Federal Register / Vol. 61, No. 103 / Tuesday, May 28, 1996 / Proposed Rules 26471

institution sends to the consumer. Rules

are set forth for deposit account

advertisements and advance notices to

account holders of adverse changes in

terms. The act restricts how institutions

must determine the account balance on

which interest is calculated. The TISA

is implemented by the Board’s

Regulation DD (12 CFR part 230). The

regulation authorizes the issuance of

official staff interpretations.

On December 6, 1995 (60 FR 62349),

the Board published for comment

proposed amendments to the

commentary to Regulation DD. Mainly,

the proposed revisions provided

guidance on technical matters such as

the effect of a leap year on the

calculation of interest, the APY and the

annual percentage yield earned (APYE).

Comments addressing other technical

issues concerning the definition of

bonuses and time accounts were also

proposed.

The Board received nearly 50

comments on its proposal. About 90

percent of the comments were from

financial institutions. By far,

commenters focused on the proposals

addressing leap-year calculations and

compounding and crediting policies.

Overall, comments were mixed. Some

supported the proposals as helpful

clarifications. Others opposed the

proposals—particularly the revisions

concerning calculations in a leap year

and crediting interest—as being unduly

technical and unnecessary. Based on the

comments received and upon further

analysis, the Board is withdrawing all

proposed commentary revisions, due to

considerations of regulatory burden and

the narrow scope of the proposals.

II. Discussion

Leap-Year Calculations

Regulation DD requires institutions to

pay interest on the full amount of

principal in an interest-bearing account

each day. Institutions may apply a daily

rate of 1/365 or 1/366 of the interest rate

during a leap year. On August 8, 1994,

the Board issued a final staff

commentary for Regulation DD (59 FR

40217). Comment 7(a) (1)–4 clarified

that institutions may apply a daily rate

of 1/365 or 1/366 of the interest rate for

366 days during a leap year, if the

account will earn interest for February

29.

The Board published on December 6,

1995 proposed revisions to the

commentary that further discussed leapyear calculations of interest, as well as

the APY and the APYE. Numerous

commenters opposed the proposed

revisions (60 FR 62349). Many believed

the regulation sufficiently addresses the

rule, and that highly technical

interpretations were neither necessary

nor desirable. Other commenters

opposed the Board’s existing rule that

permits institutions sometimes to use a

daily factor of 1/366 or 1/365 during a

leap year—although these commenters

represent both ends of the spectrum.

Some believe a daily factor of 1/366

should never be used; others would

expand its use, for example to all

accounts during a calendar leap year.

Not all commenters opposed the

proposal. Some supported the revisions,

and sought further elaboration about

calculations for a variety of specific

accounts. After reviewing the concerns

raised and upon further analysis, the

Board has decided not to adopt the

proposed comments addressing leapyear calculations. The Board believes

that for some institutions, a variety of

specific examples would be helpful;

overall, however, the Board believes the

level of technical guidance proposed is

not necessary. The regulation and

commentary provide general guidance

on leap-year calculations, which, on

balance, the Board believes is the

appropriate level of interpretive detail at

this time.

Compounding and Crediting Policies

Institutions must pay interest on the

full amount of principal in the account

each day, but may compound or credit

interest at any frequency. Neither the

TISA nor the regulation define

‘‘compounding,’’ ‘‘crediting,’’ or

‘‘principal.’’ Proposed comment 7 (b)–4

would have provided that once interest

is credited to an account it becomes part

of the principal, and if interest remains

in the account, interest must accrue on

those funds.

Many commenters addressing the

issue favored the proposal as a

clarification of current banking practice.

However, many others were opposed to

the proposal. Commenters raised several

related concerns arising out of the

proposal about the definition of terms

such as ‘‘posting,’’ ‘‘crediting,’’ and

‘‘principal.’’ Those commenters argued

that the Board’s proposal raised issues

that should properly be addressed after

further notice and opportunity for

public comment. Others were concerned

about the effect of the proposal on time

accounts that permit consumers to

withdraw credited interest during the

account term without penalty. They

argued that if this interest were to be

considered part of the principal, early

withdrawal penalties could be triggered

under some account agreements. Some

commenters also stated that the TISA

and Regulation DD do not require such

a reading of the rules regarding the

payment of interest. Many stated that

the proposal would result in a reduction

of account choices or interest rates

available to consumers for those

institutions wishing to avoid accruing

interest on interest credited to and

remaining in the account.

The Board believes a number of valid

concerns were raised about issues that

were not addressed in the proposal.

Accordingly, the Board is withdrawing

the comment and will consider whether

further guidance is needed in the future

on these matters.

Other Proposed Revisions

The proposed commentary update

also addressed rounding rules for the

APYE and the definitions of time

account and bonuses. Given the

technical nature and narrow application

of these remaining proposals, the Board

believes the cost and regulatory burden

of reviewing and implementing changes

associated with these provisions

outweighs the benefits of additional

official guidance, and is therefore

withdrawing all proposed comments.

By order of the Board of Governors of the

Federal Reserve System, acting through the

Secretary of the Board under delegated

authority, May 21, 1996.

William W. Wiles,

Secretary of the Board.

[FR Doc. 96–13226 Filed 5–24–96; 8:45 am]

BILLING CODE 6210–01–P

12 CFR Part 245

[Regulation V; Docket No. R–0928]

Loan Guarantees for Defense

Production

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Proposed rule.

SUMMARY: The Board is proposing to

abolish its Regulation V as obsolete.

This consideration does not represent

any major policy change, but rather is

intended to eliminate an outmoded

regulation and reduce regulatory

burden.

DATES: Comments must be submitted on

or before July 29, 1996.

ADDRESSES: Comments, which should

refer to Docket No. R–0928, may be

mailed to Mr. William W. Wiles,

Secretary, Board of Governors of the

Federal Reserve System, 20th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20551. Comments

addressed to Mr. Wiles also may be

delivered to the Board’s mail room

between 8:45 a.m. and 5:15 p.m. and to

the security control room outside of
26472 Federal Register / Vol. 61, No. 103 / Tuesday, May 28, 1996 / Proposed Rules

1The ‘‘head of each Federal department or agency

engaged in procurement for the national defense’’

is defined as the head of each of the departments

and agencies listed in Exec. Order No. 10,789

(1958), consisting of the following Departments:

Defense, Army, Navy, Air Force, Treasury, Interior,

Agriculture, Commerce, Transportation, Nuclear

Regulatory Commission, General Services

Administration, National Aeronautics & Space

Administration, Tennessee Valley Authority,

Government Printing Office, and Federal

Emergency Management Agency. Exec. Order No.

10,789, 23 Fed. Reg. 8,897 (1958), as amended.

2A similar provision was formerly set forth in

Section 302(c) of Exec. Order No. 10,480 (1953).

Exec. Order No. 10,480 was revoked by Exec. Order

No. 12,919 (1994).

those hours. Both the mail room and the

security control room are accessible

from the courtyard entrance on 20th

Street between Constitution Avenue and

C Street, N.W. Comments may be

inspected in Room M–P–500 between

9:00 a.m. and 5:00 p.m.

FOR FURTHER INFORMATION CONTACT:

Oliver Ireland, Associate General

Counsel (202–452–3625), Heatherun

Allison, Attorney (202–452–3565), Legal

Division; for users of the

Telecommunications Device for the Deaf

(TDD) only, Dorothea Thompson (202–

452–3544); Board of Governors of the

Federal Reserve System, Washington,

DC 20551.

SUPPLEMENTARY INFORMATION:

Regulatory Review

Pursuant to Section 303 of the Riegle

Community Development and

Regulatory Improvement Act of 1994,

the Board of Governors of the Federal

Reserve System (the Board) is

conducting a review of its regulations

and written policies in order to improve

efficiency, reduce unnecessary costs,

eliminate unwarranted constraints on

credit availability, and to remove

inconsistencies and outmoded and

duplicative requirements. As part of this

review, the Board is proposing to

abolish Regulation V (12 CFR part 245),

concerning the loan guarantee program

under the Defense Production Act of

1950 (50 App. U.S.C. 2061) (the Act).

The Board is requesting public comment

on this proposed regulatory change, as

well as soliciting the views of the

guaranteeing departments and agencies

(as defined in the Act) consistent with

Executive Order 12919 (June 3, 1994)

and Executive Order 10789 (Nov. 14,

1958) (as amended), implementing the

Act.

Authority for Regulation V

The Board promulgated Regulation V

(12 CFR 245) pursuant to the Act ‘‘to

facilitate the financing of contracts or

other operations deemed necessary to

national defense production.’’ Section

301(a)(1) of the Act allows the President

to authorize ‘‘guaranteeing agencies’’ to

enter into guarantees with public or

private financing institutions

concerning contracts ‘‘deemed by the

guaranteeing agency to be necessary to

expedite or expand production and

deliveries or services under Government

contracts for the procurement of

industrial resources or critical

technology items essential to the

national defense, or for the purpose of

financing any contractor, subcontractor

or other person in connection with or in

contemplation of the termination, in the

interest of the United States, of any

contract made for the national defense;

* * *’’ Section 301(a)(1) of the Act

defines ‘‘guaranteeing agencies’’ as the

Department of Defense, the Department

of Energy, the Department of Commerce,

‘‘and such other agencies of the United

States engaged in procurement for the

national defense as he may designate.’’

Exec. Order No. 12,919 (1994)

provides that ‘‘the head of each Federal

department or agency engaged in

procurement for the national defense

* * * and the President and chairman

of the Export-Import Bank of the United

States’’ is authorized to guarantee public

or private financing institutions as

provided in Section 301 of the Act.1 In

furtherance of this authorization, Exec.

Order No. 12,919 provides that ‘‘The

Board of Governors of the Federal

Reserve System is authorized, after

consultation with heads of guaranteeing

departments and agencies, the Secretary

of the Treasury, and the Director, OMB,

to prescribe regulations governing

procedures, forms, rates of interest, and

fees for [loan] guarantee contracts.’’

Exec. Order. No. 12919, 59 FR 29,525

(1994).2 The Board exercised this

authorization in implementing

Regulation V in the 1950s. Regulation V

was modified and streamlined in 1979.

Purpose of Regulation V

The loan guarantee provisions of the

Act were intended to permit defense

agencies to enter into defense-related

contracts without regard to whether

appropriations had been made for the

underlying projects. Without the

appropriations, defense agencies would

lack the legal authority to make progress

payments to defense contractors.

Without progress payments, contractors

would not have the working capital to

perform their contracts unless they

could obtain financing from private

banking institutions, which might be

reluctant to lend for the performance of

contracts if the funds for the contract

had not been appropriated. Thus, while

the Act contemplates that defensecontract funding would be obtained

from private banks, the loan guarantees

provisions of the Act would enable the

funding and therefore the continued

production of items deemed necessary

to the national defense by ensuring

private banks of repayment when the

contract was completed. Regulation V

sets forth applicable procedures, forms,

fees, charges and rates of interest for

these loan guarantees, in which a

Federal Reserve Bank acts as the fiscal

agent of one or more specified federal

departments or agencies for the

guarantee by that department or agency

of a defense production loan made by a

private financing institution.

Decline in Use of Regulation V

The Act and the Executive Orders

implementing it have periodically

expired and subsequently been

reauthorized. However, in 1975, the Act

was amended to make the guarantee

provisions unnecessary for most

practical purposes. These amendments

provided that ‘‘all authority hereby or

hereafter extended under title III

[relating to expansion of productive

capacity and supply, including loan

guarantee provisions] shall be effective

for any fiscal year only to such extent

or in such amounts as are provided in

advance in appropriation Acts.’’ 50

U.S.C. App. 2166(a). Thus, under the

1975 amendments, defense agencies that

have authority to authorize loan

guarantees have authority to do so only

if funds have been appropriated for the

contract in question. Once funds have

been appropriated, however, there is

little need for the guarantee, because the

appropriated funds can be paid timely

in accordance with the defense

contracts. Notwithstanding the 1975

amendments, the loan guarantee

provisions of the Act were not deleted.

No loan guarantees are currently

outstanding and no applications for loan

guarantees have been filed for several

years.

Current Regulatory Review Proposal

Repealing Regulation V would

achieve the objectives of Section 303 of

the Riegle Community Development and

Regulatory Improvement Act of 1994 by

improving efficiency and removing

outmoded requirements while at the

same time not adversely affecting the

abilities of any parties to participate in

a loan guarantee should the need arise.

Repealing Regulation V would not affect

the existence or availability of the loan

guarantee program as provided by the

Act. Although the 1975 amendments to

the Act make it unlikely that a loan

guarantee application will be filed, the

Board and the Federal Reserve Banks

would be able to perform their fiscal
Federal Register / Vol. 61, No. 103 / Tuesday, May 28, 1996 / Proposed Rules 26473

agency and application coordination

responsibilities under the Act if such an

application were filed using fiscal

agency procedures already in place in

other contexts and on a case-by-case

basis.

Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5

U.S.C. 601 et seq.) requires an agency to

publish an initial regulatory flexibility

analysis with any notice of proposed

rulemaking. Two of the requirements of

an initial regulatory flexibility analysis

(5 U.S.C. 603(b) (1)–(2)), a description of

the reasons why action by the agency is

being considered and a statement of the

objectives of, and legal basis for, the

proposal, are contained in the

supplementary material above. The

proposal rule imposes no additional

reporting or recordkeeping requirements

and does not overlap with other federal

rules. (5 U.S.C. 603(b) (4)–(5).)

Another requirement for the initial

regulatory flexibility analysis is a

description of and, where feasible, an

estimate of the number of small entities

to which the proposed rule will apply.

(5 U.S.C. 603(b)(3).) The proposal will

apply to all depository institutions

regardless of size. The proposal seeks to

eliminate an obsolete regulatory

provision and does not impose any

substantial economic burden on small

entities.

By order of the Board of Governors of the

Federal Reserve System, May 21, 1996.

William W. Wiles,

Secretary of the Board.

[FR Doc. 96–13225 Filed 5–24–96; 8:45 am]

BILLING CODE 6210–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Airspace Docket No. 96–AGL–1]

Proposed Amendment of Class E

Airspace; Rochester, MN

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking;

withdrawal.

SUMMARY: This action withdraws the

Notice of Proposed Rulemaking (NPRM)

which amended the Class E airspace at

Rochester, MN. The airspace, as

published, was incomplete and will be

reissued subsequently with the

corrected airspace description.

DATES: May 28, 1996.

FOR FURTHER INFORMATION CONTACT:

John A. Clayborn, Air Traffic Division,

Operations Branch, AGL–530, Federal

Aviation Administration, 2300 East

Devon Avenue, Des Plaines, Illinois

60018, telephone (847) 294–7459.

SUPPLEMENTARY INFORMATION:

The Proposed Rule

On March 22, 1996, a Notice of

Proposed Rulemaking was published in

the Federal Register to amend the Class

E airspace at Rochester, MN. This was

necessary to accommodate the new

Copter GPS 325 degrees approach

procedure to St. Mary’s Hospital

Heliport, Rochester, MN (61 FR 11792).

The airspace description, as published,

was incomplete; therefore this NPRM is

being withdrawn and will be reissued.

List of Subjects in 14 CFR Part 71

Airspace, Incorporation by reference,

Navigation (air).

Withdrawal of Proposed Rule

Accordingly, pursuant to the

authority delegated to me, Airspace

Docket No. 96–AGL–1, as published in

the Federal Register on March 22, 1996

(61 FR 11792), is hereby withdrawn.

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389; 49 U.S.C. 14 CFR 11.69.

Issued in Des Plaines, Illinois on May 1,

1996.

Maureen Woods,

Acting Manager, Air Traffic Division.

[FR Doc. 96–13254 Filed 5–24–96; 8:45 am]

BILLING CODE 4910–13–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Chapter I

[Docket No. 96N–0002]

‘‘Draft Document Concerning the

Regulation of Placental/Umbilical Cord

Blood Stem Cell Products Intended for

Transplantation or Further

Manufacture into Injectable Products;’’

Availability; Extension of Comment

Period

AGENCY: Food and Drug Administration,

HHS.

ACTION: Availability of draft document;

extension of comment period.

SUMMARY: The Food and Drug

Administration (FDA) is extending to

July 26, 1996, the comment period for

the draft document entitled ‘‘Draft

Document Concerning the Regulation of

Placental/Umbilical Cord Blood Stem

Cell Products Intended for

Transplantation or Further Manufacture

into Injectable Products,’’ which

appeared in the Federal Register of

February 26, 1996 (61 FR 7087). The

purpose of the draft document is to

identify a draft regulatory approach that

FDA believes is appropriate for the

regulation of placental/umbilical cord

blood stem cell products for

transplantation. FDA published the

draft document in response to numerous

inquiries regarding the agency’s

regulatory approach to cord blood stem

cell products and to provide an

opportunity for interested persons to

submit written comments on the draft

document prior to fully implementing

this approach. FDA is taking this action

in response to requests to allow

additional time for public comments.

DATES: Written comments by July 26,

1996.

ADDRESSES: Submit written comments

to the Dockets Management Branch

(HFA–305), Food and Drug

Administration, 12420 Parklawn Dr.,

rm. 1–23, Rockville, MD 20857.

FOR FURTHER INFORMATION CONTACT:

Sharon A. Carayiannis, Center for

Biologics Evaluation and Research

(HFM–630), Food and Drug

Administration, 1401 Rockville Pike,

Rockville, MD 20852–1448, 301–594–

3074.

SUPPLEMENTARY INFORMATION: In the

Federal Register of February 26, 1996

(61 FR 7087), FDA requested public

comment from interested persons on the

draft document which included

discussions of the following: (1) The

applicable legal authorities in the

Federal Food, Drug, and Cosmetic Act

and the Public Health Service Act; (2)

FDA’s approach to the regulation of

human cord blood stem cells intended

for transplantation; (3) FDA’s approach

to the regulation of cord blood stem

cells as source material for further

manufacture; and (4) FDA’s approach to

the regulation of ancillary products used

for production of cord blood stem cells.

Interested persons were given until

April 26, 1996, to submit written

comments on the draft document.

The agency received four letters from

companies and research institutions

involved in the collection and storage of

cord blood requesting an extension of

the comment period. The letters

requested up to 90 additional days for

comment on the basis that FDA’s

proposed regulatory approach would

significantly alter the current cord blood

collection and storage practices used by

companies and research institutions. In

addition, the requests cited the need for

additional time to adequately review