Unknown. Final rule

6,510 words·~30 min read·/register/2012/04/30/2012-10146

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

--- schema: federal-register doc_type: fedreg source_file: FR-2012-04-30.xml --- 77 83 Monday, April 30, 2012 Contents Agriculture Agriculture Department See Grain Inspection, Packers and Stockyards Administration See Rural Business-Cooperative Service Alcohol Tobacco Tax Alcohol and Tobacco Tax and Trade Bureau PROPOSED RULES Standards of Identity for Distilled Spirits, 25382-25384 2012-10332 Arts and Humanities, National Foundation See National Foundation on the Arts and the Humanities Consumer Financial Protection Bureau of Consumer Financial Protection NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 25437-25441 2012-10282 2012-10283 2012-10284 2012-10285 2012-10286 2012-10287 2012-10288 Centers Disease Centers for Disease Control and Prevention NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 25482-25485 2012-10325 2012-10324 Meetings: Disease, Disability, and Injury Prevention and Control Special Emphasis Panel, 25485 2012-10257 Children Children and Families Administration NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals: Developmental Disabilities Annual Protection and Advocacy Systems Program Performance Report, 25486 2012-10312 Developmental Disabilities Protection and Advocacy Program Statement of Goals and Priorities, 25485 2012-10309 Coast Guard Coast Guard RULES Safety Zones: Chicago Harbor, Navy Pier Southeast, Chicago, IL, 25361-25362 2012-10316 NOTICES Cooperative Research and Development Agreements: Federally Integrated Communications System, 25488-25490 2012-10320 Commerce Commerce Department See Foreign-Trade Zones Board See International Trade Administration See National Institute of Standards and Technology See National Oceanic and Atmospheric Administration Defense Department Defense Department NOTICES Revised Non-Foreign Overseas Per Diem Rates, 25441-25451 2012-10245 Education Department Education Department NOTICES Applications for New Awards:

Enhanced Assessment Instruments Grants Program (Accessibility Competition), 25463-25469 2012-10382 Enhanced Assessment Instruments Grants Program, Enhanced Assessment Instruments. etc., 25457-25463 2012-10359 Investing in Innovation Fund, Scale-up Grants, 25469 2012-10383 Investing in Innovation Fund, Validation, 25469-25470 2012-10373 Territories and Freely Associated States Education Grant Program, 25452-25457 2012-10377 Selection Criteria: Enhanced Assessment Instruments, 25470-25472 2012-10357 Energy Department Energy Department NOTICES Environmental Impact Statements;

Availability, etc.: Champlain Hudson Power Express Transmission Line Project; New York State, 25472-25474 2012-10304 Environmental Protection Environmental Protection Agency RULES Approvals and Promulgations of Air Quality Implementation Plans: Massachusetts; Determination of Attainment of One-hour Ozone Standard for Springfield Area, 25362-25363 2012-10198 Approvals and Promulgations of Implementation Plans and Designations of Areas for Air Quality Planning Purposes: Missouri and Illinois;

St. Louis; Determination of Attainment by Applicable Attainment Date for 1997 Ozone National Ambient Air Quality Standard, 25363-25366 2012-10207 Underground Storage Tank Program: Approved State Program for Oregon, 25366-25371 2012-9931 PROPOSED RULES Revisions to the California State Implementation Plan: San Joaquin Valley Unified Air Pollution Control District, 25384-25386 2012-10202 NOTICES Cross-Media Electronic Reporting: Authorized Program Revision Approval for Florida, 25474-25475 2012-10322 Inquiries:

Businesses Asserting Business Confidentiality Claims Regarding Waste Import and Export, 25475-25478 2012-10328 Meetings: Science Advisory Board Exposure and Human Health Committee, 25479 2012-10327 Federal Aviation Federal Aviation Administration NOTICES Meetings: RTCA Special Committee 224, Airport Security Access Control Systems, 25525 2012-10363 RTCA, NextGen Advisory Committee, 25524 2012-10368 Federal Communications Federal Communications Commission PROPOSED RULES Tank Level Probing Radars, 25386-25394 2012-9984 Federal Deposit Federal Deposit Insurance Corporation RULES Mutual Insurance Holding Company Treated as Insurance Company, 25349-25353 2012-10146 NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 25479-25480 2012-10347 Updated Listing of Financial Institutions in Liquidation, 25480 2012-10330 Federal Emergency Federal Emergency Management Agency NOTICES Changes in Flood Hazard Determinations, 25490-25495 2012-10281 Proposed Flood Hazard Determinations, 25495-25498 2012-10280 Federal Motor Federal Motor Carrier Safety Administration RULES Consumer Protection Regulations: Transportation of Household Goods in Interstate Commerce; Released Rates of Motor Carriers of Household Goods, 25371-25374 2012-9865 NOTICES Requirements and Registrations:

United States Department of Transportation Motorcoach Safety Data Utilization Student Challenge, 25525-25528 2012-10302 Federal Reserve Federal Reserve System NOTICES Corporations to do Business under Section 25A of Federal Reserve Act, 25480 2012-10345 Federal Transit Federal Transit Administration NOTICES Funding Availabilities: Over-the-Road Bus Accessibility Program Grants; Solicitation of Project Proposals, 25529-25533 2012-10369 Fiscal Fiscal Service NOTICES Surety Companies Acceptable on Federal Bonds:

Endurance American Insurance Co., 25536 2012-10138 Pacific Employers Insurance Co., 25535-25536 2012-10128 Food and Drug Food and Drug Administration RULES Disqualification of a Clinical Investigator, 25353-25361 2012-10292 Foreign Assets Foreign Assets Control Office NOTICES Unblocked Persons and Property: Pursuant to Executive Order 12978, 25536-25537 2012-9854 Foreign Trade Foreign-Trade Zones Board NOTICES Applications for Manufacturing Authority: North American Tapes, LLC, Foreign-Trade Zone 109, Watertown, NY, 25400 2012-10353 General Services General Services Administration NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals: Acquisition Regulations; Solicitation Provisions and Contract Clauses, Placement of Orders Clause, etc., 25481-25482 2012-10303 Civilian Board of Contract Appeals Rules of Procedure, 25481 2012-10278 Grain Inspection Grain Inspection, Packers and Stockyards Administration PROPOSED RULES United States Standards for Wheat: Corrections, 25375 C1--2012--9182 Health and Human Health and Human Services Department See Centers for Disease Control and Prevention See Children and Families Administration See Food and Drug Administration See National Institutes of Health NOTICES Meetings:

Presidential Advisory Council on HIV/AIDS, 25482 2012-10279 Homeland Homeland Security Department See Coast Guard See Federal Emergency Management Agency Housing Housing and Urban Development Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Personal Financial and Credit Statement, 25499 2012-10311 Public Housing Agency Burden Reduction Survey, 25498 2012-10310 Internal Revenue Internal Revenue Service PROPOSED RULES Regulations Pertaining to the Disclosure of Return Information to Carry Out Eligibility Requirements for Health Insurance Affordability Programs, 25378-25381 2012-10440 NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 25537-25538 2012-10277 Credit for Renewable Electricity Production, Refined Coal Production, Indian Coal Production, etc.; Correction, 25538 2012-10275 Quarterly Publication of Individuals Who Have Chosen to Expatriate, 25538-25545 2012-10274 International Trade Adm International Trade Administration NOTICES Alignment of Final Countervailing Duty Determinations with Final Antidumping Duty Determinations: Crystalline Silicon Photovoltaic Cells from People's Republic of China, 25400 2012-10352 Antidumping and Countervailing Duty Administrative Reviews;

Results, Extensions, Amendments, etc., 25401-25404 2012-10238 Antidumping Duty Administrative Reviews; Results, Extensions, Amendments, etc.: Certain Hot-Rolled Carbon Steel Flat Products from India, 25404-25405 2012-10351 Corrosion-Resistant Carbon Steel Flat Products from Republic of Korea, 25405 2012-10350 Modification to Content Published by Import Administration in Federal Register, 25405-25406 2012-10354 Justice Department Justice Department NOTICES Lodgings of Consent Decrees:

Proposed Natural Resource Damages, 25499-25500 2012-10289 Labor Department Labor Department See Occupational Safety and Health Administration Merit Merit Systems Protection Board NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 25501-25502 2012-10349 NASA National Aeronautics and Space Administration NOTICES Meetings: Aerospace Safety Advisory Panel, 25502 2012-10272 National Foundation National Foundation on the Arts and the Humanities NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 25502-25503 2012-10196 National Highway National Highway Traffic Safety Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Human Subjects Experiments Related to Keyless Ignition Controls, Gear Selection Controls, and Audible Warnings, 25533-25534 2012-10300 Petitions for Exemptions: Federal Motor Vehicle Motor Theft Prevention Standard; General Motors Corp., 25534-25535 2012-10301 National Institute National Institute of Standards and Technology NOTICES Membership Fee Updates:

Consortium on Concrete Rheology--Enabling Metrology, 25406-25407 2012-10265 National Institute National Institutes of Health NOTICES Meetings: Center for Scientific Review, 25486-25487 2012-10333 2012-10341 National Institute of Allergy and Infectious Diseases, 25487 2012-10335 National Institute of Biomedical Imaging and Bioengineering, 25487-25488 2012-10329 2012-10338 National Institute of Diabetes and Digestive and Kidney Diseases, 25488 2012-10331 National Labor National Labor Relations Board RULES Representation—Case Procedures, 25548-25575 2012-10263 National Oceanic National Oceanic and Atmospheric Administration PROPOSED RULES Fisheries of the Northeastern United States:

Recreational Management Measures for Summer Flounder, Scup, and Black Sea Bass Fisheries; Fishing Year 2012, 25394-25399 2012-10358 NOTICES Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic: Coral and Coral Reefs off Southern Atlantic States; Exempted Fishing Permit, 25407-25408 2012-10372 Meetings: International Whaling Commission, 25408 2012-10374 Takes of Marine Mammals Incidental to Specified Activities: Pile Replacement Project, 25408-25435 2012-10370 Taking and Importing Marine Mammals:

Naval Explosive Ordnance Disposal School Training Operations at Eglin Air Force Base, FL, 25435-25437 2012-10376 National Science National Science Foundation NOTICES Meetings: Proposal Review Panel for Materials Research, 25503 2012-10273 Nuclear Regulatory Nuclear Regulatory Commission PROPOSED RULES Emergency Planning Zones, 25375-25378 2012-10314 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 25503-25504 2012-10276 Draft Emergency Preparedness Frequently Asked Questions, 25504-25505 2012-10313 Occupational Safety Health Adm Occupational Safety and Health Administration NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals: Standard on Hazardous Waste Operations and Emergency Response, 25500-25501 2012-10348 Pension Benefit Pension Benefit Guaranty Corporation NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Locating and Paying Participants, 25505-25506 2012-10306 Personnel Personnel Management Office NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Interview Survey Form, 25506 2012-10295 Excepted Service, 25506-25509 2012-10334 Public Debt Public Debt Bureau See Fiscal Service Rural Business Rural Business-Cooperative Service NOTICES Funding Availabilities:

Small, Socially-Disadvantaged Producer Grant Application Deadlines in Fiscal Year 2012, 25400 C1--2012--9997 Securities Securities and Exchange Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 25509 2012-10291 Applications: GPS Funds I, et al., 25510-25514 2012-10290 Northern Trust Investments, Inc., et al., 25514-25521 2012-10299 Meetings; Sunshine Act, 25521-25522 2012-10512 Self-Regulatory Organizations; Proposed Rule Changes:

Fixed Income Clearing Corp., 25522-25523 2012-10308 ICE Clear Credit LLC, 25522 2012-10307 Transportation Department Transportation Department See Federal Aviation Administration See Federal Motor Carrier Safety Administration See Federal Transit Administration See National Highway Traffic Safety Administration NOTICES Meetings: Semi-Annual Workforce Management Conference, 25523-25524 2012-10298 Treasury Treasury Department See Alcohol and Tobacco Tax and Trade Bureau See Fiscal Service See Foreign Assets Control Office See Internal Revenue Service Veteran Affairs Veterans Affairs Department NOTICES Meetings:

Veterans' Advisory Committee on Rehabilitation, 25545 2012-10243 Separate Parts In This Issue Part II National Labor Relations Board, 25548-25575 2012-10263 Reader Aids Consult the Reader Aids section at the end of this page for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws. To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions. 77 83 Monday, April 30, 2012 Rules and Regulations FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 380 RIN 3064-AD89 Mutual Insurance Holding Company Treated as Insurance Company AGENCY:

Federal Deposit Insurance Corporation (FDIC). ACTION: Final rule. SUMMARY: The FDIC is issuing a final rule (“Final Rule”) that treats a mutual insurance holding company as an insurance company for purposes of Section 203(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Final Rule clarifies that the liquidation and rehabilitation of a covered financial company that is a mutual insurance holding company will be conducted in the same manner as an insurance company.

The Final Rule harmonizes the treatment of mutual insurance holding companies under Section 203(e) of the Dodd-Frank Act with the treatment of such companies under state insurance company insolvency laws. DATES: The effective date of the Final Rule is May 30, 2012. FOR FURTHER INFORMATION CONTACT: R. Penfield Starke, Assistant General Counsel, Legal Division,

(703)562-2422; Mark A. Thompson, Counsel

(703)562-2529; Elizabeth Falloon, Counsel

(703)562-6148; Timothy F. Danello, Counsel

(703)562-6338, Legal Division; or Hashim Hamandi, Section Chief Policy Section, Office of Complex Financial Institutions,

(202)898-6884. SUPPLEMENTARY INFORMATION: I. Background Title II of the Dodd-Frank Act provides for the appointment of the FDIC as receiver of a nonviable financial company that poses significant risk to the financial stability of the United States (a “covered financial company”), outlines the process for the orderly liquidation of a covered financial company following the FDIC's appointment as receiver and provides for additional implementation of the orderly liquidation authority by rulemaking. The Final Rule is promulgated pursuant to Section 209 1 of the Dodd-Frank Act, which authorizes the FDIC, in consultation with the Financial Stability Oversight Council, to prescribe such rules and regulations as the FDIC considers necessary or appropriate to implement Title II. Section 209 of the Dodd-Frank Act further provides that, to the extent possible, the FDIC should seek to harmonize rules and regulations promulgated under Section 209 with the insolvency laws that would otherwise apply to a covered financial company. 1 12 U.S.C. 5389. On December 13, 2011, the FDIC published a Notice of Proposed Rulemaking (“NPR”) in the **Federal Register** 2 setting forth the conditions under which a mutual insurance holding company would be resolved as an insurance company under Section 203(e) of the Dodd-Frank Act. The comment period for the NPR closed on February 13, 2012, and the FDIC received four comment letters. Additionally, the FDIC held a conference call with representatives of the National Association of Insurance Commissioners on January 17, 2012 and received their comments on the NPR. 2 76 FR 77442 (December 13, 2011). In light of the comments received and pursuant to the authority granted to it by Section 209 of the Dodd-Frank Act, the FDIC is issuing the Final Rule. History of Mutual Insurance Holding Company The mutual insurance industry traces its roots back to England, where, in 1696, the first mutual fire insurer was established. The first American mutual insurance company, the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, was founded in 1752. 3 3 The Philadelphia Contributionship, History, *http://www.contributionship.com/history/index.html.* Mutual insurance companies have no equity interests. Membership rights are held by their policyholders. Policyholders are entitled to vote for members of the company's board of directors and may receive special dividends in the form of capital distributions or reductions of policy premiums. The mutual insurance holding company structure was first created in Iowa in 1995. 4 A mutual insurance holding company is created through the restructuring of a mutual insurance company into two entities, a mutual insurance holding company and a stock insurance company that is converted from the original mutual insurance company. In a variation of this restructuring, a third entity may be formed, an intermediate insurance stock holding company. In this three-entity structure, in most instances, the mutual insurance holding company initially owns 100% of the intermediate insurance stock holding company, and the intermediate insurance stock holding company initially owns 100% of the stock of the converted mutual insurance company. The purpose of the restructuring is to preserve the benefits of a mutual form of organization while allowing the converted mutual insurance company access to capital markets either through sale of its stock or, in a three-entity structure, the sale of the stock of the intermediate insurance stock holding company. 4 Iowa Code Ann.

(West)§ 521A.14. Consistent with the mutual insurance company, a mutual insurance holding company also has no equity interests. Membership rights are held by the policyholders of the converted mutual insurance company who have rights similar to those they had as policyholders of the mutual insurance company before conversion. Policyholders of the converted mutual insurance company are entitled to vote for members of the mutual insurance holding company's board of directors, and may receive special dividends in the form of capital distributions or reductions of policy premiums. A majority of the states have adopted statutes providing for the formation of mutual insurance holding companies. Those statutes generally

(a)provide for the regulation of a mutual insurance holding company at the holding company level by the insurance commissioner of the domiciliary state;

(b)require that the mutual insurance holding company maintain voting control over the converted mutual insurance company; and

(c)specifically subject a mutual insurance holding company to liquidation or rehabilitation under the state regime if the converted mutual insurance company is placed in liquidation or rehabilitation. In addition, either by statute, rule or regulation, in the liquidation of a converted mutual insurance company, the assets of the mutual insurance holding company generally are included in the estate of the converted mutual insurance company being liquidated. 5 5 *E.g.,* Iowa Code Ann.

(West)521A.14(4), 215 Ill. Comp. Stat. Ann.

(West)5/59.2(1)(f)(v), and Neb. Rev. Stat. § 44-6125(6)(g). Treatment of an Insurance Company Under Section 203(e) of the Dodd-Frank Act In providing for the orderly liquidation of a covered financial company under Title II of the Dodd-Frank Act, Congress recognized that insurance companies historically had been liquidated and rehabilitated pursuant to a state insolvency framework. As a result, Congress provided that “if an insurance company is a covered financial company or a subsidiary or affiliate of a covered financial company, the liquidation or rehabilitation of such insurance company, and any subsidiary or affiliate of such company that is [an insurance company], shall be conducted as provided under applicable State law.” 6 6 12 U.S.C. 5383(e)(1). The term “insurance company” is defined in Section 201(a)(13) of the Dodd-Frank Act to mean “any entity that is—(A) engaged in the business of insurance;

(B)subject to regulation by a State insurance regulator; and

(C)covered by a State law that is designed to specifically deal with the rehabilitation, liquidation, or insolvency of an insurance company.” 7 The identical definition is found in Section 380.1 of Title 12 of the Code of Federal Regulations. Concerns have been raised with respect to the application of this definition to mutual insurance holding companies because, under applicable state laws, a mutual insurance holding company generally is prohibited from selling policies of insurance. Thus, a mutual insurance holding company arguably does not fit squarely within a literal reading of the statutory definition of insurance company under the Dodd-Frank Act. 7 12 U.S.C. 5381(a)(13). The treatment of a mutual insurance holding company, under certain circumstances, as an insurance company for purposes of Section 203(e) is consistent with the legislative intent of the Dodd-Frank Act. 8 This treatment is appropriate given the legal structure that forms a mutual insurance holding company from a converted mutual insurance company and the continuing interest of the policyholders of the converted mutual insurance company in both the converted mutual insurance company, as its customers, and the mutual insurance holding company, as holders of its membership interests. From a regulatory policy perspective, the extensive regulation of the mutual insurance holding company by the insurance commissioner of its domiciliary state and the inclusion of the mutual insurance holding company and its assets in the liquidation of the converted mutual insurance company also support this treatment. 8 There is support in the legislative history of the Dodd-Frank Act for interpreting the term “insurance company” under Section 201(a)(13) to include a mutual insurance holding company. *See* statement of Rep. Barney Frank, 111 Cong. Rec. H5216 (daily ed. June 30, 2010) and statement of Sen. Christopher Dodd, 111 Cong. Rec. S5903 (daily ed. July 15, 2010). II. Notice of Proposed Rulemaking: Summary of Comments On December 13, 2011, the FDIC invited public comment on a Notice of Proposed Rulemaking: Mutual Insurance Holding Company Treated as Insurance Company (the “Proposed Rule”). 9 The comment period ended on February 13, 2012. The FDIC received four comment letters from several industry and trade organizations representing the insurance industry and one individual. In addition, the FDIC met with representatives of the National Association of Insurance Commissioners to discuss the Proposed Rule. 9 76 FR 77442 (December 13, 2011). The Proposed Rule clarified that a mutual insurance holding company would be treated in the same manner applicable to insurance companies under Section 203(e) of the Dodd-Frank Act, which provides that “if an insurance company is a covered financial company or a subsidiary or affiliate of a covered financial company, the liquidation or rehabilitation of such insurance company, and any subsidiary or affiliate of such company that is [an insurance company], shall be conducted as provided under applicable State law.” 10 This proposed treatment was limited to mutual insurance holding companies whose largest United States subsidiary (as measured by total assets as of the end of the previous calendar quarter) is an insurance company or an intermediate insurance stock holding company, and whose investments are limited to the securities of an intermediate insurance stock holding company, the securities of the converted mutual insurance company and other assets and securities of the type authorized for holding and investment by an insurance company domiciled in its state of incorporation. The Proposed Rule also provided that this treatment apply only to mutual insurance holding companies that are regulated by and are subject to the insurance company insolvency laws of their states of domicile, and that are not subject to bankruptcy proceedings. 10 12 U.S.C. 5383(e)(1). The public comments supported the Proposed Rule's objective of treating a mutual insurance holding company as an insurance company for purposes of Section 203(e) of the Dodd-Frank Act. 11 The comments focused on two elements of the Proposed Rule: The definitions of mutual insurance holding company and intermediate insurance stock holding company and the conditions imposed in order for a mutual insurance holding company to qualify as an insurance company under Section 203(e) of the Dodd-Frank Act. 11 12 U.S.C. 5383(e). Most of the commenters suggested that the definition of mutual insurance holding company be modified with respect to the requirement that the mutual insurance holding company “hold either

(i)At least 51% of the issued and outstanding voting stock of the intermediate insurance stock holding company, if any, or

(ii)if there is no intermediate insurance stock holding company, at least 51% of the issued and outstanding voting stock of the converted mutual insurance company.” Several commenters noted that many state laws only require the mutual insurance holding company to own a majority of the voting stock of the intermediate insurance stock holding company, if any, or, if there is no intermediate insurance stock holding company, a majority of the voting stock of the converted mutual insurance company. One commenter recommended substituting “a majority of the voting stock” for “51% of the issued and outstanding voting stock” where the phrase appears within the definition of mutual insurance holding company. Another commenter recommended substituting “a majority of the voting power in the election of directors” for “51% of the issued and outstanding voting stock” where the phrase appears within the definition of mutual insurance holding company. Several commenters suggested that the definition of intermediate insurance stock holding company be modified with respect to the requirement that the intermediate insurance stock holding company “hold all of the issued and outstanding voting stock of the converted mutual insurance company.” One commenter suggested that the word “all” be changed to “a majority” to be more consistent with the requirements of state law. Another commenter suggested retaining the concept of “all of the issued and outstanding voting stock” but allow the ownership to be “directly or indirectly.” One commenter suggested that the definition of intermediate insurance stock holding company be modified to clarify that an intermediate insurance stock holding company can be formed either at the time of or at any time after the conversion of the mutual insurance company into a stock insurance company. Another commenter suggested deleting the phrase “For purposes of this subpart” from the definition of intermediate insurance stock holding company to be consistent with other definitions in § 380.1. Several commenters suggested that the definition of mutual insurance company be modified. One commenter suggested that the word “association” should be changed to “corporation” because a mutual insurance company is a non-stock corporation and not an association. The same commenter suggested changing the words “in which equity and voting rights are vested in the policyholders” to “in which rights in surplus and membership interests are vested in the policyholders” because a mutual insurance company has “surplus” not “equity” and the interests of the members may be broader than just voting rights. Another commenter suggested changing the words “in which equity and voting rights are vested in the policyholders” to “in which equity, voting rights and control are vested in the policyholders” to emphasize that “policyholders actually exercise effective control, rather than have that power merely conferred by charter or otherwise.” One commenter suggested deleting the word “domestic” in the phrase “a domestic insurance company organized under the laws of a State” because it was redundant. With respect to the conditions that must exist for a mutual insurance holding company to be treated as an insurance company for the purpose of Section 203(e) of the Dodd-Frank Act as set forth in § 380.11, several commenters suggested modifying one or more of the conditions. One commenter suggested removing the condition that the company is not subject to bankruptcy proceedings under Title 11 of the United States Code, i.e., the U.S. Bankruptcy Code. The commenter noted that the issue of whether a mutual insurance holding company is excluded from coverage under the U.S. Bankruptcy Code is unsettled. Thus, in the commenter's view, imposing the condition in § 380.11 introduced uncertainty about whether a mutual insurance holding company would be treated as an insurance company for the purpose of Section 203(e) of the Dodd-Frank Act. Several commenters suggested modifying the requirement in § 380.11 that the mutual insurance holding company limit its assets and investments to the securities of an intermediate insurance stock holding company, the securities of the converted mutual insurance company “and other assets and securities of the type authorized for holding and investment by an insurance company domiciled in its state of incorporation.” The commenters noted that the requirement is not mandated by state law although some states do limit a mutual insurance holding company's investment in non-insurance assets. One of those commenters suggested that the mutual insurance holding company be allowed to make any investment “permitted under applicable State law.” The FDIC has carefully considered the comments and made appropriate revisions to the Final Rule as described below. III. Description of Final Rule A. Overview The Final Rule modifies Part 380 of Title 12 of the Code of Federal Regulations, and provides generally that a mutual insurance holding company that meets the requirements of the Final Rule will be treated as an insurance company for the purpose of Section 203(e) of the Dodd-Frank Act. B. Section-by-Section Analysis of the Final Rule The Final Rule adds three definitions to Section 380.1 of Title 12 of the Code of Federal Regulations: Intermediate insurance stock holding company; mutual insurance company; and mutual insurance holding company. The definition of mutual insurance holding company has been modified in the Final Rule to provide that the company could own a “majority” of the stock of the intermediate insurance stock holding company and the converted mutual insurance company instead of the specific threshold of “at least 51%” included in the Proposed Rule. The definition of the intermediate insurance stock holding company was also modified in the Final Rule to delete an unnecessary introductory phrase “For purposes of this subpart” and to indicate that such company could be organized either at the time of or after the organization of the mutual insurance holding company and could hold “a majority” rather than “all” of the stock of the converted mutual insurance company. In addition, the definition of the mutual insurance company was amended to reflect that it is organized as a non-stock mutual corporation, not an association, and that its policyholders hold the surplus, not “equity” in this company. The Final Rule does not include any additional changes suggested by the public comments to permit the mutual insurance holding company to hold the voting stock of the intermediate insurance stock holding company directly or indirectly or to permit the intermediate insurance stock holding company to hold the voting stock of the converted mutual insurance company directly or indirectly. These changes appear inconsistent with the existing mutual insurance holding company structure. Likewise, the Final Rule does not remove the term “voting rights” and substitute the term “membership interests” since voting rights remain essential to defining the control of the mutual insurance company and the intermediate insurance stock holding company. The Final Rule adds Section 380.11 to provide that a mutual insurance holding company shall be treated as an insurance company for the purpose of Section 203(e) of the Dodd-Frank Act, 12 U.S.C. 5383(e); provided that:

(a)It is subject to the insurance laws of the state of its domicile, including specifically and without limitation, a statutory regime for the rehabilitation or liquidation of insurance companies that are in default or in danger of default;

(b)it is not subject to bankruptcy proceedings under Title 11 of the United States Code;

(c)its largest United States subsidiary (as measured by total assets as of the end of the previous calendar quarter) is an insurance company or an intermediate insurance stock holding company; and

(d)its investments are limited to the securities of an intermediate insurance stock holding company, the securities of the converted mutual insurance company and other assets and securities of the type authorized for holding and investment by an insurance company domiciled in its state of incorporation. The first proviso requires that the mutual insurance holding company be subject to the insurance laws of the state of its domicile, including specifically and without limitation, a statutory regime for the rehabilitation or liquidation of insurance companies that are in default or in danger of default and is included in the Final Rule to be consistent with two of the three prongs of the definition of “insurance company” set forth in Section 201(a)(13) of the Dodd-Frank Act. The reference to companies that are “in default or in danger of default” ensures that the state resolution process will be applicable in a time and manner comparable to the Title II orderly liquidation process, which applies to financial companies that are in default or in danger of default under Section 203(b)(1) of the Dodd-Frank Act. The second proviso requires that the mutual insurance holding company is not subject to bankruptcy proceedings under Title 11 of the United States Code and is included to make clear that the mutual insurance holding company must not only be subject to the applicable state insurance law but must also be resolved under the applicable state insurance law. Thus, the Final Rule does not delete this requirement as some public comments suggested, but rather retains it to ensure that there is no ambiguity or conflict with respect to the determination of which insolvency regime is applicable to a mutual insurance holding company. To the extent that any such ambiguity or conflict exists, it is the intent of the Final Rule that the ambiguity be resolved in favor of allowing resolution under Title II of the Dodd-Frank Act even if the mutual insurance holding company may be an eligible debtor under Title 11 of the United States Code. The third proviso, which requires that the mutual insurance holding company's largest United States subsidiary (as measured by total assets as of the end of the previous calendar quarter) is an insurance company or an intermediate insurance stock holding company, is included to ensure that, if a mutual insurance holding company covered by the Final Rule is placed in orderly liquidation under Title II of the Dodd-Frank Act, the Director of the Federal Insurance Office would participate in making the recommendation to take such action in accordance with the provisions of Section 203(a)(1)(C) of the Dodd-Frank Act. In addition, this requirement is intended to make clear that an insurance company subsidiary of the mutual insurance holding company must be its most significant subsidiary by asset size. The final proviso requires the mutual insurance holding company to limit its investments to the securities of the intermediate insurance stock holding company, the securities of the converted mutual insurance company and other assets and securities of the type authorized for holding and investment by an insurance company domiciled in its state of incorporation. The FDIC rejected a public comment to alter these investment requirements because the FDIC believes that this proviso ensures that the mutual insurance holding company is operating purely as a holding company and is not itself actively engaged in operating non-insurance businesses. 12 12 The investments of the intermediate insurance stock holding company, however, are not restricted in this manner because, under the Final Rule, the intermediate insurance stock holding company is not treated as an insurance company for the purpose of Section 203(e) of the Dodd-Frank Act. IV. Regulatory Analysis and Procedure A. Paperwork Reduction Act In accordance with the Paperwork Reduction Act (44 U.S.C. 3501 *et seq.* ) (“PRA”), the FDIC may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid Office of Management and Budget

(OMB)control number. The Final Rule would not involve any new collections of information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 *et seq.* ). Consequently, no information will be submitted to the Office of Management and Budget for review. B. Regulatory Flexibility Act The Regulatory Flexibility Act 5 U.S.C. 601 *et seq.*

(RFA)requires each federal agency to prepare a final regulatory flexibility analysis in connection with the promulgation of a final rule, or certify that the final rule will not have a significant economic impact on a substantial number of small entities. 13 Pursuant to Section 605(b) of the Regulatory Flexibility Act, the FDIC certifies that the Final Rule will not have a significant economic impact on a substantial number of small entities. 13 See 5 U.S.C. 603, 604 and 605. 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 $7 million or less in assets to $175 million or less in assets. 14 The Final Rule clarifies that a mutual insurance holding company that is a covered financial company will be treated as an insurance company for the purpose of Section 203(e) of the Dodd-Frank Act. The Final Rule provides internal guidance to FDIC personnel in such an event and will address an uncertainty in the financial system as to how such a company would be treated for purposes of Section 203(e) of the Dodd-Frank Act. For a mutual insurance holding company to be determined to be a covered financial company under Section 203(b) of the Dodd-Frank Act, its failure must have serious adverse effects on the financial stability of the United States. The Final Rule would apply to a mutual insurance holding company regardless of such company's size. Although the asset size of a company may not be the determinative factor of whether such company may pose a systemic risk to the financial stability of the United States, it is an important consideration. It is unlikely that the failure of a mutual insurance holding company that is at or below the $175 million asset threshold, or the nature, scope, size, scale, concentration, interconnectedness, or mix of its activities, would pose a threat to the financial stability of the United States. As such, the Final Rule will not have a significant economic impact on small entities. 14 13 CFR 121.201. C. Small Business Regulatory Enforcement Fairness Act The Office of Management and Budget has determined that the Final Rule is not a “major rule” within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA”) (5 U.S.C. 801 *et seq.).* As required by SBREFA, the FDIC will file the appropriate reports with Congress and the General Accounting Office so that the Final Rule may be reviewed. D. The Treasury and General Government Appropriations Act, 1999—Assessment of Federal Regulations and Policies on Families The FDIC has determined that the Final Rule will not affect family well-being within the meaning of Section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 2681). E. Plain Language Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113 Stat. 1338, 1471), 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 Final Rule in a simple and straightforward manner. List of Subjects in 12 CFR Part 380 Holding companies, Insurance companies, Mutual insurance holding companies. For the reasons stated above, the Board of Directors of the Federal Deposit Insurance Corporation amends part 380 of title 12 of the Code of Federal Regulations as follows: PART 380—ORDERLY LIQUIDATION AUTHORITY 1. The authority citation for part 380 is revised to read as follows: Authority: 12 U.S.C. 5383(e); 12 U.S.C. 5389; 12 U.S.C. 5390(s)(3); 12 U.S.C. 5390(b)(1)(C); 12 U.S.C. 5390(a)(7)(D). 2. The heading for subpart A is revised to read as follows: Subpart A—General and Miscellaneous Provisions 3. Amend § 380.1 by adding definitions of *Intermediate insurance stock holding company, Mutual insurance company,* and * Mutual insurance holding company* in alphabetical order to read as follows: § 380.1 Definitions. *Intermediate insurance stock holding company.* The term “ *intermediate insurance stock holding company* ” means a corporation organized either at the time of, or at any time after, the organization of the mutual insurance holding company that:

(1)Is a subsidiary of a mutual insurance holding company;

(2)Holds a majority of the issued and outstanding voting stock of the converted mutual insurance company created at the time of formation of the mutual insurance holding company; and

(3)Holds, as its largest United States subsidiary (as measured by total assets as of the end of the previous calendar quarter), an insurance company. *Mutual insurance company.* The term “ *mutual insurance company”* means an insurance company organized under the laws of a State that provides for the formation of such an entity as a non-stock mutual corporation in which the surplus and voting rights are vested in the policyholders. *Mutual insurance holding company.* The term “ *mutual insurance holding company* ” means a corporation that:

(1)Is lawfully organized under state law authorizing its formation in connection with the reorganization of a mutual insurance company that converts the mutual insurance company to a stock insurance company, and—

(2)Holds either:

(i)A majority of the issued and outstanding voting stock of the intermediate insurance stock holding company, if any, or

(ii)If there is no intermediate insurance stock holding company, a majority of the issued and outstanding voting stock of the converted mutual insurance company. 4. Add § 380.11 to read as follows: § 380.11 Treatment of mutual insurance holding companies. A mutual insurance holding company shall be treated as an insurance company for the purpose of section 203(e) of the Dodd-Frank Act, 12 U.S.C. 5383(e); provided that—

(a)The company is subject to the insurance laws of the state of its domicile, including, specifically and without limitation, a statutory regime for the rehabilitation or liquidation of insurance companies that are in default or in danger of default;

(b)The company is not subject to bankruptcy proceedings under Title 11 of the United States Code;

(c)The largest United States subsidiary of the company (as measured by total assets as of the end of the previous calendar quarter) is an insurance company or an intermediate insurance stock holding company; and

(d)The assets and investments of the company are limited to the securities of an intermediate insurance stock holding company, the securities of the converted mutual insurance company and other assets and securities of the type authorized for holding and investment by an insurance company domiciled in its state of incorporation. Dated at Washington, DC, this 23rd day of April 2012. By order of the Board of Directors. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. 2012-10146 Filed 4-27-12; 8:45 am]

Connectionstraces to 11

Traces to 11 documents