and listed chemicals into the illicit market while providing for the legitimate medical, scientific, research, and industrial needs of the United States. Controlled substances have the potential for abuse and dependence and are controlled to protect the public health and safety.

Under the CSA, each controlled substance is classified into one of five schedules based upon its potential for abuse, its currently accepted medical use in treatment in the United States, and the degree of dependence the drug or other substance may cause. 21 U.S.C. 812. The initial schedules of controlled substances established by Congress are found at 21 U.S.C. 812(c), and the current list of all scheduled substances is published at 21 CFR part 1308.

Section 201 of the CSA, 21 U.S.C. 811, provides the Attorney General with the authority to temporarily place a substance into schedule I of the CSA for two years without regard to the requirements of 21 U.S.C. 811(b) if she finds that such action is necessary to avoid imminent hazard to the public safety. 21 U.S.C. 811(h)(1). In addition, if proceedings to control a substance are initiated under 21 U.S.C. 811(a)(1), the Attorney General may extend the temporary scheduling for up to one year. 21 U.S.C. 811(h)(2).

Where the necessary findings are made, a substance may be temporarily scheduled if it is not listed in any other schedule under section 202 of the CSA, 21 U.S.C. 812, or if there is no exemption or approval in effect for the substance under section 505 of the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. 355. 21 U.S.C. 811(h)(1). The Attorney General has delegated scheduling authority under 21 U.S.C. 811 to the Administrator of the DEA. 28 CFR 0.100.

Section 201(h)(4) of the CSA, 21 U.S.C. 811(h)(4), requires the Administrator to notify the Secretary of the Department of Health and Human Services (HHS) of his intention to temporarily place a substance into schedule I of the CSA.1 The Administrator transmitted notice of his intent to place U-47700 in schedule I on a temporary basis to the Assistant Secretary by letter dated April 18, 2016. The Assistant Secretary responded to this notice by letter dated April 28, 2016, and advised that based on review by the Food and Drug Administration (FDA), there are currently no investigational new drug applications or approved new drug applications for U-47700. The Assistant Secretary also stated that the HHS has no objection to the temporary placement of U-47700 into schedule I of the CSA. U-47700 is not currently listed in any schedule under the CSA, and no exemptions or approvals are in effect for U-47700 under section 505 of the FDCA, 21 U.S.C. 355. The DEA has found that the control of U-47700 in schedule I on a temporary basis is necessary to avoid an imminent hazard to public safety.

To find that placing a substance temporarily into schedule I of the CSA is necessary to avoid an imminent hazard to the public safety, the Administrator is required to consider three of the eight factors set forth in section 201(c) of the CSA, 21 U.S.C. 811(c): The substance's history and current pattern of abuse; the scope, duration and significance of abuse; and what, if any, risk there is to the public health. 21 U.S.C. 811(h)(3). Consideration of these factors includes actual abuse, diversion from legitimate channels, and clandestine importation, manufacture, or distribution. 21 U.S.C. 811(h)(3).

A substance meeting the statutory requirements for temporary scheduling may only be placed in schedule I. 21 U.S.C. 811(h)(1). Substances in schedule I are those that have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. 21 U.S.C. 812(b)(1).

The substance U-47700 was first described in 1978 in the patent literature. Publications in the scientific literature in the early 1980's found that U-47700 behaved similarly to morphine in animal models. No approved medical use has been identified for this synthetic opioid, nor has it been approved by the FDA for human consumption. The recent identification of U-47700 in drug evidence and the identification of this substance in association with fatal overdose events indicate that this substance is being abused for its morphine-like properties. In addition, U-47700 is available for purchase over the Internet and is marketed as a “research chemical.” Labels which state “not for human consumption” or “for research purposes only” have been encountered and are likely used in an effort to circumvent statutory restrictionson controlled substance analogues. 21 U.S.C. 813.

Available data and information for U-47700, summarized below, indicate that this synthetic opioid has a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. The DEA's three-factor analysis is available in its entirety under the public docket of this action as a supporting document at www.regulations.gov under Docket Number DEA-440.

The National Forensic Laboratory Information System (NFLIS) is a national drug forensic laboratory reporting system that systematically collects results from drug chemistry analyses conducted by State and local forensic laboratories across the country. The first laboratory submissions of U-47700 were recorded in the first quarter of 2016; 10 records were reported from January-March 2016 according to NFLIS (query date: 06/20/2016).

On October 1, 2014, the DEA implemented STARLiMS (a web-based, commercial laboratory information management system) as its laboratory drug evidence data system of record. DEA laboratory data submitted after September 30, 2014, are reposited in STARLiMS; data from STARLiMS were queried on April 12, 2016. STARLiMS registered one report containing U-47700 in 2016 from Montana. Through information collected from law enforcement reports and personal communications,2 3 the DEA is aware of the identification of U-47700 from toxicology reports and submitted evidence to forensic laboratories in several states, including New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Texas, and Wisconsin. These identifications occurred in 2015 and 2016.

Evidence suggests that the pattern of abuse of synthetic opioids, including U-47700, parallels that of heroin and prescription opioid analgesics. Seizures of U-47700 have been encountered in powder form and in counterfeit tablets that mimic pharmaceutical opioids. U-47700 has also been encountered in glassine bags and envelopes and knotted corners of plastic bags, which demonstrates the abuse of this substance as a replacement for heroin or other opioids, either knowingly or unknowingly. U-47700 has been encountered as a single substance as well as in combination with other substances, including heroin, fentanyl, and furanyl fentanyl.

The DEA is currently aware of at least 15 confirmed fatalities associated with U-47700. The information on these deaths occurring in 2015 and 2016 was collected from personal communications and toxicology and medical examiner reports and was reported from New Hampshire (1), North Carolina (10), Ohio (1), Texas (2), and Wisconsin (1). The population likely to abuse U-47700 appears to overlap with the populations abusing prescription opioid analgesics and heroin, as evidenced by drug use history documented in U-47700 fatal overdose cases. This is further supported by U-47700 being sold on the illicit market in glassine bags, some of which are marked with stamped logos, imitating the sale of heroin. Because abusers of U-47700 are likely to obtain this substance through non-regulated sources, the identity, purity, and quantity is uncertain and inconsistent, thus posing significant adverse health risks to the end user. Individuals who initiate (i.e. use an illicit drug for the first time) U-47700 abuse are likely to be at risk of developing substance use disorder, overdose, and death similar to that of other opioid analgesics (e.g., fentanyl, morphine, etc.).

STARLiMS contains a report in which U-47700 was identified in drug exhibits submitted in 2016 from Montana. A query of NFLIS returned 10 records of U-47700 being identified in exhibits submitted to Federal, State and local forensic laboratories in the first quarter of 2016. The DEA is not aware of any laboratory analyses of drug evidence identifying U-47700 prior to 2015, indicating that this synthetic opioid only recently became available as a replacement for other opioids that are commonly abused (i.e. oxycodone, heroin, fentanyl). U-47700 is available over the Internet and is marketed as a “research chemical” which allows this substance to be easily obtainable.

U-47700 exhibits pharmacological profiles similar to that of morphine and other mu-opioid receptor agonists. Due to limited scientific data, the potency and toxicity of U-47700 are not known; however, the toxic effects of U-47700 in humans are demonstrated by overdose fatalities associated with this substance. Abusers of U-47700 may not know the origin, identity, or purity of these substances, thus posing significant adverse health risks when compared to abuse of pharmaceutical preparations of opioid analgesics, such as morphine and oxycodone.

Based on the documented case reports of overdose fatalities, the abuse of U-47700 leads to the same qualitative public health risks as heroin, fentanyl and other opioid analgesic substances. The public health risks attendant to the abuse of heroin and opioid analgesics are well established and have resulted in large numbers of drug treatment admissions, emergency department visits, and fatal overdoses.

U-47700 has been associated with fatalities. At least 15 confirmed overdose deaths involving U-47700 occurred in 2015 and 2016 in New Hampshire (1), North Carolina (10), Ohio (1), Texas (2), and Wisconsin (1). This indicates that U-47700 poses an imminent hazard to the public safety.

In accordance with 21 U.S.C. 811(h)(3), based on the available data and information summarized above, the continued uncontrolled manufacture, distribution, reverse distribution, importation, exportation, conduct of research and chemical analysis, possession, and abuse of U-47700 poses an imminent hazard to the public safety. The DEA is not aware of any currently accepted medical uses for U-47700 in the United States. A substance meeting the statutory requirements for temporary scheduling, 21 U.S.C. 811(h)(1), may only be placed in schedule I. Substances in schedule I are those that have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. Available data and information for U-47700 indicate that this substance has a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. As required by section 201(h)(4) of the CSA, 21 U.S.C. 811(h)(4), the Administrator, through a letter dated April 18, 2016, notified the Assistant Secretary of the DEA's intention to temporarily place this substance in schedule I.

This notice of intent initiates an expedited temporary scheduling action and provides the 30-day notice pursuant to section 201(h) of the CSA, 21 U.S.C. 811(h). In accordance with the provisions of section 201(h) of the CSA, 21 U.S.C. 811(h), the Administrator considered available data and information, herein set forth the grounds for his determination that it is necessary to temporarily schedule U-47700 in schedule I of the CSA, and finds that placement of this synthetic opioid into schedule I of the CSA is necessary in order to avoid an imminent hazard to the public safety.

Because the Administrator hereby finds that it is necessary to temporarily place this synthetic opioid into schedule I to avoid an imminent hazard to the public safety, any subsequent final order temporarily scheduling this substance will be effective on the date of publication in the Federal Register, and will be in effect for a period of two years, with a possible extension of one additional year, pending completion of the regular scheduling process. 21 U.S.C. 811(h) (1) and (2). It is the intention of the Administrator to issue such a final order as soon as possible after the expiration of 30 days from the date of publication of this notice. U-47700 will then be subject to the regulatory controls and administrative, civil, and criminal sanctions applicable to the manufacture, distribution, reverse distribution, importation, exportation, research, conduct of instructional activities and chemical analysis, and possession of a schedule I controlled substance.

The CSA sets forth specific criteria for scheduling a drug or other substance. Regular scheduling actions in accordance with 21 U.S.C. 811(a) are subject to formal rulemaking procedures done “on the record after opportunity for a hearing” conducted pursuant to the provisions of 5 U.S.C. 556 and 557. 21 U.S.C. 811. The regular scheduling process of formal rulemaking affords interested parties with appropriate process and the government with any additional relevant information needed to make a determination. Final decisions that conclude the regular scheduling process of formal rulemaking are subject to judicial review. 21 U.S.C. 877. Temporary scheduling orders are not subject to judicial review. 21 U.S.C. 811(h)(6).

Section 201(h) of the CSA, 21 U.S.C. 811(h), provides for an expedited temporary scheduling action where such action is necessary to avoid an imminent hazard to the public safety. As provided in this subsection, the Attorney General may, by order, schedule a substance in schedule I on a temporary basis. Such an order may not be issued before the expiration of 30 days from (1) the publication of a notice in the Federal Register of the intention to issue such order and the grounds upon which such order is to be issued, and (2) the date that notice of the proposed temporary scheduling order is transmitted to the Assistant Secretary of HHS. 21 U.S.C. 811(h)(1).

Inasmuch as section 201(h) of the CSA directs that temporary scheduling actions be issued by order and sets forth the procedures by which such orders are to be issued, the DEA believes that the notice and comment requirements of section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553, do not apply to this notice of intent. In the alternative, even assuming that this notice of intent might be subject to section 553 of the APA, the Administrator finds that there is good cause to forgo the notice and comment requirements of section 553, as any further delays in the process for issuance of temporary scheduling orders would be impracticable and contrary to the public interest in view of the manifest urgency to avoid an imminent hazard to the public safety.

Although the DEA believes this notice of intent to issue a temporary scheduling order is not subject to the notice and comment requirements of section 553 of the APA, the DEA notes that in accordance with 21 U.S.C. 811(h)(4), the Administrator will take into consideration any comments submitted by the Assistant Secretary with regard to the proposed temporary scheduling order.

Further, the DEA believes that this temporary scheduling action is not a “rule” as defined by 5 U.S.C. 601(2), and, accordingly, is not subject to the requirements of the Regulatory Flexibility Act (RFA). The requirements for the preparation of an initial regulatory flexibility analysis in 5 U.S.C. 603(a) are not applicable where, as here, the DEA is not required by section 553 of the APA or any other law to publish a general notice of proposed rulemaking.

Additionally, this action is not a significant regulatory action as defined by Executive Order 12866 (Regulatory Planning and Review), section 3(f), and, accordingly, this action has not been reviewed by the Office of Management and Budget (OMB).

This action will 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. Therefore, in accordance with Executive Order 13132 (Federalism) it is determined that this action does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

For the reasons set out above, the DEA proposes to amend 21 CFR part 1308 as follows:

The addition reads as follows:

We view public participation as essential to effective rulemaking, and will consider all comments and material received due on or before December 6, 2016. Your comments can help shape the outcome of this possible rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, you may review a Privacy Act notice regarding the Federal Docket Management System in the March 24, 2005, issue of the Federal Register (70 FR 15086).

Documents mentioned in the ANPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that Web site's instructions. For illustrations showing the locations of anchorage grounds being considered in the ANPRM, look for the documents in the Supporting & Related Material category. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted and if we publish rulemaking documents related to the ANPRM.

The Coast Guard is responsible for considering adjustments to improve navigational and environmental safety of waterways, including those requested by groups of mariners. On June 9, 2016, the Coast Guard published an ANPRM in the Federal Register (81 FR 37168) entitled Anchorage Grounds, Hudson River; Yonkers, NY, to Kingston, NY. With its publication, we initiated the early stage of a methodical and public rulemaking process to learn all possible navigational, environmental, terrestrial, and other effects of adding anchorages on the Hudson River. The ANPRM is a preliminary step, the goal of which is to gather information that defines the multiple stakeholder considerations we need to incorporate when considering proposed rule for potential anchorage grounds. This ANPRM solicitation has generated more than 2,100 public submissions with comments on the subject from many diverse stakeholders. This wide-ranging feedback is very helpful. To continue encouraging this important public discussion, we are adding an additional 90 days to the comment period.

Public participation is requested to assist in determining the best way forward with respect to establishing new anchorage grounds on the Hudson River between Yonkers, NY, to Kingston, NY. To aid us in developing a possible proposed rule, we seek any comments, whether positive or negative, including but not limited to the impacts anchorage grounds may have on navigation safety and current vessel traffic in this area, the proposed number and size of vessels anchoring in each proposed anchorage ground, and the authorized duration for each vessel in each proposed anchorage ground. We are also seeking comments on any additional locations where anchorage grounds may be helpful on the Hudson River or any recommended alterations to the specific locations considered in this notice. Please submit any comments or concerns you may have in accordance with the “Public Participation and Request for Comments” section above.

I. Background A. Title X Background

The Title X Family Planning Program, Public Health Service Act (PHSA) secs. 1001 et seq. [42 U.S.C. 300], was enacted in 1970 as part of the Public Health Service Act. Administered by the Office of Population Affairs (OPA) within the Office of the Assistant Secretary for Health (OASH), Title X is the only Federal program focused solely on providing family planning and related preventive services. In 2015, more than 4 million individuals received services through more than 3,900 Title X-funded health centers.1

Title X serves women, men, and adolescents to enable individuals to freely determine the number and spacing of children. By law, services are provided to low-income individuals at no or reduced cost. Services provided through Title X-funded health centers assist in preventing unintended pregnancies and achieving pregnancies that result in positive birth outcomes. These services include contraceptive services, pregnancy testing and counseling, preconception health services, screening and treatment for sexually transmitted diseases (STD) and HIV testing and referral for treatment, services to aid with achieving pregnancy, basic infertility services, and screening for cervical and breast cancer. By statute, Title X funds are not available to programs where abortion is a method of family planning (PHSA sec. 1008), and no federal funds in Title X or any federal program may be expended for abortions except in cases of rape, incest, or where the life of the mother would be endangered.2 Additionally, Title X implementing regulations require that all pregnancy counseling shall be neutral and nondirective. 42 CFR 59.5(a)(5)(ii).

The Title X statute authorizes the Secretary “to make grants to and enter into contracts with public or nonprofit private entities to assist in the establishment and operation of voluntary family planning projects which shall offer a broad range of acceptable and effective family planning methods and services (including natural family planning methods, infertility services, and services for adolescents).” PHSA sec. 1001(a). In addition, in awarding Title X grants and contracts, the Secretary must “take into account the number of patients to be served, the relative need of the applicant, and its capacity to make rapid and effective use of such assistance.” PHSA sec. 1001(b). The statute also mandates that local and regional entities “shall be assured the right to apply for direct grants and contracts.” PHSA sec. 1001(b). The statute delegates rulemaking authority to the Secretary to set the terms and conditions of these grants and contracts. PHSA sec. 1006. These regulations were last revised in 2000. 65 FR 41270 (July 3, 2000).

Title X regulations delineating the criteria used to decide which family planning projects to fund and in what amount, include, among other factors, the extent to which family planning services are needed locally, the number of patients to be served (and, in particular, low-income patients), and the adequacy of the applicant's facilities and staff. 42 CFR 59.7. Project recipients receive funds directly from the Federal government following a competitive process. The project recipients may elect to provide Title X services directly or by subawarding funds to qualified entities (subrecipients). HHS is responsible for monitoring and evaluating the project recipient's performance and outcomes, and each project recipient that subawards to qualified subrecipients is responsible for monitoring the performance and outcomes of those subrecipients. The subrecipients must meet the same Federal requirements as the project recipients, including being a public or private nonprofit entity, and adhering to all Title X and other applicable federal requirements. In the event of poor performance or noncompliance, a project recipient may take enforcement actions as described in the uniform grants rules at 45 CFR 75.371.

In the past several years, a number of states have taken actions to restrict participation by certain types of providers as subrecipients in the Title X Program, unrelated to the provider's ability to provide the services required under Title X. In at least several instances, this has led to disruption of services or reduction of services. Since 2011, 13 states have placed restrictions on or eliminated subawards with specific types of providers based on reasons unrelated to their ability to provide required services in an effective manner. When the state health department is a Title X recipient, these restrictions on subrecipient participation can apply. In several instances, these restrictions have interfered with the “capacity [of the applicant] to make rapid and effective use of [Title X federal] assistance.” PHSA sec. 1001(b). Moreover, states that restrict eligibility of subrecipients have caused limitations in the geographic distribution of services, and decreased access to services through trusted and qualified providers.

States have restricted subrecipients from participating in the Title X program in several ways. Some states have employed a tiered approach to compete or distribute Title X funds, whereby entities such as comprehensive primary care providers, state health departments, or community health centers receive a preference in the distribution of Title X funds. This approach effectively excludes providers focused on reproductive health from receiving funds, even though they have been shown to provide higher quality services, such as preconception services, and accomplish Title X programmatic objectives more effectively.3 4 For example, in 2011, Texas reduced its contribution to family planning services, and also re-competed subawards of Title X funds using a tiered approach. The combination of these actions decreased the Title X provider network from 48 to 36 providers, and the number of Title X clients served was reduced dramatically. Although another entity became the statewide project recipient in 2013, the number of Title X clients served decreased from 259,606 in 2011 to 166,538 in 2015.5 6 In other cases, states have prohibited specific types of providers from being eligible to receive Title X subawards, which has had a direct impact on service availability, primarily for low-income women. In some cases, experienced providers that have historically served large numbers of patients in major cities or geographic areas have been eliminated from participation in the Title X program. In Kansas, for example, following the exclusion of specific family planning providers in 2011, the number of clients, 87 percent of whom were low income (at or below 200 percent of the Federal Poverty Level), declined from 38,461 in 2011 to 24,047 in 2015, a decrease of more than 37 percent. As with the declines in Texas, this is a far greater decrease than the national average of 20 percent.7 8

In New Hampshire, in 2011, the New Hampshire Executive Council voted not to renew the state's contract with a specific provider that was contracted to provide Title X family planning services for more than half of the state. To restore services to clients in the unserved part of the state, HHS issued an emergency replacement grant, but there was significant disruption in the delivery of services, and for approximately three months, no Title X services were available to potential clients in a part of the state.

Most recently, in 2016 Florida enacted a law that would have gone into effect on July 1, 2016, prohibiting the state from making Title X subawards to certain family planning providers.9 In one county alone, 1,820 clients are served by the family planning provider that would have been excluded, and it is not clear how the needs of those clients would have been met.

None of these state restrictions are related to the subrecipients' ability to effectively deliver Title X services. The previously mentioned exclusions are based either on non-Title X health services offered or other activities the providers conduct with non-federal funds, or because they are a certain type of provider. The Title X program provides family planning services based on “the number of patients to be served, the extent to which family planning services are needed locally, the relative need of the applicant, and its capacity to make rapid and effective use of [Title X Federal] assistance.” PHSA sec. 1001(b). Allowing project recipients, including states and other entities, to impose restrictions on subrecipients that are unrelated to the ability of subrecipients to provide Title X services in an effective manner has been shown to have an adverse effect on access to Title X services and therefore the fundamental goals of the Title X program.

Litigation concerning these restrictions has led to inconsistency across states in how recipients may choose subrecipients. As the restrictions vary, so have the statutory and constitutional issues in the cases. For example, in Planned Parenthood of Kansas & Mid-Missouri v. Moser, 747 F.3d 814, 824-25 (10th Cir. 2014), the U.S. Court of Appeals for the Tenth Circuit preliminarily upheld a state law that did not explicitly exclude a particular provider, but directed all Title X funding to be allocated to hospitals and community health centers. In finding that Title X did not provide a private cause of action for the plaintiffs, the Court reasoned: “HHS has deep experience and expertise in administering Title X, and the great breadth of the statutory language suggests a congressional intent to leave the details to the agency. . . . Absent private suits, HHS can maintain uniformity in administration with centralized control. . . . Of course, administrative actions taken by HHS will often be reviewable under the Administrative Procedure Act, but only after the federal agency has examined the matter and had the opportunity to explain its analysis to a court that must show substantial deference.” Thus, while finding deference would be afforded any agency determination of Title X requirements, the court did not reach the merits of the plaintiff's Supremacy Clause claims.

At least two other U.S. Courts of Appeal have specifically held that Title X prohibits state laws that have restrictive subrecipient eligibility criteria. See Planned Parenthood of Houston & Se. Tex. v. Sanchez, 403 F.3d 324, 337 (5th Cir. 2005) (“[A] state eligibility standard that altogether excludes entities that might otherwise be eligible for federal funds is invalid under the Supremacy Clause.”); Planned Parenthood Fed'n of Am. v. Heckler, 712 F.2d 650, 663 (D.C. Cir. 1983) (“Although Congress is free to permit the states to establish eligibility requirements for recipients of Title X funds, Congress has not delegated that power to the states. Title X does not provide, or suggest, that states are permitted to determine eligibility criteria for participants in Title X programs.” (internal quotation marks and citation omitted)); see also Planned Parenthood of Cent. N. Carolina v. Cansler, 877 F. Supp. 2d 310, 331-32 (M.D.N.C. 2012) (“Therefore, the Court concludes once again that the fact that Plaintiff may, at some point in the future, be able to apply directly for Title X funding does not mean that the state may now or in the future impose additional eligibility criteria or exclusions with respect to the Title X funding administered by the state.”); Planned Parenthood of Billings, Inc. v. State of Mont., 648 F. Supp. 47, 50 (D. Mont. 1986) (“Based on the foregoing, the Court concludes the co-location proviso contained in the Montana General Appropriations Act of 1985 adds an impermissible condition of eligibility for federal funding under the Public Health Service Act, in violation of the Supremacy clause.”).

These and other appellate courts have also considered First Amendment issues in adjudicating state restrictions, though not all cases have involved Title X funds. Some courts have concluded certain state restrictions do not violate the Constitution. See, e.g., Planned Parenthood of Indiana, Inc. v. Comm'r of Indiana State Dep't of Health, 699 F. 3d 962, 988 (7th Cir. 2012); see also Planned Parenthood Ass'n of Hidalgo Cty. Texas, Inc. v. Suehs, 692 F.3d 343, 350 (5th Cir. 2012). Other courts have found the restrictions violate the Constitution by conditioning funding on First Amendment rights. See Planned Parenthood Association of Utah v. Herbert, No. 2:15-CV-00693-CW, 2016 U.S. App. LEXIS 12788, *36-38, (10th Cir. July 12, 2016)); Planned Parenthood of Southwest and Central Florida v. Philip et al., No. 4:16cv321-RH/CAS, 2016 U.S. Dist. LEXIS 86251, *15-16 (N.D. Fl. June 30, 2016); Planned Parenthood of Greater Ohio v. Hodges, No 1:116cv539, 2016 U.S. Dist. Lexis 106985, *22 (S.D. Oh. August 12, 2016).

The Department is proposing to amend the regulations at 42 CFR 59.3 to require that project recipients that do not provide services directly may not prohibit subrecipients from participating on bases unrelated to their ability to provide Title X services effectively. The proposed rule will maintain uniformity in administration, ensure consistency of subrecipient participation across grant awards, improve the provision of services to populations in appropriate geographic areas, and guarantee Title X resources are allocated on the basis of fulfilling Title X family planning goals. The deleterious effects already caused by restrictions in several states as outlined above justify a rule in order to fulfill the purpose of Title X. The proposed rule helps fulfill the declared purpose of providing a broad range of family planning methods and services to populations most in need. Nothing in the statute supports giving discretion to project recipients to make eligibility restrictions that may adversely affect accessibility of Title X services.

The proposed rule will further Title X's purpose by protecting access of intended beneficiaries to Title X service providers that offer a broad range of acceptable and effective family planning methods and services. Title X regulations at 42 CFR 59.7 lay out the criteria for how the Department decides which family planning projects to fund and in what amount, based on the Department's judgment as to which projects best promote the purposes of the statute. Among these criteria are: The number of patients to be served (in particular, low-income patients), as well as the adequacy of the applicant's facilities and staff.

Data show that specific provider types with a reproductive health focus provide a broader range of contraceptive methods on-site, and are more likely to have protocols that assist clients with initiating and continuing to use methods without barriers.10 In addition, these providers have been shown to serve disproportionately more clients in need of publicly funded family planning services than do public health departments and federally qualified health centers (FQHCs). One reproductive-focused provider constitutes ten percent of all publicly supported family planning centers, yet serves more than one-third of the clients who obtain publicly supported contraceptive services. In comparison, one-third of all publicly funded clinics are administered by public health departments, and they serve only about one-third of clients that receive publicly-funded family planning services. On average, an individual FQHC serves 330 contraceptive clients per year and a health department serves 750, as compared to specific family planning providers that on average serve 3,000 contraceptive clients per year.11 To exclude providers that serve large numbers of clients in need of publicly funded services limits access for patients who need these services. Furthermore, in 2011, 71 percent of family planning organizations in Texas widely offered long-acting reversible contraception; in 2012-2013 following enactment of legislation in Texas that reduced funding and restricted provider participation in the state's family planning program, only 46 percent of family planning agencies did so.12

In April 2014, CDC and the Office of Population Affairs released clinical recommendations, “Providing Quality Family Planning Services: Recommendations of CDC and the U.S. Office of Population Affairs,”  13 (QFP) which identify core components of quality family planning services. Preconception care (PCC) was identified as one of the most important services to be provided as part of high quality family planning. As explained in QFP, preconception care services “promote the health of women of reproductive age before conception, and help to reduce pregnancy-related adverse outcomes, such as low birth weight, premature birth, and infant mortality.” A nationally representative study was performed prior to release of these recommendations to assess the prevalence of PCC services being delivered. Study results were tabulated according to the type of publicly funded site where the services were provided (Community Health Center, Health Department, Planned Parenthood, Outpatient Hospitals, and other clinics). Study results indicated that all provider types lagged behind the focused reproductive health providers in providing these PCC services, an indication of higher quality services.14

Another study, using nationally representative survey data, examined four aspects of the scope and quality of family planning service delivery before release of the QFP: The scope of family planning services provided, contraceptive methods provided onsite, written contraceptive counseling protocols, and youth-friendly services. In assessing the scope of family planning services provided, providers were asked about the provision of the following services in the past three months: Pregnancy diagnosis and counseling, contraceptive services, basic infertility services, STD screening, and preconception health care. To assess contraceptive methods provided onsite, questions were asked regarding the provision of a range of reversible methods on site, as well as the presence of contraceptive counseling protocols. Again, as described in the previous study, results were tabulated according to the type of publicly funded site where services were provided. Across all four aspects, the focused reproductive health providers provided services that were broader in scope and of higher quality across all four aspects of family planning service delivery.15

Data show that restricting specific providers of Title X services has harmful effects on access to family planning services and is linked with increased pregnancy rates that are not in line with population-wide trends. In addition, studies have shown that state actions to exclude specific family planning providers from publicly funded programs has contributed to a host of barriers to care and poor health outcomes, including reduced use of highly effective methods of contraception and corresponding increases in rates of childbirth among populations that rely on Federally supported care; 16 decreased utilization rates of other preventive services, including cancer screenings, particularly for women with low educational attainment; 17 and an increase in reported barriers to reproductive health care services, particularly for young, low-income, Spanish-speaking, and immigrant women.18 Specifically, in Texas, when certain Title X providers were barred from participation in the program, in counties where those providers provided services, uptake of the most effective forms of contraception decreased by up to 35.5 percent, and the rate of childbirth covered by Medicaid increased by 1.9 percentage points, while pregnancy rates decreased in the rest of the state. Specifically, the study assessed rates of contraceptive method provision, method continuation, and childbirth covered by Medicaid between 2011 and 2014, corresponding to two years before and two years after the providers' exclusion.19

Denying participation by family planning providers that can provide effective services has also resulted in populations in certain geographic areas being left without a Title X provider for an extended period of time, such as in New Hampshire in 2011 (detailed previously). In some cases, excluded providers do not have the administrative capacity to directly apply for and manage a Title X grant, as was the case in Kansas when specific family planning providers were excluded by the state from participation in the Title X Program. The data show that restrictions hurt the priority population for publicly funded family planning services, and that providers that are focused specifically on family planning service provision generally provide better access and higher quality family planning services, which is the purpose of the program.20

Under the proposed rule, all project recipients that do not provide the services directly must only choose subrecipients on the basis of their ability to effectively deliver Title X required services.21 Non-profit project recipients that do not provide all services directly must also allow any qualified providers that can effectively provide services in a given area to apply to provide those services, and they may not continue or begin contracting (or subawarding) with providers simply because they are affiliated in some way that is unrelated to programmatic objectives of Title X. Project recipients that directly provide services will not be required to start awarding to subrecipients. For instance, some recipients provide services directly, meaning they directly operate the service sites, the business operations are controlled by the recipient, and the recipient directly controls the clinics (e.g., clinic hours, staffing, etc.) and the delivery of services (e.g., consistent clinical protocols throughout the system). This is the case for some public recipients, such as state health departments, as well as non-profits. For example, some state departments of health provide all services directly—the local and county health departments are considered part of the state, and the staff in the health departments are state health department staff. In comparison, some health departments make subawards to county health departments and/or non-profit agencies within their services network for the delivery of family planning services.

Under the proposed rule, a tiering structure—described above—would not be allowable unless it could be shown that the top tier provider (e.g., community health center or other provider type) more effectively delivered Title X services than a lower tier provider. In addition, a preference for particular subspecialty providers would have to be justified by showing that they more effectively deliver Title X services. Furthermore, actions that favor `comprehensive providers' would require justification that those providers are at least as effective as other subrecipients applying for funds. The proposed rule does not limit all types of providers from competing for subrecipient funds, but delimits the criteria by which a project recipient can allocate those funds based on the objectives in Title X.

The Department seeks comments on several issues. The Department is cognizant of administrative burdens on both itself and project recipients that could result from the proposed changes, as discussed further below in the Regulatory Impact Analysis, and seeks comment on how to minimize them. Additionally, the Department seeks input on whether other portions of the Title X rules might need to be amended to conform to this rule regarding the selection of subrecipients. We invite comments on the utility of requiring compliance reports or other records demonstrating a project recipient's criteria for selecting providers, or whether a complaint-driven process would promote the same goals more efficiently. Project recipients found out of compliance would have all the same rights to appeal adverse determinations under the proposed rule as they do any other agency decision. For example, after voluntary compliance avenues have failed and the Department determines to terminate the grant, grantees could appeal wrongful termination claims through the Departmental Appeals Board process. 42 CFR 59.10.

While the Department is also aware of the scope of the proposed rule, it does not believe it will interfere with other generally applicable state laws. If, for example, a state law requires certain wage rates, or addresses family leave or non-discrimination, this rule will not interfere with that law, since all subrecipients will be similarly situated as to that state law. Only those laws which directly distinguish among Title X providers for reasons unrelated to their ability to deliver services would be implicated, and then, only if the state chooses to continue to apply for funding. The Department seeks comment on the regulatory language and ways it may be seen as interacting with other state law provisions.

While specifically seeking comment on the issues outlined above, the Department invites comments on any other issues raised by the proposed regulation.

HHS has examined the impact of this proposed rule under 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 of 1980 (Pub. L. 96-354, September 19, 1980), the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 1995), and Executive Order 13132 on Federalism (August 4, 1999).

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects; distributive impacts; and equity). Executive Order 13563 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review as established in Executive Order 12866. HHS expects that this proposed rule will not have an annual effect on the economy of $100 million or more in at least 1 year. Therefore, this rule will not be an economically significant regulatory action as defined by Executive Order 12866.

The Regulatory Flexibility Act (RFA) requires agencies that issue a regulation to analyze options for regulatory relief of small businesses if a rule has a significant 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; (2) a nonprofit 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”). For similar rules, HHS considers a rule to have a significant economic impact on a substantial number of small entities if at least 5 percent of small entities experience an impact of more than 3 percent of revenue. HHS anticipates that the proposed rule will not have a significant economic impact on a substantial number of small entities.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $146 million, using the most current (2015) implicit price deflator for the gross domestic product. This proposed rule would not trigger the Unfunded Mandate Reform Act because it will not result in any expenditure by states or other government entities.

Since 2011, 13 states have taken actions to restrict participation by certain types of providers as subrecipients in the Title X program based on factors unrelated to the providers' ability to provide the services required under Title X effectively. In at least several instances, this has led to disruption of services or reduction of services where a public entity, such as a state health department, holds a Title X grant and makes subawards to subrecipients for the provision of services. In response to these actions, this proposed rule requires that any Title X recipient subawarding funds for the provision of Title X services not prohibit a potential subrecipient from participating for reasons unrelated to its ability to provide services effectively.

Certain states have policies in place which limit access to high quality family planning services by restricting specific types of providers from participating in the Title X program. These policies, and varying court decisions on their legality, has led to uncertainty among grantees, inconsistency in program administration, and diminished access to services for Title X target populations. These restrictive state policies exclude certain providers for reasons unrelated to their ability to provide Title X services effectively. As a result of these state policies, providers previously determined by Title X grantees to be effective providers of family planning services have been excluded from participation in the Title X program. In turn, the exclusion of these high quality providers is associated with a reduction in the quality of family planning services, the number of Title X service sites, reduced geographic availability of Title X services, and fewer Title X clients served.22 23 This proposed regulation seeks to ensure that state policies regarding Title X do not direct funding to subrecipients for reasons other than their ability to meet the objectives of the Title X program.

Reducing access to Title X services has many adverse effects. Title X services have a dramatic effect on the number of unintended pregnancies and births in the United States. For example, services provided by Title X-funded sites helped prevent an estimated 1 million unintended pregnancies in 2010 which would have resulted in an estimated 501,000 unplanned births.24 The Title X program also helps prevent the spread of STDs by providing screening and treatment.25 The program helps reduce maternal morbidity and mortality, as well as low birth weight, premature birth, and infant mortality.26 27 Title X as it exists today is also very cost effective: Every grant dollar spent on family planning saves an average of $7.09 in Medicaid-related costs.28

In addition to reducing access to the Title X program, these policies may reduce the quality of Title X services, as described previously. Research has shown that providers with a reproductive health focus provide services that more closely align with the statutory and regulatory goals and purposes of the Title X Program. In particular, these entities provide a broader range of contraceptive methods on-site, are more likely to have written protocols that assist clients with initiating and continuing contraceptive use without barriers, disproportionately serve more clients in need of family planning services, and provide higher quality services as stipulated in national recommendations, “Providing Quality Family Planning Services: Recommendations of CDC and the U.S. Office of Population Affairs.”

Policies that eliminate specific reproductive health providers for reasons unrelated to their ability to provide the quality family planning services in an effective manner may shift funding from relatively high quality family planning service providers to providers of lower quality. This, in turn, can reduce access to high quality family planning services for the populations that need these services the most. This regulation takes the simplest approach to reverse the adverse effects of these policies that exclude certain reproductive health care providers for reasons unrelated to their ability to provide services effectively.

This proposed rule directly prohibits Title X recipients that subaward funds for the provision of Title X services from excluding an entity from participating for reasons unrelated to its ability to provide services effectively. Following the implementation of policies this regulation proposes to reverse, states shifted funding away from family planning service providers previously determined to be most effective. We believe that this proposed rule is likely to undo these effects, resulting in a shift toward service providers previously determined to be the most effective. To the extent that a state may come into compliance with this regulation by relinquishing its Title X grant or not applying for a Title X grant, other organizations could compete for Title X funding to deliver services in areas where a state entity previously subawarded funds for the delivery of Title X services. In turn, we expect that this will reverse the associated reduction in access to Title X services and deterioration of outcomes for affected populations.

Research has shown that every grant dollar spent on family planning saves an average of $7.09 in Medicaid-related expenditures.29 In addition to reducing spending, these services improve health and quality of life for affected individuals, suggesting the return on investment to these family planning services is even higher. For example, these services reduce the incidence of invasive cervical cancer and sexually transmitted infections in addition to improving birth outcomes through reductions in preterm and low birth weight births.30 Data show that specific provider types with a reproductive health focus have been shown to serve disproportionately more clients in need of publicly funded family planning services than do public health departments and federally qualified health centers (FQHCs).31 Therefore, eliminating discrimination against certain providers is expected to result in an increased number of patients served and services delivered by the Title X program. We expect that the return on investment among higher quality, more efficient providers is even higher than the average return on investment discussed above, and that shifting funding away from these providers has reduced the return on investment to family planning services. We estimate that the changes proposed here will reduce unintended pregnancies, increase savings to Medicaid, and improve the health and wellbeing of many individuals across the country.

Following publication of a final rule that builds upon this proposal and public comments, OPA will work to educate Title X program recipients and applicants about the requirement to not prohibit a potential subrecipient from participating for reasons unrelated to its ability to provide services effectively. OPA will send a letter summarizing the change to current recipients of Title X funds and post the letter to its Web site. OPA will also add conforming language to its related forthcoming funding opportunity announcements (FOAs). OPA has existing channels for disseminating information to stakeholders. Therefore, based on previous experience, the Department estimates that preparing and disseminating these materials will require approximately one to three percent of a full-time equivalent OPA employee at the GS-12 step 5 level. Based on federal wage schedule for 2016 in the Washington, DC area, GS-12 step 5 level corresponds to an annual salary of $87,821. We double this salary cost to account for overhead and benefits. As a result, we estimate a cost of approximately $1,800—$5,300 to disseminate information following publication of the final rule.

We expect that, if this proposed rule is finalized, stakeholders including grant applicants and recipients potentially affected by this proposed policy change will process the information and decide how to respond. This change will not affect the majority of current recipients, and as a result the majority of current recipients will spend very little time reviewing these changes before deciding that no change in behavior is required. For the states that currently hold Title X grants and have laws or policies restricting Title X subrecipients, the final rule would implicate state law or policy. State agencies that currently restrict subawards would need to carefully revise their current practices in order to comply with these changes.

We estimate that current and potential recipients will spend an average of one to two hours processing the information and deciding what action to take. We note that individual responses are likely to vary, as many parties unaffected by these changes will spend a negligible amount of time in response to these changes. According to the U.S. Bureau of Labor Statistics,1 the average hourly wage for a chief executive in state government is $54.26, which we believe is a good proxy for the individuals who will spend time on these activities. After adjusting upward by 100 percent to account for overhead and benefits, we estimate that the per-hour cost of a state government executive's time is $108.52. Thus, the average cost per current or potential grant recipient to process this information and decide upon a course of action is estimated to be $108.52-$217.04. OPA will disseminate information to an estimated 89 Title X grant recipients. As a result, we estimate that dissemination will result in a total cost of approximately $9,700-$19,300.

Public funding for family planning services is likely to shift to providers that see a higher number of patients and provide higher quality services. Increases in the quantity and quality of Title X service utilization will lead to fewer unintended pregnancies, improved health outcomes, reduced Medicaid costs, and increased quality of life for many individuals and families. The proposed rule's impacts will take place over a long period of time, as it will allow for the continued flow of funding to provide family planning services for those most in need, and it will prevent future attempts to provide Title X funding to subrecipients for reasons other than their ability to best meet the objectives of the Title X program.

We estimate costs of $11,400-$24,600 in the first year following publication of the final rule, and suggest that this rule is beneficial to society in increasing access to and quality of care. We note that the estimates provided here are uncertain.

We carefully considered the option of not pursuing regulatory action. However, as discussed previously, not pursuing regulatory action means allowing the continued provision of Title X funds to subrecipients for reasons other than their ability to provide high quality family planning services. This, in turn, means accepting reductions in access to and quality of services to populations who rely on Title X. As a result, we chose to pursue regulatory action.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has federalism implications. The Department particularly invites comments from states and local governments, and will consult with them as needed in promulgating the final rule. While we do not believe this rule will cause substantial economic impact on the states, it will implicate some state laws if states wish to apply for federal Title X funds. Therefore, the following federalism impact statement is provided.

E.O. 13132 establishes the need for Federal agency deference and restraint in taking action that would curtail the policy-making discretion of the states or otherwise have a substantial impact on the expenditure of state funds. The proposed rule simply sets the conditions to be eligible for federal funding for both public and private entities. The proposed rule will not have a significant impact on state funds as, by law, project grants must be funded with at least 90 percent federal funds. 42 U.S.C. 300a-4(a). Furthermore, states that are the project recipients of Title X grants are not required to issue subawards at all. However, those that choose to do so would be required to do so in a manner that considers only the ability of the subrecipients to meet the statutory objectives.

States remain entirely free to set their policies and funding preferences as to family planning services paid for with state funds. While this proposed rule will eliminate the ability of states to restrict subawards with Title X funds for reasons unrelated to the statutory objectives of Title X, they remain free to set their own preferences in providing state-funded family planning services. The rule does not impose any additional requirements on states in their performance under the Title X grant, other than to avoid discrimination in making subawards, should they choose to make such subawards. And states remain free to apply for federal program funds, subject to the eligibility conditions. For the reasons outlined above, the proposed rule is designed to achieve the objectives of Title X related to providing effective family planning services to program beneficiaries with the minimal intrusion on the ability of project recipients to select their subrecipients.

The amendments proposed in this rule will not impose any additional data collection requirements beyond those already imposed under the current information collection requirements which have been approved by the Office of Management and Budget.

Therefore, under the authority of section 1006 of the Public Health Service Act as amended, and for the reasons stated in the preamble, the Department proposes to amend 42 CFR part 59 as follows:

I. Background

On June 16, 2016, DoD published a proposed rule in the Federal Register at 81 FR 39481 to implement section 815 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2012, which—

• Adds special provisions for handling technical data that are necessary for segregation and reintegration activities;

• Codifies and revises the policies and procedures regarding deferred ordering of technical data necessary to support DoD major systems or subsystems, weapon systems, or noncommercial items or processes;

• Expands the period in which DoD can challenge an asserted restriction on technical data from 3 years to 6 years;

• Rescinds changes to 10 U.S.C. 2320 from the NDAA for FY 2011; and

• Codifies Government purpose rights as the default rights for technical data related to technology developed with mixed funding.

The comment period for the proposed rule is extended 16 days, from September 14, 2016 to September 30, 2016, to provide additional time for interested parties to comment on the proposed DFARS changes.

In the Interstate Commerce Act, Congress charged the Board with protecting the public from unreasonable pricing by freight railroads, while fostering a sound, safe, and efficient rail transportation system by allowing carriers to earn adequate revenues. See 49 U.S.C. 10101. In the Staggers Rail Act of 1980, Public Law 96-448, 94 Stat. 1895, and subsequent legislation, including the ICC Termination Act of 1995 (ICCTA), Public Law 104-88, 109 Stat. 803, Congress established a careful balance between these two important yet conflicting goals. On the one hand, Congress permitted differential pricing and removed regulatory controls over railroad pricing for traffic with effective competition so that carriers would have greater ability to earn the revenues necessary to attract capital and reinvest in the network. On the other hand, Congress made clear that railroad rates for traffic without effective competition must be reasonable (see 49 U.S.C. 10702, 10707), and that shippers of grain, in particular, are entitled to some additional protections (see, e.g., 49 U.S.C. 10709(g) (providing that shippers may file a complaint with the Board asking it to review agricultural contracts on certain grounds)).

By decision served in Rail Transportation of Grain, Rate Regulation Review, Docket No. EP 665 (Sub-No. 1) on December 12, 2013, the Board invited public comment on how to ensure that the Board's existing rate complaint procedures are accessible to grain shippers and provide effective protection against unreasonable freight rail transportation rates, including proposals for modifying existing procedures or new alternative rate relief methodologies. The Board received opening and reply comments from interested shipper, railroad, and government entities. The Board then held a public hearing on June 10, 2015, to further examine issues related to the accessibility of rate relief for grain shippers and to provide interested persons the opportunity to comment on the suggestions made during the public comment period. Following the hearing, the Board received supplemental comments from three parties.

The Board has considered all of the written comments and oral testimony received in Docket No. EP 665 (Sub-No. 1).1 A number of issues raised during the public comment period—related to the accessibility of the Board's existing rate review processes, modifications to those processes, and alternative rate review processes set forth by parties—merit further discussion, and the Board is seeking further comment on those issues.2 Based on the comments and testimony received, the Board believes that the existing rate review processes present accessibility challenges for not only grain shippers, but also small shippers of any commodity. The Board also recognizes that for small rate disputes, regardless of commodity, the litigation costs required to bring a case under the Board's existing rate reasonableness methodologies can quickly exceed the value of the case. Therefore, the Board is opening a proceeding in Docket No. EP 665 (Sub-No. 2) to develop a new rate review process that would be more affordable and accessible to shippers of all commodities with small disputes.

Before discussing ideas for use in a new rate reasonableness methodology, we will discuss the Board's existing rate reasonableness standards and the comments received in Docket No. EP 665 (Sub-No. 1).

Where a railroad has market dominance—i.e., there is an absence of effective competition from other rail carriers or modes of transportation—its transportation rates for common carrier service must be reasonable. 49 U.S.C. 10701(d)(1), 10702, 10707(a). The Board is precluded, however, from finding market dominance if the revenues produced by a challenged rate are less than 180% of the carrier's “variable costs” 3 of providing the service. 49 U.S.C. 10707(d)(1)(A). If, upon complaint, the Board finds a challenged rate unreasonable, it will order the railroad to pay reparations to the complainant for past movements and may prescribe the maximum rate the carrier is permitted to charge. 49 U.S.C. 10704(a)(1), 11704(b).

In carrying out its regulatory functions, the Board is guided by the rail transportation policy set forth at 49 U.S.C. 10101. And in assessing the reasonableness of rail rates, it must also give due consideration to the “Long-Cannon” factors contained in 49 U.S.C. 10701(d)(2)(A)-(C). The Board must recognize that rail carriers should have an opportunity to earn “adequate revenues,” which are defined as those that are sufficient—under honest, economical, and efficient management—to cover operating expenses, support prudent capital outlays, repay a reasonable debt level, raise needed equity capital, and otherwise attract and retain capital in amounts adequate to provide a sound rail transportation system. 49 U.S.C. 10701(d)(2), 10704(a)(2).

As part of ICCTA, Congress added a new provision to the rail transportation policy calling for the “expeditious handling and resolution of all proceedings.” 49 U.S.C. 10101(15). Congress further instructed the Board to establish procedures for rail rate challenges in particular, including “appropriate measures for avoiding delay in the discovery and evidentiary phases of such proceedings.” 49 U.S.C. 10704(d). Congress directed the Board to “establish a simplified and expedited method for determining the reasonableness of challenged rail rates in those cases in which a full stand-alone cost presentation is too costly, given the value of the case.” 49 U.S.C. 10701(d)(3). In the Surface Transportation Board Reauthorization Act of 2015, Public Law 114-110, 129 Stat. 2228 (2015), Congress directed the Board to “initiate a proceeding to assess procedures that are available to parties in litigation before courts to expedite such litigation and the potential application of any such procedures to rate cases.” 129 Stat. 2228. That proceeding is currently pending before the Board. See Expediting Rate Cases, EP 733 (STB served June 15, 2016).

Under the theory of “constrained market pricing” (CMP), adopted by the agency in 1985 to judge the reasonableness of rail freight rates, a captive shipper should not be required to pay more than is necessary for the carrier involved to earn adequate revenues, nor should it pay more than is necessary for efficient service, and a captive shipper should not bear the costs of any facilities or services from which it derives no benefit. Coal Rate Guidelines, Nationwide (Guidelines), 1 I.C.C.2d 520, 523 (1985), aff'd sub nom. Consol. Rail Corp. v. United States, 812 F.2d 1444 (3d Cir. 1987). CMP contains three main limits on the extent to which a railroad may charge differentially higher rates on captive traffic: The revenue adequacy constraint, the management efficiency constraint, and the stand-alone cost constraint.4 Of these three limits under CMP, the stand-alone cost (SAC) constraint has been the most widely utilized before the agency.

A SAC analysis seeks to determine whether a complainant is bearing costs resulting from inefficiencies or costs associated with facilities or services from which it derives no benefit. The SAC analysis does this by simulating the competitive rate that would exist in a “contestable market.” 5 Under the SAC constraint, the rate at issue cannot be higher than what a hypothesized stand-alone railroad (SARR) would need to charge to serve the complaining shipper while fully covering all of its costs, including a reasonable return on investment. The principal objective of the SAC approach is to restrain a railroad from exploiting market power over a captive shipper by charging more than it needs to earn a reasonable return on the cost of the infrastructure used to serve that shipper. A second objective of the SAC constraint is to detect and eliminate the costs of inefficiencies in a carrier's investments or operations. See id. at 542-46.

The agency recognized that the SAC methodology adopted in Guidelines could be expensive and impractical for certain shippers. The agency therefore adopted in 1996 a simplified methodology, the Three-Benchmark methodology, under which the reasonableness of a challenged rated is determined by examining that rate in relation to three benchmark figures. Rate Guidelines—Non-Coal Proceedings, 1 S.T.B. 1004 (1996), pet. to reopen denied, 2 S.T.B. 619 (1997), appeal dismissed sub nom. Ass'n of Am. R.Rs. v. STB, 146 F.3d 942 (D.C. Cir. 1998). A decade passed, however, without any shipper bringing a case under that methodology. Accordingly, in 2007, the Board modified the Three-Benchmark test and created Simplified-SAC—a simplified alternative under CMP where a full SAC analysis was too costly given the value of the case. See Simplified Standards for Rail Rate Cases, EP 646 (Sub-No. 1) (STB served Sept. 5, 2007), aff'd sub nom. CSX Transp., Inc. v. STB, 568 F.3d 236 (D.C. Cir.), vacated in part on reh'g, 584 F.3d 1076 (D.C. Cir. 2009).

In Simplified Standards, EP 646 (Sub-No. 1), slip op. at 13, the Board acknowledged that it is the second objective—in which the complaint seeks to detect and eliminate the cost of inefficiencies in carrier's investments or operations—that turns the case into an intricate, expensive undertaking. Accordingly, the Board limited the inquiry under the Simplified-SAC method to the first objective of SAC: whether a captive shipper is being forced to cross-subsidize other parts of the railroad's rail network. The Simplified-SAC test does so by comparing the costs and revenues of the actual operations and services provided under the assumption that all existing infrastructure along the predominant route used to haul the complainant's traffic is needed to serve the traffic on that route. Rate Regulation Reforms, EP 715, slip op. at 1 n.2 (STB served Mar. 13, 2015); see also Simplified Standards, EP 646 (Sub-No. 1), slip op. at 5. The core analysis in a Simplified-SAC proceeding addresses the cost to build the existing facilities used to serve the captive shipper and the return on investment a hypothetical SARR would require to replicate those facilities. The Board then determines whether the traffic using those facilities is paying more than needed to cover operating expenses and a reasonable return on the cost of those facilities. To hold down the cost of a Simplified-SAC presentation, various simplifying assumptions and standardization measures were adopted.6 Such an approach is a less thorough application of CMP in that it would not identify inefficiencies in the current rail operation.

Under the Three-Benchmark method, the reasonableness of a challenged rate is determined by examining that rate in relation to the following three benchmark figures, each of which is expressed as a revenue-to-variable cost (R/VC) ratio: (1) Revenue Shortfall Allocation Method (RSAM), which measures the average markup over variable cost that the defendant railroad would need to charge all of its “potentially captive” traffic (traffic priced above the 180% R/VC level) in order for the railroad to earn adequate revenues as measured by the Board under 49 U.S.C. 10704(a)(2); (2) R/VC>180, which measures the average markup over variable cost currently earned by the defendant railroad on its potentially captive traffic; and (3) R/VCCOMP, which is used to compare the markup being paid by the challenged traffic to the average markup assessed on other comparable potentially captive traffic. Rate Regulation Reforms, EP 715, slip op. at 11 (STB served July 25, 2012).

In Three-Benchmark cases, each party simultaneously proposes an initial comparison group, and, after critiquing the other side's proposal, a “final offer” comparison group. After receiving simultaneous rebuttal filings, the Board selects without adjustment one of the two “final offer” comparison groups. Each movement in the comparison group is adjusted by a revenue need adjustment factor, which is the ratio of RSAM ÷ R/VC>180 (each of which is a four-year average calculation). The Board then calculates the mean and standard deviation of the resulting adjusted R/VC ratios (weighted in accordance with the proper sampling factors). If the challenged rate is above a reasonable confidence interval around the estimate of the mean for the adjusted comparison group, it is presumed unreasonable and, absent any “other relevant factors,” the maximum lawful rate is prescribed at that boundary level. See Simplified Standards, EP 646 (Sub-No. 1), slip op. at 21.

Since Simplified Standards, only a few Three-Benchmark cases have been decided by the Board, while no complaint has been litigated to completion under the Simplified-SAC alternative.

There is no monetary limit on relief for a complainant that elects to use the SAC or Simplified-SAC methods, see Rate Regulation Reforms, EP 715, slip op. at 3 (STB served July 18, 2013) (removing relief limit on Simplified-SAC cases), though rate relief in SAC cases is limited to a 10 year period, see Major Issues in Rail Rate Cases, EP 657 (Sub-No. 1), slip op. at 62-66 (STB served Oct. 30, 2006), and relief in Simplified-SAC cases is limited to a five-year period, Simplified Standards, EP 646 (Sub-No. 1), slip op. at 27-29. The maximum potential rate relief available to a complainant that elects to use the Three-Benchmark method is limited to no more than $4 million per case over a five-year period. See Rate Regulation Reforms, EP 715, slip op. at 2 (STB served Mar. 13, 2015); Simplified Standards, EP 646 (Sub-No. 1), slip op. at 27-29.

The shipper community argues that the Board's current rate review processes are not useable to test the reasonableness of agriculture commodity rail rates. Shippers argue that the Board's existing methodologies are cost-prohibitive. (ARC Opening 21-22; NGFA Opening 13-15; AAI Reply 2.) For example, NGFA argues that even the simplest of the Board's rate reasonableness methodologies, the Three-Benchmark approach, is ineffective because railroad defendants raise numerous expert-intensive “other relevant factor” arguments and arguments for the use of current waybill data in the possession of the defendant railroad, which greatly increase the complexity and costs of those cases. (NGFA Opening 15.)

Even if the Three-Benchmark methodology were not cost prohibitive, shippers argue that a comparison group approach is ineffective for agricultural commodities because carriers have applied “across-the-board” pricing. (ARC Opening 23; NGFA Opening 15; AAI Reply 2.) Specifically, shippers claim that carriers use their market power to impose a uniformly high rate across-the-board for certain commodities or groups of commodities. (ARC Opening 23; NGFA Opening 15.) As a result, shippers argue that the R/VCCOMP benchmark is inherently problematic for grain shippers and producers because railroad grain rates generally produce R/VCs that are uniform, or uniform in geographic areas, for states or regions. (ARC Opening 23, V.S. Whiteside 12.) According to NGFA, the fact that only defendant traffic may be included in a Three-Benchmark comparison group compounds this flaw. (NGFA Opening 15.)

NGFA also argues that SAC and Simplified-SAC are inaccessible because many grain shippers are on low-density rural branch lines or secondary lines, and the Board's holding regarding cross-subsidies in PPL Montana, LLC v. Burlington Northern & Santa Fe Railway, NOR 42054 (STB served Aug. 20, 2002) and Otter Tail Power Co. v. BNSF Railway, NOR 42058, slip op. at 11-13 (STB served Jan. 27, 2006) have essentially eliminated the ability for grain shippers to use SAC rules to test the reasonableness of rates for agricultural commodities. (NGFA Opening 13-14, 21.)

Shippers propose both modifications to the existing methodologies and new processes for rate review. Regarding the existing methodologies, several shipper groups argue for changes to the Three-Benchmark methodology. ARC argues that the comparison groups in the Three-Benchmark method should include non-defendant traffic for grain and grain products shippers because limiting comparison groups to defendant traffic eliminates a significant amount of traffic with similar demand characteristics. (ARC Opening 22-23, V.S. Fauth 23.) 7 NGFA and ARC both argue that expanding the comparable traffic group to include non-defendant traffic would also address “across-the-board” pricing practices. (ARC Opening 23; NGFA Opening 15, 28, V.S. Crowley 9-11.) As NGFA notes, the inclusion of non-defendant traffic in a comparison group approach would establish a “market” rate, and thereby address, to some extent, the current practice of the Class I railroads to limit the ability of a captive shipper or a group of captive shippers to reach desired markets by setting rail rates that largely dictate where the shipper's commodity goes on that railroad's system. (NGFA Opening 28, V.S. Crowley 9-11.)

Shippers also argue that comparison groups in the Three-Benchmark methodology should include non-captive traffic, i.e., traffic priced below the 180% R/VC level.8 (ARC Opening 23-24, V.S. Fauth 23-24; NGFA Opening 29.) According to NGFA, including movements with R/VC ratios below 180% is essential because captive agriculture commodity producers and elevators compete in the marketplace against other agriculture commodity shipments with rates both above and below the 180% R/VC threshold. (NGFA Opening 29.) Likewise, ARC argues that restricting the comparison group to traffic moving at an R/VC ratio greater than 180% significantly reduces the amount of traffic available for the comparison group because the majority of grain and grain products move at R/VC levels below 180%. (ARC Opening 23, V.S. Fauth 23-24.)

In addition, ARC proposes two adjustment factors that the Board could apply in rate challenges related to grain shipments. First, it proposes a Grain Cost Adjustment Factor (GCAF), which would be applied to the Board's URCS Phase III costing program for railroad movements of grain and grain products. ARC claims the GCAF would more accurately reflect the fact that these movements generally have certain lower costs than the system average costs, including switching, crew, locomotive, and car costs. (ARC Opening, V.S. Fauth 7.) ARC also proposes an export grain rate adjustment that takes into account the economic relationship between grain prices and grain exports. (ARC Opening, V.S. Fauth 30-31.)

ARC and NGFA also each propose new rate review processes. ARC sets forth a “Two-Benchmark” approach for revenue adequate railroads, which would eliminate the R/VCCOMP benchmark (and rely only on the RSAM and R/VC>180 benchmarks by carrier).9 According to ARC's witness, the R/VCCOMP benchmark is designed to reflect demand-based differential pricing and is inappropriate under the revenue adequacy constraint announced many years ago in Guidelines, 1 I.C.C.2d at 520. (ARC Opening, V.S. Fauth 25.) ARC, therefore, argues that the R/VCCOMP benchmark should have no application in assessing the rates of revenue adequate carriers because it provides a means of reflecting demand-based differential pricing principles and differential pricing should not affect rates on captive traffic to the extent those rates provide revenues above revenue adequacy levels. (ARC Opening 17-19.) Under ARC's proposed Two-Benchmark test, if grain shippers have rates which generate R/VC ratios in excess of the 180%, then the R/VC ratio could not exceed the RSAM level. (ARC Opening, V.S. Fauth 26.)

NGFA proposes an alternative method called the Ag Commodity Maximum Rate Methodology (ACMRM). (NGFA Opening 27-31, V.S. Crowley 6-17.) Under ACMRM, the issue traffic would be compared against all railroads (not just the defendant railroad) and movements with R/VC ratios less than 180% (although, the maximum reasonable rate produced by the analysis would be subject to the statutory 180% floor). (NGFA Opening 28-29, V.S. Crowley 9-11.) Under NGFA's proposal, the comparison group would be based on certain default factors, including a mileage band, commodity type, railcar type, railcar ownership, and movement type. (NGFA Opening, V.S. Crowley 6-7.) ACMRM also would eliminate the confidence interval adjustment and the “other relevant factors” analysis so that captive agriculture commodity rate cases could be decided quickly and at reasonable cost. (NGFA Opening 31.) The rate prescription period would be 5 years, and there would be no limits on the amount of relief that the complaining shipper or group of shippers could receive if a rate challenge is successful. (NGFA Opening 31.) ACMRM also includes a commodity-specific Revenue Adequacy Adjustment Factor, which would be used to adjust the R/VC ratio of each movement in the comparison group to account for the revenue adequacy status of each railroad. (NGFA Opening 31.) 10

Carriers, on the other hand, argue that grain rates are not unreasonable and the Board's existing rules provide ample opportunity for grain shippers to pursue rate relief. (BNSF Opening 1, 26-29; UP Opening 19-20.) Carriers cite the lack of grain rate litigation as evidence that most grain rates are reasonable or not subject to the Board's jurisdiction (R/VC ratios below 180%, contract movements, or exempt commodities). (BNSF Opening 26-29; UP Opening 20; AAR Reply 9-10; CSXT Reply 4; NSR Reply 24-25.) According to carriers, rail rates for grain are effectively constrained by competition from truck, barge, and other railroads, as well as by the competitive global market for grain sales. (BNSF Opening 17-23, 27-29; UP Opening 15-20; CSXT Reply 2-3.)

Carriers also argue that the Board has already sufficiently addressed shippers' concerns by limiting its market dominance inquiry to direct competition (i.e., not allowing product or geographic competition), creating two simplified rate reasonableness methodologies, and eliminating or increasing the relief caps for those methodologies. (AAR Opening 18-19; BNSF Opening 24-26; UP Opening 20; CSXT Reply 8.) CSXT notes that the Board also eliminated the use of movement-specific adjustments to URCS to reduce litigation costs. (CSXT Reply 6 (citing Major Issues, EP 657 (Sub-No. 1), slip op. at 59-60).) BNSF and CSXT also dispute the shippers' allegations that railroads impose uniformly high rates for certain commodities or groups of commodities. (BNSF Reply 14-15; CSXT Reply 8-9.) According to BNSF, shippers' concerns about broad, industry-wide rate increases are purely speculative and inconsistent with market realities. (BNSF Reply 14.)

Generally, carriers advocate maintaining the Board's current rate review processes and ask the Board to reject the modifications and alternatives set forth by the shipper community. (See AAR Opening 18; BNSF Opening 24-26; NSR Opening 6; UP Opening 2.) Carriers argue that NGFA's proposal would result in a “ratcheting effect,” whereby, through repeated successful rate challenges, rates charged to captive shippers could be systematically lowered to the jurisdictional floor. (BNSF Reply 21, 24-25; NSR Reply 14-15; UP Reply 23-24.) Carriers also argue that the Board should reject NGFA's proposal because the methodology is not supported by sound economics and is inherently biased for grain shippers. (CSXT Reply 2, 10; NSR Reply 13-14.) According to CSXT, NGFA's proposal would eliminate demand-based differential pricing for grain traffic, prevent the Board from determining appropriate contribution to fixed costs, and “adjust” URCS in ways that would blatantly favor grain shippers over other shippers. (CSXT Reply 10-11.) Carriers also oppose the unlimited relief available under ACMRM. (BNSF Reply 29; UP Reply 34-35.)

Carriers also find flaws in ARC's proposal. Specifically, they argue that ARC's proposal would create a disincentive for railroads to expand competitive traffic through good business practices and would result in an overall degradation of rail service, contrary to the public interest. (AAR Reply 21-22; BNSF Reply 31; UP Reply 21-22, 37.) UP further argues that ARC's proposal is inconsistent with the competitive market principles embodied in the Board's governing statute and with basic railroad economics because it disregards the railroad's need for differential pricing to recover their joint and common costs. (UP Reply 35; see also AAR Reply 16.)

The carriers also argue that modifications to the Three-Benchmark approach, such as inclusion of non-defendant or non-captive traffic in the comparison group, lack sound economic support. Railroads dispute the idea of including non-defendant traffic in comparison groups, arguing that comparisons that include traffic moving on other railroads do not accurately establish the appropriate contribution to the defendant railroad's fixed costs. (AAR Reply 17-18; BNSF Reply 27.) BNSF further argues that including all traffic in the proposed comparison group eliminates a railroad's ability to engage in differential pricing, contrary to the basic economics of the railroad industry. (BNSF Reply 23.) NSR notes that expanding the comparison group would not simplify rate reasonableness determinations, but rather would increase the cost and complexity of the Three-Benchmark approach by requiring examination and evidence based on rates and costing from other railroads. (NSR Reply 29.)

Likewise, carriers oppose the inclusion of non-captive traffic in the comparison group. According to NSR, there is no basis for comparing traffic over which the railroad is potentially market dominant to traffic over which the railroad is not market dominant by statute. (NSR Reply 17.) According to BNSF and UP, by seeking to include in the comparison group traffic with competitive alternatives, NGFA seeks to eliminate a railroad's ability to engage in differential pricing, contrary to the basic economics of the railroad industry. (BNSF Reply 23; UP Reply 24-26.) According to BNSF and UP, including movements with R/VC ratios below 180% in the comparison group will also lead to a ratcheting down of R/VC ratios until the 180% R/VC ratio becomes the rate ceiling. (BNSF Reply 24-25; UP Reply 23-24.)

USDA also provided comment, arguing that a new approach is necessary and warranted, and should be explored, and that agricultural shippers require specifically designed rail rate challenge procedures. (USDA Opening 2.) USDA argues that none of the current rail rate appeals procedures are suitable for agricultural shippers because they are much too costly, complex, and time consuming, and agricultural shippers do not move large enough quantities to justify the cost of these procedures. (Id. at 6.) USDA also argues that, by the time a decision could be rendered, the routes or rates may have changed to fit new agricultural market conditions, nullifying most of the benefits from winning the case. (Id.) USDA estimates that a rate reasonableness methodology must have costs no greater than $50,000 in order to be a viable option for agriculture shippers. (Id. at 7-8.)

Based on the comments and testimony received in this proceeding, the Board is persuaded that the existing rate review processes present accessibility challenges not only for small shippers of grain, but also for small shippers of any commodity. The Board recognizes that, for small disputes, the litigation costs required to bring a case under the Board's existing rate reasonableness methodologies, even the Board's most simplified method, Three-Benchmark, can quickly exceed the value of the case. The Board appreciates receiving the alternative methodologies proposed by ARC and NGFA; however, we are not convinced that the alternative methodologies as proposed strike the proper balance between the Board's statutory goals of providing captive shippers meaningful access to regulatory remedies for unreasonable rail rates, while permitting railroads to earn a reasonable return on their investments so that they will have the resources to make the investment needed to continue to serve the transportation needs of their customers.

Although the Board has concerns with the proposals set forth by ARC and NGFA, several of the ideas that parties have raised as part of these methodologies, or on how to modify the Three-Benchmark methodology, warrant further exploration. In particular, if the Board could develop a process that reduces the litigation burden on parties even more than the simplest existing rate reasonableness methodology, it could achieve the goal of creating more accessible rate review processes for small disputes where even a Three-Benchmark case would be too costly, given the value of the case. Accordingly, we are considering developing a set of procedures that could comprise a new comparison-based rate reasonableness methodology for use by shippers of all commodities in very small disputes. The Board is considering a new process that would entail the following key elements.

First, the process would include a preliminary screen that would limit its application to shippers that are more likely to be considered captive and to have rates that are outliers. Such a screen might allow for the Board to make market dominance and rate reasonableness determinations based on an abbreviated evidentiary process. Second, the process would contain a comparison-based analysis in which the Board develops an initial comparison group and then allows parties to propose modifications. By having the Board set the initial comparison group, based on pre-determined criteria, the evidentiary process could be simplified, as parties would only have to present evidence on modifications rather than creating their own comparison groups (as is currently the case in Three-Benchmark cases). Third, the process would contain other procedural modifications that help expedite and streamline the comparison-based assessment. In particular, the Board is considering ideas such as limiting discovery, establishing mandatory disclosures, limiting the length of filings, and establishing an evidentiary hearing in lieu of rebuttal evidence. Finally, because the process would only be intended for small disputes, the Board would limit the amount of relief available.

It is the Board's goal that procedures evolving from this ANPR would shorten the case timeline and reduce litigation costs, while achieving the same objectives as the existing rate methodologies and minimizing the loss of precision. The Board is guided by the concerns raised during the public comment period in Docket No. EP 665 (Sub-No. 1), namely that the Board's current rate review processes are cost-prohibitive for grain and other shippers with small disputes, and by the rail transportation policy set forth at 49 U.S.C. 10101. The Board must balance the shippers' interest in being protected from unreasonable rates, see 49 U.S.C. 10101(6), against the need to promote a safe and efficient rail transportation system by allowing rail carriers to earn adequate revenues, see 49 U.S.C. 10101(3), 49 U.S.C. 10701(d)(2). We must also consider all parties' needs for expeditious handling of proceedings, see 49 U.S.C. 10101(15).

We are seeking comment in a new docket, Docket No. EP 665 (Sub-No. 2), as we believe this methodology should be available to shippers of all commodities, not just grain, with small disputes. Many of the concerns raised about the accessibility of the Board's existing rate reasonableness procedures are general in nature. Indeed, some commenters expressly acknowledged that such concerns may be equally applicable to shippers of other commodities (see, e.g., ARC Opening 9-10 (“Many of the deficiencies in the status quo may not be unique to grain”)), while others argued that limiting the availability of a methodology to a subset of shippers or commodities would be arbitrary (see, e.g., NSR Opening 6 (“nothing in the Board's governing statutes or prior considerations of rate regulation . . . suggests that the economic basis or soundness of a [rate] methodology . . . should vary based on the shipper or commodities at issue”)). Thus, we are exploring how best to develop a new methodology available to shippers of all commodities.

The Board seeks comment on whether the procedures set forth in this decision—or variations on these procedures—would provide a reasonable yet accessible methodology for use in very small rate disputes. The Board also welcomes comments on other means the Board could implement to keep the costs of a new process low.

Although the concerns expressed by the agricultural community in Docket No. EP 665 (Sub-No. 1) and elsewhere have been instrumental in informing the Board of the need for a new approach, we do not believe that a new methodology should be limited to small shippers of only agricultural products. Instead, as discussed above, we are exploring how best to develop a new methodology that would be available to shippers of all commodities with small disputes.

We are considering limiting this methodology, however, to disputes involving only Class I rail carriers. The Board does not envision that the new process would apply to purely local movements of a Class II or Class III carrier, which would be consistent with the Three-Benchmark methodology. See Simplified Standards, EP 646 (Sub-No. 1), slip op. at 102 (explaining limitations of methodology with respect to Class II and III carriers). However, we seek comment on whether this methodology, if adopted, should or should not be applicable to Class II and III rail carriers.

The new methodology the Board is considering would utilize a comparison group approach to determine the reasonableness of the challenged traffic's rate. Under such an approach, the issue traffic would be compared against a comparison group of similar traffic drawn from the preceding four years of data in the Board's Waybill Sample. In order to reduce litigation costs, the Board would determine an initial comparison group based on default parameters established in a rulemaking, rather than having parties develop and tender a proposed comparison group, as is done in Three-Benchmark cases. See Simplified Standards, EP 646 (Sub-No. 1), slip op. at 18. As discussed in more detail below, both the complainant and the defendant would have the opportunity to present arguments regarding the appropriateness of the initial comparison group determined by the Board and propose modifications to the group. After considering the arguments proposed by the parties, the Board would determine which movements would comprise the final, adjusted comparison group, which the Board would use in its rate reasonableness analysis.

The Board is considering the following default parameters for selecting the initial comparison group and seeks comment on each.

Traffic at or Above 180% R/VC. The Board is considering including other potentially captive traffic, i.e., traffic priced at or above the 180% R/VC level, in the comparison group, but not traffic priced below the 180% R/VC level. Excluding traffic with an R/VC level below 180% would be consistent with the Board's explanation that only captive traffic over which the carrier has market power should be included in the comparison group in the Three-Benchmark methodology. See Simplified Standards, EP 646 (Sub-No. 1), slip op. at 17 (“[t]he purpose of the R/VCCOMP benchmark is to use the R/VC ratios of other `potentially captive traffic' (i.e., traffic priced above the 180% R/VC level) as evidence of the reasonable R/VC levels for traffic of that sort. . . . The rates available to traffic with competitive alternatives would provide little evidence on the degree of permissible demand-based differential pricing needed to provide a reasonable return on the investment.”). Although the shipper community presented arguments in favor of including traffic below 180% R/VC in comparison groups, the Board is concerned that including shipments below 180% R/VC may be contrary to the principle of demand-based differential pricing. The Board invites comment on the advisability of including or excluding non-captive traffic in comparison groups.

Traffic With Similar Shipping Characteristics. The comparison group would also include traffic that shares similar shipping characteristics as the issue traffic, as rail rates typically depend, at least in part, on the length of haul, shipment type, and the type of commodity being shipped. The Board, therefore, is considering limiting comparable movements to those movements that satisfy all of the following criteria:

(a) The movement is within a +/− 15% mileage band around the actual miles travelled by the challenged traffic,

(b) the movement is of the same shipment type (e.g., unit train traffic or non-unit train traffic), and

(c) the movement is of a commodity classified under the same Standard Transportation Commodity Code (STCC).

With respect to the last of these parameters, the Board believes that the most appropriate method of determining which commodities should be used in the comparison group is to use the same five-digit STCC as the issue traffic. Commodities listed at the five-digit STCC generally should be similar enough in characteristics for inclusion in the comparison group. However, certain other commodities differ at an even more granular level, such as chemicals (i.e., any commodity with a STCC starting with 28), and therefore may best be limited to comparisons to the seven-digit STCC. Chemicals are highly varied at the five-digit STCC designation and therefore may require a finer degree of distinction when selecting the initial comparison group.

The Board invites comment on these comparison group procedures, and also on which commodities would be appropriately compared at the seven-digit STCC. The Board also invites comment on whether the Board should consider expanding the comparison of commodities beyond the five- or seven-digit STCC level in the event that this parameter would result in the initial comparison group containing insufficient observations. In order for any study to be statistically valid, the study sample must contain a minimum number of observations, and that minimum number varies depending on the type and complexity of the analysis to be undertaken. For the purposes of comparison-based rate reasonableness analyses, the Board is concerned that fewer than 20 observations would be insufficient. See e.g., E.I. du Pont de Nemours & Co. v. CSX Transp., Inc., NOR 42101, slip op. at 13 (STB served June 30, 2008) (deciding a Three-Benchmark rate case where the comparison group included 23 observations and the sample size was uncontested). Therefore, the Board seeks comments on whether the Board should, in instances where there are insufficient observations, relax the default STCC limitation to the next most specific STCC level that yields sufficient observations for the comparison group. For example, if a comparison group based on a seven-digit STCC code contains too few observations, we could examine the corresponding five-digit STCC, then the four-digit STCC, and so on, until the comparison group includes greater than 20 observations.

The Board invites comments on this possible approach of broadening the STCC limitation in this manner and on whether a 20-observation minimum would be an appropriate requirement.

Contract and Tariff Traffic. The comparison group would include contract and tariff traffic from the defendant carrier, excluding the issue traffic. As the Board noted in Simplified Standards, EP 646 (Sub-No. 1), slip op. at 83, excluding contract movements from the comparison group may leave insufficient movements from the Waybill Sample to perform a statistically meaningful comparison analysis. The Board is considering applying a common carrier adjustment to the comparison group to account for the contract traffic similar to the one applied in U.S. Magnesium, L.L.C. v. Union Pacific Railroad, NOR 42114, slip op. at 18-19 (STB served Jan. 28, 2010), aff'd sub nom. Union Pacific Railroad v. STB, 628 F.3d 597 (D.C. Cir. 2010). The Board invites comment on the inclusion of contract traffic and a common carrier adjustment. Additionally, the Board invites parties to propose alternative means of calculating a common carrier adjustment.

Non-Defendant Carrier Traffic. The Board seeks comment on whether to expand the comparison group in this new methodology to include traffic from non-defendant carriers 11 operating in the same URCS region 12 as the defendant carrier. The Board has, in the past, acknowledged that varying joint and common costs can lead to inevitable differences in R/VC ratios among different carriers. See Simplified Standards, EP 646 (Sub-No. 1), slip op. at 82-83. We are mindful of the concerns raised by the railroads, and previously acknowledged by the Board, about comparing R/VC ratios across carriers. However, shippers have also raised arguments as to why the Board should include non-defendant traffic. (See, e.g., NGFA Opening 28-29; ARC Opening 23.) Notwithstanding the Board's previously stated concerns and the concerns raised by the railroads, the Board seeks comment on whether it should reconsider this issue. Additionally, the Board is considering whether, for the purposes of a new methodology, it may be appropriate to include non-defendant traffic in the comparison group to ensure that the Board can perform a statistically meaningful comparison analysis. Including non-defendant movements could help ensure that the initial comparison group includes sufficient movements from the Waybill Sample on which the Board can base its rate reasonableness determination.13

The Board notes, however, that, including non-defendant traffic in the comparison group likely would necessitate third-party discovery (as to whether cost structure differences between carriers make certain movements inappropriate for the comparison group) and would affect whether parties would be required to hire outside counsel to manage the receipt of confidential Waybill Sample data from other carriers. See 49 CFR 1244.9. We recognize that these issues would add a layer of complexity to the process, potentially increasing the time and expense required to bring a case.14 We seek comment on the advisability of including non-defendant traffic in all or limited circumstances under this simplified methodology, and how such inclusion would affect the time and costs to bring a case.

The Board recognizes that it is essential that any procedures comprising a new rate reasonableness methodology be both more streamlined and less costly than the Board's existing rate review processes. As a result, the Board is considering the procedures set forth below with the goal of achieving a shortened procedural schedule and including measures addressing concerns that the existing procedures for challenging a rate are cost-prohibitive.

Given the abbreviated evidentiary presentation in a simplified, lower-cost process, the Board is considering requiring that challenged traffic meet certain threshold criteria in order to be eligible to be reviewed under the new methodology. This preliminary screen would seek to identify those movements for which truck transportation alternatives are unlikely and the rates are significant outliers, allowing the Board to make market dominance and rate reasonableness determinations based on the abbreviated evidentiary submissions described below. The issue traffic would, of course, have to be priced above the 180% R/VC level, which is the statutory floor for regulatory rail rate intervention. See 49 U.S.C. 10707(d).

Additionally, the Board is considering the following criteria for the issue traffic as a preliminary screen and seeks comment on each of the following potential criteria.

Issue Traffic Length of Haul. The origin and destination of the issue traffic would be required to be located a certain minimum distance apart. As noted in Review of Commodity, Boxcar, and TOFC/COFC Exemptions, EP 704 (Sub-No. 1), slip op. at 7 n.12 (STB served Mar. 23, 2016) (with Commissioner Begeman dissenting), trucking becomes less viable when the length of haul exceeds 500 miles because in many instances a transport over that threshold cannot be completed in one day. Thus, it may be appropriate to require that the origin and destination be more than 500 highway miles apart. Traffic moving fewer than 500 highway miles between origin and destination would not be eligible to be challenged under the new methodology because trucking alternatives for those movements are more likely. Such a criterion could allow the Board to consider making market dominance determinations on an abbreviated evidentiary presentation.

Issue Traffic Revenue Per Ton Mile. As noted, part of the preliminary screen would be to determine if rates are significant outliers. The Board is considering using revenue per ton mile to make this determination. Specifically, the Board could require the revenue per ton mile of the challenged traffic to be in the top 10% or 20% of the initial, Board-determined comparison group. Another possibility would be to require the issue traffic to be at least one standard deviation above the mean revenue per ton mile of the comparison group.15 Analyzing how a movement's revenue per ton mile compares to the revenue per ton mile earned on similar movements would help identify movements with outlier rates. The Board would complete this revenue per ton mile analysis following the receipt of the defendant's answer, in which the defendant would provide the actual miles traveled by the challenged traffic. The Board invites parties to comment on these or other measures that would achieve the same objective of identifying movements in which rates are significant outliers.

Prior Litigation. Lastly, the Board is considering a requirement that the complainant must not have brought a case against the defendant under this methodology within a certain number of years. This limitation could correspond to the maximum rate prescription available under the new process, which is discussed in more detail in the section related to limits on relief below. By including this limitation, the Board intends to prevent attempts to divide a large dispute into multiple smaller disputes.

The Board also is considering limiting discovery in order to reduce litigation costs for very small disputes. In particular, the Board could require that parties file certain initial disclosures with their complaint and answer. Concurrent with the filing of its complaint, the complainant could be required to disclose the nine standard inputs for the URCS Phase III costing program.16 The complainant could also be required to provide a preliminary estimate of the variable cost of the challenged movements, using the unadjusted figures produced by the URCS Phase III costing program on the Board's Web site,17 to demonstrate that the Board's jurisdictional threshold has been met. The complainant could also be required to provide to the Board and the defendant all documents that it relied upon to determine the inputs to the URCS Phase III costing program. The Board invites parties to comment on whether the URCS Phase III costing program should be used as described, or whether the availability of this new process would be improved by some alternative, such as by creating a paper form for submitting URCS Phase III inputs to the Board.

With regard to qualitative market dominance, the complainant could also be required to make certain required disclosures. For example, in a verified statement by a company official, the complainant could be required to submit: (i) A statement that the issue traffic has not moved more than a de minimis amount on alternative transportation modes between the same origin and destination within a certain number of years, and (ii) a statement whether the complainant has made any inquiries to, or received any responses from, alternative transportation providers for the issue traffic within a certain number of years, including copies of any such communications (if available).

The defendant could likewise be required to provide initial disclosures to the complainant concurrent with filing its answer. Like the complainant, the defendant could be required to produce its preliminary estimate of the variable cost of the challenged movement, using the unadjusted figures produced by the URCS Phase III costing program. To the extent that the defendant disagreed with any of the URCS inputs provided in the complaint, it could also be required to provide the inputs that it used. The defendant could also be required to provide to the Board and the complainant all documents that it relied upon to determine the inputs used in the URCS Phase III costing program. Finally, the defendant could be required to disclose the actual route miles for the issue traffic and provide supporting data to the Board and, upon request, to the complainant.

Another limit on discovery could be to limit the amount or type of party-initiated discovery or eliminating such discovery altogether, given that the need for such information would be significantly reduced by the simplifications discussed here. For example, the fact that the initial comparison group would be set by the Board (based on defined criteria) and not the parties would eliminate one need for the parties to seek discovery. In terms of limiting discovery, in preparing its answer, the defendant could reply with information that is either disclosed by the complainant in its complaint or opening evidence, or developed independently by the defendant, but the defendant would not be permitted to seek additional discovery from the complainant. Likewise, the complainant would not be permitted to serve any discovery on the defendant in preparation of its evidentiary submissions.

Additionally, as noted above, if the Board were to include non-defendant traffic in the comparison group, the Board is concerned that it would be required to permit discovery from the non-defendant carriers whose traffic is included in the comparison group. In that case, the Board could consider limits, such as five interrogatories (including subparts) and five document requests (including subparts) per party for each non-defendant carrier, and could require that such discovery be completed by a specific number of days. Such third-party discovery would occur prior to the submission of each party's evidence.

We therefore seek comment on whether to mandate certain initial disclosures and, if so, what those disclosures should be, and any other ways to limit or eliminate party-initiated discovery in a new, streamlined comparison group methodology for small disputes.

The Board seeks comment on the following procedures it is considering for use in a new simplified rate reasonableness methodology.

Complaint. A party would initiate a case by filing a complaint with the Board. In its complaint, the complainant would be required to: (i) Allege that the rates for certain traffic are unreasonable, (ii) allege that the defendant has both quantitative market dominance (i.e., the issue traffic must move at rates above 180% R/VC) and qualitative market dominance (i.e., other modes of transportation are not feasible); and (iii) submit the required initial disclosures, as described above in the section on limits on discovery. The complaint and initial disclosures would include information sufficient for the Board to determine that the issue traffic meets a preliminary screen, discussed in more detail above. Additionally, with its complaint, the complainant would submit a signed confidentiality agreement. The agreement would be standardized specifically for cases brought under the new process and available for download on the Board's Web site. By asking parties to submit the confidentiality agreement early in the process, the Board could expedite the distribution of the comparison group. The Board invites comment on the appropriate content or other issues related to the filing of the complaint.

Answer. In its answer, the defendant would be required to admit or deny each of the allegations in the complaint and submit its initial disclosures, described above. The defendant would also file with its answer a signed copy of the standardized confidentiality agreement. The Board invites comment on the appropriate content or other issues related to the filing of the answer.

Opening Evidence. Unlike in Three-Benchmark cases, the Board envisions sequential rather than simultaneous filings of each party's evidence. In its opening evidence, the complainant would address both qualitative market dominance 18 and the appropriateness of the initial comparison group. With respect to qualitative market dominance, given the information derived from the preliminary screen and the initial disclosure requirements, the complainant would be permitted to present an abbreviated evidentiary submission, but must explain why the use of other transportation modes is not feasible. The complainant could also expand on its initial disclosures to the extent necessary.

In its opening evidence, the complainant would also have the opportunity to state whether the initial, Board-determined comparison group is appropriate. The complainant may propose adjustments to the default initial comparison group and present “other relevant factors” evidence, such as a density adjustment or PTC adjustment, among others.

Reply Evidence. The defendant's reply would likewise address both qualitative market dominance and the appropriateness of the default initial comparison group. Specifically, in its reply evidence, the defendant would have the opportunity to reply to the complainant's qualitative market dominance evidence. As noted above, we are considering limits on discovery as it relates to qualitative market dominance. For example, in formulating its response to the complainant's qualitative market dominance evidence, the defendant could be limited to information disclosed by the complainant with its complaint or opening evidence or developed independently by the defendant.

The defendant would also have the opportunity to respond to the complainant's arguments regarding the appropriateness of any proposed adjustments to the default initial comparison group. The defendant could also propose its own adjustments to the default initial comparison group and set forth “other relevant factors” evidence.

Limitations on Opening and Reply Evidence. In order to minimize the time and expense associated with litigating a small rate dispute, the Board is considering placing limitations on the opening and reply evidence, such as imposing word or page limits on the complainant's opening evidence and the defendant's reply evidence. The Board seeks comment on whether to include a word or page limitation and if so, what the appropriate limitation would be.

We recognize that, even with a word limit and limits on or exclusion of discovery, allowing parties' presentations to include “other relevant factors” evidence could substantially increase the cost and time required to prepare for submission of a case. For instance, we do not expect that the examples noted above—a density adjustment or PTC adjustment—could be easily calculated by a small entity without hiring outside consultants. Therefore, the Board invites comment on the advisability of allowing parties' presentations to include “other relevant factors” evidence. The Board also invites parties to comment on the appropriateness of sequential as opposed to simultaneous filings of each party's evidence, a reasonable time-frame for considering qualitative market dominance arguments, a reasonable word or page limit for opening and reply evidence, and any other issues related to the filing of opening and reply evidence.

Evidentiary Hearing. In an effort to make the new process cost-effective for small disputes, the Board is considering offering an evidentiary hearing following the submission of opening and reply evidence, in lieu of formal rebuttal filings and final briefs. The evidentiary hearing, which would take place before Board staff, would permit the Board to further examine and develop the evidentiary record without requiring the parties to take on the higher litigation costs associated with formal written submissions. At the evidentiary hearing, the complainant would have the opportunity to rebut the defendant's reply and respond to Board staff's questions. The defendant would also participate in the hearing and could respond to any questions from Board staff. Board staff would have the opportunity to further explore the parties' arguments regarding the appropriateness of the comparison group. A court reporter would be present, and the transcript would become part of the record. The evidentiary hearing could also take place by conference call. We invite parties to comment on whether an evidentiary hearing in lieu of rebuttal filings and final briefs would help minimize the time or expense associated with litigating a case under a new rate methodology for small disputes.

Under the procedures being considered as described in this decision, the Board would issue two decisions. First, following receipt of the defendant's answer, the Board would issue a preliminary decision in which the Board would (i) resolve any URCS Phase III input disputes, (ii) determine whether the challenged traffic meets the preliminary screen based on the initial comparison group, and (iii) make a final determination on whether the defendant carrier has quantitative market dominance over the movements at issue. In the event that the issue traffic fails to meet the preliminary screen based on the initial comparison group, the Board would dismiss the complaint without prejudice. For challenged traffic that satisfies the preliminary screen, the Board would provide the initial comparison group data pursuant to the standardized confidentiality agreements previously filed by the parties.

Second, following the evidentiary hearing, the Board would issue a final decision addressing qualitative market dominance and rate reasonableness. With regard to qualitative market dominance, the Board expects that its qualitative market dominance analysis could be far more limited than in other rate reasonableness methodologies given the preliminary screen and initial disclosure requirements. In particular, because the screen would help identify movements that are more likely to be captive, the Board envisions determining qualitative market dominance without as extensive an analysis as under the current methodologies. The Board seeks comments on specific qualitative market dominance factors it could consider for this type of new rate reasonableness methodology.

If the Board finds that the defendant carrier has qualitative market dominance over the challenged traffic, the Board would address each of the parties' arguments regarding the appropriateness of the initial comparison group and adjustments thereto. If the comparison group is adjusted, the Board would reevaluate the challenged traffic to ensure that it continues to satisfy the preliminary screen based on the adjusted comparison group. In the event that the issue traffic fails to meet the preliminary screen based on the adjusted comparison group, the Board would dismiss the proceeding with prejudice to the complainant challenging the same movement under the new method for a certain period, but without prejudice to the complainant challenging the same movement under one of the Board's other rate review processes.

For the rate reasonableness determination, the Board would compute the maximum R/VC ratio for the issue traffic in a manner similar to the Three-Benchmark analysis, although with a potential modification. Specifically, the Board would apply a revenue need adjustment—which is the ratio of RSAM ÷ R/VC>180 (each of which is a four-year average calculation) 19 —to each movement in the final comparison group. The Board would then calculate the mean and standard deviation of the R/VC ratios for the adjusted comparison group (weighted in accordance with the proper sampling factors). If the challenged rate is above a reasonable confidence interval around the estimate of the mean for the adjusted comparison group, it would be determined unreasonable and the maximum lawful rate would be prescribed at that upper boundary level.20

However, the Board is considering departing from Three-Benchmark precedent with respect to the revenue need adjustment. As noted, in a Three-Benchmark case, each movement in the final comparison group is adjusted by a revenue need adjustment factor. During the public comment period in Docket No. EP 665 (Sub-No. 1), NGFA proposed the creation of an alternative revenue need adjustment factor—a Revenue Adequacy Adjustment Factor (RAAF), which would be commodity-specific and would account for the revenue adequacy status of each railroad. NGFA argues that the RAAF is superior to the Board's current revenue need adjustment factor because it takes into consideration the amount of issue commodity traffic that is ostensibly captive to the railroad and allocates the burden of a revenue need adjustment factor to those commodities that provide the most revenue. (NGFA Opening, V.S. Crowley 12.) There may be merit to NGFA's suggestion that our current revenue need adjustment factor could be adapted to reflect the differences in rates and revenues carriers obtain from various commodity groups. Thus, the Board is considering whether it could make the revenue need adjustment factor commodity specific. However, if the Board were to adopt a commodity specific revenue need adjustment factor, we must ensure that we establish the most appropriate formula.

Therefore, we seek comment on whether the Board should modify its revenue need adjustment factor to be commodity-specific, and if so, how we can effectively disaggregate the existing RSAM on a commodity-by-commodity basis. Because some commodities have a higher R/VC ratio than others, the adjusted revenue need adjustment factor should allocate the revenue shortfall in ways that reflect the different demand elasticities faced by different commodities. However, the weighted average of all commodities when totaled should equal the overall RSAM.

We believe that, on average, differences in demand elasticities are reflected in R/VC ratios—those with higher R/VC ratios tend to enjoy less direct and indirect competition while those with lower R/VC ratios tend to enjoy somewhat more competition. In an individual proceeding, we would consider applying a commodity-specific RSAM where the resulting figure reflects this intuition. We believe such a mark-up could be done in a manner consistent with Ramsey pricing principles.21 If the Board were to adopt such a modified revenue need adjustment factor, we also seek comment on whether the reliance on a single year's data would be inappropriate. Because profits are pro-cyclical, we believe an approach that considers a longer period of time may be more appropriate. Finally, we also seek comment on whether application of a modified revenue need adjustment factor, if adopted, should be limited to a new methodology.

Because of the abbreviated nature of the process described in this decision, the Board is considering limiting relief available under this process. The ideas presented in the ANPR describe a process that would be significantly more streamlined than the process required to bring a Three-Benchmark case. As such, the relief available under this method would likewise need to be significantly less than the relief available under the Three-Benchmark approach. The Board invites parties to comment on the amount of relief that should be available and why that amount of relief would be appropriate.

The limit on relief would apply to the difference between the challenged rate and the maximum lawful rate, whether in the form of reparations, a rate prescription, or a combination of the two. Any rate prescription would automatically terminate once the complainant has exhausted the relief available. Thus, the actual length of the prescription may be less than the prescription period if the shipper ships a large enough volume of traffic so that the relief is used up in a shorter time. The complainant would be barred from bringing another complaint against the same rate for the remainder of the prescription period.

Where the shipper exhausts all of its relief before the end of the prescription period, the carrier's rate making freedom would be restored with a regulatory safe harbor at the challenged rate for the remainder of the prescription period, with appropriate adjustments for inflation using the rail cost adjustment factor, adjusted for inflation and productivity (RCAF-A). See R.R. Cost Recovery Procedures—Productivity Adjustment, 5 I.C.C.2d 434 (1989), aff'd sub nom. Edison Elec. Inst. v. ICC, 969 F.2d 1221 (D.C. Cir. 1992). If, however, a carrier establishes a new common carrier rate once the rate prescription expires, and the new rate exceeds the inflation-adjusted challenged rate, the shipper may bring a new complaint against the newly established common carrier rate.

Because this ANPR does not impose or propose any requirements, and instead seeks comments and suggestions for the Board to consider in possibly developing a subsequent proposed rule, the requirements of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612 (RFA) do not apply to this action. Nevertheless, as part of any comments submitted in response to this ANPR, parties may include comments or information that could help the Board assess the potential impact of a subsequent regulatory action on small entities pursuant to the RFA.

The Board seeks public input on how best to establish a new rate reasonableness process for use in small disputes, available to shippers of all commodities, to provide shippers with small disputes meaningful access to regulatory relief in those cases where even a Three-Benchmark case is too costly, given the value of the case. The Board welcomes comments from interested parties on the issues and considerations presented in this decision.

It is ordered:

1. Comments are due by November 14, 2016. Reply comments are due by December 19, 2016.

2. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration.

3. Notice of this decision will be published in the Federal Register.

4. This decision is effective on its service date.

Today's decision is an important step forward for the Board. Despite the agency's well-intentioned efforts over the years to create simpler, timelier, and less costly rate dispute processes, I believe that they are still inaccessible to shippers with small disputes, denying them the opportunity to obtain rate relief. This decision focuses on filling that gap in our processes.

While I applaud the Board for today's action, we still have work to do. Even if the Board is able to develop an abbreviated rate case methodology that can be used by shippers with small rate disputes, it will not resolve the concerns that have been raised about the SAC test. The methodology here is only intended to address small rate disputes for shippers that meet certain criteria. As such, the Board still needs to consider alternatives to the SAC test for shippers with larger disputes. A reasonable starting point to address this issue would be for the Board to publicly release the report prepared by our outside consultant on SAC alternatives and conduct a hearing to obtain feedback and reaction from our stakeholders on the report's conclusions.22 Hopefully the report will be issued soon and stakeholders given an opportunity to comment.

We will accept written comments and information during this reopened comment period on the March 11, 2016, proposed rule (81 FR 13174) to remove the Greater Yellowstone Ecosystem (GYE) population of grizzly bears (Ursus arctos horribilis) from the List of Endangered and Threatened Wildlife. We specifically seek comments on the proposed rule in light of five peer reviews and recently finalized State regulatory mechanisms. The State regulations describe Wyoming, Montana, and Idaho's approach to managing human-caused mortality should we delist the grizzly bear in the GYE. The State regulatory mechanisms include Montana's Grizzly Bear Hunting Regulations, Chapter 67 of the Wyoming Game and Fish Commission regulations, Idaho's Fish and Game Commission Proclamation, and the Memorandum of Agreement Regarding the Management and Allocation of Discretionary Mortality of Grizzly Bears in the Greater Yellowstone Ecosystem (Tri-State MOA). Copies of Grizzly Bear Montana Hunting Regulations, Chapter 67 of the Wyoming Game and Fish Commission regulations, Idaho's Fish and Game Commission Proclamation, and the Tri-State MOA are available on the Internet at http://www.regulations.gov under Docket No. FWS-R6-ES-2016-0042 or at https://www.fws.gov/mountain-prairie/es/grizzlybear.php; or upon request from the U.S. Fish and Wildlife Service, Grizzly Bear Recovery Office (see FOR FURTHER INFORMATION CONTACT). We will consider information and recommendations from all interested parties.

You may submit your comments and materials concerning the proposed rule by one of the methods listed in ADDRESSES. We will not accept comments sent by email or fax or to an address not listed in ADDRESSES. If you submit a comment via http://www.regulations.gov, your entire comment—including your personal identifying information—will be posted on the Web site. If you submit a hardcopy comment that includes personal identifying information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. We will post all hardcopy comments on http://www.regulations.gov.

Comments and materials we receive, as well as supporting documentation we used in preparing the proposed rule, will be available for public inspection on http://www.regulations.gov under Docket No. FWS-R6-ES-2016-0042, or by appointment, during normal business hours, at the Grizzly Bear Recovery Office (see FOR FURTHER INFORMATION CONTACT).

On March 11, 2016, we published a proposed rule to revise the List of Endangered and Threatened Wildlife in title 50 of the Code of Federal Regulations at 50 CFR 17.11(h), under the authority of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.), by removing the Greater Yellowstone Ecosystem (GYE) population of grizzly bears (Ursus arctos horribilis) (81 FR 13174). In the proposed rule, we explained that State regulations addressing human-caused grizzly bear mortality in Montana, Wyoming, and Idaho must include five elements to maintain a recovered population of grizzly bears in the GYE:

1. Suspension of all discretionary mortality inside the Demographic Monitoring Area (DMA), except if required for human safety, if the model-averaged Chao2 population estimate falls below 600.

2. Suspension of grizzly bear hunting inside the DMA if total mortality limits for any sex/age class (as per tables 1, 2, and 3 in the proposed rule) are met at any time during the year (the mortality limits in these tables are reiterated in table 1 in this document, below).

3. Prohibition of recreational harvest of female grizzly bears with young.

4. In a given year, allowance of discretionary mortality only if nondiscretionary mortality (e.g., mortality from illegal kills, mortality from self-defense, calculated unknown/unreported mortalities, natural mortalities, and mortality from other causes such as vehicle collisions) does not meet or exceed total mortality limits for that year.

5. Provisions to ensure that any mortality that exceeds total mortality limits in any year will be subtracted from that age/sex class total mortality limit for the following year to ensure that long-term mortality levels remain within prescribed limits inside the DMA.

We noted that regulatory mechanisms containing these provisions must be in place in each State for delisting to occur because the adequacy or inadequacy of those regulatory mechanisms help inform us whether a species, once delisted, will remain recovered. The ESA requires the Service to consider existing regulatory mechanisms when making listing determinations.

Montana, Wyoming, and Idaho recently finalized such regulatory mechanisms governing potential hunting seasons for grizzly bear. These three States also approved the Tri-State MOA, which outlines their coordinated plans for grizzly bear management and allocates discretionary mortality of grizzly bears in the GYE between the three States. The three States approved the Tri-State MOA on the following dates: Wyoming, on May 11, 2016; Montana, on July 13, 2016; and Idaho, on August 8, 2016.

Montana, Wyoming, and Idaho each used a different regulatory method, appropriate to their respective legal processes, to enact their State rules governing human-caused grizzly bear mortality. Montana's Fish and Wildlife Commission adopted hunting regulations that outline the structure of a possible future grizzly bear hunting season on July 13, 2016 (Montana Fish and Wildlife Commission, 2016). Montana's Fish and Wildlife Commission also approved the Tri-State MOA (Wyoming Game and Fish Commission, Montana Fish and Wildlife Commission, & Idaho Fish and Game Commission, 2016). Before adopting these regulations and the MOA, Montana released the drafts of these documents for public comment and review. The Montana Fish and Wildlife Commission adopted the hunting regulations and the MOA in the same manner that it adopts other regulations, with public notice and comment. In the Service Assessment below, we assume the MOA and hunting regulations are regulatory in nature.

On July 8, 2016, the Wyoming Game and Fish Commission approved a regulatory framework that “provides for the management of grizzly bears in Wyoming to ensure a recovered population” (Wyoming Game and Fish Commission, 2016). The Wyoming Game and Fish Commission invited the public to participate in the process of developing these regulations with a public comment period. Once the Governor of Wyoming approves and signs these regulations, they will be incorporated into Chapter 67 of the Wyoming Game and Fish Commission's regulations. In the Service Assessment, set forth below, we anticipate that, prior to publication of our final rule, the Governor of Wyoming will sign the version of the regulations that was approved by the Wyoming Game and Fish Commission.

Idaho's Fish and Game Commission issued a proclamation relating to the limit of the take of grizzly bears in the GYE on August 8, 2016 (Idaho Fish and Game Commission, 2016). Idaho Code Section 36-105 authorizes the Idaho Fish and Game Commission to use proclamations, which “have full force and effect as law,” as a means of “setting any season or limit on numbers, size, sex or species of wildlife classified by the commission as game animals.” Since grizzly bears are classified as game animals in Idaho Administrative Code 13.01.06.100.01e, the Idaho Fish and Game Commission may use a proclamation to establish binding limits on the take of grizzly bears (Idaho Administrative Code 13.01.06.100.01e).

Table 2 cross-references the aforementioned requirements in the proposed rule with the content of each State's regulations. The full text of the State regulations and the Tri-State MOA can be found on the Internet at http://www.regulations.gov under Docket No. FWS-R6-ES-2016-0042 or https://www.fws.gov/mountain-prairie/es/grizzlybear.php; or upon request from the Grizzly Bear Recovery Office (see FOR FURTHER INFORMATION CONTACT).

The Service has reviewed the recently finalized State regulations governing the management of grizzly bears in the GYE and the regulation of human-caused mortality (including the Tri-State MOA, Montana's Grizzly Bear Hunting Regulations, Chapter 67 of Wyoming's Game and Fish Commission regulations, and Idaho's Fish and Game Commission Proclamation). Our preliminary assessment is that these documents are consistent with the letter or intent of the regulatory requirements regarding human-caused mortality that we outlined in the proposed rule. Thus, based on our review, we believe the regulatory framework in Montana, Wyoming, and Idaho, in combination with the Tri-State MOA, will maintain a recovered population of grizzly bears in the GYE. We are accepting public comments on these State regulations and our preliminary assessment that they provide adequate regulatory mechanisms such that we can conclude that the population no longer meets the definition of threatened under the Endangered Species Act.

In accordance with our joint policy on peer review published in the Federal Register on July 1, 1994 (59 FR 34270), we subjected the proposed delisting rule to peer review. We received submissions from five independent peer reviewers, and their input is available as described under ADDRESSES. These peer reviews were conducted by third-party selected scientific experts in large carnivore ecology and management with expertise in one or more of the following areas: population ecology, management, demographics, conservation, and population genetics. We welcome any comments on the proposed rule in light of these reviews (see compiled reviews in Amec Foster Wheeler, 2016). Previously received public comments, and the data and information they provided, can be found at http://www.regulations.gov under Docket No. FWS-R6-ES-2016-0042.

A complete list of references cited is available: on the Internet at http://www.regulations.gov under Docket No. FWS-R6-ES-2016-0042; from the Service's Mountain Prairie Region Grizzly Bear Web site https://www.fws.gov/mountain-prairie/es/grizzlybear.php; or upon request from the Grizzly Bear Recovery Office (see FOR FURTHER INFORMATION CONTACT).

The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).