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Federal Register / Vol. 79, No. 3 / Monday, January 6, 2014 / Proposed Rules
programs administered by a transferor
agency that ceased to exist. Therefore,
there are no annuitants that can elect
FEGLI as a result of these provisions.
Regulatory Impact Analysis
OPM has examined the impact of this
proposed rule as required by Executive
Order 12866 and Executive Order
13563, which directs agencies to assess
all costs and benefits of available
regulatory alternatives and, if regulation
is necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public, health, and
safety effects, distributive impacts, and
equity). A regulatory impact analysis
must be prepared for major rules with
economically significant effects of $100
million or more in any one year. This
rule is not considered a major rule
because OPM expects that this rule will
not impose costs of more than $100
million in any one year.
List of Subjects on 5 CFR Part 870
Administrative practice and
procedure, Government Employees, Life
insurance.
U.S. Office of Personnel Management.
Katherine Archuleta,
Director.

Eligibility for life insurance.

*

*
*
*
*
(f) An individual’s period of coverage
in a life insurance plan is credited to the
5 years of service under (a)(2) of this
section if: (1) He/she participated in the
Office of Thrift Supervision (OTS) life
insurance plan and transferred to the
Office of the Comptroller of the
Currency/Federal Deposit Insurance
Corporation under the Dodd-Frank Wall
Street Reform and Consumer Protection
Act, Public Law 111–203, or he/she
transferred to the Consumer Financial
Protection Bureau under the DoddFrank Wall Street Reform and Consumer
Protection Act, Public Law 111–203 and
did not have a prior FEGLI election
opportunity at their former agency from
which they transferred, and (2) elected
FEGLI coverage during the special
enrollment period between June 1, 2012
and July 29, 2012. Evidence of the nonFEGLI period of continuous coverage
will be documented in a manner
designated by OPM.
*
*
*
*
*
[FR Doc. 2013–31498 Filed 1–3–14; 8:45 am]
BILLING CODE 6325–63–P

FEDERAL RESERVE SYSTEM

For the reasons set forth in the
preamble, the U.S. Office of Personnel
Management proposes to amend 5 CFR
Part 870 as follows:

12 CFR Part 201
[Regulation A; Docket No. R–1476]
RIN 7100–AE08

Title 5—Administrative Personnel

Extensions of Credit by Federal
Reserve Banks

PART 870—FEDERAL EMPLOYEES’
GROUP LIFE INSURANCE PROGRAM

AGENCY:

Subpart A—Administration and
General Provisions
1. The authority citation for Part 870
is revised to read as follows:

■

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§ 870.701

Authority: 5 U.S.C. 8716; Subpart J also
issued under section 599C of Pub. L. 101–
513, 104 Stat. 2064, as amended; Sec.
870.302(a)(3)(ii) also issued under section
153 of Pub. L. 104–134, 110 Stat. 1321; Sec.
870.302(a)(3) also issued under sections
11202(f), 11232(e), and 11246(b) and (c) of
Pub. L. 105–33, 111 Stat. 251, and section
7(e) of Pub. L. 105–274, 112 Stat. 2419; Sec.
870.302(a)(3) also issued under section 145 of
Pub. L. 106–522, 114 Stat. 2472; Secs.
870.302(b)(8), 870.601(a), and 870.602(b) also
issued under Pub. L. 110–279, 122 Stat. 2604;
Subpart E also issued under 5 U.S.C. 8702(c);
Sec. 870.601(d)(3) also issued under 5 U.S.C.
8706(d); Sec. 870.703(e)(1) also issued under
section 502 of Pub. L. 110–177, 121 Stat.
2542; Sec. 870.705 also issued under 5 U.S.C.
8714b(c) and 8714c(c); Public Law 104–106,
110 Stat. 521;

2. In § 870.701, add paragraph (f) to
read as follows:

■

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Board of Governors of the
Federal Reserve System.
ACTION: Notice of proposed rulemaking;
request for public comment.
SUMMARY: The Board invites public
comment on proposed amendments to
Regulation A (Extensions of Credit by
Federal Reserve Banks) that would
implement sections 1101 and 1103 of
the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the
‘‘Dodd-Frank Act’’). These provisions of
the Dodd-Frank Act amend the
emergency lending authority of the
Federal Reserve Banks under section
13(3) of the Federal Reserve Act (the
‘‘FRA’’), and require the Board, in
consultation with the Secretary of the
Treasury, to establish by regulation
certain policies and procedures with
respect to emergency lending under that
section.
DATES: Comments must be submitted by
March 7, 2014.
ADDRESSES: You may submit comments,
identified by Docket No. R–1476, by any
of the following methods:

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615

• Agency Web site: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
at http://www.federalreserve.gov/apps/
foia/proposedregs.aspx.
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email:
regs.comments@federalreserve.gov.
Include docket number in the subject
line of the message.
• FAX: (202) 452–3819 or (202) 452–
3102.
• Mail: Robert deV. Frierson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
All public comments are available
from the Board’s Web site at http://
www.federalreserve.gov/apps/foia/
proposedregs.aspx as submitted, unless
modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room MP–500 of the
Board’s Martin Building (20th and C
Street NW.,) between 9:00 a.m. and 5:00
p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT:
Laurie S. Schaffer, Associate General
Counsel (202) 452–2272, Sophia H.
Allison, Senior Counsel (202) 452–3565,
or Jay R. Schwarz, Counsel (202) 452–
2970, Legal Division; for users of
Telecommunications Device for the Deaf
(TDD) only, contact (202) 263–4869;
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Ave. NW., Washington, DC
20551.
SUPPLEMENTARY INFORMATION:
I. Background
Prior to 2010, section 13(3) of the FRA
(12 U.S.C. 343) provided that the Board
may authorize any Federal Reserve Bank
(‘‘Reserve Bank’’) to extend credit to any
individual, partnership, or corporation
subject to four principal conditions set
forth in that section. These conditions
required that (1) credit be extended only
in unusual and exigent circumstances;
(2) the Board act by the affirmative vote
of at least five of its members; (3) the
lending Reserve Bank obtain evidence
before extending the credit that the
borrower is unable to secure adequate
accommodations from other banking
institutions; and (4) the extension of
credit be indorsed or otherwise secured
to the satisfaction of the Reserve Bank.
This statutory authority to extend credit
in unusual and exigent circumstances
was enacted by Congress in 1932 to

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Federal Register / Vol. 79, No. 3 / Monday, January 6, 2014 / Proposed Rules

enable the Federal Reserve, as the
nation’s central bank, to provide
liquidity in times of financial stress.
Effective on July 21, 2010, the DoddFrank Act (Pub. L. 111–203, 124 Stat.
1376) made extensive amendments to
section 13(3) of the FRA. In particular,
section 1101 of the Dodd-Frank Act
amended section 13(3) of the FRA to:
• Remove the general authority to
lend to an individual, partnership, or
corporation and limit the Federal
Reserve’s emergency lending authority
to extending credit to participants in a
program or facility with broad-based
eligibility;
• require the Board to obtain the
approval of the Secretary of the
Treasury prior to extending emergency
credit under section 13(3) of the FRA;
• provide that a program or facility
that is structured to remove assets from
the balance sheet of a single and specific
company, or that is established for the
purpose of assisting a single and
specific company avoid bankruptcy,
resolution under title II of the DoddFrank Act, or any other Federal or State
insolvency proceeding, would not be
considered a program or facility with
broad-based eligibility; and
• require the Board, in consultation
with the Secretary of the Treasury, to
adopt by regulation policies and
procedures that are designed to ensure
that:
Æ Any emergency lending program or
facility is for the purpose of providing
liquidity to the financial system, and
not to aid a failing financial company;
Æ the security for emergency loans is
sufficient to protect taxpayers from
losses;
Æ any such program or facility is
terminated in a timely and orderly
fashion;
Æ a Reserve Bank assigns, consistent
with sound risk management practices
and to ensure protection for the
taxpayer, a lendable value to all
collateral for emergency loans; and
Æ borrowing by insolvent borrowers
is prohibited.
The revisions made to section 13(3)
by the Dodd-Frank Act focus this
emergency lending authority on
programs and facilities that relieve
liquidity pressures in financial markets
through broad-based liquidity facilities.
The Dodd-Frank Act did not change the
requirements already contained in
section 13(3) that the Board authorize
lending under that section only in
unusual and exigent circumstances and
upon a vote of at least five of its
members, the Reserve Bank be secured
to its satisfaction, and the Reserve Bank
obtain evidence that other bank credit

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accommodations are not generally
available.
Because these rules establish
procedures governing lending activity,
the Board does not believe that the
Administrative Procedure Act requires
publication of the proposed rule or
impedes lending in accordance with the
statutory provisions of section 13(3) as
amended by the Dodd-Frank Act prior
to adoption of the final rule.
Nevertheless, the Board also believes
that there is significant value in
obtaining public comment on the
proposed rule in this instance.
Consequently, the Board invites
comment on all aspects of the proposed
amendments to Regulation A set forth
below to implement the requirements of
the Dodd-Frank Act. As required by the
Dodd-Frank Act, the Board consulted
with the Secretary of the Treasury in the
development of the proposed
amendments.
II. Section by Section Summary of
Proposed Rule
A. Section 201.4(d)—Emergency Credit
for Others
1. Authorization To Extend Credit
Section 201.4(d)(1) of the proposed
rule sets forth the process that the Board
must undertake to authorize a Reserve
Bank to extend credit under section
13(3) of the FRA. First, section
201.4(d)(1)(i) provides that the Board
may authorize credit under section 13(3)
of the FRA only if it determines that
unusual and exigent circumstances exist
upon the affirmative vote of not less
than five members of the Board unless
fewer are authorized pursuant to section
11(r) of the FRA. This requirement in
section 13(3) was not changed by the
Dodd-Frank Act. Section 201.4(d)(1)(ii)
of the proposed rule provides that the
Board may not establish a program or
facility under section 13(3) without the
prior approval of the Secretary of the
Treasury.
Section 201.4(d)(1)(i) of the proposed
rule also provides that credit may be
extended by any Reserve Bank only
through a program or facility with
broad-based eligibility. This
requirement conforms the regulation
with the limitations in the Dodd-Frank
Act. In addition, section 201.4(d)(1)(i)
provides that any credit extended under
section 13(3) of the FRA is subject to
such other conditions as the Board may
determine.
Section 201.4(d)(1)(iii) of the
proposed rule provides that the Board
must, at the time of the authorization or
as soon thereafter as is reasonably
practicable, document the justification
for its authorization, including

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describing the unusual and exigent
circumstances that exist and the
intended effect of the program or
facility. Section 201.4(d)(1)(iii) of the
proposed rule further requires that the
Board (and the authorized Reserve Bank
or Reserve Banks, as appropriate) make
publicly available, as soon as is
reasonably practicable, a description of
the program or facility and the terms
and conditions for participation in the
program or facility.
2. Definitions of Broad-Based Eligibility
and Insolvency
Section 201.4(d)(2) of the proposed
rule sets forth the definition of a
program or facility ‘‘with broad-based
eligibility.’’ As part of this definition, it
also sets forth the definition of
‘‘insolvent.’’
Proposed section 201.4(d)(2)(i)
incorporates three requirements
established by the Dodd-Frank Act for a
program or facility to have ‘‘broad-based
eligibility’’ for purposes of section 13(3)
of the FRA. Under subparagraph (A) of
proposed section 201.4(d)(2)(i), in order
for a program or facility to have ‘‘broadbased eligibility,’’ it must be designed to
provide liquidity to a market or sector
of the financial system. As required by
the Dodd-Frank Act, proposed section
201.4(d)(2)(i)(B) provides that a program
or facility must not be for the purpose
of aiding a failing financial company
and must not be structured to remove
assets from the balance sheet of a single
and specific company. In addition,
proposed section 201.4(d)(2)(i)(C)
incorporates the requirement of the
Dodd-Frank Act that a program or
facility not be established for the
purpose of assisting a single and
specific company to avoid bankruptcy,
resolution under Title II of the DoddFrank Act, or any other Federal or State
insolvency proceeding.
Proposed section 201.4(d)(2)(ii)
authorizes the Board to determine the
type of facility used to extend credit, so
long as the facility is broad-based. For
example, liquidity facilities may extend
credit directly to participants in those
facilities in some cases, or through a
special purpose vehicle in other cases.
As noted above, section 1101 of the
Dodd-Frank Act requires the Board to
‘‘establish procedures to prohibit
borrowing from programs and facilities
by borrowers that are insolvent.’’
Section 1101 also provides that a
borrower ‘‘shall be considered
insolvent’’ if the borrower ‘‘is in
bankruptcy, resolution under Title II of
[the Dodd-Frank Act], or any other

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Federal Register / Vol. 79, No. 3 / Monday, January 6, 2014 / Proposed Rules
Federal or State insolvency
proceeding.’’ 1
The proposed rule adopts these
statutory provisions. Accordingly,
proposed section 201.4(d)(2)(iii)
provides that a Reserve Bank must not
extend credit through a program or
facility established under section 13(3)
of the FRA to any person or entity that
is in bankruptcy, resolution under Title
II of the Dodd-Frank Act, or any other
Federal or State insolvency proceeding.
As provided by the Dodd-Frank Act,
the proposed rule includes a
certification process for establishing that
a person or entity is not ‘‘insolvent’’ for
purposes of the rule. Proposed section
201.4(d)(2)(iii)(B) provides that a
Reserve Bank may rely on a written
certification from the person, the chief
executive officer of the entity or another
authorized officer of the entity, at the
time the person or entity initially
borrows under a program or facility, that
the person or entity is not in bankruptcy
or in a resolution or other insolvency
proceeding. As also provided in section
1101 of the Dodd-Frank Act, the
proposed rule provides that a person or
entity that submits a written
certification must immediately notify
the lending Reserve Bank if the
information in the certification changes.
Section 201.4(d)(2)(iii)(C) of the
proposed rule provides that a
participant that is or has become
insolvent would be prohibited from
receiving any new extension of credit
under the program or facility.

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3. Indorsement or Other Security
Prior to the Dodd-Frank Act, section
13(3) provided that any extension of
credit under that section must be
‘‘indorsed or otherwise secured to the
satisfaction of the Federal Reserve
bank.’’ 2 The Dodd-Frank Act retained
this provision of the original statute and
added two further requirements. First,
the Dodd-Frank Act directs that the
Board’s policies and procedures ‘‘be
designed to ensure . . . that the security
for emergency loans is sufficient to
protect taxpayers from losses.’’ 3
Second, the Dodd-Frank Act requires
that the Board’s policies and procedures
‘‘require that a Federal reserve bank
assign, consistent with sound risk
management practices and to ensure
protection for the taxpayer, a lendable
value to all collateral for a loan
executed’’ under section 13(3) of the
FRA.4
1 124

Stat. 1376 at 2113–15.
12 U.S.C. 343, 47 Stat. 715.
3 Dodd-Frank Act Section 1101(a)(6).
4 Id.

Section 201.4(d)(3) of the proposed
rule incorporates both of these
requirements. Section 201.4(d)(3)
provides that all credit extended under
emergency lending programs and
facilities must be indorsed or otherwise
secured to the satisfaction of the lending
Reserve Bank and that the Reserve Bank
must, at the time the credit is initially
extended, assign a lendable value to all
collateral for the program or facility,
consistent with sound risk management
practices and to ensure protection for
the taxpayer. As in section 13(3) of the
FRA as amended, proposed section
201.4(d)(3)(ii) applies specifically to
‘‘collateral.’’
The Reserve Banks have long assigned
a lendable value to collateral at the time
credit is extended by reviewing the
collateral and applying discounts or
‘‘haircuts’’ to the value of the collateral.
The Reserve Banks then determine,
based on the lendable value of any
collateral posted, the financial strength
of the borrower, the presence of any
indorsement, and other factors, whether
the credit is satisfactorily secured. The
haircuts applied to collateral are
described in the Federal Reserve
Discount Window & Payment System
Risk Collateral Margins Table and the
Federal Reserve Collateral Guidelines,
available on the Federal Reserve
Discount Window & Payment System
Risk Web site.5 The Board believes that
these provisions of proposed section
201.4(d)(3) address the statutory
requirement for policies and procedures
that are designed to ensure protection
for the taxpayer.

liquidity support provided by such
program or facility; and other
appropriate factors. The Board will
generally seek to terminate programs or
facilities when their identified goals
have been reached or once the Board
determines that conditions have
otherwise changed to warrant the
termination of the program or facility.
5. Evidence Regarding Unavailability of
Adequate Credit Accommodation
Section 13(3) has always required that
a Reserve Bank, prior to extending
credit to any participant in a program or
facility under that section, obtain
evidence that such participant is unable
to secure adequate credit
accommodations from other banking
institutions. The proposed rule
incorporates this requirement that the
Reserve Bank obtain evidence of the
inability of participants to secure
adequate credit accommodations, and
recognizes that this evidence may
include evidence based on economic
conditions in the market or markets
addressed by the program or facility or
evidence obtained from other sources,
including facility or market participants.
6. Reporting Requirements
The Dodd-Frank Act contains detailed
reporting requirements with respect to
section 13(3) extensions of credit.7 The
Board intends to comply with these
statutory requirements as enacted.
Therefore, the proposed rule provides
that the Board will comply with 12
U.S.C. 248(s) and 12 U.S.C. 343(3)(C)
pursuant to their terms.

4. Termination of Program or Facility
The Dodd-Frank Act requires that the
Board’s policies and procedures with
respect to section 13(3) extensions of
credit be designed to ensure that any
such program is terminated in a timely
and orderly fashion.6 In order to address
this requirement, Section 201.4(d)(4) of
the proposed rule provides that the
Board will periodically review whether
each emergency lending program should
be terminated. The proposed rule
further provides that, in conducting this
review, the Board will consider such
factors as the continued existence of
unusual and exigent circumstances; the
extent of usage of the program or
facility; the extent to which the
continuing authorization of the program
or facility facilitates restoring or
sustaining confidence in financial
markets; economic and market
conditions; the functioning of financial
markets; the ongoing need for the

7. No Obligation To Extend Credit

5 http://www.frbdiscountwindow.org/index.cfm.

7 Dodd-Frank Act Sections 1101(a)(6) and
1103(b).

Section 201.4(d)(7) of the proposed
rule recognizes that Reserve Banks have
no obligation to extend credit to any
particular person or entity through an
emergency lending program or facility.
This provision mirrors the provision
applicable to lending to depository
institutions set forth in section 201.3(b)
of Regulation A.
8. Short-Term Emergency Credit
Secured Solely by United States or
Agency Obligations
Section 201.4(d)(8) of the proposed
rule retains, but relocates, an
authorization already included in
Regulation A that authorizes a Reserve
Bank to extend credit under section
13(13) of the FRA if the collateral used
to secure the credit consists solely of
obligations of, or obligations fully
guaranteed as to principal and interest
by, the United States or an agency of the

2 See

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6 Dodd-Frank

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Federal Register / Vol. 79, No. 3 / Monday, January 6, 2014 / Proposed Rules

United States. As under the current rule,
under the proposed rule, the Reserve
Bank would be authorized to extend
credit under section 13(13) of the FRA
in unusual and exigent circumstances,
after consultation with the Board, and if
the Reserve Bank has obtained evidence
that credit is not available from other
sources and failure to obtain credit
would adversely affect the economy. As
set forth in section 13(13) of the FRA,
section 201.4(d)(8) of the proposed rule
also provides that credit extended under
this provision may not be extended for
a term exceeding 90 days. Section
201.4(d)(8) retains the provision in
current section 201.4(d) of Regulation A
that extensions of credit under this
section be at a rate above the highest
rate in effect for advances to depository
institutions.
B. Section 201.3(b)—No obligation to
make advances or discounts
Section 201.3(b) of the proposed rule
reflects a technical change to conform
the language of that section with the
language of section 201.4(d)(7) of the
proposed rule.
The Board invites comments on all
aspects of its proposed rule.
III. Administrative Law Matters

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A. Regulatory Flexibility Act
In accordance with section 3(a) of the
Regulatory Flexibility Act (5 U.S.C. 601
et seq.) (‘‘RFA’’), the Board is publishing
an initial regulatory flexibility analysis
of the proposed rule. The RFA requires
an agency either to provide an initial
regulatory flexibility analysis with a
proposed rule for which a general notice
of proposed rulemaking is required or to
certify that the proposed rule will not
have a significant economic impact on
a substantial number of small entities.
Based on its analysis and for the reasons
stated below, the Board believes that
this proposed rule will not have a
significant economic impact on a
substantial number of small entities.
Nevertheless, the Board is publishing an
initial regulatory flexibility analysis. A
final regulatory flexibility analysis will
be conducted after comments received
during the public comment period have
been considered.
In accordance with section 1101 and
1103 of the Dodd-Frank Act, the Board
is proposing amendments to Regulation
A (12 CFR part 201 et seq.) to establish
policies and procedures for emergency
lending under section 13(3) of the FRA.
The reasons and justification for the
proposed rule are described in the
Supplementary Information. The Board
does not believe that the proposed rule
duplicates, overlaps, or conflicts with

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any other Federal rules. Under
regulations issued by the Small
Business Administration (‘‘SBA’’), a
‘‘small entity’’ includes those firms
within the ‘‘Finance and Insurance’’
sector with asset sizes that vary from
$35.5 million or less in assets to $500
million or less in assets. The Board
believes that the Finance and Insurance
sector constitutes a reasonable universe
of firms for these purposes because such
firms generally engage in activities that
are financial in nature and the vast
majority of emergency loans under
section 13(3) during the recent financial
crisis were extended to such firms.
Consequently, financial firms with asset
sizes of $175 million or less are small
entities for purposes of the RFA.
As discussed in the Supplementary
Information, the proposed rule would
apply to any participant in an
emergency lending program or facility
with broad-based eligibility. To the
extent that small entities are
participants in these programs or
facilities, they would be receiving
emergency loans from the Federal
Reserve. It is not possible to ascertain at
this time the number of small entities
that might participate in these programs
and facilities or what requirements will
be imposed on them if they do so. At a
minimum, it is likely that participants
would be required to pay interest on
loans extended to them and to keep
records of the use of loan proceeds.
However, the positive economic impact
of receiving such a loan is likely to
substantially outweigh any economic
burden of participating in the program
or facility.
In light of the foregoing, the Board
does not believe that the proposed rule,
if adopted in final form, would have a
significant negative economic impact on
a substantial number of small entities.
Nonetheless, the Board invites comment
on whether (a) the Finance and
Insurance sector constitutes a
reasonable universe of firms for
establishing the definition of ‘‘small
entity’’ and (b) the proposed rule would
impose undue burdens on, or have
unintended consequences for, small
organizations, and whether there are
ways such potential burdens or
consequences could be minimized in a
manner consistent with sections 1101
and 1103 of the Dodd-Frank Act.
B. Paperwork Reduction Act Analysis
Office of Management and Budget
(OMB) regulations implementing the
Paperwork Reduction Act (PRA) state
that agencies must submit ‘‘collections
of information’’ contained in proposed
rules published for public comment in
the Federal Register in accordance with

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OMB regulations.8 OMB regulations
define a ‘‘collection of information’’ as
obtaining, causing to be obtained,
soliciting, or requiring the disclosure to
an agency, third parties or the public of
information by or for an agency ‘‘by
means of identical questions posed to,
or identical reporting, recordkeeping, or
disclosure requirements imposed on,
ten or more persons, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit.’’ 9
In accordance with the PRA, the
Board reviewed the proposed rule under
the authority delegated to the Board by
the Office of Management and Budget
(OMB). The Federal Reserve may not
conduct or sponsor, and a respondent is
not required to respond to, an
information collection unless it displays
a currently valid OMB control number.
The collection of information that
would be required by this notice of
proposed rulemaking is found in section
201.4(d)(2)(iii)(B). Under this section a
Reserve Bank may rely on a written
certification from the person, the chief
executive officer of the entity or another
authorized officer of the entity, at the
time the person or entity initially
borrows under a program or facility, that
the person or entity is not in bankruptcy
or in a resolution or other insolvency
proceeding. In addition, a person or
entity that submits such a written
certification must immediately notify
the lending Reserve Bank if the
information in the certification changes.
The Federal Reserve believes that
compliance with this requirement
should require minimal effort on the
part of the respondent, thus the burden
associated would be considered
negligible.
Comments are invited regarding (a)
whether the proposed collection of
information is necessary for the proper
performance of the Federal Reserve’s
functions, including whether the
information has practical utility; (b) the
accuracy of the Federal Reserve’s
estimate of the burden of the proposed
information collection, including the
cost of compliance; (c) ways to enhance
the quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden of
information collection on respondents,
including through the use of automated
collection techniques or other forms of
information technology. Comments on
the collection of information should be
sent to Secretary, Board of Governors of
the Federal Reserve System,
8 5 CFR 1320.11. The PRA is codified at 44 U.S.C.
3506 et seq.
9 5 CFR 1320.11(c).

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Federal Register / Vol. 79, No. 3 / Monday, January 6, 2014 / Proposed Rules
Washington, DC 20551, with copies of
such comments to be sent to the Office
of Management and Budget, Paperwork
Reduction Project, Washington, DC
20503.
C. Invitation for Comments on Use of
Plain Language
Section 722 of the Gramm-Leach
Bliley Act of 1999 requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000.10 The
Board invites comment on whether the
proposed rule is clearly stated and
effectively organized, and how the
Board might make the text of the rule
easier to understand.
List of Subjects in 12 CFR Part 201
Banks, Banking, Federal Reserve
System, Reporting and recordkeeping
requirements.
Authority and Issuance
For the reasons set forth in the
preamble, the Board is proposing to
amend 12 CFR Part 201 (Regulation A)
as follows:
PART 201—EXTENSIONS OF CREDIT
BY FEDERAL RESERVE BANKS
(REGULATION A)
1. The authority citation for part 201
is revised to read as follows:

■

Authority: 12 U.S.C. 248(i)–(j) and (s), 343
et seq., 347a, 347b, 347c, 348 et seq., 357,
374, 374a, and 461.

2. Section 201.3 paragraph (b) is
revised to read as follows:

■

§ 201.3

Extensions of credit generally.

*

*
*
*
*
(b) No obligation to make advances or
discounts. This section does not entitle
any person or entity to obtain credit
from a Federal Reserve Bank.
*
*
*
*
*
■ 3. Section 201.4 paragraph (d) is
revised to read as follows:
§ 201.4

Availability and terms of credit.

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*

*
*
*
*
(d) Emergency credit for others.—(1)
Authorization to extend credit. (i) In
unusual and exigent circumstances, the
Board, by the affirmative vote of not less
than five members,1 may authorize any
Federal Reserve Bank, subject to such
conditions and during such periods as
the Board may determine, to extend
credit to any participant in a program or
facility with broad-based eligibility
established and operated in accordance
10 12

U.S.C. 4809.
fewer are authorized pursuant to section
11(r) of the Federal Reserve Act. 12 U.S.C. 248(r).
1 Unless

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with this section at rates established in
accordance with the provisions of
section 14, subdivision (d) of the
Federal Reserve Act (12 U.S.C. 357).
(ii) The Board may not establish any
program or facility under this section
without obtaining the prior approval of
the Secretary of the Treasury.
(iii) At the time of any authorization
under paragraph (d)(1)(i) of this section
or as soon thereafter as is reasonably
practicable, the Board will document
the justification for its authorization,
including a description of the unusual
and exigent circumstances that exist and
the intended effect of the program or
facility. The Board and the authorized
Federal Reserve Bank or Federal Reserve
Banks, as appropriate, will make
publicly available a description of the
program or facility and the terms and
conditions for participation in the
program or facility as soon as is
reasonably practicable.
(2) Broad-based eligibility; insolvency.
(i) A program or facility established
under this section must have broadbased eligibility in accordance with
terms established by the Board. For
purposes of this section, a program or
facility has broad-based eligibility only
if the program or facility—
(A) Is designed to provide liquidity to
an identifiable market or sector of the
financial system;
(B) Is not for the purpose of aiding a
failing financial company and is not
structured to remove assets from the
balance sheet of a single and specific
company; and
(C) Is not established for the purpose
of assisting a single and specific
company to avoid bankruptcy,
resolution under Title II of Dodd-Frank
Wall Street Reform and Consumer
Protection Act (Pub. L. 111–203, 12
U.S.C. 5381 et seq.), or any other
Federal or State insolvency proceeding.
(ii) A Federal Reserve Bank may
extend credit through a program or
facility with broad-based eligibility
established under this section through
such mechanism or vehicle as the Board
determines would facilitate the
extension of such credit.
(iii) A Federal Reserve Bank may not
extend credit through a program or
facility established under this section to
any person or entity that is insolvent.
(A) A person or entity is ‘‘insolvent’’
for purposes of this section if the person
or entity is in bankruptcy, resolution
under Title II of Public Law 111–203 (12
U.S.C. 5381 et seq.) or any other Federal
or State insolvency proceeding.
(B) In determining for purposes of this
section whether a person or entity is
insolvent, a Federal Reserve Bank may
rely on a written certification from the

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619

person or from the chief executive
officer or other authorized officer of the
entity, at the time the person or entity
initially borrows under a program or
facility hereunder, that the person or
entity is not in bankruptcy or in a
resolution or other insolvency
proceeding described in paragraph
(d)(2)(iii)(A) of this section. The person
or entity submitting such a written
certification must immediately notify
the lending Federal Reserve Bank if the
information in the certification changes.
(C) Upon a finding by the Federal
Reserve Bank that a participant,
including a participant that has
provided a certification under paragraph
(d)(2)(iii)(B) of this section, is or has
become insolvent, that participant is not
eligible for any new extension of credit
from a program or facility established
under this section until such time as the
Federal Reserve Bank determines that
such participant is no longer insolvent.
(3) Indorsement or other security. (i)
All credit extended under a program or
facility established under this section
must be indorsed or otherwise secured
to the satisfaction of the lending Federal
Reserve Bank.
(ii) In determining whether an
extension of credit under any program
or facility established under this section
is secured to its satisfaction, a Federal
Reserve Bank must, prior to or at the
time the credit is initially extended,
assign a lendable value to all collateral
for the program or facility, consistent
with sound risk management practices
and to ensure protection for the
taxpayer.
(4) Termination of program or facility.
To ensure that the program or facility
under this section is terminated in a
timely and orderly fashion, the Board
will periodically review the existence of
unusual and exigent circumstances; the
extent of usage of the program or
facility; the extent to which the
continuing authorization of the program
or facility facilitates restoring or
sustaining confidence in financial
markets; economic and market
conditions; the functioning of financial
markets; the ongoing need for the
liquidity support provided by such
program or facility; and such other
factors as the Board may deem to be
appropriate.
(5) Evidence regarding unavailability
of adequate credit accommodation.
Each lending Federal Reserve Bank
must obtain evidence that, under the
prevailing circumstances, participants
in a program or facility established
under this section are unable to secure
adequate credit accommodations from
other banking institutions. This
evidence may be based on economic

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620

Federal Register / Vol. 79, No. 3 / Monday, January 6, 2014 / Proposed Rules

conditions in the market or markets
intended to be addressed by the
program or facility, or other evidence
from participants, or other sources.
(6) Reporting requirements. The Board
will comply with the reporting
requirements of 12 U.S.C. 248(s) and 12
U.S.C. 343(3)(C) pursuant to their terms.
(7) No obligation to extend credit.
This section does not entitle any person
or entity to obtain credit from a Federal
Reserve Bank.
(8) Short-term emergency credit
secured solely by United States or
agency obligations. In unusual and
exigent circumstances and after
consultation with the Board, a Federal
Reserve Bank may extend credit under
section 13(13) of the Federal Reserve
Act if the collateral used to secure such
credit consists solely of obligations of,
or obligations fully guaranteed as to
principal and interest by, the United
States or an agency thereof. Prior to
extending credit under this paragraph,
the Federal Reserve Bank must obtain
evidence that credit is not available
from other sources and failure to obtain
such credit would adversely affect the
economy. Credit extended under this
paragraph may not be extended for a
term exceeding 90 days, must be
extended at a rate above the highest rate
in effect for advances to depository
institutions as determined in
accordance with section 14(d) of the
Federal Reserve Act, and is subject to
such limitations and conditions as
provided by the Board.
By order of the Board of Governors of the
Federal Reserve System, December 23, 2013.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2013–31025 Filed 1–3–14; 8:45 am]

Executive Summary

BILLING CODE 6210–01–P

DEPARTMENT OF DEFENSE
Department of the Navy
[No. USN–2011–0016]
RIN 0703–AA90

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32 CFR Part 767
Guidelines for Permitting
Archaeological Investigations and
Other Activities Directed at Sunken
Military Craft and Terrestrial Military
Craft Under the Jurisdiction of the
Department of the Navy
Department of the Navy, DoD.
Proposed rule.

AGENCY:
ACTION:

SUMMARY: The Department of the Navy
(DoN) is revising its rules to assist the
Secretary in managing sunken military

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craft under the jurisdiction of the DoN
pursuant to the Sunken Military Craft
Act (SMCA), and to issue revised
application guidelines for research
permits on terrestrial military craft
under the jurisdiction of the DoN.
DATES: Interested parties should submit
written comments on or before March 7,
2014.
ADDRESSES: You may submit comments,
identified by docket number and/or
Regulatory Information Number (RIN)
and title, by any of the following
methods:
Federal eRulemaking Portal: http://
www.regulations.gov.
Follow the instructions for submitting
comments.
Mail: Federal Docket Management
System Office, 4800 Mark Center Drive,
East Tower, Suite 02G09, Alexandria,
VA 22350–3100.
Instructions: All submissions received
must include the agency name and
docket or RIN number for this Federal
Register document. The general policy
for comments and other submissions
from members of the public is to make
these submissions available for public
viewing on the Internet at http://
regulations.gov as they are received
without change, including any personal
identifiers or contact information.
FOR FURTHER INFORMATION CONTACT: Dr.
Robert Neyland, Head, Underwater
Archaeology Branch, Naval History &
Heritage Command, Department of the
Navy, 805 Kidder Breese Street SE., BL
57, Washington Navy Yard, DC 20374,
email: NHHCUnderwater
Archaeology@navy.mil.
SUPPLEMENTARY INFORMATION:
This proposed rule serves as a
revision of the current 32 CFR part 767
and incorporates existing regulations
together with the expanded authority
provided to the Secretary of the Navy by
the SMCA (Pub. L. 108–375, 10 U.S.C.
113 Note and 118 Stat. 2094–2098) in
regards to permitting activities directed
at sunken military craft that are
otherwise prohibited by the SMCA (10
U.S.C. 1402(a)–1402(b)). The proposed
rule replaces the current regulations and
establishes a single permitting process
for members of the public wishing to
engage in activities that disturb, remove,
or injure DoN sunken and terrestrial
military craft for archaeological,
historical, or educational purposes. As
per the limitations on application
expressed in (10 U.S.C. 1402(c)(1)),
section 1402 shall not apply to actions
taken by, or at the direction of, the
United States.

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The current rule is based on
provisions of the National Historic
Preservation Act (NHPA) (16 U.S.C. 470)
which sets forth the responsibility for
each agency to preserve and manage
historic properties under their
respective jurisdiction and control and
5 U.S.C. 301, which authorizes the DoN
to promulgate regulations regarding the
custody, use, and preservation of its
records, papers and property. The rule
institutes a permitting program that
authorizes controlled access to disturb
these historic properties, which remain
property of the DoN, for prescribed
purposes. It is the policy of the DoN to
preserve these sites in situ unless site
disturbance, removal, or injury is
necessary for their protection or
justified for research and educational
purposes. Archaeological science and
sound management principles support
this strategy that affords the DoN the
ability to efficiently oversee its more
than 17,000 historic wrecks dispersed
around the globe.
The existing regulations only apply to
ships and aircraft that are classified as
historic structures or archaeological
sites, regardless of location, and do not
carry the enforcement provisions
necessary to serve as a deterrent to their
unauthorized disturbance. The SMCA
was enacted in 2004 and codified these
existing principles of preservation of
title and sovereign immunity in regards
to sunken military craft. As defined in
the SMCA, the term sunken military
craft includes all sunken warships, all
naval auxiliaries, and other vessels that
were owned or operated by a
government on military noncommercial
service when they sank. The term also
includes all sunken military aircraft or
spacecraft owned or operated by a
government when they sank. In
addition, associated contents such as
equipment, cargo, and the remains and
personal effects of the crew and
passengers are also protected if located
within a craft’s debris field. It is
important to note that the SMCA is not
limited to historic sunken military craft
of the United States. All U.S. sunken
military craft are covered, regardless of
location or time of loss, while all foreign
sunken military craft in U.S. waters,
consisting of U.S. internal waters, the
U.S. territorial sea, and the U.S.
contiguous zone, are also afforded
protection from disturbance by the
SMCA. A permitting process may be
implemented by the Secretary of a
military department or the department
in which the Coast Guard is operating
in order to permit activities directed at
sunken military craft that are otherwise
prohibited.

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