Collective Investment Funds: Prior Notice Period for Withdrawals, 49229-49233 [2020-17322]

Download as PDF 49229 Rules and Regulations Federal Register Vol. 85, No. 157 Thursday, August 13, 2020 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 9 [Docket ID OCC–2020–0031] RIN 1557–AE99 Collective Investment Funds: Prior Notice Period for Withdrawals Office of the Comptroller of the Currency, Treasury. ACTION: Interim final rule; request for comment. AGENCY: OCC regulations permit a national bank or Federal Savings association (collectively, a bank) administering a collective investment fund (CIF) that is invested primarily in real estate or other assets that are not readily marketable to require a prior notice period, not to exceed one year, for withdrawals from the fund. The OCC interprets this notice provision as requiring the bank to withdraw an account within the prior notice period or, if permissible under the CIF’s written plan, within one year after prior notice was required (standard withdrawal period). The OCC is issuing an interim final rule to codify the standard withdrawal period and create a limited exception that allows a bank, with OCC approval, to withdraw an account from the CIF up to one year beyond the standard withdrawal period, with opportunities for further extensions, provided that certain conditions are satisfied. The exception is intended to enable a bank to preserve the value of the CIF’s assets for the benefit of fund participants during unanticipated and severe market conditions, such as those resulting from the current national health emergency concerning the coronavirus disease (COVID–19) outbreak. DATES: The interim final rule is effective August 13, 2020. Comments on the SUMMARY: VerDate Sep<11>2014 19:35 Aug 12, 2020 Jkt 250001 interim final rule must be received no later than September 14, 2020. ADDRESSES: Commenters are encouraged to submit comments through the Federal eRulemaking Portal or email, if possible. Please use the title ‘‘Collective Investment Funds: Prior Notice Period for Withdrawals’’ 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–2020–0031’’ 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–2020–0031’’ 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, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E–218, Washington, DC 20219. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘Docket ID OCC–2020–0031’’ 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 that you provide such as name and address information, email addresses, or phone numbers. PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 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–2020–0031’’ 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–2020–0031’’ 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.–5 p.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. FOR FURTHER INFORMATION CONTACT: Patricia Dalton, Director for Asset Management Policy, David Stankiewicz, Technical Expert for Asset Management Policy, Market Risk Policy Division, E:\FR\FM\13AUR1.SGM 13AUR1 49230 Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Rules and Regulations Bank Supervision Policy, 202–649– 6360; Beth Kirby, Assistant Director, Asa Chamberlayne, Counsel, or Daniel Perez, Senior Attorney, 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 collective investment fund (CIF) is a bank-managed fiduciary fund that holds pooled assets. A national bank or Federal savings association (collectively, a bank) that establishes and operates a CIF must do so in accordance with the criteria established under the OCC fiduciary activities regulation at 12 CFR 9.18.1 A CIF is funded through contributions by the CIF’s participants, which are the beneficial owners of the fund’s assets. A bank admitting a CIF participant or withdrawing all or part of its participating interest (that is, allowing the participant to, in effect, redeem a proportionate interest in the assets of the CIF) must do so on the basis of a valuation of the CIF’s assets.2 A bank administering a CIF invested primarily in real estate or other assets that are not readily marketable may require a prior notice period of up to one year for withdrawals.3 The OCC has interpreted this notice as requiring the bank to withdraw an account within the prior notice period or, if permissible under the CIF’s written plan, within one year after prior notice was required (standard withdrawal period).4 The OCC has also recognized, however, that there may be circumstances when a longer withdrawal period is appropriate. For example, during the 2009 financial crisis, the OCC permitted a bank to extend the time period for withdrawals, subject to certain conditions.5 During normal market conditions, a bank can typically satisfy withdrawal requests within the standard withdrawal period. However, in the event of unanticipated and severe market conditions, a bank may be faced with an increased number of withdrawal requests and reduced market liquidity. If the bank is required to sell assets held by a CIF to satisfy withdrawals within the standard withdrawal period, it may have difficulty realizing a fair value for 1 Pursuant to 12 CFR 150.260, the terms ‘‘bank’’ and ‘‘national bank’’ as used in 12 CFR 9.18 are deemed to include a Federal savings association. 2 12 CFR 9.18(b)(5)(i). 3 12 CFR 9.18(b)(5)(iii). 4 See, e.g., OCC Interpretive Letter No. 1121 (Aug. 2009) (Interpretive Letter 1121). 5 Id. VerDate Sep<11>2014 16:05 Aug 12, 2020 Jkt 250001 those assets. This could compel ‘‘fire sales’’ of CIF assets and lead to avoidable economic harm for CIF participants, which would be contrary to general fiduciary principles that require a CIF trustee to act in the interests of CIF participants. Similarly, an in-kind distribution 6 of CIF assets to CIF participants would be generally impractical and involve considerable difficulties and transaction costs for the participants, who may be ill-equipped to receive, manage, and liquidate such assets. Extending the time period for acting upon withdrawal requests beyond the standard withdrawal period would allow a bank administering a CIF to take appropriate steps to satisfy the requests within the context of current market conditions, including allowing for an orderly liquidation of sufficient assets to raise cash through prudent and appropriate sales, as the return of more normal market conditions permit. II. Interim Final Rule The OCC is issuing an interim final rule that clarifies the standard withdrawal period and establishes a limited exception to that withdrawal period. Under 12 CFR 9.18(b)(5)(iii), a bank administering a CIF invested primarily in real estate or other assets that are not readily marketable may require a prior notice period of up to one year for withdrawals. As described above, the OCC has interpreted this notice provision as requiring payment of the withdrawal requests within the standard withdrawal period. The IFR adds new paragraph (b)(5)(iii)(B) to § 9.18, which codifies the standard withdrawal period as a distinct provision of the rule and provides that a bank that requires a prior notice period for withdrawals generally must withdraw an account within the prior notice period or, if permissible under the CIF’s written plan, within one year after prior notice was required. The IFR also adds new paragraph (b)(5)(iii)(C) to § 9.18 to create an exception to the standard withdrawal period that may be invoked under exceptional circumstances. Specifically, under the exception, a bank may withdraw an account from a CIF up to one year beyond the standard withdrawal period described in new paragraph (b)(5)(iii)(B), if the OCC approves and certain conditions are met. Namely, the fund’s written plan 6 See 12 CFR 9.18(b)(5)(iv) (a bank may withdraw an account from a fund in cash, ratably in kind, a combination of cash and ratably in kind, or in any other manner permitted under state law where the bank national maintains the fund). PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 (including its notice and withdrawal policy) must authorize an extended withdrawal period and be fully disclosed to fund participants. In addition, the bank’s board of directors, or a committee authorized by the board of directors, must make certain determinations and commitments. The bank’s board of directors, or a committee authorized by the board of directors, must determine that (1) due to unanticipated and severe market conditions for specific assets held by the fund, an extended withdrawal period is necessary in order to preserve the value of the fund’s assets for the benefit of fund participants; and (2) the extended withdrawal period is consistent with 12 CFR part 9 and applicable law. The bank’s board of directors, or a committee authorized by the board of directors, must also commit that the bank will act upon any withdrawal request as soon as practicable. Finally, the rule provides discretion for the OCC to impose additional conditions if the OCC determines that the conditions are necessary or appropriate to protect the interests of fund participants. The conditions established by this interim final rule are intended to ensure that the exception is only granted if it is consistent with fiduciary principles, applicable law, and the CIF’s written plan.7 To ensure that the exception is consistent with these principles and requirements, and as described above, the OCC may impose additional conditions, such as requiring periodic progress reports from the bank. If, due to ongoing severe market conditions, a bank has been unable to satisfy withdrawal requests during the one-year extension period without causing harm to participants, the bank may request OCC approval under new paragraph (b)(5)(iii)(D) for up to two additional one-year extensions. The OCC may only approve each additional one-year extension if the OCC determines that the bank has made a good faith effort to satisfy withdrawal requests during the original extension period and the bank has been unable to satisfy such requests without causing harm to participants due to ongoing severe market conditions. The bank must also continue to satisfy the conditions described in new paragraph (b)(5)(iii)(C). In the OCC’s experience, the initial one-year extension should be sufficient in most cases to avoid a ‘‘fire sale’’ of CIF assets during stressed market conditions. Additional extensions are available in one-year increments to allow the OCC to review 7 See 12 CFR 9.18(b)(1) (written plan requirements). E:\FR\FM\13AUR1.SGM 13AUR1 Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Rules and Regulations the bank’s ongoing efforts to satisfy withdrawal requests. The additional requests are capped at two years based on the OCC’s experience with stressed market events and the need to balance the bank’s and participants’ interest in satisfying withdrawal requests at fair value with the participants’ interest in timely withdrawals. For example, under normal circumstances and pursuant to the standard withdrawal period in new paragraph (b)(5)(iii)(B), a bank that requires notice of withdrawal by December 31, 2020, is required to withdraw an account no later than December 31, 2021. However, if, due to exceptional circumstances, the bank receives a one-year extension of the standard withdrawal period pursuant to new paragraph (b)(5)(iii)(C), the bank is required to withdraw the account no later than December 31, 2022. If the bank later receives an additional oneyear extension pursuant to new paragraph (b)(5)(iii)(D), the bank is required to withdraw the account no later than December 31, 2023. III. Request for Comment The OCC invites comment on all aspects of this rulemaking. In particular, the OCC invites comment on whether the OCC approval requirement and associated conditions for an extended withdrawal period are (1) sufficient to ensure that any extension of the withdrawal period would be consistent with fiduciary principles and applicable law; and (2) consistent with general business practices. 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 30-day delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA).8 Pursuant to section 553(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.’’ 9 The OCC is concerned that the disruption and stress in the real estate markets and other markets for not readily marketable assets resulting from the outbreak of the COVID–19 emergency, coupled with requiring a 85 95 U.S.C. 553. U.S.C. 553(b)(B). VerDate Sep<11>2014 16:05 Aug 12, 2020 Jkt 250001 bank to withdraw an account within the standard withdrawal period, may undermine the ability of a bank to realize an appropriate value for CIF assets and be harmful in preserving the value of the CIF’s assets for the benefit of fund participants. Accordingly, the OCC finds that the public interest is best served by implementing the interim final rule immediately upon publication in the Federal Register. 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.10 Because the rule relieves a restriction on banks, the interim final rule is exempt from the APA’s delayed effective date requirement.11 In addition, for the same reasons set forth above under the discussion of section 553(b)(B) of the APA, the OCC finds good cause to publish the interim final rule with an immediate effective date. While the OCC believes that there is good cause to issue the interim final rule without advance notice and comment and with an immediate effective date as of the date of Federal Register publication, the OCC is 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 Office of Management and Budget (OMB) makes a determination as to whether a final rule constitutes a ‘‘major’’ rule.12 If a rule is deemed a ‘‘major rule’’ by OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.13 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.14 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.15 In light of the potential economic harm described above, the OCC finds that delaying the effective date of the interim final rule would be contrary to the public interest. As required by the Congressional Review Act, the OCC will submit the interim 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 reporting requirements under the Paperwork Reduction Act. With the OCC’s approval, and if certain conditions are satisfied, a bank may withdraw an account from a collective investment fund up to one year after the end of the standard withdrawal period.16 In addition, a bank may request that the OCC approve an extension beyond the one-year extension period, if certain conditions are satisfied.17 Extensions past the initial one-year extension must be requested and approved annually, for a maximum of two years after the initial one-year extension period.18 Title of Information Collection: Fiduciary Activities. OMB Control No.: 1557–0140. Frequency: On occasion. Affected Public: Businesses or other for-profit. Estimated number of respondents: 4. Total estimated annual burden: 220 burden hours. Comments are invited on: a. Whether the collections of information are necessary for the proper performance of the OCC’s functions, 14 5 U.S.C. 804(2). U.S.C. 808. 16 12 CFR 9.18(b)(5)(iii)(C) introductory text. 17 12 CFR 9.18(b)(5)(iii)(D). 18 Id. 10 5 U.S.C. 553(d). 11 5 U.S.C. 553(d)(1). 12 5 U.S.C. 801 et seq. 13 5 U.S.C. 801(a)(3). PO 00000 Frm 00003 Fmt 4700 49231 15 5 Sfmt 4700 E:\FR\FM\13AUR1.SGM 13AUR1 49232 Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Rules and Regulations including whether the information has practical utility; b. The accuracy or the estimate of the burden of the information collections, including the validity of the methodology and assumptions used; c. Ways to enhance the quality, utility, and clarity of the information to be collected; d. Ways to minimize the burden of the information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information. 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.22 For the reasons described above, the OCC finds good cause exists under section 302 of RCDRIA to publish the interim final rule with an immediate effective date. Therefore, because the OCC has found good cause to dispense with notice and comment for this interim final rule, the OCC concludes that the requirements of UMRA do not apply to this interim final rule. D. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) 19 requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities.20 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 impracticable and contrary to the public’s interest, and therefore the OCC is not issuing a notice of proposed rulemaking. Accordingly, the OCC concludes that the RFA’s requirements relating to initial and final regulatory flexibility analysis do not apply. Nevertheless, the OCC is interested in receiving feedback on ways that the OCC can reduce any potential burden of the interim final rule on small entities. F. Use of Plain Language Section 722 of the Gramm-LeachBliley Act 23 requires the Federal banking agencies to use ‘‘plain language’’ in all proposed and final rules published after January 1, 2000. In light of this requirement, 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 the OCC can take to make the rule easier to understand. For example: • Have we 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? For the reasons set forth in the preamble, the OCC amends chapter I of Title 12 of the Code of Federal Regulations as follows: 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),21 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 19 5 U.S.C. 601 et seq. 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. 21 12 U.S.C. 4802(a). 20 Under VerDate Sep<11>2014 16:05 Aug 12, 2020 Jkt 250001 G. Unfunded Mandates Act 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). 22 12 23 12 PO 00000 U.S.C. 4802. U.S.C. 4809. Frm 00004 Fmt 4700 Sfmt 4700 List of Subjects 12 CFR Part 9 Estates, Investments, National banks, Reporting and recordkeeping requirements, Trusts and trustees. Office of the Comptroller of the Currency 12 CFR CHAPTER I Authority and Issuance PART 9—FIDUCIARY ACTIVITIES OF NATIONAL BANKS 1. The authority citation for part 9 continues to read as follows: ■ Authority: 12 U.S.C. 24 (Seventh), 92a, and 93a; 15 U.S.C. 78q, 78q-1, and 78w. 2. Section 9.18 is amended by revising paragraph (b)(5)(iii): ■ § 9.18 Collective investment funds. * * * * * (b) * * * (5) * * * (iii) Prior notice period for withdrawals from funds with assets not readily marketable—(A) A bank administering a collective investment fund described in paragraph (a)(2) of this section that is invested primarily in real estate or other assets that are not readily marketable may require a prior notice period, not to exceed one year, for withdrawals. (B) A bank that requires a prior notice period for withdrawals must withdraw an account from the fund within the prior notice period or, if permissible under the fund’s written plan, within one year after the date on which notice was required, except as described in paragraph (b)(5)(iii)(C) of this section. (C) A bank may withdraw an account from the fund up to one year after the withdrawal period described in paragraph (b)(5)(iii)(B) of this section, with the OCC’s approval, provided that the following conditions are met: (1) The fund’s written plan, including its notice and withdrawal policy, authorizes an extended withdrawal period and is fully disclosed to fund participants; (2) The bank’s board of directors, or a committee authorized by the board of E:\FR\FM\13AUR1.SGM 13AUR1 Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Rules and Regulations directors, determines that, due to unanticipated and severe market conditions for specific assets held by the fund, an extended withdrawal period is necessary in order to preserve the value of the fund’s assets for the benefit of fund participants; (3) The bank’s board of directors, or a committee authorized by the board of directors, determines that the extended withdrawal period is consistent with 12 CFR part 9 and applicable law; (4) The bank’s board of directors, or a committee authorized by the board of directors, commits that the bank will act upon any withdrawal request as soon as practicable; and (5) Any other condition imposed by the OCC, if the OCC determines that the condition is necessary or appropriate to protect the interests of fund participants. (D) Upon request by a bank, the OCC may approve an extension beyond the one-year extension period described in paragraph (b)(5)(iii)(C) of this section if the OCC determines that the bank has made a good faith effort to satisfy withdrawal requests and the bank has been unable to satisfy such requests without causing harm to participants due to ongoing severe market conditions. The bank must also continue to satisfy the conditions described in paragraph (b)(5)(iii)(C) of this section. Extensions under this paragraph must be requested and approved annually, for a maximum of two years after the initial one-year extension period. * * * * * Brian P. Brooks, Acting Comptroller of the Currency. [FR Doc. 2020–17322 Filed 8–12–20; 8:45 am] BILLING CODE 4810–33–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2020–0418; Product Identifier 2017–SW–053–AD; Amendment 39–21210; AD 2020–17–05] RIN 2120–AA64 Airworthiness Directives; Airbus Helicopters Deutschland GmbH Helicopters Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. AGENCY: The FAA is adopting a new airworthiness directive (AD) for certain SUMMARY: VerDate Sep<11>2014 16:05 Aug 12, 2020 Jkt 250001 49233 Airbus Helicopters Deutschland GmbH Model MBB–BK 117 D–2 helicopters. This AD was prompted by the discovery that certain longitudinal trim actuators, lateral trim actuators, and yaw trim actuators, which are certified for installation on MBB–BK 117 C–2 helicopters, were erroneously listed as eligible for installation on MBB–BK 117 D–2 helicopters. This AD requires removing the affected parts from service and prohibits installing the affected parts on MBB–BK 117 D–2 helicopters. The FAA is issuing this AD to address the unsafe condition on these products. DATES: This AD is effective September 17, 2020. ADDRESSES: For service information identified in this final rule, contact Airbus Helicopters, 2701 N Forum Drive, Grand Prairie, TX 75052; phone: 972–641–0000 or 800–232–0323; fax: 972–641–3775; or at https:// www.airbus.com/helicopters/services/ support.html. You may view this service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N–321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call 817–222–5110. installation on MBB–BK 117 D–2 helicopters. The NPRM proposed to require removing the affected parts from service and prohibit installing the affected parts on MBB–BK 117 D–2 helicopters. The FAA is issuing this AD to address erroneously installed longitudinal trim actuators, lateral trim actuators, and yaw trim actuators, which could lead to reduced control of the helicopter. The European Aviation Safety Agency (now European Union Aviation Safety Agency) (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2017–0094, dated May 29, 2017 (EASA AD 2017–0094) (referred to after this as the Mandatory Continuing Airworthiness Information, or ‘‘the MCAI’’), to correct an unsafe condition for Airbus Helicopters Deutschland GmbH Model MBB–BK 117 D–2 helicopters with a serial number (S/N) up to 20126 inclusive, excluding S/N 20109, 20119, and 20124. You may examine the MCAI in the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2020– 0418. Examining the AD Docket You may examine the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2020– 0418; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this final rule, any comments received, and other information. The street address for Docket Operations is listed above. FOR FURTHER INFORMATION CONTACT: David Hatfield, Aviation Safety Engineer, Safety Management Section, Rotorcraft Standards Branch, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; phone: 817–222–5110; email: david.hatfield@faa.gov. SUPPLEMENTARY INFORMATION: Comments The FAA gave the public the opportunity to participate in developing this final rule. The FAA received no comments on the NPRM or on the determination of the cost to the public. Discussion The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus Helicopters Deutschland GmbH Model MBB–BK 117 D–2 helicopters. The NPRM published in the Federal Register on April 23, 2020 (85 FR 22684). The NPRM was prompted by the discovery that certain longitudinal trim actuators, lateral trim actuators, and yaw trim actuators, which are certified for installation on MBB–BK 117 C–2 helicopters, were erroneously listed as eligible for PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 Conclusion The FAA reviewed the relevant data and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes: • Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and • Do not add any additional burden upon the public than was already proposed in the NPRM. Related Service Information Airbus Helicopters has issued Alert Service Bulletin MBB–BK117 D–2–67A– 005, Revision 0, dated April 3, 2017. This service information contains procedures for replacing the affected parts. Differences Between This AD and the EASA AD The EASA AD has a compliance time of ‘‘Within 400 flight hours, or within 12 months, whichever occurs first’’ for the replacement. However, this AD requires replacing affected parts within 300 hours time-in-service instead. The E:\FR\FM\13AUR1.SGM 13AUR1

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[Federal Register Volume 85, Number 157 (Thursday, August 13, 2020)]
[Rules and Regulations]
[Pages 49229-49233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17322]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / 
Rules and Regulations

[[Page 49229]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 9

[Docket ID OCC-2020-0031]
RIN 1557-AE99


Collective Investment Funds: Prior Notice Period for Withdrawals

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

ACTION: Interim final rule; request for comment.

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SUMMARY: OCC regulations permit a national bank or Federal Savings 
association (collectively, a bank) administering a collective 
investment fund (CIF) that is invested primarily in real estate or 
other assets that are not readily marketable to require a prior notice 
period, not to exceed one year, for withdrawals from the fund. The OCC 
interprets this notice provision as requiring the bank to withdraw an 
account within the prior notice period or, if permissible under the 
CIF's written plan, within one year after prior notice was required 
(standard withdrawal period). The OCC is issuing an interim final rule 
to codify the standard withdrawal period and create a limited exception 
that allows a bank, with OCC approval, to withdraw an account from the 
CIF up to one year beyond the standard withdrawal period, with 
opportunities for further extensions, provided that certain conditions 
are satisfied. The exception is intended to enable a bank to preserve 
the value of the CIF's assets for the benefit of fund participants 
during unanticipated and severe market conditions, such as those 
resulting from the current national health emergency concerning the 
coronavirus disease (COVID-19) outbreak.

DATES: The interim final rule is effective August 13, 2020. Comments on 
the interim final rule must be received no later than September 14, 
2020.

ADDRESSES: Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal or email, if possible. Please use the title 
``Collective Investment Funds: Prior Notice Period for Withdrawals'' 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-2020-0031'' 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-2020-0031'' 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, Office of the Comptroller of 
the Currency, 400 7th Street SW, Suite 3E-218, Washington, DC 20219.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2020-0031'' 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 that you provide 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-2020-0031'' 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-2020-0031'' 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.-5 p.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.

FOR FURTHER INFORMATION CONTACT: 
    Patricia Dalton, Director for Asset Management Policy, David 
Stankiewicz, Technical Expert for Asset Management Policy, Market Risk 
Policy Division,

[[Page 49230]]

Bank Supervision Policy, 202-649-6360; Beth Kirby, Assistant Director, 
Asa Chamberlayne, Counsel, or Daniel Perez, Senior Attorney, 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 collective investment fund (CIF) is a bank-managed fiduciary fund 
that holds pooled assets. A national bank or Federal savings 
association (collectively, a bank) that establishes and operates a CIF 
must do so in accordance with the criteria established under the OCC 
fiduciary activities regulation at 12 CFR 9.18.\1\ A CIF is funded 
through contributions by the CIF's participants, which are the 
beneficial owners of the fund's assets. A bank admitting a CIF 
participant or withdrawing all or part of its participating interest 
(that is, allowing the participant to, in effect, redeem a 
proportionate interest in the assets of the CIF) must do so on the 
basis of a valuation of the CIF's assets.\2\
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    \1\ Pursuant to 12 CFR 150.260, the terms ``bank'' and 
``national bank'' as used in 12 CFR 9.18 are deemed to include a 
Federal savings association.
    \2\ 12 CFR 9.18(b)(5)(i).
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    A bank administering a CIF invested primarily in real estate or 
other assets that are not readily marketable may require a prior notice 
period of up to one year for withdrawals.\3\ The OCC has interpreted 
this notice as requiring the bank to withdraw an account within the 
prior notice period or, if permissible under the CIF's written plan, 
within one year after prior notice was required (standard withdrawal 
period).\4\ The OCC has also recognized, however, that there may be 
circumstances when a longer withdrawal period is appropriate. For 
example, during the 2009 financial crisis, the OCC permitted a bank to 
extend the time period for withdrawals, subject to certain 
conditions.\5\
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    \3\ 12 CFR 9.18(b)(5)(iii).
    \4\ See, e.g., OCC Interpretive Letter No. 1121 (Aug. 2009) 
(Interpretive Letter 1121).
    \5\ Id.
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    During normal market conditions, a bank can typically satisfy 
withdrawal requests within the standard withdrawal period. However, in 
the event of unanticipated and severe market conditions, a bank may be 
faced with an increased number of withdrawal requests and reduced 
market liquidity. If the bank is required to sell assets held by a CIF 
to satisfy withdrawals within the standard withdrawal period, it may 
have difficulty realizing a fair value for those assets. This could 
compel ``fire sales'' of CIF assets and lead to avoidable economic harm 
for CIF participants, which would be contrary to general fiduciary 
principles that require a CIF trustee to act in the interests of CIF 
participants. Similarly, an in-kind distribution \6\ of CIF assets to 
CIF participants would be generally impractical and involve 
considerable difficulties and transaction costs for the participants, 
who may be ill-equipped to receive, manage, and liquidate such assets.
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    \6\ See 12 CFR 9.18(b)(5)(iv) (a bank may withdraw an account 
from a fund in cash, ratably in kind, a combination of cash and 
ratably in kind, or in any other manner permitted under state law 
where the bank national maintains the fund).
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    Extending the time period for acting upon withdrawal requests 
beyond the standard withdrawal period would allow a bank administering 
a CIF to take appropriate steps to satisfy the requests within the 
context of current market conditions, including allowing for an orderly 
liquidation of sufficient assets to raise cash through prudent and 
appropriate sales, as the return of more normal market conditions 
permit.

II. Interim Final Rule

    The OCC is issuing an interim final rule that clarifies the 
standard withdrawal period and establishes a limited exception to that 
withdrawal period.
    Under 12 CFR 9.18(b)(5)(iii), a bank administering a CIF invested 
primarily in real estate or other assets that are not readily 
marketable may require a prior notice period of up to one year for 
withdrawals. As described above, the OCC has interpreted this notice 
provision as requiring payment of the withdrawal requests within the 
standard withdrawal period. The IFR adds new paragraph (b)(5)(iii)(B) 
to Sec.  9.18, which codifies the standard withdrawal period as a 
distinct provision of the rule and provides that a bank that requires a 
prior notice period for withdrawals generally must withdraw an account 
within the prior notice period or, if permissible under the CIF's 
written plan, within one year after prior notice was required.
    The IFR also adds new paragraph (b)(5)(iii)(C) to Sec.  9.18 to 
create an exception to the standard withdrawal period that may be 
invoked under exceptional circumstances. Specifically, under the 
exception, a bank may withdraw an account from a CIF up to one year 
beyond the standard withdrawal period described in new paragraph 
(b)(5)(iii)(B), if the OCC approves and certain conditions are met. 
Namely, the fund's written plan (including its notice and withdrawal 
policy) must authorize an extended withdrawal period and be fully 
disclosed to fund participants. In addition, the bank's board of 
directors, or a committee authorized by the board of directors, must 
make certain determinations and commitments. The bank's board of 
directors, or a committee authorized by the board of directors, must 
determine that (1) due to unanticipated and severe market conditions 
for specific assets held by the fund, an extended withdrawal period is 
necessary in order to preserve the value of the fund's assets for the 
benefit of fund participants; and (2) the extended withdrawal period is 
consistent with 12 CFR part 9 and applicable law. The bank's board of 
directors, or a committee authorized by the board of directors, must 
also commit that the bank will act upon any withdrawal request as soon 
as practicable. Finally, the rule provides discretion for the OCC to 
impose additional conditions if the OCC determines that the conditions 
are necessary or appropriate to protect the interests of fund 
participants.
    The conditions established by this interim final rule are intended 
to ensure that the exception is only granted if it is consistent with 
fiduciary principles, applicable law, and the CIF's written plan.\7\ To 
ensure that the exception is consistent with these principles and 
requirements, and as described above, the OCC may impose additional 
conditions, such as requiring periodic progress reports from the bank.
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    \7\ See 12 CFR 9.18(b)(1) (written plan requirements).
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    If, due to ongoing severe market conditions, a bank has been unable 
to satisfy withdrawal requests during the one-year extension period 
without causing harm to participants, the bank may request OCC approval 
under new paragraph (b)(5)(iii)(D) for up to two additional one-year 
extensions. The OCC may only approve each additional one-year extension 
if the OCC determines that the bank has made a good faith effort to 
satisfy withdrawal requests during the original extension period and 
the bank has been unable to satisfy such requests without causing harm 
to participants due to ongoing severe market conditions. The bank must 
also continue to satisfy the conditions described in new paragraph 
(b)(5)(iii)(C). In the OCC's experience, the initial one-year extension 
should be sufficient in most cases to avoid a ``fire sale'' of CIF 
assets during stressed market conditions. Additional extensions are 
available in one-year increments to allow the OCC to review

[[Page 49231]]

the bank's ongoing efforts to satisfy withdrawal requests. The 
additional requests are capped at two years based on the OCC's 
experience with stressed market events and the need to balance the 
bank's and participants' interest in satisfying withdrawal requests at 
fair value with the participants' interest in timely withdrawals.
    For example, under normal circumstances and pursuant to the 
standard withdrawal period in new paragraph (b)(5)(iii)(B), a bank that 
requires notice of withdrawal by December 31, 2020, is required to 
withdraw an account no later than December 31, 2021. However, if, due 
to exceptional circumstances, the bank receives a one-year extension of 
the standard withdrawal period pursuant to new paragraph 
(b)(5)(iii)(C), the bank is required to withdraw the account no later 
than December 31, 2022. If the bank later receives an additional one-
year extension pursuant to new paragraph (b)(5)(iii)(D), the bank is 
required to withdraw the account no later than December 31, 2023.

III. Request for Comment

    The OCC invites comment on all aspects of this rulemaking. In 
particular, the OCC invites comment on whether the OCC approval 
requirement and associated conditions for an extended withdrawal period 
are (1) sufficient to ensure that any extension of the withdrawal 
period would be consistent with fiduciary principles and applicable 
law; and (2) consistent with general business practices.

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 30-day delayed effective 
date ordinarily prescribed by the Administrative Procedure Act 
(APA).\8\ Pursuant to section 553(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.'' \9\
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    \8\ 5 U.S.C. 553.
    \9\ 5 U.S.C. 553(b)(B).
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    The OCC is concerned that the disruption and stress in the real 
estate markets and other markets for not readily marketable assets 
resulting from the outbreak of the COVID-19 emergency, coupled with 
requiring a bank to withdraw an account within the standard withdrawal 
period, may undermine the ability of a bank to realize an appropriate 
value for CIF assets and be harmful in preserving the value of the 
CIF's assets for the benefit of fund participants. Accordingly, the OCC 
finds that the public interest is best served by implementing the 
interim final rule immediately upon publication in the Federal 
Register.
    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.\10\ Because the 
rule relieves a restriction on banks, the interim final rule is exempt 
from the APA's delayed effective date requirement.\11\ In addition, for 
the same reasons set forth above under the discussion of section 
553(b)(B) of the APA, the OCC finds good cause to publish the interim 
final rule with an immediate effective date.
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    \10\ 5 U.S.C. 553(d).
    \11\ 5 U.S.C. 553(d)(1).
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    While the OCC believes that there is good cause to issue the 
interim final rule without advance notice and comment and with an 
immediate effective date as of the date of Federal Register 
publication, the OCC is 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 Office of Management 
and Budget (OMB) makes a determination as to whether a final rule 
constitutes a ``major'' rule.\12\ If a rule is deemed a ``major rule'' 
by OMB, the Congressional Review Act generally provides that the rule 
may not take effect until at least 60 days following its 
publication.\13\
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    \12\ 5 U.S.C. 801 et seq.
    \13\ 5 U.S.C. 801(a)(3).
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    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.\14\
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    \14\ 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.\15\ In light of the 
potential economic harm described above, the OCC finds that delaying 
the effective date of the interim final rule would be contrary to the 
public interest.
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    \15\ 5 U.S.C. 808.
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    As required by the Congressional Review Act, the OCC will submit 
the interim 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 
reporting requirements under the Paperwork Reduction Act. With the 
OCC's approval, and if certain conditions are satisfied, a bank may 
withdraw an account from a collective investment fund up to one year 
after the end of the standard withdrawal period.\16\ In addition, a 
bank may request that the OCC approve an extension beyond the one-year 
extension period, if certain conditions are satisfied.\17\ Extensions 
past the initial one-year extension must be requested and approved 
annually, for a maximum of two years after the initial one-year 
extension period.\18\
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    \16\ 12 CFR 9.18(b)(5)(iii)(C) introductory text.
    \17\ 12 CFR 9.18(b)(5)(iii)(D).
    \18\ Id.
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    Title of Information Collection: Fiduciary Activities.
    OMB Control No.: 1557-0140.
    Frequency: On occasion.
    Affected Public: Businesses or other for-profit.
    Estimated number of respondents: 4.
    Total estimated annual burden: 220 burden hours.
    Comments are invited on:
    a. Whether the collections of information are necessary for the 
proper performance of the OCC's functions,

[[Page 49232]]

including whether the information has practical utility;
    b. The accuracy or the estimate of the burden of the information 
collections, including the validity of the methodology and assumptions 
used;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    d. Ways to minimize the burden of the information collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    e. Estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \19\ requires an agency to 
consider whether the rules it proposes will have a significant economic 
impact on a substantial number of small entities.\20\ 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 impracticable and contrary to the public's interest, 
and therefore the OCC is not issuing a notice of proposed rulemaking. 
Accordingly, the OCC concludes that the RFA's requirements relating to 
initial and final regulatory flexibility analysis do not apply. 
Nevertheless, the OCC is interested in receiving feedback on ways that 
the OCC can reduce any potential burden of the interim final rule on 
small entities.
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    \19\ 5 U.S.C. 601 et seq.
    \20\ 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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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),\21\ 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.\22\ 
For the reasons described above, the OCC finds good cause exists under 
section 302 of RCDRIA to publish the interim final rule with an 
immediate effective date.
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    \21\ 12 U.S.C. 4802(a).
    \22\ 12 U.S.C. 4802.
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F. Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \23\ requires the Federal 
banking agencies to use ``plain language'' in all proposed and final 
rules published after January 1, 2000. In light of this requirement, 
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 the OCC can take to make the rule easier to 
understand. For example:
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    \23\ 12 U.S.C. 4809.
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     Have we 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 Act

    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 concludes that the requirements of UMRA do not apply to 
this interim final rule.

List of Subjects

12 CFR Part 9

    Estates, Investments, National banks, Reporting and recordkeeping 
requirements, Trusts and trustees.

Office of the Comptroller of the Currency

12 CFR CHAPTER I

Authority and Issuance

    For the reasons set forth in the preamble, the OCC amends chapter I 
of Title 12 of the Code of Federal Regulations as follows:

PART 9--FIDUCIARY ACTIVITIES OF NATIONAL BANKS

0
1. The authority citation for part 9 continues to read as follows:

    Authority: 12 U.S.C. 24 (Seventh), 92a, and 93a; 15 U.S.C. 78q, 
78q-1, and 78w.


0
2. Section 9.18 is amended by revising paragraph (b)(5)(iii):


Sec.  9.18   Collective investment funds.

* * * * *
    (b) * * *
    (5) * * *
    (iii) Prior notice period for withdrawals from funds with assets 
not readily marketable--(A) A bank administering a collective 
investment fund described in paragraph (a)(2) of this section that is 
invested primarily in real estate or other assets that are not readily 
marketable may require a prior notice period, not to exceed one year, 
for withdrawals.
    (B) A bank that requires a prior notice period for withdrawals must 
withdraw an account from the fund within the prior notice period or, if 
permissible under the fund's written plan, within one year after the 
date on which notice was required, except as described in paragraph 
(b)(5)(iii)(C) of this section.
    (C) A bank may withdraw an account from the fund up to one year 
after the withdrawal period described in paragraph (b)(5)(iii)(B) of 
this section, with the OCC's approval, provided that the following 
conditions are met:
    (1) The fund's written plan, including its notice and withdrawal 
policy, authorizes an extended withdrawal period and is fully disclosed 
to fund participants;
    (2) The bank's board of directors, or a committee authorized by the 
board of

[[Page 49233]]

directors, determines that, due to unanticipated and severe market 
conditions for specific assets held by the fund, an extended withdrawal 
period is necessary in order to preserve the value of the fund's assets 
for the benefit of fund participants;
    (3) The bank's board of directors, or a committee authorized by the 
board of directors, determines that the extended withdrawal period is 
consistent with 12 CFR part 9 and applicable law;
    (4) The bank's board of directors, or a committee authorized by the 
board of directors, commits that the bank will act upon any withdrawal 
request as soon as practicable; and
    (5) Any other condition imposed by the OCC, if the OCC determines 
that the condition is necessary or appropriate to protect the interests 
of fund participants.
    (D) Upon request by a bank, the OCC may approve an extension beyond 
the one-year extension period described in paragraph (b)(5)(iii)(C) of 
this section if the OCC determines that the bank has made a good faith 
effort to satisfy withdrawal requests and the bank has been unable to 
satisfy such requests without causing harm to participants due to 
ongoing severe market conditions. The bank must also continue to 
satisfy the conditions described in paragraph (b)(5)(iii)(C) of this 
section. Extensions under this paragraph must be requested and approved 
annually, for a maximum of two years after the initial one-year 
extension period.
* * * * *

Brian P. Brooks,
Acting Comptroller of the Currency.
[FR Doc. 2020-17322 Filed 8-12-20; 8:45 am]
BILLING CODE 4810-33-P

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