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Rules and Regulations Federal Register

58603 

Vol. 70, No. 194 

Friday, October 7, 2005 

FEDERAL RESERVE SYSTEM 

12 CFR Part 204 

[Regulation D; Docket No. R–1236] 

Reserve Requirements of Depository 

Institutions 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule. 

SUMMARY: The Board is amending 

Regulation D, Reserve Requirements of 

Depository Institutions, to reflect the 

annual indexing of the low reserve 

tranche and of the reserve requirement 

exemption amount for 2006. The 

Regulation D amendments increase the 

amount of net transaction accounts at 

each depository institution that is 

subject to a three percent reserve 

requirement in 2006 from $47.6 million 

to $48.3 million. This amount is known 

as the low reserve tranche. The 

Regulation D amendments also increase 

the amount of total reservable liabilities 

of each depository institution that is 

subject to a zero percent reserve 

requirement in 2006 from $7.0 million 

to $7.8 million. This amount is known 

as the reserve requirement exemption 

amount. The adjustments to both of 

these amounts are derived using 

statutory formulas specified in the 

Federal Reserve Act. 

The Board is also announcing 

increases in two other amounts, the 

nonexempt deposit cutoff level and the 

reduced reporting limit, that are used to 

determine the frequency with which 

depository institutions must submit 

deposit reports. These amounts are 

indexed annually in order to reduce 

reporting burden for smaller depository 

institutions. 

DATES: Effective date: November 7, 

2005. 

Compliance dates: For depository 

institutions that report weekly, the 

adjusted low reserve tranche and 

reserve requirement exemption amount 

will apply to the fourteen-day reserve 

computation period that begins 

Tuesday, November 22, 2005, and the 

corresponding fourteen-day reserve 

maintenance period that begins 

Thursday, December 22, 2005. For 

depository institutions that report 

quarterly, the adjusted low reserve 

tranche and reserve requirement 

exemption amount will apply to the 

seven-day reserve computation period 

that begins Tuesday, December 20, 

2005, and the corresponding seven-day 

reserve maintenance period that begins 

Thursday, January 19, 2006. For all 

depository institutions, the nonexempt 

deposit cutoff level, the reserve 

requirement exemption amount, and the 

reduced reporting limit will be used for 

2006 deposit report screening to 

determine reporting frequency for the 

twelve-month period that begins in 

September 2006. 

FOR FURTHER INFORMATION CONTACT: 

Heatherun Allison, Senior Counsel 

(202/452–3565), Legal Division, or 

Gretchen Weinbach, Senior Economist 

(202/452–2841), Division of Monetary 

Affairs; for user of Telecommunications 

Device for the Deaf (TDD) only, contact 

(202/263–4869); Board of Governors of 

the Federal Reserve System, 20th and C 

Streets, NW., Washington, DC 20551. 

SUPPLEMENTARY INFORMATION: Section 

19(b)(2) of the Federal Reserve Act (12 

U.S.C. 461(b)(2)) requires each 

depository institution to maintain 

reserves against its transaction accounts 

and nonpersonal time deposits, as 

prescribed by Board regulations, for the 

purpose of implementing monetary 

policy. Section 11(a)(2) of the Federal 

Reserve Act (12 U.S.C. 248(a)(2)) 

authorizes the Board to require reports 

of liabilities and assets from depository 

institutions to enable the Board to 

conduct monetary policy. The Board’s 

actions with respect to each of these 

provisions are discussed in turn below. 

1. Reserve Requirements. Pursuant to 

section 19(b)(2) of the Federal Reserve 

Act, transaction account balances 

maintained at each depository 

institution up to a certain amount, 

known as the low reserve tranche, are 

subject to a three percent reserve 

requirement. Transaction account 

balances over the low reserve tranche 

are subject to a ten percent reserve 

requirement. Section 19(b)(2) also 

provides that, before December 31 of 

each year, the Board shall issue a 

regulation adjusting the low reserve 

tranche for the next calendar year. The 

Act requires the adjustment in the low 

reserve tranche to be 80 percent of the 

percentage increase or decrease in total 

transaction accounts of all depository 

institutions over the one-year period 

that ends on the June 30 prior to the 

adjustment. 

Currently, the low reserve tranche is 

$47.6 million. Net transaction accounts 

of all depository institutions rose 1.8 

percent (from $700.4 billion to $713.1 

billion) between June 30, 2004 and June 

30, 2005. Accordingly, the Board is 

amending Regulation D (12 CFR part 

204) to increase the low reserve tranche 

for net transaction accounts by $0.7 

million, from $47.6 million for 2005 to 

$48.3 million for 2006. 

Section 19(b)(11)(A) of the Federal 

Reserve Act (12 U.S.C. 461(b)(11)(A)) 

provides that a zero percent reserve 

requirement shall apply at each 

depository institution to total reservable 

liabilities that do not exceed a certain 

amount, known as the reserve 

requirement exemption amount. 

Section 19(b)(11)(B) provides that, 

before December 31 of each year, the 

Board shall issue a regulation adjusting 

the reserve requirement exemption 

amount for the next calendar year if 

total reservable liabilities held at all 

depository institutions increase from 

one year to the next. Unlike the low 

reserve tranche, which can be adjusted 

upward or downward, no adjustment is 

made to the reserve requirement 

exemption amount if total reservable 

liabilities held at all depository 

institutions should decrease during the 

applicable time period. The Act requires 

the percentage increase in the reserve 

requirement exemption amount to be 80 

percent of the increase in total 

reservable liabilities of all depository 

institutions over the one-year period 

that ends on the June 30 prior to the 

adjustment. 

Total reservable liabilities of all 

depository institutions increased by 

13.7 percent (from $2,946.2 billion to 

$3,350.0 billion) between June 30, 2004, 

and June 30, 2005. Accordingly, the 

Board is amending Regulation D to 

increase the reserve requirement 

exemption amount by $0.8 million, from 

58604 Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Rules and Regulations 

1Consistent with Board practice, the low reserve 

tranche and reserve requirement exemption 

amounts have been rounded to the nearest $0.1 

million. 

2Consistent with Board practice, the nonexempt 

deposit cutoff level has been rounded to the nearest 

$0.1 million, while the reduced reporting limit has 

been rounded to the nearest $1 million. 

$7.0 million for 2005 to $7.8 million for 

2006.1

For depository institutions that report 

weekly, the adjusted low reserve 

tranche and reserve requirement 

exemption amount will be effective for 

the fourteen-day reserve computation 

period beginning Tuesday, November 

22, 2005, and for the corresponding 

fourteen-day reserve maintenance 

period beginning Thursday, December 

22, 2005. For depository institutions 

that report quarterly, the adjusted low 

reserve tranche and reserve requirement 

exemption amount will be effective for 

the seven-day reserve computation 

period beginning Tuesday, December 

20, 2005, and for the corresponding 

seven-day reserve maintenance period 

beginning Thursday, January 19, 2006. 

2. Deposit Reports. Section 11(b)(2) of 

the Federal Reserve Act authorizes the 

Board to require depository institutions 

to file reports of their liabilities and 

assets as the Board may determine to be 

necessary or desirable to enable it to 

discharge its responsibility to monitor 

and control the monetary and credit 

aggregates. The Board screens 

depository institutions each year and 

assigns them to one of four deposit 

reporting panels (weekly reporters, 

quarterly reporters, annual reporters, or 

nonreporters). An institution’s panel 

assignment is effective with the annual 

deposit panel shifts in September of the 

screening year. 

In order to ease the reporting burden, 

the Board permits institutions with net 

transaction account above the reserve 

requirement exemption amount but 

with total deposits below a specified 

level (the ‘‘nonexempt deposit cutoff’’) 

to report quarterly. The Board requires 

certain large depository institutions to 

report weekly regardless of the level of 

their net transaction accounts if their 

total deposits exceed a specified level 

(the ‘‘reduced reporting limit’’). The 

annual adjustment to the first amount, 

the reserve requirement exemption 

amount, is described in Section 1 above. 

The nonexempt deposit cutoff level and 

the reduced reporting limit are also 

adjusted annually, by an amount equal 

to 80 percent of the increase, if any, in 

total deposits of all depository 

institutions over the one-year period 

that ends on the June 30 prior to the 

adjustment. 

Total deposits at all depository 

institutions increased 8.3 percent (from 

$6,962.1 billion to $7,540.4 billion) 

between June 30, 2004 and June 30, 

2005. Accordingly, the Board is 

adjusting the nonexempt deposit cutoff 

level upward by $11.3 million, from its 

current level of $169.8 million for 2005 

to $181.1 million for 2006. The Board is 

also adjusting the reduced reporting 

limit upward by $75 million, from its 

current level of $1.131 billion for 2005 

to $1.206 billion for 2006.2

Beginning in September 2006, the 

boundaries of the four deposit reporting 

panels will be defined as follows. Those 

depository institutions with net 

transaction accounts over $7.8 million 

(the reserve requirement exemption 

amount) or total deposits greater than or 

equal to $1.206 billion (the reduced 

reporting limit) are subject to detailed 

reporting, and must file an FR 2900 

report either weekly or quarterly. Of this 

group, those with total deposits greater 

than or equal to $181.1 million (the 

nonexempt deposit cutoff level) are 

required to file the FR 2900 report each 

week, while those with total deposits 

less than $181.1 million are required to 

file the FR 2900 report each quarter. 

Those depository institutions with net 

transaction accounts less than or equal 

to $7.8 million (the reserve requirement 

exemption amount) and with total 

deposits less than $1.206 billion (the 

reduced reporting limit) are eligible for 

reduced reporting, and must either file 

a deposit report annually or not at all. 

Of this group, those with total deposits 

greater than $7.8 million (but less than 

$1.206 billion) are required to file the 

FR 2910a report annually, while those 

with total deposits less than or equal to 

$7.8 million are not required to file a 

deposit report. A depository institution 

that manipulates its reporting, however, 

in an attempt to qualify for less frequent 

reporting or to reduce its reserve 

requirement may be required to report 

the FR 2900 on a weekly basis and 

maintain appropriate reserve balances 

with its Reserve Bank, regardless of its 

most recent panel assignment. 

Notice and Regulatory Flexibility Act. 

The provisions of 5 U.S.C. 553(b) 

relating to notice of proposed 

rulemaking have not been followed in 

connection with the adoption of these 

amendments. The amendments involve 

expected, ministerial adjustments 

prescribed by statute and by the Board’s 

policy concerning reporting practices. 

The increases in the reserve requirement 

exemption amount, the low reserve 

tranche, the nonexempt deposit cutoff 

level, and the reduced reporting limit 

serve to reduce regulatory burdens on 

depository institutions. Accordingly, the 

Board finds good cause for determining, 

and so determines, that notice in 

accordance with 5 U.S.C. 553(b) is 

unnecessary. Consequently, the 

provisions of the Regulatory Flexibility 

Act, 5 U.S.C. 601, do not apply to these 

amendments. 

List of Subjects in 12 CFR Part 204 

Banks, Banking, Reporting and 

recordkeeping requirements. 

■ For the reasons set forth in the 

preamble, the Board is amending 12 

CFR part 204 as follows: 

PART 204—RESERVE 

REQUIREMENTS OF DEPOSITORY 

INSTITUTIONS (REGULATION D) 

■ 1. The authority citation for part 204 

continues to read as follows: 

Authority: 12 U.S.C. 248(a), 248(c), 371a, 

461, 601, 611, and 3105. 

■ 2. Section 204.9 is revised to read as 

follows: 

§ 204.9 Reserve requirement ratios. 

The following reserve requirement 

ratios are prescribed for all depository 

institutions, banking Edge and 

agreement corporations, and United 

States branches and agencies of foreign 

banks: 

Category Reserve requirement 

Net transaction accounts: 

$0 to $7.8 million .......................................................................................................................... 0 percent of amount. 

Over $7.8 million and up to $48.3 million .................................................................................... 3 percent of amount. 

Over $48.3 million ........................................................................................................................ $1,215,000 plus 10 percent of amount over 

$48.3 million. 

Nonpersonal time deposits .................................................................................................................. 0 percent. 

Eurocurrency liabilities ......................................................................................................................... 0 percent. 

Federal Register / Vol. 70, No. 194 / Friday, October 7, 2005 / Rules and Regulations 58605 

By order of the Board of Governors of the 

Federal Reserve System, October 4, 2005. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 05–20299 Filed 10–6–05; 8:45 am] 

BILLING CODE 6210–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 25 

[Docket No. NM330; Special Conditions No. 

25–301–SC] 

Special Conditions: Raytheon Model 

HS.125 Airplanes; High-Intensity 

Radiated Fields (HIRF) 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final special conditions; request 

for comments. 

SUMMARY: These special conditions are 

issued for a Raytheon Model HS.125 

airplane modified by LJSC Ltd. This 

modified airplane will have a novel or 

unusual design feature when compared 

to the state of technology envisioned in 

the airworthiness standards for 

transport category airplanes. The 

modification incorporates the 

installation of two Air Data Display 

Units and two Air Data Sensors 

manufactured by Innovative Solutions 

and Support. These systems perform 

critical functions. The applicable 

airworthiness regulations do not contain 

adequate or appropriate safety standards 

for the protection of these systems from 

the effects of high-intensity radiated 

fields (HIRF). 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: The effective date of these 

special conditions is September 29, 

2005. 

Comments must be received on or 

before November 7, 2005. 

ADDRESSES: Comments on these special 

conditions may be mailed in duplicate 

to: Federal Aviation Administration, 

Transport Airplane Directorate, 

Attention: Rules Docket (ANM–113), 

Docket No. NM330, 1601 Lind Avenue 

SW., Renton, Washington 98055–4056; 

or delivered in duplicate to the 

Transport Airplane Directorate at the 

above address. All comments must be 

marked: Docket No. NM330. 

FOR FURTHER INFORMATION CONTACT: Greg 

Dunn, FAA, Airplane and Flight Crew 

Interface Branch, ANM–111, Transport 

Airplane Directorate, Aircraft 

Certification Service, 1601 Lind Avenue 

SW., Renton, Washington 98055–4056; 

telephone (425) 227–2799; facsimile 

(425) 227–1320. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

The FAA has determined that notice 

and opportunity for prior public 

comment is impracticable because these 

procedures would significantly delay 

certification of the airplane and thus 

delivery of the affected aircraft. In 

addition, the substance of these special 

conditions has been subject to the 

public comment process in several prior 

instances with no substantive comments 

received. The FAA therefore finds that 

good cause exists for making these 

special conditions effective upon 

issuance; however, the FAA invites 

interested persons to participate in this 

rulemaking by submitting written 

comments, data, or views. The most 

helpful comments reference a specific 

portion of the special conditions, 

explain the reason for any 

recommended change, and include 

supporting data. We ask that you send 

us two copies of written comments. 

We will file in the docket all 

comments we receive, as well as a 

report summarizing each substantive 

public contact with FAA personnel 

concerning these special conditions. 

The docket is available for public 

inspection before and after the comment 

closing date. If you wish to review the 

docket in person, go to the address in 

the ADDRESSES section of this preamble 

between 7:30 a.m. and 4 p.m., Monday 

through Friday, except Federal holidays. 

We will consider all comments we 

receive on or before the closing date for 

comments. We will consider comments 

filed late if it is possible to do so 

without incurring expense or delay. We 

may change these special conditions 

based on the comments we receive. 

If you want the FAA to acknowledge 

receipt of your comments on these 

special conditions, include with your 

comments a pre-addressed, stamped 

postcard on which the docket number 

appears. We will stamp the date on the 

postcard and mail it back to you. 

Background 

On July 11, 2005, LJSC Ltd., 8847 

West Monroe Circle, Suite 300, Wichita, 

Kansas 67209 applied for a 

supplemental type certificate (STC) to 

modify a Raytheon Model HS.125 Series 

600A airplane, S/N 256066. This model 

is currently approved under Type 

Certificate No. A3EU. The Raytheon 

Model HS.125 airplane is a small 

transport category airplane powered by 

two turbine engines. It operates with a 

2-pilot crew and can seat up to 15 

passengers. The modification 

incorporates the installation of two Air 

Data Display Units (ADDUs) and two 

Air Data Sensors (ADSs) manufactured 

by Innovative Solutions and Support 

(IS&S). The avionics/electronics and 

electrical systems installed in this 

airplane have the potential to be 

vulnerable to high-intensity radiated 

fields (HIRF) external to the airplane. 

Type Certification Basis 

Under the provisions of 14 CFR 

21.101, LJSC Ltd. must show that 

Raytheon Model HS.125 Series 600A 

airplane S/N 256066, as changed, 

continues to meet the applicable 

provisions of the regulations 

incorporated by reference in Type 

Certificate No. A3EU, or the applicable 

regulations in effect on the date of 

application for the change. The 

regulations incorporated by reference in 

the type certificate are commonly 

referred to as the ‘‘original type 

certification basis.’’ The certification 

basis for the Raytheon Model HS.125 

airplane includes CAR 10, British Civil 

Airworthiness Requirements and 

Special Conditions. This certification is 

equivalent to CAR.4b dated December 

1953, Amendment 4b–1 through 

Amendment 4b–11, exclusive of CAR 

4b.350(e) and includes Special 

Regulations SR.422B. Type Certificate 

No. A3EU was amended to include 

HS.125 Series 600A on January 6, 1976. 

Compliance over and above certification 

basis requirements has been met with 

CAR Amendment 4B–12 and 

Amendment 4B–14. Compliance has 

been established with the special 

retroactive requirements of 14 CFR 25.2 

through Amendment 25–20, 14 CFR 21 

Amendment 21–27, and 14 CFR 36 

(1)(c)(2). 

If the Administrator finds that the 

applicable airworthiness regulations 

(i.e., part 25, as amended) do not 

contain adequate or appropriate safety 

standards for the Raytheon Model 

HS.125 Series 600A airplane, S/N 

256066, 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, Raytheon Model HS.125 

Series 600A airplane, S/N 256066, 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 defined in 14 

CFR 11.19, are issued in accordance 

with § 11.38 and become part of the type