[Federal Register Volume 74, Number 65 (Tuesday, April 7, 2009)]
[Rules and Regulations]
[Pages 15657-15665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-7861]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 24

[Docket ID OCC-2009-0006]
RIN 1557-AD12


Community and Economic Development Entities, Community 
Development Projects, and Other Public Welfare Investments

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
adopting in final form and without change the interim final rule, 
issued on August 11, 2008, which implemented the statutory change to 
national banks' community development investment authority made in the 
Housing and Economic Recovery Act of 2008 (HERA). The OCC also is 
revising Appendix 1 to part 24, the CD-1 National Bank Community 
Development (Part 24) Investments Form, to make technical changes that 
are consistent with the HERA provision and the revised regulation. 
Section 2503 of the HERA revised the community development investment 
authority in section 24(Eleventh) to restore a national bank's 
authority to make investments designed primarily to promote the public 
welfare.

DATES: Effective Date: April 7, 2009.

FOR FURTHER INFORMATION CONTACT: Stephen Van Meter, Assistant Director, 
Community and Consumer Law Division, (202) 874-5750; Michele Meyer, 
Assistant Director, Patrick T. Tierney, Senior Attorney, or Rebecca 
Smith, Attorney, Legislative and Regulatory Activities Division, (202) 
874-5090, Office of the Comptroller of the Currency, 250 E Street, SW., 
Washington, DC 20219.

SUPPLEMENTARY INFORMATION: 

Background

Introduction

    The Financial Services Regulatory Relief Act of 2006 (FSRRA) \1\ 
made a number of changes to 12 U.S.C. 24(Eleventh), the statute that 
authorizes national banks' community development investments.\2\ Prior 
to its amendment by the FSRRA, 12 U.S.C. 24(Eleventh) authorized a 
national bank ``[t]o make investments designed primarily to promote the 
public welfare, including the welfare of low- and moderate-income 
communities or families (such as by providing housing, services, or 
jobs)'' (the public welfare test). The FSRRA, among other things, 
narrowed the grant of authority in section 24(Eleventh) by providing 
that a national bank may ``make investments directly or indirectly, 
each of which promotes the public welfare by benefiting primarily low- 
and moderate-income communities or families (such as by providing 
housing, services, or jobs).'' \3\ On April 24, 2008, the OCC issued a 
final rule that implemented the

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FSRRA's narrowing of the public welfare test.\4\
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    \1\ Public Law 109-351, 120 Stat. 1966 (Oct. 13, 2006).
    \2\ See 12 CFR part 24 (2008) (implementing 12 U.S.C. 
24(Eleventh)).
    \3\ Public Law 109-351, Sec.  305, 120 Stat. at 1970-71 
(emphasis added).
    \4\ 73 FR 22216 (Apr. 24, 2008).
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    On July 30, 2008, the President signed into law the HERA, which 
reinstated the pre-FSRRA public welfare test.\5\ Specifically, section 
2503 of the HERA revised section 24(Eleventh) to provide that a 
national bank may ``* * * make investments directly or indirectly, each 
of which is designed primarily to promote the public welfare, including 
the welfare of low- and moderate-income communities or families (such 
as by providing housing, services, or jobs).'' \6\
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    \5\ Public Law 110-289, Sec.  2503, 122 Stat. 2654, 2857-58 
(July 30, 2008).
    \6\ Id. (emphasis added).
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    On August 11, 2008, the OCC issued an interim final rule to 
implement section 2503 of the HERA.\7\ Under section 2503 of the HERA 
and the revisions made by the interim final rule, national banks and 
their subsidiaries are able to make a broader range of investments that 
will strengthen and stabilize communities, including communities 
affected by rising foreclosures. The OCC is now adopting the interim 
final rule in final form without change.
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    \7\ 73 FR 46532 (Aug. 11, 2008).
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Description of the Interim Final Rule

    The interim final rule made the following revisions to part 24 in 
order to implement the HERA's changes to the public welfare test.
Definition of ``Community and Economic Development Entity'' (CEDE) 
(Sec.  24.2(c))
    The interim final rule amended the definition of a CEDE in Sec.  
24.2(c) to implement the HERA change to the public welfare test. Thus, 
paragraph (c) of the interim final rule defined a CEDE as ``an entity 
that makes investments or conducts activities that primarily benefit 
low- and moderate-income individuals, low- and moderate-income areas, 
or other areas targeted by a governmental entity for redevelopment, or 
would receive consideration as qualified investments under 12 CFR 
25.23.''
Removing the Definition of ``Benefiting Primarily Low- and Moderate-
Income Areas or Individuals'' (Sec.  24.2(g))
    As discussed above, the FSRRA authorized a national bank and its 
subsidiaries to make investments that promote the public welfare by 
``benefiting primarily'' low- and moderate-income areas or individuals. 
The April 2008 final rule that implemented the FSRRA added a definition 
of ``benefiting primarily low and moderate-income areas or 
individuals.'' Consistent with the HERA change to section 24(Eleventh), 
the August 2008 interim final rule removed the definition of 
``benefiting primarily low- and moderate-income areas or individuals'' 
from part 24.
Public Welfare Investments (Sec.  24.3)
    The interim final rule revised Sec.  24.3, which authorizes 
national banks to make investments pursuant to section 24(Eleventh), to 
conform the wording of the regulation to the changes made by the HERA.
Examples of Qualifying Public Welfare Investments (Sec.  24.6)
    Section 24.6 contains examples of qualifying public welfare 
investments. The interim final rule revised the introductory language 
in Sec.  24.6 to reflect the HERA changes and restored to the examples 
references to investments in ``targeted redevelopment areas,'' which 
were removed by the April 2008 FSRRA final rule.
Revision to Appendix 1 to Part 24, the CD-1 National Bank Community 
Development (Part 24) Investments Form
    The interim final rule also revised Appendix 1 to part 24, the CD-1 
National Bank Community Development (Part 24) Investments Form, to 
reflect the changes to the regulation.

Comments on the Interim Final Rule

    The OCC's interim final rule included a request for public comment 
on the changes implementing the HERA's revisions to section 
24(Eleventh). The comment period closed on September 10, 2008. The OCC 
received nine comments, seven of which addressed the interim final 
rule.\8\ The seven commenters unanimously supported the interim final 
rule. One commenter expressed concern that, because many of the 
examples of qualifying public investments listed in Sec.  24.6 pertain 
to investments that benefit low- and moderate-income areas or 
individuals, the list of examples could be interpreted as a requirement 
for national banks to demonstrate that the primary beneficiaries of an 
investment are low- and moderate-income individuals or areas. The 
commenter asserted that such an interpretation would be inconsistent 
with the flexibility afforded by the Sec.  24.3 public welfare 
investment standard, which also permits investments in areas targeted 
by a governmental entity for redevelopment or investments that would be 
considered ``qualified investments'' under Sec.  25.23 of the OCC's 
Community Reinvestment Act (CRA) regulations. The commenter encouraged 
the OCC to clarify that the HERA changes to part 24 provide national 
banks with additional flexibility to make community development 
investments.
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    \8\ Two commenters objected to a separate and unrelated HERA 
provision that places restrictions on down payment assistance 
programs. The OCC is not authorized to implement this provision, and 
it was not the subject of this rulemaking action.
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    We agree that Sec.  24.6 serves as a non-exclusive list of examples 
that illustrate how a national bank may permissibly use its authority 
to make public welfare investments. The list cannot, and does not, 
restrict the express authorization in Sec.  24.3, which, as the 
commenter noted, permits investments in areas targeted by a 
governmental entity for redevelopment or investments that would be 
considered ``qualified investments'' under Sec.  25.23 of the CRA 
regulations. Moreover, to provide guidance to national banks and OCC 
bank examiners, the OCC provides detailed information about part 24 
public welfare investments on its Web site at http://www.occ.gov/cdd/pt24toppage.htm. If, after reviewing Sec.  24.6 and OCC's Web site, a 
national bank is still uncertain about whether a particular investment 
is permissible, the bank also may submit a prior approval request under 
Sec.  24.5 and receive from the OCC a permissibility determination. 
Accordingly, the OCC has concluded that the list in Sec.  24.6 need not 
include an example of each type of investment that part 24 and the 
statute permit.
    Accordingly, the OCC has determined that it is appropriate to adopt 
as final the interim final rule as originally published on August 11, 
2008.

Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (Pub. L. 96-354, Sept. 19, 1980) 
(RFA) applies only to rules for which an agency publishes a general 
notice of proposed rulemaking pursuant to 5 U.S.C. 553(b).\9\ Pursuant 
to the Administrative Procedure Act (APA) at 5 U.S.C. 553(b)(B), 
general notice and an opportunity for public comment are not required 
prior to the issuance of a final rule when an agency, for good cause, 
finds that ``notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest.'' \10\
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    \9\ 5 U.S.C. 601(2).
    \10\ 5 U.S.C. 553(b)(B).
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    For the reasons set forth in the interim final rule,\11\ the OCC 
determined for good cause that the APA did not require general notice 
and public comment on

[[Page 15659]]

the interim final rule and, therefore, did not publish a general notice 
of proposed rulemaking. Thus, the RFA, pursuant to 5 U.S.C. 601(2), 
does not apply to this final rule.
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    \11\ 73 FR 46534 (Aug. 11, 2008).
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Executive Order 12866

    The OCC has concluded that this final rule is not a significant 
regulatory action under Executive Order 12866. The changes made by this 
final rule will not have an annual effect on the economy of $100 
million or more within the meaning of Executive Order 12866. The OCC 
further concludes that this final rule does not meet any of the other 
standards for a significant regulatory action set forth in Executive 
Order 12866.

Unfunded Mandates Reform Act of 1995 Determinations

    Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 
104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency 
prepare a budgetary impact statement before promulgating any final rule 
for which a general notice of proposed rulemaking was published. As 
discussed above, the OCC determined for good cause that the APA did not 
require general notice and public comment on the interim final rule 
and, therefore, the OCC did not publish a general notice of proposed 
rulemaking. Accordingly, the final rule is not subject to section 202 
of the Unfunded Mandates Act.

Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3506), the OCC has reviewed the final rule and 
determined that it contains no collections of information as defined by 
the Paperwork Reduction Act.

Lists of Subjects in 12 CFR Part 24

    Community development, Credit, Investments, Low and moderate income 
housing, National banks, Reporting and recordkeeping requirements, 
Rural areas, Small businesses.

0
For the reasons set forth in the preamble, under the authority at 12 
U.S.C. 24(Eleventh), 93a, 481 and 1818, the interim rule amending 12 
CFR part 24, which was published at 73 FR 46532 on August 11, 2008, is 
adopted as final with the following change:

PART 24--COMMUNITY AND ECONOMIC DEVELOPMENT ENTITIES, COMMUNITY 
DEVELOPMENT PROJECTS, AND OTHER PUBLIC WELFARE INVESTMENTS

0
1. The authority citation for part 24 continues to read as follows:

    Authority:  12 U.S.C. 24(Eleventh), 93a, 481 and 1818.


0
2. Appendix 1 to Part 24 is revised to read as follows:


APPENDIX 1 TO PART 24--CD-1--NATIONAL BANK COMMUNITY DEVELOPMENT (PART 
24) INVESTMENTS

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    Dated: March 31, 2009.
John C. Dugan,
Comptroller of the Currency.
 [FR Doc. E9-7861 Filed 4-6-09; 8:45 am]
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