Organization; Standards of Conduct and Referral of Known or Suspected Criminal Violations; Eligibility and Scope of Financing; Loan Policies and Operations; Funding and Fiscal Affairs, Loan Policies and Operations, and Funding Operations; Regulatory Burden, 65383-65387 [E6-18841]
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Federal Register / Vol. 71, No. 216 / Wednesday, November 8, 2006 / Rules and Regulations
(b) Acquisition strategy.
(1) DOE and DOI shall select a royalty
volume from specified leases for transfer
usually over six-month periods.
(2) If logistics and crude oil quality
are compatible with SPR receipt
capabilities and requirements
respectively, DOE may take the royalty
oil directly from DOI and place it in SPR
storage sites. Otherwise, DOE may
competitively solicit suppliers to deliver
oil of comparable value to the SPR in
exchange for the receipt of royalty-inkind oil.
(3) If, based on the market analysis
described in paragraph (d) of this
section, DOE determines there is a high
probability that the cost to the
Government can be reduced without
significantly affecting national energy
security goals, DOE may contract for
delivery at a future date in expectation
of lower prices and a higher quantity of
oil in exchange. Conversely, it may
schedule deliveries at an earlier date
under the contract in anticipation of
higher prices at later dates.
(4) Based on the market analysis in
paragraph (d) of this section, DOE may,
after consultation with DOI, suspend the
transfer of royalty oil to DOE if it
appears the added demand for oil will
add significant upward pressure to
prices either regionally or on a worldwide basis.
(c) Fill requirements determination.
DOE shall develop SPR fill
requirements for each solicitation based
on an assessment of national energy
security goals, the availability of royalty
oil and storage capacity, and need for
specific grades and quantities of crude
oil.
(d) Market analysis.
(1) DOE may use prices on futures
markets, spot markets, recent price
movements, current and projected
shipping rates, forecasts by the DOE
Energy Information Administration, and
any other analytic tools to determine the
most desirable acquisition profile.
(2) A market analysis may also
consider recent price changes, private
inventory levels, oil acquisition by other
stockpiling entities, the outlook for
world oil production, incipient
disruptions of supply or refining
capability, logistical problems for
moving petroleum products,
macroeconomic factors, and any other
considerations that may be pertinent to
the balance of petroleum supply and
demand.
(e) Evaluation of royalty exchange
offers.
(1) DOE shall evaluate offers using:
(i) The criteria and requirements
stated in the solicitation; and
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65383
(ii) The market analysis under
paragraph (d) of this section.
(2) DOE shall require financial
guarantees from contractors in the form
of a letter of credit or equivalent
financial assurance.
FARM CREDIT ADMINISTRATION
§ 626.8 Deferrals of contractually
scheduled deliveries.
Organization; Standards of Conduct
and Referral of Known or Suspected
Criminal Violations; Eligibility and
Scope of Financing; Loan Policies and
Operations; Funding and Fiscal
Affairs, Loan Policies and Operations,
and Funding Operations; Regulatory
Burden
(a) General.
(1) DOE prefers to take deliveries of
petroleum for the SPR at times
scheduled under applicable contracts.
However, in the event the market is
distorted by disruption to supply or
other factors, DOE may defer scheduled
deliveries or request or entertain
deferral requests from contractors.
(2) A contractor seeking to defer
scheduled deliveries of oil to the SPR
may submit a deferral request to DOE.
(b) Deferral criteria. DOE shall only
grant a deferral request for negotiation
under paragraph (c) of this section if it
determines that DOE can receive a
premium for the deferral paid in
additional barrels of oil and, based on
DOE’s deferral analysis, that at least one
of the following conditions exists:
(1) DOE can reduce the cost of its oil
acquisition per barrel and increase the
volume of oil being delivered to the SPR
by means of the premium barrels
required by the deferral process.
(2) DOE anticipates private
inventories are approaching a point
where unscheduled outages may occur.
(3) There is evidence that refineries
are reducing their run rates for lack of
feedstock.
(4) There is an unanticipated
disruption to crude oil supply.
(c) Negotiating terms.
(1) If DOE decides to negotiate a
deferral of deliveries, DOE shall
estimate the market value of the deferral
and establish a strategy for negotiating
with suppliers the minimum percentage
of the market value to be taken by the
Government. During these negotiations,
if the deferral request was initiated by
DOE, DOE may consider any reasonable,
customary, and applicable costs already
incurred by the supplier in the
performance of a valid contract for
delivery. In no event shall such
consideration account for any
consequential damages or lost profits
suffered by the supplier as a result of
such deferral.
(2) DOE shall only agree to amend the
contract if the negotiation results in an
agreement to give the Government a fair
and reasonable share of the market
value.
[FR Doc. E6–18786 Filed 11–7–06; 8:45 am]
BILLING CODE 6450–01–P
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12 CFR Parts 611, 612, 613, 614, and
615
RIN 3052–AC15
AGENCY:
Farm Credit Administration
(FCA).
ACTION:
Final rule.
SUMMARY: This final rule is intended to
reduce regulatory burden on the Farm
Credit System (FCS or System) by
repealing or revising five regulations.
The final rule also corrects eight
outdated and erroneous cross-references
in five regulation sections. These
revisions provide System banks and
associations with greater flexibility
concerning stock ownership of service
corporations, employee reporting under
standards of conduct rules, domestic
lending to cooperatives, and real
property evaluations for certain
business loans.
DATES: Effective Date: These regulations
will be effective 30 days after
publication in the Federal Register
during which either or both houses of
Congress are in session. We will publish
a notice of the effective date in the
Federal Register.
FOR FURTHER INFORMATION CONTACT:
Jacqueline R. Melvin, Associate Policy
Analyst, Office of Regulatory Policy,
Farm Credit Administration, McLean,
VA 22102–5090, (703) 883–4414, TTY
(703) 883–4434; or Howard I. Rubin,
Senior Counsel, Office of General
Counsel, Farm Credit Administration,
McLean, VA 22102–5090, (703) 883–
4020, TTY (703) 883–4020.
SUPPLEMENTARY INFORMATION:
I. Objective
The objective of this rule is to reduce
regulatory burden by repealing and/or
revising regulations and correcting
outdated and erroneous regulations.
II. Background
On March 28, 2006, we invited the
public to comment on five proposed
changes to our regulations. See 71 FR
15343. The comment period was
scheduled to close on May 30, 2006.
However, on May 26, 2006, the
Independent Community Bankers of
America requested that the FCA extend
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the comment period. On June 15, 2006,
we reopened the comment period until
July 17, 2006. See 71 FR 34549.
We also published a separate notice in
the Federal Register on March 28, 2006,
explaining how we addressed or will
address comments we received as part
of the 2003 solicitation, including the
reasons why we are not changing certain
regulations at this time. See 71 FR
15413. Our proposed rule addressed the
following issues:
A. Service corporations. Clarifying
that service corporations are not
required to offer stock to every System
bank and association.
B. Standards of conduct. Allowing
new System employees to report to the
Standards of Conduct official within 5
days after starting employment.
C. Cooperative eligibility. Eliminating
the 10-percent limitation on dividends
in determining a cooperative’s eligibility
to borrow from a title III System lender.
D. Appraisal requirements.
Eliminating a requirement for a Uniform
Standards of Professional Appraisal
Practices (USPAP) compliant real
property appraisal for business loans
between $250,000 and $1 million.
E. Bankers’ acceptance financing.
Repealing an outdated regulation
pertaining to the purchase of bankers’
acceptances by the Federal Farm Credit
Banks Funding Corporation from an
agricultural credit bank.
We also proposed to correct outdated
and erroneous cross-references affecting
two regulations governing title III
lending.
III. Comments Received
We received 275 comment letters.
Overall, supporters aligned with the
System commented favoring our five
proposed amendments, while those
aligned with non-System lenders
commented opposing two of our
proposed amendments. Additionally,
our proposed amendment pertaining to
cooperative eligibility rules were
supported by three independent groups,
the National Council of Farm Credit
Cooperatives, the Minnesota
Association of Cooperatives, and the
Iowa Institute for Cooperatives.
Comments from five System banks, 59
System associations and the Farm Credit
Council, on behalf of its members, urged
FCA to move forward on its five
proposed amendments. Also, in
response to our 2003 regulatory burden
solicitation, some System supporters
asked that we implement changes on all
regulations for which we received
comments. As stated in section II above,
we addressed the 2003 solicitation
comments in a separate notice in the
Federal Register on March 28, 2006.
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Comments from 129 commercial
banks, eight individuals and, on behalf
of their members, the Independent
Community Bankers of America, the
Independent Bankers of Colorado, the
Independent Bankers of Minnesota, and
the Community Bankers of Wisconsin
opposed our proposed amendments to
eliminate: (1) The 10-percent dividend
limitation on cooperatives borrowing
from a title III System lender; and (2) the
requirement for a USPAP-compliant
appraisal on certain business loans.
After careful consideration of all the
comments, we are adopting all five
proposed amendments as final without
change. In this final rule, we also make
eight technical and conforming changes
to five regulation sections governing
title III System lenders; six changes are
made to correct outdated and erroneous
cross-references and two changes are
made to remove references to deleted
§ 614.4710. Three of the cross-reference
changes were part of our proposed rule
and are adopted without change. We
also made five additional technical and
conforming changes in the final rule.
We find that publishing a notice and
asking for public comment on these
changes is unnecessary and impractical
because they are not substantive and
merely correct and update crossreferences in other related parts of our
rules.
IV. Section-by-Section Discussion of
Comments to the Five Amendments
A. Section 611.1135—Incorporation of
Service Corporations
We proposed to amend the relevant
sentence of § 611.1135(b) to clarify that
service corporations are not required to
offer stock to every System bank and
association. We did not receive any
specific comments on this proposal. We
are adopting this proposal as final.
B. Section 612.2155—Employee
Reporting
We proposed to amend § 612.2155(d)
to require a newly hired employee to
complete a standards of conduct report
not later than 5 business days after the
new employee’s start date. We did not
receive any specific comments on this
proposal. We are adopting this proposal
as final.
C. Section 613.3100—Domestic
Lending—Banks Operating Under Title
III of the Farm Credit Act
Section 3.8(a) of the Farm Credit Act
of 1971, as amended (Act),1 provides
that an agricultural or aquatic
cooperative (that meets statutory
minimum levels of farmer ownership
1 12
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Frm 00014
Fmt 4700
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and business with members) is eligible
for financing from a title III System
lender if it conforms to either of the two
following requirements:
(1) No member of the association is
allowed more than one vote because of
the amount of stock or membership
capital he may own therein; or
(2) Does not pay dividends on stock
or membership capital in excess of such
per centum per annum as may be
approved under regulations of the Farm
Credit Administration * * *.2
Current § 613.3100(b)(1)(iii) provides
that an eligible cooperative must
comply with one of the following two
conditions:
(A) No member of the cooperative
shall have more than one vote because
of the amount of stock or membership
capital owned therein; or
(B) The cooperative restricts
dividends on stock or membership
capital to 10 percent per year or the
maximum percentage per year permitted
by applicable state law, whichever is
less.
We proposed to delete the 10-percent
limitation, allowing state law to govern
compliance with the dividend
requirement.
Commenters who supported the
amendment stated that the amendment
would be of significant benefit as
cooperatives continue to develop new
ownership structures and capital plans.
Other commenters stated changes to the
eligibility provisions in title III of the
Act will be necessary for System lenders
to serve new farmer-owned businesses
being created under state laws. These
commenters further noted the limited
effect of the regulatory change, stating
that the 80-percent farmer voting control
requirement contained in the Act
remains a more serious obstacle for
cooperatives.
Commenters who opposed the
amendment asserted that the Act
requires the FCA to set the dividend
limit and that FCA cannot defer this
authority and responsibility to the
states. These commenters stated that
FCA’s proposal was therefore arbitrary
and capricious. After careful
consideration of these comments, we
conclude that it is appropriate to adopt
the proposed section as final for the
following four reasons.
First, we note that Congress gave FCA
substantial discretion in this area.
Unlike section 3.8(a)(1), (a)(3), and (a)(4)
of the Act, which prescribe very specific
eligibility requirements for cooperatives,
2 As discussed below, even if one of these
eligibility requirements is met, the Act has other
requirements that must also be satisfied in order for
a cooperative to borrow from a title III System
lender.
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section 3.8(a)(2) of the Act leaves the
determination of the maximum
dividend percentage solely to the
discretion of FCA. It is an appropriate
use of discretion for FCA to look to
another authoritative source of
applicable law—state law—in setting
this limit. Moreover, our existing rule—
10 percent per year or the maximum
percentage per year permitted by
applicable state law, whichever is less—
already generally defers to state law
because most states have an 8-percent
limit.
Second, FCA’s reference to state law
is not ‘‘arbitrary’’ in this context because
cooperatives that borrow from a title III
System lender are usually a form of a
state-chartered corporation whose
organization and operations are
governed by state law. Compliance with
state law—for corporate formation
requirements—always impacts the
eligibility of a ‘‘legal entity’’ to borrow
from the System. Therefore, we believe
that it is reasonable for FCA to defer to
state law—an external authoritative
source—in adopting this cooperative
eligibility rule.
Third, we disagree with commenters
who stated that FCA should look to the
Capper-Volstead Act’s limitations on
cooperative dividends. As we noted in
the proposed rule’s preamble, in the
Farm Credit Act of 1971, Congress
specifically eliminated the former Farm
Credit law’s reference to the CapperVolstead Act (and its 8-percent dividend
limitation) in providing for cooperative
eligibility. Therefore, Capper-Volstead
Act limitations are irrelevant and their
application to FCS eligibility arguably
violates congressional intent.
Fourth, after careful consideration of
comments to the contrary, we conclude
that FCA’s proposed amendment would
not have sweeping adverse effects and
would not allow lending to all types of
cooperatives. The Act specifically limits
eligibility to agricultural cooperatives
that meet very specific farmer
ownership and business with members’
requirements. Nothing in this rule alters
those requirements. Moreover, three
non-System organizations representing
cooperatives commented that the
proposed rule would benefit agricultural
cooperatives and their farmer members.
For the reasons stated above, we are
adopting the proposed amendment as
final.
D. Section 614.4265—Real Property
Evaluations
We proposed to eliminate the
requirement for a USPAP-compliant real
property appraisal for business loans
between $250,000 and $1 million that
are not otherwise exempt under our
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rules. Supporting commenters stated
that the existing requirement is unduly
burdensome and places System lenders
at a competitive disadvantage because
non-System lenders are not required to
perform USPAP-compliant appraisals
for these types of business loans.
Commenters further added that the
existing requirement does not
necessarily ensure greater safety and
soundness because a similar level of
analysis is required for collateral
evaluations.
Opposing commenters asserted that
the deletion of the proposed amendment
could create numerous safety and
soundness problems because FCA does
not have other safeguards in place like
other Federal financial regulators. They
stated that the Office of the Comptroller
of the Currency’s (OCC) regulations 3
provide safeguards that do not exist in
FCA’s regulations.
FCA believes that our regulations
provide safeguards that are comparable
to other financial regulators. Part 614,
subpart F (‘‘Collateral Evaluation
Requirements’’) of our regulations
requires well-defined and effective
collateral evaluation policies and
standards which cover areas such as:
• Criteria for when USPAP collateral
appraisals are required rather than a
collateral evaluation;
• Accounting for market trends,
volatility, and types of credit;
• Using an unbiased and qualified
evaluator;
• Collateral evaluation standards
found in § 614.4250 addressing such
items as market value, highest and best
use, and income-producing capacity;
• Evaluation requirements found in
§ 614.4260 addressing such items as
appraiser certifications;
• Real property evaluations found in
§ 614.4265 addressing such items as the
approach used and debt-servicing
capacity;
• Personal and intangible property
evaluations found in § 614.4266
addressing such items as comparisons of
value, and USPAP Competency and
Ethics Provisions; and
• Professional association
membership.
Some commenters asserted that FCA’s
appraisal regulations pertaining to
independence standards are not as
stringent as the OCC regulations in 12
CFR 34.45.
FCA finds that its regulations on
appraisal independence are as stringent
as those of other regulators. Multiple
FCA regulation sections address
independence, such as:
3 See 12 CFR 34.62 (addressing loan portfolio
management and expertise on local markets).
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65385
• Section 614.4255, which is devoted
exclusively to ‘‘Independence
Requirements,’’ outlines clear
prohibitions for directors, officers,
employees, real estate appraisers, and
fee appraisers. In addition, this section
prohibits persons performing a
collateral evaluation from involvement
in credit decisions.
• Section 614.4240(n) defines
qualified evaluators as persons who are
competent, reputable, impartial, and
have demonstrated sufficient training
and experience.
• Section 614.4245(a)(3) requires
System institution policies and
standards to ensure that collateral
evaluations are completed by a qualified
evaluator in an unbiased manner.
Commenters also contended that
removing the USPAP requirement could
result in ‘‘inflated land values.’’ We
believe that removing this requirement
will not inflate collateral values and
thus, will not adversely impact the
System’s safety and soundness. For
business loans under $1 million, real
property evaluations will be required.
Section 614.4265 contains specific
requirements of those real property
evaluations such as:
• Determining market value that
considers approaches using income
capitalization, sales comparisons, and/
or costs.
• Evaluating and documenting the
income and debt-servicing capacity for
the property and operation for
transaction values over $250,000.
• Identifying nonagricultural
influences.
Several commenters stated that
Federal Reserve Regulation Y generally
requires ‘‘outside’’ appraisals for
transactions over $250,000, and that
FCA’s requirement should be the same.
We believe our requirements are
essentially the same. Regulation Y at 12
CFR 225.63(a)(1) requires appraisals by
a state-certified or licensed appraiser for
non-business loan transactions with
values more than $250,000. FCA’s
requirements at § 614.4260(b)(1) also
require appraisals by a state-certified or
licensed appraiser for non-business loan
transactions over $250,000. Regulation
Y at 12 CFR 225.63(a)(5) requires an
appraisal by a state-certified or licensed
appraiser for a business loan transaction
over $1 million. Section 614.4260(c)(2)
also requires an appraisal by a statecertified or licensed appraiser for a
business loan transaction over $1
million.
Several commenters stated that FCA’s
proposal regarding appraisal
requirements for business loans was not
comparable to other Federal financial
regulators. FCA finds that its
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requirements are very similar to those of
other regulators. The amendment will
make our regulations more comparable
to the:
• Federal Reserve’s regulation at 12
CFR 225.63(a)(5).
• Federal Deposit Insurance
Corporation’s regulation at 12 CFR
323.3(a)(5).
• Office of Thrift Supervision’s
regulation at 12 CFR 464.3(a)(5).
• OCC’s regulation at 12 CFR
34.43(a)(5).
For the reasons stated above, we are
adopting the proposed amendment as
final.
E. Section 614.4710—Bankers’
Acceptance Financing
V. Regulatory Flexibility Act
Pursuant to section 605(b) of the
Regulatory Flexibility Act (5 U.S.C. 601
et seq.), FCA hereby certifies that the
final rule will not have a significant
economic impact on a substantial
number of small entities. Each of the
banks in the Farm Credit System,
considered together with its affiliated
associations, has assets and annual
income in excess of the amounts that
would qualify them as small entities.
Therefore, FCS institutions are not
‘‘small entities’’ as defined in the
Regulatory Flexibility Act.
List of Subjects
12 CFR Part 611
Agriculture, Banks, banking, Rural
areas.
12 CFR Part 612
Agriculture, Banks, banking, Conflicts
of interest, Crime, Investigations, Rural
areas.
Agriculture, Banks, banking, Credit,
Rural areas.
I
1. The authority citation for part 611
is revised to read as follows:
I
Authority: Secs. 1.3, 1.4, 1.13, 2.0, 2.1,
2.10, 2.11, 3.0, 3.2, 3.21, 4.12, 4.12A, 4.15,
4.20, 4.21, 5.9, 5.10, 5.17, 6.9, 6.26, 7.0–7.13,
8.5(e) of the Farm Credit Act (12 U.S.C. 2011,
2012, 2021, 2071, 2072, 2091, 2092, 2121,
2123, 2142, 2183, 2184, 2203, 2208, 2209,
2243, 2244, 2252, 2278a–9, 2278b–6, 2279a–
2279f–1, 2279aa–5(e)); secs. 411 and 412 of
Pub. L. 100–233, 101 Stat. 1568, 1638; secs.
409 and 414 of Pub. L. 100–399, 102 Stat.
989, 1003, and 1004.
2. Amend § 611.1135 by revising
paragraph (b) to read as follows:
I
§ 611.1135 Incorporation of service
corporations.
*
*
*
*
*
(b) Who may own equities in your
service corporation?
(1) Your service corporation may only
issue voting and non-voting stock to:
(i) One or more Farm Credit banks
and associations; and
(ii) Persons that are not Farm Credit
banks or associations, provided that at
least 80 percent of the voting stock is at
all times held by Farm Credit banks or
associations.
(2) For the purposes of this subpart,
we define persons as individuals or
legal entities organized under the laws
of the United States or any state or
territory thereof.
*
*
*
*
*
PART 612—STANDARDS OF
CONDUCT AND REFERRAL OF
KNOWN OR SUSPECTED CRIMINAL
VIOLATIONS
Agriculture, Banks, banking, Foreign
trade, Reporting and recordkeeping
requirements, Rural areas.
12 CFR Part 615
Accounting, Agriculture, Banks,
banking, Government securities,
Investments, Rural areas.
For the reasons stated in the preamble,
parts 611, 612, 613, 614, and 615 of
chapter VI, title 12 of the Code of
Jkt 211001
Authority: Secs. 1.5, 1.7, 1.9, 1.10, 1.11,
2.2, 2.4, 2.12, 3.1, 3.7, 3.8, 3.22, 4.18A, 4.25,
4.26, 4.27, 5.9, 5.17 of the Farm Credit Act
(12 U.S.C. 2013, 2015, 2017, 2018, 2019,
2073, 2075, 2093, 2122, 2128, 2129, 2143,
2206a, 2211, 2212, 2213, 2243, 2252).
Subpart B—Financing for Banks
Operating Under Title III of the Farm
Credit Act
6. Amend § 613.3100 by revising
paragraphs (b)(1)(iii)(B) and (d)(1) to
read as follows:
I
§ 613.3100
Domestic lending.
*
*
*
*
*
(b) * * *
(1) * * *
*
*
*
*
*
(iii) * * *
(A) * * *
(B) The cooperative restricts
dividends on stock or membership
capital to the maximum percentage per
year permitted by applicable state law.
*
*
*
*
*
(d) Water and waste disposal
facilities—(1) Eligibility. A cooperative
or a public agency, quasi-public agency,
body, or other public or private entity
that, under the authority of state or local
law, establishes and operates water and
waste disposal facilities in a rural area,
as that term is defined by paragraph
(a)(4) of this section, is eligible to
borrow from a bank for cooperatives or
an agricultural credit bank.
*
*
*
*
*
PART 614—LOAN POLICIES AND
OPERATIONS
3. The authority citation for part 612
continues to read as follows:
I
Authority: 42 U.S.C. 4012a, 4104a, 4104b,
4106, and 4128; secs. 1.3, 1.5, 1.6, 1.7, 1.9,
1.10, 1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13,
2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28,
4.12, 4.12A, 4.13B, 4.14, 4.14A, 4.14C, 4.14D,
4.14E, 4.18, 4.18A, 4.19, 4.25, 4.26, 4.27,
4.28, 4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2, 7.6,
7.8, 7.12, 7.13, 8.0, 8.5 of the Farm Credit Act
(12 U.S.C. 2011, 2013, 2014, 2015, 2017,
2018, 2019, 2071, 2073, 2074, 2075, 2091,
2093, 2094, 2097, 2121, 2122, 2124, 2128,
2129, 2131, 2141, 2149, 2183, 2184, 2201,
2202, 2202a, 2202c, 2202d, 2202e, 2206,
2206a, 2207, 2211, 2212, 2213, 2214, 2219a,
2219b, 2243, 2244, 2252, 2279a, 2279a–2,
2279b, 2279c–1, 2279f, 2279f–1, 2279aa,
2279aa–5); sec. 413 of Pub. L. 100–233, 101
Stat. 1568, 1639.
4. Amend 612.2155 by revising
paragraph (d) to read as follows:
I
§ 612.2155
Employee reporting.
*
I
5. The authority citation for part 613
continues to read as follows:
I
Subpart A—Standards of Conduct
12 CFR Part 614
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PART 611—ORGANIZATION
Authority: Secs. 5.9, 5.17, 5.19 of the Farm
Credit Act (12 U.S.C. 2243, 2252, 2254).
12 CFR Part 613
16:03 Nov 07, 2006
PART 613—ELIGIBILITY AND SCOPE
OF FINANCING
Subpart I—Service Organizations
We proposed to delete § 614.4710,
pertaining to bankers’ acceptance
financing, in its entirety. We did not
receive any specific comments on this
proposal. We are adopting this proposal
as final.
VerDate Aug<31>2005
Federal Regulations are amended as
follows:
*
*
*
*
(d) A newly hired employee shall
report matters required to be reported in
paragraphs (a), (b), and (c) of this
section to the Standards of Conduct
Official 5 business days after starting
employment and thereafter shall comply
with the requirements of this section.
PO 00000
Frm 00016
Fmt 4700
Sfmt 4700
7. The authority citation for part 614
continues to read as follows:
E:\FR\FM\08NOR1.SGM
08NOR1
Federal Register / Vol. 71, No. 216 / Wednesday, November 8, 2006 / Rules and Regulations
Subpart A—Lending Authorities
8. Amend § 614.4010 by revising
paragraphs (d)(1) and (d)(2) to read as
follows:
I
§ 614.4010
Agricultural credit banks.
*
*
*
*
*
(d) * * *
(1) Eligible cooperatives, as defined in
§ 613.3100(b)(1), in accordance with
§§ 614.4200, 614.4231, 614.4232,
614.4233, and subpart Q of part 614;
(2) Other eligible entities, as defined
in § 613.3100(b)(2), in accordance with
§§ 614.4200, 614.4231, and 614.4232;
*
*
*
*
*
§ 614.4020
[Amended]
9. Amend § 614.4020 by:
a. Removing the reference
‘‘§ 613.3110’’ and adding in its place,
the reference ‘‘§ 613.3100(b)(1)’’ in
paragraph (a)(1); and
I b. Removing the reference
‘‘§ 613.3110(c)’’ and adding in its place,
the reference ‘‘§ 613.3100(b)(2)’’ in
paragraph (a)(2).
I
I
Authority: Secs. 1.5, 1.7, 1.10, 1.11, 1.12,
2.2, 2.3, 2.4, 2.5, 2.12, 3.1, 3.7, 3.11, 3.25, 4.3,
4.3A, 4.9, 4.14B, 4.25, 5.9, 5.17, 6.20, 6.26,
8.0, 8.3, 8.4, 8.6, 8.7, 8.8, 8.10, 8.12 of the
Farm Credit Act (12 U.S.C. 2013, 2015, 2018,
2019, 2020, 2073, 2074, 2075, 2076, 2093,
2122, 2128, 2132, 2146, 2154, 2154a, 2160,
2202b, 2211, 2243, 2252, 2278b, 2278b–6,
2279aa, 2279aa–3, 2279aa–4, 2279aa–6,
2279aa–7, 2279aa–8, 2279aa–10, 2279aa–12);
sec. 301(a) of Pub. L. 100–233, 101 Stat. 1568,
1608.
Subpart Q—Bankers’ Acceptances
14. Revise § 615.5550 to read as
follows:
I
§ 615.5550
Bankers’ acceptances.
Banks for cooperatives may
rediscount with other purchasers the
acceptances they have created. The bank
for cooperatives’ board of directors,
under established policies, may delegate
this authority to management.
Dated: November 3, 2006.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. E6–18841 Filed 11–7–06; 8:45 am]
BILLING CODE 6705–01–P
Subpart F—Collateral Evaluation
Requirements
§ 614.4265
DEPARTMENT OF TRANSPORTATION
[Amended]
10. Amend § 614.4265 by removing
paragraph (c) and redesignating
paragraphs (d), (e), (f), (g), and (h) as (c),
(d), (e), (f), and (g), respectively.
I
Subpart J—Lending and Leasing
Limits
Federal Aviation Administration
11. Amend § 614.4355 by:
a. Revising paragraph (a)(8) to read as
follows; and
I b. Removing the reference
‘‘§ 614.4321’’ and adding in its place,
the reference ‘‘§ 614.4720’’ in paragraph
(a)(9).
§ 614.4355
Banks for cooperatives.
*
*
*
*
*
(a) * * *
(8) Commodity loans qualifying under
§ 614.4231: 50 percent.
*
*
*
*
*
Subpart Q—Banks for Cooperatives
and Agricultural Credit Banks
Financing International Trade
§ 614.4710
pwalker on PRODPC60 with RULES
I
[Removed]
12. Remove and reserve § 614.4710.
PART 615—FUNDING AND FISCAL
AFFAIRS, LOAN POLICIES AND
OPERATIONS, AND FUNDING
OPERATIONS
13. The authority citation for part 615
continues to read as follows:
I
VerDate Aug<31>2005
16:03 Nov 07, 2006
Jkt 211001
in the forward support structure of the
floor panel. Crack propagation in certain
areas could lead to failure of the main
wing torsion box, which could result in
loss of control.
This AD becomes effective on
December 13, 2006.
As of December 13, 2006, the Director
of the Federal Register approved the
incorporation by reference of certain
publications listed in the regulation.
DATES:
To get the service
information identified in this AD,
contact Pilatus Aircraft Ltd., Customer
Liaison Manager, CH–6371 Stans,
Switzerland; telephone: +41 41 619 63
19; fax: +41 41 619 6224.
To view the AD docket, go to the
Docket Management Facility, U.S.
Department of Transportation, 400
Seventh Street, SW., Nassif Building,
Room PL–401, Washington, DC 20590–
0001 or on the Internet at https://
dms.dot.gov. The docket number is
FAA–2006–25582; Directorate Identifier
2006–CE–42–AD.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Doug Rudolph, Aerospace Engineer,
FAA, Small Airplane Directorate, 901
Locust, Room 301, Kansas City,
Missouri 64106; telephone: (816) 329–
4059; fax: (816) 329–4090.
14 CFR Part 39
SUPPLEMENTARY INFORMATION:
[Docket No. FAA–2006–25582; Directorate
Identifier 2006–CE–42–AD; Amendment 39–
14813; AD 2006–23–01]
Discussion
RIN 2120–AA64
I
I
65387
Airworthiness Directives; Pilatus
Aircraft Ltd. Model PC–7 Airplanes
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
SUMMARY: The FAA adopts a new
airworthiness directive (AD) for certain
Pilatus Aircraft Ltd. (Pilatus) Model PC–
7 airplanes. This AD requires you to do
repetitive eddy-current, non-destructive
inspections of the nose skin and
adjacent structure above the left and
right main landing gear bay and
repetitive visual inspections of the
forward support structure of the floor
panel for crack damage. If you find any
crack damage, this AD requires you to
contact Pilatus to obtain a repair
solution and incorporate the repair. This
AD results from mandatory continuing
airworthiness information (MCAI)
issued by the airworthiness authority for
Switzerland. We are issuing this AD to
detect and correct cracks in the nose
skin and adjacent structure above the
left and right main landing gear bay and
PO 00000
Frm 00017
Fmt 4700
Sfmt 4700
On September 11, 2006, we issued a
proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) to
include an AD that would apply to
certain Pilatus Model PC–7 airplanes.
This proposal was published in the
Federal Register as a notice of proposed
rulemaking (NPRM) on September 15,
2006 (71 FR 54441). The NPRM
proposed to require you to do repetitive
eddy-current, non-destructive
inspections of the nose skin and
adjacent structure above the left and
right main landing gear bay and
repetitive visual inspections of the
forward support structure of the floor
panel for crack damage. If crack damage
is found, the NPRM proposed to require
you to contact Pilatus to obtain a repair
solution and incorporate the repair.
Comments
We provided the public the
opportunity to participate in developing
this AD. The following presents the
comments received on the proposal and
FAA’s response to each comment:
We received one comment from
Pilatus Aircraft in favor of the proposed
AD.
E:\FR\FM\08NOR1.SGM
08NOR1
]]>Agencies
[Federal Register Volume 71, Number 216 (Wednesday, November 8, 2006)]
[Rules and Regulations]
[Pages 65383-65387]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-18841]
=======================================================================
-----------------------------------------------------------------------
FARM CREDIT ADMINISTRATION
12 CFR Parts 611, 612, 613, 614, and 615
RIN 3052-AC15
Organization; Standards of Conduct and Referral of Known or
Suspected Criminal Violations; Eligibility and Scope of Financing; Loan
Policies and Operations; Funding and Fiscal Affairs, Loan Policies and
Operations, and Funding Operations; Regulatory Burden
AGENCY: Farm Credit Administration (FCA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule is intended to reduce regulatory burden on the
Farm Credit System (FCS or System) by repealing or revising five
regulations. The final rule also corrects eight outdated and erroneous
cross-references in five regulation sections. These revisions provide
System banks and associations with greater flexibility concerning stock
ownership of service corporations, employee reporting under standards
of conduct rules, domestic lending to cooperatives, and real property
evaluations for certain business loans.
DATES: Effective Date: These regulations will be effective 30 days
after publication in the Federal Register during which either or both
houses of Congress are in session. We will publish a notice of the
effective date in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Jacqueline R. Melvin, Associate Policy
Analyst, Office of Regulatory Policy, Farm Credit Administration,
McLean, VA 22102-5090, (703) 883-4414, TTY (703) 883-4434; or Howard I.
Rubin, Senior Counsel, Office of General Counsel, Farm Credit
Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-
4020.
SUPPLEMENTARY INFORMATION:
I. Objective
The objective of this rule is to reduce regulatory burden by
repealing and/or revising regulations and correcting outdated and
erroneous regulations.
II. Background
On March 28, 2006, we invited the public to comment on five
proposed changes to our regulations. See 71 FR 15343. The comment
period was scheduled to close on May 30, 2006. However, on May 26,
2006, the Independent Community Bankers of America requested that the
FCA extend
[[Page 65384]]
the comment period. On June 15, 2006, we reopened the comment period
until July 17, 2006. See 71 FR 34549.
We also published a separate notice in the Federal Register on
March 28, 2006, explaining how we addressed or will address comments we
received as part of the 2003 solicitation, including the reasons why we
are not changing certain regulations at this time. See 71 FR 15413. Our
proposed rule addressed the following issues:
A. Service corporations. Clarifying that service corporations are
not required to offer stock to every System bank and association.
B. Standards of conduct. Allowing new System employees to report to
the Standards of Conduct official within 5 days after starting
employment.
C. Cooperative eligibility. Eliminating the 10-percent limitation
on dividends in determining a cooperative's eligibility to borrow from
a title III System lender.
D. Appraisal requirements. Eliminating a requirement for a Uniform
Standards of Professional Appraisal Practices (USPAP) compliant real
property appraisal for business loans between $250,000 and $1 million.
E. Bankers' acceptance financing. Repealing an outdated regulation
pertaining to the purchase of bankers' acceptances by the Federal Farm
Credit Banks Funding Corporation from an agricultural credit bank.
We also proposed to correct outdated and erroneous cross-references
affecting two regulations governing title III lending.
III. Comments Received
We received 275 comment letters. Overall, supporters aligned with
the System commented favoring our five proposed amendments, while those
aligned with non-System lenders commented opposing two of our proposed
amendments. Additionally, our proposed amendment pertaining to
cooperative eligibility rules were supported by three independent
groups, the National Council of Farm Credit Cooperatives, the Minnesota
Association of Cooperatives, and the Iowa Institute for Cooperatives.
Comments from five System banks, 59 System associations and the
Farm Credit Council, on behalf of its members, urged FCA to move
forward on its five proposed amendments. Also, in response to our 2003
regulatory burden solicitation, some System supporters asked that we
implement changes on all regulations for which we received comments. As
stated in section II above, we addressed the 2003 solicitation comments
in a separate notice in the Federal Register on March 28, 2006.
Comments from 129 commercial banks, eight individuals and, on
behalf of their members, the Independent Community Bankers of America,
the Independent Bankers of Colorado, the Independent Bankers of
Minnesota, and the Community Bankers of Wisconsin opposed our proposed
amendments to eliminate: (1) The 10-percent dividend limitation on
cooperatives borrowing from a title III System lender; and (2) the
requirement for a USPAP-compliant appraisal on certain business loans.
After careful consideration of all the comments, we are adopting
all five proposed amendments as final without change. In this final
rule, we also make eight technical and conforming changes to five
regulation sections governing title III System lenders; six changes are
made to correct outdated and erroneous cross-references and two changes
are made to remove references to deleted Sec. 614.4710. Three of the
cross-reference changes were part of our proposed rule and are adopted
without change. We also made five additional technical and conforming
changes in the final rule. We find that publishing a notice and asking
for public comment on these changes is unnecessary and impractical
because they are not substantive and merely correct and update cross-
references in other related parts of our rules.
IV. Section-by-Section Discussion of Comments to the Five Amendments
A. Section 611.1135--Incorporation of Service Corporations
We proposed to amend the relevant sentence of Sec. 611.1135(b) to
clarify that service corporations are not required to offer stock to
every System bank and association. We did not receive any specific
comments on this proposal. We are adopting this proposal as final.
B. Section 612.2155--Employee Reporting
We proposed to amend Sec. 612.2155(d) to require a newly hired
employee to complete a standards of conduct report not later than 5
business days after the new employee's start date. We did not receive
any specific comments on this proposal. We are adopting this proposal
as final.
C. Section 613.3100--Domestic Lending--Banks Operating Under Title III
of the Farm Credit Act
Section 3.8(a) of the Farm Credit Act of 1971, as amended (Act),\1\
provides that an agricultural or aquatic cooperative (that meets
statutory minimum levels of farmer ownership and business with members)
is eligible for financing from a title III System lender if it conforms
to either of the two following requirements:
---------------------------------------------------------------------------
\1\ 12 U.S.C. 2129(a).
---------------------------------------------------------------------------
(1) No member of the association is allowed more than one vote
because of the amount of stock or membership capital he may own
therein; or
(2) Does not pay dividends on stock or membership capital in excess
of such per centum per annum as may be approved under regulations of
the Farm Credit Administration * * *.\2\
---------------------------------------------------------------------------
\2\ As discussed below, even if one of these eligibility
requirements is met, the Act has other requirements that must also
be satisfied in order for a cooperative to borrow from a title III
System lender.
---------------------------------------------------------------------------
Current Sec. 613.3100(b)(1)(iii) provides that an eligible
cooperative must comply with one of the following two conditions:
(A) No member of the cooperative shall have more than one vote
because of the amount of stock or membership capital owned therein; or
(B) The cooperative restricts dividends on stock or membership
capital to 10 percent per year or the maximum percentage per year
permitted by applicable state law, whichever is less.
We proposed to delete the 10-percent limitation, allowing state law
to govern compliance with the dividend requirement.
Commenters who supported the amendment stated that the amendment
would be of significant benefit as cooperatives continue to develop new
ownership structures and capital plans. Other commenters stated changes
to the eligibility provisions in title III of the Act will be necessary
for System lenders to serve new farmer-owned businesses being created
under state laws. These commenters further noted the limited effect of
the regulatory change, stating that the 80-percent farmer voting
control requirement contained in the Act remains a more serious
obstacle for cooperatives.
Commenters who opposed the amendment asserted that the Act requires
the FCA to set the dividend limit and that FCA cannot defer this
authority and responsibility to the states. These commenters stated
that FCA's proposal was therefore arbitrary and capricious. After
careful consideration of these comments, we conclude that it is
appropriate to adopt the proposed section as final for the following
four reasons.
First, we note that Congress gave FCA substantial discretion in
this area. Unlike section 3.8(a)(1), (a)(3), and (a)(4) of the Act,
which prescribe very specific eligibility requirements for
cooperatives,
[[Page 65385]]
section 3.8(a)(2) of the Act leaves the determination of the maximum
dividend percentage solely to the discretion of FCA. It is an
appropriate use of discretion for FCA to look to another authoritative
source of applicable law--state law--in setting this limit. Moreover,
our existing rule--10 percent per year or the maximum percentage per
year permitted by applicable state law, whichever is less--already
generally defers to state law because most states have an 8-percent
limit.
Second, FCA's reference to state law is not ``arbitrary'' in this
context because cooperatives that borrow from a title III System lender
are usually a form of a state-chartered corporation whose organization
and operations are governed by state law. Compliance with state law--
for corporate formation requirements--always impacts the eligibility of
a ``legal entity'' to borrow from the System. Therefore, we believe
that it is reasonable for FCA to defer to state law--an external
authoritative source--in adopting this cooperative eligibility rule.
Third, we disagree with commenters who stated that FCA should look
to the Capper-Volstead Act's limitations on cooperative dividends. As
we noted in the proposed rule's preamble, in the Farm Credit Act of
1971, Congress specifically eliminated the former Farm Credit law's
reference to the Capper-Volstead Act (and its 8-percent dividend
limitation) in providing for cooperative eligibility. Therefore,
Capper-Volstead Act limitations are irrelevant and their application to
FCS eligibility arguably violates congressional intent.
Fourth, after careful consideration of comments to the contrary, we
conclude that FCA's proposed amendment would not have sweeping adverse
effects and would not allow lending to all types of cooperatives. The
Act specifically limits eligibility to agricultural cooperatives that
meet very specific farmer ownership and business with members'
requirements. Nothing in this rule alters those requirements. Moreover,
three non-System organizations representing cooperatives commented that
the proposed rule would benefit agricultural cooperatives and their
farmer members.
For the reasons stated above, we are adopting the proposed
amendment as final.
D. Section 614.4265--Real Property Evaluations
We proposed to eliminate the requirement for a USPAP-compliant real
property appraisal for business loans between $250,000 and $1 million
that are not otherwise exempt under our rules. Supporting commenters
stated that the existing requirement is unduly burdensome and places
System lenders at a competitive disadvantage because non-System lenders
are not required to perform USPAP-compliant appraisals for these types
of business loans. Commenters further added that the existing
requirement does not necessarily ensure greater safety and soundness
because a similar level of analysis is required for collateral
evaluations.
Opposing commenters asserted that the deletion of the proposed
amendment could create numerous safety and soundness problems because
FCA does not have other safeguards in place like other Federal
financial regulators. They stated that the Office of the Comptroller of
the Currency's (OCC) regulations \3\ provide safeguards that do not
exist in FCA's regulations.
---------------------------------------------------------------------------
\3\ See 12 CFR 34.62 (addressing loan portfolio management and
expertise on local markets).
---------------------------------------------------------------------------
FCA believes that our regulations provide safeguards that are
comparable to other financial regulators. Part 614, subpart F
(``Collateral Evaluation Requirements'') of our regulations requires
well-defined and effective collateral evaluation policies and standards
which cover areas such as:
Criteria for when USPAP collateral appraisals are required
rather than a collateral evaluation;
Accounting for market trends, volatility, and types of
credit;
Using an unbiased and qualified evaluator;
Collateral evaluation standards found in Sec. 614.4250
addressing such items as market value, highest and best use, and
income-producing capacity;
Evaluation requirements found in Sec. 614.4260 addressing
such items as appraiser certifications;
Real property evaluations found in Sec. 614.4265
addressing such items as the approach used and debt-servicing capacity;
Personal and intangible property evaluations found in
Sec. 614.4266 addressing such items as comparisons of value, and USPAP
Competency and Ethics Provisions; and
Professional association membership.
Some commenters asserted that FCA's appraisal regulations
pertaining to independence standards are not as stringent as the OCC
regulations in 12 CFR 34.45.
FCA finds that its regulations on appraisal independence are as
stringent as those of other regulators. Multiple FCA regulation
sections address independence, such as:
Section 614.4255, which is devoted exclusively to
``Independence Requirements,'' outlines clear prohibitions for
directors, officers, employees, real estate appraisers, and fee
appraisers. In addition, this section prohibits persons performing a
collateral evaluation from involvement in credit decisions.
Section 614.4240(n) defines qualified evaluators as
persons who are competent, reputable, impartial, and have demonstrated
sufficient training and experience.
Section 614.4245(a)(3) requires System institution
policies and standards to ensure that collateral evaluations are
completed by a qualified evaluator in an unbiased manner.
Commenters also contended that removing the USPAP requirement could
result in ``inflated land values.'' We believe that removing this
requirement will not inflate collateral values and thus, will not
adversely impact the System's safety and soundness. For business loans
under $1 million, real property evaluations will be required. Section
614.4265 contains specific requirements of those real property
evaluations such as:
Determining market value that considers approaches using
income capitalization, sales comparisons, and/or costs.
Evaluating and documenting the income and debt-servicing
capacity for the property and operation for transaction values over
$250,000.
Identifying nonagricultural influences.
Several commenters stated that Federal Reserve Regulation Y
generally requires ``outside'' appraisals for transactions over
$250,000, and that FCA's requirement should be the same. We believe our
requirements are essentially the same. Regulation Y at 12 CFR
225.63(a)(1) requires appraisals by a state-certified or licensed
appraiser for non-business loan transactions with values more than
$250,000. FCA's requirements at Sec. 614.4260(b)(1) also require
appraisals by a state-certified or licensed appraiser for non-business
loan transactions over $250,000. Regulation Y at 12 CFR 225.63(a)(5)
requires an appraisal by a state-certified or licensed appraiser for a
business loan transaction over $1 million. Section 614.4260(c)(2) also
requires an appraisal by a state-certified or licensed appraiser for a
business loan transaction over $1 million.
Several commenters stated that FCA's proposal regarding appraisal
requirements for business loans was not comparable to other Federal
financial regulators. FCA finds that its
[[Page 65386]]
requirements are very similar to those of other regulators. The
amendment will make our regulations more comparable to the:
Federal Reserve's regulation at 12 CFR 225.63(a)(5).
Federal Deposit Insurance Corporation's regulation at 12
CFR 323.3(a)(5).
Office of Thrift Supervision's regulation at 12 CFR
464.3(a)(5).
OCC's regulation at 12 CFR 34.43(a)(5).
For the reasons stated above, we are adopting the proposed
amendment as final.
E. Section 614.4710--Bankers' Acceptance Financing
We proposed to delete Sec. 614.4710, pertaining to bankers'
acceptance financing, in its entirety. We did not receive any specific
comments on this proposal. We are adopting this proposal as final.
V. Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), FCA hereby certifies that the final rule will not
have a significant economic impact on a substantial number of small
entities. Each of the banks in the Farm Credit System, considered
together with its affiliated associations, has assets and annual income
in excess of the amounts that would qualify them as small entities.
Therefore, FCS institutions are not ``small entities'' as defined in
the Regulatory Flexibility Act.
List of Subjects
12 CFR Part 611
Agriculture, Banks, banking, Rural areas.
12 CFR Part 612
Agriculture, Banks, banking, Conflicts of interest, Crime,
Investigations, Rural areas.
12 CFR Part 613
Agriculture, Banks, banking, Credit, Rural areas.
12 CFR Part 614
Agriculture, Banks, banking, Foreign trade, Reporting and
recordkeeping requirements, Rural areas.
12 CFR Part 615
Accounting, Agriculture, Banks, banking, Government securities,
Investments, Rural areas.
0
For the reasons stated in the preamble, parts 611, 612, 613, 614, and
615 of chapter VI, title 12 of the Code of Federal Regulations are
amended as follows:
PART 611--ORGANIZATION
0
1. The authority citation for part 611 is revised to read as follows:
Authority: Secs. 1.3, 1.4, 1.13, 2.0, 2.1, 2.10, 2.11, 3.0, 3.2,
3.21, 4.12, 4.12A, 4.15, 4.20, 4.21, 5.9, 5.10, 5.17, 6.9, 6.26,
7.0-7.13, 8.5(e) of the Farm Credit Act (12 U.S.C. 2011, 2012, 2021,
2071, 2072, 2091, 2092, 2121, 2123, 2142, 2183, 2184, 2203, 2208,
2209, 2243, 2244, 2252, 2278a-9, 2278b-6, 2279a-2279f-1, 2279aa-
5(e)); secs. 411 and 412 of Pub. L. 100-233, 101 Stat. 1568, 1638;
secs. 409 and 414 of Pub. L. 100-399, 102 Stat. 989, 1003, and 1004.
Subpart I--Service Organizations
0
2. Amend Sec. 611.1135 by revising paragraph (b) to read as follows:
Sec. 611.1135 Incorporation of service corporations.
* * * * *
(b) Who may own equities in your service corporation?
(1) Your service corporation may only issue voting and non-voting
stock to:
(i) One or more Farm Credit banks and associations; and
(ii) Persons that are not Farm Credit banks or associations,
provided that at least 80 percent of the voting stock is at all times
held by Farm Credit banks or associations.
(2) For the purposes of this subpart, we define persons as
individuals or legal entities organized under the laws of the United
States or any state or territory thereof.
* * * * *
PART 612--STANDARDS OF CONDUCT AND REFERRAL OF KNOWN OR SUSPECTED
CRIMINAL VIOLATIONS
0
3. The authority citation for part 612 continues to read as follows:
Authority: Secs. 5.9, 5.17, 5.19 of the Farm Credit Act (12
U.S.C. 2243, 2252, 2254).
Subpart A--Standards of Conduct
0
4. Amend 612.2155 by revising paragraph (d) to read as follows:
Sec. 612.2155 Employee reporting.
* * * * *
(d) A newly hired employee shall report matters required to be
reported in paragraphs (a), (b), and (c) of this section to the
Standards of Conduct Official 5 business days after starting employment
and thereafter shall comply with the requirements of this section.
PART 613--ELIGIBILITY AND SCOPE OF FINANCING
0
5. The authority citation for part 613 continues to read as follows:
Authority: Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 2.2, 2.4, 2.12, 3.1,
3.7, 3.8, 3.22, 4.18A, 4.25, 4.26, 4.27, 5.9, 5.17 of the Farm
Credit Act (12 U.S.C. 2013, 2015, 2017, 2018, 2019, 2073, 2075,
2093, 2122, 2128, 2129, 2143, 2206a, 2211, 2212, 2213, 2243, 2252).
Subpart B--Financing for Banks Operating Under Title III of the
Farm Credit Act
0
6. Amend Sec. 613.3100 by revising paragraphs (b)(1)(iii)(B) and
(d)(1) to read as follows:
Sec. 613.3100 Domestic lending.
* * * * *
(b) * * *
(1) * * *
* * * * *
(iii) * * *
(A) * * *
(B) The cooperative restricts dividends on stock or membership
capital to the maximum percentage per year permitted by applicable
state law.
* * * * *
(d) Water and waste disposal facilities--(1) Eligibility. A
cooperative or a public agency, quasi-public agency, body, or other
public or private entity that, under the authority of state or local
law, establishes and operates water and waste disposal facilities in a
rural area, as that term is defined by paragraph (a)(4) of this
section, is eligible to borrow from a bank for cooperatives or an
agricultural credit bank.
* * * * *
PART 614--LOAN POLICIES AND OPERATIONS
0
7. The authority citation for part 614 continues to read as follows:
Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128; secs.
1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12,
2.13, 2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A,
4.13B, 4.14, 4.14A, 4.14C, 4.14D, 4.14E, 4.18, 4.18A, 4.19, 4.25,
4.26, 4.27, 4.28, 4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.8,
7.12, 7.13, 8.0, 8.5 of the Farm Credit Act (12 U.S.C. 2011, 2013,
2014, 2015, 2017, 2018, 2019, 2071, 2073, 2074, 2075, 2091, 2093,
2094, 2097, 2121, 2122, 2124, 2128, 2129, 2131, 2141, 2149, 2183,
2184, 2201, 2202, 2202a, 2202c, 2202d, 2202e, 2206, 2206a, 2207,
2211, 2212, 2213, 2214, 2219a, 2219b, 2243, 2244, 2252, 2279a,
2279a-2, 2279b, 2279c-1, 2279f, 2279f-1, 2279aa, 2279aa-5); sec. 413
of Pub. L. 100-233, 101 Stat. 1568, 1639.
[[Page 65387]]
Subpart A--Lending Authorities
0
8. Amend Sec. 614.4010 by revising paragraphs (d)(1) and (d)(2) to
read as follows:
Sec. 614.4010 Agricultural credit banks.
* * * * *
(d) * * *
(1) Eligible cooperatives, as defined in Sec. 613.3100(b)(1), in
accordance with Sec. Sec. 614.4200, 614.4231, 614.4232, 614.4233, and
subpart Q of part 614;
(2) Other eligible entities, as defined in Sec. 613.3100(b)(2), in
accordance with Sec. Sec. 614.4200, 614.4231, and 614.4232;
* * * * *
Sec. 614.4020 [Amended]
0
9. Amend Sec. 614.4020 by:
0
a. Removing the reference ``Sec. 613.3110'' and adding in its place,
the reference ``Sec. 613.3100(b)(1)'' in paragraph (a)(1); and
0
b. Removing the reference ``Sec. 613.3110(c)'' and adding in its
place, the reference ``Sec. 613.3100(b)(2)'' in paragraph (a)(2).
Subpart F--Collateral Evaluation Requirements
Sec. 614.4265 [Amended]
0
10. Amend Sec. 614.4265 by removing paragraph (c) and redesignating
paragraphs (d), (e), (f), (g), and (h) as (c), (d), (e), (f), and (g),
respectively.
Subpart J--Lending and Leasing Limits
0
11. Amend Sec. 614.4355 by:
0
a. Revising paragraph (a)(8) to read as follows; and
0
b. Removing the reference ``Sec. 614.4321'' and adding in its place,
the reference ``Sec. 614.4720'' in paragraph (a)(9).
Sec. 614.4355 Banks for cooperatives.
* * * * *
(a) * * *
(8) Commodity loans qualifying under Sec. 614.4231: 50 percent.
* * * * *
Subpart Q--Banks for Cooperatives and Agricultural Credit Banks
Financing International Trade
Sec. 614.4710 [Removed]
0
12. Remove and reserve Sec. 614.4710.
PART 615--FUNDING AND FISCAL AFFAIRS, LOAN POLICIES AND OPERATIONS,
AND FUNDING OPERATIONS
0
13. The authority citation for part 615 continues to read as follows:
Authority: Secs. 1.5, 1.7, 1.10, 1.11, 1.12, 2.2, 2.3, 2.4, 2.5,
2.12, 3.1, 3.7, 3.11, 3.25, 4.3, 4.3A, 4.9, 4.14B, 4.25, 5.9, 5.17,
6.20, 6.26, 8.0, 8.3, 8.4, 8.6, 8.7, 8.8, 8.10, 8.12 of the Farm
Credit Act (12 U.S.C. 2013, 2015, 2018, 2019, 2020, 2073, 2074,
2075, 2076, 2093, 2122, 2128, 2132, 2146, 2154, 2154a, 2160, 2202b,
2211, 2243, 2252, 2278b, 2278b-6, 2279aa, 2279aa-3, 2279aa-4,
2279aa-6, 2279aa-7, 2279aa-8, 2279aa-10, 2279aa-12); sec. 301(a) of
Pub. L. 100-233, 101 Stat. 1568, 1608.
Subpart Q--Bankers' Acceptances
0
14. Revise Sec. 615.5550 to read as follows:
Sec. 615.5550 Bankers' acceptances.
Banks for cooperatives may rediscount with other purchasers the
acceptances they have created. The bank for cooperatives' board of
directors, under established policies, may delegate this authority to
management.
Dated: November 3, 2006.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. E6-18841 Filed 11-7-06; 8:45 am]
BILLING CODE 6705-01-P
