[Federal Register Volume 79, Number 61 (Monday, March 31, 2014)]
[Rules and Regulations]
[Pages 17854-17856]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06783]


=======================================================================
-----------------------------------------------------------------------

FARM CREDIT ADMINISTRATION

12 CFR Parts 611, 620, and 630

RIN 3052-AD00


Organization; Disclosure to Shareholders; Disclosure to Investors 
in System-wide and Consolidated Bank Debt Obligations of the Farm 
Credit System; Advisory Vote

AGENCY: Farm Credit Administration.

ACTION: Interim final rule.

-----------------------------------------------------------------------

SUMMARY: The Farm Credit Administration (FCA, we, or our) issues this 
interim final rule amending its regulations to remove all requirements 
for non-binding, advisory votes at Farm Credit System (System) banks 
and associations. This rule is in response to recent legislation 
wherein Congress provided that no funds available to the FCA may be 
used to ``implement or enforce'' regulations requiring non-binding, 
advisory votes on senior officer compensation, and directed the FCA to 
review its rules to ensure they reflect

[[Page 17855]]

Congressional intent that a primary responsibility of the boards of 
directors of System institutions is to oversee compensation practices.

DATES: This interim final rule will become effective 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. Comments, if any, are due within April 
30, 2014.

ADDRESSES: Interested parties may submit written comments by any of the 
following methods:
     Email: Send an email to reg-comm@fca.gov.
     FCA Web site: http://www.fca.gov. Select ``Public 
Commenters,'' then ``Public Comments,'' and follow the directions for 
``Submitting a Comment.''
     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 Web site at http://www.fca.gov. Once you are 
in the Web site, select ``Public Commenters,'' then ``Public 
Comments,'' and follow the directions for ``Reading Submitted Public 
Comments.'' We will show your comments as submitted, including any 
supporting data provided, 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 email addresses to help 
reduce Internet spam.

FOR FURTHER INFORMATION CONTACT:
Deborah Wilson, Associate Director, Office of Regulatory Policy, Farm 
Credit Administration, McLean, VA 22102-5090, (703) 883-4224, TTY (703) 
883-4056, or
Laura McFarland, Senior Counsel, Office of General Counsel, Farm Credit 
Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-
4056.

SUPPLEMENTARY INFORMATION:

I. Objective

    Our objective in this interim final rule is to ensure the 
provisions of Title VI of the Consolidated Appropriations Act, 2014 
(Appropriations Act) \1\ are fulfilled by ensuring our rules on non-
binding, advisory votes on senior officer compensation are neither 
implemented nor enforced.
---------------------------------------------------------------------------

    \1\ 113 Public Law 76, 128 Stat. 5 (H.R. 3547).
---------------------------------------------------------------------------

II. Background

    On October 3, 2012, the FCA \2\ issued a final rule regarding 
senior officer compensation disclosures and related topics that amended 
parts 611, 612, 619, 620, and 630.\3\ Section 611.410 of the rule 
requires Farm Credit banks and associations to hold non-binding, 
advisory votes on senior officer compensation in certain 
circumstances.\4\ On January 17, 2014, the President of the United 
States signed into law the Appropriations Act. The Appropriations Act 
is the vehicle for making consolidated appropriations for Federal 
agencies in the fiscal year ending September 30, 2014, and for other 
purposes.\5\ A provision in Title VI of the Appropriations Act limits 
the FCA from using fiscal year 2014 funds to ``implement or enforce 
those portions of the final regulation published in the Federal 
Register on October 3, 2012 (77 FR 60582), establishing a requirement 
that Farm Credit System institutions hold an advisory vote on officer 
compensation.''
---------------------------------------------------------------------------

    \2\ As an independent agency within the Executive branch of the 
Federal Government, FCA is responsible for the safety, soundness, 
regulation and supervision of the banks, associations, and related 
entities in the System, as well as the Federal Agricultural Mortgage 
Corporation (Farmer Mac). The System and Farmer Mac are Government-
sponsored enterprises with public service missions.
    \3\ See 77 FR 60582. The rule was effective December 17, 2012, 
but non-binding, advisory votes on compensation increases of 15 
percent or more are not required until 2015 (77 FR 76215, December 
27, 2012).
    \4\ On December 4, 2012, the Farm Credit Council, on behalf of 
the System banks and associations, filed a petition requesting that 
we repeal those provisions of the final rule that require a non-
binding, advisory vote on senior officer compensation. Interested 
parties have the right to petition a Federal agency to issue, amend, 
or repeal regulations under 5 U.S.C. 553(e). We published the 
petition in the Federal Register on February 19, 2013 (78 FR 11551), 
and invited comments.
    \5\ The FCA does not receive a Federal appropriation and is 
primarily funded through assessments paid by System institutions. In 
its appropriations Acts, Congress limits the amount of funds that 
the FCA can assess and collect from System institutions for our 
administrative expenses.
---------------------------------------------------------------------------

    Also, in February 2014, the Agricultural Act of 2014 (Farm Bill) 
was signed into law.\6\ Section 5404 of the Farm Bill contained 
``Findings by Congress'' that emphasized the benefit to System 
stockholders' understanding of the operations of their institution 
through disclosure of the institution's senior officer compensation, 
and explained that transparent disclosure regarding compensation 
practices reinforces the cooperative nature of System institutions.\7\ 
Also, the findings in Section 5404 of the Farm Bill placed primary 
responsibility, and therefore accountability, for the establishment and 
oversight of System institution compensation practices with each 
institution's board of directors,\8\ and clearly linked the boards' 
oversight responsibility for compensation to the overall safe and sound 
operations of the respective institutions. Congress explained in the 
Farm Bill that any regulation should strengthen the ability of System 
institutions' boards of directors to oversee compensation practices. 
Consistent with the aforementioned Congressional findings, the FCA will 
continue to emphasize, through its regulatory and supervisory 
authorities, the importance of providing comprehensive, transparent and 
beneficial disclosures to stockholders on senior officer compensation. 
We also intend to reinforce the responsibility and accountability of 
System institutions' boards of directors in establishing and overseeing 
compensation practices to ensure the safe and sound operation of the 
institutions they serve.
---------------------------------------------------------------------------

    \6\ 113 Public Law 79, 128 Stat. 649 (H.R. 2642), signed by the 
President on February 7, 2014.
    \7\ As cooperatives, the System banks and associations are 
borrower-owned financial institutions. Only those borrowers who are 
farmers, ranchers, or producers or harvesters of aquatic products, 
and cooperatives eligible to borrow from System institutions under 
the Farm Credit Act of 1971, as amended, hold voting stock. Also, 
System associations are voting stockholders of their affiliated Farm 
Credit bank.
    \8\ The voting stockholders of each System bank and association 
elect a majority of its directors. The stockholder-elected directors 
must constitute at least 60 percent of the members of each 
institution's board.
---------------------------------------------------------------------------

III. Interim Final Rulemaking and Non-Binding, Advisory Votes on 
Compensation

    With the promulgation of this rule, the FCA is using the ``Interim 
Final'' rule procedure for rulemaking, which permits agencies to adopt 
certain rules on an expedited basis, without going through the usual 
proposal and final stages of notice-and-comment rulemaking. The 
Administrative Procedure Act (APA) generally requires an agency to 
publish notice of a proposed and final rulemaking in the Federal 
Register. This requirement does not apply, however, when the agency 
``for good cause finds . . . that notice and public procedure thereon 
are impracticable, unnecessary, or contrary to the public interest.'' 
\9\
---------------------------------------------------------------------------

    \9\ See 5 U.S.C. 553(b). The APA, 5 U.S.C. 551-59, et seq., 
supports this streamlined technique of rulemaking.
---------------------------------------------------------------------------

    The FCA believes that the amendments contained in this rulemaking 
fit the category of rules appropriate for interim final rulemaking. We 
believe the provision in

[[Page 17856]]

Title VI of the Appropriations Act supports an interim final rulemaking 
as the limitation arguably makes formal proposed and final rulemaking 
procedures ``impracticable, unnecessary, or contrary to the public 
interest.'' Further, we believe amending the rule to remove the 
requirements for non-binding, advisory votes will ensure compliance 
with the Appropriations Act. Consistent with the Appropriations Act, as 
well as the Farm Bill, this interim final rulemaking is limited to the 
advisory vote provisions of the October 3, 2012, (77 FR 60582) 
rulemaking.
    Specifically, we are removing the following rule provisions:
    [ssquf] Sec.  611.100(a), defining the term ``advisory vote'';
    [ssquf] Sec.  611.360, requiring policies and procedures for non-
binding, advisory votes on senior officer compensation;
    [ssquf] Sec.  611.410, addressing non-binding, advisory votes on 
senior officer compensation;
    [ssquf] Sec.  620.5(a)(11), requiring disclosure of any advisory 
votes held during the reporting year at the institution;
    [ssquf] Sec.  620.6(c)(6), requiring disclosure (adjacent to the 
compensation table) in the annual report of a stockholder's right to 
petition for a non-binding, advisory vote on senior officer 
compensation; and
    [ssquf] Sec.  630.20(i)(last sentence), requiring disclosure of any 
advisory votes held during the reporting year within the System.
    All other regulatory provisions and changes resulting from the 
October 3, 2012 (77 FR 60582) rulemaking remain in effect.

IV. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), the FCA hereby certifies that this interim final 
rule will not have a significant economic impact on a substantial 
number of small entities. Each of the banks in the System, considered 
together with its affiliated associations, has assets and annual income 
in excess of the amounts that would qualify them as small entities. 
Therefore, System institutions are not ``small entities'' as defined in 
the Regulatory Flexibility Act.

List of Subjects

12 CFR Part 611

    Agriculture, Banks, banking, Rural areas.

12 CFR Part 620

    Accounting, Agriculture, Banks, banking, Reporting and 
recordkeeping requirements, Rural areas.

12 CFR Part 630

    Accounting, Agriculture, Banks, banking, Organization and functions 
(Government agencies), Reporting and recordkeeping requirements, Rural 
areas.
    For the reasons stated in the preamble, parts 611, 620, and 630 of 
chapter VI, title 12 of the Code of Federal Regulations are amended as 
follows:

PART 611--ORGANIZATION

0
1. The authority citation for part 611 continues to read as follows:

    Authority: Secs. 1.2, 1.3, 1.4, 1.5, 1.12, 1.13, 2.0, 2.1, 2.2, 
2.10, 2.11, 2.12, 3.0, 3.1, 3.2, 3.3, 3.7, 3.8, 3.9, 3.21, 4.3A, 
4.12, 4.12A, 4.15, 4.20, 4.21, 4.25, 4.26, 4.27, 4.28A, 5.9, 5.17, 
5.25, 7.0-7.13, 8.5(e) of the Farm Credit Act (12 U.S.C. 2002, 2011, 
2012, 2013, 2020, 2021, 2071, 2072, 2073, 2091, 2092, 2093, 2121, 
2122, 2123, 2124, 2128, 2129, 2130, 2142, 2154a, 2183, 2184, 2203, 
2208, 2209, 2211, 2212, 2213, 2214, 2243, 2252, 2261, 2279a-2279f-1, 
2279aa-5(e)); secs. 411 and 412 of Pub. L. 100-233, 101 Stat. 1568, 
1638; sec. 414 of Pub. L. 100-399, 102 Stat. 989, 1004.


Sec.  611.100  [Amended]

0
2. Section 611.100 is amended by removing paragraph (a) and 
redesignating paragraphs (b) through (h) as new paragraphs (a) through 
(g), respectively.


Sec.  611.360  [Removed and reserved]

0
3. Section 611.360 is removed and reserved.


Sec.  611.410  [Removed and reserved]

0
4. Section 611.410 is removed and reserved.

PART 620--DISCLOSURE TO SHAREHOLDERS

0
5. The authority citation for part 620 continues to read as follows:

    Authority: Secs. 4.3, 4.3A, 4.19, 5.9, 5.17, 5.19 of the Farm 
Credit Act (12 U.S.C. 2154, 2154a, 2207, 2243, 2252, 2254); sec. 424 
of Pub. L. 100-233, 101 Stat. 1568, 1656; sec. 514 of Pub. L. 102-
552, 106 Stat. 4102.


Sec.  620.5  [Amended]

0
6. Section 620.5 is amended by removing paragraph (a)(11) and 
redesignating paragraph (a)(12) as new paragraph (a)(11).


Sec.  620.6  [Amended]

0
7. Section 620.6 is amended by removing paragraph (c)(6) and 
redesignating paragraph (c)(7) as new paragraph (c)(6).

PART 630--DISCLOSURE TO INVESTORS IN SYSTEM-WIDE AND CONSOLIDATED 
BANK DEBT OBLIGATIONS OF THE FARM CREDIT SYSTEM

0
8. The authority citation for part 630 continues to read as follows:

    Authority: Secs. 4.2, 4.9, 5.9, 5.17, 5.19 of the Farm Credit 
Act (12 U.S.C. 2153, 2160, 2243, 2252, 2254); sec. 424 of Pub. L. 
100-233, 101 Stat. 1568, 1656; sec. 514 of Pub. L. 102-552, 106 
Stat. 4102.


Sec.  630.20  [Amended]

0
9. Section 630.20 is amended by removing the last sentence of paragraph 
(i).

    Dated: March 21, 2014.
Dale L. Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2014-06783 Filed 3-28-14; 8:45 a.m.]
BILLING CODE 6705-01-P