Federal Register Vol. 83, No.218,

The Immigration and Nationality Act (INA), 8 U.S.C. 1101, et seq., establishes the H-2B nonimmigrant classification for a nonagricultural temporary worker “having a residence in a foreign country which he has no intention of abandoning who is coming temporarily to the United States to perform . . . temporary [non-agricultural] service or labor if unemployed persons capable of performing such service or labor cannot be found in this country.” 8 U.S.C. 1101(a)(15)(H)(ii)(b).1 The Secretary of Homeland Security, in administering the H-2B program, may grant a petition for an otherwise eligible H-2B nonimmigrant worker “after consultation with appropriate agencies of the Government.” 8 U.S.C. 1184(c)(1). The Secretary of Homeland Security also may delegate to “any employee of the United States, with the consent of the head of the applicable Department or other independent establishment, . . . any of the powers, privileges, or duties conferred or imposed” on DHS under the INA. 8 U.S.C. 1103(a)(6); see also 8 CFR 2.1. DHS regulations provide that an H-2B petition for temporary employment in the United States must be accompanied by an approved temporary labor certification from DOL. 8 CFR 214.2(h)(6)(iii)(A) and (iv)(A). Pursuant to and in accordance with the above authorities, the temporary labor certification serves as DHS's consultation with DOL to determine the question of whether a qualified U.S. worker is available to fill the petitioning H-2B employer's job opportunity and whether a foreign worker's employment in the job opportunity will adversely affect the wages or working conditions of similarly employed U.S. workers. See 8 CFR 214.2(h)(6)(iii)(A) and (D).

In order to advise DHS on the availability of U.S. workers and the potential for adverse effect on the wages and working conditions of similarly employed U.S. workers, DOL's Office of Foreign Labor Certification (OFLC) provides consultation to DHS through issuance of temporary labor certifications, in accordance with 8 U.S.C. 1103(a) and 1184(c);). See 8 CFR 214.2(h)(6)(iii)(A) and (D). The Departments have jointly issued regulations that govern the standards and procedures applicable to OFLC's issuance of temporary labor certifications under the H-2B program. See 20 CFR 655 subpart A. The regulations at 20 CFR 655 subpart A require employers seeking H-2B temporary labor certification to, among other things, actively recruit for U.S. workers before submitting petitions with DHS to hire foreign workers.

The standards and procedures governing the recruitment of U.S. workers generally are set forth in 20 CFR 655.40-655.48. These regulations generally require, among other things, that an employer seeking an H-2B temporary labor certification (1) place two print advertisements in a newspaper of general circulation serving the area of intended employment, § 655.42(a); (2) contact former U.S. workers employed in the previous year to solicit their return, § 655.43; and (3) contact the bargaining unit, if one exists, to seek referrals of U.S. workers, or if a bargaining unit does not exist, post the job opportunity at the place(s) of employment for at least 15 consecutive business days, § 655.45. An employer may need to conduct additional recruitment, as provided in section 655.46(a), where the OFLC Certifying Officer (CO) determines there is a likelihood that qualified U.S. workers will be available to fill the employer's job opportunity.

As relevant here, section 655.42(a) requires an employer seeking an H-2B temporary labor certification to place a print advertisement on two separate days, one of which must be a Sunday, in a newspaper of general circulation serving the area of intended employment and appropriate to the occupation and workers likely to apply for the job opportunity. If the employer's job opportunity is located in a rural area that does not have a newspaper with a Sunday edition, then section 655.42(b) permits the CO to direct the employer, in place of a Sunday edition, to place a print advertisement in the regularly published daily edition with the widest circulation in the area of intended employment. Both advertisements must meet the minimum content requirements set forth in section 655.41, and the employer is required to maintain documentation of the actual newspaper advertisement(s) published in the event of an audit or other review. § 655.42(d).

In order to effectuate DHS's requirement for DOL consultation, which is provided in the form of temporary labor certifications, DOL must issue regulations to structure procedures and substantive standards for its issuance of labor certifications, as DOL has done for almost 50 years. On April 29, 2015, following a court's vacatur of nearly all of DOL's H-2B regulations, the Departments jointly promulgated an interim final rule (IFR) governing DOL's role in issuing temporary labor certifications and enforcing the statutory and regulatory rights and obligations applicable to employment under the H-2B program. See Temporary Non-Agricultural Employment of H-2B Aliens in the United States, 80 FR 24,042 (Apr. 29, 2015) (codified at 8 CFR part 214, 20 CFR part 655, and 29 CFR part 503) (“2015 H-2B IFR”).

As explained in the 2015 H-2B IFR, following conflicting legal decisions about DOL's authority to independently issue legislative rules to carry out its duties for the H-2B program under the INA, the Departments jointly issued the 2015 H-2B IFR “to ensure that there can be no question about the authority for and validity of the regulations in this area.” 80 FR at 24,045; see also 80 FR at 24,044-24,047.2 Specifically, DHS's participation in the rulemaking is pursuant to its broad authority to issue rules in the H-2B program under 8 U.S.C. 1103(a)(3) and 1184(a), and, as referenced above, DOL—which has the institutional expertise on all matters relating to the domestic labor market and has for decades issued temporary labor certifications and legislative rules governing them in the non-agricultural foreign worker program—is necessarily authorized to promulgate rules governing its issuance of temporary labor certifications pursuant to 8 U.S.C. 1103(a) and 1184(c). The Departments further explained that by issuing the 2015 H-2B IFR jointly, “the Departments affirm that this rule is fully consistent with the INA and implementing DHS regulations and is vital to DHS's ability to faithfully implement the statutory labor protections attendant to the program.” 80 FR at 24,045-46. Litigation on these and related matters is ongoing. Accordingly, notwithstanding that DOL has authority to independently issue this NPRM, DHS is joining DOL in this rulemaking to ensure that there can be no question about the authority underlying this action.

The Departments are proposing to modernize the recruitment that an employer must conduct under section 655.42 by replacing print newspaper advertisements with electronic advertisements posted on the internet. After due consideration, the Departments believe that advertisements posted on the types of websites described below will reduce burden on employers and applicants, and be a more effective and efficient means of recruiting U.S. workers than the print newspaper advertisements that section 655.42 currently requires.

The Departments are basing this proposal on several considerations. First, available data suggest that U.S. workers are now much more likely to turn to the internet to search for work than classified newspaper advertisements in print newspapers. For instance, a recent survey conducted by the Pew Research Center indicated that 79 percent of Americans research jobs online, whereas only 32 percent use “ads in print publications,” and only four percent found ads in print publications to be the most useful tool in obtaining their recent employment.3 This trend is likely to continue as U.S. workers gain increased and more convenient access to the internet via smartphones and other digital devices,4 and print newspaper circulation continues to decline.5 Consequently, classified advertisements in print editions are becoming a less effective means of notifying potential applicants about available job opportunities.6 In recognition of these facts, many newspapers now offer online classified employment listings using multi-platform content providers, and popular online job search websites power the job boards of thousands of newspaper sites, providing a lower cost recruiting option for employers and job seekers alike.7

Second, this general trend is consistent with anecdotal evidence that the Departments have received from stakeholders, who have reported that print newspaper advertisements are not an effective method of recruiting prospective U.S. workers for job opportunities filled by H-2B workers. For instance, two comments submitted in response to the 2015 H-2B IFR indicated that reliance on newspaper advertising to recruit U.S. workers was outmoded. Specifically, the Northwest Workers' Justice Project (NWJP), a not-for-profit organization that provides civil legal assistance to low-income persons, stated:

Finally, electronic advertisements offer employers a less expensive, more convenient means of broadly disseminating information about their job opportunities to potential U.S. workers. Many websites offer standard advertising packages for free or at significantly lower marginal costs than the standard print newspaper advertisement, and advertisements can be posted on these sites for longer periods than a typical print newspaper advertisement remains in circulation, providing greater exposure of the employer's job opportunity to U.S. workers at no additional cost to the employer. Moreover, unlike print advertisements, which are subject to publishing deadlines that can delay exposure of the job opportunity to U.S. workers, an electronic advertisement can be posted within minutes or hours of submission to the website.

In light of the foregoing, the Departments are proposing to revise the recruitment that an employer must conduct under section 655.42 to replace print newspaper advertisements with electronic advertisements posted on the internet, as described below. The Departments are also proposing minor amendments to sections 655.48 and 655.71 to conform those sections with the Departments' proposed elimination of print newspaper advertisements.

The Departments are proposing to revise section 655.42(a) to replace the requirement that an employer place print newspaper advertisements with a requirement that the employer advertise its job opportunity on a website that is widely viewed and appropriate for use by workers who are likely to apply for the job opportunity in the area of intended employment. The Departments propose to remove the word “occupation” from the text in order to address a possible redundancy in the language. This proposed drafting change is stylistic only, and the Departments intend to effect no substantive change by it.

The proposed rule would not mandate that an employer post its advertisement on a specific website. Rather, proposed section 655.42(a) would allow an employer to place an advertisement on any of a variety of websites that are widely viewed and appropriate for use by workers who are likely to apply for the job opportunity in the area of intended employment, including websites that specialize in advertising job opportunities for the specific industry or occupation, and websites that specifically serve the local area, such as localized online job listing services and digital classified sections of local newspapers. Proposed section 655.42(a) also contemplates the use of websites that are not specifically directed at workers in the area of intended employment or the particular occupation, so long as the website is appropriate for the occupation and adequately serves the area of intended employment.

The Departments anticipate that advertisements posted on the types of websites described above will provide greater exposure of job opportunities to U.S. workers than the print newspaper advertisements that section 655.42 currently requires, because they can be more easily accessed by applicants across a much larger geographic area and for a longer period. The Departments invite comments on whether they should establish qualifying criteria (e.g., minimum number of unique visitors per month), or define the types of websites on which an employer may place an electronic advertisement under the proposed rule, and whether the rule should exclude websites maintained by the employer and/or the employer-client of a job contractor seeking to employ H-2B workers, as defined in section 655.5. The Departments also solicit comments on whether, instead of eliminating print newspaper advertisements, they should instead offer electronic advertisements as an alternative means of satisfying the existing print advertising requirement in section 655.242. The Departments are not proposing this option, given the data and trends discussed in Section I.C., which suggest that electronic advertisements will be more effective in disseminating information about job opportunities to the American workforce. However, the Departments invite comments on whether there are employers that lack the technology or internet access necessary to place the electronic advertisements described in the proposed rule, and if so, how the Departments should determine whether such employers have met their obligation to recruit U.S. workers. For instance, the Departments could leave current recruitment requirements in place as an option for such employers. The Departments solicit comments on whether there are alternative methods that would more broadly and effectively disseminate information about available job opportunities to U.S. workers.

Proposed section 655.42(b) specifies that an employer's advertisement must be clearly visible on the website's homepage or be easily retrievable using the search tools on the website. Any advertisement that is not clearly visible on the website's homepage must be easily retrievable. An advertisement is easily retrievable if it can be quickly accessed using a prominently displayed link on the website's homepage or the search tools and filters that are prominently displayed on the website's homepage. Each navigation choice or interaction that a job seeker has with the website should take him or her closer to the job opportunity being advertised, and applicants should be able to quickly locate job vacancies using a number of search criteria, such as occupation, job or position title, geographic location, pay range, and keywords in the job description. The employer must use commonly understood terms and keywords to describe its job opportunity when placing the advertisement, so that U.S. workers who are likely to apply for the position will retrieve the advertisement when using the website's search function.

Proposed section 655.42(b) would also require an employer to post the electronic advertisement for a period of no less than 14 consecutive calendar days. Unlike the print newspaper advertisements that an employer must place under the current rule, which are typically published once, many websites offer standard advertising packages that allow an employer to place an advertisement for a weekly period or up to 30 calendar days for free or at a much lower marginal cost than a standard print newspaper advertisement. Accordingly, the Departments anticipate that the fourteen-day consecutive posting period in proposed section 655.42(b) will attract more U.S. workers to job opportunities than the print newspaper advertisements that this section currently requires, because an employer's job opportunity will be easily accessible to U.S. workers seeking jobs for a longer period than a print newspaper advertisement, at no additional cost to the employer.

Further, in order to assure that the job opportunity described in the advertisement is readily available to U.S. workers, proposed section 655.42(b) would require that the advertisement be publicly accessible at no cost to an applicant. To meet this requirement, the website on which the advertisement is placed cannot require U.S. workers to pay fees to establish personal accounts or make payments of any kind to view the advertisement. The website must also be functionally compatible with the latest commercial web browser platforms and easily viewable on mobile smartphones and similar portable devices. Moreover, like the current rule, proposed section 655.42(b) would require that the advertisement comply with the minimum content requirements set forth in section 655.41.

In order to ensure that an employer retains the evidence necessary to demonstrate compliance with proposed section 655.42(a) and (b), proposed section 655.42(c) would require an employer to print and retain screen shots of the web pages on which its advertisement appears and screen shots of the web pages establishing the path used to access the advertisement. Although the proposed rule does not require employers to submit this documentation to the CO with their recruitment reports, an employer must nevertheless retain this documentation in accordance with 20 CFR 655.56 and provide it to DOL in the event of an audit or other review.

The proposed section 655.42(d) includes a transition provision that would permit an employer submitting an Application for Temporary Employment Certification with a date of need prior to October 1, 2019 to elect between placing (a) an electronic advertisement in accordance with the requirements in the proposed rule, or (b) two newspaper advertisements in accordance with existing requirements. Because the Departments are proposing to have this rule take effect immediately upon publication of the final rule, the Departments are including this transition period to provide flexibility to employers that seek additional time to understand and comply with the proposed regulatory revisions, while simultaneously permitting employers that wish to place electronic advertisements immediately upon the effective date of the final rule the ability to do so. The transition provision is intended to better ensure, among other things, that employers who have purchased newspaper advertising space in advance do not lose the benefit of such purchase.

However, the option to elect between the placement of newspaper and electronic advertisements would apply only to those applications with a date of need prior to October 1, 2019. All employers submitting an Application for Temporary Employment Certification with a date of need after the transition period ends (i.e., employers with dates of need beginning on or after October 1, 2019) would be required to place an advertisement in accordance with the proposed revisions to 655.42(a)-(c).

The Departments are proposing minor revisions to two other sections in subpart A in order to conform the regulatory text of those sections with the proposed revision to section 655.42. First, the Departments are proposing to amend section 655.48(a)(i), relating to recruitment reports, by revising the requirement that an employer provide the name of the newspaper used to satisfy the recruitment requirement in section 655.42 to instead require the name of the website used to satisfy this requirement. Second, the Departments are proposing to amend section 655.71(c)(2) by deleting the option to use newspaper advertisements for assisted recruitment.

DOL, with the concurrence of DHS, has taken initial steps toward creating an online platform to assist employers in complying with the requirements for electronic advertising under this proposed rule. Pending the outcome of this rulemaking, DOL intends to leverage the latest advertising technologies by establishing a mechanism to make advertising data available to popular job-search websites. Specifically, DOL is evaluating the development of a centralized platform to automate the electronic advertising of approved H-2B job opportunities. DOL anticipates that, once fully developed and implemented, this electronic advertising platform would maintain a standard set of data on each job opportunity that can be integrated with a wide array of job search website technologies. Through this platform, DOL would make available to job-search websites real-time access to the information that employers provide about their job opportunities subject to agreement to abide by terms of service. The companies that operate job-search websites would execute standard protocols to pull new H-2B jobs from the online platform in real time for advertising to U.S. workers.

If developed as currently envisioned, DOL expects that employers would provide information about their job opportunities, at the time of filing their H-2B temporary labor certification applications, and indicate their intention to use the electronic advertising platform. Employers that elect to use this platform would have information about their job opportunities transmitted by DOL to companies offering to provide advertising services, which in turn would advertise these jobs on the companies' job search websites.

The Departments believe that facilitating employers' use of technology is in the best interest of employers and U.S. workers. Because information about the job opportunity would already be provided at the time of filing theH-2B temporary labor certification application and transmitted by DOL to companies operating these job search websites, the burden associated with placing separate electronic advertisements would be significantly reduced. The goal is to reduce burdens on the regulated community, while ensuring that the maximum number of U.S. workers learn about job opportunities. Having DOL maintain a publicly available list of the companies participating in this advertising platform would give U.S. workers and other organizations that provide employment placement services a greater degree of certainty regarding where these temporary or seasonal jobs will be advertised and available for U.S. workers to apply. Employers that elect to use the new platform would satisfy the advertising requirements in § 655.42. Finally, offering this platform to employers would ensure more uniform compliance with advertising requirements.

The Departments are not soliciting comments on this electronic advertising platform at this time, but the Departments, or DOL acting alone, may inform the public about the advertising platform's completion through a notice in the Federal Register.

The Departments propose to claim an exception under 5 U.S.C. 553(d)(1) from the 30-day delayed effective date requirement on the basis that relieves the restriction against on-line advertising of jobs for which an employer seeks to hire H-2B workers. The final rule would relieve regulated parties of the requirement that they only place paper advertisements in newspapers of general circulation in the area of intended employment. During the transition period, which would apply to all employers who file an Application for Temporary Employment Certification with a date of need prior to October 1, 2019, the rule would allow employers to select between placing two paper newspaper advertisements or placing an online advertisement. After the transition period ends, the rule would altogether replace the newspaper advertising requirement with online advertising, which is anticipated to be more cost-effective and flexible for employers, as well as a more effective way of reaching U.S. workers who may be able, willing, and qualified for the employers' job opportunities. The online advertising would also provide flexibility for U.S. workers who are job seekers to identify and apply for the job opportunities for which employers seek to hire H-2B workers. As discussed in greater detail in this preamble, this approach is in line with commenter requests on the 2015 H-2B joint Interim Final Rule, urging the Departments to transition to an online recruitment model. The Departments anticipate that allowing employers additional time to transition away from advertising by newspaper over an approximately six-month period after the rule's publication would provide needed flexibility, and thus provide employers with notice and time to conform their business practices to the new rule. This rule would take effect immediately upon publication of the final rule.

Under Executive Order (E.O.) 12866, the Office of Management and Budget (OMB)'s Office of Information and Regulatory Affairs determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and review by OMB. 58 FR 51735. Sec. 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that (1) has an annual effect on the economy of $100 million or more, or adversely affects in a material way 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) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O. Id. OMB has determined that this proposed rule is a significant, but not an economically significant, regulatory action under Sec. 3(f) of E.O. 12866. Consequently, OMB has reviewed this rule.

E.O. 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; the regulation is tailored to impose the least burden on society, consistent with achieving the regulatory objectives; and in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. E.O. 13563 recognizes that some benefits are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.

E.O. 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017. This proposed rule is expected to be an E.O. 13771 deregulatory action because the cost savings to H-2B employers associated with the rule are larger than the costs. The estimated cost savings associated with this regulatory action are derived from the proposed revision to section 655.42(a), which would replace print newspaper advertisements with electronic advertisements posted on the internet.

The Departments' analysis below considers the expected impacts of the following aspects of the proposed rule against the baseline (i.e., the 2015 Interim Final Rule): (a) The replacement of newspaper advertisements with electronic advertisements, and (b) the time it takes the regulated community to read and review the rule.

The Departments are proposing to modernize the positive recruitment that an employer must conduct under the regulations by eliminating the use of print newspaper advertisements and replacing it with electronic advertisements posted on the internet, which will make the job opportunity more broadly available to U.S. workers. Specifically, the Departments are proposing to revise section 655.42(a) to replace print newspaper advertisement requirements with a requirement for an electronic advertisement posted on a website appropriate for the workers who are likely to apply for the job opportunity in the area of intended employment. As discussed in section I.C. of the preamble to this NPRM, the basis for this proposal is rooted in the Departments' determination that electronic advertisements will be a more effective and efficient means of recruiting U.S. workers than the print newspaper advertisements that the regulations currently require.

To estimate the cost savings to employers that would result from the proposed rule, the Departments first calculated the average number of H-2B temporary labor certifications approved in a Fiscal Year (FY) based on data from FY 2015-2017, which yielded an annual average of 5,879.10 Next, the Departments identified the top five states in which prospective H-2B employers received temporary labor certifications and researched the cost of placing a newspaper advertisement in the most populous city in each of these states (for several newspapers, including large and local papers) that would satisfy the advertising content requirements.11 The Departments then averaged the data obtained to estimate the average cost of complying with section 655.42. Based on these data, the Departments determined that the average cost of placing a single, one-day newspaper advertisement required by section 655.42 is $803.08.12

As mentioned above, the Departments believe, based on preliminary research, that employers can choose to advertise using online job search websites free of charge or at significantly lower marginal costs, so removing the requirement to advertise in a print newspaper would result in a cost savings equal to the cost of complying with the current regulation.13 Although section 655.42 currently requires employers to advertise on two consecutive days, one of which must be a Sunday, the Departments did not identify a significant difference in cost between advertisements placed on Sundays and weekdays, so the Departments did not distinguish between these two costs when calculating total advertising cost savings. To estimate the annual cost savings of newspaper advertising costs that employers will avoid under the proposed rule, the Departments multiplied the average annual number of approved H-2B temporary labor certifications (5,879) by the average newspaper advertising cost of $803.08, and multiplied it by two to account for each of the days that employers seeking H-2B workers are currently required to place newspaper advertisements. This yielded an average annual cost savings of $9.44 million 14 for employers.

During the first year that this rule would be in effect, employers seeking H-2B workers would need time to learn about the new requirements. The Departments assume that many employers participating in the H-2B program would learn about the requirements of the new rule from an industry newsletter or bulletin. The Departments assume that the amount of time required to understand the rule change to be 10 minutes. The proposed rule addresses only the job advertising requirements for employers seeking H-2B workers.

This requirement represents a cost to employers participating in the H-2B program in the first year of the rule. The Departments estimate this cost by multiplying the time required to read and review the new rule (10 minutes) by the median hourly wage of a human resources specialist ($31.84),15 multiplied by a factor of two (2) to account for fringe benefits and overhead, which yields a cost of $10.61 16 per employer. The Departments estimate the total cost of reading and reviewing the rule by multiplying $10.61 by the average annual number of employers participating in the H-2B program over FY 2015-2017 (6,151). This calculation results in a cost of $65,283 17 in the first year.

The Departments acknowledge, however, that there are some potentially limited situations—particularly in rural communities—where the upfront costs associated with accessing the internet and learning how to post such advertisements may result in noteable opportunity costs for employers. The Departments believe that very few employers who currently participate in the H-2B program do not currently have access to the internet. For those employers that do not currently have internet access, the Departments estimate that it will take two hours to access the internet (which may include transporation to the nearest library), research the websites and pick one to use, establish an account on that website, learn how to post a job on the website, and establish an email account. In addition, employers would need to make additional trips to check for responses from U.S. workers. Because of the uncertainties, we are unable to provide an estimate of the number of employers who do not have access to the internet and would incur these additional costs to post advertisements online. The Departments seek comment from the public on the likely magnitude and incidence of these costs. For employers with access to the internet who are not familiar with posting such advertisements online, there will be some up front costs associated with the time it takes to research job advertisement sites, establish an account, and learn how to post a job on the website.

However, online advertisements for H-2B employment would increase the visibility of job openings to potential U.S. workers and increase the number of workers that would be able to access these jobs. This benefit would significantly outweigh any cost potentially incurred by the negligible number of employers who do not currently have access to the internet due to transitioning from print newspaper advertisements to online job postings. The Departments therefore believe that the net societal benefit of implementing this rule would be maximized if all H-2B employers are required to utilize online advertisements. As such this rule constitutes as a deregulatory action.

The Departments estimate the total first-year costs of the proposed rule to be $65,283. This cost results from the estimated time required to read and review the proposed rule by a human resources specialist. This cost is incurred by all employers seeking H-2B workers subject to proposed section 655.42(a). The Departments estimate a first-year cost savings of $9.44 million. This cost savings results from replacing the requirement that employers place print newspaper advertisements with a requirement that employers place internet advertisements. Net first-year cost savings amount to $9.38 million.18 This estimated cost savings excludes any increase in costs to employers without current access to the internet.

Generally, annual cost savings are expected to be $9.44 million in all years following the first year due to the lack of monetized costs regarding the time required to read and review the proposed rule. The 10-year discounted net cost savings of the proposed rule range from $66.25 million to $80.46 million (with 7- and 3-percent discount rates, respectively). The annualized net cost savings of the proposed rule is $9.43 million (with 3- and 7-percent discount rates). When the Departments use a perpetual time horizon to allow for cost comparisons under E.O. 13771, the annualized cost savings of this proposed rule are $9.44 million at a discount rate of 7 percent (excluding any increased costs to employers without access to the internet).

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 (March 29, 1996), requires federal agencies engaged in rulemaking to consider the impact of their proposals on small entities, consider alternatives to minimize that impact, and solicit public comment on their analyses. The RFA requires the assessment of the impact of a regulation on a wide range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Agencies must perform a review to determine whether a proposed or final rule would have a significant economic impact on a substantial number of small entities. 5 U.S.C. 603 and 604.

This proposed rule may impact small businesses that request H-2B temporary labor certifications. The Departments assume that the average number of H-2B temporary labor certifications requested by any small business per year would be one. The Departments estimate that small businesses would incur a one-time cost of $10.61 to familiarize themselves with the rule and would incur annual cost savings of $1,606.16 associated with advertising online rather than in print newspapers. Over a 10-year analysis period, the net annualized cost savings for a small business would be $1,604.74 at a 7-percent discount rate.

The Departments reviewed the impacts of the proposed rule for two North American Industry Classification System (NAICS) Codes that frequently request H-2B temporary labor certifications: NAICS 561730: Landscaping Services, and NAICS 721110: Hotels (except Casino Hotels) and Motels. The Small Business Administration estimates that revenue for a small business with NAICS Code 561730 is $7.5 million and for NAICS Code 721110 is $32.5 million.19 The impact of the proposed rule would be less than 1 percent of annual revenue for the smallest businesses in these industries with the employment size fewer than 5 ($197,491 for NAICS 561730 and $321,239 for NAICS 721110).20 Based on this determination, the Departments certify that the proposed rule would not have a significant economic impact on a substantial number of small entities.

The Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., provides that a Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number. See 5 CFR 1320.5(a) and 1320.6. DOL has submitted the Information Collection Request (ICR) contained in this rule to OMB and obtained approval using emergency clearance procedures outlined at 5 CFR 1320.13.

More specifically, this rule proposes to replace print newspaper advertisements with an advertisement posted on at least one website that is widely viewed and appropriate for use by U.S. workers who are likely to apply for the job opportunity in the area of intended employment. The proposed rule would require that this advertisement be clearly visible on the website's homepage or be easily retrievable through the website, posted for a period of no less than 14 consecutive calendar days, publicly accessible to U.S. workers at no cost using the latest browser technologies and mobile devices, and satisfy the advertising content requirements set forth in § 655.41. Under the proposed rule and in accordance with 20 CFR 655.56(c)(2)(ii), an employer would be required to retain documentation demonstrating that it posted an electronic advertisement in compliance with the requirements in the proposed rule, including screen shots of the web page on which the advertisement appears and screen shots of the web pages establishing the path that U.S. workers must follow to access the advertisement. The employer must be prepared to produce all information and records contained in this information collection in the event of an audit examination, investigation, or other enforcement proceedings in the H-2B program. The Departments are using technology to reduce burden by replacing newspaper advertisements with electronic advertisements. The information collection requirements associated with this rule are summarized as follows:

Agency: DOL-ETA.

Type of Information Collection: New.

Title of the Collection: Advertising Requirements for Employers Seeking to Employ H-2B Nonimmigrant Workers.

Agency Form Number: None.

Affected Public: Private Sector—businesses or other for-profits.

Total Estimated Number of Respondents: 5,879.

Average Responses per Year per Respondent: 2.

Total Estimated Number of Responses: 11,758.

Average Time per Response: 7 minutes per application.

Total Estimated Annual Time Burden: 686 hours.

Total Estimated Other Costs Burden: $0.

The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. Title II of the Act requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in $100 million or more expenditure (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector.

This NPRM, if finalized, does not exceed the $100 million expenditure in any 1 year when adjusted for inflation, and this rulemaking does not contain such a mandate. The requirements of Title II of the Act, therefore, do not apply, and the Departments have not prepared a statement under the Act.

This NPRM, if finalized, would not be a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996, Public Law 104-121, 804, 110 Stat. 847, 872 (1996), 5 U.S.C. 804(2). The Office of Information and Regulatory Affairs has found that this rule is not likely to result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic or export markets.

This NPRM does not have federalism implications because it would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, Executive Order 13132, Federalism, requires no further agency action or analysis.

This NPRM does not have “tribal implications” because it would not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes. Accordingly, Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, requires no further agency action or analysis.

This NPRM would have no effect on family well-being or stability, marital commitment, parental rights or authority, or income or poverty of families and children. Accordingly, section 654 of the Treasury and General Government Appropriations Act of 1999 (5 U.S.C. 601 note) requires no further agency action, analysis, or assessment.

This NPRM would have no adverse impact on children. Accordingly, Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks, as amended by Executive Orders 13229 and 13296, requires no further agency action or analysis.

This action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This action is therefore categorically excluded from further review under the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321-4375.

This NPRM has not been identified to have impacts on energy supply. Accordingly, Executive Order 13211 requires no further agency action or analysis.

This NPRM, would not implement a policy with takings implications. Accordingly, Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, requires no further agency action or analysis.

This NPRM was drafted and reviewed in accordance with Executive Order 12988, Civil Justice Reform. It was written to provide a clear legal standard for affected conduct and was carefully reviewed to eliminate drafting errors and ambiguities, so as to minimize litigation and undue burden on the Federal court system. It meets the applicable standards provided in section 3 of Executive Order 12988.

For the reasons stated in this document, 20 CFR part 655 is proposed to be amended as follows:

I. Background A. Legal Framework

The Immigration and Nationality Act (INA), as amended by the Immigration Reform and Control Act of 1986 (IRCA), establishes the H-2A nonimmigrant visa classification for a worker “having a residence in a foreign country which he has no intention of abandoning who is coming temporarily to the United States to perform agricultural labor or services . . . of a temporary or seasonal nature.” 8 U.S.C. 1101(a)(15)(H)(ii)(a); see also 8 U.S.C. 1184(c)(1) and 1188.1 Among other things, the INA requires the Secretary of Homeland Security to consult with appropriate agencies of the Government—and in particular, DOL—before approving a petition to employ H-2A nonimmigrant agricultural workers. 8 U.S.C. 1184(c)(1). To that end, the Secretary of Homeland Security may not approve a petition to employ H-2A workers unless the petitioning employer has applied to the Secretary of Labor (Secretary) for a certification that:

(A) There are not sufficient U.S. workers who are able, willing, and qualified, and who will be available at the time and place needed to perform the labor or services involved in the petition; and

(B) the employment of the alien in such labor or services will not adversely affect the wages and working conditions of workers in the United States similarly employed.

The INA specifies a number of conditions under which the Secretary cannot grant a temporary labor certification. 8 U.S.C. 1188(b). One such condition is where “[t]he Secretary determines that the employer has not made positive recruitment efforts within a multi-state region of traditional or expected labor supply where the Secretary finds that there are a significant number of qualified United States workers who, if recruited, would be willing to make themselves available for work at the time and place needed.” 8 U.S.C. 1188(b)(4). The “positive recruitment” that the INA requires “is in addition to, and shall be conducted within the same time period as, the circulation through the interstate employment service system of the employer's job offer.” 8 U.S.C. 1188(b)(4). An employer's obligation to engage in this recruitment terminates “on the date the H-2A workers depart for the employer's place of employment.” Id.

Since 1987, the Department has relied on regulations promulgated under the authority of the INA to review and evaluate an application for a temporary labor certification under the H-2A visa classification. 20 CFR part 655, subpart B. The last significant revisions to these regulations, which are published in 20 CFR part 655, subpart B, took effect in 2010, following notice and comment rulemaking. 75 FR 6884 (Feb. 12, 2010) (2010 Final Rule). Pursuant to these regulations, the “positive recruitment” mandated by the INA is defined as “[t]he active participation of an employer or its authorized hiring agent, performed under the auspices and direction of the OFLC, in recruiting and interviewing individuals in the area where the employer's job opportunity is located and any other State designated by the Secretary as an area of traditional or expected labor supply with respect to the area where the employer's job opportunity is located, in an effort to fill specific job openings with U.S. workers.” 20 CFR 655.103.

The standards and procedures governing the positive recruitment of U.S. workers are set forth in sections 655.151-655.154. These regulations generally require, among other things, that an employer seeking H-2A temporary labor certification (1) place two print advertisements in a newspaper of general circulation serving the area of intended employment, § 655.151(a); (2) contact former U.S. workers who were employed in the previous year, § 655.153; and (3) recruit U.S. workers in up to three additional states designated by the Secretary as states of traditional or expected labor supply, § 655.154.

As relevant here, section 655.151(a) requires an employer seeking an H-2A temporary labor certification to place a print advertisement on two separate days, one of which must be a Sunday, in a newspaper of general circulation serving the area of intended employment and appropriate to the occupation and workers likely to apply for the job opportunity. Section 655.151(b) provides that if the employer's job opportunity is located in a rural area that does not have a newspaper with a Sunday edition, OFLC may direct the employer, in place of a Sunday edition, to place a print advertisement in the regularly published daily edition with the widest circulation in the area of intended employment. Both advertisements must meet the minimum content requirements set forth in section 655.152, and the employer is required to maintain documentation of the actual newspaper advertisements in the event of an audit or other review, as required by section 655.167(c)(1)(ii).

In addition, under section 655.154, an employer must conduct positive recruitment within a multistate region of traditional or expected labor supply where an OFLC Certifying Officer (CO) finds that there are a significant number of qualified U.S. workers who, if recruited, would be willing to make themselves available for work at the time and place needed. Paragraph (c) of this section leaves the precise nature of the additional positive recruitment that an employer must conduct to the discretion of the CO. In practice, however, the Department has generally directed employers to place print advertisements in newspapers with the largest circulations in the states identified by the CO as traditional or expected labor supply states.

The Department is proposing to modernize the recruitment that an employer must conduct under its regulations by replacing print newspaper advertisements with electronic advertisements posted on the internet. After due consideration, the Department believes that advertisements posted on the types of websites described below will reduce burden on employers and applicants, and be a more effective and efficient means of recruiting U.S. workers than the print newspaper advertisements that section 655.151 currently requires.

The Department is basing this proposal on several considerations. First, available data indicates that farmworkers in the United States very rarely, if ever, learn about job opportunities or obtain employment through print newspaper advertisements. According to recent data available from the National Agricultural Workers Survey (NAWS), farmworkers did not identify print newspaper advertisements as a source for obtaining their current job.2 This data is consistent with the Department's experience conducting audit examinations of labor certifications approved under the current rule, as well as anecdotal evidence that the Department has received from stakeholders, who report that print newspaper advertisements are not an effective method of recruiting prospective U.S. workers for agricultural job opportunities.

Second, available data also suggests that U.S. workers are now much more likely to turn to the internet to search for work than classified advertisements in print newspapers. For instance, a recent survey conducted by the Pew Research Center indicated that 79 percent of Americans research jobs online, whereas only 32 percent use “ads in print publications,” and only four percent found ads in print publications to be the most useful tool in obtaining their recent employment.3 This trend is likely to continue as U.S. workers gain increased and more convenient access to the internet via smartphones and other digital devices,4 and print newspaper circulation continues to decline.5 Consequently, classified advertisements in print editions are becoming a less effective means of notifying U.S. workers about available job opportunities. 6 In recognition of this fact, many newspapers now offer online classified employment listings using multi-platform content providers, and popular online job search websites power the job boards of thousands of newspaper sites, providing a lower cost recruiting option for employers and job seekers alike.7

Finally, electronic advertisements offer employers a less expensive, more convenient means of broadly disseminating information about their job opportunities to potential U.S. workers. Many job search websites offer standard advertising packages for free or at significantly lower marginal costs than the standard print newspaper advertisement, and advertisements can be posted on these sites for longer periods than a typical print newspaper advertisement remains in circulation, providing greater exposure of the employer's job opportunity to U.S. workers at no additional cost to the employer. Moreover, unlike print advertisements, which are subject to publishing deadlines that can delay exposure of the job opportunity to U.S. workers, an electronic advertisement can be posted within minutes or hours of submission to the website.

In light of the foregoing, the Department is proposing to revise the recruitment that an employer must conduct under section 655.151 to replace print newspaper advertisements with the electronic advertisements posted on the internet described below. The Department is also proposing minor amendments to sections 655.167 and 655.225 to conform those sections to the proposed elimination of print newspaper advertisements.

The Department is proposing to revise section 655.151(a) to replace the requirement that an employer place print newspaper advertisements with a requirement that the employer advertise its job opportunity on a website that is widely viewed and appropriate for use by workers who are likely to apply for the job opportunity in the area of intended employment. The Department proposes to remove the word “occupation” from the text in order to address a possible redundancy in the language. This proposed drafting change is stylistic only, and the Department intends to effect no substantive change by it.

The proposed rule would not mandate that an employer post its advertisement on a specific website. Rather, proposed section 655.151(a) would allow an employer to place an advertisement on any of a variety of websites that are widely viewed and appropriate for use by workers who are likely to apply for the job opportunity in the area of intended employment, including websites operated by state or local agricultural associations, job search websites that advertise agricultural job opportunities, and other classified advertisement websites with sections focused on local jobs.

The Department anticipates that advertisements posted on the types of websites described above will provide greater exposure of agricultural job opportunities to U.S. workers than the print newspaper advertisements that section 655.151 currently requires, because they can be more easily accessed by U.S. workers across a much larger geographic area and for a longer period. The Department included websites operated by state or local agricultural associations as an example of an appropriate website because some state farm bureaus, commissions, and cooperatives provide services that help agricultural employers recruit farm labor for seasonal work, and the Department believes these organizations can be a valuable asset in advertising and coordinating farm labor demands across employers and leveraging social media to connect employers with potential workers in the state or local area.

The Department invites comments on whether it should establish qualifying criteria (e.g., minimum number of unique visitors per month) or more specifically define the types of websites that would fulfill the requirement in proposed section 655.151, and whether the regulation should explicitly exclude advertisements placed on websites of agricultural associations that serve as agents or sole or joint employers of H-2A workers, as defined in section 655.103. The Department also solicits comments on whether, instead of eliminating print newspaper advertisements, it should instead offer electronic advertisements as an alternative means of satisfying the existing advertising requirement in section 655.151. The Department is not proposing this option, given the data and trends discussed in Section I.B., which suggest that electronic advertisements will be more effective in disseminating information about available job opportunities to the American workforce. The Department invites comments on whether there are agricultural employers that lack the technology or internet access necessary to place the electronic advertisements described in the proposed rule, and if so, how the Department should determine whether such employers have met their obligation to engage in positive recruitment of U.S. workers. For instance, the Department could leave current recruitment requirements in place as an option for such employers. The Department solicits comments on whether there are alternative methods that would more broadly and effectively disseminate information about available job opportunities to U.S. agricultural workers.

Proposed section 655.151(b) specifies that an employer's advertisement must be clearly visible on the website's homepage or be easily retrievable using the search tools on the website. Any advertisement that is not clearly visible on the website's homepage must be easily retrievable. The Department will consider an advertisement to be easily retrievable if it can be quickly accessed using a prominently displayed link on the website's homepage or the search tools and filters that are prominently displayed on the website's homepage. Each navigation choice or interaction that a job seeker has with the website should take him or her closer to the job opportunity being advertised, and applicants should be able to quickly locate job vacancies using a number of search criteria, such as occupation, job or position title, geographic location, pay range, and keywords in the job description. The employer must use commonly understood terms and keywords to describe its job opportunity when placing the advertisement, so that U.S. workers who are likely to apply for the position will retrieve the advertisement when using the website's search function.

Proposed section 655.151(b) would also require an employer to post the electronic advertisement for a period of no less than 14 consecutive calendar days. Unlike the print newspaper advertisements that an employer must place under the current rule, which are typically published once, many websites offer standard advertising packages that allow an employer to place an advertisement for a weekly period or up to 30 calendar days for free or at a significantly lower marginal cost than a standard print newspaper advertisement. Accordingly, the Department anticipates that the consecutive fourteen-day posting period in proposed section 655.151(b) will attract more U.S. workers to job opportunities than the print newspaper advertisements that section 655.151 currently requires, because an employer's job opportunity will be easily accessible to U.S. workers for a longer period than a print newspaper advertisement, at no additional cost to the employer.

Further, in order to ensure that the job opportunity described in the advertisement is readily available to U.S. workers, proposed section 655.151(b) would also require that the advertisement be publicly accessible at no cost to an applicant. To meet this requirement, the website on which the advertisement is placed cannot require U.S. workers to establish personal accounts or make payments of any kind to view the advertisement. The website must also be functionally compatible with the latest commercial web browser platforms and easily viewable on mobile smartphones and similar portable devices. Moreover, like the current rule, proposed section 655.42(b) would require that the advertisement comply with the minimum content requirements set forth in section 655.41.

In order to ensure that an employer retains the evidence necessary to demonstrate compliance with proposed section 655.151(a) and (b), proposed section 655.151(c) would require an employer to print and retain screen shots of the web pages on which its advertisement appears and screen shots of the web pages establishing the path used to access the advertisement. Although the proposed rule does not require employers to submit this documentation to the CO with their recruitment reports, an employer must nevertheless retain this documentation in accordance with section 655.167 and provide it to the Department in the event of an audit or other review.

The proposed section 655.151(d) includes a transition provision that would permit an employer submitting an Application for Temporary Employment Certification with a date of need prior to October 1, 2019 to elect between placing (a) an electronic advertisement in accordance with the requirements in the proposed rule, or (b) two newspaper advertisements in accordance with existing requirements. Because the Department is proposing to have this rule take effect immediately upon publication of the final rule, the Department is including this transition period to provide flexibility to employers that seek additional time to understand and comply with the proposed regulatory revisions, while simultaneously permitting employers that wish to place electronic advertisements immediately upon the effective date of the final rule the ability to do so. The transition provision is intended to better ensure, among other things, that employers who have purchased newspaper advertising space in advance do not lose the benefit of such purchase.

However, the option to elect between the placement of newspaper and electronic advertisements would apply only to those applications with a start date of need prior to October 1, 2019. All employers submitting an Application for Temporary Employment Certification with a start date of need after the transition period ends (i.e., employers with dates of need beginning on or after October 1, 2019) would be required to place an advertisement in accordance with the proposed revisions to section 655.151(a)-(c).

As previously discussed, employers seeking H-2A temporary labor certification are statutorily required to engage in positive recruitment of U.S. workers in multistate regions of traditional or expected labor supply. Under section 655.154(c), when a job opportunity is located in an area served by traditional or expected labor supply states, the CO will designate no more than three states for each area of intended employment listed on the employer's application and describe the additional positive recruitment steps that the employer must conduct. In determining the specific recruitment steps that an employer must conduct, the CO must consider “the normal recruitment efforts of non H-2A agricultural employers of comparable or smaller size in the area of intended employment, and the kind and degree of recruitment efforts which the potential H-2A employer made to obtain foreign workers.” Section 655.154(b). The Department's standard practice has been to require an employer to place print advertisements in newspapers serving the traditional or expected labor supply states designated by the CO, see 75 FR at 6930; however, given the data and trends discussed in Section I.B., the Department does not intend to continue this practice. While the Department continues to believe that the CO must evaluate the appropriate locations and methods of recruiting U.S. workers in traditional or expected labor supply states on a case-by-case basis, where the CO determines that an electronic advertisement placed under proposed section 655.151 is a sufficient means of recruiting U.S. workers in the traditional or expected labor supply states identified for the employer's job opportunity, this advertisement will likely fulfill the positive recruitment required by section 655.154.

The Department has taken initial steps toward creating an online platform to assist employers in complying with the requirements for electronic advertising under this proposed rule. Pending the outcome of this rulemaking, the Department intends to leverage the latest advertising technologies by establishing a mechanism to make advertising data available to popular job-search websites. Specifically, the Department is evaluating the development of a centralized platform to automate the electronic advertising of approved H-2A job opportunities. The Department anticipates that, once fully developed and implemented, this electronic advertising platform would maintain a standard set of data on each job opportunity that can be integrated with a wide array of job search website technologies. Through this platform, DOL would make available to job-search websites real-time access to the information that employers provide about their job opportunities subject to agreement to abide by terms of service. The companies that operate job-search websites would execute standard protocols to pull new H-2A jobs from the online platform in real time for advertising to U.S. workers. DOL is not proposing to mandate the use of the new electronic advertising platform but instead would make participation voluntary for H-2A employers.

If developed as currently envisioned, the Department expects that employers would provide information about their job opportunities, as part of their H-2A applications for temporary labor certifications, and indicate their intention to use the electronic advertising platform. Employers that elect to use this platform would have information about their job opportunities transmitted by the Department to companies offering to provide advertising services, which in turn would advertise these jobs on the companies' job-search websites.

The Department believes that facilitating employers' use of technology is in the best interest of employers and U.S. workers. Because information about the job opportunity would already be provided at the time of filing the H-2A application for a temporary labor certification and transmitted by the Department to companies operating these job search websites, the burden associated with placing separate electronic advertisements would be significantly reduced. The goal is to reduce burdens on the regulated community, while ensuring that the maximum number of U.S. workers learn about job opportunities. Having DOL maintain a publicly available list of the companies offering this advertising service, would give U.S. workers and other organizations that provide employment placement services a greater degree of certainty regarding where these temporary or seasonal jobs will be advertised and available for U.S. workers to apply. Employers that elect to use the new platform would satisfy the advertising requirement in § 655.151. Finally, offering this platform to employers would ensure more uniform compliance with advertising requirements.

The Department is not soliciting comments on this electronic advertising platform at this time, but will inform the public about the advertising platform's completion through notices in the Federal Register.

The Department is proposing minor revisions to two other sections to conform with the proposed changes to section 655.151. First, the Department is proposing to make a technical amendment to section 655.167(c)(1)(ii), which specifies document retention requirements, to delete a reference to print advertisements in professional, trade, or ethnic publications, and to correct the text's cross-reference to another regulatory provision. Currently, the regulation directs employers to retain “advertising as specified in § 655.152.” But the reference to “655.152” is incorrect, as that provision provides the content requirements. The advertising requirement is specified in § 655.151. Accordingly, the text should properly read “advertising as specified in § 655.151.”

Second, the Department is proposing to amend 655.225(d), which specifies the post-acceptance requirements for positions engaged in the herding or production of livestock on the range, to delete the reference to “a newspaper of general circulation serving the area of intended employment,” in order to conform with the proposed change to the advertisements required by section 655.151.

The Department proposes to claim an exception under 5 U.S.C. 553(d)(1) from the 30-day delayed effective date requirement on the basis that this rule relieves the restriction against online advertising of jobs for which an employer seeks to hire H-2A workers. The final rule would relieve regulated parties of the requirement that they only place paper advertisements in newspapers of general circulation in the area of intended employment. During the transition period, which would apply to all employers who file an Application for Temporary Employment Certification with a date of need prior to October 1, 2019, the rule would allow employers to select between placing two paper newspaper advertisements or placing an online advertisement. After the transition period ends, the rule would altogether replace the newspaper advertising requirement with online advertising, which is anticipated to be more cost-effective and flexible for employers, as well as a more effective way of reaching U.S. workers who may be able, willing, and qualified for the employers' job opportunities. The online advertising would also provide flexibility for U.S. workers who are job seekers to identify and apply for the job opportunities for which employers seek to hire H-2A workers. The Department anticipates that allowing employers additional time to transition away from advertising by newspaper over an approximately six-month period after the rule's publication would provide needed flexibility, and thus provide employers with notice and time to conform their business practices to the new rule. Therefore, this rule would take effect immediately upon publication of the final rule.

Under Executive Order (E.O.) 12866, the Office of Management and Budget (OMB)'s Office of Information and Regulatory Affairs determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and review by OMB. 58 FR 51735. Sec. 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that (1) has an annual effect on the economy of $100 million or more, or adversely affects in a material way 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) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O. Id. OMB has determined that this proposed rule is a significant, but not economically significant, regulatory action under Sec. 3(f) of E.O. 12866. Consequently, OMB has reviewed this rule.

E.O. 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; the regulation is tailored to impose the least burden on society, consistent with achieving the regulatory objectives; and in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. E.O. 13563 recognizes that some benefits are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.

E.O. 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017. This proposed rule is expected to be an E.O. 13771 deregulatory action because the cost savings to H-2A employers associated with the rule are larger than the costs. The estimated cost savings associated with this regulatory action are derived from the proposed revision to section 655.151(a), which would replace print newspaper advertisements with electronic advertisements posted on the internet.

The Department's analysis below considers the expected impacts of the following aspects of the proposed rule against the baseline (i.e., the 2010 Final Rule): (a) The replacement of newspaper advertisements with electronic advertisements, and (b) the time it takes the regulated community to read and review the rule.

The Department is proposing to modernize the positive recruitment that an employer must conduct under its regulations by eliminating the use of print newspaper advertisements and replacing it with electronic advertisements posted on the internet, which will make the job opportunity more broadly available to U.S. workers. Specifically, the Department is proposing to revise section 655.151(a) to replace print newspaper advertisements requirements with a requirement for an electronic advertisement posted on a website that is widely viewed and appropriate for use by workers who are likely to apply for the job opportunity in the area of intended employment. As discussed in section I.B. of this NPRM, the basis for this proposal is rooted in the Department's determination that electronic advertisements will be a more effective and efficient means of recruiting U.S. workers than the print newspaper advertisements that its regulations currently require.

To estimate the cost savings to employers that would result from the proposed rule, the Department first calculated the average number of H-2A temporary labor certifications approved in Fiscal Year (FY) based on data from FY 2015-2017, which yielded an annual average of 9,796.8 Next, the Department identified the top five states in which prospective H-2A employers received temporary labor certifications, and it researched the cost of placing a newspaper advertisement in the most populous city in each of these states (for several newspapers, including large and local papers) that would satisfy the content requirements set forth in section 655.152.9 The Department then averaged the data it obtained to estimate the average cost of complying with section 655.151. Based on these data, the Department determined that the average cost of placing the newspaper advertisements required by section 655.151 is $672 (or $336 for each advertisement).

As mentioned above, the Department believes, based on preliminary research, employers can choose to advertise using online job search websites free of charge, so removing the requirement to advertise in a print newspaper would result in a cost savings equal to the cost of complying with the current regulation.10 Although section 655.151 currently requires employers to advertise on two consecutive days, one of which must be a Sunday, the Department did not identify a significant difference in cost between advertisements placed on Sundays and weekdays, so the Department did not distinguish between these two costs when calculating total advertising cost savings. To estimate the annual cost savings of newspaper advertising costs that employers will avoid under the proposed rule, the Department multiplied the average annual number of approved H-2A temporary labor certifications (9,796) by the average newspaper advertising cost of $672. This yielded an average annual cost savings of $6.58 million.

During the first year that this rule would be in effect, employers seeking H-2A workers would need time to learn about the new requirements. The Department assumes that many employers participating in the H-2A program would learn about the requirements of the new rule from an industry newsletter or bulletin. The Department assumes that the amount of time required to understand the rule change to be 10 minutes. The proposed rule addresses only the job advertising requirements for employers seeking H-2A workers.

This requirement represents a cost to employers participating in the H-2A program in the first year of the rule. The Department estimates this cost by multiplying the time required to read and review the new rule (10 minutes) by the median hourly wage of a human resources manager at an agricultural business ($31.84),11 multiplied by a factor of two (2) to account for fringe benefits and overhead, which yields a cost of $10.61 per employer. The Department estimates the total cost of reading and reviewing the rule by multiplying $10.61 by the average number of employers participating in the H-2A program over FY 2015-2017 (6,676). This calculation results in a cost of $70,855 in the first year.

DOL acknowledges, however, that there are some potentially limited situations—particularly in rural communities—where the upfront costs associated with accessing the internet and learning how to post such advertisements may result in notable opportunity costs for employers. DOL believes that very few employers do not have access to the internet. For those employers that do not currently have internet access, DOL estimates that it will take two hours to access the internet (which may include transportation to the nearest library), research the websites and pick one to use, establish an account on that website, learn how to post a job on the website, and establish an email account. In addition, employers would need to make additional trips to check for responses from U.S. workers. For employers with access to the internet who are not familiar with posting such advertisements online, there will be some up-front costs associated with the time it takes to research job advertisement sites, establish an account, and learn how to post a job on the website.

Because of the uncertainties, we are unable to provide an estimate of the number of employers who do not have access to the internet, or those who have access to the internet but are unfamiliar with posting jobs online, and would incur these additional costs to post advertisements online. DOL seeks comment from the public on the likely magnitude and incidence of these costs. However, online advertisements for H-2A employment would increase the visibility of job openings to potential U.S. workers and increase the number of workers that would be able to access these jobs. This benefit would significantly outweigh any cost potentially incurred by the negligible number of employers that might be affected by the transition from print newspaper advertisements to online job postings. The Department therefore believes that the net societal benefit of implementing this rule would be maximized if all H-2A employers are required to utilize online advertisements. As such this rule constitutes as a deregulatory action.

The Department estimates the total first-year costs of the proposed rule to be $70,855. This cost results from the time required to read and review the proposed rule. This cost is incurred by employers seeking H-2A workers subject to proposed 655.151(a). The Department estimates first-year cost savings of $6.58 million. This cost savings results from replacing the requirement that employers place print newspaper advertisements with a requirement that employers place internet advertisements. Net first-year cost savings amount to $6.51 million. This estimated cost savings excludes any increase in costs to employers without current access to the internet and any up-front costs incurred by those unfamiliar with posting job advertisements online who need to establish accounts, and invest time in learning how to post online.

Generally, annual cost savings are expected to be $6.58 million in all years following the first year due to the lack of monetized costs regarding the time required to read and review the proposed rule. The 10-year discounted net cost savings of the proposed rule range from $46.15 million to $56.06 million (with 7- and 3-percent discount rates, respectively). The annualized net cost savings of the proposed rule is $6.57 million (with 3- and 7-percent discount rates). When the Department uses a perpetual time horizon to allow for cost comparisons under E.O. 13771, the annualized cost savings of this proposed rule are $6.57 million at a discount rate of 7 percent (excluding any up-front familiarization costs or increased costs to employers without access to the internet).

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 (March 29, 1996), requires federal agencies engaged in rulemaking to consider the impact of their proposals on small entities, consider alternatives to minimize that impact, and solicit public comment on their analyses. The RFA requires the assessment of the impact of a regulation on a wide range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Agencies must perform a review to determine whether a proposed or final rule would have a significant economic impact on a substantial number of small entities. 5 U.S.C. 603 and 604.

This proposed rule may impact small businesses that request H-2A temporary labor certifications. The Department assumed that the average number of H-2A temporary labor certifications requested by any small business per year would be one. The Department estimates that small businesses would incur a one-time cost of $10.61 to familiarize themselves with the rule and would incur annual cost savings of $672 associated with advertising online rather than in print newspapers. Over a 10-year period, the net annualized cost savings for a small business would be $672 at a 7-percent discount rate.

The Department reviewed the impacts of the proposed rule for two North American Industry Classification System (NAICS) Codes that frequently request H-2A temporary labor certifications—NAICS 115115: Farm Labor Contractors & Crew Leaders, and NAICS 111998: All Other Miscellaneous Crop Farming. The Small Business Administration (SBA) estimates that revenue for a small business with NAICS Code 115115 is $15 million and for NAICS Code 111998 is $750,000.12 The impact of the proposed rule would be less than 1 percent of annual revenue for the small businesses in these industries with the employment size fewer than 5 ($710,717 for NAICS 115115 and $430,835 for NAICS 11).13 Based on this determination, the Department certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities.

The Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., provides that a Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number. See 5 CFR 1320.5(a) and 1320.6. DOL has submitted the Information Collection Request (ICR) contained in this rule to OMB and obtained approval using emergency clearance procedures outlined at 5 CFR 1320.13.

More specifically, this rule proposes to replace print newspaper advertisements with an advertisement posted on a website that is widely viewed and appropriate for use by U.S. workers who are likely to apply for the job opportunity in the area of intended employment. The proposed rule would require that this advertisement be clearly visible on the website's homepage or be easily retrievable through the website, posted for a period of no less than 14 consecutive calendar days, publicly accessible to U.S. workers at no cost using the latest browser technologies and mobile devices, and satisfy the advertising content requirements set forth in § 655.152. Under the proposed rule and in accordance with 20 CFR 655.167(c)(1)(ii), an employer would be required to retain documentation demonstrating that it posted an electronic advertisement in compliance with the requirements in the proposed rule, including screen shots of the web page on which the advertisement appears and screen shots of the web pages establishing the path that U.S. workers must follow to access the advertisement. The employer must be prepared to produce all information and records contained in this information collection for the Department or other federal agencies in the event of an audit examination, investigation, or other enforcement proceedings in the H-2A program. The Department is using technology to reduce burden by replacing newspaper advertisements with electronic advertisements. The information collection requirements associated with this rule are summarized as follows:

Agency: DOL-ETA.

Type of Information Collection: New.

Title of the Collection: Advertising Requirements for Employers Seeking to Employ H-2A Nonimmigrant Workers.

Agency Form Number: None.

Affected Public: Private Sector—businesses or other for-profits.

Total Estimated Number of Respondents: 9,796.

Average Responses per Year per Respondent: 2.

Total Estimated Number of Responses: 19,592.

Average Time per Response: 7 minutes per application.

Total Estimated Annual Time Burden: 1,142 hours.

Total Estimated Other Costs Burden: $0.

The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. Title II of the Act requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in $100 million or more expenditure (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector.

This NPRM, if finalized, does not exceed the $100 million expenditure in any 1 year when adjusted for inflation, and this rulemaking does not contain such a mandate. The requirements of Title II of the Act, therefore, do not apply, and the Department has not prepared a statement under the Act.

This NPRM, if finalized, is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996, Public Law 104-121, 804, 110 Stat. 847, 872 (1996), 5 U.S.C. 804(2). This proposed rule has not been found to result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic or export markets.

This NPRM, if finalized, does not have federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, Executive Order 13132, Federalism, requires no further agency action or analysis.

This NPRM, if finalized, does not have “tribal implications” because it does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes. Accordingly, Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, requires no further agency action or analysis.

This NPRM, if finalized, will have no effect on family well-being or stability, marital commitment, parental rights or authority, or income or poverty of families and children. Accordingly, section 654 of the Treasury and General Government Appropriations Act of 1999 (5 U.S.C. 601 note) requires no further agency action, analysis, or assessment.

This NPRM, if finalized, will have no adverse impact on children. Accordingly, Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks, as amended by Executive Orders 13229 and 13296, requires no further agency action or analysis.

This action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This action is therefore categorically excluded from further review under the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321-4375.

This NPRM, if finalized, has not been identified to have impacts on energy supply. Accordingly, Executive Order 13211 requires no further Agency action or analysis.

This NPRM, if finalized, will not implement a policy with takings implications. Accordingly, Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, requires no further agency action or analysis.

This NPRM, if finalized, was drafted and reviewed in accordance with Executive Order 12988, Civil Justice Reform. This proposed rule was written to provide a clear legal standard for affected conduct and was carefully reviewed to eliminate drafting errors and ambiguities, so as to minimize litigation and undue burden on the Federal court system. The Department has determined that this proposed rule meets the applicable standards provided in section 3 of Executive Order 12988.

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

In this action, the EPA is proposing limited revisions to the FIP for NGS that we promulgated on October 3, 1991 (“1991 FIP”), March 5, 2010 (“2010 FIP”), and August 8, 2014 (“2014 FIP”).1 The provisions of the 1991 action are codified in the Code of Federal Regulations (CFR) at 40 CFR 52.145(d), and the 2010 and 2014 regulations are codified at 40 CFR 49.5513. We refer collectively to the provisions from the 1991, 2010, and 2014 actions as the “FIP” or the “NGS FIP.” The NGS FIP includes federally enforceable emission limitations for PM, opacity, sulfur dioxide (SO2), and oxides of nitrogen (NOX).

Generally, the EPA is proposing to move provisions from the 1991 FIP to a different section of the CFR and to update certain provisions in the 1991 FIP to be consistent with recent national rulemakings. Specifically, we are proposing to move the 1991 FIP provisions from 40 CFR 52.145(d) to 40 CFR 49.5513. If finalized, the effect of our action will be to move requirements for NGS from subpart D of part 52, which contains the state implementation plan (SIP) provisions for Arizona, to subpart L of part 49, which contains source-specific FIP requirements for NGS, to consolidate all of the applicable requirements for NGS in one section of the CFR. We are proposing to update the definition of “boiler operating day” in the 1991 FIP to be consistent with the definition in the 2014 FIP.2

In addition, we are proposing to revise the PM compliance demonstration from annual source testing to the use of PM continuous emissions monitoring systems (PM CEMS), which were installed and calibrated on each of the three units at the facility in 2016. We are also proposing to lower the PM emission limitation in the 2010 FIP from 0.060 pounds per million British thermal units (lb/MMBtu) to 0.030 lb/MMBtu. This lower emission limitation already applies to NGS pursuant to the EPA's Mercury and Air Toxics Standard (MATS) Rule.3 Because the operator of NGS will be using PM CEMS to demonstrate compliance with the 0.030 lb/MMBtu emission limitation for PM, the EPA is also proposing to remove the opacity emission limitation and associated continuous opacity monitoring system (COMS) requirements from the NGS FIP. The opacity limitation and COMS have generally functioned as surrogates for ensuring compliance with PM emission limitations. This proposed revision is consistent with the provisions related to PM CEMS and opacity in the New Source Performance Standard for Electric Utility Steam Generating Units (“NSPS for EGUs”) and the Acid Rain Program requirements at 40 CFR 75.14(e), which generally provide that any owner or operator that elects to install, calibrate, maintain, and operate a PM CEMS for demonstrating compliance with a sufficiently stringent PM emission limitation (i.e., 0.030 lb/MMBtu or lower) need not meet the opacity limit and monitoring requirements.4

Finally, we are proposing to clarify requirements that have already been satisfied (e.g., a one-time requirement that has been met to submit a description of dust suppression methods to the Regional Administrator) and update the addresses to which the owner or operator must submit reports.

NGS is a coal-fired power plant located on the reservation lands of the Navajo Nation, just east of Page, Arizona, and approximately 135 miles north of Flagstaff. NGS is co-owned by several entities and operated by Salt River Project (SRP).5 The facility currently operates three units, each with a capacity of 750 megawatts (MW) net generation, providing a total capacity of 2250 MW. Operations at the facility produce air pollutant emissions, including emissions of SO2, NOX, and PM. Existing pollution control equipment at NGS includes wet flue gas desulfurization units for SO2 and PM removal, electrostatic precipitators for PM removal, and low-NOX burners with separated over-fire air to reduce NOX formation during the combustion process. In the future, the owner or operator of NGS will be taking steps to reduce emissions of NOX further, pursuant to the requirements of the 2014 FIP.

The area around NGS is designated attainment, unclassifiable/attainment or unclassifiable for all criteria pollutants under the Act.6

When the CAA was amended in 1990, Congress included a new provision, section 301(d), granting the EPA authority to treat tribes in the same manner as states where appropriate.7 In 1998, the EPA promulgated regulations known as the Tribal Authority Rule (TAR).8 The EPA's promulgation of the TAR clarified, among other things, that state air quality regulations generally do not, under the CAA, apply to facilities located anywhere within the exterior boundaries of Indian reservations.9 Prior to the addition of section 301(d) and the promulgation of the TAR, some states had mistakenly included emission limitations in their SIPs that they may have believed could apply under the CAA to private facilities operating on adjacent Indian reservations.

In the preambles to the proposed and final 1998 TAR, the EPA generally discussed the legal basis in the CAA that authorizes the EPA to regulate sources of air pollution in Indian country.10 The EPA concluded that the CAA authorizes the EPA to protect air quality throughout Indian country.11 The TAR, therefore, provides that the EPA “[s]hall promulgate without unreasonable delay such federal implementation plan provisions as are necessary or appropriate to protect air quality, consistent with the provisions of sections [301](a) and 301(d)(4), if a tribe does not submit a tribal implementation plan meeting the completeness criteria of 40 CFR part 51, Appendix V, or does not receive EPA approval of a submitted tribal implementation plan.” 12

On December 2, 1980, EPA issued regulations addressing visibility impairment that is traceable or “reasonably attributable” to a single source or small group of sources.13 These regulations required a number of states to submit SIPs no later than September 2, 1981. Most states, including Arizona, failed to submit SIPs as called for by the regulations. Accordingly, in 1987, the EPA issued visibility FIPs consisting of general plan requirements and long-term strategies for 29 states including Arizona.14

In 1989, based on a report submitted by the National Park Service, the EPA proposed to find that a portion of the visibility impairment in Grand Canyon National Park was reasonably attributable to NGS.15 Under the 1991 FIP, NGS was required to phase-in compliance with the SO2 emission limit, by installing scrubbers in 1997, 1998, and 1999.16 In establishing the SO2 emission limit for NGS in the final 1991 FIP, the EPA determined that the FIP would provide for greater reasonable progress toward the national visibility goal than implementation of Best Available Retrofit Technology (BART).17

On September 8, 1999, the EPA proposed a source-specific FIP for NGS.18 The 1999 proposed FIP stated: “Although the facility has been historically regulated by Arizona since its construction, the state lacks jurisdiction over the facility or its owners or operations for CAA compliance or enforcement purposes.” The EPA intended for the proposed action in 1999 to “federalize” the emission limitations that Arizona had erroneously included in its SIP.19 The EPA received comments on the proposed FIP but did not finalize the proposal.

In 2006, the EPA published a new proposed rule to promulgate federally enforceable numerical emission limitations for PM and SO2 and took action to finalize it in 2010.20 The 2010 FIP also established an opacity limit and a requirement for specific control measures to limit dust emissions. In the 2010 FIP, the EPA determined that the emission limitations for PM and SO2 were more stringent than, or at least as stringent as, the emission limitations that had historically applied at NGS pursuant to an operating permit issued by Arizona. Therefore, the EPA concluded that air quality in this area would be positively impacted by the 2010 FIP.21

On August 8, 2014, the EPA promulgated a final rule that established limits for NOX emissions from NGS under BART provisions of the Regional Haze Rule.22 We finalized an alternative to BART based on agreed-upon recommendations developed by a group of diverse stakeholders. The 2014 FIP limits emissions of NOX from NGS by establishing a long-term facility-wide cap on total NOX emissions from 2009 to 2044 and requires the implementation of one of several alternative operating scenarios to ensure that the 2009 to 2044 cap is met.

In this proposed FIP revision, the EPA is exercising its discretionary authority under sections 301(a) and 301(d)(4) of the CAA and 40 CFR 49.11(a). The EPA is proposing that it is necessary or appropriate to revise the FIP for NGS to be more consistent with the MATS Rule and the NSPS for EGUs. In particular, we are proposing to require the use of PM CEMS to demonstrate compliance with a lower PM emission limitation and remove the opacity limitation and COMS monitoring requirement, which has served as a surrogate for a compliance demonstration for the PM emission limitation. As explained in the preamble to the 2010 FIP establishing the opacity limitation and COMS requirement, water droplets, which are present in the NGS stacks because of the SO2 scrubbers, can cause inaccurate excess emission readings from the COMS.23 Therefore, the PM CEMS would provide a better continuous demonstration of compliance with the PM emission limitation than an opacity limit and COMS.

For the reasons set forth above, we are proposing to find that limited revisions to the FIP for NGS are necessary or appropriate to further protect air quality on the Navajo Nation.

The EPA is proposing the following limited revisions to the FIP for NGS at 40 CFR 52.145(d) and 40 CFR 49.5513. We have included two documents in the docket for this proposed rulemaking that show the original text of 40 CFR 52.145(d) and 40 CFR 49.5513 and the EPA's proposed revisions to those provisions.24

The EPA is proposing to move the 1991 FIP promulgated at 40 CFR 52.145(d) to 40 CFR 49.5513(k) to consolidate the NGS FIP requirements in a single section of the CFR. We are also proposing to revise 40 CFR 52.145(d) by changing internal citations referring to paragraph (d) to refer instead to paragraph (k). For clarity, in this action we continue to refer to the 1991 FIP as designated in 40 CFR 52.145(d).

In addition, we are proposing to revise the definition of boiler operating day in paragraph 52.145(d)(1) to be consistent with its definition in the 2014 FIP.

Under paragraph (b) of 40 CFR 49.5513, we are proposing to clarify that the applicable compliance date for this section is April 5, 2010, which was the original effective date for this section, unless otherwise specified within specific provisions in 40 CFR 49.5513.

In 40 CFR 49.5513(d)(2), we are proposing to revise the emission limitation for PM from 0.060 lb/MMBtu to 0.030 lb/MMBtu, add a compliance date for this revised limit, and remove specifications related to PM testing. In 40 CFR 49.5513(d)(3), we are proposing to remove the compliance date for submitting to the EPA a dust suppression plan and to clarify the status of this plan, which the owner or operator submitted on June 4, 2010 and revised on February 2, 2015.25 The final revision we are proposing to 40 CFR 49.5513(d) is to remove the opacity limit and exclusions for water vapor in paragraph (4).

In 40 CFR 49.5513(e)(1), we are proposing to delete the requirement to operate COMS. In 40 CFR 49.5513(e)(2), we are proposing to replace the existing specifications related to annual PM testing with a requirement to demonstrate compliance with the PM emission limit in 40 CFR 49.5513(d)(2) using PM CEMS in accordance with 40 CFR part 63 subpart UUUUU and add a compliance date for this requirement. Under 40 CFR 49.5513(e)(4), we are proposing to remove the provision related to COMS. Under 40 CFR 49.5513(e)(8), we are proposing to correct an outdated reference.

The EPA is proposing revisions to the reporting and recordkeeping requirements to provide additional clarity that all reports and notifications required in 40 CFR 49.5513(f), (f)(2), and (f)(4), should be reported to the Navajo Nation Environmental Protection Agency (NNEPA) and the EPA. We are also revising 40 CFR 49.5513(f) to update addresses for reporting to the EPA. In addition, in 40 CFR 49.5513(f)(4), consistent with the proposed removal of the opacity emission limitation and COMS requirement in 40 CFR 49.5513(d) and (e), we are proposing to replace a requirement to submit excess opacity reports as recorded by COMS with a requirement to submit excess emission reports for PM as recorded by CEMS, and to remove additional provisions related to the COMS.

Under 40 CFR 49.5513(j)(8), we are proposing to remove addresses for the NNEPA and the EPA that are already provided in 40 CFR 49.5513(f) and to require that all reports and notifications under 40 CFR 49.5513(j) be submitted to the NNEPA and the EPA in accordance with 40 CFR 49.5513(f).

We are proposing to move the 1991 FIP from 40 CFR 52.145(d) to 40 CFR 49.5513(k). The 1991 FIP was originally codified in 40 CFR part 52 subpart D, which contains the SIP provisions for the state of Arizona. The provisions at 52.145 relate to visibility protection and paragraph (d) pertains to the control of SO2 emissions from NGS based on the effects of those emissions on visibility at Grand Canyon National Park. Because the EPA has subsequently promulgated FIP requirements for NGS in 40 CFR part 49 subpart L, for regulatory clarity, we are proposing to move the SO2 requirements from the 1991 FIP to the same part of the CFR as the implementation plans in Indian country, including the FIP requirements for NGS promulgated in 2010 and 2014. This move will not relax any existing FIP requirements for NGS and will have no effect on air quality in the area surrounding NGS.

Throughout 40 CFR 52.145(d), the provisions include internal citations referring to specific subparagraphs in paragraph (d). Consistent with our proposal to move the provisions from the 1991 FIP to 40 CFR 49.5513(k), we are also proposing to revise the internal citations that currently refer to paragraph (d) (i.e., 40 CFR 52.145(d)) to refer instead to paragraph (k) (i.e., 40 CFR 49.5513(k)). This proposed revision will not relax any existing FIP requirements for NGS and will have no effect on air quality in the area surrounding NGS.

We are also proposing to revise a definition of boiler operating day in 40 CFR 52.145(d)(1). The term is currently defined as a 24-hour calendar day during which coal is combusted in that unit for the entire 24-hours. We are proposing to revise the definition to mean a 24-hour period between 12 midnight and the following midnight during which any fuel is combusted at any time, such that it is not necessary for fuel to be combusted the entire 24-hour period. This revised definition, if finalized, would be identical to the definition of boiler operating day promulgated in the 2014 FIP and would be consistent with the recent changes to the definition promulgated by the EPA elsewhere (e.g., the NSPS for EGUs).

Under paragraph (b) of 40 CFR 49.5513, we are proposing to add a statement to the compliance dates specifying that compliance with the requirements of the section is required by April 5, 2010, which was the original effective date for this section, unless otherwise specified within specific provisions in 40 CFR 49.5513. Because the FIP provisions for NGS promulgated in 1991, 2010, and 2014 all have different compliance dates, we are proposing to revise this provision for regulatory clarity. The compliance date for the FIP provisions for NGS promulgated in 2010 would remain April 5, 2010, while the deadlines for the 1991 and 2014 FIPs would remain as specified in paragraphs 40 CFR 52.145(d)(6) and 49.5513(j) respectively. The compliance dates for the revised PM limit and PM CEMS requirements would be specified in paragraphs 40 CFR 49.5513(d)(2) and (e)(2), as explained below. This proposed revision would not relax any existing FIP requirements for NGS and would have no effect on air quality in the area surrounding NGS.

In 40 CFR 49.5513(d)(2), we are proposing to revise the PM emission limitation from 0.060 lb/MMBtu to 0.030 lb/MMBtu for consistency with the numerical PM emission limitation in the MATS Rule. The current applicable emission limitation for PM in the 2010 FIP is higher than the PM emission limitation in the MATS Rule. Revising the PM emission limitation in 40 CFR 49.5513(d)(2) to 0.030 lb/MMBtu will make the PM emission limitation in the FIP conform to the applicable, more stringent emission limitation in the MATS Rule. The EPA anticipates this will not result in any substantive change in the applicable requirements or the method of PM control for this facility. We propose to require compliance with this limitation in the FIP by the effective date of the final FIP. In 40 CFR 49.5513(d)(2), we are also proposing to delete the current provisions related to PM emissions testing. The requirements for demonstrating compliance with the PM emission limitation are instead addressed in 40 CFR 49.5513(e). In 40 CFR 49.5513(d)(3), we are proposing to clarify the requirement for submitting to the EPA a dust suppression plan.

In 40 CFR 49.5513, we are proposing to remove paragraph (d)(4), which contains provisions related to the opacity limit. In 2016, SRP installed and calibrated PM CEMS on each unit at NGS. We are proposing to remove the opacity limit from the NGS FIP because in 40 CFR 49.5513(e)(2), we are proposing to add a new requirement to operate the PM CEMS on each unit to demonstrate compliance with the PM emission limitation of 0.030 lb/MMBtu. This provision is consistent with the NSPS for EGUs at 40 CFR 60.42Da(b)(1) and the Acid Rain Program requirements at 40 CFR 75.14(e), which generally provide that any owner or operator that elects to install, calibrate, maintain, and operate a PM CEMS for demonstrating compliance with a sufficiently stringent PM emission limitation (i.e., 0.030 lb/MMBtu or lower) need not meet the opacity limit and monitoring requirements.26 The PM CEMS is a monitoring system that provides a continuous assessment of compliance with a PM emission limitation. Generally, opacity limits and COMS have been used as a surrogate to ensure compliance with a PM emission standard that would otherwise be subject only to periodic source testing.27 NGS is not subject to the NSPS for EGUs at 40 CFR 60.42Da. However, we are proposing to follow the same rationale from Subpart Da to remove the opacity limit and COMS requirement because we are concurrently proposing to revise the NGS FIP to require the installation, calibration, operation, and maintenance of PM CEMS to demonstrate compliance with the lower proposed PM emission limitation of 0.030 lb/MMBtu. As explained in the preamble to our 2010 FIP, water droplets, which are present in the NGS stacks because of the SO2 scrubbers, can cause inaccurate excess emission readings on the COMS.28 Because the PM CEMS provides a better continuous demonstration of compliance with the revised and more stringent PM emission limitation than an opacity limit and COMS, this proposed revision would not relax any existing requirements in the NGS FIP with respect to PM emissions and would not adversely affect air quality in the surrounding area.

In 40 CFR 49.5513(e)(1) and (e)(4), we are proposing changes to remove testing and monitoring requirements for opacity, consistent with our proposed removal of the opacity limit in 40 CFR 49.5513(d)(4). Because we are proposing to remove the opacity limit, the requirements in 40 CFR 49.5513(e)(1) to operate COMS and in (e)(4) to maintain two sets of opacity filters for the COMS are no longer necessary. In paragraph (e)(2), we are proposing to replace the existing specifications related to annual PM testing with a requirement to install, calibrate, maintain, and operate PM CEMS to demonstrate compliance with the 0.030 lb/MMBtu emission limit in accordance with the specifications in the MATS Rule by the effective date of the final FIP. The use of PM CEMS is a continuous measurement and is a better method for ensuring compliance with the revised and more stringent PM emission limit than annual source testing for the existing less stringent PM emission limit combined with an opacity limit and COMS. Therefore, these combined revisions would not relax existing requirements with respect to PM emissions or result in adverse effects on air quality in the surrounding area.

Under 40 CFR 49.5513(e)(8), we are proposing to correct an outdated reference to “Section 49.24(d)(3),” which has been recodified as 40 CFR 49.5513(d)(3).29

The EPA is proposing revisions to the reporting and recordkeeping requirements to specify that all reports and notifications required in 40 CFR 49.5513 should be sent to the NNEPA and the Regional Administrator of the Region IX office of the EPA. Because 40 CFR 49.5513(f)(2) repeats addresses and other reporting details already provided in paragraph (f), we are also proposing to delete the redundant provisions in paragraph (f)(2). These proposed administrative changes would not relax any requirements or have any effect on air quality in the area surrounding NGS.

In addition, consistent with the proposed removal of the COMS requirement in paragraph (e), we are also proposing to remove the reporting requirements related to the COMS in paragraph (f)(4). The use of PM CEMS is a continuous measurement and is a better method for ensuring compliance with the revised and more stringent PM emission limit than annual source testing for the existing less stringent PM emission limit combined with an opacity limit and COMS. Therefore, these combined revisions would not relax existing requirements with respect to PM emissions or result in adverse effects on air quality in the surrounding area.

In 40 CFR 49.5513(j)(8), we are proposing to remove addresses for the NNEPA and the EPA that are already provided in 40 CFR 49.5513(f) and to require that all reports and notifications under paragraph (j) be submitted to the NNEPA and the EPA in accordance with 40 CFR 49.5513(f). This proposed revision removes redundant information and requires reporting for 40 CFR 49.55153(j) to be consistent with the reporting requirements in 40 CFR 49.5513(f). Therefore, these proposed revisions would not adversely affect air quality in the surrounding area. These proposed changes to 40 CFR 49.5513(j)(10) do not relax any requirements or have any effect on air quality in the area surrounding NGS.

As described above, the EPA is proposing the following revisions: (1) Move the 1991 FIP provisions from 40 CFR 52.145(d) to 40 CFR 49.5513; (2) revise a definition of boiler operating day; (3) clarify the compliance dates applicable to the FIP requirements; (4) lower the PM emission limitation in the 2010 FIP from 0.060 lb/MMBtu to 0.030 lb/MMBtu; (5) revise the PM compliance demonstration from annual source testing to the use of PM CEMS; (6) and replace the existing opacity limit and COMS requirement with a new requirement to demonstrate compliance with the PM emission limitation of 0.030 lb/MMBtu using PM CEMS.

The EPA solicits comments on the limited provisions of the NGS FIP that we are proposing to revise in this rulemaking. We are not accepting comment on any provisions of the NGS FIP that we are not proposing to revise. Accordingly, please limit your comments to those specific provisions listed above that we are proposing to revise in today's action.

The Navajo Generating Station is located on the reservation lands of the Navajo Nation, and the EPA recognizes there is significant community interest in the emissions and environmental effects of this facility. As discussed elsewhere in this document, the proposed revisions to the NGS FIP would strengthen the FIP by requiring the use of PM CEMS to demonstrate compliance with the lower PM emission limitation of 0.030 lb/MMBtu. Because the proposed revisions strengthen the NGS FIP, the EPA considers this action to be beneficial for human health and the environment, and to have no potential disproportionately high and adverse effects on minority, low-income, or indigenous populations.

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review. This rule applies to only one facility and is therefore not a rule of general applicability.

This action is not expected to be an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.

This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. This rule applies to only one facility. Therefore, its recordkeeping and reporting provisions do not constitute a “collection of information” as defined under 44 U.S.C. 3502(3) and 5 CFR 1320.3(c).

I certify that this proposed action will not have a significant economic impact on a substantial number of small entities. This action will not impose any requirements on small entities. Firms primarily engaged in the generation, transmission, and/or distribution of electric energy for sale are small if, including affiliates, the total electric output for the preceding fiscal year did not exceed four million megawatt-hours. Each of the owners of the facility affected by this rule, Salt River Project, the Bureau of Reclamation, Arizona Public Service, Tucson Electric Power, and NV Energy, exceed this threshold.

This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have tribal implications, as specified in Executive Order 13175. Although this proposed action affects a facility located in Indian country, the proposed limited revisions to existing provisions in the NGS FIP will not have substantial direct effects on any Indian tribes, on the relationship between the federal government and Indian tribes, or on the distribution of power and responsibilities between the federal government and Indian tribes. Thus, Executive Order 13175 does not apply to this action. However, we note that we have engaged in numerous discussions with the NNEPA during the development of this proposed rule and continue to invite consultation on this proposed action.

EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk.

This action is not subject to Executive Order 13211 because it is not a significant regulatory action under Executive Order 12866.

This action involves technical standards. The technical standards in this action are based on the technical standards used in other rulemakings promulgated by the EPA. We refer to the discussion of the technical standards and voluntary consensus standards in the final rule for 40 CFR part 60 subpart Da and 40 CFR part 63 subpart UUUUU at 77 FR 9304 at 9441 (February 16, 2012).

The EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations. If this rule is finalized as proposed, we expect that the limited revisions to the FIP will strengthen requirements for PM compliance demonstrations with a lower PM emission limitation of 0.030 lb/MMBtu, and will not relax any other existing requirements.

Chapter I, title 40, of the Code of Federal Regulations is proposed to be amended as follows:

The revisions and additions read as follows:

Table of Contents I. Requirement for Kentucky to Submit an SO2 Attainment Plan for the Jefferson County Area II. Requirements for SO2 Attainment Plans III. Attainment Demonstration and Longer Term Averaging IV. Review of Attainment Plan Requirements A. Emission Inventory B. Attainment Modeling Demonstration 1. Model Selection 2. Meteorological Data 3. Emissions Data 4. Emission Limits i. Enforceability ii. Longer Term Average Limits 5. Background Concentration 6. Summary of Modeling Results C. RACM/RACT D. New Source Review (NSR) E. Reasonable Further Progress (RFP) F. Contingency Measures V. Incorporation by Reference VI. EPA's Proposed Action VII. Statutory and Executive Orders I. Requirements for Kentucky to Submit an SO2 Plan for the Jefferson County Area.

On June 22, 2010 (75 FR 35520), EPA promulgated a new 1-hour primary SO2 NAAQS of 75 parts per billion (ppb), which is met at an ambient air quality monitoring site when the 3-year average of the annual 99th percentile of daily maximum 1-hour average concentrations does not exceed 75 ppb, as determined in accordance with Appendix T of 40 CFR part 50. See 40 CFR 50.17(a)-(b). On August 5, 2013 (78 FR 47191), EPA designated a first set of 29 areas of the country as nonattainment for the 2010 SO2 NAAQS. See 40 CFR part 81, subpart C. These designations included the Jefferson County nonattainment area, which encompasses the primary SO2 emitting source Mill Creek and the nearby Watson Lane SO2 monitor (Air Quality Site (AQS) ID: 21-11-0051). These area designations were effective October 4, 2013. Section 191 of the CAA directs states to submit SIPs for areas designated as nonattainment for the SO2 NAAQS to EPA within 18 months of the effective date of the designation, i.e., by no later than April 4, 2015, in this case. Under CAA section 192(a), these SIPs are required to demonstrate that their respective areas will attain the NAAQS as expeditiously as practicable, but no later than 5 years from the effective date of designation, which is October 4, 2018.

For the Jefferson County nonattainment area (and many other areas), EPA published a notice on March 18, 2016 (81 FR 14736), that Kentucky (and other pertinent states) had failed to submit the required SO2 nonattainment plan by the submittal deadline. This finding initiated a deadline under CAA section 179(a) for the potential imposition of NSR offset and highway funding sanctions. However, pursuant to Kentucky's submittal of June 23, 2017,1 and EPA's subsequent letter dated October 10, 2017, to Kentucky finding the submittal to be complete and noting the termination of these sanctions deadlines, these sanctions under section 179(a) were not and will not be imposed as a result of Kentucky having missed the April 4, 2015, submittal deadline. Under CAA section 110(c), EPA's March 18, 2016, finding also triggered a requirement that EPA promulgate a federal implementation plan (FIP) within two years of the finding unless, by that time (a) the state has made the necessary complete submittal and (b) EPA has approved the submittal as meeting applicable requirements. EPA's FIP duty will be terminated if EPA issues a final approval of Kentucky's SIP revision.

Nonattainment areas must provide SIPs meeting the applicable requirements of the CAA, and specifically CAA sections 110(a), 172, 191 and 192 for the SO2 NAAQS. EPA's regulations governing nonattainment SIPs are set forth at 40 CFR part 51, with specific procedural requirements and control strategy requirements residing at subparts F and G, respectively. Soon after Congress enacted the 1990 Amendments to the CAA, EPA issued general guidance on SIPs, in a document entitled the “General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990,” published at 57 FR 13498 (April 16, 1992) (General Preamble). Among other things, the General Preamble addressed SO2 SIPs and fundamental principles for SIP control strategies. Id., at 13545-49, 13567-68. On April 23, 2014, EPA issued guidance for meeting the statutory requirements in SO2 SIPs under the 2010 primary NAAQS, in a document entitled, “Guidance for 1-Hour SO2 Nonattainment Area SIP Submissions,” available at https://www.epa.gov/sites/production/files/2016-06/documents/20140423guidance_nonattainment_sip.pdf (hereafter referred to as SO2 nonattainment guidance). In this guidance, EPA described the statutory requirements for SO2 SIPs for nonattainment areas, which include: An accurate emissions inventory of current emissions for all sources of SO2 within the nonattainment area; an attainment demonstration; demonstration of RFP; implementation of RACM (including RACT); NNSR; enforceable emissions limitations and control measures; and adequate contingency measures for the affected area.

For EPA to fully approve a SIP as meeting the requirements of CAA sections 110, 172 and 191-192, and EPA's regulations at 40 CFR part 51, the SIP for the affected area needs to demonstrate to EPA's satisfaction that each of the aforementioned requirements have been met. Under CAA sections 110(l) and 193, EPA may not approve a SIP that would interfere with any applicable requirement concerning NAAQS attainment and RFP, or any other applicable requirement, and no requirement in effect (or required to be adopted by an order, settlement, agreement, or plan in effect before November 15, 1990) in any area which is a nonattainment area for any air pollutant, may be modified in any manner unless it insures equivalent or greater emission reductions of such air pollutant. EPA is proposing to approve Kentucky's June 23, 2017, SO2 attainment SIP for the Jefferson County nonattainment area because EPA has preliminarily determined that the plan satisfies the aforementioned CAA and regulatory requirements for nonattainment areas. Furthermore, EPA notes that current 2015-2017 quality-assured and certified data for the Watson Lane monitor (AQS ID: AQS ID: 21-11-0051) in the nonattainment area indicates a design value below the 1-hour SO2 standard.

CAA sections 172(c)(1) and (6) direct states with areas designated as nonattainment to demonstrate that the submitted plan provides for attainment of the NAAQS. 40 CFR part 51, subpart G further delineates the control strategy requirements that SIPs must meet, and EPA has long required that all SIPs and control strategies reflect four fundamental principles of quantification, enforceability, replicability, and accountability. General Preamble, at 13567-68. SO2 attainment plans must consist of two components: (1) Emission limits and other control measures that assure implementation of permanent, enforceable and necessary emission controls, and (2) a modeling analysis which meets the requirements of 40 CFR part 51, Appendix W which demonstrates that these emission limits and control measures provide for timely attainment of the primary SO2 NAAQS as expeditiously as practicable, but by no later than the CAA maximum attainment date for the affected area. In all cases, the emission limits and control measures must be accompanied by appropriate methods and conditions to determine compliance with the respective emission limits and control measures and must be quantifiable (i.e., a specific amount of emission reduction can be ascribed to the measures), fully-enforceable (specifying clear, unambiguous and measurable requirements for which compliance can be practicably determined), replicable (the procedures for determining compliance are sufficiently specific and non-subjective so that two independent entities applying the procedures would obtain the same result), and accountable (source specific limits must be permanent and must reflect the assumptions used in the SIP demonstrations).

EPA's April 2014 SO2 nonattainment guidance recommends that the emission limits be expressed as short-term average limits (e.g., addressing emissions averaged over one or three hours), but also describes the option to establish emission limits with longer averaging times of up to 30 days so long as the limits meet certain recommended criteria. See SO2 nonattainment guidance, pp. 22 to 39. The guidance recommends that—should states and sources utilize longer averaging times—the longer term average limit should be a lower-adjusted level that reflects a stringency comparable to the 1-hour average limit at the critical emission value (CEV) shown by modeling to provide for attainment that the plan otherwise would have set.

EPA's SO2 nonattainment guidance provides an extensive discussion of EPA's rationale for concluding that appropriately set comparably stringent limitations based on averaging times as long as 30 days can be found to provide for attainment of the 2010 SO2 NAAQS. In evaluating this option, EPA considered the nature of the standard, conducted detailed analyses of the impact concerning the use of 30-day average limits on the prospects for attaining the standard, and carefully reviewed how best to achieve an appropriate balance among the various factors that warrant consideration in judging whether a state's plan provides for attainment. Id. at pp. 22 to 39. See also id. at Appendices B, C, and D.

As specified in 40 CFR 50.17(b), the 1-hour primary SO2 NAAQS is met at an ambient air quality monitoring site when the 3-year average of the annual 99th percentile of daily maximum 1-hour average concentrations is less than or equal to 75 ppb. In a year with 365 days of valid monitoring data, the 99th percentile would be the fourth highest daily maximum 1-hour value. The 2010 SO2 NAAQS, including this form of determining compliance with the standard, was upheld by the U.S. Court of Appeals for the District of Columbia Circuit in Nat'l Envt'l Dev. Ass'n's Clean Air Project v. EPA, 686 F.3d 803 (D.C. Cir. 2012). Because the standard has this form, a single hourly exceedance of the 75-ppb level does not create a violation of the standard. Instead, at issue is whether a source operating in compliance with a properly set longer term average could cause exceedances, and if so the resulting frequency and magnitude of such exceedances, and in particular, whether EPA can have reasonable confidence that a properly set longer term average limit will provide that the 3-year average of the annual fourth highest daily maximum 1-hour value will be at or below 75 ppb. A synopsis of how EPA judges whether such plans “provide for attainment,” based on modeling of projected allowable emissions and in light of the SO2 NAAQS form for determining attainment at monitoring sites, follows.

For SO2 plans that are based on 1-hour emission limits, the standard approach is to conduct modeling using fixed emission rates. The maximum emission rate that would be modeled to result in attainment (i.e., in an “average year” 2 shows three, not four days with maximum hourly levels exceeding 75 ppb) is labeled the “critical emission value.” The modeling process for identifying this critical emissions value inherently considers the numerous variables that affect ambient concentrations of SO2, such as meteorological data, background concentrations, and topography. In the standard approach, the state would then provide for attainment by setting a continuously applicable 1-hour emission limit at this critical emission value.

EPA recognizes that some sources have highly variable emissions, for example due to variations in fuel sulfur content and operating rate, that can make it extremely difficult, even with a well-designed control strategy, to ensure in practice that emissions for any given hour do not exceed the critical emission value. EPA also acknowledges the concern that longer term emission limits can allow short periods with emissions above the “critical emission value,” which, if coincident with meteorological conditions conducive to high SO2 concentrations, could in turn create the possibility of a NAAQS exceedance occurring on a day when an exceedance would not have occurred if emissions were continuously controlled at the level corresponding to the critical emission value. However, for several reasons, EPA believes that the approach recommended in its guidance document suitably addresses this concern. First, from a practical perspective, EPA expects the actual emission profile of a source subject to an appropriately set longer term average limit to be similar to the emission profile of a source subject to an analogous 1-hour average limit. EPA expects this similarity because it has recommended that the longer term average limit be set at a level that is comparably stringent to the otherwise applicable 1-hour limit (reflecting a downward adjustment from the critical emissions value) and that takes the source's emissions profile into account. As a result, EPA expects either form of emission limit to yield comparable air quality.

Second, from a more theoretical perspective, EPA has compared the likely air quality with a source having maximum allowable emissions under an appropriately set longer term limit, to the likely air quality with the source having maximum allowable emissions under the comparable 1-hour limit. In this comparison, in the 1-hour average limit scenario, the source is presumed at all times to emit at the critical emission level, and in the longer term average limit scenario the source is presumed to occasionally emit more than the critical emission value but on average, and presumably at most times, to emit well below the critical emission value. In an “average year,” compliance with the 1-hour limit is expected to result in three exceedance days (i.e., three days with hourly values above 75 ppb) and a fourth day with a maximum hourly value at 75 ppb. By comparison, with the source complying with a longer term limit, it is possible that additional exceedances would occur that would not occur in the 1-hour limit scenario (if emissions exceed the critical emission value at times when meteorology is conducive to poor air quality). However, this comparison must also factor in the likelihood that exceedances that would be expected in the 1-hour limit scenario would not occur in the longer term limit scenario. This result arises because the longer term limit requires lower emissions most of the time (because the limit is set well below the critical emission value), so a source complying with an appropriately set longer term limit is likely to have lower emissions at critical times than would be the case if the source were emitting as allowed with a 1-hour limit.

As a hypothetical example to illustrate these points, suppose a source that always emits 1000 pounds of SO2 per hour, which results in air quality at the level of the NAAQS (i.e., results in a design value of 75 ppb). Suppose further that in an “average year,” these emissions cause the 5-highest maximum daily average 1-hour concentrations to be 100 ppb, 90 ppb, 80 ppb, 75 ppb, and 70 ppb. Then suppose that the source becomes subject to a 30-day average emission limit of 700 pounds per hour (lb/hr). It is theoretically possible for a source meeting this limit to have emissions that occasionally exceed 1000 lb/hr, but with a typical emissions profile, emissions would much more commonly be between 600 and 800 lb/hr. In this simplified example, assume a zero-background concentration, which allows one to assume a linear relationship between emissions and air quality. (A nonzero background concentration would make the mathematics more difficult but would give similar results.) Air quality will depend on what emissions happen on what critical hours, but suppose that emissions at the relevant times on these 5 days are 800 lb/hr, 1100 lb/hr, 500 lb/hr, 900 lb/hr, and 1200 lb/hr, respectively. (This is a conservative example because the average of these emissions, 900 lb/hr, is well over the 30-day average emission limit.) These emissions would result in daily maximum 1-hour concentrations of 80 ppb, 99 ppb, 40 ppb, 67.5 ppb, and 84 ppb. In this example, the fifth day would have an exceedance that would not otherwise have occurred, but the third day would not have an exceedance that otherwise would have occurred, and the fourth day would have a concentration below, rather than at, 75 ppb. In this example, the fourth highest maximum daily concentration under the 30-day average would be 67.5 ppb.

This simplified example illustrates the findings of a more complicated statistical analysis that EPA conducted using a range of scenarios using actual plant data. As described in Appendix B of EPA's SO2 nonattainment guidance, EPA found that the requirement for lower average emissions is highly likely to yield better air quality than is required with a comparably stringent 1-hour limit. Based on analyses described in Appendix B of its nonattainment guidance, EPA expects that an emission profile with maximum allowable emissions under an appropriately set comparably stringent 30-day average limit is likely to have the net effect of having a lower number of exceedances and better air quality than an emission profile with maximum allowable emissions under a 1-hour emission limit at the critical emission value. This result provides a compelling policy rationale for allowing the use of a longer averaging period, in appropriate circumstances where the facts indicate this result can be expected to occur.

The question then becomes whether this approach—which is likely to produce a lower number of overall exceedances even though it may produce some unexpected exceedances above the critical emission value—meets the requirements in sections 110(a)(1) and 172(c)(1) and (6) for SIPs to contain enforceable emissions limitations and other control measures to “provide for attainment” of the NAAQS. For SO2, as for other pollutants, it is generally impossible to design a nonattainment plan in the present that will guarantee that attainment will occur in the future. A variety of factors can cause a well-designed attainment plan to fail and unexpectedly not result in attainment, for example if meteorology occurs that is more conducive to poor air quality than was anticipated in the plan. Therefore, in determining whether a plan meets the requirement to provide for attainment, EPA's task is commonly to judge not whether the plan provides absolute certainty that attainment will in fact occur, but rather whether the plan provides an adequate level of confidence of prospective NAAQS attainment. From this perspective, in evaluating use of a 30-day average limit, EPA must weigh the likely net effect on air quality. Such an evaluation must consider the risk that occasions with meteorology conducive to high concentrations will have elevated emissions leading to exceedances that would not otherwise have occurred, and must also weigh the likelihood that the requirement for lower emissions on average will result in days not having exceedances that would have been expected with emissions at the critical emissions value. Additional policy considerations, such as in this case the desirability of accommodating real world emissions variability without significant risk of violations, are also appropriate factors for EPA to weigh in judging whether a plan provides a reasonable degree of confidence that the plan will lead to attainment. Based on these considerations, especially given the high likelihood that a continuously enforceable limit averaged over as long as 30 days, determined in accordance with EPA's nonattainment guidance, will result in attainment, EPA believes as a general matter that such limits, if appropriately determined, can reasonably be considered to provide for attainment of the 2010 SO2 NAAQS.

The SO2 nonattainment guidance offers specific recommendations for determining an appropriate longer term average limit. The recommended method starts with determination of the 1-hour emission limit that would provide for attainment (i.e., the critical emission value), and applies an adjustment factor to determine the (lower) level of the longer term average emission limit that would be estimated to have a degree of stringency comparable to the otherwise necessary 1-hour emission limit. This method uses a database of continuous emission data reflecting the type of control that the source will be using to comply with the SIP emission limits, which (if compliance requires new controls) may require use of an emission database from another source. The recommended method involves using these data to compute a complete set of emission averages, computed according to the averaging time and averaging procedures of the prospective emission limitation. In this recommended method, the ratio of the 99th percentile among these long-term averages to the 99th percentile of the 1-hour values represents an adjustment factor that may be multiplied by the candidate 1-hour emission limit to determine a longer term average emission limit that may be considered comparably stringent.3 The guidance also addresses a variety of related topics, such as the potential utility of setting supplemental emission limits, such as mass-based limits, to reduce the likelihood and/or magnitude of elevated emission levels that might occur under the longer term emission rate limit.

Preferred air quality models for use in regulatory applications are described in Appendix A of EPA's Guideline on Air Quality Models (40 CFR part 51, Appendix W), also referred to as Guideline. In 2005, EPA promulgated AERMOD as the Agency's preferred near-field dispersion modeling for a wide range of regulatory applications addressing stationary sources (for example in estimating SO2 concentrations) in all types of terrain based on extensive developmental and performance evaluation. Supplemental guidance on modeling for purposes of demonstrating attainment of the SO2 NAAQS is provided in Appendix A to the SO2 nonattainment guidance document referenced above. Appendix A provides extensive guidance on the modeling domain, the source inputs, assorted types of meteorological data, and background concentrations. Consistency with the recommendations in this guidance is generally necessary for the attainment demonstration to offer adequately reliable assurance that the plan provides for attainment.

As stated previously, attainment demonstrations for the 2010 1-hour primary SO2 NAAQS must demonstrate future attainment and maintenance of the NAAQS in the entire area designated as nonattainment (i.e., not just at the violating monitor) by using air quality dispersion modeling (see Appendix W to 40 CFR part 51) to show that the mix of sources and enforceable control measures and emission rates in an identified area will not lead to a violation of the SO2 NAAQS. For a short-term (i.e., 1-hour) standard, EPA believes that dispersion modeling of stationary sources as applied consistent with EPA's Guideline is technically appropriate, efficient and effective in demonstrating attainment in nonattainment areas because it appropriately takes into consideration combinations of meteorological and emission source operating conditions that may contribute to peak ground-level concentrations of SO2. The SIP modeling should follow requirements in the Guideline for conducting a cumulative impact assessment and, thus, should use EPA's preferred dispersion model, the AERMOD modeling system (or approved alternative model) and follow Section 8 of the Guideline in terms of characterizing contributions to total concentrations.

The emissions inventory and source emission rate data for an area serve as the foundation for air quality modeling and other analyses that enable states to: (1) Estimate the degree to which different sources within a nonattainment area contribute to violations within the affected area; and (2) Assess the expected improvement in air quality within the nonattainment area due to the adoption and implementation of control measures. As noted above, the state must develop and submit to EPA a comprehensive, accurate and current inventory of actual emissions from all sources of SO2 emissions in each nonattainment area, as well as any sources located outside the nonattainment area which may affect attainment in the area. See CAA section 172(c)(3) and (4) and EPA's SO2 nonattainment guidance.

The base year inventory establishes a baseline that is used to evaluate emission reductions achieved by the control strategy and to assess reasonable further progress requirements. Kentucky used 2011 as the base year for emission inventory preparation. At the time of preparation of the attainment SIP, 2011 reflected the most recent triennial National Emission Inventory (NEI v2),4 Version 2 supported the requirement for timeliness of data, and was also representative of a year with violations of the primary SO2 NAAQS (i.e., one of the 3-years for which EPA designated the area nonattainment).

For the base-year inventory, Kentucky reviewed and compiled county-level actual SO2 emissions for all source categories (i.e., point, mobile (on-road and non-road), area (non-point) and event (wildfires and prescribed burns)) in Jefferson County and then utilized county and partial county (the portion in the nonattainment area) population and land use data to determine estimated SO2 emission inventories for sources of SO2 in the partial county nonattainment area. The emissions inventory provided in the June 23, 2017, submission reflects the most current emissions profile for all source categories. Additionally, EPA has provided supplemental emissions information to accurately account for point source emissions for the County. In Jefferson County, point sources account for approximately 99 percent of the total county-level SO2 emissions. Kentucky provided an SO2 emission inventory for those point sources in the County that emitted over 10 tons per year (tpy) based on the 2011 NEI. Table 1 below shows county-level SO2 emissions that emitted greater than 10 tpy in 2011.

The primary SO2-emitting point source located within the partial county nonattainment area is LG&E's Mill Creek Generating Station (Mill Creek). Mill Creek consists of four coal-fired boilers (U1-U4). A breakdown of the actual 2011 emissions by unit in tpy are as follows: Unit 1—5,211 tpy; Unit 2—6,802 tpy; Unit 3—7,175 tpy and Unit 4—10,756 tpy. LG&E replaced the existing wet Flue Gas Desulfurization (FGD) control equipment with more efficient FGD controls, to comply with the mercury air toxics standard (MATS). These replacements have been operational for all four units as of June 8, 2016. Mill Creek is the only SO2 point source located in the partial nonattainment area that is listed in Table 1. Refer to sections IV.B.4 and IV.C for more information on Mill Creek and the 1-hour SO2 control strategy.

Prior to 2016, LG&E Cane Run Generating Station (Cane Run) was the next largest SO2 source located in the northern portion of the County and outside the nonattainment area. The facility had three boilers and reported SO2 emissions of 7,823 tons in 2011. In 2015, LG&E constructed a new natural gas combined cycle turbine (U15) at the Cane Run facility and shut-down coal-fired units U4 thru U8 and U10.6

The CEMEX Kosmos Louisville Cement Plant (Kosmos) is outside the boundary of, but adjacent to, the Jefferson County nonattainment area. The facility produces Portland and masonry cement and has a production design capacity of 1.6 million short tons of cement per year. The primary source of the SO2 emissions are from kiln operations, which emitted 187 tons in 2011.

Mill Creek is the only point source in the nonattainment area and the primary source of the violation at the Watson Lane monitor at the time of designations for the nonattainment area listed in Table 1. Therefore, Mill Creek was the only SO2 source the Commonwealth and the District considered for further evaluation determined to impact the nonattainment area. Cane Run, Kosmos and the remaining county-level point sources in Table 1 are all located outside of the nonattainment area and were accounted for in the attainment modeling through the background monitor (see section IV.B.4 below).

KDAQ used the 2011 NEIv2 to obtain estimates of the area and nonroad sources. For on-road mobile source emissions, KDAQ utilized EPA's Motor Vehicle Emissions Simulator (MOVES2014) and NONROAD. A more detailed discussion of the emissions inventory development for the Jefferson County Area can be found in the June 23, 2017, submittal. Table 2 below provides Kentucky's 2011 base year county-level SO2 emission inventory for Jefferson County.

Based on an evaluation of county and partial county (nonattainment area) census and land use data, Kentucky determined that the nonattainment area accounted for 0.42 percent of the total county land use 8 or a total of 1.1 tpy when applied to the county-level source categories in Table 2, excluding the point source category (see Table 1 above). As noted above, Mill Creek is the only point source in the nonattainment area. Table 3 below shows the level of SO2 emissions, expressed in tpy, in the partial Jefferson County nonattainment area for the 2011 base year by emissions source category.

The attainment demonstration also provides for a projected 2018 attainment year inventory that includes estimated emissions for all emission sources of SO2 which are determined to impact the nonattainment area for the year in which the Area is expected to attain the standard. This inventory should also address any future growth in the Area or any potential increases in emissions of the pollutant for which the Jefferson County Area is nonattainment due to the construction and operation of new major sources, major modifications to existing sources, or increased minor source activity. KDAQ stated in its June 23, 2017, submittal that because the Area is rural and relatively small, it is unlikely that there will be any significant growth in the nonattainment area. However, the Commonwealth cites to the District's Regulation 2.04, Construction or Modification of Major Sources in or Impacting Upon Non-Attainment Areas, which requires NNSR, approved into the SIP and last updated on October 23, 2001 (see 66 FR 53660). The District's SIP-approved NNSR program requires lowest achievable emissions rate, offsets, and public participation requirements for major stationary sources and major modification and therefore, would account for potential growth in the nonattainment area. Kentucky reviewed and compiled county-level actual SO2 emissions for all source categories (i.e., point, mobile (on-road and non-road), area (non-point) and event) in Jefferson County and then utilized county and partial county nonattainment area population and land use data to determine estimated SO2 emission inventories for sources of SO2 in the nonattainment area. The Commonwealth developed a projected emissions inventory for county-level SO2 emissions source categories based on the 2011 NEI as well as the 2008 NEI inventory to extrapolate emissions to 2018. The point source emissions were estimated by taking credit at Mill Creek for the new wet FGD controls and title V operating permit limits of 0.20 lb/MMBtu per unit based on a rolling 30-day average.11 Point sources in the County are still expected to account for approximately 99 percent of the total county-level SO2 emissions.12 Emission estimates for on-road sources were re-estimated with MOVES2014; nonroad emissions were projected using national growth factors, and area source emissions were scaled based on emission factors developed using the Annual Energy Outlook 2014 for consumption and production forecasts. Table 4 below provides Kentucky's 2018 projected county-level SO2 emission inventory for Jefferson County.

Based on county and partial county nonattainment area census and land use data, similar to the base-year nonattainment area inventory, Kentucky applied the 0.42 percent nonattainment area land use ratio to the 2018 county-level projected emissions inventory in Table 4 resulting in total of 1.06 tpy for on-road, non-road and area sources, excluding point source category.13 Table 5 below shows the level of emissions, expressed in tpy, in the Jefferson County nonattainment area for the 2018 projected attainment year inventory.

KDAQ provided a future year projected emissions inventory for all known sources included in the 2011 base year inventory, discussed above. The projected emissions are consistent with expected levels beyond October 4, 2018, when the control strategy for the attainment demonstration will be fully implemented. Therefore, as an annual future year inventory, the point source portion is reasonably estimated beyond October 4, 2018, and would represent an annual inventory for 2019 or beyond. The projected emissions in Table 2 are estimated actual emissions, representing a 55 percent reduction from the base year SO2 emissions.

EPA has evaluated Kentucky's 2011 base year and projected emissions inventory for the Jefferson County nonattainment area and has made the preliminary determination that these inventories were developed consistent with EPA's April 2014 SO2 nonattainment guidance. Although EPA has noted minor discrepancies between Kentucky's inventory provided in the nonattainment SIP and the 2011 NEI, EPA is proposing to find that Kentucky's inventory is sufficiently comprehensive and accurate to serve the planning purposes for which the inventory is required. Therefore, EPA is proposing to determine the Jefferson County SO2 attainment SIP meets the requirements of CAA section 172(c)(3) and (4) for the Jefferson County nonattainment area.

The following discussion is an evaluation of various features of the modeling that Kentucky used in its attainment demonstration.

Kentucky's attainment demonstration used AERMOD, the EPA's preferred model for this application. The Commonwealth used AERMOD version 15181 with regulatory default options and a rural land use designation. Version 15181 of the AERMOD modeling system was the current regulatory version at the time Kentucky was preparing the attainment demonstration. Appendix 3 in Kentucky's June 23, 2017, submittal, provides a summary of the modeling procedures and options, including details explaining how they applied the Auer technique to determine that the rural dispersion coefficients were appropriate for the modeling. Model receptors were located throughout the nonattainment area using a grid with 100 meters spacing between receptors. Receptor elevations and hill heights required by AERMOD were determined using the AERMAP terrain preprocessor version 11103. The meteorological data was processed using AERMET version 15181 and AERMINUTE version 15272. The surface characteristics around the meteorological surface station were determined using AERSURFACE version 13016. An analysis of Good Engineering Practice (GEP) stack heights and building downwash was performed using BPIPPRIME version 04274. The results of the downwash analysis show that the actual stack heights at the Mill Creek facility exceed the GEP heights, so the GEP stack heights for each stack were used in the modeling. EPA proposes to find the model selection and procedures used to run the model appropriate.

The Commonwealth incorporated the most recently available five years of meteorology data from 2011-2015, as measured at a spatially representative National Weather Service airport site. The 1-minute surface-level data came from the Louisville Standiford Field station in Louisville, Kentucky located about 20 kilometers (km) to the northeast of the facility. Twice daily upper-air meteorological information came from the Wilmington Air Park, Wilmington, Ohio station located about 240 km to the northeast. The surface characteristics of the meteorological surface station were processed using AERSURFACE version 13016 following EPA-recommended procedures and were determined to be representative of the facility by the Commonwealth. EPA proposes to find that the meteorological data selection and processing are appropriate.

As previously stated, Mill Creek is the only SO2 emitting major point source in the nonattainment area and the only emission source explicitly modeled in the attainment modeling analysis for the Jefferson County nonattainment area. All minor area sources and other major point sources (located outside the nonattainment area boundary) were accounted for with the background concentration discussed in Section IV.B.5. Mill Creek operates four coal-fired boiler units (U1 thru U4) that emit from three stacks. Unit 1 and Unit 2 have a joint stack (S33) while Unit 3 and Unit 4 have separate stacks (S4 and S34, respectively). Mill Creek replaced its wet FGD Units on all stacks to improve SO2 reduction efficiencies. All FGD construction was completed and operational by June 8, 2016.

The Commonwealth evaluated the emissions from Mill Creek and derived a set of three SO2 critical emission values (CEVs), one for each stack, from AERMOD modeling simulations to show compliance with the 2010 SO2 NAAQS. The AERMOD modeling analysis resulted in the following CEV's: Stack S33, which serves Units 1 and 2, was modeled at 225.4 grams/second (g/s) equivalent to 1,789 lb/hr; stack S4, which serves Unit 3, was modeled at 152.6 g/s equivalent to 1,211 lb/hr; and stack S34, which serves Unit 4, was modeled at 183.6 g/s equivalent to 1,457 lb/hr. In each case, the modeled emission rate corresponds to 0.29 pounds per million British thermal units (lb/MMBtu) times the maximum heat input capacity (MMBtu/hr) of the unit(s) associated with each stack. This form of an emission limit, in lb/MMBtu, is a frequent form of emission limit associated with electric generating units. The Commonwealth determined from these AERMOD modeling simulations that an hourly emission limit of 0.29 lb/MMBtu would suffice to ensure modeled attainment of the SO2 NAAQS. However, the Commonwealth opted to apply a 30-day average limit, following EPA's SO2 nonattainment guidance for setting longer term average limits. The Commonwealth determined that a 30-day average limit of 0.20 lb/MMBtu could be considered comparably stringent to a 1-hour limit of 0.29 lb/MMBtu. Section IV.B.4.ii below, entitled “Longer Term Average Limits,” provides more discussion on how the Commonwealth made this determination.

An important prerequisite for approval of an attainment plan is that the emission limits that provide for attainment be quantifiable, fully-enforceable, replicable, and accountable. See General Preamble at 13567-68. Therefore, part of the review of Kentucky's attainment plan must address the use of these limits, both with respect to the general suitability of using such limits for this purpose and with respect to whether the limits included in the plan have been suitably demonstrated to provide for attainment. The first subsection that follows addresses the enforceability of the limits in the plan, and the second subsection that follows addresses the 30-day average limits.

Section 172(c)(6) provides that emission limits and other control measures in the attainment SIP shall be enforceable. Kentucky's attainment SIP for the Jefferson County nonattainment area relies on control measures and enforceable emission limits for the four coal-fired boilers at Mill Creek. These emission reduction measures were accounted for in the attainment modeling for Mill Creek, which demonstrates attainment for the 2010 SO2 NAAQS. Kentucky's control strategy for the Jefferson County nonattainment area consists of replacing FGD control equipment with more efficient FGD controls at Mill Creek, addressing SO2 emissions for all four units (U1, U2, U3 and U4): Unit 4 new FGD went into service on December 9, 2014; Units 1 and 2 new combined FGD went into service on May 27, 2015; and Unit 3 new FGD went into service on June 8, 2016.

LG&E installed wet FGD replacements at Mill Creek to comply with the MATS Rule.15 Jefferson County issued a construction permit (No. 34595-12-C) on June 15, 2012, to LG&E authorizing the construction for wet FGD control equipment replacements for the four coal-fired boilers at the Mill Creek facility. This construction permit also included a 0.20 lb/MMBtu limit for SO2 as a surrogate for the hydrochloric acid gas requirements for MATS. This emission limit was incorporated into the title V permit on July 31, 2014, (145-97-TV (R2)). LG&E was required to comply with the MATS Rule by April 2016.16 Effective June 8, 2016, the Mill Creek facility completed installation of improved wet FGD SO2 controls on all three stacks, which has reduced SO2 emissions by approximately 89 percent since 2014 emission levels.17

As discussed further in the RACT/RACM section 1V.C below, Kentucky determined that the wet FGD replacements at Mill Creek provide for SO2 emission reductions that model attainment for the Jefferson County nonattainment area. With respect to the 1-hour SO2 standard, Kentucky established an independent emission limit of 0.20 lb/MMBtu, for each coal-fired unit at Mill Creek on a 30-day average basis in accordance with EPA's SO2 nonattainment guidance for longer term averaging time for the purpose of demonstrating attainment for the 1-hour SO2 standard (see section IV.B.4. ii). These emission limits apply independently to each of the four coal-fired units (U1 thru U4), which emit SO2 from three separate stacks (S33, S4, and S34). Unit 1 and Unit 2 share a common stack (S33) while Unit 3 and Unit 4 have separate stacks (S4 and S34, respectively). These SO2 limits were established in a revised title V operating permit 145-97-TV(R3) for Mill Creek and became effective on April 5, 2017. Mill Creek demonstrates compliance with the 30-day emission limits through a continuous emission monitoring system on each stack as well as the monitoring of the heat input firing rate of each emission unit. The 30-day SO2 emission limit was established to demonstrate modeled attainment of the 2010 1-hour SO2 standard for the Jefferson County nonattainment area and therefore is separate from the SO2 emission limit of the same numerical value established to comply with the 2012 MATS Rule (i.e., SO2 as a surrogate for hydrochloric acid). These two limits were independently established through unique methodologies and guidance to address distinct and separate CAA requirements for the LG&E Mill Creek facility. Kentucky requested that EPA incorporate into the Jefferson County portion of the Commonwealth's SIP the 30-day SO2 emission limits and operating and compliance parameters (monitoring, record keeping and reporting) established at Plant-wide Specific condition S1-Standards, S2-Monitoring and Record Keeping and S3-Reporting 18 in title V permit 145-97-TV(R3).19 The accountability of the SO2 emission limits is established through KDAQ's request to include the limits in the SIP and in the attainment modeling demonstration to ensure permanent and enforceable emission limitations as necessary to provide for attainment of the 2010 SO2 NAAQS.

Kentucky established an emission limit of 0.20 lb/MMBtu of SO2 emissions, for each individual coal-fired emission unit at Mill Creek, on a 30-day average basis. This emission limit applies individually to each of the four coal-fired units (U1 thru U4), which emit SO2 from three stacks. Unit 1 and Unit 2 have a joint stack (Stack ID S33) while Unit 3 and Unit 4 each have separate stacks (Stack IDs S4 and S34, respectively). As discussed above in the emissions data section, modeling was performed by Jefferson County and the Commonwealth to determine an appropriate CEV, in g/s, for each of the three stacks (stack S33, which serves Units 1 and 2, was modeled at 225.4 g/s; stack S4, which serves Unit 3, was modeled at 152.6 g/s; and stack S34, which serves Unit 4, was modeled at 183.6 g/s). The corresponding candidate 1-hour emission factor limits (in lb/MMBtu) may be calculated by first converting these g/s CEV values to lb/hr (using a standard unit conversion factor of 1 g/s = 7.937 lb/hr) and then dividing by the maximum heat input capacity of each unit, in MMBtu/hr. In each case, the CEV corresponds to an emission factor of 0.29 lb/MMBtu. Since Units 1 and 2 share a stack (S33), the relevant maximum heat input capacity was the combined value for both units (6,170 MMBtu/hr total). Unit 3 has a maximum heat input capacity of 4,204 MMBtu/hr and vents to a single stack (S4), and Unit 4 has a maximum heat input capacity of 5,025 MMBtu/hr and vents to a single stack (S34).

As discussed further below, Kentucky used the procedures in EPA's April 2014 SO2 nonattainment guidance to determine a compliance ratio (adjustment factor) of 0.69, which when multiplied by 0.29 lbs/MMBTU yields a 30-day average limit of 0.20 lbs/MMBTU. Each of the four emission units were subject to this 0.20 lb/MMBtu 30-day average permit limit effective April 5, 2017. EPA generally defines the term CEV to mean the 1-hour emission rate for an individual stack that, in combination with the other CEVs for other relevant stacks, is shown through proper modeling to yield attainment. As mentioned above, Kentucky developed a set of CEVs (one per stack) in each case corresponding to an hourly limit of 0.29 lb/MMBtu and demonstrated with AERMOD modeling that these CEVs show modeled compliance with the NAAQS. Unit 1 and Unit 2 have a joint stack (S33) and a combined wet FGD control, while Unit 3 and Unit 4 have separate stacks (S4 and S34, respectively), each with individual wet FGD controls.

EPA's SO2 nonattainment guidance recommends that any longer term average emission limit should be comparably stringent to the 1-hour limit that has been shown to provide for attainment of the 2010 SO2 standard. The guidance recommends a procedure, detailed in Appendix C, for determining an adjustment factor which may be multiplied times the candidate 1-hour limit to derive a longer term limit that may be estimated to be comparably stringent to the 1-hour limit. Using this procedure (discussed in section II above) and using hourly emission data provided by EPA's Air Markets Program Data database for Mill Creek for the period 2009-2013 (i.e., before the wet FGD replacements), Kentucky determined an adjustment factor of 0.69. Multiplication of this adjustment factor times the candidate 1-hour limit yielded the 0.20 lb/MMBtu 30-day average permit limit that Kentucky established in Mill Creek's title V permit effective April 5, 2017. The period from 2009 to 2013 was a period of stable operation prior to the wet FGD replacements (which were made between late 2014 to mid-2016), a time when similar but less efficient wet FGDs were used for SO2 emission control for each coal-fired unit. EPA believes that these data were the best data available at the time to Kentucky for estimating the variability of emissions to be expected at Mill Creek upon compliance with the permit limits. At the time Kentucky conducted its assessment, only a small amount of post-replacement data was available. Use of a mix of pre-replacement and post-replacement data would have yielded a distorted analysis of variability. Therefore, the 2009 to 2013 data from Mill Creek provided the best representation available to Kentucky of the variability of emissions to be expected from this plant.

Additionally, the 2009-2013 emissions data set yielded an adjustment factor slightly lower (more conservative) than the average 30-day adjustment factor (0.71) included in Table 1 of Appendix D of EPA's SO2 nonattainment guidance for emission sources with wet scrubbers. The results provided in Appendix D were intended to provide insight into the range of adjustment factors that may be considered typical. For these reasons, EPA believes the 0.69 adjustment factor calculated by Kentucky is an appropriate estimate of the degree of adjustment needed to derive a comparably stringent 30-day average emission limit for this facility.

In accordance with EPA's SO2 nonattainment guidance, the Commonwealth used the distribution of hourly emissions to determine a corresponding distribution of 30-operating day longer term emission averages at the end of each operating day. The 99th percentile of the 1-hour average emission values and the 4th maximum value of the 30-day average emission values 20 for each year were calculated, then the average value of the five years' 99th percentile value was determined. The adjustment factor was calculated as the ratio of the 99th percentile for the longer term average to the 99th percentile hourly average emissions for each of the four boilers at Mill Creek, separately. The adjustment factors for each of the four units (0.64, 0.68, 0.75 and 0.68) were averaged together to arrive at a single compliance ratio of 0.69. The average compliance ratio was then applied to the 0.29 lb/MMBtu hourly emission rate to create a comparably stringent long term (30-day) emission limit of 0.20 lb/MMBtu, which was imposed on each emission unit individually. EPA believes that use of an average adjustment factor is a suitable means of projecting future variability of the four units at the plant because the use of an average adjustment factor is likely to yield similar results to use of unit-specific adjustment factors; indeed, Kentucky determined that annual potential total SO2 emissions based on use of an average adjustment factor (with a limit of 0.20 lb/MMBtu for all units) are about 137 tpy less than would be allowed with limits of 0.29 lb/MMBtu adjusted by unit-specific adjustment factors.

Based on a review of the Commonwealth's submittal and EPA's additional analysis described below, EPA believes that the 30-day average 0.20 lb/MMBtu limit for each of the four boilers at Mill Creek provides a suitable alternative to establishing a 1-hour average emission limit for each unit at this source. The Commonwealth has used a suitable data base and has derived an adjustment factor that yields an emission limit that has comparable stringency to the 1-hour average limit that Kentucky determined would otherwise have been necessary to provide for attainment. While the 30-day rolling average limit allows occasions in which emissions may be higher than the level that would be allowed with the 1-hour limit, the Commonwealth's limit compensates by requiring average emissions to be lower than the level that would otherwise have been required by a 1-hour average limit.

EPA's SO2 nonattainment guidance recommends evaluating “whether the longer term average limit, potentially in combination with other limits, can be expected to constrain emissions sufficiently so that any occasions of emissions above the critical emission value will be limited in frequency and magnitude and, if they occur, would not be expected to result in NAAQS violations.” For this purpose, EPA analyzed Air Markets Program Data available from EPA. Mill Creek completed replacements of the FGD equipment during the period from December 2014 to June 2016. EPA believes that the emissions data available after completion of the replacements are the data that best indicate the likely frequency of hourly emission levels above the critical emission value. At the time EPA conducted its analysis, these data were available through the end of March 2018. Therefore, in addition to the analysis submitted by Kentucky, EPA analyzed hourly emissions obtained from the EPA Air Markets Program Data for Mill Creek for the period April 2016 to March 2018,21 which encompasses the time after all the wet FGD replacements were completed and the facility was operating under a 0.20 lb/MMBtu emission limitation. During this time Units 1, 2 and 3 did not have any 30-day average values above 0.20 lb/MMBtu, these units each had only 0.1 percent of the hours exceeding the “critical emission factor” of 0.29 lb/MMBtu. Although Unit 4 slightly exceeded 0.20 lb/MMBtu approximately 5.4 percent of the 30-day averages during this period (based on Kentucky's compliance determination procedures), this unit only exceeded the “critical emission factor” of 0.29 lb/MMBtu for 0.5 percent of the hours. Therefore, EPA is proposing to conclude that Mill Creek can reasonably be expected to exceed the critical emission value only rarely. For details of this analysis, please refer to the spreadsheet titled “Mill Creek Analysis of Values Above the Critical Emission Rate” in the Docket for this proposal action.

For reasons described above and explained in more detail in EPA's SO2 nonattainment guidance, EPA believes appropriately set longer term average limits provide a reasonable basis by which nonattainment plans may provide for attainment. Based on its review of this information as well as the information in the Commonwealth's plan, EPA proposes to find that the 30-day average limits for Mill Creek provide for attainment of the SO2 standard. Furthermore, EPA notes that 2015-2017 quality-assured and certified design value for the Watson Lane monitor (AQS ID: AQS ID: 21-11-0051) in the nonattainment area is 31 ppb, which is below the 1-hour SO2 standard.

The Commonwealth requested EPA approve into the Jefferson County portion of the Kentucky SIP, the 30-day, 0.20 lb/MMBtu SO2 emission limit for each boiler as well as operating and compliance parameters (monitoring and reporting requirements) established in Mill Creek's title V permit 145-97-TV (R3). EPA has evaluated these emissions limits and proposes to determine that these limits provide for attainment of the 2010 SO2 NAAQS.

Background concentrations of SO2 were included in the modeling using 2013-2015 season-by-hour monitoring data from the Green Valley Road monitor (AQS ID: 18-043-1004) located in New Albany, Indiana. Use of the season-by-hour data is one of the approaches for calculating background concentrations provided in the SO2 nonattainment guidance. The season-by-hour background values ranged from 2.13 ppb to 20.67 ppb. This monitor is located approximately 29 km to the north of the Mill Creek facility in the vicinity of many SO2 emissions sources, including the Duke Energy Indiana, LLC, Gallagher Generating Station coal-fired power plant with 3,500 tpy of SO2 emissions in 2014, which is located approximately 5 km upwind of the monitor. This source, along with other sources in the area upwind of the monitor (including numerous small area sources in the City of Louisville and the Louisville Gas and Electric Company, Cane Run Station power plant), emitted approximately 13,000 tpy of SO2 in 2014. The background concentrations from the Green Valley ambient air monitor were used by the Commonwealth to account for SO2 impacts from all sources besides the Mill Creek facility, which was explicitly modeled with AERMOD to develop an appropriate emissions limit. The Commonwealth evaluated other SO2 monitors in the Louisville area that are closer to the Mill Creek facility and the nonattainment area, including the Watson Lane (AQS ID: 21-111-0051), Cannons Lane (AQS ID: 21-111-0067) and Algonquin Parkway/Firearms Training (AQS ID: 21-111-1041) monitors. However, the Commonwealth determined that each of these monitors had issues with data completeness during the 2013-2015 timeframe and thus were not available for use in their modeling analysis.

EPA is supplementing the attainment demonstration modeling provided by the Commonwealth with an independent analysis to assess the conclusion that the Green Valley background monitor adequately represents background concentrations of SO2 within this nonattainment area, including the impact from Kosmos that is located outside but adjacent to the nonattainment area to the southeast of the Mill Creek facility. The Commonwealth states in its submission that the Green Valley monitor was determined to be the most appropriate and representative background monitor for the demonstration and that it accounts for impacts from all sources not explicitly modeled, including Kosmos. As described below, EPA's independent analysis supports KDAQ's conclusion that the Green Valley monitor adequately represents impacts from all unmodeled sources including those from Kosmos.

EPA evaluated whether Kosmos, which is located in close proximity to the nonattainment area boundary (less than 0.50 km), should be considered a “nearby source” or an “other source” as these terms are defined in Section 8.3.1 of EPA's Guideline contained in 40 CFR part 51, Appendix W (Appendix W).22 Section 8.3.1.a.i of Appendix W discusses evaluating significant concentration gradient in the vicinity of the source under consideration for SIP emissions limits for determining if other sources in the area are adequately represented by background ambient monitoring. Section 8.3.3.b.ii of Appendix W further describes the assessment of concentration gradients and states that “the magnitude of a concentration gradient will be greatest in the proximity of the source and will generally not be significant at distances greater than 10 times the height of the stack(s) at that source without consideration of terrain influences.” The height of the cement kiln stack at Kosmos is 75 feet (approximately 23 meters) and there are no significant terrain features located near Kosmos or within the nonattainment area boundary. Evaluating the concentration gradients for Kosmos using the “10 times stack height” general rule of thumb indicates that concentration gradients should be comparatively modest beyond 230 meters from the stack. The closest edge of the nonattainment boundary is approximately 480 meters from the stack, which is more than twice the distance of this general rule of thumb. Therefore, EPA believes that the SO2 emissions from Kosmos likely would not result in a significant concentration gradient within the nonattainment area boundary.

EPA also evaluated whether the Green Valley background monitor data is adequately representative of potential SO2 concentration impacts from Kosmos within the nonattainment area. This evaluation consisted of an assessment of wind patterns in the Louisville area, the SO2 emissions sources in the vicinity of the Green Valley monitor, and comparing those sources to the Kosmos source. EPA evaluated wind data from 2011-2015 from the Louisville Standiford Field Airport to determine the predominant wind patterns. The results of this analysis show that winds blow predominately from the southeast, south and southwest directions. EPA then identified significant SO2 emissions sources located south, southeast and southwest of the Green Valley monitor. The Commonwealth used Green Valley ambient concentration data from the 2013-2015 time period for the background concentrations. Therefore, EPA used SO2 emissions data contained in the 2014 NEI to evaluate sources in the vicinity of the Green Valley monitor. EPA's evaluation of sources in the 2014 NEI found that a large coal fired power plant, the Duke Energy Indiana, LLC, Gallagher Generating Station, with SO2 emissions of 3,500 tpy, is located approximately 5 km southwest of the Green Valley monitor. Also, the Louisville Gas and Electric Company, Cane Run Station reported 8,700 tpy of SO2 emissions in 2014 and is located approximately 15 km southwest of the Green Valley monitor. Further, the City of Louisville and its associated numerous small area SO2 emissions sources (e.g., diesel vehicles and generators) is located within 9 km southeast of the monitor. Combined, these sources total over 13,000 tpy of SO2 emissions (according to the 2014 NEI) located upwind of the monitor and contribute to the measured SO2 season-by-hour concentrations in 2013-2015 that ranged from 2.13 ppb to 20.67 ppb.

EPA used its Emissions Inventory System (EIS) Gateway to obtain emissions data for Kosmos for comparison to the emissions sources impacting the Green Valley monitor. The EIS Gateway data for Kosmos show SO2 emissions of 207 tpy in 2014, 289 tpy in 2015, and 364 tpy in 2016. These emissions data demonstrate that Kosmos' SO2 emissions are much less than the emissions sources that are contributing to the measured concentrations at the Green Valley background monitor. While Kosmos is located much closer to the nonattainment area boundary (approximately 0.5 km) than the distance the larger sources of emissions are from the Green Valley monitor (from 5 km to 15 km), the sources near the Green Valley monitor have more than an order of magnitude more emissions than Kosmos. EPA believes that the net effect of these compensating differences is that the Green Valley monitor reasonably indicates the impact of Kosmos on the nonattainment area.

Based upon EPA's analyses summarized above, EPA is proposing to concur with the Commonwealth's use of ambient SO2 concentration data from the Green Valley monitor to account for potential impacts from Kosmos and all other emissions sources located outside the nonattainment area that were not explicitly modeled in the attainment demonstration modeling analysis.

The AERMOD modeling resulted in a maximum modeled design value of 190.1 micrograms per cubic meter or 72.6 ppb, including the background concentration, which is below the 1-hour SO2 NAAQS of 75 ppb. As discussed above, the AERMOD modeling used hourly SO2 emissions for each stack equivalent to the hourly SO2 emission rate of 0.29 lb/MMBtu, which was used to derive the 30-day average emission limit for the four coal-fired boilers at the Mill Creek facility. Effective June 8, 2016, the Mill Creek facility completed installation of improved wet FGD SO2 controls on all three stacks, and became subject the new 30-day SO2 emission limits on April 5, 2017, which has reduced SO2 emissions by approximately 89 percent from 2014 emission levels.23 Furthermore, the Watson Lane monitoring data trends during the timeframe corroborate the significant SO2 reductions from Mill Creek facility, supporting EPA's view that limiting Mill Creek emissions adequately will assure attainment. EPA has evaluated the modeling procedures, inputs and results and proposes to find that the results of the Commonwealth's modeling analysis demonstrate that the limits on Mill Creek assure that there will be no violations of the NAAQS within the nonattainment area.

CAA section 172(c)(1) requires that each attainment plan provide for the implementation of all RACM as expeditiously as practicable (including such reductions in emissions from existing sources in the area as may be obtained through the adoption, at a minimum, of RACT) and shall provide for attainment of the NAAQS. Additionally, 172(c)(6) require SIPs to contain enforceable emissions limitations and other control measures to “provide for attainment” of the NAAQS. EPA interprets RACM, including RACT, under section 172, as measures that a state determines to be reasonably available and which contribute to attainment as expeditiously as practicable for existing sources in the area.

Kentucky's plan for attaining the 1-hour SO2 NAAQS in the Jefferson County SO2 nonattainment area included a review of three control measures as potential options which could be implemented at Mill Creek to reduce ambient SO2 concentrations and attain the SO2 NAAQS: More efficient scrubber operation; increased stack height; and restriction of high sulfur fuels. The Commonwealth in coordination with the District determined that FGD is the appropriate control strategy and represents RACT/RACM for the nonattainment area. The new controls increase Mill Creek's ability to control SO2 emissions from previously permitted levels, i.e., around 90 percent, to a 98 percent removal rate. Emissions are expected to be reduced from actual emissions of 29,994 tpy in 2011 to a projected post-control level of 13,489.5 tpy. Effective June 8, 2016, the Mill Creek facility completed installation of improved wet FGD SO2 controls on all three stacks, and became subject the new 30-day SO2 emission limits on April 5, 2017 (discussed in section IV.B.4 above). The replaced FGD controls and April 5, 2017 compliance with the 30-day SO2 emission limits has resulted in reduced SO2 emissions at Mill Creek by approximately 89 percent since 2014 emission levels.24 Furthermore, the monitoring data trends during the time period corroborate the existence of the substantial air quality benefits from the significant SO2 reductions from Mill Creek facility. The Watson Lane monitor has recorded decreasing SO2 concentrations from an annual 99th percentile value of 148.6 ppb in 2014, 54.2 ppb in 2015, 26.1 ppb in 2016 and 13.7 ppb in 2017. Currently, the quality-assured and certified 2015-2017, 3-year design value for the Watson Lane monitor is 31 ppb, which is well below the 1-hour SO2 standard. In addition to the modeling demonstrating attainment of the SO2 standard, actual monitored 99th percentile of 1-hour daily maximum concentrations at the Watson Lane do not show violations of the NAAQS. On this basis, Jefferson County determined that no additional measures could contribute to attainment as expeditiously as practicable. Therefore, the FGD controls for the Mill Creek Generating Station was determined to constitute RACT/RACM for the nonattainment area. Kentucky has determined that these measures suffice to provide for timely attainment. EPA preliminarily concurs with Kentucky's approach and analysis, and proposes to conclude that the Commonwealth has satisfied the requirement in section 172(c)(1) and (6) to adopt and submit all RACT/RACM and emission limitations and control measures as needed to attain the standard as expeditiously as practicable.

EPA last approved Louisville's NNSR regulations 2.04—Construction or Modification of Major Sources in or Impacting upon Non-Attainment Areas (Emissions Offset Requirements) on October 23, 2001 (66 FR 53660). These rules provide for appropriate NSR for SO2 sources undergoing construction or major modification in any nonattainment area in Jefferson County including the SO2 nonattainment area without need for modification of the approved rules. Therefore, EPA proposes to conclude that this requirement is met for this Area through Louisville's existing NSR rules.

CAA section 172(c)(2) requires attainment plan to require RFP, which is defined in CAA section 171(1) as “annual incremental reductions in emissions of the relevant air pollutant as are required by this part or may reasonably be required by the Administrator for the purpose of ensuring attainment of the SO2 NAAQS by the statutory attainment date.” For pollutants like SO2 where a limited number of sources affect air quality, the General Preamble and the SO2 nonattainment guidance explain that RFP is best construed as an ambitious compliance schedule. As discussed above, LG&E completed installation of FGD replacement scrubbers for all four coal-fired boilers at Mill Creek on June 8, 2016 (Unit 4 new FGD went into service on December 9, 2014; Units 1 and 2's new FGD went into service on May 27, 2015; and Unit 3 25 new FGD went into service on June 8, 2016) to comply with EPA's MATS extended compliance date of April 16, 2016. However, for purposes of demonstrating attainment of the 2010 SO2 standard, Kentucky established an independent SO2 emission limit of 0.20 lb/MMBtu for Mill Creek (title V operating permit 145-97-TV(R3) based on the SO2 emission reductions from the FGD replacement. All FGD controls are currently installed and operational at Mill Creek and the facility is currently complying with the 30-day emission limits as of April 5, 2017 (the date the revised title V permit was issued).26 EPA has evaluated these emissions limits and proposes to determine that these limits provide for modeled attainment of the 2010 SO2 NAAQS in the Jefferson County nonattainment area.

SO2 emissions within the nonattainment area have decreased approximately 89 percent since 2014, which correlates to a reduction of SO2 concentrations recorded at the Watson Lane monitor during this period.27 Kentucky finds that this plan requires the affected sources implement appropriate control measures as expeditiously as practicable to ensure attainment of the standard by the applicable attainment date. Mill Creek has met the limits in Kentucky's plan by the April 5, 2017 compliance date (effective date of the new 30-day SO2 emission limits). Therefore, Kentucky concludes that this plan provides for RFP in accordance with EPA's April 2014 SO2 nonattainment guidance. Currently, the Watson Lane monitor 2015-2017 quality-assured and certified SO2 design value is below the 1-hour NAAQS at 31 ppb, EPA expects the Area to show attainment of the 2010 standard by the statutory attainment date. EPA proposes to concur and concludes that the plan provides for RFP, as specified in the General Preamble and the SO2 nonattainment guidance, and therefore satisfies the requirements of CAA section 172(c)(2).

As noted above, EPA's SO2 nonattainment guidance describes special features of SO2 planning that influence the suitability of alternative means of addressing the requirement in section 172(c)(9) for contingency measures for SO2, such that an appropriate means of satisfying this requirement is for the Commonwealth to have a comprehensive enforcement program that identifies sources of violations of the SO2 NAAQS and to undertake an aggressive follow-up for compliance and enforcement. Kentucky's plan provides for satisfying the contingency measure requirement in this manner. Jefferson County is authorized by Kentucky Revised Statutes Chapter 77 to ensure that control strategies, including reasonably achievable control technology and contingency measures, necessary to attain the standard by the applicable attainment date are implemented in the nonattainment area. Kentucky's proposed SIP revision has been developed in accordance with this authority. In addition, if a monitored exceedance of the SO2 NAAQS occurs in the future and all sources are found to comply with applicable SIP and permit emission limits, Jefferson County will perform the necessary analysis to determine the cause of the exceedance, and determine what additional control measures are necessary to impose on the Area's stationary sources to continue to maintain attainment of the SO2 NAAQS. Jefferson County will inform any affected stationary sources of SO2 of the potential need for additional control measures. If there is a violation of the NAAQS for SO2 within the nonattainment area, then Jefferson County will notify the stationary source that the potential exists for a NAAQS violation. Within six months of notification, the source must submit a detailed plan of action specifying additional control measures to be implemented no later than 18 months after the notification. The additional control measures will be submitted to the EPA for approval and incorporation into the SIP. EPA preliminarily concurs and proposes to approve Kentucky's plan for meeting the contingency measure requirement as described above and in the proposed SIP revision.

In this rule, EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is proposing to incorporate by reference into the Jefferson County portion of the Kentucky SIP, a SO2 emission limit and specified compliance conditions established in title V permit 145-97-TV(R3) for each coal-fired emissions unit at the LG&E Mill Creek Generating station in Jefferson County nonattainment area. Specifically, EPA is proposing to incorporate into the Jefferson County portion of the Kentucky SIP a 0.20 lb/MMBtu 30-day SO2 emission limit for each EGU (U1, U2, U3 and U4) and operating and compliance conditions (monitoring, recordkeeping and reporting) all established at Plant-wide Specific condition S1-Standards, S2-Monitoring and Record Keeping and S3-Reporting in title V permit 145-97-TV(R3) for EGU U1, U2, U3 and U4. The SO2 emission standards specified in the permit are the basis for the attainment demonstration. EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at EPA Region 4 office (please contact the person identified in the For Further Information Contact section of this preamble for more information).

EPA is proposing to approve Kentucky's SO2 nonattainment SIP submission, which the Commonwealth submitted to EPA on June 23, 2017, for attaining the 2010 1-hour SO2 NAAQS for the Jefferson County nonattainment area and for meeting other nonattainment area planning requirements. EPA has preliminarily determined that the nonattainment SIP meets the applicable requirements of sections 110, 172, 191 and 192 of the CAA and nonattainment regulatory requirements at 40 CFR part 51. This SO2 nonattainment plan includes Kentucky's attainment demonstration for the Jefferson County nonattainment area and other nonattainment requirements for RFP, RACT/RACM, NNSR, base-year and projection-year emission inventories, enforceable emission limits and control measures and compliance parameters, and contingency measures. Additionally, EPA is proposing to approve into the Jefferson County portion of the Kentucky SIP, Mill Creek's enforceable SO2 emission limits and compliance parameters (monitoring and reporting) established at Plant-wide Specific condition S1-Standards, S2-Monitoring and Record Keeping and S3-Reporting established in title V permit 145-97-TV(R3).

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. See 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. This action merely proposes to approve state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:

• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;

• 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 (Public Law 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 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 as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.

In proposed rule FR 2018-23700, in the issue of Tuesday, October 30, 2018, on page 54527, in the third column, correct the docket numbers listed in the ADDRESSES section to read:

• Email: [email protected]. Include Docket ID No. EPA-HQ-OAR-2018-0696 in the subject line of the message.

• Fax: (202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-2018-0696.

• Mail: To ship or send mail via the United States Postal Service, use the following address: U.S. Environmental Protection Agency, EPA Docket Center, Docket ID No. EPA-HQ-OAR-2018-0696, Mail Code 28221T, 1200 Pennsylvania Avenue NW, Washington, DC 20460.

• Hand/Courier Delivery: Use the following Docket Center address if you are using express mail, commercial delivery, hand delivery, or courier: EPA Docket Center, EPA WJC West Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004. Delivery verification signatures will be available only during regular business hours.”

In proposed rule FR 2018-23700, in the issue of Tuesday, October 30, 2018, on page 54528, make the following correction to the docket numbers listed in the SUPPLEMENTARY INFORMATION section. In the second paragraph of the section, in the first column, revise the docket number in the first sentence to say, “Docket. The EPA has established a docket for this rulemaking under Docket ID No. EPA-HQ-OAR-2018-0696.”

In the third paragraph of the section, in the first column, revise the docket number in the first sentence to say, “Instructions. Direct your comments to Docket ID No. EPA-HQ-OAR-2018-0696.”

In the sixth paragraph of the section, in the third column, revise the docket number in the last sentence to say, “Send or deliver information identified as CBI only to the following address: OAQPS Document Control Officer (C404-02), OAQPS, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711, Attention Docket ID No. EPA-HQ-OAR-2018-0696.”

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments.

American Health Benefit Exchanges, or “Exchanges” (also called “Marketplaces”) are entities established under the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Heath Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) (collectively referred to as PPACA) through which qualified individuals and qualified employers can purchase health insurance coverage. Exchanges that were established by states (State Exchanges) include State-based Exchanges (SBEs) which perform eligibility and enrollment functions, as well as State-based Exchanges on the Federal platform (SBE-FPs) that utilize the Federally-facilitated Exchange's infrastructure to perform eligibility and enrollment functions. Many individuals who enroll in qualified health plans (QHPs) through individual market Exchanges are eligible to receive a premium tax credit (PTC) to reduce their costs for health insurance premiums, and receive reductions in required cost-sharing payments to reduce out-of-pocket expenses for health care services. Eligible individuals can receive the estimated amount of the PTC on an advance basis, known as advance payments of the premium tax credit (APTC), in accordance with section 1412 of the PPACA.

Strengthening program integrity with respect to subsidy payments in the individual market is a top priority of this Administration. Key areas of focus include—(1) ensuring that eligible enrollees receive the correct amount of APTC and cost-sharing reduction (CSR) (as applicable), and do not receive APTC or CSRs for abortion coverage and/or services for which such payments are not available under section 1303 of the PPACA; (2) conducting effective and efficient monitoring and oversight of State Exchanges to ensure that consumers are receiving the correct amount of APTC and CSRs in SBEs, and that State Exchanges are meeting the standards of federal law in a transparent manner; and (3) protecting the interests of taxpayers, and consumers, and the financial integrity of Federally-facilitated Exchanges (FFEs) through oversight of health insurance issuers, including ensuring compliance with Exchange requirements, such as maintenance of records and participation in investigations and compliance reviews, and with the requirements of section 1303 of the PPACA.

The Department of Health and Human Services (HHS) has recently made significant strides in these areas. For example, we have implemented policy-based payments in the FFEs and almost all of the SBEs, a critical system change across Exchanges and issuers that ensures the data used to generate APTC and CSR payments to issuers are verified and associated with particular enrollees.

We also recently implemented pre-enrollment verification of eligibility for applicable individual market special enrollment periods for all Exchanges served by the federal eligibility and enrollment platform (the HealthCare.gov platform), ensuring that only those who qualify for special enrollment periods receive them. In the HHS Notice of Benefit and Payment Parameters for 2019 Final Rule (83 FR 16930) (April 17, 2018), we established a policy to require documentary evidence for certain consumers who attest to income that is significantly higher than the amount found in the Exchange's income data. This new check will be conducted for applicants for whom trusted data sources (such as the Internal Revenue Service, the Social Security Administration, the Department of Homeland Security, Veterans Health Administration, Peace Corps, the Department of Defense, Experian, and Carahsoft).1 This new check will not be performed with respect to non-citizen applicants who are ineligible for Medicaid based on their immigration status, as these applicants may be statutorily eligible for APTC with annual household income below 100 percent of the FPL. An accurate eligibility determination is critical for consumers near this threshold to ensure APTC is not paid on behalf of consumers who are statutorily ineligible for APTC.

In late 2017, we developed an innovative approach to provide additional notification to tax filers who, based on Internal Revenue Service (IRS) data, had received APTC for a prior benefit year but failed to reconcile these payments on their tax returns. The notices explained that the tax filer was required to take action to reconcile these prior APTC payments, or APTC associated with all enrollees for whom the individual is the tax filer would be terminated. While HHS was already contacting these affected households through its standard annual notification processes, this supplemental notice provided further clarification and instruction for the tax filer, while adhering to IRS' protocols regarding the safe disclosure of protected federal tax information.

We continue to explore opportunities to improve program integrity. We work on an ongoing basis on improving program oversight and procedures to conduct comprehensive audits of FFE processes to verify their integrity. These efforts further our goal of protecting consumers enrolled in FFEs and safeguarding taxpayer dollars. We review consumer complaints and allegations of fraud and abuse received by the FFE call center from insurers, as well as law enforcement and states. Additionally, we analyze data to identify issues and vulnerabilities, share relevant information with issuers, and identify administrative actions to stop bad actors and protect consumers.

We are proposing several changes targeting these priorities. First, we are planning changes to the current periodic data matching (PDM) processes, which are the processes through which Exchanges periodically examine available data sources to identify changes that would affect enrollees' eligibility for subsidies. Second, we are planning to add an optional authorization to the Exchange application that would allow an individual to authorize the FFE to receive Medicare eligibility and enrollment information about the enrollee. If an applicant provides this authorization and elects to have the Exchange automatically terminate QHP coverage if the applicant is found to be dually enrolled, then the FFE will end enrollees' QHP coverage on their behalf in such a circumstance, even if the enrollee is not receiving APTC or CSRs. Third, we propose to specify that Exchanges must conduct PDM for Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the Basic Health Program (BHP), if applicable, at least twice a year, beginning with the 2020 calendar year, to ensure that Exchanges make adequate efforts to discontinue APTC and CSR for those who are eligible for or enrolled in other minimum essential coverage (MEC) and, therefore, are ineligible for APTC or CSRs.

We are also proposing changes to improve program integrity related to State Exchanges. To strengthen the mechanisms and tools HHS uses in its oversight of compliance by State Exchanges with federal requirements, including eligibility and enrollment requirements under 45 CFR part 155, subparts D and E, we are proposing changes that provide further specificity to their program reporting requirements. In addition, to ensure proper eligibility determinations and enrollments in SBEs, we are proposing to clarify the scope of the annual programmatic audits that SBEs are required to conduct and submit results of annually to HHS, and include testing of SBE eligibility and enrollment transactions in the annual programmatic audits.

Lastly, we are proposing changes related to the separate payment requirement in section 1303 of the PPACA. To align the regulatory requirements for issuer billing of the portion of the enrollee's premium attributable to certain abortion services with the separate payment requirement applicable to issuers offering coverage of these services, we are proposing changes to the billing and payment collection requirements for QHP issuers in connection with their plans offered through an individual market Exchange that include coverage for abortion services for which federal funding is prohibited.

Sections 1311(b) and 1321(b) of the PPACA provide that each state has the opportunity to establish an Exchange. Section 1311(b)(1) of the PPACA gives each state the opportunity to establish an Exchange that both facilitates the purchase of QHPs by individuals and families, and provides for the establishment of a Small Business Health Options Program (SHOP) that is designed to assist qualified employers in the state who are small employers in facilitating the enrollment of their employees in QHPs offered in the small group market in the state.

Section 1313 of the PPACA describes the steps the Secretary of Health and Human Services (the Secretary) may take to oversee Exchanges' compliance with HHS standards related to Title I of the PPACA and ensure their financial integrity, including conducting investigations and annual audits.

Section 1321(a) of the PPACA provides broad authority for the Secretary to establish standards and regulations to implement the statutory standards related to Exchanges, QHPs, and other standards of title I of the PPACA.

Section 1321(c)(2) of the PPACA authorizes the Secretary to enforce the Exchange standards using civil money penalties (CMPs) on the same basis as detailed in section 2723(b) of the Public Health Service Act (PHS Act). Section 2723(b) of the PHS Act authorizes the Secretary to impose CMPs as a means of enforcing the individual and group market reforms contained in Part A of title XXVII of the PHS Act when a state fails to substantially enforce these provisions.

Section 1411(c) of the PPACA requires the Secretary to submit certain information provided by applicants under section 1411(b) of the PPACA to other federal officials for verification, including income and family size information to the Secretary of the Treasury.

Section 1411(d) of the PPACA provides that the Secretary must verify the accuracy of information provided by applicants under section 1411(b) of the PPACA for which section 1411(c) does not prescribe a specific verification procedure, in such manner as the Secretary determines appropriate.

Section 1411(f)(1)(B) of the PPACA requires the Secretary to establish procedures to redetermine eligibility on a periodic basis, in appropriate circumstances, including for eligibility to purchase a QHP through the Exchange and for APTC and CSRs.

Section 1411(g) of the PPACA allows the exchange of applicant information only for the limited purposes of, and to the extent necessary to, ensure the efficient operation of the Exchange, including by verifying eligibility to enroll through the Exchange and for APTC and CSRs.

On October 30, 2013, we published a final rule entitled, “Patient Protection and Affordable Care Act; Program Integrity: Exchange, Premium Stabilization Programs, and Market Standards; Amendments to the HHS Notice of Benefit and Payment Parameters for 2014,” (78 FR 65046), to implement certain program integrity standards and oversight requirements for State Exchanges.

Section 1303 of the PPACA, as implemented in 45 CFR 156.280, specifies standards for issuers of QHPs through the Exchanges that cover abortion services for which public funding is prohibited (also referred to as non-Hyde abortion services). The statute and regulations establish that, unless otherwise prohibited by state law, a QHP issuer may elect to cover such non-Hyde abortion services. If an issuer elects to cover such services under a QHP sold through an individual market Exchange, the issuer must take certain steps to ensure that no PTC or CSR funds are used to pay for abortion services for which public funding is prohibited. One such step is that individual market Exchange issuers must determine the amount of, and collect, from each enrollee, a “separate payment” for an amount equal to the actuarial value of the coverage for abortions for which public funding is prohibited,2 which must be no less than $1 per enrollee per month. QHP issuers must also segregate funds for non-Hyde abortion services collected through this payment into a separate allocation account used exclusively to pay for non-Hyde abortion services.

In the 2012 Exchange Establishment Rule, we codified the statutory provisions of section 1303 of the PPACA in regulation at 45 CFR 156.280. On February 27, 2015, we published the Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2016, (80 FR 10750) (herein after referred to as the 2016 Payment Notice) providing guidance regarding acceptable billing and premium collection methods for the portion of the consumer's total premium attributable to non-Hyde abortion coverage for purposes of satisfying the statutory separate payment requirement.

HHS has consulted with stakeholders on policies related to the operation of Exchanges. We have held a number of listening sessions with consumers, providers, employers, health plans, the actuarial community, and state representatives to gather public input, with a particular focus on risks to the individual and small group markets, and how we can alleviate burdens facing patients and issuers. We consulted with stakeholders through regular meetings with the National Association of Insurance Commissioners, regular contact with State Exchanges through the Exchange Blueprint process and ongoing oversight and technical assistance engagements, and meetings with Tribal leaders and representatives, health insurance issuers, trade groups, consumer advocates, employers, and other interested parties.

Section 155.200 of the PPACA establishes the functions that an Exchange must perform. Section 155.200(c) of the PPACA specifies that the Exchange must perform oversight and financial integrity functions, specifically that the Exchange must perform required functions related to oversight and financial integrity requirements in accordance with section 1313 of the PPACA. HHS interprets this requirement broadly to include program integrity functions related to protecting against fraud, waste, and abuse, including functions not explicitly identified in section 1313 of the PPACA. We believe SBEs have generally interpreted this requirement broadly as well, as evidenced by their engagement in activities designed to combat fraud and abuse related to the Exchange.

However, questions about the breadth of this function have arisen when Exchanges have sought to understand what uses and disclosures of personally identifiable information (PII) are permitted under § 155.260.3 Specifically, we have received questions about whether Exchanges are permitted under § 155.260 to disclose applicant PII to certain entities, such as the state departments of insurance, when investigating fraudulent behavior related to Exchange enrollments on the part of agents and brokers. We believe that use and disclosure related to Exchange program integrity efforts, like combatting fraud, currently fall under § 155.200(c), but believe the regulation is not as clear as it could be. Therefore, we propose to revise § 155.200(c) to clarify that the Exchanges must perform oversight functions generally, and cooperate with oversight activities, in accordance with section 1313 of the PPACA and as required under 45 CFR part 155, including overseeing its Exchange programs, Navigators, agents, brokers, and other non-Exchange entities as defined in § 155.260(b). Because this change is a clarification and not a new function, we do not believe it would impose additional burdens on State Exchanges, but instead would help resolve questions about whether states have the necessary tools and authority to enable them to effectively oversee and combat potentially fraudulent behavior. We seek comment on this proposal, including with respect to our understanding of the potential imposition of additional burden on State Exchanges.

Currently, under § 155.330, Exchanges are required to periodically examine available data sources to identify, with respect to enrollees on whose behalf APTC or CSRs are being paid, eligibility or enrollment determinations for Medicare, Medicaid, CHIP, or the BHP, if a BHP is operating in the service area of the Exchange. Individuals identified as enrolled both in Exchange coverage with or without APTC or CSRs and one of these other forms of coverage are referred to as dually enrolled consumers.

If a consumer is eligible for premium-free Medicare Part A or enrolled in Medicare Part A or Part C (also known as Medicare Advantage), all of which qualify as MEC, he or she is not eligible to receive APTC or CSRs to help pay for an Exchange plan or covered services.

The Secretary has broad authority under section 1321(a) of the PPACA to establish regulations setting standards to implement the statutory requirements under title I of the PPACA, including with respect to the establishment and operation of Exchanges, the offering of QHPs through the Exchanges, the establishment of statutory reinsurance and risk adjustment programs, and such other requirements as the Secretary determines appropriate. Additionally, section 1411(g) of the PPACA allows the exchange of certain applicant information as necessary to ensure the efficient operation of the Exchange, including verifying eligibility to enroll in coverage through the Exchange and to receive APTC or CSRs.

Section 155.320(b)(2) specifies that the disclosure to HHS of information regarding eligibility for and enrollment in a health plan that is a government program, which may be considered protected health information (PHI), is expressly authorized for the purposes of verification of applicant eligibility for MEC as part of the eligibility determination process for APTC or CSRs. Section 155.430(b)(1)(ii) requires an Exchange to provide an opportunity at the time of plan selection for an enrollee to choose to remain enrolled in a QHP if he or she becomes eligible for other MEC, or to terminate QHP coverage if the enrollee does not choose to remain enrolled in the QHP upon completion of the redetermination process. As such, we added language to the existing single, streamlined application used by Exchanges using the federal eligibility and enrollment platform to allow consumers to authorize the Exchange to obtain eligibility and enrollment data and, if desired, to end their QHP coverage if the Exchange finds that the consumer has become eligible for or enrolled in other qualifying coverage, such as Medicare, Medicaid/CHIP, or BHP, during periodic checks.

In addition, for plan years beginning with the 2020 plan year, we also plan to add a new authorization to the single, streamlined application used by Exchanges using the federal eligibility and enrollment platform, which will meet Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L. 104-191) standards regarding how one's PHI is collected and used. This new authorization will expand the current scope of Medicare PDM to individuals in the Exchange population not receiving financial assistance who authorize the FFE to conduct certain PDM for them. Specifically, this new authorization will allow applicants or QHP enrollees, whether or not they have applied for or are receiving APTC or CSRs, to authorize the Exchange, when conducting Medicare PDM, to request PHI from HHS such as their name, Social Security Number, Medicare eligibility or enrollment status, and other data elements the Exchange may determine necessary, to allow the Exchange to determine whether the consumer is simultaneously enrolled in Medicare and, if requested, to act on the enrollee's behalf to terminate QHP coverage in cases of dual enrollment. We note that, because entitlement to premium-free Medicare Part A is based on age and information held by the Social Security Administration (that is, the number of quarters of coverage toward a Social Security benefit under Title II of the Act), the Exchange will not be able to identify through this process any consumer who is eligible for premium-free Part A; we encourage all consumers who are age 65 and older to apply with the Social Security Administration to receive an eligibility determination with respect to Medicare. Our adoption of this new optional authorization to access Medicare enrollment information does not extend to access to Medicaid, CHIP, or BHP information for applicants who are not receiving APTC or CSRs, because these programs are targeted to relatively lower income consumers and we would not expect to identify a significant number of enrollees dually enrolled in one of these programs and an unsubsidized QHP through the Exchange.

For consumers who request voluntary termination upon a finding of dual enrollment, the Exchange would terminate coverage after following the current PDM process outlined in § 155.330(e)(2)(i), which requires the Exchange to provide notice of the updated information the Exchange has found and a 30-day period for the enrollee to respond. For example, upon receiving the required notice, the enrollee could (1) return to the Exchange and terminate his or her QHP coverage, (2) revoke the prior authorization for the Exchange to terminate his or her QHP coverage in the event dual enrollment is found, so that he or she would remain enrolled both in the QHP and in Medicare, or (3) notify the Exchange that he or she is not eligible for, or enrolled in, Medicare. For consumers who revoke their prior authorization for the Exchange to terminate their QHP enrollment where the Exchange finds the enrollee is eligible for or enrolled in Medicare, or who disagree that they are eligible for or enrolled in Medicare, the Exchange would only proceed to terminate the enrollee's APTC and CSRs, and not his or her enrollment in QHP coverage through the Exchange, using the process specified in § 155.330(e)(2)(i). Again, as the Exchange cannot identify through this process those consumers who are eligible for but not enrolled in premium-free Part A, we encourage all consumers who are 65 and older to apply with the Social Security Administration to receive an eligibility determination with respect to Medicare.

Based on our experience performing Medicare PDM, we believe that many consumers are inadvertently enrolled in Medicare and QHP coverage at the same time, and that their dual enrollment does not represent an informed decision. For example, we have found that, once consumers are informed of the consequences of their dual enrollment, such as paying full price for a QHP and risk for financial penalties for delaying Medicare Part B enrollment, the majority of consumers end their QHP coverage shortly thereafter. Furthermore, our own internal analyses show that the majority of QHP enrollees who become dually enrolled do so by aging into Medicare and failing to terminate the APTC or CSRs they are receiving through the Exchange (and, if desired, their Exchange coverage itself) during their Medicare initial enrollment period. We believe that Exchanges should play an important role in helping to ensure that consumers, regardless of whether the consumer has applied for, or is receiving, APTC or CSRs through the Exchange, are aware of their dual enrollment, the fact that their QHP coverage may duplicate coverage available to them through Medicare at potentially lower expense, and their potential risk for tax liability for APTC received during months of overlapping coverage (for consumers receiving APTC) or financial penalties (such as the Medicare Part B late enrollment penalty if they delay enrolling in Medicare during their initial eligibility period).

We believe these changes will support HHS's program integrity efforts regarding the Exchanges by helping promote a balanced risk pool for the individual market as Medicare and Medicaid/CHIP beneficiaries tend to be higher utilizers of medical services, ensuring that consumers are accurately determined eligible for APTC and income-based CSRs, and safeguarding consumers against enrollment in unnecessary or duplicative coverage. Such unnecessary or duplicative coverage, coupled with typically higher utilization, generally results in higher premiums across the individual market, leading to unnecessarily inflated expenditures of federal funds on PTC for taxpayers eligible for PTC in the individual market. We also encourage SBEs and enhanced direct enrollment partners to adopt these changes if they are not already using the single, streamlined application. We seek comment on these plans.

In accordance with § 155.330(d), Exchanges must periodically examine available data sources to determine whether enrollees in a QHP through an Exchange with APTC or CSRs have been determined eligible for or enrolled in other qualifying coverage through Medicare, Medicaid, CHIP, or the BHP, if applicable. HHS has not previously defined “periodically.” Currently, FFEs conduct Medicare PDM and Medicaid/CHIP PDM twice a year. To ensure that all Exchanges are taking adequate steps to check for enrollees who have become eligible for or enrolled in these other forms of MEC, and to terminate APTC and CSRs if so, we propose to add a clearer requirement to conduct Medicare, Medicaid/CHIP, and BHP, if applicable, periodic data matching with regular frequency. Specifically, we propose to add paragraph (d)(3) to specify that Exchanges conduct Medicare, Medicaid/CHIP, and BHP, if applicable, PDM at least twice a year, beginning with the 2020 calendar year. We believe this timeframe will give Exchanges that are not already performing these PDM checks twice a year sufficient time to implement any business, operational, and information technology changes needed to comply with the proposed new requirement. Based on HHS's experience, Exchanges should consider spacing Medicare, Medicaid/CHIP, and BHP, if applicable, PDM checks evenly throughout the year, which we believe would help ensure the greatest number of potentially affected enrollees are identified and notified. Further, we do not anticipate that the proposal—to apply Medicare PDM to those enrollees who are not receiving APTC/CSRs but authorize the Exchange to receive Medicare enrollment information—would add significant costs to performing Medicare PDM. Based on HHS's experience, the dually enrolled unsubsidized population is significantly smaller than the population receiving APTC/CSRs. We believe this policy would likely reduce QHP premiums and improve program integrity for all Exchanges, since Medicare and Medicaid/CHIP beneficiaries tend to have a higher risk profile than a typical Exchange enrollee and, therefore, may have negative impacts on the risk pool because of the typically increased utilization of services expected for these populations, which include significant numbers of older and disabled beneficiaries or poorer health outcomes associated with lower income statuses.4 As noted above, this negative effect on the risk pool likely results in higher premiums across the individual market, leading to increased expenditures of federal funds on PTC for taxpayers eligible for PTC resulting from unnecessary or duplicative coverage. So that the FFEs and SBEs may prioritize the implementation of the proposed requirement to conduct PDM for Medicare, Medicaid, CHIP, and BHP (if applicable) eligibility or enrollment at least twice yearly, we are not proposing to require Exchanges to perform PDM for death at least twice in a calendar year. We will consider whether to require this check to be performed at a particular frequency through future rulemaking.

Since most SBEs have shared, integrated eligibility systems with their respective Medicaid programs, Medicaid/CHIP and BHP, if applicable, PDM requirements may be met differently for SBEs than for the FFEs. While there is some variation among SBEs in their Medicaid/CHIP and BHP, if applicable, PDM processes, most SBEs have implemented fully integrated eligibility systems where the design of the system mitigates risk of dual enrollment in, or inconsistent eligibility results regarding, APTC/CSRs and Medicaid/CHIP and BHP, if applicable, coverage by having one eligibility rules engine for eligibility determinations for all these programs. In these SBEs, an individual cannot be enrolled in both a QHP through the Exchange with APTC/CSRs, and Medicaid/CHIP or BHP, if applicable, coverage, at any given time. At paragraph (d)(3), we propose to specify that we will deem these SBEs to be in compliance with the requirement to perform Medicaid/CHIP PDM or BHP PDM, if applicable. SBEs that do not have fully integrated eligibility systems for APTC/CSRs and Medicaid/CHIP would be required to perform Medicaid/CHIP PDM at least twice a year. Similarly, SBEs in states that have implemented the BHP, but where the BHP is not integrated into the state's shared eligibility system, would be required to perform BHP PDM at least twice a year. We anticipate most SBEs will meet or exceed the proposed requirements for Medicaid/CHIP PDM and BHP PDM, if applicable, based on current or planned operations for calendar year 2018, as reported to us through the State-based Marketplace Annual Reporting Tool and through technical assistance engagements. Therefore, we anticipate that the proposed requirement to conduct Medicaid/CHIP PDM and BHP PDM, if applicable, at least twice a year would not result in a significant administrative burden for SBEs that are not deemed to be in compliance (and no administrative burden for those that are so deemed).

Although we believe that compliance by SBEs with these proposed requirements is critically important for program integrity, we are not proposing specific penalties if SBEs do not comply. However, we note that under current authority HHS requires a SBE to take corrective action if it is not complying with federal guidance and regulations. We utilize specific oversight tools (SMART, programmatic audits, etc. as described in the preamble to § 155.1200) to identify issues with, and place corrective actions on Exchanges, and provide technical assistance and ongoing monitoring to track those actions until the Exchange comes into compliance.

Additionally, under section 1313(a)(4) PPACA, if HHS determines that an Exchange has engaged in serious misconduct with respect to compliance with Exchange requirements, it has the option to rescind up to 1 percent of payments due a state under any program administered by HHS until it is resolved. These existing authorities would apply to the proposed periodic data matching requirements in § 155.330(d). If HHS determines it is necessary to apply this authority due to non-compliance by an Exchange with § 155.330(d), HHS would also determine the HHS-administered program from which it will rescind payments that are due to that state.

Lastly, we propose to make a technical correction in § 155.330(d)(1) by adding an additional reference to the process and authority in § 155.320(b). This reference was omitted previously, but the requirements in § 155.320(b), specifying that Exchanges must verify whether an applicant is eligible for MEC other than through an eligible employer-sponsored plan using information obtained by transmitting identifying information specified by HHS to HHS for verification purposes, apply to the PDM process in § 155.330.

As section 1311 of the PPACA Exchange Establishment grant program has come to a conclusion and State Exchanges are financially self-sustaining, HHS has a need for strengthening the mechanisms and tools for overseeing SBE and SBE-FP ongoing compliance with federal requirements for Exchanges, including eligibility and enrollment requirements under 45 CFR part 155.

HHS approves or conditionally approves a state to establish a State Exchange (either an SBE or SBE-FP) based on an assessment of a state's attested compliance with statutory and regulatory rules. Once approved or conditionally approved, State Exchanges must meet specific program integrity and oversight requirements specified at section 1313(a) of the PPACA, §§ 155.1200 and 155.1210. These requirements provide HHS with the authority to oversee the Exchanges after their establishment. Currently, annual reporting requirements for State Exchanges at § 155.1200(b) include the annual submission of: (1) A financial statement in accordance with generally accepted accounting principles (GAAP); (2) eligibility and enrollment reports; and (3) performance monitoring data.

Additionally, under § 155.1200(c), each State Exchange is required to contract with an independent external auditing entity that follows generally accepted governmental auditing standards (GAGAS) to perform annual independent external financial and programmatic audits. State Exchanges are required to provide HHS with the results of the annual external audits, including corrective action plans to address any material weaknesses or significant deficiencies identified by the auditor. All corrective action plans are monitored by HHS until closed. Currently, the audits must address compliance with all Exchange requirements under 45 CFR part 155.

HHS designed and developed the State-based Marketplace Annual Reporting Tool (SMART) in 2014 to assist Exchanges in conducting a defined set of oversight activities. The SMART was designed to facilitate State Exchanges' reporting to HHS on how they are meeting federal program requirements and operational requirements set forth in statute, regulations, and applicable guidance that implements the statutory and regulatory requirements, including reporting compliance with Federal eligibility and enrollment program requirements under 45 CFR 155 subparts D and E. The SMART, thus, enables HHS to evaluate and monitor State Exchange progress in coming into compliance with federal requirements where needed. Since then, HHS has come to utilize the SMART, along with the annual programmatic and financial audit reports, as primary oversight tools for identifying and addressing State Exchange non-compliance issues. HHS requires State Exchanges to take corrective actions to address issues that are identified through the SMART and annual programmatic and financial audits, and HHS monitors the implementation of the corrective actions. We propose to modify § 155.1200(b)(2) to reflect that HHS requires State Exchanges to submit annual compliance reports (such as the SMART), that encompass eligibility and enrollment reporting, but also include reporting on compliance across other Exchange program requirements under 45 CFR part 155. We also propose to modify § 155.1200(b)(1) to eliminate the April 1st date in which states must provide a financial statement to HHS, to provide HHS the flexibility to align the financial statement deadline with the SMART deadline, which is set annually by HHS. Because we are proposing to remove the April 1st date, but intend to maintain the requirement that State Exchanges submit the required reports by a deadline, we also propose to modify the introductory text to § 155.1200(b) to specify that State Exchanges must provide the required annual reporting by deadlines to be set by HHS.

We propose to retain the requirement at § 155.1200(c) that an annual programmatic audit be conducted by SBEs and SBE-FPs, but make a minor change from “state” to “State Exchanges” to be consistent and clear on the entities to which this rule applies. We also propose to add specificity to the annual programmatic audit requirement by proposing a clarification of § 155.1200(d)(2) to make clear that HHS may specify or target the scope of a programmatic audit to address compliance with particular Exchange program areas or requirements. This would provide HHS with the ability to specify those Exchange functions that are most pertinent to a particular State Exchange model (SBE or SBE-FP) and need to be regularly included in the audit; target those Exchange functions most likely to impact program integrity, such as eligibility verifications; and reduce burden on State Exchanges where possible. In addition, we propose to modify § 155.1200(d) by replacing existing paragraph (d)(4) with new paragraphs (d)(4) and (5). These requirements specify that SBEs must ensure that the independent audits implement testing procedures or other auditing procedures that assess whether an SBE is conducting accurate eligibility determinations and enrollment transactions under 45 CFR 155 subparts D and E. Such auditing procedures include the use of statistically valid sampling methods in the testing or auditing procedures.

We believe these proposed changes will strengthen our programmatic oversight and the program integrity of State Exchanges, while providing flexibility for HHS in the collection of information. Through the Paperwork Reduction Act (PRA) process, we are able to make updates and refinements to the SMART reporting tool to align with our oversight and program integrity priorities for Exchanges as they evolve. In addition, allowing HHS to specify the scope of the programmatic audit at § 155.1200(d)(2) would provide us the ability to target our oversight to specific Exchange program requirements based on the particular State Exchange model, our program integrity priorities, and the goal of reducing burden on State Exchanges where possible. For instance, this would allow the audits to focus on SBE compliance with Exchange eligibility and enrollment requirements in 45 CFR 155 subparts D and E, and SBE-FP compliance with Exchange requirements in 45 CFR 155 subpart C. We believe this approach will provide HHS and states with greater insight into SBE and SBE-FP compliance with federal standards in a more cost-effective manner. We believe these two tools, state reporting and independent testing, coupled with our ongoing oversight activities would strengthen program integrity in State Exchanges.

We believe this approach would allow HHS to identify State Exchange non-compliance issues with more precision and efficacy. It would also allow HHS to provide more effective, targeted technical assistance to State Exchanges in developing corrective action plans to address issues that are identified, thus mitigating the need for more drastic or severe enforcement actions against a State Exchange. We believe this approach can reduce administrative burden on State Exchanges while maintaining the traditional role of State Exchanges in managing and operating their Exchanges, with HHS maintaining its role of overseeing State Exchange compliance with federal requirements through structured reporting processes. We seek comment on these proposals.

Since 1976, the Congress has included language, commonly known as the Hyde Amendment, in the Labor, Health and Human Services, Education and Related Agencies appropriations legislation.5 The Hyde Amendment as currently in effect permits federal funds to be used for abortion services only in the limited cases of rape, incest, or if a woman suffers from a life-threatening physical disorder, physical injury, or physical illness, including a life-endangering physical condition caused by or arising from the pregnancy itself, that would, as certified by a physician, place the woman in danger of death unless an abortion is performed (Hyde abortion coverage). The Hyde Amendment prohibits the use of federal funds for abortion coverage in instances beyond those limited circumstances (non-Hyde abortion coverage). Consistent with the Hyde Amendment, section 1303(b)(2) of the PPACA prohibits the issuer of a QHP that includes non-Hyde abortion coverage from using any amount attributable to PTC (including APTC) or CSRs (including advance payments of those funds to the issuer, if any) for abortions for which federal funds appropriated for HHS are prohibited, “based on the law as in effect as of the date that is 6 months before the beginning of the plan year involved.” 6

Section 1303 of the PPACA outlines specific accounting and notice requirements that QHPs covering non-Hyde abortion services on the Exchanges must follow to ensure that no federal funding is used to pay for those services. Under section 1303(b)(2)(B) of the PPACA, as implemented in § 156.280(e)(2)(i), QHP issuers must collect a “separate payment,” from each enrollee in a plan “without regard to the enrollee's age, sex, or family status,” for an amount equal to the greater of the actuarial value of the coverage for abortions for which public funding is prohibited or $1 per enrollee per month. Section 1303(b)(2)(D) of the PPACA, implemented in § 156.280(e)(4), provides that the estimation is to be determined on an average actuarial basis and that QHP issuers may take into account the impact on overall costs of the inclusion of such coverage, but may not take into account any cost reduction estimated to result from such services, including prenatal care, delivery, or postnatal care. Section 1303(b)(2)(D) of the PPACA as implemented in § 156.280(e)(4) further states that QHP issuers are to estimate these costs as if the coverage were included for the entire population covered. With respect to the “separate payment” requirement, if an enrollee's premium for coverage under the plan is paid through employee payroll deposit (or deduction) under section 1303(b)(2)(B), the separate payments “shall each be paid by a separate deposit.”

As mentioned above, QHP issuers that offer coverage for non-Hyde abortion may not use APTC to pay for such coverage, or use CSR funds to pay for such services. Pursuant to section 1303(b)(2)(D)(ii)(III) of the PPACA, these QHP issuers may not estimate the premium attributable to the benefit to be less than $1 per enrollee per month, regardless of the actual cost of the benefit. Currently, in certain rare scenarios, the FFE system allocates an amount of APTC to a policy such that the share of the aggregate premium for which the consumer is responsible is too low to meet this minimum standard. We intend to make system changes for open enrollment for plan year 2019 to ensure that the minimum premium amount of $1 per enrollee per month is assigned to all enrollments into plans offering coverage of non-Hyde abortion, so that issuers may separately collect this amount directly from consumers for the portion of the total premium attributable to coverage of non-Hyde abortion services.

Under section 1303(b)(3)(A) of the PPACA as implemented in § 156.280(f), QHP issuers must provide notice to enrollees as part of the Summary of Benefits and Coverage (SBC) at the time of enrollment if non-Hyde abortion services are covered by the QHP. As required under § 155.205(b)(1)(ii), each Exchange must maintain an up-to-date website that provides the SBCs. Section 147.200(a)(4) requires that individual market QHP issuers that provide the SBC electronically must place it in a prominent and readily accessible location on the QHP issuer's internet website. Additionally, pursuant to section 1303(b)(2)(C) of the PPACA, as implemented at § 156.280(e)(3), QHP issuers must segregate funds for non-Hyde abortion services collected from consumers into a separate allocation account that is to be used exclusively to pay for non-Hyde abortion services. Thus, if a QHP issuer disburses funds for a non-Hyde abortion on behalf of a consumer, it must draw those funds from the segregated allocation account. The account cannot be used for any other purpose.

Section 1303 of the PPACA and regulations at § 156.280 do not specify the method a QHP issuer must use to comply with the separate payment requirement under section 1303(b)(2)(B)(i) of the PPACA and § 156.280(e)(2)(i). In the 2016 Payment Notice, we provided guidance with respect to acceptable methods that a QHP issuer offering non-Hyde abortion coverage on the individual market Exchange may use to comply with the separate payment requirement. We stated that the QHP issuer could satisfy the separate payment requirement in one of several ways, including by sending the enrollee a single monthly invoice or bill that separately itemizes the premium amount for non-Hyde abortion services; sending the enrollee a separate monthly bill for these services; or sending the enrollee a notice at or soon after the time of enrollment that the monthly invoice or bill will include a separate charge for such services and specify the charge. In the 2016 Payment Notice, we also stated that a consumer may make the payment for non-Hyde abortion services and the separate payment for all other services in a single transaction. On October 6, 2017, we released a bulletin that discussed the statutory requirements for separate payment, as well as this previous guidance with respect to the separate payment requirement.7

HHS now believes that some of the methods for billing and collection of the separate payment for non-Hyde abortion services noted as permissible in the preamble to the 2016 Payment Notice do not adequately reflect what we see as Congressional intent that the QHP issuer bill separately for two distinct (that is, “separate”) payments, one for the non-Hyde abortion services, and one for all other services covered under the policy, rather than simply itemizing these two components of a single total billed amount or notifying the enrollee, at or soon after the time of enrollment, that the monthly invoice or bill will include a separate charge for these services. Although we recognize that itemizing or providing advance notice about the amounts arguably identifies two “separate” amounts for two separate purposes, we believe that the statute contemplates issuers billing for two separate “payments” of these two amounts (for example, two different checks or two distinct transactions), consistent with the requirement on issuers in section 1303(b)(2)(B)(i) of the PPACA to collect two separate payments. HHS, thus, believes that requiring QHP issuers to separately bill the portion of the consumer's premium attributable to non-Hyde abortion services and instruct consumers to make a separate payment for this amount is a better implementation of the statutory requirement for issuers to collect a separate payment for these services.

As such, we are proposing an amendment at § 156.280(e)(2) relating to billing and payment of the consumer's portion of the premium attributable to non-Hyde abortion services to reflect this interpretation of the statute. Specifically, we are proposing that, if these policies are finalized, as of the effective date of the final rule, QHP issuers (1) send an entirely separate monthly bill to the policy subscriber for only the portion of premium attributable to non-Hyde abortion coverage, and (2) instruct the policy subscriber to pay the portion of their premium attributable to non-Hyde abortion coverage in a separate transaction from any payment the policy subscriber makes for the portion of their premium not attributable to non-Hyde abortion coverage. We believe that these proposals would better align the regulatory requirements for QHP issuer billing of enrollee premiums with the separate payment requirement in section 1303 of the PPACA. If these proposals are finalized, QHP issuers would no longer be permitted to send the enrollee a single monthly invoice or bill that separately itemizes the premium amount for non-Hyde abortion services, or send the enrollee a notice at or soon after the time of enrollment that the monthly invoice or bill will include a separate charge for such services and specify the charge in order to meet the separate payment requirement. Instead, QHP issuers would have to send a separate bill and instruct enrollees to send a separate payment in the manner specified by the final rule.8 We invite comment on these proposals.

To better align the regulatory requirements for issuer billing of enrollee premiums with the separate payment requirement in section 1303 of the PPACA, our proposal would require the QHP issuer to send this separate bill in a separate mailing with separate postage. If a QHP issuer sends bills electronically, we propose that it provide consumers with the two bills in separate emails or other electronic communications. We believe this approach will help reduce consumer confusion about receiving two separate bills in a single envelope. For example, consumers may inadvertently miss or discard a second paper bill included in a single envelope, increasing terminations of coverage for failure to pay premiums. The QHP issuer would also be required to produce an invoice or bill that is distinctly separate from the invoice or bill for the other portion of the consumer's premium that is not attributable to non-Hyde abortion coverage, whether in paper or electronic format. We solicit comment on any operational issues that may arise from this aspect of the proposed rule.

We also seek comment on ways to mitigate any possible confusion, for example through an annual notice or standard explanatory language on each of the two monthly bills. To meet the requirements of this new proposal, QHP issuers would be required to instruct policy subscribers to pay the separately billed or invoiced portion of the premium for non-Hyde abortion coverage in a transaction separate from the transaction for payment of the other portion of the premium that is not attributable to non-Hyde abortion coverage and make reasonable efforts to collect the payment separately, such as by including a separate payment stub on each of the separately mailed bills or invoices (if sent on paper) or providing a separate payment link in the separate email or electronic communication with a separate payment field on the payment web page for each separate payment to be collected (if sending an electronic bill, or accepting electronic payments regardless of how the bills were transmitted). Under this proposal, consumer non-payment of any premium due (including non-payment of the portion of the consumer's premium attributable to non-Hyde abortion coverage) would continue to be subject to state and federal rules regarding grace periods. In the event that a policy subscriber does not follow the separate payment instructions, however, and pays the entire premium in a single transaction (both the portion attributable to non-Hyde abortion coverage, as well as the portion attributable to coverage for other services), the QHP issuer would not be permitted to refuse to accept such a combined payment on the basis that the policy subscriber did not send two checks as requested by the QHP issuer, and to then terminate the policy, subject to any applicable grace period, for non-payment of premiums. We believe that potential loss of coverage would be an unreasonable result of a consumer paying in full but failing to adhere to the QHP issuer's requested payment procedure. Under our new interpretation, a QHP issuer would thus be required to accept a combined payment, to the extent necessary to avoid this result.

QHP issuers that do receive combined consumer premiums covering the portion attributable to non-Hyde abortion coverage as well as the portion attributable to coverage for other services in one single payment would treat the portion of the premium attributable to non-Hyde abortion services as a separate payment for which the QHP issuer would be expected to disaggregate into the separate allocation account used solely for these services. We would expect the QHP issuer in this scenario to again explain to the consumer the separate payment requirement in the law, and take steps to inform the consumer not complying with this policy that he or she should do so in future months, including documentation of such outreach and educational efforts. Again, if the consumer still declines to do so, however, the combined payment must be accepted to avoid a loss of coverage. Likewise, QHP issuers would not be permitted to refuse to accept separate premium payments paid to the issuer in a single return envelope (for example, two separate checks returned to the issuer in a single return envelope) on the basis that the consumer did not separately return each premium payment in a separate mailing. We seek comment on these proposals.

We are also proposing a technical change, to Section 156.280(e)(2)(iii) as redesignated, to insert appropriate cross reference to the explanation of the separate payments.

Consistent with § 156.715, HHS has broad authority to perform compliance reviews to monitor FFE issuer compliance. HHS conducts compliance reviews throughout the year, and issuer notification of selection for a review may occur at any time during the year. Detailed examples of regulatory and operational areas that will be reviewed are included in the Key Priorities for FFM Compliance Review, which is updated each year with new key oversight priorities.9 Consistent with this authority, we propose updating our compliance reviews governing QHP certification to include new reviews of FFE issuer compliance with § 156.280, including the segregation of funds requirement and the new proposals for separate billing of the portion of the consumer's premium attributable to coverage of non-Hyde abortion services as specified in this rule. FFE issuers subject to these compliance reviews should maintain all documents and records of compliance with section 1303 of the PPACA and these requirements in accordance with § 156.705, and should anticipate making available to HHS the types of records specified at § 156.715(b) that would be necessary to establish their compliance with these requirements. For example, FFE issuers subject to compliance reviews for § 156.280 should anticipate supplying HHS with documentation of their estimate of the basic per enrollee per month cost, determined on an average actuarial basis, for coverage of non-Hyde abortion services; detailed invoice and billing records demonstrating they are separately billing in a separate mailing or separate electronic communication and collecting the portion of the premium attributable to coverage of non-Hyde abortion services as specified in this rule; and appropriately segregating the funds collected from consumers into a separate allocation account that is used exclusively to pay for non-Hyde abortion services. We believe the addition of these compliance reviews will help to address remaining issuer compliance issues, if any, previously identified by the 2014 U.S. Government Accountability Office report.10 We seek comment on this proposal.

As is the case with many provisions in the PPACA, states are the entities primarily responsible for implementing and enforcing the provisions in section 1303 of the PPACA related to individual market QHP coverage of non-Hyde abortion services. Section 1303(b)(2)(E)(i) of the PPACA, as implemented at § 156.280(e)(5), designates the state insurance commissioners as the entities responsible for monitoring, overseeing, and enforcing the provisions in section 1303 of the PPACA related to QHP segregation of funds for non-Hyde abortion services. However, as stated in 2017 guidance,11 where we are charged with directly enforcing these statutory requirements in the FFEs, we intend to do so fully in instances of issuer non-compliance. We call upon states that operate their own Exchanges to fully enforce these requirements as codified in the federal regulations governing the Exchanges. To the extent such a state operating its own Exchange fails to substantially enforce these requirements, HHS would expect to enforce them in the state's place. However, as states remain the primary enforcers of these requirements, we propose that HHS involvement in enforcement would be limited to ensuring that federal funds are appropriately managed. For example, HHS enforcement would be limited to instances where it becomes clear that the state department of insurance is not overseeing the requirement for the QHP issuer to determine the actuarial value of the coverage of non-Hyde abortions, to separately bill (and collect) premium of at least $1 per enrollee per month for such coverage, or to segregate funds effectively; a state department of insurance or other entity notifies HHS of suspected misuse of federal funding for coverage of non-Hyde abortion services; or the state's enforcement actions are inadequate and fail to result in compliance from the QHP issuer. The Office of Personnel Management may issue guidance related to these provisions for multi-state plan issuers.12

We remind issuers that pursuant to § 156.280(e)(5)(ii), any issuer offering coverage of non-Hyde abortions services on the Exchange must submit a plan to its state department of insurance that details the issuer's process and methodology for meeting the requirements of section 1303(b)(2)(C), (D), and (E) of the PPACA (hereinafter, “separation plan”) to the state health insurance commissioner. The separation plan should describe the QHP issuer's financial accounting systems, including appropriate accounting documentation and internal controls, that would ensure the segregation of funds required by section 1303(b)(2)(C), (D), and (E) of the PPACA. Issuers should refer to § 156.280(e)(5)(ii) for more information on precisely what issuers should include in their separation plans to demonstrate compliance with these requirements.

As mentioned previously, consistent with HHS's authority under § 156.715, we propose monitoring FFE issuer compliance with the requirements under § 156.280 by requiring QHP issuers in FFEs to show documentation of compliance with the requirement to estimate the basic per enrollee per month cost, determined on an average actuarial basis, for coverage of non-Hyde abortion services and charge at least $1 per enrollee per month for such coverage, as well as with the segregation of funds requirements when undergoing compliance reviews, including detailed records and documentation demonstrating compliance with the separate billing (including mailing, as applicable) and collection requirements proposed in this rule, as well as the segregation of funds requirements. We also remind issuers offering medical QHPs in the FFEs that they must already attest to adhering to all applicable requirements of 45 CFR part 156 as part of the QHP certification application, including those requirements related to the segregation of funds for abortion services implemented in § 156.280.13 If the separate billing and premium collection proposals at § 156.280(e)(2) are finalized as proposed, issuers in the FFE completing this attestation would also attest to adhering to these new separate billing and collection requirements. As part of the QHP certification process, issuers in states with FFEs where the States perform plan management functions must also complete similar program attestations attesting to adherence with § 156.280.14 Issuers in states with SBEs that offer QHPs including non-Hyde abortion coverage should contact their state for attestation requirements as part of the QHP certification process.

We seek comment on these proposals.

Under the Paperwork Reduction Act of 1995 (PRA), we are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. This proposed rule contains information collection requirements (ICRs) that are subject to review by OMB. A description of these provisions is given in the following paragraphs.

In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues:

• The need for the information collection and its usefulness in carrying out the proper functions of our agency.

• The accuracy of our estimate of the information collection burden.

• The quality, utility, and clarity of the information to be collected.

• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

We are soliciting public comment on each of these issues for the following sections of this document that contain ICRs:

The burden associated with State Exchanges meeting the proposed program integrity reporting requirements in § 155.1200 have already been assessed and encompassed through SMART currently approved under OMB control number: 0938-1244 (CMS-10507). This proposed rule does not impose any new burden or add any additional requirements to the existing collection.

In the preamble to § 156.280, we explain that the proposals to require separate issuer billing for, and collection of, the portion of the premium attributable to non-Hyde abortion coverage would be subject to future HHS compliance reviews of FFE issuers, requiring issuers in the FFE to maintain and submit records showing compliance with these requirements to HHS. We have determined that the requirements associated with compliance reviews have already been assessed and encompassed by the Program Integrity: Exchange, Premium Stabilization Programs, and Market Standards; Amendments to the HHS Notice of Benefit and Payment Parameters for 2014; Final Rule II ICR currently approved under OMB control number: 0938-1277 (CMS-10516).

To show compliance with FFE standards and program requirements, all issuers seeking QHP certification in FFE states are required to submit responses to program attestations as part of their QHP application. This response already includes an attestation that the issuer agrees to adhere to the requirements related to the segregation of funds for abortion services implemented in § 156.280. We have determined that the requirements associated with QHP certification have already been assessed and encompassed by the Establishment of Exchanges and Qualified Health Plans; Exchange Standard for Employers approved under OMB control number 0938-1187 (CMS-10433). Therefore, proposed § 156.280(e)(2) adds no new ICRs as it relates to program attestations.

In § 156.280(e)(2), we propose that QHP issuers must send an entirely separate monthly bill in a separate mailing or separate electronic communication to the policy subscriber for only the portion of premium attributable to non-Hyde abortion coverage, and instruct the policy subscriber to pay the portion of their premium attributable to non-Hyde abortion coverage in a separate transaction from any payment the policy subscriber makes for the portion of their premium not attributable to non-Hyde abortion coverage. Based on 2018 QHP certification data in the FFEs and SBE-FPs, we estimate that 15 QHP issuers offered a total of 111 plans with coverage of non-Hyde abortion services in 7 States. In SBEs, we estimate that 60 QHP issuers offered a total of approximately 1,000 plans offering this coverage across 10 SBEs. In total, this leads to an estimated 75 QHP issuers offering a total of 1,111 plans covering non-Hyde abortion services across 17 states. As such, the ICRs associated with these proposals would create a new burden on QHP issuers and plans and are subject to the Paperwork Reduction Act. Salaries for the positions cited below were taken from the May 2017 National Occupational Employment and Wage Estimates United States Department of Labor's Bureau of Labor Statistics (BLS) (http://www.bls.gov/oes/current/oes_nat.htm) based on the listed national median hourly wage. All wages on the following pages are inflated by 100 percent to account for the cost of fringe benefits and overhead costs.

We anticipate that populating the enrollee information on the separate electronic or paper bill, transmitting the separate electronic or paper bill in a separate mailing or separate electronic communication, and processing the enrollee's separate electronic or mailed payment, will be an automated process that occurs monthly after a computer programmer adds this functionality to the QHP issuer's billing and payment operating system. We estimate that, on a one-time basis, a computer programmer will require 10 hours to add this functionality to an affected QHP issuer's systems (at a rate of $84.16 per hour) for a total burden of 10 hours. We estimate that this will result in a one-time cost of $841.60 per QHP issuer that offers plans that cover non-Hyde abortion services to meet this reporting requirement. This would be a one-time cost, such that the overall burden for all 75 QHP issuers would be 750 hours, with an associated total cost of $63,120.

Because an estimated 75 QHP issuers offered a total of 1,111 plans with coverage of non-Hyde abortion services across 17 states, we estimate that the total number of QHP issuers that offer plans with coverage of non-Hyde abortion, for which they would be required to send separate bills in a separate mailing or separate electronic communication and collect separate payments as proposed at § 156.280(e)(2), would be 75 per year, for a total one-time burden of 750 hours. Below is the estimate of the burden imposed on a single QHP issuer subject to the reporting requirements of this rule. The aggregate burden for 3 years will be same as for 1 year: $841.60 per respondent and $63,120 for all respondents.

Although we anticipate that populating the enrollee information on the separate electronic or paper bill and transmitting that bill in a separate mailing or separate electronic communication would be an automated process, we estimate that a general office clerk working for an affected QHP issuer would require 2 hours monthly (at a rate of $30.28 per hour) per plan to determine which enrollees are enrolled in plans that cover non-Hyde abortion and to oversee the process of sending a separately packaged complete and accurate bill in a separate mailing or separate electronic communication to these enrollees for the portion of their premium attributable to that coverage, for an annual burden of 24 hours. This estimate includes the amount of time the office clerk would spend determining which enrollees prefer paper billing versus electronic billing, and ensuring that the bills are complete and accurate and are being sent in a separate mailing or separate electronic communication. We estimate that it would cost $726.72 annually per plan that covers non-Hyde abortion services to meet the reporting requirement, with a total annual burden for all 1,111 plans of 26,664 hours and an associated total annual cost of $807,385.92.

We similarly anticipate that processing the payment made by enrollees for this portion of their premium would be an automated process. However, we estimate that a general office clerk working for an affected QHP issuer would require 2 hours monthly (at a rate of $30.28 per hour) per plan to review for accuracy the separate payment an enrollee in a plan covering non-Hyde abortion services sends for the portion of their premium attributable to that coverage and to process any payments or paper checks made by enrollees through the mail, for an annual burden of 24 hours. This estimate includes the amount of additional time the office clerk would need to spend reviewing for accuracy the separate payments returned in separate mailings from the payments received for the portion of the policy subscriber's premium not attributable to non-Hyde abortion. We estimate that it would cost $726.72 annually per plan that covers non-Hyde abortion services to meet the reporting requirement, with a total annual burden for all 1,111 plans of 26,664 hours and an associated total cost of $807,385.92.

As such, we estimate that the total number of plans for which QHP issuers would need to send separate bills in a separate mailing or separate electronic communication and collect separate payments as proposed at § 156.280(e)(2) would be 1,111 per year, for a total burden of 53,328 hours to meet these reporting requirements per year. Below is the estimate of the burden imposed on a single plan subject to the reporting requirements of this rule. The aggregate burden for 3 years will be $4,360.32 per respondent and $4,844,315.52 for all respondents.

We have submitted a copy of this proposed rule to OMB for its review of the rule's information collection and recordkeeping requirements. The requirements are not effective until they have been approved by OMB.

We invite public comments on these information collection requirements. If you wish to comment, please identify the rule (CMS-9922-P) and, where applicable, the ICR's CFR citation, CMS ID number, and OMB control number.

To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of following:

1. Access CMS's website address at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.

2. Email your request, including your address, phone number, OMB number, and CMS document identifier, to [email protected].

3. Call the Reports Clearance Office at (410) 786-1326.

See this rule's DATES and ADDRESSES sections for the comment due date and for additional instructions.

Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document.

We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs (January 30, 2017).

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 regulation: (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 must be prepared for major rules with economically significant effects ($100 million or more in any 1 year), and an “economically significant” regulatory action is subject to review by the Office of Management and Budget (OMB). As discussed below regarding their anticipated effects, these proposals are not likely to have economic impacts of $100 million or more in any 1 year, and therefore do not meet the definition of “economically significant” under Executive Order 12866. However, OMB has determined that the actions are significant within the meaning of section 3(f)(4) of the Executive Order. Therefore, OMB has reviewed these final rules and the Departments have provided the following assessment of their impact.

HHS is committed to promoting program integrity throughout its programs to ensure that federal statutory requirements are met and federal monies are not being inappropriately spent. Ensuring that consumers receive the correct amount of APTC and CSRs at the time of enrollment or re-enrollment is a top priority for us, and necessitates regulatory action. Accurate and up-to-date eligibility determinations help reduce the possibility that an individual or family is paying a premium amount that is either higher or lower than they should have to, the latter of which could result in the individual or family needing to pay a large amount back to the federal Treasury on their federal income tax returns. We propose a number of changes in this rule to help mitigate the risk of federal dollars incorrectly leaving the federal Treasury in the form of APTC during the year. To further improve program integrity and ensure that individuals receiving APTC/CSRs are appropriately enrolled in insurance affordability programs, we are also proposing to specify that Exchanges must conduct Medicare PDM, Medicaid/CHIP PDM, and BHP PDM, if applicable, pursuant to § 155.330(d)(1)(ii), at least twice a year beginning with the 2020 calendar year. We also believe this policy would likely reduce QHP premiums and improve program integrity for all Exchanges, since Medicare and Medicaid/CHIP beneficiaries tend to have a higher risk profile than a typical Exchange enrollee and, therefore, may have negative impacts on the risk pool because of the typically increased utilization of services expected for these populations, which include significant numbers of older and disabled beneficiaries or poorer health outcomes associated with lower income statuses.15 As noted above, this negative effect on the risk pool results in higher premiums across the individual market, leading to increased expenditures of federal funds on PTC for taxpayers eligible for PTC resulting from duplicative coverage.

As part of our efforts to strengthen program integrity with respect to subsidy payments in the individual market, we also believe improvements should be made to our ability to conduct effective and efficient oversight of State Exchanges to ensure consumers receive the correct amount of APTC and CSRs (as applicable). As section 1311 of the PPACA Exchange Establishment grant program has come to a conclusion and State Exchanges are financially self-sustaining, HHS has a need to strengthen the mechanisms and tools for overseeing ongoing compliance by State Exchanges with federal program requirements, including eligibility and enrollment requirements under 45 CFR part 155. For these reasons, we are proposing to add specificity to the reporting requirements for State Exchanges at § 155.1200 to focus on activities that speak to compliance with Exchange program requirements, including eligibility and enrollment requirements. We are also proposing changes at § 155.1200 to clarify the scope of annual programmatic audits that State Exchanges are required to conduct, and include new requirements that focus on ensuring proper eligibility determinations and enrollments in SBEs. It is our intent that these changes would enable us to better identify and address State Exchange non-compliance issues.

HHS believes that some of the methods for billing and collection of the separate payment for non-Hyde abortion services noted as permissible in the preamble to the 2016 Payment Notice do not adequately reflect what we see as Congressional intent that the QHP issuer bill separately for two distinct (that is, “separate”) payments as required by section 1303 of the PPACA. To remedy this, we are proposing at § 156.280(e)(2) that: (1) QHP issuers send an entirely separate monthly bill to the policy subscriber for only the portion of premium attributable to non-Hyde abortion coverage, and (2) instruct the policy subscriber to pay the portion of their premium attributable to non-Hyde abortion coverage in a separate transaction from any payment the policy subscriber makes for the portion of their premium not attributable to non-Hyde abortion coverage. We believe that these proposals are necessary to better align the regulatory requirements for QHP issuer billing of enrollee premiums with the separate payment requirement in section 1303 of the PPACA. HHS believes that requiring QHP issuers to separately bill the portion of the policy subscriber's premium attributable to non-Hyde abortion services and instruct policy subscribers to make a separate payment for this amount is a better interpretation of, and would result in greater compliance with this interpretation of, the statutory requirement for QHP issuers to collect a separate payment for these services.

Revising § 155.200(c) to clarify that the Exchanges must perform oversight functions or cooperate with activities related to oversight and financial integrity requirements is a clarification and not a new function. Therefore, it would not impose additional burdens on State Exchanges.

Our proposal that Exchanges conduct Medicare PDM, Medicaid/CHIP PDM, and BHP PDM, if applicable, at least twice a year beginning with the 2020 calendar year, merely adds specificity to the existing requirement that Exchanges must periodically examine available data sources to determine whether Exchange enrollees have been determined eligible for or enrolled in other qualifying coverage such as Medicare, Medicaid, CHIP, or the BHP, if applicable. Therefore, we expect the costs associated with this proposal to be minimal. However, SBEs that are not already conducting PDM with the frequency proposed, or deemed in compliance with the Medicaid, CHIP, and BHP (where applicable) PDM requirements, would likely be required to engage in IT system development activity in order to communicate with these programs and act on enrollment data either in a new way, or in the same way more frequently. Thus, there may be additional associated administrative cost for these SBEs to implement the proposed PDM requirements. We anticipate a majority (about eight) of the twelve SBEs would be exempt from the requirement to perform Medicaid, CHIP, and BHP (where applicable) PDM because they have shared, integrated eligibility systems, as they would be deemed in compliance with this requirement. However, at this point we are not able to confirm the exact number because we have not yet set specific criteria and process to assess and confirm which SBEs would be exempt, and would need additional operational information from SBEs to confirm our assessment. We would establish and engage in that process after finalization of the rule. For an SBE not already conducting Medicare, Medicaid/CHIP, and BHP PDM at least twice a year, and that does not already have a shared, integrated eligibility system with its respective Medicaid/CHIP, and BHP (where applicable) programs, we estimate that it would cost approximately $1,740,000 per SBE to build such capabilities in their system. These costs would be incurred by the SBE as they are required to be financially self-sustaining and do not receive federal funding for their establishment or operational activities.

We believe these changes will support HHS's program integrity efforts regarding the Exchanges by helping promote a balanced risk pool for the individual market as Medicare and Medicaid/CHIP beneficiaries tend to be higher utilizers of medical services, ensuring that consumers are accurately determined eligible for APTC and income-based CSRs, and safeguarding consumers against enrollment in unnecessary or duplicative coverage. Such unnecessary or duplicative coverage, coupled with typically higher utilization, generally results in higher premiums across the individual market, leading to unnecessarily inflated expenditures of federal funds on PTC for taxpayers eligible for PTC in the individual market.

We expect our plan to permit HHS to verify applicant eligibility for or enrollment in MEC in order for HHS to perform the periodic checks required under § 155.330(d) for those consumers who provide consent to the Exchange to obtain their eligibility and enrollment data, and, if desired, to end their QHP coverage if found dually enrolled in other qualifying coverage, to have minimal economic impact. Based on HHS's experience, the dually enrolled unsubsidized population is significantly smaller than those receiving APTC or CSRs. This plan would help expand the scope of the population that is part of Medicare PDM, rather than adding new Exchange requirements.

We do not anticipate the proposed changes to § 155.1200 will result in any additional cost for the State Exchanges because the changes leverage an existing reporting mechanism, the annual State Based Marketplace Reporting Tool, for meeting eligibility and enrollment reporting requirements in § 155.1200(b). Additionally, State Exchanges are already required to annually contract with, and budget accordingly for, an external independent audit entity to perform an annual financial and programmatic audit as required under § 155.1200(c). We believe the proposed requirement that HHS be able to specify the scope of annual programmatic audits to focus on the program areas that are most pertinent to a State Exchange model (SBE or SBE-FP), or have the greatest program integrity implications, would allow State Exchanges to utilize the funds that they already allocate to contracting with an external independent audit entity in the most cost-effective manner.

In § 156.280, we propose to amend billing and premium collection requirements related to the separate payment requirement for abortions for which public funding is prohibited pursuant to section 1303 of the PPACA, as implemented at § 156.280. Specifically, the proposals described at § 156.280(e)(2) would require QHP issuers offering non-Hyde abortion coverage through an Exchange to send an entirely separate monthly bill in a separate mailing or separate electronic communication to the policy subscriber for only the portion of premium attributable to non-Hyde abortion coverage, and instruct the policy subscriber to pay the portion of their premium attributable to non-Hyde abortion coverage in a separate transaction from any payment the policy subscriber makes for the portions of the premium not attributable to coverage for non-Hyde abortion services. These proposals aim to better align the regulatory requirements for QHP issuer billing of premiums with the separate payment requirement in section 1303 of the PPACA.

As reflected in the associated ICRs for the proposals at § 156.280(e)(2), we recognize that QHP issuers that cover non-Hyde abortion services may experience an increase in burden if these proposals are finalized. We anticipate that QHP issuers would need to invest additional time and resources to develop a separate invoice for non-Hyde abortion services, separately mail with separate postage the bill for the portion of the premium attributable to non-Hyde abortion coverage or separately email or electronically send the separate bill, as well as additional time and resources for receipt and processing of the separate payment through a separate transaction as proposed at § 156.280(e)(2). Specifically, we anticipate QHP issuers would need to invest time and resources to oversee the process of sending in a separate mailing or separate electronic communication a complete and accurate bill to these enrollees for the portion of their premium attributable to that coverage, to review for accuracy the separate payment a policy subscriber in a QHP covering non-Hyde abortion sends for the portion of their premium attributable to that coverage, and to process separate payments, whether made electronically or by mail. We also anticipate that QHP issuers would need to add functionality to their operating systems to develop an automated process to populate the enrollee information on the separate bill, transmit the separate bill in a separate mailing or separate electronic communication, and process the separate payment.

Based on 2018 QHP certification data in FFEs and SBE-FPs, 15 QHP issuers offered a total of 111 plans with coverage of non-Hyde abortion services in 7 states. In SBEs, we estimate that 60 issuers offered a total of 1,000 QHPs offering non-Hyde abortion coverage across 10 SBEs. In total, this leads to an estimated 75 QHP issuers offering a total of 1,111 QHPs covering non-Hyde abortion services across 17 states. This rule could significantly increase the administrative burden for QHP issuers covering non-Hyde abortion services in developing, sending, and processing the separate invoices required under this proposal.

Based on 2018 QHP Certification data in FFEs and SBE-FPs, there were approximately 300,000 enrollees across the 111 QHPs covering non-Hyde abortion coverage. In SBEs, we estimate that there were approximately 1,000,000 enrollees across the approximate 1,000 QHPs offering non-Hyde abortion coverage. If finalized, these requirements would also increase burden on those 1,300,000 consumers, related to paying the portion of the premium attributable to non-Hyde abortion services through a separate paper check or electronic transaction; that burden, however, is contemplated by the specific language of section 1303 which requires a QHP issuer “to collect from each enrollee in the plan . . . a separate payment” for the coverage of non-Hyde abortion services. In order to develop a preliminary estimate of the consumer cost of this proposed provision, we assume that a policy subscriber reading their separately received paper or electronic bill and writing out an additional paper check or filling in the necessary information for completion of a separate electronic payment adds approximately ten minutes per month to a policy subscriber's' monthly payment process for payment of their QHP premiums, for a total of 2 hours per year. Based on the May 2017 National Occupational Employment and Wage Estimates United States Department of Labor's Bureau of Labor Statistics (BLS) (http://www.bls.gov/oes/current/oes_nat.htm), using the listed national mean hourly wage for the 25th percentile,16 it would cost a policy subscriber $11.91 for an additional hour of burden, or approximately $1.98 for an additional 10 minutes of burden. As such, the 10 minute monthly estimated burden for filling out a separate check or online payment for a policy subscriber would be $1.98, and the yearly added burden for each policy subscriber would be $23.76. We note that many consumers are enrolled on the Exchange for an average of 10 months. For those enrollees, the annual consumer burden would be $19.80 for a total annual burden of $25,740,000. However, in total for all affected enrollees in QHPs covering non-Hyde abortion enrolled in plans for 12 months, we estimate that it would annually cost $30,888,000 for policy subscribers to comply with these proposals. This estimate excludes the cost of consumer learning (which may have significant upfront costs and could also continue to be resource intensive on an ongoing basis given the potential confusion of consumers in receiving multiple bills. In some cases, these may entail costs not just to consumers but also to QHP issuers, such as in increased volume of requests for customer service assistance and follow up needed to consumers to pay their full bill). However, HHS believes that, if finalized as proposed, the proposed changes would better align the regulatory requirements for QHP issuer billing of premiums with the separate payment requirement in section 1303 of the PPACA. As such, HHS believes that this outweighs the estimated consumer burden. We solicit comments on the impact of the proposed policy at § 156.280(e)(2) and on whether other impacts should be considered or quantified.

We request comment on both our assessment of the need for the regulatory action and an explanation of how the regulatory action will meet that need, as well as our assessment of the potential costs and benefits of the regulatory action. To be sure our analysis is as accurate as possible with respect to any additional costs to states, issuers, or other entities, we encourage robust comment in this area.

The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Individuals and states are not included in the definition of a small entity. We are not preparing an analysis for the RFA because we have determined, and the Secretary certifies, that this proposed rule would not have a significant economic impact on a substantial number of small entities.

Section 202 of the Unfunded Mandates Reform Act of 1995 also 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. In 2018, that threshold is approximately $150 million. This rule will have no consequential effect on state, local, or tribal governments or on the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has Federalism implications. This proposed rule does not impose substantial direct costs on state and local governments or preempt state law. However, we believe the rule has Federalism implications.

In HHS's view, this regulation has Federalism implications due to our proposal that Exchanges conduct Medicare, Medicaid/CHIP, and, if applicable, BHP PDM at least twice a year, beginning with the 2020 calendar year. However, HHS believes that the Federalism implications are substantially mitigated because the proposed requirement sets only a minimum frequency with which Exchanges must conduct Medicare, Medicaid/CHIP, and, if applicable, BHP PDM, which is already required to be conducted periodically; SBEs would continue to have the flexibility to conduct PDM with greater frequency.

Additionally, the proposed changes to State Exchange oversight and reporting requirements in § 155.1200 have Federalism implications since those rules would require State Exchanges to submit certain reports to HHS and require them to enter into contracts with an external independent audit entity to perform audits, and incur the associated costs. However, HHS believes that the Federalism implications are substantially mitigated because the proposed changes do not impose new requirements on State Exchanges, but rather add specificity to the existing requirements.

This proposed rule is subject to the Congressional Review Act (5 U.S.C. 801, et seq.), which specifies that before a rule can take effect, the federal agency promulgating the rule shall submit to each House of the Congress and to the Comptroller General a report containing a copy of the rule along with other specified information, and has been transmitted to the Congress and the Comptroller General for review.

Executive Order 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017. Section 2(a) of Executive Order 13771 requires an agency, unless prohibited by law, to identify at least two existing regulations to be repealed when the agency publicly proposes for notice and comment, or otherwise promulgates, a new regulation. In furtherance of this requirement, section 2(c) of Executive Order 13771 requires that the new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations. OMB Guidance Implementing Executive Order 13771 (April 5, 2017) defines a regulatory action as (1) a significant regulatory action as defined in section 3(f) of Executive Order 12866, or (2) a significant guidance document (for example, significant interpretive guidance) that has been reviewed by OMB under the procedures of Executive Order 12866 and that, when finalized, is expected to impose total costs greater than zero. This proposed rule, if finalized as proposed, is expected to be an E.O. 13771 regulatory action. Details on the estimated costs appear in the preceding analysis.

If regulations impose administrative costs on private entities, such as the time needed to read and interpret this proposed rule, we estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the rule, we assume that the total number of unique commenters on similar Exchange-related CMS rules will be the number of reviewers of this proposed rule. We acknowledge this assumption may understate or overstate the costs of reviewing this rule. It is possible that not all commenters will review the rule in detail, and it is also possible that some reviewers will chose not to comment on the proposed rule. For these reasons, we consider the number of past commenters on similar CMS rules will be a fair estimate of the number of reviewers of this rule. We welcome any comments on the approach in estimating the number of entities which will review this proposed rule.

We recognize that different types of entities may be affected by only certain provisions of this proposed rule, and therefore, for the purposes of our estimate, we assume that each reviewer reads approximately 50 percent of the rule.

Using the wage information from the Bureau of Labor and Statistics (BLS) for medical and health service managers (Code 11-9111), we estimate that the cost of reviewing this rule is $107.38 per hour, including overhead and fringe benefits.17 We estimate that it would take approximately 1 hour for the staff to review the relevant portions of this proposed rule. Based on previous and similar CMS rules, we assume that 321 entities will review this proposed rule. Therefore, we estimate that the total cost of reviewing this regulation is approximately $34,469 ($107.38 × 321 reviewers).

This may underestimate the review costs, since not all reviewers may have submitted comments. In addition, stakeholders may need to do a detailed analysis in order to implement the unanticipated provisions of this rule will need additional time and personnel, which will vary depending on the extent to which they are affected. To estimate an upper bound, we assume that on average 530 issuers and 50 states will spend 10 hours each, 100 other organizations will spend 5 hours each and 100 individuals will spend 1 hour each to review the rule. Under these assumptions, total time spent reviewing the rule would be 6,400 hours with an estimated cost of approximately $673,024.

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

For the reasons set forth in the preamble, the Department of Health and Human Services proposes to amend 45 CFR parts 155 and 156 as set forth below:

The revisions and addition read as follows:

The revisions and addition read as follows:

This is a summary of the Auction 100 Comment Public Notice in AU Docket No.17-329, DA 18-1038, released on October 19, 2018. The complete text of this document, including its attachment, is available for public inspection and copying from 8:00 a.m. to 4:30 p.m. Eastern Time (ET) Monday through Thursday or from 8:00 a.m. to 11:30 a.m. ET on Fridays in the FCC Reference Information Center, 445 12th Street SW, Room CY-A257, Washington, DC 20554. The Auction 100 Comment Public Notice and related documents also are available on the internet at the Commission's website: https://www.fcc.gov/auction/100/, or by using the search function for AU Docket No. 17-329 on the Commission's ECFS web page at https://www.fcc.gov/ecfs/.

All filings in response to the Auction 100 Comment Public Notice must refer to AU Docket No. 17-329. The Bureaus strongly encourage interested parties to file comments electronically, and request that an additional copy of all comments and reply comments be submitted electronically to the following address: [email protected].

Electronic Filers: Comments may be filed electronically using the internet by accessing ECFS: http://apps.fcc.gov/ecfs. Follow the instructions for submitting comments.

Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission (FCC). All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to the FCC Headquarters at 445 12th Street SW, Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. Eastern Time (ET). All hand deliveries must be held together with rubber bands or fasteners. Any envelope or box must be disposed of before entering the building. Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701. U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW, Washington, DC 20554.

1. On December 4, 2017, the Bureaus announced a second auction filing window for AM broadcasters seeking new cross-service FM translator station construction permits. By this Public Notice, the Bureaus seek comment on the procedures to be used for Auction 100. Auction 100 will be a closed auction: Only those entities listed in Attachment A of the Auction 100 Comment Public Notice will be eligible to participate further in Auction 100.

2. The Bureaus anticipate that the bidding for Auction 100 will commence in fiscal year 2019. The Bureaus will announce a schedule for bidding in Auction 100 by public notice, to provide applicants with sufficient time to submit upfront payments and prepare for bidding in the auction.

3. Auction 100 will resolve by competitive bidding mutually exclusive (MX) engineering proposals for construction permits for up to 13 new cross-service FM translator stations. The locations and channels of these proposed stations are identified in Attachment A of the Auction 100 Comment Public Notice. Attachment A also specifies a proposed minimum opening bid and a proposed upfront payment amount for each construction permit listed.

4. An applicant listed in Attachment A may become qualified to bid only if it complies with the additional filing, qualification, and payment requirements, and otherwise complies with applicable rules, policies, and procedures. Each qualified bidder will be eligible to bid on only those construction permits specified for that qualified bidder in Attachment A of the Auction 100 Comment Public Notice. All of the engineering proposals in each MX group are directly mutually exclusive with one another; therefore, no more than one construction permit will be awarded for each MX group identified in Attachment A. Under the Commission's established precedent, once mutually exclusive applications are accepted for a construction permit and thus mutual exclusivity exists for auction purposes, an applicant cannot obtain a construction permit without placing a bid, even if no other applicant for that particular construction permit becomes qualified to bid or in fact places a bid.

5. The Commission adopted eligibility criteria for filing window opportunities in its 2015 AM Radio Revitalization rulemaking order. Chesapeake-Portsmouth Broadcasting Corporation requested a waiver of the eligibility restriction for the Auction 100 filing window opportunity. MHR License LLC filed an objection to this waiver request. The Bureaus intend to address the Chesapeake-Portsmouth waiver request by the release of the public notice establishing procedures for Auction 100.

6. Applicants listed in Attachment A to the Auction 100 Comment Public Notice previously filed short-form applications (FCC Form 175). The Bureaus will process the Forms 175 filed by the 25 applicants listed in Attachment A to determine which are complete, and subsequently will issue a public notice identifying those that are complete and those that are incomplete or deficient because of minor defects that may be corrected. That public notice will provide instructions for applicants to make only minor corrections to their Forms 175. The public notice will include a deadline for resubmitting corrected Forms 175.

7. As required by 47 CFR 1.65, an applicant must maintain the accuracy and completeness of information furnished in its pending application and must notify the Commission of any substantial change that may be of decisional significance to that application. Thus, section 1.65 requires an auction applicant to notify the Commission of any substantial change to the information or certifications included in its pending short-form application. See also 47 CFR 1.2105(b)(4), (c).

8. If information needs to be submitted pursuant to sections 1.65 or 1.2105 outside of the upcoming resubmission window in Auction 100, the applicant must submit a letter briefly summarizing the changes by email to [email protected]. Such email must include a subject or caption referring to Auction 100 and the name of the applicant. If any information needs to be submitted during the upcoming resubmission window pursuant to sections 1.65 or 1.2105, that information must be submitted within an Auction 100 applicant's Form 175.

9. The Bureaus previously announced that section 1.2105(a)(3)'s prohibition on the filing of more than one auction application (Form 175) in an auction by entities with any of the same controlling interests would be waived for Auction 100 applicants in recognition of the specific eligibility provisions and filing procedures established by the Commission for this cross-service FM translator filing window. Thus, entities controlled by the same individual or set of individuals were permitted to file separate short-form applications for Auction 100.

10. The rule provision that was waived in the Auction 100 Filing Instructions Public Notice, section 1.2105(a)(3), was adopted in 2015 in conjunction with other rule changes. Under section 1.2105(a), as revised in 2015, each auction applicant must certify that it has disclosed any arrangements or understandings of any kind relating to the licenses being auctioned to which it (or any party that controls or is controlled by it) is a party, and must certify that it (or any party that controls or is controlled by it) has not entered and will not enter any arrangement or understanding of any kind relating directly or indirectly to bidding at auction with, among others, any other applicant for the auction. Also in 2015, section 1.2105(c) was extended to prohibit communication of bids or bidding strategies between any applicants for an auction, and thus is no longer limited to a communication between applicants that had applied for construction permits to serve the same area. In addition, the 2015 revisions to that rule removed a prior exception to section 1.2105(c) under which applicants that had entered into bidding-related agreements could engage in certain communications so long as each entity had disclosed the other as a party to such an agreement on its auction application, pursuant to section 1.2105(a)(2)(viii). In applying the prohibited communications rule, the Bureaus have found that, where an individual served as an officer or director for two or more applicants subject to the rule, the bids and bidding strategies of one applicant are presumptively conveyed to the other applicant. Consequently, the Bureaus determined that, absent a disclosed bidding agreement between such applicants creating an applicable exception under the prior rule, an apparent violation of section 1.2105(c) would occur. Finally, in a change related to the prohibition on joint bidding agreements and the changes to the prohibited communications rule, revised section 1.2105(a)(2)(iii) now prohibits any individual from serving as an authorized bidder of more than one applicant.

11. In recognition that some Auction 100 applicants under common control may have filed separate Forms 175 relying on the waiver of section 1.2105(a)(3), the Bureaus seek comment on whether it would be appropriate to waive or modify for Auction 100 the application of certain other provisions of section 1.2105 so that such applicants will not thereby violate such other provisions of the rule. For instance, in the absence of relief, such applicants could be at risk of violating section 1.2105(c) because the Commission presumes that bidding strategies are communicated between entities that share a common officer or director. Moreover, current rules bar most kinds of joint bidding agreements that may have, under the prior rule, permitted certain communications between commonly controlled entities or other auction applicants under the former rules.

12. Accordingly, the Bureaus seek comment on whether it would be appropriate to waive or modify the application of section 1.2105 provisions so that Auction 100 applicants relying on the waiver of section 1.2105(a)(3) will not thereby violate such other provisions. Commenters may wish to consider the Bureaus' prior observations regarding circumstances under which competitive bidding rules might be waived or modified in particular situations and should review carefully that discussion in the Auction 100 Comment Public Notice and references in that section.

13. The Bureaus, under delegated authority, seek comment on multiple issues relating to the conduct of Auction 100.

14. Simultaneous Multiple Round Auction Design. The Bureaus propose to use the Commission's standard simultaneous multiple-round auction format for Auction 100. This type of auction offers every construction permit for bidding at the same time and consists of successive bidding rounds in which eligible bidders may place bids on individual construction permits. Typically, bidding remains open on all construction permits until bidding stops on every construction permit. The Bureaus seek comment on this proposal.

15. Bidding Rounds. Auction 100 will consist of sequential bidding rounds, each followed by the release of round results. The Commission will conduct Auction 100 over the internet using the FCC auction bidding system. Qualified bidders will also have the option of placing bids by telephone through a dedicated auction bidder line.

16. The Bureaus propose to retain the discretion to change the bidding schedule to foster an auction pace that reasonably balances speed with the bidders' need to study round results and adjust their bidding strategies. Under this proposal, the Bureaus may change the amount of time for the bidding rounds, the amount of time between rounds, or the number of rounds per day, depending upon bidding activity and other factors. The Bureaus seek comment on this proposal. Commenters on this issue should address the role of the bidding schedule in managing the pace of the auction, specifically discussing the tradeoffs in managing auction pace by bidding schedule changes, by changing the activity requirements or bid amount parameters, or by using other means.

17. Stopping Rule. To complete bidding in the auction within a reasonable time, the Bureaus propose to employ a simultaneous stopping rule approach for Auction 100, which means all construction permits remain available for bidding until bidding stops on every construction permit. Specifically, bidding would close on all construction permits after the first round in which no bidder submits any new bids, no bidder applies a proactive waiver, or, if bid withdrawals are permitted in this auction, no bidder withdraws any provisionally winning bid which is a bid that would become a final winning bid if the auction were to close in that given round. Thus, unless the Bureaus announce alternative procedures, under the proposed simultaneous stopping approach bidding would remain open on all construction permits until bidding stops on every construction permit. Consequently, it is not possible to determine in advance how long the bidding in this auction will last.

18. Further, the Bureaus propose to retain the discretion to exercise any of the following options during Auction 100. (1) Use a modified version of the simultaneous stopping rule that would close the auction for all construction permits after the first round in which no bidder applies a waiver, no bidder withdraws a provisionally winning bid (if withdrawals are permitted in this auction), or no bidder places any new bid on a construction permit for which it is not the provisionally winning bidder, which means that, absent any other bidding activity, a bidder placing a new bid on a construction permit for which it is the provisionally winning bidder would not keep the auction open under this modified stopping rule. (2) Use a modified version of the simultaneous stopping rule that would close the auction for all construction permits after the first round in which no bidder applies a waiver, no bidder withdraws a provisionally winning bid (if withdrawals are permitted in this auction), or no bidder places any new bid on a construction permit that already has a provisionally winning bid, which means that, absent any other bidding activity, a bidder placing a new bid on an FCC-held construction permit (a construction permit that does not already have a provisionally winning bid) would not keep the auction open under this modified stopping rule. (3) Use a modified version of the simultaneous stopping rule that combines options (1) and (2). (4) The auction would close after a specified number of additional rounds (special stopping rule) to be announced by the Bureaus. If the Bureaus invoke this special stopping rule, they will accept bids in the specified final round(s), after which the auction will close. (5) The auction would remain open even if no bidder places any new bid, applies a waiver, or withdraws any provisionally winning bid (if withdrawals are permitted in this auction). In this event, the effect will be the same as if a bidder had applied a waiver. The activity rule will apply as usual, and a bidder with insufficient activity will either lose bidding eligibility or use a waiver.

19. The Bureaus propose to exercise these options only in certain circumstances, for example, where the auction is proceeding unusually slowly or quickly, there is minimal overall bidding activity, or it appears likely that the auction will not close within a reasonable period of time or will close prematurely. Before exercising these options, the Bureaus are likely to attempt to change the pace of the auction. For example, the Bureaus may adjust the pace of bidding by changing the number of bidding rounds per day and/or the minimum acceptable bids. The Bureaus proposed to retain the discretion to exercise any of these options with or without prior announcement during the auction. The Bureaus seek comment on these proposals.

20. Auction Delay, Suspension or Cancellation. Pursuant to 47 CFR 1.2104(i), the Bureaus propose that they may delay, suspend, or cancel bidding in Auction 100 in the event of a natural disaster, technical obstacle, administrative or weather necessity, evidence of an auction security breach or unlawful bidding activity, or for any other reason that affects the fair and efficient conduct of competitive bidding. The Bureaus would notify participants of any such delay, suspension or cancellation by public notice and/or through the FCC auction bidding system's announcement function. If bidding is delayed or suspended, the Bureaus may, in their sole discretion, elect to resume the auction starting from the beginning of the current round or from some previous round, or cancel the auction in its entirety. Network interruption may cause the Bureaus to delay or suspend the auction. The Bureaus emphasized that they will exercise this authority solely at their discretion, and not as a substitute for situations in which bidders may wish to apply activity rule waivers. The Bureaus seek comment on this proposal.

21. Upfront Payments and Bidding Eligibility. The Bureaus have determined an appropriate upfront payment for each construction permit being auctioned, taking into account such factors as the efficiency of the auction process and the potential value of similar construction permits. The upfront payment is a refundable deposit made by an applicant to establish eligibility to bid on construction permits. Upfront payments that are related to the specific construction permits being auctioned protect against frivolous or insincere bidding and provide the Commission with a source of funds from which to collect payments owed at the close of bidding. With these considerations in mind, the Bureaus proposed the upfront payments set forth in Attachment A of the Auction 100 Comment Public Notice. The Bureaus seek comment on the upfront payments specified in that Attachment A.

22. The Bureaus further propose that the amount of the upfront payment submitted by a bidder will determine its initial bidding eligibility in bidding units. The Bureaus propose to assign each construction permit a specific number of bidding units, equal to one bidding unit per dollar of the upfront payment listed in Attachment A of the Auction 100 Comment Public Notice. The number of bidding units for a given construction permit is fixed and does not change during the auction as prices change. If an applicant is found to be qualified to bid on more than one permit in Auction 100, such a bidder may place bids on multiple construction permits, provided that the total number of bidding units associated with those construction permits does not exceed the bidder's current eligibility. A bidder cannot increase its eligibility during the auction; it can only maintain its eligibility or decrease its eligibility. Thus, in calculating its upfront payment amount and hence its initial bidding eligibility, an applicant must determine the maximum number of bidding units on which it may wish to bid (or hold provisionally winning bids) in any single round, and submit an upfront payment amount covering that total number of bidding units. The Bureaus request comment on these proposals.

23. Activity Rule. To ensure that the auction closes within a reasonable period of time, an activity rule requires bidders to bid actively throughout the auction, rather than wait until late in the auction before participating. The Bureaus propose a single stage auction with the following activity requirement: In each round of the auction, a bidder desiring to maintain its current bidding eligibility is required to be active on 100 percent of its bidding eligibility. A bidder's activity in a round will be the sum of the bidding units associated with any construction permits upon which it places bids during the current round and the bidding units associated with any construction permits for which it holds provisionally winning bids. Failure to maintain the requisite activity level would result in the use of an activity rule waiver, if any, or a reduction in the bidder's eligibility, possibly curtailing or eliminating the bidder's ability to place additional bids in the auction. The Bureaus seek comment on this proposal.

24. Activity Rule Waivers and Reducing Eligibility. For the proposed simultaneous multiple round auction format, the Bureaus propose that when a bidder's eligibility in the current round is below the required minimum level, it may preserve its current level of eligibility through an activity rule waiver, if available. An activity rule waiver applies to an entire round of bidding, not to a particular construction permit. Activity rule waivers can be either proactive or automatic. Activity rule waivers are principally a mechanism for a bidder to avoid the loss of bidding eligibility if exigent circumstances prevent it from bidding in a particular round.

25. The FCC auction bidding system will assume that a bidder that does not meet the activity requirement would prefer to use an activity rule waiver (if available) rather than lose bidding eligibility. Therefore, the system will automatically apply a waiver at the end of any bidding round in which a bidder's activity is below the minimum required unless (1) the bidder has no activity rule waivers remaining or (2) the bidder overrides the automatic application of a waiver by reducing eligibility, thereby meeting the activity requirement. If a bidder has no waivers remaining and does not satisfy the required activity level, the bidder's current eligibility will be permanently reduced, possibly curtailing or eliminating the ability to place additional bids in the auction.

26. A bidder with insufficient activity may wish to reduce its bidding eligibility rather than use an activity rule waiver. If so, the bidder must affirmatively override the automatic waiver mechanism during the bidding round by using the reduce eligibility function in the FCC auction bidding system. In this case, the bidder's eligibility would be permanently reduced to bring it into compliance with the specified activity requirement. Reducing eligibility is an irreversible action; once eligibility has been reduced, a bidder cannot regain its lost bidding eligibility.

27. Under the proposed simultaneous stopping rule, a bidder may apply an activity rule waiver proactively as a means to keep the auction open without placing a bid. If a bidder proactively were to apply an activity rule waiver (using the proactive waiver function in the FCC auction bidding system) during a bidding round in which no bids are placed or withdrawn (if bid withdrawals are permitted in this auction), the auction would remain open and the bidder's eligibility would be preserved. An automatic waiver applied by the FCC auction bidding system in a round in which there are no new bid, no bid withdrawal (if bid withdrawals are permitted in this auction), or no proactive waiver would not keep the auction open. The Bureaus propose that each bidder in Auction 100 be provided with three activity rule waivers that may be used at the bidder's discretion during the course of the auction. The Bureaus seek comment on this proposal.

28. Reserve Price or Minimum Opening Bids. Normally, a reserve price is an absolute minimum price below which a construction permit or license will not be sold in a given auction. The Bureaus did not propose to establish separate reserve prices for the Auction 100 construction permits.

29. A minimum opening bid is the minimum bid price set at the beginning of the auction below which no bids are accepted. Because it is an effective tool for accelerating the competitive bidding process, the Bureaus propose minimum opening bid amounts for Auction 100 determined by taking into account the type of service and class of facility offered, market size, population covered by the proposed broadcast facility, and recent broadcast transaction data. Attachment A of the Auction 100 Comment Public Notice lists a proposed minimum opening bid amount for each construction permit available in Auction 100. Consistent with 47 U.S.C. 309(j)(4)(f), the Bureaus seek comment on the minimum opening bid amounts specified in Attachment A of the Auction 100 Comment Public Notice.

30. If commenters believe that these minimum opening bid amounts will result in unsold construction permits, are not reasonable amounts, or should instead operate as reserve prices, they should explain why this is so and comment on the desirability of an alternative approach. The Bureaus ask commenters to support their claims with valuation analyses and suggested amounts or formulas for reserve prices or minimum opening bids. In establishing the minimum opening bid amounts, the Bureaus particularly seek comment on factors that could reasonably have an impact on bidders' valuation of the broadcast spectrum, including the type of service offered, market size, population covered by the proposed broadcast facility, and any other relevant factors.

31. Bid Amounts. The Bureaus propose that, if the bidder has sufficient eligibility to place a bid on a particular construction permit in a round, an eligible bidder will be able to place a bid on that construction permit in any of up to nine different amounts. In the event of duplicate bid amounts due to rounding, the FCC auction system will omit the duplicates and will list fewer than nine acceptable bid amounts for that construction permit. Under this proposal, the FCC auction bidding system interface will list the acceptable bid amounts for each construction permit.

32. The first of the acceptable bid amounts is called the minimum acceptable bid amount. The minimum acceptable bid amount for a construction permit will be equal to its minimum opening bid amount until there is a provisionally winning bid for the construction permit. After there is a provisionally winning bid for a construction permit, the minimum acceptable bid amount will be a certain percentage higher. The percentage used for this calculation, the minimum acceptable bid increment percentage, is multiplied by the provisionally winning bid amount, and the resulting amount is added to the provisionally winning bid amount. If, for example, the minimum acceptable bid increment percentage is 10 percent, then the provisionally winning bid amount is multiplied by 10 percent. The result of that calculation is added to the provisionally winning bid amount, and that sum is rounded using the Commission's standard rounding procedure for auctions. If bid withdrawals are permitted in this auction, in the case of a construction permit for which the provisionally winning bid has been withdrawn, the minimum acceptable bid amount will equal the second highest bid received for the construction permit.

33. The eight additional bid amounts would be calculated using the minimum acceptable bid amount and an additional bid increment percentage. The minimum acceptable bid amount is multiplied by the additional bid increment percentage, and that result, rounded, is the additional increment amount. The first additional acceptable bid amount equals the minimum acceptable bid amount plus the additional increment amount. The second additional acceptable bid amount equals the minimum acceptable bid amount plus two times the additional increment amount; the third additional acceptable bid amount is the minimum acceptable bid amount plus three times the additional increment amount; etc. If, for example, the additional bid increment percentage is 5 percent, then the calculation of the additional increment amount is (minimum acceptable bid amount) * (0.05), rounded. The first additional acceptable bid amount equals (minimum acceptable bid amount) + (additional increment amount); the second additional acceptable bid amount equals (minimum acceptable bid amount) + (2 *(additional increment amount)); the third additional acceptable bid amount equals (minimum acceptable bid amount) + (3 *(additional increment amount)); etc. The Bureaus will round the results using the Commission's standard rounding procedures for auctions.

34. For Auction 100, the Bureaus propose to use a minimum acceptable bid increment percentage of 10 percent. This means that the minimum acceptable bid amount for a construction permit will be approximately 10 percent greater than the provisionally winning bid amount for the construction permit. To calculate the additional acceptable bid amounts, the Bureaus propose to use an additional bid increment percentage of 5 percent. The Bureaus seek comment on these proposals.

35. Consistent with past practice, the Bureaus propose to retain the discretion to change the minimum acceptable bid amounts, the minimum acceptable bid increment percentage, the additional bid increment percentage, and the number of acceptable bid amounts if the Bureaus determine that circumstances so dictate. Further, the Bureaus propose to retain the discretion to do so on a construction-permit-by-construction-permit basis. The Bureaus also propose to retain the discretion to limit (a) the amount by which a minimum acceptable bid for a construction permit may increase compared with the corresponding provisionally winning bid, and (b) the amount by which an additional bid amount may increase compared with the immediately preceding acceptable bid amount. For example, the Bureaus could set a $1,000 limit on increases in minimum acceptable bid amounts over provisionally winning bids. Thus, if calculating a minimum acceptable bid using the minimum acceptable bid increment percentage results in a minimum acceptable bid amount that is $1,200 higher than the provisionally winning bid on a construction permit, the minimum acceptable bid amount would instead be capped at $1,000 above the provisionally winning bid. The Bureaus seek comment on the circumstances under which the Bureaus should employ such a limit, factors the Bureaus should consider when determining the dollar amount of the limit, and the tradeoffs in setting such a limit or changing other parameters, such as changing the minimum acceptable bid percentage, the bid increment percentage, or the number of acceptable bid amounts. If the Bureaus exercise this discretion, they will alert bidders by announcement in the FCC auction bidding system during the auction. The Bureaus seek comment on these proposals

36. Provisionally Winning Bids. Provisionally winning bids are bids that would become winning bids if the auction were to close in that given round. At the end of each bidding round, the FCC auction bidding system will determine a provisionally winning bid for each construction permit based on the highest bid amount received for that permit. A provisionally winning bid will remain the provisionally winning bid until there is a higher bid on the same construction permit at the close of a subsequent round. Provisionally winning bids become the winning bid at the end of the auction.

37. The auction bidding system assigns a pseudo-random number to each bid when the bid is entered. If identical high bid amounts are submitted on a construction permit in any given round (i.e., tied bids), the FCC auction bidding system will use a pseudo-random number generator to select a single provisionally winning bid from among the tied bids. The tied bid with the highest pseudo-random number wins the tiebreaker and becomes the provisionally winning bid. The remaining bidders, as well as the provisionally winning bidder, can submit higher bids in subsequent rounds. However, if the auction were to close with no other bids being placed, the winning bidder would be the one that placed the provisionally winning bid. If the construction permit receives any bids in a subsequent round, the provisionally winning bid again will be determined by the highest bid amount received for the construction permit.

38. A provisionally winning bid will be retained until there is a higher bid on the construction permit at the close of a subsequent round, unless the provisionally winning bid is withdrawn (if bid withdrawals are permitted in this auction). As a reminder, provisionally winning bids count toward a bidder's activity level for purposes of the activity rule.

39. Bid Removal and Bid Withdrawal. The FCC auction bidding system allows each bidder to remove any of the bids it placed in a round before the close of that round. By removing a bid placed within a round, a bidder effectively unsubmits the bid. A bidder removing a bid placed in the same round is not subject to a withdrawal payment. Once a round closes, a bidder is no longer permitted to remove a bid.

40. The Bureaus seek comment on whether bid withdrawals should be permitted in Auction 100. When permitted in an auction, bid withdrawals provide a bidder with the option of withdrawing bids placed in prior rounds that have become provisionally winning bids. A bidder would be able to withdraw its provisionally winning bids using the withdraw function in the FCC auction bidding system. A bidder that withdraws its provisionally winning bid(s), if permitted in this auction, is subject to the bid withdrawal payment provisions of 47 CFR 1.2104(g) and 1.2109.

41. Based on the stand-alone nature of FM translator facilities and the Auction 100 limit of one FM translator station proposal per AM station, as well as the experience of the Bureaus with past auctions of broadcast construction permits, the Bureaus propose to prohibit bidders from withdrawing any bid after the close of the round in which that bid was placed. The Bureaus made this proposal in light of the site- and applicant-specific nature and wide geographic dispersion of the permits available in this closed auction, all of which suggest that potential applicants for this auction will not need to use the auction process to aggregate construction permits (as compared with bidders in many auctions of wireless licenses). Thus, the Bureaus believe that it is unlikely that bidders will have a need to withdraw bids in this auction. Also, allowing bid withdrawals may encourage insincere bidding or increase opportunities for anti-competitive bidding in certain circumstances. The Bureaus also remain mindful that bid withdrawals, particularly those made late in this auction, could result in delays in licensing new cross-service FM translator stations and attendant delays in the offering of new broadcast service to the public. The Bureaus seek comment on their proposal to prohibit bid withdrawals in Auction 100.

42. Interim Withdrawal Payment Percentage. A bidder that withdraws a bid during an auction is subject to a withdrawal payment equal to the difference between the amount of the withdrawn bid and the amount of the winning bid in the same or a subsequent auction. However, if a construction permit for which a bid has been withdrawn does not receive a subsequent higher bid or winning bid in the same auction, the FCC cannot calculate the final withdrawal payment until that construction permit receives a higher bid or winning bid in a subsequent auction. In such cases, when that final withdrawal payment cannot yet be calculated, in accordance with 47 CFR 1.2104(g)(1) the FCC imposes on the bidder responsible for the withdrawn bid an interim bid withdrawal payment, which will be applied toward any final bid withdrawal payment that is ultimately assessed.

43. Pursuant to 47 CFR 1.2104(g)(1), the amount of the interim bid withdrawal payment may range from 3 to 20 percent of the withdrawn bid amount. If the Bureaus allow bid withdrawals in Auction 100, the Bureaus propose that the interim bid withdrawal payment be 20 percent of the withdrawn bid amount. The Bureaus request comment on using 20 percent for calculating an interim bid withdrawal payment amount in Auction 100. Commenters advocating the use of bid withdrawals in Auction 100 should also address the percentage of the interim bid withdrawal payment.

44. Additional Default Payment Percentage. Any winning bidder that defaults or is disqualified after the close of an auction (i.e., fails to remit the required down payment by the specified deadline, fails to submit a timely long-form application, fails to make full and timely final payment, or is otherwise disqualified) is liable for a default payment under 47 CFR 1.2104(g)(2). This default payment consists of a deficiency payment equal to the difference between the amount of the Auction 100 bidder's winning bid and the amount of the winning bid the next time a construction permit covering the same spectrum is won in an auction, plus an additional payment equal to a percentage of the defaulter's bid or of the subsequent winning bid, whichever is less. Based on the nature of the service and the construction permits being offered, the Bureaus propose for Auction 100 an additional default payment amount of 20 percent of the applicable winning bid. The Bureaus seek comment on this proposal.

45. This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198. See 44 U.S.C. 3506(c)(4).

46. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), 5 U.S.C. 603, the Commission prepared Initial Regulatory Flexibility Analyses (IRFAs) as part of the 1997 Broadcast Competitive Bidding Notice of Proposed Rulemaking (NPRM) and other Commission notices (collectively, Broadcast Competitive Bidding NPRMs) pursuant to which Auction 100 will be conducted. Final Regulatory Flexibility Analyses (FRFAs) likewise were prepared in the 1998 Broadcast First Report and Order and other Commission rulemaking orders (collectively, Broadcast Competitive Bidding Orders). The Bureaus have prepared this Supplemental Initial Regulatory Flexibility Analysis (Supplemental IRFA) of the possible significant economic impact on a substantial number of small entities of the policies and rules addressed in the Auction 100 Comment Public Notice, to supplement the Commission's Initial and Final Regulatory Flexibility Analyses completed in the Broadcast First Report and Order and other Commission orders pursuant to which Auction 100 will be conducted. Written public comments are requested on this Supplemental IRFA. Comments must be identified as responses to the Supplemental IRFA and must be filed by the same filing deadline for comments specified on the first page of the Auction 100 Comment Public Notice. The Commission will send a copy of the Public Notice, including this Supplemental IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA), 5 U.S.C. 603(a).

47. Need for, and Objectives of, the Proposed Rules. In addition to providing notice of proposed procedures in the Auction 100 Comment Public Notice, consistent with 47 U.S.C. 309(j)(3)(E)(i), the Bureaus intend to provide adequate time for participants to comment on proposed procedures to govern Auction 100, an auction of up to 13 cross-service FM translator construction permits. To promote the efficient and fair administration of the competitive bidding process for all Auction 100 participants, including small businesses, the Bureaus seek comment on the following proposed procedures: (1) Whether certain aspects of the rules governing auction applications should be waived or modified in conjunction with the Bureaus' prior decision to allow eligible AM licensees having any of the same controlling interest in common to file separate auction applications (Forms 175), rather than a single Form 175; (2) Use of a simultaneous multiple-round auction format, consisting of sequential bidding rounds with a simultaneous stopping rule (with discretion by the Bureaus to exercise alternative stopping rules under certain circumstances); (3) A specific minimum opening bid amount for each construction permit available in Auction 100; (4) A specific upfront payment amount for each construction permit; (5) Establishment of a bidder's initial bidding eligibility in bidding units based on that bidder's upfront payment through assignment of a specific number of bidding units for each construction permit; (6) Use of an activity rule that would require bidders to bid actively during the auction rather than waiting until late in the auction before participating; (7) A single stage auction in which a bidder is required to be active on 100 percent of its bidding eligibility in each round of the auction; (8) Provision of three activity rule waivers for each bidder to allow it to preserve bidding eligibility during the course of the auction; (9) Use of minimum acceptable bid amounts and additional bid increments, along with a proposed methodology for calculating such amounts, with the Bureaus retaining discretion to change their methodology if circumstances dictate; (10) A procedure for breaking ties if identical high bid amounts are submitted on a permit in a given round; (11) Bid removal procedures; (12) Whether to permit bid withdrawals; (13) Establishment of an interim bid withdrawal percentage of 20 percent of the withdrawn bid in the event the Bureaus allow bid withdrawals in Auction 100; and (14) Establishment of an additional default payment of 20 percent under 47 CFR 1.2104(g)(2) in the event that a winning bidder defaults or is disqualified after the auction.

48. Legal Basis. The Commission's statutory obligations to small businesses participating in a spectrum auction under the Communications Act of 1934, as amended (the Act), are found in 47 U.S.C. 309(j)(3)(B) and 309(j)(4)(D). The statutory basis for the Commission's competitive bidding rules is found in various provisions of the Act, including 47 U.S.C. 154(i), 301, 302, 303(e), 303(f), 303(r), 304, 307, and 309(i). The Commission has established a framework of competitive bidding rules pursuant to which it has conducted auctions since the inception of the auction program in 1994 and would conduct Auction 100. In promulgating those rules, the Commission conducted numerous Regulatory Flexibility Act analyses to consider the possible impact of competitive bidding rules on small businesses that might seek to participate in Commission auctions. The Commission has directed the Bureaus, under delegated authority, to seek comment on a variety of auction-specific procedures prior to the start of bidding in each auction.

49. Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted, 5 U.S.C. 603(b)(3). The RFA generally defines the term small entity as having the same meaning as the terms small business, small organization, and small government jurisdiction, 5 U.S.C. 601(6). In addition, the term small business has the same meaning as the term small business concern under the Small Business Act, 15 U.S.C. 632. A small business concern is one which: (1) Is independently owned and operated, (2) is not dominant in its field of operation, and (3) satisfies any additional criteria established by the SBA, 5 U.S.C. 632.

50. The specific procedures and minimum opening bid amounts on which comment is sought in the Auction 100 Comment Public Notice will affect directly all applicants participating in Auction 100. There are a maximum of 25 individuals or entities that may become qualified bidders in Auction 100, in which applicant eligibility is closed. Therefore, the specific competitive bidding procedures and minimum opening bid amounts described in the Auction 100 Comment Public Notice will affect only the 25 individuals or entities listed in Attachment A to that Public Notice and who are the only parties eligible to complete the remaining steps to become qualified to bid in Auction 100. These specific 25 Auction 100 individuals or entities include firms of all sizes.

51. Radio Stations. This Economic Census category comprises establishments primarily engaged in broadcasting aural programs by radio to the public. Programming may originate in their own studio, from an affiliated network, or from external sources. The SBA has established a small business size standard for this category as firms having $38.5 million or less in annual receipts. Economic Census data for 2012 shows that 2,849 radio station firms operated during that year. Of that number, 2,806 firms operated with annual receipts of less than $25 million per year, 17 with annual receipts between $25 million and $49,999,999 and 26 with annual receipts of $50 million or more. Therefore, based on the SBA's size standard, the majority of such entities are small entities.

52. According to Commission staff review of the BIA/Kelsey, LLC's Media Access Pro Radio Database as of September 6, 2018, about 11,024 (or about 99.92 percent) of 11,033 commercial radio stations had revenues of $38.5 million or less and thus qualify as small entities under the SBA definition. The Bureaus note, however, that the SBA size standard data does not enable the Bureaus to make a meaningful estimate of the number of small entities who may participate in Auction 100.

53. In assessing whether a business entity qualifies as small under the SBA definition, business control affiliations must be included. The Bureaus' estimate therefore likely overstates the number of small entities that might be affected by its action because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. Moreover, the definition of small business also requires that an entity not be dominant in its field of operation and that the entity be independently owned and operated. The estimate of small businesses to which Auction 100 competitive bidding rules may apply does not exclude any radio station from the definition of a small business on these bases and is therefore over-inclusive to that extent. Furthermore, the Bureaus are unable at this time to define or quantify the criteria that would establish whether a specific radio station is dominant in its field of operation. In addition, the Bureaus note that it is difficult to assess these criteria in the context of media entities and therefore estimates of small businesses to which they apply may be over-inclusive to this extent.

54. The Bureaus also note that they are unable to accurately develop an estimate of how many of these 25 individuals or entities in Auction 100 are small businesses based on the number of small entities that applied to participate in prior broadcast auctions because that information is not collected from applicants for broadcast auctions in which bidding credits are not based on an applicant's size (as is the case in auctions of licenses for wireless services). Due to specific eligibility criteria adopted in a 2015 Commission rulemaking order, potential eligible bidders in Auction 100 include existing holders of broadcast station construction permits or licenses. In 2013, the Commission estimated that 97 percent of radio broadcasters met the SBA's prior definition of small business concern, based on annual revenues of $7 million. The SBA has since increased that revenue threshold to $38.5 million, which suggests that an even greater percentage of radio broadcasters would fall within the SBA's definition at 13 CFR 121.201. Based on Commission staff review of BIA/Kelsey, LLC's Media Access Pro Radio Database, 4,626 (99.94%) of 4,629 a.m. radio stations have revenue of $38.5 million or less. Accordingly, based on this data, the Bureaus conclude that the majority of Auction 100 eligible bidders would likely meet the SBA's definition of a small business concern.

55. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities. In the Auction 100 Comment Public Notice, the Bureaus propose no new reporting, recordkeeping, or other compliance requirements for small entities or other auction applicants. The Commission designed the auction application process itself to minimize reporting and compliance requirements for applicants, including small business applicants. In the first part of the Commission's two-phased auction application process, parties desiring to participate in an auction file streamlined, short-form applications in which they certify under penalty of perjury as to their qualifications. Eligibility to participate in bidding is based on an applicant's short-form application and certifications, as well as its upfront payment. In the second phase of the process, there are additional compliance requirements for winning bidders. Thus, a small business that fails to become a winning bidder does not need to file a long-form application and provide the additional showings and more detailed demonstrations required of a winning bidder.

56. Steps Taken To Minimize the Significant Economic Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities, 5 U.S.C. 603(c)(1)-(4).

57. The Bureaus intend that the proposals of the Auction 100 Comment Public Notice to facilitate participation in Auction 100 will result in both operational and administrative cost savings for small entities and other auction participants. In light of the numerous resources that will be available from the Commission at no cost, the processes and procedures proposed in the Auction 100 Comment Public Notice should result in minimal economic impact on small entities. For example, prior to the auction, the Commission will hold a mock auction to allow eligible bidders the opportunity to familiarize themselves with both the bidding processes and systems that will be used in Auction 100. During the auction, participants will be able to access and participate in bidding via the internet using a web-based system, or telephonically, providing two cost-effective methods of participation and avoiding the cost of travel for in-person participation. Further, small entities as well as other auction participants will be able to avail themselves of telephone hotlines for assistance with auction processes and procedures as well as technical support hotlines to assist with issues such as access to or navigation within the electronic FCC Form 175 and use of the FCC's auction system. In addition, all auction participants, including small business entities, will have access to various other sources of information and databases through the Commission that will aid in both their understanding of and participation in the process. These mechanisms are made available to facilitate participation in Auction 100 by all eligible bidders and may result in significant cost savings for small business entities who utilize these mechanisms. These steps, coupled with the advance description of the bidding procedures in Auction 100, should ensure that the auction will be administered efficiently and fairly, thus providing certainty for small entities as well as other auction participants.

58. These proposed procedures for the conduct of Auction 100 constitute the more specific implementation of the competitive bidding rules contemplated by 47 CFR parts 1 and 73 and the underlying rulemaking orders, including the Broadcast First Report and Order and relevant competitive bidding orders, and are fully consistent therewith.

59. Federal Rules That May Duplicate, Overlap or Conflict With the Proposed Rules. None.

60. This proceeding has been designated as a permit-but-disclose proceeding in accordance with the Commission's ex parte rules. While additional information is provided in the Auction 100 Comment Public Notice on the relevant reporting requirements, participants in Auction 100 should familiarize themselves with the Commission's ex parte rules.

This is a synopsis of the Commission's Notice of Proposed Rulemaking, MB Docket No. 18-320; RM-11817; DA 18-1070, adopted October 18, 2018, and released October 18, 2018. Pursuant to section 1.420(i) of the Commission's rules, 47 CFR 1.420(i). The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street SW, Washington, DC 20554, or online at http://apps.fcc.gov/ecfs/. To request materials in accessible formats (braille, large print, computer diskettes, or audio recordings), please send an email to [email protected] or call the Consumer & Government Affairs Bureau at (202) 418-0530 (VOICE), (202) 418-0432 (TTY).

This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, do not apply to this proceeding.

Members of the public should note that all ex parte contacts are prohibited from the time a Notice of Proposed Rulemaking is issued to the time the matter is no longer subject to Commission consideration or court review, see 47 CFR 1.1208. There are, however, exceptions to this prohibition, which can be found in §§ 1.1204(a) of the Commission's rules, 47 CFR 1.1204(a).

See §§ 1.415 and 1.420 of the Commission's rules for information regarding the proper filing procedures for comments, 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

The coastal migratory pelagics fishery in the Atlantic region is managed under the FMP and includes cobia, along with king and Spanish mackerel. The FMP was prepared by the Councils and is implemented by NMFS through regulations at 50 CFR part 622 under authority of the Magnuson-Stevens Act.

Through the CMP FMP, cobia is managed in two distinct migratory groups. The first is the Gulf migratory group of cobia that ranges both in the Gulf from Texas through Florida as well as in the Atlantic off the east coast of Florida (Gulf cobia). The second is the Atlantic migratory group of cobia that is managed from Georgia through New York (Atlantic cobia). The boundary between these two migratory groups is the Georgia-Florida state boundary. Both the Gulf and the Atlantic migratory groups of cobia were assessed through SEDAR 28 in 2013 and neither stock was determined to be overfished or experiencing overfishing.

The majority of Atlantic cobia landings occur in state waters and, despite closures in Federal water in recent years, recreational landings have exceeded the recreational annual catch limit (ACL) and the combined stock ACL. This has resulted in shortened fishing seasons, which have been ineffective at constraining harvest. Following overages of the recreational and combined stock ACLs in 2015 and 2016, Federal waters closures for recreational harvest occurred in both 2016 (June 20) and 2017 (January 24). Additionally, Federal waters were closed to commercial harvest of Atlantic cobia in 2016 (December 5) and 2017 (September 4), because the commercial ACL was projected to be reached during the fishing year.

Allowable harvest in state waters following the Federal closures varied by time and area. Georgia did not close state waters to recreational harvest of Atlantic cobia in 2016 or 2017. South Carolina allowed harvest in 2016 during May in the Southern Cobia Management Zone and closed state waters in 2017 when Federal waters closed. Most harvest of Atlantic cobia off Georgia and South Carolina occurs in Federal waters. Off North Carolina recreational harvest of Atlantic cobia closed on September 30, 2016; in 2017, harvest was allowed May 1 through August 31. Off Virginia in 2016, harvest was allowed until August 30, 2016, and in 2017, Virginia allowed harvest June 1 through September 15. Harvest in state waters during the Federal closures contributed to the overage of the recreational ACL and the combined stock ACL.

The South Atlantic Council requested that the Atlantic States Marine Fisheries Commission (ASMFC) consider complementary management measures for Atlantic cobia, as constraining harvest in Federal waters has not prevented the recreational and combined ACLs from being exceeded. The ASMFC consists of 15 Atlantic coastal states that manage and conserve their shared coastal fishery resources. The majority of ASMFC's fisheries decision-making occurs through the Interstate Fisheries Management Program, where species management boards determine management strategies that the states implement through fishing regulations.

In May 2016, the ASMFC started developing an interstate FMP for Atlantic cobia with the purpose of improving cobia management in the Atlantic. In April 2018, the ASFMC implemented the Interstate FMP, which established state management for Atlantic cobia. Each affected state developed an implementation plan that included regulations in their state waters. In addition, the ASMFC is currently amending the Interstate FMP for Atlantic cobia to establish a mechanism for recommending future management measures to NMFS. If Amendment 31 is implemented, such management measures would need to be implemented in Federal waters through the authority and process defined in the Atlantic Coastal Act.

The management measures contained within the ASMFC's Interstate FMP are consistent with the current Federal regulations for Atlantic cobia. For the recreational sector, the management measures in the Interstate FMP include a recreational bag and possession limit of one fish per person, not to exceed six fish per vessel per day, and a minimum size limit of 36 inches (91.4 cm), fork length. For the commercial sector, the management measures in the Interstate FMP include a commercial possession limit of two cobia per person, not to exceed six fish per vessel, and a minimum size limit of 33 inches (83.8 cm), fork length. Under the ASMFC plan, regulations in each state must match, or be more restrictive than, the Interstate FMP management measures. Georgia, South Carolina, North Carolina, and Virginia have implemented more restrictive regulations for the recreational sector in their state waters than those specified in the Interstate FMP. Those regulations include recreational bag and vessel limits, and minimum size limits, in addition to allowable fishing seasons. The Interstate FMP also provides the opportunity for states to declare de minimis status for their Atlantic cobia recreational sector if a state's recreational landings for 2 of the previous 3 years is less than 1 percent of the coastwide recreational landings for the same time period. States in a de minimis status would be required to adopt the regulations (including season) of the closest adjacent non-de minimis state or accept a one fish per vessel per day trip limit and a minimum size limit of 29 inches (73.7 cm), fork length. Maryland, Delaware, and New Jersey have declared a de minimis status.

The Magnuson-Stevens Act requires a council to prepare an FMP for each fishery under its authority that requires conservation and management. Any stocks that are predominately caught in Federal waters and are overfished or subject to overfishing, or likely to become overfished or subject to overfishing, are considered to require conservation and management (50 CFR 600.305(c)(1)). Beyond such stocks, councils may determine that additional stocks require conservation and management. Thus, not every fishery requires Federal management and the NMFS National Standard Guidelines at 50 CFR 600.305(c) provide factors that NMFS and the councils should consider when considering removal of a stock from a FMP. This analysis is contained in Amendment 31.

Based on this analysis, the Councils and NMFS have determined that Atlantic cobia is no longer in need of conservation and management within the South Atlantic Council's jurisdiction and the stock is eligible for removal from the CMP FMP. The majority of Atlantic group cobia landings are in state waters and the stock is not overfished or undergoing overfishing. Additionally, the CMP FMP has proven ineffective at resolving the primary ongoing user conflict between the recreational fishermen from different states, and it does not currently appear to be capable of promoting a more efficient utilization of the resource. Most significantly, the harvest of Atlantic cobia is adequately managed in state waters by the ASMFC and their Interstate FMP, which was implemented in April 2018. Georgia, South Carolina, North Carolina, and Virginia have implemented more restrictive recreational regulations than those specified in the Interstate FMP. Furthermore, the Interstate FMP requires that if a state's average annual landings over the 3-year time period are greater than their annual harvest target, then that state must adjust their recreational season length or recreational vessel limits for the following 3 years, as necessary, to prevent exceeding their harvest target in the future years. For the commercial sector, the ASMFC's Interstate FMP specified management measures for Atlantic cobia that are consistent with the current ACL and AM specified in the Federal regulations implemented pursuant to the CMP FMP.

Therefore, NMFS and the Councils have determined that management by the states, in conjunction with the ASMFC and Secretary of Commerce, will be more effective at constraining harvest and preventing overfishing; thereby, offering greater biological protection to the stock and decreasing adverse socioeconomic effects to fishermen. Further, management of Atlantic cobia by the ASMFC is expected to promote a more equitable distribution of harvest of the species among the states.

This proposed rule would remove Atlantic cobia from Federal management under the Magnuson-Stevens Act. At the same time, it would implement comparable regulations, in Federal waters, under the Atlantic Coastal Act.

Current commercial management measures for Atlantic cobia include a minimum size limit of 33 inches (83.8 cm), fork length and a commercial trip limit of two fish per person per day, not to exceed six fish per vessel per day. Federal regulations for recreational harvest of Atlantic cobia in Federal waters include a minimum size limit of 36 inches (91.4 cm), fork length and a bag and possession of one fish per person per day, not to exceed six fish per vessel per day.

Under the authority of the Atlantic Coastal Act, this proposed rule would implement these same minimum size limits, recreational bag and possession limits, and commercial trip limits in Federal waters. Additionally, this proposed rule would implement regulations consistent with current CMP FMP regulations for the fishing year, general prohibitions, authorized gear, and landing fish intact provisions specific to Atlantic cobia.

The current Atlantic cobia commercial ACL is 50,000 lb (22,680 kg) and the recreational ACL is 620,000 lb (281,227 kg). The proposed removal of Atlantic cobia from Federal management under the Magnuson-Stevens Act would remove these sector ACLs. Under this proposed rule, a commercial quota of 50,000 lb (22,280 kg), would be implemented consistent with the current commercial ACL. The current commercial accountability measure (AM) requires that if commercial landings reach or are projected to reach the ACL, then commercial harvest will be prohibited for the remainder of the fishing year. This proposed rule would implement commercial quota closure provisions through the Atlantic Coastal Act to prohibit commercial harvest once the commercial quota is reached or projected to be reached.

The ASMFC's Interstate FMP has specified a recreational harvest limit (RHL) of 613,800 lb (278,415 kg) in state and Federal waters and state-by-state recreational quota shares (harvest targets) of the coastwide RHL. During the development of the Interstate FMP, one percent of the amount of the recreational allocation of the current Federal ACL (initially 6,200 lb (2,812 kg)) was set aside to account for harvests in de minimis states (Maryland, Delaware, and New Jersey). The harvest targets for each state, in both state and Federal waters, are 58,311 lb (26,449 kg) for Georgia, 74,885 lb (33,967 kg) for South Carolina, 236,316 lb (107,191 kg) for North Carolina and 244,292 lb (110,809 kg) for Virginia. Percentage allocations are based on states' percentages of the coastwide historical landings in numbers of fish, derived as 50 percent of the 10-year average landings from 2006-2015 and 50 percent of the 5-year average landings from 2011-2015.

The proposed removal of Atlantic cobia from Federal management under the Magnuson-Stevens Act would remove the recreational sector AM for Atlantic cobia. The recreational AM requires that both the recreational ACL and the stock ACL are exceeded in a fishing year then in the following fishing year, recreational landings will be monitored for a persistence in increased landings, and, if necessary, the recreational vessel limit will be reduced to no less than 2 fish per vessel to ensure recreational landings achieve the recreational annual catch target, but do not exceed the recreational ACL in that fishing year. Additionally, if the reduction in the recreational vessel limit is determined to be insufficient to ensure that recreational landings will not exceed the recreational ACL, then the length of the recreational fishing season will also be reduced.

In place of the current recreational AM, state-defined regulations and seasons implemented consistent with the ASMFC's Interstate FMP are designed to keep harvest within the state harvest targets. If a state's average annual landings over the 3-year time period are greater than their annual harvest target, then the Interstate FMP requires the state to adjust their recreational season length or recreational vessel limits for the following 3 years, as necessary, to prevent exceeding their harvest target in the future years.

If Amendment 31 is subsequently approved and implemented, Atlantic cobia would be managed under the ASMFC's Interstate FMP in state waters and through Atlantic Coastal Act regulations in Federal waters. This will ensure that Atlantic cobia continues to be managed in Federal waters and that there would be no lapse in management of the stock. These regulations would be expected to be implemented concurrently with the removal of Atlantic cobia from the CMP FMP and serve essentially the same function as the current CMP FMP based management measures. It is expected that the Interstate FMP and Atlantic Coastal Act would provide adequate management of Atlantic cobia in state and Federal waters and ensure that the stock has sufficient conservation and management measures in place.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with Amendment 31, the FMP, the Magnuson-Stevens Act, and other applicable laws, subject to further consideration after public comment. Additionally, this proposed rule is compatible with the effective implementation of the ASMFC's Interstate Fishery management Plan for Atlantic Migratory Group Cobia.

This proposed rule has been determined to be not significant for purposes of Executive Order 12866. NMFS expects this proposed rule would reduce regulatory complexity and administrative costs, as well as provide economic benefits to recreational anglers through expanded harvest opportunities in Federal waters and a more stable recreational fishing season for Atlantic cobia.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The factual basis for this determination follows.

A description of this proposed rule, why it is being considered, and the objectives of this proposed rule are contained in the preamble. The Magnuson-Stevens Act and the Atlantic Coastal Act provide the statutory basis for this proposed rule.

This proposed rule would apply to all commercial vessels, charter vessels and headboats (for-hire vessels), and recreational anglers that fish for or harvest Atlantic cobia in Federal waters of the Atlantic. Because no Federal permit is required for the commercial harvest or sale of Atlantic cobia, the distinction between commercial and recreational fishing activity for the purposes of this proposed rule is whether the fish are sold. Individuals that harvest Atlantic cobia under the recreational bag limit in Federal waters and who do not subsequently sell these fish are considered to be recreational anglers. Recreational anglers who would be directly affected by this proposed rule are not considered small entities under the RFA, and are, therefore, outside the scope of this analysis. 5 U.S.C. 603. Small entities include “small businesses,” “small organizations,” and “small governmental jurisdictions.” 5 U.S.C. 601(6) and 601(3)-(5). Recreational anglers are not businesses, organizations, or governmental jurisdictions. In summary, only the impacts on businesses that engage in commercial fishing (i.e., those that sell their harvests of Atlantic cobia) will be discussed.

For-hire vessels sell fishing services to recreational anglers. The proposed changes to the CMP FMP would not directly alter the services sold by these for-hire vessels. Any change in anglers' demand for these fishing services (and associated economic effects) as a result of the proposed action would be secondary to any direct effect on anglers and, therefore, would be an indirect effect of this proposed rule. Indirect effects are not germane to the RFA; however, because for-hire captains and crew are allowed to harvest and sell Atlantic cobia under the possession limit when the commercial season is open, for-hire businesses, or employees thereof, could be directly affected by this proposed rule as well.

Data from 2012 through 2016 were used in Amendment 31 and these data provided the basis for the Councils' decisions. Although no Federal permit is required for the commercial harvest and sale of Atlantic cobia, vessels with other Federal commercial permits are required to report their catches for all species harvested, including Atlantic cobia. On average from 2012 through 2016, there were only 100 commercial vessels with Federal permits that reported landings of Atlantic cobia in the South Atlantic (excluding east Florida, which is outside of the Atlantic cobia stock boundary). Their average annual vessel-level revenue from all species for 2012 through 2016 was approximately $62,000 (2017 dollars) and Atlantic cobia accounted for less than 1 percent of this revenue. The maximum annual revenue from all species reported by a single one of these vessels from 2012 through 2016 was approximately $300,000 (2017 dollars). In the Mid-Atlantic, there were 28 vessels, on average, that harvested Atlantic cobia from 2012 through 2016. Complete revenue profiles for these vessels are not available; however, on average, each vessel earned approximately $2,000 (2017 dollars) per year from the sale of Atlantic cobia. Finally, it is unknown how many non-federally permitted vessels may have fished commercially for Atlantic cobia in Federal waters during this time.

As of June 15, 2018, there were 1,757 valid Federal South Atlantic charter/headboat CMP permits. Although the for-hire permit application collects information on the primary method of operation, the resultant permit itself does not identify the permitted vessel as either a headboat or a charter vessel. Operation as either a headboat or charter vessel is not restricted by permitting regulations and vessels may operate in both capacities. However, only selected headboats are required to submit harvest and effort information to the NMFS Southeast Region Headboat Survey (SRHS). Participation in the SRHS is based on determination by the Southeast Fisheries Science Center that the vessel primarily operates as a headboat. As of June 11, 2018, 64 South Atlantic headboats were registered in the SRHS. As a result, of the 1,757 vessels with South Atlantic charter/headboat CMP permits, up to 64 may primarily operate as headboats and the remainder as charter vessels. The average charter vessel is estimated to receive approximately $120,000 (2017 dollars) in annual revenue. The average headboat is estimated to receive approximately $213,000 (2017 dollars) in annual revenue.

For RFA purposes only, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (NAICS code 11411) is classified as a small business if independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide. All of the commercial vessels directly regulated by this proposed rule are believed to be small entities based on the NMFS size standard.

The SBA has established size criteria for all major industry sectors in the U.S., including fish harvesters. A business involved in the for-hire fishing industry is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $7.5 million (NAICS code 487210, for-hire businesses) for all its affiliated operations worldwide. All for-hire businesses expected to be directly affected by this proposed rule are believed to be small business entities. NMFS has not identified any other small entities that would be directly affected by this proposed rule.

This proposed rule would remove Atlantic cobia and associated regulatory measures from the CMP FMP. The ASMFC would manage Atlantic cobia in state waters and NMFS would promulgate regulations under the Atlantic Coastal Act to replace the existing Magnuson-Stevens Act based regulations in Federal waters. This would ensure that Atlantic cobia continues to be managed in Federal waters and there is no lapse in management of the stock. It is expected that commercial management measures for Atlantic cobia implemented in state waters through the ASMFC Interstate FMP, and in Federal waters through the Atlantic Coastal Act would remain consistent with those currently in place, thereby, not generating any direct economic effects on any small entities.

The information provided above supports a determination that this proposed rule would not have a significant adverse economic impact on a substantial number of small entities. Because this rule, if implemented, is not expected to have a significant adverse economic impact on any small entities, an initial regulatory flexibility analysis is not required and none has been prepared.

No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting, record-keeping, or other compliance requirements are introduced by this proposed rule. Accordingly, the Paperwork Reduction Act does not apply to this proposed rule.

For the reasons set out in the preamble, 50 CFR parts 600, 622, and 697 are proposed to be amended as follows: