Federal Register / Vol. 62, No. 198 / Tuesday, October 14, 1997 / Rules and Regulations 53227

monetary reserve in an amount not to

exceed approximately one marketing

year’s operational expenses. Last year’s

actual Board expenditures totaled

$284,894. The reduced assessment rate

is expected to result in an operating

reserve of $257,497, which is about

equal to what the Board actually spent

last year for program expenses.

The Board discussed alternatives to

this rule, including alternative

expenditure levels. Lower assessment

rates were considered, but not

recommended because they would not

generate the income necessary to

administer the program with an

adequate reserve. Major expenses

recommended by the Board for the

1997–98 marketing years include

$46,864 for personal services (salaries

and benefits), $5,640 for rent, and

$5,000 for compliance, $17,000 for a

crop survey, $269,000 for promotion,

and $182,364 for an emergency fund.

Budgeted expenses for these items in

1996–97 were $50,020, $5,640, $5,000,

$15,000, $275,000, and $182,364,

respectively. As mentioned earlier, the

Board will not make any decision on

using emergency funds until December

1997, at the earliest.

Hazelnut shipments for the year are

estimated at 70,000,000 pounds, which

should provide $280,000 in assessment

income. Income derived from handler

assessments, along with interest and

funds from the Board’s authorized

reserve, will be adequate to cover

budgeted expenses. Funds in the reserve

will be kept within the maximum

permitted by the order.

Recent price information indicates

that the grower price for the 1997–98

marketing season will range between

$0.32 and $0.43 per pound of hazelnuts.

Therefore, the estimated assessment

revenue for the 1997–98 marketing years

as a percentage of total grower revenue

will range between .93 and 1.25 percent.

This action will reduce the

assessment obligation imposed on

handlers. While this rule will impose

some additional costs on handlers, the

costs are minimal and in the form of

uniform assessments on all handlers.

Some of the additional costs may be

passed on to producers. However, these

costs will be offset by the benefits

derived by the operation of the

marketing order. In addition, the

Board’s meeting was widely publicized

throughout the hazelnut industry and

all interested persons were invited to

attend the meeting and participate in

Board deliberations on all issues. Like

all Board meetings, the August 28, 1997,

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

information on the regulatory and

informational impacts of this action on

small businesses.

This action will not impose any

additional reporting or recordkeeping

requirements on either small or large

hazelnut 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.

The Department has not identified

any relevant Federal rules that

duplicate, overlap, or conflict with this

rule.

After consideration of all relevant

matter presented, including the

information and recommendation

submitted by the Board and other

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) This action reduces the

current assessment rate for hazelnuts;

(2) the 1997–98 marketing year began on

July 1, 1997, and the marketing order

requires that the rate of assessment

apply to all assessable hazelnuts

handled during such marketing year; (3)

handlers are aware of this action which

was unanimously recommended by the

Board 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 982

Marketing agreements, Hazelnuts,

Reporting and recordkeeping

requirements.

For the reasons set forth in the

preamble, 7 CFR part 982 is amended as

follows:

PART 982—HAZELNUTS GROWN IN

OREGON AND WASHINGTON

1. The authority citation for 7 CFR

part 982 continues to read as follows:

Authority: 7 U.S.C. 601–674.

§ 982.340 [Amended]

2. Section 982.340 is amended by

removing the words ‘‘July 1, 1996,’’ and

adding in their place the words ‘‘July 1,

1997,’’ and by removing ‘‘$0.007’’ and

adding in its place ‘‘$0.004.’’

Dated: October 7, 1997.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable

Programs.

[FR Doc. 97–27101 Filed 10–10–97; 8:45 am]

BILLING CODE 3410–02–P

FARM CREDIT ADMINISTRATION

12 CFR Part 615

RIN 3052–AB73

Funding and Fiscal Affairs, Loan

Policies and Operations, and Funding

Operations; Book-Entry Procedures for

Farm Credit Securities

AGENCY: Farm Credit Administration.

ACTION: Final rule.

SUMMARY: The Farm Credit

Administration (FCA), through the FCA

Board (Board), adopts as final with

minor technical changes a previously

adopted interim rule that revises

procedures governing the issuance,

maintenance, and transfer of Farm

Credit securities on the book-entry

system of the Federal Reserve Banks

(Book-entry System). This action

completes rulemaking necessary to

conform FCA book-entry procedures to

the recently revised book-entry

procedures of the Department of the

Treasury (Treasury), which regulates the

Book-entry System for Treasury

securities. The action simultaneously

finalizes conforming amendments in the

book-entry regulations governing

securities of the Farm Credit System

Financial Assistance Corporation (FAC)

and the Federal Agricultural Mortgage

Corporation (Farmer Mac).

EFFECTIVE DATE: January 1, 1997, except

that the technical amendments adopted

herein are effective 30 days after

publication during which either or both

Houses of Congress are in session. A

notice of effective date for the technical

amendments will be published in the

Federal Register.

FOR FURTHER INFORMATION CONTACT:

Laurie A. Rea, Senior Policy Analyst,

Office of Policy Development and

Risk Control, Farm Credit

Administration, McLean, VA 22102–

5090, (703) 883–4498,

or

William L. Larsen, Senior Attorney,

Office of General Counsel, Farm

Credit Administration, McLean, VA

22102–5090, (703) 883–4020, TDD

(703) 883–4444.
53228 Federal Register / Vol. 62, No. 198 / Tuesday, October 14, 1997 / Rules and Regulations

SUPPLEMENTARY INFORMATION:

I. Background

On December 20, 1996, the FCA

published interim regulations

completely revising the procedures

governing the issuance, maintenance,

and transfer of Farm Credit securities on

the Book-entry System (61 FR 67188).

The FCA’s interim rulemaking followed

the action of Treasury, which revised its

book-entry regulations to eliminate

outdated legal concepts and incorporate

significant changes in commercial and

property law affecting the holding of

securities through financial

intermediaries. At the request of

Treasury, and in coordination with

other regulators of GovernmentSponsored Enterprises (GSEs), the FCA

made the interim rule effective on

January 1, 1997, the same date on which

Treasury’s new book-entry regulations

became effective. This coordinated

action was designed to avoid market

uncertainty and help ensure a consistent

regulatory approach for all users of the

Book-entry System, including Farm

Credit System (System) institutions. The

interim rulemaking provided for a posteffective date comment period.

More extensive background on FCA

book-entry regulations can be found in

the interim rulemaking document and is

not repeated in this notice of final

adoption. A detailed explanation of the

rationale and effect of the Treasury’s

new book-entry regulations, known by

the acronym ‘‘TRADES’’ (Treasury/

Reserve Automated Debt Entry System)

is set forth in Treasury’s proposed and

final rulemaking documents. See 61 FR

8420 (March 4, 1996) and 61 FR 43626

(August 23, 1996). Members of the

public should refer to Treasury’s

TRADES rulemaking documentation for

background on the history and

mechanics of the Book-entry System

and guidance on the general provisions

of the book-entry regulations. As is its

current policy regarding interpretation

of book-entry regulations, the FCA

expects to continue to follow Treasury

TRADES interpretations and guidance

with respect to FCA book-entry

regulations and will coordinate with

Treasury regarding future guidance and

any necessary changes.

II. Comments and Technical Changes

The FCA received one written

comment on the interim regulations.

The Federal Farm Credit Banks Funding

Corporation (Funding Corporation),

responding on behalf of the System

banks, fully supported the interim

regulations but suggested several

technical clarifications. In addition, the

FCA has continued to consult with

Treasury, the Federal Reserve Board,

and the Federal Reserve Bank of New

York regarding final implementation of

the interim regulations. Treasury

suggested that references to the United

States in several sections of the interim

regulations be omitted to avoid any

implication that the United States

guarantees Farm Credit securities.

Treasury made the same suggestion to

other GSE regulators in connection with

their revised book-entry regulations.

The FCA now adopts the interim bookentry regulations as final, but in

response to these comments and

suggestions, makes several minor

technical changes in the regulations as

discussed below.

Section 615.5450(h)

The Funding Corporation suggested

that the FCA add ‘‘respectively’’ after

the words ‘‘sections 4.2(c) and 4.2(d)’’ to

clarify that consolidated securities are

issued under section 4.2(c) and

Systemwide securities are issued under

section 4.2(d) of the Farm Credit Act of

1971, as amended (Act) (12 U.S.C.

2155(c)). The final rule incorporates this

suggestion.

Providing for Issuance of Registered

Definitive Securities in §§ 615.5451(c)

and 615.5457(c)

The Funding Corporation noted that

there are registered definitive Farm

Credit securities outstanding and that

registered definitive securities may be

issued in the future. Thus, the Funding

Corporation suggested that the reference

to ‘‘bearer-definitive form’’ in

§ 615.5451(c) be replaced with a more

generic reference to ‘‘definitive form,’’

which would encompass both bearer

and registered definitive form.

Similarly, the Funding Corporation

suggested deletion of the term ‘‘bearer’’

in § 615.5457(c). The FCA agrees that

regulatory references to definitive

securities should not be limited to

bearer securities and is adding the

phrase ‘‘either registered or’’ preceding

the term ‘‘bearer’’ in both sections. In

§ 615.5451(c), this broader language

authorizes Farm Credit securities to be

issued in either registered or bearer

form, and in § 615.5457(c), it permits

Farm Credit securities being withdrawn

from the Book-entry System to be

converted into definitive securities and

issued in either registered or bearer form

to the extent permitted by the applicable

securities documentation. As amended,

this language is consistent with

Treasury’s in 31 CFR 306.117(d).

Section 615.5457(a)

The Funding Corporation requested

clarification regarding the process for

withdrawing eligible securities from the

Book-entry System. Specifically, the

Funding Corporation asked who

requests that the securities be

withdrawn and to whom the request is

submitted.

The FCA’s regulations on withdrawal

of eligible book-entry securities for

conversion to definitive form are

modeled after Treasury’s regulations at

31 CFR 306.117. Consistent with the

TRADES regulations, requests for

withdrawal and conversion of eligible

book-entry securities could only be

made to a Federal Reserve Bank through

a participant as defined in the

regulations. Thus an investor’s request

for withdrawal and conversion of

eligible book-entry securities would

proceed through the chain of the

investor’s financial intermediaries to a

participant. In turn, the participant

would transmit the withdrawal and

conversion request to the Federal

Reserve Bank, which would convert the

book-entry securities into definitive

securities and deliver them in

accordance with the participant’s

instructions.

Section 615.5457(d)

The terms of certain issuances of

Farm Credit securities provide for the

redemption of such securities, either in

whole or in part, at specified times prior

to maturity. Since there may thus be

more than one call date that applies to

a particular issue of Farm Credit

securities, the Funding Corporation

requested clarification of which call

date applies when requests to withdraw

eligible book-entry securities are made.

In response to this comment, the FCA

inserts the term ‘‘the applicable’’

preceding the term ‘‘call date’’ to clarify

that eligible book-entry securities may

be converted to definitive securities

only before the call date applicable to

such securities. The amount of advance

notice required for conversion requests

to be honored is controlled by the

securities documentation and Federal

Reserve Bank Operating Circulars.

New § 615.5460(c)

In response to the Funding

Corporation’s comment suggesting that

there should be more explicit authority

in the regulations for conversion of

definitive securities into book-entry

securities, the FCA has added new

§ 615.5460(c). New § 615.5460(c) states

that definitive Farm Credit securities

may be converted to book-entry form in

accordance with the terms of the

applicable securities documentation and

Federal Reserve Bank Operating

Circular. This new provision

complements the existing references in
Federal Register / Vol. 62, No. 198 / Tuesday, October 14, 1997 / Rules and Regulations 53229

§§ 615.5456 and 615.5462 to conversion

of definitive securities to book-entry

form.

Regulations Applicable to Securities

Converted From Book-Entry to Definitive

Form

The Funding Corporation requested

clarification as to which of the

regulations in subpart O of part 615

apply to securities converted from bookentry to definitive form. In general,

unless limited by their terms, the

definitions in § 615.5450 apply to

definitive securities, whether original

issue or converted from book-entry. The

conversion authority in §§ 615.5456 and

615.5457 covers the conversion process

and related matters. Because

§§ 615.5461 and 615.5462 apply

specifically to lost and stolen definitive

securities and the restrictive

endorsement of bearer definitive

securities, their requirements would

apply to definitive securities converted

from book-entry form. Converted

securities also are subject to applicable

securities documentation and any other

provisions of law that may be applicable

to the issuance, maintenance, and

transfer of definitive securities.

The Funding Corporation also

inquired whether converted securities

are subject to 31 CFR part 306 of

Treasury regulations, which sets forth

general regulations governing treatment

of definitive U.S. securities. Farm Credit

securities are not U.S. securities and

therefore are not subject to 31 CFR part

306. However, where appropriate and

not inconsistent with FCA regulations,

the Farm Credit banks may specify in

their securities documentation that

maintenance, transfer, and other

procedures relating to definitive Farm

Credit securities will be the same as

those applicable to Treasury securities.

References to the United States

Treasury suggested to the FCA and

other GSE regulators that their bookentry regulations omit references to the

United States wherever possible to

avoid any potential confusion regarding

the liability of the United States for GSE

securities. For this reason, the FCA is

removing certain references to the

United States in §§ 615.5452(a),

615.5454(c), and 615.5455(a). As the

preamble to the interim regulations

noted, any reference in FCA book-entry

regulations to the United States, the

Treasury, or the Federal Reserve Banks

is not meant to imply any liability of the

United States for Farm Credit securities.

See section 4.4(c) of the Act.

List of Subjects in 12 CFR Part 615

Accounting, Agriculture, Banks,

Banking, Government securities,

Investments, and Rural areas.

For the reasons stated in the interim

rule release, supplemented by the above

analysis and discussion, the FCA Board

adopts as final with technical changes

the interim rule amending Part 615

published at 61 FR 67188, Dec. 20,

1996, governing book-entry procedures

for Farm Credit, FAC, and Farmer Mac

securities. The effective date of this rule

remains January 1, 1997, except that the

technical amendments adopted herein

are effective 30 days after publication

during which either or both Houses of

Congress are in session. A notice of

effective date for the technical

amendments will be published in the

Federal Register.

PART 615—FUNDING AND FISCAL

AFFAIRS, LOAN POLICIES AND

OPERATIONS, AND FUNDING

OPERATIONS

1. The authority citation for part 615

continues to read as follows:

Authority: Secs. 1.5, 1.7, 1.10, 1.11, 1.12,

2.2, 2.3, 2.4, 2.5, 2.12, 3.1, 3.7, 3.11, 3.25, 4.3,

4.3A, 4.9, 4.14B, 4.25, 5.9, 5.17, 6.20, 6.26,

8.0, 8.3, 8.4, 8.6, 8.7, 8.8, 8.10, 8.12 of the

Farm Credit Act (12 U.S.C. 2013, 2015, 2018,

2019, 2020, 2073, 2074, 2075, 2076, 2093,

2122, 2128, 2132, 2146, 2154, 2154a, 2160,

2202b, 2211, 2243, 2252, 2278b, 2278b–6,

2279aa, 2279aa–3, 2279aa–4, 2279aa–6,

2279aa–7, 2279aa–8, 2279aa–10, 2279aa–12);

sec. 301(a) of Pub. L. 100–233, 101 Stat. 1568,

1608.

Subpart O—Book-entry Procedures for

Farm Credit Securities

2. Section 615.5450 is amended by

revising paragraph (h) to read as

follows:

§ 615.5450 Definitions.

* * * * *

(h) Farm Credit securities means

consolidated notes, bonds, debentures,

or other similar obligations of the Farm

Credit banks and Systemwide notes,

bonds, debentures, or similar

obligations of the Farm Credit banks

issued under sections 4.2(c) and 4.2(d),

respectively, of the Act, or laws

repealed thereby.

* * * * *

3. Section 615.5451 is amended by

revising paragraph (c) to read as follows:

§ 615.5451 Book-entry and definitive

securities.

* * * * *

(c) Consolidated and Systemwide

securities also may be issued in either

registered or bearer definitive form.

4. Section 615.5452 is amended by

revising the section heading and the

introductory text of paragraphs (a)(1)

and (a)(2) to read as follows:

§ 615.5452 Law governing rights and

obligations of Federal Reserve Banks, Farm

Credit banks, and Funding Corporation;

rights of any person against Federal

Reserve Banks, Farm Credit banks, and

Funding Corporation.

(a) * * *

(1) The rights and obligations of the

Farm Credit banks, the Funding

Corporation, and the Federal Reserve

Banks with respect to:

* * * * *

(2) The rights of any person, including

a participant, against the Farm Credit

banks, the Funding Corporation, and the

Federal Reserve Banks with respect to:

* * * * *

5. Section 615.5454 is amended by

revising paragraph (c)(1) to read as

follows:

§ 615.5454 Creation of participant’s

security entitlement; security interests.

* * * * *

(c)(1) The Farm Credit banks, the

Funding Corporation, and the Federal

Reserve Banks have no obligation to

agree to act on behalf of any person or

to recognize the interest of any

transferee of a security interest or other

limited interest in favor of any person

except to the extent of any specific

requirement of Federal law or regulation

or to the extent set forth in any specific

agreement with the Federal Reserve

Bank on whose books the interest of the

participant is recorded. To the extent

required by such law or regulation or set

forth in an agreement with a Federal

Reserve Bank, or the Federal Reserve

Bank Operating Circular, a security

interest in a security entitlement that is

in favor of a Federal Reserve Bank, a

Farm Credit bank, the Funding

Corporation, or a person may be created

and perfected by a Federal Reserve Bank

marking its books to record the security

interest. Except as provided in

paragraph (b) of this section, a security

interest in a security entitlement marked

on the books of a Federal Reserve Bank

shall have priority over any other

interest in the securities.

* * * * *

6. Section 615.5455 is amended by

revising paragraph (a) to read as follows:

§ 615.5455 Obligations of the Farm Credit

banks and the Funding Corporation; no

adverse claims.

(a) Except in the case of a security

interest in favor of the United States or

a Federal Reserve Bank or otherwise as

provided in § 615.5454(c)(1), for the
53230 Federal Register / Vol. 62, No. 198 / Tuesday, October 14, 1997 / Rules and Regulations

purposes of this subpart O, the Farm

Credit banks, the Funding Corporation

and the Federal Reserve Banks shall

treat the participant to whose securities

account an interest in a book-entry

security has been credited as the person

exclusively entitled to issue a transfer

message, to receive interest and other

payments with respect thereof and

otherwise to exercise all the rights and

powers with respect to such security,

notwithstanding any information or

notice to the contrary. The Federal

Reserve Banks, the Farm Credit banks,

and the Funding Corporation are not

liable to a person asserting or having an

adverse claim to a security entitlement

or to a book-entry security in a

participant’s securities account,

including any such claim arising as a

result of the transfer or disposition of a

book-entry security by a Federal Reserve

Bank pursuant to a transfer message that

the Federal Reserve Bank reasonably

believes to be genuine.

* * * * *

7. Section 615.5457 is amended by

revising paragraphs (c) and (d) to read

as follows:

§ 615.5457 Withdrawal of eligible bookentry securities for conversion to definitive

form.

* * * * *

(c) Farm Credit securities which are to

be delivered upon withdrawal may be

issued in either registered or bearer

form, to the extent permitted by the

applicable securities documentation.

(d) All requests for withdrawal of

eligible book-entry securities must be

made prior to the maturity or the

applicable date of call of the Farm

Credit securities.

8. Section 615.5460 is amended by

adding a new paragraph (c) to read as

follows:

§ 615.5460 Additional provisions.

* * * * *

(c) Conversion of definitive securities

into book-entry securities. Definitive

Farm Credit securities may be converted

to book-entry form in accordance with

the terms of the applicable securities

documentation and Federal Reserve

Operating Circular.

Dated: October 3, 1997.

Floyd Fithian,

Secretary, Farm Credit Administration Board.

[FR Doc. 97–26999 Filed 10–10–97; 8:45 am]

BILLING CODE 6705–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 301 and 602

[TD 8737]

RIN 1545–AU88

Rewards for Information Relating to

Violations of Internal Revenue Laws

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final and temporary

regulations.

SUMMARY: This document contains

temporary regulations relating to

rewards for information that relates to

violations of the internal revenue laws.

The regulations reflect changes to the

law made by the Taxpayer Bill of Rights

2 and affect persons that are eligible to

receive an informant’s reward.

The text of these regulations also

serves as the text of the proposed

regulations set forth in the notice of

proposed rulemaking on this subject in

the Proposed Rules section of this issue

of the Federal Register.

DATES: These regulations are effective

October 14, 1997.

For dates of applicability, see

§ 301.7623–1T(g).

FOR FURTHER INFORMATION CONTACT:

Judith A. Lintz (202)622–4940 (not a

toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

These regulations are being issued

without prior notice and public

procedure pursuant to the

Administrative Procedure Act (5 U.S.C.

553). For this reason, the collections of

information contained in these

regulations have been reviewed and,

pending receipt and evaluation of

public comments, approved by the

Office of Management and Budget under

control number 1545–1534. Responses

to the collection of information are

voluntary with respect to the provision

of information relating to violations of

the internal revenue laws, but are

required to obtain a benefit with respect

to filing a claim for reward.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a valid control

number assigned by the Office of

Management and Budget.

For further information concerning

these collections of information, and

where to submit comments on the

collections of information and the

accuracy of the estimated burden, and

suggestions for reducing this burden,

please refer to the preamble to the crossreferencing notice of proposed

rulemaking published in the Proposed

Rules section of this issue of the Federal

Register.

Books or records relating to a

collection of information must be

retained as long as their contents may

become material in the administration

of any internal revenue law. Generally,

tax returns and tax return information

are confidential, as required by 26

U.S.C. 6103.

Background

This document contains amendments

to the Procedure and Administration

Regulations (26 CFR part 301) under

section 7623 relating to rewards for

information that relates to violations of

the internal revenue laws. This section

was amended by section 1209 of the

Taxpayer Bill of Rights 2 (TBOR 2) (Pub.

L. 104–168, 110 Stat. 1452 (1996)).

Explanation of Provisions

Section 7623 provides the Secretary

with the authority, by regulation, to pay

rewards for information that relates to

violations of the internal revenue laws.

Section 1209 of TBOR 2 amended

section 7623 to clarify that rewards may

be paid for information relating to civil,

as well as criminal, violations. TBOR 2

also provided that the rewards are to be

paid out of the proceeds of amounts

(other than interest) collected by reason

of the information. These temporary

regulations reflect those amendments.

In addition, these temporary

regulations incorporate and update

§ 301.7623–1. For example, the

regulations increase the limit on awards

from 10% to 15% and provide new

titles and addresses to which persons

should submit information relating to

violations of the internal revenue laws.

Special Analyses

It has been determined that this

Treasury Decision is not a significant

regulatory action as defined in EO

12866. Therefore, a regulatory

assessment is not required. It has also

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) does not apply to these

regulations.

It is hereby certified that the

regulations in this document will not

have a significant economic impact on

a substantial number of small entities.

This certification is based on a

determination that in the past

approximately 10,000 persons have filed

claims for reward on an annual basis. Of

these persons, almost all have been

individuals. Accordingly, a regulatory