[Federal Register Volume 80, Number 228 (Friday, November 27, 2015)]
[Rules and Regulations]
[Pages 73945-73947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30071]


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FEDERAL RESERVE SYSTEM

12 CFR Part 213

[Docket No. R-1519]
RIN 7100 AE-35

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1013

RIN 3170-AA06


Consumer Leasing (Regulation M)

AGENCIES: Board of Governors of the Federal Reserve System (Board); and 
Bureau of Consumer Financial Protection (Bureau).

[[Page 73946]]


ACTION: Final rules, official interpretations and commentary.

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SUMMARY: The Board and the Bureau are publishing final rules amending 
the official interpretations and commentary for the agencies' 
regulations that implement the Consumer Leasing Act (CLA). The Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) 
amended the CLA by requiring that the dollar threshold for exempt 
consumer leases be adjusted annually by the annual percentage increase 
in the Consumer Price Index for Urban Wage Earners and Clerical Workers 
(CPI-W). If there is no annual percentage increase in the CPI-W, the 
Board and Bureau will not adjust this exemption threshold from the 
prior year. Based on the annual percentage decrease in the CPI-W as of 
June 1, 2015, the exemption threshold will remain at $54,600 through 
December 31, 2016.
    Because the Dodd-Frank Act also requires similar adjustments in the 
Truth in Lending Act's threshold for exempt consumer credit 
transactions, the Board and the Bureau are making similar amendments to 
each of their respective regulations implementing the Truth in Lending 
Act elsewhere in this issue of the Federal Register.

DATES: This final rule is effective January 1, 2016.

FOR FURTHER INFORMATION CONTACT: Board: Vivian W. Wong, Counsel, 
Division of Consumer and Community Affairs, Board of Governors of the 
Federal Reserve System, at (202) 452-3667; for users of 
Telecommunications Device for the Deaf (TDD) only, contact (202) 263-
4869.
    Bureau: James Wylie, Counsel, Office of Regulations, Bureau of 
Consumer Financial Protection, at (202) 435-7700.

SUPPLEMENTARY INFORMATION:

I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 
2010 (Dodd-Frank Act) increased the threshold in the Consumer Leasing 
Act (CLA) for exempt consumer leases from $25,000 to $50,000, effective 
July 21, 2011.\1\ In addition, the Dodd-Frank Act requires that this 
threshold be adjusted annually for inflation by the annual percentage 
increase in the Consumer Price Index for Urban Wage Earners and 
Clerical Workers (CPI-W), as published by the Bureau of Labor 
Statistics. In April 2011, the Board issued a final rule amending 
Regulation M (which implements the CLA) consistent with these 
provisions of the Dodd-Frank Act along with a similar final rule 
amending Regulation Z (which implements the Truth in Lending Act) 
(collectively, the Board Final Threshold Rules).\2\
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    \1\ Public Law 111-203 section 1100E, 124 Stat. 1376 (2010).
    \2\ 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr. 4, 2011).
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    Title X of the Dodd-Frank Act transferred rulemaking authority for 
a number of consumer financial protection laws from the Board to the 
Bureau, effective July 21, 2011. In connection with this transfer of 
rulemaking authority, the Bureau issued its own Regulation M 
implementing the CLA in an interim final rule, 12 CFR part 1013 (Bureau 
Interim Final Rule).\3\ The Bureau Interim Final Rule substantially 
duplicated the Board's Regulation M, including the revisions to the 
threshold for exempt transactions made by the Board in April 2011. 
Although the Bureau has the authority to issue rules to implement the 
CLA for most entities, the Board retains authority to issue rules under 
the CLA for certain motor vehicle dealers covered by section 1029(a) of 
the Dodd-Frank Act, and the Board's Regulation M continues to apply to 
those entities.\4\
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    \3\ 76 FR 78500 (Dec. 19, 2011).
    \4\ Section 1029(a) of the Dodd-Frank Act states: ``Except as 
permitted in subsection (b), the Bureau may not exercise any 
rulemaking, supervisory, enforcement, or any other authority . . . 
over a motor vehicle dealer that is predominantly engaged in the 
sale and servicing of motor vehicles, the leasing and servicing of 
motor vehicles, or both.'' 12 U.S.C. 5519(a). Section 1029(b) of the 
Dodd-Frank Act states: ``Subsection (a) shall not apply to any 
person, to the extent that such person (1) provides consumers with 
any services related to residential or commercial mortgages or self-
financing transactions involving real property; (2) operates a line 
of business (A) that involves the extension of retail credit or 
retail leases involving motor vehicles; and (B) in which (i) the 
extension of retail credit or retail leases are provided directly to 
consumers; and (ii) the contract governing such extension of retail 
credit or retail leases is not routinely assigned to an unaffiliated 
third party finance or leasing source; or (3) offers or provides a 
consumer financial product or service not involving or related to 
the sale, financing, leasing, rental, repair, refurbishment, 
maintenance, or other servicing of motor vehicles, motor vehicle 
parts, or any related or ancillary product or service.'' 12 U.S.C. 
5519(b).
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    Section 213.2(e)(1) of the Board's Regulation M and Sec.  
1013.2(e)(1) of the Bureau's Regulation M, and their accompanying 
commentaries, provide that the exemption threshold will be adjusted 
annually effective January 1 of each year based on any annual 
percentage increase in the CPI-W that was in effect on the preceding 
June 1. Any increase in the threshold amount will be rounded to the 
nearest $100 increment. For example, if the annual percentage increase 
in the CPI-W would result in a $950 increase in the threshold amount, 
the threshold amount will be increased by $1,000. However, if the 
annual percentage increase in the CPI-W would result in a $949 increase 
in the threshold amount, the threshold amount will be increased by 
$900.\5\ As stated in the Board Final Threshold Rules, if there is no 
annual percentage increase in the CPI-W, the Board and Bureau will not 
adjust the exemption threshold from the prior year.\6\
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    \5\ See comments 2(e)-9 in Supplements I of 12 CFR part 213 and 
12 CFR part 1013.
    \6\ 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (``[A]n annual period 
of deflation or no inflation would not require a change in the 
threshold amount.'').
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II. Adjustment and Commentary Revision

    Effective January 1, 2016, the exemption threshold amount remains 
at $54,600. This is based on the CPI-W in effect on June 1, 2015, which 
was reported on May 22, 2015. The Bureau of Labor Statistics publishes 
consumer-based indices monthly, but does not report a CPI change on 
June 1; adjustments are reported in the middle of the month. The CPI-W 
is a subset of the CPI-U index (based on all urban consumers) and 
represents approximately 28 percent of the U.S. population. Because the 
CPI-W reported on May 22, 2015 reflects a 0.8 percent decrease in the 
CPI-W from April 2014 to April 2015, the Board and the Bureau are not 
adjusting the exemption threshold amount. The Board and the Bureau are 
revising the commentaries to their respective regulations to add new 
comment 2(e)-9.vii to state that, from January 1, 2016 through December 
31, 2016, the threshold amount is $54,600. These revisions are 
effective January 1, 2016.

III. Administrative Law Matters

Administrative Procedure Act

    Under the Administrative Procedure Act, notice and opportunity for 
public comment are not required if the Board and the Bureau find that 
notice and public comment are impracticable, unnecessary, or contrary 
to the public interest.\7\ The amendment in this notice is technical 
and applies the method previously set forth in the Board Final 
Threshold Rules.\8\ 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.
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    \7\ See 5 U.S.C. 553(b)(B).
    \8\ See supra note 6.
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Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a

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general notice of proposed rulemaking is not required.\9\ 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 RFA's requirements relating to an initial and 
final regulatory flexibility analysis do not apply.
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    \9\ See 5 U.S.C. 603 and 604.
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\10\ the 
agencies reviewed this final rule. No collections of information 
pursuant to the Paperwork Reduction Act are contained in the final 
rule.
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    \10\ 44 U.S.C. 3506; 5 CFR part 1320.
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List of Subjects

12 CFR Part 213

    Advertising, Consumer leasing, Consumer protection, Federal Reserve 
System, Reporting and recordkeeping requirements.

12 CFR Part 1013

    Advertising, Consumer leasing, Reporting and recordkeeping 
requirements.

Board of Governors of the Federal Reserve System

Text of Final Revisions

    For the reasons set forth in the preamble, the Board amends 
Regulation M, 12 CFR part 213, as set forth below:

PART 213--CONSUMER LEASING (REGULATION M)

0
1. The authority citation for part 213 continues to read as follows:

    Authority:  15 U.S.C. 1604 and 1667f; Pub. L. 111-203 section 
1100E, 124 Stat. 1376.


0
2. In Supplement I to Part 213, under Section 213.2--Definitions, under 
2(e) Consumer Lease, paragraph 9.vii is added to read as follows:

Supplement I to Part 213--Official Staff Commentary to Regulation M

* * * * *

Section 213.2--Definitions

* * * * *
    2(e) Consumer Lease.
    9. * * *
    vii. From January 1, 2016 through December 31, 2016, the 
threshold amount is $54,600.
* * * * *

Bureau of Consumer Financial Protection

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau amends 
Regulation M, 12 CFR part 1013, as set forth below:

PART 1013--CONSUMER LEASING (REGULATION M)

0
3. The authority citation for part 1013 continues to read as follows:

    Authority: 15 U.S.C. 1604 and 1667f; Pub. L. 111-203 section 
1100E, 124 Stat. 1376.


0
4. In Supplement I to part 1013, under Section 1013.2--Definitions, 
under 2(e) Consumer Lease, paragraph 9.vii is added to read as follows:

Supplement I to Part 1013--Official Interpretations

* * * * *

Section 1013.2--Definitions

* * * * *
    2(e) Consumer Lease. * * * .
    9. * * *
    vii. From January 1, 2016 through December 31, 2016, the 
threshold amount is $54,600.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, November 18, 2015.
Robert deV. Frierson,
Secretary of the Board.
    Dated: September 22, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2015-30071 Filed 11-25-15; 8:45 am]
 BILLING CODE 4810-AM-P; 6210-01-P