Federal Register / Vol. 70, No. 208 / Friday, October 28, 2005 / Rules and Regulations 62057 

positive impact on small and large 

handlers by assuring that all exemption 

applications and reviews are handled 

equitably following approved 

standardized procedures. 

The committee discussed alternatives 

to this change, including not making 

any changes, but determined that 

specific procedures were needed to 

facilitate: (1) Exempting handlers from 

minimum quality testing; (2) revoking 

exemptions when handlers violate 

requirements under the marketing order; 

and (3) processing appeals to the 

committee’s actions. These procedures 

are expected to ensure that all such 

requests are treated equitably. The 

committee’s vote was unanimous. 

The information collection 

requirements for the ACP Form–5, 

which handlers will complete and 

forward to the committee to request 

exemption from minimum quality 

requirements under the order, was 

previously submitted to the Office of 

Management and Budget (OMB) and 

approved under OMB No. 0581–0230. 

Thus, this action will not impose any 

additional reporting or recordkeeping 

requirements on either small or large 

pistachio handlers. As with all Federal 

marketing order programs, reports and 

forms are periodically reviewed to 

reduce information requirements and 

duplication by industry and public 

sector agencies. In addition, USDA has 

not identified any relevant Federal rules 

that duplicate, overlap or conflict with 

this rule. 

The AMS is committed to compliance 

with the Government Paperwork 

Elimination Act, which requires 

government agencies in general to 

provide the public the option of 

submitting information or transacting 

business electronically to the maximum 

extent possible. 

Further, the committee’s meetings are 

widely publicized throughout the 

pistachio industry and all interested 

persons are encouraged to attend the 

meetings and participate in the 

committee’s deliberations. Like all 

committee meetings, the April 12, 2005, 

meeting was a public meeting and all 

entities, both large and small, were 

encouraged to express their views on 

these issues. 

An interim final rule concerning this 

action was published in the Federal 

Register on July 22, 2005 (70 FR 42256). 

Copies of the rule were provided to the 

committee and handlers by the 

committee staff. In addition, the rule 

was made available through the Internet 

by USDA and the Office of the Federal 

Register. That rule provided for a 60-day 

comment period, which ended 

September 20, 2005. No comments were 

received. 

A small business guide on complying 

with fruit, vegetable, and specialty crop 

marketing agreements and orders may 

be viewed at: http://www.ams.usda.gov/ 

fv/moab.html. Any questions about the 

compliance guide should be sent to Jay 

Guerber at the previously mentioned 

address in the FOR FURTHER INFORMATION

CONTACT section. 

After consideration of all relevant 

material presented, including the 

committee’s recommendation and other 

information, it is found that this 

finalizing the interim final rule, without 

change, as published in the Federal 

Register (70 FR 42256, July 22, 2005), 

will tend to effectuate the declared 

policy of the Act. 

List of Subjects in 7 CFR Part 983 

Pistachios, Marketing agreements and 

orders, Reporting and recordkeeping 

requirements. 

PART 983—PISTACHIOS GROWN IN 

CALIFORNIA 

■ Accordingly, the interim final rule 

amending 7 CFR part 983, which was 

published at 70 FR 42256 on July 22, 

2005, is adopted as a final rule without 

change. 

Dated: October 24, 2005. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 05–21489 Filed 10–27–05; 8:45 am] 

BILLING CODE 3410–02–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 330 

RIN 3064–AC90 

Deposit Insurance Coverage; Accounts 

of Qualified Tuition Savings Programs 

Under Section 529 of the Internal 

Revenue Code 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: The FDIC is adopting a final 

rule governing the insurance coverage of 

deposits of qualified tuition savings 

programs under section 529 of the 

Internal Revenue Code. The final rule 

makes no substantive changes to a 

previous interim final rule. Under the 

rule, the deposits of a qualified tuition 

savings program will be insured on a 

‘‘pass-through’’ basis to the program 

participants. In other words, the 

deposits will be insured up to $100,000 

for the interest of each participant in 

aggregation with the participant’s other 

deposits (if any) at the same insured 

depository institution. 

DATES: The final rule will be effective on 

December 27, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Christopher L. Hencke, Counsel, Legal 

Division, (202) 898–8839, Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

I. Qualified Tuition Programs 

Section 529 of the Internal Revenue 

Code provides tax benefits for ‘‘qualified 

tuition programs.’’ See 26 U.S.C. 529(a). 

Such programs include prepaid tuition 

programs (which may be created by 

states or educational institutions) as 

well as tuition savings programs (which 

must be sponsored by states or public 

instrumentalities). See 26 U.S.C. 

529(b)(1). A tuition savings program is 

defined by section 529 as a program 

under which a person ‘‘may make 

contributions to an account which is 

established for the purpose of meeting 

the qualified higher education expenses 

of the designated beneficiary of the 

account’’ (and which meets certain 

requirements). 26 U.S.C. 529(b)(1)(A)(ii). 

Under laws administered by the 

Securities and Exchange Commission 

(SEC), interests in a qualified tuition 

savings program must be sold by a 

public instrumentality (such as a state 

investment trust) so that the interests in 

the program will be exempt from 

registration under section 2(b) of the 

Investment Company Act. See 15 U.S.C. 

80a–2(b). This means that a participant 

in a state qualified tuition savings 

program cannot acquire an asset through 

the program or public instrumentality. 

Rather, the participant must acquire an 

interest or account in the public 

instrumentality. 

Some state 529 programs have 

provided participants with the option of 

investing their funds directly in bank 

deposits. Other state programs have 

expressed an interest in creating such an 

option. As stated above, participants in 

a 529 program must acquire an interest 

in the public instrumentality. They 

cannot acquire a particular asset. This 

means that the public instrumentality, 

not the participant, will be the legal 

owner of any bank deposit purchased by 

or through the public instrumentality. 

The fact that any bank deposit will 

belong to the public instrumentality 

raises issues under the FDIC’s insurance 

regulations. These issues are discussed 

below. 

62058 Federal Register / Vol. 70, No. 208 / Friday, October 28, 2005 / Rules and Regulations 

1 In advocating the suggested change, this 

comment explained the change as follows: ‘‘[The 

change] would * * * further ensure that the 

participant’s funds * * * would be aggregated with 

other deposit accounts of the participant held in the 

same bank, where appropriate, or would be 

appropriately segregated from other deposit 

accounts held by the same participant provided 

there are separate qualifying designated 

beneficiaries.’’ The reference to ‘‘qualifying 

beneficiaries’’ suggests that insurance coverage may 

be sought under 12 CFR 330.10. That section of the 

insurance regulations deals with revocable 

testamentary trust accounts. Under 12 CFR 330.10, 

such accounts are insured up to $100,000 for the 

funds contributed by each owner for the benefit of 

each beneficiary (with ‘‘beneficiary’’ meaning a 

person who shall become the owner of the funds 

upon the owner’s death). See 12 CFR 330.10(a). 

This ‘‘per beneficiary’’ coverage is not available, 

however, unless certain requirements are satisfied. 

First, the title of the bank account must reflect the 

testamentary nature of the account. This 

requirement can be satisfied through the use of a 

term such as ‘‘payable-on-death’’ or ‘‘POD.’’ See 12 

CFR 330.10(b). Second, the names of the 

testamentary beneficiaries must be identified 

somewhere in the bank’s deposit account records. 

See id. Third, the beneficiaries must be ‘‘qualifying 

beneficiaries’’ (i.e., the owner’s spouse, children, 

grandchildren, parents or siblings). See 12 CFR 

330.10(a). By expressly providing that the funds of 

each participant will be treated as a separate 

‘‘account,’’ the FDIC does not mean to affect any of 

the requirements for obtaining insurance coverage 

under 12 CFR 330.10. For example, as a result of 

the first requirement, no coverage will be available 

under 12 CFR 330.10 unless the bank establishes an 

account with ‘‘POD’’ or similar term in the account 

title. Also, coverage under 12 CFR 330.10 will not 

be available for a participant’s funds in a qualified 

tuition savings program unless the participant is 

permitted under 26 U.S.C. 529 and the applicable 

state law to designate one or more beneficiaries who 

will receive the funds in the event of the 

participant’s death. 

II. The FDIC’s Regulation 

Under the applicable section of the 

FDIC’s insurance regulations, the 

deposits of a corporation are insured up 

to $100,000 in the aggregate. See 12 CFR 

330.11(a)(1). This rule applies to 

ordinary corporations as well as to 

business or investment trusts that must 

file registration statements with the 

SEC. Generally, this rule also applies to 

investment trusts that would be 

required to file registration statements 

with the SEC ‘‘but for’’ certain sections 

of the Investment Company Act, 

including section 2(b). 

An exception exists for the deposits of 

a qualified tuition savings program 

sponsored by a state or public 

instrumentality. Although such 

programs are covered by section 2(b) of 

the Investment Company Act, the FDIC 

does not treat the public instrumentality 

as a corporation with insurance 

coverage limited to $100,000 in the 

aggregate. Rather, the FDIC provides 

insurance coverage up to $100,000 for 

the interest of each investor or plan 

participant. The FDIC provides this 

‘‘pass-through’’ coverage through an 

interim final rule published in June of 

2005. See 70 FR 33689 (June 9, 2005). 

In adopting the interim final rule, the 

FDIC relied upon the fact that qualified 

tuition savings programs—in placing 

participants’ funds at banks in a manner 

that satisfies the FDIC’s requirements for 

‘‘pass-through’’ insurance coverage—do 

not function in the manner of ordinary 

business trusts or investment 

companies. In a qualified tuition savings 

program, the deposits are equivalent to 

brokered deposits. Assuming the 

satisfaction of certain disclosure 

requirements, brokered deposits are 

insured on a ‘‘pass-through’’ basis to the 

broker’s customers. See 70 FR at 33691. 

Also, in adopting the interim final rule, 

the FDIC relied upon the Congressional 

purpose behind section 529. That 

purpose is to encourage persons to save 

money for post-secondary educational 

expenses. Without ‘‘pass-through’’

coverage of deposits, some persons may 

choose not to participate in 529 

programs. See id. 

III. The Public Comments 

In response to the publication of the 

interim final rule, the FDIC received 

seven public comments. These 

comments were submitted by three 

bankers’ associations, one state 

regulator, one holding company, one 

bank, and one banking information 

company. 

One of the comments did not address 

the substance of the rule but noted a 

grammatical error (involving noun/verb 

agreement). The other comments 

supported the interim final rule, though 

two changes were suggested. Each of the 

suggested changes is discussed in turn 

below. 

First, a recommendation was made to 

create a separate insurance category for 

the deposits of qualified tuition savings 

programs so that a participant’s funds in 

a 529 deposit would not be aggregated 

with the participant’s funds in other 

deposit accounts (if any) at the same 

insured depository institution. This 

suggested treatment would be similar to 

the FDIC’s treatment of the deposits of 

employee benefit plans. See 12 CFR 

330.14. 

Although the FDIC recognizes the 

deposits of employee benefit plans as a 

separate ownership category for 

purposes of applying the $100,000 

insurance limit, this special treatment is 

based upon a specific statutory 

provision. See 12 U.S.C. 1821(a)(1)(D). 

No such statutory provision exists for 

the deposits of qualified tuition savings 

programs. In the absence of any such 

statutory provision, the FDIC is 

reluctant to recognize a new deposit 

insurance ownership category. 

Moreover, no apparent reason exists 

to treat the deposits of qualified tuition 

savings programs differently than 

deposits held by agents or custodians. In 

the case of such deposits, the FDIC 

provides ‘‘pass-through’’ insurance 

coverage (assuming the satisfaction of 

certain disclosure requirements) but the 

FDIC does not insure such deposits 

separately from all other deposits. 

Rather, the FDIC aggregates the funds of 

each owner with the owner’s other 

accounts (if any) at the same insured 

depository institution. Under these 

circumstances, the FDIC has decided 

not to create a new deposit ownership 

category for the deposits of qualified 

tuition savings programs under section 

529 of the Internal Revenue Code. 

Second, a recommendation was made 

to include specific language about 

treating each participant’s funds ‘‘as a 

deposit account of the participant.’’

Although this language would not 

change the substance of the rule, the 

suggested language could clarify the 

effect (i.e., to provide separate insurance 

coverage for the funds of each 

participant). For this reason, the FDIC 

has adopted the suggested language.1

IV. The Final Rule 

Under the final rule, the deposits of 

a qualified tuition savings program 

under section 529 of the Internal 

Revenue Code will not be treated as the 

deposits of a corporation with coverage 

limited to $100,000 in the aggregate. 

Rather, the deposits will be insured up 

to $100,000 for the interest of each 

participant or investor (in aggregation 

with any other deposits of the 

participant or investor at the same 

insured depository institution). Such 

‘‘pass-through’’ coverage will not be 

available, however, unless two 

requirements are satisfied. First, the 

funds in the account must be traceable 

to one or more particular investors. 

Second, the existence of any trust or 

custodial relationships must be 

disclosed in accordance with the FDIC’s 

requirements at 12 CFR 330.5. 

In providing insurance coverage up to 

$100,000 for each ‘‘participant,’’ the 

FDIC means to provide coverage up to 

$100,000 for each owner of the 

securities issued by the public 

instrumentality. In the 529 programs 

reviewed by the FDIC, these 

‘‘participants’’ are the persons who 

contribute the funds. These persons may 

be referred to as ‘‘account owners.’’ A 

distinction exists between these 

contributors or ‘‘account owners’’ and 

the ‘‘designated beneficiaries’’ (i.e., the 

persons who will go to college 

someday). 

Federal Register / Vol. 70, No. 208 / Friday, October 28, 2005 / Rules and Regulations 62059 

In the programs reviewed by the 

FDIC, the contributors retain some 

rights with respect to the funds (e.g., the 

right to withdraw money under certain 

circumstances or the right to change the 

beneficiary). Assuming that the 

qualified tuition savings program is 

structured in this manner so that the 

securities are owned by the 

contributors, then the FDIC will treat 

the contributors as the ‘‘participants.’’ If 

the program is structured so that the 

securities are owned by the ‘‘designated 

beneficiaries,’’ however, then the FDIC 

will treat the beneficiaries as the 

‘‘participants.’’ For example, the 

beneficiary would be the ‘‘participant’’

if no one but the beneficiary possesses 

the right to withdraw funds or to name 

a different beneficiary. 

Again, the FDIC simply means to 

provide ‘‘pass-through’’ insurance 

coverage to the actual owners of the 

securities. The FDIC does not mean to 

dictate the terms of a qualified tuition 

savings program. Such programs must 

adhere to the requirements of section 

529 and the applicable state law. 

Paperwork Reduction Act 

This rule contains no new collections 

of information as defined by the 

Paperwork Reduction Act. See 44 U.S.C. 

3501 et seq. Consequently, no 

information has been submitted to the 

Office of Management and Budget for 

review. 

Regulatory Flexibility Act 

A regulatory flexibility analysis is 

required only when the agency must 

publish a notice of proposed 

rulemaking. See 5 U.S.C. 603, 604. 

Because the amendment to part 330 is 

being published in final form without a 

notice of proposed rulemaking, no 

regulatory flexibility analysis is 

required. 

Small Business Regulatory Enforcement 

Fairness Act 

In accordance with the Small 

Business Regulatory Enforcement 

Fairness Act, the FDIC will report this 

rule to Congress so that the rule may be 

reviewed. See 5 U.S.C. 801 et seq. 

List of Subjects in 12 CFR Part 330 

Bank deposit insurance, Banks, 

banking, Reporting and recordkeeping 

requirements, Savings and loan 

associations, Trust and trustees. 

■ For the reasons set forth in the 

preamble, the Board of Directors of the 

Federal Deposit Insurance Corporation 

hereby amends part 330 of title 12 of the 

Code of Federal Regulations as follows: 

PART 330—DEPOSIT INSURANCE 

COVERAGE 

■ 1. The authority citation for part 330 

continues to read as follows: 

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

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

1821(a), 1822(c). 

■ 2. Section 330.11(a)(2) is revised to 

read as follows: 

§ 330.11 Accounts of a corporation, 

partnership or unincorporated association. 

(a) * * * 

(2) Notwithstanding any other 

provision of this part, any trust or other 

business arrangement which has filed or 

is required to file a registration 

statement with the Securities and 

Exchange Commission pursuant to 

section 8 of the Investment Company 

Act of 1940 (15 U.S.C. 80a–8) or that 

would be required so to register but for 

the fact it is not created under the laws 

of the United States or a state or but for 

sections 2(b), 3(c)(1), or 6(a)(1) of that 

act shall be deemed to be a corporation 

for purposes of determining deposit 

insurance coverage. An exception to this 

paragraph (a)(2) shall exist for any trust 

or other business arrangement 

established by a state or that is a state 

agency or state public instrumentality as 

part of a qualified tuition savings 

program under section 529 of the 

Internal Revenue Code (26 U.S.C. 529). 

A deposit account of such a trust or 

business arrangement shall not be 

deemed to be the deposit of a 

corporation provided that: The funds in 

the account may be traced to one or 

more particular investors or 

participants; and the existence of the 

trust relationships is disclosed in 

accordance with the requirements of 

§ 330.5. If these conditions are satisfied, 

each participant’s funds shall be insured 

as a deposit account of the participant. 

* * * * * 

Dated at Washington, DC, this 6th day of 

October, 2005. 

By order of the Board of Directors. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 05–20766 Filed 10–27–05; 8:45 am] 

BILLING CODE 6714–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2005–22795; Directorate 

Identifier 2005–NM–193–AD; Amendment 

39–14353; AD 2005–22–09] 

RIN 2120–AA64 

Airworthiness Directives; Aerospatiale 

Model ATR42 and ATR72 Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule; request for 

comments. 

SUMMARY: The FAA is adopting a new 

airworthiness directive (AD) for all 

Aerospatiale Model ATR42 and ATR72 

airplanes. This AD requires a one-time 

inspection to determine the part number 

or markings of the fuel quality indicator 

(FQI) and replacement of any FQI 

having an incorrect part number. This 

AD results from a report that an FQI 

having an incorrect part number was 

installed on a Model ATR72 airplane. 

We are issuing this AD to ensure that a 

correct FQI is installed. An incorrect 

FQI could result in fuel starvation to the 

engine and consequent engine 

shutdown during flight. 

DATES: This AD becomes effective 

November 14, 2005. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in the AD 

as of November 14, 2005. 

We must receive comments on this 

AD by December 27, 2005. 

ADDRESSES: Use one of the following 

addresses to submit comments on this 

AD. 

• DOT Docket Web site: Go to 

http://dms.dot.gov and follow the 

instructions for sending your comments 

electronically. 

• Government-wide rulemaking Web 

site: Go to http://www.regulations.gov 

and follow the instructions for sending 

your comments electronically. 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 

Seventh Street, SW., Nassif Building, 

room PL–401, Washington, DC 20590. 

• Fax: (202) 493–2251. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street, SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

Contact Aerospatiale, 316 Route de 

Bayonne, 31060 Toulouse, Cedex 03, 

France, for service information 

identified in this AD.