Community Reinvestment Act Regulations, 15570-15574 [05-5983]

Download as PDF 15570 Federal Register / Vol. 70, No. 58 / Monday, March 28, 2005 / Rules and Regulations agencies’’) are adopting, in final form, without change, the joint interim rule that was published for comment in the Federal Register on July 8, 2004. This joint final rule conforms our regulations § 94.21 [Removed and Reserved] implementing the Community I 4. Section 94.21 is removed and Reinvestment Act (CRA) to changes in: reserved. the Standards for Defining Metropolitan and Micropolitan Statistical Areas § 94.25 [Amended] published by the U.S. Office of I 5. In § 94.25, paragraph (a) is amended Management and Budget (OMB) in by removing the words ‘‘Chihuahua, and December 2000; census tracts Sinaloa’’ and adding the words designated by the U.S. Census Bureau ‘‘Campeche, Chihuahua, Quintana Roo, (Census); and the Board’s Regulation C, Sinaloa, Sonora, and Yucatan’’ in their which implements the Home Mortgage place. Disclosure Act (HMDA). The joint final rule also makes a technical correction to Done in Washington, DC, this 22nd day of Executive Order 12988 a cross-reference within our CRA March 2005. This final rule has been reviewed regulations. This joint final rule does W. Ron DeHaven, under Executive Order 12988, Civil not make substantive changes to the Administrator, Animal and Plant Health Justice Reform. This rule: (1) Preempts requirements of the CRA regulations, Inspection Service. all State and local laws and regulations and it is identical to the joint interim [FR Doc. 05–6028 Filed 3–25–05; 8:45 am] that are inconsistent with this rule; (2) final rule adopted by the agencies. BILLING CODE 3410–34–P has no retroactive effect; and (3) does DATES: This joint final rule is effective not require administrative proceedings on March 28, 2005. before parties may file suit in court FOR FURTHER INFORMATION CONTACT: DEPARTMENT OF THE TREASURY challenging this rule. OCC: Karen Tucker, National Bank Office of the Comptroller of the Paperwork Reduction Act Examiner, Compliance Policy Division, Currency (202) 874–4428; Margaret Hesse, Special This final rule contains no new Counsel, Community and Consumer information collection or recordkeeping 12 CFR Part 25 Law Division, (202) 874–5750; or requirements under the Paperwork Patrick T. Tierney, Attorney, Legislative [Docket No. 05–06] Reduction Act of 1995 (44 U.S.C. 3501 and Regulatory Activities Division, et seq.). RIN 1557–AC86 (202) 874–5090, Office of the List of Subjects in 9 CFR Part 94 Comptroller of the Currency, 250 E FEDERAL RESERVE SYSTEM Street, SW., Washington, DC 20219. Animal diseases, Imports, Livestock, Board: William T. Coffey, Senior Meat and meat products, Milk, Poultry 12 CFR Part 228 Review Examiner, (202) 452–3946; and poultry products, Reporting and [Regulation BB; Docket No. R–1205] Catherine M.J. Gates, Oversight Team recordkeeping requirements. Leader, (202) 452–3946; Kathleen C. I Accordingly, we are amending 9 CFR FEDERAL DEPOSIT INSURANCE Ryan, Counsel, (202) 452–3667; or Dan part 94 as follows: CORPORATION S. Sokolov, Senior Attorney, (202) 452– 2412, Division of Consumer and PART 94—RINDERPEST, FOOT-AND12 CFR Part 345 Community Affairs, Board of Governors MOUTH DISEASE, FOWL PEST (FOWL of the Federal Reserve System, 20th RIN 3064–AC82 PLAGUE), EXOTIC NEWCASTLE Street and Constitution Avenue, NW., DISEASE, AFRICAN SWINE FEVER, DEPARTMENT OF THE TREASURY Washington, DC 20551. CLASSICAL SWINE FEVER, AND FDIC: Pamela Freeman, Policy BOVINE SPONGIFORM Analyst, (202) 898–6568, Division of Office of Thrift Supervision ENCEPHALOPATHY: PROHIBITED Supervision and Consumer Protection; AND RESTRICTED IMPORTATIONS Susan van den Toorn, Counsel, (202) 12 CFR Part 563e I 1. The authority citation for part 94 898–8707; or Richard M. Schwartz, [No. 2005–06] continues to read as follows: Counsel, (202) 898–7424, Legal RIN 1550–AB91 Division, Federal Deposit Insurance Authority: 7 U.S.C. 450, 7701–7772, and Corporation, 550 17th Street, NW., 8301–8317; 21 U.S.C. 136 and 136a; 31 Community Reinvestment Act Washington, DC 20429. U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4. Regulations OTS: Celeste Anderson, Project § 94.9 [Amended] Manager, Compliance Policy, (202) 906– AGENCIES: Office of the Comptroller of 7990; or Richard Bennett, Counsel, I 2. In § 94.9, paragraph (a) is amended the Currency, Treasury (OCC); Board of Regulations and Legislation Division, by removing the words ‘‘Chihuahua, and Governors of the Federal Reserve (202) 906–7409, Office of Thrift Sinaloa’’ and adding the words System (Board); Federal Deposit Supervision, 1700 G Street, NW., ‘‘Campeche, Chihuahua, Quintana Roo, Insurance Corporation (FDIC); and Washington, DC 20552. Sinaloa, Sonora, and Yucatan’’ in their Office of Thrift Supervision, Treasury place. SUPPLEMENTARY INFORMATION: (OTS). ACTION: Joint final rule. Introduction § 94.10 [Amended] or U.S. exporters of pork and pork products, small or otherwise, will be affected significantly by this final rule. This is because, for the reasons discussed above, the amount of live swine, pork, other pork products, and swine semen imported into the United States from the Mexican States of Sonora, Yucatan, Campeche, and Quintana Roo is likely to be small. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities. Sinaloa’’ and adding the words ‘‘Campeche, Chihuahua, Quintana Roo, Sinaloa, Sonora, and Yucatan’’ in their place. 3. In § 94.10, paragraph (a) is amended SUMMARY: The OCC, Board, FDIC, and by removing the words ‘‘Chihuahua, and OTS (collectively, ‘‘we’’ or ‘‘the I VerDate jul<14>2003 15:00 Mar 25, 2005 Jkt 205001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 On July 8, 2004, the agencies published a joint interim rule with E:\FR\FM\28MRR1.SGM 28MRR1 Federal Register / Vol. 70, No. 58 / Monday, March 28, 2005 / Rules and Regulations request for comment in the Federal Register (69 FR 41181) that amended our regulations implementing the CRA (12 U.S.C. 2901 et seq.). The joint interim rule conformed the agencies’ CRA regulations to recent actions of OMB, Census, and the Board.1 Together, the agencies received nine discrete comments: six from community organizations, two from financial institutions, and one from an industry trade organization. Summary of Changes Made by the Joint Interim Rule and Comments Received Changes Resulting From OMB Revisions OMB updates its standards for defining statistical areas approximately every 10 years. The agencies’ CRA regulations use OMB’s standards for defining metropolitan areas for purposes of CRA data collection and reporting, and for delineating institutions’ assessment area(s). Under OMB’s 1990 standards, metropolitan areas consisted of: (1) metropolitan statistical areas (MSAs) and (2) larger consolidated metropolitan statistical areas (CMSAs). These CMSAs consisted of primary metropolitan statistical areas (PMSAs). In 2000, OMB adopted new Standards for Defining Metropolitan and Micropolitan Statistical Areas, which replaced OMB’s 1990 standards. 65 FR 82228 (Dec. 27, 2000). The 2000 standards retain the basic concept of an MSA (an area with at least 50,000 population), but divided MSAs having a single core with a population of at least 2.5 million into ‘‘metropolitan divisions.’’ OMB directed all agencies that conduct statistical activities to collect and publish data for MSAs using the most recent definition of the area.2 The joint interim rule made several changes to the CRA regulations to incorporate OMB’s new standards and definitions. The joint interim rule removed the definition of ‘‘CMSA’’ and all references to CMSAs because OMB no longer uses that term. As discussed below, where the regulations referred to CMSAs, the joint interim rule replaced ‘‘CMSA’’ with ‘‘MSA.’’ The joint interim rule revised the definition of ‘‘MSA’’ to remove the reference to PMSA, another term that 1 The joint rulemaking is not related to the agencies’ comprehensive review of the CRA regulations and the proposed revisions to the regulations that were published for comment on February 6, 2004, at 69 FR 5729. 2 See OMB Bulletin No. 03–04 (June 6, 2003), available at https://www.whitehouse.gov/omb/ bulletins/b03–04.html and OMB Bulletin No. 04–03 (Feb. 18, 2004), available at https:// www.whitehouse.gov/omb/bulletins/fy04/b04– 03.html. VerDate jul<14>2003 15:00 Mar 25, 2005 Jkt 205001 OMB no longer uses. The revised definition of ‘‘MSA’’ refers only to metropolitan statistical areas, as defined by OMB (12 CFR 25.12(r), 228.12(r), 345.12(r), and 563e.12(q)). We added a definition of ‘‘metropolitan division’’ in the joint interim rule because in certain large MSAs, OMB has delineated ‘‘metropolitan divisions,’’ which are the statistical areas for which the agencies have determined that CRA data are to be reported, median family income is to be calculated, and within which an institution’s CRA performance is to be evaluated (12 CFR 25.12(q), 228.12(q), 345.12(q) and 563e.12(p)). Next, the joint interim rule clarified that an institution may designate an assessment area that includes one or more metropolitan divisions within a large MSA (12 CFR 25.41, 228.41, 345.41, and 563e.41), just as an institution previously could have designated an assessment area that included one or more PMSAs. Although the agencies’ regulations prior to publication of the joint interim rule allowed an institution to delineate an entire CMSA as an assessment area, examiners evaluated CRA performance at the PMSA level using PMSA income data. The joint interim rule’s supplementary information section explained that examiners similarly will evaluate CRA performance at the metropolitan division level in those MSAs that are divided into metropolitan divisions, even if the institution delineates an assessment area of more than one metropolitan division, an entire MSA, or more than one contiguous MSA. Prior to the adoption of the joint interim rule, 12 CFR 25.41(e)(4), 228.41(e)(4), 345.41(e)(4), and 563e.41(e)(4) stated that an assessment area ‘‘[m]ay not extend substantially beyond a CMSA boundary * * *.’’ The joint interim rule changed these provisions to replace ‘‘CMSA’’ with ‘‘MSA’’ to conform the terminology to the new OMB area standards. The regulations still allow an institution to delineate an assessment area consisting of more than one contiguous MSA. See 12 CFR 25.41(c)(1), 228.41(c)(1), 345.41(c)(1), and 563e.41(c)(1). The border of such an assessment area, however, may not extend substantially beyond the boundaries of the MSAs in the assessment area. Finally, the joint interim rule added a new definition of ‘‘nonmetropolitan area,’’ which is any area that is not included in an MSA (12 CFR 25.12(s), PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 15571 228.12(s), 345.12(s), and 563e.12(r)).3 In a related matter, the joint interim rule changed the agency-prepared annual aggregate disclosure statements to include a statement for the ‘‘nonmetropolitan portion of each state’’ rather than the ‘‘non-MSA portion of each state,’’ which was the language prior to the change, to ensure consistent terminology throughout the regulation. See 12 CFR 25.42(i), 228.42(i), 345.42(i), and 563e.42(i). Some community organizations commented that financial institutions should be required to designate an assessment area consisting of an entire MSA, rather than having the option to designate an assessment area limited to one or more metropolitan divisions within an MSA. They were concerned that the option to choose a metropolitan division would allow institutions to exclude from their assessment area(s) the urban areas in the Detroit-LivoniaWarren MSA, and in other large MSAs that are divided into metropolitan divisions. As discussed in the supplementary information section of the joint interim rule, OMB’s boundaries cause some census tracts in the DetroitLivonia-Dearborn Metropolitan Division (which consists only of Wayne County and represents the urban center of Detroit) to change classification from moderate-to middle-income, while some census tracts in the suburban WarrenFarmington Hills-Troy Metropolitan Division change classification from middle-to moderate-income. 69 FR 41183 (July 8, 2004). The commenters argued that institutions will be encouraged by these changes to exercise their option to include only the suburban metropolitan division(s) in their assessment area(s). The agencies have carefully considered the commenters’ concern. However, for the following reasons, we are not adopting the suggested change. The change advocated by the commenters would represent a significant departure from the CRA regulations regarding assessment area delineation, which allow institutions to delineate assessment areas smaller or larger than an entire MSA, if certain conditions are met. Under the 1995 CRA regulations, an assessment area can be as small as the census tracts in which the institution has its main office, its branches, and its deposit-taking ATMs; 3 As we noted in the supplementary information section of the joint interim rule, a ‘‘micropolitan statistical area’’ is a new statistical area, defined by OMB in 2000, that is a ‘‘nonmetropolitan area.’’ 69 FR at 41184. A micropolitan statistical area is a ‘‘core-based statistical area’’ (as is an MSA), and has at least one urban cluster that has a population of at least 10,000, but less than 50,000. E:\FR\FM\28MRR1.SGM 28MRR1 15572 Federal Register / Vol. 70, No. 58 / Monday, March 28, 2005 / Rules and Regulations or a political subdivision such as a city, county, or town; or it could consist of a single PMSA, an entire MSA, or a CMSA, if the conditions are met.4 One of the conditions has been, and continues to be, that the area designated does not arbitrarily exclude low-or moderate-income geographies or reflect illegal discrimination.5 Further, the regulations allow, and continue to allow, institutions to delineate assessment areas smaller than an entire MSA. An institution can delineate assessment areas that are political subdivisions and may even adjust the boundaries of its assessment areas to include only the portion of a political subdivision that it reasonably can be expected to serve. An adjustment is particularly appropriate in the case of an assessment area that otherwise would be extremely large, of unusual configuration, or divided by significant geographic barriers.6 Requiring institutions to delineate assessment areas no smaller than an entire MSA may be unreasonable for institutions that have delineated smaller assessment areas based on their institutional size, capacity, and business strategy. Unusual assessment area concerns, such as those presented by the DetroitLivonia-Warren MSA, can be better addressed by examiners on a case-bycase basis, using the current CRA regulations and examination procedures.7 The CRA regulations continue to prohibit delineating assessment areas that reflect illegal discrimination or that arbitrarily exclude low-or moderate-income 4 See 12 CFR 25.41(c) & (d), 228.41(c) & (d), 345.41(c) & (d), and 563e.41(c) & (d) in effect prior to the changes adopted by the joint interim rule; see also Interagency Questions and Answers Regarding Community Reinvestment, 66 FR 36620, 36640–41 (July 12, 2001) (hereinafter Qs and As) (questions and answers addressing § _.41(c) & (d)). 5 12 CFR 25.41(e)(2) & (3), 228.41(e)(2) & (3), 345.41(e)(2) & (3), and 563e.41(e)(2) & (3). Redlining violates the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq., and the Fair Housing Act, 42 U.S.C. 3601 et seq. Evidence of discriminatory credit practices adversely affects an agency’s evaluation of an institution’s performance under the CRA. 12 CFR 25.28(c), 228.28(c), 345.28(c), and 563e.28(c). 6 12 CFR 25.41(d), 228.41(d), 345.41(d), and 563e.41(d). See also Qs and As at 66 FR 36641 (question and answer § _.41(d)–1 (Adjustments to Geographic Area(s))). 7 As noted in the supplementary information section of the joint interim rule, many of the 11 MSAs that were subdivided into metropolitan divisions experienced no or negligible change in census tract income level classification because of the OMB changes, based on Board staff estimates. For example, in the following MSAs, 0 percent to 0.05 percent of census tracts changed from either moderate-income to middle-income, or from middle-income to moderate-income, as a result of OMB’s boundaries: Dallas-Fort Worth-Arlington; Los Angeles-Long Beach-Santa Ana; Miami-Ft. Lauderdale-Miami Beach; San Francisco-OaklandFremont; and Seattle-Tacoma-Bellevue. VerDate jul<14>2003 15:00 Mar 25, 2005 Jkt 205001 neighborhoods.8 If an institution in Detroit, or another MSA, changes its assessment area(s) to exclude urban areas, examiners will look at factors such as income levels inside and outside an institution’s assessment area, the institution’s size, financial condition, where it lends, and its business strategy to determine whether the institution is engaging in redlining.9 Further, in the service test, examiners consider branch distribution among geographies of different income categories and branch closings, particularly in low- and moderateincome geographies. Examination staffs at all of the agencies are aware of the new OMB boundaries and the potential impact on income level classifications. The agencies believe that these provisions are sufficient to prevent institutions from inappropriately redrawing their assessment areas to exclude urban metropolitan divisions. Finally, the agencies do not believe that the joint final rule will result in wholesale redlining of urban Detroit as commenters suggested. Data from 2003 on the branch locations and assessment area(s) of the 32 institutions in Detroit that were deemed ‘‘large’’ for CRA purposes suggest that a substantial majority of those institutions would not exclude the urban metropolitan division from their assessment area(s). Specifically, 20 of the large institutions in Detroit had at least one branch in Wayne County. Of the 20 institutions, 16 had assessment areas that included Wayne County and the suburban counties, and had branches in both Wayne County and the suburban counties. Three institutions had assessment areas and branches only in Wayne County, and one had assessment areas that included both Wayne County and the suburban counties, but had branches only in Wayne County. Thus, those institutions cannot entirely exclude the Detroit-Livonia-Dearborn Metropolitan Division from their assessment area(s).10 One financial institution commenter suggested that, rather than replacing the term ‘‘CMSA’’ with ‘‘MSA’’, the agencies should have replaced ‘‘CMSA’’ 8 12 CFR 25.41(e)(3), 228.41(e)(3), 345.41(e)(3), and 563e.41(e)(3). 9 See Qs and As at 66 FR 36641 (particularly questions and answers § _.41(d)–1 (Adjustments to Geographic Area(s)) and § _.41(e)(3)–1 (May Not Arbitrarily Exclude Low-or Moderate-Income Geographies)). 10 One additional institution included Wayne County in its assessment area and had branches only in the suburban Detroit counties. Eleven institutions had branches and assessment area(s) only in the suburban counties that make up the Warren-Farmington Hills-Troy Metropolitan Division. PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 with ‘‘CSA’’ (combined statistical area), another new area standard that OMB adopted in 2000. The agencies believe that it may be appropriate for some institutions to delineate an assessment area based on a CSA. The agencies have not, however, made the suggested change to the regulation because a CSA is not the direct equivalent of a CMSA under the 1990 standards. A CMSA was an MSA with a population of at least 1 million; in contrast, a CSA may be much smaller or much larger than a CMSA in population. For example, a CSA may consist of two Micropolitan Statistical Areas. The Micropolitan Statistical Area is a new statistical unit introduced in the 2000 standards and consists of an area with a population between 10,000 and 49,999. On the other hand, a CSA may be quite populous; it may consist of three or more MSAs and multiple Micropolitan Statistical Areas. Therefore, the agencies believe that whether an assessment area should consist of a CSA is best left to each institution, considering its size, business strategy, capacity, and constraints, and subject to review by the appropriate Federal financial institution supervisory agency. Further, if an institution designates an assessment area that consists of a CSA that includes an MSA and a Micropolitan Statistical Area, the examiner must separately evaluate performance in the MSA and the Micropolitan Statistical Area (i.e., the nonmetropolitan area) because each of these areas has a distinct median family income. For the reasons set forth above, the agencies are adopting as final the provisions conforming our regulations to OMB’s statistical area changes as they were published in the joint interim rule. Changes Resulting From Census Revisions Prior to the joint interim rule, the CRA regulations defined the term ‘‘geography’’ as ‘‘a census tract or a block numbering area delineated by the United States Bureau of the Census in the most recent decennial census.’’ Beginning with Census 2000, the U.S. Census Bureau assigned census tracts in all counties, making block numbering areas unnecessary.11 Therefore, in the joint interim rule, we changed the regulations’ definition of ‘‘geography’’ to omit the term ‘‘block numbering area’’ (12 CFR 25.12(k), 228.12(k), 345.12(k), and 563e.12(j)). 11 See, e.g., U.S. Census Bureau, Geographic Terms and Concepts (definition of ‘‘census tract’’) available at https://www.census.gov/geo/www/tiger/ glossry2.html#CensusTract. E:\FR\FM\28MRR1.SGM 28MRR1 Federal Register / Vol. 70, No. 58 / Monday, March 28, 2005 / Rules and Regulations The agencies did not receive any comments addressing this change. Accordingly, the agencies are adopting the change based on Census revisions without modification. We are adopting this change as final as it was published in the joint interim rule. Changes Resulting From Revisions to the Board’s Regulation C Prior to the joint interim rule, the CRA regulations defined a ‘‘home mortgage loan’’ to mean a ‘‘home improvement loan’’ or a ‘‘home purchase loan’’ as defined in the regulations implementing the Home Mortgage Disclosure Act (12 CFR part 203). The interagency CRA guidance that we published clarified that this definition of ‘‘home mortgage loan’’ also included refinancings of home improvement and home purchase loans.12 The Board substantially revised the HMDA regulation (Regulation C) in 2002, effective January 1, 2004.13 Revised Regulation C defined the term, ‘‘refinancing,’’ so that a loan is reportable as a refinancing if it satisfies and replaces an existing obligation, and both the new and the existing obligation are secured by a lien on a dwelling. 12 CFR 203.2(k). As a result of the revisions to Regulation C, we changed the definition of ‘‘home mortgage loan,’’ found at 12 CFR 25.12(l), 228.12(l), 345.12(l), and 563e.12(k), to include refinancings, as well as home purchase loans and home improvement loans, as defined in the Board’s regulations at 12 CFR 203.2. As we noted in the supplementary information section of the joint interim rule, because of the change in the Regulation C definition, loans to refinance small business or small farm loans, where a dwelling continues to serve as collateral solely through an abundance of caution, will now be reportable as refinancings under Regulation C. Those loans will also be reportable for Call Report and Thrift Financial Report purposes as small business or small farm loans, resulting in the potential for ‘‘double counting’’ of these loans in CRA examinations. See 69 FR 41184–85. Two community organization commenters asserted that our CRA regulations should prohibit such double reporting of small business loans and small farm loans secured by residential real estate for purposes of CRA. The agencies are not changing the CRA 12 See Qs and As at 66 FR 36628 (July 12, 2001) (question and answer §§ _.12(m) & 563e.12(l)–1). 13 67 FR 7222 (Feb. 15, 2002); 67 FR 30771 (May 8, 2002). VerDate jul<14>2003 15:00 Mar 25, 2005 Jkt 205001 regulation to address the commenters’ suggestion. The suggested change would likely increase the data collection and reporting burden for financial institutions, without increasing the effectiveness of CRA examinations. As stated in the supplementary information to the joint interim rule, the agencies do not anticipate that ‘‘double-reported’’ loans will be so numerous as to affect the typical institution’s CRA rating. In the event that an institution reports a significant number or amount of loans as both home mortgage and small business or farm loans, examiners will consider that overlap in evaluating the institution’s performance. Accordingly, the agencies are adopting the change based on the Board’s Regulation C revisions without modification. We are adopting this change as it was published in the joint interim rule. Technical Correction The joint interim rule also corrected an error in the cross-reference found in 12 CFR 25.27(g)(1), 228.27(g)(1), 345.27(g)(1), and 563e.27(g)(1). Those provisions, which address the time for an agency’s decision following receipt of a completed strategic plan, previously referred the reader to paragraph (d) of 12 CFR 25.27, 228.27, 345.27, or 563e.27, respectively, for a description of the materials that had to be included with a strategic plan submission. This information is found instead in paragraph (e) of 12 CFR 25.27, 228.27, 345.27, or 563e.27. Therefore, we corrected the cross-references in 12 CFR 25.27(g)(1), 228.27(g)(1), 345.27(g)(1), and 563e.27(g)(1) to refer to paragraph (e) of 12 CFR 25.27, 228.27, 345.27, and 563e.27, respectively. The agencies did not receive any comments addressing this technical correction. Accordingly, the agencies are adopting the technical correction that was published in the joint interim rule as final without modification. General Comment A financial industry trade association commented that inasmuch as the changes to the CRA regulations are designed to coordinate the CRA rules with existing regulatory changes, it does not object to the revisions. However, the commenter pointed out that these types of changes add to the regulatory burden for the small community bank. The agencies are aware that many regulatory changes impact regulated entities in some manner. However, the changes made by the joint interim rule and this joint final rule are necessary because institutions could not have complied with the regulations as previously PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 15573 written. For example, some of the statistical areas referenced in the previous regulations no longer exist. Effective Date The Administrative Procedure Act provides that, subject to several exceptions, a substantive rule may not be made effective until 30 days after publication in the Federal Register. 5 U.S.C. 553(d). However, an agency may make a rule immediately effective upon publication if the agency finds good cause for doing so and publishes its findings with the rule. Likewise, section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (CDRI), Public Law 103–325, authorizes a banking agency to issue a rule 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)(B). As described in the supplementary information section of the joint interim rule, the agencies found good cause to dispense with the 30-day delayed effective date pursuant to 5 U.S.C. 553(d)(3). The agencies also determined that good cause existed to adopt an effective date that is before the first day of the calendar quarter that begins on or after the date on which the regulation is published, as would otherwise be required by section 302 of the CDRI (12 U.S.C. 4802(b)(1)(B)). The joint interim rule became effective upon publication because financial institutions must use the new statistical area standards and definitions when adjusting assessment area delineations and collecting loan data during calendar year 2004 (beginning with loans made as of January 1, 2004) for reporting by March 1, 2005. The changes adopted in the joint interim rule merely conformed our CRA regulations to recent changes by OMB, Census, and the Board and corrected a cross-reference—they were not substantive. That reasoning also applies to the joint final rule, which is identical to the joint interim rule. Accordingly, the agencies conclude that it is unnecessary and contrary to public interest to delay the effective date of this joint final rule. Regulatory Analysis Paperwork Reduction Act There are no information collection requirements in this joint final rule. Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. E:\FR\FM\28MRR1.SGM 28MRR1 15574 Federal Register / Vol. 70, No. 58 / Monday, March 28, 2005 / Rules and Regulations 605(b)), the OCC, Board, FDIC, and OTS hereby certify that this joint final rule will not have a significant economic impact on a substantial number of small entities. The agencies expect that this joint final rule will not have significant secondary or incidental effects on a substantial number of small entities or create any additional burden on small entities. This joint final rule merely confirms that the joint interim rule, which made a technical correction and conformed terminology in the current CRA regulations to terms and definitions already adopted by OMB, Census, and the Board, is final. Accordingly, a regulatory flexibility analysis is not required. OCC Executive Order 13132 Determination The OCC has determined that this joint final rule does not have any Federalism implications, as required by Executive Order 13132. is adopted as a joint final rule without change. List of Subjects PART 563e—COMMUNITY REINVESTMENT OCC and OTS Executive Order 12866 Determinations 12 CFR Part 345 Banks, Banking, Community development, Credit, Investments, Reporting and recordkeeping requirements. The OCC and the OTS have determined that this joint final rule is not a significant regulatory action as defined in Executive Order 12866. OCC and OTS Unfunded Mandates Reform Act of 1995 Determinations 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 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 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). VerDate jul<14>2003 15:00 Mar 25, 2005 Jkt 205001 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 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 PART 25—COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT PRODUCTION REGULATIONS Accordingly, the joint interim rule amending 12 CFR part 25, which was published at 69 FR 41181 on July 8, 2004, is adopted as a joint final rule without change. I Board of Governors of the Federal Reserve System Department of the Treasury Office of Thrift Supervision 12 CFR Chapter V Accordingly, the joint interim rule amending 12 CFR part 563e, which was published at 69 FR 41181 on July 8, 2004, is adopted as a joint final rule without change. I Dated: February 14, 2005. Julie L. Williams, Acting Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, March 2, 2005. Jennifer J. Johnson, Secretary of the Board. Dated: March 18, 2005. By Order of the Board of Directors of the Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. Dated: February 11, 2005. By the Office of Thrift Supervision. James E. Gilleran, Director. [FR Doc. 05–5983 Filed 3–25–05; 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–2004–19757; Directorate Identifier 2001–NM–273–AD; Amendment 39–14024; AD 2005–06–04] RIN 2120–AA64 12 CFR Chapter II Airworthiness Directives; British Aerospace Model BAe 146 and Model Avro 146–RJ Series Airplanes PART 228—COMMUNITY REINVESTMENT (REGULATION BB) AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. Accordingly, the joint interim rule amending 12 CFR part 228, which was published at 69 FR 41181 on July 8, 2004, SUMMARY: The FAA is superseding an is adopted as a joint final rule without existing airworthiness directive (AD), change. which applies to certain British Federal Deposit Insurance Corporation Aerospace Model BAe 146 and Model Avro 146–RJ series airplanes. That AD 12 CFR Chapter III currently requires a one-time measurement of the thickness of the PART 345—COMMUNITY outer links on the side stays of the main REINVESTMENT landing gear (MLG), and related investigative and corrective actions as I Accordingly, the joint interim rule necessary; and provides for replacement amending 12 CFR part 345, which was published at 69 FR 41181 on July 8, 2004, of a thin outer link with a new or I PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 E:\FR\FM\28MRR1.SGM 28MRR1

Agencies

[Federal Register Volume 70, Number 58 (Monday, March 28, 2005)]
[Rules and Regulations]
[Pages 15570-15574]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-5983]


=======================================================================
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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 25

[Docket No. 05-06]
RIN 1557-AC86

FEDERAL RESERVE SYSTEM

12 CFR Part 228

[Regulation BB; Docket No. R-1205]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 345

RIN 3064-AC82

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563e

[No. 2005-06]
RIN 1550-AB91


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); and Office of Thrift Supervision, 
Treasury (OTS).

ACTION: Joint final rule.

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SUMMARY: The OCC, Board, FDIC, and OTS (collectively, ``we'' or ``the 
agencies'') are adopting, in final form, without change, the joint 
interim rule that was published for comment in the Federal Register on 
July 8, 2004. This joint final rule conforms our regulations 
implementing the Community Reinvestment Act (CRA) to changes in: the 
Standards for Defining Metropolitan and Micropolitan Statistical Areas 
published by the U.S. Office of Management and Budget (OMB) in December 
2000; census tracts designated by the U.S. Census Bureau (Census); and 
the Board's Regulation C, which implements the Home Mortgage Disclosure 
Act (HMDA). The joint final rule also makes a technical correction to a 
cross-reference within our CRA regulations. This joint final rule does 
not make substantive changes to the requirements of the CRA 
regulations, and it is identical to the joint interim final rule 
adopted by the agencies.

DATES: This joint final rule is effective on March 28, 2005.

FOR FURTHER INFORMATION CONTACT: OCC: Karen Tucker, National Bank 
Examiner, Compliance Policy Division, (202) 874-4428; Margaret Hesse, 
Special Counsel, Community and Consumer Law Division, (202) 874-5750; 
or Patrick T. Tierney, Attorney, Legislative and Regulatory Activities 
Division, (202) 874-5090, Office of the Comptroller of the Currency, 
250 E Street, SW., Washington, DC 20219.
    Board: William T. Coffey, Senior Review Examiner, (202) 452-3946; 
Catherine M.J. Gates, Oversight Team Leader, (202) 452-3946; Kathleen 
C. Ryan, Counsel, (202) 452-3667; or Dan S. Sokolov, Senior Attorney, 
(202) 452-2412, Division of Consumer and Community Affairs, Board of 
Governors of the Federal Reserve System, 20th Street and Constitution 
Avenue, NW., Washington, DC 20551.
    FDIC: Pamela Freeman, Policy Analyst, (202) 898-6568, Division of 
Supervision and Consumer Protection; Susan van den Toorn, Counsel, 
(202) 898-8707; or Richard M. Schwartz, Counsel, (202) 898-7424, Legal 
Division, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
    OTS: Celeste Anderson, Project Manager, Compliance Policy, (202) 
906-7990; or Richard Bennett, Counsel, Regulations and Legislation 
Division, (202) 906-7409, Office of Thrift Supervision, 1700 G Street, 
NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

Introduction

    On July 8, 2004, the agencies published a joint interim rule with

[[Page 15571]]

request for comment in the Federal Register (69 FR 41181) that amended 
our regulations implementing the CRA (12 U.S.C. 2901 et seq.). The 
joint interim rule conformed the agencies' CRA regulations to recent 
actions of OMB, Census, and the Board.\1\ Together, the agencies 
received nine discrete comments: six from community organizations, two 
from financial institutions, and one from an industry trade 
organization.
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    \1\ The joint rulemaking is not related to the agencies' 
comprehensive review of the CRA regulations and the proposed 
revisions to the regulations that were published for comment on 
February 6, 2004, at 69 FR 5729.
---------------------------------------------------------------------------

Summary of Changes Made by the Joint Interim Rule and Comments Received

Changes Resulting From OMB Revisions

    OMB updates its standards for defining statistical areas 
approximately every 10 years. The agencies' CRA regulations use OMB's 
standards for defining metropolitan areas for purposes of CRA data 
collection and reporting, and for delineating institutions' assessment 
area(s). Under OMB's 1990 standards, metropolitan areas consisted of: 
(1) metropolitan statistical areas (MSAs) and (2) larger consolidated 
metropolitan statistical areas (CMSAs). These CMSAs consisted of 
primary metropolitan statistical areas (PMSAs).
    In 2000, OMB adopted new Standards for Defining Metropolitan and 
Micropolitan Statistical Areas, which replaced OMB's 1990 standards. 65 
FR 82228 (Dec. 27, 2000). The 2000 standards retain the basic concept 
of an MSA (an area with at least 50,000 population), but divided MSAs 
having a single core with a population of at least 2.5 million into 
``metropolitan divisions.'' OMB directed all agencies that conduct 
statistical activities to collect and publish data for MSAs using the 
most recent definition of the area.\2\ The joint interim rule made 
several changes to the CRA regulations to incorporate OMB's new 
standards and definitions.
---------------------------------------------------------------------------

    \2\ See OMB Bulletin No. 03-04 (June 6, 2003), available at 
https://www.whitehouse.gov/omb/bulletins/b03-04.html and OMB Bulletin 
No. 04-03 (Feb. 18, 2004), available at https://www.whitehouse.gov/
omb/bulletins/fy04/b04-03.html.
---------------------------------------------------------------------------

    The joint interim rule removed the definition of ``CMSA'' and all 
references to CMSAs because OMB no longer uses that term. As discussed 
below, where the regulations referred to CMSAs, the joint interim rule 
replaced ``CMSA'' with ``MSA.''
    The joint interim rule revised the definition of ``MSA'' to remove 
the reference to PMSA, another term that OMB no longer uses. The 
revised definition of ``MSA'' refers only to metropolitan statistical 
areas, as defined by OMB (12 CFR 25.12(r), 228.12(r), 345.12(r), and 
563e.12(q)).
    We added a definition of ``metropolitan division'' in the joint 
interim rule because in certain large MSAs, OMB has delineated 
``metropolitan divisions,'' which are the statistical areas for which 
the agencies have determined that CRA data are to be reported, median 
family income is to be calculated, and within which an institution's 
CRA performance is to be evaluated (12 CFR 25.12(q), 228.12(q), 
345.12(q) and 563e.12(p)).
    Next, the joint interim rule clarified that an institution may 
designate an assessment area that includes one or more metropolitan 
divisions within a large MSA (12 CFR 25.41, 228.41, 345.41, and 
563e.41), just as an institution previously could have designated an 
assessment area that included one or more PMSAs. Although the agencies' 
regulations prior to publication of the joint interim rule allowed an 
institution to delineate an entire CMSA as an assessment area, 
examiners evaluated CRA performance at the PMSA level using PMSA income 
data. The joint interim rule's supplementary information section 
explained that examiners similarly will evaluate CRA performance at the 
metropolitan division level in those MSAs that are divided into 
metropolitan divisions, even if the institution delineates an 
assessment area of more than one metropolitan division, an entire MSA, 
or more than one contiguous MSA.
    Prior to the adoption of the joint interim rule, 12 CFR 
25.41(e)(4), 228.41(e)(4), 345.41(e)(4), and 563e.41(e)(4) stated that 
an assessment area ``[m]ay not extend substantially beyond a CMSA 
boundary * * *.'' The joint interim rule changed these provisions to 
replace ``CMSA'' with ``MSA'' to conform the terminology to the new OMB 
area standards. The regulations still allow an institution to delineate 
an assessment area consisting of more than one contiguous MSA. See 12 
CFR 25.41(c)(1), 228.41(c)(1), 345.41(c)(1), and 563e.41(c)(1). The 
border of such an assessment area, however, may not extend 
substantially beyond the boundaries of the MSAs in the assessment area.
    Finally, the joint interim rule added a new definition of 
``nonmetropolitan area,'' which is any area that is not included in an 
MSA (12 CFR 25.12(s), 228.12(s), 345.12(s), and 563e.12(r)).\3\ In a 
related matter, the joint interim rule changed the agency-prepared 
annual aggregate disclosure statements to include a statement for the 
``nonmetropolitan portion of each state'' rather than the ``non-MSA 
portion of each state,'' which was the language prior to the change, to 
ensure consistent terminology throughout the regulation. See 12 CFR 
25.42(i), 228.42(i), 345.42(i), and 563e.42(i).
---------------------------------------------------------------------------

    \3\ As we noted in the supplementary information section of the 
joint interim rule, a ``micropolitan statistical area'' is a new 
statistical area, defined by OMB in 2000, that is a 
``nonmetropolitan area.'' 69 FR at 41184. A micropolitan statistical 
area is a ``core-based statistical area'' (as is an MSA), and has at 
least one urban cluster that has a population of at least 10,000, 
but less than 50,000.
---------------------------------------------------------------------------

    Some community organizations commented that financial institutions 
should be required to designate an assessment area consisting of an 
entire MSA, rather than having the option to designate an assessment 
area limited to one or more metropolitan divisions within an MSA. They 
were concerned that the option to choose a metropolitan division would 
allow institutions to exclude from their assessment area(s) the urban 
areas in the Detroit-Livonia-Warren MSA, and in other large MSAs that 
are divided into metropolitan divisions. As discussed in the 
supplementary information section of the joint interim rule, OMB's 
boundaries cause some census tracts in the Detroit-Livonia-Dearborn 
Metropolitan Division (which consists only of Wayne County and 
represents the urban center of Detroit) to change classification from 
moderate-to middle-income, while some census tracts in the suburban 
Warren-Farmington Hills-Troy Metropolitan Division change 
classification from middle-to moderate-income. 69 FR 41183 (July 8, 
2004). The commenters argued that institutions will be encouraged by 
these changes to exercise their option to include only the suburban 
metropolitan division(s) in their assessment area(s).
    The agencies have carefully considered the commenters' concern. 
However, for the following reasons, we are not adopting the suggested 
change. The change advocated by the commenters would represent a 
significant departure from the CRA regulations regarding assessment 
area delineation, which allow institutions to delineate assessment 
areas smaller or larger than an entire MSA, if certain conditions are 
met. Under the 1995 CRA regulations, an assessment area can be as small 
as the census tracts in which the institution has its main office, its 
branches, and its deposit-taking ATMs;

[[Page 15572]]

or a political subdivision such as a city, county, or town; or it could 
consist of a single PMSA, an entire MSA, or a CMSA, if the conditions 
are met.\4\ One of the conditions has been, and continues to be, that 
the area designated does not arbitrarily exclude low-or moderate-income 
geographies or reflect illegal discrimination.\5\ Further, the 
regulations allow, and continue to allow, institutions to delineate 
assessment areas smaller than an entire MSA. An institution can 
delineate assessment areas that are political subdivisions and may even 
adjust the boundaries of its assessment areas to include only the 
portion of a political subdivision that it reasonably can be expected 
to serve. An adjustment is particularly appropriate in the case of an 
assessment area that otherwise would be extremely large, of unusual 
configuration, or divided by significant geographic barriers.\6\ 
Requiring institutions to delineate assessment areas no smaller than an 
entire MSA may be unreasonable for institutions that have delineated 
smaller assessment areas based on their institutional size, capacity, 
and business strategy.
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    \4\ See 12 CFR 25.41(c) & (d), 228.41(c) & (d), 345.41(c) & (d), 
and 563e.41(c) & (d) in effect prior to the changes adopted by the 
joint interim rule; see also Interagency Questions and Answers 
Regarding Community Reinvestment, 66 FR 36620, 36640-41 (July 12, 
2001) (hereinafter Qs and As) (questions and answers addressing 
Sec.  --.41(c) & (d)).
    \5\ 12 CFR 25.41(e)(2) & (3), 228.41(e)(2) & (3), 345.41(e)(2) & 
(3), and 563e.41(e)(2) & (3). Redlining violates the Equal Credit 
Opportunity Act, 15 U.S.C. 1691 et seq., and the Fair Housing Act, 
42 U.S.C. 3601 et seq. Evidence of discriminatory credit practices 
adversely affects an agency's evaluation of an institution's 
performance under the CRA. 12 CFR 25.28(c), 228.28(c), 345.28(c), 
and 563e.28(c).
    \6\ 12 CFR 25.41(d), 228.41(d), 345.41(d), and 563e.41(d). See 
also Qs and As at 66 FR 36641 (question and answer Sec.  --.41(d)-1 
(Adjustments to Geographic Area(s))).
---------------------------------------------------------------------------

    Unusual assessment area concerns, such as those presented by the 
Detroit-Livonia-Warren MSA, can be better addressed by examiners on a 
case-by-case basis, using the current CRA regulations and examination 
procedures.\7\ The CRA regulations continue to prohibit delineating 
assessment areas that reflect illegal discrimination or that 
arbitrarily exclude low-or moderate-income neighborhoods.\8\ If an 
institution in Detroit, or another MSA, changes its assessment area(s) 
to exclude urban areas, examiners will look at factors such as income 
levels inside and outside an institution's assessment area, the 
institution's size, financial condition, where it lends, and its 
business strategy to determine whether the institution is engaging in 
redlining.\9\ Further, in the service test, examiners consider branch 
distribution among geographies of different income categories and 
branch closings, particularly in low- and moderate-income geographies. 
Examination staffs at all of the agencies are aware of the new OMB 
boundaries and the potential impact on income level classifications. 
The agencies believe that these provisions are sufficient to prevent 
institutions from inappropriately redrawing their assessment areas to 
exclude urban metropolitan divisions.
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    \7\ As noted in the supplementary information section of the 
joint interim rule, many of the 11 MSAs that were subdivided into 
metropolitan divisions experienced no or negligible change in census 
tract income level classification because of the OMB changes, based 
on Board staff estimates. For example, in the following MSAs, 0 
percent to 0.05 percent of census tracts changed from either 
moderate-income to middle-income, or from middle-income to moderate-
income, as a result of OMB's boundaries: Dallas-Fort Worth-
Arlington; Los Angeles-Long Beach-Santa Ana; Miami-Ft. Lauderdale-
Miami Beach; San Francisco-Oakland-Fremont; and Seattle-Tacoma-
Bellevue.
    \8\ 12 CFR 25.41(e)(3), 228.41(e)(3), 345.41(e)(3), and 
563e.41(e)(3).
    \9\ See Qs and As at 66 FR 36641 (particularly questions and 
answers Sec.  --.41(d)-1 (Adjustments to Geographic Area(s)) and 
Sec.  --.41(e)(3)-1 (May Not Arbitrarily Exclude Low-or Moderate-
Income Geographies)).
---------------------------------------------------------------------------

    Finally, the agencies do not believe that the joint final rule will 
result in wholesale redlining of urban Detroit as commenters suggested. 
Data from 2003 on the branch locations and assessment area(s) of the 32 
institutions in Detroit that were deemed ``large'' for CRA purposes 
suggest that a substantial majority of those institutions would not 
exclude the urban metropolitan division from their assessment area(s). 
Specifically, 20 of the large institutions in Detroit had at least one 
branch in Wayne County. Of the 20 institutions, 16 had assessment areas 
that included Wayne County and the suburban counties, and had branches 
in both Wayne County and the suburban counties. Three institutions had 
assessment areas and branches only in Wayne County, and one had 
assessment areas that included both Wayne County and the suburban 
counties, but had branches only in Wayne County. Thus, those 
institutions cannot entirely exclude the Detroit-Livonia-Dearborn 
Metropolitan Division from their assessment area(s).\10\
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    \10\ One additional institution included Wayne County in its 
assessment area and had branches only in the suburban Detroit 
counties. Eleven institutions had branches and assessment area(s) 
only in the suburban counties that make up the Warren-Farmington 
Hills-Troy Metropolitan Division.
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    One financial institution commenter suggested that, rather than 
replacing the term ``CMSA'' with ``MSA'', the agencies should have 
replaced ``CMSA'' with ``CSA'' (combined statistical area), another new 
area standard that OMB adopted in 2000. The agencies believe that it 
may be appropriate for some institutions to delineate an assessment 
area based on a CSA. The agencies have not, however, made the suggested 
change to the regulation because a CSA is not the direct equivalent of 
a CMSA under the 1990 standards. A CMSA was an MSA with a population of 
at least 1 million; in contrast, a CSA may be much smaller or much 
larger than a CMSA in population. For example, a CSA may consist of two 
Micropolitan Statistical Areas. The Micropolitan Statistical Area is a 
new statistical unit introduced in the 2000 standards and consists of 
an area with a population between 10,000 and 49,999. On the other hand, 
a CSA may be quite populous; it may consist of three or more MSAs and 
multiple Micropolitan Statistical Areas. Therefore, the agencies 
believe that whether an assessment area should consist of a CSA is best 
left to each institution, considering its size, business strategy, 
capacity, and constraints, and subject to review by the appropriate 
Federal financial institution supervisory agency. Further, if an 
institution designates an assessment area that consists of a CSA that 
includes an MSA and a Micropolitan Statistical Area, the examiner must 
separately evaluate performance in the MSA and the Micropolitan 
Statistical Area (i.e., the nonmetropolitan area) because each of these 
areas has a distinct median family income.
    For the reasons set forth above, the agencies are adopting as final 
the provisions conforming our regulations to OMB's statistical area 
changes as they were published in the joint interim rule.

Changes Resulting From Census Revisions

    Prior to the joint interim rule, the CRA regulations defined the 
term ``geography'' as ``a census tract or a block numbering area 
delineated by the United States Bureau of the Census in the most recent 
decennial census.'' Beginning with Census 2000, the U.S. Census Bureau 
assigned census tracts in all counties, making block numbering areas 
unnecessary.\11\ Therefore, in the joint interim rule, we changed the 
regulations' definition of ``geography'' to omit the term ``block 
numbering area'' (12 CFR 25.12(k), 228.12(k), 345.12(k), and 
563e.12(j)).
---------------------------------------------------------------------------

    \11\ See, e.g., U.S. Census Bureau, Geographic Terms and 
Concepts (definition of ``census tract'') available at https://
www.census.gov/geo/www/tiger/glossry2.html#CensusTract.

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[[Page 15573]]

    The agencies did not receive any comments addressing this change. 
Accordingly, the agencies are adopting the change based on Census 
revisions without modification. We are adopting this change as final as 
it was published in the joint interim rule.

Changes Resulting From Revisions to the Board's Regulation C

    Prior to the joint interim rule, the CRA regulations defined a 
``home mortgage loan'' to mean a ``home improvement loan'' or a ``home 
purchase loan'' as defined in the regulations implementing the Home 
Mortgage Disclosure Act (12 CFR part 203). The interagency CRA guidance 
that we published clarified that this definition of ``home mortgage 
loan'' also included refinancings of home improvement and home purchase 
loans.\12\
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    \12\ See Qs and As at 66 FR 36628 (July 12, 2001) (question and 
answer Sec. Sec.  --.12(m) & 563e.12(l)-1).
---------------------------------------------------------------------------

    The Board substantially revised the HMDA regulation (Regulation C) 
in 2002, effective January 1, 2004.\13\ Revised Regulation C defined 
the term, ``refinancing,'' so that a loan is reportable as a 
refinancing if it satisfies and replaces an existing obligation, and 
both the new and the existing obligation are secured by a lien on a 
dwelling. 12 CFR 203.2(k). As a result of the revisions to Regulation 
C, we changed the definition of ``home mortgage loan,'' found at 12 CFR 
25.12(l), 228.12(l), 345.12(l), and 563e.12(k), to include 
refinancings, as well as home purchase loans and home improvement 
loans, as defined in the Board's regulations at 12 CFR 203.2.
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    \13\ 67 FR 7222 (Feb. 15, 2002); 67 FR 30771 (May 8, 2002).
---------------------------------------------------------------------------

    As we noted in the supplementary information section of the joint 
interim rule, because of the change in the Regulation C definition, 
loans to refinance small business or small farm loans, where a dwelling 
continues to serve as collateral solely through an abundance of 
caution, will now be reportable as refinancings under Regulation C. 
Those loans will also be reportable for Call Report and Thrift 
Financial Report purposes as small business or small farm loans, 
resulting in the potential for ``double counting'' of these loans in 
CRA examinations. See 69 FR 41184-85.
    Two community organization commenters asserted that our CRA 
regulations should prohibit such double reporting of small business 
loans and small farm loans secured by residential real estate for 
purposes of CRA. The agencies are not changing the CRA regulation to 
address the commenters' suggestion. The suggested change would likely 
increase the data collection and reporting burden for financial 
institutions, without increasing the effectiveness of CRA examinations. 
As stated in the supplementary information to the joint interim rule, 
the agencies do not anticipate that ``double-reported'' loans will be 
so numerous as to affect the typical institution's CRA rating. In the 
event that an institution reports a significant number or amount of 
loans as both home mortgage and small business or farm loans, examiners 
will consider that overlap in evaluating the institution's performance.
    Accordingly, the agencies are adopting the change based on the 
Board's Regulation C revisions without modification. We are adopting 
this change as it was published in the joint interim rule.

Technical Correction

    The joint interim rule also corrected an error in the cross-
reference found in 12 CFR 25.27(g)(1), 228.27(g)(1), 345.27(g)(1), and 
563e.27(g)(1). Those provisions, which address the time for an agency's 
decision following receipt of a completed strategic plan, previously 
referred the reader to paragraph (d) of 12 CFR 25.27, 228.27, 345.27, 
or 563e.27, respectively, for a description of the materials that had 
to be included with a strategic plan submission. This information is 
found instead in paragraph (e) of 12 CFR 25.27, 228.27, 345.27, or 
563e.27. Therefore, we corrected the cross-references in 12 CFR 
25.27(g)(1), 228.27(g)(1), 345.27(g)(1), and 563e.27(g)(1) to refer to 
paragraph (e) of 12 CFR 25.27, 228.27, 345.27, and 563e.27, 
respectively.
    The agencies did not receive any comments addressing this technical 
correction. Accordingly, the agencies are adopting the technical 
correction that was published in the joint interim rule as final 
without modification.

General Comment

    A financial industry trade association commented that inasmuch as 
the changes to the CRA regulations are designed to coordinate the CRA 
rules with existing regulatory changes, it does not object to the 
revisions. However, the commenter pointed out that these types of 
changes add to the regulatory burden for the small community bank. The 
agencies are aware that many regulatory changes impact regulated 
entities in some manner. However, the changes made by the joint interim 
rule and this joint final rule are necessary because institutions could 
not have complied with the regulations as previously written. For 
example, some of the statistical areas referenced in the previous 
regulations no longer exist.

Effective Date

    The Administrative Procedure Act provides that, subject to several 
exceptions, a substantive rule may not be made effective until 30 days 
after publication in the Federal Register. 5 U.S.C. 553(d). However, an 
agency may make a rule immediately effective upon publication if the 
agency finds good cause for doing so and publishes its findings with 
the rule. Likewise, section 302 of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (CDRI), Public Law 103-325, 
authorizes a banking agency to issue a rule 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)(B).
    As described in the supplementary information section of the joint 
interim rule, the agencies found good cause to dispense with the 30-day 
delayed effective date pursuant to 5 U.S.C. 553(d)(3). The agencies 
also determined that good cause existed to adopt an effective date that 
is before the first day of the calendar quarter that begins on or after 
the date on which the regulation is published, as would otherwise be 
required by section 302 of the CDRI (12 U.S.C. 4802(b)(1)(B)). The 
joint interim rule became effective upon publication because financial 
institutions must use the new statistical area standards and 
definitions when adjusting assessment area delineations and collecting 
loan data during calendar year 2004 (beginning with loans made as of 
January 1, 2004) for reporting by March 1, 2005. The changes adopted in 
the joint interim rule merely conformed our CRA regulations to recent 
changes by OMB, Census, and the Board and corrected a cross-reference--
they were not substantive. That reasoning also applies to the joint 
final rule, which is identical to the joint interim rule. Accordingly, 
the agencies conclude that it is unnecessary and contrary to public 
interest to delay the effective date of this joint final rule.

Regulatory Analysis

Paperwork Reduction Act

    There are no information collection requirements in this joint 
final rule.

Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C.

[[Page 15574]]

605(b)), the OCC, Board, FDIC, and OTS hereby certify that this joint 
final rule will not have a significant economic impact on a substantial 
number of small entities. The agencies expect that this joint final 
rule will not have significant secondary or incidental effects on a 
substantial number of small entities or create any additional burden on 
small entities. This joint final rule merely confirms that the joint 
interim rule, which made a technical correction and conformed 
terminology in the current CRA regulations to terms and definitions 
already adopted by OMB, Census, and the Board, is final. Accordingly, a 
regulatory flexibility analysis is not required.

OCC and OTS Executive Order 12866 Determinations

    The OCC and the OTS have determined that this joint final rule is 
not a significant regulatory action as defined in Executive Order 
12866.

OCC and OTS Unfunded Mandates Reform Act of 1995 Determinations

    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 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 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 Executive Order 13132 Determination

    The OCC has determined that this joint final rule does not have any 
Federalism implications, as required by Executive Order 13132.

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

PART 25--COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT 
PRODUCTION REGULATIONS

0
Accordingly, the joint interim rule amending 12 CFR part 25, which was 
published at 69 FR 41181 on July 8, 2004, is adopted as a joint final 
rule without change.

Board of Governors of the Federal Reserve System

12 CFR Chapter II

PART 228--COMMUNITY REINVESTMENT (REGULATION BB)

0
Accordingly, the joint interim rule amending 12 CFR part 228, which was 
published at 69 FR 41181 on July 8, 2004, is adopted as a joint final 
rule without change.

Federal Deposit Insurance Corporation

12 CFR Chapter III

PART 345--COMMUNITY REINVESTMENT

0
Accordingly, the joint interim rule amending 12 CFR part 345, which was 
published at 69 FR 41181 on July 8, 2004, is adopted as a joint final 
rule without change.

Department of the Treasury

Office of Thrift Supervision

12 CFR Chapter V

PART 563e--COMMUNITY REINVESTMENT

0
Accordingly, the joint interim rule amending 12 CFR part 563e, which 
was published at 69 FR 41181 on July 8, 2004, is adopted as a joint 
final rule without change.

    Dated: February 14, 2005.
Julie L. Williams,
Acting Comptroller of the Currency.

    By order of the Board of Governors of the Federal Reserve 
System, March 2, 2005.
Jennifer J. Johnson,
Secretary of the Board.
    Dated: March 18, 2005.

    By Order of the Board of Directors of the Federal Deposit 
Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
    Dated: February 11, 2005.

    By the Office of Thrift Supervision.
James E. Gilleran,
Director.
[FR Doc. 05-5983 Filed 3-25-05; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P

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