[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2001 Edition]
[From the U.S. Government Printing Office]
[[Page i]]
12
Part 600 to End
Revised as of January 1, 2001
Banks and Banking
Containing a codification of documents of general
applicability and future effect
As of January 1, 2001
With Ancillaries
Published by
Office of the Federal Register
National Archives and Records
Administration
A Special Edition of the Federal Register
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U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2001
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Table of Contents
Page
Explanation................................................. vi
Title 12:
Chapter VI--Farm Credit Administration 3
Chapter VII--National Credit Union Administration 289
Chapter VIII--Federal Financing Bank 627
Chapter IX--Federal Housing Finance Board 635
Chapter XI--Federal Financial Institutions
Examination Council 813
Chapter XIV--Farm Credit System Insurance
Corporation 849
Chapter XV--Department of the Treasury 881
Chapter XVII--Office of Federal Housing Enterprise
Oversight, Department of Housing and Urban
Development 899
Chapter XVIII--Community Development Financial
Institutions Fund, Department of the Treasury 977
Finding Aids:
Material Approved for Incorporation by Reference........ 1017
Table of CFR Titles and Chapters........................ 1019
Alphabetical List of Agencies Appearing in the CFR...... 1037
Redesignation Table..................................... 1047
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List of CFR Sections Affected--Transferred Regulations
Formerly Appearing in Title 12 CFR, Chapter V......... 1049
List of CFR Sections Affected........................... 1051
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 12 CFR 600.1 refers
to title 12, part 600,
section 1.
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EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
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parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
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collection request.
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Many agencies have begun publishing numerous OMB control numbers as
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(a) The incorporation will substantially reduce the volume of
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(b) The matter incorporated is in fact available to the extent
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(c) The incorporating document is drafted and submitted for
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the revision dates of the 50 CFR titles.
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REPUBLICATION OF MATERIAL
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Raymond A. Mosley,
Director,
Office of the Federal Register.
January 1, 2001.
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THIS TITLE
Title 12--Banks and Banking is composed of six volumes. The parts in
these volumes are arranged in the following order: parts 1-199, 200-219,
220-299, 300-499, 500-599, and part 600-end. The first volume containing
parts 1-199 is comprised of chapter I--Comptroller of the Currency,
Department of the Treasury. The second and third volumes containing
parts 200-299 are comprised of chapter II--Federal Reserve System. The
fourth volume containing parts 300-499 is comprised of chapter III--
Federal Deposit Insurance Corporation and chapter IV--Export-Import Bank
of the United States. The fifth volume containing parts 500-599 is
comprised of chapter V--Office of Thrift Supervision, Department of the
Treasury. The sixth volume containing part 600-end is comprised of
chapter VI--Farm Credit Administration, chapter VII--National Credit
Union Administration, chapter VIII--Federal Financing Bank, chapter IX--
Federal Housing Finance Board, chapter XI--Federal Financial
Institutions Examination Council, chapter XIV--Farm Credit System
Insurance Corporation, chapter XV--Department of the Treasury, chapter
XVII--Office of Federal Housing Enterprise Oversight, Department of
Housing and Urban Development and chapter XVIII--Community Development
Financial Institutions Fund, Department of the Treasury. The contents of
these volumes represent all of the current regulations codified under
this title of the CFR as of January 1, 2001.
Redesignation tables appear in the volumes containing parts 1-199,
parts 300-499, parts 500-599, and part 600-end.
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[[Page 1]]
TITLE 12--BANKS AND BANKING
(This book contains part 600 to end)
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Part
chapter vi--Farm Credit Administration...................... 600
chapter vii--National Credit Union Administration........... 700
chapter viii--Federal Financing Bank........................ 810
chapter ix--Federal Housing Finance Board................... 900
chapter xi--Federal Financial Institutions Examination
Council................................................... 1101
chapter xiv--Farm Credit System Insurance Corporation....... 1400
chapter xv--Department of the Treasury...................... 1510
chapter xvii--Office of Federal Housing Enterprise
Oversight, Department of Housing and Urban Development.... 1700
chapter xviii--Community Development Financial Institutions
Fund, Department of the Treasury.......................... 1805
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CHAPTER VI--FARM CREDIT ADMINISTRATION
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SUBCHAPTER A--ADMINISTRATIVE PROVISIONS
Part Page
600 Organization and functions.................. 5
601 Employee responsibilities and conduct....... 8
602 Releasing information....................... 8
603 Privacy Act regulations..................... 15
604 Farm Credit Administration Board meetings... 19
605 Information................................. 22
606 Enforcement of nondiscrimination on the
basis of handicap in programs or
activities conducted by the Farm Credit
Administration.......................... 24
607 Assessment and apportionment of
administrative expenses................. 30
608 Collection of claims owed the United States. 35
SUBCHAPTER B--FARM CREDIT SYSTEM
611 Organization................................ 48
612 Standards of conduct........................ 79
613 Eligibility and scope of financing.......... 87
614 Loan policies and operations................ 93
615 Funding and fiscal affairs, loan policies
and operations, and funding operations.. 146
616 Leasing..................................... 190
617 Referral of known or suspected criminal
violations.............................. 192
618 General provisions.......................... 194
619 Definitions................................. 203
620 Disclosure to shareholders.................. 205
621 Accounting and reporting requirements....... 223
622 Rules of practice and procedure............. 230
623 Practice before the Farm Credit
Administration.......................... 244
624 Regulatory accounting practices............. 248
625 Application for award of fees and other
expenses under the Equal Access to
Justice Act............................. 249
626 Nondiscrimination in lending................ 255
627 Title IV conservators, receivers, and
voluntary liquidations.................. 258
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630 Disclosure to investors in systemwide and
consolidated bank debt obligations of
the Farm Credit System.................. 267
650 Federal Agricultural Mortgage Corporation... 281
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SUBCHAPTER A--ADMINISTRATIVE PROVISIONS
PART 600--ORGANIZATION AND FUNCTIONS--Table of Contents
Subpart A--Farm Credit Administration
Sec.
600.1 The Farm Credit Act.
600.2 Farm Credit Administration.
600.3 Farm Credit Administration Board.
600.4 Chairman of the Farm Credit Administration Board.
600.5 Organization of the Farm Credit Administration.
Subpart B--Rules and Procedures for Service Upon the Farm Credit
Administration
600.10 Service of Process.
Authority: Secs. 5.7, 5.8, 5.9, 5.10, 5.11, 5.17, 8.11 of the Farm
Credit Act (12 U.S.C. 2241, 2242, 2243, 2244, 2245, 2252, 2279aa-11).
Source: 53 FR 16693, May 11, 1988, unless otherwise noted.
Subpart A--Farm Credit Administration
Sec. 600.1 The Farm Credit Act.
The Farm Credit Act of 1971, Pub. L. 92-181 recodified and replaced
the prior laws under which the Farm Credit Administration and the
institutions of the Farm Credit System were organized and operated. The
prior laws, which were repealed and superseded by the Act, are
identified in section 5.40(a) of the Act. Subsequent amendments to the
Act and enactment dates are as follows: Pub. L. 94-184, December 31,
1975; Pub. L. 95-443, October 10, 1978; Pub. L. 96-592, December 24,
1980; Pub. L. 99-190, December 19, 1985; Pub. L. 99-198, December 23,
1985; Pub. L. 99-205, December 23, 1985; Pub. L. 99-509, October 21,
1986; Pub. L. 100-233, January 6, 1988; Pub. L. 100-399, August 17,
1988; Pub. L. 100-460, October 1, 1988; Pub. L. 101-73, August 9, 1989;
Pub. L. 101-220, December 12, 1989; Pub. L. 101-624, November 28, 1990;
Pub. L. 102-237, December 13, 1991; Pub. L. 102-552, October 28, 1992.
The law is codified at 12 U.S.C. 2000, et. seq.
[53 FR 16693, May 11, 1988, as amended at 56 FR 2672, Jan. 24, 1991; 59
FR 21641, Apr. 26, 1994]
Sec. 600.2 Farm Credit Administration.
The Farm Credit Administration is an independent, non-appropriated
fund agency in the executive branch of the Federal Government. It is
composed of the Farm Credit Administration Board and such other
personnel as are employed in carrying out the functions, powers, and
duties vested in the Farm Credit Administration. The mailing address of
the central offices of the Farm Credit Administration is McLean,
Virginia 22102-5090. The hours of business in the central offices are
8:30 a.m.-5:00 p.m. (eastern time), Monday through Friday, excluding
Federal holidays.
Sec. 600.3 Farm Credit Administration Board.
(a) Organization. The Farm Credit Administration Board (Board) is a
full-time, three-member board entrusted with the responsibility to
manage the Farm Credit Administration. The Board consists of three
members appointed by the President with the advice and consent of the
Senate. The Board may not contain more than two members of the same
political party. One member is designated by the President as Chairman
of the Board for the duration of such member's term. Each member of the
Board shall serve a single 6-year term and cannot be reappointed except
in the case of such members who are initially appointed for less than a
6-year term on initial formation of the Board or any member who is
appointed to fill an unexpired term of less than 3 years. A member of
the Board shall continue to serve subsequent to the expiration of that
member's term until the point in time at which an eligible successor has
taken his or her oath of office. A person appointed to the Board shall
subscribe to the oath of office within 15 days after having received
notice of appointment. Each Board member is assisted by a staff.
(b) Functions and responsibilities. The Board manages, administers,
and establishes policies for the Farm Credit Administration.
Specifically, the
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Board prescribes the rules and regulations necessary for the
implementation of the Farm Credit Act of 1971, as amended, and provides
for the examination of Farm Credit System institutions and for the
performance of all the powers and duties vested in the Farm Credit
Administration.
Sec. 600.4 Chairman of the Farm Credit Administration Board.
(a) The Chairman of the Board is the Chief Executive Officer of the
Farm Credit Administration. The Chairman is responsible for directing
the implementation of the policies and regulations adopted by the Board
and, after consultation with the Board, the execution of the
administrative functions and duties of the Farm Credit Administration.
In carrying out policies as directed by the Board, the Chairman acts as
the spokesperson for the Board and represents the Board and the Farm
Credit Administration in their official relations within the Federal
Government. Under policies adopted by the Board, the Chairman consults
with the Secretary of Treasury, Board of Governors of the Federal
Reserve System, and the Secretary of Agriculture on specific matters.
(b) The Chairman has the authority to appoint such personnel as may
be necessary to carry out the functions of the Farm Credit
Administration, including the appointment of a Secretary to the Board
and noncareer Office Directors. The Board has the authority to approve
the appointment by the Chairman of a Chief Operating Officer and career
Office Directors. Each Board member has the authority to appoint
personnel employed regularly and full-time in his or her immediate
office. The Chairman may not delegate powers specifically reserved to
the Chairman by the Act without the approval of the Board. In carrying
out authorities and responsibilities, the Chairman is governed by
general policies adopted by the Board and by such regulatory decisions,
findings, and determinations as the Board may by law be authorized to
make.
(c) The Chairman as Chief Executive Officer is responsible for
overseeing the agency's equal employment opportunity programs. An Equal
Employment Opportunity Manager reports directly to the Chairman as Chief
Executive Officer.
(d) The Chairman, as head of the agency, has general supervisory
authority over the Inspector General. The Inspector General has the
authority to select, appoint, and employ such officers and employees as
may be necessary to carry out the functions, powers, and duties of the
Office of Inspector General. The Inspector General is also authorized to
enter into contracts and other arrangements for audits, studies,
analyses, and other services with public agencies and private persons,
and to obtain the temporary or intermittent services of experts or
consultants or an organization of any such professionals. In exercising
these authorities, the Inspector General is subject to applicable
statutory and regulatory constraints, as well as agency and
governmentwide administrative and budgetary limitations.
[53 FR 16693, May 11, 1988, as amended at 59 FR 21641, Apr. 26, 1994]
Sec. 600.5 Organization of the Farm Credit Administration.
(a) Chief Operating Officer. The Chief Operating Officer (COO)
reports to and is subject to the direction of the Chief Executive
Officer (CEO) concerning administrative matters and to the Board
regarding general planning and policy matters, budgetary issues,
rulemaking issues, and other matters for which the Board is responsible.
Within this context, the COO has responsibility for planning,
organizing, directing, coordinating, and controlling agency operations.
(b) Office Directors. Each Office of the Farm Credit Administration
is headed by a Director. The Director of the Office of Congressional and
Public Affairs reports to the CEO. The Director of the Office of
Secondary Market Oversight reports to the CEO on administrative matters
and to the Board concerning general policy and rulemaking issues. The
Directors of the Offices of Examination, Policy Development and Risk
Control, and Resources Management
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report to the COO. The General Counsel reports to the COO on
administrative matters and to the Board on matters of agency policy.
Each Office Director may, with the approval of the CEO or COO, as
appropriate, establish and fix the responsibilities of the divisions and
such other units as the Director deems necessary for the efficient
functioning of the Office.
(c) Inspector General. The Inspector General reports directly to the
Chairman.
(d) Offices and functions--(1) Office of Examination. The Office of
Examination plans and conducts examinations of System institutions and
other institutions as required by law; prepares and issues reports of
examination summarizing examination findings; recommends corrective
action as appropriate; and oversees compliance with the borrower rights
provisions of the Act and agency regulations. The Office of Examination
recommends formal administrative action to correct deficiencies when
System institutions are found to be operating in an unsafe or unsound
manner or are in violation of law or regulation. The Office Director
prepares examination schedules for approval by the Board and advises the
Board on matters affecting policy, regulation, and legislation relating
to examination activities. The Director, Office of Examination, is the
Chief Examiner of the Farm Credit Administration.
(2) Office of Policy Development and Risk Control. The Office of
Policy Development and Risk Control (OPDRC) develops policies and
regulations for the FCA Board's consideration and promotes risk
management policies and practices by the Farm Credit System. The OPDRC
has primary responsibility for developing regulatory proposals and
public policy statements that effectively implement applicable statutes
and promote the safety and soundness of the System. Other major
functions include evaluating requests for regulatory and charter
approvals and managing the FCA's corporate activities; ensuring that
risks associated with chartering activities are properly disclosed to
System shareholders and the FCA Board; managing the FCA's formal
enforcement activities and providing economic and financial analyses
that identify risk and contribute to the effective management of such
risks. The OPDRC also facilitates the FCA's strategic planning function.
(3) Office of Resources Management. The Office of Resources
Management provides agency administrative management for the agency
budget, accounting, human resources, training, procurement, electronic
data processing, document processing, property, supply, facilities,
records and other administrative services. The Chairman and the Board
members have delegated to the Chief of the Human Resources Division the
authority to serve as appointing officer, including the authority to
classify or place positions in the appropriate pay plan and pay ranges.
(4) Office of General Counsel. The Office of General Counsel
provides legal advice and services to the Board, the Chairman, and the
agency staff. The Office interprets the Farm Credit Act of 1971, as
amended, and other applicable laws; participates in the preparation of
agency rules and regulations; and represents the agency in litigation,
in enforcement proceedings brought by the agency, and in proceedings
before other administrative bodies. The Office of General Counsel also
has the responsibility to ensure that the agency meets all statutory and
regulatory ethics requirements. The Director, Office of General Counsel,
is the General Counsel of the Farm Credit Administration.
(5) Office of Congressional and Public Affairs. The Office of
Congressional and Public Affairs coordinates and disseminates all
communication by the agency with the Congress and plans and implements
all public communications. The Office is the first source of information
to the Farm Credit System and borrowers concerning the Farm Credit
Administration and provides other representational services for the
Board and the agency to the public.
(6) Office of Inspector General. The Office of Inspector General is
an independent office established by the Inspector General Act
Amendments of 1988 to:
(i) Conduct and supervise audits and investigations relating to the
programs
[[Page 8]]
and operations of the Farm Credit Administration;
(ii) Provide leadership and coordination and recommend policies for
activities designed to promote economy, efficiency, and effectiveness in
the administration of the Farm Credit Administration's programs and
operations;
(iii) Prevent and detect fraud and abuse in the Farm Credit
Administration's programs and operations; and
(iv) Provide a means to keep the Chairman and Congress fully and
currently informed about problems and deficiencies relating to the Farm
Credit Administration's programs and operations and the necessity for,
and progress of, corrective actions.
(7) Office of Secondary Market Oversight. The Office of Secondary
Market Oversight, a separate office within the Farm Credit
Administration pursuant to section 8.11 of the Act, provides for:
(i) The examination of the Federal Agricultural Mortgage Corporation
and its affiliates; and
(ii) The general supervision of the safe and sound performance of
the powers, functions, and duties vested in the Federal Agricultural
Mortgage Corporation and its affiliates.
(e) Additional Information. Current information on the organization
of the Farm Credit Administration may be obtained from the Office of
Congressional and Public Affairs, Farm Credit Administration, McLean,
Virginia 22102-5090.
[53 FR 16693, May 11, 1988, as amended at 59 FR 21641, Apr. 26, 1994; 61
FR 67185, Dec. 20, 1996]
Subpart B--Rules and Procedures for Service Upon the Farm Credit
Administration
Sec. 600.10 Service of Process.
(a) Except as otherwise provided in the Farm Credit Administration
regulations, the Federal Rules of Civil Procedure or by order of a court
with jurisdiction over the Farm Credit Administration, any legal process
upon the Farm Credit Administration shall be duly issued and served upon
the Secretary to the Farm Credit Administration Board, 1501 Farm Credit
Drive, McLean, Virginia 22102-5090.
(b) Service of process upon the Secretary to the Farm Credit
Administration Board may be effected by personally delivering a copy of
the documents to the Secretary or by sending a copy of the documents to
the Secretary by registered or certified mail.
(c) The Secretary shall promptly forward a copy of all documents to
the General Counsel and to any Farm Credit Administration personnel
named in the caption of the documents.
[54 FR 50736, Dec. 11, 1989, as amended at 59 FR 21642, Apr. 26, 1994]
PART 601--EMPLOYEE RESPONSIBILITIES AND CONDUCT--Table of Contents
Authority: 5 U.S.C. 7301; 12 U.S.C. 2243, 2252.
Sec. 601.100 Cross-references to employee ethical conduct standards and financial disclosure regulations.
Board members, officers, and other employees of the Farm Credit
Administration are subject to the Standards of Ethical Conduct for
Employees of the Executive Branch at 5 CFR part 2635, the Farm Credit
Administration regulation at 5 CFR part 4101, which supplements the
Executive Branch-wide Standards, and the executive branch-wide financial
disclosure regulations at 5 CFR part 2634.
[60 FR 30782, June 12, 1995]
PART 602--RELEASING INFORMATION--Table of Contents
Subpart A--Information and Records Generally
Sec.
602.1 Purpose and scope.
602.2 Disclosing reports of examination.
Subpart B--Availability of Records of the Farm Credit Administration
602.3 Definitions.
602.4 How to make a request.
602.5 FCA response to requests for records.
602.6 FOIA exemptions.
602.7 Confidential business information.
602.8 Appeals.
602.9 Current FOIA index.
[[Page 9]]
Subpart C--FOIA Fees
602.10 Definitions.
602.11 Fees by type of requester.
602.12 Fees.
602.13 Fee waiver.
602.14 Advance payments--notice.
602.15 Interest on unpaid fees.
602.16 Combining requests.
Subpart D--Testimony and Production of Documents in Legal Proceedings in
Which FCA is Not a Named Party
602.17 Policy.
602.18 Definitions.
602.19 Request for testimony or production of documents.
602.20 Testimony of FCA employees.
602.21 Production of FCA documents.
602.22 Fees.
602.23 Responses to demands served on FCA employees.
602.24 Responses to demands served on non-FCA employees or entities.
Subpart E--Release of Records in Public Rulemaking Files
602.25 General.
Authority: Secs. 5.9, 5.17; 12 U.S.C. 2243, 2252; 5 U.S.C. 301, 552;
52 FR 10012; E.O. 12600, 52 FR 23781, 3 CFR 1987, p. 235.
Source: 64 FR 41770, Aug. 2, 1999, unless otherwise noted.
Subpart A--Information and Records Generally
Sec. 602.1 Purpose and scope.
This part contains FCA's rules for disclosing our records or
information; processing requests for records under the Freedom of
Information Act (5 U.S.C. 552, as amended)(FOIA); FOIA fees; disclosing
otherwise exempt information in litigation when FCA is not a party; and
getting documents in public rulemaking files. Part 603 of this chapter
tells you how to get records about yourself under the Privacy Act of
1974, 5 U.S.C. 552a.
Sec. 602.2 Disclosing reports of examination.
(a) Disclosure by FCA. Reports of examination are FCA property. We
prepare them for our confidential use and the use of the institution
examined. We do not give reports of examination to the public. Except as
provided in this section, only the Chairman or the Chairman's designee
may consent to disclosing reports of examination of Farm Credit System
institutions and other institutions subject to our examination. You may
send a written request to our General Counsel that explains why we
should give permission.
(b) Disclosure by Farm Credit System institutions. An institution
that we have examined may disclose its report of examination to its
officers, directors, and agents, such as its attorney or accountant, if
they agree to keep the report confidential. In addition, banks may
disclose their reports of examination to their affiliated associations,
associations may disclose their reports to their supervisory bank, and
service corporations may disclose their reports of examination to the
institutions that own them. An institution may not disclose these
institutions' reports of examination to any other person without our
written permission.
(c) Disclosure to governmental entities. Without waiving any
privilege, we will disclose reports of examination to other Federal
government entities:
(1) In response to a Federal court order;
(2) In response to a request of either House or a Committee or
Subcommittee of Congress; or
(3) When requested for confidential use in an official investigation
by authorized representatives of other Federal agencies.
Subpart B--Availability of Records of the Farm Credit Administration
Sec. 602.3 Definitions.
Appeal means a request under the FOIA asking for the reversal of a
decision.
Business information means trade secrets or other commercial or
financial information that is privileged or confidential.
Business submitter means any person or entity that gives business
information to the Government.
FOIA request means a written request for FCA records, made by any
person or entity that either directly or indirectly invokes the FOIA or
this part.
[[Page 10]]
Record means all documentary materials, such as books, papers, maps,
photographs, and machine-readable materials, regardless of physical form
or characteristics (for example, electronic format) in our possession
and control when we receive your FOIA request.
Sec. 602.4 How to make a request.
(a) How to make and address a request. Your request for records must
be in writing and addressed to the FOIA Officer, Farm Credit
Administration. You may send it:
(1) By mail to 1501 Farm Credit Drive, McLean, Virginia 22102-5090;
(2) By facsimile to (703) 790-0052; or
(3) By E-mail to ``[email protected].''
(b) Description of requested records. You must describe the
requested records in enough detail to let us find them with a reasonable
effort. If the description is inadequate, we will ask you to provide
more information and the 20-day response period under Sec. 602.5(a) will
not begin until we receive your reply.
(c) Faster response. You may ask for a faster response to your FOIA
request by giving us a statement, certified to be true, that you have a
``compelling need.'' The FOIA Officer will tell you within 10 calendar
days after receiving the request whether we will respond to it faster.
If so, we will respond to your request as soon as we can. A compelling
need means:
(1) Someone's life or physical safety may be in danger if we do not
respond to the request faster; or
(2) You urgently need to tell the public about Federal government
activity as a representative of the news media.
(d) Request for personal information. If you or your representative
requests your personal information, we may require you to give us a
notarized request, identify yourself under penalty of perjury, or
provide other proof of your identity.
(e) Fees. When making a request, you must tell us the most you are
willing to pay. Our charges are in the fee tables in Secs. 602.11 and
602.12. You may also want to tell us the purpose of your request so we
can classify your request for fee purposes.
(f) Other requests. To ensure the public has timely information
about our activities, the Office of Congressional and Public Affairs
will make available copies of public documents, such as the FCA annual
report and media advisories.
Sec. 602.5 FCA response to requests for records.
(a) Response time. Within 20 business days of receiving your
request, the FOIA Officer will tell you whether we have granted or
denied it. If you send your request to the wrong address, the 20-day
response time will not begin until the FOIA Officer receives your
request.
(b) Extension of response time. In ``unusual circumstances,'' the
FOIA Officer may extend the 20-day response time for up to 10 more
business days by telling you in writing why we need more time and the
date we will mail you our response. As used in this subpart, ``unusual
circumstances'' means our need to:
(1) Search for and get the requested records from field offices or
other locations;
(2) Search for, get, and review many records identified in a single
request;
(3) Consult with another Federal agency having a substantial
interest in the request; or
(4) Consult with two or more FCA offices having a substantial
interest in the request.
(c) Referrals. If you ask for records we have that another Federal
agency originated, we will refer the request to the originating agency
and tell you about the referral. If you should have sent your request to
another Federal agency, we will refer the request to that agency and so
advise you.
Sec. 602.6 FOIA exemptions.
The FOIA allows agencies to withhold documents in certain
categories. For instance, we do not have to give you documents that
relate to our examination of institutions or that would violate the
personal privacy of an individual. If we do not give you a document
because the FOIA does not require us to, we will tell you which FOIA
exemption applies to our decision.
[[Page 11]]
Sec. 602.7 Confidential business information.
(a) FCA disclosure. FCA may disclose business information from a
business submitter only under this section. This section will not apply
if:
(1) We decide the business submitter has no valid basis to object to
disclosure;
(2) The information has been published lawfully or made available to
the public; or
(3) Law (other than the FOIA) requires disclosure of the
information.
(b) Notice by FCA. When we receive a request for confidential
business information, the FOIA Officer will promptly tell the requester
and the business submitter in writing that the responsive records may be
free from disclosure under the FOIA. We will give the business submitter
a reasonable time to object to the proposed disclosure of the responsive
records and tell the requester whenever:
(1) The business submitter has in good faith labeled the information
a trade secret or commercial or financial information that is privileged
or confidential. We will provide such notice for 10 years after
receiving the information unless the business submitter justifies the
need for a longer period; or
(2) We believe that disclosing the information may result in
commercial or financial injury to the business submitter.
(c) Objection to release. A business submitter who objects to our
releasing the requested information should tell us in writing why the
information is a trade secret or commercial or financial information
that is privileged or confidential.
(d) FCA response. (1) We will consider carefully a business
submitter's objections. If we decide to disclose business information
over the submitter's objection, the FOIA Officer will explain to the
submitter in writing why we disagreed with the submitter's objection and
describe the business information to be disclosed.
(2) We will tell the requester and the submitter the proposed
disclosure date at the same time.
(3) If a submitter sues to prevent release, we will promptly tell
the requester and will not disclose the business information until after
the court's decision.
(4) If a requester sues to compel disclosure, we will promptly tell
the business submitter.
Sec. 602.8 Appeals.
(a) How to appeal. You may appeal a total or partial denial of your
FOIA request within 30 calendar days of the date of the denial letter.
Your appeal must be in writing and addressed to the Director, Office of
Resources Management (ORM), Farm Credit Administration. You may send it:
(1) By mail to 1501 Farm Credit Drive, McLean, Virginia 22102-5090;
(2) By facsimile to (703) 893-2608; or
(3) By E-mail to [email protected].
(b) FCA action on appeal. Within 20 business days of receiving your
appeal, the ORM Director will tell you, in writing, whether we have
granted or denied it. If you send your appeal to the wrong address, the
20-day response time will not begin until the ORM Director receives your
appeal.
(c) Unusual circumstances. In unusual circumstances, the ORM
Director may extend the 20-day response time by telling you in writing
why we need more time and the date we will mail you our response. All
extensions, including any extension of the response time for the first
request, may not total more than 10 business days.
Sec. 602.9 Current FOIA index.
FCA will make a current index available for public inspection and
copying, as required by the FOIA. We will give you an index for the cost
of copying it. Because we rarely receive requests for an index, we have
not published one in the Federal Register.
Subpart C--FOIA Fees
Sec. 602.10 Definitions.
Commercial use request means an information request by an individual
or entity seeking information for a use or purpose that furthers the
commercial, trade, or profit interests of that individual or entity.
Direct costs means the costs FCA incurs in searching for and
reproducing documents to respond to a FOIA request. For a commercial use
request, it
[[Page 12]]
also means the costs we incur in reviewing documents to respond to the
request. Direct costs include the pro rated cost of the salary of the
employee performing the work (based on the basic rate of pay plus 16
percent to cover benefits) and the cost of operating reproduction
equipment. They do not include overhead expenses.
Educational institution means a preschool, a public or private
elementary or secondary school, an institution of undergraduate or
graduate higher education, an institution of professional education, or
an institution of vocational education that runs a program of scholarly
research.
Noncommercial scientific institution means a nonprofit institution
that conducts scientific research that is not intended to promote any
particular product or industry.
Pages mean 8-1/2 x 11 inch or 11 x 14 inch paper copies.
Representative of the news media means any person actively gathering
news for an entity that publishes or broadcasts news to the public. News
means information about current events or of current interest to the
public.
Reproduce (or reproduction) means copying a record.
Review means looking at documents found in response to a FOIA
request to decide whether any portion should be withheld. It does not
include the time spent resolving legal or policy issues.
Search means all time spent looking for material responsive to a
FOIA request, including page-by-page or line-by-line identification of
material within documents.
Sec. 602.11 Fees by type of requester.
Depending on your identity and the purpose of your request, the FCA
may charge you the direct costs of searching for responsive records,
reviewing the records, and reproducing them. If necessary, we will seek
clarification before classifying the request.
(a) Educational institutions and noncommercial scientific
institutions. We charge fees for reproduction costs only. The first 100
pages are free. You must show that the request is sanctioned by an
educational or noncommercial scientific institution and that you seek
the records for scholarly or scientific research, not for a commercial
use.
(b) Representatives of the news media. We charge fees for
reproduction costs only. The first 100 pages are free. You must be a
representative of the news media, and the request must not be made for a
commercial use. A request for records supporting news distribution is
not a request for a commercial use.
(c) Commercial use. We charge the direct cost for search, review,
and reproduction. Commercial use requesters are not entitled to free
search time or free reproduction. We will charge you even if we do not
disclose any records.
(d) All others. The first 2 hours of search time and the first 100
pages of reproduction are free. After that, we will charge you for
search and reproduction costs. We will charge you for a search even if
we do not disclose any records.
(e) Fee table. The fee information in paragraphs (a) through (d) of
this section is presented in the table to this paragraph. You may apply
for a waiver if your request is not mostly in your commercial interest
and the disclosure is in the public interest. See Sec. 602.13.
Fee Table
----------------------------------------------------------------------------------------------------------------
Charges for
Type of requester --------------------------------------------------- Reproduction
Search time Review time
----------------------------------------------------------------------------------------------------------------
Educational................. No Charge............... No charge.............. First 100 pages free, $
Noncommercial scientific 0.15 a page after
users. that.
News media..................
Commercial Users \1\................ All direct costs........ All direct costs....... $0.15 a page.
All others \1\...................... First 2 hours free, all No charge.............. First 100 pages free,
direct costs after that. $0.15 a page after
that.
----------------------------------------------------------------------------------------------------------------
\1\ You are responsible for fees even if we do not disclose any records.
[64 FR 41770, Aug. 2, 1999; 64 FR 45589, Aug. 20, 1999]
[[Page 13]]
Sec. 602.12 Fees.
(a) FCA may charge:
(1) For manual searches for records and for review, the pro rated
cost of the salary of the employee doing the work.
(2) For computer searches for records, the direct costs of computer
search time and supply or material costs.
(3) For each page made by photocopy or similar method, fifteen cents
a page, and for other forms of copying, the direct costs.
(4) The direct costs of elective services, such as certifying
records as true copies or sending records by special methods.
(b) We will not charge fees when total assessed fees are less than
$15.00.
(c) You must pay by personal check, bank draft drawn on a United
States bank, or postal money order made payable to the Treasury of the
United States.
(d) We treat a request about yourself under Privacy Act fee rules.
(e) The information in paragraphs (a) and (b) of this section is
presented in the table to this paragraph. Direct costs means the costs
FCA incurs in searching for, reviewing, and reproducing documents to
respond to a request. Direct costs include pro rated salary and
reproduction costs. We will not charge fees when they total less than
$15.00.
Fee Amounts Table
------------------------------------------------------------------------
Type of fee Amount of fee
------------------------------------------------------------------------
Manual Search and Review................. Pro rated Salary Costs.
Computer Search.......................... Direct Costs.
Photocopy................................ $0.15 a page.
Other Reproduction Costs................. Direct Costs.
Elective Services........................ Direct Costs.
------------------------------------------------------------------------
Sec. 602.13 Fee waiver.
We may waive or reduce fees if disclosure is not mostly in your
commercial interest but, instead, is in the public interest because it
will advance public understanding of the Federal government's operations
or activities.
Sec. 602.14 Advance payments--notice.
(a) If fees will be more than $25.00 and you have not told us in
advance that you will pay estimated fees, we will tell you the estimated
amount and ask that you agree to pay it. Except as noted in this
section, we will begin processing the FOIA request when we receive your
agreement to pay.
(b) If estimated fees exceed $250.00 and you have a history of
promptly paying fees charged for information requests, we may respond to
your request based on your agreement to pay.
(c) If estimated fees exceed $250.00 and you have no history of
paying fees, we may require you to pay in advance.
(d) If you have previously failed to pay fees for information
requests or paid them late, you must pay any fees still owed, plus
interest calculated under Sec. 602.15, and the estimated fees before we
will respond to a new or a pending request.
(e) If we require advance payment or an advance agreement to pay, we
will not consider your request to be received and will not respond to it
until you meet the requirement.
Sec. 602.15 Interest on unpaid fees.
If you fail to pay fees on time, FCA may charge you interest
starting on the 31st calendar day following the date we bill you. We
will charge you interest at the rate allowed by law (31 U.S.C. 3717) on
the billing date.
Sec. 602.16 Combining requests.
You may not avoid paying fees by filing multiple requests at the
same time. When FCA reasonably believes that you, alone or with others,
are breaking down a request into a series of requests to avoid fees, we
will combine the requests and charge accordingly. We will assume that
multiple requests within a 30-day period have been made to avoid fees.
Subpart D--Testimony and Production of Documents in Legal Proceedings in
Which FCA is Not a Named Party
Sec. 602.17 Policy.
(a) The rules in this subpart preserve the confidentiality of FCA's
documents and information, conserve employees' time for official duties,
uphold fairness in litigation, and help the Chairman
[[Page 14]]
decide when to allow testimony and to produce documents. This subpart
does not affect access to documents under the FOIA or the Privacy Act.
See subpart B of this part and part 603 of this chapter.
(b) Generally, we will not produce documents voluntarily and
employees will not appear as witnesses voluntarily in any legal
proceeding. However, in limited circumstances, the Chairman may allow
the production of documents or testimony when the Chairman decides it
would be in the best interest of FCA or the public. All privileged
documents produced under this subpart remain our property. Any employee
having information or privileged documents may disclose them only as
allowed by the Chairman.
Sec. 602.18 Definitions.
Court means any entity conducting a legal proceeding.
Demand means any order, subpoena, or other legal process for
testimony or documents.
Direct costs means FCA's costs to search for, review, and reproduce
documents to respond to a request. Direct costs include the pro rated
cost of the salary of the employee performing the work (based on the
basic rate of pay plus 16 percent to cover benefits) and the cost of
operating reproduction equipment.
Document means any record or other documentary materials, such as
books, papers, maps, photographs, and machine-readable materials,
regardless of physical form or characteristics (for example, electronic
format) in our possession and control when we receive the request.
Employee means any present or former FCA employee, any present or
former FCA Board member, any former Federal Farm Credit Board member,
any present or former FCA-appointed receiver or conservator, and any
present or former agent or contractor.
FCA Counsel means the General Counsel, a Department of Justice
attorney, or counsel authorized by FCA to act for the FCA or an
employee.
General Counsel means the FCA's General Counsel or designee.
Legal proceeding means any administrative, civil, or criminal
proceeding, including a discovery proceeding, before a court when FCA is
not a named party and has not instituted the legal proceeding.
Sec. 602.19 Request for testimony or production of documents.
(a) How to make and address a request. Your request for an
employee's testimony about official matters or the production of
documents must be in writing and addressed to the General Counsel, 1501
Farm Credit Drive, McLean, Virginia 22102-5090.
(b) Your request must contain the following:
(1) Title of the case;
(2) Forum;
(3) Your interest in the case;
(4) Summary of the litigation issues;
(5) Reasons for the request;
(6) Why the confidential information is important; and
(7) An explanation of why the testimony or document you want is not
reasonably available from another source. If you want testimony, you
must also state how you intend to use the testimony, provide a subject
matter summary of the requested testimony, and explain why a document
could not be used instead.
(c) The General Counsel may ask you to limit your request to make it
less burdensome or to give us information to help us decide if providing
documents or testimony is in the public interest.
Sec. 602.20 Testimony of FCA employees.
(a) An employee may testify only as the Chairman approves in
writing. Generally, an employee may testify only by deposition or
written interrogatory. An employee may give only factual testimony and
may not give opinion testimony.
(b) If, in response to your request, the Chairman decides that an
employee may testify, you must serve the employee with a subpoena under
applicable Federal or State rules of procedure and at the same time send
a copy of the subpoena by registered mail to the General Counsel.
(c) Normally, depositions will be taken at the employee's office, at
a time convenient to the employee and
[[Page 15]]
the FCA. FCA counsel may represent FCA's interests at the deposition.
(d) If you request the deposition, you must give the General Counsel
a copy of the deposition transcript at no charge.
Sec. 602.21 Production of FCA documents.
(a) An FCA employee may produce documents only as the Chairman
allows.
(b) Before we will release any documents, the requesting party must
get an acceptable protective order from the court before which the
action is pending that will preserve the confidentiality of the
documents to be released.
(c) On request, we may provide certified or authenticated copies of
documents.
Sec. 602.22 Fees.
(a) For documents released under this subpart, FCA will charge:
(1) The direct costs of searching for responsive records, including
the use of a computer, reviewing the records, and reproducing them. We
also will charge for the direct costs of any other services and
materials that we provide at your request.
(2) Fifteen cents a copy for each page made by photocopy or similar
process.
(3) The direct costs for each certification or authentication of
documents.
(b) You must pay by personal check, bank draft drawn on a United
States bank, or postal money order made payable to FCA. We will waive
fees of $15.00 or less. We will send the documents after we receive your
payment.
Sec. 602.23 Responses to demands served on FCA employees.
(a) An employee served with a demand or a subpoena in a legal
proceeding must immediately tell the General Counsel of such service,
the testimony or documents described in the demand, and all relevant
facts.
(b) When the Chairman does not allow testimony or production of
documents, FCA Counsel will provide the regulations in this subpart to
the party or court issuing the demand and explain that the employee may
not testify or produce documents without the Chairman's prior approval.
(c) If the court rules the employee must comply with the demand
regardless of the Chairman's instructions not to do so, the employee
must respectfully refuse to comply.
(d) FCA's decision under this subpart to comply or not to comply
with any demand is not a waiver, an assertion of privilege, or an
objection based on relevance, technical deficiency, or any other ground.
We may oppose any demand on any legal ground.
Sec. 602.24 Responses to demands served on non-FCA employees or entities.
If you are not an employee and are served with a demand or a
subpoena in a legal proceeding directing you to produce or testify about
an FCA report of examination, other document created or adopted by FCA,
or any related document, you must object and immediately tell the
General Counsel of such service, the testimony or documents described in
the demand, and all relevant facts. You also must object to the
production of any documents on the basis that they are FCA's property
and cannot be released without FCA's consent. You should tell the
requester the production of documents or testimony must follow the
procedures in this part.
Subpart E--Release of Records in Public Rulemaking Files
Sec. 602.25 General.
FCA has a public rulemaking file for each regulation. You may get
copies of documents in the public rulemaking file by sending a written
request to the Director, Regulation and Policy Division, Office of
Policy and Analysis, Farm Credit Administration, 1501 Farm Credit Drive,
McLean, Virginia 22102-5090. We will charge fifteen cents a copy for
each page. We will waive fees of $15.00 or less.
PART 603--PRIVACY ACT REGULATIONS--Table of Contents
Sec.
603.300 Purpose and scope.
603.305 Definitions.
603.310 Procedures for requests pertaining to individual records in a
record system.
[[Page 16]]
603.315 Times, places, and requirements for identification of
individuals making requests.
603.320 Disclosure of requested information to individuals.
603.325 Special procedures for medical records.
603.330 Request for amendment to record.
603.335 Agency review of request for amendment of record.
603.340 Appeal of an initial adverse determination of a request to
amend a record.
603.345 Fees for providing copies of records.
603.350 Criminal penalties.
603.355 Exemptions.
Authority: Secs. 5.9, 5.17 of the Farm Credit Act (12 U.S.C. 2243,
2252); 5 U.S.C. app. 3, 5 U.S.C. 552a (j)(2) and (k)(2).
Source: 40 FR 40454, Sept. 2, 1975, unless otherwise noted.
Sec. 603.300 Purpose and scope.
(a) This part is published by the Farm Credit Administration
pursuant to the Privacy Act of 1974 (Pub. L. 93-579, 5 U.S.C. 552a)
which requires each Federal agency to promulgate rules to establish
procedures for notification and disclosure to an individual of agency
records pertaining to that person, and for review of such records.
(b) The records covered by this part include:
(1) Personnel and employment records maintained by the Farm Credit
Administration which are not covered by Secs. 293.101 through 293.108 of
the regulations of the Office of Personnel Management (5 CFR 293.101
through 293.108), and
(2) Other records contained in record systems maintained by the Farm
Credit Administration.
[40 FR 40454, Sept. 2, 1975, as amended at 51 FR 41941, Nov. 20, 1986]
Sec. 603.305 Definitions.
For the purposes of this part:
(a) Agency means the Farm Credit Administration.
(b) Individual means a citizen of the United States or an alien
lawfully admitted for permanent residence;
(c) Maintain includes maintain, collect, use, or disseminate;
(d) Record means any item, collection, or grouping of information
about an individual that is maintained by an agency including, but not
limited to, that person's education, financial transactions, medical
history, and criminal or employment history, and that contains that
person's name, or the identifying number, symbol, or other identifying
particular assigned to the individual, such as a finger or voice print
or photograph;
(e) Routine use means, with respect to the disclosure of a record,
the use of such record for a purpose that is compatible with the purpose
for which it was collected;
(f) Statistical record means a record in a system of records
maintained for statistical research or reporting purposes only and not
used in whole or in part in making any determination about an
identifiable individual, except as provided by 13 U.S.C. 8;
(g) System of records means a group of any records under the control
of any agency from which information is retrieved by the name of an
individual or by some identifying number, symbol, or other identifying
particular assigned to the individual.
[51 FR 41941, Nov. 20, 1986]
Sec. 603.310 Procedures for requests pertaining to individual records in a record system.
(a) Any present or former employee of the Farm Credit Administration
seeking access to that person's official civil service records
maintained by the Farm Credit Administration shall submit a request in
such manner as is prescribed by the Office of Personnel Management.
(b) Individuals shall submit their requests in writing to the
Privacy Act Officer, Office of General Counsel, Farm Credit
Administration, McLean, Virginia 22102-5090, when seeking to obtain from
the Farm Credit Administration:
(1) Notification of whether the agency maintains a record pertaining
to that person in a system of records;
(2) Notification of whether the agency has disclosed a record for
which an accounting of disclosure is required to be maintained and made
available to that person;
(3) A copy of a record pertaining to that person or the accounting
of its disclosure;
(4) The review of a record pertaining to that person or the
accounting of its
[[Page 17]]
disclosure. The request shall state the full name and address of the
individual, and identify the system or systems of records believed to
contain the information or record sought.
[51 FR 41941, Nov. 20, 1986, as amended at 61 FR 67185, Dec. 20, 1996]
Sec. 603.315 Times, places, and requirements for identification of individuals making requests.
The individual making written requests for information or records
ordinarily will not be required to verify that person's identity. The
signature upon such requests shall be deemed to be a certification by
the requester that he or she is the individual to whom the record
pertains, or the parent of a minor, or the duly appointed legal guardian
of the individual to whom the record pertains. The Privacy Act Officer,
however, may require such additional verification of identity in any
instance in which the Privacy Act Officer deems it advisable.
[51 FR 41941, Nov. 20, 1986]
Sec. 603.320 Disclosure of requested information to individuals.
(a) The Privacy Act Officer shall, within a reasonable period of
time after the date of receipt of a request for information of records:
(1) Determine whether or not such request shall be granted,
(2) Notify the requester of the determination and, if the request is
denied, of the reasons therefor, and
(3) Notify the requester that fees for reproducing copies of records
may be charged as provided in Sec. 603.345 of this part.
(b) If access to a record is denied because the information therein
has been compiled by the Farm Credit Administration in reasonable
anticipation of a civil or criminal action proceeding, the Privacy Act
Officer shall notify the requester of that person's right to judicial
appeal under 5 U.S.C. 552a(g).
(c)(1) If access to a record is granted, the requester shall notify
the Officer whether the requested record is to be copied and mailed to
the requester or whether the record is to be made available for personal
inspection.
(2) A requester who is an individual may be accompanied by an
individual selected by the requester when the record is disclosed, in
which case the requester may be required to furnish a written statement
authorizing the discussion of the record in the presence of the
accompanying person.
(d) If the record is to be made available for personal inspection,
the requester shall arrange with the Privacy Act Officer a mutually
agreeable time in the offices of the Farm Credit Administration for
inspection of the record.
[40 FR 40454, Sept. 2, 1975, as amended at 51 FR 41941, Nov. 20, 1986]
Sec. 603.325 Special procedures for medical records.
Medical records in the custody of the Farm Credit Administration
which are not subject to Office of Personnel Management regulations
shall be disclosed either to the individual to whom they pertain or that
person's authorized or legal representative or to a licensed physician
named by the individual.
[51 FR 41942, Nov. 20, 1986]
Sec. 603.330 Request for amendment to record.
(a) If, after disclosure of the requested information, an individual
believes that the record is not accurate, relevant, timely, or complete,
that person may request in writing that the record be amended. Such a
request shall be submitted to the Privacy Act Officer and shall contain
identification of the system of records and the record or information
therein, a brief description of the material requested to be changed,
the requested change or changes, and the reason for such change or
changes.
(b) The Privacy Act Officer shall acknowledge receipt of the request
within 10 days (excluding Saturdays, Sundays, and legal holidays) and,
if a determination has not been made, advise the individual when that
person may expect to be advised of action taken on the request. The
acknowledgment may contain a request for additional information needed
to make a determination.
[51 FR 41942, Nov. 20, 1986]
[[Page 18]]
Sec. 603.335 Agency review of request for amendment of record.
Upon receipt of a request for amendment of a record, the Privacy Act
Officer shall:
(a) Correct any portion of a record which the individual making the
request believes is not accurate, relevant, timely, or complete and
thereafter inform the individual in writing of such correction, or
(b) Inform the individual in writing of refusal to amend the record
and of the reasons therefor, and advise that the individual may appeal
such determination as provided in Sec. 603.340 of this part.
[40 FR 40454, Sept. 2, 1975, as amended at 51 FR 41942, Nov. 20, 1986]
Sec. 603.340 Appeal of an initial adverse determination of a request to amend a record.
(a) Not more than 10 days (excluding Saturdays, Sundays, and legal
holidays) after receipt by an individual of an adverse determination on
the individual's request to amend a record or otherwise, the individual
may appeal to the Director, Office of Resources Management.
(b) The appeal shall be by letter, mailed or delivered to the
Director, Office of Resources Management, Farm Credit Administration,
McLean, Virginia 22102-5090. The letter shall identify the records
involved in the same manner they were identified to the Privacy Act
Officer, shall specify the dates of the request and adverse
determination, and shall indicate the expressed basis for that
determination. Also, the letter shall state briefly and succinctly the
reasons why the adverse determination should be reversed.
(c) The review shall be completed and a final determination made by
the Director not later than 30 days (excluding Saturdays, Sundays, and
legal holidays) from receipt of the request for such review, unless the
Director extends such 30-day period for good cause. If the 30-day period
is extended, the individual shall be notified of the reasons therefor.
(d) If the Director refuses to amend the record in accordance with
the request, the individual shall be notified of the right to file a
concise statement setting forth that person's disagreement with the
final determination and that person's right under 5 U.S.C. 552a(g)(1)(A)
to a judicial review of the final determination.
(e) If an amendment of a record as requested upon review is refused,
there shall be included in the disputed portion of the record a copy of
the concise statement filed by the individual together with a concise
statement of the reasons for not amending the record as requested. Such
statements will be included when disclosure of the disputed record is
made to persons and agencies as authorized under 5 U.S.C. 552a.
[40 FR 40454, Sept. 2, 1975, as amended at 51 FR 41942, Nov. 20, 1986;
56 FR 2673, Jan. 24, 1991]
Sec. 603.345 Fees for providing copies of records.
Fees for providing copies of records shall be charged in accordance
with Secs. 602.267 and 602.269 of this chapter.
[40 FR 40454, Sept. 2, 1975, as amended at 56 FR 28479, June 21, 1991]
Sec. 603.350 Criminal penalties.
Section 552a (l) (3) of the Privacy Act (5 U.S.C. 552a (i) (3))
makes it a misdemeanor, subject to a maximum fine of $5,000, to
knowingly and willfully request or obtain any record concerning any
individual from an agency under false pretenses. Sections 552a (i) (1)
and (2) of the Act (5 U.S.C. 552a (i) (1), (2)) provide penalties for
violation by agency employees of the Act or regulations established
thereunder.
Sec. 603.355 Exemptions.
(a) Specific. Pursuant to 5 U.S.C. 552a(k)(2), the investigatory
material compiled for law enforcement purposes in the following systems
of records is exempt from subsections (c)(3), (d), (e)(1), (e)(4) (G),
(H), and (I) and (f) of 5 U.S.C. 552a and from the provisions of this
part:
Farm Credit Bank loans--FCA.
Production Credit Association loans--FCA.
Agricultural Credit Association loans--FCA.
Federal Land Credit Association loans--FCA.
Agricultural Credit Bank loans--FCA.
Office of Inspector General Investigative Files--FCA.
[[Page 19]]
(b) General. (1) In addition, pursuant to 5 U.S.C. 552a (j)(2),
investigatory materials compiled for criminal law enforcement in the
system of records described in (b)(2) are exempt from all subsections of
5 U.S.C. 552a, except (b), (c) (1) and (2), (e)(4) (A) through (F), (e)
(6), (7), (9), (10), and (11), and (i). Exemptions from the particular
subsections are justified for the following reasons:
(i) From subsection (c)(3) because making available to a record
subject the accounting of disclosures from records concerning him/her
would reveal investigative interest on the part of the OIG. This would
enable record subjects to impede the investigation by, for example,
destroying evidence, intimidating potential witnesses, or fleeing the
area to avoid inquiries or apprehension by law enforcement personnel.
(ii) From subsection (c)(4) because this system is exempt from the
access provisions of subsection (d) pursuant to subsection (j)(2) of the
Privacy Act.
(iii) From subsection (d) because the records contained in this
system relate to official Federal investigations. Individual access to
those records might compromise ongoing investigations, reveal
confidential informants or constitute unwarranted invasions of the
personal privacy of third parties who are involved in a certain
investigation. Amendment of the records would interfere with ongoing
criminal law enforcement proceedings and impose an impossible
administrative burden by requiring criminal investigations to be
continuously reinvestigated.
(iv) From subsections (e) (1) and (5) because in the course of law
enforcement investigations, information may occasionally be obtained or
introduced the accuracy of which is unclear or which is not strictly
relevant or necessary to a specific investigation. In the interests of
effective law enforcement, it is appropriate to retain all information
that may aid in establishing patterns of criminal activity. Moreover, it
would impede the specific investigative process if it were necessary to
assure the relevance, accuracy, timeliness and completeness of all
information obtained.
(v) From subsection (e)(2) because in a law enforcement
investigation the requirement that information be collected to the
greatest extent possible from the subject individual would present a
serious impediment to law enforcement in that the subject of the
investigation would be informed of the existence of the investigation
and would therefore be able to avoid detection, apprehension, or legal
obligations or duties.
(vi) From subsection (e)(3) because to comply with the requirements
of this subsection during the course of an investigation could impede
the information gathering process, thus hampering the investigation.
(vii) From subsections (e)(4) (G), and (H), and (I), (e)(8), (f),
(g) and (h) because this system is exempt from the access provisions of
subsection (d) pursuant to subsection (j) of the Privacy Act.
(2) Office of Inspector General Investigative Files--FCA.
[56 FR 2673, Jan. 24, 1991, as amended at 57 FR 32421, July 22, 1992]
PART 604--FARM CREDIT ADMINISTRATION BOARD MEETINGS--Table of Contents
Sec.
604.400 Definitions.
604.405 Notice of public observation.
604.410 Scope of application.
604.415 Open meetings.
604.420 Exemptive provisions.
604.425 Announcement of meetings.
604.430 Closure of meetings.
604.435 Record of closed meetings or closed portion of a meeting.
604.440 Requests for information.
Authority: Secs. 5.9, 5.17 of the Farm Credit Act; 12 U.S.C. 2243,
2252.
Sec. 604.400 Definitions.
For purposes of this part:
(a) Agency means the Farm Credit Administration.
(b) Board means the Farm Credit Administration Board.
(c) Exempt meeting and exempt portion of a meeting mean,
respectively, a meeting or that part of a meeting designated as provided
in Sec. 604.430 of this part as closed to the public by reason of one or
more of the exemptive provisions listed in Sec. 604.420 of this part.
[[Page 20]]
(d) Meeting means the deliberations of at least two (quorum) members
of the Board where such deliberations determine or result in joint
conduct or disposition of official Farm Credit Administration business.
(e) Member means any one of the members of the Board.
(f) Open meeting means a meeting or portion of a meeting which is
not an exempt meeting or an exempt portion of a meeting.
(g) Public observation means the right of any member of the public
to attend and observe, but not participate or interfere in any way in,
an open meeting of the Board, within the limits of reasonable and
comfortable accommodations made available for such purpose by the Farm
Credit Administration.
[51 FR 41942, Nov. 20, 1986]
Sec. 604.405 Notice of public observation.
(a) A member of the public is not required to give advance notice to
the Farm Credit Administration of an intention to exercise the right of
public observation of an open meeting of the Board. However, in order to
permit the Farm Credit Administration to determine the amount of space
and number of seats which must be made available to accommodate
individuals who desire to exercise the right of public observation, such
individuals are requested to give notice to the Farm Credit
Administration at least two business days before the start of the open
meeting of the intention to exercise such right.
(b) Notice of intention to exercise the right of public observation
may be given in writing, in person, or by telephone to the official
designated in Sec. 604.440 of this part.
(c) Individuals who have not given advance notice of intention to
exercise the right of public observation will not be permitted to attend
and observe the open meeting of the Board if the available space and
seating are necessary to accommodate individuals who gave advance notice
of such intention to the Farm Credit Administration.
[42 FR 12161, Mar. 3, 1977. Redesignated and amended at 51 FR 41942,
Nov. 20, 1986]
Sec. 604.410 Scope of application.
The provisions of this part apply to meetings of the Board, and do
not apply to conferences or other gatherings of employees of the Farm
Credit Administration who meet or join with others, except at meetings
of the Board, to deliberate official agency business.
[51 FR 41942, Nov. 20, 1986]
Sec. 604.415 Open meetings.
Every meeting and portion of a meeting of the Board shall be open to
public observation unless the Board determines that such meeting or
portion of a meeting will involve the discussion of matters which are
within one or more of the exemptive provisions listed in Sec. 604.420 of
this part, and that the public interest is not served by the discussion
of such matters in an open meeting.
[51 FR 41943, Nov. 20, 1986]
Sec. 604.420 Exemptive provisions.
Except in a case where the Board determines that the public interest
requires otherwise, a meeting or portion of a meeting may be closed to
public observation where the Board determines that the meeting or
portion of the meeting is likely to:
(a) Disclose matters that are:
(1) Specifically authorized under criteria established by an
Executive order to be kept secret in the interests of national defense
or foreign policy, and
(2) In fact properly classified pursuant to such Executive order;
(b) Relate solely to the internal personnel rules and practices of
the Farm Credit Administration;
(c) Disclose matters specifically exempted from disclosure by
statute (other than 5 U.S.C. 552): Provided, That such statute:
(1) Requires that the matters be withheld from the public in such a
manner as to leave no discretion on the issue, or
(2) Establishes particular types of matters to be withheld;
(d) Disclose trade secrets and privileged or confidential commercial
or financial information obtained from a person;
[[Page 21]]
(e) Involve accusing any person of a crime, or formally censuring
any person;
(f) Disclose information of a personal nature where disclosure would
constitute a clearly unwarranted invasion of personal privacy;
(g) Disclose investigator records compiled for law enforcement
purposes, or information which if written would be contained in such
records, but only to the extent that the production of such records or
information would:
(1) Interfere with enforcement proceedings;
(2) Deprive a person of a right to a fair trial or an impartial
adjudication;
(3) Constitute an unwarranted invasion of personal privacy;
(4) Disclose the identity of a confidential source and, in the case
of a record compiled by a criminal law enforcement authority in the
course of a criminal investigation, or by an agency conducting a lawful
national security intelligence investigation, confidential information
furnished only by the confidential source;
(5) Disclose investigative techniques and procedures; or
(6) Endanger the life or physical safety of law enforcement
personnel;
(h) Disclose information contained in or related to examination,
supervision, operating, or condition reports prepared by, on behalf of,
or for the use of the Farm Credit Administration;
(i) Disclose information the premature disclosure of which would:
(1) Significantly endanger the stability of any Farm Credit System
institution, including banks, associations, service organizations, the
Funding Corporation, the Farm Credit System Assistance Board, or the
Farm Credit System Financial Assistance Corporation; or
(2) Be likely to significantly frustrate implementation of a
proposed action of the Farm Credit Administration: Provided, said
Administration has not already disclosed to the public the content or
nature of its proposed action, or is not required by law to make such
disclosure on its own initiative prior to taking final action on such
proposal; or
(j) Specifically concern participation by the Farm Credit
Administration in a civil action or proceeding otherwise involving a
determination on the record before an opportunity for a hearing.
[51 FR 41943, Nov. 20, 1986, as amended at 56 FR 2673, Jan. 24, 1991]
Sec. 604.425 Announcement of meetings.
(a) The Board meets in the offices of the Farm Credit
Administration, McLean, Virginia 22102-5090, on the second Thursday of
each month.
(b) At any duly called meeting held previous to any meeting
scheduled as provided in paragraph (a) of this section, the Board may
fix a different time and place for a subsequent meeting.
(c) At the earliest practicable time, which is estimated to be not
later than 8 days before the beginning of a meeting of the Board, the
Farm Credit Administration shall make available for public inspection by
posting notice on its public notice board in its offices, or pursuant to
telephonic or written requests, the time, place, and subject matter of
the meeting except to the extent that such information is exempt from
disclosure under the provisions of Sec. 604.420 of this part.
[42 FR 12161, Mar. 3, 1977. Redesignated and amended at 51 FR 41943,
Nov. 20, 1986; 56 FR 9611, Mar. 7, 1991]
Sec. 604.430 Closure of meetings.
(a) A majority of the meetings or portions of a majority of the
meetings of the board are exempt by reason of Sec. 604.420 (d), (h),
(i)(1), or (j) of this part. An exempt meeting or an exempt portion of a
meeting shall be closed to the public when at least two members of the
Board vote by a recorded vote of the Board at the beginning of the
exempt meeting or exempt portion of a meeting to close such meeting or
such exempt portion, and the General Counsel, Farm Credit
Administration, publicly certifies that, in his or her opinion, the
meeting or portion of the meeting may be closed to the public stating
each relevant exemptive provision listed in Sec. 604.420 of this part.
(b) A copy of the vote of the Board to close a meeting or an exempt
portion thereof reflecting the vote of each member on the question, and
a copy of
[[Page 22]]
the certification of General Counsel, shall be made available for public
inspection in the offices of the Farm Credit Administration, or pursuant
to telephonic or written requests.
(c) A copy of the certification of the General Counsel, together
with a statement from the presiding officer of the meeting setting forth
the time and place of an exempt meeting or an exempt portion of a
meeting which was closed and the persons present, shall be retained by
the Farm Credit Administration for a period of at least 2 years after
the date of such closed meeting or closed portion of a meeting.
[42 FR 12161, Mar. 3, 1977. Redesignated and amended at 51 FR 41943,
Nov. 20, 1986]
Sec. 604.435 Record of closed meetings or closed portion of a meeting.
(a) The Farm Credit Administration shall maintain a complete
transcript or electronic recording adequate to record fully the
proceedings of each closed meeting or closed portion of a meeting,
except that in the case of a meeting or portion of a meeting closed to
the public pursuant to Sec. 604.420 (d), (h), (i)(1), or (j) of this
part, the Farm Credit Administration shall maintain either such
transcript, recording, or a set of minutes.
(b) Any minutes so maintained shall fully and clearly describe all
matters discussed and shall provide a full and accurate summary of any
actions taken, and the reasons therefor, including a description of each
of the views expressed on any item and the record of any roll call vote.
All documents considered in connection with any action shall be
identified in the minutes.
(c) The Farm Credit Administration shall promptly make available to
the public, in its offices, the transcript, electronic recording, or
minutes, of the discussion of any item on the agenda of a closed
meeting, or closed portion of a meeting, except for such item or items
of discussion which the Farm Credit Administration determines to contain
information which may be withheld under Sec. 604.420 of this part.
Copies of such transcript or minutes, or a transcription of such
recording disclosing the identity of each speaker, shall be furnished to
any person at the actual cost of duplication or transcription.
(d) The Farm Credit Administration shall maintain a complete
verbatim copy of the transcript, a complete copy of the minutes, or a
complete electronic recording of each closed meeting or closed portion
of a meeting for a period of 2 years after the date of such closed
meeting or closed portion of a meeting.
(e) All actions required or permitted by this section to be
undertaken by the Farm Credit Administration shall be by or under the
authority of the Director, Office of Resources Management.
[42 FR 12161, Mar. 3, 1977. Redesignated and amended at 51 FR 41943,
Nov. 20, 1986; 56 FR 2673, Jan. 24, 1991]
Sec. 604.440 Requests for information.
Requests to the Farm Credit Administration for information about the
time, place, and subject matter of a meeting, whether it or any portion
thereof is closed to the public, and any requests for copies of the
transcript or minutes, or of a transcript of an electronic recording of
a closed meeting, or closed portion of a meeting, to the extent not
exempt from disclosure by the provisions of Sec. 604.420 of this part,
shall be addressed to the Secretary to the Board, Farm Credit
Administration, McLean, Virginia 22102-5090.
[51 FR 41944, Nov. 20, 1986, as amended at 59 FR 21642, Apr. 26, 1994]
PART 605--INFORMATION--Table of Contents
Sec.
605.500 Policy.
605.501 Information Security Officer.
605.502 Program and procedures.
Authority: Secs. 5.9, 5.12, 5.17 of the Farm Credit Act; 12 U.S.C.
2243, 2246, 2252.
Sec. 605.500 Policy.
It is the policy of the Farm Credit Administration to act in matters
relating to national security information in accordance with Executive
Order 12356 and directives issued thereunder by the Information Security
Oversight Office (ISOO).
[49 FR 9859, Mar. 16, 1984]
Sec. 605.501 Information Security Officer.
(a) The Information Security Officer of the Farm Credit
Administration
[[Page 23]]
shall be responsible for implementation and oversight of the information
security program and procedures adopted by the Agency pursuant to the
Executive order. This officer shall be the recipient of questions,
suggestions, and complaints regarding all elements of this program and
shall be solely responsible for changes to it and for the assurance that
it is at all times consistent with the Executive order and ISOO
directive.
(b) The Information Security Officer shall be the Farm Credit
Administration's official contact for requests for declassification of
materials submitted under the Executive order, regardless of the point
of origin of such requests, and shall assure that such requests for
records in the Farm Credit Administration's possession that were
originated by another agency shall be forwarded to the originating
agency. The Farm Credit Administration shall include a copy of the
records requested together with its recommendation for action. Upon
receipt, the originating agency shall process the request in accordance
with 32 CFR 2001.32(a)(2)(i). Upon request, the originating agency shall
communicate its declassification determination to the Farm Credit
Administration. The Farm Credit Administration shall inform the
requester of the determination within 1 year from the date of receipt,
except in unusual circumstances. If an appeal is made on a denial of a
mandatory declassification review request, the originating agency's
appellate authority shall normally make a determination within 30
working days following the receipt of an appeal. If additional time is
required to make a determination, the originating appellate authority
shall notify the requester of the additional time needed and provide the
requester with the reason for extension. The originating agency's
appellate authority shall notify the requester in writing of the final
determination and of the reasons for any denial. Such officer shall also
assure that requests for declassification submitted under the Freedom of
Information Act are handled in accordance with that Act.
[49 FR 9859, Mar. 16, 1984]
Sec. 605.502 Program and procedures.
(a) The Farm Credit Administration has no authority for the original
classification of information for national security purposes. Only those
agencies described in the Executive order may so classify information.
(b) Derivative classification. ``Derivative Classification'' means a
determination that information is in substance the same information that
is currently classified under a designated level of classification.
Derivative application of classification markings shall be the
responsibility of the Information Security Officer who shall assure that
the use of this authority is in accordance with ISOO directives.
(c) Mandatory review. All requests for review under the mandatory
review provisions of the Executive order shall be handled by the
Information Security Officer or his/her designee. Under no circumstances
shall such official refuse to confirm the existence or nonexistence of a
document requested under the Executive order or the Freedom of
Information Act unless the fact of its existence or nonexistence would
itself be classified under the Executive order.
(d) Handling of classified documents. All documents bearing the
terms ``Top Secret,'' ``Secret,'' and ``Confidential'' shall be
delivered to the Information Security Officer or his/her designee
immediately upon receipt. All potential recipients of such documents
shall be advised of the names of such designees. In the event that the
Information Security Officer or his/her designee is not available to
receive such documents, they shall be sent to the FCA mailroom and
stored in the combination safe located in the Agency Services Branch and
secured unopened until the Information Security Officer is available.
Under no cirumstances shall classified materials that cannot be
delivered be stored other than in the designated safe. All materials not
immediately deliverable or able to be secured in the designated safe
shall be returned to the sender, under appropriate cover, for redelivery
to the FCA at the next earliest opportunity.
(e) Reproduction. Reproduction of classified materials shall take
place only in accordance with section 4.1(b)
[[Page 24]]
of the Executive order and any limitations imposed by the originator.
Should copies be made, they shall be subject to the same controls as the
original document. Records showing the number and distribution of copies
shall be maintained by the Information Security Officer or his/her
designee, and the log stored with the original documents. These measures
shall not restrict reproduction for the purposes of Mandatory Review.
(f) Storage. In accordance with 32 CFR 2001.43, all classified
documents shall be stored in combination safes located at the primary
headquarters and/or a Field Office, Office of Examination, Farm Credit
Administration. The combinations shall be changed as required by
directives issued by ISOO. The combinations shall be known only to the
Information Security Officer and his/her designees who have appropriate
security clearances.
(g) Employee education. All employees who have been granted a
security clearance and who have occasion to handle classified materials
shall be advised of handling, reproduction, and storage procedures and
shall be required to review the Executive order and appropriate ISOO
directives.
(h) Agency terminology. No official of the Farm Credit
Administration shall use the terms ``Top Secret'', ``Secret'', or
``Confidential'' except in relation to materials classified for national
security purposes. As a Federal regulatory agency, the Farm Credit
Administration maintains certain internal documents that relate to its
examination and supervision of the institutions of the Farm Credit
System. Such documents are limited in use and distribution. Material
that is of a sensitive nature to the Farm Credit Administration may be
designated ``Executive Document.''
(i) Nondisclosure agreement. In accordance with 32 CFR 2003.20, the
Farm Credit Administration requires that any person whose position
requires access to classified information must execute a nondisclosure
agreement on Standard Form 189--Classified Information Nondisclosure
Agreement. Persons not executing such nondisclosure agreements are
subject to sanctions of Executive Order 12356. It is the policy of the
Farm Credit Administration that any employee authorized access to
classified information holds a personal responsibility for safeguarding
against unlawful disclosures, and such employees are prohibited from
disclosure without consent of the FCA Information Security Officer. Any
such unauthorized disclosure will be reported to the Information
Security Oversight Office, the Department of Justice, the Department of
State, the Federal Emergency Management Agency, and to any other Federal
agency for which the Farm Credit Administration has access to classified
information, as such reportings are subject to interpretation as
required by statute and Executive order. Any employee who knowingly
disclosed classified information or who refuses to cooperate with an
investigation may be subject to mandatory administrative sanctions,
including as a minimum, denial of further access to classified
information. Further sanctions could include demotion or dismissal
depending on the circumstances of a particular case.
(j) Freedom of Information request. All inquiries regarding requests
for classified information under the Freedom of Information Act (5
U.S.C. 552), including those from the news media, shall be referred to
the FCA FOI Officer, Office of Congressional and Public Affairs, Farm
Credit Administration, and shall be handled in accordance with
provisions of that statute and applicable regulations.
[49 FR 9859, Mar. 16, 1984, as amended at 52 FR 18200, May 14, 1987; 59
FR 21643, Apr. 26, 1994]
PART 606--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE FARM CREDIT ADMINISTRATION--Table of Contents
Sec.
606.601 Purpose.
606.602 Application.
606.603 Definitions.
606.604-606.609 [Reserved]
606.610 Self-evaluation.
606.611 Notice.
606.612-606.629 [Reserved]
[[Page 25]]
606.630 General prohibitions against discrimination.
606.631-606.639 [Reserved]
606.640 Employment.
606.641-606.648 [Reserved]
606.649 Program accessibility: Discrimination prohibited.
606.650 Program accessibility: Existing facilities.
606.651 Program accessibility: New construction and alterations.
606.652-606.659 [Reserved]
606.660 Communications.
606.661-606.669 [Reserved]
606.670 Compliance procedures.
606.671-606.999 [Reserved]
Authority: 29 U.S.C. 794.
Source: 53 FR 19889, June 1, 1988, unless otherwise noted.
Sec. 606.601 Purpose.
The purpose of this part is to effectuate section 119 of the
Rehabilitation Comprehensive Services, and Developmental Disabilities
Amendments of 1978, which amended section 504 of the Rehabilitation Act
of 1973 to prohibit discrimination on the basis of handicap in programs
or activities conducted by Executive agencies or the United States
Postal Service.
Sec. 606.602 Application.
(a) This part applies to all programs or activities conducted by the
agency. For example, members of the public may participate in the
following ``programs and activities'' of the FCA:
(1) Attending open meetings of the Farm Credit Board.
(2) Making inquiries or filing complaints.
(3) Using the FCA library in McLean, Virginia.
(4) Seeking employment with FCA.
(5) Attending any meeting, conference, seminar, or other program
open to the public.
This list is illustrative only and failure to include an activity does
not necessarily mean that it is not covered by this regulation.
(b) This regulation does not apply to the institutions that are
regulated or examined by the FCA. However, this regulation governs the
conduct of FCA personnel, in their interaction with employees of such
institutions and employees of other Federal agencies, while discharging
their official FCA duties.
Sec. 606.603 Definitions.
For purposes of this part, the term:
(a) Agency means the Farm Credit Administration.
(b) Assistant Attorney General means the Assistant Attorney General,
Civil Rights Division, United States Department of Justice.
(c) Auxiliary aids means services or devices that enable persons
with impaired sensory, manual, or speaking skills to have an equal
opportunity to participate in, and enjoy the benefits of, programs or
activities conducted by the agency. For example, auxiliary aids useful
for persons with impaired vision include readers, Brailled materials,
audio recordings, and other similar services and devices. Auxiliary aids
useful for persons with impaired hearing include telephone handset
amplifiers, telephones compatible with hearing aids, telecommunication
devices for deaf persons (TDDs), interpreters, note-takers, written
materials, and other similar services and devices.
(d) Complete complaint means a written statement that contains the
complainant's name and address and describes the agency's alleged
discriminatory action in sufficient detail to inform the agency of the
nature and date of the alleged violation of section 504. It shall be
signed by the complainant or by someone authorized to do so on his or
her behalf. Complaints filed on behalf of classes or third parties shall
describe or identify (by name, if possible) the alleged victims of
discrimination.
(e) Facility means all or any portion of buildings, structures,
equipment, roads, walks, parking lots, rolling stock or other
conveyances, or other real or personal property.
(f) Individual with handicaps means any person who has a physical or
mental impairment that substantially limits one or more major life
activities, has a record of such an impairment, or is regarded as having
such an impairment. As used in this definition, the phrase:
(1) Physical or mental impairment includes:
[[Page 26]]
(i) Any physiological disorder or condition, cosmetic disfigurement,
or anatomical loss affecting one or more of the following body systems:
Neurological; musculoskeletal; special sense organs; respiratory,
including speech organs; cardiovascular; reproductive; digestive;
genitourinary; hemic and lymphatic; skin; and endocrine; or
(ii) Any mental or psychological disorder, such as mental
retardation, organic brain syndrome, emotional or mental illness, and
specific learning disabilities. The term physical or mental impairment
includes, but is not limited to, such diseases and conditions as
orthopedic, visual, speech, and hearing impairments, cerebral palsy,
epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease,
diabetes, mental retardation, emotional illness, and drug addiction and
alcoholism.
(2) Major life activities includes functions such as caring for
oneself, performing manual tasks, walking, seeing, hearing, speaking,
breathing, learning, and working.
(3) Has a record of such an impairment means has a history of, or
has been misclassified as having, a mental or physical impairment that
substantially limits one more major life activities.
(4) Is regarded as having an impairment means:
(i) Has a physical or mental impairment that does not substantially
limit major life activities but is treated by the agency as constituting
such a limitation;
(ii) Has a physical or mental impairment that substantially limits
major life activities only as a result of the attitudes of others toward
such impairment; or
(iii) Has none of the impairments defined in paragraph (f)(1) of
this definition but is treated by the agency as having such an
impairment.
(g) Qualified individual with handicaps means an individual with
handicaps who meets the essential eligibility requirements for
participation in the program or activity conducted by the agency. With
respect to employment, a qualified individual with handicaps is one who
meets the definition of qualified handicapped person set forth in 29 CFR
1613.702(f), which is made applicable to this part by Sec. 606.640 of
this rule.
(h) Section 504 means section 504 of the Rehabilitation Act of 1973
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617);
the Rehabilitation, Comprehensive Services, and Developmental
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955); and the
Rehabilitation Act Amendments of 1986 (Pub. L. 99-506, 100 Stat. 1810).
Secs. 606.604-606.609 [Reserved]
Sec. 606.610 Self-evaluation.
(a) The agency shall, within one year of the effective date of this
part, evaluate its current policies and practices, and the effects
thereof, that do not or may not meet the requirements of this part, and,
to the extent modification of any such policies and practices is
required, the agency shall proceed to make the necessary modifications.
(b) The agency shall provide an opportunity to interested persons,
including individuals with handicaps or organizations representing
individuals with handicaps, to participate in the self-evaluation
process by submitting comments (both oral and written).
(c) The agency shall, for at least three years following completion
of the evaluation required under paragraph (a) of this section, maintain
on file and make available for public inspection:
(1) A list of the interested persons who commented, with copies of
comments received;
(2) A description of areas examined and any problems identified; and
(3) A description of any modifications made.
Sec. 606.611 Notice.
The agency shall make available to employees, applicants,
participants, beneficiaries, and other interested persons such
information regarding the provisions of this part and its applicability
to the programs or activities conducted by the agency, and make such
information available to them in such manner as the agency head finds
necessary to apprise such persons of the protections against
discrimination assured them by section 504 and this regulation.
[[Page 27]]
Secs. 606.612-606.629 [Reserved]
Sec. 606.630 General prohibitions against discrimination.
(a) No qualified individual with handicaps, on the basis of
handicap, shall be excluded from participation in, be denied the
benefits of, or otherwise be subjected to discrimination under any
program or activity of the agency.
(b)(1) The agency, in providing any aid, benefit, or service, may
not, directly or through contractual or other arrangements, on the basis
of handicap:
(i) Deny a qualified individual with handicaps the oportunity to
participate in or benefit from the activity, aid, benefit, or service;
(ii) Afford a qualified individual with handicaps an opportunity to
participate in or benefit from the aid, benefit, or service that is not
equal to that afforded others;
(iii) Provide a qualified individual with handicaps with an aid,
benefit, or service that is not as effective in affording equal
opportunity to obtain the same result, to gain the same benefit, or to
reach the same level of achievement as that provided to others;
(iv) Provide different or separate aid, benefits, or services to
individuals with handicaps or to any class of individuals with handicaps
than is provided to others unless such action is necessary to provide
qualified individuals with handicaps with aid, benefits, or services
that are as effective as those provided to others;
(v) Deny a qualified individual with handicaps the opportunity to
participate as a member of planning or advisory boards;
(vi) Otherwise limit a qualified individual with handicaps in the
enjoyment of any right, privilege, advantage, or opportunity enjoyed by
others receiving the aid, benefit, or service.
(2) The agency may not deny a qualified individual with handicaps
the opportunity to participate in programs or activities that are not
separate or different, despite the existence of permissibly separate or
different programs or activities.
(3) The agency may not, directly or through contractual or other
arrangements, utilize criteria or methods of administration the purpose
or effect of which would:
(i) Subject qualified individuals with handicaps to discrimination
on the basis of handicap; or
(ii) Defeat or substantially impair accomplishment of the objectives
of a program or activity with respect to individuals with handicaps.
(4) The agency may not, in determining the site or location of a
facility, make selections the purpose or effect of which would:
(i) Exclude individuals with handicaps from, deny them the benefits
of, or otherwise subject them to discrimination under any program or
activity conducted by the agency; or
(ii) Defeat or substantially impair the accomplishment of the
objectives of a program or activity with respect to individuals with
handicaps.
(5) The agency, in the selection of procurement contractors, may not
use criteria that subject qualified individuals with handicaps to
discrimination on the basis of handicap.
(c) The exclusion of nonhandicapped persons from the benefits of a
program limited by Federal statute or Executive order to individuals
with handicaps or the exclusion of a specific class of individuals with
handicaps from a program limited by Federal statute or Executive order
to a different class of individuals with handicaps is not prohibited by
this part.
(d) The agency shall administer programs and activities in the most
integrated setting appropriate to the needs of qualified individuals
with handicaps.
Secs. 606.631-606.639 [Reserved]
Sec. 606.640 Employment.
No qualified individual with handicaps shall, on the basis of
handicap, be subjected to discrimination in employment under any program
or activity conducted by the agency. The definitions, requirements, and
procedures of section 501 of the Rehabilitation Act of 1973 (29 U.S.C.
791), as established by the Equal Employment Opportunity Commission in
29 CFR part 1613, shall apply to employment in the agency.
[[Page 28]]
Secs. 606.641-606.648 [Reserved]
Sec. 606.649 Program accessibility: Discrimination prohibited.
Except as otherwise provided in Sec. 606.650, no qualified
individual with handicaps shall, because the agency's facilities are
inaccessible to or unusable by individuals with handicaps, be denied the
benefits of, be excluded from participation in, or otherwise be
subjected to discrimination under any program or activity conducted by
the agency.
Sec. 606.650 Program accessibility: Existing facilities.
(a) General. The agency shall operate each program or activity so
that the program or activity, when viewed in its entirety, is readily
accessible to and usable by individuals with handicaps. This paragraph
does not:
(1) Necessarily require the agency to make each of its existing
facilities accessible to and usable by individuals with handicaps;
(2) Require the agency to take any action that it can demonstrate
would result in a fundamental alteration in the nature of a program or
activity or in undue financial and administrative burdens. In those
circumstances where agency personnel believe that the proposed action
would fundamentally alter the program or activity or would result in
undue financial and administrative burdens, the agency has the burden of
proving that compliance with paragraph (a) of this section would result
in such alteration or burdens. The decision that compliance would result
in such alteration or burdens must be made by the agency head or his or
her designee after considering all agency resources available for use in
the funding and operation of the conducted program or activity, and must
be accompanied by a written statement of the reasons for reaching that
conclusion. In preparing the report, the agency shall make reasonable
efforts to ensure that the person(s) to be accommodated has an
opportunity to provide relevant information. If an action would result
in such an alteration or such burdens, the agency shall take any other
action that would not result in such an alteration or such burdens but
would nevertheless ensure that individuals with handicaps receive the
benefits and services of the program or activity.
(b) Methods. The agency may comply with the requirements of this
section through such means as redesign of equipment, reassignment of
services to accessible buildings, assignment of aides to beneficiaries,
home visits, delivery of services at alternate accessible sites,
alteration of existing facilities and construction of new facilities, or
any other methods that result in making its programs or activities
readily accessible to and usable by individuals with handicaps. The
agency is not required to make structural changes in existing facilities
where other methods are effective in achieving compliance with this
section. The agency, in making alterations to existing buildings, shall
meet accessibility requirements to the extent compelled by the
Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151 through
4157), and any regulations implementing it. In choosing among available
methods for meeting the requirements of this section, the agency shall
give priority to those methods that offer programs and activities to
qualified individuals with handicaps in the most integrated setting
appropriate.
(c) Time period for compliance. The agency shall comply with the
obligations established under this section within sixty days of the
effective date of this part except that where structural changes in
facilities are undertaken, such changes shall be made within three years
of the effective date of this part, but in any event as expeditiously as
possible.
(d) Transition plan. In the event that structural changes to
facilities will be undertaken to achieve accessibility, the agency shall
develop, within six months of the effective date of this part, a
transition plan setting forth the steps necessary to complete such
changes. The agency shall provide an opportunity to interested persons,
including individuals with handicaps or organizations representing
individuals with handicaps, to participate in the development of the
transition plan by submitting comments (both oral and written). A copy
of the transition plan
[[Page 29]]
shall be made available for public inspection. The plan shall, at a
minimum:
(1) Identify physical obstacles in the agency's facilities that
limit the accessibility of its programs or activities to individuals
with handicaps;
(2) Describe in detail the methods that will be used to make the
facilities accessible;
(3) Specify the schedule for taking the steps necessary to achieve
compliance with this section, and if the time period of the transition
plan is longer than one year, identify steps that will be taken during
each year of the transition period;
(4) Indicate the official responsible for implementation of the
plan; and
(5) Identify the persons or groups who commented on the plan.
Sec. 606.651 Program accessibility: New construction and alterations.
Each building or part of a building that is constructed or altered
by, on behalf of, or for the use of the agency shall be designed,
constructed, or altered so as to be readily accessible to and usable by
individuals with handicaps. The definitions, requirements, and standards
of the Architectural Barriers Act (42 U.S.C. 4151 through 4157), as
established in 41 CFR 101-19.600 to 101-19.607, apply to buildings
covered by this section.
Secs. 606.652-606.659 [Reserved]
Sec. 606.660 Communications.
(a) The agency shall take appropriate steps to ensure effective
communication with applicants, participants, personnel of other Federal
entities, and members of the public.
(1) The agency shall furnish appropriate auxiliary aids where
necessary to afford an individual with handicaps an equal opportunity to
participate in and enjoy the benefits of a program or activity conducted
by the agency.
(i) In determining what type of auxiliary aid is necessary, the
agency shall give primary consideration to the requests of the
individual with handicaps.
(ii) The agency need not provide individually prescribed devices,
readers for personal use or study, or other devices of a personal
nature.
(2) Where the agency communicates with applicants and beneficiaries
by telephone, telecommunication devices for deaf persons (TDDs) or
equally effective telecommunication systems shall be used.
(b) The agency shall ensure that interested persons, including
persons with impaired vision or hearing, can obtain information as to
the existence and location of accessible services, activities, and
facilities.
(c) The agency shall provide signage at a primary entrance to each
of its inaccessible facilities directing users to a location at which
they can obtain information about accessible facilities. The
international symbol for accessibility shall be used at each primary
entrance of an accessible facility.
(d) This section does not require the agency to take any action that
it can demonstrate would result in a fundamental alteration in the
nature of a program or activity or in undue financial and administrative
burdens. In those circumstances where agency personnel believe that the
proposed action would fundamentally alter the program or activity or
would result in undue financial and administrative burdens, the agency
has the burden of proving that compliance with this section would result
in such alteration or burdens. The decision that compliance would result
in such alteration or burdens must be made by the agency head or his or
her designee after considering all agency resources available for use in
the funding and operation of the conducted program or activity, and must
be accompanied by a written statement of the reasons for reaching that
conclusion. In preparing the report, the agency shall make reasonable
efforts to ensure that the person(s) to be accommodated has an
opportunity to provide relevant information. If an action required to
comply with this section would result in such an alteration or such
burdens, the agency shall take any other action that would not result in
such an alteration or such burdens but would nevertheless ensure that,
to the maximum extent possible, individuals with handicaps receive the
[[Page 30]]
benefits and services of the program or activity.
Secs. 606.661-606.669 [Reserved]
Sec. 606.670 Compliance procedures.
(a) Except as provided in paragraph (b) of this section, this
section applies to all allegations of discrimination on the basis of
handicap in programs and activities conducted by the agency.
(b) The agency shall process complaints alleging violations of
section 504 with respect to employment according to the procedures
established by the Equal Employment Opportunity Commission in 29 CFR
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29
U.S.C. 791).
(c) Responsibility for implementation and operation of this section
shall be vested in the Director, Office of Resources Management, Farm
Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090.
(d) The agency shall accept and investigate all complete complaints
for which it has jurisdiction. All complete complaints must be filed
within 180 days of the alleged act of discrimination. The agency may
extend this time period for good cause.
(e) If the agency receives a complaint over which it does not have
jurisdiction, it shall promptly notify the complainant and shall make
reasonable efforts to refer the complaint to the appropriate Government
entity.
(f) The agency shall notify the Architectural and Transportation
Barriers Compliance Board upon receipt of any complaint alleging that a
building or facility that is subject to the Architectural Barriers Act
of 1968, as amended (42 U.S.C. 4151 through 4157), is not readily
accessible to and usable by individuals with handicaps.
(g) Within 180 days of the receipt of a complete complaint for which
it has jurisdiction, the agency shall notify the complainant of the
results of the investigation in a letter containing:
(1) Findings of fact and conclusions of law;
(2) A description of a remedy for each violation found; and
(3) A notice of the right to appeal.
(h) Appeals of the findings of fact and conclusions of law or
remedies must be filed by the complainant within 90 days of receipt from
the agency of the letter required by this paragraph. The agency may
extend this time for good cause.
(i) Timely appeals shall be accepted and processed by the Equal
Employment Opportunity Manager, or his/her designee, Farm Credit
Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090.
(j) The head of the agency shall notify the complainant of the
results of the appeal within 60 days of the receipt of the request. If
the head of the agency determines that additional information is needed
from the complainant, he or she shall have 60 days from the date of
receipt of the additional information to make his or her determination
on the appeal.
(k) The time limits cited in paragraphs (g) and (j) of this section
may be extended with the permission of the Assistant Attorney General.
(l) The agency may delegate its authority for conducting complaint
investigations to other Federal agencies, except that the authority for
making the final determination may not be delegated to another agency.
[53 FR 19889, June 1, 1988, as amended at 56 FR 2674, Jan. 24, 1991]
Secs. 606.671-606.999 [Reserved]
PART 607--ASSESSMENT AND APPORTIONMENT OF ADMINISTRATIVE EXPENSES--Table of Contents
Sec.
607.1 Purpose and scope.
607.2 Definitions.
607.3 Assessment of banks, associations, and designated other System
entities.
607.4 Assessment of other System entities.
607.5 Notice of assessment.
607.6 Payment of assessment.
607.7 Late-payment charges on assessments.
607.8 Reimbursements for services to non-System entities.
607.9 Reimbursable billings.
607.10 Adjustments for overpayment or underpayment of assessments.
607.11 Report of assessments and expenses.
Authority: Secs. 5.15, 5.17 of the Farm Credit Act (12 U.S.C. 2250,
2252) and 12 U.S.C. 3025.
Source: 58 FR 10942, Feb. 23, 1993, unless otherwise noted.
[[Page 31]]
Sec. 607.1 Purpose and scope.
The regulations in part 607 implement the provisions of section 5.15
of the Farm Credit Act of 1971, 12 U.S.C. 2001 et seq. (Act) relating to
Farm Credit Administration (FCA) assessments. The regulations prescribe
the procedures for the equitable apportionment of FCA annual
administrative expenses and necessary reserves among Farm Credit System
(System) institutions. Pursuant to section 5.15(a) of the Act, the
regulations also provide for the separate assessment of the FCA's costs
of supervising and examining the Federal Agricultural Mortgage
Corporation (FAMC). The regulations further provide for the
reimbursement of expenses incurred in performing statutorily required
examinations of non-System entities.
Sec. 607.2 Definitions.
For the purpose of this part, the following definitions shall apply:
(a) Assessment means the annual amount to be paid by each System
institution to the Farm Credit Administration in accordance with section
5.15 of the Act.
(b) Average risk-adjusted asset base means the average of the risk-
adjusted asset base (as determined in accordance with Sec. 615.5210(f)
of this chapter) of banks, associations, and designated other System
entities, calculated as follows:
(1) For banks, associations, and designated other System entities
with four quarters of risk-adjusted assets as of June 30 of each year,
the sum of the average daily risk-adjusted assets as of the last day of
the quarter as reported on each quarterly Call Report Schedule RC-G to
the FCA for the most recent four quarters immediately preceding each
September 15, divided by four;
(2) Except as provided in paragraphs (b)(3) and (b)(4) of this
section, for banks, associations, and designated other System entities
with less than four quarters of risk-adjusted assets as of June 30 of
each year, the sum of the average daily risk-adjusted assets as of the
last day of the quarter reported on each quarterly Call Report Schedule
RC-G to the FCA for the quarters in which it was in existence
immediately preceding September 15, divided by the number of quarters
for which the Call Report Schedule RC-G was received;
(3) For banks, associations, and designated other System entities
that were formed through mergers, consolidations, or transfers of direct
lending authority, and have less than four quarters of risk-adjusted
assets as of June 30, the sum of the average daily risk-adjusted assets
as of the last day of the quarter for the most recent four quarters
immediately preceding September 15 as reported on each quarterly Call
Report Schedule RC-G filed by the newly chartered institution and the
institutions that were merged or consolidated or that received direct
lending authority, divided by four;
(4) For banks, associations, and designated other System entities
chartered during the period July 1 through September 30 of each year
that were not formed by the merger or consolidation of existing System
institutions or the transfer of direct lending authority from another
System institution, the total of the average daily risk-adjusted assets
as of the last day of the quarter as reported on Call Report Schedule
RC-G for the quarter ending September 30.
(c) Composite Financial Institution Rating System (FIRS) rating
means the composite numerical assessment of the financial condition of
an institution assigned to the institution by the FCA based on its most
recent examination of the institution. The FIRS factors are generally
considered to be important indicators of an institution's financial
health. Institutions are rated on each of the factors during an
examination. The composite FIRS rating ranges from 1 to 5, with a lower
number indicating a better financial condition than a higher number.
(d) Delinquent amount means an amount owed to the FCA that has not
been paid by the date specified in the FCA's Notice of Assessment or
billing.
(e) Designated other System entities means other System entities
designated by the FCA in Sec. 607.3(c) to be assessed on the same basis
as banks and associations under Sec. 607.3.
(f) Direct expenses means the expenses of the FCA attributable to
the performance of examinations.
[[Page 32]]
(g) Indirect expenses means all FCA expenses that are not
attributable to the performance of examinations.
(h) Non-System entities means the National Consumer Cooperative
Bank, the National Cooperative Bank Development Corporation, and any
other entity that is required to be examined, supervised, or otherwise
regulated by the FCA that is not a System institution.
(i) Notice of Assessment means a written notice to each System
institution showing the total amount assessed and owing, the fiscal year
covered by the assessment, the amounts of installment payments, and the
due dates for such payments. For banks, associations, and designated
other System entities, the Notice of Assessment shall also include an
individualized assessment table showing the assessment under
Sec. 607.3(b)(2), where applicable.
(j) Other System entities means any service corporation chartered
under section 4.25 of the Act, the Farm Credit System Financial
Assistance Corporation, FAMC, the Federal Farm Credit Banks Funding
Corporation, the Farm Credit Finance Corporation of Puerto Rico, and any
other entity statutorily designated as a System institution that is not
a bank or association.
(k) System institutions means banks, associations, and other System
entities.
[58 FR 10942, Feb. 23, 1993, as amended at 59 FR 37403, July 22, 1994;
63 FR 34268, June 24, 1998]
Sec. 607.3 Assessment of banks, associations, and designated other System entities.
(a) Banks, associations, and other System entities designated in
paragraph (c) of this section will be assessed annually pursuant to this
section for funds to cover a portion of the FCA's administrative
expenses and for such funds as may be required to maintain a necessary
reserve. The total amount of the annual assessment of banks,
associations, and designated other System entities shall be based on the
FCA budget for each fiscal year plus such amount as may be required to
maintain a necessary reserve, excluding amounts to be assessed against
other System entities and reimbursements received from non-System
entities.
(b) The assessment shall be apportioned among the banks,
associations, and designated other System entities as follows:
(1) Thirty (30) percent of the assessment under this section shall
be apportioned to each bank, association, and designated other System
entity on the basis of each institution's pro rata share of the total
average risk-adjusted asset base.
(2) Seventy (70) percent of the assessment under this section shall
be apportioned to each bank, association, and designated other System
entity based upon the amounts of the institution's average risk-adjusted
assets that fall within the graduated risk-adjusted asset tiers
contained in the following table. An institution's total assessment
under this paragraph is the sum of the amounts assessed for risk-
adjusted assets falling into each applicable tier, subject to adjustment
for its FIRS rating as required in paragraphs (b)(2)(i) and (b)(2)(ii)
of this section. The same assessment rate (designated as X1
or a declining percentage of X1 in the following table) will
be applied to each dollar value of risk-adjusted assets falling within
each tier, increased where applicable, by the amounts prescribed in
paragraphs (b)(2)(i) and (b)(2)(ii) of this section. The actual
assessment rate under this paragraph shall be determined annually based
on relative average risk-adjusted asset bases, the FIRS ratings of
individual institutions, and the FCA budget as adjusted pursuant to
paragraph (a) of this section, but the relationship between the rates
applied to each tier shall remain constant as set forth in the following
table.
------------------------------------------------------------------------
Average risk-adjusted asset size range (in
millions)
-------------------------------------------------- Assessment rate
Over To
------------------------------------------------------------------------
$0.................................. $25 X1
25.................................. 50 .85X1
50.................................. 100 .75X1
100................................. 500 .60X1
500................................. 1,000 .50X1
1,000............................... 7,000 .35X1
7,000............................... 10,000 .20X1
10,000.............................. ........... .10X1
------------------------------------------------------------------------
Example: XYZ association has a FIRS rating of 2 and average risk-
adjusted assets of
[[Page 33]]
$500.4 million. The value of X1 has been determined to be
.000917, based on an FCA budget of $40.29 million.
X1=.000917 therefore $25,000,000 x .0917%................. = $22,925
.85X1=.000780 therefore $25,000,000 x .0780%.............. = 19,500
.75X1=.000688 therefore $50,000,000 x .0688%.............. = 34,400
.60X1=.000550 therefore $400,000,000 x .0550%............. = 220,000
.50X1=.000458 therefore $400,000 x .0458%................. = 183
---------
Total Assessment under Sec. 607.3(b)(2).............. = 297,008
(i) If the FCA assigns a bank, association, or designated other
System entity a composite FIRS rating of 3 following its most recent
examination of the institution prior to the date of assessment, the
assessment provided for in paragraph (b)(2) of this section shall be
increased by 20 percent.
(ii) If the FCA assigns a bank, association, or designated other
System entity a composite FIRS rating of 4 or 5 following its most
recent examination of the institution prior to the date of assessment,
the assessment provided for in paragraph (b)(2) of this section shall be
increased by 40 percent.
(iii) Banks, associations, and designated other System entities that
were formed through mergers or consolidations and have not been examined
before their initial assessment under this section shall be deemed to
have a composite FIRS rating equivalent to the best composite FIRS
rating assigned to the merged or consolidated institutions in the FCA's
most recent examination of the individual institutions prior to the date
of merger or consolidation. Newly chartered institutions not formed
through mergers or consolidations that have not been examined before
their initial assessment under this section shall be deemed to have a
composite FIRS rating of 2.
(3) Each bank, association, and designated other System entity shall
pay a minimum assessment of $20,000 regardless of the result of the
application of the assessment formula established by paragraphs (b)(1)
and (b)(2) of this section. If such a minimum assessment is apportioned
to an institution, that institution's average risk-adjusted asset base
shall be deducted from the total average risk-adjusted asset base, and
$20,000 shall be deducted from the total assessment amount for purposes
of determining the assessments of banks, associations, and designated
other System entities paying more than the $20,000 minimum assessment.
(c) Other System entities designated to be assessed in accordance
with this section are:
The Farm Credit Services Leasing Corporation.
(d) Assessments may be adjusted periodically to reflect:
(1) Changes in the FCA budget and necessary reserve; and
(2) Any overpayment or underpayment by a bank, association, or
designated other System entity in the prior fiscal year.
[58 FR 10942, Feb. 23, 1993, as amended at 63 FR 34268, June 24, 1998]
Sec. 607.4 Assessment of other System entities.
(a)(1) Unless otherwise designated to be assessed under Sec. 607.3,
and with the exception of FAMC as provided in paragraph (b) of this
section, other System entities will be assessed for estimated direct
expenses plus an allocated portion of FCA indirect expenses and such
amount as may be required to maintain a necessary reserve. The estimate
for direct expenses shall take into account the direct expenses incurred
in the most recent examination of the entity preceding each September 15
and expected increases or decreases in examination work for the next
fiscal year. A proportional amount of FCA indirect expenses will be
allocated to each entity based on the estimated direct expenses related
to the particular entity as a percentage of the total budgeted direct
expenses of the agency (excluding direct expenses under paragraph (b) of
this section) for the fiscal year covered by the assessment.
(2) Assessments of other System entities under paragraph (a)(1) of
this section may be adjusted periodically to reflect:
(i) Changes in the FCA budget and necessary reserve; and
(ii) Any overpayment or underpayment by such other System entity in
the prior fiscal year.
[[Page 34]]
(b) Assessment of Federal Agricultural Mortgage Corporation. The FCA
shall assess FAMC for the estimated cost of FCA's regulation,
supervision, and examination of FAMC, including reasonably related
administrative and overhead expenses. FAMC's assessment may be adjusted
periodically to reflect changes in the FCA budget and to reconcile
differences between FAMC's assessment and FCA's actual expenditures for
regulation of FAMC in the prior fiscal year.
Sec. 607.5 Notice of assessment.
(a) Except as provided in paragraph (b) of this section, prior to
September 15 of each year, the FCA shall determine the amount of
assessment to be collected from each System institution for the next
fiscal year under Secs. 607.3 and 607.4 and shall provide each System
institution with a Notice of Assessment. The total amount assessed each
System institution in the Notice of Assessment shall be an obligation of
each institution on October 1 of each fiscal year. The total amount
assessed each System institution shall be payable not less often than
quarterly in equal installments during each fiscal year, subject to
adjustment pursuant to Secs. 607.3(d), 607.4(a)(2), 607.4(b), and
607.10.
(b) For banks, associations and designated other System entities
chartered during the period July 1 through September 30 of each year,
the FCA shall, prior to December 15, determine the amount of assessment
to be collected from each such institution for the remainder of the
fiscal year and provide the institution with a Notice of Assessment. The
total amount of the assessment becomes an obligation of the institution
on January 1 and shall be payable in equal installments, subject to
adjustment pursuant to Secs. 607.3(d) and 607.10, not less often than
quarterly for the remainder of the fiscal year. The first installment
shall be due on January 1. This paragraph shall not apply to banks,
associations, and designated other System entities formed by merger,
consolidation, or transfer of direct lending authority.
(c) In the event of the proposed cancellation of the charter of a
System institution, the unpaid installments of the total amount of the
institution's assessment shall be provided for prior to the cancellation
of the charter.
Sec. 607.6 Payment of assessment.
(a) System institutions shall pay the amounts due as scheduled in
the FCA Notice of Assessment. Payment shall be made by electronic funds
transfer (EFT) for credit to the FCA's account in the Department of the
Treasury, by check to the FCA for deposit, or by such other means as the
FCA may authorize.
(b) Payments made by EFT that are not received by the close of
business on the due date shall be considered delinquent in accordance
with Sec. 607.7.
(c) Payments made by check that are not received by the FCA before
the close of business on the third workday preceding the due date shall
be considered delinquent in accordance with Sec. 607.7.
Sec. 607.7 Late-payment charges on assessments.
(a) If any portion of a scheduled installment of a System
institution's total assessment or the reimbursement billed to a non-
System entity is not paid by the due date, the overdue amount shall be
considered delinquent.
(b) Delinquent amounts shall be charged late-payment interest at the
United States Treasury Department's current value of funds rate
published in the Federal Register. Late payment interest shall be
expressed as an annual rate of interest and shall accrue on a daily
basis starting on the due date of the delinquent amount and continuing
through the date payment is received by the FCA.
(c) The FCA shall waive the collection of interest on the delinquent
amounts if such amounts are paid within 30 days of the date interest
begins to accrue. The FCA may waive interest due on delinquent amounts
upon finding no fault with the performance of the remitter.
(d) The FCA shall charge an amount necessary to cover the
administrative costs incurred as a result of collection of any
delinquent amount.
(e) The FCA shall charge a penalty of 6 percent per annum on any
portion of a delinquent amount that is more than
[[Page 35]]
90 days past due. Such penalty shall accrue from the date the amount
became delinquent.
Sec. 607.8 Reimbursements for services to non-System entities.
Non-System entities shall be assessed for direct expenses plus an
amount for FCA indirect expenses reasonably related to the services
rendered to the non-System entity. Such related indirect expenses shall
be calculated as a percentage of the FCA's overall indirect expenses
based on the extent of FCA activities with respect to the non-System
entity during the period since the entity's most recent assessment.
Sec. 607.9 Reimbursable billings.
The FCA shall bill the amounts due for services to non-System
entities each year subsequent to the issuance of their respective
Reports of Examination. Amounts billed are due in full within 30 days
from the date billed. If the billed amount or any portion thereof
remains unpaid at close of business on the due date, such amount or
portion shall be considered delinquent in accordance with Sec. 607.7.
Sec. 607.10 Adjustments for overpayment or underpayment of assessments.
Where adjustments for overpayment or underpayment of assessments are
made pursuant to Secs. 607.3(d), 607.4(a)(2), and 607.4(b), credits for
overpayments or charges for underpayments shall be based on FCA
administrative operating expenses incurred in the applicable fiscal year
and on funds required to be maintained pursuant to section 5.15 of the
Act. Such credits or charges shall be applied to the next applicable
assessment payment due during the current or subsequent fiscal year.
Where such adjustments are made, the FCA shall provide the institution
with a statement of adjustment at least 15 days prior to the date when
the institution's next assessment payment is due. Adjustments in
assessments shall be made in principal amount only. Overdue amounts
under Sec. 607.7 are not underpayments for assessment adjustment
purposes.
Sec. 607.11 Report of assessments and expenses.
By January 15 of each calendar year, the FCA shall provide each
assessed System institution with a report of assessments and expenses
for the preceding fiscal year showing total assessments and other income
received as applied to expenses incurred by major budget category and
amounts set aside for a necessary reserve.
PART 608--COLLECTION OF CLAIMS OWED THE UNITED STATES--Table of Contents
Subpart A--Administrative Collection of Claims
Sec.
608.801 Authority.
608.802 Applicability.
608.803 Definitions.
608.804 Delegation of authority.
608.805 Responsibility for collection.
608.806 Demand for payment.
608.807 Right to inspect and copy records.
608.808 Right to offer to repay claim.
608.809 Right to agency review.
608.810 Review procedures.
608.811 Special review.
608.812 Charges for interest, administrative costs, and penalties.
608.813 Contracting for collection services.
608.814 Reporting of credit information.
608.815 Credit report.
Subpart B--Administrative Offset
608.820 Applicability.
608.821 Collection by offset.
608.822 Notice requirements before offset.
608.823 Right to review of claim.
608.824 Waiver of procedural requirements.
608.825 Coordinating offset with other Federal agencies.
608.826 Stay of offset.
608.827 Offset against amounts payable from Civil Service Retirement
and Disability Fund.
Subpart C--Offset Against Salary
608.835 Purpose.
608.836 Applicability of regulations.
608.837 Definitions.
608.838 Waiver requests and claims to the General Accounting Office.
608.839 Procedures for salary offset.
608.840 Refunds.
608.841 Requesting current paying agency to offset salary.
608.842 Responsibility of the FCA as the paying agency.
608.843 Nonwaiver of rights by payments.
[[Page 36]]
Authority: Sec. 5.17 of the Farm Credit Act; 12 U.S.C. 2252; 31
U.S.C. 3701-3719; 5 U.S.C. 5514; 4 CFR parts 101-105; 5 CFR part 550.
Source: 59 FR 13187, Mar. 21, 1994, unless otherwise noted.
Subpart A--Administrative Collection of Claims
Sec. 608.801 Authority.
The regulations of this part are issued under the Federal Claims
Collection Act of 1966, as amended by the Debt Collection Act of 1982,
31 U.S.C. 3701-3719 and 5 U.S.C. 5514, and in conformity with the joint
regulations issued under that Act by the General Accounting Office and
the Department of Justice (joint regulations) prescribing standards for
administrative collection, compromise, suspension, and termination of
agency collection actions, and referral to the General Accounting Office
and to the Department of Justice for litigation of civil claims for
money or property owed to the United States (4 CFR parts 101-105).
Sec. 608.802 Applicability.
This part applies to all claims of indebtedness due and owing to the
United States and collectible under procedures authorized by the Federal
Claims Collection Act of 1966, as amended by the Debt Collection Act of
1982. The joint regulations and this part do not apply to conduct in
violation of antitrust laws, tax claims, claims between Federal
agencies, or to any claim which appears to involve fraud, presentation
of a false claim, or misrepresentation on the part of the debtor or any
other party having an interest in the claim, unless the Justice
Department authorizes the Farm Credit Administration, pursuant to 4 CFR
101.3, to handle the claim in accordance with the provisions of 4 CFR
parts 101-105. Additionally, this part does not apply to Farm Credit
Administration assessments under part 607 of this chapter.
Sec. 608.803 Definitions.
In this part (except where the term is defined elsewhere in this
part), the following definitions shall apply:
(a) Administrative offset or offset, as defined in 31 U.S.C.
3701(a)(1), means withholding money payable by the United States
Government to, or held by the Government for, a person to satisfy a debt
the person owes the Government.
(b) Agency means a department, agency, or instrumentality in the
executive or legislative branch of the Government.
(c) Claim or debt means money or property owed by a person or entity
to an agency of the Federal Government. A ``claim'' or ``debt'' includes
amounts due the Government from loans insured by or guaranteed by the
United States and all other amounts due from fees, leases, rents,
royalties, services, sales of real or personal property, overpayment,
penalties, damages, interest, and fines.
(d) Claim certification means a creditor agency's written request to
a paying agency to effect an administrative offset.
(e) Creditor agency means an agency to which a claim or debt is
owed.
(f) Debtor means the person or entity owing money to the Federal
Government.
(g) FCA means the Farm Credit Administration.
(h) Hearing official means an individual who is responsible for
reviewing a claim under Sec. 608.810 of this part.
(i) Paying agency means an agency of the Federal Government owing
money to a debtor against which an administrative or salary offset can
be effected.
(j) Salary offset means an administrative offset to collect a debt
under 5 U.S.C. 5514 by deductions at one or more officially established
pay intervals from the current pay account of a debtor.
Sec. 608.804 Delegation of authority.
The FCA official(s) designated by the Chairman of the Farm Credit
Administration are authorized to perform all duties which the Chairman
is authorized to perform under these regulations, the Federal Claims
Collection Act of 1966, as amended, and the joint regulations issued
under that Act.
Sec. 608.805 Responsibility for collection.
(a) The collection of claims shall be aggressively pursued in
accordance with the provisions of the Federal
[[Page 37]]
Claims Collection Act of 1966, as amended, the joint regulations issued
under that Act, and these regulations. Debts owed to the United States,
together with charges for interest, penalties, and administrative costs,
should be collected in one lump sum unless otherwise provided by law. If
a debtor requests installment payments, the debtor, as requested by the
FCA, shall provide sufficient information to demonstrate that the debtor
is unable to pay the debt in one lump sum. When appropriate, the FCA
shall arrange an installment payment schedule. Claims which cannot be
collected directly or by administrative offset shall be either written
off as administratively uncollectible or referred to the General Counsel
for further consideration.
(b) The Chairman, or designee of the Chairman, may compromise claims
for money or property arising out of the activities of the FCA, where
the claim (exclusive of charges for interest, penalties, and
administrative costs) does not exceed $100,000. When the claim exceeds
$100,000 (exclusive of charges for interest, penalties, and
administrative costs), the authority to accept a compromise rests solely
with the Department of Justice. The standards governing the compromise
of claims are set forth in 4 CFR part 103.
(c) The Chairman, or designee of the Chairman, may suspend or
terminate the collection of claims which do not exceed $100,000
(exclusive of charges for interest, penalties, and administrative costs)
after deducting the amount of any partial payments or collections. If,
after deducting the amount of any partial payments or collections, a
claim exceeds $100,000 (exclusive of charges for interest, penalties,
and administrative costs), the authority to suspend or terminate rests
solely with the Department of Justice. The standards governing the
suspension or termination of claim collections are set forth in 4 CFR
part 104.
(d) The FCA shall refer claims to the Department of Justice for
litigation or to the General Accounting Office (GAO) for claims arising
from audit exceptions taken by the GAO to payments made by the FCA in
accordance with 4 CFR part 105.
Sec. 608.806 Demand for payment.
(a) A total of three progressively stronger written demands at not
more than 30-day intervals should normally be made upon a debtor, unless
a response or other information indicates that additional written
demands would either be unnecessary or futile. When necessary to protect
the Government's interest, written demands may be preceded by other
appropriate actions under Federal law, including immediate referral for
litigation and/or administrative offset.
(b) The initial demand for payment shall be in writing and shall
inform the debtor of the following:
(1) The amount of the debt, the date it was incurred, and the facts
upon which the determination of indebtedness was made;
(2) The payment due date, which shall be 30 calendar days from the
date of mailing or hand delivery of the initial demand for payment;
(3) The right of the debtor to inspect and copy the records of the
agency related to the claim or to receive copies if personal inspection
is impractical. The debtor shall be informed that the debtor may be
assessed for the cost of copying the documents in accordance with
Sec. 608.807;
(4) The right of the debtor to obtain a review of the FCA's
determination of indebtedness;
(5) The right of the debtor to offer to enter into a written
agreement with the agency to repay the amount of the claim. The debtor
shall be informed that the acceptance of such an agreement is
discretionary with the agency;
(6) That charges for interest, penalties, and administrative costs
will be assessed against the debtor, in accordance with 31 U.S.C. 3717,
if payment is not received by the payment due date;
(7) That if the debtor has not entered into an agreement with the
FCA to pay the debt, has not requested the FCA to review the debt, or
has not paid the debt by the payment due date, the FCA intends to
collect the debt by all legally available means, which may include
initiating legal action against the debtor, referring the debt to a
collection agency for collection, collecting the debt by offset, or
asking
[[Page 38]]
other Federal agencies for assistance in collecting the debt by offset;
(8) The name and address of the FCA official to whom the debtor
shall send all correspondence relating to the debt; and
(9) Other information, as may be appropriate.
(c) If, prior to, during, or after completion of the demand cycle,
the FCA determines to collect the debt by either administrative or
salary offset, the FCA shall follow, as applicable, the requirements for
a Notice of Intent to Collect by Administrative Offset or a Notice of
Intent to Collect by Salary Offset set forth in Sec. 608.822.
(d) If no response to the initial demand for payment is received by
the payment due date, the FCA shall take further action under this part,
under the Federal Claims Collection Act of 1966, as amended, under the
joint regulations (4 CFR parts 101-105), or under any other applicable
State or Federal law. These actions may include reports to credit
bureaus, referrals to collection agencies, termination of contracts,
debarment, and salary or administrative offset.
Sec. 608.807 Right to inspect and copy records.
The debtor may inspect and copy the FCA records related to the
claim. The debtor shall give the FCA reasonable advance notice that it
intends to inspect and copy the records involved. The debtor shall pay
copying costs unless they are waived by the FCA. Copying costs shall be
assessed pursuant to Sec. 602.267 of this chapter.
Sec. 608.808 Right to offer to repay claim.
(a) The debtor may offer to enter into a written agreement with the
FCA to repay the amount of the claim. The acceptance of such an offer
and the decision to enter into such a written agreement is at the
discretion of the FCA.
(b) If the debtor requests a repayment arrangement because payment
of the amount due would create a financial hardship, the FCA shall
analyze the debtor's financial condition. The FCA may enter into a
written agreement with the debtor permitting the debtor to repay the
debt in installments if the FCA determines, in its sole discretion, that
payment of the amount due would create an undue financial hardship for
the debtor. The written agreement shall set forth the amount and
frequency of installment payments and shall, in accordance with
Sec. 608.812, provide for the imposition of charges for interest,
penalties, and administrative costs unless waived by the FCA.
(c) The written agreement may require the debtor to execute a
confess-judgment note when the total amount of the deferred installments
will exceed $750. The FCA shall provide the debtor with a written
explanation of the consequences of signing a confess-judgment note. The
debtor shall sign a statement acknowledging receipt of the written
explanation. The statement shall recite that the written explanation was
read and understood before execution of the note and that the debtor
signed the note knowingly and voluntarily. Documentation of these
procedures will be maintained in the FCA's file on the debtor.
Sec. 608.809 Right to agency review.
(a) If the debtor disputes the claim, the debtor may request a
review of the FCA's determination of the existence of the debt or of the
amount of the debt. If only part of the claim is disputed, the
undisputed portion should be paid by the payment due date.
(b) To obtain a review, the debtor shall submit a written request
for review to the FCA official named in the initial demand letter,
within 15 calendar days after receipt of the letter. The debtor's
request for review shall state the basis on which the claim is disputed.
(c) The FCA shall promptly notify the debtor, in writing, that the
FCA has received the request for review. The FCA shall conduct its
review of the claim in accordance with Sec. 608.810.
(d) Upon completion of its review of the claim, the FCA shall notify
the debtor whether the FCA's determination of the existence or amount of
the debt has been sustained, amended, or canceled. The notification
shall include a copy of the written decision issued by the hearing
official pursuant to Sec. 608.810(e). If the FCA's determination is
sustained, this notification shall
[[Page 39]]
contain a provision which states that the FCA intends to collect the
debt by all legally available means, which may include initiating legal
action against the debtor, referring the debt to a collection agency for
collection, collecting the debt by offset, or asking other Federal
agencies for assistance in collecting the debt by offset.
Sec. 608.810 Review procedures.
(a) Unless an oral hearing is required by Sec. 608.823(d), the FCA's
review shall be a review of the written record of the claim.
(b) If an oral hearing is required under Sec. 608.823(d), the FCA
shall provide the debtor with a reasonable opportunity for such a
hearing. The oral hearing, however, shall not be an adversarial
adjudication and need not take the form of a formal evidentiary hearing.
All significant matters discussed at the hearing, however, will be
carefully documented.
(c) Any review required by this part, whether a review of the
written record or an oral hearing, shall be conducted by a hearing
official. In the case of a salary offset, the hearing official shall not
be under the supervision or control of the Chairman of the Farm Credit
Administration.
(d) The FCA may be represented by legal counsel. The debtor may
represent himself or herself or may be represented by an individual of
the debtor's choice and at the debtor's expense.
(e) The hearing official shall issue a final written decision based
on documentary evidence and, if applicable, information developed at an
oral hearing. The written decision shall be issued as soon as
practicable after the review but not later than 60 days after the date
on which the request for review was received by the FCA, unless the
debtor requests a delay in the proceedings. A delay in the proceedings
shall be granted if the hearing official determines, in his or her sole
discretion, that there is good cause to grant the delay. If a delay is
granted, the 60-day decision period shall be extended by the number of
days by which the review was postponed.
(f) Upon issuance of the written opinion, the FCA shall promptly
notify the debtor of the hearing official's decision. Said notification
shall include a copy of the written decision issued by the hearing
official pursuant to paragraph (e) of this section.
Sec. 608.811 Special review.
(a) An employee subject to salary offset, under subpart C of this
part, or a voluntary repayment agreement, may, at any time, request a
special review by the FCA of the amount of the salary offset or
voluntary repayment, based on materially changed circumstances such as,
but not limited to, catastrophic illness, divorce, death, or disability.
(b) To determine whether an offset would prevent the employee from
meeting essential subsistence expenses (costs incurred for food,
housing, clothing, transportation, and medical care), the employee shall
submit a detailed statement and supporting documents for the employee,
his or her spouse, and dependents indicating:
(1) Income from all sources;
(2) Assets;
(3) Liabilities;
(4) Number of dependents;
(5) Expenses for food, housing, clothing, and transportation;
(6) Medical expenses; and
(7) Exceptional expenses, if any.
(c) If the employee requests a special review under this section,
the employee shall file an alternative proposed offset or payment
schedule and a statement, with supporting documents, showing why the
current salary offset or payments result in an extreme financial
hardship to the employee.
(d) The FCA shall evaluate the statement and supporting documents,
and determine whether the original offset or repayment schedule imposes
an undue financial hardship on the employee. The FCA shall notify the
employee in writing of such determination, including, if appropriate, a
revised offset or payment schedule.
Sec. 608.812 Charges for interest, administrative costs, and penalties.
(a) Except as provided in paragraph (d) of this section, the FCA
shall:
(1) Assess interest on unpaid claims;
(2) Assess administrative costs incurred in processing and handling
overdue claims; and
[[Page 40]]
(3) Assess penalty charges not to exceed 6 percent a year on any
part of a debt more than 90 days past due. The imposition of charges for
interest, administrative costs, and penalties shall be made in
accordance with 31 U.S.C. 3717.
(b)(1) Interest shall accrue from the date of mailing or hand
delivery of the initial demand for payment or the Notice of Intent to
Collect by either Administrative or Salary Offset if the amount of the
claim is not paid within 30 days from the date of mailing or hand
delivery of the initial demand or notice.
(2) The 30-day period may be extended on a case-by-case basis if the
FCA reasonably determines that such action is appropriate. Interest
shall only accrue on the principal of the claim and the interest rate
shall remain fixed for the duration of the indebtedness, except, as
provided in paragraph (c) of this section, in cases where a debtor has
defaulted on a repayment agreement and seeks to enter into a new
agreement, or if the FCA reasonably determines that a higher rate is
necessary to protect the interests of the United States.
(c) If a debtor defaults on a repayment agreement and seeks to enter
into a new agreement, the FCA may assess a new interest rate on the
unpaid claim. In addition, charges for interest, administrative costs,
and penalties which accrued but were not collected under the original
repayment agreement shall be added to the principal of the claim to be
paid under the new repayment agreement. Interest shall accrue on the
entire principal balance of the claim, as adjusted to reflect any
increase resulting from the addition of these charges.
(d) The FCA may waive charges for interest, administrative costs,
and/or penalties if it determines that:
(1) The debtor is unable to pay any significant sum toward the claim
within a reasonable period of time;
(2) Collection of charges for interest, administrative costs, and/or
penalties would jeopardize collection of the principal of the claim;
(3) Collection of charges for interest, administrative costs, or
penalties would be against equity and good conscience; or
(4) It is otherwise in the best interest of the United States,
including the situation where an installment payment agreement or offset
is in effect.
Sec. 608.813 Contracting for collection services.
The Chairman, or designee of the Chairman, may contract for
collection services in accordance with 31 U.S.C. 3718 and 4 CFR 102.6 to
recover debts.
Sec. 608.814 Reporting of credit information.
The Chairman, or designee of the Chairman, may disclose to a
consumer reporting agency information that an individual is responsible
for a debt owed to the United States. Information will be disclosed to
reporting agencies in accordance with the terms and conditions of
agreements entered into between the FCA and the reporting agencies. The
terms and conditions of such agreements shall specify that all of the
rights and protection afforded to the debtor under 31 U.S.C. 3711(f)
have been fulfilled. The FCA shall notify each consumer reporting
agency, to which a claim was disclosed, when the debt has been
satisfied.
Sec. 608.815 Credit report.
In order to aid the FCA in making appropriate determinations
regarding the collection and compromise of claims; the collection of
charges for interest, administrative costs, and penalties; the use of
administrative offset; the use of other collection methods; and the
likelihood of collecting the claim, the FCA may institute, consistent
with the provisions of the Fair Credit Reporting Act (15 U.S.C. 1681, et
seq.), a credit investigation of the debtor immediately following a
determination that the claim exists.
Subpart B--Administrative Offset
Sec. 608.820 Applicability.
(a) The provisions of this subpart shall apply to the collection of
debts by administrative [or salary] offset under 31 U.S.C. 3716, 5
U.S.C. 5514, or other statutory or common law.
[[Page 41]]
(b) Offset shall not be used to collect a debt more than 10 years
after the Government's right to collect the debt first accrued, unless
facts material to the Government's right to collect the debt were not
known and could not reasonably have been known by the official or
officials of the Government who were charged with the responsibility of
discovering and collecting such debt.
(c) Offset shall not be used with respect to:
(1) Debts owed by other agencies of the United States or by any
State or local government;
(2) Debts arising under or payments made under the Social Security
Act, the Internal Revenue Code of 1986, as amended, or tariff laws of
the United States; or
(3) Any case in which collection by offset of the type of debt
involved is explicitly provided for or prohibited by another statute.
(d) Unless otherwise provided by contract or law, debts or payments
which are not subject to offset under 31 U.S.C. 3716 or 5 U.S.C. 5514
may be collected by offset if such collection is authorized under common
law or other applicable statutory authority.
Sec. 608.821 Collection by offset.
(a) Collection of a debt by administrative [or salary] offset shall
be accomplished in accordance with the provisions of these regulations,
of 4 CFR 102.3, and 5 CFR part 550, subpart K. It is not necessary for
the debt to be reduced to judgment or to be undisputed for offset to be
used.
(b) The Chairman, or designee of the Chairman, may determine that it
is feasible to collect a debt to the United States by offset against
funds payable to the debtor.
(c) The feasibility of collecting a debt by offset will be
determined on a case-by-case basis. This determination shall be made by
considering all relevant factors, including the following:
(1) The degree to which the offset can be accomplished in accordance
with law. This determination should take into consideration relevant
statutory, regulatory, and contractual requirements;
(2) The degree to which the FCA is certain that its determination of
the existence and amount of the debt is correct;
(3) The practicality of collecting the debt by offset. The cost, in
time and money, of collecting the debt by offset and the amount of money
which can reasonably be expected to be recovered through offset will be
relevant to this determination; and
(4) Whether the use of offset will substantially interfere with or
defeat the purpose of a program authorizing payments against which the
offset is contemplated. For example, under a grant program in which
payments are made in advance of the grantee's performance, the
imposition of offset against such a payment may be inappropriate.
(d) The collection of a debt by offset may not be feasible when
there are circumstances which would indicate that the likelihood of
collection by offset is less than probable.
(e) The offset will be effected 31 days after the debtor receives a
Notice of Intent to Collect by Administrative Offset (or Notice of
Intent to Collect by Salary Offset if the offset is a salary offset), or
upon the expiration of a stay of offset, unless the FCA determines under
Sec. 608.824 that immediate action is necessary.
(f) If the debtor owes more than one debt, amounts recovered through
offset may be applied to them in any order. Applicable statutes of
limitation would be considered before applying the amounts recovered to
any debts owed.
Sec. 608.822 Notice requirements before offset.
(a) Except as provided in Sec. 608.824, the FCA will provide the
debtor with 30 calendar days' written notice that unpaid debt amounts
shall be collected by administrative [or salary] offset (Notice of
Intent to Collect by Administrative [or Salary] Offset) before the FCA
imposes offset against any money that is to be paid to the debtor.
(b) The Notice of Intent to Collect by Administrative [or Salary]
Offset shall be delivered to the debtor by hand or by mail and shall
provide the following information:
(1) The amount of the debt, the date it was incurred, and the facts
upon which the determination of indebtedness was made;
[[Page 42]]
(2) In the case of an administrative offset, the payment due date,
which shall be 30 calendar days from the date of mailing or hand
delivery of the Notice;
(3) In the case of a salary offset: (i) The FCA's intention to
collect the debt by means of deduction from the employee's current
disposable pay account until the debt and all accumulated interest is
paid in full; and
(ii) The amount, frequency, proposed beginning date, and duration of
the intended deductions;
(4) The right of the debtor to inspect and copy the records of the
FCA related to the claim or to receive copies if personal inspection is
impractical. The debtor shall be informed that the debtor shall be
assessed for the cost of copying the documents in accordance with
Sec. 608.807;
(5) The right of the debtor to obtain a review of, and to request a
hearing, on the FCA's determination of indebtedness, the propriety of
collecting the debt by offset, and, in the case of salary offset, the
propriety of the proposed repayment schedule (i.e., the percentage of
disposable pay to be deducted each pay period). The debtor shall be
informed that to obtain a review, the debtor shall deliver a written
request for a review to the FCA official named in the Notice, within 15
calendar days after the debtor's receipt of the Notice. In the case of a
salary offset, the debtor shall also be informed that the review shall
be conducted by an official arranged for by the FCA who shall be a
hearing official not under the control of the Chairman of the Farm
Credit Administration, or an administrative law judge;
(6) That the filing of a petition for hearing within 15 calendar
days after receipt of the Notice will stay the commencement of
collection proceedings;
(7) That a final decision on the hearing (if one is requested) will
be issued at the earliest practical date, but not later than 60 days
after the filing of the written request for review unless the employee
requests, and the hearing official grants, a delay in the proceedings;
(8) The right of the debtor to offer to enter into a written
agreement with the FCA to repay the amount of the claim. The debtor
shall be informed that the acceptance of such an agreement is
discretionary with the FCA;
(9) That charges for interest, penalties, and administrative costs
shall be assessed against the debtor, in accordance with 31 U.S.C. 3717,
if payment is not received by the payment due date. The debtor shall be
informed that such assessments must be made unless excused in accordance
with the Federal Claims Collection Standards (4 CFR parts 103 and 104);
(10) The amount of accrued interest and the amount of any other
penalties or administrative costs which may have been added to the
principal debt;
(11) That if the debtor has not entered into an agreement with the
FCA to pay the debt, has not requested the FCA to review the debt, or
has not paid the debt prior to the date on which the offset is to be
imposed, the FCA intends to collect the debt by administrative [or
salary] offset or by requesting other Federal agencies for assistance in
collecting the debt by offset. The debtor shall be informed that the
offset shall be imposed against any funds that might become available to
the debtor, until the principal debt and all accumulated interest and
other charges are paid in full;
(12) The date on which the offset will be imposed, which shall be 31
calendar days from the date of mailing or hand delivery of the Notice.
The debtor shall be informed that the FCA reserves the right to impose
an offset prior to this date if the FCA determines that immediate action
is necessary;
(13) That any knowingly false or frivolous statements,
representations, or evidence may subject the debtor to:
(i) Penalties under the False Claims Act, sections 3729 through 3731
of title 31, United States Code, or any other applicable statutory
authority;
(ii) Criminal penalties under sections 286, 287, 1001, and 1002 of
title 18, United States Code, or any other applicable statutory
authority; and, with regard to employees,
(iii) Disciplinary procedures appropriate under chapter 75 of title
5, United States Code; part 752 of title 5, Code of Federal Regulations,
or any other applicable statute or regulation;
[[Page 43]]
(14) The name and address of the FCA official to whom the debtor
shall send all correspondence relating to the debt or the offset;
(15) Any other rights and remedies available to the debtor under
statutes or regulations governing the program for which the collection
is being made;
(16) That unless there are applicable contractual or statutory
provisions to the contrary, amounts paid on or deducted for the debt,
which are later waived or found not owed to the United States, will be
promptly refunded to the employee; and
(17) Other information, as may be appropriate.
(c) When the procedural requirements of this section have been
provided to the debtor in connection with the same debt or under some
other statutory or regulatory authority, the FCA is not required to
duplicate those requirements before effecting offset.
Sec. 608.823 Right to review of claim.
(a) If the debtor disputes the claim, the debtor may request a
review of the FCA's determination of the existence of the debt, the
amount of the debt, the propriety of collecting the debt by offset, and
in the case of salary offset, the propriety of the proposed repayment
schedule. If only part of the claim is disputed, the undisputed portion
should be paid by the payment due date.
(b) To obtain a review, the debtor shall submit a written request
for review to the FCA official named in the Notice of Intent to Collect
by Administrative [or Salary] Offset within 15 calendar days after
receipt of the notice. The debtor's written request for review shall
state the basis on which the claim is disputed and shall specify whether
the debtor requests an oral hearing or a review of the written record of
the claim. If an oral hearing is requested, the debtor shall explain in
the request why the matter cannot be resolved by a review of the
documentary evidence alone.
(c) The FCA shall promptly notify the debtor, in writing, that the
FCA has received the request for review. The FCA shall conduct its
review of the claim in accordance with Sec. 608.810.
(d) The FCA's review of the claim, under this section, shall include
providing the debtor with a reasonable opportunity for an oral hearing
if:
(1) An applicable statute authorizes or requires the FCA to consider
waiver of the indebtedness, the debtor requests waiver of the
indebtedness, and the waiver determination turns on an issue of
credibility or veracity; or
(2) The debtor requests reconsideration of the debt and the FCA
determines that the question of the indebtedness cannot be resolved by
reviewing the documentary evidence; for example, when the validity of
the debt turns on an issue of credibility or veracity.
(e) A debtor waives the right to a hearing and will have his or her
debt offset in accordance with the proposed offset schedule if the
debtor:
(1) Fails to file a written request for review within the timeframe
set forth in paragraph (b) of this section, unless the FCA determines
that the delay was the result of circumstances beyond his or her
control; or
(2) Fails to appear at an oral hearing of which he or she was
notified unless the hearing official determines that the failure to
appear was due to circumstances beyond the employee's control.
(f) Upon completion of its review of the claim, the FCA shall notify
the debtor whether the FCA's determination of the existence or amount of
the debt has been sustained, amended, or canceled. The notification
shall include a copy of the written decision issued by the hearing
official, pursuant to Sec. 608.810(e). If the FCA's determination is
sustained, this notification shall contain a provision which states that
the FCA intends to collect the debt by offset or by requesting other
Federal agencies for assistance in collecting the debt.
(g) When the procedural requirements of this section have been
provided to the debtor in connection with the same debt or under some
other statutory or regulatory authority, the FCA is not required to
duplicate those requirements before effecting offset.
[[Page 44]]
Sec. 608.824 Waiver of procedural requirements.
(a) The FCA may impose offset against a payment to be made to a
debtor prior to the completion of the procedures required by this part,
if:
(1) Failure to impose the offset would substantially prejudice the
Government's ability to collect the debt; and
(2) The timing of the payment against which the offset will be
imposed does not reasonably permit the completion of those procedures.
(b) The procedures required by this part shall be complied with
promptly after the offset is imposed. Amounts recovered by offset, which
are later found not to be owed to the Government, shall be promptly
refunded to the debtor.
Sec. 608.825 Coordinating offset with other Federal agencies.
(a)(1) Any creditor agency which requests the FCA to impose an
offset against amounts owed to the debtor shall submit to the FCA a
claim certification which meets the requirements of this paragraph. The
FCA shall submit the same certification to any agency that the FCA
requests to effect an offset.
(2) The claim certification shall be in writing. It shall certify
the debtor owes the debt and that all of the applicable requirements of
31 U.S.C. 3716 and 4 CFR part 102 have been met. If the intended offset
is to be a salary offset, a claim certification shall instead certify
that the debtor owes the debt and that the applicable requirements of 5
U.S.C. 5514 and 5 CFR part 550, subpart K, have been met.
(3) A certification that the debtor owes the debt shall state the
amount of the debt, the factual basis supporting the determination of
indebtedness, and the date on which payment of the debt was due. A
certification that the requirements of 31 U.S.C. 3716 and 4 CFR part 102
have been met shall include a statement that the debtor has been sent a
notice of Intent to Collect by Administrative Offset at least 31
calendar days prior to the date of the intended offset or a statement
that pursuant to 4 CFR 102.3(b)(5) said Notice was not required to be
sent. A certification that the requirements of 5 U.S.C. 5514 and 5 CFR
part 550, subpart K, have been met shall include a statement that the
debtor has been sent a Notice of Intent to Collect by Salary Offset at
least 31 calendar days prior to the date of the intended offset or a
statement that pursuant to 4 CFR 102.3(b)(5) said Notice was not
required to be sent.
(b)(1) The FCA shall not effect an offset requested by another
Federal agency without first obtaining the claim certification required
by paragraph (a) of this section. If the FCA receives an incomplete
claim certification, the FCA shall return the claim certification with
notice that a claim certification which complies with the requirements
of paragraph (a) of this section must be submitted to the FCA before the
FCA will consider effecting an offset.
(2) The FCA may rely on the information contained in the claim
certification provided by a requesting creditor agency. The FCA is not
authorized to review a creditor agency's determination of indebtedness.
(c) Only the creditor agency may agree to enter into an agreement
with the debtor for the repayment of the claim. Only the creditor agency
may agree to compromise, suspend, or terminate collection of the claim.
(d) The FCA may decline, for good cause, a request by another agency
to effect an offset. Good cause includes that the offset might disrupt,
directly or indirectly, essential FCA operations. The refusal and the
reasons shall be sent in writing to the creditor agency.
Sec. 608.826 Stay of offset.
(a)(1) When a creditor agency receives a debtor's request for
inspection of agency records, the offset is stayed for 10 calendar days
beyond the date set for the record inspection.
(2) When a creditor agency receives a debtor's offer to enter into a
repayment agreement, the offset is stayed until the debtor is notified
as to whether the proposed agreement is acceptable.
(3) When a review is conducted, the offset is stayed until the
creditor agency issues a final written decision.
[[Page 45]]
(b) When offset is stayed, the amount of the debt and the amount of
any accrued interest or other charges will be withheld from payments to
the debtor. The withheld amounts shall not be applied against the debt
until the stay expires. If withheld funds are later determined not to be
subject to offset, they will be promptly refunded to the debtor.
(c) If the FCA is the creditor agency and the offset is stayed, the
FCA will immediately notify an offsetting agency to withhold the payment
pending termination of the stay.
Sec. 608.827 Offset against amounts payable from Civil Service Retirement and Disability Fund.
The FCA may request that monies payable to a debtor from the Civil
Service Retirement and Disability Fund be administratively offset to
collect debts owed to the FCA by the debtor. The FCA must certify that
the debtor owes the debt, the amount of the debt, and that the FCA has
complied with the requirements set forth in this part, 4 CFR 102.3, and
the Office of Personnel Management regulations. The request shall be
submitted to the official designated in the Office of Personnel
Management regulations to receive the request.
Subpart C--Offset Against Salary
Sec. 608.835 Purpose.
The purpose of this subpart is to implement section 5 of the Debt
Collection Act of 1982 (Pub. L. 97-365)(5 U.S.C. 5514), which authorizes
the collection of debts owed by Federal employees to the Federal
Government by means of salary offsets. These regulations provide
procedures for the collection of a debt owed to the Government by the
imposition of a salary offset against amounts payable to a Federal
employee as salary. These regulations are consistent with the
regulations on salary offset published by the Office of Personnel
Management, codified in 5 CFR part 550, subpart K. Since salary offset
is a type of administrative offset, this subpart supplements subpart B.
Sec. 608.836 Applicability of regulations.
(a) These regulations apply to the following cases:
(1) Where the FCA is owed a debt by an individual currently employed
by another agency;
(2) Where the FCA is owed a debt by an individual who is currently
employed by the FCA; or
(3) Where the FCA currently employs an individual who owes a debt to
another Federal agency. Upon receipt of proper certification from the
creditor agency, the FCA will offset the debtor-employee's salary in
accordance with these regulations.
(b) These regulations do not apply to the following:
(1) Debts or claims rising under the Internal Revenue Code of 1986,
as amended (26 U.S.C. 1 et seq.); the Social Security Act (42 U.S.C. 301
et seq.); the tariff laws of the United States; or to any case where
collection of a debt by salary offset is explicitly provided for or
prohibited by another statute (e.g., travel advances in 5 U.S.C. 5705
and employee training expenses in 5 U.S.C. 4108).
(2) Any adjustment to pay arising from an employee's election of
coverage or a change in coverage under a Federal benefits program
requiring periodic deductions from pay if the amount to be recovered was
accumulated over four pay periods or less.
(3) A claim which has been outstanding for more than 10 years after
the creditor agency's right to collect the debt first accrued, unless
facts material to the Government's right to collect were not known and
could not reasonably have been known by the official or officials
charged with the responsibility for discovery and collection of such
debts.
Sec. 608.837 Definitions.
In this subpart, the following definitions shall apply:
(a) Agency means:
(1) An executive agency as defined by 5 U.S.C. 105, including the
United States Postal Service and the United States Postal Rate
Commission;
(2) A military department as defined in 5 U.S.C. 102;
(3) An agency or court of the judicial branch, including a court as
defined in
[[Page 46]]
28 U.S.C. 610, the District Court for the Northern Mariana Islands, and
the Judicial Panel on Multi-district Litigation;
(4) An agency of the legislative branch, including the United States
Senate and the United States House of Representatives; or
(5) Other independent establishments that are entities of the
Federal Government.
(b) Disposable pay means, for an officially established pay
interval, that part of current basic pay, special pay, incentive pay,
retired pay, retainer pay, or, in the case of an employee not entitled
to basic pay, other authorized pay, remaining after the deduction of any
amount required by law to be withheld. The FCA shall allow the
deductions described in 5 CFR 581.105 (b) through (f).
(c) Employee means a current employee of the FCA or other agency,
including a current member of the Armed Forces or Reserve of the Armed
Forces of the United States.
(d) Waiver means the cancellation, remission, forgiveness, or
nonrecovery of a debt allegedly owed by an employee to the FCA or
another agency as permitted or required by 5 U.S.C. 5584 or 8346(b), 10
U.S.C. 2774, 32 U.S.C. 716, or any other law.
Sec. 608.838 Waiver requests and claims to the General Accounting Office.
(a) The regulations contained in this subpart do not preclude an
employee from requesting a waiver of an overpayment under 5 U.S.C. 5584
or 8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or in any way questioning the
amount or validity of a debt by submitting a subsequent claim to the
General Accounting Office in accordance with the procedures prescribed
by the General Accounting Office.
(b) These regulations also do not preclude an employee from
requesting a waiver pursuant to other statutory provisions pertaining to
the particular debts being collected.
Sec. 608.839 Procedures for salary offset.
(a) The Chairman, or designee of the Chairman, shall determine the
amount of an employee's disposable pay and the amount to be deducted
from the employee's disposable pay at regular pay intervals.
(b) Deductions shall begin within three official pay periods
following the date of mailing or delivery of the Notice of Intent to
Collect by Salary Offset.
(c)(1) If the amount of the debt is equal to or is less than 15
percent of the employee's disposable pay, such debt should be collected
in one lump-sum deduction.
(2) If the amount of the debt is not collected in one lump-sum
deduction, the debt shall be collected in installment deductions over a
period of time not greater than the anticipated period of employment.
The size and frequency of installment deductions will bear a reasonable
relation to the size of the debt and the employee's ability to pay.
However, the amount deducted from any pay period will not exceed 15
percent of the employee's disposable pay for that period, unless the
employee has agreed in writing to the deduction of a greater amount.
(3) A deduction exceeding the 15-percent disposable pay limitation
may be made from any final salary payment pursuant to 31 U.S.C. 3716 in
order to liquidate the debt, whether the employee is being separated
voluntarily or involuntarily.
(4) Whenever an employee subject to salary offset is separated from
the FCA and the balance of the debt cannot be liquidated by offset of
the final salary check pursuant to 31 U.S.C. 3716, the FCA may offset
any later payments of any kind against the balance of the debt.
(d) In instances where two or more creditor agencies are seeking
salary offsets against current employees of the FCA or where two or more
debts are owed to a single creditor agency, the FCA, at its discretion,
may determine whether one or more debts should be offset simultaneously
within the 15-percent limitation. Debts owed to the FCA should generally
take precedence over debts owed to other agencies.
Sec. 608.840 Refunds.
(a) In instances where the FCA is the creditor agency, it shall
promptly refund any amounts deducted under the authority of 5 U.S.C.
5514 when:
[[Page 47]]
(1) The debt is waived or otherwise found not to be owed to the
United States (unless expressly prohibited by statute or regulations);
or
(2) An administrative or judicial order directs the FCA to make a
refund.
(b) Unless required or permitted by law or contract, refunds under
this section shall not bear interest.
Sec. 608.841 Requesting current paying agency to offset salary.
(a) To request a paying agency to impose a salary offset against
amounts owed to the debtor, the FCA shall provide the paying agency with
a claim certification which meets the requirements set forth in
Sec. 608.825(a). The FCA shall also provide the paying agency with a
repayment schedule determined under the provisions of Sec. 608.839 or in
accordance with a repayment agreement entered into with the debtor.
(b) If the employee separates from the paying agency before the debt
is paid in full, the paying agency shall certify the total amount
collected on the debt. A copy of this certification shall be sent to the
employee and a copy shall be sent to the FCA. If the paying agency is
aware that the employee is entitled to payments from the Civil Service
Retirement and Disability Fund, or other similar payments, it must
provide written notification to the agency responsible for making such
payments that the debtor owes a debt (including the amount) and that the
provisions of this section have been fully complied with. However, the
FCA must submit a properly certified claim to the agency responsible for
making such payments before the collection can be made.
(c) When an employee transfers to another paying agency, the FCA is
not required to repeat the due process procedures set forth in 5 U.S.C.
5514 and this part to resume the collection. The FCA shall, however,
review the debt upon receiving the former paying agency's notice of the
employee's transfer to make sure the collection is resumed by the new
paying agency.
(d) If a special review is conducted pursuant to Sec. 608.811 and
results in a revised offset or repayment schedule, the FCA shall provide
a new claim certification to the paying agency.
Sec. 608.842 Responsibility of the FCA as the paying agency.
(a) When the FCA receives a claim certification from a creditor
agency, deductions should be scheduled to begin at the next officially
established pay interval. The FCA shall send the debtor written notice
which provides:
(1) That the FCA has received a valid claim certification from the
creditor agency;
(2) The date on which salary offset will begin;
(3) The amount of the debt; and
(4) The amount of such deductions.
(b) If, after the creditor agency has submitted the claim
certification to the FCA, the employee transfers to a different agency
before the debt is collected in full, the FCA must certify the total
amount collected on the debt. The FCA shall send a copy of this
certification to the creditor agency and a copy to the employee. If the
FCA is aware that the employee is entitled to payments from the Civil
Service Retirement Fund and Disability Fund, or other similar payments,
it shall provide written notification to the agency responsible for
making such payments that the debtor owes a debt (including the amount).
Sec. 608.843 Nonwaiver of rights by payments.
An employee's involuntary payment of all or any portion of a debt
being collected under this subpart shall not be construed as a waiver of
any rights the employee may have under 5 U.S.C. 5514 or any other
provisions of a written contract or law unless there are statutory or
contractual provisions to the contrary.
[[Page 48]]
SUBCHAPTER B--FARM CREDIT SYSTEM
PART 611--ORGANIZATION--Table of Contents
Subparts A-B [Reserved]
Subpart C--Election of Directors and Other Voting Procedures
Sec.
611.310 Eligibility for membership on bank and association boards and
subsequent employment.
611.320 Impartiality in the election of directors.
611.330 Confidentiality in voting.
611.340 Security in voting.
611.350 Application of cooperative principles to the election of
directors.
Subpart D--Rules for Compensation of Board Members
611.400 Compensation of bank board members.
Subpart E--Transfer of Authorities
611.500 General.
611.501 Procedures.
611.505 Farm Credit Administration review.
611.510 Approval procedures.
611.515 Information statement.
611.520 Plan of transfer.
611.525 Stockholder reconsideration.
Subpart F--Bank Mergers, Consolidations and Charter Amendments
611.1000 General authority.
611.1010 Bank charter amendment procedures.
611.1020 Requirements for mergers or consolidations of banks.
611.1030 Board of directors of an agricultural credit bank.
611.1040 Creation of new associations.
Subpart G--Mergers, Consolidations, and Charter Amendments of
Associations
611.1120 General authority.
611.1121 Charter amendment procedures.
611.1122 Requirements for mergers or consolidations.
611.1123 Merger or consolidation agreements.
611.1124 Territorial adjustments.
611.1125 Treatment of associations not approving districtwide mergers.
Subpart H--Rules for Inter-System Fund Transfers
611.1130 Inter-System transfer of funds and equities.
Subpart I--Service Organizations
611.1135 Incorporation of service organizations.
611.1136 Incorporated and unincorporated service organization--
regulation and examination.
611.1137 Title VIII service corporations.
Subpart J-O [Reserved]
Subpart P--Termination of Farm Credit Status--Associations
611.1200 General--Applicability.
611.1205 Definitions.
611.1210 Advance notification.
611.1211 Filing of termination application.
611.1212 Filing date of termination application.
611.1215 Farm Credit Administration review and approval.
611.1220 Voting record date and stockholder approval.
611.1225 Requirements for information statement.
611.1226 Prohibited acts.
611.1230 Plan of termination.
611.1235 Stockholder reconsideration.
611.1240 Exit fee.
611.1250 Repayment of debts.
611.1255 Retirement of equities owned.
611.1260 Dissenters' rights.
611.1266 Loan refinancing by borrowers.
611.1270 Continuation of borrower rights.
Authority: Secs. 1.3, 1.13, 2.0, 2.10, 3.0, 3.21, 4.12, 4.15, 4.20,
4.21, 5.9, 5.10, 5.17, 7.0-7.13, 8.5(e) of the Farm Credit Act (12
U.S.C. 2011, 2021, 2071, 2091, 2121, 2142, 2183, 2203, 2208, 2209, 2243,
2244, 2252, 2279a-2279f-1, 2279aa-5(e)); secs. 411 and 412 of Pub. L.
100-233, 101 Stat. 1568, 1638; secs. 409 and 414 of Pub. L. 100-399, 102
Stat. 989, 1003, and 1004.
Source: 37 FR 11415, June 7, 1972, unless otherwise noted.
Subparts A-B [Reserved]
Subpart C--Election of Directors and Other Voting Procedures
Source: 53 FR 50392, Dec. 15, 1988, unless otherwise noted.
[[Page 49]]
Sec. 611.310 Eligibility for membership on bank and association boards and subsequent employment.
(a) No person shall be eligible for membership on a bank or
association board who is or has been, within 1 year preceding the date
the term of office begins, a salaried officer or employee of any bank or
association in the System.
(b) No bank or association director shall be eligible to continue to
serve in that capacity and his or her office shall become vacant if
after election as a member of the board, he or she becomes legally
incompetent or is convicted of a felony or held liable in damages for
fraud.
(c) No bank director shall, within 1 year after the date when he or
she ceases to be a member of the board, serve as a salaried officer or
employee of such bank, or any association with which the bank has a
discount or agent relationship.
(d) No director of an association shall, within 1 year after he or
she ceases to be a member of the board, serve as a salaried officer or
employee of such association.
[53 FR 50392, Dec. 15, 1988, as amended at 54 FR 37095, Sept. 7, 1989]
Sec. 611.320 Impartiality in the election of directors.
(a) Each System institution shall adopt policies and procedures that
are designed to assure that the elections of board members are conducted
in an impartial manner.
(b) No employee or agent of a System institution shall take any
part, directly or indirectly, in the nomination or election of members
to the board of directors of a System institution, or make any
statement, either orally or in writing, which may be construed as
intended to influence any vote in such nominations, or elections. This
paragraph shall not prohibit employees or agents from providing
biographical and other similar information or engaging in other
activities pursuant to policies and procedures for nominations and
elections. This paragraph does not affect the right of an employee or
agent to nominate or vote for directors of an institution in which the
employee or agent is a voting member.
(c) No property, facilities, or resources of any System institution
shall be used by any candidate for nomination or election or by any
other person for the benefit of any candidate for nomination or
election, unless the same property, facilities, or resources are
simultaneously available and made known to be available for use by all
declared candidates.
(d) No director, employee, or agent of a System institution shall,
for the purpose of furthering the interests of any candidates for
nomination or election, furnish or make use of records that are not made
available for use by all declared candidates.
(e) No System institution shall distribute or mail either directly
or at the expense of the institution, any campaign materials for
director candidates. Institutions shall request biographical information
from all declared candidates who certify that they are eligible, restate
such information in a standard format, and distribute or mail it with
ballots or proxy ballots.
Sec. 611.330 Confidentiality in voting.
(a) No bank or association may use signed ballots in stockholder
votes. Each bank and association must adopt policies and procedures to
ensure that all information and materials regarding how or whether an
individual stockholder has voted remain confidential, including with
respect to the institution, its directors, stockholders, or employees,
or any other person except:
(1) An independent third party tabulating the vote; or
(2) The Farm Credit Administration.
(b) A bank or association may use balloting procedures, such as an
identity code on the ballot, that can be used to identify how or whether
an individual stockholder has voted only if the votes are tabulated by
an independent third party. In weighted voting, the votes must be
tabulated by an independent third party. An independent third party that
tabulates the votes must certify in writing that such party will not
disclose to any person (including the institution, its directors,
stockholders, or employees) any information about how or whether an
[[Page 50]]
individual stockholder has voted, except that the information must be
disclosed to the Farm Credit Administration if requested.
(c) Once a bank or association receives a ballot, the vote of that
stockholder is final, except that a stockholder may withdraw a proxy
ballot before balloting begins at a stockholders' meeting.
(d) A bank or association may give a stockholder voting by proxy an
opportunity to give voting discretion to the proxy of the stockholder's
choice, provided that the proxy is also a stockholder eligible to vote.
[63 FR 64843, Nov. 24, 1998]
Sec. 611.340 Security in voting.
(a) Each bank and association must adopt policies and procedures
that assure the security of all records and materials related to a
stockholder vote including, but not limited to, ballots, proxy ballots,
and other related materials.
(b) Bank and association procedures must assure that ballots and
proxy ballots are provided only to stockholders who are eligible to
vote.
(c) Ballots and proxy ballots must be safeguarded before the time of
distribution or mailing to voting stockholders and after the time of
receipt by the bank or association until disposal. In an election of
directors, ballots, proxy ballots and election records must be retained
at least until the end of the term of office of the director. In other
stockholder votes, ballots, proxy ballots, and records must be retained
for at least 3 years after the vote.
(d) The voting procedures of each institution must provide for the
establishment of a tellers committee or other designated group of
persons which must be responsible for validating ballots and proxies and
tabulating voting results. An institution and its officers, directors,
and employees may not make any public announcement of the results of a
stockholder vote before the tellers committee or other designated
persons have validated the results of the vote.
[53 FR 50392, Dec. 15, 1988, as amended at 63 FR 64843, Nov. 24, 1998]
Sec. 611.350 Application of cooperative principles to the election of directors.
In the election of directors, each System institution shall comply
with the applicable cooperative principles set forth in Sec. 615.5230 of
this chapter.
[63 FR 39225, July 22, 1998]
Subpart D--Rules for Compensation of Board Members
Sec. 611.400 Compensation of bank board members.
(a) Farm Credit System banks are authorized to pay fair and
reasonable compensation to directors for services performed in an
official capacity at a rate not to exceed the level established in
section 4.21 of the Farm Credit Act of 1971, as amended, unless the FCA
determines that such a level adversely affects the safety and soundness
of the institution.
(b) The bank director compensation level established in section 4.21
of the Act shall be adjusted to reflect changes in the Consumer Price
Index (CPI) for all urban consumers, as published by the Bureau of Labor
Statistics, in the following manner: Current year's maximum compensation
= Prior year's maximum compensation adjusted by the prior year's annual
average percent change in the CPI for all urban consumers. Adjustments
will be made to the bank director statutory compensation limit beginning
from October 28, 1992 (the date of enactment of the Farm Credit Banks
and Associations Safety and Soundness Act of 1992). Additionally, each
year the FCA will distribute a bookletter to all FCS banks that
communicates the CPI adjusted bank director statutory compensation
limit.
(c)(1) A Farm Credit bank is authorized to pay a director up to 30
percent more than the statutory compensation limit in exceptional
circumstances where the director contributes extraordinary time and
effort in the service of the bank and its shareholders.
(2) Banks must document the exceptional circumstances justifying
additional director compensation. The documentation must describe:
[[Page 51]]
(i) The exceptional circumstances justifying the additional director
compensation, including the extraordinary time and effort the director
devoted to bank business; and
(ii) The amount and the terms and conditions of the additional
director compensation.
(d) Each bank board shall adopt a written policy regarding
compensation of bank directors. The policy shall address, at a minimum,
the following areas:
(1) The activities or functions for which attendance is necessary
and appropriate and may be compensated, except that a Farm Credit System
bank shall not compensate any director for rendering services on behalf
of any other Farm Credit System institution or a cooperative of which
the director is a member, or for performing other assignments of a non-
official nature;
(2) The methodology for determining each director's rate of
compensation; and
(3) The exceptional circumstances under which the board would pay
additional compensation for any of its directors as authorized by
paragraph (c) of this section.
(e) Directors may also be reimbursed for reasonable travel,
subsistence, and other related expenses in accordance with the bank's
policy.
[59 FR 37411, July 22, 1994, as amended at 64 FR 16618, Apr. 6, 1999; 65
FR 8023, Feb. 17, 2000]
Subpart E--Transfer of Authorities
Source: 53 FR 50393, Dec. 15, 1988, unless otherwise noted.
Sec. 611.500 General.
Each Farm Credit Bank or Agricultural Credit Bank is authorized, in
accordance with section 7.6 of the Act, to transfer certain authorities
to Federal land bank associations. The regulations in this subpart set
forth the procedures and voting and approval requirements applicable to
such transfers.
Sec. 611.501 Procedures.
(a) The boards of directors of a bank and an association which seek
to transfer authorities may adopt appropriate resolutions approving such
transfer and providing for the submission of such a proposal to their
respective stockholders for a vote.
(b) The resolutions accompanied by the following information shall
be submitted to the Farm Credit Administration for review and approval:
(1) Any proposed amendments to the charters of the institutions;
(2) A copy of the transfer plan as required under Sec. 611.520 of
this part;
(3) An information statement that complies with the requirements of
Sec. 611.515;
(4) The proposed bylaws of the bank and the association, as
applicable; and
(5) Any additional information the boards of directors wish to
submit in support of the request or that the Farm Credit Administration
requests.
Sec. 611.505 Farm Credit Administration review.
(a) Upon receipt of the board of directors resolution and the
accompanying documents, the Farm Credit Administration shall review the
request and either deny or give its preliminary approval to the request.
(b) If the request is denied, written notice stating the reasons for
the denial shall be transmitted to the chief executive officer of the
bank and the association who shall promptly notify their respective
boards of directors.
(c) Upon approval of the proposed transfer of authorities by the
stockholders as provided in Sec. 611.510, the secretary of the bank and
the secretary of the association shall forward to the Farm Credit
Administration a certified record of the results of the stockholder
votes.
(d) Each institution shall notify its stockholders not later than 30
days after the stockholder vote of the final results of the vote. If no
petition for reconsideration is filed with the Farm Credit
Administration in accordance with Sec. 611.525, the transfer shall be
effective on the date specified in the transfer plan, or at such later
date as may be required by the Farm Credit Administration to grant final
approval. Notice of final approval shall be transmitted to the
institutions involved.
[[Page 52]]
(e) The effective date of a transfer may not be less than 35 days
after mailing of the notification to stockholders of the results of the
stockholder vote, or 15 days after the date of submission to the Farm
Credit Administration of all required documents for the Agency's
consideration of final approval, whichever occurs later. If a petition
for reconsideration is filed within 35 days after the date of mailing of
the notification of stockholder vote, the constituent institutions must
agree on a second effective date to be used in the event the transfer is
approved on reconsideration. The second effective date may not be less
than 60 days after stockholder notification of the results of the first
vote, or 15 days after the date of the reconsideration vote, whichever
occurs later.
[53 FR 50393, Dec. 15, 1988, as amended at 63 FR 64844, Nov. 24, 1998]
Sec. 611.510 Approval procedures.
(a) Upon receipt of approval of a resolution by the Farm Credit
Administration, the bank and the association shall call a meeting of
their voting stockholders. Each institution shall notify each
stockholder that the resolution has been filed and that a meeting will
be held in accordance with the institution's bylaws. The stockholders
meeting of the bank and the association shall be held within 60 days of
receipt of the approval from the Farm Credit Administration.
(b) The notice of meeting to consider and act upon the directors'
resolution shall be accompanied by an information statement that
complies with the requirements of Sec. 611.515.
(c) The proposal shall be approved if agreed to by:
(1) A majority of the stockholders of the bank voting in person or
by proxy, with each association entitled to cast a number of votes equal
to the number of its voting stockholders;
(2) A majority of the stockholders of the association voting, in
person or by proxy;
(3) The Farm Credit Administration.
Sec. 611.515 Information statement.
(a) The bank and association shall prepare an information statement
which will inform stockholders about the provisions of the proposed
transfer of authorities and the effect of the proposal on the bank and
the association.
(b) The information statement for each institution involved shall
contain the following materials as applicable to the institution:
(1) A statement either on the first page of the materials or on the
notice of the stockholders meeting, in capital letters and boldface
type, that:
THE FARM CREDIT ADMINISTRATION HAS NEITHER APPROVED NOR PASSED UPON
THE ACCURACY OR ADEQUACY OF THE INFORMATION ACCOMPANYING THE NOTICE OF
MEETING OR PRESENTED AT THE MEETING AND NO REPRESENTATION TO THE
CONTRARY SHALL BE MADE OR RELIED UPON.
(2) A description of the material provisions of the plan under
Sec. 611.520 and the effect of the transaction on the institution, its
stockholders, and the territory to be served.
(3) A statement enumerating the potential advantages and
disadvantages of the proposed transfer including, but not limited to,
changes in operating efficiencies, one-stop service, branch offices,
local control, and financial condition.
(4) A summary of the provisions of the charter and bylaws following
the transfer that differ materially from the charter or bylaws currently
existing.
(5) A brief statement by the board of directors of the institution
setting forth the board's opinion on the advisability of the transfer.
(6) A presentation of the following financial data:
(i) An audited balance sheet and income statement and notes thereto
of the bank or the association, as applicable, for the preceding 2
fiscal years.
(ii) If the transfer of authority includes any material transfer of
assets, a balance sheet and income statement of the bank and the
association showing its financial condition before the transfer of
authority and a pro forma balance sheet and income statement for the
bank or association, as applicable, showing its financial condition
after the transfer. The statements shall meet the following conditions:
[[Page 53]]
(A) Such financial statements shall be presented in columnar form,
showing the financial condition as of the end of the most recent quarter
of the institution, and operating results since the end of the last
fiscal year through the end of the most recent quarter of the
institution.
(B) If the request is made within 90 days after the end of the
fiscal year, the institution's financial statements shall be as of the
most recent fiscal yearend.
(C) If the request is made within 45 days after the end of the most
recent quarter, the institution's financial statements shall be as of
the end of the quarter preceding the quarter just ended.
(D) If the request is made more than 45 days after the end of the
most recent quarter, the institution's financial statements shall be as
of the end of that quarter.
(E) The financial statements must be accompanied by appropriate
notes, describing any assets being transferred and including data
relating to high-risk assets and other property owned, allowance for
loan losses, and current year-to-date chargeoffs.
(F) The amount and nature of start-up costs estimated to be
associated with the transfer.
(7) A description of the type and dollar amount of any financial
assistance that has been provided to the bank or the association, as
applicable, during the past year; the conditions on which the financial
assistance was extended, the terms of repayment or retirement, if any;
and, the liability for repayment of this assistance by the bank or the
association if the transfer were approved.
(8) A statement as to whether the bank or the association, as
applicable, would require financial assistance during the first 3 years
of operation, the estimated type and dollar amount of the assistance,
and terms of repayment or retirement, if known.
(9) A statement indicating the possible tax consequences to
stockholders and whether any legal opinion, ruling or external auditor's
opinion has been obtained on the matter.
(10) A presentation of the association's interest rate and fee
programs, interest collection policy, capitalization plan and other
factors that would affect a borrower's cost of doing business with the
association.
(11) A description of any event subsequent to the date of the last
quarterly report, but prior to the stockholder vote, that would have a
material impact on the financial condition of the bank or the
association.
(12) A statement of any other material fact or circumstances that a
stockholder would need in order to make an informed and responsible
decision, or that would be necessary in order to provide a disclosure
that is not misleading.
(13) A form of written proxy, together with instructions on its
purpose, use and authorization by the stockholder. The proxy
instructions must ensure the secrecy of the stockholder's ballot if the
stockholder votes by proxy.
(14) A copy of the plan of transfer provided for in Sec. 611.520 of
this part.
(c) No bank or association director, officer, or employee shall make
any untrue or misleading statement of a material fact, or fail to
disclose any material fact necessary under the circumstances to make
statements made not misleading, to a stockholder of the association in
connection with a transfer under this subpart.
[53 FR 50393, Dec. 15, 1988, as amended at 58 FR 48790, Sept. 20, 1993]
Sec. 611.520 Plan of transfer.
The transfer of authorities and assets, as appropriate, shall occur
pursuant to a written plan which shall be agreed to by the bank and the
association involved. The written plan shall include the following:
(a) An explanation of the value of the equity ownership as of the
last monthend held by stockholders of the bank and the association and
the impact, if any, of the transfer on the value of that equity.
(b) If the plan provides for a transfer of assets, a description of
the terms and conditions upon which such transfer will occur, including,
but not limited to, any warranties or representations regarding the
value of such assets.
[[Page 54]]
(c) A description of how the association would obtain loan funds
after the transfer.
(d) A statement on how the expenses connected with the transfer are
to be borne by the affected parties.
(e) A statement of any conditions which must be satisfied prior to
the effective date of the transfer, including but not limited to
approval by stockholders and approval by the Farm Credit Administration.
(f) A statement that prior to the effective date of the transfer the
board of directors of the bank or the association may rescind its
resolution and void the transfer, with the concurrence of the Farm
Credit Administration, on the basis that:
(1) The information disclosed to stockholders contained material
errors or omissions;
(2) Material misrepresentations were made to stockholders regarding
the impact of the transfer;
(3) Fraudulent activities were used to obtain the stockholders'
approval; or,
(4) An event occurred between the time of the vote and the transfer
that would have a significant adverse impact on the future viability of
the association.
(g) A designation of those persons who have authority to carry out
the plan of transfer, including the authority to execute any documents
necessary to perfect title, on behalf of the bank and the association.
Sec. 611.525 Stockholder reconsideration.
(a) Stockholders have the right to reconsider the approval of the
transfer provided that a petition signed by 15 percent of the
stockholders of either institution involved in the transfer is filed
with the Farm Credit Administration within 35 days after the date of
mailing of the notification of the final results of the stockholder vote
required under Sec. 611.505(d) and such petition is approved by the Farm
Credit Administration.
(b) A special stockholders meeting shall be called by the
institution to vote on the reconsideration following the Farm Credit
Administration's approval of a stockholder petition to reconsider the
transfer. If a majority of stockholders of any institution involved in
the transfer votes against the transfer, the transfer is not approved.
Subpart F--Bank Mergers, Consolidations and Charter Amendments
Source: 53 FR 50393, Dec. 15, 1988, unless otherwise noted.
Sec. 611.1000 General authority.
(a) An amendment to a bank charter may relate to any provision that
is properly the subject of a charter, including, but not limited to, the
name of the bank, the location of its offices, or the territory served.
(b) The Farm Credit Administration may make changes in the charter
of a bank as may be requested by that bank and approved by the Farm
Credit Administration pursuant to Sec. 611.1010 of this part.
(c) The Farm Credit Administration may, in accordance with the
provisions of the Act, make changes in the charter of a bank as may be
necessary or expedient to implement the provisions of the Act.
Sec. 611.1010 Bank charter amendment procedures.
(a) A bank may recommend a charter amendment to accomplish any of
the following actions:
(1) A merger or consolidation with any other bank or banks operating
under title I or III of the Act;
(2) A transfer of territory with any other bank operating under the
same title of the Act;
(3) A change to its name or location;
(4) Any other change that is properly the subject of a bank charter;
(b) Upon approval of an appropriate resolution by the bank board,
the certified resolution, together with supporting documentation, shall
be submitted to the Farm Credit Administration for preliminary or final
approval, as the case may be.
(c) The Farm Credit Administration shall review the material
submitted and either approve or disapprove the request. The Farm Credit
Administration may require submission of any supplemental materials it
deems appropriate. If the request is for merger, consolidation, or
transfer of territory,
[[Page 55]]
the approval of Farm Credit Administration will be preliminary only,
with final approval subject to a vote of the bank's stockholders.
(d) Following receipt of the Farm Credit Administration's written
preliminary approval, the proposal shall be submitted for approval to
the voting stockholders of the bank. A proposal shall be approved if
agreed to by a majority of the stockholders of each bank voting, in
person or by proxy, at a duly authorized stockholder meeting with each
association entitled to cast a number of votes equal to the number of
the association's voting shareholders.
(e) Upon approval by the stockholders of the bank, the request for
final approval and issuance of the appropriate charter or amendments to
charter for the banks involved shall be submitted to the Farm Credit
Administration.
Sec. 611.1020 Requirements for mergers or consolidations of banks.
(a) As authorized under sections 7.0 and 7.12 of the Act, a bank may
merge or consolidate with one or more banks operating under the same or
different titles of the Act.
(b) Where two or more banks plan to merge or consolidate, the banks
shall jointly submit to the Farm Credit Administration the documents
itemized in Secs. 611.1122(a)(1) through (4), (6), (7), 611.1122(e), and
611.1123. In interpreting those sections, the word ``bank'' shall be
read for the word ``association.''
(c) No bank director, officer, or employee shall make any untrue or
misleading statement of a material fact, or fail to disclose any
material fact necessary under the circumstances to make statements made
not misleading, to any stockholder of the bank in connection with a bank
merger or consolidation.
(d) Upon approval of a proposed bank merger or consolidation by the
stockholders of each constituent bank, the following documents shall be
submitted from the constituent banks to the Farm Credit Administration
for final approval and issuance of the appropriate charters or
amendments to charter:
(1) A certified copy of the stockholders' resolution, on which the
stockholders cast their votes, from each constituent bank;
(2) A certification of the stockholder vote from the corporate
secretary of each bank or from an independent third party;
(3) An Agreement of Merger or Consolidation duly executed by those
authorized to sign on behalf of each constituent bank.
Sec. 611.1030 Board of directors of an agricultural credit bank.
Each agricultural credit bank formed by the consolidation of a Farm
Credit Bank and a bank for cooperatives shall elect a board of directors
of such number, for such term, in such manner, and with such
qualifications, as may be required in its bylaws, except that at least
one member shall be elected by the other directors, which member shall
not be a director, officer, employee, or stockholder of a System
institution. In electing such directors each association shall be
entitled to cast a number of votes equal to the number of its voting
stockholders.
[53 FR 50393, Dec. 15, 1988, as amended at 61 FR 67185, Dec. 20, 1996]
Sec. 611.1040 Creation of new associations.
Any application for the issuance of a charter to a new production
credit association or Federal land bank association shall meet the
requirements of sections 2.0 or 2.10, respectively, of the Act. Any
application for the issuance of a charter for an agricultural credit
association shall meet the requirements of section 2.0 of the Act.
Subpart G--Mergers, Consolidations, and Charter Amendments of
Associations
Sec. 611.1120 General authority.
(a) An amendment to an association charter may relate to any
provision that is properly the subject of a charter, including, but not
limited to, the name of the association, the location of its offices, or
the territory served.
(b) The Farm Credit Administration may make changes in the charter
of an association as may be requested by that association and approved
by the
[[Page 56]]
Farm Credit Administration pursuant to Sec. 611.1121 of this part.
(c) The Farm Credit Administration may, by order of the Chairman and
on its own initiative, make changes in the charter of a Federal land
bank association or a production credit association where the Chairman
determines that the change is necessary for the accomplishment of the
purposes of the Act.
[50 FR 20400, May 16, 1985, as amended at 51 FR 41945, Nov. 20, 1986]
Sec. 611.1121 Charter amendment procedures.
This section shall apply to any request by an association to amend
its charter.
(a) An association which proposes to amend its charter shall submit
a request to its supervising bank containing the following information:
(1) A statement of the provision(s) of the charter that the
association proposes to amend and the proposed amendment(s);
(2) A statement of the reasons for the proposed amendment(s), the
impact of the amendment(s) on the association and its stockholders, and
the requested effective date of the amendment(s);
(3) A certified copy of the resolution of the board of directors of
the association approving the amendment(s);
(4) Any additional information or documents that the association
wishes to submit in support of the request or that may be requested by
the supervising bank.
(b) Upon receipt of a proposed amendment from an association, the
district bank shall review the materials submitted and provide the
association with its analysis of the proposal within a reasonable period
of time. Concurrently, the bank shall communicate its recommendation on
the proposal to the Farm Credit Administration, including the reasons
for the recommendation, and any analysis the bank believes appropriate.
Following review by the bank, the association shall transmit the
proposed amendment with attachments to the Farm Credit Administration.
(c) Upon receipt of an association's request for a charter
amendment, the Farm Credit Administration shall review the materials
submitted and either approve or disapprove the request. The Farm Credit
Administration may require submission of any supplemental materials it
deems appropriate.
(d) The Farm Credit Administration shall notify the association of
its approval or disapproval of the amendment request, and provide a copy
of such communication to the bank. A notification of approval shall be
accompanied by a copy of the charter, as amended.
[50 FR 20400, May 16, 1985, as amended at 51 FR 32441, Sept. 12, 1986]
Sec. 611.1122 Requirements for mergers or consolidations.
This section shall apply to any request for approval of a proposed
merger or consolidation of associations. A merger involves the
combination of one or more associations into a continuing constituent
association, which retains its charter and bylaws (except as amended to
effect the merger proposal). A consolidation involves the combination of
two or more associations into a newly organized association having a new
charter and bylaws.
(a) Where two or more associations plan to merge or consolidate, or
where the district board has adopted a reorganization plan for the
associations in the district, the associations involved shall jointly
submit a request to the district bank containing the following:
(1) In the case of a merger, a copy of the charter of the continuing
association reflecting any proposed amendments. In the case of
consolidation, a copy of the proposed charter of the new association;
(2) A statement of the reasons for the proposed merger or
consolidation, the impact of the proposed transaction on the
associations and their stockholders, and the planned effective date of
the merger or consolidation;
(3)(i) A certified copy of the resolution of the board of directors
of each association recommending approval of the merger or
consolidation; or
(ii) In the case of a district reorganization plan, a certified copy
of the resolution of the board of directors of each association
recommending either approval or disapproval of the proposal.
(4) A copy of the agreement of merger or consolidation;
[[Page 57]]
(5) Two signed copies of the continuing or proposed Articles of
Association;
(6) All of the information specified in paragraph (e) of this
section; and
(7) Any additional information or documents each association wishes
to submit in support of the request or that the supervising bank or the
Farm Credit Administration requests.
(b) Upon receipt of a request for approval of an association merger
or consolidation, the district bank shall review the materials submitted
to determine whether they comply with the requirements of these
regulations and shall communicate with the associations concerning any
deficiency. When the bank approves the request to merge or consolidate
it shall notify the associations and the Farm Credit Administration of
its approval together with the reasons for its approval and any
supporting analysis the bank deems appropriate. The associations shall
jointly submit the proposal together with required documentation to the
Farm Credit Administration for preliminary approval.
(c) Upon receipt of an association merger or consolidation request,
the Farm Credit Administration shall review the request and either deny
or give its preliminary approval to the request. When a request is
denied, written notice stating the reasons for the denial shall be
transmitted to the associations and a copy provided to the bank. When a
request is preliminarily approved, written notice of the preliminary
approval shall be given to the associations and a copy provided to the
bank. Preliminary approval by the Farm Credit Administration shall not
constitute approval of the merger or consolidation. Approval of a merger
or consolidation shall be only pursuant to paragraph (g) of this
section.
(d) Upon receipt of preliminary approval by the Farm Credit
Administration of a merger or consolidation request, each constituent
association shall call a meeting of its voting stockholders. The meeting
shall be called on written notice to each stockholder entitled to vote
on the transaction, and held in accordance with the terms of each
association's bylaws. The affirmative vote of a majority of the voting
stockholders of each association present and voting or voting by written
proxy at a meeting at which a quorum is present shall be required for
stockholder approval of a merger or consolidation proposal.
(e) Notice of the meeting to consider and act upon a proposed merger
or consolidation of associations shall be accompanied by the following
information covering each constituent association.
(1) A statement either on the first page of the materials or on the
notice of the stockholders' meeting, in capital letters and bold face
type, that:
THE FARM CREDIT ADMINISTRATION HAS NEITHER APPROVED NOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION ACCOMPANYING THE NOTICE OF
MEETING OR PRESENTED AT THE MEETING AND NO REPRESENTATION TO THE
CONTRARY SHALL BE MADE OR RELIED UPON.
(2) A description of the material provisions of the agreement of
merger or consolidation and the effect of the proposed merger or
consolidation on the associations, their stockholders, the new or
continuing board of directors, and the territory to be served. In
addition, a copy of the agreement must be furnished with the notice to
stockholders.
(3) A summary of the provisions of the charter and bylaws of the
continuing or new association that differ materially from the existing
charter or bylaw provisions of the constituent associations.
(4) A brief statement by the boards of directors of the constituent
associations setting forth the basis for the boards' recommendation on
the merger or consolidation.
(5) A description of any agreement or arrangement between a
constituent association and any of its officers relating to employment
or termination of employment and arising from the merger or
consolidation.
(6) A presentation of the following financial data:
(i) A balance sheet and income statement for each constituent
association for each of the 2 preceding fiscal years.
[[Page 58]]
(ii) A balance sheet for each constituent association as of a date
within 90 days of the date the request for preliminary approval is
forwarded to the Farm Credit Administration presented on a comparative
basis with the corresponding period of the prior fiscal year.
(iii) An income statement for the interim period between the end of
the last fiscal year and the date of the required balance sheet
presented on a comparative basis with the corresponding period of the
preceding fiscal year. The balance sheet and income statement format
shall be that contained in the association's annual report to
stockholders; shall contain any significant changes in accounting
policies that differ from those in the latest association annual report
to stockholders; and shall contain appropriate footnote disclosures,
including data relating to high-risk assets and other property owned,
and allowance for loan losses, including net chargeoffs as required in
paragraph (e)(10) of this section.
(7) The financial statements (balance sheet and income statement)
shall be in sufficient detail to show separately all significant
categories of interest-earning assets and interest-bearing liabilities
and the income or expense accrued thereon.
(8) Attached to the financial statements for each constituent
association, either:
(i) A statement signed by the chief executive officer and each
member of the board of directors of the association that the various
financial statements are unaudited, but have been prepared in all
material respects in accordance with generally accepted accounting
principles (except as otherwise disclosed therein) and are, to the best
of the knowledge of the board, a fair and accurate presentation of the
financial condition of the association; or
(ii) A signed opinion by an independent certified public accountant
that the various financial statements have been examined in accordance
with generally accepted auditing standards and, accordingly, included
such tests of the accounting records and such other auditing procedures
as were considered necessary in the circumstances, and, as of the date
of the statements, present fairly the financial position of the
association in conformity with generally accepted accounting principles
applied on a consistent basis, except as otherwise noted thereon.
(9) A presentation for each constituent association regarding its
policy on accounting for loan performance, together with the number and
dollar amount of loans in all performance categories, including those
categorized as high-risk assets.
(10) Information of each constituent association concerning the
amount of loans charged off in each of the 2 fiscal years preceding the
date of the balance sheet, the current year-to-date net chargeoff
amount, and the balance in the allowance for loan losses account and a
statement regarding whether, in the opinion of management, the allowance
for loan losses is adequate to absorb the risk currently existing in the
loan portfolio. This information may be appropriately included in the
footnotes to the financial statements.
(11) A management discussion and analysis of the financial condition
and results of operation for the past 2 fiscal years for each
constituent institution. This requirement can be satisfied by including
the materials contained in the management discussion and analysis of
each institution's most recent annual report.
(12) A discussion of any material changes in financial condition of
each constituent institution from the end of the last fiscal year to the
date of the interim balance sheet provided.
(13) A discussion of any material changes in the results of
operations of each constituent institution with respect to the most
recent fiscal-year-to-date period for which an income statement is
provided.
(14) A discussion of any change in the tax status of the new
institution from those of the constituent institutions as a result of
merger or consolidation. A statement on any adverse tax consequences to
the stockholders of the institution as a result of the change in tax
status.
(15) A statement on the proposed institution's relationship with an
independent public accountant, including
[[Page 59]]
any change that may occur as a result of the merger or consolidation.
(16) A pro forma balance sheet of the continuing or consolidated
association presented as if the merger or consolidation had occurred as
of the date on the balance sheets required in paragraph (e)(6) of this
section, as recommended to the stockholders. A pro forma summary of
earnings for the continuing or consolidated association presented as if
the merger or consolidation had been effective at the beginning of the
interim period between the end of the last fiscal year and the date of
the balance sheets.
(17) A description of the type and dollar amount of any financial
assistance that has been provided during the past year or will be
provided by the supervising bank or other party to assist the
constituent or the continuing or new association(s), the conditions on
which financial assistance has been or will be extended, the terms of
repayment or retirement, if any, and the impact of the assistance on the
subject association(s) or the stockholders.
(18) A presentation for each constituent association of interest
rate comparisons for the last 2 fiscal years preceding the date of the
balance sheet, together with a statement of the continuing or new
association's proposed interest rate and fee programs, interest
collection policies, capitalization rates, dividends or patronage
refunds, and other factors that would affect a borrower's cost of doing
business with the continuing or new association. Where agreement has not
been reached on such matters, current related information shall be
presented for each constituent association.
(19) A description for each constituent association of any event
subsequent to the date of the financial statements, but prior to the
merger or consolidation vote, that would have a material impact on the
financial condition of the constituent or continuing or new
association(s).
(20) A statement of any other material fact or circumstance that a
stockholder would need in order to make an informed decision on the
merger or consolidation proposal, or that is necessary to make the
required disclosures not misleading.
(21) Where proxies are to be solicited, a form of written proxy,
together with instructions on the purpose and authority for its use, and
the proper method for signature by the stockholder.
(f) No bank or association, or director, officer, or employee
thereof, shall make any untrue or misleading statement of a material
fact, or fail to disclose any material fact necessary under the
circumstances to make statements made not misleading, to a stockholder
of any association in connection with an association merger or
consolidation.
(g) Upon approval of a proposed merger or consolidation by the
stockholders of the constituent associations, a certified copy of the
stockholders' resolution shall be forwarded to the Farm Credit
Administration. Each constituent association shall notify its
stockholders not later than 30 days after the stockholder vote of the
final results of the vote. If no petition is filed with the Farm Credit
Administration to reconsider the vote, upon final approval by the FCA,
the merger or consolidation shall be effective on the date specified in
the merger agreement or at such later date as may be required by the
Farm Credit Administration to grant final approval. Notice of final
approval shall be transmitted to the associations and a copy provided to
the affiliated bank.
(h) No director, officer, or employee of a bank or an association
shall make an oral or written representation to any person that a
preliminary or final approval by the Farm Credit Administration of an
association merger or consolidation constitutes, directly or indirectly,
either a recommendation on the merits of the transaction or an assurance
concerning the adequacy or accuracy of any information provided to any
association's stockholders in connection therewith.
(i) The notice and accompanying information required under paragraph
(e) of this section shall not be sent to stockholders until preliminary
approval of the merger or consolidation has been given by the Farm
Credit Administration.
(j) Where a proposed merger or consolidation will involve more than
three
[[Page 60]]
associations, the Farm Credit Administration may require the
supplementation, or allow the condensation or omission of any
information required under paragraph (e) of this section in furtherance
of meaningful disclosure to stockholders. Any waiver sought under this
paragraph shall be obtained before preparation of the financial
statements and accompanying schedules required under paragraph (e) of
this section.
(k) The effective date of a merger or consolidation may not be less
than 35 days after the date of mailing of the notification to
stockholders of the results of the stockholder vote, or 15 days after
the date of submission to the Farm Credit Administration of all required
documents for the Agency's consideration of final approval, whichever
occurs later. If a petition for reconsideration is filed within 35 days
after mailing of the notification to stockholders of the results of the
stockholder vote, the constituent institutions must agree on a second
effective date to be used in the event the merger or consolidation is
approved on reconsideration. The second effective date may not be less
than 60 days after stockholder notification of the results of the first
vote, or 15 days after the date of the reconsideration vote, whichever
occurs later.
[50 FR 20400, May 16, 1985; 50 FR 32165, Aug. 9, 1985, as amended at 51
FR 32441, Sept. 12, 1986; 53 FR 50396, Dec. 15, 1988; 56 FR 2674, Jan.
24, 1991; 58 FR 48790, Sept. 20, 1993; 63 FR 64844, Nov. 24, 1998]
Sec. 611.1123 Merger or consolidation agreements.
(a) Associations operating under the same title of the Act may merge
or consolidate voluntarily only pursuant to a written agreement. The
agreement shall set forth all of the terms of the transaction,
including, but not limited to, the following:
(1) The proposed effective date of the merger or consolidation.
(2) The proposed name and headquarters location of the continuing or
consolidated association.
(3) The names of the persons nominated to serve as directors until
the first regular annual meeting of the continuing or consolidated
association to be held after the effective date of the merger or
consolidation. Any director of a constituent association may be
designated in the agreement to serve as a director of the continuing or
consolidated association for a period not to exceed his or her current
term, after which he or she must stand for reelection. However, the
terms of the agreement must provide for the election of at least one
director at each annual meeting subsequent to the effective date of the
merger or consolidation. The bylaws of the continuing or consolidated
association shall reflect the provisions of the merger or consolidation
agreement regarding director terms.
(4) A statement of the formula to be used to exchange the stock of
the constituent associations for the stock of the continuing or
consolidated association. No fractional shares of stock shall be issued.
(5) A statement of any conditions which must be satisfied prior to
the effective date of the proposed transaction, including but not
limited to approval by stockholders, the supervising bank, and the Farm
Credit Administration.
(6) A statement of the representations or warranties, if any, made
or to be made by any association, or its officers, directors, or
employees that is a party to the proposed transactions.
(7) A statement that the board of directors of each constituent
association can terminate the agreement before the effective date upon a
determination by an association, with the concurrence of the Farm Credit
Administration, that:
(i) The information disclosed to stockholders contained material
errors or omissions;
(ii) Material misrepresentations were made to stockholders regarding
the impact of the merger or consolidation;
(iii) Fraudulent activities were used to obtain stockholders'
approval; or
(iv) An event occurred between the time of the vote and the merger
that would have a significant adverse impact on the future viability of
the continuing institution.
(8) A description of the legal opinions or rulings (including those
related to tax matters), if any, that have been obtained or furnished by
any party in
[[Page 61]]
connection with the proposed transaction. Also, refer to paragraph
(a)(5) of this section.
(9) The capitalization plan and capital structure for the new
institution and a statement that the capitalization plan shall comply
with applicable FCA regulations.
(10) Provision for the employee benefits plan, its subsequent
continuation or adaptation by the board of directors of the proposed
institution following the merger or consolidation.
(11) A statement of the authority of those persons designated to
carry out the terms of the agreement, including the authority to waive
provisions of the agreement and to execute any documents necessary to
perfect title, on behalf of the constituent associations.
(b) As an attachment to the agreement, set forth those provisions of
the charter and bylaws of the continuing or consolidated association
which differ from the existing charter or bylaw provisions of the
constituent associations.
(c) Stockholders have the right to reconsider the approval of the
merger provided that a petition signed by 15 percent of the stockholders
eligible to vote of one or more of the constituent institutions is filed
with the Farm Credit Administration within 35 days after the date of
mailing the notification of the final results of the stockholder vote
required under Sec. 611.1122(g). The Farm Credit Administration will
review the petition to determine whether it complies with the
requirements of section 7.9 of the Act. Following a determination that
the petition complies with the applicable requirements, a special
stockholders meeting shall be called by the institution to reconsider
the vote. If a majority of the stockholders voting, in person or by
proxy, of any one of the constituent institutions that is a party to the
merger vote against the merger, the merger shall not take place.
[50 FR 20400, May 16, 1985, as amended at 51 FR 32442, Sept. 12, 1986;
53 FR 50396, Dec. 15, 1988]
Sec. 611.1124 Territorial adjustments.
This section shall apply to any request submitted to the Farm Credit
Administration to modify association charters for the purpose of
transferring territory from one association to another.
(a) Territorial adjustments, except as specified in paragraph (m) of
this section, require approval of a majority of the voting stockholders
of each association present and voting or voting by written proxy at a
duly authorized meeting at which a quorum is present.
(b) When two or more associations agree to transfer territory, each
association shall submit a proposal to the district bank containing the
following:
(1) A statement of the reasons for the proposed transfer and the
impact the transfer will have on its stockholders and holders of
participation certificates;
(2) A certified copy of the resolution of the board of directors of
each association approving the proposed territory transfer;
(3) A copy of the agreement to transfer territory that contains the
following information:
(i) A description of the territory to be transferred.
(ii) Transferor association's plan to transfer loans and the types
of loans to be transferred.
(iii) Transferor association's plan to retire and transferee
association's plan to issue equities held by holders of stock,
participation certificates, and allocated equities, if any, and a
statement by each association that the book value of its equities is at
least equal to par.
(iv) An inventory of the assets to be sold by the transferor
association and purchased by the transferee association.
(v) An inventory of the liabilities to be assumed from the
transferor association by the transferee association.
(vi) A statement that the holders of stock and participation
certificates whose loans are subject to transfer have 60 days from the
effective date of the territory transfer to inform the transferor
association of their decision to remain with the transferor association
for normal servicing until the current loan is paid.
(vii) A statement that the transfer is conditioned upon the approval
of the stockholders of each constituent association.
[[Page 62]]
(viii) The effective date of the proposed territory transfer.
(4) A copy of the stockholder disclosure statement provided for in
paragraph (f) of this section; and
(5) Any additional relevant information or documents that the
association wishes to submit in support of its request or that may be
required by the Farm Credit Administration.
(c) Upon receipt of documents supporting a proposed territory
transfer, the district bank shall review the materials submitted and
provide the associations with its analysis of the proposal within a
reasonable period of time. The bank shall concurrently advise the Farm
Credit Administration of its recommendation regarding the proposed
territory transfer. Following review by the bank, the associations shall
transmit the proposal to the Farm Credit Administration together with
all required documents.
(d) Upon receipt of an association's request to transfer territory,
the Farm Credit Administration shall review the request and either deny
or give preliminary approval to the request. When a request is denied,
written notice stating the reasons for the denial shall be transmitted
to the associations, and a copy provided to the bank. When a request is
preliminarily approved, written notice of the preliminary approval shall
be transmitted to the associations, and a copy provided to the bank.
Preliminary approval by the Farm Credit Administration shall not
constitute approval of the territory transfer. Final approval shall be
granted only in accordance with paragraph (h) of this section.
(e) Upon receipt of preliminary approval by the Farm Credit
Administration, each constituent association shall, by written notice,
and in accordance with its bylaws, call a meeting of its voting
stockholders. The affirmative vote of a majority of the voting
stockholders of each association present and voting or voting by written
proxy at a meeting at which a quorum is present shall be required for
stockholder approval of a territory transfer.
(f) Notice of the meeting to consider and act upon a proposed
territory transfer shall be accompanied by the following information
covering each constituent association:
(1) A statement either on the first page of the materials or on the
notice of the stockholders' meeting, in capital letters and bold face
type, that:
THE FARM CREDIT ADMINISTRATION HAS NEITHER APPROVED NOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION ACCOMPANYING THE NOTICE OF
MEETING OR PRESENTED AT THE MEETING AND NO REPRESENTATION TO THE
CONTRARY SHALL BE MADE OR RELIED UPON.
(2) A copy of the Agreement to Transfer Territory and a summary of
the major provisions of the Agreement.
(3) The reason the territory transfer is proposed.
(4) A map of the association's territory as it would look after the
transfer.
(5) A summary of the differences, if any, between the transferor and
transferee associations' interest rates, interest rate policies,
collection policies, service fees, bylaws, and any other items of
interest that would impact a borrower's lending relationship with the
institution.
(6) A statement that all loans of the transferor association that
finance operations located in the transferred territory shall be
transferred to the transferee association except as otherwise provided
for in this section or in accordance with agreements between the
associations as provided for in Sec. 614.4070 of this chapter.
(7) Where proxies are to be solicited, a form of written proxy,
together with instructions on the purpose and authority for its use, and
the proper method for signature by the stockholders.
(8) A statement that the associations' bylaws, financial statements
for the previous 3 years, and any financial information prepared by the
associations concerning the proposed transfer of territory are available
on request to the stockholders of any association involved in the
transaction.
(g) No bank or association, or director, officer, or employee
thereof, shall make any untrue or misleading statement of a material
fact, or fail to disclose any material fact necessary under the
circumstances to make statements made not misleading, to a
[[Page 63]]
stockholder of any association in connection with a territory transfer.
(h) Upon approval of a proposed territory transfer by the
stockholders of the constituent associations, a certified copy of the
stockholders' resolution for each constituent association and one
executed Agreement to Transfer Territory shall be forwarded to the Farm
Credit Administration. The territory transfer shall be effective when
thereafter finally approved and on the date as specified by the Farm
Credit Administration. Notice of final approval shall be transmitted to
the associations and a copy provided to the bank.
(i) No director, officer, or employee of a bank or an association
shall make an oral or written representation to any person that a
Preliminary or final approval by the Farm Credit Administration of a
territory transfer constitutes, directly or indirectly, a recommendation
on the merits of the transaction or an assurance concerning the adequacy
or accuracy of any information provided to any association's
stockholders in connection therewith.
(j) The notice and accompanying information required under paragraph
(f) of this section shall not be sent to stockholders until preliminary
approval of the territory transfer has been granted by the Farm Credit
Administration.
(k) Where a territory transfer is proposed simultaneously with a
merger or consolidation, both transactions may be voted on by
stockholders at the same meeting. Only stockholders of a transferee or
transferor association shall vote on a territory transfer.
(l) Each borrower whose real estate or operations is located in a
territory that will be transferred shall be provided with a written
Notice of Territory Transfer immediately after the Farm Credit
Administration has given final approval of the territory transfer. The
Notice shall inform the borrower of the transfer of the borrower's loan
to the transferee association and the exchange of related equities for
equities of like kinds and amounts in the transferee association. If a
like kind of equity is not available in the transferee association,
similar equities shall be offered that will not adversely affect the
interest of the owner. The Notice shall give the borrower 60 days from
the effective date of the territory transfer to notify the transferor
association in writing if the borrower decides to stay with the
transferor association for normal servicing until the current loan is
paid. Any application by the borrower for renewal or for additional
credit shall be made to the transferee association, except as otherwise
provided for by an agreement between associations in accordance with
Sec. 614.4070 of this chapter.
(m) This section shall not apply to territory transfers initiated by
order of the Chairman of the Farm Credit Administration or to territory
transfers due to the liquidation of the transferor association.
(n) Where a proposed action involves the transfer of a portion of an
association's territory to an association operating in a different
district, such proposal must comply with the provisions of this section
and Sec. 611.1090 of this part.
[51 FR 32442, Sept. 12, 1986]
Sec. 611.1125 Treatment of associations not approving districtwide mergers.
(a) Issuance of charters. When issuing charters or certificates of
territory for districtwide mergers or consolidations of associations,
the Farm Credit Administration will not issue any charters or
certificates of territory that include the territory of one or more
associations whose stockholders voted to disapprove the merger or
consolidation.
(b) A district bank shall not take any of the following actions with
respect to an association that has determined to not participate in a
districtwide merger or consolidation:
(1) Discriminate in the provision of any financial service and
assistance, including, but not limited to, access to loan funds and
rates of interest on loans and discounts offered by the district bank to
associations and their member/borrowers;
(2) Discriminate in the provision of any related services that are
offered by the district bank to associations and their member/borrowers;
(3) Discriminate in the provision of any professional assistance
that may
[[Page 64]]
be normally provided by the district bank to associations; or
(4) Discriminate in the provision of any technical assistance that
may be normally provided by the district bank to associations.
(c) This regulation does not prohibit a district bank from taking
any action with respect to an association, including, but not limited
to, charging different rates of interest or different prices for
services, or declining to provide financial assistance; provided that
any such action is fully documented and based on an objective analysis
of applicable criteria that are uniformly and consistently applied by
the district bank to all associations in the district.
[51 FR 32443, Sept. 12, 1986, as amended at 60 FR 34099, June 30, 1995]
Subpart H--Rules for Inter-System Fund Transfers
Sec. 611.1130 Inter-System transfer of funds and equities.
(a) Section 5.17(a)(6) of the Act authorizes the FCA to regulate the
borrowing, repayment, and transfer of funds and equities between
institutions of the System, including banks, associations, and service
organizations organized under the Act. This section sets forth the
circumstances and procedures under which the FCA may direct such a
transfer of funds and equities based on its determination with respect
to the financial condition of one or more institutions of the System.
For purposes of this section, the term ``bond'' refers to long-term
notes, bonds, debentures, or other similar obligations, or short-term
discount notes issued by one or more banks pursuant to section 4.2 of
the Act.
(b) The FCA may direct a transfer of funds or equities by one or
more banks of the System to another bank of the System where it
determines that:
(1) The receiving institution will not be able to make payments of
principal or interest on bonds for which it is primarily liable within
the meaning of section 4.4(a) of the Act; or
(2) The common or preferred stock, participation certificates, or
allocated equities of the receiving institution have a book value less
than their par or stated values; or
(3) The total bonds outstanding for which the receiving institution
is primarily liable exceed 20 times the combined capital and surplus
accounts of the bank; or
(4) Based on application to it of one or more of the following
ratios, the receiving institution is not financially viable in that it
will not be able to continue to extend new or additional credit or
financial assistance to its eligible borrowers:
(i) The ratio of stock to earned net worth (including legal reserve,
unallocated and reserved surplus, undistributed earnings, and allowance
for losses) exceeds 2 to 1;
(ii) The ratio of the outstanding bonds to capital and surplus
exceeds 15 to 1;
(iii) Nonearning assets (any noninterest-bearing assets, including
but not limited to cash, noninterest-earning loans, net fixed assets,
other property owned, accrued interest receivable, and accounts
receivable) exceed 15 percent of total assets;
(iv) Lendable net worth (interest-earning assets less interest-
bearing liabilities) is zero or less.
(c) The FCA may direct a transfer of funds or equities between two
or more Federal land bank associations or two or more production credit
associations in district where it determines that such transfer:
(1) Is necessary to provide financial support to the district bank
in which those associations are stockholders based on application of the
criteria to the bank as set forth in paragraph (b) of this section; or
(2) Is necessary to provide financial support to one or more other
like associations in the district based on application of the criteria
set forth in paragraph (b)(2) or (b)(4) of this section to the
associations, provided that in applying paragraph (b)(4)(ii) of this
section the ratio of outstanding indebtedness to capital and surplus of
the receiving association(s) shall not exceed 9 to 1; or
(3) Is an integral part of a plan that has been adopted by other
institutions of the System, and approved by the FCA, under which those
institutions will extend financial assistance to the
[[Page 65]]
district bank in which those associations are stockholders.
(d) A direction by the FCA for a transfer of funds or equities
pursuant to this section shall be signed by the Chairman and shall
establish the amount, timing, duration, repayment, and other terms of
assessments necessary to accomplish such transfer, taking into
consideration the financial condition of each institution to be
assessed. Where the FCA directs a transfer of funds or equities between
associations under paragraph (c) (1) or (2) of this section, it may
authorize the district bank in which such associations are stockholders
to accomplish the necessary assessments through debits and credits to
the accounts of the bank.
[50 FR 36986, Sept. 11, 1985. Redesignated at 51 FR 8666, Mar. 13, 1986,
as amended at 51 FR 41945, Nov. 20, 1986; 58 FR 48790, Sept. 20, 1993;
59 FR 21643, Apr. 26, 1994]
Subpart I--Service Organizations
Sec. 611.1135 Incorporation of service organizations.
(a) General. Any Farm Credit bank(s) or association(s) may organize
a corporation to perform, for or on behalf of the bank(s) or
association(s), any function or service that the bank(s) or
association(s) is authorized to perform under the Act and the
regulations, except extending credit and providing the sale of insurance
services. The bank(s) or association(s) wishing to organize such a
corporation shall submit an application to the Farm Credit
Administration according to the application requirements of paragraph
(b) of this section. If the proposal meets the requirements of the Act,
the regulations, and any other conditions that the Farm Credit
Administration may impose, the Agency may issue a charter for the
service corporation making it a federally chartered instrumentality of
the United States. Such service corporation shall be subject to
examination, supervision, and regulation by the Farm Credit
Administration. Only Farm Credit banks or associations are eligible to
become stockholders in such a corporation. Each bank or association
shall be eligible to become a stockholder of each service corporation
organized under this section.
(b) Application. The application for a corporate charter shall
include:
(1) The certified resolution of the board of each organizing bank or
association authorizing the incorporation.
(2) A request signed by the president(s) of the organizing bank(s)
or association(s) to the Farm Credit Administration to issue a charter,
supported by a detailed statement demonstrating the need and the
justification for the proposed entity.
(3) The proposed articles of incorporation addressing, at a minimum,
the following:
(i) The name of the corporation;
(ii) The city and State in which the principal offices of the
corporation are to be located;
(iii) The general purposes for which the corporation is formed;
(iv) The general powers of the corporation;
(v) The procedures under which a bank or association may become a
stockholder;
(vi) The procedures by which bylaws may be adopted and amended;
(vii) The title, par value, voting and other rights, and authorized
amount of each class of stock to be issued by the corporation, and the
procedures by which each class may be retired;
(viii) The notice and quorum requirement for a meeting of
shareholders, and the vote required for shareholder action on various
matters;
(ix) The procedures and shareholder voting requirements for the
merger, voluntary liquidation, or dissolution of the corporation or the
distribution of corporate assets;
(x) The standards and procedures for the application and
distribution of corporate earnings;
(xi) The duration of the corporation.
(4) The proposed bylaws, which shall include the provisions required
by Sec. 615.5220(b) of this chapter.
(5) A statement as to the proposed amounts and sources of
capitalization and operating funds.
(6) Any agreements between the organizing banks or associations
relating to the organization or the operation of the corporation.
[[Page 66]]
(7) Any other supporting documentation as may be requested by the
Farm Credit Administration.
(c) Approval. The Farm Credit Administration may condition the
issuance of a charter, including imposing minimum capital requirements,
as it deems appropriate. For good cause, the Farm Credit Administration
may deny the application. Upon approval by the Farm Credit
Administration of a completed application, which shall be kept on file
at the Farm Credit Administration, the Agency shall issue a charter for
the service corporation which shall thereupon become a corporate body
and a Federal instrumentality.
(d) Amendment of articles of incorporation. The articles of
incorporation of a service corporation may be amended in either of two
ways:
(1) The board of directors of the corporation may request that the
Farm Credit Administration amend the articles of incorporation by
sending with its request a certified resolution of the board of
directors of the service corporation and stating:
(i) The section(s) to be amended;
(ii) The reason(s) for the amendment;
(iii) The language of the articles of incorporation provision, as
amended; and
(iv) That the requisite shareholder approval has been obtained. The
request shall be subject to the approval of the Farm Credit
Administration as stated in paragraphs (a) and (c) of this section.
(2) The Farm Credit Administration may at any time make any and all
changes in the articles of incorporation of a service corporation that
are necessary and appropriate for the accomplishment of the purposes of
the Act.
[47 FR 27061, June 23, 1982, as amended at 50 FR 46418, Nov. 8, 1985.
Redesignated at 51 FR 8666, Mar. 13, 1986, as amended at 51 FR 41945,
Nov. 20, 1986; 56 FR 2674, Jan. 24, 1991; 61 FR 67185, Dec. 20, 1996; 62
FR 13213, Mar. 19, 1997; 63 FR 39225, July 22, 1998]
Sec. 611.1136 Incorporated and unincorporated service organization--regulation and examination.
Incorporated and unincorporated service organizations shall be
subject to regulations for the banks and associations of the Farm Credit
System, and shall be subject to examination by the Farm Credit
Administration.
[53 FR 27155, July 19, 1988]
Sec. 611.1137 Title VIII service corporations.
(a) Service corporations may be organized by any Farm Credit
institution(s) other than the Federal Agricultural Mortgage Corporation
or its affiliates for the purpose of exercising the authorities granted
under title VIII of the Act to act as agricultural mortgage marketing
facilities. The requirements of Secs. 611.1135 and 611.1136 apply as if
such organizing institutions were banks, except for good cause as
determined by the Farm Credit Administration. Such service corporations
may issue stock to Farm Credit institutions other than the Federal
Agricultural Mortgage Corporation or its affiliates and to persons that
are not Farm Credit System institutions, provided at least 80 percent of
the voting stock is at all times held by Farm Credit institutions other
than the Federal Agricultural Mortgage Corporation or its affiliates.
(b) For the purposes of this regulation, person means an individual
or a legal entity organized under the laws of the United States or any
State or territory thereof.
[57 FR 26992, June 17, 1992]
Subpart J-O [Reserved]
Subpart P--Termination of Farm Credit Status--Associations
Source: 56 FR 3407, Jan. 30, 1991, unless otherwise noted.
Sec. 611.1200 General--Applicability.
(a) Each association is authorized, in accordance with sections 7.10
and 7.11 of the Act, to terminate the status of the association as a
Farm Credit institution. The regulations in this subpart set forth the
procedural, disclosure, voting and approval requirements applicable to
such termination. The Farm Credit Administration may in its sole
discretion grant a waiver in writing from any requirement of this
subpart for good cause shown.
[[Page 67]]
(b) Except as provided in paragraph (c) of this section, these
regulations are applicable to an association that seeks to terminate its
status as a Farm Credit institution and to charter the institution as a
bank, savings and loan association, or other type of financial
institution. In the event that a receiver or conservator is appointed by
the Farm Credit Administration in the case of a voluntary or involuntary
liquidation of the association, the provisions of subpart L of part 611
apply, and the provisions of this subpart shall not apply.
(c) These regulations are not applicable to the termination of an
association whose investment in the Farm Credit Bank or agricultural
credit bank of which it is a member is in excess of 25 percent of the
bank's capital as computed according to GAAP, or whose indebtedness to
the Farm Credit Bank or agricultural credit bank of which it is a member
is in excess of 25 percent of the total loans of the bank as of the
quarter end preceding the adoption of the commencement resolution.
[56 FR 3407, Jan. 30, 1991, as amended at 61 FR 67186, Dec. 20, 1996]
Sec. 611.1205 Definitions.
For the purposes of this subpart, the following definitions apply:
(a) Commencement resolution means the resolution adopted pursuant to
Sec. 611.1210(a) to indicate the commencement of the termination
process.
(b) GAAP means generally accepted accounting principles, which is
that body of conventions, rules and procedures necessary to define
accepted accounting practice at a particular time, as promulgated by the
Financial Accounting Standards Board and other authoritative sources
recognized assetting standards for the accounting profession in the
United States. GAAP shall include not only broad guidelines of general
application but also detailed practices and procedures that constitute
standards against which financial presentations are evaluated. When the
Farm Credit Administration's interpretation of how GAAP should be
applied to a specific event or transaction differs from an association's
interpretation, the interpretation of the Farm Credit Administration
shall prevail.
(c) OFI means an other financing institution that has established a
funding and discount relationship with a Farm Credit Bank or an
agricultural credit bank pursuant to section 1.7(b)(1) of the Act and
the regulations in subpart P of part 614.
(d) Reconsideration vote means the vote at which the voting
stockholders reconsider whether to terminate the terminating
association's Farm Credit status.
(e) Successor institution means the institution to which the
terminating association will convert when its Farm Credit charter is
revoked.
(f) Terminating association means an association seeking to
terminate its status as a Farm Credit institution and to charter the
institution as a bank, savings and loan association, or other type of
financial institution.
(g) Termination resolution means the resolution adopted pursuant to
Sec. 611.1211(a) approving the applications for termination and a new
charter and providing for submission of the termination proposal to a
stockholder vote.
(h) Termination vote means the stockholder vote at which the
termination proposal is first submitted to the voting stockholders for
their approval or disapproval.
[56 FR 3407, Jan. 30, 1991; 56 FR 11589, Mar. 19, 1991; 63 FR 36547,
July 7, 1998]
Sec. 611.1210 Advance notification.
(a) An association's board of directors shall commence the process
of termination by adopting a commencement resolution indicating the
association's intention to terminate its Farm Credit status.
(b) Within 5 days of the adoption of the commencement resolution by
the board of directors, the terminating association shall:
(1) Submit a certified copy of the commencement resolution to the
Farm Credit Administration; and
(2) Mail a brief announcement to all holders of equity in the
association which states that the board is taking steps to terminate its
Farm Credit status and which describes the process of termination, the
anticipated effect of
[[Page 68]]
termination on current holders of equity, and the type of institution
the successor institution will be. If bylaws are adopted in accordance
with paragraph (e) of this section, the announcement shall also state
that, during the time period from the passage of the commencement
resolution until the effective date of termination, new common stock and
participation certificates either purchased from the association in
connection with a loan or sold to the association prior to the
termination will not entitle the holder to receive a share in the
adjusted book value in excess of par of the association.
(c)(1) Within 15 days after submission of the commencement
resolution pursuant to paragraph (b)(1) of this section, the terminating
association shall submit to the Farm Credit Administration a statement
of its estimation of the exit fee together with an explanation of the
computation of the exit fee pursuant to the requirements of
Sec. 611.1240. For purposes of this estimate of the exit fee, the
computation date set forth in Sec. 611.1240(c) shall be the quarter end
preceding the date of the commencement resolution.
(2) Within 45 days of its receipt of the terminating association's
estimated exit fee, the Farm Credit Administration shall either confirm
the association's estimation of the exit fee or notify the association
of any required revisions to the computation.
(3) In the event that the Farm Credit Administration requires
adjustments to the estimated exit fee pursuant to paragraph (c)(2) of
this section, the terminating association may request reconsideration of
any revisions. Such request shall be in writing and shall set forth
specific reasons why the revisions should not be made. The Farm Credit
Administration shall reconsider the revisions and shall inform the
terminating association of its determination within 15 days of the
receipt of the reconsideration request.
(d) During the time period after the board of directors' adoption of
the commencement resolution pursuant to paragraph (a) of this section
and prior to the effective date of termination, the following conditions
shall apply to the terminating association's conduct of business:
(1) Each prospective new borrower shall be informed of the effect of
the proposed termination upon the borrower's loan and shall be
specifically informed whether the borrower will continue to have any of
the borrower rights provided under the Act and regulations promulgated
thereunder;
(2) Any common stockholders or participation certificate holders who
seek to have such equity interest retired before termination shall be
informed that the retirement would extinguish the holder's right to an
interest in the successor institution if the termination is completed or
to dissent from the termination and receive an amount equal to the
adjusted book value of the holder's equity in the terminating
association.
(e) Notwithstanding any provisions of Sec. 615.5230(b) to the
contrary, an association may adopt bylaws which provide for the issuance
of a special class of common stock and participation certificates in
connection with loans granted during the time period subsequent to the
adoption of the commencement resolution and prior to the termination.
Such common stock or participation certificates, which shall be issued
in accordance with section 4.3A of the Act, shall have characteristics
identical to shares of the existing classes of common stock or
participation certificates issued as a condition of the extension of a
loan, except for the following:
(1) In the event of termination, the holder shall be entitled to
receive the following:
(i) If the holder is eligible to vote and does not vote against the
termination, an interest in the successor institution in an amount equal
to the adjusted book value or the purchase price of the stock, whichever
is less;
(ii) If the holder is not eligible to vote or is eligible to vote
and votes against the termination, either an interest in the successor
institution as set forth in paragraph (e)(1)(i) of this section, or, if
such holder dissents pursuant to Sec. 611.1260, cash in the amount of
the purchase price or the adjusted book value of the stock or
participation certificate, whichever is less.
[[Page 69]]
(2) In the event that the termination does not occur, the special
classes of stock or participation certificates shall automatically
convert into shares of the otherwise identical classes of stock or
participation certificates issued prior to the adoption of the
commencement resolution.
[56 FR 3407, Jan. 30, 1991; 56 FR 11589, Mar. 19, 1991]
Sec. 611.1211 Filing of termination application.
(a) The board of directors of an association that seeks to terminate
its status shall adopt an appropriate termination resolution approving
an application for such termination, approving an application for a new
charter for the successor institution, and providing for the submission
of such termination proposal to its stockholders for a vote.
(b) An original and three copies of a termination application
consisting of the following materials shall be submitted by the
terminating association to the Farm Credit Administration for review and
preliminary approval:
(1) A certified copy of the termination resolution adopted pursuant
to paragraph (a) of this section;
(2) A copy of the plan of termination as required under
Sec. 611.1230;
(3) An information statement that complies with the requirements of
Sec. 611.1225;
(4) All other information that is to be submitted to the
stockholders and other equity holders in connection with the
contemplated action; and
(5) Any additional information the board of directors wishes to
submit to the Farm Credit Administration in support of the request or
that the Farm Credit Administration requests.
(c) The terminating association shall provide the Farm Credit
Administration with any material revisions to information in the plan of
termination, including updated financial information, that becomes
available during the pendency of the termination application and prior
to termination.
Sec. 611.1212 Filing date of termination application.
(a) Except as provided in paragraph (c) of this section, the
termination application will be given a filing date which shall be the
date on which it is determined to be technically complete. Within 10
business days after the Farm Credit Administration receives the
termination application, the Farm Credit Administration shall determine
that the application is technically complete and give it a filing date,
or return the application to the terminating association if it is
incomplete. If the Farm Credit Administration fails to make a
determination or to return the application before the end of the 10-day
review period, the application shall be deemed to be technically
complete and shall receive a filing date which is the last day of the
10-day review period.
(b) A termination application is considered to be technically
complete when it is determined upon preliminary review to contain
responses to all items required to be submitted to the Farm Credit
Administration under Sec. 611.1211.
(c) In the event the advance notification required in Sec. 611.1210
is not received by the Farm Credit Administration at least 60 days prior
to the filing date which would otherwise be assigned to the termination
application in accordance with paragraph (a) of this section, the filing
date shall be the date that is 60 days following the date on which the
terminating association first informs the Farm Credit Administration of
the association's intention to terminate its Farm Credit status. During
this 60-day period, the Farm Credit Administration shall contact other
associations to determine their willingness to provide service to the
territory of the terminating association or to determine if there are
persons who wish to charter a new association to serve the territory. An
inability of the Farm Credit Administration to arrange for a new service
provider for the territory shall not be grounds for an extension of the
60-day period. However, the Farm Credit Administration may in its sole
discretion reduce the required 60-day period in the event that a new
service provider to serve the territory is determined. This paragraph
shall not apply if the entire chartered territory of the terminating
association is already included in the charter of one or more
associations that are chartered to offer
[[Page 70]]
credit services of the same type as the terminating association.
[56 FR 3407, Jan. 30, 1991; 56 FR 11589, Mar. 19, 1991]
Sec. 611.1215 Farm Credit Administration review and approval.
(a) When the termination application has received a filing date, the
Farm Credit Administration shall review the application and either
disapprove or give its preliminary approval pursuant to section
7.11(a)(2) of the Act.
(b) The Farm Credit Administration Board shall have 30 days from the
filing date, as defined in Sec. 611.1212, to approve or disapprove the
termination application. If the Farm Credit Administration Board does
not act within such 30-day period, the plan of termination may be
submitted to the stockholders pursuant to section 7.11(a)(2) of the Act.
(c) If the application is disapproved, written notice specifying the
reasons for disapproval shall be transmitted to the chief executive
officer of the association, who shall promptly notify the association's
board of directors. If the application is disapproved, it shall not be
submitted to the stockholders for a vote.
(d) Upon stockholder approval of the proposed termination as
provided in Sec. 611.1220, the secretary of the terminating association
shall forward to the Farm Credit Administration a certified record of
the results of the stockholder vote and shall notify its stockholders
and other equity holders of the results of the vote as provided in
Sec. 611.1220(e).
(e) Final approval by the Farm Credit Administration Board pursuant
to section 7.10(a)(2) shall be conditioned upon the following:
(1) A termination vote in favor of termination and, if a
reconsideration vote is held, a reconsideration vote in favor of
termination;
(2) Receipt by the Farm Credit Administration of conformed executed
copies of all contracts and agreements submitted pursuant to
Sec. 611.1230;
(3) Satisfactory evidence of the terminating association's adequate
provision for payment of debts and retirement of equities;
(4) Evidence of the grant of a new charter for the successor
institution by the appropriate Federal or State chartering authority;
(5) Payment of the exit fee by certified check of other means agreed
upon by the Farm Credit Administration and the terminating association;
and
(6) The fulfillment of any other condition of termination imposed by
the Farm Credit Administration Board which is necessary and appropriate
to provide for the equitable treatment of the parties affected by the
termination.
(f) If the Farm Credit Administration grants final approval, the
terminating association's charter shall be revoked, and the termination
shall be effective on the last to occur of--
(1) The proposed termination date of the terminating association;
(2) Ninety (90) days after receipt by the Farm Credit Administration
of the notice required to be submitted pursuant to paragraph (d) of this
section; and
(3) Receipt of final payment of the exit fee.
[56 FR 3407, Jan. 30, 1991; 56 FR 11589, Mar. 19, 1991]
Sec. 611.1220 Voting record date and stockholder approval.
(a) Upon receipt of preliminary approval of the termination
application by the Farm Credit Administration Board, or if the Board
takes no action prior to the end of the 30-day review period, the
association shall call a meeting of its voting stockholders. The
stockholders meeting shall be held within 60 days of the last day of the
30-day review period. All holders of equity in the terminating
association shall be permitted to attend the meeting. The stockholders
eligible to vote shall be the stockholders who are eligible to vote on
the voting record date as determined by the association's bylaws if such
date is not more than 70 days prior to the stockholder vote, or on a
date fixed by the board of directors which shall be not more than 70
days prior to the date of the stockholder vote. The association shall
notify each stockholder that the resolution has been filed and that a
meeting will be held in accordance with the association's bylaws.
[[Page 71]]
(b) The notice of meeting to consider and act upon the board of
directors' resolutions shall be accompanied by an information statement
that complies with the requirements of Sec. 611.1225.
(c)(1) The terminating association shall establish voting security
procedures that comply with the procedures for the election of directors
in Sec. 611.330, as applicable. Specifically, the terminating
association shall ensure that all information regarding how or whether
individual stockholders have voted and all materials such as ballots,
proxy ballots, election records, and other relevant documentation
related to the votes of stockholders is held in strict confidence.
(2) The terminating association may adopt procedures that require
the stockholders to sign or otherwise verify their eligibility to vote
on an envelope which contains a marked ballot in a sealed envelope. The
terminating association may also use signed proxies or eligibility
certificates that will accompany a ballot or instructions on how to vote
the proxy in a separate sealed envelope.
(3) The terminating association shall use a form of identity code on
the ballot enabling it to determine which stockholders are eligible to
exercise dissenters' rights and shall require that the votes be
tabulated by an independent party who is not a stockholder, director, or
officer of the terminating association or the successor institution.
When the terminating association receives notification pursuant to
Sec. 611.1260 that a stockholder intends to exercise dissenters' rights,
the association will verify with the independent party that the
stockholder voted against the termination. The terminating association
shall be informed of the vote of a stockholder only in the event that
stockholder exercises the right to retire stock in the association in
accordance with Sec. 611.1260.
(d) The proposal shall be approved by the stockholders if agreed to
by a majority of the eligible voting stockholders of the association
voting in person or by proxy at the stockholders' meeting.
(e) Upon approval of a proposed termination by the stockholders of
the terminating association, a certified statement showing the results
of the stockholder vote shall be forwarded to the Farm Credit
Administration within 10 days following the stockholders' meeting. The
terminating association shall notify its stockholders and other holders
of equity interests of the results of the vote not later than 30 days
after the final vote. If the stockholder vote is in favor of
termination, stockholders who voted against the termination and other
equity holders shall be informed of their right to dissent as provided
in Sec. 611.1260(f). In addition, the terminating association shall
further notify stockholders of their right to file a petition for
reconsideration in accordance with Sec. 611.1235 and that any petition
for reconsideration must be filed on or before a date certain, which
shall be 35 days after the date the terminating association mails notice
to the stockholders of the results of the stockholder vote.
Sec. 611.1225 Requirements for information statement.
Notice of the meeting to consider and act upon a proposed
termination shall be sent to all stockholders and other holders of
equity interests and shall be accompanied by an information statement
that contains the information and materials set forth in this regulation
as follows:
(a) A statement on either the first page of the material or the
notice of the stockholders' meeting, in capital letters and boldface
type that:
THE FARM CREDIT ADMINISTRATION HAS NEITHER APPROVED NOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION ACCOMPANYING THE NOTICE OF
MEETING OR PRESENTED AT THE MEETING AND NO REPRESENTATION TO THE
CONTRARY SHALL BE MADE OR RELIED UPON.
(b) A statement on the first page of the material entitled
``Executive Summary'' and consisting of a concise description of the
material changes in rights of the borrowers, stockholders, and holders
of other equity interests to occur as a result of the termination,
[[Page 72]]
the effect of such changes, and the potential benefits and disadvantages
to them of the termination.
(c) A description of the plan of termination as required in
Sec. 611.1230.
(d) A statement by the board of directors of the terminating
association enumerating the potential benefits and disadvantages of the
termination together with the basis for the board's recommendation for
termination.
(e) A list of the initial board of directors and senior officers of
the successor institution, together with a brief description of the
business experience of each such person, including principal occupation
and employment, during the past 5 years.
(f) A summary of the provisions of the organizational documents of
the successor institution, including the articles of incorporation and
bylaws, that differ materially from the charter and bylaws of the
terminating association. The summary shall indicate both whether the
maintenance of a borrowing relationship with the successor institution
will be required as a condition for maintaining a stockholder's
interest, and whether the maintenance of a stockholder's interest will
be required as a condition for maintaining a borrowing relationship.
(g) An explanation of any changes in the nature of the stockholders'
and other equity holders' investment in the association, including but
not limited to any changes in dividends, patronage refunds, voting
rights, preferences, retirement of equities, and priority upon
liquidation. If any eligible borrower stock is outstanding, such
explanation shall include a statement that the guaranty afforded to
eligible borrower stock by section 4.9A of the Act shall be extinguished
at termination and that any stock of the successor institution received
in exchange for eligible borrower stock shall not be protected under
section 4.9A of the Act.
(h) An explanation of the effect of termination on the rights that
borrowers are afforded under the Act; the expiration date of those
rights, if applicable, under the provisions of the plan of termination;
a statement that borrowers may seek to have their loans sold to or
refinanced with another lending institution, including the
association(s) that will be chartered to serve the terminating
association's territory or any other associations that already serve the
territory, provided that any such Farm Credit institution is authorized
to make such a loan in accordance with part 614 of this chapter; and an
explanation of the procedure for a borrower to apply for the sale or
refinancing of his loan to the association(s) that will be chartered to
serve the terminating association's territory, if such designations have
been made. The disclosure shall include the name, address and telephone
number of such association(s), together with a statement that any such
association is not obligated to accept any loans of the terminating
association.
(i) An explanation of the formula and process by which equity of the
terminating association will be exchanged for equity in the successor
institution or other consideration.
(j) A description of any agreement or arrangement with any person,
including any officers or directors of the terminating association,
relating to employment or termination of employment with the terminating
association or employment with the successor institution.
(k) An explanation of the computation of the exit fee and the
estimated amount of the exit fee.
(l) A statement detailing the nature and type of financial
institution that the successor institution will become after termination
and the conditions of approval, if any, placed on the successor
institution by the State or Federal financial regulator that will
charter the successor institution.
(m) A summary of the differences, if any, between the terminating
association and the successor institution with respect to interest
rates, interest rate policies, collection policies, services provided,
service fees, and any other item of interest that would affect a
borrower's lending relationship with the successor institution including
whether stockholders will be restricted in any way in their ability to
borrow from the successor institution.
(n) A discussion of the expected capital requirements of the
successor institution, and the amount and method
[[Page 73]]
of capitalization for the successor institution.
(o) An explanation of the sources and manner of funding the
operations of the successor institution.
(p) An explanation of the existence of any continuing contingent
liability that will not be paid immediately upon termination and the
manner in which this liability will be addressed by the successor
institution.
(q) A summary of the differences in tax status of the terminating
association and the successor institution, and an explanation of the
effect of such changes on both the successor institution and the
stockholders.
(r) A brief description of the regulatory environment for the
successor institution and a summary of the differences from the current
regulatory environment that affect the cost of doing business of the
value of equity and that are not addressed elsewhere in the information
statement.
(s) A statement describing those stockholders and other holders of
equity that are entitled to dissenters' rights and an explanation of
those rights as set forth in Sec. 611.1260, including the estimated
value of the stock upon distribution, procedures for the exercise of
dissenters' rights, and the time period during which such rights may be
exercised, and a statement that eligible voting stockholders who do not
vote against the termination will not receive dissenters' rights.
(t)(1) A presentation of the following financial data:
(i) A balance sheet and income statement for the terminating
institution for each of the 2 preceding fiscal years;
(ii) A balance sheet for the terminating institution as of a date
within 90 days of the date the termination application is forwarded to
the Farm Credit Administration, presented on a comparative basis with
the corresponding period of the prior fiscal year;
(iii) An income statement for the interim period between the end of
the last fiscal year and the date of the required balance sheet
presented on a comparative basis with the corresponding period of the
prior fiscal year;
(iv) A pro forma balance sheet of the successor institution
presented as if termination had occurred as of the date of the most
current balance sheet presented in the statement; and
(v) A pro forma summary of earnings for the successor institution
presented as if the termination has been effective at the beginning of
the interim period between the end of the last fiscal year and the date
of the balance sheet presented pursuant to paragraph (t)(1)(iv) of this
section.
(2) The format for the balance sheet and income statement shall be
the same as is contained in the institution's annual report to
stockholders and shall contain appropriate footnote disclosures,
including data relating to high-risk assets and other property owned,
and allowance for losses.
(3) The financial statements shall include either of the following:
(i) A statement signed by the chief executive officer and each
member of the board of directors of the terminating association that the
various financial statements are unaudited, but have been prepared in
all material respects in accordance with GAAP (except as otherwise
disclosed therein) and are, to the best of each signer's knowledge, a
fair and accurate presentation of the financial condition of the
association; or
(ii) A signed opinion by an independent certified public accountant
that the various financial statements have been examined in accordance
with generally accepted auditing standards and, accordingly, included
such tests of the accounting records and other such auditing procedures
as were considered necessary in the circumstances, and, as of the date
of the statements, present fairly the financial position of the
terminating association in accordance with GAAP applied on a consistent
basis, except as otherwise disclosed therein.
(u) A description of any event subsequent to the date of the
financial statements, but prior to the date upon which the termination
application is submitted to the Farm Credit Administration, that would
have a material impact on the financial condition of the terminating
association or the successor institution.
[[Page 74]]
(v) A description of any event subsequent to the submission of the
termination application to the Farm Credit Administration that would
have a material impact on any information in the termination
application.
(w) A statement of any other material fact or circumstance that a
stockholder would need to know in order to make an informed decision on
the proposed plan of termination, or that is necessary to make the
required disclosures not misleading.
(x) A proxy, together with instructions on the purpose and authority
for its use, and the proper method for signature by the stockholder.
(y) A certification signed by the entire board of directors of the
terminating association as to the truth, accuracy, and completeness of
the information contained in the information statement. If any director
refuses to sign the certification, the director shall inform the Farm
Credit Administration of the reasons for such refusal.
[56 FR 3407, Jan. 30, 1991; 56 FR 11589, Mar. 19, 1991; 58 FR 48790,
Sept. 20, 1993]
Sec. 611.1226 Prohibited acts.
(a) No terminating association or director, officer, employee or
agent thereof, shall make any untrue or misleading statement of a
material fact, or fail to disclose any material fact concerning the
proposed plan of termination to a stockholder of the association.
(b) No director, officer, employee, or agent of a terminating
association shall make an oral or written representation to any person
that a preliminary or final approval by the Farm Credit Administration
of an association's plan of termination constitutes, directly or
indirectly, either a recommendation on the merits of the proposal or an
assurance concerning the adequacy or accuracy of any information
provided to the association's stockholders and other equity holders in
connection therewith.
Sec. 611.1230 Plan of termination.
The plan of termination shall include the following information:
(a) Copies of all contracts, agreements and other documents
pertaining to the proposed termination and organization of the successor
institution.
(b) A statement of the means by which the assets of the terminating
association will be transferred to, and its liabilities assumed by, the
successor institution.
(c) The terminating association's plan to retire, and the successor
institution's plan to issue, equities held by holders of stock,
participation certificates, and allocated equities, if any.
(d) A copy of the charter application filed with the appropriate
Federal or State chartering authority, together with any exhibits or
other supporting information that is submitted to such authority.
(e) A statement whether the successor institution will continue to
have a credit relationship with the Farm Credit bank and the effect such
status will have on the provision for payment of the terminating
association's debts. The plan of termination shall include evidence of
the agreement and plan for satisfaction of outstanding debts, whether
contained in a general financing agreement or otherwise.
(f) The proposed effective date of the termination.
Sec. 611.1235 Stockholder reconsideration.
(a) Eligible voting stockholders have the right to reconsider the
approval of the termination provided that--
(1) A petition signed by 15 percent of the eligible voting
stockholders of the association is filed with the association, and a
copy of such petition is filed with the Farm Credit Administration,
within 35 days after the date of mailing of the notification to
stockholders of the final results of the stockholder vote required under
Sec. 611.1215; and
(2) Such petition is certified by the terminating association as
provided in paragraph (b) of this section.
(b) Each petition shall include the signature, printed name and full
address of each voting stockholer signing the petition. Within 5 days of
its receipt of a timely filed stockholder petition, the association
shall certify whether the signatures on the petition are the signatures
of persons who were
[[Page 75]]
eligible voting stockholders of the terminating association on the
voting record date, and the association shall notify the Farm Credit
Administration of such certification.
(c) The petition shall include the name and address of a person who
shall serve as petitioners' representative and who shall represent the
interests of the petitioners in the reconsideration vote process.
(d) If the terminating association certifies that at least 15
percent of eligible voting stockholders have signed the petition, a
special stockholders' meeting shall be called by the association to vote
on the reconsideration. Such meeting shall be held within 60 days after
the date on which the stockholders were notified of the final result of
the termination vote. If a majority of stockholders of the association
voting in person or by written proxy vote against the termination, the
termination is not approved. If a majority of stockholders of the
association voting in person or by written proxy do not vote against the
termination, the termination shall be effective pursuant to the
provisions of Sec. 611.1215(f), but not less than 15 days after the
reconsideration vote.
(e) The petitioners, through the petitioners' representative, and
board of directors of the terminating association shall each have the
opportunity to present to the stockholders and other equity holders a
written statement of their views regarding the reasons for calling a
reconsideration vote. Such statements shall be reasonable in length and
shall be mailed to stockholders and other equity holders along with the
notice of stockholders' meeting for the reconsideration vote.
(f) The terminating association shall, at its expense, immediately
provide the stockholders initiating the petition with a list of the
names and addresses of all of the eligible voting stockholders of the
association. All other expenses for the petition shall be borne by the
petitioners. Reasonable expenses for the reconsideration vote shall be
borne by the terminating association.
Sec. 611.1240 Exit fee.
(a) For the purposes of this section, the following definitions
apply:
(1) Assets means all assets less appropriate valuation reserves as
determined in accordance with GAAP except where otherwise noted in this
section.
(2) Contingent liabilities means those liabilities that, in
accordance with GAAP, will materialize if certain events occur.
(3) Total capital means all capital stock, surplus and undivided
profits accounts as determined in accordance with GAAP, except where
otherwise noted in this section, and as adjusted pursuant to the
requirements of Sec. 611.1240.
(b) A terminating association shall pay an exit fee equal to the
amount by which the total capital of the association exceeds 6 percent
of its assets. The exit fee shall be paid to the Farm Credit Assistance
Fund if the effective date of termination is prior to January 1, 1992 or
to the Farm Credit Insurance Fund if the effective date is after that
date.
(c) The computation date for the exit fee shall be the quarter end
preceding the filing date. A certified audit of the terminating
association shall be performed by a qualified public accountant, as
defined in Sec. 621.2(i), as of the computation date. The Farm Credit
Administration may, in its complete discretion, waive this requirement
if such an audit was performed as of a date within the 6 months
preceding the computation date.
(d) The method of computation shall be as follows:
(1) The average daily balance of assets and total capital for the
past 12 months preceding the computation date will be computed as a
basis for determining the exit fee; and
(2) Account balances shall be computed in accordance with GAAP and
adjusted in accordance with paragraphs (e), (f), (g), and (h) of this
section.
(e) For purposes of determining the amount of the exit fee, the Farm
Credit Administration will review the terminating association's
transactions over a 3-year period prior to the date of the adoption of
the termination resolution.
[[Page 76]]
If this review determines that the terminating association's account
balances do not accurately reflect the value of its assets and
liabilities, or that the association has retired capital outside the
ordinary course of business, or that the association has taken any other
actions unrelated to its core business that have the effect of
increasing or decreasing the amount of the exit fee, the Farm Credit
Administration may make adjustments to the association's assets,
liabilities, or capital and recompute the exit fee based on these
adjustments. The review by the Farm Credit Administration shall include,
but not be limited to:
(1) Additions to or subtractions from the allowance for loan losses;
(2) Additions to assets from transactions that are outside the
terminating association's ordinary course of business;
(3) Dividends or patronage refunds exceeding the terminating
association's usual practices;
(4) Changes in the terminating association's capitalization plan or
implementation of that plan that increased or decreased the level of
borrower investment;
(5) Contingent liabilities, such as loss-sharing obligations, that
can be reasonably quantified; and
(6) Assets that may be overvalued, undervalued or not recorded on
the books of the association.
(f) Capital of the terminating association owned by another Farm
Credit institution or by the Financial Assistance Corporation shall not
be included in capital for the purpose of determining the exit fee.
(g) In the event that GAAP requires that a liability be recorded on
the balance sheet that will be offset by an unrecorded asset, the
transaction recording the liability shall be reversed.
(h) In the event the terminating association has recorded expenses
that would not have been recorded but for the termination, such
transactions shall be reversed.
(i) The exit fee shall be paid by certified check, or other means
agreed upon by the Farm Credit Administration and the terminating
association.
[56 FR 3407, Jan. 30, 1991, as amended at 58 FR 48790, Sept. 20, 1993]
Sec. 611.1250 Repayment of debts.
(a) The terminating association shall provide for the payment or
assumption by the successor institution of all outstanding debt
obligations.
(b) The terminating association may establish and maintain an OFI
relationship with the Farm Credit Bank or agricultural credit bank,
subject to all applicable requirements of part 614, subpart P, of this
chapter. The general financing agreement establishing the OFI
relationship shall provide for the assumption by the successor
institution of any direct loan or other obligation that a production
credit association is authorized to incur and that is not repaid at the
time of termination. Any part of the direct loan or other obligation
that is not linked to a loan covered by the general financing agreement
shall be repaid as provided in paragraph (c) of this section.
(c) A terminating association that will not become an OFI shall
either repay its direct loan and any other obligations to the Farm
Credit Bank or agricultural credit bank upon termination or shall
arrange with the appropriate bank to repay the loan or obligation. The
terminating association may, with the concurrence of the Farm Credit
Bank or agricultural credit bank, repay the loan or obligation over a
period that shall not exceed 3 years following termination.
(d) The terminating association shall pay or make provision for
payment of obligations to any other Farm Credit institutions under any
loss-sharing agreement or other agreement.
[56 FR 3407, Jan. 30, 1991, as amended at 61 FR 67186, Dec. 20, 1996]
Sec. 611.1255 Retirement of equities owned.
(a) The Farm Credit Bank or agricultural credit bank may retire all
equities of the bank that are owned by the terminating association on
the termination date or may enter into an agreement with the terminating
association that would provide for a phased retirement of the equities.
Any such plan for phased retirement shall provide for such retirement to
be completed by the earlier to occur of the date on which the
terminating association repays all
[[Page 77]]
indebtedness to the bank or the date that is 3 years from the
termination date, provided that no retirement shall occur during that
period if any such retirement would result in the Bank's failure to meet
minimum capital requirements.
(b) If the Farm Credit Bank or agricultural credit bank, and the
terminating association are unable to reach agreement regarding the
retirement of the bank's equities, either institution may send the most
recent proposals to the Farm Credit Administration along with an
explanation of the points of disagreement. The Farm Credit
Administration may require the bank to retire terminating association
equities under such conditions as the Farm Credit Administration may
require.
(c) No retirement shall occur if the Farm Credit Administration
determines that the retirement of equities of the Farm Credit Bank or
the agricultural credit bank would threaten the viability of the bank.
(d) The amount to be paid to a terminating association in the
retirement of equities owned in the Farm Credit Bank or the agricultural
credit bank shall be equal to the amount of the allocated equities owned
by the terminating association in the bank, less any impairment, at the
date the request for retirement is made by the terminating association.
(e) If the terminating association has outstanding stock issued to
another Farm Credit institution, the association shall retire all such
investment prior to termination.
(f) A Farm Credit Bank's or agricultural credit bank's equities
obligated to be retired under any agreement between the terminating
association and the bank shall not be considered as part of the
permanent capital of the Farm Credit Bank or agricultural credit bank
for purposes of Sec. 615.5240.
[61 FR 67186, Dec. 20, 1996]
Sec. 611.1260 Dissenters' rights.
(a) Dissenting stockholders, at their discretion, may, but are not
required to, have their stock or participation certificates in the
terminating association retired as provided in paragraph (b) of this
section. To be eligible to be a dissenting stockholder a person must be
the owner, other than a Farm Credit institution, of voting or non-voting
stock or other equities of the terminating association who was either-
(1) Not eligible to vote on the termination resolution; or
(2) Eligible to vote on the termination resolution and voted, in
person or by proxy, against such resolution.
(b) The terminating association shall pay dissenting stockholders in
accordance with the priorities in liquidation set forth in the bylaws of
the terminating association. Notwithstanding any provision of paragraph
(c) to the contrary, dissenting stockholders who hold eligible borrower
stock shall receive not less than par value for their stock.
(c)(1) Except as provided in paragraph (d) of this section, the
price paid to dissenting stockholders who own common stock or
participation certificates shall be the adjusted book value, which is
the book value on the computation date adjusted to reflect--
(i) Any increase or decrease in asset value resulting from the
appraisals required in Sec. 611.1240; and
(ii) Deduction of the amount of the exit fee.
(2) Payments made to dissenting stockholders who own common stock or
participation certificates referred to in paragraph (c)(1) of this
section shall be made on the following basis. If the adjusted book value
of the common stock is less than or equal to the par or stated value of
the stock, the full amount of the payment shall be in cash. If the
adjusted book value of the common stock is greater than its par or
stated value, the association:
(i) Shall pay in cash an amount equal to the par or stated value of
the stock or participation certificate; and
(ii) Shall cause or otherwise provide for the successor institution
to issue on the date of termination subordinated debt to the stockholder
in an amount equal to the amount by which the book value exceeds the par
or stated value of the stock or participation certificate. Such
subordinated notes shall have a maturity date not in excess of 7 years
after the date of issuance, shall have a priority on liquidation ahead
of all equity shares but shall be subordinated to the claims of
[[Page 78]]
all other creditors, and shall carry a rate of interest that shall be
not less than the rate for debt of comparable maturity issued by the
Treasury of the United States plus 1 percent.
(d) If the association has adopted bylaws in accordance with
Sec. 611.1210(e), dissenting stockholders who own common stock or
participation certificates issued in accordance with such bylaws shall
be paid in cash an amount equal to the lesser of the par or adjusted
book value of such stock or certificates.
(e) For the purposes of this section, common stock consists of
voting stock, non-voting stock that was formerly voting stock, and stock
that has no priority of payment over any other class upon liquidation.
(f) The notice to stockholders and other holders of equity interests
required in Sec. 611.1220(e) shall include the following information:
(1) A statement of the rights of dissenting stockholders as
specified in paragraph (a) of this section;
(2) The current book and par value per share, and the expected book
and market value of the stockholder's pro rata interest in the successor
institution; and
(3) An explanation of the procedure by which stockholders may
exercise dissenters' rights and the form they shall return to the
terminating association informing it of their intent to exercise such
rights. The notification form by which stockholders may exercise
dissenters' rights shall include the date by which the form must be
returned to the terminating association, as specified in paragraph (b)
of this section, and a place for stockholders to mark or indicate that
they intend to exercise dissenters' rights. The notification form shall
be a convenient method for the stockholders to notify the association
and may consist of, but is not limited to, a postcard or pre- printed
return envelope.
(g) An explanation that dissenting stockholders shall have until 30
days following notification of their dissenters' rights to request
retirement of their stock or participation certificates. The
stockholders' election to retire stock shall be rescinded in a petition
for reconsideration is successful.
(h) An explanation that maintenance of a borrowing relationship with
the successor institution shall not be required as a condition for
owning stock in the successor institution, unless otherwise directed by
the bylaws of the successor institution.
[56 FR 3407, Jan. 30, 1991; 56 FR 11589, Mar. 19, 1991]
Sec. 611.1266 Loan refinancing by borrowers.
(a) All loans and loan assets of the terminating association shall
become assets of the successor institution unless they have been sold by
the terminating association to another lending institution or refinanced
by the borrower.
(b) If an association has been designated to serve the territory of
the terminating association prior to the mailing of the information
statement, or if an association that offers credit services of the same
type as the terminating association is already chartered to serve the
territory, such association shall be identified in the information
statement. In addition, such association shall provide the terminating
association with the following information:
(1) The name and address of the association office that the borrower
may contact;
(2) An explanation of the procedures to apply for financing with the
association and the procedures by which the loan may be transferred to
the association;
(3) An explanation of the stock purchase requirements of the new
association; and
(4) Any other information the association wishes to include or
routinely provides to new borrowers.
(c) If the terminating association receives the information required
in paragraph (b) of this section prior to the mailing of the information
statement to borrowers, the terminating association shall include such
information in the information statement. If an association has not been
designated to serve the territory or if the terminating association does
not receive the information required in paragraph (b) of this section
prior to the mailing of
[[Page 79]]
the information statement, the terminating association shall furnish
each borrower with the address and telephone number of the funding bank
with instructions that the bank may be contacted in the future to
determine the name and address of the association(s) that will serve the
territory in the future.
(d) The terminating association shall provide credit and loan
information to the association designated to serve the territory upon
the borrower's request, in accordance with Secs. 618.8300 through
618.8325, and take such other steps as are necessary to facilitate the
transfer of the loan to the association.
[56 FR 3407, Jan. 30, 1991, as amended at 61 FR 67186, Dec. 20, 1996]
Sec. 611.1270 Continuation of borrower rights.
Terminating associations which maintain an OFI relationship with the
Farm Credit bank shall comply with borrower rights provisions contained
in part 614, subparts K, L, M and N of this chapter. The terminating
association may not require a waiver of applicable borrower rights
provisions as a condition of ownership interest in and continued
financing by the successor institution.
[56 FR 3407, Jan. 30, 1991; 56 FR 11589, Mar. 19, 1991]
PART 612--STANDARDS OF CONDUCT--Table of Contents
Sec.
612.2130 Definitions.
612.2135 Director and employee responsibilities and conduct--generally.
612.2140 Directors--prohibited conduct.
612.2145 Director reporting.
612.2150 Employees--prohibited conduct.
612.2155 Employee reporting.
612.2157 Joint employees.
612.2160 Institution responsibilities.
612.2165 Policies and procedures.
612.2170 Standards of Conduct Official.
612.2260 Standards of conduct for agents.
612.2270 Purchase of System obligations.
Authority: Secs. 5.9, 5.17, 5.19 of the Farm Credit Act (12 U.S.C.
2243, 2252, 2254).
Source: 59 FR 24894, May 13, 1994, unless otherwise noted.
Sec. 612.2130 Definitions.
For purposes of this part, the following terms are defined:
(a) Agent means any person, other than a director or employee, who
represents a System institution in contacts with third parties or who
provides professional services to a System institution, such as legal,
accounting, appraisal, and other similar services.
(b) A conflict of interest or the appearance thereof exists when a
person has a financial interest in a transaction, relationship, or
activity that actually affects or has the appearance of affecting the
person's ability to perform official duties and responsibilities in a
totally impartial manner and in the best interest of the employing
institution when viewed from the perspective of a reasonable person with
knowledge of the relevant facts.
(c) Controlled entity and entity controlled by mean an entity in
which the individual, directly or indirectly, or acting through or in
concert with one or more persons:
(1) Owns 5 percent or more of the equity;
(2) Owns, controls, or has the power to vote 5 percent or more of
any class of voting securities; or
(3) Has the power to exercise a controlling influence over the
management of policies of such entity.
(d) Director means a member of a board of directors.
(e) Employee means any salaried officer or part-time, full-time, or
temporary salaried employee.
(f) Entity means a corporation, company, association, firm, joint
venture, partnership (general or limited), society, joint stock company,
trust (business or otherwise), fund, or other organization or
institution, except System institutions.
(g) Family means an individual and spouse and anyone having the
following relationship to either: parents, spouse, son, daughter,
sibling, stepparent, stepson, stepdaughter, stepbrother, stepsister,
half brother, half sister, uncle, aunt, nephew, niece, grandparent,
grandson, granddaughter, and the spouses of the foregoing.
(h) Financial interest means an interest in an activity,
transaction, property, or relationship with a person or
[[Page 80]]
an entity that involves receiving or providing something of monetary
value or other present or deferred compensation.
(i) Financially obligated with means having a joint legally
enforceable obligation with, being financially obligated on behalf of
(contingently or otherwise), having an enforceable legal obligation
secured by property owned by another, or owning property that secures an
enforceable legal obligation of another.
(j) Material, when applied to a financial interest or transaction or
series of transactions, means that the interest or transaction or series
of transactions is of such magnitude that a reasonable person with
knowledge of the relevant facts would question the ability of the person
who has the interest or is party to such transaction(s) to perform his
or her official duties objectively and impartially and in the best
interest of the institution and its statutory purpose.
(k) Mineral interest means any interest in minerals, oil, or gas,
including, but not limited to, any right derived directly or indirectly
from a mineral, oil, or gas lease, deed, or royalty conveyance.
(l) OFI means other financing institutions that have established an
access relationship with a Farm Credit Bank or an agricultural credit
bank under section 1.7(b)(1)(B) of the Act.
(m) Officer means the chief executive officer, president, chief
operating officer, vice president, secretary, treasurer, general
counsel, chief financial officer, and chief credit officer of each
System institution, and any person not so designated who holds a similar
position of authority.
(n) Ordinary course of business, when applied to a transaction,
means: (1) A transaction that is usual and customary between two persons
who are in business together; or
(2) A transaction with a person who is in the business of offering
the goods or services that are the subject of the transaction on terms
that are not preferential. Preferential means that the transaction is
not on the same terms as those prevailing at the same time for
comparable transactions for other persons who are not directors or
employees of a System institution.
(o) Person means individual or entity.
(p) Relative means any member of the family as defined in paragraph
(g) of this section.
(q) Service organization means each service organization authorized
by section 4.25 of the Act, and each unincorporated service organization
formed by one or more System institutions.
(r) Standards of Conduct Official means the official designated
under Sec. 612.2170 of these regulations.
(s) Supervised institution is a term which only applies within the
context of a System bank or an employee of a System bank and refers to
each association supervised by that bank.
(t) Supervising institution is a term that only applies within the
context of an association or an employee of an association and refers to
the bank that supervises that association.
(u) System institution and institution mean any bank, association,
or service organization in the Farm Credit System, including the Farm
Credit Banks, banks for cooperatives, agricultural credit banks, Federal
land bank associations, agricultural credit associations, Federal land
credit associations, production credit associations, the Federal Farm
Credit Banks Funding Corporation, and service organizations.
Sec. 612.2135 Director and employee responsibilities and conduct--generally.
(a) Directors and employees of all System institutions shall
maintain high standards of industry, honesty, integrity, impartiality,
and conduct in order to ensure the proper performance of System business
and continued public confidence in the System and each of its
institutions. The avoidance of misconduct and conflicts of interest is
indispensable to the maintenance of these standards.
(b) To achieve these high standards of conduct, directors and
employees shall observe, to the best of their abilities, the letter and
intent of all applicable local, state, and Federal laws and regulations
and policy statements, instructions, and procedures of the Farm Credit
Administration and System institutions and shall exercise diligence and
good judgment in carrying out
[[Page 81]]
their duties, obligations, and responsibilities.
Sec. 612.2140 Directors--prohibited conduct.
A director of a System institution shall not:
(a) Participate, directly or indirectly, in deliberations on, or the
determination of, any matter affecting, directly or indirectly, the
financial interest of the director, any relative of the director, any
person residing in the director's household, any business partner of the
director, or any entity controlled by the director or such persons
(alone or in concert), except those matters of general applicability
that affect all shareholders/borrowers in a nondiscriminatory way, e.g.,
a determination of interest rates.
(b) Divulge or make use of, except in the performance of official
duties, any fact, information, or document not generally available to
the public that is acquired by virtue of serving on the board of a
System institution.
(c) Use the director's position to obtain or attempt to obtain
special advantage or favoritism for the director, any relative of the
director, any person residing in the director's household, any business
partner of the director, any entity controlled by the director or such
persons (alone or in concert), any other System institution, or any
person transacting business with the institution, including borrowers
and loan applicants.
(d) Use the director's position or information acquired in
connection with the director's position to solicit or obtain, directly
or indirectly, any gift, fee, or other present or deferred compensation
or for any other personal benefit on behalf of the director, any
relative of the director, any person residing in the director's
household, any business partner of the director, any entity controlled
by the director or such persons (alone or in concert), any other System
institution, or any person transacting business with the institution,
including borrowers and loan applicants.
(e) Accept, directly or indirectly, any gift, fee, or other present
or deferred compensation that is offered or could reasonably be viewed
as being offered to influence official action or to obtain information
that the director has access to by reason of serving on the board of a
System institution.
(f) Knowingly acquire, directly or indirectly, except by inheritance
or through public auction or open competitive bidding available to the
general public, any interest in any real or personal property, including
mineral interests, that was owned by the employing, supervising, or any
supervised institution within the preceding 12 months and that had been
acquired by any such institution as a result of foreclosure or similar
action; provided, however, a director shall not acquire any such
interest in real or personal property if he or she participated in the
deliberations or decision to foreclose or to dispose of the property or
in establishing the terms of the sale.
(g) Directly or indirectly borrow from, lend to, or become
financially obligated with or on behalf of a director, employee, or
agent of the employing, supervising, or a supervised institution or a
borrower or loan applicant of the employing institution, unless:
(1) The transaction is with a relative or any person residing in the
director's household;
(2) The transaction is undertaken in an official capacity in
connection with the institution's discounting, lending, or participation
relationships with OFIs and other lenders; or
(3) The Standards of Conduct Official determines, pursuant to
policies and procedures adopted by the board, that the potential for
conflict is insignificant because the transaction is in the ordinary
course of business or is not material in amount and the director does
not participate in the determination of any matter affecting the
financial interests of the other party to the transaction except those
matters affecting all shareholders/borrowers in a nondiscriminatory way.
(h) Violate an institution's policies and procedures governing
standards of conduct.
Sec. 612.2145 Director reporting.
(a) Annually, as of the institution's fiscal year end, and at such
other times as may be required to comply with
[[Page 82]]
paragraph (c) of this section, each director shall file a written and
signed statement with the Standards of Conduct Official that fully
discloses:
(1) The names of any immediate family members as defined in
Sec. 620.1(e) of this chapter, or affiliated organizations, as defined
in Sec. 620.1(a) of this chapter, who had transactions with the
institution at any time during the year;
(2) Any matter required to be disclosed by Sec. 620.5(k) of this
chapter; and
(3) Any additional information the institution may require to make
the disclosures required by part 620 of this chapter.
(b) Each director shall, at such intervals as the institution's
board shall determine is necessary to effectively enforce this
regulation and the institution's standards-of-conduct policy adopted
pursuant to Sec. 612.2165, file a written and signed statement with the
Standards of Conduct Official that contains those disclosures required
by the regulations and such policy. At a minimum, these requirements
shall include:
(1) The name of any relative or any person residing in the
director's household, business partner, or any entity controlled by the
director or such persons (alone or in concert) if the director knows or
has reason to know that such individual or entity transacts business
with the institution or any institution supervised by the director's
institution; and
(2) The name and the nature of the business of any entity in which
the director has a material financial interest or on whose board the
director sits if the director knows or has reason to know that such
entity transacts business with:
(i) The director's institution or any institution supervised by the
director's institution; or
(ii) A borrower of the director's institution or any institution
supervised by the director's institution.
(c) Any director who becomes or plans to become involved in any
relationship, transaction, or activity that is required to be reported
under this section or could constitute a conflict of interest shall
promptly report such involvement in writing to the Standards of Conduct
Official for a determination of whether the relationship, transaction,
or activity is, in fact, a conflict of interest.
(d) Unless a disclosure as a director candidate under part 620 of
this chapter has been made within the preceding 180 days, a newly
elected or appointed director shall report matters required to be
reported in paragraphs (a), (b), and (c) of this section to the
Standards of Conduct Official within 30 days after the election or
appointment and thereafter shall comply with the requirements of this
section.
Sec. 612.2150 Employees--prohibited conduct.
An employee of a System institution shall not:
(a) Participate, directly or indirectly, in deliberations on, or the
determination of, any matter affecting, directly or indirectly, the
financial interest of the employee, any relative of the employee, any
person residing in the employee's household, any business partner of the
employee, or any entity controlled by the employee or such persons
(alone or in concert), except those matters of general applicability
that affect all shareholders/borrowers in a nondiscriminating way, e.g.
a determination of interest rates.
(b) Divulge or make use of, except in the performance of official
duties, any fact, information, or document not generally available to
the public that is acquired by virtue of employment with a System
institution.
(c) Use the employee's position to obtain or attempt to obtain
special advantage or favoritism for the employee, any relative of the
employee, any person residing in the employee's household, any business
partner of the employee, any entity controlled by the employee or such
persons (alone or in concert), any other System institution, or any
person transacting business with the institution, including borrowers
and loan applicants.
(d) Serve as an officer or director of an entity that transacts
business with a System institution in the district or of any commercial
bank, savings and loan, or other non-System financial institution,
except employee credit
[[Page 83]]
unions. For the purposes of this paragraph, ``transacts business'' does
not include loans by a System institution to a family-owned entity,
service on the board of directors of the Federal Agricultural Mortgage
Corporation, or transactions with nonprofit entities or entities in
which the System institution has an ownership interest. With the prior
approval of the board of the employing institution, an employee of a
Farm Credit Bank or association may serve as a director of a cooperative
that borrows from a bank for cooperatives. Prior to approving an
employee request, the board shall determine whether the employee's
proposed service as a director is likely to cause the employee to
violate any regulations in this part or the institution's policies,
e.g., the requirements relating to devotion of time to official duties.
(e) Use the employee's position or information acquired in
connection with the employee's position to solicit or obtain any gift,
fee, or other present or deferred compensation or for any other personal
benefit for the employee, any relative of the employee, any person
residing in the employee's household, any business partner of the
employee, any entity controlled by the employee or such persons (alone
or in concert), any other System institution, or any person transacting
business with the institution, including borrowers and loan applicants.
(f) Accept, directly or indirectly, any gift, fee, or other present
or deferred compensation that is offered or could reasonably be viewed
as being offered to influence official action or to obtain information
the employee has access to by reason of employment with a System
institution.
(g) Knowingly acquire, directly or indirectly, except by
inheritance, any interest in any real or personal property, including
mineral interests, that was owned by the employing, supervising, or any
supervised institution within the preceding 12 months and that had been
acquired by any such institution as a result of foreclosure or similar
action.
(h) Directly or indirectly borrow from, lend to, or become
financially obligated with or on behalf of a director, employee, or
agent of the employing, supervising, or a supervised institution or a
borrower or loan applicant of the employing institution, unless:
(1) The transaction is with a relative or any person residing in the
employee's household;
(2) The transaction is undertaken in an official capacity in
connection with the institution's discounting, lending, or participation
relationships with OFIs and other lenders; or
(3) The Standards of Conduct Official determines, pursuant to
policies and procedures adopted by the board, that the potential for
conflict is insignificant because the transaction is in the ordinary
course of business or is not material in amount and the employee does
not participate in the determination of any matter affecting the
financial interests of the other party to the transaction except those
matters affecting all shareholders/borrowers in a nondiscriminatory way.
(i) Violate an institution's policies and procedures governing
standards of conduct.
(j) Act as a real estate agent or broker; provided that this
paragraph shall not apply to transactions involving the purchase or sale
of real estate intended for the use of the employee, a member of the
employee's family, or a person residing in the employee's household.
(k) Act as an agent or broker in connection with the sale and
placement of insurance; provided that this paragraph shall not apply to
the sale or placement of insurance authorized by section 4.29 of the
Act.
Sec. 612.2155 Employee reporting.
(a) Annually, as of the institution's fiscal yearend, and at such
other times as may be required to comply with paragraph (c) of this
section, each senior officer, as defined in Sec. 620.1(o) of this
chapter, shall file a written and signed statement with the Standards of
Conduct Official that fully discloses:
(1) The names of any immediate family members, as defined in
Sec. 620.1(e) of this chapter, or affiliated organizations, as defined
in Sec. 620.1(a) of this chapter, who had transactions with the
institution at any time during the year;
[[Page 84]]
(2) Any matter required to be disclosed by Sec. 620.5(k) of this
chapter; and
(3) Any additional information the institution may require to make
the disclosures required by part 620 of this chapter.
(b) Each employee shall, at such intervals as the Board shall
determine necessary to effectively enforce this regulation and the
institution's standards-of-conduct policy adopted pursuant to
Sec. 612.2165, file a written and signed statement with the Standards of
Conduct Official that contains those disclosures required by the
regulation and such policy. At a minimum, these requirements shall
include:
(1) The name of any relative or any person residing in the
employee's household, any business partner, or any entity controlled by
the employee or such persons (alone or in concert) if the employee knows
or has reason to know that such individual or entity transacts business
with the employing institution or any institution supervised by the
employing institution; and
(2) The name and the nature of the business of any entity in which
the employee has a material financial interest or on whose board the
employee sits if the employee knows or has reason to know that such
entity transacts business with:
(i) The employing institution or any institution supervised by the
employing institution; or
(ii) A borrower of the employing institution or any institution
supervised by the employing institution.
(c) Any employee who becomes or plans to become involved in any
relationship, transaction, or activity that is required to be reported
under this section or could constitute a conflict of interest shall
promptly report such involvement in writing to the Standards of Conduct
Official for a determination of whether the relationship, transaction,
or activity is, in fact, a conflict of interest.
(d) A newly hired employee shall report matters required to be
reported in paragraphs (a), (b), and (c) of this section to the
Standards of Conduct Official within 30 days after accepting an offer
for employment and thereafter shall comply with the requirements of this
section.
Sec. 612.2157 Joint employees.
No officer of a Farm Credit Bank or an agricultural credit bank may
serve as an employee of an association in its district and no employee
of a Farm Credit Bank or an agricultural credit bank may serve as an
officer of an association in its district. Farm Credit Bank or
agricultural credit bank employees other than officers may serve as
employees other than officers of an association in its district provided
each institution appropriately reflects the expense of such employees in
its financial statements.
Sec. 612.2160 Institution responsibilities.
Each institution shall: (a) Ensure compliance with this part by its
directors and employees and act promptly to preserve the integrity of
and public confidence in the institution in any matter involving a
conflict of interest, whether or not specifically addressed by this part
or the policies and procedures adopted pursuant to Sec. 612.2165;
(b) Take appropriate measures to ensure that all directors and
employees are informed of the requirements of this regulation and
policies and procedures adopted pursuant to Sec. 612.2165;
(c) Adopt and implement policies and procedures that will preserve
the integrity of and public confidence in the institution and the System
pursuant to Sec. 612.2165;
(d) Designate a Standards of Conduct Official pursuant to
Sec. 612.2170; and
(e) Maintain all standards-of-conduct policies and procedures,
reports, investigations, determinations, and evidence of compliance with
this part for a minimum of 6 years.
Sec. 612.2165 Policies and procedures.
(a) Each institution's board of directors shall issue, consistent
with this part, policies and procedures governing standards of conduct
for directors and employees.
(b) Board policies and procedures issued pursuant to paragraph (a)
of this section shall reflect due consideration of the potential adverse
impact of any activities permitted under the policies and shall at a
minimum:
[[Page 85]]
(1) Establish such requirements and prohibitions as are necessary to
promote public confidence in the institution and the System, preserve
the integrity and independence of the supervisory process, and prevent
the improper use of official property, position, or information. In
developing such requirements and prohibitions, the institution shall
address such issues as the hiring of relatives, political activity,
devotion of time to duty, the exchange of gifts and favors among
directors and employees of the employing, supervising, and supervised
institution, and the circumstances under which gifts may be accepted by
directors and employees from outside sources, in light of the foregoing
objectives;
(2) Outline authorities and responsibilities of the Standards of
Conduct Official;
(3) Establish criteria for business relationships and transactions
not specifically prohibited by this part between employees or directors
and borrowers, loan applicants, directors, or employees of the
employing, supervised, or supervising institutions, or persons
transacting business with such institutions, including OFIs or other
lenders having an access or participation relationship;
(4) Establish criteria under which employees may accept outside
employment or compensation;
(5) Establish conditions under which employees may receive loans
from System institutions;
(6) Establish conditions under which employees may acquire an
interest in real or personal property that was mortgaged to a System
institution at any time within the preceding 12 months;
(7) Establish conditions under which employees may purchase any real
or personal property of a System institution acquired by such
institution for its operations. Farm Credit institutions must use open
competitive bidding whenever they sell surplus property above a stated
value (as established by the board) to their employees.
(8) Provide for a reasonable period of time for directors and
employees to terminate transactions, relationships, or activities that
are subject to prohibitions that arise at the time of adoption or
amendment of the policies.
(9) Require new directors and new employees involved at the time of
election or hiring in transactions, relationships, and activities
prohibited by these regulations or internal policies to terminate such
transactions within the same time period established for existing
directors or employees pursuant to paragraph (b)(8) of this section,
beginning with the commencement of official duties, or such shorter time
period as the institution may establish.
(10) Establish procedures providing for a director's or employee's
recusal from official action on any matter in which he or she is
prohibited from participating under these regulations or the
institution's policies.
(11) Establish documentation requirements demonstrating compliance
with standards-of-conduct decisions and board policy;
(12) Establish reporting requirements, consistent with this part, to
enable the institution to comply with Sec. 620.5 of this chapter,
monitor conflicts of interest, and monitor recusal compliance; and
(13) Establish appeal procedures available to any employee to whom
any required approval has been denied.
[59 FR 24894, May 13, 1994, as amended at 64 FR 43048, Aug. 9, 1999]
Sec. 612.2170 Standards of Conduct Official.
(a) Each institution's board shall designate a Standards of Conduct
Official who shall:
(1) Advise directors, director candidates, and employees concerning
the provisions of this part;
(2) Receive reports required by this part;
(3) Make such determinations as are required by this part;
(4) Maintain records of actions taken to resolve and/or make
determinations upon each case reported relative to provisions of this
part;
(5) Make appropriate investigations, as directed by the
institution's board; and
(6) Report promptly, pursuant to part 617 of this chapter, to the
institution's
[[Page 86]]
board and the Office of General Counsel, Farm Credit Administration, all
cases where:
(i) A preliminary investigation indicates that a Federal criminal
statute may have been violated;
(ii) An investigation results in the removal of a director or
discharge of an employee; or
(iii) A violation may have an adverse impact on continued public
confidence in the System or any of its institutions.
(b) The Standards of Conduct Official shall investigate or cause to
be investigated all cases involving:
(1) Possible violations of criminal statutes;
(2) Possible violations of Secs. 612.2140 and 612.2150, and
applicable policies and procedures approved under Sec. 612.2165;
(3) Complaints received against the directors and employees of such
institution; and
(4) Possible violations of other provisions of this part or when the
activities or suspected activities are of a sensitive nature and could
affect continued public confidence in the Farm Credit System.
(c) An association board may comply with this section by contracting
with the Farm Credit Bank or agricultural credit bank in its district to
provide a Standards of Conduct Official.
Sec. 612.2260 Standards of conduct for agents.
(a) Agents of System institutions shall maintain high standards of
honesty, integrity, and impartiality in order to ensure the proper
performance of System business and continued public confidence in the
System and all its institutions. The avoidance of misconduct and
conflicts of interest is indispensable to the maintenance of these
standards.
(b) System institutions shall utilize safe and sound business
practices in the engagement, utilization, and retention of agents. These
practices shall provide for the selection of qualified and reputable
agents. Employing System institutions shall be responsible for the
administration of relationships with their agents, and shall take
appropriate investigative and corrective action in the case of a breach
of fiduciary duties by the agent or failure of the agent to carry out
other agent duties as required by contract, FCA regulations, or law.
(c) System institutions shall be responsible for exercising
corresponding special diligence and control, through good business
practices, to avoid or control situations that have inherent potential
for sensitivity, either real or perceived. These areas include the
employment of agents who are related to directors or employees of the
institutions; the solicitation and acceptance of gifts, contributions,
or special considerations by agents; and the use of System and borrower
information obtained in the course of the agent's association with
System institutions.
Sec. 612.2270 Purchase of System obligations.
(a) Employees and directors of System institutions, other than the
Federal Farm Credit Banks Funding Corporation, may only purchase joint,
consolidated, or Systemwide obligations that are:
(1) Part of an offering available to the general public; and
(2) Purchased through a dealer or dealer bank affiliated with a
member of the selling group designated by the Federal Farm Credit Banks
Funding Corporation or purchased in the secondary market.
(b) No director or employee of the Federal Farm Credit Banks Funding
Corporation may purchase or otherwise acquire, directly or indirectly,
except by inheritance, any joint, consolidated, or Systemwide
obligation.
[[Page 87]]
PART 613--ELIGIBILITY AND SCOPE OF FINANCING--Table of Contents
Subpart A--Financing Under Titles I and II of the Farm Credit Act
Sec.
613.3000 Financing for farmers, ranchers, and aquatic producers or
harvesters.
613.3005 Lending objective.
613.3010 Financing for processing or marketing operations.
613.3020 Financing for farm-related service businesses.
613.3030 Rural home financing.
Subpart B--Financing for Banks Operating Under Title III of the Farm
Credit Act
613.3100 Domestic lending.
613.3200 International lending.
Subpart C--Similar Entity Authority Under Sections 3.1(11)(B) and 4.18A
of the Act
613.3300 Participations and other interests in loans to similar
entities.
Authority: Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 2.2, 2.4, 2.12, 3.1,
3.7, 3.8, 3.22, 4.18A, 4.25, 4.26, 4.27, 5.9, 5.17 of the Farm Credit
Act (12 U.S.C. 2013, 2015, 2017, 2018, 2019, 2073, 2075, 2093, 2122,
2128, 2129, 2143, 2206a, 2211, 2212, 2213, 2243, 2252).
Subpart A--Financing Under Titles I and II of the Farm Credit Act
Source: 62 FR 4441, Jan. 30, 1997, unless otherwise noted.
Sec. 613.3000 Financing for farmers, ranchers, and aquatic producers or harvesters.
(a) Definitions. For purposes of this subpart, the following
definitions apply:
(1) Bona fide farmer or rancher means a person owning agricultural
land or engaged in the production of agricultural products, including
aquatic products under controlled conditions.
(2) Legal entity means any partnership, corporation, estate, trust,
or other legal entity that is established pursuant to the laws of the
United States, any State thereof, the Commonwealth of Puerto Rico, the
District of Columbia, or any tribal authority and is legally authorized
to conduct a business.
(3) Person means an individual who is a citizen of the United States
or a foreign national who has been lawfully admitted into the United
States either for permanent residency pursuant to 8 U.S.C. 1101(a)(20)
or on a visa pursuant to a provision in 8 U.S.C. 1101(a)(15) that
authorizes such individual to own property or operate or manage a
business or a legal entity.
(4) Producer or harvester of aquatic products means a person engaged
in producing or harvesting aquatic products for economic gain in open
waters under uncontrolled conditions.
(b) Eligible borrower. Farm Credit institutions that operate under
titles I or II of the Act may provide financing to a bona fide farmer or
rancher, or producer or harvester of aquatic products for any
agricultural or aquatic purpose and for other credit needs.
Sec. 613.3005 Lending objective.
It is the objective of each bank and association, except for banks
for cooperatives, to provide full credit, to the extent of
creditworthiness, to the full-time bona fide farmer (one whose primary
business and vocation is farming, ranching, or producing or harvesting
aquatic products); and conservative credit to less than full-time
farmers for agricultural enterprises, and more restricted credit for
other credit requirements as needed to ensure a sound credit package or
to accommodate a borrower's needs as long as the total credit results in
being primarily an agricultural loan. However, the part-time farmer who
needs to seek off-farm employment to supplement farm income or who
desires to supplement off-farm income by living in a rural area and is
carrying on a valid agricultural operation, shall have availability of
credit for mortgages, other agricultural purposes, and family needs in
the preferred position along with full-time farmers. Loans to farmers
shall be on an increasingly conservative basis as the emphasis moves
away from the full-time bona fide farmer to the point where agricultural
needs only will be financed for the applicant whose business is
essentially other than farming. Credit shall not be extended where
investment in agricultural assets for speculative appreciation is a
primary factor.
[[Page 88]]
Sec. 613.3010 Financing for processing or marketing operations.
(a) Eligible borrowers. A borrower is eligible for financing for a
processing or marketing operation under titles I and II of the Act, only
if the borrower meets the following requirements:
(1) The borrower is either a bona fide farmer, rancher, or producer
or harvester of aquatic products, or is a legal entity in which eligible
borrowers under Sec. 613.3000(b) own more than 50 percent of the voting
stock or equity; and
(2) The borrower or an owner of the borrowing legal entity regularly
produces some portion of the throughput used in the processing or
marketing operation.
(b) Portfolio restrictions for certain processing and marketing
loans. Processing or marketing loans to eligible borrowers who regularly
supply less than 20 percent of the throughput are subject to the
following restrictions:
(1) Bank limitation. The aggregate of such processing and marketing
loans made by a Farm Credit bank shall not exceed 15 percent of all its
outstanding retail loans at the end of the preceding fiscal year.
(2) Association limitation. The aggregate of such processing and
marketing loans made by all direct lender associations affiliated with
the same Farm Credit bank shall not exceed 15 percent of the aggregate
of their outstanding retail loans at the end of the preceding fiscal
year. Each Farm Credit bank, in conjunction with all its affiliated
direct lender associations, shall ensure that such processing or
marketing loans are equitably allocated among its affiliated direct
lender associations.
(3) Calculation of outstanding retail loans. For the purposes of
this paragraph, ``outstanding retail loans'' includes loans, loan
participations, and other interests in loans that are either bought
without recourse or sold with recourse.
Sec. 613.3020 Financing for farm-related service businesses.
(a) Eligibility. An individual or legal entity that furnishes farm-
related services to farmers and ranchers that are directly related to
their agricultural production is eligible to borrow from a Farm Credit
bank or association that operates under titles I or II of the Act.
(b) Purposes of financing. A Farm Credit Bank, agricultural credit
bank, or direct lender association may finance:
(1) All of the farm-related business activities of an eligible
borrower who derives more than 50 percent of its annual income (as
consistently measured on either a gross sales or net sales basis) from
furnishing farm-related services that are directly related to the
agricultural production of farmers and ranchers; or
(2) Only the farm-related services activities of an eligible
borrower who derives 50 percent or less of its annual income (as
consistently measured on either a gross sales or net sales basis) from
furnishing farm-related services that are directly related to the
agricultural production of farmers and ranchers.
Sec. 613.3030 Rural home financing.
(a) Definitions.
(1) Rural homeowner means an individual who is not a bona fide
farmer, rancher, or producer or harvester of aquatic products.
(2) Rural home means a single-family moderately priced dwelling
located in a rural area that will be the occupant's principal residence.
(3) Rural area means open country within a State or the Commonwealth
of Puerto Rico, which may include a town or village that has a
population of not more than 2,500 persons.
(4) Moderately priced means the price of any rural home that either:
(i) Satisfies the criteria in section 8.0 of the Act pertaining to
rural home loans that collateralize securities that are guaranteed by
the Federal Agricultural Mortgage Corporation; or
(ii) Is otherwise determined to be moderately priced for housing
values for the rural area where it is located, as documented by data
from a credible, independent, and recognized national or regional
source, such as a Federal, State, or local government agency, or an
industry source. Housing values at or below the 75th percentile of
values reflected in such data will be deemed moderately priced.
[[Page 89]]
(b) Eligibility. Any rural homeowner is eligible to obtain financing
on a rural home. No borrower shall have a loan from the Farm Credit
System on more than one rural home at any one time.
(c) Purposes of financing. Loans may be made to rural homeowners for
the purpose of buying, building, remodeling, improving, repairing rural
homes, and refinancing existing indebtedness thereon.
(d) Portfolio limitations. (1) The aggregate of retail rural home
loans by any Farm Credit Bank or agricultural credit bank shall not
exceed 15 percent of the total of all of its outstanding loans at any
one time.
(2) The aggregate of rural home loans made by each direct lender
association shall not exceed 15 percent of the total of its outstanding
loans at the end of its preceding fiscal year, except with the prior
approval of its funding bank.
(3) The aggregate of rural home loans made by all direct lender
associations that are funded by the same Farm Credit bank shall not
exceed 15 percent of the total outstanding loans of all such
associations at the end of the funding bank's preceding fiscal year.
Subpart B--Financing for Banks Operating Under Title III of the Farm
Credit Act
Source: 62 FR 4442, Jan. 30, 1997, unless otherwise noted.
Sec. 613.3100 Domestic lending.
(a) Definitions. For purposes of this subpart, the following
definitions apply:
(1) Cooperative means any association of farmers, ranchers,
producers or harvesters of aquatic products, or any federation of such
associations, or a combination of such associations and farmers,
ranchers, or producers or harvesters of aquatic products that conducts
business for the mutual benefit of its members and has the power to:
(i) Process, prepare for market, handle, or market farm or aquatic
products;
(ii) Purchase, test, grade, process, distribute, or furnish farm or
aquatic supplies; or
(iii) Furnish business and financially related services to its
members.
(2) Farm or aquatic supplies and farm or aquatic business services
are any goods or services normally used by farmers, ranchers, or
producers and harvesters of aquatic products in their business
operations, or to improve the welfare or livelihood of such persons.
(3) Public utility means a cooperative or other entity that is
licensed under Federal, State, or local law to provide electric,
telecommunication, cable television, water, or waste treatment services.
(4) Rural area means all territory of a State that is not within the
outer boundary of any city or town having a population of more than
20,000 inhabitants based on the latest decennial census of the United
States.
(5) Service cooperative means a cooperative that is involved in
providing business and financially related services (other than public
utility services) to farmers, ranchers, aquatic producers or harvesters,
or their cooperatives.
(b) Cooperatives and other entities that serve agricultural or
aquatic producers. (1) Eligibility of cooperatives. A bank for
cooperatives or an agricultural credit bank may lend to a cooperative
that satisfies the following requirements:
(i) Unless the bank's board of directors establishes by resolution a
higher voting control threshold for any type of cooperative, the
percentage of voting control of the cooperative held by farmers,
ranchers, producers or harvesters of aquatic products, or cooperatives
shall be 80 percent except:
(A) Sixty (60) percent for a service cooperative;
(B) Sixty (60) percent for local farm supply cooperatives that have
historically served the needs of a community that would not be
adequately served by other suppliers and have experienced a reduction in
the percentage of membership by agricultural or aquatic producers due to
changed circumstances beyond their control; and
(C) Sixty (60) percent for local farm supply cooperatives that
provide or will provide needed services to a community, and are or will
be in competition with a cooperative specified in
Sec. 613.3100(b)(1)(i)(B);
[[Page 90]]
(ii) The cooperative deals in farm or aquatic products, or products
processed therefrom, farm or aquatic supplies, farm or aquatic business
services, or financially related services with or for members in an
amount at least equal in value to the total amount of such business it
transacts with or for non-members, excluding from the total of member
and non-member business, transactions with the United States, or any
agencies or instrumentalities thereof, or services or supplies furnished
by a public utility; and
(iii) The cooperative complies with one of the following two
conditions:
(A) No member of the cooperative shall have more than one vote
because of the amount of stock or membership capital owned therein; or
(B) The cooperative restricts dividends on stock or membership
capital to 10 percent per year or the maximum percentage per year
permitted by applicable State law, whichever is less.
(iv) Any cooperative that has received a loan from a bank for
cooperatives or an agricultural credit bank shall, without regard to the
requirements in paragraph (b)(1) of this section, continue to be
eligible for as long as more than 50 percent (or such higher percentage
as is established by the bank board) of the voting control of the
cooperative is held by farmers, ranchers, producers or harvesters of
aquatic products, or other eligible cooperatives.
(2) Other eligible entities. The following entities are eligible to
borrow from banks for cooperatives and agricultural credit banks:
(i) Any legal entity that holds more than 50 percent of the voting
control of a cooperative that is an eligible borrower under paragraph
(b)(1) of this section and uses the proceeds of the loan to fund the
activities of its cooperative subsidiary on the terms and conditions
specified by the bank;
(ii) Any legal entity in which an eligible cooperative has an
ownership interest, provided that if such interest is less than 50
percent, financing shall not exceed the percentage that the eligible
cooperative owns in such entity multiplied by the value of the total
assets of such entity; or
(iii) Any creditworthy private entity operated on a non-profit basis
that satisfies the requirements for a service cooperative and complies
with the requirements of either paragraphs (b)(1)(i)(A) and (b)(1)(iii)
of this section, or paragraph (b)(1)(iv) of this section, and any
subsidiary of such entity. An entity that is eligible to borrow under
this paragraph shall be organized to benefit agriculture in furtherance
of the welfare of the farmers, ranchers, and aquatic producers or
harvesters who are its members.
(c) Electric and telecommunication utilities. (1) Eligibility. A
bank for cooperatives or an agricultural credit bank may lend to:
(i) Electric and telephone cooperatives as defined by section
3.8(a)(4)(A) of the Act that satisfy the eligibility criteria in
paragraph (b)(1) of this section;
(ii) Cooperatives and other entities that:
(A) Have received a loan, loan commitment, insured loan, or loan
guarantee from the Rural Utilities Service of the United States
Department of Agriculture to finance rural electric and
telecommunication services;
(B) Have received a loan or a loan commitment from the Rural
Telephone Bank of the United States Department of Agriculture; or
(C) Are eligible under the Rural Electrification Act of 1936, as
amended, for a loan, loan commitment, or loan guarantee from the Rural
Utilities Service or the Rural Telephone Bank.
(iii) The subsidiaries of cooperatives or other entities that are
eligible under paragraph (c)(1)(ii) of this section.
(iv) Any legal entity that holds more than 50 percent of the voting
control of any public utility that is an eligible borrower under
paragraph (c)(1)(ii) of this section, and uses the proceeds of the loan
to fund the activities of the eligible subsidiary on the terms and
conditions specified by the bank.
(v) Any legal entity in which an eligible utility under paragraph
(c)(1)(ii) of this section has an ownership interest, provided that if
such interest is less than 50 percent, financing shall not exceed the
percentage that the eligible utility owns in such entity multiplied
[[Page 91]]
by the value of the total assets of such entity.
(2) Purposes for financing. A bank for cooperatives or agricultural
credit bank may extend credit to entities that are eligible to borrow
under paragraph (c)(1) of this section in order to provide electric or
telecommunication services in a rural area. A subsidiary that is
eligible to borrow under paragraph (c)(1)(iii) of this section may also
obtain financing from a bank for cooperatives or agricultural credit
bank to operate a licensed cable television utility.
(d) Water and waste disposal facilities. (1) Eligibility. A
cooperative or a public agency, quasi-public agency, body, or other
public or private entity that, under the authority of State or local
law, establishes and operates water and waste disposal facilities in a
rural area, as that term is defined by paragraph (a)(5) of this section,
is eligible to borrow from a bank for cooperatives or an agricultural
credit bank.
(2) Purposes for financing. A bank for cooperatives or agricultural
credit bank may extend credit to entities that are eligible under
paragraph (d)(1) of this section solely for installing, maintaining,
expanding, improving, or operating water and waste disposal facilities
in rural areas.
(e) Domestic lessors. A bank for cooperatives or agricultural credit
bank may lend to domestic parties to finance the acquisition of
facilities or equipment that will be leased to shareholders of the bank
for use in their operations located inside of the United States.
[62 FR 4442, Jan. 30, 1997; 62 FR 33746, June 23, 1997]
Sec. 613.3200 International lending.
(a) Definition. For the purpose of this section only, the term
``farm supplies'' refers to inputs that are used in a farming or
ranching operation, but excludes agricultural processing equipment,
machinery used in food manufacturing or other capital goods which are
not used in a farming or ranching operation.
(b) Import transactions. The following parties are eligible to
borrow from a bank for cooperatives or an agricultural credit bank
pursuant to section 3.7(b) of the Act for the purpose of financing the
import of agricultural commodities or products therefrom, aquatic
products, and farm supplies into the United States:
(1) An eligible cooperative as defined by Sec. 613.3100(b);
(2) A counterparty with respect to a specific import transaction
with a voting stockholder of the bank for the substantial benefit of the
shareholder; and
(3) Any foreign or domestic legal entity in which eligible
cooperatives hold an ownership interest.
(c) Export transactions. Pursuant to section 3.7(b)(2) of the Act, a
bank for cooperatives or an agricultural credit bank is authorized to
finance the export (including the cost of freight) of agricultural
commodities or products therefrom, aquatic products, or farm supplies
from the United States to any foreign country. The board of directors of
each bank for cooperatives and agricultural credit bank shall adopt
policies that ensure that exports of agricultural products and
commodities, aquatic products, and farm supplies which originate from
eligible cooperatives are financed on a priority basis. The total amount
of balances outstanding on loans made under this paragraph shall not, at
any time, exceed 50 percent of the capital of any bank for cooperatives
or agricultural credit bank for loans that:
(1) Finance the export of agricultural commodities and products
therefrom, aquatic products, or farm supplies that are not originally
sourced from an eligible cooperative; and
(2) At least 95 percent of the loan amount is not guaranteed by a
department, agency, bureau, board, or commission of the United States or
a corporation that is wholly owned directly or indirectly by the United
States.
(d) International business operations. A bank for cooperatives or an
agricultural credit bank may finance a domestic or foreign entity which
is at least partially owned by eligible cooperatives described in
Sec. 613.3100(b), and facilitates the international business operations
of such cooperatives.
(e) Restrictions. (1) When eligible cooperatives own less than 50
percent of a foreign or domestic legal entity, the
[[Page 92]]
amount of financing that a bank for cooperatives or agricultural credit
bank may provide to the entity for imports, exports, or international
business operations shall not exceed the percentage of ownership that
eligible cooperatives hold in such entity multiplied by the value of the
total assets of such entity; and
(2) A bank for cooperatives or agricultural credit bank shall not
finance the relocation of any plant or facility from the United States
to a foreign country.
Subpart C--Similar Entity Authority Under Sections 3.1(11)(B) and 4.18A
of the Act
Sec. 613.3300 Participations and other interests in loans to similar entities.
(a) Definitions. (1) Participate and participation, for the purpose
of this section, refer to multi-lender transactions, including
syndications, assignments, loan participations, subparticipations, other
forms of the purchase, sale, or transfer of interests in loans, or other
extensions of credit, or other technical and financial assistance.
(2) Similar entity means a party that is ineligible for a loan from
a Farm Credit bank or association, but has operations that are
functionally similar to the activities of eligible borrowers in that a
majority of its income is derived from, or a majority of its assets are
invested in, the conduct of activities that are performed by eligible
borrowers.
(b) Similar entity transactions. A Farm Credit bank or a direct
lender association may participate with a lender that is not a Farm
Credit System institution in loans to a similar entity that is not
eligible to borrow directly under Sec. 613.3000, 613.3010, 613.3020,
613.3100, or 613.3200, for purposes similar to those for which an
eligible borrower could obtain financing from the participating FCS
institution.
(c) Restrictions. Participations by a Farm Credit bank or
association in loans to a similar entity under this section are subject
to the following limitations:
(1) Lending limits. (i) Farm Credit banks operating under title I of
the Act and direct lender associations. The total amount of all loan
participations that any Farm Credit bank, agricultural credit bank, or
direct lender association has outstanding under paragraph (b) of this
section to a single credit risk shall not exceed:
(A) Ten (10) percent of its total capital; or
(B) Twenty-five (25) percent of its total capital if a majority of
the shareholders of the respective Farm Credit bank or direct lender
association so approve.
(ii) Farm Credit banks operating under title III of the Act. The
total amount of all loan participations that any bank for cooperatives
or agricultural credit bank has outstanding under paragraph (b) of this
section to a single credit risk shall not exceed 10 percent of its total
capital;
(2) Percentage held in the principal amount of the loan. The
participation interest in the same loan held by one or more Farm Credit
bank(s) or association(s) shall not, at any time, equal or exceed 50
percent of the principal amount of the loan; and
(3) Portfolio limitations. The total amount of participations that
any Farm Credit bank or direct lender association has outstanding under
paragraph (b) of this section shall not exceed 15 percent of its total
outstanding assets at the end of its preceding fiscal year.
(d) Approval by other Farm Credit System institutions. (1) No direct
lender association shall participate in a loan to a similar entity under
paragraph (b) of this section without the approval of its funding bank.
A funding bank shall deny such requests only for safety and soundness
reasons affecting the bank.
(2) No Farm Credit bank or direct lender association shall
participate in a loan to a similar entity that is eligible to borrow
under Sec. 613.3100(b) without the prior approval of the bank for
cooperatives or agricultural credit bank that, at the time the loan is
made, has the greatest volume of loans made under title III of the Act
in the State where the headquarters office of the similar entity is
located.
(3) No bank for cooperatives or agricultural credit bank shall
participate in a loan to a similar entity that is eligible to borrow
under Sec. 613.3010 or
[[Page 93]]
613.3020 without the prior consent of the Farm Credit bank(s) in whose
chartered territory the similar entity conducts operations.
(4) All approvals required under paragraph (d) of this section may
be granted on an annual basis and under such terms and conditions as the
various Farm Credit System institutions may agree.
[62 FR 4444, Jan. 30, 1997]
PART 614--LOAN POLICIES AND OPERATIONS--Table of Contents
Subpart A--Lending Authorities
Sec.
614.4000 Farm Credit Banks.
614.4010 Agricultural credit banks.
614.4020 Banks for cooperatives.
614.4030 Federal land credit associations.
614.4040 Production credit associations.
614.4050 Agricultural credit associations.
614.4060 Affiliates established pursuant to section 8.5(e)(1) of the
Farm Credit Act of 1971.
Subpart B--Chartered Territories
614.4070 Loans and chartered territory--Farm Credit Banks, agricultural
credit banks, Federal land bank associations, Federal land
credit associations, production credit associations, and
agricultural credit associations.
614.4080 Loans and chartered territory--banks for cooperatives.
Subpart C--Bank/Association Lending Relationship
614.4100 Policies governing lending through Federal land bank
associations.
614.4110 Transfer of direct lending authority to Federal land bank
associations and agricultural credit associations.
614.4120 Policies governing extensions of credit to direct lender
associations and OFIs.
614.4125 Funding and discount relationships between Farm Credit Banks
or agricultural credit banks and direct lender associations.
614.4130 Funding and discount relationships between Farm Credit Banks
or agricultural credit banks and OFIs.
Subpart D--General Loan Policies for Banks and Associations
614.4150 Lending policies and loan underwriting standards.
614.4155 Interest rates.
614.4160 Differential interst rate programs.
614.4165 Special credit needs.
Subpart E--Loan Terms and Conditions
614.4200 General requirements.
614.4231 Certain seasonal commodity loans to cooperatives.
614.4232 Loans to domestic lessors.
614.4233 International loans.
Subpart F--Collateral Evaluation Requirements
614.4240 Collateral definitions.
614.4245 Collateral evaluation policies.
614.4250 Collateral evaluation standards.
614.4255 Independence requirements.
614.4260 Evaluation requirements.
614.4265 Real property evaluations.
614.4266 Personal and intangible property evaluations.
614.4267 Professional association membership; competency.
Subpart G [Reserved]
Subpart H--Loan Purchases and Sales
614.4325 Purchase and sale of interests in loans.
614.4330 Loan participations.
614.4335 Borrower stock requirements.
614.4336 Borrower rights in connection with loan sales.
614.4337 Disclosure to borrowers.
Subpart I--Loss-Sharing Agreements
614.4340 General.
614.4341 Financial assistance.
614.4345 Guaranty agreements.
Subpart J--Lending and Leasing Limits
614.4350 Definitions.
614.4351 Computation of lending and leasing limit base.
614.4352 Farm Credit Banks and agricultural credit banks.
614.4353 Direct lender associations.
614.4354 Federal land bank associations.
614.4355 Banks for cooperatives.
614.4356 Farm Credit Leasing Services Corporation.
614.4357 Banks for cooperatives look-through notes.
614.4358 Computation of obligations.
614.4359 Attribution rules.
614.4360 Lending and leasing limit violations.
614.4361 Transition.
Subpart K--Disclosure of Loan Information
614.4365 Applicability.
614.4366 Definitions.
614.4367 Required disclosures--in general.
[[Page 94]]
614.4368 Disclosure of differential interest rates.
Subpart L--Actions on Applications; Review of Credit Decisions
614.4440 Definitions.
614.4441 Notice of action on loan application.
614.4442 Credit Review Committee.
614.4443 Review process.
614.4444 Records.
Subpart M--Loan Approval Requirements
614.4450 General requirements.
614.4460 Loan approval responsibility.
614.4470 Loans subject to bank approval.
Subpart N--Loan Servicing Requirements; State Agricultural Loan
Mediation Programs; Right of First Refusal
614.4510 General.
614.4511 Federal land bank association compensation.
614.4512 Definitions.
614.4513 Uninsured voluntary and involuntary accounts.
614.4514 Protection of borrowers who meet all loan obligations.
614.4515 [Reserved]
614.4516 Restructuring policy and procedures.
614.4517 Restructuring decision.
614.4518 Notice of denial of restructuring and right to review.
614.4519 Notice before foreclosure; limitation on foreclosure.
614.4520 [Reserved]
614.4521 Participation in State agricultural loan mediation programs.
614.4522 Right of first refusal.
Subpart O--Special Lending Programs
614.4525 General.
614.4530 Special loans, production credit associations and agricultural
credit associations.
Subpart P--Farm Credit Bank and Agricultural Credit Bank Financing of
Other Financing Institutions
614.4540 Other financing institution access to Farm Credit Banks and
agricultural credit banks for funding, discount, and other
similar financial assistance.
614.4550 Place of discount.
614.4560 Requirements for OFI funding relationships.
614.4570 Recourse and security.
614.4580 Limitation on the extension of funding, discount and other
similar financial assistance to an OFI.
614.4590 Equitable treatment of OFIs and Farm Credit System
associations.
614.4600 Insolvency of an OFI.
Subpart Q--Banks for Cooperatives and Agricultural Credit Banks
Financing International Trade
614.4700 Financing foreign trade receivables.
614.4710 Bankers acceptance financing.
614.4720 Letters of credit.
614.4800 Guarantees and contracts of suretyship.
614.4810 Standby letters of credit.
614.4900 Foreign exchange.
Subpart R--Secondary Market Authorities
614.4910 Basic authorities.
Subpart S--Flood Insurance Requirements
614.4920 Purpose and scope.
614.4925 Definitions.
614.4930 Requirement to purchase flood insurance where available.
614.4935 Escrow requirement.
614.4940 Required use of standard flood hazard determination form.
614.4945 Forced placement of flood insurance.
614.4950 Determination fees.
614.4955 Notice of special flood hazards and availability of Federal
disaster relief assistance.
614.4960 Notice of servicer's identity.
Appendix A to Subpart S of Part 614--Sample Form of Notice of Special
Flood Hazards and Availability of Federal Disaster Relief
Assistance
Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128; secs. 1.3,
1.5, 1.6, 1.7, 1.9, 1.10, 1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13,
2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A, 4.13,
4.13B, 4.14, 4.14A, 4.14C, 4.14D, 4.14E, 4.18, 4.18A, 4.19, 4.25, 4.26,
4.27, 4.28, 4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.8, 7.12, 7.13,
8.0, 8.5 of the Farm Credit Act (12 U.S.C. 2011, 2013, 2014, 2015, 2017,
2018, 2019, 2071, 2073, 2074, 2075, 2091, 2093, 2094, 2097, 2121, 2122,
2124, 2128, 2129, 2131, 2141, 2149, 2183, 2184, 2199, 2201, 2202, 2202a,
2202c, 2202d, 2202e, 2206, 2206a, 2207, 2211, 2212, 2213, 2214, 2219a,
2219b, 2243, 2244, 2252, 2279a, 2279a-2, 2279b, 2279c-1, 2279f, 2279f-1,
2279aa, 2279aa-5); sec. 413 of Pub. L. 100-233, 101 Stat. 1568, 1639.
Subpart A--Lending Authorities
Source: 55 FR 24880, June 19, 1990, unless otherwise noted.
Sec. 614.4000 Farm Credit Banks.
(a) Long-term real estate lending. Except to the extent such
authorities are transferred pursuant to section 7.6 of
[[Page 95]]
the Act, Farm Credit Banks are authorized, subject to the requirements
in Sec. 614.4200 of this part, to make real estate mortgage loans with
maturities of not less than 5 years nor more than 40 years and
continuing commitments to make such loans.
(b) Extensions of credit to Farm Credit direct lender associations.
Farm Credit Banks are authorized to make loans and extend other similar
financial assistance to associations with direct lending authority and
discount for or purchase from such associations, with the association's
endorsement or guaranty, any note, draft, and other obligations for
loans that have been made in accordance with the provisions of subparts
D and E of part 614 of these regulations. Such extensions of credit
shall be made pursuant to a written financing agreement meeting the
requirements of Sec. 614.4125.
(c) Extensions of credit to other financing institutions. Farm
Credit Banks are authorized to make loans and extend other similar
financial assistance to any national bank, State bank, trust company,
agricultural credit corporation, incorporated livestock loan company,
savings institution, credit union, or any association of agricultural
producers or any corporation engaged in the making of loans to farmers
and ranchers or producers or harvesters of aquatic products
(collectively, ``other financing institutions''), for purposes eligible
for financing by a production credit association in accordance with
Sec. 614.4130 and subpart P of this part. Farm Credit Banks are
authorized to discount for or purchase from such institutions, with the
institution's endorsement or guaranty, notes, drafts, and other
obligations or loans made to persons and for purposes eligible for
financing by a production credit association, in accordance with
Sec. 614.4130 and subpart P of this part.
(d) Loan participations. Subject to the requirements of subpart H of
part 614, a Farm Credit Bank may enter into loan participation
agreements with:
(1) Farm Credit banks and associations that are direct lenders and
lenders that are not Farm Credit institutions on loans of the type it is
authorized to make under title I of the Act; and
(2) Farm Credit banks and associations that are direct lenders on
loans it is not authorized to make, provided the borrower eligibility,
membership, term, amount, loan security, and stock or participation
certificate requirements of the originating institution are met.
(e) Other interests in loans. (1) Subject to the requirements of
subpart H of this part, Farm Credit Banks may sell interests in loans
only to:
(i) Farm Credit System institutions authorized to purchase such
interests;
(ii) Other lenders that are not Farm Credit System institutions; and
(iii) Any certified agricultural mortgage marketing facility, as
defined by section 8.0(3) of the Act, for the purpose of pooling and
securitizing such loans under title VIII of the Act.
(2) Subject to the requirements of subpart H of this part, Farm
Credit Banks may purchase interests other than participation interests
in loans and nonvoting stock from other Farm Credit System institutions.
(3) Farm Credit Banks, in their capacity as certified agricultural
mortgage marketing facilities under title VIII of the Act, may purchase
interests in loans (other than participation interests authorized in
paragraph (d) of this section) from institutions other than Farm Credit
System institutions only for the purpose of pooling and securitizing
such loans under title VIII of the Act.
(f) Residual powers after the transfer of lending authority to an
association. After transferring its authority to make and participate in
long-term real estate loans to an agricultural credit association or a
Federal land credit association pursuant to section 7.6(a) of the Act
and subpart E of part 611 of these regulations, a Farm Credit Bank
retains residual authority to:
(1) Enter into loan participation agreements pursuant to paragraph
(d) of this section;
(2) Purchase or sell other interests in loans in accordance with
paragraph (e) of this section; and
(3) Make long-term real estate loans in accordance with paragraph
(a) of this section in areas of its chartered
[[Page 96]]
territory where no active association operates.
[55 FR 24880, June 19, 1990, as amended at 57 FR 38246, Aug. 24, 1992;
57 FR 43290, Sept. 18, 1992; 62 FR 51013, Sept. 30, 1997; 63 FR 5723,
Feb. 4, 1998; 64 FR 43049, Aug. 9, 1999; 65 FR 24102, Apr. 25, 2000]
Sec. 614.4010 Agricultural credit banks.
(a) Long-term real estate lending. Except to the extent such
authorities are transferred pursuant to section 7.6 of the Act,
agricultural credit banks are authorized, subject to the requirements of
Sec. 614.4200, to make real estate mortgage loans with maturities of not
less than 5 years nor more than 40 years and continuing commitments to
make such loans.
(b) Extensions of credit to Farm Credit direct lender associations.
Agricultural credit banks are authorized to make loans and extend other
similar financial assistance to associations with direct lending
authority and discount for or purchase from such associations, with the
association's endorsement or guaranty, any note, draft, and other
obligations for loans made by the association in accordance with the
provisions of this part. Such extensions of credit shall be made
pursuant to a written financing agreement meeting the requirements of
Sec. 614.4125.
(c) Extensions of credit to other financing institutions.
Agricultural credit banks are authorized to make loans and extend other
similar financial assistance to any national bank, State bank, trust
company, agricultural credit corporation, incorporated livestock loan
company, savings institution, credit union, or any association of
agricultural producers or corporation engaged in the making of loans to
farmers, ranchers, or producers or harvesters of aquatic products
(collectively, ``other financing institutions''), for purposes eligible
for financing by a production credit association, in accordance with
Sec. 614.4130 and subpart P of this part. Agricultural credit banks are
authorized to discount for or purchase from such other financing
institutions, with the institution's endorsement or guaranty, notes,
drafts, and other obligations or loans made to persons and for purposes
eligible for financing by a production credit association, in accordance
with the requirements of Sec. 614.4130 and subpart P of this part.
(d) Extensions of credit to or on behalf of eligible cooperatives.
Agricultural credit banks are authorized to make loans and commitments
and extend other technical and financial assistance, including but not
limited to, collateral custody, discounting notes and other obligations,
guarantees, and currency exchanges necessary to service transactions
financed under paragraphs (d)(4) and (d)(5) of this section, to:
(1) Eligible cooperatives, as defined in Sec. 613.3110, in
accordance with Secs. 614.4200, 614.4231, 614.4232, 614.4233, and
subpart Q of part 614;
(2) Other eligible entities, as defined in Sec. 613.3110(c), in
accordance with Secs. 614.4200, 614.4231, and 614.4232;
(3) Domestic lessors, for the purpose of providing leased assets to
stockholders of the bank eligible to borrow under section 3.7(a) of the
Act for use in such stockholders' operations in the United States, in
accordance with Sec. 614.4232;
(4) Domestic or foreign parties with respect to a transaction with a
voting stockholder of the bank, for the import of agricultural
commodities, farm supplies, or aquatic products through purchases, sales
or exchanges, provided such stockholder substantially benefits as a
result of such extension of credit or assistance, in accordance with
policies of the bank's board, Sec. 614.4233, and subpart Q of part 614;
and
(5) Domestic or foreign parties in which a voting stockholder of the
bank has a minimum ownership interest, for the purpose of facilitating
such stockholder's import operations of the type described in paragraph
(d)(4) of this section, provided the stockholder substantially benefits
as a result of such extension of credit or assistance, in accordance
with policies of the bank's board, Sec. 614.4233, and subpart Q of part
614.
(6) Any party, subject to the requirements in Sec. 613.3200(c) of
this chapter, for the export (including the cost of freight) of
agricultural commodities or products therefrom, aquatic products, or
farm supplies from the United
[[Page 97]]
States to any foreign country, in accordance with Sec. 614.4233 and
subpart Q of this part 614; and
(7) Domestic or foreign parties in which eligible cooperatives, as
defined in Sec. 613.3100 of this chapter, hold an ownership interest,
for the purpose of facilitating the international business operations of
such cooperatives pursuant to the requirements of Sec. 613.3200 (d) and
(e) of this chapter.
(e) Loan participations. Subject to the requirements of subpart H of
this part, an agricultural credit bank may enter into loan participation
agreements with:
(1) Farm Credit banks and associations that are direct lenders and
lenders that are not Farm Credit institutions on loans of the type it is
authorized to make under the Act;
(2) Farm Credit banks and associations that are direct lenders on
loans it is not authorized to make, provided the borrower eligibility,
membership, term, amount, loan security, and stock or participation
certificate requirements of the originating institution are met.
(f) Other interest in loans. (1) Subject to subpart H of this part,
agricultural credit banks may sell interests in real estate mortgage
loans identified in paragraph (a) of this section to Farm Credit System
institutions authorized to purchase such interests, other lenders, and
certified agricultural mortgage marketing facilities for the Federal
Agricultural Mortgage Corporation. Agricultural credit banks may also
sell interests in the types of loans listed in paragraph (d) of this
section to other Farm Credit System institutions that are authorized to
purchase such interests.
(2) Subject to the requirements of subpart H of this part,
agricultural credit banks may purchase interests other than
participation interests in loans and nonvoting stock from other Farm
Credit System institutions.
(3) Agricultural credit banks, in their capacity as certified
agricultural mortgage marketing facilities under title VIII of the Act,
may purchase interests in loans (other than participation interests
authorized in paragraph (e) of this section) from institutions other
than Farm Credit System institutions only for the purpose of pooling and
securitizing such loans under title VIII of the Act.
(g) Residual powers after the transfer of lending authority to an
association. After transferring its authority to make and participate in
long-term real estate loans to an agricultural credit association or a
Federal land credit association pursuant to section 7.6(a) of the Act
and subpart E of part 611 of these regulations, an agricultural credit
bank retains residual authority to:
(1) Enter into loan participation agreements pursuant to paragraph
(e) of this section;
(2) Purchase or sell other interests in loans in accordance with
paragraph (f) of this section; and
(3) Make long-term real estate loans in accordance with paragraph
(a) of this section in areas of its chartered territory where no active
association operates.
[55 FR 24880, June 19, 1990, as amended at 57 FR 38246, Aug. 24, 1992;
57 FR 43290, Sept. 18, 1992; 62 FR 4445, Jan. 30, 1997; 62 FR 51013,
Sept. 30, 1997; 63 FR 5723, Feb. 4, 1998; 64 FR 43049, Aug. 9, 1999; 65
FR 24102, Apr. 25, 2000]
Sec. 614.4020 Banks for cooperatives.
(a) Banks for cooperatives are authorized to make loans and
commitments and extend other technical and financial assistance,
including but not limited to, collateral custody, discounting notes and
other obligations, guarantees, and currency exchanges necessary to
service transactions financed under paragraphs (a)(4) and (a)(5) of this
section, to:
(1) Eligible cooperatives, as defined in Sec. 613.3110, in
accordance with Secs. 614.4200, 614.4231, 614.4232, 614.4233, and
subpart Q of this part;
(2) Other eligible entities as defined in Sec. 613.3110(c), in
accordance with Secs. 614.4200, 614.4231, and 614.4232;
(3) Domestic lessors, for the purpose of providing leased assets to
stockholders of the bank eligible to borrow under section 3.7(a) of the
Act for use in such stockholder's operations in the United States, in
accordance with Sec. 614.4232;
(4) Domestic or foreign parties with respect to a transaction with a
voting stockholder of the bank, for the import
[[Page 98]]
of agricultural commodities, farm supplies, or aquatic products through
purchases, sales or exchanges, provided such stockholder substantially
benefits as a result of such extension of credit or assistance, in
accordance with policies of the bank's board, Sec. 614.4233, and subpart
Q of this part; and
(5) Domestic or foreign parties in which a voting stockholder of the
bank has an ownership interest, for the purpose of facilitating the
import operations of the type described in paragraph (a)(4) of this
section, in accordance with policies of the bank's board, Sec. 614.4233,
and subpart Q of this part.
(6) Any party, subject to the requirements in Sec. 613.3200(c) of
this chapter, for the export (including the cost of freight) of
agricultural commodities or products therefrom, aquatic products, or
farm supplies from the United States to any foreign country, in
accordance with Sec. 614.4233 and subpart Q of this part; and
(7) Domestic or foreign parties in which eligible cooperatives, as
defined in Sec. 613.3100 of this chapter, hold an ownership interest,
for the purpose of facilitating the international business operations of
such cooperatives pursuant to the requirements in Sec. 613.3200 (d) and
(e) of this chapter.
(b) Loan participations. Subject to the requirements of subpart H of
this part, a bank for cooperatives may enter into loan participation
agreements with:
(1) Farm Credit banks and associations that are direct lenders and
lenders that are not Farm Credit institutions on loans of the type it is
authorized to make under title III of the Act;
(2) Farm Credit banks and associations that are direct lenders on
loans of the type it is not authorized to make, provided the borrower
eligibility, membership, term, amount, loan security, and stock or
participation certificate requirements of the originating institution
are met.
[55 FR 24880, June 19, 1990, as amended at 62 FR 4445, Jan. 30, 1997; 62
FR 51013, Sept. 30, 1997]
Sec. 614.4030 Federal land credit associations.
(a) Long-term real estate lending. Federal land credit associations
are authorized, subject to the requirments of Sec. 614.4200, to make
real estate mortgage loans with maturities of not less than 5 years nor
more than 40 years and continuing commitments to make such loans.
(b) Loan participations. Subject to the requirements of subpart H of
this part, Federal land credit associations may enter into participation
agreements with:
(1) Farm Credit banks and associations that are direct lenders and
lenders that are not Farm Credit institutions on loans of the type it is
authorized to make under title I of the Act; and
(2) Farm Credit banks and associations that are direct lenders on
loans it is not authorized to make, provided the borrower eligibility,
membership, term, amount, loan security, and stock or participation
certificate requirements of the originating institution are met.
(c) Other interests in loans. (1) Subject to the requirements of
subpart H of this part and the supervision of their respective funding
banks, Federal land credit associations may sell interests in loans made
under paragraph (a) of this section only to:
(i) Farm Credit System institutions, as authorized by their
respective funding banks;
(ii) Other lenders that are not Farm Credit System institutions, as
authorized by their respective funding banks; and
(iii) Any certified agricultural mortgage marketing facility, as
defined by section 8.0(3) of the Act, for the purpose of pooling and
securitizing such loans under title VIII of the Act.
(2) Subject to the requirements of subpart H of this part, Federal
land credit associations may purchase interests in loans that comply
with the requirements of paragraph (a) of this section and nonvoting
stock from Farm Credit System institutions.
(3) Federal land credit associations, in their capacity as certified
agricultural mortgage marketing facilities under title VIII of the Act,
may purchase interests in loans (other than participation interests
under paragraph (b) of this section) from institutions other than Farm
Credit System institutions for the purpose of pooling
[[Page 99]]
and securitizing such loans under title VIII of the Act.
[55 FR 24880, June 19, 1990, as amended at 57 FR 38247, Aug. 24, 1992;
62 FR 51013, Sept. 30, 1997; 64 FR 43049, Aug. 9, 1999; 65 FR 24102,
Apr. 25, 2000]
Sec. 614.4040 Production credit associations.
(a) Loan terms. (1) Production credit associations are authorized to
make or guarantee loans and other similar financial assistance for the
following terms:
(i) Not more than 7 years
(ii) More than 7 years, but not more than 10 years, subject to
authorization in policies approved by the funding bank
(iii) Not more than 15 years to producers or harvesters of aquatic
products for major capital expenditures, including but not limited to
the purchase of vessels, construction or purchase of shore facilities,
and similar purposes directly related to the producing or harvesting
operation
(2) Subject to policies approved by the funding bank, production
credit associations may amortize loans over a period greater than the
loan terms authorized under paragraph (a)(1) of this section, provided
that:
(i) The loan is amortized over a period not to exceed 15 years
(ii) The loan may be refinanced only if the lender determines, at
the time of refinancing, that the loan meets its loan policy and
underwriting criteria;
(iii) Any refinancing may not extend repayment beyond 15 years from
the date of the original loan; and
(iv) The loan is not being made solely for the purpose of acquiring
unimproved real estate; and
(3) Short- and intermediate-term loans shall be made with maturities
that are appropriate for the purpose and underlying collateral of the
loan and that comply with an institution's loan underwriting standards
adopted pursuant to Sec. 614.4150 and the general requirements of
Sec. 614.4200 of this part.
(b) Loan participations. Subject to the requirements of subpart H of
this part, a production credit association may enter into participation
agreements with:
(1) Farm Credit banks and associations that are direct lenders and
lenders that are not Farm Credit institutions on loans of the type it is
authorized to make under title II of the Act; and
(2) Farm Credit banks and associations that are direct lenders on
loans it is not authorized to make, provided the borrower eligibility,
membership, term, amount, loan security, and stock or participation
certificate requirements of the originating institution are met.
(c) Other interests in loans. (1) Subject to the requirements of
subpart H of this part and the supervision of their respective funding
banks, production credit associations may sell interests in loans that
are made under paragraph (a) of this section to:
(i) Banks of the Farm Credit System, as authorized by their
respective funding banks; and
(ii) Any certified agricultural mortgage marketing facility, as
defined by section 8.0(3) of the Act, for the purpose of pooling and
securitizing such loans under title VIII of the Act.
(2) Subject to the requirements of subpart H of this part,
production credit associations, as authorized by their respective
funding banks, may purchase interests in loans that comply with the
requirements of paragraph (a) of this section and nonvoting stock from
banks of the Farm Credit System.
(3) Production credit associations, in their capacity as certified
mortgage marketing facilities under title VIII of the Act, may purchase
from Farm Credit System institutions and institutions that are not Farm
Credit System institutions interests in loans (other than participation
interests authorized by paragraph (c) of this section) for the purpose
of pooling and securitizing such loans under title VIII of the Act.
[55 FR 24880, June 19, 1990; 55 FR 28511, July 11, 1990, as amended at
57 FR 38247, Aug. 24, 1992; 62 FR 51013, Sept. 30, 1997; 64 FR 43049,
Aug. 9, 1999; 65 FR 24102, Apr. 25, 2000]
Sec. 614.4050 Agricultural credit associations.
Agricultural credit associations are authorized to make or
guarantee, subject to the requirements of Sec. 614.4200 of this part:
[[Page 100]]
(a) Long-term real estate mortgage loans with maturities of not less
than 5 nor more than 40 years, and continue commitments to make such
loans; and
(b) Short- and intermediate-term loans and provide other similar
financial assistance for a term of not more than 10 years (15 years for
aquatic producers and harvesters.
(c) Loan participations. Subject to the requirements of subpart H of
this part, agricultural credit associations may enter into participation
agreements with:
(1) Farm Credit banks and associations that are direct lenders and
lenders that are not Farm Credit institutions on loans of the type it is
authorized to make under titles I and II of the Act; and
(2) Farm Credit banks and associations that are direct lenders on
loans of the type it is not authorized to make, provided the borrower
eligibility, membership, term, amount, loan security, and stock or
participation certificate requirements of the originating institution
are met.
(d) Other interests in loans. (1) Subject to the requirements of
subpart H of this part and the supervision of their respective funding
banks, agricultural credit associations may sell:
(i) Interests in loans made under paragraph (a) of this section only
to:
(A) Farm Credit System institutions, as authorized by their
respective funding banks;
(B) Lenders that are not Farm Credit System institutions, as
authorized by their respective funding banks; and
(C) Any certified agricultural mortgage marketing facility, as
defined by section 8.0(3) of the Act, for the purpose of pooling and
securitizing such loans under title VIII of the Act.
(ii) Interests in loans made under paragraph (b) of this part only
to:
(A) Banks of the Farm Credit System, as authorized by their
respective funding banks; and
(B) Any certified agricultural mortgage marketing facility, as
defined by section 8.0(3) of the Act, for the purpose of pooling and
securitizing such loans under title VIII of the Act.
(2) Subject to the requirements of subpart H of this part,
agricultural credit associations may purchase:
(i) Interests in loans that comply with the requirements in
paragraph (a) of this section from institutions of the Farm Credit
System;
(ii) Interests in loans that comply with the requirements of
paragraph (b) of this section from banks of the Farm Credit System; and
(iii) Nonvoting stock from institutions of the Farm Credit System.
(3) Agricultural credit associations, in their capacity as certified
agricultural mortgage marketing facilities under title VIII of the Act,
may purchase interests in loans, other than participation interests
authorized by paragraph (c) of this section, from institutions other
than Farm Credit System institutions for the purpose of pooling and
securitizing such loans under title VIII of the Act.
[55 FR 24880, June 19, 1990; 55 FR 28511, July 11, 1990, as amended at
57 FR 38247, Aug. 24, 1992; 62 FR 51013, Sept. 30, 1997; 64 FR 43049,
Aug. 9, 1999; 65 FR 24102, Apr. 25, 2000]
Sec. 614.4060 Affiliates established pursuant to section 8.5(e)(1) of the Farm Credit Act of 1971.
An affiliate established by one or more Farm Credit System
institutions pursuant to section 8.5(e)(1) of the Act and Sec. 611.1137
of this chapter, as a certified agricultural mortgage marketing
facility, may purchase loans from Farm Credit System institutions and
institutions other than Farm Credit System institutions in accordance
with title VIII of the Act and any applicable regulation promulgated
thereunder.
[57 FR 38247, Aug. 24, 1992]
Subpart B--Chartered Territories