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

61035 

Vol. 75, No. 191 

Monday, October 4, 2010 

1 12 U.S.C. 2903. 

2See 12 CFR parts 25 (OCC), 228 (Board), 345 

(FDIC), and 563e (OTS). 

3 74 FR 31209 (Jun. 30, 2009). 

4 ‘‘Consumer loan’’ is defined in the CRA 

regulations as a loan to one or more individuals for 

household, family, or other personal expenditures. 

Consumer loans include the following categories of 

loans: motor vehicle loans, credit card loans, home 

equity loans, other secured consumer loans, and 

other unsecured consumer loans. 12 CFR 25.12(j), 

228.12(j), 345.12(j), and 563e.12(j). 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 25 

[Docket ID OCC–2010–0014] 

RIN 1557–AD24 

FEDERAL RESERVE SYSTEM 

12 CFR Part 228 

[Docket No. R–1360] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 345 

RIN 3064–AD45 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Part 563e 

[Docket ID OTS–2010–0023] 

RIN 1550–AC35 

Community Reinvestment Act 

Regulations 

AGENCIES: Office of the Comptroller of 

the Currency, Treasury (OCC); Board of 

Governors of the Federal Reserve 

System (Board); Federal Deposit 

Insurance Corporation (FDIC); Office of 

Thrift Supervision, Treasury (OTS). 

ACTION: Joint final rule. 

SUMMARY: The OCC, Board, FDIC, and 

OTS (collectively, ‘‘the Agencies’’) are 

issuing this joint final rule, which 

revises our rules implementing the 

Community Reinvestment Act (CRA). 

The rule implements the statutory 

requirement that the Agencies consider 

low-cost education loans provided by 

the financial institution to low-income 

borrowers as a factor when assessing an 

institution’s record of meeting 

community credit needs. The final rule 

also incorporates the statutory provision 

that allows the Agencies to consider 

capital investment, loan participation, 

and other ventures undertaken by 

nonminority-owned and nonwomenowned financial institutions in 

cooperation with minority- and womenowned financial institutions and lowincome credit unions as a factor when 

assessing an institution’s CRA record. 

DATES: Effective Date: November 3, 

2010. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Margaret Hesse, Special 

Counsel, Community and Consumer 

Law Division, (202) 874–5750; or 

Gregory Nagel, National Bank Examiner, 

Compliance Policy, (202) 874–4428, 

Office of the Comptroller of the 

Currency, 250 E Street, SW., 

Washington, DC 20219. 

Board: Rebecca Lassman, Supervisory 

Consumer Financial Services Analyst, 

(202) 452–2080; or Brent Lattin, Senior 

Attorney, (202) 452–3667, Division of 

Consumer and Community Affairs, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

FDIC: Janet R. Gordon, Senior Policy 

Analyst, Division of Supervision and 

Consumer Protection, Compliance 

Policy Branch, (202) 898–3850; or Susan 

van den Toorn, Counsel, Legal Division, 

(202) 898–8707, Federal Deposit 

Insurance Corporation, 550 17th Street, 

NW., Washington, DC 20429. 

OTS: Stephanie M. Caputo, Senior 

Compliance Program Analyst, 

Compliance and Consumer Protection, 

(202) 906–6549; or Richard Bennett, 

Senior Compliance Counsel, 

Regulations and Legislation Division, 

(202) 906–7409, Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552. 

SUPPLEMENTARY INFORMATION: 

Background 

The Community Reinvestment Act 

(CRA) requires the federal banking and 

thrift regulatory agencies to assess the 

record of each insured depository 

institution (hereinafter, ‘‘institution’’) in 

meeting the credit needs of its entire 

community, including low- and 

moderate-income neighborhoods, 

consistent with the safe and sound 

operation of the institution, and to take 

that record into account when the 

agency evaluates an application by the 

institution for a deposit facility.1 The 

Agencies have promulgated 

substantially similar regulations to 

implement the requirements of the 

CRA.2

Notice of Proposed Rulemaking 

On June 30, 2009, the Agencies 

published a joint notice of proposed 

rulemaking that would incorporate two 

statutory requirements into the CRA 

regulations.3 The first revision would 

implement section 1031 of the Higher 

Education Opportunity Act, Public Law 

110–315, 122 Stat. 3078 (August 14, 

2008) (the ‘‘HEOA’’), which amended the 

CRA. This provision requires the 

Agencies to consider low-cost education 

loans provided by the institution to lowincome borrowers as a factor when 

evaluating an institution’s record of 

meeting community credit needs. 12 

U.S.C. 2903(d). The second revision 

would incorporate 12 U.S.C. 2903(b), 

which allows the Agencies to consider 

and take into account nonminority- and 

nonwomen-owned financial 

institutions’ activities in connection 

with minority- and women-owned 

financial institutions and low-income 

credit unions. 

Twenty-four different commenters 

provided their views to the Agencies on 

the proposed revisions. The commenters 

represented financial institutions, 

financial institution trade organizations, 

community or consumer organizations, 

and others. 

Low-Cost Education Loans to LowIncome Borrowers 

Background and General Comments 

Under existing CRA regulations, 

education loans are evaluated as 

consumer loans.4 An institution’s 

consumer lending must be evaluated if 

consumer lending makes up a 

substantial majority of an institution’s 

business. Institutions that do not meet 


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5See 12 CFR 25.22(a)(1) and 25.42(c); 12 CFR 

228.22(a)(1) and 228.42(c); 12 CFR 345.12(a)(1) and 

345.42(c); and 12 CFR 563e.22(a)(1) and 563e.42(c). 

6See, e.g., 12 CFR 25.22 and 25.26; 228.22 and 

228.26, 345.22 and 345.26, and 563e.22 and 563.26. 

7 12 U.S.C. 2903(d). 

8H.R. Rep. No. 110–500 at 297 (2007). See also 

Private Student Lending: Hearing before the Senate 

Comm. on Banking, Housing, and Urban Affairs, 

110th Cong. (2007) (comment by Sen. Dodd: ‘‘It 

strikes me that we should be promoting, of course, 

incentives for lenders to provide the neediest 

students with good loans, loans, in my mind, that 

are similar in rate and fee structure to those under 

the federal loan program.’’) (transcript available 

through CQ Congressional Transcripts, 

Congressional Hearings, Jun. 6, 2007). 9 74 FR at 31214. 

10 12 U.S.C. 2903(d) (as added by section 1031 of 

the HEOA). 

11Section 140(a)(7) of the Truth in Lending Act, 

as added by section 1011 of the HEOA. 

12Section 140(a)(6)(A) of the Truth in Lending 

Act, as added by section 1011 of the HEOA. 

this criterion may choose to have 

consumer loans evaluated when the 

institution’s CRA record is being 

examined. Institutions must collect and 

maintain data about consumer loans if 

they choose to have those loans 

evaluated.5 Like other consumer loans, 

institutions’ education loans are 

generally evaluated by total number and 

amount; borrower characteristics (i.e., 

distribution among borrowers of 

different income levels); geographic 

distribution (i.e., distribution among 

borrowers in geographies with different 

income levels and whether the loans are 

made to borrowers in the institution’s 

assessment areas); and, for large retail 

institutions, whether the education loan 

program is innovative or flexible in 

addressing the credit needs of low- or 

moderate-income individuals or 

geographies.6 This revised rule does not 

change the eligibility of education loans 

to be treated as consumer loans. Rather, 

the revised rule amends the general 

performance rules in 12 CFR 25.21, 

228.21, 345.21, and 563e.21 to 

implement the requirements of section 

1031 of the HEOA. If an institution’s 

education loans do not qualify for CRA 

consideration under section 1031 of the 

HEOA and this implementing rule, the 

institution continues to be able to 

receive consideration under existing 

standards applicable to consumer loans. 

Section 1031 of the HEOA revised the 

CRA to require the Agencies to consider 

low-cost education loans provided by 

the institution to low-income borrowers 

as a factor when evaluating an 

institution’s record of meeting 

community credit needs.7 The 

legislative history indicates that the 

provision was intended to provide 

incentives for lenders to provide lowcost education loans to low-income 

borrowers.8

Consistent with the supplemental 

information accompanying the proposed 

rule, under the final rule as 

implemented by the Agencies, 

institutions will receive favorable 

qualitative consideration for originating 

‘‘low-cost education loans to lowincome borrowers’’ as a factor in the 

institutions’ overall CRA rating. Such 

loans would be considered responsive 

to the credit needs of the institutions’ 

communities.9

The Proposal 

The Agencies proposed to consider 

low-cost education loans provided by 

the institution to borrowers in its 

assessment area(s) who have an 

individual income that is less than 50 

percent of the area median income. 

Further, the Agencies proposed to 

define ‘‘low-cost education loans’’ to 

mean (1) education loans originated by 

an institution through a U.S. 

Department of Education loan program; 

or (2) any private education loan as 

defined in the Truth in Lending Act, 

including loans under a state or local 

education loan program, originated by 

an institution for a student at an 

‘‘institution of higher education,’’ with 

interest rates and fees no greater than 

those of comparable education loans 

offered through loan programs of the 

U.S. Department of Education. 

Under the first prong of the proposed 

definition, any loans that institutions 

make through a Department of 

Education loan program, such as the 

Federal Family Education Loan (FFEL) 

Program, would be considered ‘‘low-cost 

education loans.’’ 

Under the second prong of the 

proposed definition, ‘‘private education 

loans’’ that institutions make would be 

considered ‘‘low-cost education loans,’’ 

provided that the interest rates and fees 

are no greater than those of comparable 

education loans offered through loan 

programs of the U.S. Department of 

Education. 

The Agencies also proposed a 

conforming amendment to Appendix A 

of the regulations to include 

consideration of a financial institution’s 

low-cost education loans to low-income 

borrowers as a factor when assigning a 

rating to the institution. 

The Agencies asked for comment on 

a number of areas related to the 

proposed definition. 

General Comment About Education 

Lending by Financial Institutions 

Several commenters noted that 

education lending, particularly private 

education lending, is a specialized type 

of lending engaged in by only a few 

financial institutions. These 

commenters requested that the Agencies 

expressly state that the final rule does 

not require institutions to make low-cost 

education loans, or, for that matter, 

education loans generally. The Agencies 

agree that the intent of the revision is to 

encourage, but not to require, financial 

institutions to make low-cost education 

loans to low-income borrowers and 

provide an incentive to do so. 

Scope of ‘‘Education Loans’’ 

Education Loans—The Proposal 

The HEOA amendment to the CRA 

specifies that the Agencies must 

consider low-cost ‘‘education loans’’ to 

low-income borrowers.10 The Agencies 

proposed to define education loans as 

including loans originated by financial 

institutions through a program of the 

U.S. Department of Education. The 

Agencies also proposed to define 

education loans to include low-cost 

private education loans, including loans 

under State or local education loan 

programs. 

As discussed in the preamble to the 

proposed rule, in defining private 

education loans, the Agencies proposed 

to adopt the terms ‘‘private education 

loan,’’ ‘‘private educational lender,’’ and 

‘‘postsecondary educational expenses,’’ 

each of which is defined in the HEOA 

in the context of the Truth in Lending 

Act (TILA). Section 1011 of the HEOA 

added section 140 of TILA to provide 

the following definition: 

[T]he term ‘‘private education loan’’— 

(A) Means a loan provided by a private 

educational lender that— 

(i) Is not made, insured, or guaranteed 

under title IV of the Higher Education Act of 

1965 (20 U.S.C. 1070 et seq.); and 

(ii) Is issued expressly for postsecondary 

educational expenses to a borrower, 

regardless of whether the loan is provided 

through the educational institution that the 

subject student attends or directly to the 

borrower from the private educational lender; 

and 

(B) Does not include an extension of credit 

under an open end consumer credit plan, a 

reverse mortgage transaction, a residential 

mortgage transaction, or any other loan that 

is secured by real property or a dwelling.11

In turn, the HEOA defines a ‘‘private 

educational lender’’ to include, among 

others, any financial institution that 

solicits, makes, or extends private 

education loans.12

The HEOA defines ‘‘postsecondary 

educational expenses’’ to mean any of 

the expenses that are included as part of 

the cost of attendance of a student, as 

defined under section 472 of the Higher 

Education Act of 1965 (20 U.S.C. 

1087ll). That definition includes tuition 

and fees, books, supplies, miscellaneous 

personal expenses, room and board, and 


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13See 20 U.S.C. 1087ll (definition of ‘‘cost of 

attendance’’). 

14Health Care and Education Reconciliation Act 

of 2010, Public Law 111–152 (2010). 

15The Agencies note, however, that many such 

institutions are covered under the definition of 

‘‘institution of higher education’’ discussed below, 

and loans to their students could qualify for CRA 

consideration under this provision if other 

applicable criteria are met. 

16H.R. Rep. No. 110–500 at 203, 297 (2007) 

(emphasis added). 

17 If the Agencies were to restrict the definition 

of ‘‘institution of higher education’’ to only those 

institutions defined in section 101 of the HEA, 

loans to cover educational expenses at for-profit 

institutions of higher education, some postsecondary vocational institutions that provide 

training to prepare students for employment in a 

recognized occupation, and some U.S. Department 

of Education-approved institutions located outside 

the United States would not qualify for 

consideration. 

18The Agencies note that the U.S. Department of 

Education provides a database of post-secondary 

educational institutions and programs that are, or 

were, accredited by an accrediting agency or state 

approval agency recognized by the Secretary of 

Education as a ‘‘reliable authority as to the quality 

of postsecondary education’’ within the meaning of 

the HEA at http://ope.ed.gov/accreditation. The 

Department of Education recommends that the 

database be used as one source of qualitative 

information and that additional sources of 

qualitative information be consulted. 

an allowance for any loan fee, 

origination fee, or insurance premium 

charged to a student or parent for a loan 

incurred to cover the cost of the 

student’s attendance.13

Although section 1031 of the HEOA is 

not expressly limited to loans for higher 

education, the Agencies proposed to 

include this limitation in the definition 

of low-cost private education loans. 

Thus, the Agencies proposed that the 

private education loan definition would 

encompass loans made for expenses 

incurred at any ‘‘institution of higher 

education’’ as that term is generally 

defined in sections 101 and 102 of the 

Higher Education Act of 1965 (HEA), 20 

U.S.C. 1001 and 1002. Such institutions 

generally include accredited public or 

nonprofit colleges and vocational 

schools, accredited private colleges and 

vocational schools, and certain foreign 

institutions offering postsecondary 

education that are comparable to 

institutions of higher education in the 

United States based on standards 

approved by the U.S. Department of 

Education. The Agencies did not 

propose to cover unaccredited colleges, 

universities, or vocational schools 

because they lacked sufficient 

information regarding these institutions, 

but solicited comment on this issue. 

Based on these definitions and 

considerations, under the proposed rule, 

financial institutions would receive 

CRA consideration for making private 

(non-Federal) closed-end education 

loans, not secured by real property or a 

dwelling, for post-secondary 

educational expenses at an institution of 

higher education. They would also 

receive consideration for making 

education loans through a program of 

the U.S. Department of Education. 

Comments and Final Rule 

As discussed above, the Agencies 

proposed to define education loans as 

including loans originated by financial 

institutions through a program of the 

U.S. Department of Education, such as 

the Federal Family Education Loan 

(FFEL) Program. As of July 1, 2010, no 

new loans may be made or insured 

under the FFEL program, and no new 

funds may be appropriated or expended 

to make or insure such loans.14 Thus, 

the final rule does not include in the 

definition of education loans any 

reference to the FFEL program. 

The proposed definition of ‘‘private 

education loan’’ included only loans 

made for post-secondary (beyond high 

school) educational expenses, not for 

primary or elementary education. The 

Agencies sought comment on whether 

coverage should be limited in this 

manner. Most commenters who 

addressed the issue, including financial 

institutions, trade associations, and 

community groups, supported the 

Agencies’ proposal to limit the 

definition of private education loans to 

loans made for post-secondary 

education expenses. These commenters 

agreed that the amendment to the CRA 

statute should be viewed in light of the 

HEOA’s overall purpose of promoting 

post-secondary education affordability. 

One trade association supported the 

proposal, but encouraged the Agencies 

to consider expanding the scope at a 

later time to include vocational and 

career training.15 One financial 

institution suggested that coverage 

should be as broad as possible and 

should include all types of education, 

including primary and secondary 

education. 

The final rule covers only loans made 

for higher education expenses, not for 

primary or secondary education 

expenses. As the preamble to the 

proposed rule explained, the statutory 

requirement to consider education loans 

under the CRA was adopted as a part of 

the HEOA, which specifically addresses 

higher education reform. The purpose of 

H.R. 4137, which introduced the 

incentive of CRA consideration for lowcost education loans was ‘‘to make 

college more affordable and accessible;’’ 

to ‘‘expand college access and support 

for low-income and minority students;’’ 

and to provide incentives for lenders to 

provide ‘‘low-cost private student loans 

to low-income borrowers.’’ 16

Higher Education Institutions—The 

Proposal 

In defining the types of higher 

education institutions covered, the 

Agencies proposed to include 

‘‘institutions of higher education’’ as 

defined in sections 101 and 102 of the 

HEA, 20 U.S.C. 1001–1002. The 

Agencies requested comment on 

whether the scope of the definition 

should be narrowed to encompass only 

loans made for education expenses at an 

‘‘institution of higher education’’ as that 

term is defined for general purposes in 

section 101 of the HEA, 20 U.S.C. 1001, 

which is limited generally to accredited 

public and nonprofit colleges, 

universities, and employment training 

schools in the United States.17 The 

Agencies also requested comment on 

whether, alternatively, the scope of the 

educational institutions covered should 

be expanded to include unaccredited 

institutions that would not meet the 

definition of ‘‘institution of higher 

education’’ under the HEA but would be 

covered by the definition of ‘‘covered 

educational institution’’ under TILA 

section 140(a)(1). 

Comments and Final Rule 

Commenters generally opposed using 

the narrower definition of ‘‘institution of 

higher education’’ found in section 101 

of the HEA because it would exclude 

some institutions providing vocational 

and career training. The Agencies agree 

that, consistent with the HEOA’s 

purpose, eligible schools should include 

the broad range of accredited 

institutions under the definition of 

‘‘institution of higher education,’’ 

including accredited vocational 

institutions that provide educational 

programs that prepare students for 

gainful employment in a recognized 

profession. 

Community group commenters 

opposed expanding coverage to include 

unaccredited institutions, citing a 

concern about providing CRA credit for 

student loans to finance inadequate, 

unaccredited training programs. 

Financial institution and trade group 

commenters were split. Those who 

supported the proposal expressed 

similar concerns that degrees from 

unaccredited institutions may not be 

acceptable for certain positions such as 

federal or state civil service positions or 

other employment. One commenter did, 

however, request that the Agencies 

publish a list of accredited programs.18

By contrast, commenters who supported 

expanding coverage to include 


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19H.R. 3221, 111th Cong., 1st Sess. (2009). 

20Title II, Health Care and Education 

Reconciliation Act of 2010, Public Law 111–152 

(2010). 

unaccredited institutions encouraged 

the Agencies to provide maximum 

flexibility to financial institutions to 

provide a wide range of education loans. 

The Agencies are adopting the scope 

of higher education institutions as 

proposed. As noted above, the Agencies 

believe that the broader definition of 

‘‘institution of higher education,’’ 

including accredited vocational 

institutions, provides flexibility to 

financial institutions, while limiting the 

definition to accredited institutions will 

help ensure that such programs benefit 

students. The Agencies will consider, as 

a factor, low-cost education loans to 

low-income borrowers to attend 

institutions of higher education, as 

defined in sections 101 and 102 of the 

HEA, 20 U.S.C. 1001–1002, when 

evaluating a financial institution under 

the CRA. 

Private Education Loans—The Proposal 

As discussed above, the Agencies 

proposed to consider low-cost private 

education loans made to low-income 

borrowers, as well as loans provided to 

low-income borrowers by a financial 

institution under a Federal education 

program. The Agencies requested 

comment on whether private education 

loans not made, insured, or guaranteed 

under a Federal, state, or local 

education program should be 

considered for CRA purposes. 

Comments and Final Rule 

Although one commenter stated that 

private education loans should not be 

considered because a private loan to a 

student may not guarantee that the 

funds are used for education, many 

commenters strongly believed that 

private loans should be considered. In 

fact, several commenters noted that if 

then pending legislation in Congress 

were passed, private lenders would no 

longer be involved in Department of 

Education loan programs.19

These commenters noted that many 

students and families are unable to 

cover the full cost of an education 

relying only on government programs 

and may need to pursue other types of 

funding to complete their education. 

Consequently, these commenters 

encouraged the Agencies to allow CRA 

consideration for non-governmental 

low-cost private education loans. The 

Agencies note that the HEOA’s purpose 

was, in significant part, to provide an 

incentive to financial institutions to 

provide low-cost private education 

loans to low-income borrowers not 

currently served by education loan 

programs. 

The Agencies also considered 

whether CRA consideration is necessary 

for loans made by financial institutions 

under the Federal education programs. 

Federal program education loans 

generally subjected an institution to 

little or no risk and, therefore, already 

provided an incentive to lenders. 

However, because as of July 1, 2010, 

financial institutions may no longer 

originate education loans under the 

Federal program,20 the final rule does 

not provide for CRA consideration of 

such loans under § 1031 of HEOA. 

However, if an institution has made 

education loans under the Federal 

program, it would be able to receive 

consideration for those loans under 

existing standards applicable to 

consumer loans. 

State or Local Government-Sponsored 

Education Loans—The Proposal 

The Agencies proposed to treat 

education loans offered to low-income 

borrowers under state or local 

government education programs the 

same as all other private education 

loans, consistent with the definition of 

‘‘private education loans’’ in section 

140(a)(7) of the Truth in Lending Act, 

which includes education loans made 

by financial institutions under local and 

state education loan programs. The 

Agencies asked whether all education 

loans offered to low-income borrowers 

under state or local education programs, 

regardless of whether the fees and rates 

are greater than those under comparable 

Department of Education programs, 

should be eligible for CRA 

consideration. 

Comments and Final Rule 

Only three commenters addressed this 

question. One commenter advised that 

the Agencies should use consistent 

measures among all private education 

loan programs, without favoring state 

and local programs. A second 

commenter believed that rates and fees 

on loans made by an institution under 

state or local education programs would 

not have to be exactly the same, but 

should be reasonably comparable to 

rates and fees on loans made under the 

Department of Education programs. The 

third commenter believed that all 

education loans offered to low-income 

borrowers and families under state or 

local programs, regardless of whether 

the rates and fees are comparable to 

those under Department of Education 

programs, should be eligible for CRA 

consideration. 

After a review of the comments, the 

Agencies have adopted the language in 

the provision regarding state or local 

education programs as proposed. The 

Agencies are not aware of any state or 

local education loan programs that are 

targeted or available to low-income 

students in which costs are limited in a 

manner similar to the Federal direct 

loan program, and for which an 

alternative definition of ‘‘low-cost’’ 

might be appropriate. 

Types of Loans—The Proposal 

The proposed definition of a private 

education loan was limited to closedend loans not secured by real property 

or a dwelling originated by a financial 

institution. 

Comments and Final Rule 

Community group commenters 

supported limiting coverage in this 

manner noting a concern about using a 

home as collateral for an education loan. 

One financial institution commenter 

also supported the proposed limitation, 

noting that there may be operational 

difficulties determining whether a 

dwelling-secured loan was used for 

educational expenses. By contrast, other 

financial institution and trade group 

commenters encouraged the Agencies to 

broaden the scope of the private 

education loan definition to include 

open-end or dwelling-secured credit, 

noting that consumers use these types of 

credit to fund educational expenses. 

These commenters requested that the 

Agencies provide flexibility to financial 

institutions by including such types of 

credit. 

The definition of education loan in 

the final rule incorporates the TILA 

definition of that term, which excludes 

open-end credit and credit secured by 

real property or a dwelling. As 

discussed more fully below, the HEOA 

amended both the CRA to provide an 

incentive for financial institutions to 

make low-cost education loans and 

TILA to provide for new disclosures and 

additional consumer protections for 

private education loans. The Agencies 

believe that in order for financial 

institutions to receive consideration 

under the CRA for an education loan, it 

is appropriate that such loans also be 

covered by the new disclosures and 

other substantive restrictions added to 

TILA by the HEOA. Therefore the 

Agencies are adopting the definition of 

private education loan as used in 

section 140(a)(7) of TILA. 

Some community group commenters 

suggested that the Agencies place 

further conditions on the types of loans 

that could be eligible for CRA 

consideration. For example, 


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21Section 128(e) of the Truth in Lending Act, as 

added by section 1021 of the HEOA. 

22Section 140(e) of the Truth in Lending Act, as 

added by section 1011 of the HEOA. 

commenters suggested that the Agencies 

provide consideration only for loans 

that meet a standard of affordability and 

provide certain consumer protections 

such as income-based repayment plans, 

fixed interest rates, and no prepayment 

penalties. 

The final rule does not impose 

additional restrictions on education 

loans for purposes of CRA consideration 

because the Agencies have limited the 

types of loans eligible for CRA 

consideration to those covered under 

the new TILA protections in the HEOA. 

For example, the HEOA requires that 

consumers receive disclosures regarding 

private education loans that explain the 

terms and costs of those loans on or 

with an application, after the consumer 

is approved for the loan, and before 

funds are disbursed. The disclosures 

also provide consumers with 

information about federal student loan 

alternatives where applicable. 

Consumers are provided 30 days after a 

private education loan is approved in 

which to accept the offer and the lender 

is prohibited, with few exceptions, from 

making changes to the rate or terms of 

the loan during that time. Consumers 

are also provided with three days in 

which to cancel a loan after receiving 

the final TILA disclosure.21 In addition, 

the HEOA places restrictions on private 

education loan terms and on private 

educational lenders. For example, the 

HEOA specifically prohibits 

prepayment penalties for private 

education loans. The HEOA also 

amended TILA to prohibit practices 

such as revenue sharing and cobranding between private educational 

lenders and educational institutions.22

The Agencies also requested comment 

on whether to limit consideration to 

loans originated by the financial 

institution, as proposed, or to consider 

loans purchased by the institution. 

Community group commenters opposed 

providing consideration for purchased 

loans, stating a concern that purchasing 

loans does not significantly expand the 

capacity of financial institutions to offer 

additional loans. By contrast, financial 

institution commenters supported 

allowing consideration for purchased 

loans, consistent with other types of 

CRA-eligible loans. 

The final rule limits consideration to 

low-cost education loans originated by 

the financial institution, and not to 

purchased loans. As discussed above, 

the Agencies believe that the intent of 

the HEOA amendment to the CRA was 

to provide an incentive to financial 

institutions to originate loans to lowincome borrowers currently not reached 

by most private loan programs. The 

Agencies believe that providing 

consideration only for loans originated 

by the financial institution provides an 

incentive to financial institutions to 

develop education loan programs that 

are tailored to the specific need targeted 

by the statutory amendment. 

‘‘Low-Cost Education Loans’’ 

The Proposal 

The Agencies proposed to define 

‘‘low-cost education loans’’ as education 

loans that are originated by financial 

institutions through a program of the 

U.S. Department of Education; or any 

private education loans, including loans 

under state or local education loan 

programs, originated by financial 

institutions with interest rates and fees 

no greater than those of comparable 

education loan programs offered by the 

U.S. Department of Education. 

The proposal would have looked to 

guaranteed education loans provided by 

financial institutions through the U.S. 

Department of Education’s Federal 

Family Education Loan Program (FFEL 

loans) as being the comparable 

education loan program. 

Comments and Final Rule 

The Agencies asked whether the 

proposed definition of the term ‘‘lowcost education loans’’ is appropriate 

and, if not, how the Agencies should 

define ‘‘low-cost education loans.’’ 

Commenters representing community 

organizations generally agreed with the 

proposed definition that private 

education loans receiving CRA 

consideration should have interest rates 

and fees no greater than comparable 

loans offered through the Department of 

Education. In fact, the same commenters 

stated that, to maintain consistency with 

the purpose of the HEOA to make 

college affordable, the lowest rates and 

fees should be used. 

Although commenters representing 

financial institutions and their trade 

organizations generally agreed that 

loans made by financial institutions 

under Department of Education 

programs should be considered lowcost, they raised concerns about 

requiring the rates and fees on private 

education loans to be comparable to the 

rates and fees applicable to Department 

of Education loans. In particular, they 

noted the substantial differences 

between loans made by financial 

institutions under Department of 

Education programs and private 

education loans in terms of risks, costs, 

and pricing. For example, commenters 

noted that FFEL education loans have a 

97 percent guarantee against default and 

that a lender’s yield is not tied to the 

fixed interest rate paid by the borrower, 

but rather is based on a separate formula 

set in statute. By contrast, private 

education loans generally have a 

variable rate determined by an index, 

such as Prime or one- or three-month 

LIBOR, and a margin, which typically 

varies depending on a borrower’s 

creditworthiness. In addition, the lender 

assumes all of the risk of default on a 

private education loan. 

Several of the commenters 

representing financial institutions or 

their trade groups suggested that the 

Agencies should develop a formula, 

based on an index and a margin, to 

define low-cost, variable rate private 

education loans. Commenters suggested 

one-month or three-month LIBOR or 

Prime as possible rates to use as an 

index. Margin suggestions varied from 

three to eight percent. Commenters also 

suggested that upfront fees of up to four 

percent would be appropriate. 

The Agencies also asked how to 

determine whether a private education 

loan is comparable to a Department of 

Education loan and whether the lowest 

or highest rate and fees available under 

the comparable Department of 

Education program should be used to 

determine whether a private education 

loan is low cost. Although few 

commenters addressed these questions, 

the views of the commenters that did 

respond were mixed. Commenters 

suggested both that it is necessary to use 

the lowest rates and fees, as well as that 

the higher rate should serve as the 

maximum permissible rate for private 

loans. Industry commenters reasserted 

that it is not appropriate to evaluate 

whether a private education loan is 

‘‘low-cost’’ based on rates and fees 

applicable to federal education loans. 

The Agencies have considered these 

comments carefully. The Agencies 

considered various options with regard 

to a definition of a ‘‘low-cost’’ private 

education loan that could address these 

concerns. For example, the Agencies 

considered whether a low-cost private 

education loan should be defined with 

a rate that is 100 to 300 basis points over 

a Federal loan rate. However, we did not 

receive comments that identified a 

standard benchmark, margin, or number 

of basis points to be used as an 

alternative formula for ‘‘low cost.’’ 

After consideration of the comments 

and recent changes in the law described 

above, the Agencies have revised the 

rule to refer solely to the Federal direct 

loan program of the U.S. Department of 


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23See 20 U.S.C. 1087e. 

24See http://studentaid.ed.gov/ 

PORTALSWebApp/students/english/ 

studentloans.jsp; http://studentaid.ed.gov/ 

PORTALSWebApp/students/english/ 

parentloans.jsp. 

25 20 U.S.C. 1087e(b)(6). See also U.S. Department 

of Education, ‘‘FFEL and Direct Loan Interest Rates 

Effective July 1, 2009,’’ available at http:// 

studentaid.ed.gov/PORTALSWebApp/students/ 

english/FFEL_DL_InterestRates.jsp. 

26This is consistent with guidance issued by the 

Agencies in the Interagency Questions and Answers 

Regarding Community Reinvestment, 75 FR 11642, 

11671 (Mar. 11, 2010) (Q&A § __.42(c)(1)(iv)–4). 

Education as the benchmark for ‘‘low 

cost’’ education loans. 

To determine whether education 

loans have rates and terms that are no 

greater than the rates and terms on loans 

made under the Federal direct loan 

program, education loans will be 

compared with comparable direct loans. 

For example, fixed-rate loans will be 

compared to fixed-rate Federal loans, 

variable-rate loans will be compared to 

variable-rate Federal loans, loans to 

students will be compared to Federal 

loans to students, and loans to parents 

will be compared to Federal loans to 

parents. The Agencies note that most 

education loans originated by financial 

institutions have a variable rate. 

The direct loan program formally 

called the William D. Ford Federal 

Direct Loan Program is the program 

against which the rates and fees of 

private education loans must be 

compared.23 The rates and fees that 

have been allowed under the FFEL 

program, which the preamble of the 

proposal explained was a ‘‘comparable 

U.S. Department of Education program,’’ 

are statutorily specified and are very 

similar to the rates and fees charged to 

borrowers under the William D. Ford 

Direct Loan Program, which are also 

statutorily prescribed. The fixed rates 

under the Federal direct loan program 

that the agencies will use as benchmarks 

are the rates for unsubsidized direct 

Stafford loans for students and direct 

PLUS loans for parents.24

Although variable-rate loans are no 

longer available under the Department 

of Education programs, the Department 

of Education publishes rates annually 

for those variable-rate education loans 

that remain outstanding. The rate is 

based on 91-day Treasury bills plus a 

statutory percentage margin.25

Origination fees are allowed for 

Federal direct loans. Financial 

institutions may use the fee percentages 

for Federal loans to students and 

parents, as appropriate, as benchmarks. 

Although the Agencies are adopting a 

definition of ‘‘low-cost education loan’’ 

that is generally similar to the proposal, 

if the Agencies find that the rules as 

adopted have not acted as an incentive 

to financial institutions’ providing lowcost education loans to low-income 

borrowers, the Agencies may reconsider 

these provisions. 

‘‘Low-Income Borrower’’ 

The Proposal 

Under the proposed regulation, the 

term ‘‘low-income’’ had the same 

meaning as that term is defined in the 

existing CRA rule: An individual 

income less than 50 percent of area 

median income. In the preamble to the 

proposed regulation, the Agencies 

clarified that, if an institution considers 

the income of more than one person in 

connection with an education loan, the 

gross annual incomes of all primary 

obligors on the loan, including coborrowers and co-signers, would be 

combined to determine whether the 

borrowers are ‘‘low-income.’’ 26 The 

Agencies further noted that various 

education programs offered by the U.S. 

Department of Education are targeted to 

individuals who have financial needs 

and the criteria for the programs vary. 

The Agencies requested comment on 

whether low-income should be defined 

differently than the term is already 

defined in the CRA regulation. The 

Agencies also sought comment on how 

they should treat the income of a 

student’s family or other expected 

family contributions to ensure that the 

CRA consideration provided is 

consistent with HEOA’s focus on lowincome borrowers. 

Final Rule and Comments 

Several commenters, including 

community groups and several financial 

institutions or trade associations 

generally supported using the 50 

percent benchmark as proposed. Several 

financial institutions and trade 

associations advocated that the final 

rule be expanded to cover both lowincome and moderate-income borrowers 

as defined by the existing CRA rule. A 

state association of lenders commented 

that the Agencies should simply base 

the income assessment on loans 

originated through the U.S. Department 

of Education by defining low-cost 

education loans as need-based federal 

student loans. This commenter and 

several financial institutions further 

explained that institutions that make 

U.S. Department of Education loans do 

not have access to financial and income 

information on students and their 

families because the student borrowers 

are qualified by the school; thus, it 

would be hard to determine for CRA 

purposes whether the borrowers are 

low-income. Some of these commenters 

recommended that low-income 

borrowers be defined as any borrower 

eligible for a loan through a program of 

the U.S. Department of Education or, for 

a borrower through a private loan 

program, with qualifying income that is 

less than 50 percent of area median 

income. Another financial institution 

recommended that government loans 

that are needs-based, such as subsidized 

Stafford loans, automatically qualify as 

loans to low-income borrowers. One 

trade association suggested that, as an 

alternative to the proposed definition of 

low-income (less than 50 percent of the 

area median income), the Agencies 

could look only at the household 

income of the primary obligor on the 

loan and if the primary obligor is a 

dependent in a low-income household, 

the primary obligor would be 

considered a low-income borrower no 

matter what additional guarantors or cosignors are obligated on the loan. 

Similarly, the commenter noted, if the 

student is a financially emancipated 

adult, then his/her individual income 

would determine his/her income status. 

Alternatively, the commenter suggests 

that if all those obligated on the credit 

are taken into account, then the final 

rule needs to clarify how the Agencies 

will calculate whether the low-income 

standard is met. 

Several commenters addressed how to 

treat the income of a student’s family or 

other expected family contributions to 

ensure that the CRA consideration is 

consistent with HEOA’s focus on lowincome borrowers. As noted above, a 

trade association suggested the final 

regulation should look at the household 

income of the primary obligor. That 

commenter recommended that 

household income be considered in lieu 

of considering income of a co-signer, to 

avoid any situation where obtaining a 

co-signer, who might strengthen the 

loan application and improve the safety 

and soundness of the loan, might be 

discouraged for CRA-related loans. 

A nonprofit organization commented 

that, in cases where a student is the 

borrower but is claimed as a dependent, 

the household income of the taxpayer 

claiming the student should be used to 

determine whether the loan qualifies for 

CRA consideration. A trade association 

also suggested that if a student has 

applied for financial aid and has been 

identified as eligible, that should qualify 

the student as ‘‘low-income’’ for 

purposes of the test. A financial 

institution commented that, in addition 

to consideration of income, the CRA 

evaluation of education lending should 

also consider how many individuals are 

enrolled in or will be enrolled in an 


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Federal Register / Vol. 75, No. 191 / Monday, October 4, 2010 / Rules and Regulations 61041 

27H. Rep. No. 110–500 at 366 (2007) (emphasis 

added). The CRA also generally encourages 

financial institutions to help meet the credit needs 

of the local communities in which they are 

chartered. 12 U.S.C. 2901(b). 

institution of higher education and 

whether such individuals had unmet 

financial needs that could be addressed 

by a private education loan. Another 

financial institution commented that the 

differences between the U.S. 

Department of Education loan 

qualification standards, which are 

generally based on need, and the private 

education loan qualification standards, 

which are generally based on credit 

score and income, should preclude 

treating Federal program loans and 

private education loans the same for 

purposes of the ‘‘low-income’’ analysis. 

The Agencies considered these 

commenters’ concerns about the 

possibility that a student borrower may 

be considered to be ‘‘low-income’’ under 

the CRA standard, even though the 

student’s family may be able to provide 

additional financial support. The 

Agencies considered, for example, 

adopting a test to determine whether a 

student borrower is an ‘‘independent’’ 

student and, if not, requiring the use of 

family income to determine whether the 

loan was to a ‘‘low-income’’ borrower. 

The Agencies are adopting the 

definition of ‘‘low-income’’ as 

proposed—based on an individual 

income that is less than 50 percent of 

the area median income. As noted 

above, some financial institutions may 

not require family income information 

in connection with education loans 

(except when family members co-sign or 

guaranty the loan). Requiring collection 

of data on family income would likely 

have imposed new burdens and 

procedural requirements on both 

borrowers and financial institutions. 

‘‘Other Education Loan Issues’’ 

Quantitative Consideration 

As proposed by the Agencies, 

institutions would receive favorable 

qualitative consideration for originating 

‘‘low-cost education loans to lowincome borrowers’’ as a factor in the 

institutions’ overall CRA rating, 

independent of the consideration for 

consumer loans under the current 

lending test. Such loans would be 

considered responsive to the credit 

needs of the institutions’ communities. 

Under the CRA regulations, an 

institution’s consumer lending must be 

evaluated if consumer lending makes up 

a substantial majority of an institution’s 

business. Institutions that do not meet 

this criterion may choose to have 

education loans evaluated as consumer 

loans under the lending test applicable 

to the institution. If an institution opts 

to have education loans evaluated, the 

loans would be evaluated quantitatively, 

based on the data the institution 

provides. The Agencies requested 

comment on whether the final 

regulation should also allow an 

institution to receive separate 

quantitative consideration for the 

number and amount of low-cost 

education loans to low-income 

borrowers as part of its CRA evaluation 

under the performance test applicable to 

that institution, without regard to other 

consumer loans. 

Comments and Final Rule 

One financial institution agreed that 

institutions should receive favorable 

qualitative consideration for originating 

low-cost loans to low-income borrowers 

and recommended that, consistent with 

the treatment of other consumer loans, 

education loans not be reviewed as part 

of the quantitative CRA evaluation 

unless such loans represent a 

substantial majority of the financial 

institution’s business or at the 

institution’s option if it has collected 

and maintained data. Other financial 

institutions and a trade association 

strongly supported providing 

institutions the option to receive 

favorable quantitative consideration as 

consumer loans under the lending test 

of the current CRA rules. These 

commenters further stated that if the 

low-cost education loans were to 

become a separate subcategory of 

consumer lending, financial institutions 

would have to generate the necessary 

data, to the extent they do not already 

exist and that it would be difficult to 

evaluate the data in the absence of data 

from other institutions. They further 

stated that if this were the approach 

taken, it may be a disincentive to 

participate. Finally, one financial 

institution commented that the 

legislation regarding the low-cost 

education loans clearly anticipates that 

the agencies would consider student 

lending on its own merits, apart from 

other consumer loan categories and 

suggested that consideration could be 

accomplished by revising the consumer 

loan reporting categories to include a 

separate category for student loans. 

After consideration of the comments, 

the Agencies have adopted the 

provision as proposed to make clear that 

all types and sizes of institutions will be 

eligible to receive qualitative 

consideration for originating ‘‘low-cost 

education loans to low-income 

borrowers’’ as a factor in the institutions’ 

overall CRA rating, without regard to 

the performance test under which an 

institution is evaluated. As noted above, 

institutions may obtain CRA 

consideration of education loans as 

consumer loans under existing 

standards applicable to consumer loans. 

Application to All Institutions 

The Agencies also asked whether 

institutions and other interested parties 

understood that the new provision on 

low-cost education loans to low-income 

borrowers is applicable to all 

institutions, without regard to 

institution size, as a result of the 

provisions’ placement in 12 CFR 25.21, 

228.21, 345.21 and 563e.21. No 

commenters responded directly to the 

question. However, several commenters 

suggested that the Agencies should treat 

low-cost education loans to low-income 

borrowers differently than initially 

proposed. 

Several commenters representing 

small financial institutions suggested 

that the provision should not apply to 

small financial institutions because few 

small institutions make education loans. 

As discussed above, financial 

institutions that do not make education 

loans will not be required to start 

making such loans. 

Another commenter believed that 

evaluation of education lending should 

not apply to wholesale or limited 

purpose institutions. The Agencies 

agree that wholesale institutions will 

not engage directly in education lending 

because, by definition, wholesale 

institutions do not engage in retail 

lending. Limited purpose institutions, 

on the other hand, could engage in 

education lending as their narrow 

product line. 

One commenter suggested that lowcost education loans to low-income 

borrowers should be considered as 

community development loans. The 

primary reason for this suggestion was 

based on the more expansive 

consideration of loans that are 

considered under the community 

development test—not only in an 

institution’s assessment area(s), as 

proposed, but also in the broader 

statewide or regional area that includes 

its assessment area(s). The Agencies 

decline to adopt this change as 

suggested. The Agencies note that the 

legislative history of the Act indicates 

that the Agencies are to consider ‘‘lowcost education loans provided by a 

financial institution to low-income 

borrowers in assessing and taking into 

account the record of a financial 

institution in meeting the credit needs 

of its local community.’’ 27 The proposed 

rule restricted favorable consideration 

for low-cost education loans to lowincome borrowers to the institution’s 


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28See 12 CFR 25.22(b)(3), 228.22(b)(3), 

345.22(b)(3), and 563e.22(b)(3). 

29See Interagency Questions and Answers 

Regarding Community Reinvestment, 75 FR at 

11656–57 (Q&A § __.22(b)(2) & (3)–4). 

30 12 CFR 25.12(o)(1), 228.12(o)(1), 345.12(o)(1), 

and 563e.12(o)(1). 

31 12 U.S.C. 2903(b). 

32 74 CFR at 31213. 

33 Id. 

34 74 FR 498, 507 (Jan. 6, 2009) (Q&A § __.12(g)– 

4). 

35 74 FR at 500. 

36 74 FR at 507 (Q&A §l.12(g)–4); 75 FR at 11645 

(same). 

assessment area(s). After careful 

consideration of the comments received, 

the Agencies have decided to apply the 

same rule that applies to the 

consideration of loans made to low- and 

moderate-income borrowers.28 Thus, the 

final rule provides that the Agencies 

will consider low-cost education loans 

originated by a financial institution to 

low-income borrowers ‘‘particularly in 

its assessment area(s).’’ Similar to the 

analysis for loans to low- and moderateincome individuals generally, the 

Agencies will consider first whether a 

financial institution has adequately 

addressed the low-cost education loan 

needs of low-income borrowers in its 

assessment area(s) and, if so, will also 

consider such loans outside of its 

assessment area(s).29 The Agencies 

believe that the final rule may provide 

greater flexibility and additional 

incentives for financial institutions to 

provide low-cost education loan 

programs for low-income borrowers. 

Finally, one commenter emphasized 

that the provision addressing 

consideration of low-cost education 

loans to low-income borrowers should 

not affect CRA strategic plans that are 

already in effect or future plans. The 

Agencies do not intend this provision to 

affect CRA strategic plans. 

Other Comments on the Proposed 

Education Loan Provision 

Several commenters suggested that 

unnecessarily detailed technical 

requirements should be kept to a 

minimum in the final rule. The 

Agencies agree and have attempted to 

do so. 

One commenter suggested that 

financial institutions should be able to 

receive CRA consideration for loans to 

students who reside in their assessment 

area(s) and also for loans to students 

who attend schools in the institutions’ 

assessment area(s). The Agencies 

decline to adopt this suggestion. As 

with other consumer lending, a 

financial institution would look to the 

‘‘loan location’’ to determine whether 

the loan meets the geographical 

requirements for loan consideration. ‘‘A 

consumer loan is located in the 

geography where the borrower resides 

* * *. ’’30 Therefore, the lender should 

rely on the address on the education 

loan application or otherwise provided 

by the borrower or school to determine 

the loan location. 

Activities Undertaken in Cooperation 

with Minority- and Women-Owned 

Financial Institutions and Low-Income 

Credit Unions 

The Proposal 

Section 804(b) of the Community 

Reinvestment Act (CRA) provides that 

the Agencies may consider as a factor 

capital investment, loan participation, 

and other ventures undertaken by the 

institution in cooperation with 

minority- and women-owned financial 

institutions and low-income credit 

unions in assessing the CRA record of 

nonminority- and nonwomen-owned 

financial institutions. These activities, 

however, must help meet the credit 

needs of the local communities in 

which such institutions and credit 

unions are chartered.31 The Agencies 

proposed to incorporate this statutory 

language into their regulations and to 

clarify that such activities need not also 

benefit the assessment area or the 

broader statewide or regional area that 

includes the assessment area of the 

nonminority- and nonwomen-owned 

institution. The preamble of the 

proposed rule indicated that activities 

undertaken to assist minority- and 

women-owned financial institutions 

and low-income credit unions would be 

considered as part of the overall 

assessment of the nonminority- and 

nonwomen-owned institution’s CRA 

performance.32

The preamble further explained that 

the proposed revision to the rule would 

reinforce to examiners, financial 

institutions, and the public that the 

Agencies may consider and take into 

account nonminority- and nonwomenowned financial institutions’ activities 

in connection with minority- and 

women-owned financial institutions 

and low-income credit unions.33 The 

Agencies noted that their 2009 revisions 

to the ‘‘Interagency Questions and 

Answers Regarding Community 

Reinvestment’’ clarified this point 34 and 

indicated the proposal was intended to 

codify this clarification in the rule. 

The Agencies proposed to add the 

new provision addressing favorable 

CRA consideration for activities in 

cooperation with minority- and womenowned financial institutions and lowincome credit unions to 12 CFR 25.21, 

228.21, 345.21, and 563e.21. These 

sections apply to all types and sizes of 

institutions, without regard to the 

performance test under which an 

institution is evaluated. Accordingly, 

the preamble indicated that the 

proposed provision would also be 

applicable to all financial institutions. 

The Agencies also proposed a 

conforming amendment to Appendix A 

of the regulations to include 

consideration of a financial institution’s 

activities in cooperation with minorityand women-owned financial 

institutions as a factor when assigning a 

rating to the institution. 

Comments and Final Rule 

Several consumer and community 

groups commented on the geographic 

scope of the proposal. They urged the 

Agencies to narrow the geographic 

scope by providing favorable CRA 

consideration to investments outside the 

majority-owned institution’s assessment 

area only if the majority-owned 

institution met the needs of its 

assessment area. One community 

organization urged the Agencies to 

narrow the geographic scope even 

further by providing favorable CRA 

consideration only to loan 

participations and other ventures 

undertaken in cooperation with 

minority- and women-owned financial 

institutions and low-income credit 

unions outside the majority-owned 

institution’s assessment area only if the 

majority-owned institution met the 

needs of its assessment area. 

As the Agencies explained in the 

preamble to their 2009 Interagency 

Questions and Answers Regarding 

Community Reinvestment, the Agencies 

do not currently interpret section 804(b) 

of the CRA to impose such limitations.35

However, as indicated in the question 

and answer guidance, the impact of 

such activities on majority-owned 

institution’s CRA rating is determined 

in conjunction with its overall 

performance in its assessment area(s).36

The Agencies note that activities outside 

of the majority-owned institution’s 

assessment area will not compensate for 

poor lending performance within its 

assessment area and intend to add this 

clarification to the Interagency 

Questions and Answers Regarding 

Community Reinvestment. 

One financial institution trade 

association urged the Agencies to treat 

all capital investments, loan 

participations, and other ventures 

undertaken by a majority-owned 

institution in cooperation with 

minority- and women-owned financial 


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37 75 FR at 11652 (Q&A §l.12(t)–4). 

38 75 FR at 11648 (Q&A §l.12(h)–1). 

39 12 CFR 25.21(f); 228.21(f); 345.21(f); and 

563e.21(f). 

institutions and low-income credit 

unions as community development 

activities. The statute does not specify 

how the Agencies must evaluate these 

activities, some of which may not 

qualify as community development 

activities under the existing rules. 

Therefore, the Agencies have not 

adopted this suggestion. 

However, the Agencies note that 

nothing in today’s final rule affects the 

ability of any institution to receive 

community development consideration 

for activities undertaken in cooperation 

with minority- and women-owned 

financial institutions, low-income credit 

unions, and other financial 

intermediaries in those limited 

circumstances where such activities 

meet all of the rule’s requirements for 

community development consideration. 

These requirements include having a 

primary purpose of community 

development (as defined in 12 CFR 

25.12(g), 228.12(g), 345.12(g), or 

563e.12(g), as applicable) and meeting 

the applicable geographic restrictions 

for community development activities. 

The Agencies’ Interagency Questions 

and Answers Regarding Community 

Reinvestment provide as an example of 

‘‘qualified investments,’’ investments, 

grants, deposits, or shares in or to 

financial intermediaries, including 

minority- and women-owned financial 

institutions, that primarily lend or 

facilitate lending in low- and moderateincome areas or to low- and moderateincome individuals in order to promote 

community development.37 Similarly, 

the Interagency Questions and Answers 

provide as an example of ‘‘community 

development loans,’’ loans to financial 

intermediaries, including minority- and 

women-owned financial institutions, 

which primarily lend or facilitate 

lending to promote community 

development.38 The Agencies are not 

changing the availability of community 

development consideration for these 

activities. Today’s final rule allows 

capital investments, loan participations, 

and other ventures undertaken by a 

majority-owned institution in 

cooperation with minority- and womenowned financial institutions and lowincome credit unions to be considered 

as a factor when assigning a rating; it 

applies to a broader range of activities 

than may qualify for community 

development consideration. 

Several consumer and community 

organizations urged the Agencies to 

conduct an analysis of the impact of the 

2009 guidance on minority- and 

women-owned institutions (Q&A 

§ l.12(g)–4) before codifying the 

question and answer into the CRA rule. 

They urged the Agencies to evaluate the 

types of investments, loans, and services 

that have been leveraged to see whether 

they have disproportionately benefited 

predominantly white middle- and 

upper-income communities. They also 

urged the Agencies to ascertain whether 

bank financing of low-income credit 

unions and minority- and womenowned financial institutions has also 

benefited minorities and communities 

of color. The Agencies note that they are 

generally incorporating into the CRA 

regulations the statutory provision 

adopted by Congress. 

The Agencies are adopting 12 CFR 

l.21(f) and revising Appendix A as 

proposed. 

Effective Date 

This joint final rule becomes effective 

30 days after the date of publication in 

the Federal Register. 

Interagency Guidance 

The Agencies intend to issue for 

comment interagency CRA guidance 

addressing primarily the new provision 

addressing low-cost education loans 

made to low-income borrowers in the 

near future. The guidance, in the form 

of new interagency questions and 

answers, will include relevant 

explanatory discussion in the 

supplementary information 

accompanying this final rule. As noted 

above, the Agencies will also revise 

existing guidance to reflect the 

regulatory provisions 39 on activities in 

cooperation with minority- and womenowned financial institutions and lowincome credit unions and to indicate 

that such activities outside of the 

majority-owned institution’s assessment 

area(s) will not compensate for poor 

lending performance within its 

assessment area(s). 

Regulatory Analysis 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. Ch. 

3506; 5 CFR 1320 Appendix A.1) (PRA), 

each agency reviewed its final rule and 

determined that there are no new 

collections of information contained 

therein. However, the amendments may 

have a negligible affect on burden 

estimates for existing information 

collections, including recordkeeping 

requirements for consumer loans. The 

Agencies did not receive any comments 

on the PRA section of the proposed rule. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires an agency that is issuing a final 

rule to provide a final regulatory 

flexibility analysis or to certify that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Under regulations issued by the Small 

Business Administration, a small entity 

includes a bank holding company, 

commercial bank, or savings association 

with assets of $175 million or less 

(collectively, small banking 

organizations). Under this joint final 

rule, the Agencies would consider, as a 

factor, when assessing an institution’s 

CRA record that the institution made 

low-cost education loans to low-income 

borrowers or engaged in activities in 

cooperation with minority- or womenowned financial institutions or lowincome credit unions. The Agencies 

believe that this joint final rule will not 

have a significant economic impact on 

a substantial number of small entities 

because the final rule does not require 

a financial institution to engage in these 

activities. In addition, the Agencies did 

not receive any comments that the 

proposal would have a significant 

impact on small banking organizations. 

Accordingly, each of the Agencies 

certifies that this rule will not have a 

significant economic impact on a 

substantial number of small entities. 

OCC and OTS Executive Order 12866 

Determinations 

Pursuant to Executive Order 12866, 

OMB’s Office of Information and 

Regulatory Affairs (OIRA) has 

designated the final rule to be 

significant. 

OCC and OTS Unfunded Mandates 

Reform Act of 1995 Determination 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 

(Unfunded Mandates Act) (2 U.S.C. 

1532) requires that covered agencies 

prepare a budgetary impact statement 

before promulgating a rule that includes 

any 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 covered agencies to identify 

and consider a reasonable number of 

regulatory alternatives before 

promulgating a rule. The OCC and the 

OTS have determined that this joint 

final rule will not result in expenditures 

by State, local, and tribal governments, 

or by the private sector, of $100 million 


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or more in any one year. Accordingly, 

neither agency has prepared a budgetary 

impact statement or specifically 

addressed the regulatory alternatives 

considered. 

The Treasury and General Government 

Appropriations Act, 1999—Assessment 

of Impact of Federal Regulation on 

Families 

The FDIC has determined that this 

joint final rule will not affect family 

well-being within the meaning of 

section 654 of the Treasury and General 

Government Appropriations Act, 

enacted as part of the Omnibus 

Consolidated and Emergency 

Supplemental Appropriations Act of 

1999, Public Law 105–277 (5 U.S.C. 601 

note). 

OCC and OTS Executive Order 13132 

Determination 

The OCC and the OTS have each 

determined that its portion of this joint 

final rule does not have any Federalism 

implications, as required by Executive 

Order 13132. 

Administrative Procedure Act; Riegle 

Community Development and 

Regulatory Improvement Act of 1994 

This joint final rule becomes effective 

30 days after the date of publication in 

the Federal Register. 

Section 302 of the Riegle Community 

Development and Regulatory 

Improvement Act of 1994 (CDRIA), 

Public Law 103–325, authorizes a 

banking agency to issue a rule that 

contains additional reporting, 

disclosure, or other requirements to be 

effective before the first day of the 

calendar quarter that begins on or after 

the date on which the regulations are 

published in final form if the agency 

finds good cause for an earlier effective 

date. 12 U.S.C. 4802(b)(1). Section 302 

of CDRIA does not apply because this 

final rule imposes no additional 

requirements. Rather, it reduces burden 

by expanding the ways institutions may 

receive CRA consideration. 

List of Subjects 

12 CFR Part 25 

Community development, Credit, 

Investments, National banks, Reporting 

and recordkeeping requirements. 

12 CFR Part 228 

Banks, banking, Community 

development, Credit, Investments, 

Reporting and recordkeeping 

requirements. 

12 CFR Part 345 

Banks, banking, Community 

development, Credit, Investments, 

Reporting and recordkeeping 

requirements. 

12 CFR Part 563e 

Community development, Credit, 

Investments, Reporting and 

recordkeeping requirements, Savings 

associations. 

Department of the Treasury 

Office of the Comptroller of the 

Currency 

12 CFR Chapter I 

Authority and Issuance 

■ For the reasons discussed in the joint 

preamble, the Office of the Comptroller 

of the Currency amends part 25 of 

chapter I of title 12 of the Code of 

Federal Regulations as follows: 

PART 25—COMMUNITY 

REINVESTMENT ACT AND 

INTERSTATE DEPOSIT PRODUCTION 

REGULATIONS 

■ 1. The authority citation for part 25 is 

revised to read as follows: 

Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 

93a, 161, 215, 215a, 481, 1814, 1816, 1828(c), 

1835a, 2901 through 2908, and 3101 through 

3111. 

■ 2. In § 25.21, add new paragraphs (e) 

and (f) to read as follows: 

§ 25.21 Performance tests, standards, and 

ratings, in general. 

* * * * * 

(e) Low-cost education loans provided 

to low-income borrowers. In assessing 

and taking into account the record of a 

bank under this part, the OCC considers, 

as a factor, low-cost education loans 

originated by the bank to borrowers, 

particularly in its assessment area(s), 

who have an individual income that is 

less than 50 percent of the area median 

income. For purposes of this paragraph, 

‘‘low-cost education loans’’ means any 

education loan, as defined in section 

140(a)(7) of the Truth in Lending Act 

(15 U.S.C. 1650(a)(7)) (including a loan 

under a state or local education loan 

program), originated by the bank for a 

student at an ‘‘institution of higher 

education,’’ as that term is generally 

defined in sections 101 and 102 of the 

Higher Education Act of 1965 (20 U.S.C. 

1001 and 1002) and the implementing 

regulations published by the U.S. 

Department of Education, with interest 

rates and fees no greater than those of 

comparable education loans offered 

directly by the U.S. Department of 

Education. Such rates and fees are 

specified in section 455 of the Higher 

Education Act of 1965 (20 U.S.C. 

1087e). 

(f) Activities in cooperation with 

minority- or women-owned financial 

institutions and low-income credit 

unions. In assessing and taking into 

account the record of a nonminorityowned and nonwomen-owned bank 

under this part, the OCC considers as a 

factor capital investment, loan 

participation, and other ventures 

undertaken by the bank in cooperation 

with minority- and women-owned 

financial institutions and low-income 

credit unions. Such activities must help 

meet the credit needs of local 

communities in which the minorityand women-owned financial 

institutions and low-income credit 

unions are chartered. To be considered, 

such activities need not also benefit the 

bank’s assessment area(s) or the broader 

statewide or regional area that includes 

the bank’s assessment area(s). 

■ 3. In Appendix A to Part 25, 

paragraph (a)(1) is revised to read as 

follows: 

Appendix A to Part 25—Ratings 

(a) * * * 

(1) In assigning a rating, the OCC evaluates 

a bank’s performance under the applicable 

performance criteria in this part, in 

accordance with §§ 25.21 and 25.28. This 

includes consideration of low-cost education 

loans provided to low-income borrowers and 

activities in cooperation with minority- or 

women-owned financial institutions and 

low-income credit unions, as well as 

adjustments on the basis of evidence of 

discriminatory or other illegal credit 

practices. 

* * * * * 

Federal Reserve System 

12 CFR Chapter II 

Authority and Issuance 

■ For the reasons set forth in the joint 

preamble, the Board of Governors of the 

Federal Reserve System amends part 

228 of chapter II of title 12 of the Code 

of Federal Regulations as follows: 

PART 228—COMMUNITY 

REINVESTMENT (REGULATION BB) 

■ 1. The authority citation for part 228 

is revised as proposed to read as 

follows: 

Authority: 12 U.S.C. 321, 325, 1828(c), 

1842, 1843, 1844, and 2901 through 2908. 

■ 2. In § 228.21, add new paragraphs (e) 

and (f) to read as follows: 

§ 228.21 Performance tests, standards, 

and ratings, in general. 

* * * * * 

(e) Low-cost education loans provided 

to low-income borrowers. In assessing 

and taking into account the record of a 


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Federal Register / Vol. 75, No. 191 / Monday, October 4, 2010 / Rules and Regulations 61045 

bank under this part, the Board 

considers, as a factor, low-cost 

education loans originated by the bank 

to borrowers, particularly in its 

assessment area(s), who have an 

individual income that is less than 50 

percent of the area median income. For 

purposes of this paragraph, ‘‘low-cost 

education loans’’ means any education 

loan, as defined in section 140(a)(7) of 

the Truth in Lending Act (15 U.S.C. 

1650(a)(7)) (including a loan under a 

state or local education loan program), 

originated by the bank for a student at 

an ‘‘institution of higher education,’’ as 

that term is generally defined in 

sections 101 and 102 of the Higher 

Education Act of 1965 (20 U.S.C. 1001 

and 1002) and the implementing 

regulations published by the U.S. 

Department of Education, with interest 

rates and fees no greater than those of 

comparable education loans offered 

directly by the U.S. Department of 

Education. Such rates and fees are 

specified in section 455 of the Higher 

Education Act of 1965 (20 U.S.C. 

1087e). 

(f) Activities in cooperation with 

minority- or women-owned financial 

institutions and low-income credit 

unions. In assessing and taking into 

account the record of a nonminorityowned and nonwomen-owned bank 

under this part, the Board considers as 

a factor capital investment, loan 

participation, and other ventures 

undertaken by the bank in cooperation 

with minority- and women-owned 

financial institutions and low-income 

credit unions. Such activities must help 

meet the credit needs of local 

communities in which the minorityand women-owned financial 

institutions and low-income credit 

unions are chartered. To be considered, 

such activities need not also benefit the 

bank’s assessment area(s) or the broader 

statewide or regional area that includes 

the bank’s assessment area(s). 

■ 3. In Appendix A to Part 228, 

paragraph (a)(1) is revised to read as 

follows: 

Appendix A to Part 228—Ratings 

(a) * * * 

(1) In assigning a rating, the Board 

evaluates a bank’s performance under the 

applicable performance criteria in this part, 

in accordance with §§ 228.21 and 228.28. 

This includes consideration of low-cost 

education loans provided to low-income 

borrowers and activities in cooperation with 

minority- or women-owned financial 

institutions and low-income credit unions, as 

well as adjustments on the basis of evidence 

of discriminatory or other illegal credit 

practices. 

* * * * * 

Federal Deposit Insurance Corporation 

12 CFR Chapter III 

Authority and Issuance 

■ For the reasons set forth in the joint 

preamble, the Board of Directors of the 

Federal Deposit Insurance Corporation 

amends part 345 of chapter III of title 12 

of the Code of Federal Regulations as 

follows: 

PART 345—COMMUNITY 

REINVESTMENT 

■ 1. The authority citation for part 345 

is revised to read as follows: 

Authority: 12 U.S.C. 1814–1817, 1819– 

1820, 1828, 1831u and 2901–2908, 3103– 

3104, and 3108(a). 

■ 2. In § 345.21, add new paragraphs (e) 

and (f) to read as follows: 

§ 345.21 Performance tests, standards, 

and ratings, in general. 

* * * * * 

(e) Low-cost education loans provided 

to low-income borrowers. In assessing 

and taking into account the record of a 

bank under this part, the FDIC 

considers, as a factor, low-cost 

education loans originated by the bank 

to borrowers, particularly in its 

assessment area(s), who have an 

individual income that is less than 50 

percent of the area median income. For 

purposes of this paragraph, ‘‘low-cost 

education loans’’ means any education 

loan, as defined in section 140(a)(7) of 

the Truth in Lending Act (15 U.S.C. 

1650(a)(7)) (including a loan under a 

state or local education loan program), 

originated by the bank for a student at 

an ‘‘institution of higher education,’’ as 

that term is generally defined in 

sections 101 and 102 of the Higher 

Education Act of 1965 (20 U.S.C. 1001 

and 1002) and the implementing 

regulations published by the U.S. 

Department of Education, with interest 

rates and fees no greater than those of 

comparable education loans offered 

directly by the U.S. Department of 

Education. Such rates and fees are 

specified in section 455 of the Higher 

Education Act of 1965 (20 U.S.C. 

1087e). 

(f) Activities in cooperation with 

minority- or women-owned financial 

institutions and low-income credit 

unions. In assessing and taking into 

account the record of a nonminorityowned and nonwomen-owned bank 

under this part, the FDIC considers as a 

factor capital investment, loan 

participation, and other ventures 

undertaken by the bank in cooperation 

with minority- and women-owned 

financial institutions and low-income 

credit unions. Such activities must help 

meet the credit needs of local 

communities in which the minorityand women-owned financial 

institutions and low-income credit 

unions are chartered. To be considered, 

such activities need not also benefit the 

bank’s assessment area(s) or the broader 

statewide or regional area that includes 

the bank’s assessment area(s). 

■ 3. In Appendix A to Part 345, 

paragraph (a)(1) is revised to read as 

follows: 

Appendix A to Part 345—Ratings 

(a) * * * 

(1) In assigning a rating, the FDIC evaluates 

a bank’s performance under the applicable 

performance criteria in this part, in 

accordance with §§ 345.21 and 345.28. This 

includes consideration of low-cost education 

loans provided to low-income borrowers and 

activities in cooperation with minority- or 

women-owned financial institutions and 

low-income credit unions, as well as 

adjustments on the basis of evidence of 

discriminatory or other illegal credit 

practices. 

* * * * * 

Department of the Treasury 

Office of Thrift Supervision 

12 CFR Chapter V 

■ For the reasons set forth in the joint 

preamble, the Office of Thrift 

Supervision amends part 563e of 

chapter V of title 12 of the Code of 

Federal Regulations as follows: 

PART 563e—COMMUNITY 

REINVESTMENT 

■ 1. The authority citation for part 563e 

is revised to read as follows: 

Authority: 12 U.S.C. 1462a, 1463, 1464, 

1467a, 1814, 1816, 1828(c), and 2901 through 

2908. 

■ 2. In § 563e.21, add new paragraphs 

(e) and (f) to read as follows: 

§ 563e.21 Performance tests, standards, 

and ratings, in general. 

* * * * * 

(e) Low-cost education loans provided 

to low-income borrowers. In assessing 

and taking into account the record of a 

savings association under this part, the 

OTS considers, as a factor, low-cost 

education loans originated by the 

savings association to borrowers, 

particularly in its assessment area(s), 

who have an individual income that is 

less than 50 percent of the area median 

income. For purposes of this paragraph, 

‘‘low-cost education loans’’ means any 

education loan, as defined in section 

140(a)(7) of the Truth in Lending Act 

(15 U.S.C. 1650(a)(7)) (including a loan 

under a state or local education loan 

program), originated by the savings 


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61046 Federal Register / Vol. 75, No. 191 / Monday, October 4, 2010 / Rules and Regulations 

association for a student at an 

‘‘institution of higher education,’’ as that 

term is generally defined in sections 101 

and 102 of the Higher Education Act of 

1965 (20 U.S.C. 1001 and 1002) and the 

implementing regulations published by 

the U.S. Department of Education, with 

interest rates and fees no greater than 

those of comparable education loans 

offered directly by the U.S. Department 

of Education. Such rates and fees are 

specified in section 455 of the Higher 

Education Act of 1965 (20 U.S.C. 

1087e). 

(f) Activities in cooperation with 

minority- or women-owned financial 

institutions and low-income credit 

unions. In assessing and taking into 

account the record of a nonminorityowned and nonwomen-owned savings 

association under this part, the OTS 

considers as a factor capital investment, 

loan participation, and other ventures 

undertaken by the savings association in 

cooperation with minority- and womenowned financial institutions and lowincome credit unions. Such activities 

must help meet the credit needs of local 

communities in which the minorityand women-owned financial 

institutions and low-income credit 

unions are chartered. To be considered, 

such activities need not also benefit the 

savings association’s assessment area(s) 

or the broader statewide or regional area 

that includes the savings association’s 

assessment area(s). 

■ 3. In Appendix A to Part 563e, 

paragraph (a)(1) is revised to read as 

follows: 

Appendix A to Part 563e—Ratings 

(a) * * * 

(1) In assigning a rating, the OTS evaluates 

a savings association’s performance under 

the applicable performance criteria in this 

part, in accordance with §§ 563e.21 and 

563e.28. This includes consideration of lowcost education loans provided to low-income 

borrowers and activities in cooperation with 

minority- or women-owned financial 

institutions and low-income credit unions, as 

well as adjustments on the basis of evidence 

of discriminatory or other illegal credit 

practices. 

* * * * * 

Dated: June 29, 2010. 

John C. Dugan, 

Comptroller of the Currency. 

By order of the Board of Governors of the 

Federal Reserve System, September 2, 2010. 

Jennifer J. Johnson, 

Secretary of the Board. 

Dated at Washington, DC, this 27th day of 

September, 2010. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

Dated: September 24, 2010. 

By the Office of Thrift Supervision. 

John E. Bowman, 

Acting Director. 

[FR Doc. 2010–24737 Filed 10–1–10; 8:45 am] 

BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P; 

6720–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2010–0342; Directorate 

Identifier 2002–NE–08–AD; Amendment 39– 

16458; AD 2010–20–23] 

RIN 2120–AA64 

Airworthiness Directives; BombardierRotax GmbH Type 912 F, 912 S, and 

914 F Series Reciprocating Engines 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule. 

SUMMARY: The FAA is superseding an 

existing airworthiness directive (AD) for 

certain serial numbers (S/Ns) of 

Bombardier-Rotax GmbH type 912 F and 

914 F series reciprocating engines. That 

AD currently requires initial and 

repetitive visual inspections of the 

engine crankcase for cracks. This AD 

requires those same inspections, adds 

the 912 S series to the affected 

population, adds a test procedure to 

determine the engine suitability for a 

special flight permit, and changes 

applicability from engine S/N to 

crankcase S/N. This AD results from an 

increase in the affected crankcase 

population. We are issuing this AD to 

prevent oil loss caused by cracks in the 

engine crankcase, which could lead to 

in-flight failure of the engine and forced 

landing. 

DATES: This AD becomes effective 

November 8, 2010. 

ADDRESSES: You can get the service 

information identified in this AD from 

BRP-Rotax GmbH & Co. KG, Welser 

Strasse 32, A–4623 Gunskirchen, 

Austria. 

The Docket Operations office is 

located at Docket Management Facility, 

U.S. Department of Transportation, 1200 

New Jersey Avenue, SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC 20590–0001. 

FOR FURTHER INFORMATION CONTACT: 

Alan Strom, Aerospace Engineer, Engine 

Certification Office, FAA, Engine & 

Propeller Directorate, 12 New England 

Executive Park, Burlington, MA 01803; 

e-mail: alan.strom@faa.gov; telephone 

(781) 238–7143; fax (781) 238–7199. 

SUPPLEMENTARY INFORMATION: The FAA 

proposed to amend 14 CFR part 39 by 

superseding AD 2002–16–26, 

Amendment 39–12865 (67 FR 53296, 

August 15, 2002), with a proposed AD. 

The proposed AD applies to 

Bombardier-Rotax GmbH type 912 F, 

912 S, and 914 F series reciprocating 

engines with certain serial-numbered 

crankcases. We published the proposed 

AD in the Federal Register on April 7, 

2010 (75 FR 17632). That action 

proposed to require initial visual 

inspection for cracks in the engine 

crankcase of engines with certain serialnumbered crankcases, within 50 hours 

time-in-service (TIS) after the effective 

date of that AD, and repetitive visual 

inspections at each 100-hour, annual, or 

progressive inspection, or within 110 

hours TIS since last inspection, 

whichever occurs first. If any cracks are 

found, the engine must be removed from 

service. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Operations office between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The AD docket 

contains this AD, the regulatory 

evaluation, any comments received, and 

other information. The street address for 

the Docket Operations office (telephone 

(800) 647–5527) is provided in the 

ADDRESSES section. Comments will be 

available in the AD docket shortly after 

receipt. 

Comments 

We provided the public the 

opportunity to participate in the 

development of this AD. We have 

considered the comment received. 

One commenter asks us to change 

paragraph (g)(4) from ‘‘If the engine 

crankcase is cracked, replace the engine 

before further flight’’ to ‘‘If the engine 

crankcase is cracked, replace, repair, or 

overhaul the engine before further 

flight’’. The commenter states that this 

would allow the option of replacing the 

crankcase as a repair or overhaul as well 

as an outright engine replacement. 

We partially agree. An owner or 

operator might interpret paragraph (g)(4) 

to mean they can’t repair the engine. We 

have changed paragraph (g)(4) to state 

‘‘If the engine crankcase is cracked, 

remove the engine from service before 

further flight.’’ 


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