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Federal Register / Vol. 86, No. 227 / Tuesday, November 30, 2021 / Rules and Regulations interest.11 The amendments in this rule are technical and apply the method previously set forth in the Board Final Threshold Rules and the Regulation M
Adjustment Calculation Rule. For these reasons, the Board and the Bureau have determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendments are adopted in final form.
Regulatory Flexibility Act The Regulatory Flexibility Act RFA
does not apply to a rulemaking where a general notice of proposed rulemaking is not required.12 As noted previously, the agencies have determined that it is unnecessary to publish a general notice of proposed rulemaking for this joint final rule. Accordingly, the RFAs requirements relating to an initial and final regulatory flexibility analysis do not apply.
Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995,13 the agencies reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.
Bureau Congressional Review Act Statement Pursuant to the Congressional Review Act 5 U.S.C. 801 et seq., the Bureau will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to the rule taking effect. The Office of Information and Regulatory Affairs OIRA has designated this rule as not a major rule as defined by 5 U.S.C.
8042.
Bureau Signing Authority The Associate Director of Research, Markets, and Regulations, Janis K.
Pappalardo, having reviewed and approved this document, is delegating the authority to electronically sign this document to Laura Galban, Bureau Federal Register Liaison, for purposes of publication in the Federal Register.
List of Subjects
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12 CFR Part 213
Advertising, Consumer leasing, Consumer protection, Federal Reserve System, Reporting and recordkeeping requirements.
11 5

U.S.C. 553bB.
U.S.C. 603a and 604a.
13 44 U.S.C. 3506; 5 CFR part 1320.
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12 CFR Part 1013
Administrative practice and procedure, Advertising, Consumer protection, Reporting and recordkeeping requirements, Truth in lending.
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
Authority and Issuance For the reasons set forth in the preamble, the Board amends Regulation M, 12 CFR part 213, as set forth below:
PART 213CONSUMER LEASING
REGULATION M
1. The authority citation for part 213
continues to read as follows:

Authority: 15 U.S.C. 1604 and 1667f; Pub.
L. 111203 section 1100E, 124 Stat. 1376.

2. In Supplement I to Part 213, under Section 213.2Definitions, revise 2e Consumer Lease, as follows:

Supplement I to Part 213Official Staff Interpretations

Section 213.2Definitions

2e Consumer Lease. 1. Primary purposes. A lessor must determine in each case if the leased property will be used primarily for personal, family, or household purposes. If a question exists as to the primary purpose for a lease, the fact that a lessor gives disclosures is not controlling on the question of whether the transaction is covered. The primary purpose of a lease is determined before or at consummation and a lessor need not provide Regulation M disclosures where there is a subsequent change in the primary use.
2. Period of time. To be a consumer lease, the initial term of the lease must be more than four months. Thus, a lease of personal property for four months, three months or on a month-to-month or week-to-week basis even though the lease actually extends beyond four months is not a consumer lease and is not subject to the disclosure requirements of the regulation.
However, a lease that imposes a penalty for not continuing the lease beyond four months is considered to have a term of more than four months. To illustrate:
i. A three-month lease extended on a month-to-month basis and terminated after one year is not subject to the regulation.
ii. A month-to-month lease with a penalty, such as the forfeiture of a security deposit for terminating before one year, is subject to the regulation.
3. Total contractual obligation. The total contractual obligation is not
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necessarily the same as the total of payments disclosed under 213.4e.
The total contractual obligation includes nonrefundable amounts a lessee is contractually obligated to pay to the lessor, but excludes items such as:
i. Residual value amounts or purchase-option prices;
ii. Amounts collected by the lessor but paid to a third party, such as taxes, licenses, and registration fees.
4. Credit sale. The regulation does not cover a lease that meets the definition of a credit sale in Regulation Z, 12 CFR
226.2a16, which is defined, in part, as a bailment or lease unless terminable without penalty at any time by the consumer under which the consumer:
i. Agrees to pay as compensation for use a sum substantially equivalent to, or in excess of, the total value of the property and services involved; and ii. Will become or has the option to become, for no additional consideration or for nominal consideration, the owner of the property upon compliance with the agreement.
5. Agricultural purpose. Agricultural purpose means a purpose related to the production, harvest, exhibition, marketing, transportation, processing, or manufacture of agricultural products by a natural person who cultivates, plants, propagates, or nurtures those agricultural products, including but not limited to the acquisition of personal property and services used primarily in farming. Agricultural products include horticultural, viticultural, and dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any products thereof, including processed and manufactured products, and any and all products raised or produced on farms and any processed or manufactured products thereof.
6. Organization or other entity. A
consumer lease does not include a lease made to an organization such as a corporation or a government agency or instrumentality. Such a lease is not covered by the regulation even if the leased property is used by an employee, for example primarily for personal, family or household purposes, or is guaranteed by or subsequently assigned to a natural person.
7. Leases of personal property incidental to a service. The following leases of personal property are deemed incidental to a service and thus are not subject to the regulation:
i. Home entertainment systems requiring the consumer to lease equipment that enables a television to receive the transmitted programming.
ii. Security alarm systems requiring the installation of leased equipment intended to monitor unlawful entries
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