Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Proposed Rules 8179 

1Public Law 92–181, 85 Stat. 583 (1971), 12 

U.S.C. 2001 et seq. 

2 12 U.S.C. 2252(a)(8), (9) and (10). 

3 71 FR 5740 (Feb. 2, 2006). 

4Section 620.6 of the FCA’s regulations states, 

‘‘[e]ach member of an audit committee must be a 

member of the Farm Credit institution’s board of 

directors * * * All committee members should be 

knowledgeable in at least one of the following: 

public and corporate finance, financial reporting 

and disclosure, or accounting procedures.’’ 

information on the characteristics of the 

coil-only indoor unit for testing and 

rating purposes to satisfy the 

requirement that the highest volume 

sales unit combination be tested. 10 CFR 

429.16(a)(2)(ii). 

DOE will conduct the public meeting 

in an informal, facilitated, conference 

style. There shall be no discussion of 

proprietary information, costs or prices, 

market shares, or other commercial 

matters regulated by U.S. antitrust laws. 

A court reporter will record the minutes 

of the meeting, after which a transcript 

will be available for purchase from the 

court reporter and placed on the DOE 

Web site. 

Anyone who wishes to participate in 

the public meeting, receive meeting 

materials, or be added to the DOE 

mailing list to receive future notices and 

information about wine chillers and 

miscellaneous refrigeration products 

should contact Ms. Brenda Edwards at 

(202) 586–2945. 

Issued in Washington, DC, on February 7, 

2012. 

Kathleen Hogan, 

Deputy Assistant Secretary, Energy Efficiency 

and Renewable Energy. 

[FR Doc. 2012–3375 Filed 2–13–12; 8:45 am] 

BILLING CODE 6450–01–P 

FARM CREDIT ADMINISTRATION 

12 CFR Part 630 

RIN 3052–AC77 

Disclosure to Investors in System-wide 

and Consolidated Bank Debt 

Obligations of the Farm Credit System 

AGENCY: Farm Credit Administration. 

ACTION: Proposed rule. 

SUMMARY: The Farm Credit 

Administration (FCA, us, we, or our) 

proposes to amend our regulations 

related to the Federal Farm Credit Banks 

Funding Corporation (Funding 

Corporation) System Audit Committee 

(SAC) and the Farm Credit System 

(System) annual report to investors. The 

proposed rule would remove the 

provision that a two-thirds majority vote 

of the Funding Corporation board of 

directors be required to deny a request 

for resources by the SAC to engage 

independent legal counsel, outside 

advisors or consultants. The proposed 

rule would instead require appropriate 

funding to the SAC to perform these 

duties, quarterly reporting by the SAC to 

the Funding Corporation board on 

resources used, and annual reporting to 

investors. 

DATES: Submit comments on or before 

April 16, 2012. 

ADDRESSES: We offer a variety of 

methods for you to submit your 

comments. For accuracy and efficiency 

reasons, commenters are encouraged to 

submit comments by email or through 

the FCA’s Web site. As facsimiles (fax) 

are difficult for us to process and 

achieve compliance with section 508 of 

the Rehabilitation Act, we no longer 

accept comments submitted by fax. 

Regardless of the method you use, 

please do not submit your comments 

multiple times via different methods. 

You may submit comments by any of 

the following methods: 

• Email: Send an email to regcomm@fca.gov. 

• FCA Web site: http://www.fca.gov. 

Select ‘‘Public Commenters,’’ then 

‘‘Public Comments,’’ and follow the 

directions for ‘‘Submitting a Comment.’’ 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Gary K. Van Meter, Director, 

Office of Regulatory Policy, Farm Credit 

Administration, 1501 Farm Credit Drive, 

McLean, VA 22102–5090. 

You may review copies of all 

comments we receive at our office in 

McLean, Virginia or on our Web site at 

http://www.fca.gov. Once you are in the 

Web site, select ‘‘Public Commenters,’’ 

then ‘‘Public Comments,’’ and follow 

the directions for ‘‘Reading Submitted 

Public Comments.’’ We will show your 

comments as submitted, including any 

supporting data provided, but for 

technical reasons we may omit items 

such as logos and special characters. 

Identifying information that you 

provide, such as phone numbers and 

addresses, will be publicly available. 

However, we will attempt to remove 

email addresses to help reduce Internet 

spam. 

FOR FURTHER INFORMATION CONTACT: 

Deborah Wilson, Senior Accountant, 

Office of Regulatory Policy, Farm Credit 

Administration, McLean, VA 22102– 

5090, (703) 883–4414, TTY (703) 883– 

4434, or Laura McFarland, Senior 

Counsel, Office of General Counsel, 

Farm Credit Administration, McLean, 

VA 22102–5090, (703) 883–4020, TTY 

(703) 883–4020. 

SUPPLEMENTARY INFORMATION: 

I. Objectives 

The objectives of this proposed rule 

are to: 

• Allow the SAC unrestricted access 

to resources to engage legal counsel, 

consultants and outside advisors, 

• Ensure that investors are provided 

transparent and complete disclosure on 

the safe and sound use of resources by 

the SAC, and 

• Clarify that the appointment, 

compensation, and retention of the 

external auditor for the System-wide 

reports cannot be changed without the 

agreement of both the SAC and the 

Funding Corporation board. 

II. Background 

The Farm Credit Act of 1971, as 

amended (Act),1 authorizes the FCA to 

issue regulations implementing the 

Act’s provisions.2 Our regulations are 

intended to ensure the safe and sound 

operations of System institutions and to 

govern the disclosure of financial 

information to shareholders of, and 

investors in, the System. In 2006, we 

issued a final rulemaking on the 

governance of System institutions.3

Those regulations changed the structure, 

responsibilities, and authority of 

existing audit committees at the banks 

and the SAC, and it required audit 

committees at System associations. 

We explained in our 2006 rulemaking 

that an audit committee is the guardian 

of an institution’s financial integrity, 

and its independence is essential to 

investor confidence in the transparency 

of audited financial statements. The 

2006 rulemaking required that audit 

committees at banks and associations be 

comprised solely of well-qualified board 

members,4 but made an exception to the 

composition of the SAC. Section 

630.6(a) requires that only one-third of 

the SAC membership be composed of 

directors from the Funding Corporation 

board. This exception was in response 

to comments received on the 2006 

rulemaking that audit committee 

composition derived solely from the 

board of directors may be appropriate 

for individual System institutions, but 

not for the SAC. Commenters believed 

that the duties of the SAC require 

broader representation and greater 

financial experience of its members due 

to its oversight for the preparation of 

System combined financial statements. 

The 2006 rulemaking required that 

the SAC be permitted to contract for 

independent legal counsel and expert 

advisers and that the Funding 

Corporation provide monetary and 

nonmonetary resources for these 

activities. Also, the rulemaking required 

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8180 Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Proposed Rules 

5 75 FR 70619 (Nov. 18, 2010). 

a two-thirds super majority vote, in lieu 

of a simple majority vote, of the full 

Funding Corporation board to deny an 

SAC request for resources. In a petition 

dated May 2010, the SAC requested that 

we amend § 630.6 to allow it unfettered 

ability to engage outside advisors, 

consultants and legal counsel in the 

performance of its duties. On November 

18, 2010, we issued an advance notice 

of proposed rulemaking (ANPRM) on 

senior officer compensation disclosures 

and related topics in order to gather 

information for the development of a 

proposed rulemaking.5 Part of the 

ANPRM discussed the authority of the 

SAC to obtain resources. Among the 

comment letters received in response to 

the ANPRM, several responders, 

including the Farm Credit Council 

(Council) acting for its membership, and 

the Funding Corporation, addressed the 

ability of the SAC to have unfettered 

ability to access resources. The Council 

expressed the view of its membership 

that existing FCA regulations 

appropriately balance audit committee 

need with the board’s ultimate 

responsibility to the customershareholder for the safety and financial 

stability of the institution. However, the 

Council also noted that its membership 

supported the SAC’s request. 

This proposed rule would expand the 

authority of the SAC related to its use 

of Funding Corporation resources for 

consultants, legal counsel and outside 

advisors. In its petition, the SAC 

asserted that expanding its authority on 

the use of resources would: 

• Avoid any future potential conflict 

that could arise between it and the 

Funding Corporation board on SAC 

requests for resources, 

• Enhance its independence, and 

• Promote the integrity of the System 

both in fact and perception to investors 

in System-wide debt securities. 

We considered these views in 

proposing this rule. The rule proposes 

that the SAC report to the board at least 

quarterly on its use of resources, and the 

Funding Corporation disclose the uses 

and their benefits in the System annual 

report to investors. Further, we propose 

to clarify that the SAC appoint, 

compensate, retain and oversee the 

System’s independent accountants with 

the agreement of the Funding 

Corporation board. 

III. Section-by-Section Analysis 

We request and encourage any 

interested person to submit comments 

on this proposed rule and ask that you 

support your comments with relevant 

data or examples. We are especially 

interested in receiving comments 

related to the proposed clarification that 

the SAC appoint, compensate, and 

retain external auditors with the 

agreement of the Funding Corporation 

board of directors. 

A. System Audit Committee Authority 

[§ 630.6(a)] 

FCA regulations authorize the 

Funding Corporation board of directors 

to deny an SAC request for resources by 

a two-thirds majority vote of the full 

board. The proposed rule would provide 

the SAC with the unlimited ability to 

engage outside advisors, consultants 

and legal counsel in the performance of 

its duties. This proposed rule would 

require that the SAC use Funding 

Corporation resources in a manner that 

would not adversely affect the safety 

and soundness of the System and that 

the use of resources complies with law 

and regulation. Also, it would require 

that the SAC report to the Funding 

Corporation board at least quarterly on 

resources used pursuant to this 

proposed rule. 

This provision would not prevent the 

Funding Corporation from developing 

its own procedures to address the use of 

resources by the SAC. To facilitate an 

open and balanced discussion on the 

appropriate use of resources, we would 

expect the SAC to confer with the 

Funding Corporation board on its intent 

to use resources. We would also expect 

that in performing its fiduciary 

responsibilities, the full board would 

review the use of resources for any 

safety or soundness issues. 

B. External Auditors 

[§ 630.6(a)(4)(ii)(A)] 

The proposed rule would revise our 

regulation relating to the appointment, 

compensation and retention of the 

external auditor. The revision would 

clarify that the SAC perform this duty 

with the agreement of the Funding 

Corporation board. We believe this 

clarification will ensure that the SAC’s 

appointment, compensation and 

retention of the external auditor for the 

System-wide report are executed with 

the agreement of the full board of the 

Funding Corporation. Since the SAC is 

a subset of the full board, we believe the 

SAC duties related to the external 

auditors are of such significance that 

they must remain under the direct 

oversight of the full board. 

C. Disclosure of System Audit 

Committee Expenditures [§ 630.20(n)] 

To ensure that investors are provided 

transparent and complete disclosure on 

the safe and sound use of resources by 

the SAC, we propose in § 630.20(n) that 

Funding Corporation resources used by 

the SAC be disclosed by category in the 

annual report to investors. The 

proposed categories would include, at a 

minimum, independent legal counsel 

and related services, consultants, 

actuaries, outside advisors and other 

services performed on behalf of the 

SAC. We propose that fees paid for the 

audit of the combined System-wide 

financial statements and any fees under 

$5,000 per category need not be 

disclosed. In addition to disclosing the 

name of SAC members, we propose that 

experience and compensation for each 

member be included in the annual 

report. We propose this change for 

consistency with audit committee 

disclosures required at the bank and 

association level. 

IV. Regulatory Flexibility Act 

Pursuant to section 605(b) of the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.), the FCA hereby certifies that the 

proposed rule would not have a 

significant economic impact on a 

substantial number of small entities. 

Each of the banks in the Farm Credit 

System, considered together with its 

affiliated associations, has assets and 

annual income in excess of the amounts 

that would qualify them as small 

entities. Therefore, Farm Credit System 

institutions are not ‘‘small entities’’ as 

defined in the Regulatory Flexibility 

Act. 

List of Subjects in 12 CFR Part 630 

Accounting, Agriculture, Banks, 

banking, Organization and functions 

(Government agencies), Reporting and 

recordkeeping requirements, Rural 

areas. 

For the reasons stated in the 

preamble, part 630 of chapter VI, title 12 

of the Code of Federal Regulations are 

proposed to be amended as follows: 

PART 630—DISCLOSURE TO 

INVESTORS IN SYSTEM–WIDE AND 

CONSOLIDATED BANK DEBT 

OBLIGATIONS OF THE FARM CREDIT 

SYSTEM 

1. The authority citation for part 630 

is revised to read as follows: 

Authority: Secs. 4.2, 4.9, 5.9, 5.17, 5.19 of 

the Farm Credit Act (12 U.S.C. 2153, 2160, 

2243, 2252, 2254); sec. 424 of Pub. L. 100– 

233, 101 Stat. 1568, 1656; sec. 514 of Pub. L. 

102–552, 106 Stat. 4102. 

Subpart A—General 

2. Section 630.6 is amended by 

revising paragraphs (a)(3) and 

(a)(4)(ii)(A) to read as follows: 

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Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Proposed Rules 8181 

§ 630.6 Funding Corporation committees. 

(a) System Audit Committee. * * * 

* * * * * 

(3) Resources. The Funding 

Corporation must provide the SAC 

monetary and nonmonetary resources 

the SAC determines necessary to enable 

it to perform the duties listed in 

paragraph (a)(4) of this section. The 

Funding Corporation must permit the 

SAC to contract, for reasons directly 

related to the duties listed in paragraph 

(a)(4), the services of external auditors, 

independent legal counsel, and outside 

advisors. The SAC must not use the 

resources of the Funding Corporation in 

a manner that would adversely affect 

the safety and soundness of the System 

or be contrary to law and regulation. 

The SAC must provide the Funding 

Corporation board of directors a 

quarterly accounting of expenditures 

made pursuant to this section. 

(4) Duties. * * * 

* * * * * 

(ii) External auditors. The external 

auditor must report directly to the SAC. 

The SAC must: 

(A) Determine, with the agreement of 

the Funding Corporation board of 

directors, the appointment, 

compensation, and retention of the 

external auditors issuing System-wide 

audit reports; 

* * * * * 

Subpart B—Annual Report to Investors 

3. Section 630.20 is amended by 

revising paragraph (n) to read as 

follows: 

§ 630.20 Contents of the annual report to 

investors. 

* * * * * 

(n) System Audit Committee. The 

Funding Corporation must include in 

the System-wide Report to Investors a 

description of the System Audit 

Committee and its activities during the 

reporting period. At a minimum, the 

report must: 

(1) List the names of the System Audit 

Committee members, including each 

member’s term of office and principal 

occupation during the past 5 years. For 

each member, state the total cash and 

noncash compensation paid for services 

on the System Audit Committee during 

the reporting period. 

(2) Categorize and disclose the dollar 

value of monetary and nonmonetary 

resources used by the System Audit 

Committee during the reporting period. 

Describe the benefit(s) obtained from 

expenditures made under each category. 

Disclosures of fees paid for the audit of 

the System-wide financial statements 

and those categories of expenses having 

an annual aggregate dollar value of less 

than $5,000 are not required. At a 

minimum, there must be separate 

categories for: 

(i) Administrative expenses, 

(ii) Contracted legal services, 

(iii) Contracted consultants and 

advisors, and 

(iv) Other contracted services, 

identifying the services. 

* * * * * 

Dated: February 9, 2012. 

Dale L. Aultman, 

Secretary, Farm Credit Administration Board. 

[FR Doc. 2012–3411 Filed 2–13–12; 8:45 am] 

BILLING CODE 6705–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2012–0141; Directorate 

Identifier 2011–NM–092–AD] 

RIN 2120–AA64 

Airworthiness Directives; Fokker 

Services B.V. Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to adopt a new 

airworthiness directive (AD) for all 

Fokker Services B.V. Model F.28 Mark 

0070 and 0100 airplanes. This proposed 

AD was prompted by an in-flight failure 

of the hydraulic control panel, which 

resulted in the absence of pressure and 

quantity indication of the hydraulic 

system and accompanying alerts for 

‘‘hydraulic system 1 low quantity’’ and 

‘‘hydraulic system 2 low quantity.’’ This 

proposed AD would require 

implementing new abnormal procedures 

for hydraulics in the airplane flight 

manual (AFM). We are proposing this 

AD to prevent loss of control of the 

airplane due to incorrect hydraulic 

system failure information being 

provided to the flightcrew, followed by 

application of inappropriate procedures. 

DATES: We must receive comments on 

this proposed AD by March 30, 2012. 

ADDRESSES: You may send comments by 

any of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: (202) 493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE., 

Washington, DC 20590. 

• Hand Delivery: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE., 

Washington, DC, between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

For service information identified in 

this proposed AD, contact Fokker 

Services B.V., Technical Services Dept., 

P.O. Box 231, 2150 AE Nieuw-Vennep, 

the Netherlands; telephone +31 (0)252– 

627–350; fax +31 (0)252–627–211; email 

technicalservices.fokkerservices@

stork.com; Internet http:// 

www.myfokkerfleet.com. You may 

review copies of the referenced service 

information at the FAA, Transport 

Airplane Directorate, 1601 Lind Avenue 

SW., Renton, Washington. For 

information on the availability of this 

material at the FAA, call 425–227–1221. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Operations office between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The AD docket 

contains this proposed AD, the 

regulatory evaluation, any comments 

received, and other information. The 

street address for the Docket Operations 

office (telephone (800) 647–5527) is in 

the ADDRESSES section. Comments will 

be available in the AD docket shortly 

after receipt. 

FOR FURTHER INFORMATION CONTACT: Tom 

Rodriguez, Aerospace Engineer, 

International Branch, ANM–116, 

Transport Airplane Directorate, FAA, 

1601 Lind Avenue SW., Renton, 

Washington 98057–3356; telephone 

(425) 227–1137; fax (425) 227–1149. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposed AD. Send your comments 

to an address listed under the 

ADDRESSES section. Include ‘‘Docket No. 

FAA–2012–0141; Directorate Identifier 

2011–NM–092–AD’’ at the beginning of 

your comments. We specifically invite 

comments on the overall regulatory, 

economic, environmental, and energy 

aspects of this proposed AD. We will 

consider all comments received by the 

closing date and may amend this 

proposed AD based on those comments. 

We will post all comments we 

receive, without change, to http:// 

www.regulations.gov, including any 

personal information you provide. We 

will also post a report summarizing each 

substantive verbal contact we receive 

about this proposed AD. 

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