This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

61713 

Vol. 70, No. 206 

Wednesday, October 26, 2005 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

5 CFR Part 5502 

RIN 3209–AA15 

Supplemental Financial Disclosure 

Requirements for Employees of the 

Department of Health and Human 

Services; Corrections 

AGENCY: Department of Health and 

Human Services (HHS). 

ACTION: Correcting amendments. 

SUMMARY: The Department of Health and 

Human Services published a final rule 

in the Federal Register on Wednesday, 

August 31, 2005 (70 FR 51559), 

establishing supplemental financial 

disclosure reporting requirements for 

certain employees of the Food and Drug 

Administration (FDA) and the National 

Institutes of Health (NIH). That 

document contained language that 

incorrectly rendered the supplemental 

reporting requirements inapplicable to 

new entrant employees who file either 

a public or confidential financial 

disclosure report. This document 

corrects the final regulation by revising 

the appropriate sections. 

DATES: This correction is effective 

October 26, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Edgar M. Swindell, Associate General 

Counsel, Office of the General Counsel, 

Ethics Division, Department of Health 

and Human Services, telephone (202) 

690–7258, fax (202) 205–9752. 

SUPPLEMENTARY INFORMATION: This 

document corrects two errors in the 

final rule which HHS published, with 

the concurrence of the Office of 

Government Ethics (OGE), on August 

31, 2005, at 70 FR 51559. The 

corrections involve the supplemental 

financial disclosure reporting 

requirements for employees of the Food 

and Drug Administration and the 

National Institutes of Health contained 

respectively in 5 CFR 5502.106 and 

5502.107. These sections require certain 

FDA and NIH employees to report 

financial interests in organizations 

affected by the programs and operations 

of their respective agencies. In the final 

rule, the text of each section erroneously 

carried forward an exception that had 

appeared in the interim final rule 

published on February 3, 2005, at 70 FR 

5543. In the interim final rule, new 

entrant employees to positions 

classified as public or confidential filers 

were excepted from the supplemental 

reporting requirement because the 

disclosure of financial interests in 

significantly regulated organizations 

(SROs) for FDA or substantially affected 

organizations (SAOs) for NIH would 

duplicate the data submitted on an SF 

278 or OGE 450 report. However, the 

final rule provided that the value of the 

reported interests must be disclosed. 

Because the SF 278 requires a reporting 

of value only within certain categories 

of amount and an OGE 450 requires no 

report of value whatsoever, these forms 

do not provide the information required 

by the final rule. As a result, the 

exception for new entrant employees 

was retained inadvertently. 

Accordingly, § 5502.106(c)(1) is 

corrected to delete the phrase ‘‘other 

than a public filer or a confidential 

filer;’’ and § 5502.107(c)(1) is corrected 

to state affirmatively that new entrant 

public or confidential filers are subject 

to the reporting requirement. 

List of Subjects 

5 CFR Part 5502 

Conflict of interests, Ethics, 

Government employees, Outside 

activities, Reporting and record keeping 

requirements. 

Dated: October 17, 2005. 

Edgar M. Swindell, 

Designated Agency Ethics Official, 

Department of Health and Human Services. 

Dated: October 18, 2005. 

Michael O. Leavitt, 

Secretary, Department of Health and Human 

Services. 

Approved: October 18, 2005. 

Marilyn L. Glynn, 

General Counsel, Office of Government 

Ethics. 

■ For the reasons discussed in the 

preamble, the Department of Health and 

Human Services, with the concurrence 

of the Office of Government Ethics, 

corrects the HHS Supplemental 

Financial Disclosure Regulation at 5 

CFR part 5502, by making the following 

correcting amendments: 

PART 5502—SUPPLEMENTAL 

FINANCIAL DISCLOSURE 

REQUIREMENTS FOR EMPLOYEES OF 

THE DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

■ 1. The authority citation for part 5502 

continues to read as follows: 

Authority: 5 U.S.C. 301, 7301; 5 U.S.C. 

App. (Ethics in Government Act of 1978); 

E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., 

p. 215, as modified by E.O. 12731, 55 FR 

42547, 3 CFR, 1990 Comp., p. 306; 5 CFR 

2634.103. 

§ 5502.106 [Amended] 

■ 2. Amend § 5502.106 by removing 

from paragraph (c)(1) the commas and 

words ‘‘, other than a public filer or a 

confidential filer,’’. 

§ 5502.107 [Amended] 

■ 3. Amend § 5502.107 by removing 

from paragraph (c)(1) the commas and 

words ‘‘, other than a public filer or a 

confidential filer,’’ and adding in their 

place the words ‘‘who is a public filer 

or a confidential filer or’’. 

[FR Doc. 05–21343 Filed 10–25–05; 8:45 am] 

BILLING CODE 4150–03–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Parts 713 and 741 

Fidelity Bond and Insurance Coverage 

for Federal Credit Unions 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: NCUA is amending its fidelity 

bond rule to increase the maximum 

allowable deductible, presently 

$200,000, and to change the minimum 

required coverage. NCUA is also 

removing its listing of approved bonds 

in the rule but will continue to list and 

update them on its Web site, and has 

concluded it will be useful to include in 

the rule some additional factors credit 

unions should consider in determining 

whether to raise their bond coverage 

above the regulatory requirements. 

61714 Federal Register / Vol. 70, No. 206 / Wednesday, October 26, 2005 / Rules and Regulations 

NCUA believes these changes 

modernize the rule and provide 

flexibility while addressing safety and 

soundness concerns. In response to 

public comment, NCUA has elected not 

to rescind its approval of Blanket Bond 

Standard Form 23. Finally, NCUA is 

making a technical correction in the 

regulation that requires fidelity bond 

coverage for federally insured, state 

chartered credit unions. 

DATES: This rule is effective on 

November 25, 2005. 

FOR FURTHER INFORMATION CONTACT: Ross 

P. Kendall, Staff Attorney, Office of 

General Counsel, at the above address or 

telephone (703) 518–6540. 

SUPPLEMENTARY INFORMATION: 

Background 

On May 19, 2005, the NCUA Board 

requested comment on a proposal to 

change part 713 of its regulations to 

provide for higher required fidelity 

bond coverages for credit unions and 

allow for higher deductibles. 70 FR 

30017 (May 25, 2005). The amendments 

update the dollar amount thresholds in 

the rule, which were last amended over 

20 years ago, and conform bond 

coverage to reflect risks in the current 

financial environment more accurately. 

The proposal also called for removing 

the listing in the rule of approved bond 

forms and carriers, as this information is 

available and updated on the NCUA 

Web site. The proposal invited comment 

on whether to rescind NCUA approval 

of Blanket Bond Standard Form 23 and 

on whether additional criteria ought to 

be included in the rule for consideration 

by credit unions in determining 

appropriate bond coverage amounts. 

Summary of Comments 

NCUA received twelve comments to 

the proposal. All the commenters 

supported increasing the maximum 

allowable deductible and the required 

coverage limits for both larger and small 

credit unions. Several noted these 

changes would provide needed 

flexibility for credit unions and would 

enable them to better manage risk. 

Six commenters recommended that 

NCUA consider other additional risk 

factors besides eligibility under NCUA’s 

Regulatory Flexibility (RegFlex) 

Program, 12 CFR part 742, in 

determining permissible deductible 

limits, and suggested factors such as 

capital ratios, earnings, net worth, risk 

profile, and loss history as appropriate 

limits. A few of these commenters 

suggested using the categories in 

NCUA’s prompt corrective action rule as 

a basis for determining eligibility for 

higher deductibles, for example, 

permitting credit unions that are 

deemed ‘‘well capitalized’’ as eligible 

for higher deductibles. 12 CFR part 702. 

One commenter noted that asset size 

alone is not an indicator of risk and 

suggested that more focus on risk 

assessment, including the items 

described above, is appropriate for the 

coverage limit changes as well as for 

determining eligibility for the maximum 

deductible. 

NCUA invited comment in the 

preamble to the proposed rule on 

whether to include additional risk 

factors in the rule for credit unions to 

consider in determining appropriate 

coverage limits. One commenter 

responded in the negative, while three 

others acknowledged additional risks. 

Of these, two expressed concern that 

listing additional risk factors in the rule 

should not result in a requirement that 

credit union management must 

necessarily consider those specific 

items. Rather, the commenters said, the 

rule should continue to allow for 

individual boards of directors to retain 

discretion to make determinations 

applicable to their unique 

circumstances. 

Most commenters offered no view on 

whether NCUA should declare the 

standard bond form number 23 obsolete. 

Three commenters supported its 

removal from the approved listing of 

bond forms, but two opposed its 

removal. Of these, a trade association 

strongly urged NCUA to retain the 

standard form 23, indicating that its 

removal would restrict competition in 

the marketplace and adversely affect 

credit unions. This commenter noted 

that the form is likely to be updated in 

the near future. 

One commenter noted support for 

removing the listing of approved bond 

forms and bond carriers from the 

regulation and including this 

information exclusively on the agency’s 

Web site. 

Final Rule 

In view of the comments, NCUA is 

making the following changes to the 

version published as the proposed rule. 

Eligibility for Increased Maximum 

Deductible 

The proposal provided for raising the 

maximum deductible for credit unions 

with over a $1 million in assets from its 

current ceiling of $200,000, but 

restricting the eligibility for the higher 

deductible to credit unions that qualify 

under NCUA’s RegFlex Program. 12 CFR 

part 742. The proposal invited comment 

about whether different criteria might 

present a more appropriate measure of 

eligibility for a higher deductible. 

The Board has fully considered the 

comments it received and particularly 

those that suggested qualifying as ‘‘well 

capitalized’’ under the prompt 

corrective action rule presents a better 

measure on which to base eligibility for 

the higher deductible. 12 CFR part 702. 

While being ‘‘well capitalized’’ might 

indicate a credit union has an increased 

ability to absorb losses, the Board has 

determined that a purely quantitative 

factor such as a credit union’s capital 

level ignores the fundamental premise 

that, in assessing risk, a more qualitative 

approach measuring the overall 

financial and operational health of a 

credit union is advisable. Call report 

data for June 2005 indicate there are 

almost 2,000 credit unions that, 

although ‘‘well capitalized,’’ were 

assigned a CAMEL 3 or 4 rating. For 

these reasons, the Board has determined 

to retain in the final rule that credit 

unions over $1 million in assets that 

qualify under the RegFlex Program may 

have higher deductibles based on the 

regulatory formula, up to a maximum 

permissible deductible of $1 million. 

The Board, however, recognizes that 

eligibility for the RegFlex Program can 

fluctuate quarterly but does not believe 

that credit unions should have to review 

and, if necessary, adjust their bond 

coverage that frequently. For that 

reason, the Board has clarified in the 

final rule that a credit union must 

review its continued eligibility under 

the regulation for a higher deductible 

only once a year. A credit union’s 

continued eligibility will be based on its 

asset size as reflected in its most recent, 

year-end 5300 call report and, for 

purposes of qualifying under the 

RegFlex program, its net worth as 

reflected in that same year-end 5300 call 

report. If a credit union previously 

qualified for the higher deductible has 

a decrease in assets based on its most 

recent year-end 5300 call report or its 

net worth has decreased so that it would 

no longer qualify for the RegFlex 

Program, then it must obtain the 

coverage otherwise required by the 

regulation. Nevertheless, even if a credit 

union has maintained assets in excess of 

$1 million and its net worth would 

otherwise continue to qualify it for the 

RegFlex Program, the credit union must 

obtain the required coverage if its most 

recent examination report disqualifies it 

from the RegFlex Program. 

Coverage Limits 

The Board outlined its reasons for 

increasing coverage limits for both 

larger and smaller credit unions in the 

preamble to the proposed rule, 

including inflation, changes in asset 

size, and the rate of growth in assets for 

Federal Register / Vol. 70, No. 206 / Wednesday, October 26, 2005 / Rules and Regulations 61715 

larger credit unions, which has 

approached 80% since 1999. With 

respect to smaller credit unions, the 

preamble discussed the increased risks 

faced in today’s technological 

environment and their vulnerability to 

catastrophic loss engineered by one or a 

few dishonest insiders. No commenters 

questioned or disagreed with the 

Board’s views on these matters. 

Accordingly, NCUA is adopting these 

aspects of the proposed amendments as 

a final rule without change. 

Identification of Additional Risk Factors 

The preamble to the proposed rule 

solicited comment from the public as to 

whether it would be useful to include 

additional risk factors in the rule that 

credit unions should consider in 

determining whether to obtain 

additional or enhanced coverage. 

Comment on this aspect of the proposal 

generally recognized that risks vary 

depending on a credit union’s activities 

and various factors. The Board is aware 

that additional risk factors may exist, 

based on a credit union’s fraud trends 

and loss experience, and the types of 

programs and activities in which it is 

engaged, such as wire transfer and 

remittance services. The Board believes 

it will be useful to amplify the 

considerations noted in the rule that 

credit unions should, but are not 

required, to consider. The Board notes 

that credit unions are not required by 

the rule to consider specific risk factors 

but credit unions should undertake their 

own internal risk assessment. The Board 

recognizes that each credit union board 

of directors should evaluate the unique 

aspects of its business model and 

associated risks and determine what 

additional coverages may be warranted. 

Other Changes and Clarifications 

The final rule eliminates the listing of 

approved bond carriers and forms, since 

this information is contained on the 

agency’s Web site. One commenter 

noted that the proposed rule was 

potentially confusing in that it could be 

read to indicate all RegFlex credit 

unions, regardless of assets size, could 

have higher deductibles. The final rule 

has been revised to clarify that only 

credit unions that have $1 million or 

more in assets and are RegFlex eligible 

qualify for the higher deductibles. In 

addition, any changes to the deductible 

amount based on changes in asset size 

or RegFlex Program eligibility need only 

be made annually, within 30 days of the 

filing of the year-end call report. 

Finally, the Board has determined not to 

rescind its approval for standard bond 

form number 23 at this time, based on 

a comment submitted by the leading 

trade association for the surety industry 

indicating that the form is still viable. 

The Board believes the changes in the 

rule are consistent with its ongoing 

efforts to reduce regulatory burden 

while preserving necessary 

requirements to assure credit union 

safety and soundness. As noted in the 

preamble to the proposed rule, the 

Board does not believe the increased 

coverage requirements will add 

significantly to premium costs and 

expects changes in the deductible 

ceiling will result in many credit unions 

being able to get fidelity bond coverage 

at lower cost. 

Regulatory Procedures 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires NCUA to prepare an analysis to 

describe any significant economic 

impact any proposed regulation may 

have on a substantial number of small 

entities. NCUA considers credit unions 

having less than ten million dollars in 

assets to be small for purposes of RFA. 

Interpretive Ruling and Policy 

Statement (IRPS) 87–2 as amended by 

IRPS 03–2. The rule will require credit 

unions with assets under $4 million to 

obtain higher fidelity bond coverage 

than is currently required. The NCUA 

believes, based on discussions with 

members of the industry, that the 

increase in premium to obtain the 

higher coverage will be, relative to the 

premium already required, insignificant. 

The NCUA has determined and certifies 

that this rule will not have a significant 

economic impact on a substantial 

number of small credit unions. 

Accordingly, the NCUA has determined 

that an RFA analysis is not required. 

Paperwork Reduction Act 

In accordance with the requirements 

of the Paperwork Reduction Act of 1995, 

NCUA submitted a copy of its proposed 

rule to the Office of Management and 

Budget (OMB) at the time of its 

publication in the Federal Register and 

has applied for a control number. NCUA 

included in its proposed rule an 

analysis of the time and expense 

estimated to be required to comply with 

the notice provisions in the rule and 

solicited public comment on all aspects 

of the paperwork burden. NCUA 

received no comments on its estimate of 

the paperwork burden. OMB approved 

NCUA’s submission and has assigned 

control number 3133–170 to this 

information collection. 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act of 1996 (Pub. 

L. 104–121) provides generally for 

congressional review of agency rules. A 

reporting requirement is triggered in 

instances where NCUA issues a final 

rule as defined by Section 551 of the 

Administrative Procedure Act. 5 U.S.C. 

551. The Office of Management and 

Budget has determined that this rule is 

not a major rule for purposes of the 

Small Business Regulatory Enforcement 

Fairness Act of 1996. 

Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. In adherence to 

fundamental federalism principles, 

NCUA, an independent regulatory 

agency as defined in 44 U.S.C. 3502(5), 

voluntarily complies with the executive 

order. The final rule will not have 

substantial direct effects on the states, 

on the relationship between the national 

government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. NCUA has 

determined that the rule does not 

constitute a policy that has federalism 

implications for purposes of the 

executive order. 

The Treasury and General Government 

Appropriations Act, 1999—Assessment 

of Federal Regulations and Policies on 

Families 

The NCUA has determined that the 

final rule will not affect family wellbeing within the meaning of section 654 

of the Treasury and General 

Government Appropriations Act, 1999, 

Pub. L. 105–277, 112 Stat. 2681 (1998). 

List of Subjects in 12 CFR Parts 713 and 

741 

Credit unions, Insurance, Reporting 

and recordkeeping requirements. 

By the National Credit Union 

Administration Board on October 20, 2005. 

Mary F. Rupp, 

Secretary of the Board. 

■ Accordingly, NCUA amends 12 CFR 

parts 713 and 741 as follows: 

PART 713—FIDELITY BONDS AND 

INSURANCE COVERAGE FOR 

FEDERAL CREDIT UNIONS 

■ 1. The authority citation for part 713 

continues to read as follows: 

Authority: 12 U.S.C. 1756, 1757(5)(D), and 

(7)(I), 1766, 1782, 1784, 1785 and 1786. 

61716 Federal Register / Vol. 70, No. 206 / Wednesday, October 26, 2005 / Rules and Regulations 

■ 2. Amend § 713.4 by revising 

paragraph (a) to read as follows: 

§ 713.4 What bond forms may be used? 

(a) A current listing of basic bond 

forms that may be used without prior 

NCUA Board approval is on NCUA’s 

Web site, http://www.ncua.gov. If you 

are unable to access the NCUA Web site, 

you can get a current listing of approved 

bond forms by contacting NCUA’s 

Public and Congressional Affairs Office, 

at (703) 518–6330. 

* * * * * 

■ 3. Amend § 713.5 by revising 

paragraphs (a) and (b) to read as follows: 

§ 713.5 What is the required minimum 

dollar amount of coverage? 

(a) The minimum required amount of 

fidelity bond coverage for any single 

loss is computed based on a federal 

credit union’s total assets. 

Assets Minimum bond 

$0 to $4,000,000 ...................................................................................... Lesser of total assets or $250,000. 

$4,000,001 to $50,000,000 ...................................................................... $100,000 plus $50,000 for each million or fraction thereof over 

$1,000,000. 

$50,000,000 to $500,000,000 .................................................................. $2,550,000 plus $10,000 for each million or fraction thereof over 

$50,000,000, to a maximum of $5,000,000. 

Over $500,000,000 ................................................................................... One percent of assets, rounded to the nearest hundred million, to a 

maximum of $9,000,000. 

(b) This is the minimum coverage 

required, but a federal credit union’s 

board of directors should purchase 

additional or enhanced coverage when 

its circumstances warrant. In making 

this determination, a board of directors 

should consider its own internal risk 

assessment, its fraud trends and loss 

experience, and factors such as its cash 

on hand, cash in transit, and the nature 

and risks inherent in any expanded 

services it offers such as wire transfer 

and remittance services. 

* * * * * 

■ 4. Amend § 713.6 by revising 

paragraph (a)(1) and adding paragraph 

(c) to read as follows: 

§ 713.6 What is the permissible 

deductible? 

(a)(1)The maximum amount of 

allowable deductible is computed based 

on a federal credit union’s asset size and 

capital level, as follows: 

Assets Maximum deductible 

$0 to $100,000 ......................................................................................... No deductible allowed. 

$100,001 to $250,000 .............................................................................. $1,000. 

$250,000 to $1,000,000 ........................................................................... $2,000. 

Over $1,000,000 ....................................................................................... $2,000 plus 1/1000 of total assets up to a maximum of $200,000; for 

credit unions over $1 million in assets that qualify for NCUA’s Regulatory Flexibility Program in Part 742, the maximum deductible is 

$1,000,000. 

* * * * * 

(c) A credit union’s eligibility to 

qualify for a deductible in excess of 

$200,000 is determined based on it 

having assets in excess of $1 million as 

reflected in its most recent year-end 

5300 call report and, as of that same 

year-end, qualifying for NCUA’s 

Regulatory Flexibility Program under 

part 742 of this title as determined by 

its most recent examination report. A 

credit union that previously qualified 

for a deductible in excess of $200,000, 

but that subsequently fails to qualify 

based on its most recent year-end 5300 

call report because either its assets have 

decreased or it no longer meets the net 

worth requirements of part 742 of this 

title or fails to meet the CAMEL rating 

requirements of part 742 of this title as 

determined by its most recent 

examination report, must obtain the 

coverage otherwise required by 

paragraph (b) of this section within 30 

days of filing its year-end call report and 

must notify the appropriate NCUA 

regional office in writing of its changed 

status and confirm that it has obtained 

the required coverage. 

PART 741—REQUIREMENTS FOR 

INSURANCE 

■ 1. The authority citation for part 741 

continues to read as follows: 

Authority: 12 U.S.C. 1757, 1766, 1781–

1790, and 1790d. 

■ 2. Amend § 741.201 by revising 

paragraph (b) to read as follows: 

§ 741.201 Minimum fidelity bond 

requirements. 

* * * * * 

(b) Corporate credit unions must 

comply with § 704.18 of this chapter in 

lieu of part 713 of this chapter. 

[FR Doc. 05–21326 Filed 10–25–05; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2005–20473; Directorate 

Identifier 2004–NM–156–AD; Amendment 

39–14351; AD 2005–22–07] 

RIN 2120–AA64 

Airworthiness Directives; Boeing 

Model 757–200, –200PF, and –300 

Series Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule. 

SUMMARY: The FAA is adopting a new 

airworthiness directive (AD) for certain 

Boeing Model 757–200, –200PF, and 

–300 series airplanes. This AD requires 

inspecting for damage of the ground 

brackets, ground wires, and terminal 

lugs of the auxiliary power unit (APU) 

battery and the APU start transformer 

rectifier unit (TRU) as applicable; and