Advance Notice of Proposed Rulemaking-Young, Beginning, and Small Farmers and Ranchers, 5389-5392 [2019-02884]

Download as PDF Federal Register / Vol. 84, No. 35 / Thursday, February 21, 2019 / Proposed Rules 5389 DEFINITIONS OF MEASURES USED IN THE FINANCIAL RATIOS METHOD—Continued Variables Description Net Income before Taxes/ Total Assets (%). Nonperforming Loans and Leases/Gross Assets (%). Income (before applicable income taxes and discontinued operations) for the most recent twelve months divided by total assets.1 Sum of total loans and lease financing receivables past due 90 or more days and still accruing interest and total nonaccrual loans and lease financing receivables (excluding, in both cases, the maximum amount recoverable from the U.S. Government, its agencies or government-sponsored enterprises, under guarantee or insurance provisions) divided by gross assets.2 Other real estate owned divided by gross assets.2 Other Real Estate Owned/ Gross Assets (%). Brokered Deposit Ratio ........ Weighted Average of C, A, M, E, L, and S Component Ratings. Loan Mix Index ..................... One-Year Asset Growth (%) The ratio of the difference between brokered deposits and 10 percent of total assets to total assets. For institutions that are well capitalized and have a CAMELS composite rating of 1 or 2, reciprocal deposits are deducted from brokered deposits. If the ratio is less than zero, the value is set to zero. The weighted sum of the ‘‘C,’’ ‘‘A,’’ ‘‘M,’’ ‘‘E’’, ‘‘L’’, and ‘‘S’’ CAMELS components, with weights of 25 percent each for the ‘‘C’’ and ‘‘M’’ components, 20 percent for the ‘‘A’’ component, and 10 percent each for the ‘‘E’’, ‘‘L’’, and ‘‘S’’ components. A measure of credit risk described paragraph (a)(1)(ii)(B) of this section. Growth in assets (adjusted for mergers 3) over the previous year in excess of 10 percent.4 If growth is less than 10 percent, the value is set to zero. 1 The ratio of Net Income before Taxes to Total Assets is bounded below by (and cannot be less than) ¥25 percent and is bounded above by (and cannot exceed) 3 percent. 2 Gross assets are total assets plus the allowance for loan and lease financing receivable losses (ALLL). 3 Growth in assets is also adjusted for acquisitions of failed banks. 4 The maximum value of the Asset Growth measure is 230 percent; that is, asset growth (merger adjusted) over the previous year in excess of 240 percent (230 percentage points in excess of the 10 percent threshold) will not further increase a bank’s assessment rate. * * * * * 6. Revise § 327.16, paragraph (e)(2)(i) to read as follows: ■ § 327.16 Assessment pricing methods— beginning the first assessment period after June 30, 2016, where the reserve ratio of the DIF as of the end of the prior assessment period has reached or exceeded 1.15 percent. amozie on DSK3GDR082PROD with PROPOSALS1 * * * * * (e) * * * (2) * * * (i) Application of depository institution debt adjustment. An insured depository institution shall pay a 50 basis point adjustment on the amount of unsecured debt it holds that was issued by another insured depository institution to the extent that such debt exceeds 3 percent of the institution’s Tier 1 capital or, in the case of a qualifying community banking organization that elects to use the community bank leverage ratio framework under 12 CFR 3.12(a)(3), 12 CFR 217.12(a)(3), or 12 CFR 324.12(a)(3), CBLR tangible equity as defined in 12 CFR 3.12(b)(2), 12 CFR 217.12(b)(2), or 12 CFR 324.12(b)(2), as applicable. The amount of long-term unsecured debt issued by another insured depository institution shall be calculated using the same valuation methodology used to calculate the amount of such debt for reporting on the asset side of the balance sheets. * * * * * Dated at Washington, DC, on December 18, 2018. By order of the Board of Directors. VerDate Sep<11>2014 16:27 Feb 20, 2019 Jkt 247001 Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. 2019–02761 Filed 2–20–19; 8:45 am] BILLING CODE 6714–01–P FARM CREDIT ADMINISTRATION 12 CFR Part 614 RIN 3052–AD32 Advance Notice of Proposed Rulemaking—Young, Beginning, and Small Farmers and Ranchers Farm Credit Administration. Advance notice of proposed rulemaking. AGENCY: ACTION: The Farm Credit Administration (FCA, Agency, we, our) is requesting comments on ways to collect, evaluate, and report data on how the Farm Credit System (FCS or System) is fulfilling its mission to finance and provide services to young, beginning, and small (YBS) farmers, ranchers, and producers or harvesters of aquatic products (YBS Farmer(s)). Additionally, we are seeking comments on how FCA should define or clarify key terms associated with the collection and reporting of YBS data. DATES: You may send comments on or before May 22, 2019. ADDRESSES: We offer a variety of methods for you to submit comments on this advance notice of proposed rulemaking (ANPRM). For accuracy and efficiency reasons, commenters are encouraged to submit comments by SUMMARY: PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 email or through the Agency’s website. As facsimiles (fax) are difficult for us to process and achieve compliance with section 508 of the Rehabilitation Act, we are no longer accepting comments submitted by fax. Regardless of the method you use, please do not submit your comment multiple times via different methods. You may submit comments by any of the following methods: • Email: Send us an email at regcomm@fca.gov. • FCA website: https://www.fca.gov/. Click inside the ‘‘I want to . . .’’ field near the top of the page; select ‘‘comment on a pending regulation’’ from the dropdown menu; and click ‘‘Go.’’ • Federal eRulemaking Portal: https:// www.regulations.gov. Follow the instructions for submitting comments. • Mail: Barry F. Mardock, Deputy Director, Office of Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102–5090. You may review copies of all comments we receive at our office in McLean, Virginia, or on our website at https://www.fca.gov. Once you are in the website, click inside the ‘‘I want to . . .’’ field near the top of the page; select ‘‘find comment on pending regulation’’ from the dropdown menu; and click ‘‘Go.’’ We will show your comments as submitted, but for technical reasons we may omit items such as logos and special characters. Identifying information that you provide, such as phone numbers and addresses, will be publicly available. However, we will attempt to remove E:\FR\FM\21FEP1.SGM 21FEP1 5390 Federal Register / Vol. 84, No. 35 / Thursday, February 21, 2019 / Proposed Rules Institutions.3 The System is organized around four banks that each supervise and provide funding to associations within each bank’s district. Except for the authority of CoBank, ACB, to finance and provide services to agricultural cooperatives under title III of the Act, agricultural lending and other related services are provided primarily through the associations.4 In establishing the FCS as a I. Objective government sponsored enterprise, Congress provided farmers and ranchers The purpose of this ANPRM is to with an option of obtaining financing gather public input on how FCA might: • Improve the accuracy, transparency, through borrower-owned cooperatives that give them the ability to participate and process by which FCA ensures that in the ownership, management, and YBS Farmer data is properly collected control of their lender and to ensure that and reported by the FCS. a source of financing dedicated to their • Clarify the definitions of terms needs remains available.5 One of the related to the collection, reporting, and specific Congressionally required identification of YBS Farmer data. • Ensure the definitions of YBS responsibilities of the System is Farmers and related terms remain provided in section 4.19 of the Act (12 U.S.C. 2207), which requires FCS relevant and reflective of the evolving associations to have a program ‘‘for agricultural economy. • Evaluate the effectiveness of each furnishing sound and constructive FCS institution’s YBS program to credit and related services to young, achieve its mission of serving YBS beginning, and small farmers and Farmers. ranchers’’.6 In addition, this section requires that FCS banks report annually II. Background to FCA about the operations and The Farm Credit Act of 1971, as achievements of the associations’ amended (Act), requires each System lending and service programs for YBS association to prepare a program for Farmers.7 FCA’s regulations that furnishing sound and constructive implement these requirements are credit and related services to YBS located at 12 CFR 614.4165. FCA Farmers. Annually, each district bank prepares an annual report on the reports to FCA on the operations and quantitative and qualitative results achievements by the associations under achieved by the System and submits the YBS programs. We provide a this information to Congress when FCA summary and analysis of the results in submits its annual report on the our annual report to Congress on the condition of the System. FCA has condition of the System. We are provided guidance and clarification on reviewing the methods used to collect the System’s YBS mission and report YBS data to ensure that it is responsibilities through bookletter (BL) accurate, complete, and can be used 040 Revised—Providing Sound and reliably in conjunction with other Constructive Credit to Young, related data reported by the System. As Beginning, and Small Farmers, part of our review, we are seeking Ranchers, and Producers or Harvesters comments on methods and practices of Aquatic Products 8 and annual call that could be used to improve the reporting instructions. BL–040 Revised provides the definition for each category collection and reporting of YBS Farmer of YBS Farmers. As stated in the data and the oversight of such. The Act 1 authorizes the FCS 2 to bookletter, the three categories are provide financing and services to separate and distinct, and a loan to one farmers and ranchers across the country borrower may meet the definition for and Puerto Rico through FCS banks and 3 See sections 5.7 and 5.9 of the Act (12 U.S.C. associations (collectively referred to as 2241 and 2243). ‘‘Institutions’’). The Act also provides 4 CoBank, pursuant to title III of the Act, also has FCA, an independent agency in the authority to provide financing to certain rural executive branch of the Government, utilities projects. More detailed information on the authority to regulate and examine these structure of the FCS can be found on at https:// amozie on DSK3GDR082PROD with PROPOSALS1 email addresses to help reduce internet spam. FOR FURTHER INFORMATION CONTACT: Salvatore Iannetta, Office of Regulatory Policy, (703) 883–4326, David Grahn, Office of General Counsel, (703) 883– 4145, TTY (703) 883–4056, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102–5090. SUPPLEMENTARY INFORMATION: 1 See, 12 U.S.C. 2001 et seq. 2 The System is comprised of borrower-owned banks, associations, and service entities that collectively provide financing and other services to support agriculture and agriculture related operations as well as certain related industries that support U.S. agriculture. VerDate Sep<11>2014 16:27 Feb 20, 2019 Jkt 247001 www.fca.gov/. 5 See section 1.1 of the Act (12 U.S.C. 2001). 6 See, section 4.19(a) of the Act (12 U.S.C. 2207(a)). 7 See. section 4.19(b) of the Act (12 U.S.C. 2207(b)). 8 BL–040 can be found at: FCA website— Bookletters. PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 any or all of the categories, but a loan does not have to meet all three to be considered a loan to a YBS Farmer. III. Potential Areas for Improvement Reconciling YBS data can be challenging. The current reporting practices count the number of transactions and volume of commitments for System Institutions that involve YBS Farmers. This approach identifies the overall System dollars committed to YBS Farmers based on technology/data/standards primarily developed in the 1990s. The goal is to improve upon this approach and provide more granularity for reporting and tracking. For example, a farmer can meet the requirements for both a young and beginning farmer. Under the current approach and direction for reporting, this farmer’s data would be separately counted and reported in both the young and beginning categories. This situation can be compounded because more than one Institution may be participating in the financing of an individual YBS Farmer, which allows each participation interest to be counted and leads to further duplication when the Institutions’ numbers are consolidated. Due to the unique nature of this data, some banks’ and associations’ collection and reporting processes require considerable manual review and adjustment after retrieval from the core accounting systems. This situation creates difficulty in aligning YBS Farmer data with other data sources and reports generated from the Institutions’ core accounting systems. Finally, after recent analysis of the YBS collection and reporting practices of several banks and associations, more guidance is needed to ensure more uniform and efficient collection and reporting of YBS Farmer data. The definitions for the YBS categories have virtually remained the same since 1998, and other agricultural data sources have similar, but not equivalent, definitions. For example, since 1998, a farmer falls within the ‘‘small’’ category if the farmer ‘‘normally generates less than $250,000 in annual gross sales of agricultural or aquatic products’’. Several agricultural and economic cycles have occurred since 1998, and we are considering whether the $250,000 gross sales amount continues to be appropriate or should be revised or indexed to reflect the changes, including the economic conditions presently affecting agricultural producers. In addition to these challenges, several recent mergers of FCS associations have resulted in E:\FR\FM\21FEP1.SGM 21FEP1 Federal Register / Vol. 84, No. 35 / Thursday, February 21, 2019 / Proposed Rules unexpected variability in the YBS data reported to FCA from the banks. Based on the forgoing, FCA is considering whether changes to our YBS regulations are appropriate or needed. amozie on DSK3GDR082PROD with PROPOSALS1 IV. Request for Comments We request and encourage any interested person(s) to submit comments on the following questions and ask that you support your comments with relevant data or examples. We remind commenters that comments, and data submitted in support of a comment, will be available to the public through our website. We have organized our questions into the following categories: Reporting of YBS Farmer data and definitions of key terms associated with YBS Farmer data. A. Reporting of YBS Farmer Data As described above, FCA requires each FCS bank to obtain reports on the activities for YBS Farmer programs from the associations under its supervision. These annual reports summarize the operations and achievements of the YBS Farmer programs in each district. The banks then provide loan information for YBS Farmers to FCA, and we include a summary and analysis of the information in our annual report to Congress. The reporting period for gross new YBS lending is the calendar year. Outstanding YBS loans include all loans designated as YBS currently on the books as of December 31st in the reporting year. Because the YBS mission is focused on each borrower group separately, data are reported separately for each of the three YBS borrower categories. Since some loans fit within more than one category, adding the loans across categories cannot be done to accurately measure of the System’s YBS lending involvement. As such, we are seeking comment on the following questions to determine if the current reporting structure is sufficient to determine and report the FCS’s activities that support Section 4.19 of the Act: 1. Should loans continue to be reported in all the existing categories in which they fit? Alternatively, should loans be reported in seven mutually exclusive categories: Young; beginning; small; young and small; young and beginning; beginning and small; and young, beginning, and small? 2. When reporting YBS Farmer program performance, which would be more useful, a focus on the dollar volume of loans, the number of loans, the number of YBS Farmers that received credit and services, a combination of these, or all? VerDate Sep<11>2014 16:27 Feb 20, 2019 Jkt 247001 3. Under FCA’s regulations, the term ‘‘services,’’ as used in section 4.19(a) of the Act, includes leases and related services made by System banks and direct lender associations under titles I or II authorities. As such, how appropriate is it for lease activity to be reported for YBS purposes? Should leases and services be reported together with or separately from loans? The preamble to FCA’s Final Rule on YBS Farmers (12 CFR 614.4165) 9 stated the objective for the rule is to ensure that the System provides sound and constructive credit and services to YBS farmers and ranchers through: Clear, meaningful, and results-oriented guidelines for System YBS policies and programs; and enhanced reporting and disclosure to the public on the System’s performance and compliance with its statutory YBS mission. To evaluate this objective further, we are seeking comment to determine if there is additional information we should collect to better measure the System’s performance in fulfilling its YBS mission. 4. What additional elements or measurements would be useful in determining the FCS’s compliance with and mission performance under section 4.19 of the Act and FCA regulations at 12 CFR 614.4165? 5. What are ways Institutions could pool resources to ensure all eligible YBS Farmers are being served? 6. In what ways could Institutions use investment authorities to assist YBS Farmers, and should such investments be reported separately from YBS Farmer loan data? B. Definitions of Key Terms Associated With YBS Farmer Data FCA defines Young, Beginning, and Small farmers in Bookletter 040— Revised ‘‘Providing Sound and Constructive Credit to Young, Beginning, and Small Farmers, Ranchers, and Producers or Harvesters of Aquatic Products’’. These definitions have virtually remained the same since 1998. Additionally, the categories remain separate and distinct. However, a loan to one borrower may meet the definition for any or all categories, but a loan does not have to meet all three to be considered a loan to a YBS Farmer. The following are the current definitions used for YBS farmers: Young farmer: A farmer, rancher, or producer or harvester of aquatic products who is age 35 or younger as of the loan transaction date. Beginning farmer: A farmer, rancher, or producer or harvester of aquatic 9 69 PO 00000 FR 16470, March 30, 2004. Frm 00013 Fmt 4702 Sfmt 4702 5391 products who has 10 years or less farming, ranching, or aquatic experience as of the loan transaction date. Small farmer: A farmer, rancher, or producer or harvester of aquatic products who normally generates less than $250,000 in annual gross sales of agricultural or aquatic products. We are seeking comments on the following questions: Young Farmer 7. Given the trends in the average age of farmers, ranchers, and aquatic operators and the transfer of operations from one generation to the next, does the current age limit remain appropriate? If not, what would be a more meaningful age threshold for a ‘‘young’’ farmer and why? 8. Should the young farmer designation change for a borrower’s outstanding loans once they age beyond the threshold? 9. What additional clarification is needed on who qualifies as a young farmer? For example, should the following criteria apply to the determination of whether a person is a young farmer and to what extent: a. Ownership in the agricultural or aquatic operation. b. Ownership of agriculture land only. c. Financial control in the agricultural or aquatic operation. d. Exposure to production risk in the agricultural or aquatic operation. Beginning Farmer 10. Is the 10-year threshold still appropriate, and if not, what would be an appropriate threshold and why? 11. Should the beginning farmer designation change for a borrower’s outstanding loans once the years of experience exceed the threshold? 12. What additional clarification is needed on who qualifies as a beginning farmer? For example, should the following criteria apply to the determination of whether a person is a beginning farmer and to what extent: a. Ownership in the agricultural or aquatic operation. b. Ownership of agriculture land only. c. Financial control in the agricultural or aquatic operation. d. Exposure to production risk in the agricultural or aquatic operation. Small Farmer 13. What criteria should FCA consider in determining whether to maintain or change the $250,000 threshold? For example, should we consider thresholds adopted by other government agencies for their definition of ‘‘small’’ farmers? 14. Would it be appropriate to index or benchmark the economic measure E:\FR\FM\21FEP1.SGM 21FEP1 amozie on DSK3GDR082PROD with PROPOSALS1 5392 Federal Register / Vol. 84, No. 35 / Thursday, February 21, 2019 / Proposed Rules used at specified points in the future to ensure the threshold is current and a reasonable measure? If so, what would be an appropriate interval and benchmark? 15. Should the terminology ‘‘normally generates’’ be more clearly defined for reporting purposes? Would a multi-year median or olympic average 10 be a more meaningful measure? 16. Should the measurement for farm or aquatic income reflect a more stable metric compared to the current measure of annual gross sales of agricultural or aquatic products? 17. Should a borrower be considered a small farmer if: a. They have not yet generated agricultural or aquatic income? b. They only own agricultural land and no agricultural income is produced? 18. Should there be a time period established over which no agricultural or aquatic income is generated that would disqualify the classification of ‘‘small farmer’’ from continuing? 19. Should the small farmer designation change for a borrower’s outstanding loans if they grow beyond the threshold? 20. Should the small farmer measure account for such items as amount of acreage farmed as well as the production value generated? Other Reporting Definitions: Material Ownership and Closely Held Entity— Determining whether an entity is a young or beginning farmer. 21. What family connections among individuals who own/operate an entity should be considered to determine whether the entity meets the age or years of experience thresholds? 22. With respect to farming, ranching, and aquatic operations performed through legal entities: a. What young or beginning farmer ownership thresholds should be used to determine that an operation/entity is a young or beginning farmer? 11 b. How should the percentage of ownership in the entity by individuals that meet the requirements for a young or beginning farmer affect the threshold? c. If a single person’s ownership share is not sufficient to meet the threshold, should more than one person be allowed to jointly meet the threshold? d. What, if any, overall income threshold should be considered for an entity to be classified as a young or beginning farmer? 10 Olympic average refers to an average of numbers after removing the highest number and the lowest number. 11 As a reference, section 506(m) of the Federal Crop Insurance Act (7 U.S.C. 1508(m)) sets the minimum beneficial interest level for crop insurance purposes at 5 percent. VerDate Sep<11>2014 16:27 Feb 20, 2019 Jkt 247001 23. In determining whether an entity is a young or beginning farmer, over what minimum time period should the Agency provide for an association to make the determination, or should the determination be made at a specific point, for example, at the time the loan is applied for or closed? In addition to the questions listed above, we are interested in receiving comments on other aspects of the collection and reporting of YBS Farmer data. If providing such information, please designate responses as ‘‘Additional Comments’’. Dated: February 12, 2019. Dale L. Aultman, Secretary, Farm Credit Administration Board. [FR Doc. 2019–02884 Filed 2–20–19; 8:45 am] BILLING CODE 6705–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 71 [Docket No. FAA–2019–0036; Airspace Docket No. 19–ACE–1] Authority for This Rulemaking RIN 2120–AA66 Proposed Amendment of Class E Airspace; Charleston, MO Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). AGENCY: This action proposes to amend Class E airspace extending upward from 700 feet above the surface at Charleston, Mississippi County Airport in Charleston, MO. The FAA is proposing this action due to the decommissioning of the Charleston nondirectional radio beacon (NDB). DATES: Comments must be received on or before April 8, 2019. ADDRESSES: Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590, telephone (202) 366–9826, or (800) 647–5527. You must identify FAA Docket No. FAA–2019– 0036; Airspace Docket No. 19–ACE–1, at the beginning of your comments. You may also submit comments through the internet at https://www.regulations.gov. You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. SUMMARY: PO 00000 Frm 00014 Fmt 4702 FAA Order 7400.11C, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at https://www.faa.gov/air_traffic/ publications/. For further information, you can contact the Airspace Policy Group, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267–8783. The Order is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of FAA Order 7400.11C at NARA, call (202) 741–6030, or go to https:// www.archives.gov/federal-register/cfr/ ibr-locations.html. FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15. FOR FURTHER INFORMATION CONTACT: John Witucki, Federal Aviation Administration, Operations Support Group, Central Service Center, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone (817) 222–5900. SUPPLEMENTARY INFORMATION: Sfmt 4702 The FAA’s authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency’s authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class E airspace at Charleston, Mississippi County Airport, in support of standard instrument approach procedures for IFR operations at the airport. Comments Invited Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. E:\FR\FM\21FEP1.SGM 21FEP1

Agencies

[Federal Register Volume 84, Number 35 (Thursday, February 21, 2019)]
[Proposed Rules]
[Pages 5389-5392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02884]


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FARM CREDIT ADMINISTRATION

12 CFR Part 614

RIN 3052-AD32


Advance Notice of Proposed Rulemaking--Young, Beginning, and 
Small Farmers and Ranchers

AGENCY: Farm Credit Administration.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Farm Credit Administration (FCA, Agency, we, our) is 
requesting comments on ways to collect, evaluate, and report data on 
how the Farm Credit System (FCS or System) is fulfilling its mission to 
finance and provide services to young, beginning, and small (YBS) 
farmers, ranchers, and producers or harvesters of aquatic products (YBS 
Farmer(s)). Additionally, we are seeking comments on how FCA should 
define or clarify key terms associated with the collection and 
reporting of YBS data.

DATES: You may send comments on or before May 22, 2019.

ADDRESSES: We offer a variety of methods for you to submit comments on 
this advance notice of proposed rulemaking (ANPRM). For accuracy and 
efficiency reasons, commenters are encouraged to submit comments by 
email or through the Agency's website. As facsimiles (fax) are 
difficult for us to process and achieve compliance with section 508 of 
the Rehabilitation Act, we are no longer accepting comments submitted 
by fax. Regardless of the method you use, please do not submit your 
comment multiple times via different methods. You may submit comments 
by any of the following methods:
     Email: Send us an email at regcomm@fca.gov.
     FCA website: https://www.fca.gov/. Click inside the ``I 
want to . . .'' field near the top of the page; select ``comment on a 
pending regulation'' from the dropdown menu; and click ``Go.''
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Barry F. Mardock, Deputy Director, Office of 
Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, 
McLean, VA 22102-5090.
    You may review copies of all comments we receive at our office in 
McLean, Virginia, or on our website at https://www.fca.gov. Once you are 
in the website, click inside the ``I want to . . .'' field near the top 
of the page; select ``find comment on pending regulation'' from the 
dropdown menu; and click ``Go.'' We will show your comments as 
submitted, but for technical reasons we may omit items such as logos 
and special characters. Identifying information that you provide, such 
as phone numbers and addresses, will be publicly available. However, we 
will attempt to remove

[[Page 5390]]

email addresses to help reduce internet spam.

FOR FURTHER INFORMATION CONTACT: Salvatore Iannetta, Office of 
Regulatory Policy, (703) 883-4326, David Grahn, Office of General 
Counsel, (703) 883-4145, TTY (703) 883-4056, Farm Credit 
Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090.

SUPPLEMENTARY INFORMATION:

I. Objective

    The purpose of this ANPRM is to gather public input on how FCA 
might:
     Improve the accuracy, transparency, and process by which 
FCA ensures that YBS Farmer data is properly collected and reported by 
the FCS.
     Clarify the definitions of terms related to the 
collection, reporting, and identification of YBS Farmer data.
     Ensure the definitions of YBS Farmers and related terms 
remain relevant and reflective of the evolving agricultural economy.
     Evaluate the effectiveness of each FCS institution's YBS 
program to achieve its mission of serving YBS Farmers.

II. Background

    The Farm Credit Act of 1971, as amended (Act), requires each System 
association to prepare a program for furnishing sound and constructive 
credit and related services to YBS Farmers. Annually, each district 
bank reports to FCA on the operations and achievements by the 
associations under the YBS programs. We provide a summary and analysis 
of the results in our annual report to Congress on the condition of the 
System. We are reviewing the methods used to collect and report YBS 
data to ensure that it is accurate, complete, and can be used reliably 
in conjunction with other related data reported by the System. As part 
of our review, we are seeking comments on methods and practices that 
could be used to improve the collection and reporting of YBS Farmer 
data and the oversight of such.
    The Act \1\ authorizes the FCS \2\ to provide financing and 
services to farmers and ranchers across the country and Puerto Rico 
through FCS banks and associations (collectively referred to as 
``Institutions''). The Act also provides FCA, an independent agency in 
the executive branch of the Government, authority to regulate and 
examine these Institutions.\3\ The System is organized around four 
banks that each supervise and provide funding to associations within 
each bank's district. Except for the authority of CoBank, ACB, to 
finance and provide services to agricultural cooperatives under title 
III of the Act, agricultural lending and other related services are 
provided primarily through the associations.\4\
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    \1\ See, 12 U.S.C. 2001 et seq.
    \2\ The System is comprised of borrower-owned banks, 
associations, and service entities that collectively provide 
financing and other services to support agriculture and agriculture 
related operations as well as certain related industries that 
support U.S. agriculture.
    \3\ See sections 5.7 and 5.9 of the Act (12 U.S.C. 2241 and 
2243).
    \4\ CoBank, pursuant to title III of the Act, also has authority 
to provide financing to certain rural utilities projects. More 
detailed information on the structure of the FCS can be found on at 
https://www.fca.gov/.
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    In establishing the FCS as a government sponsored enterprise, 
Congress provided farmers and ranchers with an option of obtaining 
financing through borrower-owned cooperatives that give them the 
ability to participate in the ownership, management, and control of 
their lender and to ensure that a source of financing dedicated to 
their needs remains available.\5\ One of the specific Congressionally 
required responsibilities of the System is provided in section 4.19 of 
the Act (12 U.S.C. 2207), which requires FCS associations to have a 
program ``for furnishing sound and constructive credit and related 
services to young, beginning, and small farmers and ranchers''.\6\ In 
addition, this section requires that FCS banks report annually to FCA 
about the operations and achievements of the associations' lending and 
service programs for YBS Farmers.\7\ FCA's regulations that implement 
these requirements are located at 12 CFR 614.4165. FCA prepares an 
annual report on the quantitative and qualitative results achieved by 
the System and submits this information to Congress when FCA submits 
its annual report on the condition of the System. FCA has provided 
guidance and clarification on the System's YBS mission responsibilities 
through bookletter (BL) 040 Revised--Providing Sound and Constructive 
Credit to Young, Beginning, and Small Farmers, Ranchers, and Producers 
or Harvesters of Aquatic Products \8\ and annual call reporting 
instructions. BL-040 Revised provides the definition for each category 
of YBS Farmers. As stated in the bookletter, the three categories are 
separate and distinct, and a loan to one borrower may meet the 
definition for any or all of the categories, but a loan does not have 
to meet all three to be considered a loan to a YBS Farmer.
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    \5\ See section 1.1 of the Act (12 U.S.C. 2001).
    \6\ See, section 4.19(a) of the Act (12 U.S.C. 2207(a)).
    \7\ See. section 4.19(b) of the Act (12 U.S.C. 2207(b)).
    \8\ BL-040 can be found at: FCA website--Bookletters.
---------------------------------------------------------------------------

III. Potential Areas for Improvement

    Reconciling YBS data can be challenging. The current reporting 
practices count the number of transactions and volume of commitments 
for System Institutions that involve YBS Farmers. This approach 
identifies the overall System dollars committed to YBS Farmers based on 
technology/data/standards primarily developed in the 1990s. The goal is 
to improve upon this approach and provide more granularity for 
reporting and tracking. For example, a farmer can meet the requirements 
for both a young and beginning farmer. Under the current approach and 
direction for reporting, this farmer's data would be separately counted 
and reported in both the young and beginning categories. This situation 
can be compounded because more than one Institution may be 
participating in the financing of an individual YBS Farmer, which 
allows each participation interest to be counted and leads to further 
duplication when the Institutions' numbers are consolidated.
    Due to the unique nature of this data, some banks' and 
associations' collection and reporting processes require considerable 
manual review and adjustment after retrieval from the core accounting 
systems. This situation creates difficulty in aligning YBS Farmer data 
with other data sources and reports generated from the Institutions' 
core accounting systems. Finally, after recent analysis of the YBS 
collection and reporting practices of several banks and associations, 
more guidance is needed to ensure more uniform and efficient collection 
and reporting of YBS Farmer data.
    The definitions for the YBS categories have virtually remained the 
same since 1998, and other agricultural data sources have similar, but 
not equivalent, definitions. For example, since 1998, a farmer falls 
within the ``small'' category if the farmer ``normally generates less 
than $250,000 in annual gross sales of agricultural or aquatic 
products''. Several agricultural and economic cycles have occurred 
since 1998, and we are considering whether the $250,000 gross sales 
amount continues to be appropriate or should be revised or indexed to 
reflect the changes, including the economic conditions presently 
affecting agricultural producers. In addition to these challenges, 
several recent mergers of FCS associations have resulted in

[[Page 5391]]

unexpected variability in the YBS data reported to FCA from the banks.
    Based on the forgoing, FCA is considering whether changes to our 
YBS regulations are appropriate or needed.

IV. Request for Comments

    We request and encourage any interested person(s) to submit 
comments on the following questions and ask that you support your 
comments with relevant data or examples. We remind commenters that 
comments, and data submitted in support of a comment, will be available 
to the public through our website.
    We have organized our questions into the following categories: 
Reporting of YBS Farmer data and definitions of key terms associated 
with YBS Farmer data.

A. Reporting of YBS Farmer Data

    As described above, FCA requires each FCS bank to obtain reports on 
the activities for YBS Farmer programs from the associations under its 
supervision. These annual reports summarize the operations and 
achievements of the YBS Farmer programs in each district. The banks 
then provide loan information for YBS Farmers to FCA, and we include a 
summary and analysis of the information in our annual report to 
Congress.
    The reporting period for gross new YBS lending is the calendar 
year. Outstanding YBS loans include all loans designated as YBS 
currently on the books as of December 31st in the reporting year. 
Because the YBS mission is focused on each borrower group separately, 
data are reported separately for each of the three YBS borrower 
categories. Since some loans fit within more than one category, adding 
the loans across categories cannot be done to accurately measure of the 
System's YBS lending involvement. As such, we are seeking comment on 
the following questions to determine if the current reporting structure 
is sufficient to determine and report the FCS's activities that support 
Section 4.19 of the Act:
    1. Should loans continue to be reported in all the existing 
categories in which they fit? Alternatively, should loans be reported 
in seven mutually exclusive categories: Young; beginning; small; young 
and small; young and beginning; beginning and small; and young, 
beginning, and small?
    2. When reporting YBS Farmer program performance, which would be 
more useful, a focus on the dollar volume of loans, the number of 
loans, the number of YBS Farmers that received credit and services, a 
combination of these, or all?
    3. Under FCA's regulations, the term ``services,'' as used in 
section 4.19(a) of the Act, includes leases and related services made 
by System banks and direct lender associations under titles I or II 
authorities. As such, how appropriate is it for lease activity to be 
reported for YBS purposes? Should leases and services be reported 
together with or separately from loans?
    The preamble to FCA's Final Rule on YBS Farmers (12 CFR 614.4165) 
\9\ stated the objective for the rule is to ensure that the System 
provides sound and constructive credit and services to YBS farmers and 
ranchers through: Clear, meaningful, and results-oriented guidelines 
for System YBS policies and programs; and enhanced reporting and 
disclosure to the public on the System's performance and compliance 
with its statutory YBS mission. To evaluate this objective further, we 
are seeking comment to determine if there is additional information we 
should collect to better measure the System's performance in fulfilling 
its YBS mission.
---------------------------------------------------------------------------

    \9\ 69 FR 16470, March 30, 2004.
---------------------------------------------------------------------------

    4. What additional elements or measurements would be useful in 
determining the FCS's compliance with and mission performance under 
section 4.19 of the Act and FCA regulations at 12 CFR 614.4165?
    5. What are ways Institutions could pool resources to ensure all 
eligible YBS Farmers are being served?
    6. In what ways could Institutions use investment authorities to 
assist YBS Farmers, and should such investments be reported separately 
from YBS Farmer loan data?

B. Definitions of Key Terms Associated With YBS Farmer Data

    FCA defines Young, Beginning, and Small farmers in Bookletter 040--
Revised ``Providing Sound and Constructive Credit to Young, Beginning, 
and Small Farmers, Ranchers, and Producers or Harvesters of Aquatic 
Products''. These definitions have virtually remained the same since 
1998. Additionally, the categories remain separate and distinct. 
However, a loan to one borrower may meet the definition for any or all 
categories, but a loan does not have to meet all three to be considered 
a loan to a YBS Farmer.
    The following are the current definitions used for YBS farmers:
    Young farmer: A farmer, rancher, or producer or harvester of 
aquatic products who is age 35 or younger as of the loan transaction 
date.
    Beginning farmer: A farmer, rancher, or producer or harvester of 
aquatic products who has 10 years or less farming, ranching, or aquatic 
experience as of the loan transaction date.
    Small farmer: A farmer, rancher, or producer or harvester of 
aquatic products who normally generates less than $250,000 in annual 
gross sales of agricultural or aquatic products.
    We are seeking comments on the following questions:
Young Farmer
    7. Given the trends in the average age of farmers, ranchers, and 
aquatic operators and the transfer of operations from one generation to 
the next, does the current age limit remain appropriate? If not, what 
would be a more meaningful age threshold for a ``young'' farmer and 
why?
    8. Should the young farmer designation change for a borrower's 
outstanding loans once they age beyond the threshold?
    9. What additional clarification is needed on who qualifies as a 
young farmer? For example, should the following criteria apply to the 
determination of whether a person is a young farmer and to what extent:
    a. Ownership in the agricultural or aquatic operation.
    b. Ownership of agriculture land only.
    c. Financial control in the agricultural or aquatic operation.
    d. Exposure to production risk in the agricultural or aquatic 
operation.
Beginning Farmer
    10. Is the 10-year threshold still appropriate, and if not, what 
would be an appropriate threshold and why?
    11. Should the beginning farmer designation change for a borrower's 
outstanding loans once the years of experience exceed the threshold?
    12. What additional clarification is needed on who qualifies as a 
beginning farmer? For example, should the following criteria apply to 
the determination of whether a person is a beginning farmer and to what 
extent:
    a. Ownership in the agricultural or aquatic operation.
    b. Ownership of agriculture land only.
    c. Financial control in the agricultural or aquatic operation.
    d. Exposure to production risk in the agricultural or aquatic 
operation.
Small Farmer
    13. What criteria should FCA consider in determining whether to 
maintain or change the $250,000 threshold? For example, should we 
consider thresholds adopted by other government agencies for their 
definition of ``small'' farmers?
    14. Would it be appropriate to index or benchmark the economic 
measure

[[Page 5392]]

used at specified points in the future to ensure the threshold is 
current and a reasonable measure? If so, what would be an appropriate 
interval and benchmark?
    15. Should the terminology ``normally generates'' be more clearly 
defined for reporting purposes? Would a multi-year median or olympic 
average \10\ be a more meaningful measure?
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    \10\ Olympic average refers to an average of numbers after 
removing the highest number and the lowest number.
---------------------------------------------------------------------------

    16. Should the measurement for farm or aquatic income reflect a 
more stable metric compared to the current measure of annual gross 
sales of agricultural or aquatic products?
    17. Should a borrower be considered a small farmer if:
    a. They have not yet generated agricultural or aquatic income?
    b. They only own agricultural land and no agricultural income is 
produced?
    18. Should there be a time period established over which no 
agricultural or aquatic income is generated that would disqualify the 
classification of ``small farmer'' from continuing?
    19. Should the small farmer designation change for a borrower's 
outstanding loans if they grow beyond the threshold?
    20. Should the small farmer measure account for such items as 
amount of acreage farmed as well as the production value generated?
    Other Reporting Definitions: Material Ownership and Closely Held 
Entity--Determining whether an entity is a young or beginning farmer.
    21. What family connections among individuals who own/operate an 
entity should be considered to determine whether the entity meets the 
age or years of experience thresholds?
    22. With respect to farming, ranching, and aquatic operations 
performed through legal entities:
    a. What young or beginning farmer ownership thresholds should be 
used to determine that an operation/entity is a young or beginning 
farmer? \11\
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    \11\ As a reference, section 506(m) of the Federal Crop 
Insurance Act (7 U.S.C. 1508(m)) sets the minimum beneficial 
interest level for crop insurance purposes at 5 percent.
---------------------------------------------------------------------------

    b. How should the percentage of ownership in the entity by 
individuals that meet the requirements for a young or beginning farmer 
affect the threshold?
    c. If a single person's ownership share is not sufficient to meet 
the threshold, should more than one person be allowed to jointly meet 
the threshold?
    d. What, if any, overall income threshold should be considered for 
an entity to be classified as a young or beginning farmer?
    23. In determining whether an entity is a young or beginning 
farmer, over what minimum time period should the Agency provide for an 
association to make the determination, or should the determination be 
made at a specific point, for example, at the time the loan is applied 
for or closed?
    In addition to the questions listed above, we are interested in 
receiving comments on other aspects of the collection and reporting of 
YBS Farmer data. If providing such information, please designate 
responses as ``Additional Comments''.

    Dated: February 12, 2019.
Dale L. Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2019-02884 Filed 2-20-19; 8:45 am]
BILLING CODE 6705-01-P
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