Short-Term Investment Funds, 16888-16892 [2020-06293]
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Federal Register / Vol. 85, No. 58 / Wednesday, March 25, 2020 / Rules and Regulations
be made under the bank’s standard
procedures for making such
determinations in regards to the best
interests of its collective investment
funds; and
4. The bank must make any necessary
amendments to the written plan for the
STIF to reflect these temporary changes.
5. The OCC also hereby determines
that the relief provided by this
administrative order terminates on July
20, 2020, unless the OCC revises this
order to provide otherwise before that
date.
By authority of the Comptroller of the
Currency.
Dated: March 21, 2020.
Morris R. Morgan,
First Deputy Comptroller, Comptroller of the
Currency.
[FR Doc. 2020–06286 Filed 3–23–20; 11:15 am]
BILLING CODE 4810–01–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 9
[Docket No. OCC–2020–0012]
RIN 1557–AE84
Short-Term Investment Funds
Office of the Comptroller of the
Currency, Treasury (OCC).
ACTION: Interim final rule and request
for comment.
AGENCY:
The OCC is adopting an
interim final rule to revise the OCC’s
short-term investment fund (STIF) rule
(STIF Rule) for national banks acting in
a fiduciary capacity. Sudden
disruptions in the financial markets
have created conditions that may
constrain the ability of a national bank’s
management team to execute certain
elements of a STIF’s written investment
policy, specifically with regard to
investment plan components addressing
the weighted average maturity and
weighted average life of the STIF’s
investment portfolio. The OCC is
issuing this interim final rule to allow
national banks to operate affected STIFs
on a limited-time basis with increased
maturity limits under these
circumstances.
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SUMMARY:
The interim final rule is effective
March 23, 2020, and is applicable
beginning March 20, 2020. Comments
on the interim final rule must be
received no later than May 11, 2020.
ADDRESSES: Commenters are encouraged
to submit comments through the Federal
DATES:
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eRulemaking Portal or email, if possible.
Please use the title ‘‘Short-term
Investment Funds’’ to facilitate the
organization and distribution of the
comments. You may submit comments
by any of the following methods:
• Federal eRulemaking Portal—
Regulations.gov Classic or
Regulations.gov Beta:
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0012’’ in the Search Box and
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments. For
help with submitting effective
comments please click on ‘‘View
Commenter’s Checklist.’’ Click on the
‘‘Help’’ tab on the Regulations.gov home
page to get information on using
Regulations.gov, including instructions
for submitting public comments.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0012’’ in
the Search Box and click ‘‘Search.’’
Public comments can be submitted via
the ‘‘Comment’’ box below the
displayed document information or by
clicking on the document title and then
clicking the ‘‘Comment’’ box on the topleft side of the screen. For help with
submitting effective comments please
click on ‘‘Commenter’s Checklist.’’ For
assistance with the Regulations.gov Beta
site, please call (877) 378–5457 (toll
free) or (703) 454–9859 Monday–Friday,
9 a.m.–5 p.m. ET or email regulations@
erulemakinghelpdesk.com.
• Email: regs.comments@
occ.treas.gov.
• Mail: Chief Counsel’s Office,
Attention: Comment Processing, Office
of the Comptroller of the Currency, 400
7th Street SW, Suite 3E–218,
Washington, DC 20219.
• Hand Delivery/Courier: 400 7th
Street SW, Suite 3E–218, Washington,
DC 20219.
• Fax: (571) 465–4326.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2020–0012’’ in your comment.
In general, the OCC will enter all
comments received into the docket and
publish the comments on the
Regulations.gov website without
change, including any business or
personal information provided such as
name and address information, email
addresses, or phone numbers.
Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
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you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
rulemaking action by any of the
following methods:
• Viewing Comments Electronically—
Regulations.gov Classic or
Regulations.gov Beta:
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0012’’ in the Search box and
click ‘‘Search.’’ Click on ‘‘Open Docket
Folder’’ on the right side of the screen.
Comments and supporting materials can
be viewed and filtered by clicking on
‘‘View all documents and comments in
this docket’’ and then using the filtering
tools on the left side of the screen. Click
on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov.
The docket may be viewed after the
close of the comment period in the same
manner as during the comment period.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0012’’ in
the Search Box and click ‘‘Search.’’
Click on the ‘‘Comments’’ tab.
Comments can be viewed and filtered
by clicking on the ‘‘Sort By’’ drop-down
on the right side of the screen or the
‘‘Refine Results’’ options on the left side
of the screen. Supporting materials can
be viewed by clicking on the
‘‘Documents’’ tab and filtered by
clicking on the ‘‘Sort By’’ drop-down on
the right side of the screen or the
‘‘Refine Results’’ options on the left side
of the screen.’’ For assistance with the
Regulations.gov Beta site, please call
(877) 378–5457 (toll free) or (703) 454–
9859 Monday–Friday, 9 a.m.–5p.m. ET
or email regulations@
erulemakinghelpdesk.com.
The docket may be viewed after the
close of the comment period in the same
manner as during the comment period.
• Viewing Comments Personally: You
may personally inspect comments at the
OCC, 400 7th Street SW, Washington,
DC 20219. For security reasons, the OCC
requires that visitors make an
appointment to inspect comments. You
may do so by calling (202) 649–6700 or,
for persons who are deaf or hearing
impaired, TTY, (202) 649–5597. Upon
arrival, visitors will be required to
present valid government-issued photo
identification and submit to security
screening in order to inspect comments.
FOR FURTHER INFORMATION CONTACT:
Patricia Dalton, Director for Asset
Management Policy, Market Risk Policy
Division, Bank Supervision Policy, (202)
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649–6401, Stephanie Boccio, Asset
Management Lead Expert, Systemic Risk
Identification Support and Specialty
Supervision, (202) 649–6397, or Jamey
Basham, Assistant Director, Chief
Counsel’s Office, (202) 649–5490, for
persons who are deaf or hearing
impaired, TTY, (202) 649–5597, Office
of the Comptroller of the Currency, 400
7th Street SW, Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Background
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A. Short-Term Investment Funds
A STIF is a form of Collective
Investment Fund (CIF). A CIF is a bankmanaged fiduciary fund that holds
pooled assets; the bank is required to
establish and operate the CIF in
accordance with specific criteria
established by the OCC fiduciary
activities regulation at 12 CFR 9.18.
Under 12 CFR 9.18(b)(1), each CIF is
established under a ‘‘Plan’’ approved by
the bank’s board of directors (or an
authorized board committee) that details
the terms under which the bank
manages and administers the fund’s
assets. The bank acts as a fiduciary for
the CIF and holds legal title to the
fund’s assets, which are funded through
contributions by the CIF’s participants,
as discussed below. Participants in a
CIF are the beneficial owners of the
fund’s assets. Each participant owns an
undivided interest in the aggregate
assets of a CIF; a participant does not
directly own any specific asset held by
a CIF.1
A participant’s investment in a CIF is
called a ‘‘participating interest.’’
Participating interests in a CIF are not
insured by the Federal Deposit
Insurance Corporation (FDIC) and are
not subject to potential claims by a
bank’s creditors. In addition, a
participating interest in a CIF cannot be
pledged or otherwise encumbered in
favor of a third party. A CIF admitting
a participant (that is, allowing the
participant, in effect, to purchase a
proportionate interest in the assets of
the CIF) or withdrawing all or part of its
participating interest in the CIF may
only do so on the basis of a valuation
of the CIF’s assets, as of the admission
or withdrawal date, and only for noncancellable requests made before or on
the valuation date.2 This general
valuation rule is designed to protect all
participants in the CIF from the risk that
other participants will be admitted or
withdrawn at valuations that dilute the
1 12
2 12
CFR 9.18.
CFR 9.18(b)(5).
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value of existing participating interests
in the CIF.
A STIF is a type of CIF that permits
a bank to value the STIF’s assets on an
amortized cost basis, rather than at
mark-to-market value, for purposes of
admissions and withdrawals. Because a
STIF’s investments are limited to
shorter-term assets and those assets
generally are required to be held to
maturity, differences between the
amortized cost and mark-to-market
value of the assets will be rare, absent
atypical market conditions or an
impaired asset. STIFs typically operate
with the primary objective of
maintaining a stable net asset value
(NAV) per participation interest of
$1.00.3
The OCC’s STIF Rule at 12 CFR
9.18(b)(4)(iii) governs STIFs managed by
national banks, but it is also common
for other types of financial institutions
(collectively with national banks,
‘‘banks’’) to manage collective
investment funds pursuant to the
requirements of other laws which, in
turn, cross-reference the OCC’s CIF Rule
at 12 CFR 9.18 and the STIF Rule
subcomponent thereof at 12 CFR
9.18(b)(4)(iii).4
There are also other types of funds
that seek to maintain a stable NAV. The
most significant of these from a
financial market presence standpoint
are ‘‘money market mutual funds’’
(MMMFs). These funds are organized as
open-ended management investment
companies and are regulated by the U.S.
Securities and Exchange Commission
(‘‘SEC’’) pursuant to the Investment
Company Act of 1940, particularly
pursuant to the provisions of SEC Rule
2a–7 thereunder (‘‘Rule 2a–7’’).
There are a number of important
differences between MMMFs and STIFs;
most significantly, MMMFs are open to
3 12
CFR 9.18(b)(4)(iii)(A).
example, New York state law provides that
all investments in short-term investment common
trust funds may be valued at cost, if the plan of
operation requires that: (i) The type or category of
investments of the fund shall comply with the rules
and regulations of the Comptroller of the Currency
pertaining to short-term investment funds and (ii)
in computing income, the difference between cost
of investment and anticipated receipt on maturity
of investment shall be accrued on a straight-line
basis. See N.Y. Comp. Codes R. & Regs. Tit. 3,
section 22.23 (2010). Additionally, in order to retain
their tax-exempt status pursuant to the Internal
Revenue Code, common trust funds must operate in
compliance with § 9.18 as well as the Federal tax
laws. See 26 U.S.C. 584. Although the direct scope
of the STIF Rule provisions in § 9.18 of the OCC’s
regulations is national banks and Federal branches
and agencies of foreign banks acting in a fiduciary
capacity (12 CFR 9.1(c)) in regard to STIFs, the
nomenclature of the STIF Rule refers simply to
‘‘banks.’’ For the sake of convenience, the OCC
continues this approach and also applies the same
convention to the discussion of the STIF final rule.
4 For
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all retail, commercial, institutional, and
public sector investors, whereas, STIFs
only are available to authorized
fiduciary accounts of a bank and certain
employee benefit plans.5 Additionally,
the combined asset value of all STIFs
nationwide totals only a fraction of the
combined asset value of all MMMFs.
B. Market Disturbances Impacting STIF
Liquidity Management Functions
Recent events have significantly and
adversely impacted global financial
markets, and the OCC is concerned
about the potential effects on STIFs
operated by national banks. The spread
of the Coronavirus Disease 2019
(COVID–2019) has slowed economic
activity in many countries, including
the United States. Sudden disruptions
in financial markets have put increasing
liquidity pressure on MMMFs, as they
have been faced with redemption
requests from clients with immediate
cash needs. The Board of Governor of
the Federal Reserve System, with the
approval of the Secretary of the
Treasury, has authorized the Federal
Reserve Bank of Boston to establish the
Money Market Mutual Fund Liquidity
Facility, pursuant to section 13(3) of the
Federal Reserve Act,6 as a measure to
ameliorate these liquidity pressures.
Although STIFs do not serve the same
broad investor market as MMMFs, the
OCC remains concerned that, in light of
the acute effects the COVID–2019 virus
is triggering across the markets broadly,
there may be elevated participation
interest withdrawals for STIFs operated
by national banks, notwithstanding
these differences between STIFs and
MMMFs. Regulatory authorities
supervising other categories of banks
operating STIFs—in accordance with
the legal requirements governing those
banks and incorporating the OCC’s STIF
rules as part of those requirements—
have conveyed similar concerns to the
OCC.
In addition to the OCC’s concerns
about unusual withdrawal levels, the
OCC observes that STIF investment
portfolios are generally made up of the
same types of securities and
investments as those held by MMMFs.
5 15 U.S.C. 80a; 17 CFR 270.2a–7. Because STIFs
are a form of CIF, they are generally exempt from
the SEC’s rules under the Investment Company Act.
STIFs used exclusively for (1) the collective
investment of money by a bank in its fiduciary
capacity as trustee, executor, administrator, or
guardian and (2) the collective investment of assets
of certain employee benefit plans are exempt from
the Investment Company Act under 15 U.S.C. 80a–
3(c)(3) and (c)(11), respectively. MMMFs are not
subject to comparable restrictions as to the type of
participant who may invest in the fund or the
purpose of such investment.
6 12 U.S.C. 343(3).
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Accordingly, liquidity pressures related
to the COVID–2019 virus in the
marketplace for those assets raise
similar concerns as those presented for
MMMFs. The OCC’s STIF Rule requires
management to operate the fund
pursuant to liquidity management
standards allowing the STIF to balance
appropriately the volume of the STIF’s
daily admissions and withdrawals in
conjunction with the maturities of the
fund’s investments. Under the OCC
STIF Rule, these standards must address
contingent funding needs, and the bank
must operate an independent program
of stress testing to assess the STIF’s
ability to maintain a stable NAV in
varying market conditions.7 Acute
market-wide disturbances in the depth
of liquidity available for a bank seeking
to purchase and sell portfolio assets to
maintain a STIF’s liquidity put pressure
on the bank’s ability to perform these
functions.
In addition, the OCC’s STIF Rule
requires the STIF to be operated
pursuant to a written, board-approved
plan that requires the fund to maintain
a dollar-weighted average portfolio
maturity of 60 days or less and a dollarweighted average portfolio life maturity
of 120 days or less, as determined in the
same manner as is required by the
Securities and Exchange Commission
pursuant to Rule 2a–7 for money market
mutual funds (17 CFR 270.2a–7). The
OCC is concerned that the current
market-wide liquidity disturbances may
put pressure on bank management’s
ability to comply with these maturity
limits.
II. Description of the Interim Final Rule
The OCC is amending the OCC STIF
Rule to add a reservation of authority
provision addressing the rule’s limits on
weighted average portfolio maturity,
weighted average portfolio life maturity,
and the method for determining those
limits. The OCC believes that the
temporary nature of the need for relief,
and the uncertainty associated with
future market conditions, counsel the
OCC’s use of a flexible method of
administering relief from the limits,
rather than a direct rule amendment to
the limits themselves. In designing the
proposed rule, the OCC is also mindful
that banks other than national banks
supervised and regulated by the OCC
also operate their STIFs under
applicable legal requirements that crossreference the OCC STIF Rule. The OCC
believes it is important to include a
mechanism in the reservation of
authority that provides these banks
access to public information about the
7 12
CFR 9.18(b)(4)(iii)(F), (H).
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OCC’s use of the reservation of
authority.
Accordingly, the interim final rule
sets out a framework under which the
OCC’s reservation of authority will be
exercised in the format of an OCC
administrative order. The administrative
order will be issued by authorization of
the Comptroller of the Currency. The
OCC will publish the administrative
order on its website at www.occ.gov and
through other methods, as appropriate.
The interim final rule provides that a
bank seeking to comply with the
requirements of the OCC STIF Rule on
weighted average portfolio maturity,
weighted average portfolio life maturity,
and the method for determining them
will deemed to be in compliance with
the rule’s limits if the bank complies
with the limits or other revisions, and
any applicable conditions, described in
the administrative order.
III. Description of the Administrative
Order
Concurrently with the OCC’s issuance
of this interim final rule, the OCC is
issuing an administrative order
pursuant to provisions of the interim
final rule.
The order states that banks seeking to
comply with the requirements of section
9.18(b)(4)(iii)(B) will be deemed to be in
compliance with that section, if (1) the
STIF maintains a dollar-weighted
average portfolio maturity of 120 days or
less, and (2) the STIF maintains a dollarweighted average portfolio life maturity
of 180 days or less. Consistent with the
terms of section 9.18(b)(4)(iii)(B), both
maturities must be determined in the
same manner as is required by the
Securities and Exchange Commission
pursuant to Rule 2a–7 for money market
mutual funds (17 CFR 270.2a–7).
The relief provided by the OCC’s
order terminates on July 20, 2020,
unless the OCC revises the order to
provide otherwise before that date. The
OCC will monitor market conditions
during this period to assess whether
extensions beyond that date are
necessary and appropriate.
The order also states the bank must
determine it is acting in the best
interests of the STIF under applicable
law in connection with using these
temporary limits. This determination
may be made under the bank’s standard
procedures for making determinations
in regards to the best interests of its
collective investment funds.8 In
addition, the order states the bank must
make any necessary amendments to the
written plan for the STIF to reflect these
temporary changes.
The OCC seeks comment on all
aspects of the interim final rule.
IV. Administrative Law Matters
A. Administrative Procedure Act
The OCC is issuing the interim final
rule without prior notice and the
opportunity for public comment and the
delayed effective date ordinarily
prescribed by the Administrative
Procedure Act (APA).9 Pursuant to
section 553(b)(B) of the APA, general
notice and the opportunity for public
comment are not required with respect
to a rulemaking when an ‘‘agency for
good cause finds (and incorporates the
finding and a brief statement of reasons
therefor in the rules issued) that notice
and public procedure thereon are
impracticable, unnecessary, or contrary
to the public interest.’’ 10
The OCC believes that the public
interest is best served by implementing
the interim final rule immediately upon
publication in the Federal Register. The
spread of the COVID–19 virus has
slowed economic activity in many
countries, including the United States,
and have put increasing liquidity
pressure on the markets in which STIFs
buy and sell their portfolio assets. These
market conditions make it unusually
difficult for banks to operate STIFs on
a current basis in compliance with the
maturity limits of the OCC STIF Rule.
For these reasons, the OCC finds that
there is good cause consistent with the
public interest to issue the rule without
advance notice and comment.11
The APA also requires a 30-day
delayed effective date, except for (1)
substantive rules which grant or
recognize an exemption or relieve a
restriction; (2) interpretative rules and
statements of policy; or (3) as otherwise
provided by the agency for good
cause.12 Because the interim final rule
relieve a restriction, it is exempt from
the APA’s delayed effective date
requirement.13
While the OCC believes that there is
good cause to issue the rule without
advance notice and comment and with
an immediate effective date, the
agencies are interested in the views of
the public and requests comment on all
aspects of the interim final rule.
B. Congressional Review Act
For purposes of Congressional Review
Act, the OMB makes a determination as
95
U.S.C. 553.
U.S.C. 553(b)(3)(A).
11 5 U.S.C. 553(b)(B); 553(d)(3).
12 5 U.S.C. 553(d).
13 5 U.S.C. 553(d)(1).
10 5
8 For national banks and federal savings
associations, see, e.g. 12 CFR 9.11 and 9.18(a); see
also 12 CFR 9.2(b).
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to whether a final rule constitutes a
‘‘major’’ rule.14 If a rule is deemed a
‘‘major rule’’ by the Office of
Management and Budget (OMB), the
Congressional Review Act generally
provides that the rule may not take
effect until at least 60 days following its
publication.15
The Congressional Review Act defines
a ‘‘major rule’’ as any rule that the
Administrator of the Office of
Information and Regulatory Affairs of
the OMB finds has resulted in or is
likely to result in (A) an annual effect
on the economy of $100,000,000 or
more; (B) a major increase in costs or
prices for consumers, individual
industries, Federal, State, or local
government agencies or geographic
regions, or (C) significant adverse effects
on competition, employment,
investment, productivity, innovation, or
on the ability of United States-based
enterprises to compete with foreignbased enterprises in domestic and
export markets.16
For the same reasons set forth above,
the OCC is adopting the interim final
rule without the delayed effective date
generally prescribed under the
Congressional Review Act. The delayed
effective date required by the
Congressional Review Act does not
apply to any rule for which an agency
for good cause finds (and incorporates
the finding and a brief statement of
reasons therefor in the rule issued) that
notice and public procedure thereon are
impracticable, unnecessary, or contrary
to the public interest.17 In light of
current market uncertainty, the OCC
believes that delaying the effective date
of the rule would be contrary to the
public interest.
As required by the Congressional
Review Act, the OCC will submit the
final rule and other appropriate reports
to Congress and the Government
Accountability Office for review.
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C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3521) (PRA) states that
no agency may conduct or sponsor, nor
is the respondent required to respond
to, an information collection unless it
displays a currently valid OMB control
number. The interim final rule contains
no collection of information under the
PRA.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act
(RFA) 18 requires an agency to consider
14 5
U.S.C. 801 et seq.
U.S.C. 801(a)(3).
16 5 U.S.C. 804(2).
17 5 U.S.C. 808.
18 5 U.S.C. 601 et seq.
15 5
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whether the rules it proposes will have
a significant economic impact on a
substantial number of small entities.19
The RFA applies only to rules for which
an agency publishes a general notice of
proposed rulemaking pursuant to 5
U.S.C. 553(b). As discussed previously,
consistent with section 553(b)(B) of the
APA, the OCC has determined for good
cause that general notice and
opportunity for public comment is
unnecessary, and therefore the OCC is
not issuing a notice of proposed
rulemaking. Accordingly, the OCC has
concluded that the RFA’s requirements
relating to initial and final regulatory
flexibility analysis do not apply.
Nevertheless, the OCC seeks comment
on whether, and the extent to which, the
interim final rule would affect a
significant number of small entities.
E. Riegle Community Development and
Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the
Riegle Community Development and
Regulatory Improvement Act
(RCDRIA),20 in determining the effective
date and administrative compliance
requirements for new regulations that
impose additional reporting, disclosure,
or other requirements on insured
depository institutions (IDIs), each
Federal banking agency must consider,
consistent with the principle of safety
and soundness and the public interest,
any administrative burdens that such
regulations would place on depository
institutions, including small depository
institutions, and customers of
depository institutions, as well as the
benefits of such regulations. In addition,
section 302(b) of RCDRIA requires new
regulations and amendments to
regulations that impose additional
reporting, disclosures, or other new
requirements on IDIs generally to take
effect on the first day of a calendar
quarter that begins on or after the date
on which the regulations are published
in final form, with certain exceptions,
including for good cause.21 For the
reasons described above, the OCC finds
good cause exists under section 302 of
RCDRIA to publish this interim final
rule with an immediate effective date.
As such, the final rule will be
effective immediately. Nevertheless, the
OCC seeks comment on RCDRIA.
19 Under regulations issued by the Small Business
Administration, a small entity includes a depository
institution, bank holding company, or savings and
loan holding company with total assets of $600
million or less and trust companies with total assets
of $41.5 million or less. See 13 CFR 121.201.
20 12 U.S.C. 4802(a).
21 12 U.S.C. 4802.
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16891
F. Use of Plain Language
Section 722 of the Gramm-LeachBliley Act 22 requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000. The
OCC has sought to present the interim
final rule in a simple and
straightforward manner. The OCC
invites comments on whether there are
additional steps it could take to make
the rule easier to understand. For
example:
• Have the OCC organized the
material to suit your needs? If not, how
could this material be better organized?
• Are the requirements in the
regulation clearly stated? If not, how
could the regulation be more clearly
stated?
• Does the regulation contain
language or jargon that is not clear? If
so, which language requires
clarification?
• Would a different format (grouping
and order of sections, use of headings,
paragraphing) make the regulation
easier to understand? If so, what
changes to the format would make the
regulation easier to understand? What
else could we do to make the regulation
easier to understand?
G. Unfunded Mandates
As a general matter, the Unfunded
Mandates Act of 1995 (UMRA), 2 U.S.C.
1531 et seq., requires the preparation of
a budgetary impact statement before
promulgating a rule that includes a
Federal mandate that may result in the
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any one year. However, the UMRA
does not apply to final rules for which
a general notice of proposed rulemaking
was not published. See 2 U.S.C. 1532(a).
Therefore, because the OCC has found
good cause to dispense with notice and
comment for this interim final rule, the
OCC has not prepared an economic
analysis of the rule under the UMRA.
List of Subjects in 12 CFR Part 9
Estates, Investments, National banks,
Reporting and recordkeeping
requirements, Trusts and trustees.
For the reasons set forth in the
preamble, chapter I of title 12 of the
Code of Federal Regulations is amended
as follows:
PART 9—FIDUCIARY ACTIVITIES OF
NATIONAL BANKS
1. The authority citation for part 9
continues to read as follows:
■
22 12
E:\FR\FM\25MRR1.SGM
U.S.C. 4809.
25MRR1
16892
Federal Register / Vol. 85, No. 58 / Wednesday, March 25, 2020 / Rules and Regulations
Authority: 12 U.S.C. 24(Seventh), 92a, and
93a; 12 U.S.C. 78q, 78q–1, and 78w.
2. Section 9.18 is amended by adding
paragraph (b)(4)(iv) to read as follows:
■
§ 9.18
Collective investment funds.
*
*
*
*
*
(b) * * *
(4) * * *
(iv) Reservation of authority.
Notwithstanding paragraph (b)(4)(iii)(B)
of this section, during periods of market
stress negatively affecting, on a
temporary basis, the ability of banks to
operate STIFs in compliance with the
requirements of the paragraph:
(A) The OCC may issue an
administrative order specifying, for
purposes of paragraph (b)(4)(iii)(B) of
this section, temporary revisions to the
length of the dollar-weighted average
portfolio maturity requirement, the
length of dollar-weighted average
portfolio life maturity, and the manner
of determining such limits;
(B) A bank seeking to comply with
paragraph (b)(4)(iii)(B) will be deemed
to be in compliance with that
paragraph’s requirements by complying
with the limits or other revisions, and
any applicable conditions, described in
the administrative order; and
(C) The OCC will publish the
administrative order on www.occ.gov
and through other methods, as
appropriate.
*
*
*
*
*
Dated: March 21, 2020.
Morris R. Morgan,
First Deputy Comptroller, Comptroller of the
Currency.
[FR Doc. 2020–06293 Filed 3–23–20; 11:15 am]
BILLING CODE 4810–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 25
[Docket No. FAA–2020–0223; Special
Conditions No. 25–768–SC]
Special Conditions: GDC Technics,
Boeing Model 777–300ER Series
Airplane; Lower Lobe Crew Rest
Compartment
Federal Aviation
Administration (FAA), DOT.
ACTION: Final special conditions; request
for comments.
khammond on DSKJM1Z7X2PROD with RULES
AGENCY:
These special conditions are
issued for the Boeing Model 777–300ER
series airplane. This airplane, as
modified by GDC Technics, will have a
novel or unusual design feature when
SUMMARY:
VerDate Sep<11>2014
15:49 Mar 24, 2020
Jkt 250001
compared to the state of technology
envisioned in the airworthiness
standards for transport category
airplanes. This design feature is a lower
lobe crew rest (LLCR) compartment
located under the passenger cabin floor
of the Boeing Model 777–300ER series
airplane. The applicable airworthiness
regulations do not contain adequate or
appropriate safety standards for this
design feature. These special conditions
contain the additional safety standards
that the Administrator considers
necessary to establish a level of safety
equivalent to that established by the
existing airworthiness standards.
DATES: This action is effective on GDC
Technics on March 25, 2020. Send
comments on or before May 11, 2020.
ADDRESSES: Send comments identified
by Docket No. FAA–2020–0223 using
any of the following methods:
• Federal eRegulations Portal: Go to
https://www.regulations.gov/ and follow
the online instructions for sending your
comments electronically.
• Mail: Send comments to Docket
Operations, M–30, U.S. Department of
Transportation (DOT), 1200 New Jersey
Avenue SE, Room W12–140, West
Building Ground Floor, Washington, DC
20590–0001.
• Hand Delivery or Courier: Take
comments to Docket Operations in
Room W12–140 of the West Building
Ground Floor at 1200 New Jersey
Avenue SE, Washington, DC, between 9
a.m. and 5 p.m., Monday through
Friday, except Federal holidays.
• Fax: Fax comments to Docket
Operations at 202–493–2251.
Privacy: The FAA will post all
comments it receives, without change,
to https://www.regulations.gov/,
including any personal information the
commenter provides. Using the search
function of the docket website, anyone
can find and read the electronic form of
all comments received into any FAA
docket, including the name of the
individual sending the comment (or
signing the comment for an association,
business, labor union, etc.). DOT’s
complete Privacy Act Statement can be
found in the Federal Register published
on April 11, 2000 (65 FR 19477–19478).
Docket: Background documents or
comments received may be read at
https://www.regulations.gov/ at any time.
Follow the online instructions for
accessing the docket or go to Docket
Operations in Room W12–140 of the
West Building Ground Floor at 1200
New Jersey Avenue SE, Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT:
Shannon Lennon, Airframe and Cabin
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
Safety Section, AIR–675, Transport
Standards Branch, Policy and
Innovation Division, Aircraft
Certification Service, Federal Aviation
Administration, 2200 South 216th
Street, Des Moines, Washington 98198;
telephone and fax 206–231–3209; email
Shannon.Lennon@faa.gov.
SUPPLEMENTARY INFORMATION: The
substance of these special conditions
previously has been published in the
Federal Register for public comment.
These special conditions have been
derived without substantive change
from those previously issued. It is
unlikely that prior public comment
would result in a significant change
from the substance contained herein.
Therefore, the FAA has determined that
prior public notice and comment are
unnecessary, and finds that, for the
same reason, good cause exists for
adopting these special conditions upon
publication in the Federal Register.
Comments Invited
The FAA invites interested people to
take part in this rulemaking by sending
written comments, data, or views. The
most helpful comments reference a
specific portion of the special
conditions, explain the reason for any
recommended change, and include
supporting data.
The FAA will consider all comments
received by the closing date for
comments. The FAA may change these
special conditions based on the
comments received.
Background
On April 25, 2016, GDC Technics
applied for a supplemental type
certificate for a LLCR compartment in
the Boeing Model 777–300ER series
airplane. The Boeing Model 777–300ER
series airplane is a twin-engine,
transport category airplane, with
capacity for 550 passengers, and a
maximum takeoff weight of 775,000
pounds.
The LLCR is located under the
passenger cabin floor in the aft cargo
compartment of Boeing Model 777–
300ER series airplanes. Occupancy for
the LLCR compartment is limited to a
maximum of six (6) occupants. The
LLCR will only be occupied in flight,
i.e., not during taxi, takeoff, or landing.
Six berths are able to withstand the
maximum flight loads when the LLCR
compartment is at maximum capacity.
New components for smoke detection
system, oxygen system, emergency
lighting system and manual firefighting
system (fire extinguisher) will be
installed and integrated into existing
systems.
E:\FR\FM\25MRR1.SGM
25MRR1
]]>Agencies
[Federal Register Volume 85, Number 58 (Wednesday, March 25, 2020)]
[Rules and Regulations]
[Pages 16888-16892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06293]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 9
[Docket No. OCC-2020-0012]
RIN 1557-AE84
Short-Term Investment Funds
AGENCY: Office of the Comptroller of the Currency, Treasury (OCC).
ACTION: Interim final rule and request for comment.
-----------------------------------------------------------------------
SUMMARY: The OCC is adopting an interim final rule to revise the OCC's
short-term investment fund (STIF) rule (STIF Rule) for national banks
acting in a fiduciary capacity. Sudden disruptions in the financial
markets have created conditions that may constrain the ability of a
national bank's management team to execute certain elements of a STIF's
written investment policy, specifically with regard to investment plan
components addressing the weighted average maturity and weighted
average life of the STIF's investment portfolio. The OCC is issuing
this interim final rule to allow national banks to operate affected
STIFs on a limited-time basis with increased maturity limits under
these circumstances.
DATES: The interim final rule is effective March 23, 2020, and is
applicable beginning March 20, 2020. Comments on the interim final rule
must be received no later than May 11, 2020.
ADDRESSES: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal or email, if possible. Please use the title
``Short-term Investment Funds'' to facilitate the organization and
distribution of the comments. You may submit comments by any of the
following methods:
Federal eRulemaking Portal--Regulations.gov Classic or
Regulations.gov Beta:
Regulations.gov Classic: Go to https://www.regulations.gov/. Enter
``Docket ID OCC-2020-0012'' in the Search Box and click ``Search.''
Click on ``Comment Now'' to submit public comments. For help with
submitting effective comments please click on ``View Commenter's
Checklist.'' Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
submitting public comments.
Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
``Visit New Regulations.gov Site'' from the Regulations.gov Classic
homepage. Enter ``Docket ID OCC-2020-0012'' in the Search Box and click
``Search.'' Public comments can be submitted via the ``Comment'' box
below the displayed document information or by clicking on the document
title and then clicking the ``Comment'' box on the top-left side of the
screen. For help with submitting effective comments please click on
``Commenter's Checklist.'' For assistance with the Regulations.gov Beta
site, please call (877) 378-5457 (toll free) or (703) 454-9859 Monday-
Friday, 9 a.m.-5 p.m. ET or email [email protected].
Email: [email protected].
Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Fax: (571) 465-4326.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2020-0012'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the Regulations.gov website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this rulemaking action by any of the following methods:
Viewing Comments Electronically--Regulations.gov Classic
or Regulations.gov Beta:
Regulations.gov Classic: Go to https://www.regulations.gov/. Enter
``Docket ID OCC-2020-0012'' in the Search box and click ``Search.''
Click on ``Open Docket Folder'' on the right side of the screen.
Comments and supporting materials can be viewed and filtered by
clicking on ``View all documents and comments in this docket'' and then
using the filtering tools on the left side of the screen. Click on the
``Help'' tab on the Regulations.gov home page to get information on
using Regulations.gov. The docket may be viewed after the close of the
comment period in the same manner as during the comment period.
Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
``Visit New Regulations.gov Site'' from the Regulations.gov Classic
homepage. Enter ``Docket ID OCC-2020-0012'' in the Search Box and click
``Search.'' Click on the ``Comments'' tab. Comments can be viewed and
filtered by clicking on the ``Sort By'' drop-down on the right side of
the screen or the ``Refine Results'' options on the left side of the
screen. Supporting materials can be viewed by clicking on the
``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down
on the right side of the screen or the ``Refine Results'' options on
the left side of the screen.'' For assistance with the Regulations.gov
Beta site, please call (877) 378-5457 (toll free) or (703) 454-9859
Monday-Friday, 9 a.m.-5p.m. ET or email
[email protected].
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
Viewing Comments Personally: You may personally inspect
comments at the OCC, 400 7th Street SW, Washington, DC 20219. For
security reasons, the OCC requires that visitors make an appointment to
inspect comments. You may do so by calling (202) 649-6700 or, for
persons who are deaf or hearing impaired, TTY, (202) 649-5597. Upon
arrival, visitors will be required to present valid government-issued
photo identification and submit to security screening in order to
inspect comments.
FOR FURTHER INFORMATION CONTACT: Patricia Dalton, Director for Asset
Management Policy, Market Risk Policy Division, Bank Supervision
Policy, (202)
[[Page 16889]]
649-6401, Stephanie Boccio, Asset Management Lead Expert, Systemic Risk
Identification Support and Specialty Supervision, (202) 649-6397, or
Jamey Basham, Assistant Director, Chief Counsel's Office, (202) 649-
5490, for persons who are deaf or hearing impaired, TTY, (202) 649-
5597, Office of the Comptroller of the Currency, 400 7th Street SW,
Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Background
A. Short-Term Investment Funds
A STIF is a form of Collective Investment Fund (CIF). A CIF is a
bank-managed fiduciary fund that holds pooled assets; the bank is
required to establish and operate the CIF in accordance with specific
criteria established by the OCC fiduciary activities regulation at 12
CFR 9.18. Under 12 CFR 9.18(b)(1), each CIF is established under a
``Plan'' approved by the bank's board of directors (or an authorized
board committee) that details the terms under which the bank manages
and administers the fund's assets. The bank acts as a fiduciary for the
CIF and holds legal title to the fund's assets, which are funded
through contributions by the CIF's participants, as discussed below.
Participants in a CIF are the beneficial owners of the fund's assets.
Each participant owns an undivided interest in the aggregate assets of
a CIF; a participant does not directly own any specific asset held by a
CIF.\1\
---------------------------------------------------------------------------
\1\ 12 CFR 9.18.
---------------------------------------------------------------------------
A participant's investment in a CIF is called a ``participating
interest.'' Participating interests in a CIF are not insured by the
Federal Deposit Insurance Corporation (FDIC) and are not subject to
potential claims by a bank's creditors. In addition, a participating
interest in a CIF cannot be pledged or otherwise encumbered in favor of
a third party. A CIF admitting a participant (that is, allowing the
participant, in effect, to purchase a proportionate interest in the
assets of the CIF) or withdrawing all or part of its participating
interest in the CIF may only do so on the basis of a valuation of the
CIF's assets, as of the admission or withdrawal date, and only for non-
cancellable requests made before or on the valuation date.\2\ This
general valuation rule is designed to protect all participants in the
CIF from the risk that other participants will be admitted or withdrawn
at valuations that dilute the value of existing participating interests
in the CIF.
---------------------------------------------------------------------------
\2\ 12 CFR 9.18(b)(5).
---------------------------------------------------------------------------
A STIF is a type of CIF that permits a bank to value the STIF's
assets on an amortized cost basis, rather than at mark-to-market value,
for purposes of admissions and withdrawals. Because a STIF's
investments are limited to shorter-term assets and those assets
generally are required to be held to maturity, differences between the
amortized cost and mark-to-market value of the assets will be rare,
absent atypical market conditions or an impaired asset. STIFs typically
operate with the primary objective of maintaining a stable net asset
value (NAV) per participation interest of $1.00.\3\
---------------------------------------------------------------------------
\3\ 12 CFR 9.18(b)(4)(iii)(A).
---------------------------------------------------------------------------
The OCC's STIF Rule at 12 CFR 9.18(b)(4)(iii) governs STIFs managed
by national banks, but it is also common for other types of financial
institutions (collectively with national banks, ``banks'') to manage
collective investment funds pursuant to the requirements of other laws
which, in turn, cross-reference the OCC's CIF Rule at 12 CFR 9.18 and
the STIF Rule subcomponent thereof at 12 CFR 9.18(b)(4)(iii).\4\
---------------------------------------------------------------------------
\4\ For example, New York state law provides that all
investments in short-term investment common trust funds may be
valued at cost, if the plan of operation requires that: (i) The type
or category of investments of the fund shall comply with the rules
and regulations of the Comptroller of the Currency pertaining to
short-term investment funds and (ii) in computing income, the
difference between cost of investment and anticipated receipt on
maturity of investment shall be accrued on a straight-line basis.
See N.Y. Comp. Codes R. & Regs. Tit. 3, section 22.23 (2010).
Additionally, in order to retain their tax-exempt status pursuant to
the Internal Revenue Code, common trust funds must operate in
compliance with Sec. 9.18 as well as the Federal tax laws. See 26
U.S.C. 584. Although the direct scope of the STIF Rule provisions in
Sec. 9.18 of the OCC's regulations is national banks and Federal
branches and agencies of foreign banks acting in a fiduciary
capacity (12 CFR 9.1(c)) in regard to STIFs, the nomenclature of the
STIF Rule refers simply to ``banks.'' For the sake of convenience,
the OCC continues this approach and also applies the same convention
to the discussion of the STIF final rule.
---------------------------------------------------------------------------
There are also other types of funds that seek to maintain a stable
NAV. The most significant of these from a financial market presence
standpoint are ``money market mutual funds'' (MMMFs). These funds are
organized as open-ended management investment companies and are
regulated by the U.S. Securities and Exchange Commission (``SEC'')
pursuant to the Investment Company Act of 1940, particularly pursuant
to the provisions of SEC Rule 2a-7 thereunder (``Rule 2a-7'').
There are a number of important differences between MMMFs and
STIFs; most significantly, MMMFs are open to all retail, commercial,
institutional, and public sector investors, whereas, STIFs only are
available to authorized fiduciary accounts of a bank and certain
employee benefit plans.\5\ Additionally, the combined asset value of
all STIFs nationwide totals only a fraction of the combined asset value
of all MMMFs.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 80a; 17 CFR 270.2a-7. Because STIFs are a form of
CIF, they are generally exempt from the SEC's rules under the
Investment Company Act. STIFs used exclusively for (1) the
collective investment of money by a bank in its fiduciary capacity
as trustee, executor, administrator, or guardian and (2) the
collective investment of assets of certain employee benefit plans
are exempt from the Investment Company Act under 15 U.S.C. 80a-
3(c)(3) and (c)(11), respectively. MMMFs are not subject to
comparable restrictions as to the type of participant who may invest
in the fund or the purpose of such investment.
---------------------------------------------------------------------------
B. Market Disturbances Impacting STIF Liquidity Management Functions
Recent events have significantly and adversely impacted global
financial markets, and the OCC is concerned about the potential effects
on STIFs operated by national banks. The spread of the Coronavirus
Disease 2019 (COVID-2019) has slowed economic activity in many
countries, including the United States. Sudden disruptions in financial
markets have put increasing liquidity pressure on MMMFs, as they have
been faced with redemption requests from clients with immediate cash
needs. The Board of Governor of the Federal Reserve System, with the
approval of the Secretary of the Treasury, has authorized the Federal
Reserve Bank of Boston to establish the Money Market Mutual Fund
Liquidity Facility, pursuant to section 13(3) of the Federal Reserve
Act,\6\ as a measure to ameliorate these liquidity pressures. Although
STIFs do not serve the same broad investor market as MMMFs, the OCC
remains concerned that, in light of the acute effects the COVID-2019
virus is triggering across the markets broadly, there may be elevated
participation interest withdrawals for STIFs operated by national
banks, notwithstanding these differences between STIFs and MMMFs.
Regulatory authorities supervising other categories of banks operating
STIFs--in accordance with the legal requirements governing those banks
and incorporating the OCC's STIF rules as part of those requirements--
have conveyed similar concerns to the OCC.
---------------------------------------------------------------------------
\6\ 12 U.S.C. 343(3).
---------------------------------------------------------------------------
In addition to the OCC's concerns about unusual withdrawal levels,
the OCC observes that STIF investment portfolios are generally made up
of the same types of securities and investments as those held by MMMFs.
[[Page 16890]]
Accordingly, liquidity pressures related to the COVID-2019 virus in the
marketplace for those assets raise similar concerns as those presented
for MMMFs. The OCC's STIF Rule requires management to operate the fund
pursuant to liquidity management standards allowing the STIF to balance
appropriately the volume of the STIF's daily admissions and withdrawals
in conjunction with the maturities of the fund's investments. Under the
OCC STIF Rule, these standards must address contingent funding needs,
and the bank must operate an independent program of stress testing to
assess the STIF's ability to maintain a stable NAV in varying market
conditions.\7\ Acute market-wide disturbances in the depth of liquidity
available for a bank seeking to purchase and sell portfolio assets to
maintain a STIF's liquidity put pressure on the bank's ability to
perform these functions.
---------------------------------------------------------------------------
\7\ 12 CFR 9.18(b)(4)(iii)(F), (H).
---------------------------------------------------------------------------
In addition, the OCC's STIF Rule requires the STIF to be operated
pursuant to a written, board-approved plan that requires the fund to
maintain a dollar-weighted average portfolio maturity of 60 days or
less and a dollar-weighted average portfolio life maturity of 120 days
or less, as determined in the same manner as is required by the
Securities and Exchange Commission pursuant to Rule 2a-7 for money
market mutual funds (17 CFR 270.2a-7). The OCC is concerned that the
current market-wide liquidity disturbances may put pressure on bank
management's ability to comply with these maturity limits.
II. Description of the Interim Final Rule
The OCC is amending the OCC STIF Rule to add a reservation of
authority provision addressing the rule's limits on weighted average
portfolio maturity, weighted average portfolio life maturity, and the
method for determining those limits. The OCC believes that the
temporary nature of the need for relief, and the uncertainty associated
with future market conditions, counsel the OCC's use of a flexible
method of administering relief from the limits, rather than a direct
rule amendment to the limits themselves. In designing the proposed
rule, the OCC is also mindful that banks other than national banks
supervised and regulated by the OCC also operate their STIFs under
applicable legal requirements that cross-reference the OCC STIF Rule.
The OCC believes it is important to include a mechanism in the
reservation of authority that provides these banks access to public
information about the OCC's use of the reservation of authority.
Accordingly, the interim final rule sets out a framework under
which the OCC's reservation of authority will be exercised in the
format of an OCC administrative order. The administrative order will be
issued by authorization of the Comptroller of the Currency. The OCC
will publish the administrative order on its website at www.occ.gov and
through other methods, as appropriate. The interim final rule provides
that a bank seeking to comply with the requirements of the OCC STIF
Rule on weighted average portfolio maturity, weighted average portfolio
life maturity, and the method for determining them will deemed to be in
compliance with the rule's limits if the bank complies with the limits
or other revisions, and any applicable conditions, described in the
administrative order.
III. Description of the Administrative Order
Concurrently with the OCC's issuance of this interim final rule,
the OCC is issuing an administrative order pursuant to provisions of
the interim final rule.
The order states that banks seeking to comply with the requirements
of section 9.18(b)(4)(iii)(B) will be deemed to be in compliance with
that section, if (1) the STIF maintains a dollar-weighted average
portfolio maturity of 120 days or less, and (2) the STIF maintains a
dollar-weighted average portfolio life maturity of 180 days or less.
Consistent with the terms of section 9.18(b)(4)(iii)(B), both
maturities must be determined in the same manner as is required by the
Securities and Exchange Commission pursuant to Rule 2a-7 for money
market mutual funds (17 CFR 270.2a-7).
The relief provided by the OCC's order terminates on July 20, 2020,
unless the OCC revises the order to provide otherwise before that date.
The OCC will monitor market conditions during this period to assess
whether extensions beyond that date are necessary and appropriate.
The order also states the bank must determine it is acting in the
best interests of the STIF under applicable law in connection with
using these temporary limits. This determination may be made under the
bank's standard procedures for making determinations in regards to the
best interests of its collective investment funds.\8\ In addition, the
order states the bank must make any necessary amendments to the written
plan for the STIF to reflect these temporary changes.
---------------------------------------------------------------------------
\8\ For national banks and federal savings associations, see,
e.g. 12 CFR 9.11 and 9.18(a); see also 12 CFR 9.2(b).
---------------------------------------------------------------------------
The OCC seeks comment on all aspects of the interim final rule.
IV. Administrative Law Matters
A. Administrative Procedure Act
The OCC is issuing the interim final rule without prior notice and
the opportunity for public comment and the delayed effective date
ordinarily prescribed by the Administrative Procedure Act (APA).\9\
Pursuant to section 553(b)(B) of the APA, general notice and the
opportunity for public comment are not required with respect to a
rulemaking when an ``agency for good cause finds (and incorporates the
finding and a brief statement of reasons therefor in the rules issued)
that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.'' \10\
---------------------------------------------------------------------------
\9\ 5 U.S.C. 553.
\10\ 5 U.S.C. 553(b)(3)(A).
---------------------------------------------------------------------------
The OCC believes that the public interest is best served by
implementing the interim final rule immediately upon publication in the
Federal Register. The spread of the COVID-19 virus has slowed economic
activity in many countries, including the United States, and have put
increasing liquidity pressure on the markets in which STIFs buy and
sell their portfolio assets. These market conditions make it unusually
difficult for banks to operate STIFs on a current basis in compliance
with the maturity limits of the OCC STIF Rule. For these reasons, the
OCC finds that there is good cause consistent with the public interest
to issue the rule without advance notice and comment.\11\
---------------------------------------------------------------------------
\11\ 5 U.S.C. 553(b)(B); 553(d)(3).
---------------------------------------------------------------------------
The APA also requires a 30-day delayed effective date, except for
(1) substantive rules which grant or recognize an exemption or relieve
a restriction; (2) interpretative rules and statements of policy; or
(3) as otherwise provided by the agency for good cause.\12\ Because the
interim final rule relieve a restriction, it is exempt from the APA's
delayed effective date requirement.\13\
---------------------------------------------------------------------------
\12\ 5 U.S.C. 553(d).
\13\ 5 U.S.C. 553(d)(1).
---------------------------------------------------------------------------
While the OCC believes that there is good cause to issue the rule
without advance notice and comment and with an immediate effective
date, the agencies are interested in the views of the public and
requests comment on all aspects of the interim final rule.
B. Congressional Review Act
For purposes of Congressional Review Act, the OMB makes a
determination as
[[Page 16891]]
to whether a final rule constitutes a ``major'' rule.\14\ If a rule is
deemed a ``major rule'' by the Office of Management and Budget (OMB),
the Congressional Review Act generally provides that the rule may not
take effect until at least 60 days following its publication.\15\
---------------------------------------------------------------------------
\14\ 5 U.S.C. 801 et seq.
\15\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------
The Congressional Review Act defines a ``major rule'' as any rule
that the Administrator of the Office of Information and Regulatory
Affairs of the OMB finds has resulted in or is likely to result in (A)
an annual effect on the economy of $100,000,000 or more; (B) a major
increase in costs or prices for consumers, individual industries,
Federal, State, or local government agencies or geographic regions, or
(C) significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic and
export markets.\16\
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\16\ 5 U.S.C. 804(2).
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For the same reasons set forth above, the OCC is adopting the
interim final rule without the delayed effective date generally
prescribed under the Congressional Review Act. The delayed effective
date required by the Congressional Review Act does not apply to any
rule for which an agency for good cause finds (and incorporates the
finding and a brief statement of reasons therefor in the rule issued)
that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.\17\ In light of
current market uncertainty, the OCC believes that delaying the
effective date of the rule would be contrary to the public interest.
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\17\ 5 U.S.C. 808.
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As required by the Congressional Review Act, the OCC will submit
the final rule and other appropriate reports to Congress and the
Government Accountability Office for review.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA)
states that no agency may conduct or sponsor, nor is the respondent
required to respond to, an information collection unless it displays a
currently valid OMB control number. The interim final rule contains no
collection of information under the PRA.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \18\ requires an agency to
consider whether the rules it proposes will have a significant economic
impact on a substantial number of small entities.\19\ The RFA applies
only to rules for which an agency publishes a general notice of
proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed
previously, consistent with section 553(b)(B) of the APA, the OCC has
determined for good cause that general notice and opportunity for
public comment is unnecessary, and therefore the OCC is not issuing a
notice of proposed rulemaking. Accordingly, the OCC has concluded that
the RFA's requirements relating to initial and final regulatory
flexibility analysis do not apply.
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\18\ 5 U.S.C. 601 et seq.
\19\ Under regulations issued by the Small Business
Administration, a small entity includes a depository institution,
bank holding company, or savings and loan holding company with total
assets of $600 million or less and trust companies with total assets
of $41.5 million or less. See 13 CFR 121.201.
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Nevertheless, the OCC seeks comment on whether, and the extent to
which, the interim final rule would affect a significant number of
small entities.
E. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA),\20\ in determining the effective
date and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements on
insured depository institutions (IDIs), each Federal banking agency
must consider, consistent with the principle of safety and soundness
and the public interest, any administrative burdens that such
regulations would place on depository institutions, including small
depository institutions, and customers of depository institutions, as
well as the benefits of such regulations. In addition, section 302(b)
of RCDRIA requires new regulations and amendments to regulations that
impose additional reporting, disclosures, or other new requirements on
IDIs generally to take effect on the first day of a calendar quarter
that begins on or after the date on which the regulations are published
in final form, with certain exceptions, including for good cause.\21\
For the reasons described above, the OCC finds good cause exists under
section 302 of RCDRIA to publish this interim final rule with an
immediate effective date.
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\20\ 12 U.S.C. 4802(a).
\21\ 12 U.S.C. 4802.
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As such, the final rule will be effective immediately.
Nevertheless, the OCC seeks comment on RCDRIA.
F. Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act \22\ requires the Federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The OCC has sought to present the
interim final rule in a simple and straightforward manner. The OCC
invites comments on whether there are additional steps it could take to
make the rule easier to understand. For example:
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\22\ 12 U.S.C. 4809.
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Have the OCC organized the material to suit your needs? If
not, how could this material be better organized?
Are the requirements in the regulation clearly stated? If
not, how could the regulation be more clearly stated?
Does the regulation contain language or jargon that is not
clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand? If so, what changes to the format would make the regulation
easier to understand? What else could we do to make the regulation
easier to understand?
G. Unfunded Mandates
As a general matter, the Unfunded Mandates Act of 1995 (UMRA), 2
U.S.C. 1531 et seq., requires the preparation of a budgetary impact
statement before promulgating a rule that includes a Federal mandate
that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year. However, the UMRA does not apply to
final rules for which a general notice of proposed rulemaking was not
published. See 2 U.S.C. 1532(a). Therefore, because the OCC has found
good cause to dispense with notice and comment for this interim final
rule, the OCC has not prepared an economic analysis of the rule under
the UMRA.
List of Subjects in 12 CFR Part 9
Estates, Investments, National banks, Reporting and recordkeeping
requirements, Trusts and trustees.
For the reasons set forth in the preamble, chapter I of title 12 of
the Code of Federal Regulations is amended as follows:
PART 9--FIDUCIARY ACTIVITIES OF NATIONAL BANKS
0
1. The authority citation for part 9 continues to read as follows:
[[Page 16892]]
Authority: 12 U.S.C. 24(Seventh), 92a, and 93a; 12 U.S.C. 78q,
78q-1, and 78w.
0
2. Section 9.18 is amended by adding paragraph (b)(4)(iv) to read as
follows:
Sec. 9.18 Collective investment funds.
* * * * *
(b) * * *
(4) * * *
(iv) Reservation of authority. Notwithstanding paragraph
(b)(4)(iii)(B) of this section, during periods of market stress
negatively affecting, on a temporary basis, the ability of banks to
operate STIFs in compliance with the requirements of the paragraph:
(A) The OCC may issue an administrative order specifying, for
purposes of paragraph (b)(4)(iii)(B) of this section, temporary
revisions to the length of the dollar-weighted average portfolio
maturity requirement, the length of dollar-weighted average portfolio
life maturity, and the manner of determining such limits;
(B) A bank seeking to comply with paragraph (b)(4)(iii)(B) will be
deemed to be in compliance with that paragraph's requirements by
complying with the limits or other revisions, and any applicable
conditions, described in the administrative order; and
(C) The OCC will publish the administrative order on www.occ.gov
and through other methods, as appropriate.
* * * * *
Dated: March 21, 2020.
Morris R. Morgan,
First Deputy Comptroller, Comptroller of the Currency.
[FR Doc. 2020-06293 Filed 3-23-20; 11:15 am]
BILLING CODE 4810-01-P
