Federal Register Vol. 81, No.221,

I. Proposed Rule

On August 12, 2016, the Commission published a Notice of Proposed Rulemaking (“Proposal”) 1 to amend Commission Regulation 3.3(f) regarding when Registrants must furnish to the Commission annual reports describing, among other things, their compliance with the Commodity Exchange Act (“CEA”) and CFTC regulations (the “CCO Annual Reports”).2 The Proposal sought to extend the time period for furnishing the CCO Annual Report to the Commission from 60 days to 90 days after a Registrant's fiscal year-end by codifying the ongoing relief most recently provided to Registrants in CFTC Staff Letter No. 15-15.3 The Proposal would permit an FCM to furnish its CCO Annual Report to the Commission not more than 30 days after submission of its Form 1-FR-FCM or Financial Operational Combined Uniform Single Report (“FOCUS Report”), and would permit an SD or MSP to furnish its CCO Annual Report to the Commission not more than 90 days after its fiscal year-end until such time as the Commission adopts and implements rules establishing the time for filing the annual financial condition report required under CEA section 4s(f). The Proposal also contemplated adding new paragraph (f)(2)(ii) to clarify the filing requirements for SDs and MSPs located in a jurisdiction for which the Commission has issued a comparability determination and which elect to file reports in accordance with that determination (“Substituted Compliance Registrants”). Finally, the Proposal added new paragraph (h) to delegate to the Director of DSIO authority to grant extensions to the CCO Annual Report filing deadline.

The Commission generally requested comments on the Proposal and also solicited comments on certain specific matters.4 For example, the Commission solicited comments on the appropriateness of permitting Registrants an additional 30 days to furnish their CCO Annual Reports to the Commission, as well as the Commission's application of Regulation 3.3(f)(2) to Substituted Compliance Registrants.

In response to the Proposal, the Commission received one comment submitted jointly by the Futures Industry Association (the “FIA”), International Swaps and Derivatives Association (“ISDA”), and the Securities Industry and Financial Markets Association (“SIFMA”) (collectively, “Commenters”) on behalf of their FCM, SD, and MSP member firms.5 The Commenters were generally supportive of the Proposal and agreed with the basic premise that the statutory requirement under CEA section 4s(k)(3)(B)(i) requiring CCO Annual Reports to “accompany” each appropriate financial report does not require a simultaneous filing of the two reports.

The Commenters made several suggestions aimed at more closely aligning the Proposal with the relief provided in CFTC Staff Letter No. 15-15 and providing greater certainty for all SDs. First, Commenters cautioned against linking the filing deadline for the CCO Annual Report to the submission date for the applicable annual financial reports. The Commenters stated that using the submission date as a reference point, rather than the deadline date, could have the practical effect of reducing the time period for filing the CCO Annual Report if a Registrant chose to submit their financial report early.6 Commenters asserted that this outcome would be problematic because the inherent differences, in both substance and process, between CCO Annual Reports and financial reports affect the time required to adequately prepare each report. As a result, linking the CCO Annual Report deadline to the submission of financial reports would require new coordination and processes between the distinct groups responsible for each report's preparation.7 To address this technical timing issue, the Commenters recommended that the filing of the CCO Annual Report be required 30 days after the regulatory deadline for filing the financial reports.8

The Commenters further noted that under the Commission's proposed Capital Requirements of Swap Dealers and Major Swap Participants rulemaking,9 prudentially regulated SDs would not be required to comply with the Commission's financial condition report requirement.10 As such, Commenters explained that under language in the Proposal, which ties the submission of the CCO Annual Report with the submission of applicable financial reports, prudentially regulated SDs would have a different CCO Annual Report deadline than other SDs.11 Commenters suggested that, in order to achieve consistency among all SDs, the Commission should “set a 90-day deadline for SDs that are not subject to the Commission's proposed financial reporting rule.” 12

Finally, regarding application of the Proposal to Substituted Compliance Registrants, the Commenters requested that the Commission provide “supplemental guidance as to what constitutes a `specifically identifiable completion date'” for Substituted Compliance Registrants who file comparable annual reporting information (hereinafter, “Comparable Annual Report”).13 The Commenters indicated that different jurisdictions address reporting deadlines in many different ways that can change over time and from year to year. Accordingly, it was not clear to Commenters how the Proposal language would apply in all instances.

The Commission has considered the comments it received in response to the Proposal. Upon consideration of Commenters' suggestions, the Commission's implementation experience,14 and the current absence of financial condition reporting requirements for SDs under Commission regulations,15 the Commission is adopting a final rule that modifies Regulation 3.3(f)(2)(i) to give all Registrants up to 90 days after their fiscal year-end to furnish the CCO Annual Report to the Commission. Because the CEA section 4s(k)(3)(B) contemplates year-end filing for financial reports and CCO Annual Reports, the final rule ensures that the two reports will accompany one another at the Commission within a proximate and predictable timeframe. The Commission believes that providing all Registrants a deadline that follows their annual fiscal year meets Congressional intent and achieves fairness and consistency across all Registrants, while also codifying longstanding no-action relief. The final rule text effectively results in the same outcome as the Proposal, but does so in a manner that is simple and direct. The Commission is adopting Regulation 3.3(f)(2)(ii) as proposed, which incorporates the modified language of Regulation 3.3(f)(2)(i), and also clarifying its application to Substituted Compliance Registrants. The Commission received no comments on the proposed delegation of authority to the Director of DSIO to grant extensions to the CCO annual report filing deadline, and is adopting Regulation 3.3(h) as proposed.

The Commission believes that the language in CEA section 4s(k)(3)(B) requiring the CCO to “annually” prepare a compliance report to accompany each “appropriate” financial report does not require a simultaneous filing of the two reports to achieve its intended purpose. Rather, the intention of the statute is to require the CCO Annual Report to follow an annual reporting cycle in line with the financial reporting cycle aimed at providing the Commission, and a Registrant's senior management, with a timely self-evaluation and internal assessment of the Registrant's compliance program.16 In a similar manner, under Commission regulations, when entities are subject to capital adequacy requirements, periodic financial reporting is the mechanism employed to demonstrate compliance. Annual and other financial reporting requirements provide the Commission and self-regulatory organizations information about the financial condition of the registrant. As observed by the Commission and highlighted by Commenters, the CCO Annual Report and annual financial reports, though they serve similar informational goals, are inherently different and require different processes and expertise to produce. Accordingly, while each ought to be completed on an annual reporting cycle and provided to the Commission in temporal proximity, their submission to the Commission need not occur simultaneously to achieve their intended purpose.

Permitting all Registrants to submit their CCO Annual Report to the Commission within 90 days after their fiscal year-end meets the statutory intent of having the CCO Annual Report follow an annual reporting cycle in line with the financial reporting cycle while providing fair and consistent treatment across all Registrants. The final rule also ensures that Registrants may continue to leverage their existing report preparation processes that were developed while the Commission's no-action relief was in place. This ensures that there is effectively no change in the burden and expense of preparing the CCO Annual Reports as a result of the final rule.

With respect to the application of new paragraph (f)(2)(ii) to Substituted Compliance Registrants, the Proposal provided that Substituted Compliance Registrants whose home jurisdictions' regulations identify a specific completion or due date have 15 days after that date to submit their Comparable Annual Report to the CFTC. If a Substituted Compliance Registrant's home jurisdiction does not require or is silent as to a particular completion or due date for the Comparable Annual Report, then the Substituted Compliance Registrant must furnish its Comparable Annual Report to the Commission not more than 90 days after its fiscal year-end.

As described above, the Commenters requested additional guidance on the meaning of “specifically identifiable completion date.” The Commission is clarifying that the completion or due date could be set by the Substituted Compliance Registrant's home jurisdiction's regulations, or that the Substituted Compliance Registrant's applicable regulatory authority could otherwise announce a modified completion or due date consistent with the practices and procedures of the applicable regulatory regime. The Commission anticipates a Substituted Compliance Registrant will timely inform DSIO of any such modifications to their completion or due date. Whether the completion or due date remains static from year to year, or is subject to annual modification, the Commission intends to defer to the Substituted Compliance Registrant's home jurisdiction in this regard.

The Commission, however, is concerned about the possibility of significant reporting delays or deferrals that may apply to a specific Registrant. Accordingly, the Commission expects that a Substituted Compliance Registrant will inform the Commission of any delays or deferrals beyond the deadlines set by their home jurisdiction regulations or applicable regulatory authority that would extend that particular Registrant's Comparable Annual Report filing date, and seek appropriate relief under Regulation 3.3(f)(5), as necessary.

The Commission received no comments on its proposal to delegate to the Director of DSIO, or such other employee(s) that the Director may designate, the authority to grant extensions of time to file CCO Annual Reports. Accordingly, the Commission is adopting new paragraph (h) as proposed.

The Regulatory Flexibility Act 17 (“RFA”) requires that agencies consider whether the rules they propose will have a significant economic impact on a substantial number of small entities and, if so, provide a regulatory flexibility analysis reflecting the impact. In the Proposal, the Commission certified that the Proposal would not have a significant economic impact on those entities. The Commission received no comments with respect to the RFA.

As discussed in the Proposal, the final rule amends the filing deadline for CCO Annual Reports of FCMs, SDs, and MSPs and clarifies the filing deadline for Comparable Annual Reports. The final rule affects FCMs, SDs, and MSPs that are required to be registered with the Commission. The Commission has previously established certain definitions of “small entities” to be used in evaluating the impact of its regulations on small entities in accordance with the RFA, and has previously determined that FCMs, SDs, and MSPs are not small entities for purposes of the RFA.18 Therefore, the Commission believes that the final rule will not have a significant economic impact on a substantial number of small entities. Accordingly, the Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that the final rule being published today by this Federal Register release will not have a significant economic impact on a substantial number of small entities.

The Paperwork Reduction Act of 1995 (“PRA”) 19 provides that a federal agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number issued by the Office of Management and Budget (“OMB”). As discussed in the Proposal, the final rule contains a collection of information for which the Commission has previously received a control number from the Office of Management and Budget (“OMB”). The title for this collection of information is “Annual Report for Chief Compliance Officer of Registrants, OMB control number 3038-0080.” As discussed in the Proposal, the Commission believes that this final rule will not impose any new information collection requirements that require approval of OMB under the PRA. As a general matter, the final rule allows Registrants up to 90 days after the end of their fiscal years, and certain Substituted Compliance Registrants with up to 15 days after the date on which the Comparable Annual Report must be completed under the requirements of their home jurisdiction, to file the CCO Annual Report and Comparable Annual Reports, respectively. As such, the final rule does not, by itself, impose any new burden or any new information collection requirements in addition to those that already exist in connection with the preparation and delivery of the CCO Annual Report pursuant to part 3 of the Commission's regulations.

As discussed above, the Commission is adopting amendments to the filing requirements for CCO Annual Reports in Regulation 3.3 that: (1) Increase the amount of time registrants have to file their CCO Annual Reports with the Commission; and (2) clarify the filing requirements for Comparable Annual Reports. The baseline for this cost and benefit consideration is existing Commission Regulation 3.3.

The final rule does not change the report contents or require any additional actions to be taken by Registrants. The 90 days (or up to 15 days after the date on which a Comparable Annual Report must be completed under applicable home jurisdiction standards that allow more time) provided by the final rule lengthens the time before senior management or the board of the Registrants and the Commission may receive the CCO Annual Reports. The additional time to furnish the reports should not materially impact regulatory oversight given that the purpose of the reports is to provide a status update for the Registrant's compliance activities over the course of the preceding fiscal year and planned changes for the coming year. The reports generally do not serve to address crisis situations for which immediacy is critical. Therefore, the additional time allowed should not materially impact the usefulness of the information in the reports.20 The Commission had no other information available to it indicating that changing the filing deadline would measurably change the cost to prepare the CCO Annual Reports. Accordingly, the Commission believes that the final rule does not impose any additional costs on any other market participants, the markets themselves, or the general public. In the Proposal, the Commission solicited comments regarding how the costs associated with the CCO Annual Reports could change as a result of adopting the Proposal, but did not receive any.

The Commission believes that the final rule provides relief for Registrants from time pressures in preparing and filing their CCO Annual Reports. The additional time provided will allow Registrants to more carefully complete their internal processes used to develop the broad variety of information needed for the reports resulting in more accurate and complete reports. The Commission solicited comments regarding the nature of any benefits that could result from adoption of the Proposal, but did not receive any specific comments. Commenters were generally appreciative of the Commission's effort to improve the process.21

Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.22 Section 15(a) further specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission considered the costs and benefits resulting from its discretionary determinations with respect to the section 15(a) factors.

The Commission recognizes that there are trade-offs between reducing regulatory burdens and ensuring that the Commission has sufficient, timely information to fulfill its regulatory mission. The final rule is intended to reduce some of the regulatory burdens on Registrants. While the final rule will delay the time in which the Commission will receive the CCO Annual Reports, the delay is relatively short given that the information in the reports looks back over the entire year-long reporting period, and identifies planned improvements for the coming year. Accordingly, the Commission believes that the short delay will not affect the protection of market participants and the public.

The Commission believes that the final rule could improve allocational efficiency for participants in the market by reducing the burden of preparing the CCO Annual Report in a shorter time-frame thereby allowing them to allocate compliance resources more efficiently over the report preparation period. The Commission believes that the final rule will not have any market efficiency, competitiveness, or market integrity impacts because the reports address internal compliance programs of each Registrant and are not publicly available.

The Commission believes that the final rule does not impact on price discovery. Given that the final rule affects only the timing of when the CCO Annual Reports are filed with the Commission and the CCO Annual Reports generally would not contain trade information or be available to the public, the final rule does not affect price discovery.

The Commission believes that the final rule will not have a meaningful effect on the risk management practices of Registrants. While the CCO Annual Reports may discuss certain risk management aspects related to Registrants' compliance programs, the final rule only amends the timing of delivery of the reports to the Commission, not the contents of the reports. As described above under subsection 4.a, the short delay in delivery of the reports provided for by the final rule is not significant given the nature of the information included in the report and allowing additional time to prepare CCO Annual Reports might allow Registrants to prepare better reports that more effectively address the information contained therein.

The Commission has not identified any other public interest considerations for this rulemaking.

For the reasons stated in the preamble, the Commodity Futures Trading Commission amends 17 CFR part 3 as follows:

Therefore, under the Federal Food, Drug, and Cosmetic Act, and under authority delegated to the Commissioner of Food and Drugs, the direct final rule published on August 8, 2016, (81 FR 52329) is withdrawn.

Under this final rule, public housing agencies (PHAs) operating in designated metropolitan areas are required to use Small Area FMRs, while PHAs not operating in the designated areas have the option to use Small Area FMRs in administering their HCV programs. Other programs that use FMRs would continue to use area-wide FMRs. This final rule also provides for regulatory implementation of certain provisions of the Housing Opportunity Through Modernization Act (HOTMA) related to FMRs, as well as conforming regulatory changes to part 982 concerning the reduction in payment standards during the term of the Housing Assistance Payment (HAP) contract in the HCV program. Specifically, the final rule provides for publication of FMRs by way of the World Wide Web, and provides that PHAs are no longer required to reduce the payment standard for a family under HAP contract when the PHA is required to reduce the payment standard for its program as the result of a reduction in the FMR.

This final rule establishes a more effective means for HCV tenants to move into areas of higher opportunity and lower poverty by providing the tenants with a subsidy adequate to make such areas accessible and, consequently, help reduce the number of voucher families that reside in areas of high poverty concentration. Prior to this rule, subsidy for HUD's HCV program is determined by a formula that considers rent prices across an entire metropolitan area. However, rents can vary widely within a metropolitan area depending upon the size of the metropolitan area and the neighborhood in the metropolitan area within which one resides. The result of determining rents on the basis of an entire metropolitan area is that a voucher subsidy may be too high or may be too low to cover market rent in a given neighborhood. To date, HUD's policy for addressing high concentrations of voucher holders raises the level of the FMR from the 40th percentile to the 50th percentile (roughly a 7—8 percent increase) in the whole FMR area. This level of added subsidy has not been targeted to areas of opportunity, and consequently, this formula has not proven effective in addressing the problem of concentrated poverty and economic and racial segregation in neighborhoods. Experience with the 50th percentile regime has shown that the majority of HCV tenants use their vouchers in neighborhoods where rents are low but poverty is generally high. Small Area FMRs will complement HUD's other efforts to support households in making informed choices about units and neighborhoods with the goal of increasing the share of households that choose to use their vouchers in low poverty opportunity areas.

This rule provides that in lieu of determining rents on the basis of an entire metropolitan area, rents will be determined on the basis of ZIP codes for those metropolitan areas with both significant voucher concentration challenges and market conditions where establishing FMRs by ZIP code areas has the potential to significantly increase opportunities for voucher families. ZIP codes are small enough to reflect neighborhood differences and provide an easier method of comparing rents within one ZIP code to another ZIP code area within a metropolitan area. Based on early evidence from PHAs using Small Area FMRs that are in place in certain metropolitan areas in the U.S., HUD believes that Small Area FMRs are more effective in helping families move to areas of higher opportunity and lower poverty.

The major provisions of this final rule are set out in two sections: (1) Those that were in the proposed rule and retained at the final rule; and (2) those that were revised at the final rule or are new provisions at the final rule stage, developed in response to public comment: The major provisions are as follows:

• Defines Small Area FMR areas as the U.S. Postal Service ZIP code areas within a designated metropolitan area.

• Provides for criteria by which Small Area FMRs will be set. Small Area FMRs will be set for metropolitan areas where the area includes the following criteria: number of HCVs under lease (initially, 2,500 or more); the standard quality rental stock, within the metropolitan area, that is in small areas (that is ZIP codes) where the Small Area FMR is more than 110 percent of the metropolitan FMR (initially 20 percent or more); and the percentage of voucher holders living in concentrated low-income areas relative to all renters within these areas over the entire metropolitan area exceeds a specified threshold (initially 1.55). (This final rule also adopts additional criteria for setting Small Area FMRs for a metropolitan area, see below.)

• Defines “concentrated low-income areas” to mean those census tracts in the metropolitan FMR area with a poverty rate of 25 percent or more; or any tract in the metropolitan FMR area where 50 percent or more of the households earn incomes at less than 60 percent of the area median income (AMI) and are designated as Qualified Census Tracts in accordance with section 42 of the Internal Revenue Code (26 U.S.C. 42).

• Provides for designation of Small Area FMR areas at the beginning of a Federal fiscal year and makes additional area designations every 5 years thereafter as new data becomes available.

• Requires if a metropolitan area meets the criteria for application of Small Area FMRs, that all PHAs administering HCV programs in that area will be required to use Small Area FMRs.

• Provides that a PHA that is administering an HCV program in a metropolitan area that is not subject to application of Small Area FMRs may opt to use Small Area FMRs by seeking approval of HUD's Office of Public and Indian Housing through written request to such office.

• For all rent determinations of FMRs, 40th percentile or Small Area FMRs, replaces “the most recent decennial census” with the “most recent American Community Survey conducted by the U.S. Census Bureau.”

• Provides that metropolitan areas with FMRs set at the 50th percentile rent will transition to either (1) the 40th percentile rent at the expiration of the 3-year period for the 50th percentile rent, or (2) designation as a Small Area FMR area in accordance with the criteria for determining a Small Area FMR area.

• Provides that a PHA with jurisdiction in a 50th percentile FMR area that reverts to the standard 40th percentile FMR may request HUD approval of payment standard amounts based on the 50th percentile rent in accordance with the regulations in 24 CFR 982.503(f) that are changed by this final rule. PHAs, however, would be required to continue to meet the provisions of 24 CFR 982.503(f) annually in order to maintain payment standards based on 50th percentile rents.

• Removes the existing regulations at 24 CFR 888.113 that provide for FMRs to be set at the 50th percentile rent. However, for areas not selected for implementation of Small Area FMRs, the final rule does not revoke any FMR currently set at the 50th percentile rent, and for which the current 3-year term for retaining a 50th percentile rent has not expired.

• Conforms the regulations at § 982.505(c)(3) with the portion of section 107 of the Housing Through Opportunity Modernization Act (HOTMA), Public Law 114-201, which provides PHAs with the option to hold families under a Housing Assistance Payments (HAP) contract harmless from payment standard reductions that are currently required at the family's second annual recertification if the family's payment standard falls outside of the basic range as the result of a decrease in FMRs (including a decrease in FMR attributable to the implementation of Small Area FMRs). As an additional protection, the final rule provides that should a PHA choose not to hold the payment standard at its current level for families under HAP contract in an area experiencing a payment standard reduction, the PHA may set the payment standard for families that remain under HAP contract at any amount between the current payment standard and new normally applicable payment standard amount, and may further reduce the payment standard for families under HAP contract over time to gradually bring the family's payment standard down to payment standard that is normally applicable to the area for the PHA's program or reduce the gap between the two payment standards. The rule further extends these same flexibilities to the PHA in cases where the payment standard decrease is not the result of a FMR decrease.

The rule further provides that if the PHA chooses to apply a reduction in the payment standard to the family's subsidy calculation during the HAP contract term, the earliest the PHA may implement the initial reduction in the payment standard is the second regular reexamination following the effective date of the decrease in the payment standard amount. Section 107 of HOTMA also provides new requirements for publishing HUD's FMRs.

• Additional criteria by which Small Area FMRs will be set.

○ Adds the vacancy rate of an area as a criterion to the selection parameters for Small Area FMRs. The vacancy rate will be calculated in the following manner: Using data from the 1-year American Community Survey (ACS) tabulations, the vacancy rate is the number of Vacant For Rent Units divided by the sum of the number of Vacant For Rent Units, the number of Renter Occupied Units, and the number of Rented, not occupied units. The vacancy rate will be calculated from the 3 most current ACS 1 year datasets available and average the 3 values. Initially, this threshold will be set at 4 percent, meaning areas designated for Small Area FMRs must have vacancy rates higher than 4 percent.

○ Adds an additional requirement to the voucher concentration ratio included in the proposed rule. In addition to requiring the ratio of the proportion of voucher tenants in concentrated low-income areas (CLIAs) to the proportion of renter occupied units in CLIAs to exceed a minimum threshold (initially 155 percent), the final rule requires that the numerator of the ratio (the proportion of voucher tenants in CLIAs) meet or exceed a minimum threshold. Initially, this threshold will be set at 25 percent.

• Exempts all project-based vouchers from required application of Small Area FMRs but allows a PHA operating under the Small Area FMRs for its tenant-based program to apply Small Area FMRs to future PBV projects (and to current PBV projects provided the owner mutually agrees to the change).

• Provides that a PHA's selection to use Small Area FMRs for PBVs would not require HUD approval but should be undertaken in accordance with guidance issued by HUD and indicated in the PHA's administrative plan.

• Rather than codify both the selection criteria and the selection values in the regulatory text as in the proposed rule, the final rule codifies the selection criteria in the regulatory text, but does not codify the selection values in the regulatory text. The selection values for the first round of Small Area FMR areas is announced in a separate notice published in today's Federal Register. The selection values for future designations of Small Area FMR areas will be made available for public comment via Federal Register notice before HUD selects additional areas to be designated as Small Area FMR Areas.

• Makes two changes to the exception payment standard requirements in response to public comments:

○ PHAs not operating in Small Area FMR designated areas may establish exception payment standards for a ZIP code area of up to 110 percent of the relevant Small Area FMR by notifying HUD; and

○ The 50 percent population cap (24 CFR 982.503(c)(5)) will not be applicable to Exception Payment Standards in Small Area FMR areas.

• Exempts manufactured home space rental from Small Area FMRs.

• Provides that PHAs have up to three months from the date when the new FMRs go into effect in which to update their payment standards if a change is necessary to fall within the basic range of new FMRs. For example, if the new FMR went into effect on October 1, 2017, the PHA would need to update their payment standard if necessary to fall within the basic range of the new FMRs no later than January 1, 2018.

• Provides HUD may suspend a Small Area FMR designation for a metropolitan area, including at the request of a PHA, where HUD determines such action is warranted based on a documented finding of adverse rental housing market conditions that will be set out by notice (for example, the metropolitan area experiences a significant loss of housing units as a result of a natural disaster).

• Provides that HUD may provide an exception payment standard for a PHA administering the HCV program under Small Area FMRs for an entire ZIP Code area in accordance with the conditions and procedures provided by notice in the Federal Register. The requirements at § 982.503(c) do not apply to these exception payment standard requests.

The main benefit of the final rule is that, through setting rental subsidy amounts at a more local level, assisted households will be more able to afford homes in areas of high opportunity than under current policy. Such moves are expected to benefit both individual households, for example, through access to better schools or safer neighborhoods, and areas as a whole through reducing concentrated neighborhood poverty. Other benefits could arise through the reduction of overpayment of rent in areas where the neighborhood rent is below the metropolitan average. Early evidence from current Small Area FMR locations suggests that there could be per-voucher cost decreases relative to 50th percentile rents, depending on the choices made by tenants. Evidence also suggests that families moved to better neighborhoods with higher rents, although not greatly in excess of the metropolitan FMR, which resulted in no overall program cost increases.1 Finally, the final rule eliminates the year to year volatility of some areas changing to and from 50th percentile FMRs.

Potential costs of the final rule include the administrative expenses associated with implementation on the part of PHAs. Additionally, if there are barriers to households moving to areas of higher opportunity beyond housing costs, such as transportation expenses or social factors, assisted households might be worse off if they can no longer afford their current units in their neighborhoods. This may be particularly true for elderly families or families with a disabled member; however, HUD regulations allow PHAs wide latitude in setting payments standards for disabled tenants as “reasonable accommodations” of their disabilities. Finally, if the long-term impacts of the final rule cause per-voucher costs to rise, fewer households would receive assistance without an overall increase in program funds.

HUD's HCV program helps low-income households obtain standard rental housing and reduces the share of their income that goes toward rent. Vouchers issued under the HCV program provide subsidies that allow individuals and families to rent eligible units in the private market. A key parameter in operating the HCV program is the FMR. In general, the FMR for an area is the amount that would be needed to pay the gross rent (shelter rent plus utilities) of privately owned, decent, and safe rental housing of a modest (non-luxury) nature with suitable amenities. In addition, all rents subsidized under the HCV program must meet rent reasonableness standards. Rent reasonableness is determined by PHAs with reference to rents for comparable unassisted units.

In the HCV program, the FMR is the basis for determining the “payment standard amount” used to calculate the maximum monthly subsidy for a voucher household (see § 982.503). PHAs may establish payment standards between 90 and 110 percent of the FMR.2 HCV program households receive a housing assistance payment equal to the difference between the lower of the gross rent of the unit or the payment standard established by the PHAs and the family's Total Tenant Payment (TTP), which is generally 30 percent of the household's adjusted monthly income. Participants in the voucher program can choose to live in units with gross rents higher than the payment standard, but would be required to pay the full cost of the difference between the gross rent and the payment standard, in addition to their TTP. Please note that at initial occupancy the family's share cannot exceed 40 percent of adjusted monthly income.

HUD establishes FMRs for different geographic areas. Because payment standards are based on FMRs, housing assistance payments on behalf of the voucher household are limited by the geographic area in which the voucher household resides. HUD calculates FMRs for all nonmetropolitan counties and metropolitan areas. To date, the same FMR is applicable throughout a nonmetropolitan county or metropolitan area, which generally is comprised of several metropolitan counties. FMRs in a metropolitan area (Metropolitan FMR) represent the 40th percentile (or in special circumstances the 50th percentile) gross rent for typical non-luxury, non-substandard rental units occupied by recent movers in a local housing market.3

As noted earlier, HUD regulations have allowed a PHA to set a payment standard between 90 percent and 110 percent (inclusive) of the FMR. PHAs may determine that payment standards that are higher than 110 percent, or lower than 90 percent, are appropriate for subareas of their market; in this instance, a PHA would request HUD approval for a payment standard below 90 percent or an exception payment standard above 110 percent. The total population of a HUD-approved exception payment area (i.e., an area covered by a payment standard that exceeds 110 percent of the FMR) may not include more than 50 percent of the population of the FMR area (see § 982.503).

On October 2, 2000, at 65 FR 58870, HUD published a rule (2000 rule) establishing policy, currently in HUD's codified regulations, to set FMRs at the 50th percentile for “areas where higher FMRs are needed to help families, assisted under HUD's program as well as other HUD programs, find and lease decent and affordable housing.” This policy was put in place to achieve two program objectives: (1) Increase the ability of low-income families to find and lease decent and affordable housing; and (2) provide low-income families with access to a broad range of housing opportunities throughout a metropolitan area. The policy further provides that PHAs that had been authorized to use FMRs set at the 50th percentile rent may later be required to use FMRs set at the 40th percentile rent. This would occur if the FMR were set at the 50th percentile rent to provide a broad range of housing opportunities throughout a metropolitan area for three years, but the concentration of voucher holders in the metropolitan area did not lessen.

Since HUD established the 50th percentile FMRs 16 years ago, research has emerged 4 that indicates that 50th percentile FMRs are not an effective tool in increasing HCV tenant moves from areas of low opportunity to higher opportunity areas. Specifically, it appears that much of the benefit of increased FMRs simply accrues to landlords in lower rent submarket areas in the form of higher rents rather than creating an incentive for tenants to move to units in communities with more and/or better opportunities. As provided in HUD's currently codified regulation, to determine the 50th percentile program's effectiveness, HUD must measure the reduction in concentration of HCV tenants (objective 2 above) presumably from high poverty areas, over a 3-year period. If there is no measurable reduction in the concentration of HCV tenants, the FMR area loses the 50th percentile FMRs for a 3-year period. A large number of areas have been disqualified from the 50th percentile program for failure to show measurable reduction in voucher concentration of HCV tenants since 2001 when the program started, which strongly suggests that the deconcentration objective is not being met.5

Since the establishment of the 50th percentile program, HUD has developed Small Area FMRs to reflect rents in ZIP code based areas with a goal to improve HCV tenant outcomes. Small Area FMRs have been shown to be a more direct approach to encouraging tenant moves to housing in lower poverty areas by increasing the subsidy available in specific ZIP codes to support such moves.6 Since 2010, when the United States Census Bureau made available data collected over the first 5 years of the American Community Survey (ACS), HUD has considered various methodologies that would set FMRs at a more granular level. HUD's goal in pursuing the Small Area FMR methodology is to create more effective means for HCV tenants to move into higher opportunity, lower poverty areas by providing them with subsidy adequate to make such areas accessible and to thereby reduce the number of voucher families that reside in areas of high poverty concentration.

Toward this end, through a Federal Register notice published on May 18, 2010, at 75 FR 27808, HUD announced that in Fiscal Year (FY) 2011 it would seek to conduct a Small Area FMR demonstration project to determine the effectiveness of FMRs which are published using U.S. Postal Service ZIP codes as FMR areas within metropolitan areas. HUD also solicited public comment on the proposed demonstration. On November 20, 2012, at 77 FR 69651, HUD announced the commencement of the Small Area FMR Demonstration, for which advance notice was provided on May 18, 2010, and further announced the participation of the following PHAs: The Housing Authority of the County of Cook (IL), the City of Long Beach (CA) Housing Authority, the Chattanooga (TN) Housing Authority, the Town of Mamaroneck (NY) Housing Authority, and the Housing Authority of Laredo (TX).

Through a second Federal Register notice published on August 4, 2010, at 75 FR 46958, HUD mandated the use of Small Area FMRs in place of metropolitan-area-wide-FMRs to settle litigation in the Dallas, TX, HUD Metro FMR Area. Small Area FMRs have been in operation in Dallas, Texas, as part of a court settlement since 2010, and in a small number of PHAs since 2012.

On June 2, 2015, at 80 FR 31332, HUD published an advance notice of proposed rulemaking (ANPR) entitled “Establishing a More Effective Fair Market Rent (FMR) System; Using Small Area Fair Market Rents (Small Area FMRs) in Housing Choice Voucher Program Instead of the Current 50th Percentile FMRs.” In this ANPR, HUD announced its intention to amend HUD's FMR regulations applicable to the HCV program to provide HCV tenants with subsidies that better reflect the localized rental market, including subsidies that would be relatively higher if they move into areas that potentially have better access to jobs, transportation, services, and educational opportunities. The ANPR sought public comment on the use of Small Area FMRs for the HCV program within certain metropolitan areas. HUD received 78 public comments in response to the ANPR.

On June 16, 2016, at 81 FR 39218, HUD published a proposed rule that require the use of Small Area FMRs in place of the 50th percentile rent to address high levels of voucher concentration. The proposed rule addressed the issues and suggestions raised by public commenters on the ANPR. (See 81 FR 39222 through 39224.) In addition to responding to public comments on the ANPR, HUD specifically requested comment on certain issues. (See 81 FR 39224 through 39226.) HUD received 113 comments on its June 16, 2016, proposed rule. The public comments can be found at https://www.regulations.gov/docket?D=HUD-2016-0063.

The significant issues raised by the public commenters and HUD's responses are provided in the following section of this preamble.

Commenters were divided in their support for the rule. For those commenters that supported the rule they stated that this new methodology was long overdue because the current system was not working. Commenters stated that the current system was not working and HUD's proposal sounded like a good solution. Commenters stated that creating a system where cities, counties and municipalities could have a finer laser point on their rental markets could increase subsidy utilization rates and customer choice. The commenters stated that they highly recommended not only looking at the proposed methodologies but also collecting and refining more data from cities on their housing stock and availability. A commenter stated that setting FMRs for smaller areas is an ingenious solution because it will put an end to unnecessarily high subsidies in high poverty areas, and will gradually erode the legacy of segregation by giving HCV households more access to low-poverty neighborhoods. Another commenter stated that this FMR change is a welcome innovative step toward increasing housing choices for low-income individuals and families. Other commenters stated that the goal of the Small Area FMR rule will benefit people with disabilities by affording them better opportunities for integration into the community.

For those commenters that opposed the rule they offered the following concerns. A commenter stated HUD's proposal would result in Section 8 recipients in designated ZIP codes experiencing decreases in their subsidies, and these recipients would be obliged to increase their out-of-pocket share. Other commenters stated that research indicates low poverty rates are not 100 percent indicative of high opportunity areas. The commenters stated that given this information, Small Area FMRs are not an indicator of areas of opportunity and cannot be substituted for more robust mobility efforts resulting in poverty deconcentration, racial/ethnic deconcentration, and other positive outcomes associated with areas of opportunity. Other commenters similarly stated that voucher holders access to opportunity/higher market neighborhoods is only partially impacted by adequate payment standards. The commenters stated that while higher payment standards are essential this is not a solution to moving low-income families with children into opportunity neighborhoods. Commenters stated that HUD should not implement Small Area FMRs unless HUD revises the HCV funding formula to ensure that implementation of the rule does not result in fewer households being subsidized under the voucher program.

The following presents the specific issues that commenters raised on the proposed rule and HUD's responses.

In the proposed rule, HUD sought comment on 13 specific areas presented below.

1. Should HUD provide for PBVs that are in the pipeline to continue using metropolitan FMRs even if the area is designated as a Small Area FMR area? Additionally, should HUD require newly proposed PBVs post Small Area FMR designation to use Small Area FMRs?

Comment: In response to the question of whether PBVs in the pipeline in a designated area, and newly proposed PBVs post-designation, should use Small Area FMRs, commenters expressed wide-ranging views. Many stated that applying Small Area FMRs to existing PBV projects or those in the pipeline could destabilize deals (e.g., impact their value for LIHTC allocation, etc.). Some commenters indicated Small Area FMRs would assist in placing PBV units in high opportunity areas and reduce incentives to develop units in high-poverty areas. Other commenters stated Small Area FMRs would not be high enough to achieve the goal of creating units in high opportunity areas. Some suggested Small Area FMRs should not apply to PBVs at all because PBVs are essential to revitalization and preservation strategies. In summary, commenters offered differing views: Some recommend PBVs be excluded entirely (with or without an opt-in provision); some recommend voluntary adoption for new or pipeline projects, and others advocate application to all new projects to encourage placement of PBVs in high opportunity areas. One commenter requested HUD remove the word “jurisdiction” in proposed § 888.113(h), to clarify that the new Small Area FMRs apply in any zip code where a PHA's voucher is placed in the metropolitan area.

HUD Response: HUD appreciates that PBVs relationship to FMRs is different than tenant-based vouchers; for example, PBVs are often used for preservation in low-income neighborhoods where the Small Area FMR would be lower than current FMRs—however, Small Area FMRs that are higher than current FMRs could help PBVs reach high opportunity neighborhoods. In the context of HUD's Rental Assistance Demonstration (RAD), the use of Small Area FMRs for PBV may limit PHA options in terms of deciding whether PBV or PBRA is the appropriate choice for the RAD conversion.

Given the range and variation among public comments, and the range of uses of PBV within HUD's rental assistance programs, HUD is choosing to exempt all current and future PBVs from Small Area FMRs at this time. However, if a PHA is operating its tenant-based program under the Small Area FMRs, the PHA may apply Small Area FMRs to all future PBV projects if it establishes such a policy in its PHA administrative plan. In such a case, the PHA may also choose to also establish a policy that allows the PHA to apply the Small Area FMRs to current PBV projects, provided the owner is willing to mutually agree to do so. The application of the Small Area FMR to the PBV project must be prospective. The PHA and the PBV project owner operating under the Small Area FMRs may not subsequently choose to revert back to the metropolitan-wide FMR, regardless of whether the PHA subsequently changes its administrative policy to no longer apply Small Area FMRs to PBV projects. HUD believes this approach offers maximum flexibility for varied circumstances and HUD will closely monitor the results of the policy including for any fair housing or civil rights concerns.

HUD is also removing the term “jurisdiction” in § 888.113(h) for consistency since HUD provides approval to a “PHA” that requests to voluntarily use Small Area FMRs under 982.113(c) as opposed to a “PHA jurisdiction”.

2. The proposed rule provides for Small Area FMR area selection parameters to be codified in regulatory text. HUD is seeking comment on whether these parameters should be codified or should be incorporated into each annual proposed FMR notice to provide HUD, PHAs, and other stakeholders with flexibility, in any given fiscal year, to offer changes to these selection parameters and have the opportunity to comment before any changes to the parameters are made.

Comment: Some commenters proposed codifying area selection criteria with limited flexibility in the specific parameter values for reach (percentages, populations). They recommended HUD should codify the criteria for selecting Small Area FMR areas but the final regulations should allow HUD to revise the Small Area FMR criteria if necessary, through notice and opportunity for public comment, in the Federal Register. Commenters suggested this would be the way to ensure changes are guaranteed to fall under the informal administrative rulemaking process. However, other commenters preferred incorporating the parameters into the annual notice as a way to allow for comments and perhaps changes before final Small Area FMRs are issued for that year—enabling potential flexibility for changes on an annual basis. Commenters indicate that HUD should make clear whether Small Area FMRs designations are permanent.

HUD Response: In order to provide specificity to FMR users, and flexibility to HUD, the final rule codifies the definitions of selection parameters in regulatory text but will not include the specific values for these selection criteria in the regulatory text. The values of the selection parameters for the first round of Small Area FMR area selections are specified in a separate Federal Register notice published today. The values of selection parameters for subsequent Small Area FMR Area designations, which will be made every 5 years, will be specified through Federal Register notice with opportunity for public comment as new Small Area FMR designations are made. Further, once an area is selected to use Small Area FMRs, the selection is permanent. In future years, HUD intends to make additional selections based on updated information and different selection parameter values.

3. Several commenters to HUD's ANPR suggested that HUD provide for tenant rent protections in ZIP codes where the Small Area FMR is below the metropolitan area and tenants choose not to move. No additional tenant protections were instituted for tenants serviced by PHAs accepting HUD's invitation to participate in the Small Area FMR demonstration nor were additional tenant protections implemented for tenants living in the Dallas, TX HUD Metropolitan Area when Small Area FMRs were implemented there. However, as part of a transition strategy between Metropolitan FMRs and Small Area FMRs, HUD seeks comment on what additional policies or requirements the final rule should include that would mitigate the impact of significant and abrupt decreases in the FMRs for certain ZIP code areas on families currently under HAP contract in those impacted areas.

Comment: Commenters suggested a range of additional policies or requirements that would mitigate the impact of significant or abrupt decreases in the FMR for families currently in those areas. Many requested that HUD hold all current tenants harmless permanently if they remain in their same unit (or, as some suggested, neighborhood); others suggested until tenants move or remain for more than 5 years; and others still suggested hold harmless should only apply to certain populations. Commenters urged HUD to fund support mechanisms for impacted households, such as mobility counseling, training and guidance on reasonable accommodation procedures, and others. Some commenters stated that no additional protections were necessary. In addition, commenters also raised concerns about specific populations, exception payment standards, phasing in of payment standard reductions, and incorporation of vacancy rates; those comments are handled elsewhere in the response to comments within this preamble as other questions more directly focus on that content.

HUD Response: Based on the comments received, HUD agrees that it is important to protect tenants, and therefore, the following changes have been incorporated within this final rule. The final rule makes conforming regulatory changes in accordance with Section 107 of HOTMA, which provides PHAs with the option to establish an administrative policy that would hold harmless those families remaining in place from payment standard reductions that are currently required at the family's second annual recertification if the family's payment standard falls outside of the basic range as the result of a decrease in FMRs (including a decrease in FMR attributable to the implementation of Small Area FMRs). This will be done without requiring individual exception payment standard requests.

In addition, the final rule provides PHAs with the option to establish a new payment standard for families under HAP contract between the full “hold harmless” option provided under HOTMA and the new payment standard based on the Small Area FMR. Under this option, the PHA would have greater flexibility than what is afforded under HOTMA (which essentially requires the PHA to either hold the in-place families completely harmless or transition them to the new payment standard). This policy would allow the PHA to still achieve some budgetary flexibility by reducing the payment standard for families under HAP at the second reexamination, while ensuring the reduction in subsidy is modest and does not place families at risk of displacement.

The rule further extends these same flexibilities to the PHA if the payment standard decrease is not the result of a decrease in the FMR.

Finally, in order to ensure that a suitable amount of units remain available during the transition to Small Area FMRs, this final rule limits the annual decrease in Small Area FMRs to no more than 10 percent of the area's FMR in the prior fiscal year. That is, the current FMR may be no less than 90 percent of the area's FMR in the previous fiscal year. In addition, the final rule provides that HUD may approve exception payment standards for PHAs administering their HCV programs under Small Area FMRs for an individual ZIP code area in accordance with conditions and procedures set forth in a separate Federal Register notice as opposed to the normally applicable requirements at 982.503(c).

4. Related to question 3, HUD seeks comment on whether the final rule should limit the potential decline in the FMR for a ZIP code area resulting from the implementation of Small Area FMRs in order to ensure that sufficient housing opportunities remain available to voucher holders? If so, HUD seeks recommendations on specific policies or requirements that should be included in the final rule to achieve the desired outcome.

a. For example, an approach would be to allow the PHA to establish exception payment standards above the basic range for impacted ZIP code areas meeting certain conditions through a streamlined HUD approval process. One example of this may be that PHAs could have the discretion of setting their payment standards at up to 130 percent of the Small Area FMR in the 1st year of transition, at up to 120 percent of the Small Area FMR in the 2nd year of transition, and at up to 110 percent of the Small Area FMR in the 3rd and subsequent years following implementation.

b. With respect to protections for tenants currently under HAP contract, one possibility may be to increase the amount of time that the family is held harmless from a decrease in the payment standard. For instance, instead of the lower payment standard going into effect on the second reexamination following the effective date of the decrease in the payment standard, the final rule could provide that the lower payment standard would not go into effect for a family under HAP contract until a later re-examination (e.g., third, fourth, or fifth reexamination).

Comment: Many commenters urged HUD to provide flexibility for PHAs to set rent levels and to protect tenants served by PHAs that do not choose to hold tenants harmless as allowed under HOTMA. Commenters urged HUD to implement the provision in HOTMA that gives PHAs the discretion to hold harmless decreases in Small Area FMRs and FMRs for current tenants. Others suggested PHA-administered phase-ins and increased timeframes before decreases are required are not necessarily helpful, as such phase-ins and timeframes add to administrative tracking requirements and increase program audit risks for the administering agency, as well as cause confusion for residents and landlords.

Regarding the proposal in which PHAs could have exception payment standards above the basic range, some commenters embraced the proposal; however, others felt it would not go far enough, and only delay the onset of rent burdens. Compared to a Small Area FMR phase-in, some commenters suggested it would protect fewer families since it is likely that only some PHAs would implement the higher payment standards. Other commenters suggested HUD could permit PHAs to set payment standards for eligible voucher holders that fall anywhere between the Small Area FMR and the metro-level FMR. Commenters also suggested that HUD limit the amount the FMR or payment standard could fall below metropolitan FMRs each year. Suggestions offered by the commenters ranged from suggesting Small Area FMRs be set no lower than 90-95 percent of the metropolitan FMR, no lower than 80-90 percent the second year, and so on in 5 percent or 10 percent increments.

Some commenters supported limiting annual FMR reductions by 3 percent or 5 percent, while others suggested the decreases should occur over a 5-year instead of a 3-year period (for all areas, or for only those areas that decrease by more than 10 percent), or the total drop be no more than 5 percent. Other commenters suggested changes included removing or increasing the cap on Small Area FMR values.

Regarding the proposal to increase the amount of time that the family is held harmless from a decrease in the payment standard, some commenters suggested HUD hold the rent harmless until at least the fifth reexamination following implementation of Small Area FMRs. Other commenters stated that if HUD implements the HOTMA payment standard provision, there would be no need to implement a hold harmless provision that holds payment standards harmless in the third, fourth, or fifth reexamination.

HUD Response: As noted above, the final rule implements a number of tenant protection policies: First, the final rule conforms the regulation in accordance with Section 107 of HOTMA, which provides PHAs with the option to maintain an in-place family's current payment standard at a level above a payment standard at the top of the basic range of the a new, lower FMR. Second, the final rule further provides PHAs with the option to establish a new payment standard for families under the HAP contract between the full “hold harmless” option provided under HOTMA and a payment standard based on the basic range of the new lower Small Area FMR. It is noted that the rule also extends these same flexibilities to the PHA in cases where the payment standard decrease is not a result of a decrease in the FMR.

The rule maintains that in cases where the PHA will apply a decrease in the payment standard to families during the term of the HAP contract, the earliest that the PHA may apply the initial reduction to the payment standard amount is the second regular reexamination following the effective date of the change in the payment standard amount. This provides at minimum a family with no less than the amount of time previously provided under the regulations before a reduction in the payment standard may take effect during the term of the family's HAP contract. The final rule also provides the PHA with the administrative flexibility to further reduce the payment standard for the families that remain under HAP contract if the PHA wishes to gradually reduce or eliminate the difference between the family's payment standard and the normally applicable payment standard on the PHA's payment standard schedule over time.

HUD notes that section 78001 of the Fixing America's Surface Transportation Act (or FAST Act), amended the 1937 Act to allow PHAs to undertake full income reexaminations for families with 90 percent or more of their income from fixed-income sources every three years instead of annually. HUD recognizes that implementation of this change in the frequency of reexaminations may have significant ramifications in terms of when a decrease in a payment standard could take effect during the term of the HAP contract for some families given that under this rule the decrease may not take effect until the second regulation reexamination. Rather than try to incorporate changes to the tenant protection provisions of this rule in anticipation of those potential complications, HUD will instead consider if any changes are necessary as part of the forthcoming rule-making for implementation of those FAST Act provisions.

The final rule further provides that the PHA may establish different policies regarding how decreases in payment standards will apply during the term of the HAP contract for designated areas within their jurisdiction (e.g., for different zip code areas). However, the PHA must apply the same policies to all families under HAP contract within that designated area.

Fourth, controlling for extremely large decreases in FMRs, the final rule protects families, by limiting the maximum amount the FMR may decrease year over year to 10 percent of the prior year's FMR for the area. This protection applies to all tenants—families under HAP contract, current participants that either want or are required to move to new units, and families from the waiting list who are issued vouchers to begin their initial housing search, and to metropolitan and non-metropolitan county FMRs.

Fifth, the final rule permits a PHA that is administering its HCV program under the Small Area FMRs to request and HUD to approve exception payment standards for a ZIP Code Area under the conditions and procedures set forth in a Federal Register Notice instead of the requirements under 982.503(c). This will allow HUD to establish a process by which a PHA may request and receive approval to establish an exception payment standard promptly for a ZIP Code area if necessary to react to rapidly changing market conditions or to ensure sufficient rental units are available for voucher families.

5. The proposed rule adds a new paragraph (i) to § 888.113 to address the transition of metropolitan areas that were previously subject to 50th percentile FMRs. HUD believes that the Small Area FMR methodology will provide HCV tenants with greater access to areas of opportunity than metropolitan area wide 50th percentile FMRs. As a result, this rule proposes that a 50th percentile metropolitan area designated for Small Area FMRs would transition to Small Area FMRs on the effective date of the Small Area FMR designation. HUD is also proposing that a 50th percentile FMR area that is not designated for Small Area FMRs would remain under 50th percentile FMRs until the end of the existing 3-year period for the 50th percentile FMRs prior to reverting to the standard 40th percentile FMRs. The rule does not eliminate provisions that permit a PHA with jurisdiction in a 50th percentile FMR area that reverts to the standard 40th percentile FMR to request HUD approval of payment standard amounts based on the 50th percentile rent in accordance with the existing § 982.503(f); however, HUD is specifically seeking comment on whether this provision should be eliminated in order to phase out the use of 50th percentile rents for deconcentration purposes. HUD would also appreciate comments as to whether or not the current SEMAP deconcentration standard is appropriate as the basis for PHAs requesting HUD to approve payment standards based on 50th percentile rents under existing § 982.503(f). HUD is specifically seeking comment on these proposed polices, as well as suggestions for alternative approaches or other recommendations on how best to phase-out 50th percentile rent FMRs for impacted metropolitan areas and transition the area to either the Small Area FMRs or the standard metropolitan-wide 40th percentile FMRs.

Comment: Commenters responses to this issue varied. Some commenters requested continuation of the 50th percentile policy in its entirely (including expanding it so that all FMRs would be set at the 50th percentile). Other commenters recommended it be optional if areas proved successful deconcentration using it, and others recommended phasing out 50th percentile rents altogether. Some commenters responded that the SEMAP standard should be considered an appropriate basis for PHAs to request payment standards based on the 50th percentile until such time as the Section Eight Management Assessment Program (SEMAP) provision for deconcentration is modified. Others commented that if HUD allows agencies that earn the SEMAP deconcentration bonus to retain 50th percentile FMRs, it should also require such agencies to demonstrate that retaining 50th percentile FMRs would be more effective in enabling voucher holders to live in high-opportunity areas than adopting Small Area FMRs. and others still indicated that before determining this, HUD should clarify proposed mobility factors of SEMAP reform.

HUD Response: It is impractical to maintain both 50th percentile FMRs and Small Area FMRs as the FMR tools that HUD provides to help deconcentrate voucher tenants in metropolitan areas. However, HUD recognizes that some PHAs have attained deconcentration success using 50th percentile FMRs. Therefore, as in the proposed rule, the final rule provides that current 50th percentile areas that are designated for Small Area FMR usage will transition to using Small Area FMRs when Small Area FMRs become effective and areas not designated for Small Area FMR usage will remain 50th percentile areas until the end of their 3-year designated period and then will revert to 40th percentile areas. PHAs operating in 50th percentile areas that do not convert to Small Area FMR areas and do not choose to opt-in to using Small Area FMRs may follow the procedures available at 24 CFR 982.503(f) to apply to continue to use payment standards based on 50th percentile rents.

6. HUD is specifically seeking comment on how to reduce the administrative burden on PHAs and simplify the transition to Small Area FMRs. For example, HUD is proposing to change the percentage decrease in FMRs that triggers rent reasonableness redeterminations from 5 percent to 10 percent for Small Area FMR PHAs. HUD requests comments, however, regarding whether 10 percent is the right trigger for program-wide rent reasonableness redetermination, whether HUD should limit this proposal to Small Area FMR decreases, or also change the percentage of decrease that triggers rent reasonableness for all FMRs, and whether it should revise the trigger for program-wide rent reasonableness redeterminations at all. In regards to potentially expanding the 10 percent trigger for rent reasonableness redetermination to a program-wide requirement, HUD seeks comments on the trade-offs between administrative relief and decreased program oversight on rent levels. HUD also requests comments on what other changes would reduce the potential administrative burden and complexity for PHAs impacted by the implementation of Small Area FMRs.

Comment: Commenters emphasized that that Small Area FMRs and other recent programmatic changes represent increased administrative burden. Many commenters supported increasing the threshold at which an FMR decline triggers a rent reasonableness redetermination from 5 percent to 10 percent as a way to reduce that burden. However, others recommended changing the trigger from 5 percent to 35 percent and allowing the PHA to make that change through their annual plan process. Some commenters opposed changing the standard altogether. Other commenters stated that they do not believe a change from 5 percent to 10 percent is enough to reduce administrative burden sufficiently given the number of rent redeterminations expected from the transition to Small Area FMRs.

Aside from whether and at what level to change the trigger, some commenters recommended this be program-wide, and not just for Small Area FMRs. Commenters urged HUD to issue updated rent reasonableness guidance—including for high opportunity neighborhoods to avoid methods disallowing rents if the methods do not adequately consider location. Commenters also urged HUD to require PHAs to be transparent with the data used to perform the analysis and make it publicly available.

Other commenters urged HUD to publish new FMRs and Small Area FMRs far in advance of their effective date to avoid requiring PHAs to redo redeterminations. Commenters asked HUD to provide at least six months after publication of Small Area FMR designations before they are required to have Small Area FMR-based payment standards in place.

Some commenters raised concerns about increasing the trigger for PBV because it would trigger rent reasonable studies that result in a significant loss of income to owners of PBV contracts. The commenters stated that for properties in which this income was assumed as part of initial financing or refinancing, the property is likely to become financially unstable and unable to meet its obligations. Other commenters stated that aside from rent reasonableness, the increased administrative costs of administering Small Area FMRs come at a time when PHAs are not being paid fully to administer the HCV program.

HUD Response: Based on public comment, HUD agrees that a reduction in administrative burden is necessary. Therefore, HUD is adopting the proposed rule provisions which change the required rent reasonableness review standard from a 5 percent to a 10 percent decrease in the FMR. This change would apply not just to voucher units in Small Area FMR areas but to units in all FMR areas. Moreover, the final rule implements a policy that limits the annual decrease in FMRs (including Small Area FMRs). This change is being implemented in response to comments on the need for additional tenant protections, but should also provide some administrative relief to PHAs by having more certainty around the path of Small Area FMRs within areas where the Small Area FMR is below the metropolitan FMR as well as FMR decreases more generally.

7. HUD is currently proposing, through this rulemaking, to expand the use of Small Area FMRs within the HCV program. HUD seeks public comment as to whether or not other HUD rental assistance programs would benefit from using Small Area FMRs in their operations. For example, would the rental assistance component of the Housing Opportunities for Persons with AIDS (HOPWA) programs be a candidate for Small Area FMR treatment? Frequently, metropolitan FMRs are inadequate for HOPWA-assisted tenants to find units near health care facilities, or in neighborhoods with better job opportunities. Should the HOPWA program regulations be amended to allow participating jurisdictions the flexibility to set tenant-based assistance rents according to Small Area FMRs either in areas that would be designated Small Area FMR areas or for the HOPWA program more generally? Would other HUD programs benefit as well?

Comment: Commenters responses to this issue were varied. Some commenters were against expansion to any other program, and some urged HUD to wait until Small Area FMRs could be studied more fully. Other commenters stated that they believed new tenants in tenant-based rental assistance programs could benefit from Small Area FMRs (e.g., HOPWA, CoC Rental Assistance, Legacy Shelter Plus Care program, HOME tenant-based rental assistance,). The commenters that recommended expansion to other programs stated that applying the same Small Area FMR scheme would be less burdensome on PHAs and landlords than multiple standards.

HUD Response: HUD appreciates the suggestions, but at this time, due the myriad of programs and program rules, it is beyond the scope of this rulemaking to make changes to these programs; therefore, HUD is proceeding solely with implementation of Small Area FMRs for the HCV program, which includes traditional vouchers and special purpose vouchers. HUD will consider the comments received for future rulemaking or other program implementation strategies for the various programs as the opportunity arises.

8. As currently proposed, the Small Area FMR policy would apply to all residents within a ZIP code who receive housing vouchers. HUD seeks comment on whether there are certain situations or any specific groups of voucher recipients within the general population, such as persons with disabilities or elderly voucher recipients, where an alternate policy should apply that should exempt them from having their voucher level change as a result of this policy due to specific hardships they may encounter by having to choose between staying in their current area and receiving a smaller voucher or moving to a new area for the sake of obtaining a larger voucher?

Comment: Many commenters urged HUD to hold all existing tenants harmless, and if HUD declined to do this, to hold disabled and elderly tenants harmless.

HUD Response: In response to the commenters request that HUD hold disabled and elderly tenants harmless under this policy, HUD is prohibited from treating one or more protected class differently under the Fair Housing Act and other civil rights requirements, absent statutory authority. HUD in this rule is implementing robust tenant protections for all tenants, including those enacted in HOTMA, as outlined earlier in this preamble. HUD will study the specific impact on elderly and disabled voucher recipients as a result of this rule change to determine if additional policy changes are necessary.

9. Are there specific groups within the general population of voucher holders for whom this policy change would be particularly burdensome? What are the ways in which this policy change could create a disproportionate burden on certain groups like elderly and disabled voucher holders?

Comment: Commenters stated that there are specific groups of voucher holders for whom this policy change would be particularly burdensome. The commenters stated that these specific groups include the elderly, people with disabilities, and families with children. Commenters raised the concern that each group could face increased housing cost burdens, displacement, prohibitively expensive moves, and homelessness. Other commenters raised the concern that all tenants may have chosen their current location based on community, religious, medical, service provider, and social networks.

Specifically, certain commenters stated that tenants with disabilities may not be able to find accessible units in higher rent neighborhoods and may face limited public transportation options. They may also face discrimination in these areas. Commenters stated that it is insufficient to suggest that these tenants are not at risk because they can request reasonable accommodation. The commenters stated that many people do not know enough about their rights to request the accommodation and will not be informed of them by landlords seeking higher payments. The commenters further stated that responding to requests for accommodations from a significant portion of voucher holders may be administratively burdensome for HUD. Specific recommendations from commenters focused exception payment standards (EPS) in which HUD should (1) notify all tenants who will experience a reduced payment standard of their right to a reasonable accommodation based on disability, (2) identify tenants, based on their participant file, who might be entitled to an EPS based on disability and take affirmative steps to accommodate them, and (3) publish additional guidance with the final rule that directs PHAs to allow EPS as a reasonable accommodation in any instance when a voucher family will experience a disability-related hardship as a result of being forced to pay over 30 percent of their income in rent or move.

Commenters stated that elderly tenants may also share similar challenges finding accessible units, and that stability in a neighborhood may be more of an opportunity than mobility. Commenters also suggested families with children may be adversely impacted, as having a large number of children can act as a barrier to being able to find suitable housing. Commenters stated that families report longer search times and far fewer options.

HUD Response: HUD agrees that the concerns raised by the commenters pose serious challenges for the specific populations raised above. As such, the final rule implements robust tenant protections for all tenants and a lengthened transition to full Small Area FMR implementation as outlined earlier in this preamble. In addition, the final rule clarifies that reasonable accommodation requests may include exception payment standards of more than 120 percent of the published FMR, consistent with HOTMA. Consistent with current practice, for such requests, the focus of HUD's review will be on the exception payment standard requested by the PHA.

10. HUD is seeking comment on the criteria that HUD selected for determining which metropolitan areas should be impacted by the shift to a Small Area FMR instead of the current 50th percentile policy. Did HUD use the correct criteria in making these choices? What other criteria should HUD be using to select metropolitan areas that will be impacted by this rule change and why are those criteria important?

Comment: Commenters provided a range of responses on many topics, outlined below:

• Vacancy: Many commenters urged HUD to factor in vacancy data into the formula. Their recommendations included:

○ Excluding low vacancy markets (those with a 4 percent, 5 percent or 6 percent vacancy rates).

○ Allow PHAs with low vacancy rates to opt out of Small Area FMRs, even if they meet HUD's criteria, and require PHAs with low vacancy rates that choose to adopt Small Area FMRs to hold current tenants harmless.

○ Exempt low vacancy areas from decreases in authorized Section 8 rent levels for existing tenants; Small Area FMRs should be implemented only for new tenants (or existing tenants who move) in these areas.

• Revising the formula

○ Considering relative voucher concentration by measuring the difference—rather than the ratio—between the voucher and renter concentration shares. HUD should use the criteria that there must be at least a 15 percent difference between renter and voucher holder concentration in low-income areas.

○ Compare voucher concentration to the distribution of all housing units rather than just rental units.

○ Reduce the required proportion of rental units in areas over 110 percent of the regional FMR to 17 percent, to capture more of our most deeply segregated metro areas. An alternative approach would prioritize metropolitan areas with the highest proportion of families with young children living in concentrated poverty neighborhoods.

○ Lower this threshold for the share of rental units in ZIP codes with Small Area FMRs above 110 percent of the metro FMR at least to 15 percent.

○ Change criterion to better target metropolitan areas in which overall segregation is the highest, with less focus on concentration of voucher households in high poverty areas relative to other renters.

• Exclusions and other comments

○ Commenters also suggested that, in order not to impede PHAs whose program management has already resulted in participants living in higher opportunity/lower poverty areas, HUD should require adoption of Small Area FMRs only by those PHAs in Metro areas meeting the Small Area FMR designation criteria whose percentage of voucher holders living in concentrated low-income areas relative to all renters in concentrated low-income areas over the entire Metro FMR area exceeds 155 percent.

○ The use of Qualified Census Tracts (QCTs) in the criteria for designating Small Area FMR areas is inappropriate. In the LIHTC program, the purpose of QCTs is to increase the supply of affordable housing in these areas. It is contradictory to incentivize the construction of affordable rental units in certain areas on the one hand, and use Small Area FMRs to move residents out of those areas on the other.

○ In addition to modifying the criteria, HUD should also revise the proposed regulation to give itself flexibility to designate highly segregated areas as Small Area FMR areas if it concludes that this is needed to further fair housing.

HUD Response: While SAFMRs may be a useful tool for expanding choice and providing voucher holders with access to more units in opportunity areas, public comments on the proposed rule raised concerns with HUD's knowledge of how well SAFMRs will work in areas experiencing low vacancy rates. HUD agrees that areas with extremely low vacancy rates are indicative of rental markets in disequilibrium and the final rule includes additional selection criterion to those provided in the proposed rule. In order for the rental housing market to function in an orderly manner, there needs to be an ample supply of available vacant units. Once the vacancy rate falls below a certain percentage, typically when the quantity of units demanded exceeds the quantity of units supplied, this places upward pressure on rental prices. The solution is typically the creation of additional supply; however, in the short run, a market clearing price is harder to achieve and the rental market ceases to function normally. Therefore, the final rule includes vacancy rate as an additional selection criterion to those provided in the proposed rule. Commenters provided varied feedback on the level of vacancy for which areas should be excluded from Small Area FMR designation. The American Community Survey (ACS) provides the most comprehensive data measuring rental vacancies across all metropolitan areas; however, due to the manner in which vacancies are assessed in the ACS, as detailed in the Regulatory Impact Analysis of this rule, HUD research indicates that ACS based vacancy rates tend to underrepresent the actual level of vacancies across most markets; consequently, the final rule excludes any metropolitan area with an ACS based vacancy rate of 4 percent or lower from designation as a Small Area FMR designated area as a 4 percent vacancy rate measured by the ACS is roughly equivalent to an actual vacancy rate of 5 percent under reasonable assumptions.

While HUD believes the criterion should remain focused on voucher concentration rather than residential segregation, HUD also agrees with commenters that the voucher concentration criterion should be improved to better target communities where voucher concentration is most severe. Consequently, in addition to the voucher concentration ratio included in the proposed rule, the final rule also requires the numerator of this measure, the concentration of voucher holders within concentrated low income areas, to meet a minimum standard level (25 percent).

HUD notes the other suggestions made by commenters and will evaluate program effects including access to neighborhoods with better employment opportunities, better schools, lower crime rates and lower racial and ethnic isolation to inform any future expansion of the program.

11. The proposed rule makes no changes to 24 CFR 888.113(g), the FMR for Manufactured home space rental for voucher tenants that own manufactured housing units. Under this proposed rule Small Area FMRs would apply to manufactured home space rentals in areas designated for Small Area FMRs (i.e., FMRs for space rentals would be set at 40 percent of the 2-bedroom Small Area FMR). Given the costly nature of moving a manufactured home, HUD is seeking comment on whether or not current voucher holders using their voucher for a manufactured home space should be exempt from Small Area FMRs at their current address?

Comment: Most commenters suggested HUD should exempt manufactured home space rental from Small Area FMRs wholesale. Others suggested an exemption for existing voucher holders so long as the voucher holder remains at the current address. Some suggested HUD exempt only when the Small Area FMR is lower than the metro FMR; some pointed out that voucher holders in ZIP codes where the payment standard will increase under Small Area FMR should be permitted to benefit from the increased payment standard. Others commented that Small Area FMRs should be voluntary altogether, including for those areas which may have vouchers for manufactured home space. Manufactured homes are often limited by local regulation to particular sites. Residents should not be penalized in subsidy available to support their housing choice based on the ZIP code location of allowable manufactured home sites.

HUD Response: Based on public comment, the final rule exempts vouchers used to subsidize the rent of a manufactured home space from the use of Small Area FMRs.

12. HUD has proposed to amend the Exception Payment Standard rules at 24 CFR 982.503 to account for the fact that FMR areas in Small Area FMR designated metropolitan areas will be ZIP codes. HUD is seeking public comment to determine if there are other amendments HUD should make to the Exception Payment Standard Regulations to better facilitate the approval process of Exception Payment Standards. For example, the current exception payment standard regulations require that an exception payment standard may not include more than 50 percent of the population of the FMR area. This may be an impractical requirement when determining exception payment standards within a ZIP code. Similarly, given that ZIP codes more narrowly define the FMR area, the provision within the regulation that program justification may include helping families find housing outside areas of high poverty may not be applicable even though an exception payment standard may be necessary. Therefore, HUD is soliciting feedback to ensure that the exception payment standard regulations are revised so that PHAs may use this component of the regulations to optimize the administration of their HCV programs.

Comment: Some commenters offered that under Small Area FMRs, EPSs become much less necessary, other than to group neighborhoods into payment standard buckets to simplify program administration and limit significant volatility between years.

Specific requests of commenters included eliminating the population cap that prevents more than 50 percent of an area to be covered by an EPS, and clarify that that exception rents may exceed 150 percent of Small Area FMR. Commenters also suggested HUD clarify how exceptions will work for Census tracts and other small geographic areas. Some commenters suggested EPS should be available up to 130 percent in the first two years of the program; others request up to 150 percent of the FMR. Another commenter stated that HUD should publish additional guidance with the final rule that directs PHAs to allow EPS as a reasonable accommodation in any instance when a voucher family will experience hardship or pay over 30 percent of their income in rent.

Commenters recommended that PHAs be able to set a payment standard up to 120 percent of the FMR without requesting HUD approval. Other suggested eliminating the distinction between exceptions above and below 120 percent of FMR, as the differences and processes are complex. If they are kept separate, commenters suggested HUD should revise the regulation for 110-120 percent to eliminate the requirements that PHAs submit information other than data on market rents or inability to secure housing and, for standards below the basic range, rent burdens. If HUD retains the requirement that increases above 120 percent prevent financial hardship, it is crucial that HUD revise the regulation or provide guidance making clear that this includes potential hardship that deters families from moving to the exception area in the first place.

As far as the process, overall, commenters requested streamlined processes, clear guidance and an expedited path for approvals that is standardized across local HUD offices and HUD headquarters. Some commenters suggested a system in which HUD's Office of Policy Development and Research obtains data from local housing authority rent reasonable databases to immediately grant exception payment standards that will support the utilization of vouchers and prevent families from falling into homelessness or remain homeless. Commenters suggested allowing exception payment standards to remain in place for a prolonged period without PHA action. HUD could review existing exception every so many years.

HUD Response: This final rule addresses the operation of exception payment standards with respect to Small Area FMRs. Specifically, the rule allows PHAs to request exception payment standards within ZIP codes. Additionally, for the purposes of exception payment standards within the context of Small Area FMRs, the final rule removes the 50 percent population cap for exception payment standards within ZIP codes. Furthermore, HUD is also simplifying the procedures for PHAs not using Small Area FMRs to run their HCV program. The final rule provides that PHAs in non-Small Area FMR areas may request an exception payment standard from the HUD Field Office of up to 110 percent of the relevant Small Area FMR with no additional supporting information. Finally, as noted earlier the final rule provides that HUD may approve a request by a PHA administering the HCV program under the Small Area FMRs for an exception payment standard for a ZIP Code area in accordance with the conditions and procedures set forth in a Federal Register Notice as opposed to the formerly applicable requirements under 982.503(c). This will allow HUD to establish a streamlined and responsive process for Small Area FMR ZIP Code area exception payment standard requests.

HUD has decided against proposing comprehensive changes to its EPS regulations at this time due to the implementation of Small Area FMRs and the potential to learn from PHA experiences with their adoption and operation. The suggestions offered through the public comment process will however be taken into consideration whenever HUD does revisit its EPS regulations.

13. HUD makes administrative data for research into HUD's programs available in a variety of ways (i.e., Public Use Microdata Sample—PUMS data, Research Partnerships, and Data License Agreements). HUD seeks comment on what additional data or dissemination strategies would be helpful to the public to assess the impact of the implementation of the Small Area FMR proposed rule.

Comment: Commenters requested both data and dissemination at the federal and PHA levels. They include:

• PUMS data set should include geographic identifiers for the census tract and ZIP code tabulation area, and HUD Fair Market Rent Metro Areas (HMFAs), so researchers can incorporate neighborhood information from, for example, the American Community Survey. Because HMFAs often diverge from OMBs definitions of metropolitan areas, it would also be helpful to append key HMFA-level variables (poverty rate, median gross rent, income, etc.) to the microdata.

• Number of voucher landlords and units associated with those landlords by ZIP code to which PHAs provide access to new voucher holders. This data is public, but not easily available or centralized.

• Ensure assessments of fair housing provide data at the ZIP code level.

• Study the impact the rule has on households' ability to use their voucher within the allowable time.

• Data from the evaluation of the Small Area FMR demonstration.

• List of ZIP codes by jurisdiction and the associated FMR rather than a list at the level of metropolitan area.

• All data used in the formula to designate the areas required to implement Small Area FMRs

• Data on whether increases to FMR for higher rent neighborhoods effectuates an increase in leasing activity in these neighborhoods.

• External evaluation of the Small Area FMR implementation parallel to implementation.

• Data not only for designated Small Area FMR areas and PHAs that opt in, but also for other areas and PHAs in order to allow comparison:

○ Number of voucher holders by ZIP code including relevant data on race, ethnicity, disability status and other factors relevant to fair housing concerns.;

○ Voucher success rates by PHA (if available and reliable); PHAs should report the average time it takes to lease-up for new and continuing voucher participants (who continue in their current jurisdiction or attempt to port their voucher);

○ Voucher turnover rates; to assess the impact of Small Area FMRs on program participants, it is essential that data is collected on the number of participants leaving and entering the program each year;

○ Voucher program exit and new admission rates by PHA;

○ Number of voucher holders with rent burdens at various levels (30 percent of income or less, 31-40 percent, 41-50 percent, and so forth) by PHA or by ZIP code;

○ Number of units on lists provided to families issued vouchers, broken down by ZIP code and PHA.

• Technical Assistance opportunities for impacted landlords and beneficiaries to understand the policy revisions and rationales.

• Information on what strategies PHAs used in conjunction with the Small Area FMRs.

• HUD should determine and publicize what payment standards PHAs use, and make this information available to help HCV households with their housing search.

○ Publicly Available ZIP-Code-Level Counts of Voucher Holders and Their Race: Currently, HUD makes the number of voucher holders in a particular area available in two ways: (1) On HUD's Open Data Web site and (2) as part of the underlying data used in the AFH Data and Mapping Tool. Both give voucher counts on the Census tract level, while the latter source includes a count of the number of non-white voucher holders in each tract. Although HUD releases a crosswalk file that matches Census tracts and ZIP Code Tabulation Areas (ZCTAs), the process of converting HUD's tract-level data to ZCTAs is complex and riddled with potential for errors. Since Small Area FMRs use ZCTAs, not Census tracts, as the primary unit of analysis, HUD should release voucher counts at the ZCTA level in order to evaluate the impact of Small Area FMRs. The data made available by race will also allow evaluation of how the Small Area FMR rule impacts jurisdictions' AFFH obligations.

• Whether increasing available asking rents impact local land use decisions.

• Data on total tenant payments by age group over the course of voucher lease-up and through Small Area FMR transitions, payment standard changes by housing agencies within Small Area FMR areas, and the use and value of PBVs.

• Availability of health services in new/old neighborhoods, the rate at which households retain their vouchers in new/old neighborhoods, and the financial costs of moving beyond rent payments (transportation, deposits, etc.).

HUD Response: HUD thanks the public for these helpful comments, and will take these recommendations under advisement. HUD does not need to undertake rulemaking to release additional data or information but does need to carefully consider the ramifications and disclosure issues associated with many of the suggestions. As HUD determines what additional information is releasable, HUD will continue to post Small Area FMR-relevant data online at https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.

Comment: Commenters provided a vast array of requests through this question that support a variety of objectives:

• The ability to assess the efficacy of Small Area FMRs.

• The ability to do additional research into the Housing Choice Voucher program.

• The ability to better administer the Housing Choice Voucher program.

HUD Response: Within the context of the final rule, HUD will release Small Area FMRs accompanied by both the minimum and maximum basic range amounts (90 percent and 110 percent) for each bedroom unit count Small Area FMR. HUD will further sort the ZIP code based Small Area FMRs for each metropolitan area from least to greatest to facilitate PHAs wishing to group multiple ZIP codes together into Payment Standard regions. HUD is taking the rest of these recommendations under advisement and will continue to post Small Area FMR-relevant data online at https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.

Commenters provided a variety of other comments regarding the proposed rule. Two of these topic areas include Moving To Work (MTW) PHAs, and comments on the methods for calculating FMRs.

Issue: Moving To Work (MTW) PHAs and the use of Small Area FMRs.

Comment: Commenters asked HUD to clarify whether or not MTW PHAs operating in metropolitan areas designated for Small Area FMR usage will have to use Small Area FMRs.

HUD Response: The proposed Rule pointed out that MTW PHAs have the ability to set alternative rent policies, outside of the standard regulations governing the use of FMRs in setting payment standards with approval from HUD. To clarify, MTW PHAs administering the HCV program can exercise flexibility in regards to establishing rent in accordance with the terms of their respective MTW Agreement and approved Annual MTW Plan. If an MTW PHA has not exercised flexibility through their Annual MTW Plan, the Small Area FMR requirements set forth in this Final Rule will apply to the MTW PHA, and the MTW PHA will be required to use Small Area FMRs in place of metropolitan-wide FMRs if the PHA jurisdiction is located within a designated Small Area FMR metropolitan area.

Issue: Methodology for Calculations of Metropolitan Fair Market Rents and Small Area Fair Market Rents.

Comment: Several commenters provided HUD with unsolicited feedback regarding the methods that HUD uses to calculate metropolitan-wide and Small Area FMRs. Several commenters suggested that HUD should modify the process HUD uses to calculate FMRs to be more reflective of market rents.

Overall FMR concerns: Many commenters discussed concerns regarding overall FMRs, including data lags and gap between local rents that will be embedded into Small Area FMRs.

• Specific suggestions included:

○ Fine tuning current formula to include rent variations for different bedroom size units, and ensuring that the five-year American Community Survey is keeping pace with actual rents in each ZIP code, particularly in the targeted metro areas, and to make upward adjustments as needed.

○ Alter the current FMR methodology to account for trends in local rental markets; cease using the “Trend Factor” to calculate FMRs, which measures the forecasted changes in national gross rents, and instead use the percentage change in metropolitan area-wide rents published as part of HUD PD&R's quarterly U.S. Housing Market Conditions Regional Reports.

• Revising the formula

○ Some commenters urged HUD to adopt a methodology for calculating Small Area FMRs that would better ensure access to 40% of units in all ZCTAs.

○ Urged consideration of methodology other than ZIP codes, such as independent analyses of local housing submarkets. ZIP codes may be too large to get desired impact.

○ Calculate 40th-percentile rents with data specific to different unit sizes (rather than indexing the rents to the 2-bedroom units),

○ Rely upon local rather than national CPI data in order to trend FMRs forward

HUD Response: HUD appreciates the breadth of comments provided to HUD regarding the methods used to calculate FMRs (both metropolitan-wide and Small Area FMRs). As stated earlier in the response to comments, in this final rule HUD is implementing a floor on the amount that FMRs can decrease from year to year. This is being done to provide in-place tenants with an additional element of subsidy protection during the transition from metropolitan FMRs to Small Area FMRs. Additionally, limiting the annual decrease in FMRs will help ensure a sufficient supply of affordable units during the transition to both existing tenants who wish to move and new voucher families entering the market. The final rule does not otherwise affect the data or methods HUD uses to estimate FMRs or Small Area FMRs. Due to provisions within HOTMA, HUD will be publishing Federal Register notices of proposed material changes in the methods for calculating FMRs for public comment before these changes are incorporated into the calculation of FMRs. HUD will respond to comments on FMR methodology provided in response to the proposed Small Area FMR rule as well as the notice announcing Fiscal Year 2017 FMRs in an upcoming Notice of Proposed Material Change in FMRs.

Issue: Rulemaking is premature.

Comment: A commenter stated that given that demonstrations of this idea in five locations are well underway, HUD's proposal is premature. The commenter stated that demonstrations have the admirable purpose of working out the problems that occur even with proposals that are highly meritorious in general terms before implementing them at large scale.

HUD Response: While HUD acknowledges that more information on the overall effects of the Small Area FMR approach will be forthcoming when the results of the Small Area FMR demonstration are available to inform broad policy, HUD believes that it is not premature to implement Small Area FMRs on this limited basis in those areas where it has the potential to address significant voucher concentration concerns. Through this final rule, HUD seeks not only to employ a better tool than the 50th percentile policy to expand housing opportunities for families where voucher concentration is a particular challenge but to also provide PHAs with the administrative flexibility to implement appropriate tenant protections to families currently under HAP contract and to address changing market conditions.

Issue: Continuation in Small Area FMRs in the Dallas, TX HUD Metro FMR Area.

Comment: A commenter noted that the Dallas, TX HUD Metro FMR Area, which has been operating under Small Area FMRs since 2010 pursuant to a court settlement, was very close to the thresholds for inclusion as a Small Area FMR area, and raised concerns that it might be excluded from continuing as a Small Area FMR area in the final rule or in the future.

HUD Response: While the final rule establishes a permanent Small Area FMR program, the final does not void the settlement agreement by which PHAs in the Dallas, TX HUD Metro FMR Area are required to operate with Small Area FMRs. PHAs in the Dallas TX, HUD Metro FMR Area will continue to be required to operate using Small Area FMRs in accordance with this final rule. The final rule contains no provisions for discontinuing Small Area FMRs once they have been implemented for a FMR Area.

OMB reviewed this final rule under Executive Order 12866 (entitled “Regulatory Planning and Review”). This rulemaking was determined to be an “economically significant regulatory action,” as defined in section 3(f)(1) of the order. The accompanying Regulatory Impact Analysis (RIA) for this rulemaking addresses the costs and benefits that would result from implementation of this final rule and the RIA can be found at http://www.regulations.gov.

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments and the private sector. This final rule does not impose any federal mandate on any state, local, or tribal government or the private sector within the meaning of UMRA.

This final rule concerns the establishment of fair market rent schedules and related external administrative requirements or procedures that do not constitute a development decision that affects the physical condition of specific project areas or building sites. Accordingly, under 24 CFR 50.19(c)(6), this final rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. At the proposed rule stage, HUD prepared an Initial Regulatory Flexibility Analysis (IRFA) and HUD follows the IRFA with a Final Regulatory Flexibility Analysis (FRFA). HUD finds in the FRFA that this final rule will not have a significant economic impact on a substantial number of small entities. The FRFA, which is found in Appendix A to this final rule and can also be found at www.regulations.gov elaborates, and provides details on how HUD made this finding.

Executive Order 13132 (entitled “Federalism”) prohibits, to the extent practicable and permitted by law, an agency from promulgating a regulation that has federalism implications and either imposes substantial direct compliance costs on state and local governments and is not required by statute or preempts state law, unless the relevant requirements of section 6 of the Executive order are met. This final rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive order.

The Catalog of Federal Domestic Assistance number for 24 CFR part 982 is 14.871.

Accordingly, for the reasons stated in the preamble, HUD amends 24 CFR parts 888, 982, 983, and 985 as follows:

The final regulations (TD 9787) that are the subject of this correction are under sections 707 and 752 of the Internal Revenue Code.

As published, the final regulations (TD 9787) contain errors that may prove to be misleading and are in need of clarification.

BSEE promotes safety, protects the environment, and conserves natural resources through vigorous regulatory oversight and enforcement regarding certain activities on the OCS. BSEE derives its authority primarily from the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. 1331-1356a. Congress enacted OCSLA in 1953, codifying Federal control over the OCS and authorizing the Secretary of the Interior (Secretary) to, among other things, regulate oil and natural gas exploration, development, and production operations and to grant rights-of-way on the OCS. The Secretary has authorized BSEE to perform certain of these functions, including overseeing decommissioning. (See 30 CFR 250.101; 30 CFR part 250, subpart Q.) To carry out its responsibilities, BSEE regulates exploration, development, and production of oil and natural gas and pipeline operations to enhance safety and environmental protection in a way that reflects advancements in technology and new information. BSEE also conducts onsite inspections to ensure compliance with regulations, lease terms, and approved plans or permits. Detailed information concerning BSEE's regulations and guidance for the offshore industry may be found on BSEE's Web site at: www.bsee.gov/Regulations-and-Guidance/index.

Among its responsibilities, BSEE regulates certain types of oil and gas pipelines used on the OCS. (See 30 CFR 250.1000-250.1019). In general, BSEE regulates pipelines or pipeline segments on the OCS that are operated by oil and gas producers.1 (See id.) Pipelines regulated by BSEE generally fall within two categories, “lease term” pipelines or ROW pipelines. Among other things, BSEE approves the installation, modification, and decommissioning of all lease term and ROW pipelines, and the modification or relinquishment of all pipeline ROW grants on the OCS. BSEE's regulations for decommissioning pipelines are found at 30 CFR 250.1700 through 250.1704 and 250.1750 through 250.1754. A more detailed discussion of BSEE's regulations for OCS pipelines is found in the preamble to the proposed rule for this rulemaking. (See 81 FR 53348 (Aug. 12, 2016).)

In 2009, BSEE's predecessor agency, the Minerals Management Service (MMS), proposed new reporting requirements related to lease assignment for lease term pipelines. (See 74 FR 25177 (May 27, 2009).) MMS also proposed to require the submission of information on expenditures for decommissioning of wells, platforms, and other facilities and for site clearance. (See id.)

In a final rule published on December 4, 2015, BSEE amended its regulations to require lessees and owners of operating rights to submit summaries of actual decommissioning expenditures for certain required decommissioning activities within 120 days after completion of each such activity. (See 80 FR 75806.) Specifically, the final rule requires reporting of summaries of expenditures for plugging wells, removing platforms and other facilities, and clearing obstructions from sites. In addition, the final rule authorizes BSEE to require additional supporting information regarding specific decommissioning costs on a case-by-case basis. The December 2015 final rule was codified at 30 CFR 250.1704(h) and (i).

On April 27, 2016, BSEE issued a Notice to Lessees and Operators (NTL), No. 2016-N03, Reporting Requirements for Decommissioning Expenditures on the OCS, providing guidance and clarification regarding the submission of the decommissioning cost summaries required by § 250.1704(h). On April 29, 2016, BSEE adopted a final rule revising and establishing requirements for improving well control equipment and procedures (the Well Control Rule). (See 81 FR 25888.) Among other things, effective July 28, 2016, the Well Control Rule revised paragraph (g) of § 250.1704, added a new paragraph (h), and redesignated existing paragraphs (h) and (i) as paragraphs (i) and (j), respectively. The Well Control Rule did not, however, affect the substance of those decommissioning cost reporting provisions.

BSEE did not include reporting of expenditures for pipeline decommissioning in the December 2015 final rule because the 2009 proposed rule did not expressly refer to pipeline decommissioning expenditures. BSEE has determined, however, that accurate information about expenditures incurred for pipeline decommissioning activities is needed to better estimate future decommissioning costs for those activities.

As BSEE explained in the December 2015 final rule, with regard to expenditures for other types of decommissioning activities, summaries of actual decommissioning expenditures will help BSEE better estimate future decommissioning costs. (See 80 FR 75806.) For the same reason, summaries of actual pipeline decommissioning expenditures will help BSEE better estimate future decommissioning costs. In addition, BSEE will share its pipeline decommissioning cost estimates—as well as all other decommissioning cost estimates—with the Bureau of Ocean Energy Management (BOEM) for use by BOEM in setting necessary financial assurance levels to minimize the possibility that (1) the government will incur future financial liability for decommissioning pipelines where the responsible party has failed to carry out the required decommissioning and has posted inadequate financial assurance; or (2) financial assurance requirements will exceed the amount actually necessary to cover future decommissioning liabilities.

Accordingly, on August 12, 2016, BSEE published a proposed rule to extend the existing decommissioning cost reporting regulations to require lessees, owners of operating rights, and pipeline ROW holders to submit information regarding actual expenditures incurred for activities related to decommissioning of pipelines. (See 81 FR 53348.) Specifically, BSEE proposed to expand the scope of: (1) Existing § 250.1704(i) in order to require that lessees, owners of operating rights, and pipeline ROW holders submit certified summaries of actual expenditures for decommissioning of pipelines; and (2) existing § 250.1704(j) in order to authorize Regional Supervisors to require the submission of additional information, on a case-by-case basis, to support summaries of pipeline decommissioning expenditures submitted under § 250.1704(i). The rule did not propose to revise the existing decommissioning cost reporting provisions.

For the reasons stated in the proposed rule and based on BSEE's evaluation of the public comments received, this rule finalizes the proposal to require lessees, owners of operating rights, and pipeline ROW holders to submit information reflecting actual expenditures incurred for the decommissioning of pipelines.2 The final rule amends paragraphs (i) and (j) of § 250.1704 to require lessees, owners of operating rights, and pipeline ROW holders to submit certified summaries of actual expenditures for decommissioning of pipelines, and to authorize Regional Supervisors to require additional information, on a case-by-case basis, as needed, to support a specific summary of such expenditures.

BSEE has made no changes to the language of the proposed rule and is finalizing the regulatory text as proposed.

In response to the proposed rule, BSEE received one comment, which was submitted by a trade association representing producing companies and service providers to the offshore oil and natural gas industry. The full text of the comment can be viewed at: www.regulations.gov. To access the comment, enter BSEE-2016-0004 in the search box. A summary of the issues raised by the comment, with BSEE's responses, follows.

Comment: The commenter asserted that BSEE had not provided guidance or details on how the certified summary of pipeline decommissioning expenditures should categorize and report information. The commenter stated that, at a minimum, the guidance in NTL No. 2016-N03 should be updated before the final rule is implemented to include specific guidance on decommissioning costs for pipelines, umbilicals, pipeline end terminations (PLETS), manifolds, and other equipment permitted through pipeline applications and bonding.

Response: Subsequent to publication of the December 2015 Decommissioning Cost Reporting final rule, BSEE issued NTL No. 2016-N03, which provides guidance and clarification regarding the submission of certified decommissioning cost expenditure summaries for wells, platforms or other facilities, and for clearance of any site. Among other things, that NTL addresses the format of submitted data and recommends the submission of cost data for each decommissioning activity type, including PLETS, pipeline end manifolds, and other types of equipment being decommissioned. Notwithstanding the clarification provided by NTL No. 2016-N03, BSEE understands that supplemental guidance and clarification may be needed regarding the submission of certified summaries of pipeline decommissioning cost expenditures and expects to issue additional guidance and clarification, as future circumstances may warrant, through appropriate means (e.g., in a revised or new NTL).

Comment: The commenter suggested that, if aggregate data are used by BSEE to estimate future decommissioning costs, these data should be made available, with specific operator information removed, to industry for benchmarking purposes. In addition, the commenter suggested that the owner or operator should have the ability to request an adjustment to a BSEE cost estimate by presenting its own decommissioning estimate data to BSEE/BOEM for review.

Response: The commenter's suggestions do not warrant any revision to the proposed regulatory language; however, BSEE will take these suggestions into consideration as aggregated data are developed and analyzed under the final rule. Regarding the commenter's suggestion that BSEE allow the presentation of company-specific estimates for review and possible adjustment of the BSEE cost estimates, BSEE has always allowed such submissions and they will continue to be part of the BSEE process for estimating future costs.

Comment: The commenter asserted that the phrase “actually incurred” in proposed § 250.1704(i) is ambiguous, since operators may develop a figure for the value of work done (VOWD) prior to receiving an invoice from the vendor, and the VOWD may differ from the vendor invoice that, in some cases, may not be received until more than 120 days after the decommissioning work is completed. The commenter further stated that, while the 120-day deadline for submitting a summary of expenditures may be practicable if a summary based on the VOWD is acceptable, 120 days may be insufficient if the summary is required to be based on actual invoices for services received.

Response: BSEE disagrees that the phrase “expenditures actually incurred” is ambiguous. BSEE is requiring a summary of actual decommissioning expenditures for pipelines, using the same terminology used in the December 2015 final rule for submitting summaries of actual expenditures for decommissioning of wells, platforms, or other facilities and for site clearance. Such certified summaries are based on actual invoice data. By contrast, VOWD estimates may not accurately reflect the actual decommissioning costs and could negatively impact future BSEE decommissioning cost estimates. Accordingly, submitting a VOWD would not satisfy the requirement of this rule.

Regarding the commenter's assertion that 120 days may not be enough time to submit a certified summary based on actual invoice data, BSEE expects to apply the same guidance under this new rule as that contained in NTL No. 2016-N03, i.e.:

BSEE expects to address any special situations that may warrant an extension of the deadline for submitting a summary of pipeline decommissioning expenditures in the same manner as requests to extend the deadline for summaries of other decommissioning costs.

Executive Order (E.O.) 12866 provides that the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), will review all significant regulatory actions. BSEE has determined that this final rule is not a significant regulatory action as defined by section 3(f) of E.O. 12866 because:

• It is not expected to have an annual effect on the economy of $100 million or more;

• It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, Tribal, or local governments or communities;

• It will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

• It will not materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights or obligations of their recipients; and

• It will not raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in E.O. 12866.

Accordingly, BSEE has not prepared an economic analysis beyond the analysis required under the Paperwork Reduction Act, and OIRA has not reviewed this rule under E.O. 12866. E.O. 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the Nation's regulatory system to promote predictability, reduce uncertainty, and use the best, most innovative, and least burdensome tools for achieving regulatory ends. E.O. 13563 directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. It also emphasizes that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. BSEE developed this rule in a manner consistent with these requirements.

BSEE certifies that this final rule will not have a significant economic effect on a substantial number of small entities under the RFA (5 U.S.C. 601 et seq.). This rule potentially affects offshore lessees, owners of operating rights and other operators, and pipeline ROW holders who perform decommissioning activities under 30 CFR part 250, subpart Q. In the December 2015 final rule, using the Small Business Administration's North American Industry Classification System (NAICS) codes 211111 (Crude Petroleum and Natural Gas Extraction) and 213111 (Drilling Oil and Gas Wells), we estimated that a substantial number, about 90 of the 130 active companies potentially affected by that rule (i.e., lessees and operators), would be considered small entities. (See 80 FR 75808.) However, we concluded that the final rule would not have a significant economic effect on those small entities because the cost of preparing decommissioning cost summaries is not significant. (See id.)

This final rule will affect some additional companies (i.e., ROW holders that were not covered by the December 2015 final rule as lessees or owners of operating rights) that will be required to submit pipeline decommissioning cost summaries. Using more recent information than was available when we published the December 2015 final rule, we estimate that this final rule's requirement to report pipeline decommissioning costs could affect approximately 111 lessees, owners of operating rights, and ROW holders that currently own or control DOI pipelines, including many companies already covered by the December 2015 final rule. Of these 111 potentially affected entities, we estimate that a substantial number (66 companies) are small entities. Therefore, this final rule will affect a substantial number of small entities.

However, because the final rule requires only summary reports of actual expenditures related to pipeline decommissioning activities, it will not impose significant new economic impacts on any affected small entities. The requirement to submit pipeline decommissioning cost summaries will not result in significant additional costs or burdens for any affected entity. As indicated in the Paperwork Reduction Act section of this document, the annual burden of the rule is estimated to be only 519 hours in total for all affected entities to prepare and submit their pipeline decommissioning cost summaries. Accordingly, since the changes reflected in this final rule will not have a significant economic effect on a substantial number of small entities, the RFA does not require BSEE to prepare a regulatory flexibility analysis for this rule.

This rule is not a major rule under the SBREFA (5 U.S.C. 804(2)). This final rule will not:

• Have an annual effect on the economy of $100 million or more;

• Cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or

• Have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

Your comments are important. The Small Business and Agriculture Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small businesses about Federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the actions of BSEE, call 1-888-734-3247. You may comment to the Small Business Administration (SBA) without fear of retaliation. Allegations of discrimination/retaliation filed with the SBA will be investigated for appropriate action.

This final rule will not impose an unfunded mandate on State, Tribal, or local governments or the private sector of more than $100 million per year. This rule also will not have a significant or unique effect on State, Tribal, or local governments or the private sector. Thus, a statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

Under the criteria in E.O. 12630, this final rule will not effect a taking or otherwise have takings implications. This rule is not a governmental action capable of interference with constitutionally protected property rights. Therefore, a Takings Implication Assessment is not required.

Under the criteria in Executive Order 13132, this final rule does not have federalism implications. This rule will not have a substantial direct effect on the States or the relationship between the Federal and State governments. To the extent that State and local governments have a role in OCS activities, this final rule will not affect that role. Accordingly, a federalism summary impact statement is not required.

This final rule complies with the requirements of Executive Order 12988 (E.O. 12988), Civil Justice Reform (February 7, 1996). Specifically, this rule:

• Meets the criteria of section 3(a) of E.O. 12988 requiring that all regulations be reviewed to eliminate drafting errors and ambiguity and be written to minimize litigation; and

• Meets the criteria of section 3(b)(2) of E.O. 12988 requiring that all regulations be written in clear language and contain clear legal standards.

We have evaluated this final rule under the Department's tribal consultation policy, under Departmental Manual Part 512 Chapters 4 and 5, and under the criteria in E.O. 13175 and have determined that it will have no substantial direct effects on federally recognized Indian tribes. As a result, consultation under the Department's tribal consultation policy is not required.

This rule contains new information collection (IC) requirements and submission to the OMB under the PRA of 1995 (44 U.S.C. 3501 et seq.) is required. The OMB has approved the IC in this rule under OMB Control Number 1014-0030, expiring on November 30, 2019. We estimate the annual burden associated with this IC to be 519 hours per year.

The title of the collection of information for this rule is 30 CFR part 250, subpart Q, Decommissioning Costs for Pipelines. Potential respondents include approximately 111 OCS lessees, owners of operating rights, and ROW holders. Responses to this collection are mandatory. The frequency of response is on occasion. The IC does not include questions of a sensitive nature. BSEE will protect confidential commercial and proprietary information according to section 26 of OCSLA (43 U.S.C. 1352), FOIA (5 U.S.C. 552) and DOI's implementing regulations (43 CFR part 2), and according to 30 CFR 250.197 (Data and information to be made available to the public or for limited inspection).

Once the requirements of this rulemaking have been codified, BSEE will consolidate these additional burden hours into the primary collection for 30 CFR part 250, subpart Q, under OMB Control Number 1014-0010 (expiration November 30, 2016; 15,524 burden hours and $1,686,396 non-hour cost burdens). There are no non-hour cost burdens associated with this rulemaking.

The following table is a breakdown of the burden estimate:

We received one comment in response to the proposed rule pertaining to the information collection. Please see the Summary of and Responses to Public Comments section in this preamble. Based on the comment received, we are increasing the burden to reflect requests for extension to the 120-day reporting period (+ 19 hours).

An agency may not conduct or sponsor, and you are not required to respond to, a collection of information unless it displays a currently valid OMB control number. The public may comment at any time on the accuracy of the IC burden in this rule and may submit any comments to the Department of the Interior, Bureau of Safety and Environmental Enforcement, Attention: Regulations and Standards Branch, VA-ORP, 45600 Woodland Road, Sterling, VA 20166.

This rule meets the criteria set forth in 516 Departmental Manual (DM) 15.4C(1) for a categorical exclusion because it involves modification of existing regulations, the impacts of which would be limited to administrative or economic effects with minimal environmental impacts.

We have also analyzed this rule to determine if it involves any of the extraordinary circumstances set forth in 43 CFR 46.215 that would require an environmental assessment or an environmental impact statement for actions otherwise eligible for a categorical exclusion. We have concluded that this rule does not involve any of the listed extraordinary circumstances.

In developing this rule, we did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (44 U.S.C. 3516 et seq., Pub. L. 106-554, app. C sec. 515, 114 Stat. 2763, 2763A-153-154).

This rule is not a significant energy action under Executive Order 13211 (E.O. 13211) because:

• It is not a significant regulatory action under E.O. 12866;

• It is not likely to have a significant adverse effect on the supply, distribution or use of energy; and

• It has not been designated as a significant energy action by the Administrator of OIRA.

For the reasons stated in the preamble, BSEE amends 30 CFR part 250 as follows:

Background

Significant advances in scientific knowledge and mining and reclamation techniques have occurred in the more than 30 years that have elapsed since the enactment of the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. 1201 et seq., and the adoption of Federal regulations implementing that law. On July 27, 2015, OSMRE proposed the Stream Protection Rule for the primary purpose of updating its regulations and providing regulatory certainty to industry using these advances in scientific knowledge to minimize the adverse impacts of surface coal mining and underground mining operations on surface water, groundwater, fish, wildlife, and related environmental values, with particular emphasis on protecting or restoring streams and aquatic ecosystems. (See 80 FR 44436.)

The draft environmental impact statement (DEIS) for the proposed rule was made available for public review and comment on July 17, 2015. (See 80 FR 42535.) After an extension was granted, the comment period closed on October 26, 2015. (See 80 FR 54590.) During the comment period, OSMRE held six public hearings in Colorado, Kentucky, Missouri, Pennsylvania, Virginia, and West Virginia, and received approximately 95,000 comments on the proposed rule, DEIS, and the draft Regulatory Impact Analysis.

The FEIS for the Stream Protection Rule analyzes the environmental, socioeconomic, and other effects of the preferred alternative—Alternative 8, as revised—and a reasonable range of other alternatives, including a No Action Alternative. The FEIS, including Alternative 8, has been revised, as appropriate, in response to comments and other information received on the DEIS, proposed rule, and draft Regulatory Impact Analysis. It also includes the input of cooperating agencies.

Under the CSAPR FIPs, a portion of each state budget for each of the four CSAPR trading programs 1 is reserved as a NUSA from which allowances are allocated to eligible units through an annual one- or two-round process. EPA has described the CSAPR NUSA allocation process in three NODAs previously published this year in the Federal Register (81 FR 33636 May 27, 2016; 81 FR 50630 August 2, 2016; 81 FR 63156 September 14, 2016). In the most recent of these previous NODAs, EPA provided notice of preliminary lists of new units eligible for second-round 2016 NUSA allocations of CSAPR NOX Ozone Season allowances and provided an opportunity for the public to submit objections.

EPA received no objections to the preliminary lists of new units eligible for second-round 2016 NUSA allocations of CSAPR NOX Ozone Season allowances whose availability was announced in the September 14 NODA. EPA is therefore making second-round 2016 NUSA allocations of CSAPR NOX Ozone Season allowances to the new units identified on these lists in accordance with the procedures set forth in 40 CFR 97.512(a)(9) and (12).

As described in the September 14 NODA, any allowances remaining in the CSAPR NOX Ozone Season NUSA for a given state and control period after the second round of NUSA allocations to new units are to be allocated to the existing units in the state according to the procedures set forth in 40 CFR 97.512(a)(10) and (12). EPA has determined that CSAPR NOX Ozone Season allowances do remain in the NUSAs for a number of states following completion of second-round 2016 NUSA allocations; accordingly, EPA is allocating these allowances to existing units. The NUSA allowances are generally allocated to the existing units in proportion to the allocations previously made to the existing units under 40 CFR 97.511(a)(1), adjusted for rounding.

Under 40 CFR 97.512(b)(10), any allowances remaining in the CSAPR NOX Ozone Season Indian country NUSA for a given state and control period after the second round of Indian country NUSA allocations to new units are added to the NUSA for that state or are made available for allocation by the state pursuant to an approved SIP revision. No new units eligible for allocations of CSAPR NOX Ozone Season allowances from any 2016 Indian country NUSA have been identified, and no state has an approved SIP revision governing allocation of 2016 CSAPR NOX Ozone Season allowances. The Indian country NUSA allowances are therefore being added to the NUSAs for the respective states and are included in the pools of allowances that are being allocated to existing units under 40 CFR 97.512(10) and (12).

The final unit-by-unit data and allowance allocation calculations are set forth in Excel spreadsheets titled “CSAPR_NUSA_2016_NOx_OS_2nd_Round_Final_Data_New_Units”, and “CSAPR_NUSA_2016_NOx_OS_2nd_Round_Final_Data_Existing_Units”, available on EPA's Web site at https://www3.epa.gov/airtransport/CSAPR/actions.html.

Pursuant to CSAPR's allowance recordation timing requirements, the allocated NUSA allowances will be recorded in sources' AMS accounts by November 15, 2016. EPA notes that an allocation or lack of allocation of allowances to a given unit does not constitute a determination that CSAPR does or does not apply to the unit. EPA also notes that NUSA allocations of CSAPR NOX Ozone Season allowances are subject to potential correction if a unit to which NUSA allowances have been allocated for a given compliance year is not actually an affected unit as of May 1 of the compliance year.2

I. Background

In FR Doc. 2016-21404 which appeared in the September 16, 2016 Federal Register (81 FR 63860), entitled “Medicare and Medicaid Programs; Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers”, there were a number of typographical errors that are identified and corrected in the Correction of Errors section below. The provisions in this correction document are effective as if they had been included in the document published September 16, 2016. Accordingly, the corrections are effective November 15, 2016.

On page 64030, we inadvertently omitted a paragraph number (that is, paragraph (xii)) in numbering the paragraphs in § 482.15(h)(1).

On page 64032, we inadvertently omitted a paragraph number (that is, paragraph (xii)) in numbering the paragraphs in § 483.73(g)(1).

On page 64034, we made a typographical error in numbering the paragraphs in § 484.22(d)(1).

On page 64037, we inadvertently omitted a paragraph number (that is, paragraph (xii)) in numbering the paragraphs in § 485.625(g)(1).

We ordinarily publish a notice of proposed rulemaking in the Federal Register to provide a period for public comment before the provisions of a rule take effect in accordance with section 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). However, we can waive this notice and comment procedure if the Secretary finds, for good cause, that the notice and comment process is impracticable, unnecessary, or contrary to the public interest, and incorporates a statement of the finding and the reasons therefore in the notice.

Section 553(d) of the APA ordinarily requires a 30-day delay in effective date of final rules after the date of their publication in the Federal Register. This 30-day delay in effective date can be waived, however, if an agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued.

We believe that this correcting document does not constitute a rule that would be subject to the APA notice and comment or delayed effective date requirements. This correcting document corrects typographical errors in the regulations text of the final rule but does not make substantive changes to the policies that were adopted in the final rule. As a result, this correcting document is intended to ensure that the regulations text in the final rule accurately reflect the policies adopted in that final rule.

In addition, even if this were a rule to which the notice and comment procedures and delayed effective date requirements applied, we find that there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the corrections in this document into the final rule or delaying the effective date would be contrary to the public interest because it is in the public's interest for providers and suppliers to receive the appropriate revisions in as timely a manner as possible, and to ensure that the Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers final rule accurately reflects our policies. Furthermore, such procedures would be unnecessary, as we are not altering our policies, but rather, we are simply implementing correctly the policies that we previously proposed, received comment on, and subsequently finalized. This correcting document is intended solely to ensure that the Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers final rule accurately reflects these revisions. Therefore, we believe we have good cause to waive the notice and comment and effective date requirements.

In FR Doc. 2016-21404 of September 16, 2016 (81 FR 63860), make the following corrections:

This is a summary of the Commission's Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report and Order, document FCC 16-99, adopted on August 2, 2016, and released on August 11, 2016, in CG Docket No. 02-278. The full text of document FCC 16-99 will be available for public inspection and copying via ECFS, and during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to [email protected] or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (844) 432-2272 (videophone), or (202) 418-0432 (TTY).

1. The Commission adopts rules to implement the Budget Act's amendments to the TCPA, including—based on substantial record support, and in furtherance of the TCPA's consumer-protection goals—restrictions on the number and duration of calls that may be made pursuant to the amendments. Among other things, the Commission determines who may make covered calls, limits the number of federal debt collection calls that may be made, and determines who may be called. The Commission also creates rules to, among other things:

• Permit calls made by debt collectors when the loan is in delinquency, and by debt servicers following a specific, time-sensitive event affecting the amount or timing of payment due, and in the 30 days before such an event.

• Determine that consumers have a right to stop the autodialed, artificial-voice, and prerecorded-voice servicing and collection calls regarding a federal debt to wireless numbers at any point the consumer wishes.

• Specify that covered calls may be made by the owner of the debt or its contractor, to: (1) The wireless telephone number the debtor provided at the time the debt was incurred; (2) a phone number subsequently provided by the debtor to the owner of the debt or its contractor; and (3) a wireless telephone number the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor's telephone number.

2. Once information collection requirements of the revised § 64.1200(j)(3), (j)(4) have been approved by the Office of Management and Budget (OMB), the Commission will publish a document in the Federal Register (1) revising §§ 64.1200(a)(1)(iii); (a)(3)(iv), (v), and (vi); (f)(17); (i); and (j); and (2) announcing the effective date of these revisions to be set at 60 days after publication of that document in the Federal Register.

3. “Solely to Collect a Debt.” The Budget Act excepts covered calls from the prior-express-consent requirement when they are “solely to collect a debt owed to or guaranteed by the United States.” The Commission begins by interpreting the statutory phrase “solely to collect a debt” so as to determine whether calls are covered. Because the statutory term “solely to collect a debt” is ambiguous, the Commission has discretion to reasonably interpret that phrase.

4. The Commission rejects a subjective standard of what a caller may intend when determining whether a call is a covered call and instead looks to objective characteristics of the call. The Commission notes that an objective standard is consistent with its approach to other aspects of the TCPA, such as the meaning of “called party” for purposes of reassigned wireless numbers. Furthermore, a subjective standard would be difficult to administer, while an objective standard enables the Commission to look at actual, measurable characteristics of a call.

5. In the 2016 NPRM, the Commission asked whether covered calls should begin at delinquency or default. Several commenters support the proposal that covered calls begin at delinquency, stating that calls during delinquency can assist a debtor in determining whether alternative payment plans are an option. The FTC staff's comments, however, promote default as the starting point for covered calls. They argue that the FDCPA uses default as the “touchstone for coverage,” and that those collecting debts that were not in default when their agency obtained them are not considered debt collectors under the act. Because the amended TCPA is not limited to third-party debt collectors, however, this distinction is less important and the reasoning for using default rather than delinquency as an initiating event is likewise less persuasive.

6. The Commission interprets “solely to collect a debt,” and, therefore, calls made pursuant to the exception created in the Budget Act, to be limited to debts that are delinquent at the time the call is made or to debts that are at imminent risk of delinquency as a result of the terms or operation of the loan program itself. As a practical matter, this means that, at the time the call is made, the debt is delinquent or there is an imminent, non-speculative risk of delinquency due to a specific, time-sensitive event that affects the amount or timing of payments due, such as a deadline to recertify eligibility for an alternative repayment plan or the end of a deferment period. Many federal loan programs offer various alternate and income-based repayment options for which a debtor might qualify at various times during the life of the debt, and the amount or timing of payments due can vary significantly following expiration of a deferral period or an alternate payment plan. For example, some income-based repayment plans for student loans allow a debtor to make a monthly payment of zero dollars without being considered delinquent or in default, but higher monthly payments are required automatically if the debtor does not periodically recertify that he continues to qualify for the program. As such, calls regarding changes in the amount or timing of payments are directly related to the collection of the underlying debt in that they can ensure payments that would likely otherwise would not be made.

7. Some commenters argue that the Commission may not limit covered calls to those that are “delinquent” or in “default” because the Budget Act did not include such limiting language. For example, ACA states: “Congress made absolutely no mention of the [exception] being limited to calls made post delinquency or post-default. As a result it would be inappropriate for the Commission to read such a limitation into the amendment.” The Commission disagrees with regard to its discretion to interpret the statutory language, but notes that it is not limiting covered calls only to those made after default or delinquency. As commenters note, the Supreme Court has confirmed that a person or entity “collects” a debt by attempting to obtain payment on it. Thus, the Commission believes that covered calls must have a reasonable nexus to seeking to obtain payment and that the calls permitted under the Commission's interpretation of “solely to collect” have such a nexus. In contrast, calls outside the scope of covered calls lack such a nexus because the risk of delinquency would be too speculative and too far removed (i.e., not imminent) from an event affecting the amount or timing of payments due.

8. Other commenters argue that covered calls should begin before delinquency because calls that occur after delinquency or default are “too late to prevent damage to the consumer's credit profile and fail[] to allow the borrower to receive timely information to choose the repayment plan best suited for the borrower's unique circumstances.” The Commission agrees. Certain calls to service a debt owed to or guaranteed by the government may be so closely tied to an imminent and non-speculative risk of delinquency as to also be “solely to collect a debt.” These calls pertain to specific, time-sensitive events that affect the amount or timing of payments due. Once these time-sensitive events are sufficiently imminent, calls about these events are no longer just about a debt, but are solely about the collection of a debt. The time-sensitive nature of these calls necessitates that they are “solely to collect a debt” for only a limited time—following the event and in the 30 days before such an event. Any earlier and the calls are too speculative and attenuated for the purpose of the call to be “solely to collect a debt.”

9. The record indicates that these debt servicing calls help a debtor avoid delinquency or default, which can preserve the debtor's payment history and credit rating, and help maintain eligibility for future loans. The potential value of these servicing calls to debtors by helping them avoid delinquency or default, and the probability that servicing calls will create conditions that allow debts to be more readily collected by the United States, lead the Commission to determine that certain servicing calls should be included in the interpretation of “solely to collect a debt.”

10. A caller, therefore, need not wait until a debtor is delinquent to begin making certain debt servicing calls. Rather a caller may make debt servicing calls following a specific, time-sensitive event that affects the amount or timing of payments due, such as a recertification deadline or the end of a deferment period, and in the 30 days before such an event. For purposes of the limits on the number of covered calls, no debt servicing calls will be permitted except those regarding an approaching deadline or a change in status (deferment, forbearance, rehabilitation), calls regarding enrollment or reenrollment in income-driven or income-based repayment plans, and calls regarding similar time-sensitive events or deadlines affecting the amount or timing of payments due. While commenters list other pre-delinquency calls they would like the Commission to include in the list of debt servicing calls for purposes of the Budget Act amendments, the Commission declines to do so. This list of calls the Commission is permitting as covered debt servicing calls includes the most-requested debt servicing calls and includes calls both to enroll debtors in consumer-friendly programs and to keep them enrolled in those programs. It also includes calls aimed at alerting debtors when significant events will occur that will change their payment patterns. The list does not include calls regarding routine events, such as reminders about scheduled upcoming payments. The Commission would consider a routine event one that occurs by operation of the contract alone, as contrasted with the events described above, which require affirmative steps by the debtor to take advantage of the provisions of the debt contract. These included calls, which often increase the probability that debts will be more readily collected and that a debtor will avoid delinquency, achieve the desired result of enabling the caller to collect a debt owed to or guaranteed by the United States and simultaneously can benefit the debtor. The Commission's interpretation of covered calls permit no debt servicing calls unless the call follows one of these specific, time-sensitive events, and in the 30 days before such an event.

11. “Owed to or guaranteed by the United States.” The Commission turns next to the types of debts that are included in the phrase “owed to or guaranteed by the United States.” The Commission determines that, for TCPA purposes, this phrase includes only debts for which the United States is currently the owner or guarantor of the debt. The Budget Act amendments specify that covered calls may be made regarding “debts owed to or guaranteed by the United States.” Because the Commission lacks a developed record on the issue, it does not seek to define or determine with particularity exactly which debts are included in or excluded from this phrase; like commenter SLSA, the Commission is cognizant of the “variety of types of debts covered by the provision,” and while the Commission does not “believe that the definitions applicable to each specific federal program should be used to [automatically] determine whether debt in that program is considered owed or guaranteed by the United States,” the Commission views such definitions—and any agency or judicial interpretations of them—as highly relevant evidence regarding whether a debt is “owed to or guaranteed by the United States.”

12. The Commission clarifies that the debt must be currently owed to or guaranteed by the federal government at the time the call is made. Debts that have been satisfied are not among the covered debts, and debts that have been sold in their entirety by the federal government are, likewise, not covered. In these cases, the debt is no longer “owed to . . . the United States.” The Commission notes that basic contract principles dictate that when an owner sells an item, it no longer belongs to the original owner, but to the purchaser. Likewise, the purchaser of a debt is owed the repayment obligation, not the prior obligee. For example, a debt is not still “owed to . . . the United States” if the right to repayment is transferred in whole to anyone other than the United States, or a collection agency that has acquired ownership of the debt from the federal government collects the funds and then remits to the federal government a percentage of the amount collected. In such circumstances, the debt is no longer owed to the United States and the rules permit no calls under this exception.

13. Who may be called? The Commission next turns to the question of who may be called using the exception created by the Budget Act. The Commission determines that, because calls made pursuant to the exception must be made “solely to collect a debt,” the covered calls may only be made to the debtor or another person or entity legally responsible for paying the debt. Calls are not permitted to other persons listed on the debt paperwork, such as references or witnesses, under FCC rules. These persons are not liable for the debt; consequently, calls to these persons cannot be “solely to collect” the debt. Senators and Members of Congress support the decision to limit covered calls in this way, writing: “The regulations should limit the calls to those made just to the debtors” and “[r]estrict the calls and texts to those made just to debtors—not their family or friends.” Another Senator writes separately, urging: “Calls to persons who are not the borrower should be eliminated.” Consumer groups concur, stating “the only reasonable way to read the phrase `solely to collect a debt' is to exclude all calls to persons who do not owe the debt.” The FTC staff also supports this limitation, stating “FTC staff recommends that covered calls be limited to calls directed at the person or persons obligated to pay the debt.”

14. Other commenters, however, urge the Commission to permit covered calls to persons other than the debtor. Navient, in particular, comments on the need to call the parents, relatives, and references of a borrower in order to locate the borrower. Navient writes: “[C]alling numbers obtained through skip tracing is sometimes the only way to reach a defaulted borrower.” It also notes that the Department of Education requires “lenders to contact every `endorser, relative, reference, individual, and entity' identified in a delinquent borrower's loan file as part of their due diligence efforts.” Navient fails to note, however, that there is no requirement to make these contacts via robocall. Navient also makes clear in its comments that its purpose in calling relatives and references is to locate the debtor, not to collect the debt. Because the language of the Budget Act authorizes the Commission to limit calls “solely to collect a debt,” the rules permit covered calls only to persons who are responsible for repaying the debt.

15. Numbers that May be Called. The Commission's interpretation of the phrase “solely to collect a debt” permits no covered calls unless the call is made to the debtor or person responsible for paying the debt at one of three categories of wireless telephone numbers. First, calls may be made to the wireless telephone number the debtor provided at the time the debt was incurred, such as on the loan application. Second, covered calls may be made to a wireless phone number subsequently provided by the debtor to the owner of the debt or the owner's contractor. Because the debtor has provided the phone numbers in these first two categories, the caller risks liability for the call after the first call to the number, if the number has been reassigned from the debtor to a third party. Third, covered calls are permitted to a wireless telephone number the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor's telephone number. The Commission's decision to permit calls to these three categories of numbers is consistent with its interpretation of the phrase “solely to collect a debt,” and continues to satisfy the TCPA's consumer protection goals to the extent possible. As the connection between the phone numbers called and the debtor becomes more attenuated, so, too, does the likelihood of reaching the debtor. Beyond these three categories of numbers, persons reached will not likely be the debtor, so calls will not likely result in the collection of a debt owed to or guaranteed by the United States.

16. The Commission notes that the rules it is adopting, which permit calls only if they are to these three categories of numbers, are broader than the proposal in the 2016 NPRM. The Commission has included calls to numbers subsequently provided by the debtor to the owner of the debt or the owner's contractor, and to numbers the owner of the debt or its contractor has obtained from an independent source, provided that any such number actually is the debtor's number. These additional categories of numbers should prevent uninvolved consumers from receiving robocalls about debts they do not owe, while mitigating concerns that the phone number provided on the loan application no longer belongs to the debtor when the debt enters repayment.

17. This limitation the Commission is placing on the number of covered calls, which limits covered calls only to these three categories of numbers, is a determination that robocalls to wrong numbers are not covered by the exception created in the Budget Act amendments. Calls to reassigned wireless numbers may not be made pursuant to the exception either. Wrong numbers, as the Commission used the term in the 2015 Declaratory Ruling and Order, published at 80 FR 61129, Oct. 9, 2015, are “numbers that are misdialed or entered incorrectly into a dialing system, or that for any other reason result in the caller making a call to a number where the called party is different from the party the caller intended to reach or the party who gave consent to be called.” The Commission determines that covered calls to reassigned wireless numbers, however, are subject to the one-call window the Commission clarified in the 2015 Declaratory Ruling and Order. For purposes of this exception, the reassigned wireless number provision would come into play when the caller makes a call to the wireless number provided by the debtor but the number was subsequently reassigned. In this circumstance, the caller would be entitled to the one-call window the Commission previously clarified if the caller did not know of the reassignment.

18. Numerous parties in the record urge the Commission to apply the same wrong number and reassigned number standards set forth in the 2015 Declaratory Ruling and Order to these covered calls. Others ask the Commission to abandon or alter the wrong-number and reassigned-number standard so that covered calls are treated differently from other robocalls, but do not set forth a persuasive argument for why a covered call is different from a typical robocall subject to the one-call window. Several commenters argue for a “reasonable belief” or “actual knowledge” standard. The Commission, however, rejected those standards in the 2015 Declaratory Ruling and Order. And while ABA/CBA argues that separate regulations “mandate[] that calls be made to distressed borrowers at their last known phone number of record,” it does not indicate that the regulations require that those calls be made using an autodialer, artificial voice, or prerecorded voice. Consequently, ABA/CBA could comply with these separate regulatory requirements by manually dialing the last known phone number of record.

19. Who May Make the Calls? The Commission next considers who may make the covered calls at issue. The Commission finds that a call is made “solely to collect a debt owed to or guaranteed by the United States” only if it is made by the owner of such a debt or its contractor. The record supports this interpretation. A number of commenters urge the Commission to determine that covered calls may be made by “creditors and those calling directly on their behalf,” or “creditors and those calling on their behalf, including their agents.” Two commenters ask the Commission to broaden the universe of those who may make covered calls, asking that “subcontractors [] be permitted to call, even if the subcontractor is not an agent.” The Commission declines to adopt rules that are as broad as “subcontractor,” but limits permitted callers to the owner of the debt or its contractor. As the Commission has noted above, consumers consistently complain to the Commission, the FTC, and CFPB about abusive and persistent debt-collection robocalls. In creating the rules limiting the number of covered calls, the Commission seeks to balance the goals of increasing the likelihood that debts owed to or guaranteed by the United States will be paid by the debtor and of protecting consumers. These rules properly balance these goals by recognizing the practicality that owners of debts might use the services of contractors to make covered calls in a manner that reduces the potential for abuse or causing debtors undue hardship.

20. What Constitutes a “Call Made”? “Call,” for this exception, is consistent with the Commission's previous interpretation of “call” for TCPA purposes. A call is any initiated call. The call need not be completed, and need not result in a conversation or voicemail. While many commenters support this interpretation of “call,” others argue that the definition for purposes of the exception created by the Budget Act should be “connected calls” or “actual contacts.” The Commission finds no statutory basis to deviate from its existing interpretation of “call” and “made,” and finds persuasive one commenter's argument that “[e]very time the phone rings can cause anxiety. Whether or not the collector leaves a message on voice mail does not assuage this harassment.” Consistent with the text of the TCPA and the Commission's previous clarifications, covered calls may be an autodialed call, a prerecorded- or artificial-voice call, or a text message sent using an autodialer.

21. Content of the covered calls. The 2016 NPRM asked how to ensure that covered calls do not include extraneous material that consumers do not want, such as marketing content. The Commission agrees with the many commenters who argue that content that includes marketing, advertising, or selling products or services, and other irrelevant content is not solely for the purpose of collecting a debt owed to or guaranteed by the United States. The Commission has previously found that calls solely for the purpose of debt collection do not constitute telemarketing. Content in these calls that is telemarketing, therefore, transforms the call from one solely for the purpose of debt collection into a telemarketing call.

22. Need for restrictions. In considering the need for restrictions on calls to collect debts owed to or guaranteed by the United States, the Commission notes the volume of consumer complaints, as set forth above. These factors, along with Congress' explicit grant of authority to the Commission to “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States,” lead the Commission to adopt certain restrictions.

23. Scope. Section 301(a)(2) of the Budget Act, which enacts a new statutory provision at 47 U.S.C. 227(b)(2)(H), authorizes the Commission to “restrict or limit the number and duration of calls made to a cellular telephone number to collect a debt owed to or guaranteed by the United States.” The scope of this authority is broader than the scope of the exception from the prior-express-consent requirement, because—unlike the exception—it is not limited to calls made “solely” to collect a covered debt. Thus, the rules the Commission promulgates under this authority apply to any autodialed, prerecorded-voice, and artificial-voice calls that reasonably relate to the collection of a covered debt and therefore apply even if the calls are not “calls made solely to collect a debt” under section 227(b)(1) of the Communications Act (the Act): e.g., as noted above, if the calls also contain other content (such as advertising) or precede the specified time period for calls excepted from the consent requirement. Moreover, these number and duration rules apply to calls by the federal government (to the extent it is the owner or guarantor of the debt) and its contractors, as explained in the Jurisdiction section below.

24. The nature of restrictions, generally. The Commission determines, based on consumer complaints and on support from the record, that restrictions on the number and duration of federal debt collection calls are appropriate and necessary. In reaching this conclusion, the Commission bears in mind one reasonable interpretation of Congress' action in enacting the amendments: To make it easier for owners of debts owed to or guaranteed by the United States, as well as their contractors, to make calls to collect the debts. The Commission also bears in mind the TCPA's overarching goal to protect the privacy interests of consumers and Congress' express grant of authority to the Commission to place certain restrictions on federal debt collection calls. In seeking to balance these two interests, the Commission limits the number of federal debt collection calls to three in thirty days, with exceptions as noted below; limits the length of calls using an artificial voice or prerecorded voice, and autodialed text messages; and limits the times of day when federal debt collection calls may be made to wireless numbers. As explained more fully below, these limits apply in the aggregate to all calls from a caller to a debtor, regardless of the number of debts of each type the servicer or collector holds for the debtor. This cap of three calls per thirty days is cumulative for debt servicing calls and debt collection calls. Finally, the Commission limits the number of calls in light of a debtor's right to stop federal debt collection calls and to be notified of this right.

25. Number of calls. In the 2016 NPRM, the Commission proposed to limit the number of federal debt collection calls to three per month, per delinquency, only after delinquency. Several commenters support this number. One commenter reminds the Commission, “it is important to keep in mind that the calls made pursuant to this regulation are without consent, and are likely to comprise only a portion of the many other calls and contacts that debt collectors have with the debtors from whom they are collecting.” Other commenters, however, argue for higher limits, stating that “it takes significantly more than three contact attempts to reach the borrower and additional contacts to effectively resolve a borrower's delinquency or default.” One commenter asserts that it needs 50 calls over several months to reach the right person and have a conversation. Another states that it takes 14.3 attempts to contact a consumer. A third commenter states that it needs approximately 50 follow-up calls, but that those calls are consented-to. Two commenters assert that approximately ten call attempts per month is an appropriate rate at which to contact debtors. A mortgage servicer states: “By making up to five calls in the two weeks prior to a client becoming 60 days delinquent, we saw approximately 50% more clients become current on the loan when compared to those who weren't called.”

26. As these comments demonstrate, there is no consensus in the record. The Department of Education states that it “does not believe that allowing loan servicers and [private collection agencies] to make three [federal debt collection calls] per month would measurably increase the likelihood that they would reach a borrower,” but that “a higher limit will reasonably allow” them to do so. Consumer groups generally argue that three calls is the appropriate number for calls pursuant to the Budget Act amendments. As commenter Navient notes, however, these commenters often “fail to explain why three calls is an appropriate limit.” Additionally, callers filing comments cite statistics and call patterns documenting their perceived need for more calls—but even callers vary widely when advocating for a number on federal debt collection calls. Congress gave the Commission express authority to limit the number and duration of wireless federal debt collection calls, and the record documents the benefits to consumers of some number of covered calls. The Commission, therefore, must engage in an exercise in line drawing as it balances the competing interests to determine an appropriate limit on the number of federal debt collection calls.

27. The Commission determines, subject to the exception below, that a limit of three federal debt collection calls in a thirty-day period is appropriate. As stated above, a significant number of commenters support this numeric restriction. Furthermore, the overwhelming majority of individual commenters support the Commission imposing a low limit on the number of calls allowed pursuant to the Budget Act amendments. Commenters asking for a higher limit have failed to offer a compelling justification for any of the various limits they support. At the same time, the Commission agrees with consumer groups that have noted that callers may make as many calls as they like—they simply need to obtain the consent of the debtor or contact consumers without making a robocall.

28. The Commission, therefore, concludes that the appropriate limit for the number of federal debt collection calls is three calls within thirty days while the delinquency remains or following a specific, time-sensitive event, with such calls also permitted in the 30 days before such an event (but not before delinquency). The Commission recognizes, however, that some federal agencies, based on their expertise administering their respective statutes and programs, may desire additional calls. Balancing these needs with the TCPA's goal of protecting consumers from unwanted calls, the Commission notes that federal agencies may request a waiver seeking a different limit on the number of autodialed, prerecorded-voice, and artificial-voice calls that may be made without consent of the called party. The Commission delegates to the Consumer and Governmental Affairs Bureau the authority to address any such waivers.

29. The Commission is not persuaded by callers who argue that more calls are needed or that other regulatory or contractual obligations might impose higher limits on the total number of calls. The Commission is not limiting the total number of calls that may be made; instead, the Commission is exercising its statutory authority and discretion to establish a limit on the number of autodialed, prerecorded-voice, and artificial-voice calls that can be made without the consent of the called party for the limited purpose at issue here. Thus, the Commission sets this limit with the knowledge that callers may make additional autodialed, artificial-voice, and prerecorded-voice calls if they obtain the prior express consent of the called party or if they dial manually. Robocallers are free, of course, to obtain prior express consent for additional calls and the Commission presumes that consumers who find the calls beneficial will provide it.

30. Consumer ability to stop federal debt collection calls. The Commission has determined that an ability to stop unwanted calls is critical to the TCPA's goal of consumer protection. That right is likely more important here, where consumers need not consent to the calls in advance in order for a caller to make federal debt collection calls. As one commenter notes, “[r]equiring calls to stop after the consumer so requests constitutes a limit on the number of calls that can be made, and Congress explicitly authorized the Commission to limit the number of calls.” The Commission agrees. The Commission has stated that one reasonable interpretation of the statute is that Congress intended to make it easier for consumers to obtain useful information about debt repayment, which may be conveyed in these calls. When a debtor has rejected that presumption and declared that he or she no longer wishes to receive these calls, there is no longer any reason for the calls to continue. The Commission determines, per its authority to limit the number of federal debt collection calls, that consumers have a right to stop the covered autodialed, artificial-voice, and prerecorded-voice servicing and collection calls to wireless numbers at any point the consumer wishes. The debtor may make this request to the caller. Several commenters support this decision and the Commission's ability to make it. If Congress intended these amendments to make it easier for consumers to obtain useful information about debt repayment, then consumers may request that the calls stop if they do not find the calls or the information they contain useful. The Commission's rules, therefore, require that zero federal debt collection calls are permitted once a debtor asks the owner of the debt or its contractor to cease federal debt collection calls. This requirement that callers immediately honor a request to stop calls applies even where the caller has previously obtained prior express consent to make federal debt collection calls.

31. The Commission also understands that debts may be transferred from one servicer or collector to another. This stop-calling request is specific to the debt and the consumer, and transfers with the debt; once the consumer has asked that the number of federal debt collection calls be reduced to zero, only the consumer can alter that number restriction. Consequently, a stop-calling requests applies to a subsequent collector or servicer of the same debt. In reaching this determination, the Commission rejects a commenter's proposal that a stop-calling request be limited to a period of time such as a month, but be renewable. Because the stop-calling request for federal debt collection calls applies for the life of the debt, servicers and collectors must ensure that information regarding the request conveys with the other relevant information regarding the debt when it is sold or transferred between servicers or collectors. The requirement that the stop-call request conveys from one servicer or collector to the next implicates the Paperwork Reduction Act, as indicated in the Commission's rules, and in the Final Regulatory Flexibility Act.

32. Granting consumers a right to request calls stop at any point is only useful if consumers know of this right. The Commission agrees with the FTC staff that “[a]n opt-out right [] is only effective if it is well-known” rather than with the commenters who argue that a consumer should be notified of the right only once and in writing, or that notifying consumers of the right within every phone call will “cause a consumer to attach undue significance to such a right.” The Commission, therefore, requires callers to inform debtors of their right to make such a request. The disclosure of rights must inform the debtor that he or she has a right to request that no further autodialed, artificial-voice, or prerecorded-voice calls be made to the debtor for the life of the debt, and that such request may be made by any reasonable method. Disclosures must be made in a manner that gives debtors an effective opportunity to stop future calls. Callers must disclose this consumer right within every completed autodialed call with a live caller, whether the caller speaks with the debtor or leaves a voicemail message. Calls using a prerecorded or artificial voice must disclose the right within each message. Covered text messages must disclose the right within each text message or in a separate text message that contains only the disclosure and is sent immediately preceding the first covered text message. If the disclosure is in a separate text message, that message does not count toward the numeric limits the Commission imposes in document FCC 16-99.

33. The Commission has previously determined that consumers may opt out of calls for which prior consent is required, and that they may do so using any reasonable method, including orally or in response to a text message. Here, where the federal debt collection calls do not require consent, but where consumers may request at any time that calls stop, consumers may also make a stop-calling request using any reasonable method, including orally or in response to a text message. The Commission reaches this conclusion regarding the methods by which a consumer may make a stop-calling request after considering consumer confusion, standard calling practices, and recordkeeping procedures. The Commission anticipates that confusion will be minimized and calling practices will be streamlined if stop-calling methods and opt-out procedures are consistent. For similar reasons, the Commission determines that federal debt collection calls made using a prerecorded or artificial voice must include an automated, interactive voice- and/or key press-activated opt-out mechanism so that debtors who receive these calls may make a stop-calling request during the call by pressing a single key. When a federal debt collection call using an artificial voice or prerecorded voice leaves a voicemail message, that message must also provide a toll-free number that the debtor may call at a later time to connect directly to the automated, interactive voice and/or key press-activated mechanism and automatically record the stop-calling request. Text message disclosures must include brief explanatory instructions for sending a stop-call request by reply text message and provide a toll-free number that enables the debtor to call back later to make a stop-call request. The requirement that the artificial- and prerecorded-voice calls, as well as text messages, include opt-out instructions and features implicates the Paperwork Reduction Act, as indicated in the Commission's rules, and in the Final Regulatory Flexibility Act.

34. When may federal debt collection calls be made? In order for a federal debt collection call to produce the intended effect of “collect[ing] a debt owed to or guaranteed by the United States,” it must occur close in time to a key event in the life of the debt. As set forth above, calls “solely to collect a debt” may be collection calls or servicing calls because both increase the likelihood of a debt being collected. The Commission has interpreted the statutory phrase “solely to collect a debt” to limit debt collection calls to a period when a debt is delinquent, and to limit debt servicing calls to following a specific, time-sensitive event and in the 30 days before such an event. The Commission here uses the authority Congress granted it to limit the number and duration of calls “to collect a debt owed to or guaranteed by the United States.” The rules the Commission enacts today state that zero calls are permitted under the Budget Act amendments unless they occur: (1) During the period of delinquency for debt collection calls; and (2) following an enumerated, specific, time-sensitive event and in the 30 days before such an event for debt servicing calls.

35. Content of the calls. As stated above, the Commission's interpretation of the statutory phrase “solely to collect a debt” excludes calls that contain marketing, advertising, or selling products or services. The Commission here uses the authority Congress granted it to limit the number and duration of calls “to collect a debt owed to or guaranteed by the United States.” The rules the Commission enacts today state that zero calls are permitted under the Budget Act amendments if the autodialed, prerecorded-voice, or artificial-voice call contains any marketing, advertising, or selling of products or services. Commenters support this determination. The Commission's determination regarding calls that contain marketing, advertising, or sales also supports the Commission's interpretation of Congress' intent that the calls provide consumers with useful information about repaying their debt, and it is a step in preventing the very real problem that consumers will be subject to fraudulent calls and programs.

36. Calls only to the debtor. The Commission also here enacts rules stating that zero calls are permitted under the Budget Act amendments unless the calls are to the debtor or the person responsible for paying the debt, and the call is made to that person at one of the three categories of numbers specified in document FCC 16-99. The Commission's interpretation of the statutory phrase “solely to collect” explains its reasoning for establishing these limits on who may be called and the numbers at which these persons may be called. The Commission finds that the reasoning applies here as well, where Congress has authorized it to limit the number of calls made “to collect a debt.” Calls to persons other than the debtor or other entities responsible for paying the debt are not directly tied to collecting a debt. In balancing the inconvenience to uninvolved persons against the interests of callers, the Commission determines it is not appropriate to extend federal debt collection calls beyond the debtor and others responsible for paying the debt. Likewise, calls to numbers other than the three categories of telephone numbers the Commission specified above are unlikely to reach the person responsible for repaying the debt, and so are unlikely to result in collection of the debt. The Commission, therefore, limits to zero calls made to persons or telephone numbers other than these.

37. Call limits are per caller. Commenters also ask the Commission to “clarify whether the [limited number of federal debt collection calls] is per debtor (e.g., inclusive of all telephone numbers used by the debtor)” per delinquency, or per servicer or collector. One consumer advocate states: “[B]ecause many consumers have multiple loans—often eight to ten student loans for each borrower—we recommend that the number of calls or texts permitted to be made without consent should be limited to three calls per servicer or collector. Without this limitation, consumers who have eight to ten outstanding loans, as many do, could be receiving between twenty-four and thirty robocalls per month to their cell phones.” Because the Commission has set the federal debt collection call limit at three calls per thirty days, that number could rise to twenty-four to thirty robocalls per month if the Commission were to determine that the call limit applied per loan. In light of the record, and to prevent an excessive number of calls to individual debtors, the Commission determines that the call limit on federal debt collection calls to wireless numbers applies for each servicer or collector. If the servicer or collector has contracts with the United States for more than one type of debt—for example to collect or service student loans and Department of Agriculture loans—the servicer may utilize a three-call in thirty day limit for each type of loan the servicer or collector manages for the debtor.

38. Length of federal debt collection calls. In the 2016 NPRM, the Commission sought comment on the maximum duration of a voice call, and whether it should adopt different duration limits for prerecorded- or artificial-voice calls than for autodialed calls with a live caller. Commenters generally support the idea of a maximum length for artificial-voice and prerecorded-voice calls, but not a maximum length for autodialed calls with a live caller because this could impinge on a potentially lengthy conversation between a servicer and a debtor. Commenters who support a maximum length for artificial- and prerecorded-voice calls suggest caps of 30 or 60 seconds. Some commenters suggest that the time limit include time for any required disclosures, while others ask that required disclosures be outside of any time cap the Commission sets. In light of the record, the Commission determines that artificial-voice and prerecorded-voice calls may not exceed 60 seconds, exclusive of any required disclosures. The Commission does not place any cap on the duration of live-caller, autodialed calls made pursuant to the Budget Act exception.

39. The Commission also asked in the 2016 NPRM whether it should impose a limit on the length of text messages, and what that limit should be. Commenters note that senders of text messages generally keep the messages short because “[a] long text message would get split up into multiple texts and could confuse the borrower.” Other commenters ask that any cap on the length of a text message account for required disclosures. Text messages are generally limited to 160 characters. As stated above, any required disclosures may be included within this 160-character limit for a single text message or may be sent as a separate text message that does not count toward the numeric limits the Commission imposes herein.

40. Time of day restrictions. The Commission imposes an additional restriction on the number of federal debt collection calls or texts allowed, and determines that no federal debt collection calls or texts are permitted outside the hours of 8:00 a.m. to 9:00 p.m. (local time at the called party's location), which is identical to the rule for telemarketing calls. Congress stated that federal debt collection calls are intended “to collect a debt,” and during these times consumers are likely available to answer calls and receptive to receiving information from callers. The record supports the Commission's determination that consumers are generally comfortable with receiving calls during these times. Furthermore, FTC staff notes that the FDCPA and the Telemarketing Sales Rule “similarly limit debt collection and telemarketing calls to this same timeframe.” Adding a new category of calls to this generally accepted timeframe will cause less inconvenience and confusion to consumers than if the Commission were to impose a different schedule or no schedule for these calls. Likewise, call centers that contract with businesses to make calls on their behalf are familiar with these time-of-day restrictions; this restriction should not impose a burden on callers or their contractors making federal debt collection calls.

41. Multiple sets of regulations. The Commission acknowledges that other statutes and regulations impact debt collection calls, yet it recognizes that Congress assigned to the Commission responsibility for crafting rules for autodialed, artificial-voice, and prerecorded-voice debt collection calls where the debt is owed to or guaranteed by the United States. Because Congress specifically gave the Commission certain authority over these federal debt collection calls, the Commission assumes that callers will follow the most restrictive rules for the call being made. Which rules apply will vary based on a number of factors, such as whether the caller is a debt collector or a debt servicer, the nature of the debt, and the length of delinquency. Where multiple rules apply to the same call and one of the rules is enacted by the Commission to implement the TCPA, a caller must comply with the most restrictive requirements regarding factors such as frequency, time of day, and so on. Section 301 of the Budget Act affects the TCPA and its implementing regulations but does not affect other laws, including specifically those for which the CFPB or the FTC have responsibility.

42. Covered Calls to Residential Lines. The Commission notes that under the current rules, artificial- or prerecorded-voice calls to residential lines that are made for the purpose of collecting a debt are currently not subject to the prior express consent requirement. Although the TCPA allows for broad coverage of the prior express consent requirement to all non-emergency artificial- and prerecorded-voice calls to residential lines, the Commission has exercised its statutory exemption authority so as to apply the consent requirement only to calls that include or introduce an advertisement or constitute telemarketing. The Commission has also found that debt collection calls do not constitute telemarketing.

43. Congress, in authorizing the Commission to enact rules implementing the Budget Act's amendments, stated that the Commission could “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service.” Congress, by omission, did not authorize the Commission to enact rules to limit the number and duration of calls made to a telephone number assigned to a residential telephone line. Commenters support this understanding of the Budget Act amendment with regard to calls to numbers assigned to residential lines, stating: “Congress did not grant the Commission the authority to restrict or limit” these calls. Consequently, the Commission's current rules regarding non-telemarketing autodialed, prerecorded-voice, and artificial-voice calls to residential numbers are not altered by the Budget Act amendments. The Commission is not imposing restrictions on these calls. Callers may, however, be subject to restrictions under other applicable statutes and regulations, such as the Fair Debt Collection Practices Act.

44. Restrictions on Calls to Cellular Telephone Service. Congress authorized the Commission to “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States.” Yet, the amendment to the TCPA, authorizing calls made to collect a debt owed to or guaranteed by the United States, is broader, applying to “any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call.” Considering the identical language in the prior delegation of authority in section 227(b)(2)(C) of the Act, the Commission concludes that Congress delegated the Commission authority to limit the number and duration of all calls made pursuant to the debt collection exception in section 227(b)(1)(A)(iii) of the Act.

45. Congress, in granting the Commission authority to limit the number and duration of calls, used identical language to the language it used in the separate delegation of authority in section 227(b)(2)(C) of the Act. The identical language in these two delegations of authority indicates that Congress intended the two provisions to apply to the same services.

46. The Commission has interpreted section 227(b)(2)(C) of the Act to apply to all services mentioned in section 227(b)(1)(A)(iii) of the Act. In so doing, it has interpreted “cellular telephone service” by asking whether services are functionally equivalent from the consumer perspective rather than on technical or regulatory differences, such as which spectrum block is used to provide the service. This avoids, for example, consumers receiving wireless voice service from being treated differently depending on which spectrum block their carriers use and callers having to determine which spectrum block is used for a particular consumer's service in order to know which requirements apply.

47. Applying the canon of statutory construction that Congress knows the law, including relevant agency interpretations, at the time it adopts a statute, the Commission presumes that Congress knew of the Commission's interpretation of this key language. Congress used the same language in the recent delegation of authority without taking any action to alter the Commission's interpretation of identical language elsewhere in the same statute. The Commission therefore concludes that the authority delegated to it in the new section 227(b)(2)(H) of the Act added by the Budget Act applies to all services to which amended section 227(b)(1)(A)(iii) of the Act applies.

48. Application of Other TCPA Restrictions to Covered Calls. The Commission believes the most reasonable interpretation of the Budget Act amendments is that they except covered calls from the requirement to obtain the consent of the called party, and that calls must in every other respect comply with the TCPA unless compliance with a requirement of the TCPA is prohibited by a separate regulation pertaining to debt collection calls generally. The Budget Act amendments apply to the consent requirement of section (b)(1) of the Act, but other sections of the TCPA are left unaffected. For example, the identification requirements of § 64.1200(b)(1) through (2) of the Commission's rules apply to both excepted calls and other calls made using an autodialer, a prerecorded voice, and an artificial voice. The exception Congress created in the Budget Act amendments is not an exception to compliance with the TCPA as a whole, but only with the requirement to obtain the consent of the called party to make the call. The Commission will resolve conflicts on a case-by-case basis.

49. Other Issues. Commenters in the record raise other arguments for the Commission's consideration in enacting rules for the Budget Act amendments. For example, one commenter asks the Commission to state that “no debt collection calls [may be made to] people receiving Supplemental Security Income (SSI) benefits on the basis of old age or disability, and that Treasury not pass along information on debts owed by SSI recipients to debt collectors.” Another commenter asks the Commission to develop “a separate set of rules to assist federal student loan borrowers.” A separate commenter asks the Commission to create a certification system that authorizes callers to use autodialers for purposes of making covered calls and only renews the certification if the caller's yearly performance meets standards established by the Commission and the Department of Education. The Commission declines to address these and other ancillary issues and arguments raised in the record as they are outside the scope of this proceeding. Moreover, these issues are not fully developed in the record and the Commission would need more facts to meaningfully and cogently address these issues.

50. All of the rules that are adopted in document FCC 16-99 are designed to ensure a caller's ability to make calls pursuant to the Budget Act amendments and a debtor's ability to control the calls he or she receives. Each of the determinations the Commission undertakes in document FCC 16-99 serve a particular function toward this goal. Therefore, it is the Commission's intent that each of the rules and regulations adopted herein shall be severable. The Commission believes that debtors will benefit from the information they may receive from callers and will also benefit from the ability to ask that calls be stopped. If any of the rules or regulations, or portions thereof, are declared invalid or unenforceable for any reason, it is the Commission's intent that the remaining rules shall be in full force and effect.

51. As noted in the discussion above, two portions of the Commission's rules implicate the Paperwork Reduction Act (PRA). These portions involve the rules for the recording of a debtor's request to stop receiving autodialed, artificial-voice, and prerecorded-voice calls to collect a debt owed to or guaranteed by the United States, and rules for the conveyance of that stop-call request from one servicer or collector to another. Because these portions of the rules implicate the PRA, they will not become effective until 60 days after the Commission publishes a Notice in the Federal Register indicating approval of the information collection by OMB.

52. The remaining rules will not become effective until the rules requiring OMB approval become effective. While these remaining rules do not require OMB approval and could become effective immediately upon release of document FCC 16-99, the Commission determines that the consumer-protection rules regarding stop-call requests and conveyance of those requests are so integral to this regulatory scheme that the remaining rules should not become effective until the consumer-protection rules are in place. The rules that could become effective immediately permit a caller to make calls—they specify how many calls may be made, who may make the calls, when the calls can be made, and to which numbers the calls may be made, among other things. These rules give effect to one of the reasonable interpretations the Commission has identified for Congress' passage of the Budget amendments: to make it easier for owners of debts owed to or guaranteed by the United States and their contractors to make calls to collect debts. But the second reasonable interpretation—to make it easier for consumers to obtain useful information about debt repayment—carries with it a consumer's prerogative to determine that the debtor does not want the information conveyed in the calls and to ask that the calls stop. The rules that give effect to this interpretation of Congress' intent are delayed by PRA requirements and OMB approval. The Commission determines that the regulatory scheme it implements today must include both the ability for callers to make calls and the right of debtors to ask that calls stop—and that both portions of the regulatory scheme become effective simultaneously. To do otherwise would be to allow callers to make calls but to leave debtors with no consumer protections until OMB approval is complete. The Commission determines that both portions of the rules must become effective for the regulatory scheme to be effective.

53. The notice of OMB's approval of the information collections, the announcement of the effective date for the rule changes adopted on August 2, 2016, and released on August 11, 2016, and the appropriate amendatory language, will be contained in a document published in the Federal Register at a later date.

54. The amendments to §§ 64.1200(j)(3) and (j)(4) require OMB approval under the Paperwork Reduction Act (PRA) and will not go into effect until 60 days after we publish a notice in the Federal Register announcing OMB's approval and the effective date, and containing the formal amendatory language for the rules. The complete text of the rule changes may be found in the appendix to the Commission's decision, available on the agency Web site. The subsection (j)(3) and (j)(4) rule changes are summarized as follows:

• Required Disclosures. Prerecorded-voice, artificial-voice, or autodialed calls to collect a debt owed to or guaranteed by the United States must include a disclosure that the debtor has a right to request that no further calls of this type be made to the debtor for the life of the debt and that such requests may be made by any reasonable method. Disclosures must be made in a manner that gives debtors an effective opportunity to stop future calls. For voice telephone calls, the disclosure must be made within each telephone call. For autodialed text messages, the disclosure must be within each text message or in a separate text message that contains only the disclosure and that is sent immediately preceding the first text message permitted, but the text message containing the disclosure does not count toward the character limit contained elsewhere in the rules.

• Requests for no more calls. A debtor may request to the owner of the debt or its contractor that no further telephone calls be made to the debtor for the life of the debt by any reasonable method, including orally and by reply text message. No autodialed, prerecorded-voice, or artificial-voice federal debt collection calls are permitted after the stop-call request. Telephone calls using an artificial or prerecorded voice must include an automated, interactive voice- and/or key press-activated opt-out mechanism that enables the debtor to make a stop-calling request prior to terminating the call, including brief explanatory instructions on how to use such mechanism. When a debtor elects to make a stop-calling request using such mechanism, it must automatically record the request and immediately terminate the call. When a telephone call using an artificial or prerecorded voice leaves a message on an answering machine or a voice mail service, the message must also include a toll free number that the debtor may call later to connect directly to the automated, interactive voice- and/or key press-activated opt-out mechanism and automatically record the stop-calling request. Text messages containing the disclosure required elsewhere in the rules must include brief explanatory instructions for sending a stop-calling request by reply text message and provide a toll free number that enables the debtor to call back later to make a stop-calling request.

55. The Commission determined that the amendments to §§ 64.1200(a)(1)(iii); (a)(3)(iv), (v), and (vi); (f)(17); (i), and (j)(1)-(2),(5)-(9), which do not require OMB approval, nonetheless will not go into effect until 60 days after we publish a notice of OMB approval of § 64.1200(j)(3) and (j)(4), the effective date for all the rule changes, and the amendatory language for the rules. The complete text of the rule changes may be found in the appendix to the Commission's decision, available on the agency Web site. These other rule changes are summarized as follows:

• No consent required for calls solely to collect a debt owed to or guaranteed by the United States. The prior express consent of the called party is not needed when: A call is made to a telephone number assigned to a cellular telephone service, among others; the call is made solely to collect a debt owed to or guaranteed by the federal government of the United States; and the call is made using an automatic telephone dialing system or an artificial or prerecorded voice. The prior express written consent of the called party is not needed when a call is made to a telephone number assigned to a residential line when the call is made pursuant to the collection of a debt owed to or guaranteed by the federal government of the United States and the call is made using an artificial or prerecorded voice.

• Debtor defined. Debtor is defined as the debtor; a co-signor or other person or entity legally obligated to pay the debt; and an executor, guardian, administrator, receiver, trustee, or similar legal representative of the debtor or of another person or entity legally obligated to pay the debt.

• When a call is made solely to collect a debt owed to or guaranteed by the United States. To be considered a call made solely to collect a debt owed to or guaranteed by the United States, the telephone call must exclusively concern a debt that, at the time of the call, is owed to or guaranteed by the federal government of the United States and must contain no marketing, advertising, or sales information. The call must also be made by the owner of the debt, or its contractor, to the debtor. The entire content of the call must be directly and reasonably related either to collecting payment of a delinquent amount in order to cure such delinquency or to resolving the debt either by obtaining payment of such delinquent amount or by entering into an alternative payment arrangement that will cure such delinquency or resolve the debt, during a time period when a delinquency exists, or providing information about changes to the amount or timing of payments following the end of, or in the 30 days before: a grace, deferment, or forbearance period; expiration of an alternative payment arrangement; or occurrence of a similar time-sensitive event or deadline affecting the amount or timing of payments due. The call must be made to the debtor at the wireless telephone number the debtor provided at the time the debt was incurred, or subsequently provided by the debtor to the owner of the debt or the owner's contractor, or a wireless telephone number obtained from an independent source, provided that the number actually is the debtor's telephone number.

• Number and duration limits on calls made to collect a debt owed to or guaranteed by the United States. Telephone calls made using an autodialer or a prerecorded or artificial voice to collect a debt owed to or guaranteed by the United States are limited to three calls to a debtor within a 30-day period but zero calls if a debtor requests no further calls. These limits apply whether the calls are made by the owner of the debt or by a contractor of the owner(s) of the debt. For purposes of determining the number of calls permitted, multiple debts owed by one debtor shall be considered one debt if the agent or contractor is servicing or collecting those debts on behalf of the same owner under the same contractual or agency relationship. The limit of zero calls if a debtor requests no further calls applies for the life of the debt; the limit of three calls in a 30-day period applies during each time period in which telephone calls may be made pursuant to paragraph (i)(2) of the rules.

• Length of federal debt collection calls. Artificial- and prerecorded-voice telephone calls may not exceed 60 seconds in length, excluding any required disclosures and stop-calling instructions. Text messages are limited to 160 characters in length.

• Other restrictions on calls made to collect a debt owed to or guaranteed by the United States. No telephone calls can be made before 8 a.m. or after 9 p.m. local time at the debtor's location. No calls are permitted if the call contains marketing, advertising, or sales information. No calls are permitted except to the debtor at the wireless telephone number the debtor provided at the time the debt was incurred, a wireless telephone number subsequently provided by the debtor to the owner of the debt or the owner's contractor, or a wireless telephone number the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor's telephone number. No calls are permitted except during a time period when a delinquency exists, or following, or in the 30 days before: The end of a grace, deferment, or forbearance period; expiration of an alternative payment arrangement; or occurrence of a similar time-sensitive event or deadline affecting the amount or timing of payments due.

Who must comply with the restrictions. Notwithstanding anything to the contrary, the number and duration rules for calls to collect a debt owed to or guaranteed by the United States apply to all autodialed, artificial-voice, or prerecorded-voice calls made to a wireless number including, for example, calls by any governmental entity or its agent.

56. As required by the Regulatory Flexibility Act of 1980 (RFA), as amended, an Initial Regulatory Flexibility Analyses (IRFA) was incorporated into the 2016 NRPM. The Commission sought written public comment on the proposals in the 2016 NRPM, including comment on the IRFA. The comments received are discussed below. This Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

57. Document FCC 16-99 promulgates rules to implement section 301 of the Bipartisan Budget Act of 2015, which amends the Telephone Consumer Protection Act by excepting from that Act's consent requirement robocalls to wireless numbers “made solely to collect a debt owed to or guaranteed by the United States” and authorizing the Commission to adopt rules to “restrict or limit the number and duration” of any calls to wireless numbers “to collect a debt owed to or guaranteed by the United States.” The Budget Act requires the Commission, in consultation with the Department of the Treasury, to “prescribe regulations to implement the amendments made” by section 301 of the Budget Act within nine months of enactment. In implementing these provisions, the Commission recognizes and seeks to balance the importance of collecting debt owed to or guaranteed by the United States and the consumer protections inherent in the TCPA. In adopting these rules today, the Commission fulfills the statutory requirement to prescribe rules to implement the amendments to the TCPA.

58. Covered Calls. The Commission interprets “solely to collect a debt” and, therefore, calls made pursuant to the exception created by section 301 of the Budget Act, to be limited to 1) debts that are delinquent at the time the calls are made, and 2) debts for which there is an imminent, non-speculative risk of delinquency due to a specific, time-sensitive event that affects the amount or timing of payments due, such as a deadline to recertify eligibility for an alternative payment plan or the end of a deferment period. The Commission interprets “owed to or guaranteed by the United States” to include only debts that are owed to or guaranteed by the federal government at the time the call is made.

59. The Commission determines that, because calls made pursuant to the exception must be made “solely to collect a debt,” the covered calls may only be made to the debtor or another person or entity legally responsible for paying the debt. The Commission further determines that covered calls may only be made to the wireless telephone number the debtor provided at the time the debt was incurred, such as on the loan application; to a wireless phone number subsequently provided by the debtor; or to a wireless number that the owner of the debt or its contractor has obtained from an independent source, provided that the number actually is the debtor's telephone number.

60. The Commission determines that robocalls to wrong numbers are not covered by the exception created in the Budget Act amendments. Calls to reassigned wireless numbers may not be made pursuant to the amendment either, but they are subject to the 1-call window the Commission clarified in the 2015 Declaratory Ruling and Order.

61. The Commission limits eligible callers to the owner of the debt or its contractor. The Commission determines that a “call,” for this exception, includes any initiated call, including a text message. The Commission determines that the excepted calls are limited in content to debt collection and servicing; they may not include any marketing, advertising, or selling products or services, or other irrelevant content.

62. Limits on Number and Duration of Federal Debt Collection Calls. The Commission limits the number of federal debt collection calls to three calls within a thirty-day period while the delinquency remains or following a specific, time-sensitive event, and in the 30 days before such an event. The Commission determines that consumers have a right to stop autodialed, artificial-voice, and prerecorded-voice servicing and collection calls to wireless numbers at any point the consumer wishes. Callers must inform debtors of their right to make such a request. The Commission limits federal debt collection calls so that zero calls are permitted unless they occur: (1) During the period of delinquency for debt collection calls; and (2) following an enumerated, specific, time-sensitive event for debt servicing calls, and in the 30 days before such an event.

63. The Commission determines that artificial-voice and prerecorded-voice calls may not exceed 60 seconds, excluding any required disclosures. The Commission does not place any cap on the duration of live-caller, autodialed calls. The Commission limits text messages to 160 characters. Any required disclosures may be included within these 160 characters or may be sent as a separate text message that does not count toward the numeric limits. The Commission determines that no federal debt collection calls or texts are permitted outside the hours of 8:00 a.m. to 9:00 p.m. (local time at the called party's location). The Commission determines that if multiple rules apply to the same call and one of the rules is enacted by the Commission to implement the TCPA, a caller must comply with the most restrictive requirements regarding factors such as frequency, time of day, and so on.

64. Other Implementation Issues. The Commission interprets section 227(b)(2)(C) of the Act to apply to all services mentioned in section 227(b)(1)(A)(iii) of the Act, which excludes residential lines.

65. In document FCC 16-99, the Commission solicited comments on how to minimize the economic impact of the proposals on small businesses. The Commission received three comments directly addressing the IRFA. Two of the comments addressed the area of duplicate, overlapping, or conflicting rules, and one addressed coordination with the ongoing Consumer Financial Protection Bureau (CFPB) rulemaking. In addition, the Commission received six consumer comments that were against robocalls where the filer mentioned being the owner of a small business. None of the comments pointed out any areas where small businesses would incur a particular hardship in complying with the rules.

66. Duplicate, Overlapping, or Conflicting Rules. Both CMC and NSC claim that the Commission failed to identify rules that “duplicate, overlap or conflict with the proposed rule” as required by the Regulatory Flexibility Act. The Commission acknowledges that other statutes and regulations impact debt collection calls. The TCPA regulates autodialed, prerecorded-voice, and artificial-voice calls. The rules the Commission adopted are concerned only with regulating that subset of autodialed, artificial-voice, and prerecorded-voice calls that are made to wireless numbers and to collect a debt that is owed to or guaranteed by the United States. The TCPA amendments and these implementing rules change only the specific conditions under which a caller can use an autodialer, prerecorded voice, and artificial voice to make calls to a wireless number without the prior express consent of the called party and the limitations that apply to autodialed, prerecorded-voice, or artificial-voice calls to a wireless number made to collect a debt owed to or guaranteed by the United States.

67. CMC suggests that the rules conflict with “longstanding federal and state foreclosure prevention efforts and policies”; “several federal requirements to call mortgage borrowers by telephone to try to prevent foreclosures”; “any new FCC rule permitting consumers to block calls”; “[t]he FDCPA prohibit[ion of] unfair practices by debt collectors in attempting to collect a debt”; and “[t]he Dodd-Frank Act prohibit[ion of] unfair, deceptive, or abusive acts or practices by covered persons or service providers, including consumer mortgage servicers.” However, none of the rules cited by CMC require that calls to wireless numbers be autodialed, artificial-voice, or prerecorded-voice calls. The TCPA, with or without the amendments, does not regulate whether or when a debt collector can make a debt collection call, nor does it in any way prohibit a mortgage servicer from making a call in compliance with foreclosure requirements. Debt collectors and mortgage servicers continue to be free to make calls in compliance with non-TCPA law. The rules the Commission adopted apply only to autodialed, prerecorded-voice, and artificial-voice calls. Therefore the rules cited by CMC do not “duplicate, overlap or conflict with” the proposed rule.

68. Coordination with the CFPB. ACA notes that the CFPB “will convene one or more panels under the Small Business Regulatory Enforcement Fairness Act to assess the potential impact of its debt collection proposals under consideration on affected small business, including by obtaining feedback from small entity representatives.” ACA suggests that the Commission wait for the results of the CFPB's analysis, particularly since “the substantial majority of collection agencies are `small' under the Small Business Administration's size standard.” The Commission declines to do so for two reasons. First, the deadline of August 2nd imposed by Congress prohibits the delay of this rulemaking. Second, the CFPB is analyzing overall debt collection rules and policies, a much wider scope than the narrow area covered by these rules, which are limited to regulating autodialed, artificial-voice, and prerecorded-voice calls to wireless numbers to collect a debt owed to or guaranteed by the United States. It is unlikely that the CFPB panels will provide more information than that which has already been received through the notice and comment process that began with the 2016 NPRM.

69. Cost Analysis. CMC recommends that the Commission “consider the costs of mortgage delinquencies and foreclosures and mortgage `rescue' scams that telephone calls could have prevented or mitigated” as part of the cost analysis. The Commission has considered comments asserting the potential benefits to debtors of receiving the autodialed, pre-recorded voice, and artificial-voice calls at issue in developing the rules, including in balancing the importance of collecting debt owed to or guaranteed by the United States and the consumer protections inherent in the TCPA. Such costs as CMC mentions would not be incurred by regulated entities and, in this context, would be both hypothetical and highly speculative. As a result, the Commission does not attempt to quantify the costs raised by CMC in the Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities section below.

70. Pursuant to the Small Business Jobs Act of 2010, which amended the RFA, the Commission is required to respond to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed rules as a result of those comments. The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.

71. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small-business concern” under the Small Business Act. A “small-business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

72. The Commission's rules restricting autodialed, artificial-voice, and prerecorded-voice calls to wireless numbers apply to all entities that make such calls or texts to wireless telephone numbers to collect debts owed to or guaranteed by the United States. Thus, the rules set forth in this proceeding are likely to have an impact on a substantial number of small entities in several categories.

73. Collection Agencies. This industry comprises establishments primarily engaged in collecting payments for claims and remitting payments collected to their clients. The SBA has determined that Collection Agencies with $15 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 3,361 firms in this category operated throughout that year. Of those, 3,166 firms operated with annual receipts of less than $10 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

74. Telemarketing Bureaus and Other Contact Centers. This U.S. industry comprises establishments primarily engaged in operating call centers that initiate or receive communications for others—via telephone, facsimile, email, or other communication modes—for purposes such as (1) promoting clients products or services, (2) taking orders for clients, (3) soliciting contributions for a client, and (4) providing information or assistance regarding a client's products or services. These establishments do not own the product or provide the services they are representing on behalf of clients. The SBA has determined that Telemarketing Bureaus and other Contact Centers with $15 million or less in annual receipts qualify as small businesses. U.S. Census data for 2012 indicate that 2,251 firms in this category operated throughout that year. Of those, 2,014 operated with annual receipts of less than $10 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

75. Commercial Banks and Savings Institutions. Commercial banks are establishments primarily engaged in accepting demand and other deposits and making commercial, industrial, and consumer loans. Commercial banks and branches of foreign banks are included in this industry. Savings institutions are establishments primarily engaged in accepting time deposits, making mortgage and real estate loans, and investing in high-grade securities. Savings and loan associations and savings banks are included in this industry. The SBA has determined that Commercial Banks and Savings Institutions with $500 million or less in assets qualify as small businesses. December 2013 Call Report data compiled by SNL Financial indicate that 6,877 firms in this category operated throughout that year. Of those, 5,533 qualify as small entities. Based on this data, the Commission concludes that a substantial number of businesses in this category are small under the SBA standard.

76. Credit Unions. This industry comprises establishments primarily engaged in accepting members' share deposits in cooperatives that are organized to offer consumer loans to their members. The SBA has determined that Credit Unions with $550 million or less in assets qualify as small businesses. The December 2013 National Credit Union Administration Call Report data indicate that 6,687 firms in this category operated throughout that year. Of those, 6,252 qualify as small entities. Based on this data, the Commission concludes that a substantial number of businesses in this category are small under the SBA standard.

77. Other Depository Credit Intermediation. This industry comprises establishments primarily engaged in accepting deposits and lending funds (except commercial banking, savings institutions, and credit unions). Establishments known as industrial banks or Morris Plans and primarily engaged in accepting deposits, and private banks (i.e., unincorporated banks) are included in this industry. The SBA has determined that Other Depository Credit Intermediation entities with $550 million or less in assets qualify as small businesses. Census data for 2012 indicate that 6 firms in this category operated throughout that year. Due to the nature of this category, the Commission concludes that a substantial number of businesses in this category are small under the SBA standard.

78. Sales Financing. This industry comprises establishments primarily engaged in sales financing or sales financing in combination with leasing. Sales financing establishments are primarily engaged in lending money for the purpose of providing collateralized goods through a contractual installment sales agreement, either directly from or through arrangements with dealers. The SBA has determined that Sales Financing entities with $38.5 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 2,093 firms in this category operated throughout that year. Of those, 1,950 operated with annual receipts of less than $25 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

79. Consumer Lending. This U.S. industry comprises establishments primarily engaged in making unsecured cash loans to consumers. The SBA has determined that Consumer Lending entities with $38.5 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 2,768 firms in this category operated throughout that year. Of those, 2,702 operated with annual receipts of less than $25 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

80. Real Estate Credit. This U.S. industry comprises establishments primarily engaged in lending funds with real estate as collateral. The SBA has determined that Real Estate Credit entities with $38.5 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 2,535 firms in this category operated throughout that year. Of those, 2,223 operated with annual receipts of less than $25 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

81. International Trade Financing. This U.S. industry comprises establishments primarily engaged in providing one or more of the following: (1) Working capital funds to U.S. exporters; (2) lending funds to foreign buyers of U.S. goods; and/or (3) lending funds to domestic buyers of imported goods. The SBA has determined that International Trade Financing entities with $38.5 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 126 firms in this category operated throughout that year. Of those, 120 operated with annual receipts of less than $25 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

82. Secondary Market Financing. This U.S. industry comprises establishments primarily engaged in buying, pooling, and repackaging loans for sale to others on the secondary market. The SBA has determined that Secondary Market Financing entities with $38.5 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 89 firms in this category operated throughout that year. Of those, 78 operated with annual receipts of less than $25 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

83. All Other Nondepository Credit Intermediation. This U.S. industry comprises establishments primarily engaged in providing nondepository credit (except credit card issuing, sales financing, consumer lending, real estate credit, international trade financing, and secondary market financing). Examples of types of lending in this industry are: Short-term inventory credit, agricultural lending (except real estate and sales financing), and consumer cash lending secured by personal property. The SBA has determined that All Other Nondepository Credit Intermediation entities with $38.5 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 4,960 firms in this category operated throughout that year. Of those, 4,872 operated with annual receipts of less than $25 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

84. Mortgage and Nonmortgage Loan Brokers. This industry comprises establishments primarily engaged in arranging loans by bringing borrowers and lenders together on a commission or fee basis. The SBA has determined that Mortgage and Nonmortgage Loan Brokers with $7.5 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 6,157 firms in this category operated throughout that year. Of those, 5,939 operated with annual receipts of less than $5 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

85. Other Activities Related to Credit Intermediation. This industry comprises establishments primarily engaged in facilitating credit intermediation (except mortgage and loan brokerage; and financial transactions processing, reserve, and clearinghouse activities). The SBA has determined that Other Activities Related to Credit Intermediation entities with $20.5 million or less in annual receipts qualify as small businesses. Census data for 2012 indicate that 3,989 firms in this category operated throughout that year. Of those, 3,860 operated with annual receipts of less than $20.5 million. The Commission concludes that a substantial majority of businesses in this category are small under the SBA standard.

86. Document FCC 16-99 amends the Commission's rules implementing the TCPA to align them with the amended statutory language of the TCPA enacted by Congress in the 2015 Budget Act, creating an exception that allows the use of an autodialer, prerecorded-voice, and artificial-voice when making calls to wireless telephone numbers without the prior express consent of the called party when such calls are made solely to collect a debt owed to or guaranteed by the United States, and imposing limitations on autodialed, prerecorded-voice, and artificial-voice calls to collect a debt owed to or guaranteed by the United States. Document FCC 16-99 will likely impose a one-time cost on some entities to set up new recordkeeping and other compliance requirements. These changes affect small and large companies equally, and apply equally to all of the classes of regulated entities identified above.

87. To comply with the right of the consumer to stop autodialed, artificial-voice, and prerecorded-voice federal debt collection calls to wireless numbers without consent, regulated entities must keep a record of any request made by a consumer for the cessation of the calls, and must pass that information to any subsequent collector or servicer of the debt if the debt is transferred. This rule obligates callers to retain records of consumers opting out of receiving these autodialed or prerecorded federal debt collection messages. Because autodialed, artificial-voice, and prerecorded-voice federal debt collection calls to wireless numbers required consent prior to these amendments, the Commission assumes calling entities have systems and procedures already in place to record consent and that the current way of doing business will be sufficient for tracking revocation of consent and will not impose new costs. However, the requirement to inform subsequent collectors or servicers of the revocation of consent might be new for some calling entities, and could impose a small initial cost to modify systems or procedures. This provision does not impose a significant economic impact on small businesses. The Commission did not receive any comments stating that this rule would cause a significant economic impact on small businesses. The Commission does not require a particular form or format to be used in conveying the revocation of consent to subsequent collectors or servicers when a debt is transferred.

88. Federal debt collection calls made using a prerecorded or artificial voice must include an automated, interactive voice- and/or key press-activated opt-out mechanism so that debtors who receive these calls may make a stop-calling request during the call by pressing a single key. When a federal debt collection call using an artificial voice or prerecorded voice leaves a voicemail message, that message must also provide a toll-free number that the debtor may call at a later time to connect directly to the automated, interactive voice and/or key press-activated mechanism and automatically record the stop-calling request. Text message disclosures must include brief explanatory instructions for sending a stop-call request by reply text message and provide a toll-free number that enables the debtor to call back later to make a stop-call request. This rule obligates callers to modify their systems to produce the message, maintain toll-free numbers, and record any stop-call requests. Such records should demonstrate the caller's compliance with the provision and utilization of the automated, interactive opt-out feature. The Commission allows the calling entities the flexibility to determine how to implement the mechanism. The Commission does not require a particular form or format evidencing this mechanism or its implementation. This provision does not impose a significant economic impact on small businesses. The Commission did not receive any comments stating that this rule would cause a significant economic impact on small businesses.

89. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its approach, which may include the following four alternatives, among others: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

90. The amendments to the rules change the specific conditions under which a caller can use an autodialer, prerecorded voice, and artificial voice to make calls to a wireless number without the prior express consent of the called party and the limitations that apply to autodialed, prerecorded-voice, and artificial-voice calls to a wireless number made to collect a debt owed to or guaranteed by the United States. The limitations balance the importance of collecting debt owed to the United States and the consumer protections inherent in the TCPA. The Commission interprets the amendments as allowing such calls to be made by the federal government, owners of debt guaranteed by the federal government, and by their respective contractors. The amendments therefore benefit the federal government, owners of debt guaranteed by the federal government, and their respective contractors. Although the federal government is not a small business, many of the owners of debt guaranteed by the federal government and the contractors who make these calls are small businesses. Thus, the Commission considered the needs of small businesses in reaching its approach.

91. Automated dialers and artificial-voice, and prerecorded-voice calling systems can be used to make thousands of calls without requiring commensurate staffing. By automating the process of making calls and texts, small businesses can make as many calls as large businesses. The volume of calls is not limited by the size of the business. Therefore limitations designed to protect consumer interests must apply to both large and small calling entities to be effective. The Commission believes that any economic burden these proposed rules may have on callers is outweighed by the benefits to consumers.

92. Feedback. The Commission considered feedback from the 2016 NPRM in crafting the final order. Although none of the comments offered suggestions of ways to make the rules more friendly to small businesses, there were many comments from regulated callers with suggestions to make compliance easier for all, large and small. The Commission evaluated the comments in light of balancing the need to collect the debt with the need to protect consumer interests, and modified the proposed rules in several ways. For example, the Commission expanded the definition of the types of calls permitted to include debt servicing calls made following a specific, time-sensitive events such as a recertification deadline or the end of a deferment period, and in the 30 days before such an event, rather than limiting the exception to calls made when the debt is delinquent or in default. Similarly, the Commission expanded the reach of the exception by allowing covered calls to be made to a phone number subsequently provided by the debtor to the servicer or owner of the debt, or a number obtained from an independent source, rather than limiting calls to the number provided on the loan application. These changes benefit regulated entities of all sizes.

93. Timetables. The Commission does not see a need to establish a special timetable for small entities to reach compliance with the modification to the rules. No small business has asked for a delay in implementing the rules.

94. Reporting requirements; performance standards. Since the rule does not impose reporting requirements, there is no need to establish less burdensome reporting requirements for small businesses. Similarly, there are no design standards or performance standards to consider in this rulemaking.

95. Exemption. The Commission does not see a need to consider an exemption for small businesses from the modified rules. No small business has asked for such an exemption.

The DTAR, which supplements the Federal Acquisition Regulation (FAR), is codified at 48 CFR Chapter 10.

The Anti-Deficiency Act, 31 U.S.C. 1341 and the FAR section 32.702, state that no officer or employee of the government may create or authorize an obligation in excess of the funds available, or in advance of appropriations unless otherwise authorized by law. A continuing resolution (CR) provides funding for continuing projects or activities that were conducted in the prior fiscal year for which appropriations, funds, or other authority was previously made available.

Each CR is governed by its specific terms. However, amounts available under a CR are frequently insufficient to fully fund contract actions that may be required during its term. No existing contract clause permits partial funding of a contract action awarded during a CR. While other strategies are available to address the need to take contract actions during a CR, these strategies—for example short-term awards—are inefficient and may have other disadvantages.

On July 12, 2016, the Department issued a proposed rule (81 FR 45118) that would establish policies and procedures in order to facilitate successful, timely, and economical execution of Treasury contractual actions during a CR. Specifically, the proposed rule would set forth procedures for using incremental funding for fixed-price, time-and-material and labor-hour contracts during a period in which funds are provided to Treasury Departmental Offices or Bureaus under a CR. Heads of contracting activities may develop necessary supplemental internal procedures as well as guidance to advise potential offerors, offerors and contractors of these policies and procedures.

The comment period for the proposed rule closed on September 12, 2016. No public comments were received. Accordingly, the Department is adopting the proposed rule without substantive change.

This rule is not a significant regulatory action as defined in section 3(f) of Executive Order 12866. Therefore a regulatory assessment is not required.

The Regulatory Flexibility Act (5 U.S.C. chapter 6) generally requires agencies to conduct an initial regulatory flexibility analysis and a final regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.

It is hereby certified that this rule will not have a significant economic impact on a substantial number of small entities. The rule is intended to make changes to the DTAR that would allow for improvements in continuity when Treasury funding is operating under a CR and should not have significant economic impacts on small entities.

Accordingly, the Department of the Treasury amends 48 CFR Chapter 10 as follows:

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

NMFS closed directed fishing for Pacific cod by catcher/processors using pot gear in the BSAI under § 679.20(d)(1)(iii) on October 18, 2016 (81 FR 72009, October 19, 2016).

NMFS has determined that as of November 7, 2016, approximately 2,000 metric tons of Pacific cod remain in the 2016 Pacific cod apportionment for catcher/processors using pot gear in the BSAI. Therefore, in accordance with § 679.25(a)(1)(i), (a)(2)(i)(C), and (a)(2)(iii)(D), and to fully use the 2016 total allowable catch (TAC) of Pacific cod in the BSAI, NMFS is terminating the previous closure and is opening directed fishing for Pacific cod by catcher/processors using pot gear in the BSAI. The Administrator, Alaska Region, NMFS, (Regional Administrator) considered the following factors in reaching this decision: (1) The current catch of Pacific cod by catcher/processors using pot gear in the BSAI and, (2) the harvest capacity and stated intent on future harvesting patterns of vessels in participating in this fishery.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the opening of directed fishing for Pacific cod by catcher/processors using pot gear in the BSAI. Immediate notification is necessary to allow for the orderly conduct and efficient operation of this fishery, to allow the industry to plan for the fishing season, and to avoid potential disruption to the fishing fleet and processors. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of November 7, 2016.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

Without this inseason adjustment, NMFS could not allow the fishery for Pacific cod by catcher/processors using pot gear in the BSAI to be harvested in an expedient manner and in accordance with the regulatory schedule. Under § 679.25(c)(2), interested persons are invited to submit written comments on this action to the above address until December 1, 2016.

This action is required by § 679.25 and is exempt from review under Executive Order 12866.