Information Regarding the FDIC’s Reservation of Authority for Determining Part 363 Compliance Requirements for Insured Depository Institutions (IDIs)

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.

Rules and Regulations

Federal Register

67427

Vol. 85, No. 206

Friday, October 23, 2020

DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1719

RIN 0572–AC45

Rural Energy Savings Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule and response to

comments.

SUMMARY: The Rural Utilities Service

(RUS), a Rural Development agency of

the United States Department of

Agriculture (USDA), is confirming the

final rule published in the Federal

Register on April 2, 2020 to establish

the Rural Energy Savings Program

(RESP) as authorized by Section 6407 of

the Farm Security and Rural Investment

Act of 2002, as amended. This

document also provides the Agency an

opportunity to acknowledge public

comments received on the final rule.

DATES: The final rule published April 2,

2020 at 85 FR 18413 is confirmed.

FOR FURTHER INFORMATION CONTACT:

Robert Coates, Rural Utilities Service,

Electric Program, Rural Development,

United States Department of

Agriculture, 1400 Independence Avenue

SW, STOP 1568, Room 5165–S,

Washington, DC 20250; Telephone:

(202) 260–5415; Email Robert.Coates@

usda.gov.

SUPPLEMENTARY INFORMATION: The Rural

Utilities Service published the RESP

final rule to assist rural families and

small businesses achieve cost savings by

providing loans to qualified consumers

through eligible entities to implement

durable cost-effective energy efficiency

measures pursuant to 7 U.S.C. 8107a(a)

of the RESP authorizing statute. The

Secretary may use this funding to allow

eligible entities to offer energy

efficiency loans to customers in any part

of their service territory in accordance

to 7 CFR part 1719

eve cost savings by

providing loans to qualified consumers

through eligible entities to implement

durable cost-effective energy efficiency

measures pursuant to 7 U.S.C. 8107a(a)

of the RESP authorizing statute. The

Secretary may use this funding to allow

eligible entities to offer energy

efficiency loans to customers in any part

of their service territory in accordance

to 7 CFR part 1719. The Agency

encourages applications that will

support recommendations made in the

Rural Prosperity Task Force report (see

www.usda.gov/ruralprosperity) to help

improve life in rural America, to

consider projects that provide

measurable results in helping rural

communities build robust and

sustainable economies through strategic

investments in infrastructure,

partnerships and innovation. Key

strategies include: Achieving e-

Connectivity for rural America,

developing the rural economy,

harnessing technological innovation,

supporting a rural workforce, and

improving quality of life.

Summary of Comments and Responses

RUS invited comments on the final

rule published on April 2, 2020 in the

Federal Register (85 FR 18413) and

received three comments. Two

comments were received were from

business organizations; Fleet

Development and Energy Trust. One

comment was received from an

individual, Mr. Inri Gonzalez. The

comments and Agency’s responses are

summarized as follows:

Issue 1: One individual and one

organization expressed support for the

Program as published on April 2, 2020

in the Federal Register.

Agency Response: The Agency

appreciates the input from the two

respondents that support the final rule.

Issue 2: Two commenters provide

energy efficiency services in their state,

including services to multi-family

dwellings and manufactured homes,

and more specifically the replacement

of substandard manufactured housing

units

rogram as published on April 2, 2020

in the Federal Register.

Agency Response: The Agency

appreciates the input from the two

respondents that support the final rule.

Issue 2: Two commenters provide

energy efficiency services in their state,

including services to multi-family

dwellings and manufactured homes,

and more specifically the replacement

of substandard manufactured housing

units. One commenter wrote that ‘‘One

recommendation we offer is to re-

consider the allowable payback period

of both the RESP loan to the eligible

borrower and the loan from the

borrower to the qualified consumer.

Often utility infrastructure, energy

efficiency and renewable energy

projects are major long-term capital

investments. It is not uncommon for a

project of any scale to meet its return on

investment in the 12–20-year range and

then deliver energy savings for the next

10–20 years. We believe this financial

reality may have been partly responsible

for the historic under use of the

program. Energy efficiency and

renewable energy projects deliver their

primary energy savings in the out years

and are essentially break-even projects

in the first years. A debt amortization

period of only 10-years can leave a

significant gap from Year 10 on.’’ The

commenter suggested a potential

solution would be to allow the eligible

borrower to request repayment

schedules that fit the needs of the

project for both repayment to RESP and

the qualified consumer repayment to the

re-lender. The other commenter states

that their company invested in

manufactured home replacement

projects in Oregon. ‘‘It has been our

experience that the higher monthly

payments associated with a 10-year loan

term for higher cost measures such as

manufactured homes, can constitute a

significant obstacle for low- and

moderate-income Oregonians—many of

whom live in rural communities. The

manufactured home replacement pilot

program which they successfully

operate utilizes a 20-year customer loan

term

n. ‘‘It has been our

experience that the higher monthly

payments associated with a 10-year loan

term for higher cost measures such as

manufactured homes, can constitute a

significant obstacle for low- and

moderate-income Oregonians—many of

whom live in rural communities. The

manufactured home replacement pilot

program which they successfully

operate utilizes a 20-year customer loan

term. Should RUS find it feasible to do

so, the agency should consider whether

extending the Qualified consumer loan

term to 20 years would result in more

uptake by rural utility customers and

more effectively advance RUS ability to

deploy these funds to the benefit of

rural Americans.’’

Agency Response—The current 10-

year maturity on loans to qualified

consumers is a statutory requirement

provided in the Rural Energy Savings

Program enabling statute, see 7 U.S.C.

8107a(d)(1)(B). An amendment to that

program feature will require

Congressional action.

The RUS appreciates the interest of

the commenters in the RESP and thanks

them for their submissions.

Chad Rupe,

Administrator, Rural Utilities Service.

[FR Doc. 2020–21772 Filed 10–22–20; 8:45 am]

BILLING CODE P

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 363

RIN 3064–AF63

Applicability of Annual Independent

Audits and Reporting Requirements

for Fiscal Years Ending in 2021

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Interim final rule and request

for comment.

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12 CFR Part 363

RIN 3064–AF63

Applicability of Annual Independent

Audits and Reporting Requirements

for Fiscal Years Ending in 2021

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Interim final rule and request

for comment.

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67428

Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations

1 12 U.S.C. 343(3).

2 See Federal Reserve Board announces an

extension through December 31 of its lending

facilities that were scheduled to expire on or

around September 30 (https://

www.federalreserve.gov/newsevents/pressreleases/

monetary20200728a.htm).

3 Public Law 116–136 (Mar. 27, 2020).

4 Under the PPP, eligible borrowers generally

include businesses with fewer than 500 employees

or that are otherwise considered by the SBA to be

small, including individuals operating sole

proprietorships or acting as independent

contractors, certain franchisees, nonprofit

corporations, veterans’ organizations, and Tribal

businesses. The loan amount under the PPP would

SUMMARY: In light of recent disruptions

in economic conditions caused by the

coronavirus disease 2019 (COVID–19)

and strains in U.S. financial markets,

some insured depository institutions

(IDIs) have experienced increases to

their consolidated total assets as a result

of large cash inflows resulting from

participation in the Paycheck Protection

Program (PPP), the Money Market

Mutual Fund Liquidity Facility

(MMLF), the Paycheck Protection

Program Liquidity Facility (PPPLF), and

the effects of other government stimulus

efforts

markets,

some insured depository institutions

(IDIs) have experienced increases to

their consolidated total assets as a result

of large cash inflows resulting from

participation in the Paycheck Protection

Program (PPP), the Money Market

Mutual Fund Liquidity Facility

(MMLF), the Paycheck Protection

Program Liquidity Facility (PPPLF), and

the effects of other government stimulus

efforts. Since these inflows may be

temporary, but are significant and

unpredictable, the FDIC is issuing an

interim final rule (IFR) that will allow

IDIs to determine the applicability of

part 363 of the FDIC’s regulations,

Annual Independent Audits and

Reporting Requirements, for fiscal years

ending in 2021 based on the lesser of

their consolidated total assets as of

December 31, 2019, or consolidated

total assets as of the beginning of their

fiscal years ending 2021.

Notwithstanding any temporary relief

provided by this IFR, an IDI would

continue to be subject to any otherwise

applicable statutory and regulatory

audit and reporting requirements. The

IFR also reserves the authority to require

an IDI to comply with one or more

requirements of part 363 if the FDIC

determines that asset growth was related

to a merger or acquisition.

DATES: The interim final rule is effective

October 23, 2020 through December 31,

2021, unless extended by the FDIC.

Comments on the interim final rule

must be received no later than

November 23, 2020.

ADDRESSES: You may submit comments,

identified by RIN 3064–AF63, by any of

the following methods:

• Agency Website: https://

www.fdic.gov/regulations/laws/federal.

Follow instructions for submitting

comments on the Agency website.

• Email: Comments@FDIC.gov.

Include ‘‘RIN 3064–AF63’’ on the

subject line of the message.

• Mail: Robert E. Feldman, Executive

Secretary, Attention: Comments/RIN

3064–AF63, Federal Deposit Insurance

Corporation, 550 17th Street NW,

Washington, DC 20429

ds:

• Agency Website: https://

www.fdic.gov/regulations/laws/federal.

Follow instructions for submitting

comments on the Agency website.

• Email: Comments@FDIC.gov.

Include ‘‘RIN 3064–AF63’’ on the

subject line of the message.

• Mail: Robert E. Feldman, Executive

Secretary, Attention: Comments/RIN

3064–AF63, Federal Deposit Insurance

Corporation, 550 17th Street NW,

Washington, DC 20429.

• Hand Delivery/Courier: Comments

may be hand-delivered to the guard

station at the rear of the 550 17th Street

building (located on F Street) on

business days between 7 a.m. and 5 p.m.

All comments received must include the

agency name (FDIC) and RIN 3064-

AF63, and will be posted without

change to https://www.fdic.gov/

regulations/laws/federal, including any

personal information provided.

FOR FURTHER INFORMATION CONTACT:

Harrison E. Greene, Jr., Assistant Chief

Accountant, (202) 898–8905, hgreene@

fdic.gov; Shannon M. Beattie, Section

Chief and Deputy Chief Accountant,

(202) 898–3952, sbeattie@fdic.gov; John

Rieger, Chief Accountant, (202) 898–

3602, jrieger@fdic.gov; Mark G.

Flanigan, Senior Counsel, (202) 898–

7426, mflanigan@fdic.gov; Joyce M.

Raidle, Counsel, (202) 898–6763,

jraidle@fdic.gov; and Merritt Pardini,

Counsel, (202) 898–6680, mpardini@

fdic.gov, Legal Division, Federal Deposit

Insurance Corporation, 550 17th Street

NW, Washington, DC 20429. For the

hearing impaired only,

Telecommunication Device for the Deaf

(TDD), (800) 925–4618.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

A. Selected Government Responses Related

to the Pandemic

B. Section 36 of the Federal Deposit

Insurance Act (FDI Act) and Part 363 of

the FDIC Regulations

C. Effects of Government Response

Programs on IDI Growth

II. The Interim Final Rule

III. Expected Effects

IV. Alternatives Considered

V. Administrative Law Matters

A. Administrative Procedure Act

B. Congressional Review Act

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E

demic

B. Section 36 of the Federal Deposit

Insurance Act (FDI Act) and Part 363 of

the FDIC Regulations

C. Effects of Government Response

Programs on IDI Growth

II. The Interim Final Rule

III. Expected Effects

IV. Alternatives Considered

V. Administrative Law Matters

A. Administrative Procedure Act

B. Congressional Review Act

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E. Riegle Community Development and

Regulatory Improvement Act of 1994

F. Use of Plain Language

I. Background

A. Selected Government Responses

Related to the Pandemic

Recent events have significantly and

adversely impacted the global economy

and financial markets. The spread of

COVID–19 has slowed economic

activity in many countries, including

the United States. Sudden disruptions

in financial markets placed increasing

liquidity pressure on money market

mutual funds (MMFs) and raised the

cost of credit for most borrowers. MMFs

faced redemption requests from clients

with immediate cash needs and

potentially the need to sell a significant

number of assets to meet these

redemption requests, which further

increased market pressures. In order to

prevent the disruption in the money

markets from destabilizing the financial

system, on March 18, 2020, the Board of

Governors of the Federal Reserve

System (Board of Governors), with

approval of the Secretary of the

Treasury, authorized the Federal

Reserve Bank of Boston (FRBB) to

establish the MMLF pursuant to section

13(3) of the Federal Reserve Act.1 Under

the MMLF, the FRBB is extending

nonrecourse loans to eligible borrowers

to purchase assets from MMFs. Assets

purchased from MMFs are posted as

collateral to the FRBB. Eligible

borrowers under the MMLF include

IDIs. Eligible collateral under the MMLF

includes U.S. Treasuries and fully

guaranteed agency securities, securities

issued by government-sponsored

enterprises, and certain types of

commercial paper

is extending

nonrecourse loans to eligible borrowers

to purchase assets from MMFs. Assets

purchased from MMFs are posted as

collateral to the FRBB. Eligible

borrowers under the MMLF include

IDIs. Eligible collateral under the MMLF

includes U.S. Treasuries and fully

guaranteed agency securities, securities

issued by government-sponsored

enterprises, and certain types of

commercial paper. The MMLF is

scheduled to terminate on December 31,

2020, unless extended by the Board of

Governors.2

Small businesses also face severe

liquidity constraints and a collapse in

revenue streams, as millions of

Americans were ordered to stay home,

severely reducing their ability to engage

in normal commerce. Many small

businesses were forced to close

temporarily or furlough employees.

Continued access to financing will be

crucial for small businesses to weather

economic disruptions caused by

COVID–19 and, ultimately, to help

restore economic activity.

In recognition of the exigent

circumstances facing small businesses,

Congress created the PPP as part of the

Coronavirus Aid, Relief, and Economic

Security Act (CARES Act).3 PPP loans

are fully guaranteed as to principal and

accrued interest by the Small Business

Administration (SBA), the amount of

each being determined at the time the

guarantee is exercised. As a general

matter, SBA guarantees are backed by

the full faith and credit of the U.S.

Government. PPP loans also afford

borrowers forgiveness up to the

principal amount of the PPP loan if the

loan proceeds are used for certain

eligible expenses. The SBA reimburses

PPP lenders for any amount of a PPP

loan that is forgiven. PPP lenders are not

held liable for any representations made

by PPP borrowers in connection with a

borrower’s request for PPP loan

forgiveness.4 On June 5, 2020, the

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SBA reimburses

PPP lenders for any amount of a PPP

loan that is forgiven. PPP lenders are not

held liable for any representations made

by PPP borrowers in connection with a

borrower’s request for PPP loan

forgiveness.4 On June 5, 2020, the

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67429

Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations

be limited to the lesser of $10 million and 250

percent of a borrower’s average monthly payroll

costs. For more information on the Paycheck

Protection Program, see https://www.sba.gov/

funding-programs/loans/coronavirus-relief-options/

paycheck-protection-program-ppp.

5 Public Law 116–142 (June 5, 2020). The SBA

subsequently issued an interim final rule revising

the SBA’s interim final rule implementing sections

1102 and 1106 of the CARES Act temporarily

adding the Paycheck Protection Program to the

SBA’s 7(a) Loan Program published on April 15,

2020. See 85 FR 20811 (Apr. 15, 2020) and 85 FR

36308 (June 16, 2020).

6 12 U.S.C. 343(3). On April 30, 2020, the facility

was renamed the Paycheck Protection Program

Liquidity Facility, from Paycheck Protection

Program Lending Facility. See Periodic Report:

Update on Outstanding Lending Facilities

Authorized by the Board under Section 13(3) of the

Federal Reserve Act May 15, 2020, Board of

Governors of the Federal Reserve System (https://

www.federalreserve.gov/publications/files/mlf-

msnlf-mself-and-ppplf-5-15-20.pdf).

7 The maturity date of the extension of credit

under the PPPLF will be accelerated if the

underlying PPP loan goes into default and the

eligible borrower sells the PPP Loan to the SBA to

realize the SBA guarantee. The maturity date of the

extension of credit under the PPPLF also will be

accelerated to the extent of any PPP loan

forgiveness reimbursement received by the eligible

borrower from the SBA

rity date of the extension of credit

under the PPPLF will be accelerated if the

underlying PPP loan goes into default and the

eligible borrower sells the PPP Loan to the SBA to

realize the SBA guarantee. The maturity date of the

extension of credit under the PPPLF also will be

accelerated to the extent of any PPP loan

forgiveness reimbursement received by the eligible

borrower from the SBA.

8 Under the SBA’s interim final rule, a lender may

request that the SBA purchase the expected

forgiveness amount of a PPP loan or pool of PPP

loans at the end of the covered period. See Interim

Final Rule ‘‘Business Loan Program Temporary

Changes; Paycheck Protection Program,’’ 85 FR

20811, 20816 (Apr. 15, 2020) and 85 FR 36308 (June

16, 2020).

9 See 85 FR 16232 (Mar. 23, 2020) and 85 FR

20387 (Apr. 13, 2020). These rules were finalized

on September 29, 2020. See https://www.fdic.gov/

news/board/2020/2020-09-15-notice-sum-b-fr.pdf.

10 See 85 FR 38282 (June 26, 2020).

11 12 U.S.C. 1831m.

12 12 CFR 363.

13 12 CFR 363.1(a).

14 12 CFR 363.2(b)(3) and 12 CFR 363.3(b).

15 12 CFR 363.5(a)(2).

16 12 CFR 363.5(a)(1).

17 12 CFR 363.5(b).

18 For measuring total assets, Guideline 1 to part

363 provides that an IDI should use the total assets

reported on its most recent Report of Condition

(Call Report), the date of which coincides with the

end of its preceding fiscal year. If its fiscal year

ends on a date other than the end of a calendar

quarter, it should use the Call Report for the quarter

end immediately preceding the end of its fiscal

year

al assets, Guideline 1 to part

363 provides that an IDI should use the total assets

reported on its most recent Report of Condition

(Call Report), the date of which coincides with the

end of its preceding fiscal year. If its fiscal year

ends on a date other than the end of a calendar

quarter, it should use the Call Report for the quarter

end immediately preceding the end of its fiscal

year.

Paycheck Protection Program Flexibility

Act of 2020 (PPP Flexibility Act) was

signed into law, amending key

provisions of the CARES Act, including

provisions related to loan maturity,

deferral of loan payments, and loan

forgiveness.5 Among other changes, the

amendments increase from two to five

years the maturity of PPP loans that are

approved by the SBA on or after June 5,

2020, and provide greater flexibility for

borrowers to qualify for loan

forgiveness.

In order to provide liquidity to small

business lenders and the broader credit

markets, and to help stabilize the

financial system, on April 8, 2020, the

Board of Governors, with approval of

the Secretary of the Treasury,

authorized each of the Federal Reserve

Banks to extend credit under the PPPLF

pursuant to Section 13(3) of the Federal

Reserve Act.6 Under the PPPLF, the

Federal Reserve Banks are extending

nonrecourse loans to institutions that

are eligible to make PPP loans,

including IDIs. Under the PPPLF, only

PPP loans that are guaranteed by the

SBA with respect to both principal and

interest and that are originated by an

eligible institution may be pledged as

collateral to the Federal Reserve Banks

(loans pledged to the PPPLF). The

maturity date of the extension of credit

under the PPPLF 7 equals the maturity

date of the PPP loans pledged to secure

the extension of credit.8 No new

extensions of credit will be made under

the PPPLF after December 31, 2020,

unless extended by the Board of

Governors and the Department of the

Treasury

pledged as

collateral to the Federal Reserve Banks

(loans pledged to the PPPLF). The

maturity date of the extension of credit

under the PPPLF 7 equals the maturity

date of the PPP loans pledged to secure

the extension of credit.8 No new

extensions of credit will be made under

the PPPLF after December 31, 2020,

unless extended by the Board of

Governors and the Department of the

Treasury.

The FDIC, Board of Governors, and

Comptroller of the Currency adopted

interim final rules on March 23, 2020,

and April 13, 2020, respectively, to

allow banking organizations to

neutralize the regulatory capital effects

of purchasing assets under the MMLF

program and loans pledged to the

PPPLF.9 Consistent with Section 1102 of

the CARES Act, the April 2020 interim

final rule also required banking

organizations to apply a zero percent

risk weight to PPP loans originated by

the banking organization under the PPP

for purposes of the banking

organization’s risk-based capital

requirements. On June 26, 2020, the

FDIC adopted a rule that mitigates the

deposit insurance assessment effects of

participating in the PPP, PPPLF and

MMLF.10 Among other changes, the

final rule provides an offset to an IDI’s

total assessment amount for the increase

in its assessment base attributable to

participation in the PPP and MMLF.

The FDIC remains committed to

considering additional, targeted

adjustments to mitigate to the greatest

extent possible unintended

consequences resulting from pandemic-

related stimulus actions.

B. Section 36 of the Federal Deposit

Insurance Act (FDI Act) and Part 363 of

the FDIC Regulations

Section 36 of the FDI Act (section 36)

was added by the Federal Deposit

Insurance Corporation Improvement Act

of 1991 and imposes annual audits and

reporting requirements on IDIs that meet

certain asset thresholds.11 The purpose

of section 36 is to facilitate early

identification of needed improvements

in financial management at IDIs

nce Act (FDI Act) and Part 363 of

the FDIC Regulations

Section 36 of the FDI Act (section 36)

was added by the Federal Deposit

Insurance Corporation Improvement Act

of 1991 and imposes annual audits and

reporting requirements on IDIs that meet

certain asset thresholds.11 The purpose

of section 36 is to facilitate early

identification of needed improvements

in financial management at IDIs. Section

36 grants the FDIC discretion to set the

asset size threshold for compliance with

these statutory requirements, but

mandates a minimum threshold of $150

million in consolidated total assets. Part

363 of the FDIC’s regulations

implements section 36.12 Currently, an

IDI becomes subject to the annual

independent audits and reporting

requirements of part 363 with respect to

any fiscal year in which its consolidated

total assets as of the beginning of such

fiscal year are $500 million or more.13

Additionally, an IDI with consolidated

total assets of $1 billion or more as of

the beginning of any fiscal year must

provide management’s assessment of,

and the independent public

accountant’s report, on the effectiveness

of internal control over financial

reporting (ICFR).14

Part 363 also includes requirements

related to audit committees based on

consolidated total assets. More

specifically, each IDI with consolidated

total assets of $500 million or more but

less than $1 billion at the beginning of

its fiscal year must establish an

independent audit committee of its

board of directors, the members of

which must be outside directors, a

majority of whom must be independent

of management of the IDI.15 Each IDI

with consolidated total assets of $1

billion or more at the beginning of its

fiscal year must establish an

independent audit committee of its

board of directors, the members of

which must be outside directors who

are independent of management of the

IDI.16 Audit committees of IDIs with

consolidated total assets of $3 billion or

more as of the beginning of their fiscal

year are

Each IDI

with consolidated total assets of $1

billion or more at the beginning of its

fiscal year must establish an

independent audit committee of its

board of directors, the members of

which must be outside directors who

are independent of management of the

IDI.16 Audit committees of IDIs with

consolidated total assets of $3 billion or

more as of the beginning of their fiscal

year are required to include members

with banking or related financial

management expertise, have access to

their own outside counsel, and not

include any large customers of the

institution.17

The determination of whether an IDI

is subject to the annual independent

audit and reporting requirements of part

363, including certain additional

requirements based on asset size, is

based on its consolidated total assets as

of the beginning of its fiscal year.18 For

example, an IDI whose fiscal year begins

on January 1, 2020, and ends on

December 31, 2020, would determine

whether it met the base asset threshold

for compliance with part 363 as well as

the other asset thresholds set forth in

part 363 based upon its consolidated

total assets of December 31, 2019. As

another example, an IDI whose fiscal

year begins on July 1, 2020, and ends on

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Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations

19 An IDI that relies on existing funding,

including deposits already at the institution, to

make PPP loans would not increase its total

liabilities or total assets.

20 Call Report Data, March 31, 2020. The level of

audit work performed on an institution is reported

in the March Call Report each year and can be

found on line M.1 in the Memorandum to Schedule

RC

020 / Rules and Regulations

19 An IDI that relies on existing funding,

including deposits already at the institution, to

make PPP loans would not increase its total

liabilities or total assets.

20 Call Report Data, March 31, 2020. The level of

audit work performed on an institution is reported

in the March Call Report each year and can be

found on line M.1 in the Memorandum to Schedule

RC.

June 30, 2021, would determine

whether it met the base asset threshold

for compliance with part 363 as well as

the other asset thresholds set forth in

part 363 based upon its consolidated

total assets of June 30, 2020.

C. Effects of Government Response

Programs on IDI Growth

Participation in the PPP, PPPLF, or

MMLF programs, and effects of other

stimulus programs, have caused certain

IDIs to experience a temporary increase

in their consolidated total assets and

thus become subject to part 363 based

on certain asset size thresholds set forth

within part 363. While some of these

IDIs may have reached these thresholds

through organic growth or other means,

it is likely that others would not have

reached these thresholds but for the

effects of the government programs and

other types of stimulus. For example, an

IDI that receives funding under the

PPPLF would increase its consolidated

total assets (equal to the amount of PPP

loans pledged to the Federal Reserve

Banks), and increase its liabilities by the

same amount. An IDI that obtains

additional funding, such as additional

deposits or secured borrowings, to make

PPP loans would increase its total

liabilities and consolidated total assets

by that amount of funding.19 Similarly,

an IDI that participates in the MMLF

would increase its consolidated total

assets by the amount of assets

purchased from MMFs under the MMLF

and increase its liabilities by the same

amount

ains

additional funding, such as additional

deposits or secured borrowings, to make

PPP loans would increase its total

liabilities and consolidated total assets

by that amount of funding.19 Similarly,

an IDI that participates in the MMLF

would increase its consolidated total

assets by the amount of assets

purchased from MMFs under the MMLF

and increase its liabilities by the same

amount. Moreover, some institutions

reported general, and likely temporary,

increases in deposits due to inflows

from PPP proceeds, deposits of funds

made in connection with other CARES

Act-related programs, and general shifts

of liquid funds to safety.

Absent the regulatory relief proposed

in this IFR, some IDIs that participate in

these programs, or have otherwise been

affected by volatility in cash flows

related to the pandemic, will be forced

to incur additional compliance and

related expenses. These expenses

include engaging independent auditors,

performing assessments of ICFR,

reviewing and filing reports, and

modifying the makeup of their boards of

directors in order to comply with the

requirements of part 363.

II. The Interim Final Rule

Under the IFR, the FDIC seeks to

negate the cost and burden effects of

potentially temporary asset growth

associated with pandemic-related

programs and similar impacts. The IFR

accomplishes this by allowing IDIs to

determine the applicability of part 363

of the FDIC’s regulations for fiscal years

ending in 2021 based on the lesser of

the IDI’s (a) consolidated total assets as

of December 31, 2019, or (b)

consolidated total assets as of the

beginning of their fiscal years ending in

2021. For example, an IDI with a fiscal

year beginning July 1, 2020, and ending

June 30, 2021, would normally

determine part 363 compliance

requirements as of its fiscal year ended

June 30, 2020

years

ending in 2021 based on the lesser of

the IDI’s (a) consolidated total assets as

of December 31, 2019, or (b)

consolidated total assets as of the

beginning of their fiscal years ending in

2021. For example, an IDI with a fiscal

year beginning July 1, 2020, and ending

June 30, 2021, would normally

determine part 363 compliance

requirements as of its fiscal year ended

June 30, 2020. Under the IFR, an IDI

experiencing growth would instead use

its consolidated total assets as of

December 31, 2019, for purposes of

determining its compliance

requirements with part 363. In this

example, if the IDI’s consolidated total

assets were less than $500 million as of

December 31, 2019, it would not

become subject to part 363 for its fiscal

year beginning July 1, 2020 and ending

June 30, 2021, even if its total

consolidated total assets were $500

million or more as of June 30, 2020.

Based on consolidated total assets as

of December 31, 2019, and June 30,

2020, this proposal would, as further

discussed below, potentially apply to

approximately 290 IDIs:

• 156 IDIs based on the number of

IDIs that had consolidated total assets of

$500 million or more as of December 31,

2019, compared to the number of IDIs

that had consolidated total assets of

$500 million or more as of June 30,

2020;

• 107 IDIs based on the number of

IDIs that had consolidated total assets of

$1 billion or more as of December 31,

2019, compared to the number of IDIs

that had consolidated total assets of $1

billion or more as of June 30, 2020; and

• 27 IDIs based on the number of IDIs

that had consolidated total assets of $3

billion or more as of December 31, 2019,

compared to the number of IDIs that had

consolidated total assets of $3 billion or

more as of June 30, 2020

ts of

$1 billion or more as of December 31,

2019, compared to the number of IDIs

that had consolidated total assets of $1

billion or more as of June 30, 2020; and

• 27 IDIs based on the number of IDIs

that had consolidated total assets of $3

billion or more as of December 31, 2019,

compared to the number of IDIs that had

consolidated total assets of $3 billion or

more as of June 30, 2020.

The FDIC recognizes the benefits of

the part 363 requirements and that some

IDIs may have experienced organic or

other growth that would have resulted

in them reaching the thresholds

regardless of the impacts of pandemic-

related programs and associated effects.

However, the FDIC is balancing the risk

that some IDIs will not become subject

to part 363 requirements based on their

consolidated total assets as of their

actual fiscal year ends in 2020 with the

operational simplicity of ‘‘freezing’’ the

date to determine the applicability of

the regulation for all IDIs experiencing

growth based on their consolidated total

assets as of December 31, 2019. The

FDIC has determined that such targeted

and time-limited relief from application

of the part 363 requirements is

necessary and appropriate, in order to

ease the compliance and expense

burden on such institutions during this

crucial period for the financial services

industry.

Notwithstanding the temporary relief

provided by this IFR, IDIs remain

subject to any audit and reporting

requirements applicable under other

laws and regulations. Also, the FDIC

reserves the authority to require an IDI

to comply with one or more

requirements under part 363 if the FDIC

determines that asset growth was related

to a merger or acquisition

r the financial services

industry.

Notwithstanding the temporary relief

provided by this IFR, IDIs remain

subject to any audit and reporting

requirements applicable under other

laws and regulations. Also, the FDIC

reserves the authority to require an IDI

to comply with one or more

requirements under part 363 if the FDIC

determines that asset growth was related

to a merger or acquisition. Additionally,

staff notes that approximately 54

percent of IDIs (IDIs with less than $500

million in consolidated total assets) that

are not subject to part 363 have audits

performed by independent public

accountants.20

Sections 36(d) and (f) of the FDI Act

obligate the FDIC to consult with the

other Federal banking agencies in

implementing these provisions of the

FDI Act, and the FDIC has performed

the required consultation.

III. Expected Effects

Under part 363 of the FDIC’s

regulations, each IDI with consolidated

total assets of $500 million or more as

of the beginning of a fiscal year must,

among other things, have its financial

statements audited by an independent

public accountant, prepare a

management report describing certain

aspects of its internal control framework

and its compliance with laws and

regulations, and have an audit

committee that oversees the work of the

independent public accountant. Part

363 also contains a number of more

detailed and specific requirements that

are triggered at asset sizes of $1 billion

and $3 billion, regarding management

reporting, responsibilities of the

independent public accountant, and the

responsibilities and composition of the

audit committee. Part 363 also describes

the conditions under which these

requirements may be satisfied at the

holding company level.

Broadly speaking, by granting

temporary relief from the audit and

reporting requirements of part 363, the

IFR is likely to support participation in

the PPP, PPPLF, and MMLF programs

by IDIs, which could benefit customers

and U.S. economic activity

of the

audit committee. Part 363 also describes

the conditions under which these

requirements may be satisfied at the

holding company level.

Broadly speaking, by granting

temporary relief from the audit and

reporting requirements of part 363, the

IFR is likely to support participation in

the PPP, PPPLF, and MMLF programs

by IDIs, which could benefit customers

and U.S. economic activity. More

specifically, the IFR does this by

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67431

Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations

21 Call Report Data, December 2019.

22 Call Report Data, June 2020.

23 Call Report Data, December 2019.

24 Call Report Data, June 2020.

25 Call Report Data, December 2019.

26 Call Report Data, June 2020.

27 Regulations regarding the compliance by

subsidiaries of holding companies are set forth in

12 CFR 363.1(b).

determining the applicability of the

regulation for all IDIs based on the

lesser of their (a) consolidated total

assets as of December 31, 2019, or (b)

consolidated total assets as of the

beginning of their fiscal years ending in

2021, in order to ameliorate potential

increases in compliance costs for IDIs as

a result of their participation in the PPP,

PPPLF, and MMLF. Under the IFR, IDIs

that cross the $500 million, $1 billion,

or $3 billion asset thresholds just

described during fiscal years ending in

2021 will avoid the costs of complying

with part 363 that they otherwise would

have incurred as a result of crossing

those thresholds. IDIs that already

exceeded those thresholds at year-end

2019, however, must continue to

comply with the associated part 363

requirements.

The IFR thus will only affect those

entities that cross one or more of the

part 363 thresholds after year-end 2019,

and while the temporary relief the IFR

provides is in effect

ey otherwise would

have incurred as a result of crossing

those thresholds. IDIs that already

exceeded those thresholds at year-end

2019, however, must continue to

comply with the associated part 363

requirements.

The IFR thus will only affect those

entities that cross one or more of the

part 363 thresholds after year-end 2019,

and while the temporary relief the IFR

provides is in effect. It is difficult to

estimate how many IDIs will be directly

affected by the IFR because the FDIC

does not know how many banks with a

fiscal year ending after June 30 will

increase assets above one of the

thresholds in Part 363 between June 30

and the end of the year. Nonetheless,

this rule is expected to relieve IDIs from

incurring additional expenses if they

experience an increase in consolidated

total asset levels that could cause the IDI

to become newly subject to certain part

363 requirements.

The following analysis utilizes

Consolidated Reports of Condition and

Income (Call Report) data to assess

changes in consolidated total assets

between December 31, 2019, and June

30, 2020, for IDIs in order to identify

IDIs that are likely to be directly affected

by the IFR. Specifically, the analysis

determines whether the change in

consolidated total assets for an IDI

between December 31, 2019, and June

30, 2020, might entail a change in

compliance requirements for part 363

absent the interim final rule, assuming

that the asset level at the end of the six-

month period is representative of the

‘‘beginning of the fiscal year’’ period

criteria for determining applicability of

part 363, or its various elements.

The various thresholds included in

part 363 and the potential effects of the

temporary freeze in IDIs’ total

consolidated assets for determining

compliance with the regulation’s audit

and reporting requirements are

examined in the following section

is representative of the

‘‘beginning of the fiscal year’’ period

criteria for determining applicability of

part 363, or its various elements.

The various thresholds included in

part 363 and the potential effects of the

temporary freeze in IDIs’ total

consolidated assets for determining

compliance with the regulation’s audit

and reporting requirements are

examined in the following section.

Threshold for Compliance With Part 363

Part 363 applies to any IDI with

respect to any fiscal year in which its

consolidated total assets as of the

beginning of such fiscal year are $500

million or more. As of December 31,

2019, there were 5,177 IDIs, of which

1,453 IDIs were above the part 363 base

threshold, which is $500 million or

more in consolidated total assets.21 As

of June 30, 2020, this number had

increased to 1,609 IDIs.22 Therefore,

assuming that the asset level as of June

30, 2020, would be representative of the

‘‘beginning of the fiscal year’’ period

criteria for determining applicability of

part 363 absent the IFR, 156 institutions

would be likely to avoid costs

associated with complying with this

aspect of the rule.

According to §§ 363.2(b)(3) and

363.3(b), IDIs with consolidated total

assets of $1 billion or more as of the

beginning of their fiscal year are

required to include an assessment by

management of, and a report of the

independent public accountant on, the

effectiveness of internal control

structures and procedures in their part

363 annual report. As of December 31,

2019, 796 IDIs were above the

consolidated total asset threshold of $1

billion or more.23 As of June 30, 2020,

this number had increased to 903 IDIs.24

Therefore, assuming that the asset level

as of June 30, 2020 would be

representative of the ‘‘beginning of the

fiscal year’’ period criteria for

determining the requirements of

§§ 363.2(b) and 363.3(b), absent the IFR,

107 institutions would be likely to avoid

costs associated with complying with

this aspect of the rule

ore.23 As of June 30, 2020,

this number had increased to 903 IDIs.24

Therefore, assuming that the asset level

as of June 30, 2020 would be

representative of the ‘‘beginning of the

fiscal year’’ period criteria for

determining the requirements of

§§ 363.2(b) and 363.3(b), absent the IFR,

107 institutions would be likely to avoid

costs associated with complying with

this aspect of the rule.

According to § 363.5(b), IDIs with

total assets of more than $3 billion as of

the beginning of their fiscal year are

required to have audit committee

members with banking or related

financial management expertise, who

have access to their own outside

counsel, and are not large customers of

the institution. As of December 31,

2019, 315 IDIs were above the § 363.5(b)

consolidated total asset threshold of

more than $3 billion.25 As of June 30,

2020, this number had increased to 342

IDIs.26 Therefore, assuming that the

asset level as of June 30, 2020, would be

representative of the ‘‘beginning of the

fiscal year’’ period criteria for

determining the audit committee

member requirements of § 363.5(b),

absent the IFR, 27 institutions would be

likely to avoid costs associated with

complying with this aspect of the rule.

Summary

The IFR would not affect compliance

obligations for IDIs that are bound by

part 363 as of December 31, 2019. The

number of entities that will avoid costs

because of the IFR is likely to differ

from the numbers suggested by this

analysis because consolidated total asset

levels are likely to continue to change

throughout the remainder of calendar

year 2020 and because compliance costs

are likely to depend in part on IDIs’

eligibility for part 363 compliance at the

holding company level.27 It is difficult

to estimate regulatory compliance cost

savings as a result of the IFR because

such costs depend on the individual

characteristics of institutions, the extent

of their current audit and reporting

activities, and the extent to which they

avail themselves of this te

osts

are likely to depend in part on IDIs’

eligibility for part 363 compliance at the

holding company level.27 It is difficult

to estimate regulatory compliance cost

savings as a result of the IFR because

such costs depend on the individual

characteristics of institutions, the extent

of their current audit and reporting

activities, and the extent to which they

avail themselves of this temporary

reduction in compliance requirements,

among other things.

Finally, the FDIC believes that the

temporary relief provided by the IFR is

unlikely to substantively affect the

safety and soundness of affected IDIs

because it only grants short-term

temporary relief and IDIs would

continue to be subject to any otherwise

applicable statutory and regulatory

audit and reporting requirements. The

FDIC also maintains a number of other

regulatory and supervisory tools to

oversee the safety and soundness of

IDIs.

IV. Alternatives Considered

The FDIC has considered alternatives

to the rule, but believes the IFR

represents the most appropriate option

for covered institutions. The FDIC

considered the status quo alternative of

maintaining part 363 in its current form,

but believes that the challenges for IDIs

associated with the COVID–19

pandemic, and costs to comply with the

rule for IDIs with temporary asset

growth, necessitate targeted and time-

limited relief from the application of

part 363 requirements. Finally, and as

previously discussed, the temporary

relief granted to certain IDIs by the IFR,

is unlikely to negatively affect the safety

and soundness of IDIs. Therefore, the

FDIC believes it is appropriate to grant

IDIs this temporary relief.

V. Administrative Law Matters

A. Administrative Procedure Act

The FDIC is issuing the interim final

rule without prior notice and the

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nd soundness of IDIs. Therefore, the

FDIC believes it is appropriate to grant

IDIs this temporary relief.

V. Administrative Law Matters

A. Administrative Procedure Act

The FDIC is issuing the interim final

rule without prior notice and the

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67432

Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations

28 5 U.S.C. 553.

29 5 U.S.C. 553(b)(B).

30 5 U.S.C. 553(d).

31 5 U.S.C. 553(d)(1).

32 5 U.S.C. 801 et seq.

33 5 U.S.C. 801(a)(3).

34 5 U.S.C. 804(2).

35 5 U.S.C. 808.

36 5 U.S.C. 601 et seq.

37 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

average annual receipts of $41.5 million or less. See

13 CFR 121.201.

38 12 U.S.C. 4802(a).

39 12 U.S.C. 4802.

opportunity for public comment and the

delayed effective date ordinarily

prescribed by the Administrative

Procedure Act (APA).28

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.’’ 29 The FDIC believes that the

public interest is best served by

implementing the interim final rule

immediately upon publication in the

Federal Register.

As discussed above, the spread of

COVID–19 has slowed economic

activity in many countries, including

the United States

sued) that notice and public

procedure thereon are impracticable,

unnecessary, or contrary to the public

interest.’’ 29 The FDIC believes that the

public interest is best served by

implementing the interim final rule

immediately upon publication in the

Federal Register.

As discussed above, the spread of

COVID–19 has slowed economic

activity in many countries, including

the United States. Specifically, the

disruptions in financial markets have

caused depository institutions to receive

inflows of deposits—contributing to the

increase of deposits at Federal Reserve

Banks—and to hold significant amounts

of Treasuries. Because the interim final

rule will mitigate a potential additional

compliance burden and expense for

financial institutions participating in

Federal government programs intended

to ease financial disruptions, the FDIC

finds there is good cause consistent with

the public interest to issue the rule

without advance notice and comment.

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.30 Because the interim final rule

will provide a temporary exemption and

relief to affected IDI, the interim final

rule is exempt from the APA’s delayed

effective date requirement.31 While the

FDIC believes that there is good cause

to issue this interim final rule without

advance notice and comment and with

an immediate effective date, the FDIC is

interested in the views of the public and

request comment on all aspects of the

interim final rule.

B

mption and

relief to affected IDI, the interim final

rule is exempt from the APA’s delayed

effective date requirement.31 While the

FDIC believes that there is good cause

to issue this interim final rule without

advance notice and comment and with

an immediate effective date, the FDIC is

interested in the views of the public and

request 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

to whether a final rule constitutes a

‘‘major’’ rule.32 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.33 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.34 For the same reasons

set forth above, the FDIC is adopting the

interim final rule without the delayed

effective date generally prescribed

under the Congressional Review Act

icant 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.34 For the same reasons

set forth above, the FDIC 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.35 In light of

current market uncertainty and the need

for IDIs to prepare an audit plan in

advance of the beginning of their fiscal

years, the FDIC believes that delaying

the effective date would be contrary to

the public interest. As required by the

Congressional Review Act, the FDIC

will submit the final rule and other

appropriate reports to Congress and the

Government Accountability Office for

review.

C. Paperwork Reduction Act

In accordance with the requirements

of the Paperwork Reduction Act of 1995

(PRA), the FDIC may not conduct or

sponsor, and a respondent is not

required to respond to, an information

collection unless it displays a currently

valid Office of Management and Budget

(OMB) control number. The FDIC has

reviewed this interim final rule and

determined that it would not introduce

any new or revise any collection of

information pursuant to the PRA.

Therefore, no submissions will be made

to OMB for review.

D

onsor, and a respondent is not

required to respond to, an information

collection unless it displays a currently

valid Office of Management and Budget

(OMB) control number. The FDIC has

reviewed this interim final rule and

determined that it would not introduce

any new or revise any collection of

information pursuant to the PRA.

Therefore, no submissions will be made

to OMB for review.

D. Regulatory Flexibility Act

The Regulatory Flexibility Act

(RFA) 36 requires an agency to consider

whether the rules it proposes will have

a significant economic impact on a

substantial number of small entities.37

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 FDIC has determined for good

cause that general notice and

opportunity for public comment is

unnecessary, and therefore the FDIC is

not issuing a notice of proposed

rulemaking. Accordingly, the RFA’s

requirements relating to initial and final

regulatory flexibility analysis do not

apply. Nevertheless, the FDIC 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),38 in determining the effective

date and administrative compliance

requirements for new regulations that

impose additional reporting, disclosure,

or other requirements on 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

eporting, disclosure,

or other requirements on 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.39

For the reasons described above, the

FDIC finds that good cause exists under

section 302 of RCDRIA to publish this

interim final rule with an immediate

effective date. As such, the final rule

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Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations

40 12 U.S.C. 4809.

will be effective immediately upon

publication in the Federal Register.

Nevertheless, the FDIC seeks comment

on RCDRIA.

F. Use of Plain Language

Section 722 of the Gramm-Leach

Bliley Act 40 requires the Federal

banking agencies to use plain language

in all proposed and final rules

published after January 1, 2000. The

FDIC has sought to present the interim

final rule in a simple and

straightforward manner. The FDIC

invites comments on whether there are

additional steps it could take to make

the rule easier to understand

Language

Section 722 of the Gramm-Leach

Bliley Act 40 requires the Federal

banking agencies to use plain language

in all proposed and final rules

published after January 1, 2000. The

FDIC has sought to present the interim

final rule in a simple and

straightforward manner. The FDIC

invites comments on whether there are

additional steps it could take to make

the rule easier to understand. For

example:

• Has the FDIC 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?

List of Subjects in 12 CFR Part 363

Accounting, Administrative practice

and procedure, Banks, banking,

Reporting and recordkeeping

requirements.

Authority and Issuance

For the reasons stated in the

preamble, the FDIC amends part 363 of

chapter 1 of title 12, Code of Federal

Regulations, as follows:

PART 363—ANNUAL INDEPENDENT

AUDITS AND REPORTING

REQUIREMENTS

■1. The authority citation for part 363

is revised to read as follows:

Authority: 12 U.S.C. 1819, 1831m.

■2. Revise § 363.1(a) to read as follows:

§ 363.1

Scope and definitions.

ty and Issuance

For the reasons stated in the

preamble, the FDIC amends part 363 of

chapter 1 of title 12, Code of Federal

Regulations, as follows:

PART 363—ANNUAL INDEPENDENT

AUDITS AND REPORTING

REQUIREMENTS

■1. The authority citation for part 363

is revised to read as follows:

Authority: 12 U.S.C. 1819, 1831m.

■2. Revise § 363.1(a) to read as follows:

§ 363.1

Scope and definitions.

(a) Applicability. (1) This part applies

to any insured depository institution

with respect to any fiscal year in which

its consolidated total assets as of the

beginning of such fiscal year are $500

million or more. Notwithstanding the

foregoing and for all requirements in

this part, with respect to any fiscal year

ending in 2021, an insured depository

institution’s consolidated total assets

shall be determined based on the lesser

of (a) an insured depository institution’s

consolidated total assets as of December

31, 2019, or (b) an insured depository

institution’s consolidated total assets as

of the beginning of its fiscal year ending

in 2021. The requirements specified in

this part are in addition to any other

statutory and regulatory requirements

otherwise applicable to an insured

depository institution.

(2) Until December 31, 2021, the FDIC

reserves the authority to require an

insured depository institution to comply

with one or more requirements under

this part if the FDIC determines that

asset growth was related to a merger or

acquisition.

*

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Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on October 20,

2020.

James P. Sheesley,

Assistant Executive Secretary.

[FR Doc. 2020–23630 Filed 10–21–20; 4:15 pm]

BILLING CODE 6714–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 25

[Docket No. FAA–2020–0934; Special

Conditions No. 25–775–SC]

Special Conditions: Archeion

Holdings, LLC, Boeing Model No

of the Board of Directors.

Dated at Washington, DC, on October 20,

2020.

James P. Sheesley,

Assistant Executive Secretary.

[FR Doc. 2020–23630 Filed 10–21–20; 4:15 pm]

BILLING CODE 6714–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 25

[Docket No. FAA–2020–0934; Special

Conditions No. 25–775–SC]

Special Conditions: Archeion

Holdings, LLC, Boeing Model No. 737–

300, –400, –700, –800, –8, and –9 Series

Airplanes; Electronic-System Security

Protection From Unauthorized External

Access

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final special conditions; request

for comments.

SUMMARY: These special conditions are

issued for Boeing Model 737–300, –400,

–700, –800, –8, and –9 series airplanes.

These airplanes, as modified by

Archeion Holdings, LLC (Archeion),

will have a novel or unusual design

feature when compared to the state of

technology envisioned in the

airworthiness standards for transport-

category airplanes. This design feature

is a digital systems architecture for the

installation of a system with wireless

network and hosted application

functionality that allows access from

external sources to the airplane’s

internal electronic components. 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

Archeion on October 23, 2020. Send

comments on or before December 7,

2020.

ADDRESSES: Send comments identified

by Docket No. FAA–2020–0934 using

any of the following methods:

• Federal eRegulations Portal: Go to

http://www.regulations.gov/ and follow

the online instructions for sending your

comments electronically.

• Mail: Send comments to Docket

Operations, M–30, U.S

n is effective on

Archeion on October 23, 2020. Send

comments on or before December 7,

2020.

ADDRESSES: Send comments identified

by Docket No. FAA–2020–0934 using

any of the following methods:

• Federal eRegulations Portal: Go to

http://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 http://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

http://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

l 11, 2000 (65 FR 19477–19478).

Docket: Background documents or

comments received may be read at

http://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:

Varun Khanna, Airplane and Flight

Crew Interface Section, AIR–671,

Transport Standards Branch, Policy and

Innovation Division, Aircraft

Certification Service, Federal Aviation

Administration, 2200 South 216th

Street, Des Moines, Washington 98198;

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