Control and Divestiture Proceedings
| Published date | 02 April 2020 |
| Citation | 85 FR 18427 |
| Record Number | 2020-06993 |
| Section | Rules and Regulations |
| Court | Federal Reserve System |
Federal Register, Volume 85 Issue 64 (Thursday, April 2, 2020)
[Federal Register Volume 85, Number 64 (Thursday, April 2, 2020)]
[Rules and Regulations]
[Pages 18427-18428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06993]
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FEDERAL RESERVE SYSTEM
12 CFR Parts 225 and 238
[Regulations Y and LL; Docket No. R-1662]
RIN 7100-AF 49
Control and Divestiture Proceedings
AGENCY: Board of Governors of the Federal Reserve System (Board).
ACTION: Final rule; delay of effective date.
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SUMMARY: The Board is delaying the effective date of its final rule
that revises the Board's framework for determining whether a company
controls another company for purposes of the Bank Holding Company Act
or the Home Owners' Loan Act, as published on March 2, 2020.
DATES: The effective date for the final rule published March 2, 2020,
at 85 FR 12398, is delayed from April 1, 2020, until September 30,
2020.
FOR FURTHER INFORMATION CONTACT: Mark Buresh, Senior Counsel, (202)
452-5270, Greg Frischmann, Senior Counsel, (202) 452-2803, and Brian
Phillips, (202) 452-3221, Senior Attorney, Legal Division, Board of
Governors of Federal Reserve System, 20th and C Streets, Washington, DC
20551. You may also contact any person listed in the final rule
document published in 85 FR 12398, March 2, 2020. For users of
Telecommunication Device for Deaf (TDD) only, call (202) 263-4869.
SUPPLEMENTARY INFORMATION:
I. Final Rule and Delay of Effective Date
On January 30, 2020, the Board adopted a final rule to revise the
Board's regulations related to determinations of whether a company
controls another company for purposes of the Bank Holding Company Act
or the Home Owners' Loan Act (see 85 FR 12398, March 2, 2020). The
control final rule was originally to become effective April 1, 2020.
The Board recognizes that, as a result of COVID-19, there have been
recent dislocations in the U.S. economy. Many companies, including
regulated financial institutions, have also expressed a desire to
consult with Board staff about the effect of the new control rule on
various existing investments and relationships. For these reasons, the
Board is delaying the effective date of the control final rule by two
quarters, which should provide companies affected by the new control
rule additional time to analyze the impact of the rule on existing
investments and relationships, and to consult with Board staff as
necessary about such matters.
II. Administrative Law Matters
A. Administrative Procedure Act
The Board is issuing the final rule without prior notice and the
opportunity for public comment and the delayed effective date
ordinarily prescribed by the Administrative Procedure Act (APA)).\1\
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.'' \2\
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\1\ 5 U.S.C. 553.
\2\ 5 U.S.C. 553(b)(3)(B).
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The Board believes that the public interest is best served by
having the final rule become effective immediately upon publication in
the Federal Register. As a result of this rule, the changes approved by
the Board on January 30, 2020 to parts 225 and 238 of the Board's
regulations on control and divestiture proceedings will not be
reflected in the Code of Federal Regulations until September 30, 2020.
The spread of COVID-19 has disrupted economic activity in the United
States. In addition, U.S. financial markets have
[[Page 18428]]
featured significant levels of volatility. In approving changes to
parts 225 and 238 of the Board's regulations, the Board noted that
companies may need to consult with Board staff about prior investments
and relationships that have not been previously reviewed by the Board.
Delaying the changes to parts 225 and 238 of the Board's regulations
will allow companies additional time to consult with Board staff about
existing investments and relationships, allowing companies greater
flexibility to focus on COVID-19-related issues. For these reasons, the
Board finds that there is good cause consistent with the public
interest to issue the rule without advance notice and comment.\3\
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\3\ 5 U.S.C. 553(b)(3)(B); 553(d)(3).
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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.\4\ As noted
above, the Board finds that there is good cause to delay the effective
date of the previously approved changes to parts 225 and 238 of the
Board's regulations, for the reasons noted above.\5\
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\4\ 5 U.S.C. 553(d).
\5\ Id.
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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.\6\ 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.\7\
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\6\ 5 U.S.C. 801 et seq.
\7\ 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.\8\
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\8\ 5 U.S.C. 804(2).
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For the same reasons set forth above, the Board is adopting the
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.\9\ In light of current market uncertainty, the
Board believes that delaying the effective date of the rule would be
contrary to the public interest.
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\9\ 5 U.S.C. 808.
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As required by the Congressional Review Act, the Board 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
(PRA), an agency 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 Board has reviewed this final rule pursuant to authority delegated
by the OMB and has determined that it does not contain any collections
of information pursuant to the PRA.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \10\ requires an agency to
consider whether the rules it proposes will have a significant economic
impact on a substantial number of small entities.\11\ 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 Board has
determined for good cause that general notice and opportunity for
public comment is unnecessary, and therefore the Board is not issuing a
notice of proposed rulemaking. Accordingly, the Board has concluded
that the RFA's requirements relating to initial and final regulatory
flexibility analysis do not apply.
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\10\ 5 U.S.C. 601 et seq.
\11\ 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. Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act \12\ requires the Federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The Board has sought to present the
final rule in a simple and straightforward manner. The Board invites
comments on whether there are additional steps it could take to make
the rule easier to understand.
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\12\ 12 U.S.C. 4809.
By order of the Board of Governors of the Federal Reserve
System, March 31, 2020.
Ann Misback,
Secretary of the Board.
[FR Doc. 2020-06993 Filed 3-31-20; 11:15 am]
BILLING CODE P
