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

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Rules and Regulations Federal Register

45093 

Vol. 74, No. 168 

Tuesday, September 1, 2009 

1See Section 13(c)(4)(G) of the Federal Deposit 

Insurance Act (FDI Act), 12 U.S.C. 1823(c)(4)(G). 

The determination of systemic risk authorized the 

FDIC to take actions to avoid or mitigate serious 

adverse effects on economic conditions or financial 

stability, and the FDIC implemented the TLGP in 

response. Section 9(a) Tenth of the FDI Act, 12 

U.S.C. 1819(a)Tenth, provides additional authority 

for the establishment of the TLGP. 

2 73 FR 64179 (October 29, 2008). The Final Rule 

was published in the Federal Register on November 

26, 2008. 73 FR 72244 (November 26, 2008). 

3The other component of the TLGP, the DGP, 

initially permitted participating entities to issue 

FDIC-guaranteed senior unsecured debt until June 

30, 2009, with the FDIC’s guarantee for such debt 

to expire on the earlier of the maturity of the debt 

(or the conversion date, for mandatory convertible 

debt) or June 30, 2012. To reduce market disruption 

at the conclusion of the DGP and to facilitate the 

orderly phase-out of the program, the Board issued 

a final rule that generally extended for four months 

the period during which participating entities could 

issue FDIC-guaranteed debt. 74 FR 26521 (June 3, 

2009). All IDIs and those other participating entities 

that had issued FDIC-guaranteed debt on or before 

April 1, 2009, were permitted to participate in the 

extended DGP without application to the FDIC. 

Other participating entities that were specifically 

approved by the FDIC also could participate in the 

extended DGP. At the same time, the FDIC extended 

the expiration of the guarantee period from June 30, 

2012 to December 31, 2012. As a result, 

participating entities may issue FDIC-guaranteed, 

debt through and including October 31, 2009, and 

the FDIC’s guarantee for such debt expires on the 

earliest of the mandatory convertible debt, the 

stated date of maturity, or December 31, 2012. 

4 12 CFR 370.5(h)(5). 

5 Id. 

6 Id. 

7 12 CFR 370.7(c). 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 370 

RIN 3064–AD37 

Final Rule Regarding Limited 

Amendment of the Temporary Liquidity 

Guarantee Program To Extend the 

Transaction Account Guarantee 

Program With Modified Fee Structure 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: To assure an orderly phase 

out of the Transaction Account 

Guarantee (TAG) component of the 

Temporary Liquidity Guarantee Program 

(TLGP), the FDIC is extending the TAG 

program for six months until June 30, 

2010. Each insured depository 

institution (IDI) that participates in the 

extended TAG program will be subject 

to increased fees during the extension 

period for the FDIC’s guarantee of 

qualifying noninterest-bearing 

transaction accounts. However, each IDI 

that is currently participating in the 

TAG program will have an opportunity 

to opt out of the extended TAG program. 

Each IDI that is currently participating 

in the TAG program must review and 

update its disclosure postings and 

notices to accurately reflect whether it 

is participating in the extended TAG 

program. 

DATES: The Final rule becomes effective 

on October 1, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Christopher L. Hencke, Counsel, Legal 

Division, (202) 898–8839 or 

chencke@fdic.gov; A. Ann Johnson, 

Counsel, Legal Division, (202) 898–3573 

or aajohnson@fdic.gov; Robert C. Fick, 

Counsel, Legal Division, (202) 898–8962 

or rfick@fdic.gov; Joe DiNuzzo, Counsel, 

Legal Division, (202) 898–7349 or 

jdinuzzo@fdic.gov; Lisa D Arquette, 

Associate Director, Division of 

Supervision and Consumer Protection, 

(202) 898–8633 or larquette@fdic.gov; 

Donna Saulnier, Manager, Assessment 

Policy Section, Division of Finance, 

(703) 562–6167 or dsaulnier@fdic.gov; 

or Munsell St. Clair, Chief, Bank and 

Regulatory Policy Section, Division of 

Insurance and Research, (202) 898–8967 

or mstclair@fdic.gov. 

SUPPLEMENTARY INFORMATION

I. Background 

The FDIC established the TLGP in 

October 2008 following a determination 

of systemic risk by the Secretary of the 

Treasury (after consultation with the 

President) that was supported by 

recommendations from the FDIC and 

the Board of Governors of the Federal 

Reserve System (Federal Reserve).1 The 

TLGP is part of a coordinated effort by 

the FDIC, the U.S. Department of the 

Treasury (Treasury), and the Federal 

Reserve to address unprecedented 

disruptions in credit markets and the 

resultant inability of financial 

institutions to fund themselves and 

make loans to creditworthy borrowers. 

On October 23, 2008, the FDIC’s 

Board of Directors (Board) authorized 

the publication in the Federal Register 

of an interim rule that outlined the 

structure of the TLGP.2 Designed to 

assist in the stabilization of the nation’s 

financial system, the FDIC’s TLGP is 

composed of two distinct components: 

The Debt Guarantee Program (DGP) and 

the TAG program. Pursuant to the DGP 

the FDIC guarantees certain senior 

unsecured debt issued by participating 

entities. Pursuant to the TAG program 

the FDIC guarantees all funds held in 

qualifying noninterest-bearing 

transaction accounts at participating 

IDIs. 

The TAG program was originally 

scheduled to expire on December 31, 

2009.3 Over 7,100 IDIs participate in the 

TAG program, and the FDIC has 

guaranteed an estimated $700 billion of 

deposits in noninterest-bearing 

transaction accounts that would not 

otherwise be insured. Under the TAG 

program each IDI that offers noninterestbearing transaction accounts is required 

to post a conspicuous notice in the 

lobby of its main office and each branch 

office, and on its Web site, if applicable, 

that discloses whether the IDI is 

participating in the TAG program.4

Disclosures for participating IDIs must 

contain a statement that indicates that 

all noninterest-bearing transaction 

accounts are fully guaranteed by the 

FDIC.5 In addition, even those IDIs that 

are not participating in the TAG 

program are required to disclose that 

deposits in noninterest-bearing 

transaction accounts continue to be 

insured for up to $250,000, pursuant to 

the FDIC’s general deposit insurance 

rules.6 At this time, IDIs participating in 

the TAG program pay quarterly an 

annualized 10 basis point assessment on 

any deposit amounts that exceed the 

existing deposit insurance limit.7

II. The Notice of Proposed Rulemaking 

As with those entities participating in 

the DGP, the FDIC is committed to 

providing an orderly phase-out of the 

TAG program for participating IDIs and 

their depositors. To that end, the Board 

authorized publication in the Federal 

Register of a notice of proposed 

rulemaking that presented two 

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45094 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 

8 74 FR 31217 (June 30, 2009). 

alternatives for phasing out the TAG 

program (the ‘‘Proposed Rule’’).8

The first alternative described in the 

Proposed Rule, designated Alternative 

A, would preserve the original 

termination date for the TAG program. 

For those IDIs that had not opted out of 

the TAG program, under this option, the 

FDIC’s guarantee of noninterest-bearing 

transaction accounts would expire on 

December 31, 2009. 

The second alternative, designated 

Alternative B, proposed the extension of 

the TAG program through June 30, 2010, 

six months beyond the current 

expiration date of December 31, 2009. 

Under this option, IDIs are provided an 

opportunity to opt out of the extended 

TAG program; if an IDI that is currently 

participating in the program opts out, 

Alternative B provided that the FDIC’s 

guarantee would expire as scheduled on 

December 31, 2009. To balance the 

income generated from TAG fees with 

potential losses associated with the TAG 

program during the extension period, 

the FDIC proposed to increase the 

assessment rate to an annualized rate of 

25 basis points (rather than the current 

10 basis points) on the guaranteed 

deposits in noninterest-bearing 

transaction accounts. Under this option, 

the increased fee would be collected 

quarterly in the same manner provided 

in existing regulations. Finally, 

Alternative B recognized that some IDIs 

would have to revise their disclosures 

related to the TAG program. This would 

be required only if their current 

disclosures became inaccurate following 

extension of the TAG program. For 

example, under Alternative B, each IDI 

that is participating in the extension 

would need to revise its disclosures if 

its existing disclosures indicated that 

the FDIC’s guarantee will apply only 

through December 31, 2009. Such an IDI 

would need to revise its disclosures to 

indicate that the guarantee will apply 

through June 30, 2010. 

III. Comment Summary and Discussion 

The FDIC requested comment on 

every aspect of the Proposed Rule. In 

addition, the FDIC posed specific 

questions relating to proposed 

Alternative B. The FDIC received 91 

comments on the proposed rule. The 

commenters included 60 insured 

depository institutions, 13 industry 

associations, 5 holding companies, 7 

state government entities, 3 bankers’ 

banks, and 3 depositors. A summary of 

the comments, including a summary of 

the comments addressing the specific 

questions, follows. 

A. Alternatives for Phasing Out TAG 

Program 

The FDIC sought information on 

whether commenters preferred 

Alternative A or Alternative B (or some 

other alternative) as the most 

appropriate means of insuring an 

orderly phase-out of the FDIC’s TAG 

program. The FDIC received 15 

comments expressly supporting 

Alternative A and 44 comments 

expressly supporting Alternative B. A 

summary of the comments the FDIC 

received in both of those categories 

follows. 

Comments Favoring Alternative A 

The FDIC received 15 comments 

expressly supporting Alternative A. 

Commenters supporting Alternative A 

generally shared the opinion that 

financial market volatility and risk 

aversion have moderated since the FDIC 

implemented the TAG program in the 

fall of 2008. These commenters 

generally noted that recent economic 

and financial market improvements, 

such as greater access to debt and 

capital markets and increased depositor 

and consumer confidence in the 

banking system, have eliminated the 

need for the TAG program. 

A small number of commenters 

supporting Alternative A expressed 

concern that an extension of the TAG 

program would burden healthy 

institutions that elect to opt out. An 

insured depository institution electing 

to opt out of the extended TAG program 

would be required to disclose to 

customers that balances in its noninterest-bearing transaction accounts 

exceeding the $250,000 limit are no 

longer guaranteed under the TAG 

program. Several commenters expressed 

concern that such disclosures would 

result in a loss of depositor 

relationships. Similarly, a small number 

of the comments favoring Alternative A 

suggested that extending the TAG 

program with an opt-out election as 

proposed under Alternative B would 

effectively punish institutions electing 

to opt out and give an unfair 

competitive advantage to those 

institutions that elect to remain in the 

TAG program through the extended 

period. Specifically, these commenters 

expressed concern that customers 

would inaccurately perceive a bank’s 

election to opt out of the TAG program 

extension as an indication that the noninterest bearing transaction account 

balances exceeding $250,000 at that 

bank are at risk. To avoid customer 

confusion and any unfair competitive 

advantage being created by an extension 

of the TAG program, these commenters 

recommended that the FDIC allow the 

TAG program to phase out under 

Alternative A. 

Comments Favoring Alternative B 

The FDIC received 44 comments 

expressly supporting Alternative B as 

the more appropriate method of phasing 

out the TAG program. Commenters that 

supported Alternative B generally 

expressed a belief that, despite vast 

improvement since the fall of 2008, the 

economy has not yet stabilized to the 

point that depositors would be 

comfortable having large uninsured or 

non-guaranteed transaction balances on 

deposit with smaller insured depository 

institutions or community banks. A 

number of comments the FDIC received 

from community banks and state and 

national banking industry associations 

expressed concerns that regions of the 

country most affected by the recent 

financial and economic turmoil would 

not see an improvement in depositor 

confidence within the phase-out time 

period proposed in Alternative A. These 

commenters also emphasized that an 

extension of the TAG program is 

important to the country’s continuing 

economic recovery. 

The FDIC also received several 

comments expressing concern that 

expiration of the TAG program under 

Alternative A would result in a 

significant shift in large business 

deposits and public deposits away from 

community banks. Given the current 

economic environment, depositors with 

large balances in non-interest bearing 

transaction accounts could be motivated 

to move their deposits away from 

smaller insured depository institutions 

for the perceived security of a larger 

‘‘too big to fail’’ insured depository 

institution if the TAG program were to 

expire. A depletion of large noninterestbearing transaction account balances 

would significantly harm community 

banks and smaller insured depository 

institutions by putting them at risk of 

becoming troubled, especially in those 

regions of the country still recovering 

economically. 

In addition, the FDIC received several 

comments concerning the effect that 

recent media coverage has had on the 

public’s perception of the banking 

industry. As one community bank 

noted, news stories covering the current 

problems with commercial real estate 

and bank failures have caused the 

business community and many 

depositors to be very concerned about 

the safety of their money. The 

commenter recommended adopting 

Alternative B as an appropriate phase 

out for the TAG program because it 

would counter such negative media 

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Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 45095 

coverage and would help alleviate the 

concerns of large businesses and public 

entities about the safety of their noninterest bearing transaction accounts 

that exceed $250,000. 

For several reasons the FDIC believes 

that the better alternative is to extend 

the TAG program beyond December 31, 

2009. The FDIC, like some commenters, 

has observed that significant 

improvement in the financial markets 

has been made since last fall. However, 

the FDIC believes that there are still 

significant portions of the banking 

industry, particularly in regions still 

suffering the most from recent economic 

turmoil, that will benefit of the TAG 

program beyond the end of this year. 

Progress toward a stable, fullyfunctioning financial marketplace has 

been made, and the FDIC believes that 

the TAG program, as well as the DGP, 

was instrumental in achieving these 

improvements. However, terminating 

the TAG program too quickly could 

significantly impair or erase that 

progress. Moreover, all currently 

participating entities can choose 

whether they will participate in the 

extension of the TAG program. The 

FDIC believes that any competitive 

disadvantage that may be incurred by 

choosing not to participate is 

outweighed by the help the program 

provides in stabilizing the financial 

markets and restoring public confidence 

in the economy and the banking 

industry. 

B. Specific Questions Presented in the 

NPR 

In addition to requesting information 

on whether commenters preferred 

Alternative A or Alternative B as the 

most appropriate means of ensuring an 

orderly phase out of the FDIC’s TAG 

program, the FDIC also posed specific 

questions relating to proposed 

Alternative B. The specific questions, as 

well as a summary and discussion of the 

comments the FDIC received addressing 

each question, follows. 

Question #1: If the TAG program is 

extended, is six months an appropriate 

time for the extension? If not, what 

would be considered an appropriate 

extension period for the TAG program? 

The FDIC received 72 comments 

supporting an extension of the TAG 

program for at least six months. 

Commenters supporting a six-month 

extension of the TAG program generally 

indicated that a six-month period 

presented an appropriate timetable for 

phasing out the TAG program. One 

industry association noted that certain 

risk spreads have returned to pre-crisis 

levels, suggesting that the worst of the 

market turmoil has passed. However, 

that commenter also noted that some 

areas of the country continue to be 

affected by high unemployment rates, a 

decline in business activity, and 

increases in bank credit delinquencies 

and losses. The commenter supported a 

six-month extension as appropriate 

given the lingering financial threats in 

many local markets. 

The FDIC also received 45 comments 

(including some of the comments that 

also expressly favored Alternative B) 

that recommended extending the TAG 

program for one-year (through December 

31, 2010). A number of community 

banks cited various forecasts predicting 

that the U.S. economy will continue to 

face significant financial and economic 

pressures through 2009. Several of the 

comments noted that the TAG program 

has helped preserve the franchise values 

of banking institutions both through 

customer retention and reduction of the 

likelihood of bank deposit runs. A 

number of community banks also 

commented that the proposed six-month 

extension would be too short a time 

period to be of value for many insured 

depository institutions given the 

proposed 25 basis point fee. 

Additionally, several commenters 

recommended extending the TAG 

program through the year 2013. 

Generally, these commenters advocated 

extending the TAG program to 

December 31, 2013 because it would 

match the TAG program’s non-interest 

bearing transaction account guarantee 

time period with the time period 

established for the FDIC’s $250,000 

deposit insurance limit for individual 

accounts. 

The FDIC does not disagree with 

projections that the economy will 

continue to face pressures through the 

remainder of this year. In fact, that 

premise is one of the bases for the 

decision to extend the TAG program. 

However, the FDIC does not agree that 

the TAG program should be extended 

for one year or longer. The TAG 

program, like the DGP, was always 

intended to be temporary. The FDIC 

believes that a six-month extension of 

the TAG program will provide the 

optimum balance between continuing to 

provide support to those institutions 

most affected by the recent financial and 

economic turmoil and phasing out the 

program in an orderly manner. 

Question #2: In order to balance the 

income generated from TAG fees with 

potential losses associated with the TAG 

program during the extension period, 

the FDIC has proposed to charge an 

annualized rate of 25 basis points 

(rather than the current 10 basis points) 

on deposits in non-interest-bearing 

transaction accounts. Is this increase in 

fees appropriate? If not, what fee should 

be charged by the FDIC to cover 

potential losses caused by an extension 

of the TAG program? 

A large number of commenters 

addressed the issue of whether a 

participation fee of 25 basis points on 

deposits in non-interest-bearing 

transaction accounts is appropriate for 

the proposed TAG program extension 

under Alternative B. While a few 

commenters were in favor of the 

proposed 25 basis point fee, a majority 

of the comments favored a fee less than 

25 basis points. 

The FDIC received 20 comments 

supporting the extension of the current 

fee structure (10 basis points) to cover 

the six-month extension of the TAG 

program as proposed in Alternative B. 

Some of these commenters raised 

concerns that a 25 basis-point fee for a 

six-month extension period is too high. 

One community bank expressed the 

belief that increasing the fees charged 

for the TAG program would decrease 

profitability and capital levels of FDIC 

member banks at a time when all banks 

are struggling to improve profitability. 

One commenter noted that while the 

assessment needs to be priced fairly, it 

is also important not to make the fee so 

expensive that some financial 

institutions cannot participate. One 

community bank commented that 

maintaining the 10 basis-point fee 

would encourage greater participation 

from healthier banks and could 

potentially generate greater revenue if 

collected during a time of a 

strengthening economy. 

The FDIC also received 16 comments 

supporting a participation fee between 

10 basis points and 25 basis points. 

These commenters generally shared the 

concerns of those who supported 

extending the current 10 basis-point fee, 

that is, they felt that a fee of 25 basis 

points is too high. However, 

commenters supporting a fee between 

10 basis points and 25 basis points also 

recognized the increased costs the TAG 

program poses to the FDIC. Several of 

these commenters noted that the fee 

associated with the extension of the 

TAG program should be based on the 

costs of the program for the FDIC. A 

majority of these comments 

recommended that an appropriate 

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45096 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 

participation fee for the TAG program 

extension would fall within the range of 

15 to 20 basis points based on the costs 

of the TAG program to the FDIC. A 

small number of comments from 

insured depository institutions stated 

that they would still participate in the 

TAG extension program if the 

participation fee were increased to 25 

basis points. 

The FDIC received 23 comments 

recommending that the FDIC adopt a 

risk-based approach to establish the 

participation fee for the TAG program 

extension. Specifically, these 

commenters suggested establishing fees 

that are commensurate with the risk 

profile of the participating bank as 

determined under the FDIC’s risk-based 

assessment system for deposit 

insurance. One community bank 

commented that implementing a riskbased approach would encourage 

broader participation in the TAG 

program extension by the vast majority 

of banks that fall within Risk Category 

I and II, but more fully assess the cost 

per deposit at banks placed in higher 

Risk Categories. A second community 

bank commented that a risk-based 

approach to assessing the fee for 

participation in the TAG program 

extension would ensure that the banks 

that pose the most risk to the fund 

would pay the most for participation in 

the TAG program extension. 

The cost of providing guarantees for 

noninterest-bearing transaction accounts 

at failed IDIs since the inception of the 

TAG program already has exceeded 

projected total TAG program revenue 

through the end of December 2009. 

Further, the FDIC projects additional 

failures of IDIs through the end of the 

year that will result in overall TAG 

losses that are expected to considerably 

exceed revenues. (Revenues generated 

from fees associated with the DGP are 

expected to cover TAG losses as well as 

losses incurred by the FDIC under the 

DGP.) In an effort to balance the income 

generated from TAG fees with potential 

losses associated with the TAG program 

during the extension period, the FDIC 

believes that the base fee for the 

guarantee should be increased. 

The FDIC finds merit in the proposals 

that a risk-based system be 

implemented. Switching to a risk-based 

fee system will allow the FDIC to align 

the fees charged under the TAG program 

to the risks posed by the institutions 

that participate in the program. Those 

institutions that pose greater risk will be 

charged higher fees to reflect that risk 

and will thus bear more fully the cost 

from the extension of the program. 

Additionally, the higher overall fees 

will better cover the potential costs of 

the program. 

Given the short duration of the TAG 

extension and the limited timeframe for 

implementing a risk-based fee system, 

the FDIC will rely on the general 

framework it has in place for the 

quarterly, risk-based premium system. 

Participants in the extended program 

will be charged a fee based on the risk 

category to which they are assigned for 

purposes of the risk-based premium 

system. The minimum annualized fee 

will be 15 basis points (rather than the 

current 10 basis points) on deposits in 

noninterest-bearing transaction 

accounts. 

Question #3: Should the FDIC reduce 

the maximum interest rate for NOW 

accounts that qualify for the FDIC’s 

guarantee under the TAG program? 

Would placing an interest rate limit on 

NOW accounts of no higher than 0.25 

percent be appropriate? If not, what 

would be considered an appropriate rate 

limitation for NOW accounts? 

The FDIC received 28 comments 

addressing the question of whether to 

reduce the maximum interest rate for 

NOW accounts that qualify for the TAG 

program during the proposed extension 

period under Alterative B. The FDIC 

received 12 comments expressly 

supporting a reduction of the maximum 

interest rate and 16 comments opposing 

a reduction. 

One community bank that favored a 

reduction in the maximum interest rate 

for NOW accounts stated that dropping 

the maximum interest rate to a range of 

35 to 40 basis points would more 

closely match current market 

alternatives. However, the commenter 

also raised concerns that a reduction of 

the interest rate ceiling to 25 basis 

points might encourage larger 

institutions to grab market share by 

pricing at higher levels with the implied 

security of government backing. On the 

other hand, another community bank 

expressed the opinion that reducing the 

interest rate ceiling on qualifying NOW 

accounts under the extended TAG 

program to 25 basis points would have 

no effect on the bank’s customers. 

Similarly, a different community bank 

argued that a reduction in the maximum 

interest rate for NOW accounts is 

reasonable given that most money 

market rates have moved lower since 

the TAG program was introduced in the 

fall of 2008. However, this commenter 

also pointed out that NOW account 

customers are concerned with safety of 

principal and immediate funds 

availability rather than the maximum 

interest rate of the account. 

In opposition to a reduction in the 

maximum interest rate limit for NOW 

accounts, the FDIC received several 

comments that expressed concern that a 

reduction in the maximum interest rate 

would confuse customers about the 

guarantees available under the TAG 

program extension. 

A number of other commenters 

pointed out that a reduction in the 

maximum interest limit for NOW 

accounts would require participating 

banks in the TAG program extension to 

make costly disclosures to existing 

customers. Similarly, one national 

banking industry association 

commented that the potential disruption 

to NOW account customers and the cost 

of adjusting bank systems and customer 

agreements argues against altering the 

maximum interest rate limitation. A 

second national banking industry 

association supported not changing the 

maximum interest rate on NOW 

accounts because many institutions do 

not consider the interest rates on NOW 

accounts to be as sensitive as other 

deposit rates, and NOW account rates 

do not vary as the market fluctuates. 

The cost and confusion that could 

potentially accompany such a reduction 

would be disruptive for both 

participating banks and NOW account 

customers. 

The FDIC agrees with many of the 

concerns raised by commenters who 

support no change to the maximum 

permissible interest rate for qualifying 

NOW accounts. The FDIC believes that 

there would be a potential for customer 

confusion about the availability of the 

guarantee if the maximum interest rate 

is changed for the remainder of the 

program. Each participating institution 

would also have to revise or adjust its 

banking systems, customer agreements, 

and disclosures to reflect the change. 

The burden of making these changes, 

the potential for customer confusion, 

and the relatively short period of time 

of the extension (i.e., six months) argue 

against making such a change. 

Therefore, the FDIC has decided not to 

change the maximum interest rate limit 

for NOW accounts. The term 

‘‘noninterest-bearing transaction 

account’’ will continue to include only 

those NOW accounts with interest rates 

that are no higher than 0.50 per cent as 

further described in 12 CFR 370.2(h). 

IV. The Final Rule 

In general, the final rule amends 

various provisions in 12 CFR Part 370 

to (1) Extend for six months the 

expiration date of the TAG program, (2) 

increase the assessment fee that applies 

during that six month period from 10 

basis points to either 15 basis points, 20 

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Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 45097 

9 5 U.S.C. 604. 

10 5 U.S.C. 605(b). 

basis points, or 25 basis points 

depending on the entity’s Risk Category, 

(3) provide an opportunity for currently 

participating entities to opt out of the 

TAG program effective on January 1, 

2010, and (4) provide a sample 

disclosure statement for those entities 

that elect to opt out. 

Six-Month Extension 

The final rule extends the TAG 

program for six months; the TAG 

program will now expire on June 30, 

2010. However, each participating entity 

will have an opportunity to opt out of 

the extension. While there is evidence 

that confidence in the banking system 

and the economy in general is 

improving, some additional time is 

needed in order to provide an orderly 

phase-out of the program. 

Increased Assessment 

The final rule imposes an increased 

assessment and a risk-based fee system 

on those entities participating in the 

extension of the TAG program. 

Beginning on January 1, 2010, a 

participating entity that does not opt out 

of the transaction account guarantee 

program in accordance with 

§ 370.5(c)(2) shall pay quarterly an 

annualized fee in accordance with its 

respective Risk Category rating. All 

institutions that are assigned to Risk 

Category I of the risk-based premium 

system will be charged an annualized 

fee of 15 basis points on their deposits 

in noninterest-bearing transactions 

accounts for the portion of the quarter 

in which they are assigned to Risk 

Category I. Likewise, institutions in Risk 

Category II will be charged an 

annualized fee of 20 basis points, and 

institutions in either Risk Category III or 

Risk Category IV will be charged an 

annualized fee of 25 basis points for 

those portions of the quarter in which 

they are assigned to the various risk 

categories. The fee will continue to be 

collected quarterly in the same manner 

as provided for in existing regulations. 

The fee will apply only to deposit 

amounts that exceed the existing 

deposit insurance limit of $250,000, as 

reported on the quarterly Call Report in 

any noninterest-bearing transaction 

accounts (as defined in § 370.2(h)), 

including any such amounts swept from 

a noninterest bearing transaction 

account into an noninterest bearing 

savings deposit account as provided in 

§ 370.4(c). 

Opt-Out 

Although the final rule extends the 

expiration date of the TAG program for 

six months, it also provides each 

participating entity the opportunity to 

opt out of the program effective on 

January 1, 2010. The option to opt out 

is a one-time option, and any decision 

to opt out is irrevocable. In order to 

exercise the option to opt out, a 

participating entity must submit an email to dcas@fdic.gov no later than 

November 2, 2009 that meets all of the 

requirements of 12 CFR 370.5(g)(2). The 

opt-out provision allows each 

participating entity the opportunity to 

decide whether participation in the 

extension of the TAG program is 

desirable based upon on each entity’s 

condition and business plan. In order to 

ensure that an institution’s depositors 

and the public are aware of an entity’s 

decision to opt out of the extension, the 

final rule also includes a sample 

disclosure statement for currently 

participating institutions that opt out of 

the extension. 

IV. Regulatory Analysis and Procedure 

A. Regulatory Flexibility Act 

Under the Regulatory Flexibility Act 

(RFA), the FDIC must prepare a final 

regulatory flexibility analysis in 

connection with the promulgation of a 

final rule,9 or certify that the final rule 

will not have a significant economic 

impact on a substantial number of small 

entities.10 For purposes of the RFA 

analysis or certification, a ‘‘small entity’’ 

is any financial institution with total 

assets of $175 million or less. For the 

reasons discussed below, the FDIC 

certifies that the final rule will not have 

a significant economic impact on a 

substantial number of small entities. 

Currently 7,063 IDIs participate in the 

TAG program, of which approximately 

3,688, or 52.2 percent are small entities. 

Within the universe of small 

institutions, 1,011, or 27.4 percent did 

not have TAG eligible deposits as of the 

June 2009 Report of Condition and 

Income for banks and the Thrift 

Financial Report for thrifts (collectively, 

‘‘June 2009 Call Reports’’); thus, they 

were not required to pay the 10 basis 

point fee currently assessed for 

participation in the TAG program. 

Assuming these IDIs do not change 

circumstances and do not opt out, there 

would be no impact on this group as a 

result of the fee increase. As to the 

remaining 2,677 small entities that had 

TAG eligible deposits as of the June 

2009 Call Reports, they have the 

opportunity to opt out of the extended 

TAG program. However, assuming these 

2,677 small entities remain in the TAG 

program, the fee increase could have 

some impact on a substantial number of 

the remaining participants in the TAG 

program during the extension period. 

Nevertheless, the FDIC has 

determined that, the economic impact of 

the Rule on small entities will not be 

significant for the following reasons. 

With respect to the fee increase from 10 

basis points to 15, 20 or 25 basis points 

depending upon the institution’s risk 

rating, based on figures from the June 

2009 Call Reports, the average fee 

increase for IDIs participating in the 

extended TAG program would be $681 

for the 6 month extension period, 

representing 8.2 percent of the average 

net operating income before taxes for 

the six months through June 2009. 

Moreover, the FDIC asserts that the 

economic benefit of the six-month 

extension would outweigh the increased 

fee associated with participation in that 

the small entities would benefit from 

the extended time period within which 

to phase out the TAG program as 

financial markets continue to stabilize. 

With respect to amending the 

disclosures related to the TAG program, 

the FDIC asserts that the economic 

impact on all small entities participating 

in the program (regardless of whether 

they pay a fee) would be de minimis in 

nature and would be outweighed by the 

economic benefit of the six-month 

extension. 

Accordingly, the Rule would not have 

a significant economic impact on a 

substantial number of small entities. 

B. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.), an agency may not conduct or 

sponsor and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid OMB 

control number. This Final Rule 

implements Alternative B of the Notice 

of Proposed Rulemaking, which extends 

the TAG program through June 30, 2010. 

Alternative B included disclosure and 

reporting requirements which are 

retained in the Final Rule. Specifically, 

section 370.5(c)(2) allows IDIs 

participating in the TAG program on 

October 31, 2009, to opt out of the 

program effective January 1, 2010. In 

addition, section 370.5(g)(2)(vi) requires 

institutions that opt out of the TAG 

program to disclose to customers that 

funds in excess of the standard 

maximum deposit insurance amount 

will no longer be guaranteed under the 

TAG program after December 31, 2009. 

Finally, pursuant to section 

370.5(h)(5)(i), institutions participating 

in the TAG program extension would be 

required to update any existing 

disclosures regarding participation in 

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45098 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 

the program to reflect the extension of 

coverage through June 30, 2010. 

In the Notice of Proposed 

Rulemaking, the FDIC expressed an 

intention to amend its existing TLGPrelated information collection (OMB No. 

3064–0166) to incorporate the burden 

associated with the TAG program 

extension. However, a request for 

normal clearance of the TLGP 

information collection, which was 

initially approved under emergency 

clearance procedures, was pending 

before OMB at the time of publication 

of the Notice of Proposed Rulemaking. 

To avoid concurrent requests on the 

same information collection, the FDIC 

instead, on July 1, 2009, submitted to 

OMB a request for clearance of the 

reporting and disclosure requirements 

in Alternative B as a separate, new 

information collection. That request is 

still pending. 

The proposed rule document for the 

TAG program extension requested 

comment on the estimated paperwork 

burden. Although, as previously 

discussed, a number of comments were 

received on substantive aspects of the 

proposal, none of the comments 

addressed the estimated paperwork 

burden. Therefore, the FDIC has not 

altered its initial burden estimates. The 

estimated burden for the reporting and 

disclosure requirements, as set forth in 

the Notice of Proposed Rulemaking and 

the Final Rule, is as follows: 

Title: Temporary Liquidity Guarantee 

Program. 

OMB Number: 3064–0166. 

Affected public: Insured depository 

institutions. 

Estimated Number of Respondents: 

Opt out of TAG program/Disclosure to 

customers of discontinuation or TAG 

program guarantee—3,555. 

Disclosure to customers of TAG 

program extension—3,554. 

Frequency of Response: 

Opt out of TAG program/Disclosure to 

customers of discontinuation of TAG 

program guarantee—once. 

Disclosure to customers of TAG 

program extension—once. 

Average time per response: 

Opt out of TAG program/Disclosure to 

customers of discontinuation of TAG 

program guarantee—1 hour. 

Disclosure to customers of TAG 

program extension—1 hour. 

Estimated Annual Burden: 

Opt out of TAG program/Disclosure to 

customers of discontinuation of TAG 

program guarantee—3,555 hours. 

Disclosure to customers of TAG 

program extension—3,554 hours. 

Total annual burden—7,109 hours. 

Comment Request: The FDIC has an 

ongoing interest in public comments on 

its collections of information, including 

comments on: (1) Whether this 

collection of information is necessary 

for the proper performance of the FDIC’s 

functions, including whether the 

information has practical utility; (2) the 

accuracy of the estimates of the burden 

of the information collection, including 

the validity of the methodologies and 

assumptions used; (3) ways to enhance 

the quality, utility, and clarity of the 

information to be collected; and (4) 

ways to minimize the burden of the 

information collection on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology. Comments may 

be submitted to the FDIC by any of the 

following methods: By mail to the 

Executive Secretary, Federal Deposit 

Insurance Corporation, 550 17th Street, 

NW., Washington, DC 20429; by FAX at 

(202) 898–8788; or by e-mail to 

comments@fdic.gov. All comments 

should refer to ‘‘Transaction Account 

Guarantee Program Extension.’’ Copies 

of comments may also be submitted to 

the OMB Desk Officer for the FDIC, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, New Executive Office Building, 

Room 10235, Washington, DC 20503. 

C. Use of Plain Language 

Section 722 of the Gramm-LeachBliley Act, Public Law 106–102, 113 

Stat. 1338, 1471 (Nov. 12, 1999), 

requires the federal banking agencies to 

use plain language in all proposed and 

final rules published after January 1, 

2000. In issuing the proposed rule, the 

FDIC solicited comments on how to 

make the proposed regulation easier to 

understand. No comments addressing 

that issue were received. 

D. The Treasury and General 

Government Appropriations Act, 1999— 

Assessment of Federal Regulations and 

Policies on Families 

The FDIC has determined that the 

Rule will not affect family well-being 

within the meaning of section 654 of the 

Treasury and General Government 

Appropriations Act, enacted as part of 

the Omnibus Consolidated and 

Emergency Supplemental 

Appropriations Act of 1999 (Pub. L. 

105–277, 112 Stat. 2681). 

E. Small Business Regulatory 

Enforcement and Fairness Act 

The Office of Management and Budget 

(OMB) has determined that this Final 

Rule is not a ‘‘major rule’’ within the 

meaning of the relevant sections of the 

Small Business Regulatory Enforcement 

and Fairness Act of 1996 (SBREFA), 5 

U.S.C. 801 et seq. As required by 

SBREFA, the FDIC will file the 

appropriate reports with Congress and 

the Government Accountability Office 

so that the Rule may be reviewed. 

List of Subjects in 12 CFR Part 370 

Banks, Banking, Bank deposit 

insurance, Holding companies, National 

banks, Reporting and recordkeeping 

requirements, Savings associations. 

■ For the reasons discussed in the 

preamble, the Federal Deposit Insurance 

Corporation amends 12 CFR part 370 as 

follows: 

PART 370—TEMPORARY LIQUIDITY 

GUARANTEE PROGRAM 

■ 1. The authority citation for part 370 

continues to read as follows: 

Authority: 12 U.S.C. 1813(l), 1813(m), 

1817(i), 1818, 1819(a)(Tenth), 1820(f), 

1821(a), 1821(c), 1821(d), 1823(c)(4). 

■ 2. Amend § 370.2 as follows: 

■ a. Revise paragraph (g); and 

■ b. Revise paragraph (h)(4); to read as 

follows: 

§ 370.2 Definitions. 

* * * * * 

(g) Participating entity. The term 

‘‘participating entity’’ means with 

respect to each of the debt guarantee 

program and the transaction account 

guarantee program, 

(1) An eligible entity that became an 

eligible entity on or before December 5, 

2008 and that has not opted out, or 

(2) An entity that becomes an eligible 

entity after December 5, 2008, and that 

the FDIC has allowed to participate in 

the program, except that a participating 

entity that opts out of the transaction 

account guarantee program in 

accordance with § 370.5(c)(2) ceases to 

be a participating entity in the 

transaction account guarantee program 

effective on January 1, 2010. 

(h) * * * 

(4) Notwithstanding paragraph (h)(3) 

of this section, a NOW account with an 

interest rate above 0.50 percent as of 

November 21, 2008, may be treated as 

a noninterest-bearing transaction 

account for purposes of this part, if the 

insured depository institution at which 

the account is held reduces the interest 

rate on that account to 0.50 percent or 

lower before January 1, 2009, and 

commits to maintain that interest rate at 

no more than 0.50 percent at all times 

during the period in which the 

institution is participating in the 

transaction account guarantee program. 

* * * * * 

■ 3. Amend section 370.4 by revising 

paragraph (a) to read as follows: 

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Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 45099 

§ 370.4 Transaction Account Guarantee 

Program. 

(a) In addition to the coverage 

afforded to depositors under 12 CFR 

Part 330, a depositor’s funds in a 

noninterest-bearing transaction account 

maintained at a participating entity that 

is an insured depository institution are 

guaranteed in full (irrespective of the 

standard maximum deposit insurance 

amount defined in 12 CFR 330.1(n)) 

from October 14, 2008 through: 

(1) The date of opt-out, in the case of 

an entity that opted out prior to 

December 5, 2008; 

(2) December 31, 2009, in the case of 

an entity that opts out effective on 

January 1, 2010; or 

(3) June 30, 2010, in the case of an 

entity that does not opt out. 

* * * * * 

■ 4. Amend section 370.5 as follows: 

■ a. Revise paragraph (c); 

■ b. Revise paragraph (g); and 

■ c. Revise paragraph (h)(5), to read as 

follows: 

§ 370.5 Participation. 

* * * * * 

(c) Opt-out and opt-in options. 

(1) From October 14, 2008 through 

December 5, 2008, each eligible entity is 

a participating entity in both the debt 

guarantee program and the transaction 

account guarantee program, unless the 

entity opts out. No later than 11:59 p.m., 

Eastern Standard Time, December 5, 

2008, each eligible entity must inform 

the FDIC if it desires to opt out of the 

debt guarantee program or the 

transaction account guarantee program, 

or both. Failure to opt out by 11:59 p.m., 

Eastern Standard Time, December 5, 

2008 constitutes a decision to continue 

in the program after that date. Prior to 

December 5, 2008 an eligible entity may 

opt in to either or both programs by 

informing the FDIC that it will not opt 

out of either or both programs. 

(2) Any insured depository institution 

that is participating in the transaction 

account guarantee program may elect to 

opt out of such program effective on 

January 1, 2010. Any such election to 

opt-out must be made in accordance 

with the procedures set forth in 

paragraph (g)(2) of this section. An 

election to opt out once made is 

irrevocable. 

* * * * * 

(g) Procedures for opting out. 

(1) Except as provided in paragraph 

(g)(2) of this section, the FDIC will 

provide procedures for opting out and 

for making an affirmative decision to 

opt in using FDIC’s secure e-business 

website, FDICconnect. Entities that are 

not insured depository institutions will 

select and solely use an affiliated 

insured depository institution to submit 

their opt-out election or their affirmative 

decision to opt in. 

(2) Pursuant to paragraph (c)(2) of this 

section a participating entity may opt 

out of the transaction account guarantee 

program effective on January 1, 2010 by 

submitting to the FDIC on or before 

11:59 p.m., Eastern Standard Time, on 

November 2, 2009 an email conveying 

the entity’s election to opt out. The 

subject line of the email must include: 

‘‘TLGP Election to Opt Out—Cert. No. 

____.’’ The email must be addressed to 

dcas@fdic.gov and must include the 

following: 

(i) Institution Name; 

(ii) FDIC Certificate number; 

(iii) City, State, ZIP; 

(iv) Name, Telephone Number and 

Email Address of a Contact Person; 

(v) A statement that the institution is 

opting out of the transaction account 

guarantee program effective January 1, 

2010; and 

(vi) Confirmation that no later than 

November 16, 2009 the institution will 

post a prominent notice in the lobby of 

its main office and each domestic 

branch and, if it offers Internet deposit 

services, on its website clearly 

indicating that after December 31, 2009, 

funds held in noninterest-bearing 

transaction accounts will no longer be 

guaranteed in full under the Transaction 

Account Guarantee Program, but will be 

insured up to $250,000 under the FDIC’s 

general deposit insurance rules. 

(h) * * * 

(5) Each insured depository 

institution that offers noninterestbearing transaction accounts must post 

a prominent notice in the lobby of its 

main office, each domestic branch and, 

if it offers Internet deposit services, on 

its website clearly indicating whether 

the institution is participating in the 

transaction account guarantee program. 

If the institution is participating in the 

transaction account guarantee program, 

the notice must state that funds held in 

noninterest-bearing transactions 

accounts at the entity are guaranteed in 

full by the FDIC. 

(i) These disclosures must be 

provided in simple, readily 

understandable text. Sample disclosures 

are as follows: 

For Participating Institutions 

[Institution Name] is participating in 

the FDIC’s Transaction Account 

Guarantee Program. Under that 

program, through June 30, 2010, all 

noninterest-bearing transaction 

accounts are fully guaranteed by the 

FDIC for the entire amount in the 

account. Coverage under the 

Transaction Account Guarantee 

Program is in addition to and separate 

from the coverage available under the 

FDIC’s general deposit insurance rules. 

For Participating Institutions That Elect 

To Opt Out of the Extended Transaction 

Account Guaranty Program Effective on 

January 1, 2010 

Beginning January 1, 2010 [Institution 

Name] will no longer participate in the 

FDIC’s Transaction Account Guarantee 

Program. Thus, after December 31, 

2009, funds held in noninterest-bearing 

transaction accounts will no longer be 

guaranteed in full under the 

Transaction Account Guarantee 

Program, but will be insured up to 

$250,000 under the FDIC’s general 

deposit insurance rules. 

For Non-Participating Institutions 

[Institution Name] has chosen not to 

participate in the FDIC’s Transaction 

Account Guarantee Program. Customers 

of [Institution Name] with noninterestbearing transaction accounts will 

continue to be insured for up to 

$250,000 under the FDIC’s general 

deposit insurance rules. 

(ii) If the institution uses sweep 

arrangements or takes other actions that 

result in funds being transferred or 

reclassified to an account that is not 

guaranteed under the transaction 

account guarantee program, for 

example, an interest-bearing account, 

the institution must disclose those 

actions to the affected customers and 

clearly advise them, in writing, that 

such actions will void the FDIC’s 

guarantee with respect to the swept, 

transferred, or reclassified funds. 

* * * * * 

■ 5. Amend section 370.7 by revising 

paragraph (c) to read as follows: 

§ 370.7 Assessments for the Transaction 

Account Guarantee Program. 

* * * * * 

(c) Amount of assessment. 

(1) Except as provided in paragraph 

(c)(2) of this section any eligible entity 

that does not opt out of the transaction 

account guarantee program shall pay 

quarterly an annualized 10 basis point 

assessment on any deposit amounts 

exceeding the existing deposit insurance 

limit of $250,000, as reported on its 

quarterly Consolidated Reports of 

Condition and Income, Thrift Financial 

Report, or Report of Assets and 

Liabilities of U.S. Branches and 

Agencies of Foreign Banks (each, a ‘‘Call 

Report’’) in any noninterest-bearing 

transaction accounts (as defined in 

§ 370.2(h)), including any such amounts 

swept from a noninterest bearing 

transaction account into a noninterest 

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45100 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Rules and Regulations 

bearing savings deposit account as 

provided in § 370.4(c). 

(2) Beginning on January 1, 2010, each 

participating entity that does not opt out 

of the transaction account guarantee 

program in accordance with 

§ 370.5(c)(2) shall pay quarterly a fee 

based upon its Risk Category rating. An 

entity’s Risk Category is determined in 

accordance with the FDIC’s risk-based 

premium system described in 12 CFR 

Part 327. The amount of the fee for each 

such entity is equal to the annualized, 

TAG assessment rate for the entity 

multiplied by the amount of the 

deposits held in noninterest-bearing 

transaction accounts (as defined in 

§ 370.2(h) and including any amounts 

swept from a noninterest bearing 

transaction account into an noninterest 

bearing savings deposit account as 

provided in § 370.4(c)) that exceed the 

existing deposit insurance limit of 

$250,000, as reported on the entity’s 

most recent quarterly Call Report. The 

annualized TAG assessment rates are as 

follows: 

(i) 15 basis points, for the portion of 

each quarter in which the entity is 

assigned to Risk Category I; 

(ii) 20 basis points, for the portion of 

each quarter in which the entity is 

assigned to Risk Category II; and 

(iii) 25 basis points, for the portion of 

each quarter in which the entity is 

assigned to either Risk Category III or 

Risk Category IV. 

(3) The assessments provided in this 

paragraph (c) shall be in addition to an 

institution’s risk-based assessment 

imposed under Part 327. 

* * * * * 

By order of the Board of Directors. 

Dated at Washington, DC, this 26th day of 

August 2009. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. E9–21034 Filed 8–31–09; 8:45 am] 

BILLING CODE 6714–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 23 

[Docket No. CE294; Special Conditions No. 

23–234–SC] 

Special Conditions: Cessna Aircraft 

Company, Model 525C; Single Point 

Refuel/Defuel System 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final special conditions. 

SUMMARY: These special conditions are 

issued for the Cessna Aircraft Company, 

model 525C airplane. This airplane will 

have a novel or unusual design 

feature(s) associated with a Single Point 

Refuel/Defuel system. The applicable 

airworthiness regulations do not contain 

adequate or appropriate safety standards 

for this design feature. These special 

conditions contain the additional safety 

standards that the Administrator 

considers necessary to establish a level 

of safety equivalent to that established 

by the existing airworthiness standards. 

DATES: Effective Date: August 20, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Peter L. Rouse, Federal Aviation 

Administration, Aircraft Certification 

Service, Small Airplane Directorate, 

ACE–111, 901 Locust, Kansas City, 

Missouri, 816–329–4135, fax 816–329 

4090. 

SUPPLEMENTARY INFORMATION: 

Background 

On August 9, 2006, Cessna Aircraft 

Company applied for an amendment to 

Type Certificate Number A1WI to 

include the new model 525C (CJ4). The 

model 525C (CJ4), which is a derivative 

of the model 525B (CJ3) currently 

approved under Type Certificate 

Number A1WI, is a commuter category, 

low-winged monoplane with ‘‘T’’ tailed 

vertical and horizontal stabilizers, 

retractable tricycle type landing gear 

and twin turbofan engines mounted on 

the aircraft fuselage. The maximum 

takeoff weight is 16,650 pounds, the 

VMO/MMO is 305 KIAS/M 0.77 and 

maximum altitude is 45,000 feet. 

The model 525C fuel system will 

incorporate a Single Point Refuel/Defuel 

system. The model 525C Single Point 

Refuel/Defuel system is used to pressure 

refuel and defuel the left and right wing 

fuel tanks from a single refuel/defuel 

adapter. The system is operated by fuel 

level and positive refuel or negative 

defuel pressure. This system is similar 

in design to other part 25 Cessna 

Citation airplanes and uses many of the 

same components that are used in these 

other airplanes. The components for the 

model 525C refuel/defuel system 

include a refuel/defuel adapter, a 

precheck valve, various other check 

valves, a high level pilot valve, a refuel 

valve, a defuel valve, and a positive/ 

negative relief valve. Single point 

refueling is accomplished by connecting 

the refuel equipment to the refuel/ 

defuel adapter and applying positive 

pressure. Fuel is directed through a 

common manifold to each wing tank’s 

fuel shutoff (refuel) valve. Single point 

defueling is accomplished by 

connecting defuel equipment to the 

refuel/defuel adapter and applying 

negative pressure. Defueling is 

controlled by fuel level and negative 

pressure from the defuel equipment. 

The incorporation of a pressure 

defueling system was not considered 

when 14 CFR part 23 was created and 

there are no applicable certification 

requirements for this novel and unusual 

design feature. Pressure defueling 

systems are more common on part 25 

airplanes, and the applicable 

certification requirements are contained 

in 14 CFR part 25, § 25.979(e), which 

states: ‘‘The airplane defueling system 

(not including fuel tanks and fuel tank 

vents) must withstand an ultimate load 

that is 2.0 times the load arising from 

the maximum permissible defueling 

pressure (positive or negative) at the 

airplane fueling connection.’’ With the 

pressure defueling system design 

incorporated on the model 525C, it is 

necessary to apply a special condition to 

this novel and unusual design feature. 

Type Certification Basis 

Under the provisions of § 21.101, 

Cessna Aircraft Company must show 

that the model 525C meets the 

applicable provisions of the regulations 

incorporated by reference in Type 

Certificate Number A1WI or the 

applicable regulations in effect on the 

date of application for the change to the 

model 525B. The regulations 

incorporated by reference in the type 

certificate are commonly referred to as 

the ‘‘original type certification basis.’’ In 

addition, the certification basis includes 

exemptions, if any; equivalent level of 

safety findings, if any; and the special 

condition adopted by this rulemaking 

action. 

If the Administrator finds that the 

applicable airworthiness regulations in 

14 CFR part 23 do not contain adequate 

or appropriate safety standards for the 

model 525C because of a novel or 

unusual design feature, special 

conditions are prescribed under the 

provisions of § 21.16. 

In addition to the applicable 

airworthiness regulations and special 

conditions, the model 525C must 

comply with the fuel vent and exhaust 

emission requirements of 14 CFR part 

34 and the noise certification 

requirements of 14 CFR part 36. 

Special conditions, as appropriate, as 

defined in § 11.19, are issued in 

accordance with § 11.38, and become 

part of the type certification basis in 

accordance with § 21.101. 

Special conditions are initially 

applicable to the model for which they 

are issued. Should the type certificate 

for that model be amended later to 

include any other model that 

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