This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

26772

Vol. 65, No. 90

Tuesday, May 9, 2000

NUCLEAR REGULATORY

COMMISSION

10 CFR Chapter I

Revised High-Level Guidelines for

Performance-Based Activities

AGENCY: Nuclear Regulatory

Commission.

ACTION: Request for comments.

SUMMARY: The Nuclear Regulatory

Commission (NRC) is requesting public

comment on its proposed revised highlevel guidelines for developing a more

performance-based regulatory

framework. In addition, a process is

proposed for implementing these

guidelines. An on-line public workshop

will be held to discuss the revisions and

the proposed process.

DATES: The comment period expires

June 23, 2000. Comments received after

this date will be considered if it is

practical to do so, but the Commission

is able to assure consideration only for

comments received on or before this

date. Our preference is for members of

the public to use the on-line workshop

on June 8, 2000 as the medium for

providing comments.

ADDRESSES: Written comments may be

sent to: Secretary, U.S. Nuclear

Regulatory Commission, Washington,

DC 20555–0001, Attention: Rulemakings

and Adjudications Staff. Hand deliver

comments to 11555 Rockville Pike,

Rockville, MD, between 7:30 a.m. and

4:15 p.m. on Federal workdays.

FOR FURTHER INFORMATION CONTACT: N.

Prasad Kadambi, (301) 415–5896,

Internet: npk@nrc.gov of the Office of

Nuclear Regulatory Research, U.S.

Nuclear Regulatory Commission,

Washington, DC 20555–0001.

SUPPLEMENTARY INFORMATION:

1. Background

2. On-Line Public Workshop

3. NRC Staff Response to Public Comments

4. Revised High-Level Guidelines

5. Implementation of Revised Guidelines

1. Background

In the Staff Requirements

Memorandum (SRM) to SECY–99–176,

‘‘Plans for Pursuing Performance-Based

Initiatives,’’ issued on September 13,

1999, the Commission directed the staff

to develop high-level guidelines to

identify and assess the viability of

candidate performance-based activities.

In response, the staff developed

proposed guidelines which were

published in the Federal Register on

January 24, 2000 (65 FR 3615).

Comments from stakeholders were

discussed at a public workshop held on

March 1, 2000, and also obtained

through the submission of letters. This

FRN addresses the staff’s response to

those comments.

2. On-Line Public Workshop

The NRC will hold an on-line public

workshop on June 8, 2000, for the

purpose of soliciting stakeholder

reaction to the staff’s response to

comments offered relative to the high

level guidelines published in 65 FR

3615 and the resulting changes to the

guidelines. In addition, this workshop is

being offered to provide a second

opportunity for comment from members

of the public who were unable to attend

the first workshop held on March 1,

2000.

This workshop will be conducted

over the internet. Stakeholders will be

able to log onto the NRC’s ‘‘Rulemaking

Forum’’ website and offer comments at

any time but preferably on June 8, 2000.

The concept includes interaction with

cognizant staff over the period of the

workshop. All relevant documents,

including comments submitted

electronically by others, will be

available at this site. In recognition of

the different time zones where

stakeholders may be located, electronic

comments submitted after normal NRC

business hours will be posted on June

9, 2000. Effective June 1, 2000, the

public is invited to check the NRC’s

website at: http://ruleforum.llnl.gov/

cgi-bin/rulemake?source=PBA_RFC to

obtain detailed instructions on how to

participate in the on-line workshop.

Because some members of the public

may not have ready access to the

internet, an alternate method of

communication will also be available

during normal business hours on June 8,

2000. Toll free calls can be made to 1–

800–368–5642. Callers may request Dr.

N. Prasad Kadambi at 415–5896, or Dr.

Sidney Feld at 415–6193 to take note of

their comments.

3. NRC Staff Response to Public

Comments

The Federal Register Notice (FRN), 65

FR 3615 on January 24, 2000, requested

comments on the proposed high-level

guidelines with particular interest in a

set of specific questions. Comments

were provided at the March 1, 2000

workshop and in writing. The workshop

was conducted as a facilitated

discussion among stakeholders

representing a wide variety of interests,

including NRC staff representatives

from various program offices. A

transcription of the workshop is

available on the internet under the

‘‘Meeting Transcripts’’ link in the NRC

external website.

In the January 24, 2000 FRN, the staff

specifically requested comments on a

number of key questions concerning the

proposed guidelines. The NRC’s

response to comments has been

structured within the framework of the

questions published in the January FRN.

Comments not associated directly with

any of the questions are shown under

the heading ‘‘Other Comments’.

The NRC’s response to the comments

and any indication as to how the

guidelines have changed in response to

the comments follows:

A. Clarity and Specificity of the

Guidelines

1. Are the proposed guidelines

appropriate and clear?

Diverse opinions were expressed

regarding appropriateness and clarity of

the guidelines with a strong indication

that those opposed to the performancebased approach provided unfavorable

responses and those supporting the

approach provided favorable responses.

Because the Commission has directed

that performance-based initiatives be

pursued, no revisions have been made

in the main guidelines themselves.

Revisions involving the amplifying

language have been incorporated, as

noted below.

2. Are there additional guidelines that

would improve clarity and specificity?

One comment proposed a guideline to

increase safety and another comment

proposed a guideline to prevent

incentives to ‘‘perverse’’ outcomes. As

discussed below, a framework and

process to increase safety by adding to

Federal Register / Vol. 65, No. 90 / Tuesday, May 9, 2000 / Proposed Rules 26773

regulatory requirements (subject to the

Backfit Rule) exists and it would not be

efficient to duplicate this through

additional guidelines. No changes were

made in the main guidelines because

safety and beneficial outcomes are

generally desirable goals which form

parts of normal staff considerations.

However, the amplifying guidelines

under ‘‘Maintain Safety’’ have been

modified to emphasize that safety

considerations will play the primary

role in NRC’s assessments. Since the

Commission addressed the matter of

encouraging and rewarding improved

outcomes in the White Paper (SRM to

SECY–98–144, ‘‘White Paper on RiskInformed and Performance-Based

Regulation’’) an amplifying guideline to

this effect has been added. This

amplifying guideline under overall net

benefit generated a comment indicating

a misunderstanding that cost would be

given a greater emphasis than safety. A

revision has been made regarding the

considerations related to a simplified

net benefit test.

3. How does the ‘‘high-level’’ nature

of the guidelines affect the clarity and

specificity of the guidelines?

The comments provided did not

indicate any need to change any of the

guidelines due to this factor. One

commenter specifically endorsed the

‘‘high-level’’ approach to the guidelines,

while also suggesting a graded approach

incorporating a minimum acceptable

risk. The staff interpreted ‘‘minimum

acceptable risk’’ to mean a level of risk

consistent with adequate protection

considerations. The NRC agrees that a

graded approach is appropriate for

regulatory changes above and beyond

adequate protection. The staff maintains

that the guidelines, as currently

formulated, allow for this; thus, no

changes were made to address this

comment.

B. Implementation of the Guidelines

1. What guidelines, if any, are

mandatory for an activity to qualify as

a performance-based initiative?

No mandatory guidelines were

identified.

2. What is the best way to implement

these guidelines?

An issue of considerable interest was

whether a performance-based approach

should be voluntary or not. Certain

commenters believed that voluntary

changes negatively affect the NRC’s

inspection and enforcement role

whereas others maintained that changes

must be voluntary to ensure flexibility

on the part of licensees. It is anticipated

that voluntary implementation will

often be proposed, and where

mandatory implementation is proposed,

such a change would be subject to the

Backfit Rule.

3. How should the Backfit Rule apply

to the implementation of performancebased approaches?

Most commenters indicated that

reliance on a performance-based

approach would have no bearing on

whether or not the Backfit Rule applied.

The NRC concurs that increased

reliance on a performance-based

approach poses no unique

considerations relative to the Backfit

Rule. One commenter expressed the

view that the Backfit Rule should apply

to reductions in regulatory burden. This

comment goes well beyond the scope of

these guidelines as currently envisaged.

4. Should these guidelines be applied

to all types of activity, e.g. should they

be applied to petitions for rulemaking?

To the extent that commenters

favored application of the guidelines,

they also supported application to all

activities directed at improving the

effectiveness of regulations. However,

the staff maintains that if the activity

does not possess the necessary attributes

to support identification as a

performance-based approach, it cannot

be considered a candidate. It is in this

context that one commenter

acknowledged that it may not be

appropriate for some regulations, such

as the Fitness for Duty Rule. It should

be noted that the guidelines would be

applied to NRC’s determinations in

responding to and resolving petitions

for rulemaking.

5. Should these guidelines only be

applied to new regulatory initiatives?

Although some comments preferred

widespread implementation, NRC

currently plans to only implement the

guidelines for new initiatives primarily

because of NRC resource constraints.

6. Will these guidelines be effective in

determining whether we can make a

regulatory initiative more performancebased?

In general, to the extent that any

comments were offered in this regard,

the response was in the affirmative.

C. Establishment of Objective

Performance Criteria

1. In moving to performance-based

requirements, should the current level

of conservatism be maintained or

should introduction of more realism be

attempted?

Commenters expressed the view that

the appropriate level of conservatism

depends on the analysis methodology

and the applicable assumptions.

Defense-in-depth and uncertainty

factors also need to be considered. One

commenter stated that it should not be

assumed that the level of defense-indepth remain the same in a

performance-based approach. In

response to these comments, amplifying

guidelines have been added under the

main guideline of ‘‘Increase

effectiveness, efficiency and realism of

the NRC activities and decisionmaking’’.

2. What level of conservatism (safety

margin) needs to be built into a

performance criterion to avoid facing an

immediate safety concern if the criterion

is not met?

The comments and response from

(C.1) above are also applicable here.

3. Recognizing that performance

criteria can be set at different levels in

a hierarchy (e.g., component, train,

system, release, dose), on what basis is

an appropriate level in the hierarchy

selected for setting performance-based

requirements, and what is the

appropriate level of conservatism for

each tier in the hierarchy?

Oral and written comments expressed

the view that performance criteria are

best set at the function or system level.

Some amplifying guidelines have been

added under the main guideline of

‘‘Increase effectiveness, efficiency and

realism of the NRC activities and

decision-making’’.

4. Who would be responsible for

proposing and justifying the acceptance

limits and adequacy of objective

criteria?

A commenter suggested that the

proponent of a change should bear the

responsibility for justifying the criteria

and the adequacy of acceptance limits.

Some amplifying guidelines have been

added under the main guideline of ‘‘The

performance-based approach can be

incorporated into the regulatory

framework’’.

5. What are examples of performancebased objectives that are not amenable

to risk analyses such as PRA or

Integrated Safety Assessment?

Examples offered were cross-cutting

issues, including fitness-for-duty, safety

conscious work environment and

management effectiveness. No changes

were made to the guidelines in response

to these comments.

6. In the context of risk-informed

regulation, to what extent should

performance criteria account for

potential risk from beyond-design-basis

accidents (i.e., severe accidents)?

A commenter stated that riskinformed regulation reaches beyond

design basis events by its nature.

Performance criteria would not

normally go beyond the design basis.

Exceptions, if they occur, are most

likely if the design is found not to

provide the expected safety margin. If

exceptions arise, the generic issue

26774 Federal Register / Vol. 65, No. 90 / Tuesday, May 9, 2000 / Proposed Rules

process followed by the staff is capable

of addressing the special circumstances.

As currently constructed, these

considerations can be readily handled

in the guidelines, and no changes in the

guidelines were made.

D. Identification and Use of Measurable

(or Calculable) Parameters

1. How and by whom are performance

parameters to be determined?

Comments were presented expressing

concern that the NRC would be entirely

dependent on licensees’ own reports

regarding performance. One commenter

has stated that information collection at

nuclear facilities may require changes to

better measure performance. In the

NRC’s view, performance parameters are

typically determined jointly by NRC and

licensees, with the NRC having final

authority in the determination. Further,

the NRC would always maintain

vigilance over performance

observations. If information collection

requirements need to be changed to

implement a performance-based

approach, such proposals will be

addressed in the context of the specific

regulatory requirement under

consideration. No changes were made in

the guidelines on account of this

consideration.

2. How do you decide what a relevant

performance parameter is?

Some commenters expressed

reservations with the use of

performance parameters such as core

damage frequency as a calculable

parameter. Other comments cautioned

against drawing broader conclusions

(such as overall level of safety or lack

thereof) from performance measures

than may be justified. As these

considerations are context specific, and

the merits of specific performance

parameters are explicitly considered by

the guidelines, no changes are proposed

in the guidelines.

3. How much uncertainty can be

tolerated in the measurable or

calculated parameters?

Comments indicate a strong

connection between consideration of

uncertainty and the level of

conservatism in establishing the

performance parameters and acceptance

criteria. Changes made in response to

(C.1) above are also applicable to this

issue.

E. Pilot Projects

1. Would undertaking pilot projects in

the reactor, materials, and waste arenas

provide beneficial experience before

finalizing the guidelines?

Some commenters stated that pilot

projects would be useful, and others

stated that they were not needed. One

commenter suggested that it was

important to learn appropriate lessons

from implementation of the

maintenance rule. Another commented

that Option B of 10 CFR 50, Appendix

J has already appropriately

demonstrated the favorable results from

a performance-based regulation. The

staff plans to consider an exercise to

apply the guidelines to specific

regulations as part of the

implementation process.

2. What should be the relationship

between any such pilot projects and

those being implemented to risk-inform

the regulations?

Commenters generally stated that the

ongoing pilot projects related to riskinforming the regulations need not be

perturbed by including consideration of

the guidelines, but appropriate

coordination should be maintained. Any

screening of regulations should be done

one time as opposed to subjecting each

regulation to various screenings at

different times under different

processes. The staff proposes to

integrate the interfaces between

performance-based and risk-informed

activities so as to help ensure a more

integrated approach and avoid

duplication.

F. Other Comments

1. Eliminate all high-level guidelines

used to evaluate opportunities for

regulatory improvement (II. Guidelines

to Assess Performance-Based Regulatory

Improvement):

One commenter at the public

workshop suggested that the set of

guidelines to assess performance-based

regulatory improvement be eliminated.

The staff continues to believe that this

set of guidelines constitutes an integral

part of a structure and logic to consider

explicitly the values important to any

regulatory improvement program. No

changes were made based on this

comment.

2. Inclusion of the Advisory

Committee on Medical Uses of Isotopes

(ACMUI):

One commenter at the public

workshop suggested that ACMUI should

be included among the advisory

committees which would have an

opportunity to review the high-level

guidelines. ACMUI has been included

with ACRS and ACNW as committees

whose feedback will be sought before

the guidelines are submitted to the

Commission.

3. Inclusion of perspective from the

NRC regions in the work of the

Performance-Based Regulations

Working Group (PBRWG):

One commenter at the public

workshop suggested that a

representative from the NRC regional

offices should be included in the

PBRWG, which will play an

instrumental role in developing and

applying the guidelines. The NRC staff

accepted the merit of this suggestion

and regional representation has been

added to the PBRWG.

4. Inspection and enforcement

considerations:

An NRC staff member provided a

comment that inspection and

enforcement aspects should be front-end

considerations. Another commenter has

suggested that performance above a

threshold should result in reduced NRC

scrutiny. An amplifying guideline has

been added under the guideline ‘‘The

performance-based approach can be

incorporated into the regulatory

framework’’ to address this comment.

5. Consideration of a significantly

different regulatory paradigm:

One commenter offered suggestions to

significantly modify the regulatory

framework so that any changes

undertaken by the NRC would have as

a pre-requisite an improvement in the

level of safety. The proposals presented

would have wide ranging impacts, and

consideration of performance-based

initiatives would be only tangentially

related to most of them. No specific

changes to the guidelines were made in

consideration of these comments.

4. Revised High-Level Guidelines

The following proposed revised

guidelines are to be applied in the

reactor, materials, and waste arenas. The

nature of the regulated activity would

determine which guidelines apply and

the extent of the application.

I. Guidelines To Assess Viability

The NRC will apply the following

guidelines (which are based on the four

attributes in the White Paper) to assess

whether a more performance-based

approach is viable for any given new

regulatory initiative. This assessment

would be applied on a case-by-case

basis and would be based on an

integrated consideration of the

individual guidelines. The guidelines

are listed below:

A. Measurable (or calculable)

parameters to monitor acceptable plant

and licensee performance exist or can be

developed.

a. Directly measured parameter

related to safety objective is preferred;

b. A calculated parameter may also be

acceptable; if it is related to the safety

objective of the regulatory activity.

c. Parameters which licensees can

readily access, or are currently

accessing, in real time are preferred.

Federal Register / Vol. 65, No. 90 / Tuesday, May 9, 2000 / Proposed Rules 26775

d. Parameters monitored periodically

to address postulated or design basis

conditions may also be acceptable.

B. Objective criteria to assess

performance exist or can be developed.

a. Objective criteria are established

based on risk insights, deterministic

analyses and/or performance history.

C. Licensees would have flexibility in

meeting the established performance

criteria when a performance-based

approach is adopted.

a. Programs and processes used to

achieve the established performance

criteria would be at the licensee’s

discretion.

b. A consideration in incorporating

flexibility to meet established

performance criteria will be to

encourage and reward improved

outcomes.

D. A framework exists or can be

developed such that performance

criteria, if not met, will not result in an

immediate safety concern.

a. A sufficient safety margin exists.

b. Time is available for taking

corrective action to avoid the safety

concern.

c. The licensee is capable of detecting

and correcting performance degradation.

II. Guidelines To Assess PerformanceBased Regulatory Improvement

If a more performance-based approach

is deemed to be viable based on the

guidelines in (I. Guidelines to Assess

Viability) above, then the regulatory

activity would be evaluated against the

following set of guidelines to determine

whether, on balance, after an integrated

consideration of these guidelines, there

are opportunities for regulatory

improvement:

A. Maintain safety, protect the

environment and the common defense

and security.

a. Safety considerations play a

primary role in assessing any

improvement arising from the use of

performance-based approaches.

b. The level of conservatism and

uncertainty in the supporting analyses

would be assessed to ensure adequate

safety margins.

B. Increase public confidence.

a. An assessment would be made to

determine if the emphasis on results

and objective criteria (characteristics of

a performance-based approach) can

increase public confidence.

C. Increase effectiveness, efficiency

and realism of the NRC activities and

decision-making.

a. An assessment would be made of

the level of conservatism existing in the

currently applicable regulatory

requirements considering analysis

methodology and the applicable

assumptions. Any proposal to increase

or decrease conservatism would take

into account uncertainty factors and

defense-in-depth relative to the scenario

under consideration.

b. An assessment would be made of

the performance criteria and the level in

the performance hierarchy where they

have been set. In general, performance

criteria should be set at a level

commensurate with the function being

performed. In most cases, performance

criteria would be expected to be set at

the system level or higher.

D. Reduce unnecessary regulatory

burden.

E. A reasonable test shows an overall

net benefit results from moving to a

performance-based approach.

a. A reasonable test would begin with

a qualitative approach to evaluate

whether there is merit in changing the

existing regulatory framework. When

this question is approached from the

perspective of existing practices in a

mature industry, stakeholder support for

change may need to be obtained.

b. Unless imposition of a safety

improvement or other societal outcome

is contemplated, expending resources

for a change in regulatory practice

would be justified in most cases only if

NRC or licensee operations benefit from

such a change. The primary source of

initial information and feedback

regarding potential benefits to licensees

would be the licensees themselves.

c. A simplified definition of the

overall net benefit (such as net

reduction in worker radiation exposure)

may be appropriate for weighing the

immediate implications of a proposed

change.

F. The performance-based approach

can be incorporated into the regulatory

framework.

a. The regulatory framework may

include the regulation in the Code of

Federal Regulations, the associated

Regulatory Guide, NUREG, Standard

Review Plan, Technical Specification,

and/or inspection guidance.

b. A feasible performance-based

approach would be one which can be

directed specifically at changing one,

some, or all of these components.

c. The proponent of the change to the

components of the regulatory framework

would have the responsibility to

provide sufficient justification for the

proposed change; all stakeholders

would have the opportunity to provide

feedback on the proposal, typically in a

public meeting.

d. Inspection and enforcement

considerations would be addressed

during the formulation of regulatory

changes rather than afterwards. Such

considerations could include reduced

NRC scrutiny if performance so

warrants.

G. The performance-based approach

would accommodate new technology.

a. The incentive to consider a

performance-based approach may arise

from development of new technologies

as well as difficulty stemming from

technological changes in finding spare

components and parts.

b. Advanced technologies may

provide more economical solutions to a

regulatory issue, justifying

consideration of a performance-based

approach.

III. Guidelines To Assure Consistency

With Other Regulatory Principles

A. A proposed change to a more

performance-based approach is

consistent and coherent with other

overriding goals, principles and

approaches involving the NRC’s

regulatory process.

a. The main sources of these

principles are the Principles of Good

Regulation, the Probabilistic Risk

Assessment (PRA) Policy Statement, the

Regulatory Guide 1.174, ‘‘An Approach

for Using PRA in Risk-Informed

Decisions on Plant-Specific Changes to

the Licensing Basis,’’ and the NRC’s

Strategic Plan.

b. Consistent with the high-level at

which the guidance described above has

been articulated, specific factors which

need to be addressed in each case (such

as defense in depth and treatment of

uncertainties) would depend on the

particular regulatory issues involved.

5. Implementation of Revised

Guidelines

Implementation of the guidelines

could have an agency-wide impact.

Hence, implementing the revised

guidelines requires that the staff obtain

Commission approval for the guidelines

themselves and the process for

implementing them. Additionally, the

NRC has been directed by Congress to

revise existing outdated or paperworkoriented regulations to make them

performance-based. Subject to any

Commission guidance received, the staff

plans to apply the guidelines proposed

in this FRN relative to meeting this

Congressional mandate.

A two-step process is proposed to

implement the above guidelines. Each

step is addressed as follows:

A. Step 1: Obtain Commission Approval

of Guidelines

Subsequent to the public workshop

on June 8, 2000, the NRC staff will make

presentations or provide information to

the ACRS, ACNW and ACMUI so as to

obtain their advice on the above

26776 Federal Register / Vol. 65, No. 90 / Tuesday, May 9, 2000 / Proposed Rules

1Pub. L. 92–181, 85 Stat. 583 (Dec. 10, 1971). 2Pub. L. 102–552, 106 Stat. 4102 (Oct. 28, 1992).

guidelines. The staff will propose

sample case studies to exercise the

guidelines. Included in the

presentations will be a discussion of

stakeholder comments and responses.

The feedback from the advisory

committees will be incorporated into a

Commission paper, as appropriate, and

the paper will be submitted to the

Commission by August 21, 2000.

B. Step 2: Implement the Finalized

Guidelines into the Regulatory

Improvement Process

The guidelines, which will be used to

identify and assess performance-based

activities, will only be applied to new

initiatives. The basic process would be

institutionalized by incorporating the

elements into internal NRC procedures.

Regulatory requirements that are overly

prescriptive may be proposed for

improvement by members of the NRC

staff, industry, or the public (as a

petition for rulemaking, for example).

More widespread acceptance of the

guidelines would be likely if the

guidelines were also used by industry to

increase the level of performance-based

activities. For example, the guidelines

could be adopted for use by standards

developing organizations or industry

working groups as they develop

proposals for consideration by NRC.

NRC review of such proposals for

incorporation into the regulatory

framework would then be considerably

more streamlined.

The guidelines would serve as one of

the tools available to the staff to assess

whether a more performance-based

approach is appropriate for a given

regulatory initiative. If the evaluation

shows that safety improvements are

justified, relevant requirements

associated with the proposed change

(e.g. compliance with the Backfit Rule,

preparation of a regulatory analysis,

etc.) would be undertaken. If the

evaluation shows that unnecessary

regulatory burden can be reduced, the

proposed changes to requirements will

most likely be voluntary. In either case,

stakeholder input would be obtained in

a timely manner.

Dated at Rockville, Maryland, this 3rd day

of May, 2000.

Charles E. Rossi,

Director, Division of Systems Analysis and

Regulatory Effectiveness, Office of Nuclear

Regulatory Research.

[FR Doc. 00–11535 Filed 5–8–00; 8:45 am]

BILLING CODE 7590–01–P

FARM CREDIT ADMINISTRATION

12 CFR Part 611

RIN 3052–AC00

Organization; Stockholder Vote on

Like Lending Authority

AGENCY: Farm Credit Administration.

ACTION: Proposed rule.

SUMMARY: We propose new regulations

to carry out territorial consent

requirements of the Farm Credit Act of

1971, as amended (Act).1 Section 5.17 of

the Act allows Farm Credit System (FCS

or System) stockholders in certain areas

of the country to vote on charters

involving like lending authorities. The

charter amendments would provide

eligible customers the opportunity to

obtain lending services from more than

one association.

DATES: Please send your comments to us

by June 8, 2000.

ADDRESSES: You may send comments by

electronic mail to ‘‘reg-comm@fca.gov’’

or through the Pending Regulations

section of our Web site at

‘‘www.fca.gov.’’ You may also send

comments to Patricia W. DiMuzio,

Director, Regulation and Policy

Division, Office of Policy and Analysis,

Farm Credit Administration, 1501 Farm

Credit Drive, McLean, Virginia 22102–

5090 or fax them to (703) 734–5784. You

may review copies of all comments we

receive in the Office of Policy and

Analysis, Farm Credit Administration.

FOR FURTHER INFORMATION CONTACT:

Eric Howard, Senior Policy Analyst,

Office of Policy and Analysis, Farm

Credit Administration, McLean, VA

22102–5090, (703) 883–4498, TDD

(703) 883–4444,

or

Joy Strickland, Senior Counsel, Office of

General Counsel, Farm Credit

Administration, McLean, VA 22102–

5090, (703) 883–4020, TDD (703) 883–

4444.

SUPPLEMENTARY INFORMATION:

I. Objectives

We are committed to removing

territorial restrictions that prevent

customers of the FCS from choosing

their System lender. Recently, we

announced that direct lender

associations may apply for national

(also referred to as nationwide) charters.

In order to facilitate national charters,

stockholder votes must be conducted by

certain associations in Alabama,

Louisiana, Mississippi, and New

Mexico. Our objectives for the proposed

rule are to:

• Implement the stockholder

approvals required by statute; and

• Ensure stockholders are adequately

informed and votes are conducted

quickly and fairly.

II. Background

A. FCA Initiative

On July 14, 1998, the Farm Credit

Administration (FCA or Agency) Board

issued a Philosophy Statement on

Competition (Philosophy Statement).

The Philosophy Statement described the

FCA Board’s framework for the

Agency’s chartering, policy

development, and regulatory activities

involving System corporate structures

and related statutory authorities. The

FCA Board believes removing the

geographical constraints of System

entities will promote greater efficiency,

improve customer service, and ensure

that they continue to meet the current

and future needs of rural America. To

carry out our philosophy, we researched

strategies that conform to the Act and

increase opportunities for rural and

agricultural borrowers. Based on this

analysis, our first priority is to remove

geographic barriers by granting national

charters to FCS direct lender

associations.

We will accept applications from

institutions for charter amendments. To

facilitate the application process, we

will be furnishing additional guidance

to FCS institutions in the near future.

We note that the proposed voting

requirements only apply to the

geographic areas specifically referenced

in the Farm Credit Banks and

Associations Safety and Soundness Act

of 1992 (1992 amendments).2 Thus, they

do not apply to nationwide charter

requests outside of the areas covered by

the 1992 amendments or any other FCA

chartering actions not related to national

charters.

B. Statutory Requirements for

Stockholder Votes

Before we can grant full nationwide

charters, we must fulfill two

requirements of the Act affecting certain

institutions in four states. In the 1992

amendments, Congress required

stockholder voting on competitive

charters in these areas.

The 1992 amendments require

association stockholder votes in the

geographic area in which the Federal

Intermediate Credit Bank of Jackson or

its successor (AgFirst Farm Credit Bank)

is chartered to provide short-and