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###### Department of the Treasury

###### Office of the Comptroller of the Currency 

          - 12 CFR Part 24 
          - [Docket ID OCC-2008-0010] 
          - RIN 1557-AD12 

# AGENCY:

Office of the Comptroller of the Currency, Treasury. 

# ACTION:

Interim final rule with request for comment. 

# SUMMARY:

On July 30, 2008, the President signed into law the Housing and Economic Recovery Act of 2008 (HERA). Section 2503 of the HERA revises the community development investment authority in 12 U.S.C. 24(Eleventh) to permit a national bank to make a broader range of investments designed primarily to promote the public welfare. This interim final rule implements the changes made to section 24(Eleventh) by the HERA. 

# DATES:

*Effective Date:*                         This rule is effective on August 11, 2008.                     

*Comment Date:*                         Comments must be received by September 10, 2008.                     

# ADDRESSES:

Because paper mail in the Washington, DC area and at the OCC is subject to delay, commenters are encouraged to submit comments by e-mail, if possible. Please use the title “Community Development Investments” to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods: 
      -  Federal eRulemaking Portal—“Regulations.gov”:                          Go to                          http://www.regulations.gov,                          under the “More Search Options” tab click next to the “Advanced Docket Search” option where indicated, select “Comptroller of the Currency” from the agency drop-down menu, then click “Submit.” In the “Docket ID” column, select “OCC-2008-0010” to submit or view public comments and to view supporting and related materials for this interim final rule. The “How to Use This Site” link on the Regulations.gov home page provides information on using Regulations.gov, including instructions for submitting or viewing public comments, viewing other supporting and related materials, and viewing the docket after the close of the comment period.                     
      -  E-mail: regs.comments@occ.treas.gov.       ( print page 46533)      
      -  Mail:                          Office of the Comptroller of the Currency, 250 E Street, SW., Mail Stop 1-5, Washington, DC 20219.                     
      -  Fax:                          (202) 874-4448.                     
      -  Hand Delivery/Courier:                          250 E Street, SW., Attn: Public Information Room, Mail Stop 1-5, Washington, DC 20219.                     

*Instructions:*                         You must include “OCC” as the agency name and “Docket ID OCC-2008-0010” in your comment. In general, OCC will enter all comments received into the docket and publish them on the Regulations.gov Web site without change, including any business or personal information that you provide such as name and address information, e-mail addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.                     

You may review comments and other related materials that pertain to this interim final rule by any of the following methods: 
      -  Viewing Comments Electronically:                          Go to                          http://www.regulations.gov,                          under the “More Search Options” tab click next to the “Advanced Docket Search” option where indicated, select “Comptroller of the Currency” from the agency drop-down menu, then click “Submit.” In the “Docket ID” column, select “OCC-2008-0010” to view public comments for this rulemaking action.                     
      -  Viewing Comments Personally:                          You may personally inspect and photocopy comments at the OCC's Public Information Room, 250 E Street, SW., Washington, DC. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 874-5043. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect and photocopy comments.                     
      -  Docket:                          You may also view or request available background documents and project summaries using the methods described above.                     

# FOR FURTHER INFORMATION CONTACT:

Steven VanMeter, Assistant Director, Community and Consumer Law Division, (202) 874-5750; Stuart E. Feldstein, Assistant Director, Legislative and Regulatory Activities, (202) 874-5090; or Patrick T. Tierney, Senior Attorney, Legislative and Regulatory Activities, (202) 874-5090, Office of the Comptroller of the Currency, 250 E Street SW., Washington, DC 20219. 

# SUPPLEMENTARY INFORMATION:

## Introduction 

                    The Financial Services Regulatory Relief Act of 2006 (FSRRA) [1]                                          made a number of changes to 12 U.S.C. 24(Eleventh), the authorizing statute for the Office of the Comptroller of the Currency's (OCC) community development regulations.[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).” (emphasis added) [3] 

                    On April 24, 2008, the OCC issued a final rule that implemented the FSRRA's narrowing of the public welfare test. In the Notice of Proposed Rulemaking that preceded that final rule, the OCC noted that Congress was considering a bill that would change the language of the public welfare test back to the way it existed prior to the FSRRA changes.[4] 

                    On July 30, 2008, the President signed into law the Housing and Economic Recovery Act of 2008 (HERA), which, in part, reinstated the pre-FSRRA wording of the 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)” (emphasis added).[6]                                          Under section 2503 of the HERA and the revisions made by this interim final rule, national banks and their subsidiaries will now be able to make a broader range of investments.                 

## Description of the Interim Final Rule 

This interim final rule makes the following specific revisions to part 24 in order to implement the statutory changes to the public welfare test. 

### Definition of “Community and Economic Development Entity” (CEDE) (§ 24.2(c)) 

The interim final rule amends the definition of a CEDE in § 24.2(c) to implement the HERA change to the public welfare test. The revised paragraph (c) defines 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 indicated 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. OCC's rule implementing the FSRRA added a definition for “benefiting primarily low and moderate-income areas or individuals.” The HERA revision removed the “benefiting primarily” language, thus, this definition is no longer needed and is removed by the interim final rule. 

### Public Welfare Investments (§ 24.3) 

The interim final rule revises § 24.3, which contains the authorization to make investments pursuant to section 24(Eleventh), to conform 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 revises the introductory language in § 24.6 to reflect the changes made by section 2503 of the HERA. The interim final rule also adds back, where appropriate, references to investments in “targeted redevelopment areas.” These references had been removed by the FSRRA implementing regulation. 

### Revision to Appendix 1 to Part 24, the CD-1 National Bank Community Development (Part 24) Investments Form 

                    The interim final rule also revises Appendix 1 to part 24, the CD-1 National Bank Community Development (Part 24) Investments Form, to reflect the changes to the regulation.                           ( print page 46534)    

## Effective Date; Solicitation of Comments 

                    This interim final rule will become effective immediately upon publication in the                     **Federal Register**                    . Pursuant to the Administrative Procedure Act (APA), 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 are “impracticable, unnecessary, or contrary to the public interest.” [7]                                          Similarly, an agency may publish a final rule with an immediate effective date if the agency finds good cause and publishes such with the rule. 5 U.S.C. 553(d)(3).                 

                    Consistent with section 553(b)(B) of the APA, the OCC finds that good cause exists for a finding that notice and comment are impracticable and contrary to the public interest. In enacting the Foreclosure Prevention Act of 2008 (part of the HERA), which includes these changes to 12 U.S.C. 24(Eleventh), Congress stated that all provisions of that Act are designated as “emergency requirements and necessary to meet emergency needs.” [8]                                          An interim final rule will allow national banks and their subsidiaries immediately to make a broader range of investments to promote the public welfare, including investments in distressed communities affected by rising foreclosures. Immediate issuance of this interim final rule furthers the public interest because it will provide national banks and their subsidiaries with additional flexibility to make public welfare investments in low- and moderate-income individuals or areas or targeted redevelopment areas, or that would receive consideration under the Community Reinvestment Act (12 U.S.C. 2901*et seq.*) as “qualified investments.” For these same reasons, the OCC finds good cause to publish this rule with an immediate effective date.                     *See*5 U.S.C. 553(d)(3).                 

Although notice and comment are not required prior to the effective date of this rule, the OCC invites comment on all aspects of this interim final rule, and intends to revise the interim final rule if necessary or appropriate in light of the comments received. 

## Regulatory Analysis 

### Regulatory Flexibility Act 

                    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] 

As discussed above, the OCC has determined for good cause that the APA does not require general notice and public comment on this interim final rule and, therefore, we are not publishing a general notice of proposed rulemaking. Thus, the RFA, pursuant to 5 U.S.C. 601(2), does not apply to this interim final rule. 

### Executive Order 12866

The OCC has determined that this interim final rule is not a significant regulatory action under Executive Order 12866. We have concluded that the changes made by this interim 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 interim final rule does not meet any of the other standards for a significant regulatory action set forth in Executive Order 12866. 

### Paperwork Reduction Act 

In accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3506), we have reviewed the interim final rule to assess any information collections. There are no collections of information as defined by the Paperwork Reduction Act in the interim final rule. 

### Unfunded Mandates Reform Act of 1995 

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency prepare a budgetary impact statement before promulgating any rule likely to result in a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. The OCC has determined that this interim final rule will not result in expenditures by State, local, and tribal governments, or by the private sector, of $100 million or more in any one year. Accordingly, the interim final rule is not subject to section 202 of the Unfunded Mandates Act. 

# List 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

## Authority and Issuance 

For the reasons set forth in the preamble, part 24 of chapter I of title 12 of the Code of Federal Regulations is amended as follows: 

# 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. Amend § 24.2 by: 

a. Revising the first sentence of paragraph (c); 

b. Removing paragraph (g); and 

c. Redesignating paragraphs (h) through (j) as paragraphs (g) through (i), respectively. 

The revision reads as follows:

§ 24.2 

* * * * *

                            (c)                             *Community and economic development entity*                             (CEDE) means 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. * * *                         

* * * * *

3. Revise § 24.3 to read as follows: 

§ 24.3 

A national bank or national bank subsidiary may make an investment directly or indirectly under this part if the investment primarily benefits low- and moderate income individuals, low- and moderate income areas, or other areas targeted by a governmental entity for redevelopment, or the investment would receive consideration under 12 CFR 25.23 as a “qualified investment.” 

4. Amend § 24.6 by: 

a. Revising the introductory text; and 

b. Revising paragraphs (b)(1) through (4), (d)(1), and (d)(4).       ( print page 46535)    

The revisions read as follows:

§ 24.6 

Investments that primarily support the following types of activities are examples of investments that meet the requirements of § 24.3: 

* * * * *

(b) * * * 

(1) Investments that finance small businesses (including equity or debt financing and investments in an entity that provides loan guarantees) that are located in low- and moderate-income areas or other targeted redevelopment areas or that produce or retain permanent jobs, the majority of which are held by low- and moderate-income individuals; 

(2) Investments that finance small businesses or small farms, including minority- and women-owned small businesses or small farms, that, although not located in low- and moderate-income areas or targeted redevelopment areas, create a significant number of permanent jobs for low- and moderate-income individuals; 

(3) Investments in an entity that acquires, develops, rehabilitates, manages, sells, or rents commercial or industrial property that is located in a low- and moderate-income area or targeted redevelopment area and occupied primarily by small businesses, or that is occupied primarily by small businesses that produce or retain permanent jobs, the majority of which are held by low- and moderate-income individuals; and 

(4) Investments in low- and moderate-income areas or targeted redevelopment areas that produce or retain permanent jobs, the majority of which are held by low- and moderate-income individuals; 

* * * * *

(d) * * *

(1) Investments that provide credit counseling, financial literacy, job training, community development research, and similar technical assistance for non-profit community development organizations, low- and moderate-income individuals or areas or targeted redevelopment areas, or small businesses, including minority- and women-owned small businesses, located in low- and moderate-income areas or that produce or retain permanent jobs, the majority of which are held by low- and moderate-income individuals; 

* * * * *

(4) Investments in minority- and women-owned depository institutions that serve primarily low- and moderate-income individuals or low- and moderate-income areas or targeted redevelopment areas. 

5. Revise appendix 1 to part 24 to read as follows: 

# APPENDIX 1 TO PART 24—CD-1—NATIONAL BANK COMMUNITY DEVELOPMENT (PART 24) INVESTMENTS 

      ( print page 46536)          ( print page 46537)          ( print page 46538)          ( print page 46539)    

Dated: August 5, 2008. 

John C. Dugan, 

Comptroller of the Currency.

# Footnotes

1.                             Pub. L. 109-351, 120 Stat. 1966 (Oct. 13, 2006).                    
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2.                             12 CFR part 24 (2008).                    
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3.                             Pub. L. 109-351, 120 Stat. 1966 (Oct. 13, 2006).                    
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4.                             72 FR 36559 (July 3, 2007).                    
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5.                             Pub. L. 110-289, 122 Stat. 2654 (July 30, 2008).                    
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6.                                                     *Id.*
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7.                             5 U.S.C. 553(b)(B).                    
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8.                                                     *See*                         section 2002 of the HERA, Pub. L. 110-289, 122 Stat. 2654 (July 30, 2008).                    
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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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BILLING CODE 4810-33-P

[FR Doc. E8-18410 Filed 8-8-08; 8:45 am] 

BILLING CODE 4810-33-C