This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

9253 

Vol. 86, No. 28 

Friday, February 12, 2021 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 945 

[Doc. No. AMS–SC–20–0084; SC21–945–1 

CR] 

Irish Potatoes Grown in Certain 

Designated Counties in Idaho, and 

Malheur County, Oregon; Continuance 

Referendum 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Referendum order. 

SUMMARY: This document directs that a 

referendum be conducted among 

eligible producers of Irish potatoes 

grown in certain designated counties in 

Idaho, and Malheur County, Oregon, to 

determine whether they favor 

continuance of the marketing order 

regulating the handling of Irish potatoes 

grown in the production area. 

DATES: The referendum will be 

conducted from April 12 to April 30, 

2021. To vote in this referendum, 

producers must have produced Irish 

potatoes for the fresh market within the 

designated production area in Idaho, 

and Malheur County, Oregon, during 

the period August 1, 2019, through July 

31, 2020. 

ADDRESSES: Copies of the marketing 

order may be obtained from the office of 

the referendum agents at 1220 SW 3rd 

Avenue, Suite 305, Portland, OR 97204; 

Telephone: (503) 326–2724; or the 

Office of the Docket Clerk, Marketing 

Order and Agreement Division, 

Specialty Crops Program, AMS, USDA, 

1400 Independence Avenue SW, STOP 

0237, Washington, DC 20250–0237; 

Telephone: (202) 720–2491; or on the 

internet https://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Gregory A. Breasher or Gary D. Olson, 

Northwest Marketing Field Office, 

Marketing Order and Agreement 

Division, Specialty Crops Program, 

AMS, USDA, 1220 SW 3rd Avenue, 

Suite 305, Portland, OR 97204; 

Telephone: (503) 326–2724, or Email: 

Gregory.Breasher@usda.gov or 

GaryD.Olson@usda.gov. 

SUPPLEMENTARY INFORMATION: Pursuant 

to Marketing Agreement and Order No. 

945, as amended (7 CFR part 945), 

hereinafter referred to as the ‘‘Order,’’ 

and the applicable provisions of the 

Agricultural Marketing Agreement Act 

of 1937, as amended (7 U.S.C. 601–674), 

hereinafter referred to as the ‘‘Act,’’ it is 

hereby directed that a referendum be 

conducted to ascertain whether 

continuance of the Order is favored by 

the producers. The referendum shall be 

conducted from April 12 to April 30, 

2021, among eligible Irish potato 

producers in the production area. Only 

producers that were engaged in the 

production of Irish potatoes for the fresh 

market in Idaho, and Malheur County, 

Oregon, during the period of August 1, 

2019, through July 31, 2020, may 

participate in the continuance 

referendum. 

USDA has determined that 

continuance referenda are an effective 

means for determining whether 

producers favor continuation of 

marketing order programs. The Order 

will continue in effect if at least twothirds of producers voting in the 

referendum, or producers of at least 

two-thirds of the volume of Irish 

potatoes represented in the referendum, 

favor continuance. In evaluating the 

merits of continuance versus 

termination, USDA will not exclusively 

consider the results of the continuance 

referendum. USDA will also consider all 

other relevant information concerning 

the operation of the Order and the 

relative benefits and disadvantages to 

producers, handlers, and consumers in 

order to determine whether continued 

operation of the Order would tend to 

effectuate the declared policy of the Act. 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35), the ballots used in the 

referendum have been approved by the 

Office of Management and Budget 

(OMB) and have been assigned OMB 

No. 0581–0178—Vegetable and 

Specialty Crops. It has been estimated 

that it will take an average of 20 minutes 

for each of the approximately 450 

producers of Irish potatoes grown in 

Idaho, and Malheur County, Oregon, to 

cast a ballot. Participation is voluntary. 

Ballots postmarked after April 30, 2021, 

will not be included in the vote 

tabulation. 

Gregory A. Breasher and Gary D. 

Olson of the Northwest Marketing Field 

Office, Specialty Crops Program, AMS, 

USDA, are hereby designated as the 

referendum agents of the Secretary of 

Agriculture to conduct this referendum. 

The procedure applicable to the 

referendum shall be the ‘‘Procedure for 

the Conduct of Referenda in Connection 

with Marketing Orders for Fruits, 

Vegetables, and Nuts Pursuant to the 

Agricultural Marketing Agreement Act 

of 1937, as Amended’’ (7 CFR 900.400– 

900.407). 

Ballots will be mailed to all producers 

of record and may also be obtained from 

the referendum agents, or from their 

appointees. 

List of Subjects in 7 CFR Part 945 

Potatoes, Marketing agreements, 

Reporting and recordkeeping 

requirements. 

Authority: 7 U.S.C. 601–674. 

Bruce Summers, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 2021–02823 Filed 2–11–21; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 4 

[Docket No. OCC–2020–0005] 

RIN 1557–AE80 

Role of Supervisory Guidance 

AGENCY: Office of the Comptroller of the 

Currency, Treasury (OCC). 

ACTION: Final rule. 

SUMMARY: The OCC is adopting a final 

rule that codifies the Interagency 

Statement Clarifying the Role of 

Supervisory Guidance, issued by the 

OCC, Board of Governors of the Federal 

Reserve System (Board), Federal Deposit 

Insurance Corporation (FDIC), National 

Credit Union Administration (NCUA), 

and Bureau of Consumer Financial 

Protection (Bureau) (collectively, the 

agencies) on September 11, 2018 (2018 

Statement). By codifying the 2018 

9254 Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 

1Regulations are commonly referred to as 

legislative rules because regulations have the ‘‘force 

and effect of law.’’ Perez v. Mortgage Bankers 

Association, 575 U.S. 92, 96 (2015) (citations 

omitted). 

2See Chrysler v. Brown, 441 U.S. 281, 302 (1979) 

(quoting the Attorney General’s Manual on the 

Administrative Procedure Act at 30 n.3 (1947) 

(Attorney General’s Manual) and discussing the 

distinctions between regulations and general 

statements of policy, of which supervisory guidance 

is one form). 

3See https://www.occ.gov/news-issuances/newsreleases/2018/nr-ia-2018-97a.pdf. 

4While supervisory guidance offers guidance to 

the public on the OCC’s approach to supervision 

under statutes and regulations and safe and sound 

practices, the issuance of guidance is discretionary 

and is not a prerequisite to the OCC’s exercise of 

its statutory and regulatory authorities. This point 

reflects the fact that statutes and legislative rules, 

not statements of policy, set legal requirements. 

5The Administrative Conference of the United 

States (ACUS) has recognized the important role of 

guidance documents and has stated that guidance 

can ‘‘make agency decision-making more 

predictable and uniform and shield regulated 

parties from unequal treatment, unnecessary costs, 

and unnecessary risk, while promoting compliance 

with the law.’’ ACUS, Recommendation 2017–5, 

Agency Guidance Through Policy Statements at 2 

(adopted December 14, 2017), available at https:// 

www.acus.gov/recommendation/agency-guidancethrough-policy-statements. ACUS also suggests that 

‘‘policy statements are generally better [than 

legislative rules] for dealing with conditions of 

uncertainty and often for making agency policy 

accessible.’’ Id. ACUS’s reference to ‘‘policy 

statements’’ refers to the statutory text of the APA, 

which provides that notice and comment is not 

required for ‘‘general statements of policy.’’ The 

phrase ‘‘general statements of policy’’ has 

commonly been viewed by courts, agencies, and 

administrative law commentators as including a 

wide range of agency issuances, including guidance 

documents. 

6 5 U.S.C. 553(e). 

7See Petition for Rulemaking on the Role of 

Supervisory Guidance, available at https://bpi.com/ 

wp-content/uploads/2018/11/BPI_PFR_on_Role_of_

Supervisory_Guidance_Federal_Reserve.pdf. The 

Petitioners did not submit a petition to the NCUA, 

which has no supervisory authority over the 

financial institutions that are represented by 

Petitioners. The NCUA chose to join the Proposed 

Rule on its own initiative. 

8 85 FR 70512 (November 5, 2020). 

Statement, with amendments, the final 

rule confirms that the OCC will 

continue to follow and respect the limits 

of administrative law in carrying out its 

supervisory responsibilities. The 2018 

Statement reiterated well-established 

law by stating that, unlike a law or 

regulation, supervisory guidance does 

not have the force and effect of law. As 

such, supervisory guidance does not 

create binding legal obligations for the 

public. Because it is incorporated into 

the final rule, the 2018 Statement, as 

amended, is binding on the OCC. The 

final rule adopts the rule as proposed 

without substantive change. 

DATES: This final rule is effective on 

March 15, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Mitchell Plave, Special Counsel, (202) 

649–5490; or Henry Barkhausen, 

Counsel, Chief Counsel’s Office (202) 

649–5490; or Steven Key, Associate 

Deputy Comptroller for Bank 

Supervision Policy, (202) 649–6770, 

Office of the Comptroller of the 

Currency, 400 7th Street SW, 

Washington, DC 20219. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The OCC recognizes the important 

distinction between issuances that serve 

to implement acts of Congress (known 

as ‘‘regulations’’ or legislative rules’’) 

and non-binding supervisory guidance 

documents.1 Regulations create binding 

legal obligations. Supervisory guidance 

is issued by an agency to ‘‘advise the 

public prospectively of the manner in 

which the agency proposes to exercise 

a discretionary power’’ and does not 

create binding legal obligations.2

In recognition of the important 

distinction between rules and guidance, 

on September 11, 2018, the agencies 

issued the Interagency Statement 

Clarifying the Role of Supervisory 

Guidance (2018 Statement) to explain 

the role of supervisory guidance and 

describe the agencies’ approach to 

supervisory guidance.3 As noted in the 

2018 Statement, the agencies issue 

various types of supervisory guidance to 

their respective supervised institutions, 

including, but not limited to, 

interagency statements, advisories, 

bulletins, policy statements, questions 

and answers, and frequently asked 

questions. Supervisory guidance 

outlines the agencies’ supervisory 

expectations or priorities and articulates 

the agencies’ general views regarding 

practices for a given subject area. 

Supervisory guidance often provides 

examples of practices that mitigate risks, 

or that the agencies generally consider 

to be consistent with safety-andsoundness standards or other applicable 

laws and regulations, including those 

designed to protect consumers.4 The 

agencies noted in the 2018 Statement 

that supervised institutions at times 

request supervisory guidance and that 

guidance is important to provide clarity 

to these institutions, as well as 

supervisory staff, in a transparent way 

that helps to ensure consistency in the 

supervisory approach.5

The 2018 Statement restated existing 

law and reaffirmed the agencies’ 

understanding that supervisory 

guidance does not create binding, 

enforceable legal obligations. The 2018 

Statement reaffirmed that the agencies 

do not issue supervisory criticisms for 

‘‘violations’’ of supervisory guidance 

and described the appropriate use of 

supervisory guidance by the agencies. In 

the 2018 Statement, the agencies also 

expressed their intention to (1) limit the 

use of numerical thresholds in 

guidance; (2) reduce the issuance of 

multiple supervisory guidance 

documents on the same topic; (3) 

continue efforts to make the role of 

supervisory guidance clear in 

communications to examiners and 

supervised institutions; and (4) 

encourage supervised institutions to 

discuss their concerns about 

supervisory guidance with their agency 

contact. 

On November 5, 2018, the OCC, 

Board, FDIC, and Bureau each received 

a petition for a rulemaking (Petition), as 

permitted under the Administrative 

Procedure Act (APA),6 requesting that 

the agencies codify the 2018 Statement.7

The Petition argued that a rule on 

guidance is necessary to bind future 

agency leadership and staff to the 2018 

Statement’s terms. The Petition also 

suggested there are ambiguities in the 

2018 Statement concerning how 

supervisory guidance is used in 

connection with matters requiring 

attention, matters requiring immediate 

attention (collectively, MRAs), as well 

as in connection with other supervisory 

actions that should be clarified through 

a rulemaking. Finally, the Petition 

called for the rulemaking to implement 

changes in the agencies’ standards for 

issuing MRAs. Specifically, the Petition 

requested that the agencies limit the role 

of MRAs to addressing circumstances in 

which there is a violation of a statute, 

regulation, or order, or demonstrably 

unsafe or unsound practices. 

II. The Proposed Rule and Comments 

Received 

On November 5, 2020, the agencies 

issued a proposed rule (Proposed Rule 

or Proposal) that would have codified 

the 2018 Statement, with clarifying 

changes, as an appendix to proposed 

rule text.8 The Proposed Rule would 

have superseded the 2018 Statement. 

The rule text would have provided that 

an amended version of the 2018 

Statement is binding on each respective 

agency. 

Clarification of the 2018 Statement 

The Petition expressed support for the 

2018 Statement and acknowledged that 

it addresses many issues of concern for 

the Petitioners relating to the use of 

supervisory guidance. The Petition 

expressed concern, however, that the 

2018 Statement’s reference to not basing 

‘‘criticisms’’ on violations of 

supervisory guidance has led to 

confusion about whether MRAs are 

covered by the 2018 Statement. 

Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 9255 

9The agencies use different terms to refer to 

supervisory actions that are similar to MRAs and 

Matters Requiring Immediate Attention (MRIAs), 

including matters requiring board attention 

(MRBAs), documents of resolution, and supervisory 

recommendations. 

10For the sake of clarification, one source of law 

among many that can serve as a basis for a 

supervisory criticism is the Interagency Guidelines 

Establishing Standards for Safety and Soundness, 

see 12 CFR part 30, appendix A, 12 CFR part. 208, 

appendix D–1, and 12 CFR part 364, appendix A. 

These Interagency Guidelines were issued using 

notice and comment and pursuant to express 

statutory authority in 12 U.S.C. 1831p–1(d)(1) to 

adopt safety and soundness standards either by 

‘‘regulation or guideline.’’ 

11The 2018 Statement contains the following 

sentence: 

Examiners will not criticize a supervised 

financial institution for a ‘‘violation’’ of supervisory 

guidance. 

2018 Statement at 2. As revised in the Proposed 

Rule, this sentence read as follows: 

Examiners will not criticize (including through 

the issuance of matters requiring attention, matters 

requiring immediate attention, matters requiring 

board attention, documents of resolution, and 

supervisory recommendations) a supervised 

financial institution for, and agencies will not issue 

an enforcement action on the basis of, a ‘‘violation’’ 

of or ‘‘non-compliance’’ with supervisory guidance. 

Proposed Rule (emphasis added). As discussed 

infra in footnote 13, the Proposed Rule also 

removed the sentences in the 2018 Statement that 

referred to ‘‘citation,’’ which the Petition suggested 

had been confusing. These sentences were also 

removed to clarify that the focus of the Proposed 

Rule related to the use of guidance, not the 

standards for MRAs. 

12The Petition asserted that the federal banking 

agencies rely on 12 U.S.C. 1818(b)(1) when issuing 

MRAs based on safety-and-soundness matters. 

Through statutory examination and reporting 

authorities, Congress has conferred upon the 

agencies the authority to exercise visitorial powers 

with respect to supervised institutions. The 

Supreme Court has indicated support for a broad 

reading of the agencies’ visitorial powers. See, e.g., 

Cuomo v. Clearing House Assn L.L.C., 557 U.S. 519 

(2009); United States v. Gaubert, 499 U.S. 315 

(1991); and United States v. Philadelphia Nat. 

Bank, 374 U.S. 321 (1963). The visitorial powers 

facilitate early identification of supervisory 

concerns that may not rise to a violation of law, 

unsafe or unsound banking practice, or breach of 

fiduciary duty under 12 U.S.C. 1818. 

13The following sentences from the 2018 

Statement were not present in the Proposed Rule: 

Rather, any citations will be for violations of law, 

regulation, or non-compliance with enforcement 

orders or other enforceable conditions. During 

examinations and other supervisory activities, 

examiners may identify unsafe or unsound 

practices or other deficiencies in risk management, 

including compliance risk management, or other 

areas that do not constitute violations of law or 

regulation. 

2018 Statement at 2. The agencies did not intend 

these deletions to indicate a change in supervisory 

policy. 

14Of the comments received, some comments 

were not submitted to all agencies, and some 

comments were identical. Note that this total 

excludes comments that were directed at an 

unrelated rulemaking by the Financial Crimes 

Enforcement Network of the Department of the 

Treasury (FinCEN). 

15This final rule does not specifically discuss 

those comments that are only potentially relevant 

to other agencies. 

Accordingly, the agencies proposed to 

clarify in the Proposed Rule that the 

term ‘‘criticize’’ includes the issuance of 

MRAs and other supervisory criticisms, 

including those communicated through 

matters requiring board attention, 

documents of resolution, and 

supervisory recommendations 

(collectively, supervisory criticisms).9

As such, the agencies reiterated that 

examiners will not base supervisory 

criticisms on a ‘‘violation’’ of or ‘‘noncompliance with’’ supervisory 

guidance.10 The agencies noted that, in 

some situations, examiners may 

reference (including in writing) 

supervisory guidance to provide 

examples of safe and sound conduct, 

appropriate consumer protection and 

risk management practices, and other 

actions for addressing compliance with 

laws or regulations. The agencies also 

reiterated that they will not issue an 

enforcement action on the basis of a 

‘‘violation’’ of or ‘‘non-compliance’’ 

with supervisory guidance. The 

Proposed Rule reflected these 

clarifications.11

The Petition requested further that 

these supervisory criticisms should not 

include ‘‘generic’’ or ‘‘conclusory’’ 

references to safety and soundness. The 

agencies agreed that supervisory 

criticisms should continue to be specific 

as to practices, operations, financial 

conditions, or other matters that could 

have a negative effect on the safety and 

soundness of the financial institution, 

could cause consumer harm, or could 

cause violations of laws, regulations, 

final agency orders, or other legally 

enforceable conditions. Accordingly, the 

agencies included language reflecting 

this practice in the Proposed Rule. 

The Petition also suggested that 

MRAs, as well as memoranda of 

understanding, examination 

downgrades, and any other formal 

examination mandate or sanction, 

should be based only on a violation of 

a statute, regulation, or order, including 

a ‘‘demonstrably unsafe or unsound 

practice.’’ 12 As noted in the Proposed 

Rule, examiners all take steps to identify 

deficient practices before they rise to 

violations of law or regulation or before 

they constitute unsafe or unsound 

banking practices. The agencies stated 

that they continue to believe that early 

identification of deficient practices 

serves the interest of the public and of 

supervised institutions. Early 

identification protects the safety and 

soundness of banks, promotes consumer 

protection, and reduces the costs and 

risk of deterioration of financial 

condition from deficient practices 

resulting in violations of laws or 

regulations, unsafe or unsound 

conditions, or unsafe or unsound 

banking practices. The Proposed Rule 

also noted that the agencies have 

different supervisory processes, 

including for issuing supervisory 

criticisms. For these reasons, the 

agencies did not propose revisions to 

their respective supervisory practices 

relating to supervisory criticisms. 

The agencies also noted that the 2018 

Statement was intended to focus on the 

appropriate use of supervisory guidance 

in the supervisory process, rather than 

the standards for supervisory criticisms. 

To address any confusion concerning 

the scope of the 2018 Statement, the 

Proposed Rule removed two sentences 

from the 2018 Statement concerning 

grounds for ‘‘citations’’ and the 

handling of deficiencies that do not 

constitute violations of law.13

Comments on the Proposed Rule 

A. Overview 

The five agencies received 

approximately 30 unique comments 

concerning the Proposed Rule.14 The 

OCC discusses below those comments 

that are potentially relevant to the 

OCC.15 Commenters representing trade 

associations for banking institutions and 

other businesses, state bankers’ 

associations, individual financial 

institutions, and one member of 

Congress expressed general support for 

the Proposed Rule. These commenters 

supported codification of the 2018 

Statement and the reiteration by the 

agencies that guidance does not have 

the force of law and cannot give rise to 

binding, enforceable legal obligations. 

One of these commenters stated that the 

Proposal would serve the interests of 

consumers and competition by 

clarifying the law for institutions and 

potentially removing ambiguities that 

could deter the development of 

innovative products that serve 

consumers and business clients, without 

uncertainty regarding potential 

regulatory consequences. These 

commenters expressed strong support as 

well for the clarification in the Proposed 

Rule that the agencies will not criticize, 

including through the issuance of 

‘‘matters requiring attention,’’ a 

supervised financial institution for a 

‘‘violation’’ of, or ‘‘non-compliance’’ 

with, supervisory guidance. 

One commenter agreed with the 

agencies that supervisory criticisms 

should not be limited to violation of 

statutes, regulations, or orders, 

including a ‘‘demonstrable unsafe or 

unsound practice’’ and that supervisory 

guidance remains a beneficial tool to 

communicate supervisory expectations 

9256 Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 

16The Federal banking agencies are the OCC, 

Board, and FDIC. 12 U.S.C. 1813. 

to the industry. The commenter stated 

that the proactive identification of 

supervisory criticism or deficiencies 

that do not constitute violations of law 

facilitates forward-looking supervision, 

which helps address problems before 

they warrant a formal enforcement 

action. The commenter noted as well 

that supervisory guidance provides 

important insight to the industry and 

ensures consistency in the supervisory 

approach and that supervised 

institutions frequently request 

supervisory guidance. The commenter 

observed that the COVID–19 pandemic 

has amplified the requests for 

supervisory guidance and interpretation 

and that it is apparent institutions want 

clarity and guidance from regulators. 

Two commenters, both public interest 

advocacy groups, opposed the proposed 

rule, suggesting that codifying the 2018 

Statement may undermine the 

important role that supervisory 

guidance can play by informing 

supervisory criticism, rather than 

merely clarifying that it will not serve 

as the basis for enforcement actions. 

One commenter stated that it is essential 

for agencies to have the prophylactic 

authority to base criticisms on 

imprudent bank practices that may not 

yet have ripened into violations of law 

or significant safety and soundness 

concerns. The commenter stated that 

this is particularly important with 

respect to large banks, where delay in 

addressing concerns could lead to a 

broader crisis. One commenter stated 

that the agencies have not explained the 

benefits that would result from the rule 

or demonstrated how the rule will 

promote safety and soundness or 

consumer protection. The commenter 

argued that supervision is different from 

other forms of regulation and requires 

supervisory discretion, which could be 

constrained by the rule. One of these 

commenters argued that the Proposal 

would send a signal that banking 

institutions have wider discretion to 

ignore supervisory guidance. 

B. Scope of Rule 

Several industry commenters 

requested that the Proposed Rule cover 

interpretive rules and clarify that 

interpretive rules do not have the force 

and effect of law. One commenter stated 

that the agencies should clarify whether 

they believe that interpretive rules can 

be binding. The commenter argued that, 

under established legal principles, 

interpretive rules can be binding on the 

agency that issues them, but not on the 

public. Some commenters suggested 

that the agencies follow ACUS 

recommendations for issuing 

interpretive rules and that the agencies 

should clarify when particular guidance 

documents are (or are not) interpretive 

rules and allow the public to petition to 

change an interpretation. A number of 

commenters requested that the agencies 

expand the statement to address the 

standards that apply to MRAs and other 

supervisory criticisms, a suggestion 

made in the Petition. 

C. Role of Guidance Documents 

Several commenters recommended 

that the agencies clarify that the 

practices described in supervisory 

guidance are merely examples of 

conduct that may be consistent with 

statutory and regulatory compliance, not 

expectations that may form the basis for 

supervisory criticism. One commenter 

suggested that the agencies state that 

when agencies offer examples of safe 

and sound conduct, compliance with 

consumer protection standards, 

appropriate risk management practices, 

or acceptable practices through 

supervisory guidance or interpretive 

rules, the agencies will treat adherence 

to practices outlined in that supervisory 

guidance or interpretive rule as a safe 

harbor from supervisory criticism. One 

commenter also requested that the 

agencies make clear that guidance that 

goes through public comment, as well as 

any examples used in guidance, is not 

binding. The commenter also requested 

that the agencies affirm that they will 

apply statutory factors while processing 

applications. 

One commenter argued that guidance 

provides valuable information to 

supervisors about how their discretion 

should be exercised and therefore plays 

an important role in supervision. As an 

example, according to this commenter, 

12 U.S.C. 1831p–1 and 12 U.S.C. 1818 

recognize the discretionary power 

conferred on the Federal banking 

agencies,16 which is separate from the 

power to issue regulations. The 

commenter noted that, pursuant to these 

statutes, regulators may issue cease and 

desist orders based on reasonable cause 

to believe that an institution has 

engaged, is engaging, or is about to 

engage in an unsafe and unsound 

practice, separately and apart from 

whether the institution has technically 

violated a law or regulation. The 

commenter added that Congress 

entrusted the Federal banking agencies 

with the power to determine whether 

practices are unsafe and unsound and 

attempt to halt such practices through 

supervision, even if a specific case may 

not constitute a violation of a written 

law or regulation. 

D. Supervisory Criticisms 

Several commenters addressed 

supervisory criticisms and how they 

relate to guidance. These commenters 

suggested that supervisory criticisms 

should be specific as to practices, 

operations, financial conditions, or 

other matters that could have a negative 

effect. These commenters also suggested 

that MRAs, memoranda of 

understanding, and any other formal 

written mandates or sanctions should be 

based only on a violation of a statute or 

regulation. Similarly, these commenters 

argued that there should be no 

references to guidance in written formal 

actions and that banking institutions 

should be reassured that they will not 

be criticized or cited for a violation of 

guidance when no law or regulation is 

cited. One commenter suggested that it 

would instead be appropriate to discuss 

supervisory guidance privately, rather 

than publicly, potentially during the 

pre-exam meetings or during 

examination exit meetings. Another 

commenter suggested that, while 

referencing guidance in supervisory 

criticism may be useful at times, 

agencies should provide safeguards to 

prevent such references from becoming 

the de facto basis for supervisory 

criticisms. One commenter stated that 

examiners also should not criticize 

community banks in their final written 

examination reports for not complying 

with ‘‘best practices’’ unless the 

criticism involves a violation of bank 

policy or regulation. The commenter 

added that industry best practices 

should be transparent enough and 

sufficiently known throughout the 

industry before being cited in an 

examination report. One commenter 

requested that examiners should not 

apply large bank practices to 

community banks that have a different, 

less complex, and more conservative 

business model. One commenter 

asserted that MRAs should not be based 

on ‘‘reputational risk,’’ but rather on the 

underlying conduct giving rise to 

concerns and asked the agencies to 

address this in the final rule. 

Commenters that opposed the 

Proposal did not support restricting 

supervisory criticism or sanctions to 

explicit violations of law or regulation. 

One commenter expressed concern that 

requiring supervisors to wait for an 

explicit violation of law before issuing 

criticism would effectively erase the 

line between supervision and 

enforcement. According to the 

commenter, it would eliminate the 

space for supervision as an intermediate 

Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 9257 

17See Mortgage Bankers Association, 575 U.S. at 

96. 

18Questions concerning the legal and supervisory 

nature of interpretive rules are case-specific and 

have engendered debate among courts and 

administrative law commentators. The OCC takes 

no position in this rulemaking on those specific 

debates. See, e.g., R. Levin, Rulemaking and the 

Guidance Exemption, 70 Admin. L. Rev. 263 (2018) 

(discussing the doctrinal differences concerning the 

status of interpretive rules under the APA); see also 

Nicholas R. Parillo, Federal Agency Guidance and 

the Powder to Bind: An Empirical Study of Agencies 

and Industries, 36 Yale J. Reg 165, 168 n.6 (2019) 

(‘‘[w]hether interpretive rules are supposed to be 

nonbinding is a question subject to much confusion 

that is not fully settled’’); see also ACUS, 

Recommendation 2019–1, Agency Guidance 

Through Interpretive Rules (Adopted June 13, 

2019), available at https://www.acus.gov/ 

recommendation/agency-guidance-throughinterpretive-rules (noting that courts and 

commentators have different views on whether 

interpretive rules bind an agency and effectively 

bind the public through the deference given to 

agencies’ interpretations of their own rules under 

Auer v. Robbins, 519 U.S. 452 (1997)). 

19 Mortgage Bankers Association, 575 U.S. at 97 

(citing Shalala v. Guernsey Memorial Hospital, 514 

U.S. 87, 99 (1995)); accord Attorney General’s 

Manual at 30 n.3. 

20See Chrysler v. Brown, 441 U.S. at 302 n.31 

(quoting Attorney General’s Manual at 30 n.3); see 

also, e.g., American Mining Congress v. Mine Safety 

& Health Administration, 995 F.2d 1106, 1112 (D.C. 

Cir. 1993) (outlining tests in the D.C. Circuit for 

assessing whether an agency issuance is an 

interpretive rule). 

practice of oversight and cooperative 

problem-solving between banks and the 

regulators who support and manage the 

banking system and would also clearly 

violate the intent of the law in 12 U.S.C. 

1818(b). One commenter emphasized 

the importance of bank supervisors 

basing their criticisms on imprudent 

bank practices that may not yet have 

ripened into violations of laws or rules 

but could undermine safety and 

soundness or pose harm to consumers if 

left unaddressed. 

One commenter argued that the 

agencies should state clearly that 

guidance can and will be used by 

supervisors to inform their assessments 

of banks’ practices and that it may be 

cited as, and serve as the basis for, 

criticisms. According to the commenter, 

even under the legal principles 

described in the Proposal, it is 

permissible for guidance to be used as 

a set of standards that may inform a 

criticism, provided that application of 

the guidance is used for corrective 

purposes, if not to support an 

enforcement action. 

According to one commenter, the 

Proposal makes fine conceptual 

distinctions between, for example, 

issuing supervisory criticisms ‘‘on the 

basis of’’ guidance and issuing 

supervisory criticisms that make 

‘‘reference’’ to supervisory guidance. 

The commenter suggested that is a 

distinction that it may be difficult for 

‘‘human beings to parse in practice.’’ 

According to the commenter, a rule that 

makes such a distinction is likely to 

have a chilling effect on supervisors 

attempting to implement policy in the 

field. According to another commenter, 

the language allowing examiners to 

reference supervisory guidance to 

provide examples is too vague and 

threatens to marginalize the role of 

guidance and significantly reduce its 

usefulness in the process of issuing 

criticisms designed to correct deficient 

bank practices. 

E. Legal Authority and Visitorial Powers 

One commenter questioned the 

Federal banking agencies’ reference in 

the Proposal to visitorial powers as an 

additional authority for early 

identification of supervisory concerns 

that may not rise to a violation of law, 

unsafe or unsound banking practice, or 

breach of fiduciary duty under 12 U.S.C. 

1818. 

F. Issuance and Management of 

Supervisory Guidance 

Several commenters made suggestions 

about how the agencies should issue 

and manage supervisory guidance. 

Some commenters suggested that the 

agencies should delineate clearly 

between regulations and supervisory 

guidance. Commenters encouraged the 

agencies to regularly review, update, 

and potentially rescind outstanding 

guidance. One commenter suggested 

that the agencies rescind outstanding 

guidance that functions as rule but has 

not gone through notice and comment. 

One commenter suggested that the 

agencies memorialize their intent to 

revisit and potentially rescind existing 

guidance, as well as limit multiple 

guidance documents on the same topic. 

Commenters suggested that supervisory 

guidance should be easy to find, readily 

available, online, and in a format that is 

user-friendly and searchable. 

One commenter encouraged the 

agencies to issue principles-based 

guidance that avoids the kind of 

granularity that could be misconstrued 

as binding expectations. According to 

this commenter, the agencies can issue 

separate frequently asked questions 

with more detailed information, but 

should clearly identify these as nonbinding illustrations. This commenter 

also encouraged the agencies to publish 

proposed guidance for comment when 

circumstances allow. Another 

commenter requested that the agencies 

issue all ‘‘rules’’ as defined by the APA 

through the notice-and-comment 

process. One commenter expressed 

concern that the agencies will aim to 

reduce the issuance of multiple 

supervisory guidance documents and 

will thereby reduce the availability of 

guidance in circumstances where 

guidance would be valuable. 

Responses to Comments 

As stated in the Proposed Rule, the 

2018 Statement was intended to focus 

on the appropriate use of supervisory 

guidance in the supervisory process, 

rather than the standards for 

supervisory criticisms. The standards 

for issuing MRAs and other supervisory 

actions were, therefore, outside the 

scope of this rulemaking. For this 

reason, and for reasons discussed 

earlier, the final rule does not address 

the standards for MRAs or other 

supervisory actions. Similarly, because 

the OCC is not addressing its approach 

to supervisory criticism in the final rule, 

including any criticism related to 

reputation risk, the final rule does not 

address supervisory criticisms relating 

to ‘‘reputation risk.’’ 

With respect to the comments on 

coverage of interpretive rules, the OCC 

agrees with the commenter that 

interpretive rules do not, alone, ‘‘have 

the force and effect of law’’ and must be 

rooted in, and derived from, a statute or 

regulation.17 While interpretive rules 

and supervisory guidance are similar in 

lacking the force and effect of law, 

interpretive rules and supervisory 

guidance are distinct under the APA 

and its jurisprudence and are generally 

issued for different purposes.18

Interpretive rules are typically issued by 

an agency to advise the public of the 

agency’s construction of the statutes and 

rules that it administers,19 whereas 

general statements of policy, such as 

supervisory guidance, advise the public 

of how an agency intends to exercise its 

discretionary powers.20 To this end, 

guidance generally reflects an agency’s 

policy views, for example, on safe and 

sound risk management practices. On 

the other hand, interpretive rules 

generally resolve ambiguities regarding 

requirements imposed by statutes and 

regulations. Because supervisory 

guidance and interpretive rules have 

different characteristics and serve 

different purposes, the OCC has decided 

that the final rule will continue to cover 

supervisory guidance only. 

With respect to the question of 

whether to adopt ACUS’s procedures for 

allowing the public to request 

reconsideration or revision of an 

interpretive rule, this rulemaking, again, 

does not address interpretive rules. As 

such, the OCC is not adding procedures 

for challenges to interpretive rules 

through this rulemaking. 

9258 Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 

21Cuomo v. Clearing House Assn L.L.C., 557 U.S. 

519, 536 (2009). 22 Id. at 533. 23Watters v. Wachovia Bank, N.A., 550 U.S. 1, 

127 (2007). 24The commenter’s reading of the Federal 

banking agencies’ examination and reporting 

authorities would assert that the Federal banking 

agencies may examine supervised institutions and 

require reports, but not make findings based on 

such examinations and reporting, unless the finding 

is sufficient to warrant a formal enforcement action 

under the standard set out in 12 U.S.C. 1818. This 

reading is inconsistent with the history of federal 

banking supervision, including as described in the 

cases cited in the Proposed Rule. 

25Am. Hosp. Ass’n v. Bowen, 834 F.2d 1037, 1045 

(D.C. Cir. 1987). The specific contours of these 

exceptions are the subject of an extensive body of 

case law. 

In response to the comment that the 

agencies should treat examples in 

guidance as ‘‘safe harbors’’ from 

supervisory criticism, the OCC agrees 

that examples offered in supervisory 

guidance can provide insight about 

practices that, in general, may lead to 

safe and sound operation and 

compliance with regulations and 

statutes. The examples in guidance, 

however, are generalized. When an 

institution implements examples, 

examiners must consider the facts and 

circumstances of that institution in 

assessing the application of those 

examples. In addition, the underlying 

legal principle of supervisory guidance 

is that it does not create binding legal 

obligation for either the public or an 

agency. As such, the OCC does not 

deem examples used in supervisory 

guidance to categorically establish safe 

harbors from supervisory criticism. 

In response to the comments that the 

Proposal may undermine the important 

role that supervisory guidance can play 

in informing supervisory criticism and 

serving to address conditions before 

those conditions lead to enforcement 

actions, the OCC agrees that the 

appropriate use of supervisory guidance 

generates a more collaborative and 

constructive regulatory process that 

supports the safety and soundness and 

compliance of institutions, thereby 

diminishing the need for enforcement 

actions. As noted by ACUS, guidance 

can make agency decision-making more 

predictable and uniform and shield 

regulated parties from unequal 

treatment, unnecessary costs, and 

unnecessary risk, while promoting 

compliance with the law. The OCC does 

not view the final rule as weakening the 

role of guidance in the supervisory 

process and the OCC will continue to 

use guidance in a robust way to support 

the safety and soundness of banks and 

promote compliance with consumer 

protection laws and regulations. 

Further, the OCC does not agree with 

one commenter’s assertion that the 

Proposal made an unclear distinction 

between, on the one hand, inappropriate 

supervisory criticism for a ‘‘violation’’ 

of or ‘‘non-compliance’’ with 

supervisory guidance, and, on the other 

hand, OCC examiners’ appropriate use 

of supervisory guidance to reference 

examples of safe and sound conduct, 

appropriate consumer protection and 

risk management practices, and other 

actions for addressing compliance with 

laws or regulations. This approach 

appropriately implements the principle 

that institutions are not required to 

follow supervisory guidance in itself but 

may find such guidance useful. The 

OCC disagrees with the commenter that 

institutions and examiners are incapable 

of understanding this important 

distinction. 

With respect to the comment that 

visitorial powers do not provide the 

Federal banking agencies with authority 

to issue MRAs or other supervisory 

criticisms, the OCC disagrees. The 

OCC’s visitorial powers are wellestablished. The Supreme Court’s 

decision in Cuomo v. Clearing House 

Assn L.L.C. explained that the visitation 

included the ‘‘exercise of supervisory 

power.’’ 21 The Court ruled that the 

‘‘power to enforce the law exists 

separate and apart from the power of 

visitation.’’ 22 While the Cuomo 

decision involved the question of which 

powers may be exercised by state 

governments (and ruled that states 

could exercise law enforcement powers, 

but could not exercise visitorial 

powers), the decision did not dispute 

that the Federal banking agencies 

possess both these powers. The Court in 

Cuomo explained that visitorial powers 

entailed ‘‘oversight and supervision,’’ 

while the Court’s earlier decision in 

Watters v. Wachovia Bank, N.A. 

explained that visitorial powers entailed 

‘‘general supervision and control.’’ 23

Accordingly, visitorial powers include 

the power to issue supervisory 

criticisms independent of the agencies’ 

authority to enforce applicable laws or 

ensure safety and soundness. For these 

reasons, the OCC reaffirms the statement 

in the preamble to the Proposed Rule 

that such visitorial powers have been 

conferred through statutory examination 

and reporting authorities, which 

facilitate the OCC’s identification of 

supervisory concerns that may not rise 

to a violation of law, unsafe or unsound 

practice, or breach of fiduciary duty 

under 12 U.S.C. 1818. These statutory 

examination and reporting authorities 

pre-existed 12 U.S.C. 1818, which 

neither superseded nor replaced such 

authorities. The OCC has been vested 

with statutory examination and 

reporting authorities with respect to 

banks under its supervision.24

In response to the comments 

regarding the role of public comment for 

supervisory guidance, the OCC notes 

that it has made clear through the 2018 

Statement and in this final rule that 

supervisory guidance (including 

guidance that goes through public 

comment) does not create binding, 

enforceable legal obligations. Rather, the 

OCC in some instances issues 

supervisory guidance for comment in 

order to improve its understanding of an 

issue, gather information, or seek ways 

to achieve a supervisory objective most 

effectively. Similarly, examples that are 

included in supervisory guidance 

(including guidance that goes through 

public comment) are not binding on 

institutions. Rather, these examples are 

intended to be illustrative of ways a 

supervised institution may implement 

safe and sound practices, appropriate 

consumer protection, prudent risk 

management, or other actions in 

furtherance of compliance with laws or 

regulations. Relatedly, the OCC does not 

agree with one comment that it should 

use notice and comment procedures, 

without exception, to issue all ‘‘rules’’ 

as defined by the APA, which would 

include supervisory guidance. Congress 

has established longstanding exceptions 

in the APA from the notice and 

comment process for certain rules, 

including for general statements of 

policy like supervisory guidance and for 

interpretive rules. As one court has 

explained, Congress intended to 

‘‘accommodate situations where the 

policies promoted by public 

participation in rulemaking are 

outweighed by the countervailing 

considerations of effectiveness, 

efficiency, expedition and reduction in 

expense.’’ 25

With respect to the commenter’s 

request that the agencies affirm that they 

will apply statutory factors while 

processing applications, the OCC 

affirms that the agency will continue to 

consider and apply all applicable 

statutory factors when processing 

applications. 

In response to the question raised by 

some commenters concerning potential 

confusion between supervisory 

guidance and interpretive rules, the 

OCC notes that interpretive rules are 

outside the scope of the rulemaking. In 

addition, as stated earlier, interpretive 

rules do not, alone, ‘‘have the force and 

effect of law’’ and must be rooted in, 

and derived from, a statute or 

regulation. While interpretive rules and 

supervisory guidance are similar in 

lacking the force and effect of law, 

Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 9259 

26 44 U.S.C. 3501–3521. 27 5 U.S.C. 601, et seq. 28We base our estimate of the number of small 

entities on the SBA’s size thresholds for commercial 

banks and savings institutions, and trust 

companies, which are $600 million and $41.5 

million, respectively. Consistent with the General 

Principles of Affiliation 13 CFR 121.103(a), we 

count the assets of affiliated financial institutions 

when determining if we should classify an OCCsupervised institution as a small entity. We use 

December 31, 2018, to determine size because a 

‘‘financial institution’s assets are determined by 

averaging the assets reported on its four quarterly 

financial statements for the preceding year.’’ See 

footnote 8 of the U.S. Small Business 

Administration’s Table of Size Standards. 

29Public Law 106–102, section 722, 113 Stat. 

1338, 1471 (1999), 12 U.S.C. 4809. 

30 2 U.S.C. 1532. 

31 12 U.S.C. 4802(a). 

32 12 U.S.C. 4802. 

interpretive rules and supervisory 

guidance are distinct under the APA 

and its jurisprudence and are generally 

issued for different purposes. The OCC 

believes that when it issues an 

interpretive rule, the fact that it is an 

interpretive rule is generally clear. In 

addition, these comments relate to 

clarity in drafting, rather than a matter 

that seems suitable for rulemaking. 

In response to the two commenters 

opposing the Proposal, this final rule 

does not undermine any of the OCC’s 

safety and soundness or other 

authorities. Indeed, the final rule is 

designed to support the OCC’s ability to 

supervise banks effectively. In addition, 

the OCC notes the question of the role 

of guidance has been one of interest to 

regulated parties and other stakeholders 

over the past few years. The Petition 

and the numerous comments on the 

Proposal are a sign of this interest. As 

such, the OCC believes it will serve the 

public interest to reaffirm the 

appropriate role of supervisory 

guidance. There are inherent benefits to 

the supervisory process whenever 

institutions and examiners have a clear 

understanding of their roles, including 

how supervisory guidance can be used 

effectively within legal limits. 

Therefore, the OCC is proceeding with 

the rule as proposed. 

In response to the commenter 

expressing concern that language in the 

Statement on reducing multiple 

supervisory guidance documents on the 

same topic will limit the OCC’s ability 

to provide valuable guidance, the OCC 

assures the commenter that this 

language will not inhibit the OCC from 

issuing new supervisory guidance when 

appropriate. 

Finally, the OCC appreciates the other 

comments related to other aspects of 

guidance or the supervisory process, but 

the OCC does not believe that they are 

best addressed in this rulemaking. 

III. The Final Rule 

For the reasons discussed above, the 

final rule adopts the Proposed Rule 

without substantive change. However, 

the OCC has decided to issue a final rule 

that is specifically addressed to the OCC 

and OCC-supervised institutions, rather 

than the joint version that the five 

agencies included in their joint 

Proposal. Although many of the 

comments were applicable to all of the 

agencies, some comments were specific 

to particular agencies or to groups of 

agencies. Having separate final rules has 

enabled agencies to better focus on 

explaining any agency-specific issues to 

their respective audiences of supervised 

institutions and agency employees. 

IV. Administrative Law Matters 

A. Paperwork Reduction Act 

The Paperwork Reduction Act of 

1995 26 (PRA) states that no agency may 

conduct or sponsor, nor is the 

respondent required to respond to, an 

information collection unless it displays 

a currently valid Office of Management 

and Budget (OMB) control number. The 

OCC has reviewed this final rule and 

determined that it does not contain any 

information collection requirements 

subject to the PRA. Accordingly, no 

submissions to OMB will be made with 

respect to this final rule. 

B. Regulatory Flexibility Act 

In general, the Regulatory Flexibility 

Act 27 (RFA) requires that in connection 

with a rulemaking, an agency prepare 

and make available for public comment 

a regulatory flexibility analysis that 

describes the impact of the rule on small 

entities. Under section 605(b) of the 

RFA, this analysis is not required if an 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities 

and publishes its certification and a 

brief explanatory statement in the 

Federal Register along with its rule. 

The OCC currently supervises 

approximately 782 small entities.28

Because the final rule will apply to all 

OCC-supervised depository institutions, 

the final rule will affect a substantial 

number of OCC-supervised entities. 

While the final rule does clarify that the 

Statement is binding on the OCC, it 

would not impose any new mandates on 

the banking industry. As such, the OCC 

estimates that the costs, if any, 

associated with the final rule will be 

negligible. For these reasons, the OCC 

certifies that the final rule will not have 

a significant economic impact 

significant economic impact on a 

substantial number of small entities. 

C. Plain Language 

Section 722 of the Gramm-LeachBliley Act 29 requires the Federal 

banking agencies to use plain language 

in all proposed and final rules 

published after January 1, 2000. The 

OCC has sought to present the final rule 

in a simple and straightforward manner 

and did not receive any comments on 

the use of plain language in the 

Proposed Rule. 

D. Unfunded Mandates Reform Act of 

1995 Determination 

The OCC analyzed the final rule 

under the factors set forth in the 

Unfunded Mandates Reform Act of 1995 

(UMRA).30 Under this analysis, the OCC 

considered whether the final rule 

includes a Federal mandate that may 

result in the expenditure by State, local, 

and Tribal governments, in the 

aggregate, or by the private sector, of 

$100 million or more in any one year 

(adjusted for inflation). The OCC has 

determined that the final rule will not 

impose new mandates on the banking 

industry. Therefore, the OCC concludes 

that the final rule will not result in an 

expenditure of $100 million or more 

annually by State, local, and Tribal 

governments, or by the private sector. 

E. Riegle Community Development and 

Regulatory Improvement Act of 1994 

Pursuant to section 302(a) of the 

Riegle Community Development and 

Regulatory Improvement Act 

(RCDRIA),31 in determining the effective 

date and administrative compliance 

requirements for new regulations that 

impose additional reporting, disclosure, 

or other requirements on insured 

depository institutions (IDIs), each 

Federal banking agency must consider, 

consistent with principles of safety and 

soundness and the public interest, any 

administrative burdens that such 

regulations would place on depository 

institutions, including small depository 

institutions, and customers of 

depository institutions, as well as the 

benefits of such regulations. In addition, 

section 302(b) of RCDRIA requires new 

regulations and amendments to 

regulations that impose additional 

reporting, disclosures, or other new 

requirements on IDIs generally to take 

effect on the first day of a calendar 

quarter that begins on or after the date 

on which the regulations are published 

in final form.32 The OCC has 

determined that the final rule will not 

impose additional reporting, disclosure, 

or other requirements on IDIs; therefore, 

the requirements of the RCDRIA do not 

apply. 

9260 Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 

33 5 U.S.C. 801 et seq. 

34 5 U.S.C. 801(a)(3). 

35 5 U.S.C. 804(2). 

36 Government agencies issue regulations that 

generally have the force and effect of law. Such 

regulations generally take effect only after the 

agency proposes the regulation to the public and 

responds to comments on the Proposal in a final 

rulemaking document. 

F. Congressional Review Act 

For purposes of Congressional Review 

Act, the OMB makes a determination as 

to whether a final rule constitutes a 

‘‘major’’ rule.33 If a rule is deemed a 

‘‘major rule’’ by the OMB, the 

Congressional Review Act generally 

provides that the rule may not take 

effect until at least 60 days following its 

publication.34

The Congressional Review Act defines 

a ‘‘major rule’’ as any rule that the 

Administrator of the Office of 

Information and Regulatory Affairs of 

the OMB finds has resulted in or is 

likely to result in (A) an annual effect 

on the economy of $100,000,000 or 

more; (B) a major increase in costs or 

prices for consumers, individual 

industries, Federal, State, or local 

government agencies or geographic 

regions, or (C) significant adverse effects 

on competition, employment, 

investment, productivity, innovation, or 

on the ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic and 

export markets.35 The OCC has 

determined that the final rule will not 

impose new mandates on the banking 

industry. Therefore, we conclude that 

the final rule will not result in an 

expenditure of $100 million or more 

annually by State, local, and Tribal 

governments, or by the private sector. 

List of Subjects in 12 CFR Part 4 

Administrative practice and 

procedure, Freedom of Information, 

Individuals with disabilities, Minority 

businesses, Organization and functions 

(Government agencies), Reporting and 

recordkeeping requirements, Women. 

Authority and Issuance 

For the reasons stated in the 

Supplementary Information, chapter I of 

title 12 of the Code of Federal 

Regulations is amended by the OCC as 

follows: 

PART 4—ORGANIZATION AND 

FUNCTIONS, AVAILABILITY AND 

RELEASE OF INFORMATION, 

CONTRACTING OUTREACH 

PROGRAM, POST-EMPLOYMENT 

RESTRICTIONS FOR SENIOR 

EXAMINERS 

■ 1. The authority citation for part 4 

continues to read as follows: 

Authority: 5 U.S.C. 301, 552; 12 U.S.C. 1, 

93a, 161, 481, 482, 484(a), 1442, 1462a, 1463, 

1464 1817(a), 1818, 1820, 1821, 1831m, 

1831p–1, 1831o, 1833e, 1867, 1951 et seq., 

2601 et seq., 2801 et seq., 2901 et seq., 3101 

et seq., 3401 et seq., 5321, 5412, 5414; 15 

U.S.C. 77uu(b), 78q(c)(3); 18 U.S.C. 641, 

1905, 1906; 29 U.S.C. 1204; 31 U.S.C. 

5318(g)(2), 9701; 42 U.S.C. 3601; 44 U.S.C. 

3506, 3510; E.O. 12600 (3 CFR, 1987 Comp., 

p. 235). 

■ 2. Subpart F is added to part 4 to read 

as follows: 

Subpart F—Use of Supervisory 

Guidance 

Sec. 

4.81 Purpose. 

4.82 Implementation of the Statement 

Clarifying the Role of Supervisory 

Guidance. 

4.83 Rule of construction. Appendix A to 

Subpart F of Part 4—Statement 

Clarifying the Role of Supervisory 

Guidance 

§ 4.81 Purpose. 

The OCC issues regulations and 

guidance as part of its supervisory 

function. This subpart reiterates the 

distinctions between regulations and 

guidance, as stated in the Statement 

Clarifying the Role of Supervisory 

Guidance (appendix A to this subpart) 

(Statement). 

§ 4.82 Implementation of the Statement 

Clarifying the Role of Supervisory 

Guidance. 

The Statement describes the official 

policy of the OCC with respect to the 

use of supervisory guidance in the 

supervisory process. The Statement is 

binding on the OCC. 

§ 4.83 Rule of construction. 

This subpart does not alter the legal 

status of guidelines authorized by 

statute, including but not limited to, 12 

U.S.C. 1831p-1, to create binding legal 

obligations. 

Appendix A to Subpart F of Part 4— 

Statement Clarifying the Role of 

Supervisory Guidance 

Statement Clarifying the Role of Supervisory 

Guidance 

The OCC is issuing this statement to 

explain the role of supervisory guidance and 

to describe the OCC’s approach to 

supervisory guidance. 

Difference Between Supervisory Guidance 

and Laws or Regulations 

(1) The OCC issues various types of 

supervisory guidance, including interagency 

statements, advisories, bulletins, policy 

statements, questions and answers, and 

frequently asked questions, to its supervised 

institutions. A law or regulation has the force 

and effect of law.36 Unlike a law or 

regulation, supervisory guidance does not 

have the force and effect of law, and the OCC 

does not take enforcement actions based on 

supervisory guidance. Rather, supervisory 

guidance outlines the OCC’s supervisory 

expectations or priorities and articulates the 

OCC’s general views regarding appropriate 

practices for a given subject area. Supervisory 

guidance often provides examples of 

practices that the OCC generally considers 

consistent with safety-and-soundness 

standards or other applicable laws and 

regulations, including those designed to 

protect consumers. Supervised institutions at 

times request supervisory guidance, and such 

guidance is important to provide insight to 

the industry, as well as supervisory staff, in 

a transparent way that helps to ensure 

consistency in the supervisory approach. 

Ongoing Efforts To Clarify the Role of 

Supervisory Guidance 

(2) The OCC is clarifying the following 

policies and practices related to supervisory 

guidance: 

(i) The OCC intends to limit the use of 

numerical thresholds or other ‘‘bright-lines’’ 

in describing expectations in supervisory 

guidance. Where numerical thresholds are 

used, the OCC intends to clarify that the 

thresholds are exemplary only and not 

suggestive of requirements. The OCC will 

continue to use numerical thresholds to 

tailor, and otherwise make clear, the 

applicability of supervisory guidance or 

programs to supervised institutions, and as 

required by statute. 

(ii) Examiners will not criticize (through 

the issuance of matters requiring attention), 

a supervised financial institution for, and the 

OCC will not issue an enforcement action on 

the basis of, a ‘‘violation’’ of or ‘‘noncompliance’’ with supervisory guidance. In 

some situations, examiners may reference 

(including in writing) supervisory guidance 

to provide examples of safe and sound 

conduct, appropriate consumer protection 

and risk management practices, and other 

actions for addressing compliance with laws 

or regulations. 

(iii) Supervisory criticisms should 

continue to be specific as to practices, 

operations, financial conditions, or other 

matters that could have a negative effect on 

the safety and soundness of the financial 

institution, could cause consumer harm, or 

could cause violations of laws, regulations, 

final agency orders, or other legally 

enforceable conditions. 

(iv) The OCC has at times sought, and may 

continue to seek, public comment on 

supervisory guidance. Seeking public 

comment on supervisory guidance does not 

mean that the guidance is intended to be a 

regulation or have the force and effect of law. 

The comment process helps the OCC to 

improve its understanding of an issue, to 

gather information on institutions’ risk 

management practices, or to seek ways to 

achieve a supervisory objective most 

effectively and with the least burden on 

institutions. 

(v) The OCC will aim to reduce the 

issuance of multiple supervisory guidance 

Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 9261 

1Regulations are commonly referred to as 

legislative rules because regulations have the ‘‘force 

and effect of law.’’ Perez v. Mortgage Bankers 

Association, 575 U.S. 92, 96 (2015). 

2See Chrysler v. Brown, 441 U.S. 281, 302 (1979) 

(quoting the Attorney General’s Manual on the 

Administrative Procedure Act at 30 n.3 (1947) 

(Attorney General’s Manual) and discussing the 

distinctions between regulations and general 

statements of policy, of which supervisory guidance 

is one form). 

3See https://www.consumerfinance.gov/about-us/ 

newsroom/agencies-issue-statement-reaffirmingrole-supervisory-guidance/. 

4While supervisory guidance offers guidance to 

the public on the agencies’ approach to supervision 

under statutes and regulations and safe and sound 

practices, the issuance of guidance is discretionary 

and is not a prerequisite to an agency’s exercise of 

its statutory and regulatory authorities. This point 

reflects the fact that statutes and legislative rules, 

not statements of policy, set legal requirements. 

documents on the same topic and will 

generally limit such multiple issuances going 

forward. 

(vi) The OCC will continue efforts to make 

the role of supervisory guidance clear in 

communications to examiners and to 

supervised financial institutions and 

encourage supervised institutions with 

questions about this statement or any 

applicable supervisory guidance to discuss 

the questions with their appropriate agency 

contact. 

Blake J. Paulson, 

Acting Comptroller of the Currency. 

[FR Doc. 2021–01499 Filed 2–11–21; 8:45 am] 

BILLING CODE 4810–33–P 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 217, 225, 238, and 252 

RIN 7100–AF95 

Amendments to Capital Planning and 

Stress Testing Requirements for Large 

Bank Holding Companies, Intermediate 

Holding Companies and Savings and 

Loan Holding Companies 

AGENCY: Board of Governors of the 

Federal Reserve System (Board). 

ACTION: Technical correction. 

SUMMARY: This document corrects an 

error in amendatory instruction 2 

affecting Part 217 of the Board’s 

Regulation Q published in the Federal 

Register on February 3, 2021. 

DATES: Effective April 5, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Asad Kudiya, Senior Counsel, (202) 

475–6358 or Jonah Kind, Counsel, (202) 

452–2045. You may also contact any of 

the named individuals in the final rule 

document 86 FR 7927 (February 3, 

2021). 

SUPPLEMENTARY INFORMATION: 

Correction 

In final rule FR Doc. 2021–02182, 

published on February 3, 2021, on page 

7938, in the third column, make the 

following corrections to instruction 2, 

amending § 217.11: 

§ 217.11 [Corrected] 

■ 1. In instruction 2.b., the text 

‘‘Revising the paragraph (c) subject 

heading and paragraphs (c)(1)(i) and (ii), 

(c)(1)(iii) introductory text, and (c)(1)(iv) 

introductory text, (c)(1)(v) introductory 

text, and (c)(vi) introductory text; and’’ 

is corrected to read ‘‘Revising the 

paragraph (c) heading and paragraphs 

(c)(1)(i) and (ii), (c)(1)(iii) introductory 

text, (c)(1)(iv) introductory text, (c)(1)(v) 

introductory text, and (c)(1)(vi); and’’ 

■ 2. In instruction 2.c., the text 

‘‘Correctly designating the second 

occurrence of paragraph (c)(1)(v) as 

paragraph (c)(1)(vii); and’’ is corrected 

to read ‘‘Correctly designating the 

second occurrence of paragraph (c)(1)(v) 

as paragraph (c)(1)(vii) and revising it; 

and’’ 

■ 3. In instruction 2.d., the text 

‘‘Revising paragraph (c)(2).’’ is corrected 

to read ‘‘Revising paragraph (c)(2) 

heading, (c)(2)(i) and (c)(2)(ii) 

introductory text’’. 

Ann Misback, 

Secretary of the Board. 

[FR Doc. 2021–02911 Filed 2–11–21; 8:45 am] 

BILLING CODE P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1074 

[Docket No. CFPB–2020–0033] 

RIN 3710–AB02 

Role of Supervisory Guidance 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

adopting a final rule that codifies the 

Interagency Statement Clarifying the 

Role of Supervisory Guidance, issued by 

the Office of the Comptroller of the 

Currency (OCC), Board of Governors of 

the Federal Reserve System (Board), 

Federal Deposit Insurance Corporation 

(FDIC), National Credit Union 

Administration (NCUA), and the Bureau 

(collectively, the agencies) on 

September 11, 2018 (2018 Statement). 

By codifying the 2018 Statement, with 

amendments, the final rule confirms 

that the Bureau will continue to follow 

and respect the limits of administrative 

law in carrying out its supervisory 

responsibilities. The 2018 Statement 

reiterated well-established law by 

stating that, unlike a law or regulation, 

supervisory guidance does not have the 

force and effect of law. As such, 

supervisory guidance does not create 

binding legal obligations for the public. 

Because it is incorporated into the final 

rule, the 2018 Statement, as amended, is 

binding on the Bureau. The final rule 

adopts the rule as proposed without 

substantive change. 

DATES: This final rule is effective on 

March 15, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Bradley Lipton or Christopher Shelton, 

Senior Counsels, Legal Division, (202) 

435–7700. If you require this document 

in an alternative electronic format, 

please contact CFPB_Accessibility@

cfpb.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Bureau recognizes the important 

distinction between issuances that serve 

to implement acts of Congress (known 

as ‘‘regulations’’ or legislative rules’’) 

and non-binding supervisory guidance 

documents.1 Regulations create binding 

legal obligations. Supervisory guidance 

is issued by an agency to ‘‘advise the 

public prospectively of the manner in 

which the agency proposes to exercise 

a discretionary power’’ and does not 

create binding legal obligations.2

In recognition of the important 

distinction between rules and guidance, 

on September 11, 2018, the agencies 

issued the Interagency Statement 

Clarifying the Role of Supervisory 

Guidance (2018 Statement) to explain 

the role of supervisory guidance and 

describe the agencies’ approach to 

supervisory guidance.3 As noted in the 

2018 Statement, the agencies issue 

various types of supervisory guidance to 

their respective supervised institutions, 

including, but not limited to, 

interagency statements, advisories, 

bulletins, policy statements, questions 

and answers, and frequently asked 

questions. Supervisory guidance 

outlines the agencies’ supervisory 

expectations or priorities and articulates 

the agencies’ general views regarding 

practices for a given subject area. 

Supervisory guidance often provides 

examples of practices that mitigate risks, 

or that the agencies generally consider 

to be consistent with safety-andsoundness standards or other applicable 

laws and regulations, including those 

designed to protect consumers.4 The 

agencies noted in the 2018 Statement 

that supervised institutions at times 

request supervisory guidance and that 

guidance is important to provide clarity