[Federal Register Volume 73, Number 155 (Monday, August 11, 2008)]
[Rules and Regulations]
[Pages 46532-46539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-18410]


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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


Community and Economic Development Entities, Community 
Development Projects, and Other Public Welfare Investments

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Interim final rule with request for comment.

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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:
    <bullet> 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.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#f98b9c9e8ad79a9694949c978d8ab9969a9ad78d8b9c988ad79e968f"><span class="__cf_email__" data-cfemail="93e1f6f4e0bdf0fcfefef6fde7e0d3fcf0f0bde7e1f6f2e0bdf4fce5">[email protected]</span></a>.

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    <bullet> Mail: Office of the Comptroller of the Currency, 250 E 
Street, SW., Mail Stop 1-5, Washington, DC 20219.
    <bullet> Fax: (202) 874-4448.
    <bullet> 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:
    <bullet> 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.
    <bullet> 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.
    <bullet> 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\
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    \1\ Pub. L. 109-351, 120 Stat. 1966 (Oct. 13, 2006).
    \2\ 12 CFR part 24 (2008).
    \3\ Pub. L. 109-351, 120 Stat. 1966 (Oct. 13, 2006).
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    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\
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    \4\ 72 FR 36559 (July 3, 2007).
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    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.
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    \5\ Pub. L. 110-289, 122 Stat. 2654 (July 30, 2008).
    \6\ Id.
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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) 
(Sec.  24.2(c))

    The interim final rule amends the definition of a CEDE in Sec.  
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'' (Sec.  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 (Sec.  24.3)

    The interim final rule revises Sec.  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 (Sec.  24.6)

    Section 24.6 contains examples of qualifying public welfare 
investments. The interim final rule revises the introductory language 
in Sec.  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.

[[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).
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    \7\ 5 U.S.C. 553(b)(B).
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    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).
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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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    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\
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    \9\ 5 U.S.C. 601(2).
    \10\ 5 U.S.C. 553(b)(B).
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    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

0
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

0
1. The authority citation for part 24 continues to read as follows:

    Authority: 12 U.S.C. 24(Eleventh), 93a, 481, and 1818.


0
2. Amend Sec.  24.2 by:
0
a. Revising the first sentence of paragraph (c);
0
b. Removing paragraph (g); and
0
c. Redesignating paragraphs (h) through (j) as paragraphs (g) through 
(i), respectively.
    The revision reads as follows:


Sec.  24.2  Definitions.

* * * * *
    (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. * * *
* * * * *

0
3. Revise Sec.  24.3 to read as follows:


Sec.  24.3  Public welfare investments.

    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.''

0
4. Amend Sec.  24.6 by:
0
a. Revising the introductory text; and
0
b. Revising paragraphs (b)(1) through (4), (d)(1), and (d)(4).

[[Page 46535]]

    The revisions read as follows:


Sec.  24.6  Examples of qualifying public welfare investments.

    Investments that primarily support the following types of 
activities are examples of investments that meet the requirements of 
Sec.  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.


0
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

BILLING CODE 4810-33-P

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    Dated: August 5, 2008.
John C. Dugan,
Comptroller of the Currency.
[FR Doc. E8-18410 Filed 8-8-08; 8:45 am]
BILLING CODE 4810-33-C


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