Federal Register / Vol. 74, No. 148 / Tuesday, August 4, 2009 / Rules and Regulations 38505 

or disproportionately burdened. 

Marketing orders issued pursuant to the 

Act, and rules issued thereunder, are 

unique in that they are brought about 

through group action of essentially 

small entities acting on their own 

behalf. 

Industry Information 

There are approximately 73 handlers 

of Colorado Area No. 2 potatoes subject 

to regulation under the order and 

approximately 180 producers in the 

regulated production area. The order is 

administered locally by the Colorado 

Potato Administrative Committee, Area 

No. 2 (Committee). Small agricultural 

service firms are defined by the Small 

Business Administration (13 CFR 

121.201) as those having annual receipts 

of less than $7,000,000, and small 

agricultural producers are defined as 

those having annual receipts of less than 

$750,000. 

During the 2007–2008 marketing year, 

approximately 14,225,568 

hundredweight of Colorado Area No. 2 

potatoes were inspected under the order 

and sold into the fresh market. Based on 

an estimated average f.o.b. price of 

$12.05 per hundredweight, the 

Committee estimates that 62 Area No. 2 

handlers, or about 85 percent, had 

annual receipts of less than $7,000,000. 

In view of the foregoing, the majority of 

Colorado Area No. 2 potato handlers 

may be classified as small entities. 

In addition, based on information 

provided by the National Agricultural 

Statistics Service (NASS), the average 

producer price for Colorado potatoes for 

2007 was $9.85 per hundredweight. The 

average annual fresh potato revenue for 

the Colorado Area No. 2 potato 

producers is therefore calculated to be 

approximately $778,455. Consequently, 

on average, the majority of the Area No. 

2 Colorado potato producers may not be 

classified as small entities. 

Section 948.22 authorizes the 

issuance of grade, size, quality, 

maturity, pack, and container 

regulations for potatoes grown in the 

production area. Section 948.21 further 

authorizes the modification, suspension, 

or termination of requirements issued 

pursuant to § 948.22. 

Section 948.386 of the marketing 

order’s rules and regulations establishes 

minimum sizes for various varieties of 

potatoes. This rule continues in effect 

the action that changed the minimum 

size requirement from 2 inches in 

diameter to 17⁄8 inches in diameter and 

removed the minimum weight 

requirement for long potatoes that are 

considered neither ‘‘Size B’’ nor 

‘‘creamer’’ size potatoes. 

In 2007, handlers were unable to 

adequately supply the fresh market 

because of low yields due to poor 

weather conditions and because of more 

restrictive regulations. Adverse weather 

conditions contributed to lower yields 

and short supplies of potatoes for the 

market again in the 2008–2009 season. 

The Committee believes that relaxing 

the minimum size and weight 

requirements on long potato varieties 

allows handlers to market a larger 

portion of the crop in fresh market 

outlets, and thus better meet demand. 

This action is expected to foster 

increased consumption and have a 

positive impact on the Colorado potato 

industry. 

This change is expected to improve 

returns to producers. The interim final 

rule was a relaxation of the minimum 

size regulation and, as such, should 

have a positive impact on industry 

participants. The Committee believes 

that this change should not negatively 

impact either handlers or producers. 

The Committee discussed alternatives 

to this change, including not taking any 

action. However, for the reasons 

discussed earlier, the Committee 

believes this action best meets the needs 

of buyers and is most beneficial to the 

industry. 

This rule will not impose any 

additional reporting or recordkeeping 

requirements on either small or large 

Colorado Area No. 2 potato handlers. As 

with all Federal marketing order 

programs, reports and forms are 

periodically reviewed to reduce 

information requirements and 

duplication by industry and public 

sector agencies. 

In addition, as noted in the initial 

regulatory flexibility analysis, USDA 

has not identified any relevant Federal 

rules that duplicate, overlap or conflict 

with this rule. 

Further, the Committee’s meeting was 

widely publicized throughout the 

Colorado Area No. 2 potato industry and 

all interested persons were invited to 

attend the meeting and participate in 

Committee deliberations on all issues. 

Like all Committee meetings, the August 

21, 2008, meeting was a public meeting 

and all entities, both large and small, 

were able to express views on this issue. 

This action also affirms information 

contained in the interim final rule 

concerning the authority for marketing 

orders under the Agricultural Marketing 

Agreement Act of 1937 (7 U.S.C. 601– 

674), as well as information regarding 

Executive Orders 12866 and 12988, the 

Paperwork Reduction Act (44 U.S.C. 

Chapter 35), and the E-Gov Act (44 

U.S.C. 101). 

Comments on the interim final rule 

were required to be received on or 

before June 15, 2009. No comments 

were received. Therefore, for reasons 

given in the interim final rule, USDA is 

adopting the interim final rule as a final 

rule, without change. 

To view the interim final rule, go to: 

http://www.regulations.gov/fdmspublic/

component/main?main=DocketDetail&

d=AMS-FV-08-0094. 

After consideration of all relevant 

material presented, it is found that 

finalizing the interim final rule, without 

change, as published in the Federal 

Register (74 FR 17589, April 16, 2009) 

will tend to effectuate the declared 

policy of the Act. 

List of Subjects in 7 CFR Part 948 

Marketing Agreements, Potatoes, 

Reporting and recordkeeping 

requirements. 

PART 948—IRISH POTATOES GROWN 

IN COLORADO 

■ Accordingly, the interim final rule 

that amended 7 CFR part 948 and that 

was published at 74 FR 17589 on April 

16, 2009, is adopted as a final rule, 

without change. 

Dated: July 29, 2009. 

Rayne Pegg, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. E9–18539 Filed 8–3–09; 8:45 am] 

BILLING CODE 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 959 

[Doc. No. AMS–FV–09–0044; FV09–959–2 

IFR] 

Onions Grown in South Texas; 

Decreased Assessment Rate 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: This rule decreases the 

assessment rate established for the 

South Texas Onion Committee 

(Committee) for the 2009–10 and 

subsequent fiscal periods from $0.03 to 

$0.025 per 50-pound equivalent of 

onions handled. The Committee locally 

administers the marketing order which 

regulates the handling of onions grown 

in South Texas. Assessments upon 

onion handlers are used by the 

Committee to fund reasonable and 

necessary expenses of the program. The 


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38506 Federal Register / Vol. 74, No. 148 / Tuesday, August 4, 2009 / Rules and Regulations 

fiscal period begins August 1 and ends 

July 31. The assessment rate will remain 

in effect indefinitely unless modified, 

suspended, or terminated. 

DATES: Effective August 5, 2009. 

Comments received by October 5, 2009, 

will be considered prior to issuance of 

a final rule. 

ADDRESSES: Interested persons are 

invited to submit written comments 

concerning this rule. Comments must be 

sent to the Docket Clerk, Marketing 

Order Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA, 1400 

Independence Avenue, SW., STOP 

0237, Washington, DC 20250–0237; Fax: 

(202) 720–8938; or Internet: http:// 

www.regulations.gov. Comments should 

reference the document number and the 

date and page number of this issue of 

the Federal Register and will be 

available for public inspection in the 

Office of the Docket Clerk during regular 

business hours, or can be viewed at: 

http://www.regulations.gov. All 

comments submitted in response to this 

rule will be included in the record and 

will be made available to the public. 

Please be advised that the identity of the 

individuals or entities submitting the 

comments will be made public on the 

Internet at the address provided above. 

FOR FURTHER INFORMATION CONTACT: 

Belinda G. Garza, Regional Manager, 

Texas Marketing Field Office, Marketing 

Order Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA; 

Telephone: (956) 682–2833, Fax: (956) 

682–5942, or E-mail: 

Belinda.Garza@ams.usda.gov. 

Small businesses may request 

information on complying with this 

regulation by contacting Jay Guerber, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA, 1400 Independence 

Avenue, SW., STOP 0237, Washington, 

DC 20250–0237; Telephone: (202) 720– 

2491, Fax: (202) 720–8938, or E-mail: 

Jay.Guerber@ams.usda.gov. 

SUPPLEMENTARY INFORMATION: This rule 

is issued under Marketing Order No. 

959, as amended (7 CFR part 959), 

regulating the handling of onions grown 

in South Texas, hereinafter referred to 

as the ‘‘order.’’ The order is effective 

under the Agricultural Marketing 

Agreement Act of 1937, as amended (7 

U.S.C. 601–674), hereinafter referred to 

as the ‘‘Act.’’ 

The Department of Agriculture 

(USDA) is issuing this rule in 

conformance with Executive Order 

12866. 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. Under the marketing order now 

in effect, South Texas onion handlers 

are subject to assessments. Funds to 

administer the order are derived from 

such assessments. It is intended that the 

assessment rate as issued herein will be 

applicable to all assessable onions 

beginning August 1, 2009, and continue 

until amended, suspended, or 

terminated. This rule will not preempt 

any State or local laws, regulations, or 

policies, unless they present an 

irreconcilable conflict with this rule. 

The Act provides that administrative 

proceedings must be exhausted before 

parties may file suit in court. Under 

section 608c(15)(A) of the Act, any 

handler subject to an order may file 

with USDA a petition stating that the 

order, any provision of the order, or any 

obligation imposed in connection with 

the order is not in accordance with law 

and request a modification of the order 

or to be exempted therefrom. Such 

handler is afforded the opportunity for 

a hearing on the petition. After the 

hearing, USDA would rule on the 

petition. The Act provides that the 

district court of the United States in any 

district in which the handler is an 

inhabitant, or has his or her principal 

place of business, has jurisdiction to 

review USDA’s ruling on the petition, 

provided an action is filed not later than 

20 days after the date of the entry of the 

ruling. 

This rule decreases the assessment 

rate established for the Committee for 

the 2009–10 and subsequent fiscal 

periods from $0.03 to $0.025 per 50- 

pound equivalent of onions. 

The South Texas onion marketing 

order provides authority for the 

Committee, with the approval of USDA, 

to formulate an annual budget of 

expenses and collect assessments from 

handlers to administer the program. The 

members of the Committee are 

producers and handlers of South Texas 

onions. They are familiar with the 

Committee’s needs and with the costs 

for goods and services in their local 

area, and are thus in a position to 

formulate an appropriate budget and 

assessment rate. The assessment rate is 

formulated and discussed in a public 

meeting. Thus, all directly affected 

persons have an opportunity to 

participate and provide input. 

For the 2007–08 and subsequent fiscal 

periods, the Committee recommended, 

and USDA approved, an assessment rate 

that would continue in effect from fiscal 

period to fiscal period unless modified, 

suspended, or terminated by USDA 

upon recommendation and information 

submitted by the Committee or other 

information available to USDA. 

The Committee met on June 9, 2009, 

and unanimously recommended 2009– 

10 expenditures of $184,705.12 and an 

assessment rate of $0.025 per 50-pound 

equivalent of onions. In comparison, 

last year’s budgeted expenditures were 

$185,095.12. The assessment rate of 

$0.025 is $0.005 lower than the rate 

currently in effect. The Committee 

recommended a lower assessment rate 

in order to reduce its reserve fund. 

The major expenditures 

recommended by the Committee for the 

2009–10 fiscal period include $73,705 

for management, administrative, and 

rent expenses; $45,000 for promotion 

expenses; and $44,000 for compliance. 

Budgeted expenses for these items in 

2008–09 were $66,695, $45,000, and 

$48,000 for compliance, respectively. 

The assessment rate recommended by 

the Committee was derived by 

considering anticipated expenses and 

production levels of South Texas 

onions. In its recommendation, the 

Committee utilized an estimate of 6 

million 50-pound equivalents of 

assessable onions for the 2009–10 fiscal 

period. If realized, this will provide 

estimated assessment revenue of 

$150,000 from all handlers. In addition, 

it is anticipated that $34,705 will be 

provided by interest income and reserve 

funds. When combined, revenue from 

these sources will be adequate to cover 

budgeted expenses. Funds in the reserve 

(currently $214,770) will be kept within 

the maximum of approximately two 

fiscal periods’ expenses as required by 

§ 959.43 of the order. 

The assessment rate established in 

this rule will continue in effect 

indefinitely unless modified, 

suspended, or terminated by USDA 

upon recommendation and information 

submitted by the Committee or other 

available information. 

Although this assessment rate is 

effective for an indefinite period, the 

Committee will continue to meet prior 

to or during each fiscal period to 

recommend a budget of expenses and 

consider recommendations for 

modification of the assessment rate. The 

dates and times of Committee meetings 

are available from the Committee or 

USDA. Committee meetings are open to 

the public and interested persons may 

express their views at these meetings. 

USDA will evaluate Committee 

recommendations and other available 

information to determine whether 

modification of the assessment rate is 

needed. Further rulemaking will be 

undertaken as necessary. The 

Committee’s 2009–10 budget and those 

for subsequent fiscal periods will be 

reviewed and, as appropriate, approved 

by USDA. 


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Federal Register / Vol. 74, No. 148 / Tuesday, August 4, 2009 / Rules and Regulations 38507 

Initial Regulatory Flexibility Analysis 

Pursuant to requirements set forth in 

the Regulatory Flexibility Act (RFA) (5 

U.S.C. 601–612), the Agricultural 

Marketing Service (AMS) has 

considered the economic impact of this 

rule on small entities. Accordingly, 

AMS has prepared this initial regulatory 

flexibility analysis. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

business subject to such actions in order 

that small businesses will not be unduly 

or disproportionately burdened. 

Marketing orders issued pursuant to the 

Act, and the rules issued thereunder, are 

unique in that they are brought about 

through group action of essentially 

small entities acting on their own 

behalf. 

There are approximately 84 producers 

of onions in the production area and 

approximately 31 handlers subject to 

regulation under the order. Small 

agricultural producers are defined by 

the Small Business Administration 

(SBA) (13 CFR 121.201) as those having 

annual receipts less than $750,000, and 

small agricultural service firms are 

defined as those whose annual receipts 

are less than $7,000,000. 

Most of the South Texas handlers are 

vertically integrated corporations 

involved in producing, shipping, and 

marketing onions. For the 2007–08 

marketing year, the industry’s 31 

handlers shipped onions produced on 

10,978 acres with the average and 

median volume handled being 202,245 

and 176,551 fifty-pound equivalents, 

respectively. In terms of production 

value, total revenues for the 31 handlers 

were estimated to be $174.7 million, 

with average and median revenues 

being $5.64 million and $4.92 million, 

respectively. 

The South Texas onion industry is 

characterized by producers and 

handlers whose farming operations 

generally involve more than one 

commodity, and whose income from 

farming operations is not exclusively 

dependent on the production of onions. 

Alternative crops provide an 

opportunity to utilize many of the same 

facilities and equipment not in use 

when the onion production season is 

complete. For this reason, typical onion 

producers and handlers either produce 

multiple crops or alternate crops within 

a single year. 

Based on the SBA’s definition of 

small entities, the Committee estimates 

that all of the 31 handlers regulated by 

the order would be considered small 

entities if only their onion revenues are 

considered. However, revenues from 

other farming enterprises could result in 

a number of these handlers being above 

the $7,000,000 annual receipt threshold. 

All of the 84 producers may be 

classified as small entities based on the 

SBA definition if only their revenue 

from onions is considered. 

This rule decreases the assessment 

rate established for the Committee and 

collected from handlers for the 2009–10 

and subsequent fiscal periods from 

$0.03 to $0.025 per 50-pound equivalent 

of onions handled. The Committee 

unanimously recommended 2009–10 

expenditures of $184,705.12 and an 

assessment rate of $0.025 per 50-pound 

equivalent. The recommended 

assessment rate is $0.005 lower than the 

rate currently in effect. The quantity of 

assessable onions for the 2009–10 fiscal 

period is estimated at 6 million 50- 

pound equivalents. Thus, the $0.025 

rate should provide $150,000 in 

assessment income. Income derived 

from handler assessments, along with 

interest income and funds from the 

Committee’s authorized reserve will be 

adequate to cover budgeted expenses. 

The major expenditures 

recommended by the Committee for the 

2009–10 fiscal period include $73,705 

for management, administrative, and 

rent expenses; $45,000 for promotion 

expenses; and $44,000 for compliance. 

Budgeted expenses for these items in 

2008–09 (previous year) were $66,695, 

$45,000, and $48,000, respectively. 

The Committee reviewed and 

unanimously recommended 2009–10 

expenditures of $184,705.12, which 

include a decrease in compliance 

expenses due to a shortened regulatory 

period. The assessment rate of $0.025 

per 50-pound equivalent of assessable 

onions recommended by the Committee 

was determined by considering 

anticipated expenses and production 

levels of South Texas onions. As stated 

earlier, the Committee utilized an 

estimate of 6 million 50-pound 

equivalents of assessable onions for the 

2009–10 fiscal period, which, if 

realized, will provide estimated 

assessment revenue of $150,000 from all 

handlers. In addition, it is anticipated 

that $34,705 will be provided by interest 

income and reserve funds. When 

combined, revenue from these sources 

will be adequate to cover budgeted 

expenses. 

The Committee discussed alternative 

expenditure levels, but determined that 

the recommended expenses were 

reasonable and necessary to adequately 

cover program operations. Other 

assessment rates were not considered 

because the Committee believed 

decreasing the rate by $0.005 was 

sufficient to reduce their current reserve 

fund to a desirable level. 

A review of historical information and 

preliminary information pertaining to 

the upcoming fiscal period indicates 

that the season average f.o.b. price for 

the 2009–10 fiscal period could range 

between $10.00 and $28.00 per 50- 

pound equivalent of onions. Therefore, 

the estimated assessment revenue for 

the 2009–10 fiscal period as a 

percentage of total f.o.b. revenue could 

range between 0.1 and 0.25 percent. 

This action decreases the assessment 

obligation imposed on handlers. 

Assessments are applied uniformly on 

all handlers, and some of the costs may 

be passed on to producers. However, 

decreasing the assessment rate reduces 

the burden on handlers, and may reduce 

the burden on producers. In addition, 

the Committee’s meeting was widely 

publicized throughout the South Texas 

onion industry and all interested 

persons were invited to attend the 

meeting and participate in Committee 

deliberations on all issues. Like all 

Committee meetings, the June 9, 2009, 

meeting was a public meeting and all 

entities, both large and small, were able 

to express views on this issue. Finally, 

interested persons are invited to submit 

comments on this interim final rule, 

including the regulatory and 

informational impacts of this action on 

small businesses. 

This action imposes no additional 

reporting or recordkeeping requirements 

on either small or large South Texas 

onion handlers. As with all Federal 

marketing order programs, reports and 

forms are periodically reviewed to 

reduce information requirements and 

duplication by industry and public 

sector agencies. 

AMS is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

USDA has not identified any relevant 

Federal rules that duplicate, overlap, or 

conflict with this rule. 

A small business guide on complying 

with fruit, vegetable, and specialty crop 

marketing agreements and orders may 

be viewed at: http://www.ams.usda.gov/ 

AMSv1.0/ams.fetchTemplateData.do?

template=TemplateN&page=Marketing

OrdersSmallBusinessGuide. Any 

questions about the compliance guide 

should be sent to Jay Guerber at the 

previously mentioned address in the 

FOR FURTHER INFORMATION CONTACT

section. 

After consideration of all relevant 

material presented, including the 

information and recommendation 

submitted by the Committee and other 


rmajette on DSK29S0YB1PROD with RULES
38508 Federal Register / Vol. 74, No. 148 / Tuesday, August 4, 2009 / Rules and Regulations 

available information, it is hereby found 

that this rule, as hereinafter set forth, 

will tend to effectuate the declared 

policy of the Act. 

Pursuant to 5 U.S.C. 553, it is also 

found and determined upon good cause 

that it is impracticable, unnecessary, 

and contrary to the public interest to 

give preliminary notice prior to putting 

this rule into effect, and that good cause 

exists for not postponing the effective 

date of this rule until 30 days after 

publication in the Federal Register 

because: (1) The 2009–10 fiscal period 

begins on August 1, 2009, and the 

marketing order requires that the rate of 

assessment for each fiscal period apply 

to all assessable onions handled during 

such fiscal period; (2) this action 

decreases the assessment rate for 

assessable onions beginning with the 

2009–10 fiscal period; (3) handlers are 

aware of this action which was 

unanimously recommended by the 

Committee at a public meeting and is 

similar to other assessment rate actions 

issued in past years; and (4) this interim 

final rule provides a 60-day comment 

period, and all comments timely 

received will be considered prior to 

finalization of this rule. 

List of Subjects in 7 CFR Part 959 

Marketing agreements, Onions, 

Reporting and recordkeeping 

requirements. 

■ For the reasons set forth in the 

preamble, 7 CFR part 959 is amended as 

follows: 

PART 959—ONIONS GROWN IN 

SOUTH TEXAS 

■ 1. The authority citation for 7 CFR 

part 959 continues to read as follows: 

Authority: 7 U.S.C. 601–674. 

■ 2. Section 959.237 is revised to read 

as follows: 

§ 959.237 Assessment rate. 

On and after August 1, 2009, an 

assessment rate of $0.025 per 50-pound 

equivalent is established for South 

Texas onions. 

Dated: July 29, 2009. 

Rayne Pegg, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. E9–18540 Filed 8–3–09; 8:45 am] 

BILLING CODE 3410–02–P 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1229 

RIN 2590–AA21 

Capital Classifications and Critical 

Capital Levels for the Federal Home 

Loan Banks 

AGENCY: Federal Housing Finance 

Agency. 

ACTION: Final rule. 

SUMMARY: The Federal Housing Finance 

Regulatory Reform Act, Division A of 

the Housing and Economic Recovery 

Act of 2008 (HERA), requires the 

Director of the Federal Housing Finance 

Agency (FHFA) to establish criteria 

based on the amount and type of capital 

held by a Federal Home Loan Bank 

(Bank) for each of the following capital 

classifications: Adequately capitalized; 

Undercapitalized; Significantly 

undercapitalized; and Critically 

undercapitalized. In addition, HERA 

provides that the critical capital level 

for each Bank shall be the amount of 

capital that the Director by regulation 

shall require. HERA also sets forth 

prompt corrective action (PCA) 

authority that the Director has for the 

Banks. To implement these new 

provisions, FHFA published in the 

Federal Register on January 30, 2009 an 

interim final rule to define critical 

capital for the Banks, establish the 

criteria for each of the capital 

classifications identified in HERA and 

delineate its PCA authority over the 

Banks. FHFA requested comments on 

all aspects of the regulation. It also 

sought comment on whether it should 

establish a ‘‘well-capitalized’’ 

classification and on what criteria may 

be appropriate to define such a new 

category. After considering the 

comments received on the interim final 

rule, FHFA is adopting the interim final 

rule as a final regulation, subject to 

amendments meant to clarify certain 

provisions. 

DATES: The final regulation is effective 

August 4, 2009. 

FOR FURTHER INFORMATION CONTACT: Julie 

Paller, Senior Financial Analyst, (202) 

408–2842, and Anthony G. Cornyn, 

Senior Associate Director, (202) 408– 

2522, Division of Federal Home Loan 

Bank Regulation, Federal Housing 

Finance Agency, 1625 Eye Street, NW., 

Washington, DC 20006; or Thomas E. 

Joseph, Senior Attorney-Advisor, (202) 

414–3095, Office of General Counsel, 

Federal Housing Finance Agency, 1700 

G St., NW., Washington, DC 20552. The 

telephone number for the 

Telecommunications Device for the Deaf 

is (800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Federal Housing Finance Agency and 

Recent Legislation 

Effective July 30, 2008, HERA, Public 

Law 110–289, 122 Stat. 2654 (2008), 

transferred the supervisory and 

oversight responsibilities of the Office of 

Federal Housing Enterprise Oversight 

(OFHEO) over the Federal National 

Mortgage Association (Fannie Mae), and 

the Federal Home Loan Mortgage 

Corporation (Freddie Mac) (collectively, 

the Enterprises) and the oversight 

responsibilities of the Federal Housing 

Finance Board (Finance Board) over the 

Banks and the Office of Finance (which 

acts as the Banks’ fiscal agent) to a new 

independent executive branch agency, 

FHFA. FHFA is responsible for ensuring 

that the Enterprises and the Banks 

operate in a safe and sound manner, 

including that they maintain adequate 

capital and internal controls, that their 

activities foster liquid, efficient, 

competitive and resilient national 

housing finance markets, and that they 

carry out their public policy missions 

through authorized activities. See id. at 

§ 1102, 122 Stat. 2663–64. 

Section 1141 of HERA states that the 

Director shall adopt regulations 

specifying the critical capital level for 

each Bank no later than the expiration 

of the 180 day period from the date that 

HERA was enacted. See id. at § 1141, 

122 Stat. 2730 (adopting 12 U.S.C. 

4613(b)). In establishing this 

requirement, HERA provides that the 

Director shall take due consideration of 

the critical capital levels established for 

the Enterprises, with such modifications 

as the Director determines to be 

appropriate to reflect the difference in 

operations between the Banks and the 

Enterprises. 

In addition, section 1142 of HERA 

requires that the Director, no later than 

180 days from its enactment, establish 

for the Banks criteria for each of the four 

following capital classifications: 

Adequately capitalized; 

Undercapitalized; Significantly 

undercapitalized; and Critically 

undercapitalized. See id. at § 1142, 122 

Stat. 2730–32. HERA specifies that the 

criteria should be based on the amount 

and types of capital held by a Bank and 

the risk-based, minimum and critical 

capital levels for the Banks, taking due 

consideration of the capital 

classifications established for the 

Enterprises, with such modifications as 

the Director determines to be 

appropriate to reflect the difference in 


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