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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules
use by third parties will not affect the bank occupied premises calculation.
The OCC recognizes that often national banks and Federal savings associations are asked or required by outside parties, such as a local government, to make commitments to allow third party or public use in order to acquire or hold real estate. When such commitments are requested or required, the national bank or Federal savings association should inform the appropriate OCC supervisory office of such requests and share such commitments and other relevant information with the appropriate OCC
supervisory office.

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Impermissible Premises 7.1024d Proposed 7.1024d provides that a national bank or Federal savings association may not acquire or hold impermissible premises. Proposed 7.1024a4 defines impermissible premises as real estate that is not bank occupied premises or that otherwise does not conform with the requirements of this section. If the real estate acquisition or holding would not conform with the requirements of 7.1024, then it would be impermissible.
Question Eight: Should the OCC
include specific examples in 7.1024d of impermissible premises? If so, what examples should be included? Should large retail operations, such as grocery stores, be specifically impermissible?
Should commercial lodging rental apartments, branded hotels be specifically impermissible?
Question Nine: Courts have explained that, under 12 U.S.C. 29, national banks investing in property should be doing so in good faith, solely with a view of obtaining an eligible location and not for the purpose of speculating or investing in real estate as a landlord.20 Should the final rule retain the good faith requirement to ensure that national banks and Federal savings associations are only permitted to acquire additional real estate with the intention of using it as premises?
Should the final rule make further clarification that national banks and Federal savings associations would not be permitted to obtain real estate with the intention of using part of the real estate for a non-premises purpose on an indefinite basis?
20 Brown v. Schleier, 118 F. 981, 984 8th Cir.
1902, affd 194 U.S. 18 1904.

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Sharing National Bank or Federal Savings Association Space and Employees in Jointly Held Bank Occupied Premises 7.1024e Proposed 7.1024e substantially imports current 12 CFR 7.3001
concerning the sharing of national bank or Federal savings association space and employees in jointly held bank occupied office premises covering situations where a bank and another business jointly hold and share the same space as opposed to a bank leasing a separate space within a building to a third party. Proposed 7.1024e provides guidance on how to share offices and employees in a manner that protects customers and is consistent with safe and sound banking practices.
The proposed rule would not alter or affect existing precedent applicable to 12 CFR 7.3001. Proposed 7.1024e4, like current 12 CFR 7.3001d, provides that in conducting sharing arrangements, national banks and Federal savings associations would be required to ensure that each arrangement complies with all applicable laws or regulations. Proposed 7.1024e4, like current 12 CFR
7.3001d, lists three requirements, which are illustrative and not exhaustive.
Permissible Means of Holding Real Estate and Fixed Assets 7.1024f Proposed 7.1024f provides technical information related to permissible means of holding real estate and fixed assets. These provisions are substantially similar to the provisions in current 12 CFR 7.1024a3, b, and c.
Transition 7.1024g Proposed 7.1024g provides that as of XX, 20XX, a national bank or Federal savings association that holds an investment in real estate, fixed assets, banking premises, or other real property that complies with the legal requirements in effect prior to XX, 20XX, but would violate any provision of proposed 7.1024, would be permitted to continue to hold the investment in accordance with the prior legal requirements. However, a national bank or Federal savings association holding such an investment cannot modify, expand, or improve the investment, except for routine maintenance, without the prior approval of the appropriate OCC supervisory office. Proposed 7.1024g grandfathers national banks or Federal savings associations that currently have permissible real estate investments that would no longer be permissible under the proposed revisions. The proposed
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rule would supersede outstanding OCC
precedent and former OTS precedent in this area to the extent it is inconsistent with the proposed rule.
While national banks and Federal savings associations would be able to continue to rely on this precedent, including interpretive letters, with respect to current real estate investments, national banks and Federal savings associations would not be able to rely on this precedent with respect to future real estate investments. The proposed rule would not affect outstanding precedent regarding 12 CFR
7.1000 or 12 CFR 7.3001.
Question Ten: The OCC requests comment on the appropriate parameters of a national bank or Federal savings associations ability to hold real estate subject to the transition rule in 7.1024g. Specifically, should a renewal, modification, or termination of a lease constitute a modification subject to the transition rule? Should other activities besides routine maintenance be permitted under the transition rule?
IV. Administrative Law Matters Paperwork Reduction Act. In accordance with the requirements of the Paperwork Reduction Act of 1995
PRA, 44 U.S.C. 3501 et seq., the OCC
may not conduct or sponsor, and respondents are not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget OMB control number. The OCC has reviewed the notice of proposed rulemaking and determined that it would not introduce any new or revise any existing collection of information pursuant to the PRA. Therefore, no submission will be made to OMB for review.
Regulatory Flexibility Act. The Regulatory Flexibility Act RFA, 5
U.S.C. 601 et seq., requires an agency, in connection with a proposed rule, to prepare an Initial Regulatory Flexibility Analysis describing the impact of the proposed rule on small entities defined by the Small Business Administration SBA for purposes of the RFA to include commercial banks and savings institutions with total assets of $600
million or less and trust companies with total assets of $41.5 million of less or to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities. The OCC currently supervises approximately 745 small entities. The OCC expects that all of these small entities would be impacted by the proposed rule. Because the proposed rule applies to all OCC-supervised depository institutions, the proposed
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