The Department of the Treasury's Bureau of the Fiscal Service is taking a significant step towards regulatory streamlining by issuing a direct final rule to remove two parts of Title 31 of the Code of Federal Regulations. Effective July 6, 2026, pending no significant adverse public comments received by June 5, 2026, this action eliminates regulations governing Federal Housing Administration (FHA) debentures (31 CFR Part 337) and 5 Percent Treasury Certificates of Indebtedness--R.E.A. Series (31 CFR Part 345). This initiative is a direct response to President Trump's Executive Order 14219, known as the "Department of Government Efficiency" Deregulatory Initiative, and a subsequent Presidential Memorandum, both aimed at reducing regulatory burdens by repealing unnecessary or unlawful regulations.
Context of Federal Deregulation Initiatives
The broader impetus for this action is President Trump's administration's directive for federal agencies to review existing regulations. Executive Order 14219, issued on February 19, 2025, mandated that executive departments and agencies assess their regulatory frameworks to identify and eliminate those that are either unlawful, impose undue burdens, or lack current applicability. This policy underscores a persistent effort within federal government to enhance efficiency and reduce the administrative load associated with maintaining a vast body of regulations. The Fiscal Service's current direct final rule is a tangible outcome of this top-down push for regulatory reform.
Elimination of FHA Debenture Regulations
One of the regulations slated for removal, 31 CFR Part 337, concerns "Supplemental Regulations Governing Federal Housing Administration Debentures." Historically, the FHA, with the Fiscal Service acting as its agent, utilized these debentures to settle claims on certain insured mortgages. However, this practice has been obsolete for some time. In 2015, the FHA amended its own regulations to standardize the method of payment for insurance claims to cash, thereby eliminating the option for mortgagees to elect debentures. This policy shift was formalized in 80 FR 51466, published August 25, 2015.
Following this amendment, the offering of debentures under 31 CFR Part 337 was maintained out of an abundance of caution, allowing for a phased transition. The Fiscal Service has confirmed that the last debenture was issued on February 3, 2011, and the final maturity payment with interest was made on July 2, 2012. All remaining matured outstanding debentures were redeemed by October 1, 2025. In consultation with the FHA, the Fiscal Service determined that the regulation for these debentures is no longer necessary, and the interagency agreement for their servicing will not renew in Fiscal Year 2026. This removal will not impact the Fiscal Service's ongoing responsibility for disbursing cash payments under 31 U.S.C. 3321.
Removal of Obsolete R.E.A. Series Certificates Regulations
The second regulation being removed is 31 CFR Part 345, titled "Regulations Governing 5 Percent Treasury Certificates of Indebtedness--R.E.A. Series." These certificates were originally offered to borrowers of the Rural Electrification Administration (R.E.A.) and the Rural Telephone Bank. The R.E.A., a New Deal-era agency, was abolished in 1994, with its functions subsequently assumed by the Rural Utilities Service (RUS). Similarly, the Rural Telephone Bank was liquidated in 2006, and all its shares were redeemed.
Given the dissolution of both entities and the redemption of all associated financial instruments, there are no remaining outstanding obligations in the R.E.A. Series. The Fiscal Service, in consultation with the RUS, has concluded that 31 CFR Part 345 is entirely unnecessary. Its continued presence in the Code of Federal Regulations serves no practical purpose and contributes to regulatory clutter.
Procedural Justification for Direct Final Rule
The Fiscal Service is implementing this change via a direct final rule, a procedural mechanism utilized when an agency anticipates no significant adverse comments because the rule is non-controversial or merely implements technical corrections. The Administrative Procedure Act (APA), specifically 5 U.S.C. 553(b)(B), allows for an exception to the typical notice-and-comment rulemaking process if an agency finds that such a process is "impracticable, unnecessary, or contrary to the public interest." The Fiscal Service has invoked this exception, reasoning that the regulations being removed are definitively obsolete and have no current or future applicability, thus rendering notice and comment unnecessary. Furthermore, this action is not considered a significant regulatory action under Executive Order 12866, nor does it require an analysis under the Regulatory Flexibility Act.
Implications for the Regulatory Landscape
This action by the Fiscal Service, while targeting specific and largely historical financial instruments, is indicative of a broader trend in federal governance: the continuous review and reduction of regulatory frameworks that no longer serve their intended purpose. By eliminating these defunct regulations, the Treasury aims to enhance the clarity and navigability of the Code of Federal Regulations, making it easier for legal professionals, policymakers, and the public to identify currently relevant statutes. This move aligns with the overarching goal of reducing bureaucratic overhead and focusing governmental resources on regulations that address contemporary issues.
