Federal Register Vol. 81, No.39,

On October 30, 2015, OPM published FLTCIP final regulations in the Federal Register to (1) Expand the definition of “qualified relative” under 5 U.S.C. 9001(5)(D) to include both same-sex and opposite-sex domestic partners of Federal and U.S. Postal Service employees and annuitants and members and retired members of the uniformed services; (2) expand the definition of “qualified relative” to include adult children of domestic partners of Federal and U.S. Postal Service employees and annuitants, and members and retired members of the uniformed services; and (3) make other technical conforming amendments. See 80 FR 66785-66787. This document amends the regulations by adding the definitions of “domestic partner” and “domestic partnership” to 5 CFR 875.101.

Accordingly, OPM is amending 5 CFR part 875 as follows:

The 1999 Act was enacted into law on October 22, 1999, [Pub. L. 106-78; 113 Stat. 1188; 7 U.S.C. 1635-1636(i)] as an amendment to the Agricultural Marketing Act of 1946, as amended (7 U.S.C. 1621 et seq.). On April 2, 2001, AMS Livestock, Poultry, and Seed Program's (LPS) Livestock, Poultry, and Grain Market News Division (LPGMN) implemented the LMR program as required by the 1999 Act. The purpose was to establish a program of easily understood information regarding the marketing of cattle, swine, lambs, and livestock products; improve the price and supply reporting services of the USDA; and encourage competition in the marketplace for livestock and livestock products. The LMR regulations (7 CFR part 59) set the requirements for certain packers or importers to electronically submit purchase and sales information of livestock and livestock products to meet this purpose.

The statutory authority for the program lapsed on September 30, 2005. In October 2006, Congress passed the Livestock Mandatory Reporting Reauthorization Act (2006 Reauthorization Act) [Pub. L. 109-296]. The 2006 Reauthorization Act re-established the regulatory authority for the continued operation of LMR through September 30, 2010. On July 15, 2008, the LMR final rule became effective (73 FR 28606, May 16, 2008).

On September 28, 2010, Congress passed the Mandatory Price Reporting Act of 2010 (2010 Reauthorization Act) [Pub. L. 111-239]. The 2010 Reauthorization Act reauthorized LMR for an additional 5 years through September 30, 2015. On January 7, 2013, the LMR final rule became effective (77 FR 50561, August 22, 2012).

On September 30, 2015, the Agriculture Reauthorizations Act of 2015 (2015 Reauthorization Act) [Pub. L. 114-54] reauthorized the LMR program for an additional 5 years and directed the Secretary to revise the LMR lamb reporting requirements by modifying the definitions of packer and importer within the Code of Federal Regulations not later than 180 days after enactment.

It is found and determined that good cause exists for implementing this direct final rule on May 31, 2016. This rule has been determined to be a “non-significant regulatory action” under section 3(f) of Executive Order 12866; and, AMS finds that under 5 U.S.C. 553(b)(3)(B) and 808(2) good cause exists to publish a direct final rule without prior publication of a notice of proposed rulemaking. The Agriculture Reauthorizations Act of 2015 directed the Secretary to revise the LMR lamb reporting requirements by redefining terms within the Code of Federal Regulations not later than 180 days after enactment which was September 30, 2015. This statutory deadline made it impracticable for AMS to publish a proposed rule prior to issuing a direct final rule. Additionally, prior notice and opportunity for comment are unnecessary because the revisions in the direct final rule are based upon lamb industry recommendations and AMS does not expect substantive public comments for this rulemaking due to the minor nature and minimal impact of the revision. The Livestock Marketing Information Center (LMIC), an independent provider of economic analyses concerning the livestock industry, conducted an analysis of the current LMR program for lamb reporting in 2013 at the request of the American Sheep Industry Association, an industry organization representing sheep producers throughout the U.S. The regulatory revisions within this rulemaking are based upon this study.1

This direct final rule incorporates the lamb reporting changes contained within the 2015 Reauthorization Act under the USDA LMR regulations. As part of this direct final rule, interested parties may submit comments by April 29, 2016. If AMS receives substantive adverse comments on the rule, it will evaluate the comment to determine whether they are sufficiently compelling to warrant reconsideration of the effective date of the rule. Accordingly, this rule will be effective on May 31, 2016.

Section 241 of the 1999 Act gives USDA authority to establish a mandatory lamb price reporting program that will: (1) Provide timely, accurate, and reliable market information; (2) facilitate more informed marketing decisions; and (3) promote competition in the lamb slaughtering industry. AMS established submission requirements for lamb packers and lamb importers in accordance with this authority based upon its extensive knowledge of the lamb industry gained through a program of voluntary market information reporting of lamb.

Under the current LMR regulation, the term packer includes federally inspected lamb processing plants that slaughtered or processed an average of 75,000 head of lamb during the immediately preceding 5 calendar years. Additionally, a lamb processing plant that did not slaughter or process an average of 75,000 lambs during the immediately preceding 5 calendar years was required to report information if the Secretary determined the processing plant should be considered a packer based on its capacity. According to the regulation, packers are required to report information daily on domestic sales of boxed lamb cuts each reporting day including the price and quantity for each sale, the type of sale, the USDA grade, trim specification, weight range, delivery period, the product state of refrigeration, and any branded product characteristics. USDA reports on domestic boxed lamb cut sales to the public once each reporting day.

For any calendar year, a lamb importer who imported an average of 2,500 metric tons of lamb meat products per year during the immediately preceding 5 calendar years is required to report to USDA weekly the prices received for imported lamb cuts sold on the domestic market. Additionally, the term includes those that did not import an average of 2,500 metric tons of lamb meat products during the immediately preceding 5 calendar years, if USDA determines that the person should be considered an importer based on their volume of lamb imports. In the original rule, this threshold was an average of 5,000 metric tons of lamb meat products during the immediately preceding 5 calendar years, but was subsequently lowered to 2,500 metric tons in a final rule published in 2004 (69 FR 53784, September 2, 2004). Because there are not enough daily sales of imported products to meet the confidentiality guidelines and allow USDA to publish daily reports, lamb importers are required to report information on a weekly basis for sales of imported boxed lamb cuts sold on the domestic market during the prior week including the price and quantity for each sale, the type of sale, the USDA grade, trim specification, weight range, delivery period, the product state of refrigeration, and any branded product characteristics.

Since the implementation of LMR in 2001 and its subsequent revisions, the U.S. lamb industry has become more concentrated at all levels of the production system through consolidation, impacting AMS' ability to publish certain market information in accordance with the confidentiality provisions of the 1999 Act. To help address this issue, LMIC conducted an analysis of the current LMR program for lamb reporting in 2013 at the request of the American Sheep Industry Association.2 Based on this study, recommendations were proposed to amend the current LMR regulations to improve the price and supply reporting services of AMS and better align LMR lamb reporting requirements with current industry marketing practices. These recommendations are the basis for the lamb reporting changes contained within the 2015 Reauthorization Act under the USDA LMR regulations.

The 2015 Reauthorization Act revised the LMR lamb reporting requirements by modifying the definitions of packer and importer contained within the Code of Federal Regulations. Under the 2015 Reauthorization Act, the term “packer” includes any person with 50 percent or more ownership in a facility that slaughtered or processed an average of 35,000 lambs during the immediately preceding 5 calendar years, or a facility that did not slaughter or process an average of 35,000 lambs during the immediately preceding 5 calendar years if the Secretary determines that the processing plant should be considered a packer after considering its capacity.

In addition, under the 2015 Reauthorization Act, the term “importer” includes any person that imported an average of 1,000 metric tons of lamb meat products per year during the immediately preceding 4 calendar years, or did not import an average 1,000 metric tons of lamb meat products during the immediately preceding 4 calendar years and the Secretary determines that the person should be considered an importer based on their volume of lamb imports.

For consistency, the establishment of the 1,000 metric tons reporting provision on lamb importers will be comparable with the 35,000 head provision defining a lamb packer for purposes of LMR. The 1,000 metric tons provision is equal to approximately 2.2 million pounds of lamb meat product (1,000 metric tons × 2,204.6 pounds = 2,204,600 pounds). The 35,000 head provision is equal to approximately 2.4 million pounds of lamb meat product based upon an average lamb carcass weight of 69 pounds (National Agricultural Statistics Service data for 2014) (35,000 head × 69 pounds = 2,415,000 pounds).

As required by the 2015 Reauthorization Act, the reporting requirements for lamb are revised by modifying the definitions of packer and importer within the Code of Federal Regulations not later than 180 days after enactment. Subpart D of part 59 lists the requirements of lamb reporting beginning with § 59.300, establishing definitions for terms used throughout the subpart including those of packer and importer, which are the entities required to report under this rule. Therefore, under this direct final rule, the definition of a packer is modified within § 59.300 to include any person with 50 percent or more ownership in a facility that slaughtered or processed an average of 35,000 lambs during the immediately preceding 5 calendar years, or that did not slaughter or process an average of 35,000 lambs during the immediately preceding 5 calendar years if the Secretary determines that the processing plant should be considered a packer after considering its capacity. Additionally, under this direct final rule, the definition of an importer is modified within § 59.300 to include any person that imported an average of 1,000 metric tons of lamb meat products per year during the immediately preceding 4 calendar years, or did not import an average 1,000 metric tons of lamb meat products during the immediately preceding 4 calendar years and the Secretary determines that the person should be considered an importer based on their volume of lamb imports.

For entities that did not slaughter or process an average of 35,000 lambs during the immediately preceding 5 calendar years, AMS will project the plant's annual slaughter or production based upon the plant's estimate of annual slaughter capacity to determine which entities meet the definition of a packer as defined in these regulations.

For importers of lamb meat products, AMS will annually review import lamb volume data obtained from the U.S. Customs and Border Protection to determine which importers are required to report imported lamb information under these regulations.

This direct final rule is being issued by USDA with regard to the LMR program in conformance with Executive Orders 12866 and 13563.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives, and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

This action has been designated as a “non-significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the Office of Management and Budget (OMB) has waived the review process for this action.

In General. This direct final rule has been reviewed under the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612). The purpose of RFA is to consider the economic impact of a rule on small business entities. Alternatives, which would accomplish the objectives of the rule without unduly burdening small entities or erecting barriers that would restrict their ability to compete in the marketplace, have been evaluated. Regulatory action should be appropriate to the scale of the businesses subject to the action. The collection of information is necessary for the proper performance of the functions of AMS concerning the mandatory reporting of livestock information. Information is only available directly from those entities required to report under these regulations and exists nowhere else. Therefore, this direct final rule does not duplicate market information reasonably accessible to the USDA.

Objectives and Legal Basis. The objective of this direct final rule is to improve the price and supply reporting services of the USDA to encourage competition in the marketplace for lambs and lamb meat products as specifically directed by the 2015 Reauthorization Act and these regulations, as described in detail in the background section.

Estimated Number of Small Businesses. Under the 2015 Reauthorization Act, a lamb packer includes any person with 50 percent or more ownership in a facility that slaughtered or processed an average of 35,000 lambs during the immediately preceding 5 calendar years, or that did not slaughter or process an average of 35,000 lambs during the immediately preceding 5 calendar years if the Secretary determines that the processing plant should be considered a packer after considering its capacity. Additionally, under the 2015 Reauthorization Act, a lamb importer includes any person that imported an average of 1,000 metric tons of lamb meat products per year during the immediately preceding 4 calendar years, or did not import an average of 1,000 metric tons of lamb meat products during the immediately preceding 4 calendar years if the Secretary determines that the person should be considered an importer based on their volume of lamb imports. AMS estimates that approximately 1 additional company operating 1 lamb slaughtering plant and approximately 3 additional firms that import lamb carcasses and/or lamb meat are required to report market information under this final rule.

For this regulatory flexibility analysis, AMS utilized the North American Industry Classification System (NAICS), the standard used by Federal statistical agencies to classify business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. This analysis compares the size of lamb packing companies and importing firms to the NAICS standards to determine the percentage of small businesses within the industry affected by this rule. Under these size standards, meat packing companies with 500 or less employees are considered small business entities.3 Based on this size standard and its knowledge of the lamb industry, AMS estimates that all lamb packing companies currently required to report under LMR are considered to be small businesses. As such, the additional company affected by this direct final rule under the 2015 Reauthorization Act is also considered to be a small business. Additionally, the NAICS small business size standard for meat importers is 100 or less employees.4 Based on its knowledge of the industry and previous experience with LMR, AMS estimates that the additional lamb importers affected by this direct final rule are classified as small businesses under the NAICS standard.

The LMR regulations require lamb slaughter and processing plants and lamb importers of a certain size to report information to the USDA at prescribed times throughout the day and week. The LMR regulations already exempt many small businesses by the establishment of annual slaughter, processing, and import capacity thresholds. Based on figures published by the National Agricultural Statistics Service, there were 522 federally inspected lamb slaughter plants operating in the U.S. at the end of 2014. This LMR regulation requires 16 lamb packers and importers to report information (less than 2 percent of all federally inspected lamb plants and approximately 1 percent of all lamb importers). Therefore, approximately 98 percent of lamb packers and approximately 99 percent of lamb importers are exempt from reporting information by this direct final rule. As previously discussed, this final rule does not change this exemption. With regard to alternatives, if the definitions of a lamb packer and importer are not changed, AMS would continue to be hindered in reporting more accurate and reliable information on purchases of slaughter lambs and sales of domestic and imported boxed lamb cuts due to information confidentiality requirements of the 1999 Act.

Projected Reporting. The LMR regulations require the reporting of specific market information regarding the buying and selling of livestock and livestock products. This information is reported to AMS by electronic means and the adoption of this direct final rule will not affect this requirement. Electronic reporting involves the transfer of data from a packer's or importer's electronic recordkeeping system to a centrally located AMS electronic database. The packer or importer is required to organize the information in an AMS-approved format before electronically transmitting the information to AMS. Once the required information has been entered into the AMS database, it is aggregated and processed into various market reports, which are released according to the daily and weekly time schedule set forth in the LMR regulations. As an alternative, AMS also developed and made available web-based input forms for submitting data online as AMS found that some of the smaller entities covered under mandatory price reporting would benefit from such a web-based submission system. AMS estimates the total annual burden on each lamb packer to be $7,973, including $5,406 for annual costs associated with electronically submitting data, $699 for startup/annual maintenance costs, and $1,868 for the storage and maintenance of electronic files submitted to AMS. AMS estimates the total annual burden on each importer of lamb to be $2,682, including $115 for annual costs associated with electronically submitting data, $699 for startup/annual maintenance costs, and $1,868 for the storage and maintenance of electronic files submitted to AMS.

This rule does not substantially change these prior estimates. Adjusting the 75,000 head provision that establishes those lamb packers covered under the LMR regulation to 35,000 head increases the number of lamb packers required to report by 1 company; the estimated cost burden of $7,973 per packer remains the same. Likewise, the amended 2,500 metric tons provision that establishes those lamb importers covered under the LMR regulations to 1,000 metric tons increases the number of lamb importers required to report by 3; the estimated annual cost burden of $2,682 per importer remains the same.

Each packer and importer required to report information to USDA under LMR must maintain such records as are necessary to verify the accuracy of the information provided to AMS. This includes information regarding price, class, head count, weight, quality grade, yield grade, and other factors necessary to adequately describe each transaction. These records are already kept by the industry. Reporting packers and importers are required to maintain and make available the original contracts, agreements, receipts, and other records associated with any transaction relating to the purchase, sale, pricing, transportation, delivery, weighing, slaughter, or carcass characteristics of all livestock, and to maintain these records for a minimum of 2 years. Packers and importers are not required to report any other new or additional information they do not generally have available or maintain. Further, they are not required to keep any information that would prove unduly burdensome to maintain. The paperwork burden imposed on the packers and importers is further discussed in the following section entitled Paperwork Reduction Act.

In addition, AMS has not identified any relevant federal rules currently in effect that duplicate, overlap, or conflict with this rule. Professional skills required for recordkeeping under the LMR regulations are not different than those already employed by the reporting entities. Reporting is accomplished using computers or similar electronic means. This direct final rule does not affect the professional skills required for recordkeeping already employed by the reporting entities. Reporting will be accomplished using computers or similar electronic means. AMS believes the skills needed to maintain such systems are already in place in those small businesses affected by this rule.

Alternatives. This direct final rule requires lamb packing plants and lamb importers of a certain size to report information to the Secretary at prescribed times throughout the day and week. The 1999 Act and these regulations exempt the vast majority of small businesses by the establishment of slaughter, processing, and import capacity thresholds.

AMS recognizes that most of the economic impact of this direct final rule on those small entities required to report involves the manner in which information must be reported to the Secretary. However, in developing this direct final rule, AMS considered other means by which the objectives of this direct final rule could be accomplished, including reporting the required information by telephone, facsimile, and regular mail. AMS believes these alternatives are not capable of meeting the program objectives, especially timely reporting. The LMR regulations prescribe specific times that reporting entities must report to AMS and similarly prescribes specific times for publication of reports by AMS. AMS believes electronic submission to be the only method capable of allowing AMS to collect, review, process, aggregate, and publish reports while complying with the specific time-frames set forth in the 1999 Act and regulations.

To respond to concerns of smaller operations, AMS developed a web-based input form for submitting data online. Based on prior experience, AMS found that some of the smaller entities covered under mandatory price reporting would benefit from such a Web-based submission system. Accordingly, AMS developed such a system for program implementation.

Additionally, to further assist small businesses, AMS may provide for an exception to electronic reporting in emergencies, such as power failures or loss of Internet accessibility, or in cases when an alternative is agreeable between AMS and the reporting entity.

Other than these alternatives, there are no other practical and feasible alternatives to the methods of data transmission that are less burdensome to small businesses. AMS will continue to work actively with those small businesses required to report and provide the technical assistance needed, in an effort to minimize the burden on them to the maximum extent practicable.

In accordance with OMB regulations (5 CFR part 1320) that implement the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), the information collection requirements included in 7 CFR part 59 were previously approved by OMB and were assigned control number 0581-0186 Livestock Mandatory Reporting Act of 1999. The purpose of this direct final rule is to amend the LMR regulations to modify the requirement for the submission of information on domestic and imported lamb sales. All other provisions of the LMR regulations remain the same.

Adjusting the 75,000 head provision that establishes those lamb packers covered under the LMR regulation to 35,000 head, increases the number of lamb packers required to report from 7 to 8; likewise, the amended 2,500 metric tons provision that establishes those lamb importers covered under the LMR regulations to 1,000 metric tons increases the number of lamb importers required to report from 5 to 8.5 This change does not substantially impact the overall total burden hours from the increase of 4 entities and 16 plants (respondents).

The new collective overall burden for this collection is as follows:

Estimate of Burden: Public reporting burden for this collection of information is estimated to average .172 hours per response.

Respondents: Business or other for profit entities, individuals or households, farms, and the Federal Government.

Estimated Number of Respondents: 438 respondents.

Estimated Number Responses: 139,776 responses.

Estimated Number of Responses per Respondent: 319 responses.

Estimated Total Annual Burden on Respondents: 24,055 hours.

New Estimate of Burden: Public reporting burden for this collection of information is estimated to average .23 hours per response.

Respondents: Business or other for profit entities, individuals or households, farms, and the Federal Government.

Estimated Number of Respondents: 16 respondents.

Estimated Number Responses: 1,248 responses.

Estimated Number of Responses per Respondent: 78 responses.

Estimated Total Annual Burden on Respondents: 289 hours.

Upon publication of this direct final rule, AMS will submit a Justification for Change to OMB for approval of an increase in number of respondents and an increase in burden hours for the following forms under the currently approved OMB 0581-0186 Livestock Mandatory Reporting Act of 1999: LS-121 Live Lamb Daily Report—Current Established Prices, LS-123 Live Lamb Weekly Report, LS-124 Live Lamb Weekly Report—Formula Purchases, LS-125 Lamb Premiums and Discounts Weekly Report, LS-128 Boxed Lamb Daily Report, and LS-129 Lamb Carcass Report.

AMS is committed to implementation of the Government Paperwork Elimination Act which provides for the use of information resources to improve the efficiency and effectiveness of governmental operations, including providing the public with the option of submitting information or transacting business electronically to the extent practicable. AMS believes the burden savings resulting from electronically compiling and submitting a reduced number of sales transactions to be negligible.

It is hereby found that this direct final rule, as hereinafter set forth, is consistent with and will effectuate the declared policy of the Livestock Mandatory Reporting Act of 1999 and the Agriculture Reauthorizations Act of 2015.

This direct final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This direct final rule is not intended to have retroactive effect. Section 259 of the 1999 Act prohibits States or political subdivisions of a State to impose any requirement that is in addition to, or inconsistent with, any requirement of the 1999 Act with respect to the submission or reporting of information, or the publication of such information, on the prices and quantities of livestock or livestock products. In addition, the 1999 Act does not restrict or modify the authority of the Secretary to administer or enforce the Packers and Stockyards Act of 1921 (7 U.S.C. 181 et seq.); administer, enforce, or collect voluntary reports under the 1999 Act or any other law; or access documentary evidence as provided under Sections 9 and 10 of the Federal Trade Commission Act (15 U.S.C. 49, 50). There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this direct final rule.

AMS has considered the potential civil rights implications of this direct final rule on minorities, women, or persons with disabilities to ensure that no person or group shall be discriminated against on the basis of race, color, national origin, gender, religion, age, disability, sexual orientation, marital or family status, political beliefs, parental status, or protected genetic information. This review included persons who are employees of the entities that are subject to this regulation. This direct final rule does not require affected entities to relocate or alter their operations in ways that could adversely affect such persons or groups. Further, this direct final rule will not deny any persons or groups the benefits of the program or subject any persons or groups to discrimination.

This direct final rule has been reviewed under Executive Order 13132, Federalism. This Order directs agencies to construe, in regulations and otherwise, a Federal Statute to preempt State law only when the statute contains an express preemption provision. This direct final rule is required by the 1999 Act. Section 259 of the 1999 Act, Federal Preemption states, “In order to achieve the goals, purposes, and objectives of this title on a nationwide basis and to avoid potentially conflicting State laws that could impede the goals, purposes, or objectives of this title, no State or political subdivision of a State may impose a requirement that is in addition to, or inconsistent with, any requirement of this subtitle with respect to the submission or reporting of information, or the publication of such information, on the prices and quantities of livestock or livestock products.”

Prior to the passage of the 1999 Act, several States enacted legislation mandating, to various degrees, the reporting of market information on transactions of cattle, swine, and lambs conducted within that particular State. However, since the federal LMR program was implemented on April 2, 2001, these State programs are no longer in effect. Therefore, there are no federalism implications associated with this rulemaking.

This direct final rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. AMS has considered the potential implications of this direct final rule to ensure this regulation will not have substantial and direct effects on Tribal governments and will not have significant Tribal implications.

For the reasons set forth in the preamble, title 7, part 59 is amended as follows:

The Farm Service Agency (FSA) published a final rule in the Federal Register on January 21, 2016 (81 FR 3289-3293), adding DFOML to the existing Direct Loan Program. The final rule changes to 7 CFR part 764 resulted in inadvertently omitting two paragraphs that were previously in 7 CFR 764.101(i)(4), “General Eligibility Requirements,” which specified alternatives for demonstrating managerial ability for microloans (MLs) for Operating Loan (OL) purposes.

The only changes the final rule intended to make in section 764.101 were to clarify that the references to MLs in paragraphs (i)(3) and (4) were only for MLs for OL purposes. In making the change to paragraph (i)(4), we should have specified that the change was only to the introductory text of paragraph (i)(4) because the phrase “introductory text” was not specified, it resulted in paragraphs (i)(4)(i) through (ii) being inadvertently omitted from the CFR when the changes were made as specified in the final rule. Therefore, this document corrects the regulation by reinserting the previously published text for paragraphs (i)(4)(i) through (ii).

For reasons discussed above, FSA amends 7 CFR part 764 as follows:

Section 10(d) of the Federal Deposit Insurance Act (FDI Act) generally requires the appropriate Federal banking agency for an insured depository institution (IDI) to conduct a full-scope, on-site examination of the institution at least once during each 12-month period.1 Prior to enactment of section 83001 of the FAST Act,2 section 10(d)(4) of the FDI Act authorized the appropriate Federal banking agency to extend the on-site examination cycle for an IDI to at least once during an 18-month period if the IDI (1) had total assets of less than $500 million; (2) was well capitalized (as defined in 12 U.S.C.1831o (prompt corrective action)); (3) was found, at its most recent examination, to be well managed 3 and to have a composite condition of “outstanding” or, in the case of an institution that has total assets of not more than $100 million, “outstanding” or “good;” (4) was not subject to a formal enforcement proceeding or order by the FDIC or its appropriate Federal banking agency; and (5) had not undergone a change in control during the previous 12-month period in which a full-scope, on-site examination otherwise would have been required. Section 10(d)(10) of the FDI Act further gave the agencies discretionary authority to raise the size limit for otherwise qualifying IDIs with an “outstanding” or “good” composite rating from $100 million to an amount not to exceed $500 million in total assets if the agencies determined that the higher limit would be consistent with the principles of safety and soundness.4

The Board and the FDIC, as the appropriate Federal banking agencies for State-chartered insured banks and savings associations, are permitted to conduct on-site examinations of such IDIs on alternating 12-month or 18-month periods with the institution's State supervisor, if the Board or FDIC, as appropriate, determines that the alternating examination conducted by the State carries out the purposes of section 10(d) of the FDI Act.5

In addition, section 7(c)(1)(C) of the International Banking Act (IBA) provides that a Federal or a State branch or agency of a foreign bank shall be subject to on-site examination by its appropriate Federal banking agency or State bank supervisor as frequently as a national or State bank would be subject to such an examination by the agency.6 The agencies previously adopted regulations to implement the examination cycle requirements of section 10(d) of the FDI Act and section 7(c)(1)(C) of the IBA, including the extended 18-month examination cycle available to qualifying small institutions and U.S. branches and agencies of foreign banks.7 The agencies have also exercised discretion under section 10(d)(10) of the FDI Act, first, in 1997 to extend the 18-month examination cycle for otherwise qualifying institutions with “good” composite ratings 8 with total assets of $250 million or less, and again in 2007 for such institutions with total assets of $500 million or less.9

Section 83001 of the FAST Act, effective on December 4, 2015, amended section 10(d) of the FDI Act to raise, from $500 million to $1 billion, the total asset threshold below which an agency may apply an 18-month (rather than a 12-month) on-site examination cycle for IDIs with “outstanding” composite ratings, and to raise, from not more than $100 million to not more than $200 million, the total asset threshold below which an agency may apply an 18-month examination cycle to an institution with an “outstanding” or “good” composite rating.10 Section 83001 also amended section 10(d)(10) of the FDI Act to authorize the appropriate Federal banking agency to increase, by regulation, the maximum amount limitation for IDIs with “outstanding” or “good” composite ratings from not more than $200 million to not more than $1 billion if the appropriate Federal banking agency determines that the higher amount would be consistent with the principles of safety and soundness for IDIs.11

These FAST Act amendments reduce regulatory burdens on small, well capitalized, and well managed institutions and allow the agencies to better focus their supervisory resources on those IDIs and U.S. branches and agencies of foreign banks that may present capital, managerial, or other issues of supervisory concern.

The agencies are adopting interim final rules to implement the FAST Act amendments to section 10(d) of the FDI Act. In particular, the agencies are amending their respective rules to raise, from $500 million to $1 billion, the total asset threshold below which an institution that meets the criteria in section 10(d) and the agencies' rules may qualify for an 18-month, on-site examination cycle. In addition, as authorized by the FAST Act, the agencies have determined that it is consistent with the principles of safety and soundness to permit institutions with total assets of $200 million or greater and not exceeding $1 billion that receive a composite CAMELS or ROCA rating of “1” or “2,” and that meet the other qualifying criteria set forth in section 10(d) and the agencies' rules to qualify for an 18-month examination cycle. The FDIC analyzed the frequency with which institutions rated a composite CAMELS rating of “1” or “2” failed within five years, versus the frequency with which institutions rated a composite CAMELS rating of “3,” “4,” or “5” failed within five years. FDIC analysis indicates that between 1985 and 2010 (using bank failure data through 2015),12 FDIC-insured depository institutions with assets less than $1 billion and a composite CAMELS rating of “1” or “2” had a five-year failure rate that was one-seventh as high as institutions with a CAMELS rating of “3,” “4,” or “5.” Moreover, the relationship between failure rates in the two ratings groups does not meaningfully change when the analysis is restricted to institutions with assets between $200 million and $500 million compared to institutions with assets between $500 million to $1 billion. This analysis suggests that extending the examination cycle for well-rated institutions with $500 million to $1 billion in assets by an additional six months, combined with the agencies' off-site monitoring activities and ability to examine an institution more frequently as necessary or appropriate, will not negatively affect the safe and sound operations of qualifying institutions or the ability of the agencies to effectively supervise and protect the safety and soundness of institutions with total assets of less than $1 billion.13 Furthermore, the agencies note that, in order to qualify for an 18-month examination cycle, any institution with total assets of less than $1 billion—including one with a CAMELS composite rating of “2”—must meet the other capital, managerial, and supervisory criteria set forth in section 10(d).

Consistent with section 7(c)(1)(C) of the IBA, the agencies also are making conforming changes to their regulations governing the on-site examination cycle for the U.S. branches and agencies of foreign banks. The interim final rules permit a U.S. branch or agency of a foreign bank with total assets of less than $1 billion to qualify for an 18-month examination cycle if the U.S. branch or agency of a foreign bank received a composite ROCA rating of “1” or “2” at its most recent examination and meets the other applicable criteria.

The agencies estimate that the interim final rules will increase the number of institutions that may qualify for an extended 18-month examination cycle by approximately 617 institutions (371 of which are supervised by the FDIC, 142 by the OCC, and 104 by the Board), bringing the total number to 4,987 IDIs.14 Approximately 89 U.S. branches and agencies of foreign banks would be eligible for the extended examination cycle based on the interim final rules, an increase of 26 (1 of which is supervised by the FDIC, 3 by the OCC, and 22 by the Board).15

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) provided for a substantial reorganization of the regulation of State and Federal savings associations and their holding companies.16 Beginning July 21, 2011, the powers, duties, and functions formerly performed by the Office of Thrift Supervision (OTS) were transferred to the FDIC, as to State savings associations, the OCC, as to Federal savings associations, and the Board, as to savings and loan holding companies. Section 316(b) of the Dodd-Frank Act 17 provides the manner of treatment for all orders, resolutions, determinations, regulations, and advisory materials that had been issued, made, prescribed, or allowed to become effective by the OTS. Section 316(b) provides that if such materials were in effect on the day before the transfer date, they continue in effect and are enforceable by or against the appropriate successor agency until they are modified, terminated, set aside, or superseded in accordance with applicable law by such successor agency, by any court of competent jurisdiction, or by operation of law.

Section 316(c) of the Dodd-Frank Act further directed the FDIC and the OCC to consult with one another and to publish a list of the continued OTS regulations that will be enforced by the FDIC and the OCC, respectively. On June 14, 2011, the FDIC's Board of Directors approved a “List of OTS Regulations to be Enforced by the OCC and the FDIC Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.” This list was published by the FDIC and the OCC as a Joint Notice in the Federal Register on July 6, 2011.18

Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act 19 granted the OCC rulemaking authority relating to both State and Federal savings associations, nothing in the Dodd-Frank Act affected the FDIC's existing authority to issue regulations for State savings associations under the FDI Act and other laws as the “appropriate Federal banking agency” or under similar statutory terminology. Section 312(c) of the Dodd-Frank Act 20 amended the definition of “appropriate Federal banking agency” contained in section 3(q) of the FDI Act 21 to add State savings associations to the list of entities for which the FDIC is designated as the “appropriate Federal banking agency.” As a result, when the FDIC acts as the designated “appropriate Federal banking agency” (or under similar terminology) for State savings associations, as it does here, the FDIC is authorized to issue, modify, and rescind regulations involving such associations.

As noted, on June 14, 2011, operating pursuant to this authority, the FDIC's Board of Directors reissued and re-designated certain transferring regulations of the former OTS. These transferred OTS regulations were published as new FDIC regulations in the Federal Register on August 5, 2011.22 When the FDIC republished the transferred OTS regulations as new FDIC regulations, the FDIC specifically noted that its staff would evaluate the transferred OTS rules and might later recommend incorporating the transferred OTS regulations into other FDIC rules, amending them, or rescinding them, as appropriate.

Twelve CFR 390.351 implements the FDIC's examination requirements for savings associations under the authority of section 4(a) of the Home Owners' Loan Act (HOLA),23 which provides that the FDIC will examine State savings associations for safety and soundness and under section 10(d) of the FDI Act, which covers examinations of all IDIs.24

Section 390.351 requires full-scope, on-site examinations of State savings associations at least once each 12-month period and once each 18-month period for a State savings association with total assets of no more than $500 million that is well capitalized; was assigned a CAMELS “1” or “2” for management and was rated either a CAMELS composite “1” or “2” on its most recent examination; is not currently under a formal enforcement proceeding or order by the FDIC; and has not undergone a change in control during the preceding 12-month period.

Section 390.351 is substantively identical to section 337.12 and, therefore, redundant to section 337.12. This interim final rule rescinds and removes section 390.351. The amendment to section 337.12 in the interim final rule also reflects the authority of the FDIC under section 4(a) of HOLA to provide for the examination and safe and sound operation of State savings associations. With this amendment, all FDIC-supervised institutions, including State savings associations, will be subject to the requirements of 12 CFR 337.12.

The agencies are issuing the interim final rules without prior notice and the opportunity for public comment and the 30-day delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA).25 Pursuant to section 553(b)(B) of the APA, general notice and the opportunity for public comment are not required with respect to a rulemaking when an “agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” 26 The interim final rules implement the provisions of section 83001 of the FAST Act, which became effective on December 4, 2015. The interim final rules adopt without change the statutory increase in the total asset ceiling for the 18-month examination cycle for CAMELS and ROCA 1-rated institutions and also make available, pursuant to the statutory authority, the 18-month examination cycle for CAMELS and ROCA 2-rated institutions. Consistent with the underlying statute, the interim final rules would allow well capitalized and well managed institutions with under $1 billion in total assets to benefit from the statutorily extended 18-month examination schedule.

The agencies believe that the public interest is best served by implementing the statutorily amended thresholds as soon as possible. Immediate implementation would reduce regulatory burdens on small, well capitalized, and well managed institutions, while also allowing the agencies to better focus their supervisory resources on those institutions that may present capital, managerial, or other issues of supervisory concern. Because the affected institutions and agencies must plan and prepare for examinations in advance, the agencies believe issuing interim final rules would provide the certainty necessary to allow the institutions and agencies to begin scheduling according to the new examination cycle period. In addition, the agencies believe that providing a notice and comment period prior to issuance of the interim final rules is unnecessary because the agencies do not expect public objection to the regulations being promulgated, as these rules implement the changes specified by Congress.27 Moreover, because the interim final rules would permit an agency to conduct an on-site examination of an institution more frequently than once every 18 months, the agencies retain the ability to maintain the current—or a more frequent—on-site examination schedule for an institution, if the relevant agency determines it would be necessary or appropriate.

Similarly, the FDIC believes there is good cause to rescind and remove section 390.351 because section 337.12 will be made immediately applicable to both insured State savings associations and insured State nonmember banks. As a result, insured State savings associations will be provided the same burden reduction benefits and appropriate supervisory focus afforded to insured State nonmember banks. For these reasons, the agencies find there is good cause consistent with the public interest to issue the rules without advance notice and comment.28

The APA also requires a 30-day delayed effective date, except for (1) substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause.29 The agencies conclude that, because the rules recognize an exemption, the interim final rules are exempt from the APA's delayed effective date requirement.30 Additionally, the agencies find good cause to publish the interim final rules with an immediate effective date for the same reasons set forth above under the discussion of section 553(b)(B) of the APA.

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),31 in determining the effective date and administrative compliance requirements for a new regulation that imposes additional reporting, disclosure, or other requirements on IDIs, each Federal banking agency must consider any administrative burdens that such regulation would place on depository institutions and the benefits of such regulation. In addition, section 302(b) of the RCDRIA requires such new regulation to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form, with certain exceptions, including for good cause. Because the interim final rules expand eligibility for an 18-month, rather than 12-month on-site examination schedule and are burden-reducing in nature, the interim final rules do not impose additional reporting, disclosure, or other requirements on IDIs, and section 302 of the RCDRIA therefore does not apply. Nevertheless, the agencies have considered the administrative burdens that such regulations would place on depository institutions and the benefits of such regulations in determining the effective date and compliance requirements. In addition, for the same reasons set forth above under the discussion of section 553(b)(B) of the APA, the agencies find good cause would exist under section 302 of RCDRIA to publish these interim final rules with an immediate effective date.

While the agencies believe there is good cause to issue the rules without advance notice and comment and with an immediate effective date, the agencies are interested in the views of the public and request comment on all aspects of the interim final rules.

Section 722 of the Gramm-Leach-Bliley Act 32 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The Federal banking agencies invite your comments on how to make these interim final rules easier to understand. For example:

• Have the agencies organized the material to suit your needs? If not, how could this material be better organized?

• Are the requirements in the interim final rules clearly stated? If not, how could the interim final rules be more clearly stated?

• Do the interim final rules contain language or jargon that is not clear? If so, which language requires clarification?

• Would a different format (grouping and order of sections, use of headings, paragraphing) make the interim final rules easier to understand? If so, what changes to the format would make the interim final rules easier to understand?

• What else could the agencies do to make the regulation easier to understand?

The Regulatory Flexibility Act (RFA) 33 applies only to rules for which an agency publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed above, consistent with section 553(b)(B) of the APA, the agencies have determined for good cause that general notice and opportunity for public comment is not necessary. Accordingly, the RFA's requirements relating to initial and final regulatory flexibility analysis do not apply. Nonetheless, the agencies observe that the extension of the periodic examination cycle for certain small institutions from 12 to 18 months should not have a significant adverse economic impact on a substantial number of small entities, and, in fact, should reduce regulatory burdens on these entities. The agencies request comment on these conclusions.

The Paperwork Reduction Act of 1995 34 states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. Because the interim final rules do not create a new, or revise an existing, collection of information, no information collection request submission needs to be made to the OMB.

Under section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA),35 the agencies are required to conduct a review at least once every 10 years to identify any outdated or otherwise unnecessary regulations. The agencies completed the last comprehensive review of their regulations under EGRPRA in 2006 and are currently conducting the next decennial review. The burden reduction evidenced in these interim final rules is consistent with the objectives of the EGRPRA review process.

Consistent with section 202 of the Unfunded Mandates Reform Act of 1995, before promulgating any final rule for which a general notice of proposed rulemaking was published, the OCC prepares an economic analysis of the final rule. As discussed above, the OCC has determined that the publication of a general notice of proposed rulemaking was unnecessary. Accordingly, the OCC has not prepared an economic analysis of the joint interim final rules.

For the reasons set forth in the joint preamble, the OCC amends part 4 of chapter I of title 12 of the Code of Federal Regulations as follows:

For the reasons set forth in the joint preamble, the Board amends parts 208 and 211 of chapter II of title 12 of the Code of Federal Regulations as follows:

For the reasons set forth in the joint preamble, the Board of Directors of the FDIC amends parts 337, 347, and 390 of chapter III of title 12 of the Code of Federal Regulations as follows:

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Fokker Services B.V. Model F.27 Mark 200, 300, 400, 500, 600, and 700 airplanes. The NPRM published in the Federal Register on September 18, 2015 (80 FR 56413) (“the NPRM”).

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0100, dated April 30, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Fokker Services B.V. Model F.27 Mark 200, 300, 400, 500, 600, and 700 airplanes. The MCAI states:

Required actions also include revising the maintenance or inspection program, as applicable, by incorporating fuel airworthiness limitation items and critical design configuration control limitations. You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-3633.

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

Fokker Services B.V. has issued Fokker F27 Proforma Service Bulletin SBF27-28-072, Revision 1, dated March 6, 2014, including Fokker F27 Service Bulletin Appendix SBF27-28-072/APP01, dated July 17, 2014, including List of Drawings/Part Lists, dated July 17, 2014. The service information describes procedures for installing additional bonding provisions.

Fokker Services B.V. has also issued Fokker Manual Change Notification—Maintenance Documentation MCNM-F27-027, dated September 9, 2014. The service information describes fuel airworthiness limitations items and critical design configuration control limitations.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 15 airplanes of U.S. registry.

We also estimate that it will take about 8 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $10,200, or $680 per product.

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 757-200 series airplanes modified by particular STCs. The NPRM published in the Federal Register on June 5, 2015 (80 FR 32061) (“the NPRM”). The NPRM was prompted by reports of a main cargo door being blown past its full open position while on the ground during gusty wind conditions, which resulted in uncontrolled fall down to its closed position. The NPRM proposed to require installation of a new placard and bracket, replacement of an existing placard, and replacement of the main cargo door control panel. We are issuing this AD to prevent damage to the main cargo door, which could result in rapid decompression of the airplane, or injury to maintenance and ground crew during ground operations.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response to each comment.

Precision Conversions, LLC requested that we revise the SUMMARY and Discussion sections of the NPRM and the unsafe condition section of the proposed AD. Precision Conversions, LLC stated that it was concerned by certain conclusions stated in the NPRM for which it does not believe there is a factual basis. Precision Conversions, LLC noted that the NPRM stated that wind damage to a cargo door could result in rapid decompression, leading to in-flight breakup. However, even without the accomplishment of Precision Conversions Service Bulletin PC-757-11-0023, dated August 1, 2014, Precision Conversions, LLC stated that the suggested scenario would not occur. If, during ground operations, the main cargo door were to deflect beyond the fully open position enough to be of concern, its damaged operating system would prevent the cargo door from closing as usual, which would not go unnoticed by the crew, and the airplane would not be dispatched. Thus, a potential unsafe condition would occur only on the ground, not in the air.

Precision Conversions, LLC stated that a potential for an unsafe condition does arise from the possibility of ground crew operating the main cargo door outside of the wind limits published in the aircraft maintenance manual and operations manual supplements. Precision Conversions, LLC asserted that exceeding published limits could result in damage to the door operating system and loss of control of the door, creating an unsafe condition, but only during ground operations; thus, Precision Conversions, LLC believed that the proposed language regarding rapid decompression and in-flight breakup had no basis, given the relevant factual scenario, and should not be included in the final rule. Precision Conversions, LLC requested that we revise the unsafe condition to indicate that the NPRM will “prevent wind damage to the main cargo door operating system and ensure its safe use during ground operations.”

We partially agree with the request. We disagree that a damaged door will always be detected because of human factors. We agree, however, that rapid decompression might not necessarily lead to in-flight breakup, which would depend on the decompression. We have therefore revised the SUMMARY and Discussion sections of this final rule and paragraph (e), Unsafe Condition, of this AD to remove reference to in-flight breakup, and to include injury to maintenance and ground crew during ground operations.

Boeing stated that the NPRM does not address or affect any Boeing designs; therefore, Boeing can neither review the data nor comment on the content of the NPRM.

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

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

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

We reviewed Precision Conversions LLC Service Bulletin PC-757-11-0023, dated August 1, 2014. The service information describes procedures for installing a new placard and bracket, replacement of an existing placard, and replacement of the main cargo door control panel. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 9 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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

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

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

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

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

(3) Will not affect intrastate aviation in Alaska, and

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

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

Discussion

We have received reports of missing right and left outboard partition tie rods at station 337 (door number 1) on Model 787-8 airplanes as a result of a manufacturing escape (i.e., insufficient documentation to show engineering details). We are issuing this AD to detect and correct partitions with missing tie rods or release pins or with supports that are not engaged in the structural bracket. These partitions could come loose during a high-acceleration event and strike the flight attendant seats in the door 1 location, causing serious injury to the seat occupants, or could affect safe egress from the airplane.

We reviewed Boeing Service Bulletin B787-81205-SB250081-00, Issue 001, dated December 9, 2014. The service bulletin describes procedures for an inspection of the station 337 outboard partitions for a tie rod and quick release pins, and also to determine that both partition supports are engaged in the structural bracket, and corrective actions. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

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

This AD requires accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between the AD and the Service Information.”

The phrase “corrective actions” is used in this AD. “Corrective actions” are actions that correct or address any condition found. Corrective actions in an AD could include, for example, repairs.

Boeing Service Bulletin B787-81205-SB250081-00, Issue 001, dated December 9, 2014, specifies to do the general visual inspection “in accordance with the Tasks in Table 6” of the service information. However “Table 6” does not exist. The tasks are identified in Table 4 of the service information. Therefore, this AD requires that the inspection be done in accordance with the tasks in Table 4 of the Accomplishment Instructions of Boeing Service Bulletin B787-81205-SB250081-00, Issue 001, dated December 9, 2014.

Since there are currently no domestic operators of this product, we find that notice and opportunity for prior public comment are unnecessary and that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment. However, we invite you to send any written data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket Number FAA-2016-3981; Directorate Identifier 2015-NM-053-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

We estimate that this AD affects 0 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary repairs that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need these repairs:

According to the manufacturer, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.

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

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

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

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

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

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

(3) Will not affect intrastate aviation in Alaska, and

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

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

This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary. This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.

The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, Part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:

This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The applicable FAA forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA form documents is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAPs, Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure, and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPS as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.

Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:

Authority for various parts of 15 CFR Chapter VII is based on the Defense Production Act of 1950 as amended, the Military Selective Service Act, the Export Administration Act of 1979 as amended and the Trading with the Enemy Act. This rule updates authority citations in 15 CFR Chapter VII to include the most recent applicable United States Code (“U.S.C.”) citations for those statutes. Additionally, the authority for parts 730 and 744 of that chapter rests, in part, on Executive Order 12947—Prohibiting Transactions With Respect to Terrorists Who Threaten To Disrupt the Middle East Peace Process (60 FR 5079, 3 CFR, 1995 Comp., p. 356) and on the annual notice continuing the emergency declared in that executive order. This rule updates the authority citations for those parts to cite the most recent such notice. This rule also removes citations to Section 103 of the Energy Policy and Conservation Act, which has been repealed, and adds citations to the Annual Compilation of Presidential Documents for Presidential documents that have been compiled therein. Finally, this rule makes stylistic edits to conform citations to the style prescribed in the Federal Register Document Drafting Handbook.

The specific reasons for the revisions are as follows:

• Parts 700, 701 and 702 to cite the most recent U.S.C. codification of the Defense Production Act of 1950 as amended;

• Part 700 to cite the most recent U.S.C. codification of the Military Selective Service Act;

• Parts 730 through 744 and 746 through 774 to cite the most recent U.S.C. codification of the Export Administration Act;

• Parts 730, 738, 754 and 774 to remove the citation to Section 103 of the Energy Policy and Conservation Act, 42 U.S.C. 6212, which dealt with, inter alia, restrictions on exports of crude oil and has been repealed;

• Parts 730, 738 and 774 to cite the most recent U.S.C. codification of the Trading With the Enemy Act;

• Parts 730 and 744 to cite the presidential notice of January 22, 2016 continuing the emergency declared in E.O. 12947; and

• Parts 743, 746, 747 and 750 to cite the Title 3 CFR Annual Compilation of Presidential Documents for Presidential documents that have been compiled therein.

All other changes to the authority citations made by this rule are stylistic changes made to conform to the style of the Federal Register Document Drafting Handbook.

This rule is purely procedural, and makes no changes other than to revise CFR authority paragraphs for the purpose of making the authority citations current and to conform to Federal Register Document Drafting Handbook style. It does not change the text of any section of Chapter VII nor does it alter any right, obligation or prohibition that applies to any person under that chapter.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). This rule does not impose any regulatory burden on the public and is consistent with the goals of Executive Order 13563. This rule has been determined to be not significant for purposes of Executive Order 12866.

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This rule does not involve any collection of information.

3. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132.

4. The Department finds that there is good cause under 5 U.S.C. 553(b)(B) to waive the provisions of the Administrative Procedure Act requiring prior notice and the opportunity for public comment because they are unnecessary. This rule only updates legal authority citations. It clarifies information and is non-discretionary. This rule does not alter any right, obligation or prohibition that applies to any person under the EAR. Because these revisions are not substantive changes, it is unnecessary to provide notice and opportunity for public comment. In addition, the 30-day delay in effectiveness otherwise required by 5 U.S.C. 553(d) is not applicable because this rule is not a substantive rule. Because neither the Administrative Procedure Act nor any other law requires that notice of proposed rulemaking and an opportunity for public comment be given for this rule, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, no Final Regulatory Flexibility Analysis is required and none has been prepared.

Accordingly, 15 CFR Chapter VII is amended as follows:

The Washington State Department of Transportation requested permission for the Montlake Bridge across the Lake Washington Ship Canal to remain in the closed-to-navigation position to facilitate the safe, uninterrupted roadway passage of event participants. The deviation is necessary to accommodate the grand opening of the new Evergreen Point Floating Bridge bike ride by the Cascade Bicycle Club. The Montlake Bridge in the closed position provides 30 feet of vertical clearance throughout the navigation channel, and 46 feet of vertical clearance throughout the center 60 feet of the bridge; vertical clearance references to the Mean Water Level of Lake Washington. The deviation period is from 7 a.m. to 6 p.m. on April 2, 2016, and from 6:30 a.m. to 12:30 p.m. on April 3, 2016. The normal operating schedule for the Montlake Bridge operates in accordance with 33 CFR 117.1051(e).

Waterway usage on the Lake Washington Ship Canal ranges from commercial tug and barge to small pleasure craft. Vessels able to pass through the bridge in the closed-to-navigation position may do so at any time. The bridge will be able to open for emergencies. The Lake Washington Ship Canal has no immediate alternate route for vessels to pass. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by the temporary deviation.

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

Long Island Cares, Inc. requested and the bridge owner for both bridges, the State of New York Department of Transportation, concurred with this temporary deviation from the normal operating schedule to facilitate a public event, the Dee Snider's Motorcycle Ride to Fight Hunger.

The Loop Parkway Bridge, mile 0.7, across Long Creek has a vertical clearance in the closed position of 21 feet at mean high water and 25 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.799(f).

The Meadowbrook State Parkway Bridge, mile 12.8, across Sloop Channel has a vertical clearance in the closed position of 22 feet at mean high water and 25 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.799(h).

Long Creek and Sloop Channel are transited by commercial fishing and recreational vessel traffic.

Under this temporary deviation, the Loop Parkway and the Meadowbrook State Parkway Bridges may remain in the closed position between 11 a.m. and 1 p.m. on September 18, 2016.

Vessels able to pass under the bridge in the closed position may do so at any time. The bridges will not be able to open for emergencies and there are no immediate alternate routes for vessels to pass.

The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by the temporary deviation.

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

The proposed rule was published in the June 22, 2015, edition of the Federal Register (80 FR 35621) and the regulations.gov docket number was COE-2015-0006. In response to the proposal, three comments were received. The comments received from the Virginia Department of Historic Resources and Virginia Department of Conservation and Recreation stated that the proposed rule will have no adverse effect on historic properties and no adverse impacts on natural heritage resources. In addition, a comment was received in response to the proposal in the Federal Register objecting to the creation of a firing range and the environmental effects associated with it. This action is the establishment of a danger zone at an existing firing range which has been in use for the last century, therefore no new environmental impacts are proposed as a result of the action.

In response to a request by the United States Navy, and pursuant to its authorities in Section 7 of the Rivers and Harbors Act of 1917 (40 Stat. 266; 33 U.S.C. 1) and Chapter XIX of the Army Appropriations Act of 1919 (40 Stat. 892; 33 U.S.C. 3), the Corps of Engineers is amending 33 CFR part 334 for a permanent danger zone, in waters of the Atlantic Ocean south of Rudee Inlet in Virginia Beach, Virginia. The establishment of a permanent danger zone is necessary to protect the public from hazards associated with live firing operations.

a. Review under Executive Order 12866. This rule is issued with respect to a military function of the Defense Department and the provisions of Executive Order 12866 do not apply.

b. Review under the Regulatory Flexibility Act. This final rule has been reviewed under the Regulatory Flexibility Act (Pub. L. 96-354). The Regulatory Flexibility Act generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice-and-comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities (i.e., small businesses and small governments). The danger zone is necessary to protect public safety and satisfy Department of Defense and other government agency requirements for small arms training. Small entities can utilize navigable waters outside of the danger zone when the danger zone is activated. After considering the economic impacts of this final danger zone regulation on small entities, I certify that this action will not have a significant impact on a substantial number of small entities.

c. Review under the National Environmental Policy Act. This rule will not have a significant impact to the quality of the human environment and, therefore, preparation of an environmental impact statement is not required. An environmental assessment has been prepared. It may be reviewed at the District office listed at the end of the FOR FURTHER INFORMATION CONTACT section, above.

d. Unfunded Mandates Act. This rule does not impose an enforceable duty among the private sector and, therefore, is not subject to the requirements of Section 202 or 205 of the Unfunded Mandates Reform Act (Public Laws 104-4, 109 Stat. 48, 2 U.S.C. 1501 et seq.). We have also found under Section 203 of the Act, that small governments will not be significantly or uniquely affected by this rule.

For the reasons set out in the preamble, the Corps amends 33 CFR part 334 as follows:

The CAA at section 110(a)(2)(C) requires states to develop and submit to the EPA for approval into the SIP preconstruction review and permitting programs applicable to certain new and modified stationary sources of air pollutants for attainment and nonattainment areas that cover both major and minor new sources and modifications, collectively referred to as the New Source Review (NSR) SIP. The CAA NSR SIP program is composed of three separate programs: PSD, Nonattainment New Source Review (NNSR), and Minor NSR. PSD is established in part C of title I of the CAA and applies in areas that meet the National Ambient Air Quality Standards (NAAQS)—“attainment areas,” as well as areas where there is insufficient information to determine if the area meets the NAAQS—“unclassifiable areas.” The NNSR SIP program is established in part D of title I of the CAA and applies in areas that are not in attainment of the NAAQS—“nonattainment areas.” The Minor NSR SIP program addresses construction or modification activities that do not emit, or have the potential to emit, beyond certain major source thresholds, and thus do not qualify as “major” and applies regardless of the designation of the area in which a source is located. The EPA regulations governing the criteria that states must satisfy for EPA approval of the NSR programs as part of the SIP are contained in 40 CFR 51.160-51.166.

On October 20, 2010, EPA promulgated revisions to the existing requirements of the federal PSD permitting program as it pertains to emissions of PM2.5. 1 As relevant here for this rulemaking, those revisions included two screening tools which outlined the extent to which certain sources were required as part of a permit application to demonstrate the impact of the proposed project on ambient air quality. A SMC was established to determine whether a PSD permit application may be exempted from the 1-year air monitoring requirement for PM2.5 based on the grounds that the increase of the pollutant is de minimis and would have a limited impact on ambient air quality. Additionally, SILs were established, below which a source was presumed to have met its statutory obligation to demonstrate that the proposed project would not cause or contribute to a violation of the NAAQS. In response to a request from EPA and a petition from a third party, the United States Court of Appeals for the District of Columbia Circuit (the Court) subsequently vacated and remanded to the EPA the portions of the 2010 PSD regulations establishing the PM2.5 SMC and SILs. Sierra Club v. EPA, 705 F.3d 458, 463-64 (D.C. Cir. 2013). As a result of this decision, EPA subsequently revised its regulations to amend the SMC for PM2.5 and to remove the SILs for PM2.5 altogether. See 78 FR 73698 (December 9, 2013).2

Prior to the Court's decision, on August 25, 2011, VADEQ submitted a formal revision to its SIP to incorporate changes to its PM2.5 regulations in accordance with the federal PSD program in effect at that time. In light of the Court's decision, by letter dated February 13, 2013, Virginia officially withdrew from the August 25, 2011 submittal those portions of the Virginia Administrative Code (VAC) which pertained to the PM2.5 SILs and SMC. Specifically, Virginia withdrew the PM2.5 SIL regulation at paragraph A(2) of 9VAC5-80-1715 and the portion of paragraph E(1) of 9VAC5-80-1695 pertaining to the PM2.5 SMC. On February 25, 2014, EPA approved the remaining portions of VADEQ's submittal without addressing the PM2.5 SMC and SILs. See 79 FR 10377. Virginia subsequently revised the VAC to comport with EPA's December 9, 2013 rulemaking for SILs and SMC and submitted those amended regulations to EPA as a formal SIP revision on July 22, 2014.

Virginia's July 22, 2014 SIP submittal consists of revisions to Virginia's PSD permitting regulations at 9VAC5-80, sections 1695 and 1715 to reflect federal requirements relating to PM2.5 SMC and SILs. Specifically, 9VAC5-80-1695E(1) establishes a SMC of 0 µg/m3 of PM2.5, and expressly states that no exemption from monitoring is available with regard to PM2.5. As previously discussed, VADEQ's PM2.5 SILs provision, formerly codified at 9VAC5-80-1715A(2) was never approved by EPA into Virginia's SIP and was subsequently removed by Virginia from the VAC. Therefore, this approval action does not include a substantive revision to 9VAC5-80-1715A. Rather, EPA's action involves approval of Virginia's administrative recodification, necessitated by the Commonwealth's revision of state regulations (i.e., the removal of the SILs from 9VAC5-80-1715). The Virginia regulations, 9VAC5-80, sections 1695 and 1715, are consistent with federal PSD requirements for PM2.5 in the CAA and its implementing regulations, including specifically 40 CFR 51.166, and were effective in Virginia on June 4, 2014.

EPA is approving VADEQ's July 22, 2014 SIP submittal, including revised provisions of the VAC, 9VAC5-80, sections 1695 and 1715, as a revision to the Virginia SIP because the revision meets CAA requirements in the CAA and its implementing regulations. EPA is publishing this rule without prior proposal because EPA views this as a noncontroversial amendment and anticipates no adverse comment. However, in the “Proposed Rules” section of this Federal Register, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This rule will be effective on April 29, 2016 without further notice unless EPA receives adverse comment by March 30, 2016. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time.

In 1995, Virginia adopted legislation that provides, subject to certain conditions, for an environmental assessment (audit) “privilege” for voluntary compliance evaluations performed by a regulated entity. The legislation further addresses the relative burden of proof for parties either asserting the privilege or seeking disclosure of documents for which the privilege is claimed. Virginia's legislation also provides, subject to certain conditions, for a penalty waiver for violations of environmental laws when a regulated entity discovers such violations pursuant to a voluntary compliance evaluation and voluntarily discloses such violations to the Commonwealth and takes prompt and appropriate measures to remedy the violations. Virginia's Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1-1198, provides a privilege that protects from disclosure documents and information about the content of those documents that are the product of a voluntary environmental assessment. The Privilege Law does not extend to documents or information that: (1) Are generated or developed before the commencement of a voluntary environmental assessment; (2) are prepared independently of the assessment process; (3) demonstrate a clear, imminent and substantial danger to the public health or environment; or (4) are required by law.

On January 12, 1998, the Commonwealth of Virginia Office of the Attorney General provided a legal opinion that states that the Privilege Law, Va. Code Sec. 10.1-1198, precludes granting a privilege to documents and information “required by law,” including documents and information “required by Federal law to maintain program delegation, authorization or approval,” since Virginia must “enforce Federally authorized environmental programs in a manner that is no less stringent than their Federal counterparts. . . .” The opinion concludes that “[r]egarding § 10.1-1198, therefore, documents or other information needed for civil or criminal enforcement under one of these programs could not be privileged because such documents and information are essential to pursuing enforcement in a manner required by Federal law to maintain program delegation, authorization or approval.” Virginia's Immunity law, Va. Code Sec. 10.1-1199, provides that “[t]o the extent consistent with requirements imposed by Federal law,” any person making a voluntary disclosure of information to a state agency regarding a violation of an environmental statute, regulation, permit, or administrative order is granted immunity from administrative or civil penalty. The Attorney General's January 12, 1998 opinion states that the quoted language renders this statute inapplicable to enforcement of any federally authorized programs, since “no immunity could be afforded from administrative, civil, or criminal penalties because granting such immunity would not be consistent with Federal law, which is one of the criteria for immunity.”

Therefore, EPA has determined that Virginia's Privilege and Immunity statutes will not preclude the Commonwealth from enforcing its PSD program consistent with the Federal requirements. In any event, because EPA has also determined that a state audit privilege and immunity law can affect only state enforcement and cannot have any impact on Federal enforcement authorities, EPA may at any time invoke its authority under the CAA, including, for example, sections 113, 167, 205, 211 or 213, to enforce the requirements or prohibitions of the state plan, independently of any state enforcement effort. In addition, citizen enforcement under section 304 of the CAA is likewise unaffected by this, or any, state audit privilege or immunity law.

In this rulemaking action, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of VADEQ rules regarding PM2.5 SILs and SMC discussed in Section III of this preamble. The EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or may be viewed at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

The SIP is not approved to apply on any Indian reservation land as defined in 18 U.S.C. 1151 or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 29, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of this Federal Register, rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking action.

This action pertaining to Virginia's PSD requirements for PM2.5 may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

40 CFR part 52 is amended as follows:

Table of Contents I. Background II. Summary of Proposed Provisions and Analysis of and Responses to Public Comments on the Proposed Methodology A. Background B. Overview of the Funding Methodology and Calculation of the Payment Amount C. Required Rate Cells D. Sources and State Data Considerations E. Discussion of Specific Variables Used in Payment Equations F. Adjustments for American Indians and Alaska Natives G. State Option To Use 2016 or 2017 QHP Premiums for BHP Payments H. State Option To Include Retrospective State-Specific Health Risk Adjustment in Certified Methodology III. Provisions of the Final Methodology A. Overview of the Funding Methodology and Calculation of the Payment Amount B. Federal BHP Payment Rate Cells C. Sources and State Data Considerations D. Discussion of Specific Variables Used in Payment Equations E. Adjustments for American Indians and Alaska Natives F. State Option To Use 2016 or 2017 QHP Premiums for BHP Payments G. State Option To Include Retrospective State-Specific Health Risk Adjustment in Certified Methodology IV. Collection of Information Requirements V. Regulatory Impact Statement A. Overall Impact B. Unfunded Mandates Reform Act C. Regulatory Flexibility Act D. Federalism Acronyms

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

Section 1331 of the Patient Protection and Affordable Care Act (Pub. L. 111-148, enacted on March 23, 2010), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30, 2010) (collectively referred as the Affordable Care Act) provides states with an option to establish a Basic Health Program (BHP). In the states that elect to operate BHP, BHP will make affordable health benefits coverage available for individuals under age 65 with household incomes between 133 percent and 200 percent of the Federal poverty level (FPL) who are not otherwise eligible for Medicaid, the Children's Health Insurance Program (CHIP), or affordable employer-sponsored coverage, or for individuals whose income is below these levels but are lawfully present non-citizens ineligible for Medicaid. (For those states that have expanded Medicaid coverage under section 1902(a)(10)(A)(i)(VIII) of the Social Security Act (the Act), the lower income threshold for BHP eligibility is effectively 138 percent due to the application of a required 5 percent income disregard in determining the upper limits of Medicaid income eligibility (section 1902(e)(14)(I) of the Act)).

BHP provides another option for states in providing affordable health benefits to individuals with incomes in the ranges previously described. States may find BHP a useful option for several reasons, including the ability to potentially coordinate standard health plans in BHP with their Medicaid managed care plans, or to potentially reduce the costs to individuals by lowering premiums or cost-sharing requirements.

Federal funding will be available for BHP based on the amount of premium tax credit (PTC) and cost-sharing reductions (CSRs) that BHP enrollees would have received had they been enrolled in qualified health plans (QHPs) through Exchanges. These funds are paid to trust funds dedicated to BHP in each state, and the states then administer the payments to standard health plans within BHP.

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

In the BHP final rule, we specified that the BHP Payment Notice process would include the annual publication of both a proposed and final BHP Payment Notice. The proposed BHP Payment Notice would be published in the Federal Register each October, and would describe the proposed methodology for the upcoming BHP program year, including how the Secretary considered the factors specified in section 1331(d)(3) of the Affordable Care Act, along with the proposed data sources used to determine the Federal BHP payment rates. The final BHP Payment Notice would be published in the Federal Register in February, and would include the final BHP funding methodology, as well as the Federal BHP payment rates for the next BHP program year. For example, payment rates published in February 2016 would apply to BHP program year 2017, beginning in January 2017. As discussed in section III.C of this methodology, and as referenced in § 600.610(b)(2), state data needed to calculate the Federal BHP payment rates for the final BHP Payment Notice must be submitted to CMS.

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

Under section 1331(d)(3)(A)(ii) of the Affordable Care Act, the funding methodology and payment rates are expressed as an amount per eligible individual enrolled in a BHP standard health plan (BHP enrollee) for each month of enrollment. These payment rates may vary based on categories or classes of enrollees. Actual payment to a state would depend on the actual enrollment of individuals found eligible in accordance with a state's certified blueprint eligibility and verification methodologies in coverage through the state BHP. A state that is approved to implement BHP must provide data showing quarterly enrollment of eligible individuals in the various Federal BHP payment rate cells. Such data should include the following:

• Personal identifier;

• Date of birth;

• County of residence;

• Indian status;

• Family size;

• Household income;

• Number of person in household enrolled in BHP;

• Family identifier;

• Months of coverage;

• Plan information; and

• Any other data required by CMS to properly calculate the payment.

In the February 24, 2015 Federal Register (80 FR 9636), we published the final payment notice entitled “Basic Health Program; Federal Funding Methodology for Program Year 2016” (hereinafter referred to as the 2016 payment methodology) that sets forth the methodology that will be used to calculate the Federal BHP payments for the 2016 program year.

The following sections, arranged by subject area, include a summary of the public comments that we received, and our responses. For a complete and full description of the BHP proposed funding methodology, see the “Basic Health Program; Federal Funding Methodology for Program Years 2017 and 2018” proposed rule published in the October 22, 2015 Federal Register (80 FR 63936).

We received a total of 5 timely comments from individuals and organizations. The public comments received ranged from general support or opposition to the BHP, but did not address the proposed methodology.

In the October 22, 2015 (80 FR 63936) proposed rule, we specified the methodology of how the Federal BHP payments would be calculated. For specific discussions, please refer to the October 22, 2015 proposed rule (80 FR 63936).

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

Comment: Some commenters expressed general opposition to or support for the BHP.

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

Comment: Some commenters expressed general support for the BHP payment methodology.

Response: We appreciate the comments in support of the payment methodology.

Final Decision: We are finalizing our proposed methodology for how the Federal BHP payments will be calculated.

We proposed in the overview of the funding methodology to calculate the PTC and CSR as consistently as possible and in general alignment with the methodology used by Exchanges to calculate the advance payments of the PTC and CSR, and by the Internal Revenue Service (IRS) to calculate the allowable PTC. We proposed in this section 4 equations that compose the overall BHP funding methodology. For specific discussions, please refer to the October 22, 2015 proposed rule (80 FR 63936).

We received no comments regarding the overview of the funding methodology and calculation of the payment amount. We are finalizing the BHP overview of the funding methodology and the payment amount for 2017 and 2018 as proposed.

In this section, we proposed that a state implementing BHP provide us with an estimate of the number of BHP enrollees it will enroll in the upcoming BHP program, by applicable rate cell, to determine the Federal BHP payment amounts. For each state, we proposed using rate cells that separate the BHP population into separate cells based on the following 5 factors: Age; geographic rating area; coverage status; household size; and income. For specific discussions, please refer to the October 22, 2015 proposed rule (80 FR 63936).

We received no comments regarding the rate cells used to calculate the Federal BHP payment amounts. We are finalizing the criteria and definitions of the rate cells to determine the Federal BHP payment amounts for 2017 and 2018.

We proposed in this section to use, to the extent possible, data submitted to the Federal government by QHP issuers seeking to offer coverage through an Exchange to determine the Federal BHP payment cell rates. However, in states operating a State Based Exchange (SBE), we proposed that such states submit required data for CMS to calculate the Federal BHP payment rates in those states. For specific discussions, please refer to the October 22, 2015 proposed rule (80 FR 63936).

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

In this section, we proposed 11 specific variables to use in the payment equations that compose the overall BHP funding methodology. (10 variables are described in section III.D of this document, and the premium trend factor is described in section III.F.) For each proposed variable, we included a discussion on the assumptions and data sources used in developing the variables. For specific discussions, please refer to the October 22, 2015 proposed rule (80 FR 63936).

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

We proposed to make several adjustments for American Indians and Alaska Natives when calculating the CSR portion of the Federal BHP payment rate to be consistent with the Exchange rules. For specific discussions, please refer to the October 22, 2015 proposed rule (80 FR 63936).

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

In this section, we proposed to provide states implementing BHP with the option to use the 2016 or 2017 QHP premiums multiplied by a premium trend factor to calculate the Federal BHP payment rates instead of using the 2017 or 2018 QHP premiums, for the 2017 and 2018 BHP program years, respectively. For specific discussions, please refer to the October 22, 2015 proposed rule (80 FR 63936).

We did not receive any comments on the “State Option to Use 2016 or 2017 QHP Premiums for BHP Payments” section and are finalizing the BHP methodology as proposed.

In this section, we proposed to provide states implementing BHP the option to develop a methodology to account for the impact that including the BHP population in the Exchange would have had on QHP premiums based on any differences in health status between the BHP population and persons enrolled through the Exchange. For specific discussions, please refer to the October 22, 2015 proposed rule (80 FR 63936).

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

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

Section 1331(d)(3)(A)(ii) of the Affordable Care Act specifies that the payment determination shall take into account all relevant factors necessary to determine the value of the premium tax credits and CSRs that would have been provided to eligible individuals, including the age and income of the enrollee, whether the enrollment is for self-only or family coverage, geographic differences in average spending for health care across rating areas, the health status of the enrollee for purposes of determining risk adjustment payments and reinsurance payments that would have been made if the enrollee had enrolled in a qualified health plan through an Exchange, and whether any reconciliation of PTC and CSR would have occurred if the enrollee had been so enrolled. This payment methodology takes each of these factors into account. This methodology is the same as the 2016 payment methodology, with minor changes to update the value of certain factors used to calculate the payments, but with no changes in methods. These updates are explained in later sections of this notice.

Through this notice, we are establishing a payment methodology for the 2017 and 2018 BHP program years. The same methodology will apply for both years, but the values of a number of factors will be updated for 2018, as noted throughout this notice. We reserve the right to specify a different methodology for 2018.

The methodology will be the same methodology as used for 2015 and 2016. We have developed a methodology that the total Federal BHP payment amount would be based on multiple rate cells in each state. Each rate cell would represent a unique combination of age range, geographic area, coverage category (for example, self-only or two-adult coverage through BHP), household size, and income range as a percentage of FPL. Thus, there would be distinct rate cells for individuals in each coverage category within a particular age range who reside in a specific geographic area and are in households of the same size and income range. We note that the development of the BHP payment rates will be consistent with those states' rules on age rating. Thus, in the case of a state that does not use age as a rating factor on the Marketplace, the BHP payment rates would not vary by age.

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

To calculate the total Federal BHP payment, Equation (1) will be used to calculate the estimated PTC for eligible individuals enrolled in the BHP in each rate cell and Equation (2) will be used to calculate the estimated CSR payments for eligible individuals enrolled in the BHP in each rate cell. (Indeed, we note that throughout the payment notice, when we refer to enrollees and enrollment data, we mean data regarding individuals who are enrolled in the BHP who have been found eligible for the BHP using the eligibility and verification requirements that are applicable in the state's most recent certified Blueprint.) By applying the equations separately to rate cells based on age, income and other factors, we effectively take those factors into account in the calculation. In addition, the equations reflect the estimated experience of individuals in each rate cell if enrolled in coverage through the Exchange, taking into account additional relevant variables. Each of the variables in the equations is defined in this section, and further detail is provided later in this section of the payment notice.

In addition, we describe how we will calculate the adjusted reference premium (ARP), which is the value of the premium accounting for specified adjustments (such as the relative health status of BHP enrollees or the projected annual increase in the premium) (described later in this section of the payment notice) that is used in Equations (1) and (2). This is defined in Equation (3a) and Equation (3b).

The estimated PTC, on a per enrollee basis, will be calculated for each rate cell for each state based on age range, geographic area, coverage category, household size, and income range. The PTC portion of the rate will be calculated in a manner consistent with the methodology used to calculate the PTC for persons enrolled in a QHP, with 3 adjustments. First, the PTC portion of the rate for each rate cell will represent the mean, or average, expected PTC that all persons in the rate cell would receive, rather than being calculated for each individual enrollee. Second, the reference premium (RP) used to calculate the PTC (described in more detail later in the section) will be adjusted for BHP population health status, and in the case of a state that elects to use 2016 premiums for the basis of the BHP Federal payment, for the projected change in the premium from the 2016 to 2017, to which the rates announced in the final payment methodology would apply. These adjustments are described in Equation (3a) and Equation (3b). Third, the PTC will be adjusted prospectively to reflect the mean, or average, net expected impact of income reconciliation on the combination of all persons enrolled in BHP; this adjustment, as described in section III.D.5. of this methodology, will account for the impact on the PTC that would have occurred had such reconciliation been performed. Finally, the rate is multiplied by 95 percent, consistent with section 1331(d)(3)(A)(i) of the Affordable Care Act. We note that in the situation where the average income contribution of an enrollee would exceed the ARP, we would calculate the PTC to be equal to 0 and would not allow the value of the PTC to be negative.

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

The CSR portion of the rate will be calculated for each rate cell for each state based on age range, geographic area, coverage category, household size, and income range defined as a percentage of FPL. The CSR portion of the rate will be calculated in a manner consistent with the methodology used to calculate the CSR component of advance payments for persons enrolled in a QHP, as described in the “HHS Notice of Benefit and Payment Parameters for 2016”final rule published in the February 27, 2015 Federal Register (80 FR 10749), with 3 principal adjustments. (We will make a separate calculation that includes different adjustments for American Indian/Alaska Native BHP enrollees, as described in section III.D.1 of this methodology.) For the first adjustment, the CSR rate, like the PTC rate, will represent the mean expected CSR subsidy that would be paid on behalf of all persons in the rate cell, rather than being calculated for each individual enrollee. Second, this calculation will be based on the ARP, as described in section III.A.3. of this methodology. Third, this equation uses an ARP that reflects premiums charged to non-tobacco users, rather than the actual premium that is charged to tobacco users to calculate the CSR component of advance payments for tobacco users enrolled in a QHP. Accordingly, the equation will include a tobacco rating adjustment factor that would account for BHP enrollees' estimated tobacco-related health costs that are outside the premium charged to non-tobacco-users. Finally, the rate will be multiplied by 95 percent, as provided in section 1331(d)(3)(A)(i) of the Affordable Care Act.

Consistent with the methodology previously described, Equation (2) is defined as:

As part of these calculations for both the PTC and CSR components, we will calculate the value of the ARP as described below in this methodology. Consistent with the approach in previous years, we will allow states to choose between using the actual 2017 and 2018 QHP premiums or the 2016 and 2017 QHP premiums multiplied by the premium trend factor (for the 2017 and 2018 program years, respectively, and as described in section III.F). Therefore, we describe how we would calculate the ARP under each option.

In the case of a state that elected to use the RP based on the 2017 premiums for the 2017 program year, we will calculate the value of the ARP as specified in Equation (3a). The ARP will be equal to the RP, which will be based on the second lowest cost silver plan premium in 2017, multiplied by the BHP population health factor (described in section III.D of this methodology), which will reflect the projected impact that enrolling BHP-eligible individuals in QHPs on an Exchange would have had on the average QHP premium.

In the case of a state that elected to use the RP based on the 2016 premiums for the 2017 program year (as described in section III.F of this methodology), we will calculate the value of the ARP as specified in Equation (3b). The ARP will be equal to the RP, which will be based on the second lowest cost silver plan premium in 2016, multiplied by the BHP population health factor (described in section III.D of this methodology), which will reflect the projected impact that enrolling BHP-eligible individuals in QHPs on an Exchange would have had on the average QHP premium, and by the premium trend factor, which will reflect the projected change in the premium level between 2016 and 2017 (including the estimated impact of changes resulting from the transitional reinsurance program established in section 1341 of the Affordable Care Act).

This methodology will also apply for the 2018 program year, using either actual 2018 QHP premiums or the 2017 QHP premiums multiplied by a premium trend factor.

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

The use of Federal BHP payment rate cells will be the same as in the 2015 and 2016 methodologies. We will require that a state implementing BHP provide us an estimate of the number of BHP enrollees it projects will enroll in the upcoming BHP program year, by applicable rate cell, prior to the first quarter and each subsequent quarter of program operations until actual enrollment data is available. Upon our approval of such estimates as reasonable, they will be used to calculate the prospective payment for the first and subsequent quarters of program operation until the state has provided us actual enrollment data. These data will be required to calculate the final BHP payment amount, and make any necessary reconciliation adjustments to the prior quarters' prospective payment amounts due to differences between projected and actual enrollment. Subsequent, quarterly deposits to the state's trust fund will be based on the most recent actual enrollment data submitted to us. Actual enrollment data must be based on individuals enrolled for the quarter submitted who the state found eligible and whose eligibility was verified using eligibility and verification requirements as agreed to by the state in its applicable BHP Blueprint for the quarter that enrollment data is submitted. Procedures will ensure that Federal payments to a state reflect actual BHP enrollment during a year, within each applicable category, and prospectively determined Federal payment rates for each category of BHP enrollment, with such categories defined in terms of age range, geographic area, coverage status, household size, and income range, as explained above in this section.

We will require the use of certain rate cells as part of the methodology. For each state, we will use rate cells that separate the BHP population into separate cells based on the 5 factors described as follows:

Factor 1—Age: We will separate enrollees into rate cells by age, using the following unchanged age ranges that capture the widest variations in premiums under Department of Health and Human Services' (HHS) Default Age Curve: 1

• Ages 0-20.

• Ages 21-34.

• Ages 35-44.

• Ages 45-54.

• Ages 55-64.

Factor 2—Geographic area: For each state, we will separate enrollees into rate cells by geographic areas within which a single RP is charged by QHPs offered through the state's Exchange. Multiple, non-contiguous geographic areas will be incorporated within a single cell, so long as those areas share a common RP.2 This provision would also be unchanged from the current method.

Factor 3—Coverage status: We will separate enrollees into rate cells by coverage status, reflecting whether an individual is enrolled in self-only coverage or persons are enrolled in other-than-self-only coverage (or “family coverage”) through BHP, as provided in section 1331(d)(3)(A)(ii) of the Affordable Care Act, consistent with the current methodology. Among recipients of family coverage through BHP, separate rate cells, as explained below in this methodology, will apply based on whether such coverage involves 2 adults alone or whether it involves children.

Factor 4—Household size: We will separate enrollees into rate cells by household size that states use to determine BHP enrollees' income as a percentage of the FPL under § 600.320 (Administration, eligibility, essential health benefits, performance standards, service delivery requirements, premium and cost sharing, allotments, and reconciliation; Determination of eligibility for and enrollment in a standard health plan), consistent with the current methodology. We will require separate rate cells for several specific household sizes. For each additional member above the largest specified size, we will publish instructions for how we will develop additional rate cells and calculate an appropriate payment rate based on data for the rate cell with the closest specified household size. We will publish separate rate cells for household sizes of 1 through 10.

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

• 0 to 50 percent of the FPL.

• 51 to 100 percent of the FPL.

• 101 to 138 percent of the FPL.3

• 139 to 150 percent of the FPL.

• 151 to 175 percent of the FPL.

• 176 to 200 percent of the FPL.

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

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

To the extent possible, we will continue to use data submitted to the Federal government by QHP issuers seeking to offer coverage through an Exchange to perform the calculations that determine Federal BHP payment cell rates. In this methodology, we make some clarifications regarding the submission of state data in this section, and is otherwise consistent with the current methodology.

States operating a State Based Exchange in the individual market, however, must provide certain data, including premiums for second lowest cost silver plans, by geographic area, for CMS to calculate the Federal BHP payment rates in those states. A state operating a State Based Exchange interested in obtaining the applicable Federal BHP payment rates for its state must submit such data accurately, completely, and as specified by CMS, by no later than October 15, 2016, for CMS to calculate the applicable rates for 2017 and by October 15, 2017 for 2018. If additional state data (that is, in addition to the second lowest cost silver plan premium data) are needed to determine the Federal BHP payment rate, such data must be submitted in a timely manner, and in a format specified by CMS to support the development and timely release of annual BHP payment notices. The specifications for data collection to support the development of BHP payment rates will be published in CMS guidance and will be available at http://www.medicaid.gov/Federal-Policy-Guidance/Federal-Policy-Guidance.html.

States must submit to CMS enrollment data on a quarterly basis and should be technologically prepared to begin submitting data at the start of their BHP. This requirement is necessary for us to implement the payment methodology that is tied to a quarterly reconciliation based on actual enrollment data.

We make 2 additional clarifications regarding state-submitted data. First, for states that have BHP enrollees who do not file Federal tax returns (non-filers), the state must develop a methodology which they must submit to CMS at the time of their Blueprint submission to determine the enrollees' household income and household size consistently with Exchange requirements. We reserve the right to approve or disapprove the state's methodology to determine income and household size for non-filers.

Second, as the Federal payments are determined quarterly and the enrollment data is required to be submitted by the states to CMS quarterly, we clarify that the quarterly payment would be based on the characteristics of the enrollee at the beginning of the quarter (or their first month of enrollment in BHP in each quarter). Thus, if an enrollee were to experience a change in county of residence, income, household size, or other factors related to the BHP payment determination during the quarter, the payment for the quarter would be based on the data as of the beginning of the quarter. Payments will still be made only for months that the person is enrolled in and eligible for BHP. We do not anticipate that this will have a significant effect on the Federal BHP payment. The states must maintain data that are consistent with our verification requirements, including auditable records for each individual enrolled, indicating an eligibility determination and a determination of income and other criteria relevant to the payment methodology as of the beginning of each quarter.

As described in § 600.610 (Secretarial determination of BHP payment amount), the state is required to submit certain data in accordance with this Notice. We require that this data be collected and validated by states operating BHP and that this data be submitted to CMS.

To calculate the estimated PTC that would be paid if individuals enrolled in QHPs through the Exchange, we must calculate a RP because the PTC is based, in part, on the premiums for the applicable second lowest cost silver plan as explained in section III.C.4 of this methodology, regarding the Premium Tax Credit Formula (PTCF). Accordingly, for the purposes of calculating the BHP payment rates, the RP, in accordance with 26 U.S.C. 36B(b)(3)(C), is defined as the adjusted monthly premium for an applicable second lowest cost silver plan. The applicable second lowest cost silver plan is defined in 26 U.S.C. 36B(b)(3)(B) as the second lowest cost silver plan of the individual market in the rating area in which the taxpayer resides, which is offered through the same Exchange. We will use the adjusted monthly premium for an applicable second lowest cost silver plan in 2017 and 2018 as the RP (except in the case of a state that elects to use the 2016 or 2017 premium, respectively, as the basis for the Federal BHP payment, as described in section III.F of this final notice). The use of the RP and the determination of the RP is consistent with the current methodology.

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

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

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

American Indians and Alaska Natives with household incomes between 100 percent and 300 percent of the FPL are eligible for a full cost sharing subsidy regardless of the plan they select (as described in sections 1402(d) and 2901(a) of the Affordable Care Act). We assume that American Indians and Alaska Natives would be more likely to enroll in bronze plans as a result, as it would reduce the amount of the premium they would pay compared to the costs of enrolling in a silver plan; thus, for American Indian/Alaska Native BHP enrollees, we will use the lowest cost bronze plan as the basis for the RP for the purposes of calculating the CSR portion of the Federal BHP payment as described further in section III.E of this methodology.

We note that the choice of the second lowest cost silver plan for calculating BHP payments relies on several simplifying assumptions in its selection. For the purposes of determining the second lowest cost silver plan for calculating PTC for a person enrolled in a QHP through an Exchange, the applicable plan may differ for various reasons. For example, a different second lowest cost silver plan may apply to a family consisting of 2 adults, their child, and their niece than to a family with 2 adults and their children, because 1 or more QHPs in the family's geographic area might not offer family coverage that includes the niece. We believe that it would not be possible to replicate such variations for calculating the BHP payment and believe that in aggregate they would not result in a significant difference in the payment. Thus, we will use the second lowest cost silver plan available to any enrollee for a given age, geographic area, and coverage category.

This choice of RP relies on 2 assumptions about enrollment in the Exchanges. First, we assume that all persons enrolled in BHP would have elected to enroll in a silver level plan if they had instead enrolled in a QHP through the Exchanges. It is possible that some persons would have chosen not to enroll at all or would have chosen to enroll in a different metal-level plan (in particular, a bronze level plan with a premium that is less than the PTC for which the person was eligible). We do not believe it is appropriate to adjust the payment for an assumption that some BHP enrollees would not have enrolled in QHPs for purposes of calculating the BHP payment rates, since section 1331(d)(3)(A)(ii) of the Affordable Care Act requires the calculation of such rates as if the enrollee had enrolled in a qualified health plan through an Exchange.

Second, we assume that, among all available silver plans, all persons enrolled in BHP would have selected the second-lowest cost plan. Both this and the prior assumption allow an administratively feasible determination of Federal payment levels. They also have some implications for the CSR portion of the rate. If persons were to enroll in a bronze level plan through the Exchange, they would not be eligible for CSRs, unless they were an eligible American Indian or Alaska Native; thus, assuming that all persons enroll in a silver level plan, rather than a plan with a different metal level, would increase the BHP payment. Assuming that all persons enroll in the second lowest cost silver plan for the purposes of calculating the CSR portion of the rate may result in a different level of CSR payments than would have been paid if the persons were enrolled in different silver level plans on the Exchanges (with either lower or higher premiums). We believe that it would be difficult to project how many BHP enrollees would have enrolled in different silver level QHPs, and thus will use the second lowest cost silver plan as the basis for the RP and calculating the CSR portion of the rate. While some data is available from the Exchanges, developing projections of how persons in different income ranges choose plans and extrapolating that to other states, with different numbers of plans and different premiums, would not be an improvement upon the current methodology. For American Indian/Alaska Native BHP enrollees, we will use the lowest cost bronze plan as the basis for the RP as described further in section III.E. of this methodology.

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

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

Finally, in terms of the coverage category, the Federal payment rates will only recognize self-only and two-adult coverage, with exceptions that account for children who are potentially eligible for BHP. First, in states that set the upper income threshold for children's Medicaid and CHIP eligibility below 200 percent of FPL (based on modified adjusted gross income), children in households with incomes between that threshold and 200 percent of FPL would be potentially eligible for BHP. Currently, the only states in this category are Arizona, Idaho, and North Dakota.4 Second, BHP would include lawfully present immigrant children with incomes at or below 200 percent of FPL in states that have not exercised the option under the sections 1903(v)(4)(A)(ii) and 2107(e)(1)(E) of the Act to qualify all otherwise eligible, lawfully present immigrant children for Medicaid and CHIP. States that fall within these exceptions would be identified based on their Medicaid and CHIP State Plans, and the rate cells would include appropriate categories of BHP family coverage for children. For example, Idaho's Medicaid and CHIP eligibility is limited to families with MAGI at or below 185 percent FPL. If Idaho implemented BHP, Idaho children with incomes between 185 and 200 percent could qualify. In other states, BHP eligibility will generally be restricted to adults, since children who are citizens or lawfully present immigrants and who live in households with incomes at or below 200 percent of FPL will qualify for Medicaid or CHIP and thus be ineligible for BHP under section 1331(e)(1)(C) of the Affordable Care Act, which limits BHP to individuals who are ineligible for minimum essential coverage (as defined in section 5000A(f) of the Internal Revenue Code of 1986).

The population health factor will be included in the methodology to account for the potential differences in the average health status between BHP enrollees and persons enrolled in the Exchange. To the extent that BHP enrollees would have been enrolled in the Exchange in the absence of BHP in a state, the exclusion of those BHP enrollees in the Exchange may affect the average health status of the overall population and the expected QHP premiums. The use and determination of the PHF as described below is consistent with the current methodology.

We currently do not believe that there is evidence that the BHP population would have better or poorer health status than the Exchange population. At this time, there is a lack of experience available in the Exchange that limits the ability to analyze the health differences between these groups of enrollees. Exchanges have been in operation since 2014, and 2 states have operated BHP in 2015, but we do not have the data available to do the analysis necessary to make this adjustment at this time. In addition, differences in population health may vary across states. Thus, at this time, we believe that it is not feasible to develop a methodology to make a prospective adjustment to the population health factor that is reliably accurate.

Given these analytic challenges and the limited data about Exchange coverage and the characteristics of BHP-eligible consumers that will be available by the time we establish Federal payment rates for 2017 and 2018, we believe that the most appropriate adjustment for 2017 and 2018 would be 1.00.

In the 2015 and 2016 payment methodologies, we included an option for states to include a retrospective population health status adjustment. Similarly, for the 2017 and 2018 payment methodology we will provide states with the same option, as described further in section III.G of this methodology, to include a retrospective population health status adjustment in the certified methodology, which is subject to our review and approval. (Regardless of whether a state elects to include a retrospective population health status adjustment, we anticipate that, in future years, when additional data become available about Exchange coverage and the characteristics of BHP enrollees, we may estimate this factor differently.)

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

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

• 0-50 percent.

• 51-100 percent.

• 101-138 percent.

• 139-150 percent.

• 151-175 percent.

• 176-200 percent.

We will assume a uniform income distribution for each Federal BHP payment cell. We believe that assuming a uniform income distribution for the income ranges will be reasonably accurate for the purposes of calculating the PTC and CSR components of the BHP payment and would avoid potential errors that could result if other sources of data were used to estimate the specific income distribution of persons who are eligible for or enrolled in BHP within rate cells that may be relatively small.

Thus, when calculating the mean, or average, PTC for a rate cell, we will calculate the value of the PTC at each 1 percentage point interval of the income range for each Federal BHP payment cell and then calculate the average of the PTC across all intervals. This calculation would rely on the PTC formula described in section III.4 of this methodology.

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

As is consistent with the current methodology, in Equation 1 described in section III.A.1 of this methodology, we will use the formula described in 26 U.S.C. 36B(b) to calculate the estimated PTC that would be paid on behalf of a person enrolled in a QHP on an Exchange as part of the BHP payment methodology. This formula is used to determine the contribution amount (the amount of premium that an individual or household theoretically would be required to pay for coverage in a QHP on an Exchange), which is based on (A) the household income; (B) the household income as a percentage of FPL for the family size; and (C) the schedule specified in 26 U.S.C. 36B(b)(3)(A) and shown below in this section. The difference between the contribution amount and the adjusted monthly premium for the applicable second lowest cost silver plan is the estimated amount of the PTC that would be provided for the enrollee.

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

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

These are the applicable percentages for calendar year (CY) 2016 and will be used for the 2017 payment methodology. We plan to use the CY 2017 percentages when they become available for the 2018 payment methodology, as the percentages are indexed annually and published by the IRS. The applicable percentages will be updated in future years in accordance with 26 U.S.C. 36B (b)(3)(A)(ii).

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

Section 1331(e)(2) of the Affordable Care Act specifies that an individual eligible for BHP may not be treated as a qualified individual under section 1312 eligible for enrollment in a QHP offered through an Exchange. We are defining “eligible” to mean anyone for whom the state agency or the Exchange assesses or determines, based on the single streamlined application or renewal form, as eligible for enrollment in the BHP. Because enrollment in a QHP is a requirement for PTC for the enrolled individual's coverage, individuals determined or assessed as eligible for a BHP are not eligible to receive APTC assistance for coverage in the Exchange. Because they do not receive APTC assistance, BHP enrollees, on whom the 2017 and 2018 payment methodology is based, are not subject to the same income reconciliation as Exchange consumers. Nonetheless, there may still be differences between a BHP enrollee's household income reported at the beginning of the year and the actual income over the year. These may include small changes (reflecting changes in hourly wage rates, hours worked per week, and other fluctuations in income during the year) and large changes (reflecting significant changes in employment status, hourly wage rates, or substantial fluctuations in income). There may also be changes in household composition. Thus, we believe that using unadjusted income as reported prior to the BHP program year may result in calculations of estimated PTC that are inconsistent with the actual incomes of BHP enrollees during the year. Even if the BHP program adjusts household income determinations and corresponding claims of Federal payment amounts based on household reports during the year or data from third-party sources, such adjustments may not fully capture the effects of tax reconciliation that BHP enrollees would have experienced had they been enrolled in a QHP through an Exchange and received APTC assistance.

Therefore, in accordance with current practice, we will include in Equation 1 an income adjustment factor that would account for the difference between calculating estimated PTC using: (a) Income relative to FPL as determined at initial application and potentially revised mid-year, under proposed § 600.320, for purposes of determining BHP eligibility and claiming Federal BHP payments; and (b) actual income relative to FPL received during the plan year, as it would be reflected on individual Federal income tax returns. This adjustment will prospectively account for the average effect of income reconciliation aggregated across the BHP population had those BHP enrollees been subject to tax reconciliation after receiving APTC assistance for coverage provided through QHPs. For 2017 and 2018, we will estimate the reconciliation effects based on tax data for 2 years, reflecting income and tax unit composition changes over time among BHP-eligible individuals.

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

For 2017, OTA has estimated that the income reconciliation factor for states that have implemented the Medicaid eligibility expansion to cover adults up to 133 percent of the FPL will be 100.40 percent, and for states that have not implemented the Medicaid eligibility expansion and do not cover adults up to 133 percent of the FPL will be 100.35 percent. The value of the income reconciliation factor for 2017 will be 100.38 percent, which is the average of the factors, rounded to the nearest hundredth of one-percent.

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

To estimate the average effect of tobacco use on health care costs (not reflected in the premium charged to non-users), we will calculate the ratio between premiums that silver level QHPs charge for tobacco users to the premiums they charge for non-tobacco users at selected ages. To calculate estimated proportions of tobacco users, we will use data from the Centers for Disease Control and Prevention (CDC) to estimate tobacco utilization rates by state and relevant population characteristic.9 For each state, we will calculate the tobacco usage rate based on the percentage of persons by age who use cigarettes and the percentage of persons by age that use smokeless tobacco, and calculate the utilization rate by adding the 2 rates together. The data is available for 3 age intervals: 18-24; 25-44; and 45-64. For the BHP payment rate cell for persons ages 21-34, we will calculate the factor as (4/14 * the utilization rate of 18-24 year olds) plus (10/14 * the utilization rate of 25-44 year olds), which will be the weighted average of tobacco usage for persons 21-34 assuming a uniform distribution of ages; for all other age ranges used for the rate cells, we will use the age range in the CDC data in which the BHP payment rate cell age range is contained.

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

The Factor for Removing Administrative Costs represents the average proportion of the total premium that covers allowed health benefits, and we will include this factor in our calculation of estimated CSRs in Equation 2. The product of the RP and the Factor for Removing Administrative Costs will approximate the estimated amount of Essential Health Benefit (EHB) claims that would be expected to be paid by the plan. This step is needed because the premium also covers such costs as taxes, fees, and QHP administrative expenses. We will set this factor equal to 0.80, which is the same percentage for the factor to remove administrative costs for calculating the CSR component of advance payments for established in the 2016 HHS Notice of Benefit and Payment Parameters. This is consistent with the current methodology.

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

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

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

The 2016 HHS Notice of Benefit and Payment Parameters provided induced utilization factors for the purposes of calculating the cost-sharing reduction component of advance payments for 2016. In that Notice, the induced utilization factors for silver plan variations ranged from 1.00 to 1.12, depending on income. Using those utilization factors, the induced utilization factor for all persons who would qualify for BHP based on their household income as a percentage of FPL is 1.12; this would include persons with household income between 100 percent and 200 percent of FPL, lawfully present non-citizens below 100 percent of FPL who are ineligible for Medicaid because of immigration status, and American Indians and Alaska Natives with household income between 100 and 300 percent of FPL, not subject to any cost-sharing. Thus, consistent with last year, we will set the induced utilization factor equal to 1.12 for the BHP payment methodology.

We note that for CSRs for QHPs, there will be a final reconciliation at the end of the year and the actual level of induced utilization could differ from the factor used in the rule. This methodology for BHP funding does not include any reconciliation for utilization.

The increase in actuarial value will account for the impact of the CSR subsidies on the relative amount of EHB claims that would be covered for or paid by eligible persons, and it is included as a factor in calculating estimated CSRs in Equation 2. This is consistent with the current methodology.

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

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

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

We will make the following adjustments:

• The ARP for use in the CSR portion of the rate will use the lowest cost bronze plan instead of the second lowest cost silver plan, with the same adjustment for the population health factor (and in the case of a state that elects to use the 2016 or 2017 premiums as the basis of the Federal BHP payment, the same adjustment for the premium trend factor). American Indians and Alaska Natives are eligible for CSRs with any metal level plan, and thus we believe that eligible persons would be more likely to select a bronze level plan instead of a silver level plan. (It is important to note that this would not change the PTC, as that is the maximum possible PTC payment, which is always based on the applicable second lowest cost silver plan.)

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

• The induced utilization factor for use in the CSR portion of the rate would be 1.15 for 2017 and 2018, which is consistent with the 2016 HHS Notice of Benefit and Payment Parameters induced utilization factor for calculating the CSR component of advance payments for persons enrolled in bronze level plans and eligible for CSRs up to 100 percent of actuarial value.

• The change in the actuarial value for use in the CSR portion of the rate will be 0.40. This reflects the increase from 60 percent actuarial value of the bronze plan to 100 percent actuarial value, as American Indians and Alaska Natives with household incomes between 100 and 300 percent FPL are eligible to receive CSRs up to 100 percent of actuarial value.

In the interest of allowing states greater certainty in the total BHP Federal payments for 2017 or 2018, we will provide states the option to have their final 2017 and 2018 Federal BHP payment rates, respectively, calculated using the projected 2017 and 2018 ARP (that is, using 2016 or 2017 premium data multiplied by the premium trend factor defined below in this methodology), as described in Equation (3b). This approach and the determination of the premium trend factor is consistent with the current methodology.

For a state that would elect to use the 2016 or 2017 premiums as the basis for the 2017 and 2018 BHP Federal payments, respectively, we will require that the state inform us no later than May 15, 2016 for the 2017 program year and May 15, 2017 for the 2018 program year. (Our experience to date has been that states have elected to use the premium data that correlates to the year of payment. If this trend continues, we will consider in future payment notices whether to eliminate the choice of the premium from the prior year moving forward.)

For Equation (3b), we define the premium trend factor, with minor changes in calculation sources and methods, as follows:

Premium Trend Factor (PTF): In Equation (3b), we calculate an ARP based on the application of certain relevant variables to the ARP, including a premium trend factor (PTF). In the case of a state that would elect to use the 2016 or 2017 premiums as the basis for determining the BHP payment, it is appropriate to apply a factor that would account for the change in health care costs between the year of the premium data and the BHP plan year. We define this as the premium trend factor in the BHP payment methodology. This factor will approximate the change in health care costs per enrollee, which would include, but not be limited to, changes in the price of health care services and changes in the utilization of health care services. This will provide an estimate of the adjusted monthly premium for the applicable second lowest cost silver plan that will be more accurate and reflective of health care costs in the BHP program year, which would be the year following issuance of the final Federal payment notice. In addition, we believe that it would be appropriate to adjust the trend factor for the estimated impact of changes to the transitional reinsurance program on the average QHP premium.

For the trend factor we will use the annual growth rate in private health insurance expenditures per enrollee from the National Health Expenditure projections, developed by the Office of the Actuary in CMS (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html, Table 17). For 2017, the projected increase in private health insurance premiums per enrollee is 4.4 percent.

The adjustment for changes in the transitional reinsurance program is developed from analysis by CMS' Center for Consumer Information and Insurance Oversight (CCIIO). In unpublished analysis, CCIIO estimated that the end of the transitional reinsurance program in 2016 would contribute 4.0 percent to QHP premium increases between 2016 and 2017.

Combining these 2 factors together, we calculate that the premium trend factor for 2017 would be 8.6 percent (1 + 0.044) × (1 + 0.040)−1 = 8.6 percent.

States may want to consider that the increase in premiums for QHPs from 2016 to 2017 or from 2017 to 2018 may differ from the premium trend factor developed for the BHP funding methodology for several reasons. In particular, states may want to consider that the second lowest cost silver plan for 2016 or 2017 may not be the same as the second lowest cost silver plan in 2017 or 2018, respectively. This may lead to the premium trend factor being greater than or less than the actual change in the premium of the second lowest cost silver plan in 2016 compared to the premium of the second lowest cost silver plan in 2017 (or from 2017 to 2018).

To determine whether the potential difference in health status between BHP enrollees and consumers in the Exchange would affect the PTC, CSRs, risk adjustment and reinsurance payments that would have otherwise been made had BHP enrollees been enrolled in coverage on the Exchange, we will continue to provide states implementing the BHP the option to propose and to implement, as part of the certified methodology, a retrospective adjustment to the Federal BHP payments to reflect the actual value that would be assigned to the population health factor (or risk adjustment) based on data accumulated during program years 2017 and 2018 for each rate cell. This is consistent with the approach in the current methodology.

We acknowledge that there is uncertainty for this factor due to the lack of experience of QHPs on the Exchange and other payments related to the Exchange, which is why, absent a state election, we will use a value for the population health factor to determine a prospective payment rate which assumes no difference in the health status of BHP enrollees and QHP enrollees. There is considerable uncertainty regarding whether the BHP enrollees will pose a greater risk or a lesser risk compared to the QHP enrollees, how to best measure such risk, and the potential effect such risk would have had on PTC, CSRs, risk adjustment and reinsurance payments that would have otherwise been made had BHP enrollees been enrolled in coverage on the Exchange. To the extent, however, that a state would develop an approved protocol to collect data and effectively measure the relative risk and the effect on Federal payments, we will permit a retrospective adjustment that would measure the actual difference in risk between the 2 populations to be incorporated into the certified BHP payment methodology and used to adjust payments in the previous year.

For a state electing the option to implement a retrospective population health status adjustment, we will require the state to submit a proposed protocol to CMS, which would be subject to approval by us and would be required to be certified by the Chief Actuary of CMS, in consultation with the Office of Tax Analysis, as part of the BHP payment methodology. We describe the protocol for the population health status adjustment in guidance in Considerations for Health Risk Adjustment in the Basic Health Program in Program Year 2015 (http://www.medicaid.gov/Basic-Health-Program/Downloads/Risk-Adjustment-and-BHP-White-Paper.pdf). We will require a state to submit its proposed protocol by August 1, 2016 for our approval for the 2017 program year, and by August 1, 2017 for the 2018 program year. This submission would also include descriptions of how the state would collect the necessary data to determine the adjustment, including any contracting contingences that may be in place with participating standard health plan issuers. We will provide technical assistance to states as they develop their protocols. To implement the population health status, we must approve the state's protocol no later than December 31, 2016 for the 2017 program year, and by December 31, 2017 for the 2018 program year. Finally, we will require that the state complete the population health status adjustment at the end of 2017 (or 2018) based on the approved protocol. After the end of the 2017 and 2018 program years, and once data is made available, we will review the state's findings, consistent with the approved protocol, and make any necessary adjustments to the state's Federal BHP payment amounts. If we determine that the Federal BHP payments were less than they would have been using the final adjustment factor, we would apply the difference to the state's next quarterly BHP trust fund deposit. If we determine that the Federal BHP payments were more than they would have been using the final reconciled factor, we would subtract the difference from the next quarterly BHP payment to the state.

This 2017 and 2018 methodology is mostly unchanged from the 2016 final notice published on February 24, 2015 (80 FR 9636). For states that have BHP enrollees who do not file Federal tax returns (“non-filers”), this methodology notice clarifies that the state must develop a methodology to determine the enrollee's household income and household size consistent with Exchange requirements. Since the requirement applies to fewer than 10 states, and states would not reasonably be expected to transmit the methodology to any independent entities (5 CFR 1320.3(c)(4)) the 2017 and 2018 methodology does not require additional OMB review under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Otherwise, the methodology's information collection requirements and burden estimates are not affected by this action and are approved by OMB under control number 0938-1218 (CMS-10510). With regard to state elections, protocols, certifications, and status adjustments, this action would not revise or impose any additional reporting, recordkeeping, or third-party disclosure requirements or burden on qualified health plans or on states operating State Based Exchanges.

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

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

A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). As noted in the BHP final rule, BHP provides states the flexibility to establish an alternative coverage program for low-income individuals who would otherwise be eligible to purchase coverage through the Exchange. Because we make no changes in methodology that would have a consequential effect on state participation incentives, or on the size of either the BHP program or offsetting PTC and CSR expenditures, the effects of the changes made in this methodology notice would not approach the $100 million threshold, and hence it is neither an economically significant rule under E.O. 12866 nor a major rule under the Congressional Review Act. The size of the BHP program depends on several factors, including the number of and which particular states choose to implement or continue BHP in 2017 or 2018, the level of QHP premiums in 2016 and 2017, the number of enrollees in BHP, and the other coverage options for persons who would be eligible for BHP. In particular, while we generally expect that many enrollees would have otherwise been enrolled in a QHP through the Exchange, some persons may have been eligible for Medicaid under a waiver or a state health coverage program. For those who would have enrolled in a QHP and thus would have received PTCs or CSRs, the Federal expenditures for BHP would be expected to be more than offset by a reduction in Federal expenditures for PTCs and CSRs. For those who would have been enrolled in Medicaid, there would likely be a smaller offset in Federal expenditures (to account for the Federal share of Medicaid expenditures), and for those who would have been covered in non-Federal programs or would have been uninsured, there likely would be an increase in Federal expenditures. None of these factors or incentives would be materially affected by the updates we have made here.

In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget.

Section 1331 of the Affordable Care Act (codified at 42 U.S.C. 18051) requires the Secretary to establish a BHP, and paragraph (d)(1) specifically provides that if the Secretary finds that a state meets the requirements of the program established under section (a) [of section 1331 of the Affordable Care Act], the Secretary shall transfer to the State Federal BHP payments described in paragraph (d)(3). This methodology provides for the funding methodology to determine the Federal BHP payment amounts required to implement these provisions in program years 2017 and 2018.

Many of the factors used in this notice are specified in statute; therefore, we are limited in the alternative approaches we could consider. One area in which we had a choice was in selecting the data sources used to determine the factors included in the methodology. Except for state-specific RPs and enrollment data, we are using national rather than state-specific data. This is due to the lack of currently available state-specific data needed to develop the majority of the factors included in the methodology. We believe the national data will produce sufficiently accurate determinations of payment rates. In addition, we believe that this approach will be less burdensome on states. In many cases, using state-specific data would necessitate additional requirements on the states to collect, validate, and report data to CMS. By using national data, we are able to collect data from other sources and limit the burden placed on the states. To RPs and enrollment data, we are using state-specific data rather than national data as we believe state-specific data will produce more accurate determinations than national averages.

In addition, we considered whether or not to provide states the option to develop a protocol for a retrospective adjustment to the population health factor in 2017 and 2018 as we did in the 2015 and 2016 payment methodologies. We believe that providing this option again in 2017 and 2018 is appropriate and likely to improve the accuracy of the final payments.

We also considered whether or not to require the use of 2017 and 2018 QHP premiums to develop the 2017 and 2018 Federal BHP payment rates. We believe that the payment rates can still be developed accurately using either the 2016 and 2017 QHP premiums (for the 2017 and 2018 program years, respectively) or the 2017 and 2018 program year premiums and that it is appropriate to provide the states the option, given the interests and specific considerations each state may have in operating the BHP.

The provisions of this notice are designed to determine the amount of funds that will be transferred to states offering coverage through a BHP rather than to individuals eligible for Federal financial assistance for coverage purchased on the Exchange. We are uncertain what the total Federal BHP payment amounts to states will be as these amounts will vary from state to state due to the varying nature of state composition. For example, total Federal BHP payment amounts may be greater in more populous states simply by virtue of the fact that they have a larger BHP-eligible population and total payment amounts are based on actual enrollment. Alternatively, total Federal BHP payment amounts may be lower in states with a younger BHP-eligible population as the RP used to calculate the Federal BHP payment will be lower relative to older BHP enrollees. While state composition will cause total Federal BHP payment amounts to vary from state to state, we believe that the methodology, like the methodology used in 2015 and 2016, accounts for these variations to ensure accurate BHP payment transfers are made to each state.

Section 202 of the UMRA requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation, by state, local, or tribal governments, in the aggregate, or by the private sector. In 2015, that threshold is approximately $144 million. States have the option, but are not required, to establish a BHP. Further, the methodology would establish Federal payment rates without requiring states to provide the Secretary with any data not already required by other provisions of the Affordable Care Act or its implementing regulations. Thus, neither this payment methodology nor the methodologies used in 2015 and 2016 mandate expenditures by state governments, local governments, or tribal governments.

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

Because this methodology is focused solely on Federal BHP payment rates to states, it does not contain provisions that would have a direct impact on hospitals, physicians, and other health care providers that are designated as small entities under the RFA. Accordingly, we have determined that the methodology, like the previous methodology and the final rule that established the BHP program, will not have a significant economic impact on a substantial number of small entities.

Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a methodology may have a significant economic impact on the operations of a substantial number of small rural hospitals. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. For the preceding reasons, we have determined that the methodology will not have a significant impact on a substantial number of small rural hospitals.

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

This is a summary of the Commission's Report and Order, FCC 16-4, adopted on January 28, 2016 and released on January 29, 2016. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW., Room CY-A257, Washington, DC 20554. This document will also be available via ECFS at http://fjallfoss.fcc.gov/ecfs/. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to [email protected] or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

This Report and Order contains new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA).1 The requirements will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002, we previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees.

1. In this Report and Order, we expand the list of entities that will be required to post their public inspection files to the FCC's online database. In 2012, the Commission adopted online public file rules that required broadcast television stations to post public file documents to a central, FCC-hosted online database rather than maintaining paper files locally at their main studios. Standardized and Enhanced Disclosure Requirements for Television Broadcast Licensee Public Interest Obligations, Second Report and Order, 77 FR 27631, May 11, 2012 (“Second Report and Order”). Our goals were to modernize the procedures television broadcasters use to inform the public about how they are serving their communities, to make information concerning broadcast service more accessible to the public, and, over time, to reduce the cost of broadcasters' compliance. This Report and Order continues our modernization effort by requiring cable operators, satellite TV (also referred to as “Direct Broadcast Satellite” or “DBS”) providers, broadcast radio licensees, and satellite radio (also referred to as “Satellite Digital Audio Radio Services” or “SDARS”) licensees to post their public file documents to the FCC-hosted online database as well. By including these services in our transition to an online public file, we continue our effort to harness the efficiencies made possible by digital technology to make public file information more readily available to the public, while at the same time minimizing the burden on covered entities of maintaining the file.

2. As the Commission has stated, this modernization of the public inspection file is “plain common sense.” The evolution of the Internet and the spread of broadband infrastructure have transformed the way society accesses information today. It is no longer reasonable to require the public to travel to a station or headquarters' office to review the public file and make paper copies when a centralized, online file will permit review with a quick, easy, and almost costless Internet search. Moreover, an online file will permit searches by the public without requiring assistance from station or headquarters' staff, further reducing the burden of maintaining the public file.

3. As we proposed in the Notice of Proposed Rulemaking in this proceeding, Expansion of Online Public File Obligations To Cable and Satellite TV Operators and Broadcast and Satellite Radio Licensees, Notice of Proposed Rulemaking, 80 FR 8031, Feb. 13, 2015 (“NPRM”), we take the same general approach to transitioning cable, DBS, broadcast radio, and SDARS to the online file that the Commission took with respect to television broadcasters, phasing-in and otherwise tailoring the requirements as appropriate for the different services. We also take similar measures to minimize the effort and costs entities must undertake to move their public files online. Specifically, we require entities to upload to the online file only those public file documents that are not already on file with the Commission or that the Commission does not currently maintain in its own database. In order to reduce the cost of transitioning to the online file, we follow the approach we took with respect to television stations and exempt existing political file material from the online file requirement and require only that political file documents be uploaded on a going-forward basis. In order to ease the transition to the online file for broadcast radio stations, particularly those with small staffs and limited financial resources, we commence the transition to the online file with commercial stations in top 50 markets with 5 or more full-time employees. We delay for two years, until March 1, 2018, all online file requirements for all other radio stations. With respect to smaller cable systems, we exempt systems with fewer than 1,000 subscribers from all online public file requirements given that they are exempt from most public file requirements. In addition, we delay for two years, until March 1, 2018, the requirement that cable systems with between 1,000 and 5,000 subscribers commence uploading new political file material to the online file.

4. With minor exceptions, we do not adopt new or modified public inspection file requirements in this proceeding. Our focus is simply to adapt our existing public file requirements to an online format in a manner that appropriately reflects the differences among the services and that minimizes the burden for all affected entities.

5. One of a broadcaster's fundamental public interest obligations is to air programming responsive to the needs and interests of its community of license. To ensure that stations meet this obligation, the Commission relies on viewers and listeners as an important source of information about the nature of a station's programming, operations, and compliance with Commission rules. To provide the public with access to information about station operations, the Commission's rules have long required television and radio broadcast stations to maintain a physical public inspection file, including a political file, at their respective stations or headquarters and to place in the file records that provide information about station operations. The purpose of the public inspection file requirement is to “make information to which the public already has a right more readily available, so that the public will be encouraged to play a more active part in dialogue with broadcast licensees.”

6. The requirement that broadcasters maintain documents for public inspection dates back to 1938, when the Commission promulgated its first political file rule. In 1965, following action by Congress to allow greater public participation in the broadcast licensing process, the Commission adopted a broader public inspection file rule to enable local inspection of broadcast applications, reports, and related documents. The Commission noted that Congress' actions “zealously guarded the rights of the general public to be informed” and that the Commission's goal was to make “practically accessible to the public information to which it is entitled.”

7. Cable, DBS, and SDARS entities also have public and political file requirements modeled, in large part, on the longstanding broadcast requirements. In 1974, the Commission adopted a public inspection file requirement for cable, including a requirement to retain political file material, noting that, “[i]f the public is to play an informed role in the regulation of cable television, it must have at least basic information about a local system's operations and proposals.” The Commission also noted that “[r]equiring cable systems to maintain a public file merely follows our policy for broadcast licensees and is necessary for similar reasons” and that “[t]hrough greater disclosure we hope to encourage a greater interaction between the Commission, the public, and the cable industry.” With respect to DBS providers, the Commission adopted public and political inspection file requirements in 1998 in conjunction with the imposition of certain public interest obligations, including political broadcasting and children's television requirements, on those entities. DBS providers were required to “abide by political file obligations similar to those requirements placed on terrestrial broadcasters and cable systems” and were also required to maintain a public file with records relating to other DBS public interest obligations. Finally, the Commission imposed equal employment opportunity and political broadcast requirements on SDARS licensees in 1997, noting that the rationale behind imposing these requirements on broadcasters applies also to satellite radio.

8. In 2002, Congress adopted the Bipartisan Campaign Reform Act (“BCRA”) which amended the political file requirements in section 315 of the Communications Act of 1934. The amendments apply to broadcast television and radio, cable, DBS, and SDARS. BCRA essentially codified the Commission's existing political file obligations by requiring that information regarding any request to purchase advertising time made on behalf of a legally qualified candidate for public office be placed in the political file. In addition, BCRA expanded political file obligations by requiring that television, radio, cable, DBS, and SDARS entities also place in the political file information related to any advertisements that discuss a “political matter of national importance,” including the name of the person or entity purchasing the time and a list of the chief executive officers or members of the executive committee or of the board of directors of any such entity.

9. In 2012, the Commission replaced the decades-old requirement that commercial and noncommercial television stations maintain public files at their main studios with a requirement to post most of the documents in those files to a central, online public file hosted by the Commission. The television online public file rules were the culmination of a more than decade-long effort to make information regarding how a television broadcast station serves the public interest “easier to understand and more accessible,” “promote discussion between the licensee and its community,” and “lessen the need for government involvement in ensuring that a station is meeting its public interest obligation.”

10. Based on commenter suggestions, in the Second Report and Order the Commission determined that each television station's entire public file would be hosted online by the Commission. The Commission took a number of steps to minimize the burden of the online file on stations. Broadcasters were required to upload only those items required to be in the public file but not otherwise filed with the Commission or available on the Commission's Web site. Any document or information required to be kept in the public file and that is required to be filed with the Commission electronically in the Consolidated Data Base System (“CDBS”) is imported to the online public file and updated by the Commission. In addition, television stations were not required to upload their existing political files to the online file; rather, stations were required only to upload new political file content on a going-forward basis. Because of privacy concerns, television stations also were not required to upload letters and emails from the public to the online file; rather, they must continue to retain them in a correspondence file at the main studio.

11. In addition, to smooth the transition for both television stations and the Commission and to allow smaller broadcasters additional time to begin posting their political files online, the Commission phased-in the new political file posting requirement. Stations affiliated with the top four national networks (ABC, NBC, CBS, and Fox) and licensed to serve communities in the top 50 Designated Market Areas (“DMAs”) were required to begin posting their political file documents online starting August 2, 2012, but other stations were exempted from posting their political file documents online until July 1, 2014. In the Second Report and Order, the Commission also rejected several proposals in the FNPRM to increase public file requirements in conjunction with implementation of the online file. Rather, the Commission determined that stations would be required to place in their online files only material that is already required to be placed in their local files.

12. The Commission stated in the Second Report and Order that it was deferring consideration of whether to adopt online posting requirements for radio licensees and multichannel video programming distributors (“MVPDs”) until it had gained experience with online posting of public files of television broadcasters. The Commission noted that starting the online public file process with the much smaller number of television licensees, rather than with all broadcasters and MVPDs, would “ease the initial implementation of the online public file.”

13. In July 2014, the Campaign Legal Center, Common Cause, and the Sunlight Foundation (collectively, “Petitioners” or “CLC et al.”) filed a joint Petition for Rulemaking requesting that the Commission initiate a rulemaking to expand to cable and satellite systems the requirement that public and political file documents be posted to the FCC's online database. The Petitioners argued that cable and satellite services have increasingly become outlets for political advertising and that the ability of satellite television providers to sell household-specific “addressable advertising” would likely accelerate that trend. Petitioners asserted that moving the television public file online has resulted in “unquestionably substantial” public benefits, which would also occur if cable and satellite systems were required to upload their public and political files online. In addition, Petitioners argued that television broadcasters experienced few problems moving to the online file, and cable and satellite systems would also likely not be burdened by the online filing requirement.

14. On August 7, 2014, the Media Bureau issued a Public Notice seeking comment on the Petition for Rulemaking and, in addition, on whether it should initiate a rulemaking to expand online public file obligations to broadcast radio stations. See Public Notice, Commission Seeks Comment on Petition for Rulemaking Filed by the Campaign Legal Center, Common Cause, and the Sunlight Foundation Seeking Expansion of Online Public File Obligations to Cable and Satellite TV Operators, Bureau Also Seeks Comment on Expanding Online Public File Obligations to Radio Licensees, 79 FR 51136, August 27, 2014 (“Public Notice”). After reviewing the comments filed in response to the Public Notice, the Commission issued the NPRM in this proceeding proposing to expand the online file to cable operators, DBS providers, and broadcast and satellite radio licensees.

15. The rules we adopt today will modernize the outdated procedures for providing public access to cable, DBS, broadcast radio, and SDARS public files in a manner that avoids imposing unnecessary burdens on these entities. By taking advantage of the efficiencies made possible by digital technology, we will make information that cable, DBS, and broadcast and satellite radio licensees are already required to make publicly available more accessible while also reducing costs both for the government and the private sector. The Internet is an effective, low-cost means of maintaining contact with, and distributing information to, viewers and listeners. Placing the public file online will permit 24-hour access from any location, thereby improving access to information about how cable, satellite, broadcast radio, and SDARS entities are serving their communities and meeting their public interest obligations. Maintaining this information online will also either eliminate or substantially reduce the number of public visits to stations or headquarters offices to view public file material, reducing the burden on staff who would otherwise have to assist during these visits and enabling entities to improve security and minimize risks to employees. As the Commission has stated previously, the public benefits of posting public file information online, while difficult to quantify with exactitude, are unquestionably substantial.

16. Expansion of the online public file to cover more services is particularly important with respect to improving access to political files. While broadcast television remains the dominant medium for political advertising, the quantity of such advertising on cable and satellite television continues to increase, and the advent of technological advances such as addressable advertising is likely to further this trend. Political advertising on radio is also on the rise. Adding cable, satellite TV, and broadcast and satellite radio political file material to the existing online file database will facilitate public access to disclosure records for all these services and allow the public to view and analyze political advertising expenditures more easily in each market as well as nationwide.

17. Similar to the approach we took to transitioning television stations to the online file, we take steps here to minimize the effort and cost that all entities must undertake to move their public files online. Entities will be required to upload to the online file only documents that are not already on file with the Commission or that the Commission maintains in its own database. Any document or information required both to be kept in the public file and to be filed with the Commission electronically in Commission databases such as CDBS or the Cable Operations and Licensing System (“COALS”) database will be imported to the online public file and updated by the Commission. In addition, entities being added to the online file will not be required to upload their existing political files to the online file; rather, they will be required only to upload new political file content on a going-forward basis. We note that the size of the political file likely correlates with an entity's political advertising revenues. Accordingly, entities with little or no political advertising revenues will likely have few obligations under our rules, while entities with more documents in their political files will likely also have greater political advertising revenues.

18. Some commenters responding to the NPRM argue that the goal of the public inspection file requirements is to make documents available to members of the public in the station's community of license and that requiring these documents to be placed online will encourage the filing of complaints by individuals unconnected to the local community. While we agree that the public file is first and foremost a tool for community members, it is also a tool for the larger media policy community. Easy access to public file information will also assist the Commission, Congress, and researchers as they fashion public policy recommendations relating to media issues. For this reason, we also reject the suggestion of NAB that the Commission focus its enforcement efforts on complaints submitted by actual viewers and listeners about the public files of their local stations and decline to consider public file complaints from entities unrelated to the licensee's local community. The Commission will consider and fairly evaluate any complaint related to our public inspection file rules. Our primary goal, however, is to improve access to public information file material.

19. The Commission has taken a number of steps to ensure that the online file will be capable of accommodating the significant increase in network traffic as well as the volume of public file material that will result from the expansion of online filing requirements. We recognize that adding cable, DBS, broadcast radio, and SDARS to the online file will greatly increase the number of users of the file and the volume of material that must be uploaded. We also recognize that there is likely to be a heavy demand on the online file during certain filing windows and in peak political seasons, when many broadcast stations take new advertising orders and modify existing orders on a daily basis. The improvements we have made to the operation of the online file will facilitate use of the database by members of the public as well as by the entities required to maintain an online file, including existing TV station users.

20. Technical improvements to the online file. The Commission has made several technical improvements to the online file database. First, the Commission has finished the transition to cloud-based computing solutions for purposes of managing the online public file database. Cloud computing technology will not only ensure that we maintain sufficient capacity to store the increased number of public file materials in the database, it will also permit us to increase network capacity during times of high demand to relieve network congestion and avoid delays or backups in uploading documents to the database. As the Commission stated in the Second Report and Order, cloud-based computing will permit the Commission to implement an online public file that is highly available, scalable, and eliminates user wait times associated with processing documents after upload. Second, as requested by NCTA, the Commission has added to the database the ability to place a document in multiple files using a single upload. This functionality should greatly facilitate maintenance of the online file, especially for cable operators or station group owners that place similar documents in the public file for multiple cable systems or broadcast stations. Third, when entities move a document from one folder to another in the online file, the database will now display both the date the document was first uploaded to the online file as well as the date it was moved to a different online file location. This will permit entities to move files within the online file if, for example, the file was initially placed in the wrong folder or the entity is creating new or different subfolders for purposes of improving the organization of the file, while maintaining a record of the date the document was first uploaded to the online file. Fourth, the database now will permit entities easily to delete files and empty folders when documents in the file are past their retention period or the entity wishes to delete them for another reason. Entities will be able to select one or more files and/or folders for deletion at one time, permitting them to efficiently remove documents from the online file.

21. Finally, as advocated by a number of commenters, the Commission has completed the development and implementation of an application programming interface (“API”) that can connect the online file database to third-party web hosting services and that will permit such services to efficiently load documents into the online file on behalf of client broadcast stations and other entities. We recognize that third-party web hosting services may offer valuable assistance to entities in uploading documents to the online file and otherwise maintaining the file, particularly smaller entities that may choose to outsource this effort because of cost savings and other resource constraints. The Media Bureau and the Office of the Managing Director will provide further information about the API in the near future and will conduct one or more demonstrations. The API library will also be made available for testing by covered entities and their third-party service providers prior to the effective date of the online filing requirements adopted in this proceeding. While we recognize the benefits that web hosting services may provide in assisting entities in uploading materials to the online file, we emphasize that each entity remains responsible for ensuring that its own online public file is complete. While entities are free to enter into contractual arrangements with third parties to upload information into the online file, and to require as part of those arrangements that the third party ensure compliance with the FCC's rules, we decline to relieve entities of their responsibility to ensure that their own online public file is complete and otherwise complies with our rules. While we decline to provide a safe harbor for entities that choose to engage a third party to assist with the online file, we note that our primary goal in this proceeding is to improve access to public file information. Our enforcement efforts initially will be focused on ensuring that entities understand and comply with the online file requirements adopted herein, rather than on imposing fines for minor failures to comply with the rules, particularly during the period when entities being added to the online file are becoming familiar with online filing.

22. Links to other Web sites. With the exception of the channel lineup information that cable systems must retain in the online file, we will not permit entities to provide a link in the online file to an alternative online location where political file or other public file material may be maintained in lieu of uploading documents to the Commission's database. The Commission's online file database is intended to serve as a single source of public file material for entities required to use the file, and not as a collection of links to other Web sites. The online database is organized with folders and subfolders that provide a consistent display of public file material for entities in each service. Members of the public who access the online file will be able to locate documents more easily if they are organized in a similar manner for each service. We agree with CLC et al. that allowing entities to substitute a link to another Web site, which may follow a different organizational structure, instead of uploading documents to the online file, would likely make the file more confusing, harder to navigate, and less useful to the public. With respect to channel lineups, however, we believe it is appropriate to permit cable operators that maintain a lineup on their own Web site to provide a link to that existing online lineup in lieu of also maintaining a lineup in the Commission's online file database. Operators may elect to provide channel lineup information both in the Commission's online file as well as on their own Web sites, but will not be required to do so.

23. We will permit those entities that maintain their own electronic public and/or political files to include in the Commission's online database a link to that private file database, in addition to uploading to the Commission's database the materials required to be retained in the online public file. Such links would provide a further source of public file information that could prove to be a useful supplement to the information available on the Commission's online database.

24. Filing windows. We decline at this time to extend or otherwise alter our current filing windows, as advocated by several commenters. We are confident that the online file will be capable of handling the increased number of filers and the volume of material required to be uploaded as a result of the expansion of the Commission's online database. We may reconsider expanding or otherwise altering filing windows at a later time if we believe that such efforts will either assist filers in maintaining a complete, up-to-date online file or help avoid congestion in the online database.

25. Orderly online files. Consistent with our requirement for television stations, we will require that cable, DBS, broadcast radio, and SDARS entities maintain orderly public files and remove expired contracts when and if replacement agreements are uploaded. While we otherwise do not require that files that are past their retention period or otherwise out-of-date be deleted, we urge all entities to actively manage their online files to ensure that they do not become so overgrown with out-of-date documents that it is difficult to access relevant materials. The Commission will take no action under the public file rules based on any public file document that is outside the mandatory retention period.

26. As proposed in the NPRM, cable operators, broadcast radio licensees, DBS operators, and SDARS entities will not be required to upload their existing political files to the online file. Instead, as we require with television licensees, these entities will be permitted to maintain locally those documents already in place in their political file at the time the new rules become effective, and upload documents to the online political file only on a going-forward basis. Existing political file material must be retained in the local political file at the station, cable system, or DBS or SDARS headquarters' office for the remainder of the two-year retention period, unless entities voluntarily elect to upload these materials to the online file. Given this limited two-year retention period, exempting the existing political file from the online database will require entities to continue to maintain this file locally for only a relatively short period of time after the effective date of the online political file requirements established in this order. Thus, exempting the existing political file from online posting will reduce the initial burden of moving public files online. In addition, as discussed below, with respect to smaller cable systems (those with between 1,000 and 5,000 subscribers) we are delaying for two years, until March 1, 2018, the requirement that they commence uploading new political file material to the online file. We also delay all online file requirements until March 1, 2018 for radio stations with fewer resources, which we define as all NCE stations, commercial stations in markets below the top 50 or outside all radio markets, and commercial stations in the top 50 markets with fewer than five full-time employees. We believe that providing these entities with additional time to complete their transition to the online file will ease implementation for these smaller entities and also give the Commission time to address any concerns that may arise as larger entities commence using the online file.

27. Consistent with our current political file rules, and as proposed in the NPRM, we will require that new political file materials be uploaded to the online file “immediately absent unusual circumstances.” The contents of the political file are time-sensitive. Therefore, it is essential that there be no delay in posting political file materials to the online file. In addition, consistent with our approach to the television online file, we will create and propagate subfolders for federal and state candidate ad purchases, as appropriate, as well as issue ads that relate to a political matter of national importance. We will also provide entities with the ability to create additional subfolders and subcategories in compliance with their own practices.

28. As we proposed in the NPRM, we will permit entities that are temporarily exempt from part or all online public file requirements to upload material to the online public file voluntarily before the delayed effective date of their online file requirement. For example, an NCE broadcast radio station that is not required to commence using the online file until March 1, 2018, as discussed below, could elect voluntarily to commence using the online file prior to this date. We will also permit entities to elect voluntarily to upload to the online file existing political file material that would otherwise be required to be retained in the entity's local public file until the end of the two-year retention period. To avoid any confusion regarding the location and completeness of the public and political file, any entity that voluntarily elects to commence using the online file early must ensure that the online file contains all new public file material on a going-forward basis, including all new political file material. That is, all new public and political file material must be uploaded to the online file on a going-forward basis commencing on the date the entity elects to transition to the online file. The online file database will require users to indicate that they have transitioned to the online file.

29. As proposed in the NPRM, cable, DBS, broadcast radio, and SDARS entities will not be required to maintain back-up copies of all public file materials. Instead, as we do for the existing television online file, an entity may request that the Commission create a mirror copy of its public file to ensure that, if the data in the online file are compromised, the file can be reconstituted using the back-up copy. If the Commission's online file becomes temporarily inaccessible for the uploading of new documents, we will require entities to maintain those documents and upload them to the file once it is available again for upload.

30. As proposed in the NPRM and consistent with the approach we take with respect to television broadcasters, however, we will require cable, DBS, broadcast radio, and SDARS entities to make back-up files for the political file available to the public to ensure that they can comply with their statutory obligation to make that information available to candidates, the public, and others immediately. Entities will be required to make these backups available only if and during such rare times as the Commission's online public file is unavailable. To minimize any burden caused by this requirement, entities may choose to meet the political file back-up requirement by periodically downloading a mirror copy of the public file, including the political file, housed on the FCC's database. To ensure that the political file is complete, entities that choose this option must retain any political file records that have not yet been uploaded to the FCC's online file database or that were uploaded after their last download of a mirror copy of the online public file.

31. These back-up files may be retained either in paper or electronic form at the entity's local public file location. Alternatively, entities may elect to make these back-up political files accessible to the public online via the entity's own Web site. Cable operators or other entities with their own electronic political files may elect to use these files as a back-up in the event the Commission's online database is unavailable.

32. In the event the Commission's online file becomes temporarily inaccessible, we will require DBS and SDARS entities to make their back-up political files available to the public through the entity's choice of either an online method, via the entity's own Web site, or by answering questions and accommodating requests for copies of political file materials made by telephone. Copies requested by telephone may be sent by fax, email, or mail, at the caller's request. If a requester prefers access by mail, the DBS or SDARS entity may require the individual requesting documents to pay for photocopying. We believe it is necessary to require DBS and SDARS entities to provide alternative means to access back-up political file documents, either online or by telephone, as these entities provide service nationwide and are required to maintain only one public and political file for the entire U.S. at their headquarters office, making in-person access very difficult. This requirement for online or telephone access will apply only to DBS and SDARS back-up political file materials during times when the Commission's online database is unavailable. Accordingly, we do not believe this requirement will be unduly burdensome.

33. As proposed in the NPRM, cable, DBS, and broadcast and satellite radio entities will be required to upload any electronic documents to the online file in their existing format to the extent feasible. The Commission will display the documents in both the uploaded format and in a pdf version. If a required document already exists in a searchable format, documents must be uploaded in that format to the extent technically feasible.

34. We decline at this time to implement a standard format for the online file, including for political advertising data, as requested by CLC et al. As discussed above, the Commission has made a number of upgrades to its online file database to accommodate additional users and make the file easier to use. We will continue to prioritize these and other efforts to ensure that the database is reliable and user-friendly before considering further improvements.

35. We will require cable operators, DBS providers, and broadcast and satellite radio licensees that have Web sites to place a link to the online public file on their home pages, consistent with our proposal in the NPRM and our requirement for television stations. This link must connect to the first page of the entity's online public file. We will also require entities that have Web sites to include on their home page contact information for a representative who can assist any person with disabilities with issues related to the content of the public file.

36. As proposed in the NPRM, we will not require cable, DBS, broadcast radio, or SDARS entities to make on-air announcements regarding the change in location of their public file. Consistent with the approach taken with respect to television stations in the Second Report and Order, we will require broadcast radio stations, however, to revise their on-air pre- and post-filing renewal announcements to reflect the availability of a station's renewal application on the Commission's Web site.

37. As we proposed in the NPRM, we will continue to require that cable, DBS, and broadcast and satellite radio entities make their EEO materials available on their Web sites, if they have one. Similar to our requirements for television stations, entities may fulfill this Web site posting requirement by providing, on their own Web site, a link to the EEO materials on their online public file page on the Commission's Web site.The link to EEO materials must be a direct link to such materials on the FCC's Web site, and not simply a link to the first page of the entity's online public file. As discussed above, all entities that have Web sites must also place a link to the first page of their online public file on the home page of their Web site.

38. Entities that have fully transitioned to the online public file—that is, entities that have uploaded all public file material to the FCC's online file database including all political file material required to be retained in the public file—and that also provide online access to back-up political file material via the entity's own Web site when the FCC's online database is temporarily unavailable, will not be required to maintain a local public file. This option is not available to commercial broadcast licensees who must continue to retain a correspondence file that cannot be made available online for privacy reasons.

39. NTCA, Verizon, and DIRECTV request that we clarify that entities do not need to maintain a local public inspection file once they have fully transitioned to the online file. We note that, unlike commercial broadcast stations who must retain a correspondence file at the station, cable, DBS, and SDARS entities will have fully transitioned to the online file once the retention period for existing political files expires. As discussed above, however, all entities must maintain a back-up file for the political file in the event the online file becomes unavailable and make this back-up file available to the public. As discussed above, we will permit entities to retain back-up political file materials either in paper or electronic form at their local file location or make such materials available to the public online via the entity's own Web site. Entities with their own Web sites must indicate clearly on that Web site either the Web site or physical address of their back-up political files. Entities that have fully transitioned to the online file and that make their back-up political file materials available online will not be required to maintain a local public file.

40. We will require all cable and DBS operators and broadcast and satellite radio licensees to provide information in the online public file about the individual who may be contacted for questions about the file. This information must be provided when the operator or licensee first establishes its online public file and should be updated if and when staffing or location changes occur. In addition, entities that have not fully transitioned to the FCC's online public file—that is, entities that do not post online all public and political file material required to be maintained in the public inspection file—and that do not also provide online access via their own Web sites to back-up political file materials must also provide information in the FCC's online public file about the location of the entity's local public file. This information is necessary to inform the public of the location of the existing political file (until its retention period expires) and/or the location where the public can access back-up political file materials in the event the Commission's database is unavailable. All commercial broadcast licensees must include information in the FCC's online file about the location of their local public file so the public is aware of the location of the correspondence file retained by these broadcasters.

41. New Public File Materials. In order to facilitate a smooth transition to the online public file, we will provide entities a period of time after the effective date of the online file requirements adopted in this order to begin uploading files. Cable systems with 1,000 or more subscribers, DBS providers, SDARS licensees, and commercial radio broadcast stations in the top 50 markets with five or more full-time employees will be required to begin using the online public file 30 days after the Commission announces in the Federal Register that OMB has completed its review of this Order under the Paperwork Reduction Act (“PRA”) and approved the collection. Commencing on this effective date, these entities must begin uploading new public file materials to the Commission's online public file database and, with the exception of cable systems with between 1,000 and 5,000 subscribers, these entities must also upload new political file material to the Commission's online file. Entities will not be permitted to commence uploading material to the online file prior to this effective date. We decline NAB's request that we give radio stations 60 days from the effective date to commence uploading new public file material. Only commercial radio broadcast stations in the top 50 radio markets with 5 or more full-time employees are required to commence uploading documents to the online file beginning 30 days after the effective date of this Order. We believe these larger radio stations have the necessary resources to be able to commence using the online file within this time frame without imposing an undue burden.

42. In recognition of their more limited resources, we provide more time for smaller entities to transition to the online file. Thus, as discussed further below, commercial broadcast radio stations in the top 50 markets with fewer than five full-time employees, all commercial broadcast radio stations in markets below the top 50 and outside all radio markets, and all NCE broadcast radio stations will not be required to begin uploading new public and political file material to the online file until March 1, 2018. In addition, cable systems with 1,000 or more but fewer than 5,000 subscribers will not be required to commence uploading new political file material to the online file until March 1, 2018. Cable systems with fewer than 1,000 subscribers are exempt from all online filing requirements.

43. Existing Public File Materials. We will give cable systems with 1,000 or more subscribers, DBS providers, SDARS licensees, and commercial radio broadcast stations in the top 50 markets with five or more full-time employees six months from the effective date of the rules (i.e., six months after the Commission publishes a notice in the Federal Register announcing OMB approval under the PRA as discussed above) to complete the process of uploading to the online file their existing public file materials, with the exception of existing political files. This approach is similar to that taken by the Commission in the Second Report and Order to transition television stations to the online public file. Entities will be permitted to begin uploading existing public file materials immediately on the effective date, at the same time that they must begin posting new materials to the online public file on a going-forward basis. These entities must complete the process of uploading the existing public file—but not the existing political file, which is not required to be transitioned to the online file—within six months of the effective date. We believe that giving these entities six months to upload existing files will provide adequate time and flexibility to complete this process.

44. While we do not believe online posting of the public file, including prospective posting of the political file, will impose an unreasonable burden on the vast majority of entities subject to the rules adopted in this Order, we recognize that there may be a few entities for which the transition to an online public inspection file may prove especially difficult. In this regard, we note that some small radio stations in remote locations may not have access to reliable Internet service or may be without Internet access altogether. In addition, there may be rare instances in which a small radio station or cable operator faces undue economic or other resource limitations that make the transition to the online public file especially challenging. If an entity believes that the transition to the online file will impose an undue hardship, it may seek a waiver of the requirements adopted in this order. An entity seeking a waiver should provide the Commission with information documenting the economic hardship the station would incur in complying with online file requirements, its technical inability to do so, or such other reasons as would warrant waiver under our general waiver standards.2

FRA is issuing this final rule to amend certain PTC system implementation deadlines in 49 CFR part 236, subpart I, to conform with statutory changes made by the Positive Train Control Enforcement and Implementation Act of 2015, Public Law 114-73, 129 Stat. 576, 582 (Oct. 29, 2015). FRA is also making conforming amendments and removing portions of its PTC regulations that are no longer applicable.

Under the Railroad Safety Improvement Act of 2008 (RSIA), Public Law 110-432, 122 Stat. 4854 (Oct. 16, 2008) (codified at 49 U.S.C. 20157), much of the railroad industry had been implementing PTC to meet a statutory deadline of December 31, 2015. Under defined circumstances, certain small railroads could also delay PTC system implementation on locomotives until after December 31, 2015. See 49 U.S.C. 20157(i)(4) (2008); 49 CFR 236.1006(b)(4).

On October 29, 2015, the Positive Train Control Enforcement and Implementation Act of 2015 (PTCEI Act), amended RSIA to extend the PTC implementation deadline to December 31, 2018, or, alternatively December 31, 2020, and provide qualifying small railroads with an additional three years to comply from the dates in FRA's regulation at 49 CFR 236.1006(b)(4)(iii)(B). See Public Law 114-73, 129 Stat. 568, 576-82 (Oct. 29, 2015); 49 U.S.C. 20157(a)(1), (a)(2)(B), (k). Congress made further amendments in the Fixing America's Surface Transportation (FAST) Act, which clarified FRA's authority under the PTCEI Act. See Public Law 114-94, sec. 11315(d), 129 Stat. 1312, 1675 (Dec. 4, 2015) (codified at 49 U.S.C. 20157(g)).

By statute, and delegation from the Secretary of Transportation, FRA is required to remove or revise the date-specific deadlines in the regulations or orders implementing 49 U.S.C. 20157 necessary to conform with the amendments the PTCEI and FAST Acts made. See 49 U.S.C. 20157(g)(2); 49 CFR 1.89. FRA is not required to make any changes to its regulations other than changing the dates. 49 U.S.C. 20157(g)(3) (“Nothing in the Positive Train Control Enforcement and Implementation Act of 2015, or the amendments made by such Act, shall be construed to require the Secretary to issue regulations to implement such Act or amendments”). Accordingly, the only amendments made in this final rule are the date changes and any necessary conforming amendments.

FRA is issuing this final rule without providing an opportunity for prior public notice and comment as the Administrative Procedure Act (APA) normally requires. See 5 U.S.C. 553. The APA authorizes agencies to dispense with certain notice and comment procedures if the agency finds for good cause that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. See 5 U.S.C. 553(b)(3)(B). For example, an “impracticable” good cause situation might be where the federal railroad safety rules should be amended without delay if FRA determines that the safety of the traveling public is at stake. Public notice is unnecessary when the public does not need or benefit from the notice and comment, such as with a minor or technical amendment.

In this case, FRA finds, for good cause, that notice and public comment is unnecessary, because the public would not benefit from such notice. The scope of this regulatory change is very limited; FRA is merely replacing old statutory deadlines with the new statutory deadlines and is otherwise making no substantive changes to the regulations; making conforming amendments; and removing portions of its PTC regulations that are no longer applicable.

Unless otherwise noted, all section references below refer to sections in title 49 of the Code of Federal Regulations (CFR).

Originally, Congress mandated PTC implementation by December 31, 2015. However, the PTCEI Act extended that deadline. In the PTCEI Act, rather than choosing a single future date, Congress elected to provide an implementation deadline of December 31, 2018, with an opportunity to extend the deadline up to December 31, 2020, for those railroads that qualify. To be eligible for such an extension, a railroad must fulfill certain statutory conditions and prerequisites and receive FRA approval.

Because each railroad's implementation deadline may be based on a variety of currently unfulfilled conditions or prerequisites, modification of the deadlines in this rule is not merely a simple replacement of dates in the applicable regulations. To address these variables, and place the statutory requirements in a regulatory context, some regulatory explanation and conforming amendments are required. This rule text includes some of the more explicit requirements necessary to receive FRA approval for an extension beyond 2018; some of the less definitive prerequisites (i.e., training and revenue service demonstration requirements under 49 U.S.C. 20157(a)(3)(B)) remain applicable as stated in the legislative text. FRA intends that all linguistic changes to be conforming, to merely incorporate the new statutory deadlines, and not to include any additional requirements. Therefore, FRA is issuing a final rule in this proceeding. Even if FRA had issued a proposed rule, and received comments, FRA could not make any changes without violating the statute.

To this end, FRA is striking the deadline referenced in § 236.1005(b)(1) and is adding a paragraph (b)(7) to address the new deadlines the recent legislation mandates.

Paragraph (b)(6) currently states that no new intercity or commuter rail passenger service shall commence after December 31, 2015, until a PTC system certified under this subpart has been installed and made operative. FRA continues to believe this is a clearly necessary requirement to satisfy the statute and to ensure PTC operations for railroads commencing new operations after the statutory implementation deadline. However, per the PTCEI Act, FRA recognizes the need to change the deadline. Accordingly, FRA is amending paragraph (b)(6) by striking “2015” and replacing it with “2020.” Since that paragraph only concerns new rail passenger service commencing after the full implementation deadline, it is consistent with the PTCEI Act to change the date to 2020. However, all rail passenger operations commencing before December 31, 2020, must comply with the implementation deadlines in the PTCEI Act.

For the same reasons stated in the analysis of § 236.1005 above, FRA is striking the deadline in § 236.1006(b)(1) and (b)(3). For purposes of clarity and context, we are replacing the latter change with a cross-reference to new paragraph § 236.1005(b)(7).

Paragraph (b)(2) references a number of reports that were due in prior years. Given that this regulation is now stale, it is being removed.

Paragraph (b)(3) refers to the original deadline that has passed. Accordingly, FRA is striking the introductory phrase. Since the remaining text applies at all times, and is no longer limited to the implementation deadline, FRA does not believe it is necessary to cross-reference to § 236.1005(b)(7) or otherwise reference a deadline.

In addition to changing the implementation deadline, the PTCEI Act also provides some flexibility for railroads that may achieve PTC System Certification earlier than others. The PTCEI Act, codified at 49 U.S.C. 20157(j)(1), provides that until 1 year after the last Class I railroad achieves PTC System Certification and full PTC system implementation, each railroad shall comply with the operational restrictions in 49 U.S.C. 20157(j)(2)-(j)(4) in lieu of those required under 49 CFR 236.567 and 236.1029. While these statutory provisions are substantively outside the scope of this rulemaking, FRA recognizes that paragraph (b)(3) also references § 236.1029. To reduce confusion, and without making any interpretation or determination about the effect of the PTCEI Act, FRA is also referencing 49 U.S.C. 20157(j). The actual applicability at any given time of either 49 U.S.C. 20157(j) or 49 CFR 236.1029 would be determined at a later date in a different forum.

As previously noted, since the rule was first issued in 2010, FRA has provided Class II and Class III railroads a limited opportunity to delay or avoid PTC implementation on certain locomotives in prescribed circumstances. The PTCEI Act requires this rule to extend those permissible delays another 3 years from the dates in FRA's regulation at 49 CFR 236.1006(b)(4)(iii)(B). Accordingly, FRA is merely adding three years to each date referenced in paragraph (b)(4)(iii)(B).

Under the existing regulations, each railroad is required to submit an annual progress report on each anniversary of its initial PTCIP filing. Since the statute was amended to require annual submission of such progress reports by March 31 of each year (see 49 U.S.C. 20157(c)(1)), FRA is amending paragraph (a)(5) to reference that new progress report deadline and to avoid confusion and potential redundant submissions. FRA notes, however, that it retains under the existing and amended statutes and regulations the authority to require more frequent reporting.

For the same reasons explained above regarding the amendments to § 236.1005, FRA is amending the deadline in § 236.1011. Given that a different deadline, albeit within the statutory limits, may apply to each railroad, FRA believes a single date in the regulation is no longer appropriate. Accordingly, the amendments to this section merely cross-reference to the applicable deadline determined under § 236.1005(b)(7).

For the same reasons as previously explained regarding the amendments to § 236.1005, FRA is amending the deadline dates referenced in Appendix A. In addition, in the new legislation, Congress reaffirmed FRA's authority to enforce the requirements of subpart I. Therefore, FRA has reviewed its related civil penalties guidance found in Appendix A. Although FRA is currently not suggesting any substantive changes to the regulations, the agency believes that some clarity is warranted. And, of course, FRA retains the authority to enforce any violations of the new legislation or regulations whether or not explicitly mentioned in Appendix A.

In consideration of the foregoing, FRA hereby amends 49 CFR part 236 as follows: