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

11387 

Vol. 86, No. 36 

Thursday, February 25, 2021 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 1217 

[Document Number AMS–SC–20–0014] 

Softwood Lumber Research, 

Promotion, Consumer Education and 

Industry Information Order; 

Assessment Rate Increase 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This rule amends the 

Softwood Lumber Research, Promotion, 

Consumer Education and Industry 

Information Order (Order) to increase 

the assessment rate from $0.35 to $0.41 

per thousand board feet (mbf). The 

Order is administered by the Softwood 

Lumber Board (Board) with oversight by 

the U.S. Department of Agriculture 

(USDA). This rule will also add the 

conversion factor for square meters to 

board feet and makes one conforming 

change. 

DATES: Effective Date: April 1, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Andrea Ricci, Marketing Specialist, 

Promotion and Economics Division, 

Specialty Crops Program, AMS, USDA, 

1400 Independence Avenue SW, Room 

1406–S, Stop 0244, Washington, DC 

20250–0244; telephone: (202) 572–1442; 

facsimile: (202) 205–2800; or electronic 

mail: Andrea.Ricci@usda.gov. 

SUPPLEMENTARY INFORMATION: This final 

rule affecting 7 CFR part 1217 (herein 

the ‘‘Order’’) is authorized under the 

Commodity Promotion, Research, and 

Information Act of 1996 (1996 Act) (7 

U.S.C. 7411–7425). 

Executive Orders 12866 and 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts and equity). 

Executive Order 13563 emphasizes the 

importance of quantifying both costs 

and benefits, reducing costs, 

harmonizing rules and promoting 

flexibility. This action falls within a 

category of regulatory actions that the 

Office of Management and Budget 

(OMB) exempted from Executive Order 

12866 review. 

Executive Order 13175 

This action has been reviewed in 

accordance with the requirements of 

Executive Order 13175, Consultation 

and Coordination with Indian Tribal 

Governments. The review reveals that 

this regulation will not have substantial 

and direct effects on Tribal governments 

and will not have significant Tribal 

implications. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. It is not intended to have 

retroactive effect. Section 524 of the 

1996 Act (7 U.S.C. 7423) provides that 

it shall not affect or preempt any other 

Federal or State law authorizing 

promotion or research relating to an 

agricultural commodity. 

Under section 519 of the 1996 Act (7 

U.S.C. 7418), a person subject to an 

order may file a written petition with 

USDA stating that an order, any 

provision of an order, or any obligation 

imposed in connection with an order, is 

not established in accordance with the 

law, and request a modification of an 

order or an exemption from an order. 

Any petition filed challenging an order, 

any provision of an order, or any 

obligation imposed in connection with 

an order, must be filed within two years 

after the effective date of an order, 

provision, or obligation subject to 

challenge in the petition. The petitioner 

will have the opportunity for a hearing 

on the petition. Thereafter, USDA will 

issue a ruling on the petition. The 1996 

Act provides that the district court of 

the United States for any district in 

which the petitioner resides or conducts 

business shall have the jurisdiction to 

review a final ruling on the petition, if 

the petitioner files a complaint for that 

purpose not later than 20 days after the 

date of the entry of USDA’s final ruling. 

Background 

This rule amends the Order by 

increasing the assessment rate from 

$0.35 to $0.41 per mbf of softwood 

lumber shipped within or imported into 

the United States. The Order is 

administered by the Board with 

oversight by the USDA. Under the 

program, assessments are collected from 

domestic manufacturers and importers 

and used for research and promotion 

projects designed to strengthen the 

position of softwood lumber in the 

marketplace. The additional funds will 

enable the Board to maintain its existing 

programs, while supporting new 

programs that will help maintain and 

expand markets for softwood lumber. 

This rule will also add the conversion 

factor for square meters to board feet 

and make one conforming change. 

The Order specifies that the funds to 

cover the Board’s expenses shall be paid 

by assessments on manufacturers for the 

U.S. market, other income of the Board, 

and other funds available to the Board. 

Domestic manufacturers pay 

assessments based on the volume of 

softwood lumber shipped within the 

United States and importers pay 

assessments based on the volume of 

softwood lumber imported to the United 

States. Assessments are collected per 

mbf of softwood lumber, except that no 

entity shall pay an assessment on the 

first 15 million board feet (mmbf) of 

softwood lumber otherwise subject to 

assessments in a fiscal year. Domestic 

manufacturers are required to remit to 

the Board assessments owed no later 

than 30 calendar days of the month 

following the end of the quarter in 

which the softwood lumber was 

shipped. Importers are responsible for 

paying assessments to the Board on 

softwood lumber imported into the 

United States through the U.S. Customs 

and Border Protection (CBP). If CBP 

does not collect an assessment from the 

importer, the importer is responsible for 

paying the assessment to the Board no 

later than 30 calendar days of the month 

following the end of the quarter in 

which the softwood lumber was 

imported. Domestic manufacturers and 

importers must also remit to the Board 

required reports. 

The Order also provides for 

exemptions from assessments. Section 

1217.53 specifies that U.S. 

manufacturers and importers that 

domestically ship and/or import less 

11388 Federal Register / Vol. 86, No. 36 / Thursday, February 25, 2021 / Rules and Regulations 

than 15 mmbf annually, exports of 

softwood lumber from the United States, 

and shipments and imports of organic 

softwood lumber are exempt from the 

Order’s assessment requirements. 

Pursuant to § 1217.52, and subject to 

the exemptions specified in § 1217.53, 

each domestic manufacturer and 

importer shall pay an assessment rate of 

$0.35 per mbf of softwood lumber, 

except that no entity shall pay an 

assessment on the first 15 mmbf of 

softwood lumber otherwise subject to 

assessment in a fiscal year. The 

assessment rate may not be less than 

$0.35 per mbf nor more than $0.50 per 

mbf. Section 1217.44(c) prescribes that 

the Board may recommend to the 

Secretary a change in the assessment 

rate as it deems appropriate by at least 

a majority of Board members plus two 

(exclusive of vacant seats). 

The $0.35 per mbf assessment rate has 

been in effect since the program’s 

inception in 2011. The Board’s fiscal 

year runs from January 1 through 

December 31. Board expenditures for 

the five-year period from 2014–2018 

have ranged from a low of $12.35 

million in 2014 to a high of $15.32 

million in 2016; expenditures in 2018 

were $14.23 million. Program 

expenditures averaged $12.96 million 

during those five years, with annual 

expenditures averaging $3.29 million 

(24 percent) for research conducted on 

wood standards; $4.06 million (29 

percent) on a communications program, 

which includes continuing education 

courses for architects and engineers; and 

$3.94 million (28 percent) on a 

construction and design program that 

provides technical support to architects 

and structural engineers about using 

wood. Pursuant to § 1217.50(h), 

administrative expenditures have been 

under 8 percent of the assessments 

collected and other income received by 

and available to the Board for the fiscal 

year. 

Board assessment income has ranged 

from $12.55 million in 2014 to $13.74 

million in 2018. About 70 percent of the 

assessment income is from domestic 

manufacturers and 30 percent is from 

importers. Additionally, pursuant to 

§ 1217.50(i), the Board maintains a 

monetary reserve with funds that do not 

exceed one fiscal period’s budget. This 

rule will also amend § 1217.52(h) to add 

the conversion factor for square meters 

to board feet. Currently, the Order 

provides a factor used to convert cubic 

meters of imported softwood lumber 

into the equivalent volume of thousands 

of board feet, thus enabling the Board to 

calculate appropriate assessments. 

Softwood lumber is also being imported 

in square meters. Adding a conversion 

factor for square meters will better 

reflect current industry practices and 

facilitate the administration of the 

program. 

Finally, this rule will make a 

conforming change to § 1217.52(c) to 

reflect previously revised voting 

requirements in § 1217.44. In a final rule 

published in the Federal Register on 

September 25, 2019 (84 FR 50294), 

voting requirements prescribed in 

§ 1217.44 were revised to specify that 

recommendations to change the 

assessment rate require affirmation by at 

least a majority of Board members plus 

two (exclusive of vacant seats). 

Currently, corresponding language in 

§ 1217.52(c) specifies that an affirmative 

vote of at least two-thirds of Board 

members is required for assessment rate 

recommendations. A conforming change 

in this rule will revise § 1217.52(c) to 

require affirmation of assessment rate 

recommendations by a Board majority 

plus two, thus harmonizing the 

language in the two sections related to 

assessment recommendations. 

Board Recommendation 

The Board met on November 20, 2019, 

and recommended increasing its 

assessment rate from $0.35 to $0.41 per 

mbf. The additional funds will enable 

the Board to maintain its existing 

programs, while supporting new 

programs that will help maintain and 

expand markets for softwood lumber. 

For the 2016–2018 fiscal years, the 

Board has used reserve funds to bridge 

the deficit between income and 

expenses. In 2019, the Board kept 

expenditures in line with income and 

had to make cuts to its programs, 

primarily its communications program. 

The Board discussed the deficit 

spending that occurred from 2016–2018 

and the funding cuts in 2019, along with 

the impacts of inflation, and determined 

that without the increase it would not 

be able to maintain its current programs 

nor be able to address gaps that limit the 

Board’s ability to expand the market for 

softwood lumber. Continuing at the 

current funding level would limit its 

ability to capitalize on new 

opportunities or address challenges and 

maintain the impact the Board has 

achieved for the softwood lumber 

industry in prior years. Additionally, 

the current funding level restricts the 

ability to accelerate softwood lumber’s 

increase in market share and lumber 

usage in the non-residential sector. 

The Board’s funding of research on 

wood standards has facilitated interest 

in using wood-based building systems 

in non-traditional markets, such as tall 

wood building. The 2021 International 

Code Council building standards will 

recognize the construction of mass 

timber buildings up to 18 stories in 

height. These new opportunities require 

a more comprehensive approach, 

particularly in outreach and education 

initiatives. The Board recognized that its 

funded programs must go beyond 

inspiring professionals to think about 

building with wood. These individuals 

need resources and technical assistance. 

The Board estimated the increased 

assessment rate of $0.41 per mbf would 

generate additional revenues as shown 

in Table 1. The consumption forecast 

and assessable board feet figures are 

shown in billion board feet (bbf). 

The additional funds will support 

programs targeting contractors and 

developers to address installer training 

and skills development; establish an 

education program that will target 

architecture and engineering students, 


ER25FE21.000</GPH>
Federal Register / Vol. 86, No. 36 / Thursday, February 25, 2021 / Rules and Regulations 11389 

1SBA does have a small business size standard 

for ‘‘Sawmills’’ of 500 employees (see https://

www.sba.gov/sites/default/files/2019-08/ 

SBA%20Table%20of%20Size%20Standards_

Effective%20Aug%2019%2C%202019_Rev.pdf). 

Based on USDA’s understanding of the lumber 

industry, using this criterion would be impractical 

as sawmills often use contractors rather than 

employees to operate and, therefore, many mills 

would fall under this criterion while being, in 

reality, a large business. Therefore, USDA used 

agricultural service firm as a more appropriate 

criterion for this analysis. 

as well as professionals; and restore the 

Board’s communications program 

budget so that by 2025 it will be 

equivalent to 2018 expenditures. 

Therefore, the Board recommended 

increasing the assessment rate in the 

Order from $0.35 to $0.41 per mbf. 

Final Regulatory Flexibility Act 

Analysis 

In accordance with the Regulatory 

Flexibility Act (RFA) (5 U.S.C. 601– 

612), the Agricultural Marketing Service 

(AMS) is required to examine the 

impact of the action on small entities. 

Accordingly, AMS has considered the 

economic impact of this action on such 

entities. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

businesses subject to the actions so that 

small businesses will not be 

disproportionately burdened. The Small 

Business Administration (SBA) defines, 

in 13 CFR part 121, small agricultural 

service firms (domestic manufacturers 

and importers) as those having annual 

receipts of no more than $8 million.1

The Random Lengths Publications, 

Inc.’s yearly average framing lumber 

composite price was $356 per mbf in 

2019. Dividing the $8 million threshold 

that defines an agricultural service firm 

as small by this price results in a 

maximum threshold of 22.5 million 

board feet (mmbf) of softwood lumber 

per year that a domestic manufacturer or 

importer may ship to be considered a 

small entity for purposes of the RFA. 

Table 2 shows the number of entities 

and the amount of volume they 

represent that may be categorized as 

small or large based on the SBA 

definition. 

As shown in Table 2, there are a total 

of 1,396 domestic manufacturers and 

importers of softwood lumber based on 

2019 data. Of these, 1,000 entities, or 72 

percent, shipped or imported less than 

22.5 mmbf and would be considered 

small under the SBA definition. These 

1,000 entities domestically 

manufactured or imported 3.25 billion 

board feet (bbf) in 2019, less than 5 

percent of total volume. 

While this action increases the 

assessment obligation on domestic 

manufacturers and importers from $0.35 

per mbf to $0.41 per mbf, the impact on 

these entities will be minimal and 

uniform. The current assessment rate of 

$0.35 per mbf represents 0.1 percent of 

the Random Lengths 2019 average 

framing lumber composite price of $356 

per mbf. The assessment rate of $0.41 

per mbf is 0.12 percent of this price. The 

increase in assessment rate represents 

an increase in cost to domestic 

manufacturers and importers of twothousandth of one percentage point 

relative to their average received price. 

This cost, though minimal, will also be 

offset by the benefits derived from the 

program. 

The 1996 Farm Bill requires that 

Research and Promotion programs be 

evaluated every five years with the 

specific goal of measuring the economic 

impact of commodity promotion on 

demand for the commodity. The Board 

completed its first five-year evaluation 

of program effectiveness in 2016. The 

five-year evaluation, conducted by 

Prime Consulting, found that softwood 

lumber use per square foot increased 

nearly 23 percent among architects and 

structural engineers from the program’s 

inception in 2011 to 2015. The 

evaluation also found a cumulative 

return on investment (ROI) of more than 

$15 in increased sales of softwood 

lumber per $1 spent on promotion by 

the program between 2012 and 2015. 

The cumulative ROI was updated in 

2019 to reflect the time period of 2012 

to 2018. The result was a return of more 

than $23 in increased sales per $1 spent 

on promotion. 

This rule amends § 1217.52(b) to 

increase the assessment rate from $0.35 

to $0.41 per mbf. The Order is 

administered by the Board with 

oversight by the USDA. Under the 

program, assessments are collected from 

domestic manufacturers and importers 

and used for research and promotion 

projects designed to strengthen the 

position of softwood lumber in the 

marketplace. The additional funds 

collected at the increased rate will 

enable the Board to maintain its existing 

programs, while supporting new 

programs that will help maintain and 

expand markets for softwood lumber. 

This rule also amends § 1217.52(h) to 

add the conversion factor for square 

meters to board feet and make one 

conforming change to section 1217.52(c) 

regarding voting requirements. 

Regarding alternatives, the Board 

considered maintaining the current 

assessment rate. However, a majority of 

Board members determined that an 

increase was needed to adequately 

support existing programs and fund new 

initiatives. The Board discussed 

increasing the assessment at its meeting 

in November 2018, but after much 

consideration it determined it was not 

the right time for the industry to make 

such a recommendation. In 2019, with 

the reduction of assessment revenue and 

the program cuts that were made, the 

Board again considered the merits of 

increasing the assessment rate. This was 

discussed at several Board committee 

meetings, including meetings of the 

Executive Committee on September 17, 

2019, and November 19, 2019, and the 

Finance Committee on November 19, 

2019. The Board also considered rates of 

$0.39 and $0.50 per mbf. After much 

discussion at committee meetings and 

with the full Board, the Board 

recommended increasing the rate from 

$0.35 to $0.41 per mbf. 

In accordance with the Paperwork 

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

Chapter 35), the information collection 

and recordkeeping requirements that are 

imposed by the Order have been 

approved previously under OMB 

control number 0581–0093. This rule 

will not result in a change to the 


ER25FE21.001</GPH>
11390 Federal Register / Vol. 86, No. 36 / Thursday, February 25, 2021 / Rules and Regulations 

information collection and 

recordkeeping requirements previously 

approved and will impose no additional 

reporting and recordkeeping burden on 

domestic manufacturers and importers 

of softwood lumber. 

As with all Federal promotion 

programs, reports and forms are 

periodically reviewed to reduce 

information requirements and 

duplication by industry and public 

sector agencies. USDA has not 

identified any relevant Federal rules 

that duplicate, overlap, or conflict with 

this rule. 

AMS is committed to complying with 

the E-Government Act, to promote the 

use of the internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

A proposed rule concerning this 

action was published in the Federal 

Register on August 13, 2020 (85 FR 

49281). A 60-day comment period 

ending October 13, 2020, was provided 

to allow interested persons to submit 

comments. 

Analysis of Comments 

Twenty-nine comments were received 

in response to the proposed rule. Of 

those 29 comments, 22 supported the 

proposed assessment increase, six 

opposed the action, and one was outside 

the scope of the rulemaking. 

Overall, commenters in support of the 

proposal expressed that increasing 

market share by developing new 

markets and uses for softwood lumber 

products while addressing the 

continued pressures from competitors is 

paramount to the continued success of 

the softwood lumber industry. They 

contend this may only be accomplished 

by the increased investment in the 

softwood lumber program. One 

commenter, who identified as a small 

sawmill, argued that the proposed 

increase was not enough, and an 

assessment rate of $0.50 per mfb or 

more was warranted to continue 

promoting and developing new markets 

and uses for softwood lumber products. 

Commenters expressed the need for 

continued work on wood standards and 

the adoption of using wood-based 

products in non-traditional markets. 

They emphasized the importance of 

educational programs and continued 

technical assistance for builders, 

designers, developers, architects and 

engineers. Several commenters 

discussed the benefit of being able to 

work collaboratively as an industry to 

drive demand for softwood lumber, 

noting that the efforts of the program are 

critical to the long-term success of the 

softwood lumber industry. Commenters 

noted the return on investment and 

incremental demand results from the 

most recent program evaluation as 

evidence of the success of the program 

thus far. And two commenters 

mentioned the results of the 2018 

continuance referendum (78 percent of 

manufacturers and importers voting, 

who represented 94 percent of the 

volume of softwood lumber, were in 

favor of continuing the program) to 

demonstrate the continued support of 

the industry for the program. 

Out of the six comments in 

opposition, three commenters noted that 

the industry is currently seeing record 

demand and historically high prices, 

and that the need for an increase in the 

assessment to fund programming geared 

towards creating additional demand is 

not necessary. Two commenters noted 

that the Board should be able to create 

demand at the current funding levels. 

One commenter simply opposed the 

increase, but did not provide further 

detail. In its discussion of the proposed 

increase, the Board determined that 

continuing at the current funding level 

would limit its ability to maintain the 

impact it has achieved for the softwood 

lumber industry in prior years. It 

reviewed its revenues and expenditures 

for the past several fiscal periods and 

agreed that without the increase it 

would not be able to maintain its 

current programs nor be able to address 

gaps that limit the Board’s ability to 

expand the market for softwood lumber. 

Additionally, it believed current 

funding levels restricts its ability to 

accelerate softwood lumber’s increase in 

market share and lumber usage in the 

non-traditional markets. In formulating 

the proposed increase, the Board 

reviewed several different rate options, 

including not increasing the rate, but 

ultimately decided that additional funds 

generated by the increase are needed to 

maintain and expand markets for 

softwood lumber. None of the 

commenters provided comments on the 

addition of the conversion factor and 

the conforming change. Accordingly, no 

changes will be made to the rule as 

proposed, based on the comments 

received. 

After consideration of all relevant 

material presented, including the 

information and recommendations 

submitted by the Board, the comments 

received, and other available 

information, it is hereby found that this 

rule, as hereinafter set forth, is 

consistent with and will effectuate the 

purposes of the 1996 Act. 

List of Subjects in 7 CFR Part 1217 

Administrative practice and 

procedure, Advertising, Consumer 

information, Marketing agreements, 

Softwood Lumber promotion, Reporting 

and recordkeeping requirements. 

For the reasons set forth in the 

preamble, 7 CFR part 1217 is amended 

as follows: 

PART 1217—SOFTWOOD LUMBER 

RESEARCH, PROMOTION, 

CONSUMER EDUCATION AND 

INDUSTRY INFORMATION ORDER 

■ 1. The authority citation for 7 CFR 

part 1217 continues to read as follows: 

Authority: 7 U.S.C. 7411–7425; 7 U.S.C. 

7401. 

■ 2. Amend § 1217.52 by revising 

paragraphs (b), (c), and (h) to read as 

follows: 

§ 1217.52 Assessments. 

* * * * * 

(b) Subject to the exemptions 

specified in § 1217.53, each 

manufacturer for the U.S. market shall 

pay an assessment to the Board at the 

rate of $0.41 per thousand board feet of 

softwood lumber, except that no person 

shall pay an assessment on the first 15 

million board feet of softwood lumber 

otherwise subject to assessment in a 

fiscal year. Domestic manufacturers 

shall pay assessments based on the 

volume of softwood lumber shipped 

within the United States and importers 

shall pay assessments based on the 

volume of softwood lumber imported to 

the United States. 

(c) At least 24 months after the Order 

becomes effective and periodically 

thereafter, the Board shall review and 

may recommend to the Secretary, upon 

an affirmative vote by at least a majority 

of Board members plus two (exclusive 

of vacant seats), a change in the 

assessment rate. In no event may the 

rate be less than $0.35 per thousand 

board feet nor more than $0.50 per 

thousand board feet. A change in the 

assessment rate is subject to rulemaking 

by the Secretary. 

* * * * * 

(h) The HTSUS categories and 

assessment rates on imported softwood 

lumber are listed in the following table. 

The assessment rates are computed 

using the following conversion factors: 

One cubic meter (m3) equals 

0.423776001 thousand board feet, and 

one square meter (m2) equals 

0.010763104 thousand board feet. 

Accordingly, the assessment rate per 

cubic meter and square meter is as 

follows. 

Federal Register / Vol. 86, No. 36 / Thursday, February 25, 2021 / Rules and Regulations 11391 

1 12 U.S.C. 1817(b). As used in this final rule, the 

term ‘‘insured depository institution’’ has the same 

meaning as it is used in section 3(c)(2) of the FDI 

Act, 12 U.S.C. 1813(c)(2). Pursuant to this 

requirement, the FDIC first adopted a risk-based 

deposit insurance assessment system effective in 

1993 that applied to all IDIs. See 57 FR 45263 (Oct. 

1, 1992). The FDIC implemented this assessment 

system with the goals of making the deposit 

insurance system fairer to well-run institutions and 

encouraging weaker institutions to improve their 

condition, and thus, promote the safety and 

soundness of IDIs. 

2As used in this final rule, the term ‘‘small bank’’ 

is synonymous with ‘‘small institution,’’ the term 

‘‘large bank’’ is synonymous with ‘‘large 

institution,’’ and the term ‘‘highly complex bank’’ 

is synonymous with ‘‘highly complex institution,’’ 

as the terms are defined in 12 CFR 327.8. For 

assessment purposes, a large bank is generally 

defined as an institution with $10 billion or more 

in total assets, a small bank is generally defined as 

an institution with less than $10 billion in total 

assets, and a highly complex bank is generally 

defined as an institution that has $50 billion or 

more in total assets and is controlled by a parent 

holding company that has $500 billion or more in 

total assets, or is a processing bank or trust 

company. See 12 CFR 327.8(e), (f), and (g). 

3Banking organizations subject to the capital rule 

include national banks, state member banks, state 

nonmember banks, savings associations, and toptier bank holding companies and savings and loan 

holding companies domiciled in the United States 

not subject to the Federal Reserve Board’s Small 

Bank Holding Company Policy Statement (12 CFR 

part 225, appendix C), but exclude certain savings 

and loan holding companies that are substantially 

engaged in insurance underwriting or commercial 

activities or that are estate trusts, and bank holding 

companies and savings and loan holding companies 

that are employee stock ownership plans. See 12 

CFR part 3 (Office of the Comptroller of the 

Currency)); 12 CFR part 217 (Board); 12 CFR part 

324 (FDIC). See also 84 FR 4222 (Feb. 14, 2019) and 

85 FR 61577 (Sept. 30, 2020). 

4See 84 FR 4225 (Feb. 14, 2019). 

TABLE 1 TO PARAGRAPH (h) 

Softwood lumber 

(by HTSUS number) 

Assessment 

$/cubic 

meter 

Assessment 

$/square 

meter 

4407.11.00 .................. 0.1737 0.004412 

4407.12.00 .................. 0.1737 0.004412 

4407.19.05 .................. 0.1737 0.004412 

4407.19.06 .................. 0.1737 0.004412 

4407.19.10 .................. 0.1737 0.004412 

4409.10.05 .................. 0.1737 0.004412 

4409.10.10 .................. 0.1737 0.004412 

4409.10.20 .................. 0.1737 0.004412 

4409.10.90 .................. 0.1737 0.004412 

4418.99.10 .................. 0.1737 0.004412 

* * * * * 

Bruce Summers, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 2021–03467 Filed 2–24–21; 8:45 am] 

BILLING CODE P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 327 

RIN 3064–AF65 

Assessments, Amendments To 

Address the Temporary Deposit 

Insurance Assessment Effects of the 

Optional Regulatory Capital 

Transitions for Implementing the 

Current Expected Credit Losses 

Methodology 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: The Federal Deposit 

Insurance Corporation is adopting 

amendments to the risk-based deposit 

insurance assessment system applicable 

to all large insured depository 

institutions (IDIs), including highly 

complex IDIs, to address the temporary 

deposit insurance assessment effects 

resulting from certain optional 

regulatory capital transition provisions 

relating to the implementation of the 

current expected credit losses (CECL) 

methodology. The final rule removes the 

double counting of a specified portion 

of the CECL transitional amount or the 

modified CECL transitional amount, as 

applicable (collectively, the CECL 

transitional amounts), in certain 

financial measures that are calculated 

using the sum of Tier 1 capital and 

reserves and that are used to determine 

assessment rates for large or highly 

complex IDIs. The final rule also adjusts 

the calculation of the loss severity 

measure to remove the double counting 

of a specified portion of the CECL 

transitional amounts for a large or 

highly complex IDI. This final rule does 

not affect regulatory capital or the 

regulatory capital relief provided in the 

form of transition provisions that allow 

banking organizations to phase in the 

effects of CECL on their regulatory 

capital ratios. 

DATES: The final rule is effective April 

1, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Scott Ciardi, Chief, Large Bank Pricing, 

(202) 898–7079 or sciardi@fdic.gov; 

Ashley Mihalik, Chief, Banking and 

Regulatory Policy, (202) 898–3793 or 

amihalik@fdic.gov; Nefretete Smith, 

Counsel, (202) 898–6851 or nefsmith@

fdic.gov; Sydney Mayer, Senior 

Attorney, (202) 898–3669 or smayer@

fdic.gov. 

SUPPLEMENTARY INFORMATION: 

I. Policy Objectives and Overview of 

Final Rule 

The Federal Deposit Insurance Act 

(FDI Act) requires that the FDIC 

establish a risk-based deposit insurance 

assessment system for insured 

depository institutions (IDIs).1

Consistent with this statutory 

requirement, the FDIC’s objective in 

finalizing this rule is to ensure that IDIs 

are assessed in a manner that is fair and 

accurate. In particular, the primary 

objective of this final rule is to remove 

a double counting issue in several 

financial measures used to determine 

deposit insurance assessment rates for 

large or highly complex banks, which 

could result in a deposit insurance 

assessment rate for a large or highly 

complex bank that does not accurately 

reflect the bank’s risk to the deposit 

insurance fund (DIF), all else equal.2

The final rule amends the assessment 

regulations to remove the double 

counting of a portion of the CECL 

transitional amounts, in certain 

financial measures used to determine 

deposit insurance assessment rates for 

large or highly complex banks. In 

particular, certain financial measures 

are calculated by summing Tier 1 

capital, which includes the CECL 

transitional amounts, and reserves, 

which already reflects the 

implementation of CECL. As a result, a 

portion of the CECL transitional 

amounts is being double counted in 

these measures, which in turn affects 

assessment rates for large or highly 

complex banks. The final rule also 

adjusts the calculation of the loss 

severity measure to remove the double 

counting of a portion of the CECL 

transitional amounts for large or highly 

complex banks. 

This final rule amends the deposit 

insurance system applicable to large 

banks and highly complex banks only, 

and it does not affect regulatory capital 

or the regulatory capital relief provided 

in the form of transition provisions that 

allow banking organizations to phase in 

the effects of CECL on their regulatory 

capital ratios.3 Specifically, in 

calculating another measure used to 

determine assessment rates for all IDIs, 

the Tier 1 leverage ratio, the FDIC will 

continue to apply the CECL regulatory 

capital transition provisions, consistent 

with the regulatory capital relief 

provided to address concerns that 

despite adequate capital planning, 

unexpected economic conditions at the 

time of CECL adoption could result in 

higher-than-anticipated increases in 

allowances.4

The FDIC did not receive any 

comment letters in response to the 

proposal and is adopting the proposed 

rule as final without change. Under this 

final rule, amendments to the deposit 

insurance assessment system and 

changes to regulatory reporting 

requirements will be applicable only 

while the regulatory capital relief 

described above, or any potential future 

amendment that may affect the