Premiums, 17371-17374 [E9-8535]

Download as PDF 17371 Rules and Regulations Federal Register Vol. 74, No. 71 Wednesday, April 15, 2009 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. Wednesday, April 1, 2009, make the following correction: On page 14706, TABLE 1—SHEEP AND GOATS: IMPORTS AND EXPORTS, 2007 should be corrected as follows: DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 9 CFR Part 71 [Docket No. 00–094–2] RIN 0579–AB84 Interstate Movement of Sheep and Goats Correction In rule document E9–7233 beginning on page 14703 in the issue of TABLE 1—SHEEP AND GOATS: IMPORTS AND EXPORTS, 2007 Imports Item Exports Value in millions Numbers Numbers Value in millions Sheep ............................................................................................................... Goats ............................................................................................................... 92 33 $0.058 0.010 116,618 9,231 $8.148 0.597 Total .......................................................................................................... 125 0.068 125,849 8.745 Source: Global Trade Atlas, November 2008. [FR Doc. Z9–7233 Filed 4–14–09; 8:45 am] BILLING CODE 1505–01–D FARM CREDIT SYSTEM INSURANCE CORPORATION 12 CFR Part 1410 RIN 3055–AA10 Premiums rwilkins on PROD1PC63 with RULES AGENCY: Farm Credit System Insurance Corporation. ACTION: Direct final rule. SUMMARY: The Farm Credit System Insurance Corporation (FCSIC or Corporation) is issuing a direct final rule amending its premium regulations to reflect the amendments of the Farm VerDate Nov<24>2008 16:06 Apr 14, 2009 Jkt 217001 Credit Act of 1971 that were made by the enactment of the Food, Conservation, and Energy Act of 2008. The purpose of the amended rule is to clarify the premium regulations and eliminate provisions of the premium regulations that are obsolete or inconsistent with the Farm Credit Act of 1971, as amended. DATES: If we receive no significant adverse comment on or before May 15, 2009, these regulations will be effective upon the expiration of 30 days after publication in the Federal Register during which either or both Houses of Congress are in session. We will publish notice of the effective date in the Federal Register. If we receive significant adverse comment on an amendment, paragraph, PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 or section of the rule, and that provision may be addressed separately from the remainder of the rule, we will withdraw that amendment, paragraph, or section and adopt as final those provisions of the rule that are not the subject of a significant adverse comment. ADDRESSES: You may send comments by electronic mail through the ‘‘Contact Us’’ section of FCSIC’s Web site, https://www.fcsic.gov, or through the Governmentwide www.regulations.gov portal. You may also send comments to James M. Morris, General Counsel, at morrisj@fcsic.gov or by mail at the address listed below. Copies of all comments we receive may be reviewed in our office in McLean, Virginia. FOR FURTHER INFORMATION CONTACT: James M. Morris, General Counsel, Farm E:\FR\FM\15APR1.SGM 15APR1 17372 Federal Register / Vol. 74, No. 71 / Wednesday, April 15, 2009 / Rules and Regulations Credit System Insurance Corporation, 1501 Farm Credit Drive, McLean, VA 22102, 703–883–4380, TTY 703–883– 4390, Fax 703–790–9088. SUPPLEMENTARY INFORMATION: Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub. L. 96– 354, 5 U.S.C. 601 et seq.), it is certified that the rule will not have significant impact on a substantial number of small entities. Each of the banks in the Farm Credit System (FCS or System), considered together with its affiliated associations, has assets and annual income in excess of the amounts that qualify them as small entities. Therefore, System banks are not ‘‘small entities’’ as defined in the Regulatory Flexibility Act. Direct Final Rulemaking rwilkins on PROD1PC63 with RULES We are amending our premium regulations using the ‘‘direct final’’ procedure for rulemaking. Direct final rulemaking permits agencies to adopt noncontroversial rules on an expedited basis, without going through the usual proposed and final stages of notice-andcomment rulemaking. This process enables us to reduce the time and resources we need to develop, review, and publish a noncontroversial final rule while still affording the public an adequate opportunity to comment on or object to the rule. Direct final rulemaking was recommended by the Administrative Conference of the United States.1 In direct final rulemaking, we notify the public that a rule will become final on a specified future date unless we receive significant adverse comment during the comment period specified in the notice. A significant adverse comment is one where the commenter explains why the rule would be inappropriate (including challenges to its underlying premise or approach), ineffective, or unacceptable without a change. In general, a significant adverse comment would raise an issue serious enough to warrant a substantive response from us in a notice-andcomment rulemaking. We believe these amendments are noncontroversial. As discussed below, the provisions of the Farm Credit Act of 1971 (Act) 2 that govern FCSIC premiums were recently amended. Some of FCSIC’s existing premium regulations are inconsistent with the 1 Recommendation 95–4, referencing the Administrative Procedure Act (APA) ‘‘good cause’’ exemption at 5 U.S.C. 553(b)(B) (adopted June 15, 1995). 2 12 U.S.C. 2001 et seq. VerDate Nov<24>2008 16:06 Apr 14, 2009 Jkt 217001 amended provisions of the Act. Generally, regulatory provisions that are inconsistent with subsequent statutory amendments are invalidated by operation of law. The Corporation wishes to amend its regulations in order to minimize any potential for confusion and clarify the regulations. This rule withdraws regulations that are inconsistent with the amended provisions of the Act and clarifies the effect of these amended statutory provisions. We do not anticipate significant adverse comment on this rulemaking. If we receive no significant adverse comment, we will publish a notice of the effective date of the rule in accordance with applicable law. If we do receive significant adverse comment during the comment period, we will publish a notice of withdrawal of the relevant portions of this rule. Our notice will also indicate how further rulemaking would proceed. Background The Farm Credit System Insurance Corporation (FCSIC or Corporation) insures the timely payment of principal and interest on insured debt obligations issued by Farm Credit System banks. On March 23, 2007, the Corporation’s Board of Directors adopted a legislative proposal requesting that the Congress amend the Act to, inter alia, base premiums on the outstanding insured debt obligations instead of loans, and permit the Corporation to collect a broader range of premiums on insured debt. Provisions incorporating the legislative proposal became a part of versions of proposed Farm Bills in the House and Senate. Ultimately, enactment of the Food, Conservation, and Energy Act (FCE Act) 3 in 2008 amended the provisions of the Farm Credit Act of 1971 4 that govern FCSIC premiums to include 5 the Corporation’s proposed changes. As amended, the Act’s provisions assess premiums that are generally based on each bank’s pro rata share of outstanding insured debt obligations (rather than on loans), aligning premiums with the obligations that 3 Public Law 110–234 (2008), Public Law 110– 246, 122 Stat. 1651 (2008). 4 12 U.S.C. 2001 et seq. 5 The House and Senate passed H.R. 2419 over veto, enacting 14 of 15 Farm Bill titles into law. On May 22, 2008, H.R. 2419 became Public Law 110– 234. Because one title of the Farm Bill was omitted from H.R. 2419, in June 2008, Congress passed a new bill, H.R. 6124, enacting 15 Farm Bill titles. On June 18, 2008, H.R. 6124 became Public Law 110– 246. Corresponding amendments of the premium provisions of the Farm Credit Act were included in both H.R. 2419 and H.R. 6124. PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 FCSIC insures. The amendments reduce the total insured debt obligations on which premiums are assessed by 90 percent of Federal governmentguaranteed loans and investments and 80 percent of State governmentguaranteed loans and investments, and deduct similar percentages of such guaranteed loans and investments when calculating the ‘‘secure base amount.’’ If the Farm Credit Insurance Fund is below the secure base amount, the amended Act requires that each insured Farm Credit System bank pay FCSIC the premium due from the bank, which shall be equal to (a) the adjusted average outstanding insured obligations multiplied by 0.0020; and (b) the average principal outstanding on loans in nonaccrual status and average amount outstanding of other than temporarily impaired investments multiplied by 0.0010; subject to FCSIC’s power to reduce the premium in its sole discretion. The statutory amendments also clarified that FCSIC may collect premiums more frequently than annually. The amended Act provides that each insured System bank shall file with the Corporation a certified statement showing the amount of the premium due the Corporation from the bank. The Act mandates that each insured System bank shall pay to the Corporation the premium payments required under the statute not more frequently than once in each calendar quarter, in such manner and at such one or more times as the Board of Directors shall prescribe. The certified statement is to be filed on a date to be determined in the sole discretion of the Corporation. Under existing regulations, the certified statement and payments must be received by January 31.6 No change is being made to this date. In June 2008, the Corporation’s Board of Directors took action to implement the amendments of the Act’s premium provisions. The Board implemented (effective on July 1, 2008) the new premium rates and calculation method and adjusted the premiums pursuant to the Corporation’s authority under section 5.55(a)(3) of the Act, as amended by the FCE Act. Consistent with the Corporation’s past practice of generally adjusting premium rates quarterly, the new rates were made effective at the beginning of the next quarter, July 1, 2008. The Corporation has existing regulations concerning premiums.7 The Corporation has concluded that some of those regulations are inconsistent with 6 12 7 12 E:\FR\FM\15APR1.SGM CFR 1410.4. CFR part 1410. 15APR1 rwilkins on PROD1PC63 with RULES Federal Register / Vol. 74, No. 71 / Wednesday, April 15, 2009 / Rules and Regulations the provisions of the Act, as amended by the FCE Act. Generally, regulatory provisions that are inconsistent with subsequent statutory amendments are invalidated by operation of law. The Corporation is amending its regulations in order to minimize any potential for confusion and clarify the regulations. The rule withdraws regulations that are inconsistent with the FCE Act and clarifies the effect of the premium provisions of the Act as amended by the FCE Act. The provisions of the amended rule are consistent with the June 2008 action of the FCSIC Board of Directors implementing the new statutory premium calculations as of July 1, for the second half of 2008. The amended provisions of the Act are not applied retroactively and premiums are calculated under the old method for the first half of 2008. In order to provide a measured and structured transition to the new premium levels, the Board of Directors, in its June action, also exercised its discretion under section 5.55(a)(3) of the Act to reduce the premiums from the 20 basis points rate imposed by the amended Act to an annualized rate of 15 basis points on the adjusted average outstanding insured obligations for the 3rd quarter of 2008, and to an annualized rate of 18 basis points on the adjusted average outstanding insured obligations for the 4th quarter of 2008. The amended rule reflects these rates. The Corporation is generally limiting its current regulatory amendments to those that are necessary in order to eliminate provisions that are obsolete or inconsistent with the FCE Act. Accordingly, new regulatory definitions are not being added. While two new terms, ‘‘investment’’ and ‘‘other than temporarily impaired,’’ were added by the FCE Act, those terms can be interpreted as accounting terms. If experience under the new statutory provisions leads us to believe that these or other terms should be defined, those definitions will be added later. A section of the existing regulations 8 provides that copies of the certified statements are available from the Corporation. The Corporation is amending this section to remove outdated references, but is not otherwise amending this provision. The banks and others may obtain copies of the current certified statements for 2008 by contacting the Corporation. The FCE Act amendments clarified that, in addition to FCSIC’s regulatory authority under title V of the Farm Credit Act, FCSIC has authority to adopt 8 12 16:06 Apr 14, 2009 List of Subjects in 12 CFR Part 1410 Banks, Banking, Insurance, Reporting and recordkeeping requirements. ■ For the reasons stated in the preamble, part 1410 of chapter XIV, title 12 of the Code of Federal Regulations is amended as follows: PART 1410—PREMIUMS 1. The authority citation for part 1410 is revised to read as follows: ■ Authority: Secs. 12 U.S.C. 2020, 2277a–4, 2277a–5, 2277a–7. 2. Amend § 1410.2 as follows: a. Revise paragraph (b); b. Add the words ‘‘or investments’’ after the words ‘‘Governmentguaranteed loans’’ in the heading of paragraph (d); and ■ c. Add the words ‘‘or investments’’ after the words ‘‘loans or credits’’ each place they appear in the introductory text of paragraph (d); and ■ d. Remove the words ‘‘the Federal Intermediate Credit Bank of Jackson and’’ from paragraph (e). The revision reads as follows: ■ ■ ■ § 1410.2 Definitions. * * * * * (b) Average principal outstanding means the average annual principal outstanding on a daily basis using balances as of the close of each day. In computing the average annual principal outstanding in this manner, the closing balance of the most recent past business day shall be the closing balance for days when an institution is closed. * * * * * ■ 3. Revise § 1410.3 to read as follows: § 1410.3 Calculation and reporting of premiums due. (a) Reporting. For purposes of computing premiums, each insured CFR 1410.6. VerDate Nov<24>2008 rules and regulations concerning provisions in title I of the Farm Credit Act that govern Farm Credit System banks passing along cost of insurance premiums. We note that section 1.12(b) of the Act, as amended by the FCE Act, no longer specifies how the Farm Credit System banks pass the cost of premiums to associations and other financing institutions, but requires that the banks do so ‘‘in an equitable manner, as determined by the Corporation.’’ This change gives the Farm Credit System banks flexibility in allocating premium costs to associations and other financing institutions. At this time, the Corporation is not amending regulations concerning section 1.12(b) or the manner in which the cost of such premiums are passed to associations and other financing institutions. Jkt 217001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 17373 bank shall, without limitation, report all information concerning the insured bank; each direct lending association that is receiving (or has received) funds provided through the insured bank; and each other financing institution that is receiving (or has received) funds provided through the insured bank; that the Corporation determines is necessary in order to compute the premiums due under the Act. (b) Calculating the premium payment for periods from July 1, 2008 through December 31, 2008. (1) The premium payment for the 3rd Quarter 2008 (defined for purposes of this section as the period from July 1, 2008 through September 30, 2008) and the premium payment for the 4th Quarter 2008 (defined for purposes of this section as the period October 1, 2008, through December 31, 2008) shall be equal to 25 percent of the amount computed by applying the premium calculation formulas contained in sections 5.55 and 5.56 of the Act (unless reduced by the Corporation acting under section 5.55(a)(3) of the Act or under paragraph (d) of this section) to the insured bank during the 3rd Quarter 2008 or 4th Quarter 2008, respectively. (2) In accord with paragraph (b)(1) of this section, the premium payment for the 3rd Quarter 2008 (having been reduced by the Corporation acting under section 5.55(a)(3) of the Act) shall be equal to 25 percent of the following amount: (i) The average outstanding insured obligations issued by the bank for the period, after deducting from the obligations the percentages of the guaranteed portions of loans and investments described in section 5.55(a)(2) of the Act, multiplied by 0.0015; and (ii) The product obtained by multiplying— (A) The sum of— (1) The average principal outstanding for the period on loans made by the bank (computed in accord with section 5.55 of the Act) that are in nonaccrual status; and (2) The average amount outstanding for the period of other-than-temporarily impaired investments made by the bank (computed in accord with section 5.55 of the Act); (B) By 0.0010. (3) In accord with paragraph (b)(1) of this section, the premium payment for the 4th Quarter 2008 (having been reduced by the Corporation acting under section 5.55(a)(3) of the Act) shall be equal to 25 percent of the following amount: (i) The average outstanding insured obligations issued by the bank for the E:\FR\FM\15APR1.SGM 15APR1 rwilkins on PROD1PC63 with RULES 17374 Federal Register / Vol. 74, No. 71 / Wednesday, April 15, 2009 / Rules and Regulations period, after deducting from the obligations the percentages of the guaranteed portions of loans and investments described in section 5.55(a)(2) of the Act, multiplied by 0.0018; and (ii) The product obtained by multiplying— (A) The sum of— (1) The average principal outstanding for the period on loans made by the bank (computed in accord with section 5.55 of the Act) that are in nonaccrual status; and (2) The average amount outstanding for the period of other-than-temporarily impaired investments made by the bank (computed in accord with section 5.55 of the Act); (B) By 0.0010. (c) Calculating the premium payment for periods in 2009 and subsequent years. (1) The premium payment for periods in calendar year 2009 and subsequent years shall be equal to the amount computed by applying the premium calculation formulas contained in sections 5.55 and 5.56 of the Act (unless reduced by the Corporation acting under section 5.55(a)(3) of the Act or under paragraph (d) of this section) to the insured bank during the period. (2) In accord with paragraph (c)(1) of this section, the premium payment for the period shall (unless reduced by the Corporation acting under section 5.55(a)(3) of the Act or under paragraph (d) of this section) be equal to: (i) The average outstanding insured obligations issued by the bank for the period, after deducting from the obligations the percentages of the guaranteed portions of loans and investments described in section 5.55(a)(2), multiplied by 0.0020; and (ii) The product obtained by multiplying— (A) The sum of— (1) The average principal outstanding for the period on loans made by the bank (computed in accord with section 5.55 of the Act) that are in nonaccrual status; and (2) The average amount outstanding for the period of other than temporarily impaired investments made by the bank (computed in accord with section 5.55 of the Act); (B) By 0.0010. (d) Secure base amount. In addition to the Corporation’s authority to reduce premiums under section 5.55(a)(3) of the Act, upon reaching the secure base amount determined by the Corporation in accordance with section 5.55 of the Act, the annual premium to be paid by each insured bank, computed in accordance with paragraphs (b) and (c) VerDate Nov<24>2008 16:06 Apr 14, 2009 Jkt 217001 of this section, shall be reduced by a percentage determined by the Corporation so that the aggregate of the premiums payable by all of the Farm Credit banks for the following calendar year is sufficient to ensure that the Insurance Fund balance is maintained at not less than the secure base amount. The Corporation shall announce any such percentage no later than December 31 of the year prior to the January in which such premiums are to be paid. § 1410.4 [Amended] 4. Amend § 1410.4 as follows: a. Remove paragraph (a); b. Redesignate paragraphs (b) and (c) as paragraphs (a) and (b), respectively; ■ c. Remove the heading from newly designated paragraph (a) and add the word ‘‘Payments.’’ as the new heading; and ■ d. Add the words, ‘‘sections 5.55 and 5.56 of the Act, and’’ after the words ‘‘in accordance with’’ in the first sentence of newly designated paragraph (a). ■ ■ ■ § 1410.6 [Amended] 5. Amend § 1410.6(a) as follows: a. Remove the words ‘‘The following forms are available from the Corporation:’’ from paragraph (a) introductory text; and ■ b. Remove paragraphs (a)(1) and (a)(2). ■ ■ Dated: April 9, 2009. Roland E. Smith, Secretary to the Board, Farm Credit System Insurance Corporation. [FR Doc. E9–8535 Filed 4–14–09; 8:45 am] BILLING CODE 6710–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 23 [Docket No. CE293; Special Conditions No. 23–233–SC] Special Conditions: Spectrum Aeronautical, LLC Model Freedom S–40 Airplane Special Conditions for Flight Performance, Flight Characteristics, and Operating Limitations AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final special conditions; request for comments. SUMMARY: These special conditions are issued for the Spectrum Aeronautical, LLC Model Freedom S–40 airplane. This airplane will have a novel or unusual design feature(s) associated with engine location, certain performance, flight PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 characteristics and operating limitations necessary for this type of airplane. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. DATES: The effective date of these special conditions is April 2, 2009. We must receive your comments by June 1, 2009. ADDRESSES: Mail your comments in duplicate to: Federal Aviation Administration, Regional Counsel, ACE–7, Attn: Rules Docket No. CE293, 901 Locust, Room 506, Kansas City, Missouri 64106; or deliver your comments in duplicate to the Regional Counsel at the above address. Comments must be marked: Docket No. CE293. Comments may be inspected in the Rules Docket weekdays, except Federal holidays, between 7:30 a.m. and 4 p.m. FOR FURTHER INFORMATION CONTACT: Ross Schaller, Federal Aviation Administration, Aircraft Certification Service, Small Airplane Directorate, ACE–111, 901 Locust, Room 301, Kansas City, Missouri, 816–329–4162, fax 816–329–4090. SUPPLEMENTARY INFORMATION: The FAA has determined that notice and opportunity for prior public comment hereon are impracticable because these procedures would significantly delay issuance of the approval design and thus delivery of the affected aircraft. In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon issuance. Comments Invited We invite interested people to take part in this rulemaking by sending written comments, data, views, or arguments. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data. Send us your written comments in duplicate. We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel about these special conditions. You may inspect the docket before and after the comment closing date. If you wish to E:\FR\FM\15APR1.SGM 15APR1

Agencies

[Federal Register Volume 74, Number 71 (Wednesday, April 15, 2009)]
[Rules and Regulations]
[Pages 17371-17374]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-8535]


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FARM CREDIT SYSTEM INSURANCE CORPORATION

12 CFR Part 1410

RIN 3055-AA10


Premiums

Agency: Farm Credit System Insurance Corporation.

ACTION: Direct final rule.

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SUMMARY: The Farm Credit System Insurance Corporation (FCSIC or 
Corporation) is issuing a direct final rule amending its premium 
regulations to reflect the amendments of the Farm Credit Act of 1971 
that were made by the enactment of the Food, Conservation, and Energy 
Act of 2008. The purpose of the amended rule is to clarify the premium 
regulations and eliminate provisions of the premium regulations that 
are obsolete or inconsistent with the Farm Credit Act of 1971, as 
amended.

DATES: If we receive no significant adverse comment on or before May 
15, 2009, these regulations will be effective upon the expiration of 30 
days after publication in the Federal Register during which either or 
both Houses of Congress are in session. We will publish notice of the 
effective date in the Federal Register.
    If we receive significant adverse comment on an amendment, 
paragraph, or section of the rule, and that provision may be addressed 
separately from the remainder of the rule, we will withdraw that 
amendment, paragraph, or section and adopt as final those provisions of 
the rule that are not the subject of a significant adverse comment.

ADDRESSES: You may send comments by electronic mail through the 
``Contact Us'' section of FCSIC's Web site, https://www.fcsic.gov, or 
through the Governmentwide www.regulations.gov portal. You may also 
send comments to James M. Morris, General Counsel, at morrisj@fcsic.gov 
or by mail at the address listed below. Copies of all comments we 
receive may be reviewed in our office in McLean, Virginia.

FOR FURTHER INFORMATION CONTACT: James M. Morris, General Counsel, Farm

[[Page 17372]]

Credit System Insurance Corporation, 1501 Farm Credit Drive, McLean, VA 
22102, 703-883-4380, TTY 703-883-4390, Fax 703-790-9088.

SUPPLEMENTARY INFORMATION: 

Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub. 
L. 96-354, 5 U.S.C. 601 et seq.), it is certified that the rule will 
not have significant impact on a substantial number of small entities. 
Each of the banks in the Farm Credit System (FCS or System), considered 
together with its affiliated associations, has assets and annual income 
in excess of the amounts that qualify them as small entities. 
Therefore, System banks are not ``small entities'' as defined in the 
Regulatory Flexibility Act.

Direct Final Rulemaking

    We are amending our premium regulations using the ``direct final'' 
procedure for rulemaking. Direct final rulemaking permits agencies to 
adopt noncontroversial rules on an expedited basis, without going 
through the usual proposed and final stages of notice-and-comment 
rulemaking. This process enables us to reduce the time and resources we 
need to develop, review, and publish a noncontroversial final rule 
while still affording the public an adequate opportunity to comment on 
or object to the rule. Direct final rulemaking was recommended by the 
Administrative Conference of the United States.\1\
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    \1\ Recommendation 95-4, referencing the Administrative 
Procedure Act (APA) ``good cause'' exemption at 5 U.S.C. 553(b)(B) 
(adopted June 15, 1995).
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    In direct final rulemaking, we notify the public that a rule will 
become final on a specified future date unless we receive significant 
adverse comment during the comment period specified in the notice. A 
significant adverse comment is one where the commenter explains why the 
rule would be inappropriate (including challenges to its underlying 
premise or approach), ineffective, or unacceptable without a change. In 
general, a significant adverse comment would raise an issue serious 
enough to warrant a substantive response from us in a notice-and-
comment rulemaking.
    We believe these amendments are noncontroversial. As discussed 
below, the provisions of the Farm Credit Act of 1971 (Act) \2\ that 
govern FCSIC premiums were recently amended. Some of FCSIC's existing 
premium regulations are inconsistent with the amended provisions of the 
Act. Generally, regulatory provisions that are inconsistent with 
subsequent statutory amendments are invalidated by operation of law. 
The Corporation wishes to amend its regulations in order to minimize 
any potential for confusion and clarify the regulations. This rule 
withdraws regulations that are inconsistent with the amended provisions 
of the Act and clarifies the effect of these amended statutory 
provisions.
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    \2\ 12 U.S.C. 2001 et seq.
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    We do not anticipate significant adverse comment on this 
rulemaking. If we receive no significant adverse comment, we will 
publish a notice of the effective date of the rule in accordance with 
applicable law.
    If we do receive significant adverse comment during the comment 
period, we will publish a notice of withdrawal of the relevant portions 
of this rule. Our notice will also indicate how further rulemaking 
would proceed.

Background

    The Farm Credit System Insurance Corporation (FCSIC or Corporation) 
insures the timely payment of principal and interest on insured debt 
obligations issued by Farm Credit System banks.
    On March 23, 2007, the Corporation's Board of Directors adopted a 
legislative proposal requesting that the Congress amend the Act to, 
inter alia, base premiums on the outstanding insured debt obligations 
instead of loans, and permit the Corporation to collect a broader range 
of premiums on insured debt.
    Provisions incorporating the legislative proposal became a part of 
versions of proposed Farm Bills in the House and Senate. Ultimately, 
enactment of the Food, Conservation, and Energy Act (FCE Act) \3\ in 
2008 amended the provisions of the Farm Credit Act of 1971 \4\ that 
govern FCSIC premiums to include \5\ the Corporation's proposed 
changes.
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    \3\ Public Law 110-234 (2008), Public Law 110-246, 122 Stat. 
1651 (2008).
    \4\ 12 U.S.C. 2001 et seq.
    \5\ The House and Senate passed H.R. 2419 over veto, enacting 14 
of 15 Farm Bill titles into law. On May 22, 2008, H.R. 2419 became 
Public Law 110-234. Because one title of the Farm Bill was omitted 
from H.R. 2419, in June 2008, Congress passed a new bill, H.R. 6124, 
enacting 15 Farm Bill titles. On June 18, 2008, H.R. 6124 became 
Public Law 110-246. Corresponding amendments of the premium 
provisions of the Farm Credit Act were included in both H.R. 2419 
and H.R. 6124.
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    As amended, the Act's provisions assess premiums that are generally 
based on each bank's pro rata share of outstanding insured debt 
obligations (rather than on loans), aligning premiums with the 
obligations that FCSIC insures. The amendments reduce the total insured 
debt obligations on which premiums are assessed by 90 percent of 
Federal government-guaranteed loans and investments and 80 percent of 
State government-guaranteed loans and investments, and deduct similar 
percentages of such guaranteed loans and investments when calculating 
the ``secure base amount.'' If the Farm Credit Insurance Fund is below 
the secure base amount, the amended Act requires that each insured Farm 
Credit System bank pay FCSIC the premium due from the bank, which shall 
be equal to (a) the adjusted average outstanding insured obligations 
multiplied by 0.0020; and (b) the average principal outstanding on 
loans in nonaccrual status and average amount outstanding of other than 
temporarily impaired investments multiplied by 0.0010; subject to 
FCSIC's power to reduce the premium in its sole discretion.
    The statutory amendments also clarified that FCSIC may collect 
premiums more frequently than annually. The amended Act provides that 
each insured System bank shall file with the Corporation a certified 
statement showing the amount of the premium due the Corporation from 
the bank. The Act mandates that each insured System bank shall pay to 
the Corporation the premium payments required under the statute not 
more frequently than once in each calendar quarter, in such manner and 
at such one or more times as the Board of Directors shall prescribe. 
The certified statement is to be filed on a date to be determined in 
the sole discretion of the Corporation. Under existing regulations, the 
certified statement and payments must be received by January 31.\6\ No 
change is being made to this date.
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    \6\ 12 CFR 1410.4.
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    In June 2008, the Corporation's Board of Directors took action to 
implement the amendments of the Act's premium provisions. The Board 
implemented (effective on July 1, 2008) the new premium rates and 
calculation method and adjusted the premiums pursuant to the 
Corporation's authority under section 5.55(a)(3) of the Act, as amended 
by the FCE Act. Consistent with the Corporation's past practice of 
generally adjusting premium rates quarterly, the new rates were made 
effective at the beginning of the next quarter, July 1, 2008.
    The Corporation has existing regulations concerning premiums.\7\ 
The Corporation has concluded that some of those regulations are 
inconsistent with

[[Page 17373]]

the provisions of the Act, as amended by the FCE Act. Generally, 
regulatory provisions that are inconsistent with subsequent statutory 
amendments are invalidated by operation of law. The Corporation is 
amending its regulations in order to minimize any potential for 
confusion and clarify the regulations. The rule withdraws regulations 
that are inconsistent with the FCE Act and clarifies the effect of the 
premium provisions of the Act as amended by the FCE Act.
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    \7\ 12 CFR part 1410.
---------------------------------------------------------------------------

    The provisions of the amended rule are consistent with the June 
2008 action of the FCSIC Board of Directors implementing the new 
statutory premium calculations as of July 1, for the second half of 
2008. The amended provisions of the Act are not applied retroactively 
and premiums are calculated under the old method for the first half of 
2008.
    In order to provide a measured and structured transition to the new 
premium levels, the Board of Directors, in its June action, also 
exercised its discretion under section 5.55(a)(3) of the Act to reduce 
the premiums from the 20 basis points rate imposed by the amended Act 
to an annualized rate of 15 basis points on the adjusted average 
outstanding insured obligations for the 3rd quarter of 2008, and to an 
annualized rate of 18 basis points on the adjusted average outstanding 
insured obligations for the 4th quarter of 2008. The amended rule 
reflects these rates.
    The Corporation is generally limiting its current regulatory 
amendments to those that are necessary in order to eliminate provisions 
that are obsolete or inconsistent with the FCE Act. Accordingly, new 
regulatory definitions are not being added. While two new terms, 
``investment'' and ``other than temporarily impaired,'' were added by 
the FCE Act, those terms can be interpreted as accounting terms. If 
experience under the new statutory provisions leads us to believe that 
these or other terms should be defined, those definitions will be added 
later.
    A section of the existing regulations \8\ provides that copies of 
the certified statements are available from the Corporation. The 
Corporation is amending this section to remove outdated references, but 
is not otherwise amending this provision. The banks and others may 
obtain copies of the current certified statements for 2008 by 
contacting the Corporation.
---------------------------------------------------------------------------

    \8\ 12 CFR 1410.6.
---------------------------------------------------------------------------

    The FCE Act amendments clarified that, in addition to FCSIC's 
regulatory authority under title V of the Farm Credit Act, FCSIC has 
authority to adopt rules and regulations concerning provisions in title 
I of the Farm Credit Act that govern Farm Credit System banks passing 
along cost of insurance premiums. We note that section 1.12(b) of the 
Act, as amended by the FCE Act, no longer specifies how the Farm Credit 
System banks pass the cost of premiums to associations and other 
financing institutions, but requires that the banks do so ``in an 
equitable manner, as determined by the Corporation.'' This change gives 
the Farm Credit System banks flexibility in allocating premium costs to 
associations and other financing institutions. At this time, the 
Corporation is not amending regulations concerning section 1.12(b) or 
the manner in which the cost of such premiums are passed to 
associations and other financing institutions.

List of Subjects in 12 CFR Part 1410

    Banks, Banking, Insurance, Reporting and recordkeeping 
requirements.

0
For the reasons stated in the preamble, part 1410 of chapter XIV, title 
12 of the Code of Federal Regulations is amended as follows:

PART 1410--PREMIUMS

0
1. The authority citation for part 1410 is revised to read as follows:

    Authority:  Secs. 12 U.S.C. 2020, 2277a-4, 2277a-5, 2277a-7.

0
2. Amend Sec.  1410.2 as follows:
0
a. Revise paragraph (b);
0
b. Add the words ``or investments'' after the words ``Government-
guaranteed loans'' in the heading of paragraph (d); and
0
c. Add the words ``or investments'' after the words ``loans or 
credits'' each place they appear in the introductory text of paragraph 
(d); and
0
d. Remove the words ``the Federal Intermediate Credit Bank of Jackson 
and'' from paragraph (e).
    The revision reads as follows:


Sec.  1410.2  Definitions.

* * * * *
    (b) Average principal outstanding means the average annual 
principal outstanding on a daily basis using balances as of the close 
of each day. In computing the average annual principal outstanding in 
this manner, the closing balance of the most recent past business day 
shall be the closing balance for days when an institution is closed.
* * * * *

0
3. Revise Sec.  1410.3 to read as follows:


Sec.  1410.3  Calculation and reporting of premiums due.

    (a) Reporting. For purposes of computing premiums, each insured 
bank shall, without limitation, report all information concerning the 
insured bank; each direct lending association that is receiving (or has 
received) funds provided through the insured bank; and each other 
financing institution that is receiving (or has received) funds 
provided through the insured bank; that the Corporation determines is 
necessary in order to compute the premiums due under the Act.
    (b) Calculating the premium payment for periods from July 1, 2008 
through December 31, 2008. (1) The premium payment for the 3rd Quarter 
2008 (defined for purposes of this section as the period from July 1, 
2008 through September 30, 2008) and the premium payment for the 4th 
Quarter 2008 (defined for purposes of this section as the period 
October 1, 2008, through December 31, 2008) shall be equal to 25 
percent of the amount computed by applying the premium calculation 
formulas contained in sections 5.55 and 5.56 of the Act (unless reduced 
by the Corporation acting under section 5.55(a)(3) of the Act or under 
paragraph (d) of this section) to the insured bank during the 3rd 
Quarter 2008 or 4th Quarter 2008, respectively.
    (2) In accord with paragraph (b)(1) of this section, the premium 
payment for the 3rd Quarter 2008 (having been reduced by the 
Corporation acting under section 5.55(a)(3) of the Act) shall be equal 
to 25 percent of the following amount:
    (i) The average outstanding insured obligations issued by the bank 
for the period, after deducting from the obligations the percentages of 
the guaranteed portions of loans and investments described in section 
5.55(a)(2) of the Act, multiplied by 0.0015; and
    (ii) The product obtained by multiplying--
    (A) The sum of--
    (1) The average principal outstanding for the period on loans made 
by the bank (computed in accord with section 5.55 of the Act) that are 
in nonaccrual status; and
    (2) The average amount outstanding for the period of other-than-
temporarily impaired investments made by the bank (computed in accord 
with section 5.55 of the Act);
    (B) By 0.0010.
    (3) In accord with paragraph (b)(1) of this section, the premium 
payment for the 4th Quarter 2008 (having been reduced by the 
Corporation acting under section 5.55(a)(3) of the Act) shall be equal 
to 25 percent of the following amount:
    (i) The average outstanding insured obligations issued by the bank 
for the

[[Page 17374]]

period, after deducting from the obligations the percentages of the 
guaranteed portions of loans and investments described in section 
5.55(a)(2) of the Act, multiplied by 0.0018; and
    (ii) The product obtained by multiplying--
    (A) The sum of--
    (1) The average principal outstanding for the period on loans made 
by the bank (computed in accord with section 5.55 of the Act) that are 
in nonaccrual status; and
    (2) The average amount outstanding for the period of other-than-
temporarily impaired investments made by the bank (computed in accord 
with section 5.55 of the Act);
    (B) By 0.0010.
    (c) Calculating the premium payment for periods in 2009 and 
subsequent years. (1) The premium payment for periods in calendar year 
2009 and subsequent years shall be equal to the amount computed by 
applying the premium calculation formulas contained in sections 5.55 
and 5.56 of the Act (unless reduced by the Corporation acting under 
section 5.55(a)(3) of the Act or under paragraph (d) of this section) 
to the insured bank during the period.
    (2) In accord with paragraph (c)(1) of this section, the premium 
payment for the period shall (unless reduced by the Corporation acting 
under section 5.55(a)(3) of the Act or under paragraph (d) of this 
section) be equal to:
    (i) The average outstanding insured obligations issued by the bank 
for the period, after deducting from the obligations the percentages of 
the guaranteed portions of loans and investments described in section 
5.55(a)(2), multiplied by 0.0020; and
    (ii) The product obtained by multiplying--
    (A) The sum of--
    (1) The average principal outstanding for the period on loans made 
by the bank (computed in accord with section 5.55 of the Act) that are 
in nonaccrual status; and
    (2) The average amount outstanding for the period of other than 
temporarily impaired investments made by the bank (computed in accord 
with section 5.55 of the Act);
    (B) By 0.0010.
    (d) Secure base amount. In addition to the Corporation's authority 
to reduce premiums under section 5.55(a)(3) of the Act, upon reaching 
the secure base amount determined by the Corporation in accordance with 
section 5.55 of the Act, the annual premium to be paid by each insured 
bank, computed in accordance with paragraphs (b) and (c) of this 
section, shall be reduced by a percentage determined by the Corporation 
so that the aggregate of the premiums payable by all of the Farm Credit 
banks for the following calendar year is sufficient to ensure that the 
Insurance Fund balance is maintained at not less than the secure base 
amount. The Corporation shall announce any such percentage no later 
than December 31 of the year prior to the January in which such 
premiums are to be paid.


Sec.  1410.4  [Amended]

0
4. Amend Sec.  1410.4 as follows:
0
a. Remove paragraph (a);
0
b. Redesignate paragraphs (b) and (c) as paragraphs (a) and (b), 
respectively;
0
c. Remove the heading from newly designated paragraph (a) and add the 
word ``Payments.'' as the new heading; and
0
d. Add the words, ``sections 5.55 and 5.56 of the Act, and'' after the 
words ``in accordance with'' in the first sentence of newly designated 
paragraph (a).


Sec.  1410.6  [Amended]

0
5. Amend Sec.  1410.6(a) as follows:
0
a. Remove the words ``The following forms are available from the 
Corporation:'' from paragraph (a) introductory text; and
0
b. Remove paragraphs (a)(1) and (a)(2).

    Dated: April 9, 2009.
Roland E. Smith,
Secretary to the Board, Farm Credit System Insurance Corporation.
[FR Doc. E9-8535 Filed 4-14-09; 8:45 am]
BILLING CODE 6710-01-P