Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Rules and Regulations 64135

12 consecutive months; (2) tracing back

to the farm of origin and successfully

closing a stated percent of all brucellosis

reactors found in the course of Market

Cattle Identification (MCI) testing; (3)

maintaining a surveillance system that

includes testing of dairy herds,

participation of all recognized

slaughtering establishments in the MCI

program, identification and monitoring

of herds at high risk of infection

(including herds adjacent to infected

herds and herds from which infected

animals have been sold or received),

and having an individual herd plan in

effect within a stated number of days

after the herd owner is notified of the

finding of brucellosis in a herd he or she

owns; and (4) maintaining minimum

procedural standards for administering

the program.

Before the effective date of this

interim rule, Arkansas was classified as

a Class A State.

To attain and maintain Class Free

status, a State or area must (1) remain

free from field strain Brucella abortus

infection for 12 consecutive months or

longer; (2) trace back at least 90 percent

of all brucellosis reactors found in the

course of MCI testing to the farm of

origin; (3) successfully close at least 95

percent of the MCI reactor cases traced

to the farm of origin during the 12

consecutive month period immediately

prior to the most recent anniversary of

the date the State or area was classified

Class Free; and (4) have a specified

surveillance system, as described above,

including an approved individual herd

plan in effect within 15 days of locating

the source herd or recipient herd.

After reviewing the brucellosis

program records for Arkansas, we have

concluded that this State meets the

standards for Class Free status.

Therefore, we are removing Arkansas

from the list of Class A States in

§ 78.41(b) and adding it to the list of

Class Free States in § 78.41(a). This

action relieves certain restrictions on

moving cattle interstate from Arkansas.

Immediate Action

The Administrator of the Animal and

Plant Health Inspection Service has

determined that there is good cause for

publishing this interim rule without

prior opportunity for public comment.

Immediate action is warranted to

remove unnecessary restrictions on the

interstate movement of cattle from

Arkansas.

Because prior notice and other public

procedures with respect to this action

are impracticable and contrary to the

public interest under these conditions,

we find good cause under 5 U.S.C. 553

to make it effective on December 3,

1997. We will consider comments that

are received within 60 days of

publication of this rule in the Federal

Register. After the comment period

closes, we will publish another

document in the Federal Register. It

will include a discussion of any

comments we receive and any

amendments we are making to the rule

as a result of the comments.

Executive Order 12866 and Regulatory

Flexibility Act

This rule has been reviewed under

Executive Order 12866. For this action,

the Office of Management and Budget

has waived its review process required

by Executive Order 12866.

Cattle moved interstate are moved for

slaughter, for use as breeding stock, or

for feeding. Changing the brucellosis

status of Arkansas from Class A to Class

Free will promote economic growth by

reducing certain testing and other

requirements governing the interstate

movement of cattle from this State.

Testing requirements for cattle moved

interstate for immediate slaughter or to

quarantined feedlots are not affected by

this change. Cattle from certified

brucellosis-free herds moving interstate

are not affected by this change.

The groups affected by this action will

be herd owners in Arkansas, as well as

buyers and importers of cattle from this

State.

There are an estimated 32,553 cattle

herds in Arkansas that would be

affected by this rule. All of these are

owned by small entities. Test-eligible

cattle offered for sale interstate from

other than certified-free herds must

have a negative test under present Class

A status regulations, but not under

regulations concerning Class Free status.

If such testing were distributed equally

among all animals affected by this rule,

Class Free status would save

approximately $3 per head.

Therefore, we believe that changing

the brucellosis status of Arkansas will

not have a significant economic impact

on the small entities affected by this

interim rule.

Under these circumstances, the

Administrator of the Animal and Plant

Health Inspection Service has

determined that this action will not

have a significant economic impact on

a substantial number of small entities.

Executive Order 12372

This program/activity is listed in the

Catalog of Federal Domestic Assistance

under No. 10.025 and is subject to

Executive Order 12372, which requires

intergovernmental consultation with

State and local officials. (See 7 CFR part

3015, subpart V.)

Executive Order 12988

This rule has been reviewed under

Executive Order 12988, Civil Justice

Reform. This rule: (1) Preempts all State

and local laws and regulations that are

in conflict with this rule; (2) has no

retroactive effect; and (3) does not

require administrative proceedings

before parties may file suit in court

challenging this rule.

Paperwork Reduction Act

This document contains no

information collection or recordkeeping

requirements under the Paperwork

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

et seq.).

List of Subjects in 9 CFR Part 78

Animal diseases, Bison, Cattle, Hogs,

Quarantine, Reporting and

recordkeeping requirements,

Transportation.

Accordingly, 9 CFR part 78 is

amended as follows:

PART 78—BRUCELLOSIS

1. The authority citation for part 78

continues to read as follows:

Authority: 21 U.S.C. 111–114a–1, 114g,

115, 117, 120, 121, 123–126, 134b, and 134f;

7 CFR 2.22, 2.80, and 371.2(d).

§ 78.41 [Amended]

2. In § 78.41, paragraph (a) is

amended by adding ‘‘Arkansas,’’

immediately after ‘‘Arizona,’’ and

paragraph (b) is amended by removing

‘‘Arkansas,’’.

Done in Washington, DC, this 26th day of

November 1997.

Craig A. Reed,

Acting Administrator, Animal and Plant

Health Inspection Service.

[FR Doc. 97–31756 Filed 12–3–97; 8:45 am]

BILLING CODE 3410–34–P

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Part 8

[Docket No. 97–23]

RIN 1557–AB41

Assessment of Fees; National Banks;

District of Columbia Banks

AGENCY: Office of the Comptroller of the

Currency, Treasury.

ACTION: Final rule.

SUMMARY: The Office of the Comptroller

of the Currency (OCC), in order to more

accurately reflect the OCC’s costs of
64136 Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Rules and Regulations

1See 62 FR 8078 (February 21, 1997).

supervising banks, is amending its

assessment regulation to impose a

surcharge on banks that receive a rating

of 3, 4, or 5 under the Uniform Financial

Institutions Rating System (UFIRS) (also

referred to as the CAMELS rating) and

on Federal branches and agencies of

foreign banks that receive a rating of 3,

4, or 5 under the ROCA rating system

(which rates risk management,

operational controls, compliance, and

asset quality). This amendment will

enable the OCC to distribute more

equitably the costs it incurs when

supervising institutions that are

experiencing significant problems. The

OCC also is eliminating the annual

franchise fee on banks that are

registered as municipal and/or

government securities dealers.

EFFECTIVE DATE: December 31, 1997.

FOR FURTHER INFORMATION CONTACT: Roy

Madsen, Deputy Chief Financial Officer,

Financial Review, Policy and Analysis,

(202) 874–5130; or Mark Tenhundfeld,

Assistant Director, Legislative and

Regulatory Activities Division, (202)

874–5090.

SUPPLEMENTARY INFORMATION:

Background

The OCC charters, regulates, and

supervises approximately 2,700 national

banks and 64 Federal branches and

agencies of foreign banks in the United

States, accounting for nearly 60 percent

of the nation’s banking assets. Its

mission is to ensure a safe, sound, and

competitive national banking system

that supports the citizens, communities,

and economy of the United States. The

OCC funds the activities that further this

mission by imposing assessments, fees,

and other charges on banks within its

jurisdiction, as necessary and

appropriate to meet the OCC’s expenses,

pursuant to 12 U.S.C. 482.

The OCC charges each national bank

and Federal branch and agency a

semiannual assessment according to a

formula that is described in 12 CFR 8.2.

In general, the OCC calculates the

semiannual assessment by using a

marginal rate that declines as an

institution’s asset size grows. The OCC

also reduces assessments charged to a

‘‘non-lead bank’’ (which, generally

speaking, refers to a national bank that

is not the largest national bank owned

by the same company) by a percentage

determined in accordance with each

assessment. For example, the OCC

reduced the assessment for non-lead

national banks that was due January 31,

1997, by 12 percent.

The marginal rate structure (which

applies a declining marginal rate as

bank asset size grows) and the

assessment reduction for non-lead

national banks reflect the OCC’s cost

savings resulting from the economies of

scale realized in the examination and

supervision of large institutions and

non-lead banks. However, the current

assessment regulation does not reflect

the increased costs that the OCC incurs

when supervising a bank whose

condition requires special attention. As

a result, healthy banks subsidize banks

that are experiencing significant

problems. The imposition of a surcharge

on banks requiring additional OCC

resources, discussed in the section that

follows, addresses this concern.

Discussion of the Final Rule

Surcharge

In the proposed rule (62 FR 54747

(October 21, 1997)), the OCC sought

comment on the addition of new

paragraphs (a)(7) and (b)(5) to § 8.2,

pursuant to which the OCC would

impose a surcharge equal to 25 percent

of the amount of the assessment that

otherwise would be due from (a)

national banks that receive a UFIRS

rating of 3, 4, or 5 and (b) Federal

branches and agencies of foreign banks

that receive a ROCA rating of 3, 4, or 5.

This proposal stemmed from OCC cost

data, which show that there is a

significant increase in supervision costs

once an institution’s rating moves from

2 to 3 and that these increased costs

continue while the bank is rated 3, 4, or

5. To reflect this increase in costs of

supervising a bank rated 3 or worse, the

OCC proposed to use a UFIRS or ROCA

rating (as appropriate) of 3 as the

threshold for applying the surcharge.

Using the most recently available data,

the surcharge would affect

approximately 94 national banks and

Federal branches and agencies of foreign

banks, resulting in an aggregate annual

increase in assessments for these banks

of approximately $983,000.

The OCC received three comments on

the proposal, all of which were

generally supportive of imposing the

surcharge. The first commenter

acknowledged that banks rated a 3, 4, or

5 require greater supervisory attention

and concluded that the fee structure

should reflect this. This commenter

observed, however, that the surcharge

might worsen the financial condition of

institutions having to pay the surcharge.

The second commenter, while

supporting the imposition of a

surcharge, suggested that the OCC (a)

raise the surcharge for all banks rated a

3, 4, or 5 to some percentage higher than

25%, (b) increase the amount of the

surcharge the worse a bank’s condition

becomes, and (c) charge banks a higher

assessment the longer they fail to

improve their condition. The third

commenter agreed that banks rated a 3,

4, or 5 should pay a surcharge, but

suggested that the OCC adopt a sliding

scale that would impose a higher

surcharge the worse a bank’s rating

became. This commenter also suggested

that the OCC consider charging banks by

the hour for examinations, but then

noted that such an approach would

raise the possibility of disputes over the

number and qualifications of examiners

used and the length of examinations.

The OCC believes, based on available

cost data, that a 25% surcharge is an

appropriate step toward minimizing the

extent to which healthy banks subsidize

banks requiring additional supervision

without having counterproductive

results. The data do not at this point

support increasing the assessment

surcharge in the other ways proposed by

the commenters. Accordingly, the OCC,

acting pursuant to 12 U.S.C. 482, adopts

the proposed surcharge without change.

The OCC will continue to review its cost

data and make further adjustments to

the assessment calculation as

appropriate.

The OCC will use the date of the most

recent Report of Examination to

determine whether a surcharge should

be imposed. If a bank is rated 3, 4, or

5 in the most recent exam report that is

dated before the end of the relevant

assessment period, a surcharge will be

applied. Thus, for instance, if a bank is

downgraded from a 2 to a 3 and receives

this rating in an exam report dated on

or before December 31, that bank would

have to pay the surcharge with the

assessment that is due by the following

January 31. If, however, the exam report

is dated January 1, in this example the

bank would not have to pay the

surcharge with the payment due the

following January 31 but would have to

pay the surcharge with all subsequent

assessments until it is upgraded.

Assessments of a Bank That Owns

Another Bank

In the preamble to the proposed rule,

the OCC sought comment on the proper

method of calculating the assessments

of national banks that own other banks.

This issue stems from a recent change

in the Consolidated Report of Condition

and Income (Call Report) instructions 1

pursuant to which the assets of a

subsidiary bank are reported on a

consolidated basis in the Call Report of

its parent bank. Given that the

subsidiary bank also must file a Call

Report, the current assessment

regulation, which bases assessments on
Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Rules and Regulations 64137

assets reported in a bank’s Call Report,

has the unintended effect of doublecounting at least some of the assets of

the subsidiary bank.

The OCC received two comments on

this issue. Both commenters suggested

that subsidiary bank assets be subtracted

from consolidated parent bank assets in

determining the supervisory assessment

base for the parent bank. The OCC

agrees that it is appropriate to subtract

the assets of the subsidiary bank for

purposes of calculating the assessment

of the parent bank. However, given the

small number of banks that own other

banks and the wide divergence in

circumstances of these banks, the OCC

has determined that it is appropriate to

address this situation on a case-by-case

basis instead of adopting a regulation

that attempts to cover all situations. In

order to ensure that these banks are

assessed fairly, the OCC will inform the

affected institutions in each semiannual

assessment notice that they may submit

information to the OCC demonstrating

what the appropriate adjustment should

be to the top-tier bank’s total assets. The

OCC then will review the information

and adjust the assessment accordingly.

Removal of Annual Franchise Fees

(§ 8.15)

The OCC also is removing § 8.15 from

the current rule, which states that

national banks that are registered or on

file as municipal and/or government

securities dealers shall pay an annual

franchise fee covering each dealer

activity. National banks engage in a

wide variety of activities requiring an

equally wide variety of supervisory

activities. Rather than impose special

fees on a few activities or, conversely,

attempt to segregate and define all

different types of supervisory activities

and costs, the OCC has determined that

it is more efficient and simpler for the

industry for the OCC to recover its costs

by imposing only one fee, namely, the

semiannual assessment. Thus, the

special fee charged to those banks that

are registered as municipal and

government securities dealers will be

removed.

Adoption of Final Rule Removing

Annual Franchise Fees

The OCC has determined that notice

and comment is not required before

removing § 8.15. The rule involves

agency practice and procedure and thus

is exempt under 5 U.S.C. 553(b)(A) from

the prior notice requirements of the

Administrative Procedure Act (5 U.S.C.

551 et seq.). The determination of how

fees are imposed is internal to the OCC,

since the Comptroller is required by 12

U.S.C. 482 to recover expenses but is

not required to follow specific

calculations or formulae when making

this determination. As a result, the OCC

may revise its assessment structure as

necessary to meet its expenses. In

addition, the rule is exempt pursuant to

5 U.S.C. 553(b)(B) from the prior notice

requirements because delaying adoption

of the final rule pending receipt of

comments would be unnecessary and

contrary to the public interest. The rule

confers a benefit on national banks that

are registered as municipal and/or

government securities dealers by

eliminating the franchise fee.

Regulatory Flexibility Act

Pursuant to section 605(b) of the

Regulatory Flexibility Act (RFA) (5

U.S.C. 605(b)), the regulatory flexibility

analysis otherwise required under

section 604 of the RFA (5 U.S.C. 604) is

not required if the agency certifies that

the rule will not have a significant

economic impact on a substantial

number of small entities and the agency

publishes that certification and a short,

explanatory statement in the Federal

Register along with the final rule.

Pursuant to section 605(b) of the RFA,

the OCC hereby certifies that this final

rule will not have a significant

economic impact on a substantial

number of small entities. While the rule

requires national banks, Federal

branches, and Federal agencies of all

sizes that receive a UFIRS or ROCA

rating of 3, 4, or 5 to pay an assessment

surcharge, this will not create a

significant or disparate impact on small

institutions. The assessments for the 69

national banks, Federal branches, and

Federal agencies with total assets of

under $100 million that currently are

rated 3, 4, or 5 would increase, in the

aggregate, by approximately $357,683

per year, which is equal to

approximately $5,184 per institution.

Accordingly, a regulatory flexibility

analysis under section 604 of the RFA

is not required.

Executive Order 12866

The OCC has determined that this

final rule is not a significant regulatory

action under Executive Order 12866.

Unfunded Mandates Reform Act of

1995

Section 202 of the Unfunded

Mandates Reform Act of 1995, Public

Law 104–4 (2 U.S.C. 1532) (Unfunded

Mandates Act), requires that an agency

prepare a budgetary impact statement

before promulgating any rule likely to

result in a Federal mandate that may

result in the expenditure by State, local,

and tribal governments, in the aggregate,

or by the private sector of $100 million

or more in any one year. If a budgetary

impact statement is required, section

205 of the Unfunded Mandates Act also

requires an agency to identify and

consider a reasonable number of

regulatory alternatives before

promulgating a rule. The OCC has

determined that this final rule will not

result in expenditures by State, local,

and tribal governments, or by the

private sector, of $100 million or more

in any one year. The increase in the

assessments of institutions rated a 3, 4,

or 5 will be less than $1.0 million in the

aggregate. Accordingly, the OCC has not

prepared a budgetary impact statement

or specifically addressed any regulatory

alternatives.

List of Subjects in 12 CFR Part 8

Assessments, Fees, National banks.

Authority and Issuance

For the reasons set forth in the

preamble, part 8 of chapter I of title 12

of the Code of Federal Regulations is

amended as follows:

PART 8—ASSESSMENT OF FEES;

NATIONAL BANKS; DISTRICT OF

COLUMBIA BANKS

1. The authority citation for part 8

continues to read as follows:

Authority: 12 U.S.C. 93a, 481, 482, 3102,

and 3108; 15 U.S.C. 78c and 78l; and 26 D.C.

Code 102.

2. Section 8.2 is amended by adding

new paragraphs (a)(7) and (b)(5) to read

as follows:

§ 8.2 Semiannual assessment.

(a) * * *

(7) The OCC shall adjust the

semiannual assessment computed in

accordance with paragraphs (a)(1)

through (a)(6) of this section by

multiplying that figure by 1.25 for each

bank that receives a rating of 3, 4, or 5

under the Uniform Financial

Institutions Rating System at its most

recent examination.

(b) * * *

(5) The OCC shall adjust the

semiannual assessment computed in

accordance with paragraphs (b)(1)

through (b)(4) of this section by

multiplying that figure by 1.25 for each

Federal branch or Federal agency that

receives a ROCA rating (which rates risk

management, operational controls,

compliance, and asset quality) of 3, 4, or

5 at its most recent examination.

§ 8.15 [Removed]

3. Section 8.15 is removed.
64138 Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Rules and Regulations

1 62 FR 17110 (April 9, 1997).

Dated: December 1, 1997.

Eugene A. Ludwig,

Comptroller of the Currency.

[FR Doc. 97–31867 Filed 12–2–97; 11:32 am]

BILLING CODE 4810–33–P

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 516, 543, 545, 552, 556,

563

[No. 97–121]

RIN 1550–AA83

Application Processing

AGENCY: Office of Thrift Supervision,

Treasury.

ACTION: Final rule.

SUMMARY: As a part of its on-going effort

to review and streamline its regulations,

the Office of Thrift Supervision (OTS) is

issuing a final rule revising its comment

procedures for specified applications

and notices (collectively, applications).

In addition to reorganizing the

regulation, the OTS has expanded the

comment period on these applications,

set forth the information that a comment

should contain, and replaced existing

provisions requiring the OTS to conduct

an oral argument on applications under

certain circumstances, with provisions

for informal and formal meetings. Under

the final rule, the OTS will conduct an

informal meeting ordinarily upon the

request of a commenter, but also on its

own initiative. Thereafter, upon the

request of any participant to an informal

meeting, the OTS will conduct a formal

meeting. The OTS may also conduct a

formal meeting on any application on its

own initiative.

EFFECTIVE DATE: January 1, 1998.

FOR FURTHER INFORMATION CONTACT:

Catherine Shepard, Senior Attorney,

Regulations and Legislation Division,

(202) 906–7275, Kevin Corcoran,

Assistant Chief Counsel, Business

Transactions Division, (202) 906–6962,

Office of Chief Counsel; or Diana L.

Garmus, Director, Corporate Activities

Division, (202) 906–5683, Office of

Thrift Supervision, 1700 G Street NW.,

Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Background

OTS regulations governing

applications for permission to organize

a federal stock or mutual savings

association, to establish or relocate a

branch office of a federal savings

association, and to engage in a

transaction that is subject to the Bank

Merger Act require applicants to follow

the public comment and review

procedures at existing § 543.2 (e) and (f).

Currently, § 543.2 provides an

opportunity for the public to submit

communications in favor or in protest of

applications, and permits the applicant

to respond to any protest. When a

protest is timely submitted, meets

specified criteria and includes a request

for oral argument, or if an applicant

timely requests an oral argument, the

regulation requires the OTS to conduct

an oral argument on the merits of the

application. The OTS may also hold an

oral argument in the absence of any

protests, if it determines that these

additional proceedings are desirable.

On April 9, 1997, the OTS published

a notice of proposed rulemaking

revising these procedures.1 In addition

to reorganizing the regulations, the OTS

proposed to amend its existing

procedures to expand the comment

period on applications, prescribe the

information that comments must

contain in order to be considered when

the OTS evaluates applications, and

replace existing provisions that require

the OTS to conduct an oral argument on

applications under certain

circumstances, with provisions for

discretionary conferences. The OTS

believed that these changes would make

the application processing procedures

easier to understand and apply.

Additionally, the OTS concluded that

the discretionary conference procedures

would align OTS regulations more

closely with those of the other federal

banking agencies in accordance with

section 303 of the Community

Development and Regulatory

Improvement Act of 1994.

II. Summary of Comments and

Description of Final Rule

A. General Discussion of the Comments

The public comment period on the

proposed rule closed on June 9, 1997.

Eight commenters responded to the

proposal: four community advocacy

groups, two trade associations, one

federal savings association, and one

professional records and information

management association.

As a general matter, the four

community advocacy groups opposed

the elimination of mandatory oral

arguments and supported the extension

of the public comment period.

Conversely, the trade associations and

the federal savings association

supported the proposed conference

procedures and opposed the extension

of the public comment period. The

information management association

expressed unqualified support for the

proposal. Specific comments are

discussed where appropriate in the

section by section analysis below.

B. Section by Section Analysis

The final rule adds new Subparts C

and D to part 516. The new subparts use

plain language drafting techniques

promoted by the Vice President’s

National Performance Review Initiative

and new guidance in the Federal

Register Document Drafting Handbook

(January 1997 edition). The primary goal

of plain language drafting is to make

regulations more readily

understandable. Plain language drafting

emphasizes the use of informative

headings (often written as a question),

non-technical language (including the

use of ‘‘you’’) and sentences in the

active voice.

Although commenters did not have

the opportunity to comment on the

plain language format prior to its use in

this final rule, the OTS believes that the

benefits of the format justify its use.

Moreover, the use of the plain language

format has not altered the substance of

the regulation. The OTS welcomes

comments on the plain language format,

and suggestions on how to improve this

format. The OTS is committed to

converting more of its regulations to the

plain language format in order to reduce

regulatory burden. The recently issued

OTS final rule on subsidiaries uses this

plain English drafting format. See 12

CFR Part 559 (1997).

Subpart C—Comment Procedures

Section 516.100—What Does This

Subpart Do?

Section 516.100 of the final rule

provides that Part 516, Subpart C

contains the procedures governing the

submission of public comments on

certain types of applications or notices

pending before the OTS. Subpart C

applies whenever a regulation

incorporates the procedures, or where

otherwise required by the OTS. This

section is based on § 516.5(a)(1) of the

proposed rule.

Section 516.110—Who May Submit a

Written Comment?

Section 516.110 provides that any

person may submit a written comment

supporting or opposing an application.

This provision is also based on

proposed § 516.5(a)(1).

Section 516.120—What Information

Should I Include in My Comment?

Under the existing rules, a protest is

considered ‘‘substantial’’ if it is

submitted in writing within the