15600 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations

planting season for flue-cured tobacco

begins in April, it is urgent that fluecured tobacco producers make their

planting decisions for the 1997 crop.

Therefore, this rule is effective

immediately upon publication in the

Federal Register. It does not appear that

Congress meant, by the production

flexibility contract provisions, to

adversely affect the ability of flue-cured

tobacco producers to conduct normal

operations to produce their crop, except

as such restrictions might be needed to

protect the production flexibility

program. Accordingly, this rule amends the

tobacco regulations in 7 CFR part 723 to

allow the Deputy Administrator to

permit special highly limited

combinations of flue-cured tobacco

allotments and quotas on PFC farms and

non-PFC farms which will be effective

for flue-cured tobacco purposes only.

Such permission will be conditioned

upon the agreement of interested parties

not to use the land on the PFC farm that

otherwise would have been planted to

tobacco to produce a PFC commodity.

The following commodities are PFC

commodities under the 1996 Act: wheat,

corn, grain sorghum, barley, oats,

upland cotton, and rice. Failure to

comply with that agreement will render

the special combination void and can

result in penalties for tobacco

marketings that are in excess of

allowable marketings. The Deputy

Administrator may set other conditions

as necessary to comply with all relevant

statutory schemes. In addition, a related change is made

for burley tobacco in 7 CFR part 723

concerning situations in which, due to

a farm reconstitution by division, a

resulting farm may have less than 1,000

pounds of burley quota. That restriction

is derived from section 379(c) of the

Agricultural Adjustment Act of 1938. In

order to avoid the loss of such quota on

these farms, the quota may be sold,

additional quota purchased, or the farm

combined with another farm owned by

the person so that at least 1,000 pounds

of quota is amassed on the resulting

farm. Here also, because of a PFC

participation, some farm combinations

which would otherwise be permitted,

may no longer be allowed. This rule

allows the Deputy Administrator to

grant an exception to this minimum

quota requirement if the farm could

otherwise be combined with another

farm so that the resulting farm would

meet the 1,000 pound minimum, but

such combination is prohibited because

of PFC participation. Regulations governing the

reconstitutions of farms that were

previously in 7 CFR part 719 are now

found in 7 CFR part 718, subpart C as

a result of a rule published in the

Federal Register on July 18, 1996 (61 FR

37544, July 18, 1996). This interim rule

corrects the references contained in part

723 accordingly.

List of Subjects in 7 CFR Part 723

Acreage allotments, Auction

warehouses, Dealers, Domestic

manufacturers, Marketing quotas,

Penalties, Reconstitutions, Tobacco.

Interim Rule

For the reasons set forth in the

preamble, 7 CFR part 723 is amended as

follows:

1. The authority citation for 7 CFR

part 723 continues to read as follows:

PART 723—[AMENDED]

Authority: 7 U.S.C. 1301, 1311–1314,

1314–1, 1314b, 1314b–1, 1314b–2, 1314c,

1314d, 1314e, 1314f, 1314i, 1315, 1316, 1362,

1363, 1372–75, 1377–79, 1421, 1445–1, and

1445–2.

2. Section 723.209 is amended by

adding paragraph (c) to read as follows:

§ 723.209 Determination of acreage

allotments, marketing quotas, and yields for

combined farms.

* * * * *

(c) Special combinations.

Notwithstanding other provisions of this

title, the Deputy Administrator may,

upon proper application and to the

extent deemed consistent with other

obligations, permit, with respect to

allotments and quotas for flue-cured

tobacco, two farms to be considered

combined for purposes of this part and

part 1464 of this title only, even though

one of the farms involved is subject to

a production flexibility contract (PFC)

entered into under the provisions of 7

CFR part 1412. Such farms must

otherwise meet the requirements for

farm combinations in part 718. Such

permission shall be conditioned upon

the agreement of all interested parties

that land on the PFC flue-cured quota

farm that would have been used for the

production of tobacco shall not be used

for the production of any PFC

commodity. A failure to comply with

this provision shall render this special

combination void, retroactive to the date

of original approval. Such action may

result in tobacco acreage in excess of the

allotment and in marketing quota

penalties on any excess marketings of

tobacco. The Deputy Administrator may

set such additional conditions on the

production of tobacco on such farms as

deemed necessary to serve the goals of

the tobacco program and the goals of the

production flexibility contract. The term

‘‘PFC commodity’’ for purposes of this

paragraph means wheat, corn, grain

sorghum, barley, oats, upland cotton,

and rice.

3. Section 723.208 is amended by

adding paragraph (b)(6)(v) to read as

follows:

§ 723.208 Determination of acreage

allotments, marketing quotas, and yields for

divided farms.

* * * * *

(b) * * *

(6) * * *

(v) when the individual tract or farm

with less than 1,000 pounds of quota

could be combined with another tract or

farm with sufficient quota to reach 1,000

pounds but for the existence of a

production flexibility contract on one of

the farms.

* * * * *

§§ 723–723.509 [Amended]

4. Sections 723.101 through 723.509

are amended by removing the numbers

‘‘719’’ each time they appear and adding

in their place ‘‘718’’.

Signed at Washington, DC, on March 25,

1997.

Bruce R. Weber,

Acting Administrator, Farm Service Agency.

[FR Doc. 97–8415 Filed 4–1–97; 8:45 am]

BILLING CODE 3410–05–P

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Regulations H and K, Docket No. R–0921]

Government Securities Sales

Practices; Correction

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Joint final rule; correction.

SUMMARY: The Office of the Comptroller

of the Currency (OCC), Federal Reserve

System (Board), and the Federal Deposit

Insurance Corporation (FDIC) published

in the Federal Register of March 19,

1997, a document regarding sales

practices concerning government

securities by depository institutions

within their respective jurisdictions.

This document corrects two inadvertent

errors regarding the Board’s

interpretation entitled ‘‘Obligations

concerning institutional customers.’’

DATES: Effective on July 1, 1997.

FOR FURTHER INFORMATION CONTACT:

Lawranne Stewart, Senior Attorney

(202–452–3513), Legal Division, Board

of Governors of the Federal Reserve

System, 20th and C Streets, NW,

Washington, D.C. 20551. For the hearing

impaired only, Telecommunications

Device for the Deaf (TDD), Diane Jenkins

(202–452–3544).

SUPPLEMENTARY INFORMATION: The OCC,

Board and FDIC published their joint
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations 15601

final rule on March 19, 1997 (62 FR

13276) in which the Board added

§§ 208.25 and 208.129 to Regulation H

(12 CFR part 208). The Board’s

amendatory instruction number 3.

‘‘§ 208.129 is added to subpart B’’ will

be corrected to read ‘‘§ 208.129 is added

to subpart E’’. In § 208.129, paragraph

(b), in the first sentence, the cite

‘‘§ 208.25(b)’’ will be corrected to read

‘‘§ 208.25(d).’’

In final rule FR Doc. 97–6803,

published on March 19, 1997 (62 FR

13276), make the following corrections:

1. On page 13285, in the third

column, instruction 3., remove ‘‘subpart

B’’ and add in its place ‘‘subpart E.’’

2. On page 13285, in the third

column, under § 208.129, paragraph (b),

in the first sentence, remove

‘‘§ 208.25(b)’’ and add in its place

‘‘§ 208.25(d).’’

By order of the Board of Governors of the

Federal Reserve System, March 28, 1997.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 97–8358 Filed 4–1–97; 8:45 am]

BILLING CODE 6210–01–P

SMALL BUSINESS ADMINISTRATION

13 CFR Part 120

Business Loan Programs

AGENCY: Small Business Administration.

ACTION: Interim final rule.

SUMMARY: The U.S. Small Business

Administration (SBA) is modifying its

rules regarding the financing and

securitization of the unguaranteed

portion of loans it guarantees under

Section 7(a) of the Small Business Act.

Present SBA regulations allow only nondepository lenders to engage in these

practices (13 CFR 120.420, revised as of

March 1, 1996). This interim rule will

permit both depository and nondepository lenders to pledge or sell the

unguaranteed portions of SBA

guaranteed loans.

During the pendency of this interim

final rule, subject to compliance with all

other aspects of the interim final rule,

SBA expects to give favorable review to

any transaction which complies with

the retainage requirements described in

the notice of proposed rulemaking

relevant to financing and securitization

which appeared in the Federal Register

on February 26, 1997. If SBA is

presented with a transaction which is

not structured in a manner consistent

with such retainage requirements, SBA

will need to assure itself as to safety and

soundness considerations and

compliance with the interim rule before

giving its approval.

DATES: Effective: April 2, 1997.

Comments must be submitted on or

before May 2, 1997.

ADDRESSES: Please mail all comments to

Jane Palsgrove Butler, Acting Associate

Administrator for Financial Assistance,

U.S. Small Business Administration,

409 Third Street, SW, Room 8200,

Washington, D.C. 20416.

FOR FURTHER INFORMATION CONTACT:

James W. Hammersley, Acting Deputy

Associate Administrator for Financial

Assistance, (202) 205–7505.

SUPPLEMENTARY INFORMATION: Over the

past several years, the average SBA

guarantee under its guaranteed business

loan program (program) has decreased

from nearly 90% to approximately 75%.

This 150% increase in lender exposure

requires lenders participating in the

program to commit substantially more

of their own capital in order to support

their dollar volume of SBA guaranteed

loans. In 1992, SBA promulgated

regulations that permitted nondepository lenders participating in the

program to pledge or sell the

unguaranteed portions of SBA

guaranteed loans, thereby permitting

them to fund unguaranteed portions of

SBA guaranteed loans with the proceeds

of loans or securities offerings

(securitizations). (See 13 CFR § 120.420,

revised as of March 1, 1996.)

Since that time, bank (depository)

participants have asked SBA to modify

its regulations to provide them the same

ability to offset the increase in

commitment of capital needed for them

to continue participation in the

program. These lenders have told SBA

that, in many cases, it is more efficient

to raise funds through a pledge or

securitization than to attract additional

deposits.

Congress has now recognized the

need to permit all participants in the

program to have a level playing field in

raising capital needed to fund the

increased requirement for unguaranteed

portions. Therefore, recent legislation

prohibits the sale of unguaranteed

portions under SBA’s present

regulations after March 31, 1997, unless

SBA develops regulations permitting all

participating lenders to sell the

unguaranteed portions of their SBA

guaranteed loans. See § 103(e) of Public

Law 104–408, Oct. 1, 1996, which

directs SBA to promulgate a final

regulation ‘‘that applies uniformly to

both depository institutions and other

lenders * * * setting forth the terms

and conditions under which such sales

can be permitted, including

maintenance of appropriate reserve

requirements and other safeguards to

protect the safety and soundness of the

program.’’

On November 29, 1996, SBA

published an advance notice of

proposed rulemaking which requested

the views of interested parties on how

this statutory requirement might be

satisfied. 61 FR 60649, Nov. 29, 1996.

SBA received nine responses,

including one response which had four

signatories. The comments addressed

several questions posed in the advance

notice of proposed rulemaking regarding

how the statutory mandate should be

satisfied.

On February 26, 1997, at 62 FR 8640,

SBA published a notice of proposed

rulemaking on this subject. The

proposed rulemaking took the

comments on the advance notice of

proposed rulemaking fully into

consideration. The public was given 30

days to comment on the proposal. As of

March 21, 1997, SBA had not received

any comments from the public in

response to the proposed rulemaking.

SBA recognizes the complexity of the

issues surrounding the various means

for implementing the statutory mandate.

It is clear that additional time will be

necessary to develop a full spectrum of

comment on the notice of proposed

rulemaking. It is SBA’s desire to have

the broadest possible public

involvement in this rulemaking. At the

same time, SBA does not wish to

penalize any lender seeking to conduct

a pledging or sale transaction after

March 31, 1997.

Under these circumstances, SBA has

decided to extend, for an additional 30

days, the comment period on its

proposed rule. Pending its review of all

comments received and its issuance of

a final rule on the subject, SBA also will

promulgate an interim final rule which

will allow all lenders in the program to

proceed with securitizations, subject to

prior SBA approval on a case by case

basis. In this regard, SBA will extend to

all of its lenders, on an interim basis, an

existing regulation which previously

has been applicable only to nondepository lenders. This will afford SBA

the opportunity to obtain further public

comment, to consider how best to

implement the statutory directive that a

new rule be finalized, and to permit

interim transactions to go forward on a

basis consistent with safety and

soundness in the program.

SBA is convinced that it can review

any transactions which take place

during the interim period in a manner

sufficient to protect such safety and

soundness. It should be noted that all

pledging or sale transactions which

have taken place since 1992 have been