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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

# AGENCY:

Office of the Comptroller of the Currency, Treasury.

# ACTION:

Final rule.

# 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                           ( print page 15658)                        FSRRA's narrowing of the public welfare test.[4] 

                    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] 

                    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.                

### 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) (§ 24.2(c))

The interim final rule amended the definition of a CEDE in § 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” (§ 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 (§ 24.3)

The interim final rule revised § 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 (§ 24.6)

Section 24.6 contains examples of qualifying public welfare investments. The interim final rule revised the introductory language in § 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 § 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 § 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 § 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.                

                    We agree that § 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 § 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 § 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 § 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 § 24.5 and receive from the OCC a permissibility determination. Accordingly, the OCC has concluded that the list in § 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] 

                    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                           ( print 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.                

## 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

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

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

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

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

      ( print page 15660)          ( print page 15661)          ( print page 15662)          ( print page 15663)          ( print page 15664)    

Dated: March 31, 2009.

John C. Dugan,

Comptroller of the Currency.

# Footnotes

1.                             Public Law 109-351, 120 Stat. 1966 (Oct. 13, 2006).                    
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2.                                                     *See*12 CFR part 24 (2008) (implementing 12 U.S.C. 24(Eleventh)).                    
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3.                             Public Law 109-351, § 305, 120 Stat. at 1970-71 (emphasis added).                    
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4.                             73 FR 22216 (Apr. 24, 2008).                    
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5.                             Public Law 110-289, § 2503, 122 Stat. 2654, 2857-58 (July 30, 2008).                    
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6.                                                     *Id.*                         (emphasis added).                    
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7.                             73 FR 46532 (Aug. 11, 2008).                    
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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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9.                             5 U.S.C. 601(2).                    
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10.                             5 U.S.C. 553(b)(B).                    
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11.                             73 FR 46534 (Aug. 11, 2008).                    
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BILLING CODE 4810-33-P

 [FR Doc. E9-7861 Filed 4-6-09; 8:45 am]

                BILLING CODE 4810-33-C                      ( print page 15665)