Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 54347 

1The Federal banking regulatory agencies are the 

Office of the Comptroller of the Currency (OCC), the 

Federal Deposit Insurance Corporation (FDIC), and 

the Board of Governors of the Federal Reserve 

(FRB). See 12 CFR 3.20(b)(1)(i) (OCC), 12 CFR 

324.20(b)(1)(i) (FDIC); 12 CFR 217.20(b)(1)(i) (FRB). 

2The Federal Agricultural Mortgage Corporation 

(Farmer Mac), which is also a System institution, 

has authority to operate secondary markets for 

agricultural real estate mortgage loans, rural 

housing mortgage loans, and rural utility 

cooperative loans. The FCA has a separate set of 

capital regulations that apply to Farmer Mac. This 

rulemaking does not affect Farmer Mac, and the use 

of the term ‘‘System institution’’ in this preamble 

and rule does not include Farmer Mac. 

3The Funding Corporation was established 

pursuant to section 4.9 of the Farm Credit Act of 

1971, as amended, and is owned by all Farm Credit 

banks. 

4The agricultural credit bank lends to and 

provides other financial services to farmer-owned 

cooperatives, rural utilities (electric and 

telecommunications), and rural water and 

wastewater disposal systems. It also finances U.S. 

agricultural exports and imports and provides 

international banking services to cooperatives and 

other eligible borrowers. The agricultural credit 

bank operates a Farm Credit Bank subsidiary. 

5 12 U.S.C. 2001–2279cc. The Act is available at 

www.fca.gov under ‘‘Laws and regulations’’ and 

‘‘Statutes.’’ 

Amendment Number 2, on December 

15, 2021. 

Amendment Number 3 Effective Date: 

November 5, 2019, superseded by 

Renewed Amendment Number 3, on 

December 15, 2021. 

SAR Submitted by: Holtec 

International. 

SAR Title: Final Safety Analysis 

Report for the HI–STAR 100 Cask 

System. 

Docket Number: 72–1008. 

Certificate Expiration Date: October 4, 

2019. 

Renewed Certificate Expiration Date: 

October 4, 2059. 

Model Number: HI–STAR 100 (MPC– 

24, MPC–32, MPC–68, MPC–68F). 

* * * * * 

Dated: September 15, 2021. 

For the Nuclear Regulatory Commission. 

Margaret M. Doane, 

Executive Director for Operations. 

[FR Doc. 2021–21427 Filed 9–30–21; 8:45 am] 

BILLING CODE 7590–01–P 

FARM CREDIT ADMINISTRATION 

12 CFR Parts 614, 615, 620, and 628 

RIN 3052–AD27 

Regulatory Capital Rules: Tier 1/Tier 2 

Framework 

AGENCY: Farm Credit Administration. 

ACTION: Final rule. 

SUMMARY: The Farm Credit 

Administration (FCA or we) is adopting 

a final rule that amends the regulatory 

capital requirements for Farm Credit 

System (System or FCS) institutions. 

These amendments clarify certain 

provisions in the Tier 1/Tier 2 Capital 

Framework final rule that became 

effective in 2017 (2017 Capital Rule) 

and codify the guidance provided in 

FCA Bookletter—BL–068—Tier 1/Tier 2 

Capital Framework Guidance. This final 

rule also includes revisions to the 

regulatory capital rules to reduce 

administrative burden for System 

institutions and the FCA. Lastly, to 

maintain comparability in our 

regulatory capital requirements, we are 

amending certain definitions pertaining 

to qualified financial contracts in 

conformity with changes adopted by the 

Federal banking regulatory agencies. 

DATES: The regulation shall become 

effective January 1, 2022, or 30 days 

after publication in the Federal Register 

during which either or both houses of 

Congress are in session, whichever is 

later. Pursuant to 12 U.S.C. 2252(c)(1), 

FCA will publish notification of the 

effective date in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: 

Technical information: Jeremy R. 

Edelstein, EdelsteinJ@fca.gov, Associate 

Director or Clayton D. Milburn, 

MilburnC@fca.gov, Senior Financial 

Analyst, Finance and Capital Markets 

Team, Office of Regulatory Policy, Farm 

Credit Administration, McLean, VA 

22102–5090, (703) 883–4414, TTY (703) 

883–4056 or ORPMailbox@fca.gov; 

or 

Legal information: Rebecca S. Orlich, 

Orlichr@fca.gov, Senior Counsel, or 

Jennifer A. Cohn, Cohnj@fca.gov, Senior 

Counsel, Office of General Counsel, 

Farm Credit Administration, McLean, 

VA 22102–5090, (703) 883–4020, TTY 

(703) 883–4056. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

A. Objectives of the Final Rule 

B. Background 

C. Summary of the Proposed Rule 

D. General Summary of Comments 

Received 

II. Substantive Revisions to the Capital Rule 

A. Safe Harbor Deemed Prior Approval 

B. Capital Bylaw or Board Resolution To 

Include Equities in Tier 1 and Tier 2 

Capital 

C. Common Cooperative Equity Issuance 

Date 

D. Farm Credit Leasing Services 

Corporation 

E. Lending and Leasing Limit Base 

Calculation 

F. Qualified Financial Contract (QFC) 

Related Definitions 

G. Common Equity Tier 1 Capital 

Eligibility Requirements 

III. Clarifying and Other Revisions to the 

Capital Rule 

A. Capitalization Bylaw Adjustment 

B. Annual Report to Shareholders 

Corrections 

C. Appropriate Risk-Weighting of Cash and 

Gold Bullion 

D. Securitization Formulas 

E. Unallocated Retained Earnings and 

Equivalents Deductions and Adjustments 

F. Service Corporation Deductions and 

Adjustments 

G. Adjustments for Accruing Patronage and 

Dividends 

H. Bank Disclosures 

I. Retirement of Statutory Borrower Stock 

IV. Abbreviations 

V. Regulatory Analysis 

A. Regulatory Flexibility Act 

B. Congressional Review Act 

I. Introduction 

A. Objectives of the Final Rule 

FCA’s objectives in adopting this rule 

are to: 

• Provide technical corrections, 

amendments and clarification to certain 

provisions in the Tier 1/Tier 2 Capital 

Framework; and 

• Ensure the System’s capital 

requirements maintain comparability 

with the standardized approach that the 

Federal banking regulatory agencies 1

have adopted (U.S. Rule) while 

accommodating the cooperative 

structure and the organization of the 

System. 

B. Background 

In 1916, Congress created the System 

to provide permanent, stable, affordable, 

and reliable sources of credit and 

related services to American agricultural 

and aquatic producers.2 As of June 30, 

2021, the System consists of 3 Farm 

Credit Banks, 1 agricultural credit bank, 

66 agricultural credit associations, 1 

Federal land credit association, service 

corporations, and the Federal Farm 

Credit Banks Funding Corporation 

(Funding Corporation). Farm Credit 

banks (including both the Farm Credit 

Banks and the agricultural credit bank) 

issue System-wide consolidated debt 

obligations in the capital markets 

through the Funding Corporation,3

which enable the System to extend 

short-, intermediate-, and long-term 

credit and related services to farmers, 

ranchers, aquatic producers and 

harvesters, their cooperatives, rural 

utilities, exporters of agricultural 

commodities products, farm-related 

businesses, and certain rural 

homeowners.4 The System’s enabling 

statute is the Farm Credit Act of 1971, 

as amended (Act).5

FCA’s Tier 1/Tier 2 Capital 

Framework, the 2017 Capital Rule, was 

published in the Federal Register in 

54348 Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 

6 81 FR 49720 (July 28, 2016). The rule was 

effective January 1, 2017. 

7Public Law 111–203, 124 Stat. 1376 (2010). 

8For a comprehensive discussion of the 2017 

Capital Rule, see 81 FR 49720 (July 28, 2016). FCA’s 

capital requirements can be found at Parts 615 and 

628 of FCA Regulations. 

9A copy of the Capital Bookletter can be found 

at www.fca.gov, under ‘‘Laws & Regulations’’ and 

‘‘Bookletters.’’ 

10See 85 FR 55786 (September 10, 2020). 

11FCA adjusted some of the guidance provided in 

the Capital Bookletter to address concerns 

identified through ongoing monitoring and 

examination of the requirements of the 2017 Capital 

Rule. Specific elements of the Capital Bookletter as 

incorporated into the rule are detailed in the 

‘‘Substantive Revisions’’ and the ‘‘Clarifying and 

Other Revisions’’ sections of this preamble. 

12Total capital is defined at § 628.2. Permanent 

capital is defined at § 615.5201. 

13The comment letters for the proposed rule are 

available at www.fca.gov. Once you are on the 

website, click the ‘‘I want to . . .’’ field near the top 

of the page; select ‘‘find comments on a pending 

regulation’’ from the drop down menu; and click 

‘‘Go;’’ then select Capital—Tier 1/Tier 2 Capital 

Framework—Clean Up—NPRM. 

14See Letter from Charles Dana, General Counsel, 

Farm Credit Council (November 6, 2020). 

15See Letter from Thomas E. Halverson, President 

and Chief Executive Officer, CoBank, ACB 

(November 9, 2020); Letter from Barbara Kay Stille, 

Chief Administrative Officer and General Counsel, 

AgriBank, FCB (November 9, 2020). 

16See Letter from Northwest Farm Credit 

Services, FLCA and PCA (November 6, 2020); Letter 

from Steve Zagar, Senior Vice President Chief 

Financial Officer, Farm Credit Mid-America, ACA 

(November 9, 2020); Letter from Jase Wagner, Chief 

Financial Officer (CFO), Compeer Financial, ACA 

(November 5, 2020). 

17See Letter from Hu A. Benton, Vice President, 

Banking Policy, American Bankers Association 

(November 9, 2020). 

July 2016.6 The objectives of the 2017 

Capital Rule were: 

• To modernize capital requirements 

while ensuring that institutions 

continue to hold enough regulatory 

capital to fulfill their mission as a 

Government-sponsored enterprise 

(GSE); 

• To ensure that the System’s capital 

requirements are comparable to the 

Basel III framework and the 

standardized approach in the U.S. Rule, 

but also to ensure that the rules take 

into account the cooperative structure 

and the organization of the System; 

• To make System regulatory capital 

requirements more transparent; and 

• To meet the requirements of section 

939A of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act of 

2010 (Dodd-Frank Act).7

To date, FCA believes the 2017 

Capital Rule has met, and continues to 

meet, these stated objectives.8

On December 22, 2016, the FCA 

Board adopted FCA Bookletter—BL– 

068—Tier 1/Tier 2 Capital Framework 

Guidance (Capital Bookletter).9 The 

Capital Bookletter provided guidance to 

ensure System institutions had the 

necessary information to correctly 

implement the requirements of the 2017 

Capital Rule. The Capital Bookletter 

included clarification and technical 

fixes on 18 separate items. The Capital 

Bookletter also stated our intention to 

incorporate some of these items into the 

regulation in a future rulemaking 

project. 

C. Summary of the Proposed Rule 

On September 10, 2020,10 FCA 

published in the Federal Register a 

notice of proposed rulemaking seeking 

public comment on revisions to our 

regulatory capital requirements to 

incorporate some of the guidance in the 

Capital Bookletter, with various 

adjustments,11 as well as other 

revisions, as follows: 

• Eliminate the stand-alone capital 

requirements for Farm Credit Leasing 

Services Corporation (Farm Credit 

Leasing or FCL); 

• Change the computation of the 

lending and leasing limit base in 

§ 614.4351, by using total capital instead 

of permanent capital in the 

calculation 12 and eliminating the 

exceptional treatment of certain 

purchased stock in § 614.4351(a)(1); 

• Simplify ’’Safe Harbor’’ provisions 

that determine when System 

institutions have ‘‘deemed prior 

approval’’ from FCA to distribute cash 

payments; 

• Revise and clarify certain criteria 

that capital instruments must meet to be 

included in common equity tier 1 

(CET1) and tier 2 capital; 

• Further clarify when the holding 

period starts for certain Common 

Cooperative Equities included in CET1 

or tier 2 capital; and 

• Amend the requirement to adopt an 

annual board resolution with respect to 

prior approval requirements and the 

minimum holding periods for certain 

equities included in CET1 or tier 2 

capital. 

We additionally proposed technical 

revisions to: 

• Amend the definitions of 

‘‘Collateral agreement,’’ ‘‘Eligible margin 

loan,’’ ‘‘Qualifying master netting 

agreement (QMNA),’’ and ‘‘Repo-style 

transaction’’ to incorporate amendments 

made to these definitions in the U.S. 

Rule; 

• Amend § 615.5220(a)(6) to replace 

references to parts 615 and 628 with a 

general reference to FCA regulations; 

• Make certain amendments to 

§ 620.5 to ensure institutions report 

financial information as we intended; 

• Clarify the appropriate riskweighting of cash and gold bullion held 

in a System institution’s own vaults; 

• Correct securitization formulas as 

provided in the Capital Bookletter; 

• Specify the deductions and 

adjustments required for calculating the 

requirement in § 628.10 that at least 1.5 

percent of the 4 percent tier 1 leverage 

ratio minimum must consist of 

unallocated retained earnings (URE) and 

URE equivalents; 

• Revise the deductions required 

under existing § 628.22(a)(6) to include 

allocated equity investments in System 

service corporations; 

• Add to the regulation certain 

guidance in the call report instructions 

on the treatment of accruals of 

patronage or dividend payables or 

receivables recorded prior to the 

governing board declaration or 

resolution; 

• Clarify certain requirements for 

regulatory capital disclosures of System 

banks in §§ 620.3, 628.62(c), and 

628.63(b)(4); and 

• Clarify that institutions may retire 

minimum amounts of statutory 

borrower stock without prior approval 

from FCA so long as, after the 

retirement, the institution continues to 

comply with all minimum regulatory 

capital requirements. The proposal also 

provided clarification and guidance on 

continuously redeemable preferred 

stock (or ‘‘H Stock’’), responded to a 

letter received from the Farm Credit 

Council addressing various capital 

related topics, and sought comment on 

potential changes to FCA’s existing 

permanent capital regulations. 

D. General Summary of Comments 

Received 

FCA received seven comment letters 

on the proposed rule.13 The Farm Credit 

Council, a trade association representing 

System institutions, submitted a letter 

on behalf of its membership after 

soliciting comments from all 

institutions (System Comment Letter).14

Two System banks 15 and three System 

associations 16 also submitted 

individual comment letters in support 

of the System Comment Letter. One 

System association, Compeer Financial, 

ACA (Compeer), raised additional 

concerns. The American Bankers 

Association (ABA), a trade association 

representing the U.S. banking industry, 

submitted the remaining comment 

letter.17 We address the comments in 

the preamble sections that follow. 

The System Comment Letter stated 

that the Farm Credit Council and its 

members ‘‘generally support’’ the 

proposed rule, including provisions that 

incorporate the Capital Bookletter and 

call report instructions, but that certain 

aspects of the proposal were 

Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 54349 

18See 79 FR 52814 (September 4, 2014). 

19 In the proposed rule preamble, we discussed 

the exclusion of continuously redeemable preferred 

stock (H Stock) from tier 1 and tier 2 capital and 

also commented on issues raised in a 2016 letter we 

received from the Farm Credit Council. See 85 FR 

57786, 55795 (September 10, 2020). 

20See existing regulation § 628.20(f)(5)(ii). FCA 

considers the date of the cash distribution to be the 

date on which the institution’s board passes a 

binding resolution declaring an amount it will make 

as a cash dividend or patronage refund. This either 

must be a specified dollar amount or must include 

language whereby a specific amount can be 

calculated. 

21See 85 FR 55786, 55788 (September 10, 2020). 

22See § 628.20(f)(5)(iii). 

23Compare, for example, §§ 628.10 and 628.11 

with the OCC’s rules at 12 CFR 3.10 and 3.11. 

24Section 4.3(a) of the Act (12 U.S.C. 2154) and 

12 CFR 615.5350. 

25Section 5.25 of the Act (12 U.S.C. 2261). 

26To be included in regulatory capital, common 

cooperative equities (defined at § 628.2) must meet 

minimum holding periods as stipulated in 

§ 628.20(b)(1)(xiv) and (d)(1)(xi). Minimum holding 

period requirements are further discussed below 

under Section II, C—Common Cooperative Equity 

Issuance Date. 

27See 81 FR 49720, 49731 (July 28, 2016). 

‘‘problematic.’’ Many of the comments 

from System institutions reiterated 

recommendations they had previously 

communicated to FCA (in comments on 

the September 4, 2014, proposed 

rulemaking) 18 and requested changes 

that were beyond the scope of the 

proposal. The balance of the comments 

from System institutions were 

supportive of the proposed amendments 

or requested specific technical changes. 

The ABA asserted that the proposed 

rule would increase risks to the safety 

and soundness of the System and 

increase competitive inequities between 

the System and commercial banks. The 

ABA also requested that we clarify 

certain matters we did not expressly 

address in the proposal. In some cases, 

the ABA’s comments did not directly 

relate to the amendments we proposed. 

In the preamble to the proposed rule, 

we discussed certain matters that were 

not the subject of the proposed rule,19

and we also sought comments on 

potential changes to our permanent 

capital regulations to reduce regulatory 

burden. We may consider proposing 

specific changes to the permanent 

capital requirements and calculations in 

a future rulemaking. 

As discussed in Section 2— 

Substantive Revisions to the Capital 

Rule and Section 3—Clarifying and 

Other Revisions to the Capital Rule, the 

final rule adopts the revisions we 

proposed with minor adjustments in 

response to comments received. 

II. Substantive Revisions to the Capital 

Rule 

A. Safe Harbor Deemed Prior Approval 

Under existing § 628.20(f), System 

institutions are required to obtain prior 

approval from FCA before retiring 

equities included in tier 1 or tier 2 

capital and making cash payments for 

dividends and patronage (collectively, 

cash distributions). Institutions have 

‘‘deemed prior approval’’ from FCA for 

such distributions provided the 

conditions in § 628.20(f)(5) and (6) are 

satisfied (Safe Harbor). One of the 

conditions stipulates that, after any such 

cash payment, the dollar amount of 

CET1 capital must equal or exceed the 

dollar amount of CET1 on the same date 

in the previous calendar year.20 Using 

the same date in the previous calendar 

year has made monitoring and enforcing 

this requirement difficult because 

regulatory capital numbers for System 

institutions are reported to FCA 

quarterly, rather than daily. 

We proposed to simplify the Safe 

Harbor provisions of § 628.20(f) by 

replacing the requirement to use the 

exact calendar date of the cash 

distribution with a requirement to use 

the quarter-end date of the quarter in 

which the cash payment is made. A 

System institution would have ‘‘deemed 

prior approval’’ from FCA if, after 

making the cash distribution, the dollar 

amount of CET1 capital at the quarterend equals or exceeds the dollar amount 

of CET1 capital on the same quarter-end 

in the previous calendar year. We 

provided two examples in the preamble 

to the proposed rule.21 We stated that 

we do not believe the amendment as 

proposed would increase or decrease 

the amount of cash patronage System 

institutions would be able to pay when 

compared to the provision in the 2017 

Capital Rule. 

The ABA expressed concern that the 

proposal was ‘‘liberalizing’’ the 

provisions of the ‘‘Safe Harbor Deemed 

Prior Approval’’ in § 628.20(f)(5) and 

suggested that the Safe Harbor 

framework gives inadequate 

consideration to an institution’s risk 

profile. The comments appear to be 

based in part on concerns regarding the 

proposal’s omission of specific reference 

to capital distribution limitations 

already in the 2017 Capital Rule and 

unchanged by the proposal. 

We disagree with the assertion that 

the proposal would ‘‘liberalize’’ the Safe 

Harbor. The proposed rule would 

change the date for determining 

compliance with the Safe Harbor 

provision in order to simplify the 

administration, enforcement, and 

monitoring of compliance with the Safe 

Harbor requirements. As we state above, 

we do not believe the proposal would 

increase or decrease the amount of cash 

patronage System institutions could pay 

when compared to the existing 

provision. The proposed changes would 

in no way ‘‘liberalize’’ the Safe Harbor 

or create any greater opportunity for 

capital distributions under the Safe 

Harbor. 

In response to the ABA’s concerns 

regarding the Safe Harbor giving 

inadequate consideration to an 

institution’s risk profile, the 

commenter’s assertion that the Safe 

Harbor permits ‘‘cash payouts based 

only on maintaining the dollar amount 

of CET1 capital in a prior year’’ is 

incorrect. As we stated in the preamble 

to the proposed rule, in order to make 

a cash distribution under the Safe 

Harbor, a System institution must 

remain in compliance with all 

regulatory capital requirements and any 

supervisory or enforcement actions after 

such distribution.22 FCA’s regulatory 

capital requirements are comparable to 

the U.S. Rule and include regulatory 

capital measures using both riskadjusted and non-risk-adjusted 

computational methods.23 Furthermore, 

FCA has comparable authorities to the 

Federal banking regulatory agencies to 

establish minimum capital ratios for an 

individual institution 24 as well as to 

place further restrictions on institutions’ 

capital distributions as part of 

supervisory agreements and 

enforcement actions.25 Lastly, cash 

distributions under the Safe Harbor are 

subject to the capital buffers in § 628.11, 

which reduce the amount of capital 

distributions an institution can make 

when its capital levels fall within the 

leverage buffer or capital conservation 

buffer ranges. These requirements are 

unaltered by the proposed or final rule. 

Compeer requested that we expand 

the Safe Harbor to allow institutions to 

retire the allocated equities of a 

borrower, irrespective of compliance 

with minimum holding periods,26 to 

offset losses when a borrower defaults 

on a loan. The commenter asserted that 

present hurdles to retiring equities in 

these scenarios (i.e., requesting prior 

approval from FCA under § 628.20(f)) 

present an unnecessary administrative 

burden. 

Compeer’s requested revision is 

beyond the scope of the present 

rulemaking. We note, however, that as 

we stated in the preamble to the 2017 

Capital Rule, equities are issued to 

capitalize the institution, not the loan. 

Accordingly, these equities should not 

be viewed or treated as compensating 

loan balances.27 Furthermore, the 

preamble to the 2017 Capital Rule also 

explains in detail our position on the 

54350 Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 

28See 81 FR 49720, 49732 (July 28, 2016). 

29See existing regulations §§ 628.20 and 

615.5200(d). 

30By meeting the conditions for ‘‘deemed prior 

approval’’ under regulation § 628.20(f)(5) and (6), an 

institution effectively obtains FCA prior approval 

for a given capital distribution. 

31Existing § 615.5200(d)(3) requires boards to 

obtain prior approval before redesignating 

unallocated retained earnings (URE) equivalents as 

redeemable equities; removing equities from 

regulatory capital (other than through repurchase, 

cancellation, redemption, or revolvement); or 

redesignating equities from one regulatory capital 

component to another. Section 615.5200(d)(4) 

requires that URE equivalents shall not be revolved, 

except under very limited circumstances (i.e., upon 

dissolution or liquidation). 

32Common cooperative equities are defined in 

§ 628.2. 

33As established in § 628.20(b)(1)(xiv)(A) and 

(d)(1)(xi)(A). 

34See 85 FR 55786, 55789 (September 10, 2020). 

35See 81 FR 49720, 49732 (July 28, 2016). The 

proposed rule is at 79 FR 52814 (September 4, 

2014). 

36See 81 FR 49720, 49726–49730 (July 28, 2016). 

37Farm Credit Leasing is a service corporation 

chartered under section 4.25 of the Act. A service 

corporation is an institution of the System that is 

established by System banks or associations and 

chartered by FCA, and it is subject to FCA 

regulation and examination. See title IV, subpart E 

of the Act. 

necessity for minimum holding periods 

to address the ‘‘expectation criterion’’ in 

the Basel III Framework and the U.S. 

Rule, maximizing comparability of our 

rule with the rules applicable to 

commercial banks.28 We note that, 

under § 628.20(f)(6), System institutions 

may offset allocated equities against a 

loan in default if mandated by a court 

of competent jurisdiction or under 

§ 615.5290 in connection with a 

restructuring plan. 

The balance of comments received 

supported this proposed amendment, 

and we are adopting it as proposed. 

B. Capital Bylaw or Board Resolution To 

Include Equities in Tier 1 and Tier 2 

Capital 

The 2017 Capital Rule stipulates 

conditions and criteria that must be met 

in order to include an instrument in an 

institution’s regulatory capital.29 Among 

these are the requirements for the 

institution’s board of directors to affirm 

its commitment to adhere to the 

regulatory minimum redemption or 

revolvement periods; to obtain prior 

approval from FCA prior to redeeming, 

revolving, redesignating, cancelling or 

removing equities included in 

regulatory capital; 30 and to obtain prior 

approval from FCA for certain other 

actions that could impact the 

institution’s capital quantity or 

quality.31 Such affirmation must be set 

forth in the institution’s capitalization 

bylaws or in a board resolution that the 

board must re-affirm annually. Where 

this requirement is satisfied by a board 

resolution, we proposed to reduce the 

administrative burden by no longer 

requiring an annual re-affirmation by 

the board. We proposed to replace the 

annual re-affirmation with a one-time 

requirement to adopt the board 

resolution and, in subsequent annual 

capital adequacy plans, to expressly 

acknowledge the continuing and 

binding effect of this resolution. 

We proposed to move the existing 

requirements of § 615.5200(d) to a new 

section, § 628.21, and to revise them to 

provide that an institution’s board must 

adopt either a capitalization bylaw 

requirement or a binding board 

resolution. New § 615.5200(b) would 

add to existing capital planning 

provisions a requirement that the capital 

adequacy plan must expressly 

acknowledge the continuing and 

binding effect of all board resolutions 

adopted pursuant to 

§§ 628.20(b)(1)(xiv), (c)(1)(xiv), and 

(d)(1)(xi) and 628.21. We proposed 

conforming changes as necessary to 

refer to new § 628.21 rather than 

§ 615.5200(d). 

We received no specific comments on 

this amendment and are adopting it as 

proposed. 

C. Common Cooperative Equity Issuance 

Date 

Common cooperative equities 32

included in CET1 capital have a 

minimum holding period of 7 years 

before redemption or revolvement, and 

common cooperative equities included 

in tier 2 capital have a minimum 

holding period of 5 years.33 These 

holding periods also must be met for 

equities (other than the statutory 

borrower stock minimum) to be 

retireable under the Safe Harbor. To 

clarify when the minimum redemption 

and revolvement period starts for a 

common cooperative equity, we 

proposed to add a new definition, 

common cooperative equity issuance 

date, in § 628.2 and to make conforming 

changes to other sections of the 

regulations. Similar to our guidance in 

the Capital Bookletter, we proposed to 

define the common cooperative equity 

issuance date as the quarter-end in 

which an institution recognizes newly 

issued purchased stock in its financial 

statements and, for newly allocated 

equities, the quarter-end in which the 

institution’s board has declared a 

patronage refund and the applicable 

accounting treatment has taken place. 

We provided examples of the proposed 

treatment in the proposed rule 

preamble.34

The System Comment Letter and 

Compeer requested that we eliminate 

altogether the minimum holding period 

requirements for allocated equities. The 

System made the same request and 

supporting arguments in comments on 

our 2014 Tier 1/Tier 2 proposed capital 

rule, and FCA responded to those 

comments in the final rule preamble to 

the 2017 Capital Rule.35

The System’s request not only is 

beyond the scope of this rulemaking but 

also presents no new arguments that 

would persuade us to reevaluate the 

need for minimum holding periods. We 

discussed at length the stock-like 

attributes of allocated equities (as 

distinct from unallocated retained 

earnings) and the reasons for the 

minimum holding periods in the 

preamble to the 2017 Capital Rule.36

The System Comment Letter 

suggested we add the word ‘‘calendar’’ 

before ‘‘quarter-end’’ in the proposed 

definition of ‘‘common cooperative 

equity issuance date’’ to clarify that the 

issuance date would be the calendar 

quarter-end. We agree and have 

incorporated the suggestion into the 

final rule. FCA also fully acknowledges 

the legal stock issuance date may be 

different from the quarter-end date used 

for financial reporting and regulatory 

capital calculations. Beyond this minor 

change, we are adopting the new 

definition as proposed. 

D. Farm Credit Leasing Services 

Corporation 

The proposed rule would recognize 

the current ownership status of Farm 

Credit Leasing as a wholly-owned 

subsidiary of CoBank, ACB (CoBank) by 

removing FCL from the definition of 

‘‘System institution’’ in §§ 615.5201 and 

628.2 for the purposes of the regulatory 

capital requirements.37 In so doing, FCA 

would no longer require FCL to meet 

minimum capital and related regulatory 

requirements under part 615, subpart H, 

and part 628 of our regulations on a 

stand-alone basis. As a wholly-owned 

subsidiary of CoBank, FCL is a business 

unit of the bank with profits and losses 

accrued to the bank, and its assets and 

liabilities are consolidated with the 

bank’s assets and liabilities for financial 

and regulatory reporting purposes. To 

the extent the bank is adequately 

capitalized overall, CoBank’s 

consolidation ensures FCL’s assets are 

adequately capitalized. This amendment 

will reduce the administrative burden of 

separately applying the regulatory 

capital requirements to FCL and will not 

reduce the capital to be held against 

FCL and CoBank’s combined assets. If 

Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 54351 

38The definitions of ‘‘System institution’’ under 

§§ 615.5201 and 628.2 provide that we may include 

‘‘any other institution chartered by the FCA that we 

determine should be included for purposes of this 

subpart.’’ 

39The existing lending and leasing limit base 

(which this final rule is changing) is a System 

institution’s permanent capital with adjustments 

applicable to the institution in accordance with 

§ 615.5207, and with two additional adjustments in 

§ 614.4351(a) that apply only to the lending and 

leasing limit base. 

40The 2017 Capital Rule requires System 

institutions to deduct their investments in other 

System institutions from regulatory capital 

calculations. Existing § 614.4351(a)(1) directs a 

System institution to include its investment in 

another System institution in its lending limit base 

where the investment resulted from stock 

purchased in connection with a loan participation. 

This is, in effect, the exact opposite of the 

regulatory capital requirements in the 2017 Capital 

Rule. 

41See 85 FR 55786, 55790 (September 10, 2020), 

footnotes 29 and 30. 

42See 82 FR 56630 (November 29, 2017) (OCC); 

82 FR 50228 (October 30, 2017) (FDIC); and 82 FR 

42882 (September 12, 2017) (FRB). 

43See 85 FR 55786, 55790–55791 (September 10, 

2020). 

44As we have previously stated, FCA seeks to 

achieve comparability between our regulatory 

capital rules and those of the Federal banking 

regulatory agencies. Among other benefits, 

comparability of rules increases transparency for 

investors in the capital markets. 

45See § 624.2. 

46See Basel Committee on Banking Supervision 

(BCBS), Basel III: A Global Regulatory Framework 

for More Resilient Banks and Banking Systems, 

December 2010 (as revised June 2011). 

47See BCBS, Basel III Definition of capital— 

Frequently Asked Questions, September 2017 

(update of FAQs published in December 2011). 

48See 85 FR 55786, 55791–55792 (September 10, 

2020). 

49 Id. 

50As discussed under Section III, E—Unallocated 

Retained Earnings and Equivalents Deductions and 

Adjustments, the System Comment Letter draws a 

connection between our determination that 

allocated equities are ‘‘paid-in,’’ as defined by the 

Basel Committee, and arguments in the letter 

requesting the elimination of the URE and URE 

equivalents requirements in FCA’s capital rules. 

Our determination that allocated equities fully meet 

the Basel III definition of paid-in capital does not 

have any connection to our URE and URE 

equivalents requirements. 

FCL’s ownership status were to change 

in the future, we will reassess whether 

to separately apply our regulatory 

capital requirements.38

Commenters supported this change, 

and we are adopting it as proposed. 

E. Lending and Leasing Limit Base 

Calculation 

Since adopting the 2017 Capital Rule, 

FCA has relied on tier 1 and tier 2 

capital, not on permanent capital, to 

evaluate the safety and soundness of 

System institutions. In order to better 

align the lending and leasing limit base 

with FCA’s supervisory focus on tier 1 

and tier 2 capital, we proposed to shift 

the base of the lending and leasing limit 

from permanent capital 39 to total capital 

as defined and adjusted in §§ 628.20– 

628.22 and to continue to include 

otherwise eligible third-party capital 

that must be excluded under § 628.23. 

We further proposed to align the 

treatment of investments in other 

System institutions under the lending 

and leasing limit base with the 

treatment under regulatory capital 

calculations by eliminating the 

exceptional treatment of stock 

purchased in connection with a loan 

participation under § 614.4351(a)(1).40

We estimated that the impacts to 

lending limits at System institutions 

resulting from these changes would be 

small.41 The System Comment Letter 

supported the change to the use of total 

capital as the lending limit base and 

noted that most institutions have 

internal lending limit policies that are 

lower than the lending limit base in the 

regulation. We received no other 

comments and are adopting the 

amendment as proposed. 

F. Qualified Financial Contract (QFC) 

Related Definitions 

In 2017, the Federal banking 

regulatory agencies adopted rules 

establishing certain restrictions and 

requirements for the financial contracts 

(QFC Rules) of global systemically 

important banking institutions 

(GSIBs).42 We provided details on the 

background and impetus for these 

regulatory changes in the preamble to 

the proposed rule.43 The QFC Rules 

prompted related definitional changes 

in the U.S. Rule to ensure regulated 

entities continued to benefit from 

recognition of the risk-mitigating effects 

of netting and financial collateral on 

certain financial transactions. This 

recognition likely results in reduced 

capital requirements for those 

transactions. 

To incorporate amendments made to 

the U.S. Rule 44 and to ensure System 

institutions would also continue to 

benefit from recognition of the riskmitigating effects of netting and 

financial collateral, we proposed 

changes to the definitions of ‘‘Collateral 

agreement,’’ ‘‘Eligible margin loan,’’ 

‘‘Qualifying master netting agreement 

(QMNA),’’ and ‘‘Repo-style transaction.’’ 

The proposed changes to QMNA would 

also harmonize that definition with the 

definition of ‘‘Eligible master netting 

agreement’’ as used in FCA’s Margin 

and Capital requirements for Covered 

Swap Entities regulation.45 The System 

Comment Letter supported these 

revisions, and we are adopting them as 

proposed. 

G. Common Equity Tier 1 Capital 

Eligibility Requirements 

Consistent with the Basel III 

regulatory capital framework 46 and the 

U.S. Rule, we proposed to add the term 

‘‘paid-in’’ to the eligibility criteria for 

CET1 capital in § 628.20(b)(1)(i). Basel 

III defines ‘‘paid-in’’ capital as capital 

that (1) has been received with finality 

by the institution, (2) is reliably valued, 

(3) is fully under the institution’s 

control, and (4) does not directly or 

indirectly expose the institution to the 

credit risk of the investor.47

As discussed in the preamble to the 

proposed rule, we proposed this 

amendment to the eligibility criteria for 

CET1 capital after re-evaluating the 

attributes of System allocated equities, 

which we have subsequently 

determined meet the Basel definition of 

‘‘paid-in.’’ 48 We further discussed our 

reexamination of the attributes of 

allocated equities and the financing of 

statutorily required borrower stock at 

System institutions.49 The System 

Comment Letter supported our 

recognition of allocated equities as 

meeting the definition of ‘‘paid-in’’ and 

expressed no concern with the 

additional criteria for an instrument’s 

inclusion in CET1 capital.50 We are 

adopting the revision as proposed. 

We also proposed a conforming 

change in § 628.20(d)(1)(i) to clarify that 

all instruments included in tier 2 capital 

must be issued and paid-in. We received 

no comments on this proposed change 

and are adopting it as proposed. 

Lastly, we proposed clarifying, nonsubstantive changes to § 628.20(b)(1)(i) 

and (b)(1)(ii), both to align our language 

more closely with the language in the 

U.S. Rule and to emphasize a difference 

between the rules’ prioritization of a 

capital instrument holder’s claim on the 

residual assets of an institution in a 

receivership, insolvency, liquidation, or 

similar proceeding. We received no 

comments on these proposed revisions 

and are adopting them as proposed. 

III. Clarifying and Other Revisions to 

the Capital Rule 

A. Capitalization Bylaw Adjustment 

Section 615.5220(a)(6) requires a 

System institution to include in its 

capitalization bylaws a provision stating 

that equities other than those protected 

under Section 4.9A of the Act are 

retireable at the sole discretion of the 

board, provided minimum capital 

adequacy standards established in 

subpart H of part 615 and part 628 are 

54352 Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 

51See 85 FR 55786, 55792 (September 10, 2020). 

52 If the change is non-substantive and does not 

alter, reduce, or increase the rights of any memberborrowers, a System institution’s board may choose 

to make a conforming change to the capitalization 

bylaws to include a general reference to regulatory 

capital adequacy standards without a vote by its 

member-borrowers, provided that such bylaws 

allow for technical amendments without a 

shareholder vote. 

53See Capital Bookletter, Item 4. 

54Section 628.10(c)(4) requires the amounts 

deducted under §§ 628.22(a) and (c) and 628.23 to 

be deducted from tier 1 capital when calculating the 

tier 1 leverage ratio. However, the deductions under 

§§ 628.22(c) and 628.23 were not applied to the 

numerator when calculating the URE and UREE 

requirement as they do not increase the URE of a 

System institution. Although we are amending the 

rule to incorporate deductions under new 

§ 628.22(b) and existing § 628.22(c), we did not find 

it necessary to require the deductions under 

§ 628.23 when calculating the URE and UREE 

measure because third-party stock is not a 

component of URE, UREE, or CET1 capital. 

55Proposed § 628.22(b) is discussed below under 

Section III, G—Adjustments for Accruing Patronage 

and Dividends. 

56See the call report instructions for Uniform Call 

Report schedule RC–R.4, item 3, and schedule RC– 

R.5, item 1.c. The call report instructions are 

available at https://ww3.fca.gov/fcsinfo/CRS/ 

CallReportFiles/UCR%20Report

%20Instructions.pdf. 

met. We proposed to amend this section 

by replacing the reference to parts 615 

and 628 with a general reference to 

FCA’s capital adequacy standards. This 

would satisfy the requirement to refer to 

parts 615 and 628 and would include all 

existing capital requirements of the FCA 

as well as any future capital 

requirements that we may adopt in 

other parts of our regulations. 

As we noted in the proposal,51

changes to bylaws to conform to this 

regulatory requirement should not 

change any substantive rights of the 

System institution or its memberborrowers.52 System institutions that 

have already amended their 

capitalization bylaws to include a 

reference to parts 615 and 628 do not 

need to amend their capitalization 

bylaws to comply with this revision. 

We received no comments on this 

amendment and are adopting it as 

proposed. 

B. Annual Report to Shareholders 

Corrections 

We proposed technical revisions to 

§ 620.5, which lists the required 

contents of a System institution’s 

annual report to shareholders, to ensure 

institutions report financial data as we 

intended. First, we proposed to move 

the requirement that System 

associations report their tier 1 leverage 

ratio in each annual report for each of 

the last 5 fiscal years from 

§ 620.5(f)(4)(iv) to § 620.5(f)(3)(v), as we 

had originally intended. In addition, we 

proposed to amend the requirement in 

§ 620.5(f)(4) that institutions report core 

surplus, total surplus, and the net 

collateral ratio (banks only) in a 

comparative columnar form for each 

fiscal year ending in 2012 through 2016. 

This requirement resulted in System 

institutions reporting capital ratios 

beyond the 5-year requirement 

established in § 620.5(f), which was not 

our intention. Accordingly, we 

proposed to require these disclosures in 

each annual report through 2021, but 

only as long as these ratios are part of 

the previous 5 fiscal years for which 

disclosures are required. We received no 

comments on these revisions and are 

adopting them as proposed. 

C. Appropriate Risk-Weighting of Cash 

and Gold Bullion 

We proposed to delete provisions in 

§ 628.32(l)(1) pertaining to the risk 

weighting of cash that were redundant 

and potentially confusing. Specifically, 

existing § 628.32(l)(1) states that System 

institutions must assign a 0-percent risk 

weight to cash held in accounts at a 

depository institution, which created 

potential confusion pertaining to the 

proper risk weight for deposits that 

exceed the limit of FDIC deposit 

insurance coverage (currently set at 

$250,000). In addition, existing 

§ 628.32(l)(1) also states that System 

institutions must assign a 0-percent risk 

weight to cash held in accounts at a 

Federal Reserve Bank. As the risk 

weighting of cash on deposit with a U.S. 

depository institution or at the Federal 

Reserve Bank is adequately and more 

accurately addressed in 

§ 628.32(a)(1)(i)(A) and (B) and (d)(1), 

we proposed eliminating the duplicative 

and potentially confusing provisions in 

§ 628.32(l)(1). We received no comments 

on these revisions and are adopting 

them as proposed. 

We additionally proposed to revise 

§ 628.32(l)(1) to add a provision 

assigning a 0-percent risk weight to gold 

bullion held in a System institution’s 

own vaults, consistent with the risk 

weight assigned to gold bullion held in 

the vaults of a depository institution. 

We received no comments on this 

revision and are adopting it as 

proposed. 

D. Securitization Formulas 

Consistent with corrections 

previously provided in the Capital 

Bookletter, we proposed to correct 3 

formulas used in the simplified 

supervisory formula approach (SSFA) to 

risk-weighting securitizations under 

§ 628.43(d), and one formula used in the 

simple risk-weight approach (SRWA) for 

risk-weighting equity exposures under 

§ 628.52. These formulas were printed 

incorrectly in the Federal Register 

version of the 2017 Capital Rule. We 

received no comments on these 

corrections and are finalizing them as 

proposed. 

E. Unallocated Retained Earnings and 

Equivalents Deductions and 

Adjustments 

Under § 628.10, at least 1.5 percent of 

the 4 percent tier 1 leverage ratio 

minimum must consist of URE and URE 

equivalents (UREE). As the 2017 Capital 

Rule did not specify how to calculate 

this requirement, we proposed to 

prescribe the calculation methodology. 

Specifically, we proposed to incorporate 

the guidance in the Capital Bookletter 

requiring the deductions in § 628.22(a) 

from the numerator and the deductions 

used in calculating the tier 1 leverage 

ratio from the denominator.53 We also 

proposed to require that institutions 

deduct from the numerator any 

purchased equity investments that must 

be deducted under the corresponding 

deduction approach in § 628.22(c). The 

use of differing deductions for the 

computation of the tier 1 leverage ratio 

and the URE and UREE measure, which 

is a component of the tier 1 leverage 

ratio, resulted in the URE and UREE 

measure, when calculated on a standalone basis, exceeding the tier 1 leverage 

ratio at many System institutions.54 This 

was not our intent. The System 

Comment Letter generally supported our 

proposed revisions, and we are adopting 

them as proposed. 

In addition, we are adopting technical 

conforming amendments in 

§ 628.10(c)(4) to incorporate 

adjustments required under proposed 

§ 628.22(b) 55 into the computation of 

both the tier 1 leverage ratio and the 

URE and UREE measure. More 

specifically, we are amending the 

calculation of average total consolidated 

assets described in § 628.10(c)(4)(i) to 

include the deduction or adjustment 

required by § 628.22(b). Furthermore, 

we are amending the calculation of the 

URE and UREE measure described in 

§ 628.10(c)(4)(ii) to include the 

deduction or adjustment required by 

§ 628.22(b). These conforming changes 

are consistent with existing call report 

instructions,56 are technical in nature, 

and are necessary to maintain 

consistency in the deductions for the 

computation of the tier 1 leverage ratio 

and the URE and UREE measure, 

consistent with the intent of the 

proposed rule. 

Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 54353 

57The Farm Credit Council made similar 

comments in response to the 2017 Capital Rule, as 

we summarized in the rule’s preamble. See 81 FR 

49720, 49733–49735 (July 28, 2016). 

58To include nonqualified allocated equities in 

UREE, an institution’s board must designate the 

equities as UREE at issuance and undertake in its 

capitalization bylaws or a board resolution (1.) not 

to change the designation without FCA prior 

approval, (2.) not to exercise discretion to revolve 

the equities except under dissolution or liquidation, 

and (3.) not offset the equities against a loan in 

default except as required by a court of competent 

jurisdiction, or if required under § 615.5290 in 

connection with a restructuring. 

59URE and UREE provide a cushion from losses 

for both third-party and common cooperative 

equities and protect against interconnected risk 

between System banks and associations. See 79 FR 

52814 (September 4, 2014). 

60See 81 FR 49720, 49732–49735 (July 28, 2016). 61See 81 FR 55786, 55791 (September 10, 2020). 62As noted in the System Comment Letter, Basel 

III recognizes two broad categories of CET1 capital: 

Retained earnings and paid-in capital instruments. 

Consistent with that view, our capital rules 

acknowledge and draw distinction between these 

two types of CET1 capital (§ 628.20(b)(1) and (2)). 

Our interpretation that common cooperative 

equities are ‘‘paid-in’’ as defined by Basel does not 

eliminate the distinction between these two types 

of high-quality capital. Equities allocated by one 

System institution to another are at risk at both 

institutions and present a risk of financial contagion 

as a result of the interconnection that gives rise to 

their existence. Unallocated retained earnings and 

equivalents (as presently defined) do not present 

the same contagion risk. 

63System institution is defined in existing § 628.2 

as ‘‘a System bank, an association of the Farm 

Credit System, . . . and any other institution 

chartered by the FCA that the FCA determines 

should be considered a System institution for the 

purposes of this part.’’ The FCA has not made any 

determinations to include other institutions in this 

definition. 

64Letter dated November 22, 2016, from Charles 

Dana, General Counsel, Farm Credit Council to Gary 

K. Van Meter, Director, Office of Regulatory Policy. 

This letter was received after the 2017 Capital Rule 

had been adopted by the FCA Board and 

communicated a request to change certain 

provisions of the 2017 Capital Rule, as discussed in 

this section. 

65See 85 FR 55786, 55795 (September 10, 2020). 

The System Comment Letter 

advocated that FCA reconsider the 

necessity of requirements to hold a 

minimum level of URE. Consistent with 

its comments on our 2014 proposed 

Capital Rule, the System Comment 

Letter asserted that the minimum URE 

requirement establishes URE as higher 

quality capital relative to other System 

capital components, results in nearly 3 

percent of URE held against each dollar 

of new loans made by associations, 

violates the cooperative principle of 

user-ownership, and undermines the 

cooperative principle of user-control.57

In addition, the System Comment Letter 

asserted that a minimum URE 

requirement is not consistent with the 

Basel III Framework and thus decreases 

the comparability of FCA’s capital 

requirements to those of the U.S. Rule. 

The System Comment Letter and 

AgriBank, FCB (AgriBank), also 

requested that we consider changes to 

the definition of UREE in § 628.2 if we 

retain the URE requirement. 

Under the existing definition, 

nonqualified allocated equities not 

subject to redemption or revolvement 

are included in the definition of UREE 

and count towards an institution’s 

minimum URE and UREE requirement, 

provided that certain additional 

stipulations are met.58 Such equities 

allocated to other System institutions 

are expressly excluded. The 

commenters assert that, because of the 

deductions and eliminations for 

computing regulatory capital under 

FCA’s 2017 Capital Rule, equities 

allocated by a System bank to an 

association satisfy the objectives for 

URE and UREE as previously outlined 

by FCA.59

The request to reconsider application 

of the minimum URE and UREE 

requirements or to change the definition 

of UREE is beyond the scope of the 

proposal. We explained at length our 

position on the significance of URE and 

UREE to System capitalization in the 

preamble to the 2017 Capital Rule.60

We note that the System Comment 

Letter and AgriBank drew a connection 

between our interpretation that 

allocated equities are ‘‘paid-in’’, as 

defined by Basel, and their argument for 

the elimination of the URE and UREE 

requirements. The interpretation that 

allocated equities meet the Basel 

definition of paid-in capital, as 

discussed in the proposal,61 does not 

diminish the importance of the URE and 

UREE requirements.62

The minimum URE and UREE 

requirement as presently calculated 

protects association members against 

association losses, associations against 

bank losses, and the System against 

financial contagion. Financial contagion 

in this context would include impacts to 

earnings measures that are relevant to 

System investors and FCA’s evaluations 

of the safety and soundness of System 

institutions. In addition to our 

previously stated position, we note that 

URE at a System bank ensures the bank 

can act as a source of strength and 

provide assistance to district 

associations or other banks if needed, 

and it also insulates a bank’s affiliated 

associations from losses in other 

districts in the event of a joint and 

several liability call. 

F. Service Corporation Deductions and 

Adjustments 

Existing § 628.22(a)(6) requires a 

System institution to deduct any 

allocated equity investment in another 

System institution. We proposed to 

expand the deduction requirement to 

include allocated equity investments in 

a System service corporation.63 The 

System Comment Letter indicated that 

System institutions are unaware of any 

service corporations that allocate 

equities and provided no further 

comment on the amendment proposed. 

Accordingly, we are adopting the 

revision as proposed. 

As we noted in the preamble to the 

proposed rule, in November 2016 the 

Farm Credit Council sent a letter 64 to 

FCA requesting that institutions be 

permitted to risk-weight their 

investments in System service 

corporations at 100 percent instead of 

having to deduct the investments from 

CET1 capital in their regulatory capital 

calculations. The Farm Credit Council 

further requested FCA to establish 

regulatory capital treatments for 

unincorporated business entities (UBEs) 

based on the specific nature of the entity 

in question. We responded to this 

request in the preamble to the proposed 

rule, declining to revise the requirement 

to deduct equity investments in service 

corporations from regulatory capital and 

noting that we retain the authority to 

consider the appropriate capital 

treatment of UBEs on a case-by-case 

basis. 

The System Comment Letter 

requested that we reconsider our 

position on service corporation 

investments. The System believes the 

requirement to deduct investments in 

System service corporations is 

inconsistent with the level of risk in the 

investments and state that the deduction 

requirement discourages the formation 

of organizations that provide an efficient 

means for cooperation among System 

institutions in providing services to 

their stockholders. The System further 

noted that all service corporations are 

subject to chartering requirements and 

that FCA can establish the individual 

capital requirements of a service 

corporation on a case-by-case basis. 

We are not convinced of the need to 

change our previously communicated 

position. As we stated in the preamble 

to the proposed rule, we believe that 

investments in service corporations are 

committed to support the risks at the 

service corporation and must be 

available to meet the service 

corporation’s capital needs.65 This 

position and our resulting regulatory 

capital treatment of investments in 

service corporations are consistent with 

our treatment of all intra-System 

investments. The System accurately 

points out that FCA can establish 

54354 Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 

66See existing Call Report instructions for 

Schedule RC–R.4, Line item 3 at https://

www.fca.gov/bank-oversight/fcs-call-reports. 

67See 85 FR 55786, 55787–55788 (September 10, 

2020). 

68The declaration must include an amount to be 

paid or include language by which an amount could 

be calculated. 

69Under FCA regulations, only the annual report 

to shareholders prepared at yearend must be 

audited. See § 620.5(j)(1). 

70See § 628.10(a). 

71See 85 FR 55786, 55794 (September 10, 2020). 

Of note, under § 628.20(b)(1)(x) and (d)(1)(viii), any 

statutory borrower stock in excess of the statutory 

minimum that is funded through loan proceeds 

from the System institution is includable only in 

tier 2 capital. 

individual capital requirements for 

service corporations as part of the 

chartering process. We believe the more 

prudent default treatment is deduction 

rather than risk weighting. We would 

consider risk weighting on a case-bycase basis as the exception. 

G. Adjustments for Accruing Patronage 

and Dividends 

We proposed to amend the regulatory 

capital adjustment and deduction 

requirements under § 628.22 by 

incorporating in proposed § 628.22(b) 

the existing call report instructions 

directing System institutions to reverse 

the accrual of patronage or dividend 

payables or receivables that occur prior 

to a board declaration resolution.66 As 

discussed in the proposed rule 

preamble, FCA believes it is important 

to reflect regulatory capital on the basis 

of related contractual obligations. Some 

options for the treatment of patronage 

and dividend accruals under GAAP may 

not be consistent with this regulatory 

capital requirement.67 FCA looks to the 

date an institution’s board of directors 

passes a binding resolution declaring an 

amount it will pay in patronage or 

dividends 68 to establish when the legal 

obligation exists and should be reflected 

in regulatory capital computations. We 

received no comments on this 

amendment and are adopting it as 

proposed. 

H. Bank Disclosures 

We proposed clarifying amendments 

to the requirement under § 628.63(b)(4) 

that banks disclose a reconciliation of 

their regulatory capital elements to their 

balance sheets in any audited 

consolidated financial statements. 

Specifically, we proposed to add the 

word ‘‘applicable’’ before ‘‘audited’’ to 

clarify that reconciliation requirements 

apply only to current period financial 

statements that have been audited.69 We 

further proposed that System banks be 

required to complete this reconciliation 

of regulatory capital elements using 

both point-in-time and three-month 

average daily balance regulatory capital 

values as our regulatory capital 

requirements are based on a threemonth average daily balance.70

Financial statements are generally 

prepared using point-in-time 

information. 

The System Comment Letter 

questioned the value added by 

completing the required reconciliation 

on both a point-in-time and a threemonth average daily balance basis. The 

commenters noted that Basel III Pillar 3 

disclosure requirements are based on a 

tieback to audited financial statements, 

which are prepared on a point-in-time 

basis. They further noted that the 

addition of the three-month average 

reconciliation was unnecessary and 

potentially confusing. 

We are persuaded that completing the 

reconciliation on a point-in-time basis 

satisfies the Basel III Pillar 3 disclosure 

requirement for a reconciliation of 

regulatory capital to GAAP capital. We 

acknowledge that requiring a 

reconciliation on two separate bases 

would have added another 

administrative requirement. We have 

decided instead to revise § 628.63(b)(4) 

to require only a reconciliation on a 

point-in-time basis, together with a 

statement that compliance with the 

minimum capital requirements in 

subpart B of part 628 is determined 

using average daily balances for the 

most recent 3 months. 

To address potential conflicts 

between the requirements of §§ 620.3 

and 628.62(c), we proposed to revise 

§ 620.3 to state that, unless otherwise 

determined by FCA, the use of the 

authorized limited disclosure in 

§ 628.62(c) does not create an 

incomplete disclosure. We also 

proposed to revise § 620.3 to permit 

institutions to modify the required 

statement that the information provided 

is true, accurate, and complete to 

explain that the completeness of the 

disclosure was determined in 

consideration of § 628.62(c). We 

received no comments on this 

amendment and are adopting it as 

proposed. 

Lastly, we proposed to remove and 

reserve § 628.63(b)(3), which required 

disclosure of the computation of 

regulatory capital ratios during the 

transition period, because the provision 

is no longer applicable. We received no 

comments on this amendment and are 

adopting it as proposed. 

I. Retirement of Statutory Borrower 

Stock 

Under existing § 628.20(b)(1)(xiv)(B), 

System institutions may redeem the 

minimum statutory borrower stock 

described in § 628.20(b)(1)(x) without 

prior FCA approval and without 

satisfying the minimum holding period 

for common cooperative equities 

included in CET1 capital. In order to 

eliminate any possible misinterpretation 

that an institution could retire statutory 

borrower stock if the institution were 

not meeting its regulatory capital 

requirements, we proposed to add a 

provision to § 628.20(b)(1)(xiv)(B) to 

clarify that institutions may redeem 

statutory borrower stock only provided 

that, after such redemption, the 

institution continues to comply with all 

minimum regulatory capital 

requirements. 

The System Comment Letter and 

Compeer requested that we reconsider 

the regulatory provisions for 

redemptions of statutory minimum 

borrower stock because of the 

administrative burden they create for 

small-balance loans at some institutions 

(those with balances of $50,000 or less). 

As we clarified in the preamble to the 

proposed rule, under the existing 

provisions of § 628.20(b)(1)(xiv)(B), for 

any statutory borrower stock exceeding 

$1,000 or 2 percent of the loan amount, 

whichever is less, the minimum holding 

periods for inclusion in regulatory 

capital apply.71 We also clarified in the 

preamble that the 2 percent of the loan 

amount is determined relative to the 

originated loan amount. Commenters 

stated that, under this structure, some 

System institutions must undertake a 

‘‘burdensome process’’ to track the 

holding period for stock that is $1,000 

or less but greater than 2 percent of the 

loan balance. The commenters further 

noted that the amounts of capital 

retained as a result of this requirement 

are de minimis in terms of any 

institution’s total capital. 

We are persuaded that the burden of 

tracking and managing these de minimis 

amounts of statutory minimum 

borrower stock in accordance with 

existing requirements is not justified by 

the safety and soundness benefits of the 

nominal amounts of capital retained. 

Accordingly, we are amending the 

provisions of § 628.20(b)(1)(xiv)(B) to 

reflect that an amount of the statutory 

borrower stock as described in section 

4.3A of the Act, not to exceed $1,000, 

may be redeemed without a minimum 

period outstanding after issuance and 

without the prior approval of the FCA. 

This amendment eliminates the burden 

of tracking de minimis amounts of 

statutory borrower stock that are less 

than $1,000 but exceed 2 percent of the 

loan balance. More specifically, System 

institutions may redeem up to $1,000 of 

statutory borrower stock irrespective of 

Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 54355 

72 85 FR 55786, 55794 (September 10, 2020). 

73See objectives in 81 FR 49720 (July 28, 2016). 

74 12 U.S.C. 59. 

75Under § 628.20(f)(5), institutions may retire 

common cooperative equities included in CET1 

capital a minimum of 7 years after the issuance 

date, and they may retire common cooperative 

equities included in tier 2 capital a minimum of 5 

years after the issuance date. In the case of common 

cooperative equities included in CET1, after such 

retirements the dollar amount of CET1 capital 

outstanding must equal or exceed the dollar amount 

outstanding one year earlier. Under 

§ 628.20(b)(1)(xiv)(B), statutory minimum borrower 

stock may be retired without a minimum period 

outstanding after issuance and without the prior 

approval of FCA. 

76See 81 FR 49720, 49731 (July 28, 2016). 

77See § 628.20(c)(1)(vi) and (d)(1)(X). 

78Statutory minimum borrower stock is stock 

acquired by System borrowers to satisfy 

requirements under Section 4.3A of the Act. It is 

equal to the lesser of $1,000 or 2 percent of the loan. 

79As of June 30, 2021, System entities reported 

combined total regulatory capital of $65.8 billion, 

of which $0.39 billion or 0.6 percent was comprised 

of statutory minimum borrower stock that is already 

eligible to be redeemed without a minimum holding 

period under existing regulatory requirements. This 

rulemaking does not change the requirements 

governing redemption of this stock. 

80See § 628.20(f)(5). 

81As defined in § 628.2, unallocated retained 

earnings (URE) equivalents include nonqualified 

allocated equities designated as URE equivalents at 

issuance that a System institution undertakes not to 

revolve except upon dissolution or liquidation. 

Under new § 628.21, System institutions are 

required to obtain prior FCA approval before redesignating URE equivalents as equities that the 

institution has discretion to redeem. 

82As of March 31, 2021, System entities reported 

a combined total regulatory capital of $65.8 billion, 

of which $19.2 billion (29 percent) was comprised 

of allocated common cooperative equities. Of the 

$19.1 billion in allocated common cooperative 

equities, $11.9 billion (62 percent) were designated 

as unallocated retained earnings equivalents. 

83See 81 FR 49720, 49731 (July 28, 2016). 

84 § 628.20(f)(5). 

85 12 U.S.C. 60. 

86See 81 FR 49720, 49731 (July 28, 2016). 

the proportional relationship of the 

stock investment and the originated 

loan amount. We are making 

conforming changes to § 628.20(b)(1)(x) 

and (d)(1)(viii)(C) to incorporate this 

change. 

The ABA commented that it 

appreciated our clarification but 

asserted that the proposal would still 

leave FCS institutions subject to very 

lax requirements concerning stock 

redemptions compared to those 

applicable to commercial banks. We 

note that the proposed amendment 

eliciting this comment does not reduce 

restrictions on stock redemptions for 

System institutions. As discussed in the 

preamble to the proposed rule, the 

proposed amendment is merely a 

technical clarification for the avoidance 

of doubt.72

As stated in the preamble to the 2017 

Capital Rule, one of our objectives was 

to ensure the System’s capital 

requirements are comparable to the 

Basel III framework and the 

standardized approach under the U.S. 

Rule, taking into consideration the 

cooperative structure and the 

organization of the System.73

Accordingly, while most requirements 

of our rule are similar or identical to 

requirements in the U.S. Rule, the 

cooperative structure and the 

organization of System institutions 

necessitated modification of other 

requirements. A piecemeal comparison 

of various elements of the two rules will 

not yield an accurate appraisal of the 

regulatory outcome of our requirements 

as compared to the U.S. Rule. 

As the ABA points out, when 

restrictions on stock redemptions are 

considered in isolation of other rule 

requirements, commercial banks are 

subject to more restrictions than System 

institutions. For example, to retire stock, 

national banks must obtain the approval 

of shareholders owning two thirds of the 

shares in each affected class, as well as 

prior approval from the OCC.74 By 

contrast, System institutions may 

redeem common cooperative equities 

without obtaining FCA or shareholder 

prior approval, provided certain 

conditions are met.75 We acknowledged 

and discussed this difference in the 

preamble to the 2017 Capital Rule.76

However, the requirements for stock 

redemptions should not be evaluated in 

isolation of the remaining restrictions 

on distributions in FCA’s capital rules. 

First, FCA’s Safe Harbor for stock 

redemptions applies only to common 

cooperative equities; all other capital 

instruments including preferred stock 

and subordinated debt cannot be 

redeemed or retired prior to their 

maturity without express prior approval 

from the FCA Board.77 Second, the most 

flexible treatment of stock redemptions 

under FCA’s existing capital rules, 

which is the focus of the ABA’s 

comments, is applicable only to 

minimum statutory borrower stock.78

This capital element comprises less than 

1 percent of the System’s total capital 

base.79 All other common cooperative 

equities included in regulatory capital 

are subject to further restrictions 

including minimum holding periods 

before they can be redeemed without 

obtaining prior approval from FCA.80 A 

third consideration is that a significant 

portion of allocated equities in the 

System has been designated as 

unallocated retained earnings 

equivalents,81 a type of common 

cooperative equity that cannot be 

redeemed without obtaining prior 

approval from the FCA Board.82

Finally and most importantly, as 

previously discussed in the preamble to 

the 2017 Capital Rule, the redemptions 

we allow must be considered in the 

context of our overall limitations on 

capital distributions.83 Under the 

provisions of FCA’s Safe Harbor 

Deemed Prior Approval,84 all capital 

distributions by a System institution, 

including redemptions of common 

cooperative equities, dividends, and 

cash patronage, are limited to no more 

than the year-over-year dollar increase 

in CET1 capital for any given 12-month 

period. All other factors held constant, 

this in effect limits System institutions 

to distributing no more than the current 

year’s net income. By contrast, national 

banks have statutory authority to 

distribute cash dividends in amounts up 

to current year’s net income plus the 

retained net income for the two 

previous years.85 As we noted in the 

preamble to the 2017 Capital Rule, we 

believe that our Safe Harbor for equities 

is appropriately comparable to Basel III 

and the U.S. Rule because the Safe 

Harbor’s broader application to total 

cash dividend payments, cash patronage 

payments, and equity redemptions or 

revolvements is tempered by an overall 

limit that is more restrictive than 

commercial banks’ safe harbor to pay 

cash dividends.86

IV. Abbreviations 

BCBS Basel Committee on Banking 

Supervision 

CFR Code of Federal Regulations 

CFTC Commodity Futures Trading 

Commission 

EMNA Eligible Master Netting Agreement 

FCA Farm Credit Administration 

FDIC Federal Deposit Insurance 

Corporation 

FDI Act Federal Deposit Insurance 

Corporation Improvement Act of 1991 

FFIEC Federal Financial Institutions 

Examination Council 

FR Federal Register 

FRB Board of Governors of the Federal 

Reserve System 

GAAP Generally Accepted Accounting 

Principles (U.S.) 

GSE Government-Sponsored Enterprise 

GSIB Global Systemically Important Bank 

OCC Office of the Comptroller of the 

Currency 

QFC Qualified Financial Contract 

QMNA Qualified Master Netting Agreement 

SEC Securities and Exchange Commission 

SFA Supervisory Formula Approach 

SRWA Simple Risk-Weight Approach 

SSFA Simplified Supervisory Formula 

Approach 

UBE Unincorporated Business Entity 

URE Unallocated Retained Earnings 

UREE Unallocated Retained Earnings 

Equivalents 

U.S.C. United States Code 

54356 Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 

V. Regulatory Analysis 

A. Regulatory Flexibility Act 

Pursuant to section 605(b) of the 

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

et seq.), FCA hereby certifies that this 

final rule will not have a significant 

economic impact on a substantial 

number of small entities. Each of the 

banks in the 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, System 

institutions are not ‘‘small entities’’ as 

defined in the Regulatory Flexibility 

Act. 

B. Congressional Review Act 

Under the provisions of the 

Congressional Review Act (5 U.S.C. 801 

et seq.), the Office of Management and 

Budget’s Office of Information and 

Regulatory Affairs has determined that 

this final rule is not a ‘‘major rule’’ as 

the term is defined at 5 U.S.C. 804(2). 

List of Subjects 

12 CFR Part 614 

Agriculture, Banks, Banking, Foreign 

trade, Reporting and recordkeeping 

requirements, Rural areas. 

12 CFR Part 615 

Accounting, Agriculture, Banks, 

Banking, Government securities, 

Investments, Rural areas. 

12 CFR Part 620 

Accounting, Agriculture, Banks, 

Banking, Reporting and recordkeeping 

requirements, Rural areas. 

12 CFR Part 628 

Accounting, Agriculture, Banks, 

Banking, Capital, Government 

securities, Investments, Rural areas. 

For the reasons stated in the 

preamble, the Farm Credit 

Administration amends parts 614, 615, 

620, and 628 of chapter VI, title 12 of 

the Code of Federal Regulations as 

follows: 

PART 614—LOAN POLICIES AND 

OPERATIONS 

■ 1. The authority citation for part 614 

is revised to read as follows: 

Authority: Secs. 1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 

1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13, 2.15, 

3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 

4.12A, 4.13B, 4.14, 4.14A, 4.14D, 4.14E, 4.18, 

4.18A, 4.19, 4.25, 4.26, 4.27, 4.28, 4.36, 4.37, 

5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.8, 7.12, 7.13, 

8.0, 8.5 of the Farm Credit Act (12 U.S.C. 

2011, 2013, 2014, 2015, 2017, 2018, 2019, 

2071, 2073, 2074, 2075, 2091, 2093, 2094, 

2097, 2121, 2122, 2124, 2128, 2129, 2131, 

2141, 2149, 2183, 2184, 2201, 2202, 2202a, 

2202d, 2202e, 2206, 2206a, 2207, 2211, 2212, 

2213, 2214, 2219a, 2219b, 2243, 2244, 2252, 

2279a, 2279a–2, 2279b, 2279c–1, 2279f, 

2279f–1, 2279aa, 2279aa–5); 12 U.S.C. 2121 

note; 42 U.S.C. 4012a, 4104a, 4104b, 4106, 

and 4128. 

■ 2. Amend § 614.4351 by revising 

paragraph (a) to read as follows: 

§ 614.4351 Computation of lending and 

leasing limit base. 

(a) Lending and leasing limit base. An 

institution’s lending and leasing limit 

base is composed of the total capital 

(tier 1 and tier 2) of the institution, as 

defined in § 628.2 of this chapter, with 

adjustments applicable to the institution 

provided for in § 628.22 of this chapter, 

and with the following further 

adjustments: 

(1) [Reserved] 

(2) Eligible third-party capital that is 

required to be excluded from total 

capital under § 628.23 of this chapter 

may be included in the lending limit 

base. 

* * * * * 

PART 615—FUNDING AND FISCAL 

AFFAIRS, LOAN POLICIES AND 

OPERATIONS, AND FUNDING 

OPERATIONS 

■ 3. The authority citation for part 615 

is revised 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, 8.0, 8.3, 8.4, 

8.6, 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, 2279aa, 2279aa-3, 2279aa–4, 2279aa–6, 

2279aa–8, 2279aa–10, 2279aa–12); 12 U.S.C. 

2154 note; 15 U.S.C. 78o–7 note. 

■ 4. Revise § 615.5200 to read as 

follows: 

§ 615.5200 Capital planning. 

(a) The Board of Directors of each 

System institution shall determine the 

amount of regulatory capital needed to 

assure the System institution’s 

continued financial viability and to 

provide for growth necessary to meet 

the needs of its borrowers. The 

minimum capital standards specified in 

this part and part 628 of this chapter are 

not meant to be adopted as the optimal 

capital level in the System institution’s 

capital adequacy plan. Rather, the 

standards are intended to serve as 

minimum levels of capital that each 

System institution must maintain to 

protect against the credit and other 

general risks inherent in its operations. 

(b) Each Board of Directors shall 

establish, adopt, and maintain a formal 

written capital adequacy plan as a part 

of the financial plan required by 

§ 618.8440 of this chapter. The plan 

shall include the capital targets that are 

necessary to achieve the System 

institution’s capital adequacy goals as 

well as the minimum permanent capital, 

common equity tier 1 (CET1) capital, 

tier 1 capital, total capital, and tier 1 

leverage ratios (including the 

unallocated retained earnings (URE) and 

URE equivalents minimum) standards. 

The plan shall expressly acknowledge 

the continuing and binding effect of all 

board resolutions adopted in accordance 

with § 628.20(b)(1)(xiv), (c)(1)(xiv), and 

(d)(1)(xi) of this chapter, and with 

§ 628.21 of this chapter. The plan shall 

address any projected dividend 

payments, patronage payments, equity 

retirements, or other action that may 

decrease the System institution’s capital 

or the components thereof for which 

minimum amounts are required by this 

part and part 628 of this chapter. The 

plan shall set forth the circumstances 

and minimum timeframes in which 

equities may be redeemed or revolved 

consistent with the System institution’s 

applicable bylaws or board of directors’ 

resolutions. 

(c) In addition to factors that must be 

considered in meeting the minimum 

standards, the board of directors shall 

also consider at least the following 

factors in developing the capital 

adequacy plan: 

(1) Capability of management and the 

board of directors (the assessment of 

which may be a part of the assessments 

required in paragraphs (b)(2)(ii) and 

(b)(7)(i) of § 618.8440 of this chapter); 

(2) Quality of operating policies, 

procedures, and internal controls; 

(3) Quality and quantity of earnings; 

(4) Asset quality and the adequacy of 

the allowance for losses to absorb 

potential loss within the loan and lease 

portfolios; 

(5) Sufficiency of liquid funds; 

(6) Needs of a System institution’s 

customer base; and 

(7) Any other risk-oriented activities, 

such as funding and interest rate risks, 

potential obligations under joint and 

several liability, contingent and offbalance-sheet liabilities or other 

conditions warranting additional 

capital. 

■ 5. Amend § 615.5201 by revising the 

definition of ‘‘System institution’’ to 

read as follows: 

§ 615.5201 Definitions. 

* * * * * 

System institution means a System 

bank, an association of the Farm Credit 

System, and their successors, and any 

other institution chartered by the Farm 

Credit Administration (FCA) that the 

FCA determines should be considered a 

Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 54357 

System institution for the purposes of 

this subpart. 

* * * * * 

■ 6. Amend § 615.5220 by revising 

paragraph (a)(6) to read as follows: 

§ 615.5220 Capitalization bylaws. 

(a) * * * 

(6) The manner in which equities will 

be retired, including a provision stating 

that equities other than those protected 

under section 4.9A of the Act are 

retireable at the sole discretion of the 

board, provided minimum capital 

adequacy standards established by the 

Farm Credit Administration, and the 

capital requirements established by the 

board of directors of the System 

institution, are met; 

* * * * * 

PART 620—DISCLOSURE TO 

SHAREHOLDERS 

■ 7. The authority citation for part 620 

continues to read as follows: 

Authority: Secs. 4.3, 4.3A, 4.19, 5.9, 5.17, 

5.19 of the Farm Credit Act (12 U.S.C. 2154, 

2154a, 2207, 2243, 2252, 2254); sec. 424 of 

Pub. L. 100–233, 101 Stat. 1568, 1656; sec. 

514 of Pub. L. 102–552, 106 Stat. 4102. 

■ 8. Amend § 620.3 by adding a 

sentence at the ends of paragraphs (a) 

and (c)(3) to read as follows: 

§ 620.3 Accuracy of reports and 

assessment of internal control over 

financial reporting. 

(a) * * * Unless otherwise 

determined by the Farm Credit 

Administration (FCA), the appropriate 

use of the limited disclosure authorized 

by § 628.62(c) of this chapter does not 

create an incomplete disclosure. 

* * * * * 

(c) * * * 

(3) * * * If the report contains the 

limited disclosure authorized by 

§ 628.62(c) of this chapter, the statement 

may be modified to explain that the 

completeness of the report was 

determined in consideration of 

§ 628.62(c). 

* * * * * 

■ 9. Amend § 620.5 by adding paragraph 

(f)(3)(v) and revising paragraph (f)(4) to 

read as follows: 

§ 620.5 Contents of the annual report to 

shareholders. 

* * * * * 

(f) * * * 

(3) * * * 

(v) Tier 1 leverage ratio. 

(4) For all banks (on a bank only 

basis) and for all associations. The 

following ratios shall be disclosed in 

comparative columnar form in each 

annual report through fiscal year end 

2021, only as long as these ratios are 

part of the previous 5 fiscal years of 

financial data required under 

paragraphs (f)(2) and (3) of this section: 

(i) Core surplus ratio. 

(ii) Total surplus ratio. 

(iii) For banks only, net collateral 

ratio. 

* * * * * 

PART 628—CAPITAL ADEQUACY OF 

SYSTEM INSTITUTIONS 

■ 10. The authority citation for part 628 

is revised 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, 8.0, 8.3, 8.4, 

8.6, 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, 2279aa, 2279aa–3, 2279aa–4, 2279aa–6, 

2279aa–8, 2279aa–10, 2279aa–12); 12 U.S.C. 

2154 note; 15 U.S.C. 78o–7 note. 

■ 11. Amend § 628.2 by: 

■ a. Revising the definition of 

‘‘Collateral agreement’’; 

■ b. Adding in alphabetical order a 

definition for ‘‘Common cooperative 

equity issuance date’’; and 

■ c. Revising the definitions of ‘‘Eligible 

margin loan’’, ‘‘Qualifying master 

netting agreement’’, ‘‘Repo-style 

transaction’’, and ‘‘System institution’’. 

The revisions and addition read as 

follows: 

§ 628.2 Definitions. 

* * * * * 

Collateral agreement means a legal 

contract that specifies the time when, 

and circumstances under which, a 

counterparty is required to pledge 

collateral to a System institution for a 

single financial contract or for all 

financial contracts in a netting set and 

confers upon the System institution a 

perfected, first-priority security interest 

(notwithstanding the prior security 

interest of any custodial agent), or the 

legal equivalent thereof, in the collateral 

posted by the counterparty under the 

agreement. This security interest must 

provide the System institution with a 

right to close-out the financial positions 

and liquidate the collateral upon an 

event of default of, or failure to perform 

by, the counterparty under the collateral 

agreement. A contract would not satisfy 

this requirement if the System 

institution’s exercise of rights under the 

agreement may be stayed or avoided: 

(1) Under applicable law in the 

relevant jurisdictions, other than: 

(i) In receivership, conservatorship, or 

resolution under the Federal Deposit 

Insurance Act, Title II of the DoddFrank Act, or under any similar 

insolvency law applicable to 

Government-sponsored enterprises 

(GSEs), or laws of foreign jurisdictions 

that are substantially similar to the U.S. 

laws referenced in this paragraph (1)(i) 

in order to facilitate the orderly 

resolution of the defaulting 

counterparty; 

(ii) Where the agreement is subject by 

its terms to, or incorporates, any of the 

laws referenced in paragraph (1)(i) of 

this definition; or 

(2) Other than to the extent necessary 

for the counterparty to comply with the 

requirements of part 47, subpart I of part 

252, or part 382 of this title, as 

applicable. 

* * * * * 

Common cooperative equity issuance 

date means the date in which the 

holding period for purchased stock 

(excluding statutory minimum borrower 

stock and third-party stock) and 

allocated equities start: 

(1) For allocated equities, the calendar 

quarter-ending in which: 

(i) The System institution’s Board of 

Directors has passed a resolution 

declaring a patronage refund; and 

(ii) The System institution has 

completed the applicable accounting 

treatment by segregating the new 

allocated equities from its unallocated 

retained earnings. 

(2) For purchased stock (excluding 

statutory minimum borrower stock and 

third-party stock), the calendar quarterending in which the stock is acquired by 

the holder and recognized on the 

institution’s balance sheet. 

* * * * * 

Eligible margin loan means: 

(1) An extension of credit where: 

(i) The extension of credit is 

collateralized exclusively by liquid and 

readily marketable debt or equity 

securities, or gold; 

(ii) The collateral is marked-to-fair 

value daily, and the transaction is 

subject to daily margin maintenance 

requirements; and 

(iii) The extension of credit is 

conducted under an agreement that 

provides the System institution the right 

to accelerate and terminate the 

extension of credit and to liquidate or 

set-off collateral promptly upon an 

event of default, including upon an 

event of receivership, insolvency, 

liquidation, conservatorship, or similar 

proceeding, of the counterparty, 

provided that, in any such case: 

(A) Any exercise of rights under the 

agreement will not be stayed or avoided 

under applicable law in the relevant 

jurisdictions, other than: 

(1) In receivership, conservatorship, 

or resolution under the Federal Deposit 

54358 Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 

2This requirement is met where all transactions 

under the agreement are (i) executed under U.S. law 

and (ii) constitute ‘‘securities contracts’’ under 

section 555 of the Bankruptcy Code (11 U.S.C. 555), 

qualified financial contracts under section 11(e)(8) 

of the Federal Deposit Insurance Act, or netting 

contracts between or among financial institutions 

under sections 401–407 of the Federal Deposit 

Insurance Corporation Improvement Act or the 

Federal Reserve Board’s Regulation EE (12 CFR part 

231). 

Insurance Act, Title II of the DoddFrank Act, or under any similar 

insolvency law applicable to GSEs,2 or 

laws of foreign jurisdictions that are 

substantially similar to the U.S. laws 

referenced in this paragraph 

(1)(iii)(A)(1) in order to facilitate the 

orderly resolution of the defaulting 

counterparty; or 

(2) Where the agreement is subject by 

its terms to, or incorporates, any of the 

laws referenced in paragraph 

(1)(iii)(A)(1) of this definition; and 

(B) The agreement may limit the right 

to accelerate, terminate, and close-out 

on a net basis all transactions under the 

agreement and to liquidate or set-off 

collateral promptly upon an event of 

default of the counterparty to the extent 

necessary for the counterparty to 

comply with the requirements of part 

47, subpart I of part 252, or part 382 of 

this title, as applicable. 

(2) In order to recognize an exposure 

as an eligible margin loan for purposes 

of this subpart, a System institution 

must comply with the requirements of 

§ 628.3(b) with respect to that exposure. 

* * * * * 

Qualifying master netting agreement 

means a written, legally enforceable 

agreement provided that: 

(1) The agreement creates a single 

legal obligation for all individual 

transactions covered by the agreement 

upon an event of default following any 

stay permitted by paragraph (2) of this 

definition, including upon an event of 

receivership, conservatorship, 

insolvency, liquidation, or similar 

proceeding, of the counterparty; 

(2) The agreement provides the 

System institution the right to 

accelerate, terminate, and close-out on a 

net basis all transactions under the 

agreement and to liquidate or set-off 

collateral promptly upon an event of 

default, including upon an event of 

receivership, conservatorship, 

insolvency, liquidation, or similar 

proceeding, of the counterparty, 

provided that, in any such case: 

(i) Any exercise of rights under the 

agreement will not be stayed or avoided 

under applicable law in the relevant 

jurisdictions, other than: 

(A) In receivership, conservatorship, 

or resolution under the Federal Deposit 

Insurance Act, Title II of the DoddFrank Act, or under any similar 

insolvency law applicable to GSEs, or 

laws of foreign jurisdictions that are 

substantially similar to the U.S. laws 

referenced in this paragraph (2)(i)(A) in 

order to facilitate the orderly resolution 

of the defaulting counterparty; or 

(B) Where the agreement is subject by 

its terms to, or incorporates, any of the 

laws referenced in paragraph (2)(i)(A) of 

this definition; and 

(ii) The agreement may limit the right 

to accelerate, terminate, and close-out 

on a net basis all transactions under the 

agreement and to liquidate or set-off 

collateral promptly upon an event of 

default of the counterparty to the extent 

necessary for the counterparty to 

comply with the requirements of part 

47, subpart I of part 252, or part 382 of 

this title, as applicable; 

(3) The agreement does not contain a 

walkaway clause (that is, a provision 

that permits a non-defaulting 

counterparty to make a lower payment 

than it otherwise would make under the 

agreement, or no payment at all, to a 

defaulter or the estate of a defaulter, 

even if the defaulter or the estate of the 

defaulter is a net creditor under the 

agreement); and 

(4) In order to recognize an agreement 

as a qualifying master netting agreement 

for purposes of this subpart, a System 

institution must comply with the 

requirements of § 628.3(d) with respect 

to that agreement. 

Repo-style transaction means a 

repurchase or reverse repurchase 

transaction, or a securities borrowing or 

securities lending transaction, including 

a transaction in which the System 

institution acts as agent for a customer 

and indemnifies the customer against 

loss, provided that: 

(1) The transaction is based solely on 

liquid and readily marketable securities, 

cash, or gold; 

(2) The transaction is marked-to-fair 

value daily and subject to daily margin 

maintenance requirements; 

(3)(i) The transaction is a ‘‘securities 

contract’’ or ‘‘repurchase agreement’’ 

under section 555 or 559, respectively, 

of the Bankruptcy Code (11 U.S.C. 555 

or 559), a qualified financial contract 

under section 11(e)(8) of the Federal 

Deposit Insurance Act, or a netting 

contract between or among financial 

institutions under sections 401–407 of 

the Federal Deposit Insurance 

Corporation Improvement Act or the 

Federal Reserve’s Regulation EE (12 CFR 

part 231); or 

(ii) If the transaction does not meet 

the criteria set forth in paragraph (3)(i) 

of this definition, then either: 

(A) The transaction is executed under 

an agreement that provides the System 

institution the right to accelerate, 

terminate, and close-out the transaction 

on a net basis and to liquidate or set-off 

collateral promptly upon an event of 

default, including upon an event of 

receivership, insolvency, liquidation, or 

similar proceeding, of the counterparty, 

provided that, in any such case: 

(1) Any exercise of rights under the 

agreement will not be stayed or avoided 

under applicable law in the relevant 

jurisdictions, other than: 

(i) In receivership, conservatorship, or 

resolution under the Federal Deposit 

Insurance Act, Title II of the DoddFrank Act, or under any similar 

insolvency law applicable to GSEs, or 

laws of foreign jurisdictions that are 

substantially similar to the U.S. laws 

referenced in this paragraph 

(3)(ii)(A)(1)(i) in order to facilitate the 

orderly resolution of the defaulting 

counterparty; 

(ii) Where the agreement is subject by 

its terms to, or incorporates, any of the 

laws referenced in paragraph 

(3)(ii)(A)(1)(i) of this definition; and 

(2) The agreement may limit the right 

to accelerate, terminate, and close-out 

on a net basis all transactions under the 

agreement and to liquidate or set-off 

collateral promptly upon an event of 

default of the counterparty to the extent 

necessary for the counterparty to 

comply with the requirements of part 

47, subpart I of part 252, or part 382 of 

this title, as applicable; or 

(B) The transaction is: 

(1) Either overnight or 

unconditionally cancelable at any time 

by the System institution; and 

(2) Executed under an agreement that 

provides the System institution the right 

to accelerate, terminate, and close-out 

the transaction on a net basis and to 

liquidate or set-off collateral promptly 

upon an event of counterparty default; 

and 

(4) In order to recognize an exposure 

as a repo-style transaction for purposes 

of this subpart, a System institution 

must comply with the requirements of 

§ 628.3(e) with respect to that exposure. 

* * * * * 

System institution means a System 

bank, an association of the Farm Credit 

System, and their successors, and any 

other institution chartered by the Farm 

Credit Administration (FCA) that the 

FCA determines should be considered a 

System institution for the purposes of 

this subpart. 

* * * * * 

■ 12. Amend § 628.10 by revising 

paragraph (c)(4) to read as follows: 

§ 628.10 Minimum capital requirements. 

* * * * * 

Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 54359 

(c) * * * 

(4) Tier 1 leverage ratio. (i) A System 

institution’s leverage ratio is the ratio of 

the institution’s tier 1 capital to the 

institution’s average total consolidated 

assets as reported on the institution’s 

Call Report net of deductions and 

adjustments from tier 1 capital under 

§§ 628.22(a), (b), and (c) and 628.23. 

(ii) To calculate the measure of URE 

and URE equivalents described in 

paragraph (b)(4) of this section, a 

System institution must adjust URE and 

URE equivalents to reflect all the 

deductions and adjustments required 

under § 628.22(a), (b), and (c), and must 

use the denominator of the tier 1 

leverage ratio. 

* * * * * 

■ 13. Amend § 628.20 by revising 

paragraphs (b)(1)(i), (ii), (x), and (xiv), 

(c)(1)(xiv), (d)(1)(i), (d)(1)(viii)(C), 

(d)(1)(xi), and (f)(5)(ii) to read as 

follows: 

§ 628.20 Capital components and eligibility 

criteria for tier 1 and tier 2 capital 

instruments. 

* * * * * 

(b) * * * 

(1) * * * 

(i) The instrument is paid-in, issued 

directly by the System institution, and 

represents the most subordinated claim 

in a receivership, insolvency, 

liquidation, or similar proceeding of the 

System institution; 

(ii) The holder of the instrument is 

entitled to a claim on the residual assets 

of the System institution after all senior 

claims have been satisfied in a 

receivership, insolvency, liquidation, or 

similar proceeding; 

* * * * * 

(x) The System institution, or an 

entity that the System institution 

controls, did not purchase or directly or 

indirectly fund the purchase of the 

instrument, except that where there is 

an obligation for a member of the 

institution to hold an instrument in 

order to receive a loan or service from 

the System institution, an amount of 

that loan equal to no more than $1,000 

of the borrower stock requirement under 

section 4.3A of the Act will not be 

considered as a direct or indirect 

funding where: 

(A) The purpose of the loan is not the 

purchase of capital instruments of the 

System institution providing the loan; 

and 

(B) The purchase or acquisition of one 

or more member equities of the 

institution is necessary in order for the 

beneficiary of the loan to become a 

member of the System institution; 

* * * * * 

(xiv) The System institution’s 

capitalization bylaws, or a resolution 

adopted by its board of directors under 

§ 628.21, provides that the institution: 

(A) Establishes a minimum 

redemption or revolvement period of 7 

years for equities included in CET1; and 

(B) Shall not redeem, revolve, cancel, 

or remove any equities included in 

CET1 without prior approval of the FCA 

under paragraph (f) of this section, 

except that the statutory borrower stock 

described in paragraph (b)(1)(x) of this 

section, not to exceed $1,000, may be 

redeemed without a minimum period 

outstanding after issuance and without 

the prior approval of the FCA, as long 

as after the redemption, the System 

institution continues to comply with all 

minimum regulatory capital 

requirements. 

* * * * * 

(c) * * * 

(1) * * * 

(xiv) The System institution’s 

capitalization bylaws, or a resolution 

adopted by its board of directors under 

§ 628.21, provides that the institution: 

(A) Establishes a minimum 

redemption or no-call period of 5 years 

for equities included in additional tier 

1; and 

(B) Shall not redeem, revolve, cancel, 

or remove any equities included in 

additional tier 1 capital without prior 

approval of the FCA under paragraph (f) 

of this section. 

* * * * * 

(d) * * * 

(1) * * * 

(i) The instrument is issued and paidin; 

* * * * * 

(viii) * * * 

(C) The capital instruments are in 

excess of $1,000. 

* * * * * 

(xi) The System institution’s 

capitalization bylaws, or a resolution 

adopted by its board of directors under 

§ 628.21, provides that the institution: 

(A) Establishes a minimum call, 

redemption or revolvement period of 5 

years for equities included in tier 2 

capital; and 

(B) Shall not call, redeem, revolve, 

cancel, or remove any equities included 

in tier 2 capital without prior approval 

of the FCA under paragraph (f) of this 

section. 

* * * * * 

(f) * * * 

(5) * * * 

(ii) After such cash payments have 

been declared and defined by resolution 

of the board, the dollar amount of the 

System institution’s CET1 capital at 

quarter-end equals or exceeds the dollar 

amount of CET1 capital on the same 

quarter-end in the previous calendar 

year; and 

* * * * * 

■ 14. Add § 628.21 to read as follows: 

§ 628.21 Capital bylaw or board resolution 

to include equities in tier 1 and tier 2 

capital. 

In order to include otherwise eligible 

purchased and allocated equities in tier 

1 capital and tier 2 capital, the System 

institution must adopt a capitalization 

bylaw, or its board of directors must 

adopt a binding resolution, which 

resolution must be acknowledged by the 

board on an annual basis in the capital 

adequacy plan described in § 615.5200, 

in which the institution undertakes the 

following, as applicable: 

(a) The institution shall obtain prior 

FCA approval under § 628.20(f) before: 

(1) Redeeming or revolving the 

equities included in common equity tier 

1 (CET1) capital; 

(2) Redeeming or calling the equities 

included in additional tier 1 capital; and 

(3) Redeeming, revolving, or calling 

instruments included in tier 2 capital 

other than limited life preferred stock or 

subordinated debt on the maturity date. 

(b) The equities shall have a 

minimum redemption or revolvement 

period as follows: 

(1) 7 years for equities included in 

CET1 capital, except that the statutory 

borrower stock described in 

§ 628.20(b)(1)(x) may be redeemed 

without a minimum holding period and 

that equities designated as unallocated 

retained earnings (URE) equivalents 

cannot be revolved without submitting 

a written request to the FCA for prior 

approval; 

(2) a minimum no-call, repurchase, or 

redemption period of 5 years for 

additional tier 1 capital; and 

(3) a minimum no-call, repurchase, 

redemption, or revolvement period of 5 

years for tier 2 capital. 

(c) The institution shall submit to 

FCA a written request for prior approval 

before: 

(1) Redesignating URE equivalents as 

equities that the institution may 

exercise its discretion to redeem other 

than upon dissolution or liquidation; 

(2) Removing equities or other 

instruments from CET1, additional tier 

1, or tier 2 capital other than through 

repurchase, cancellation, redemption or 

revolvement; and 

(3) Redesignating equities included in 

one component of regulatory capital 

(CET1 capital, additional tier 1 capital, 

or tier 2 capital) for inclusion in another 

component of regulatory capital. 

(d) The institution shall not exercise 

its discretion to revolve URE 

54360 Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 

equivalents except upon dissolution or 

liquidation and shall not offset URE 

equivalents against a loan in default 

except as required under final order of 

a court of competent jurisdiction or if 

required under § 615.5290 in connection 

with a restructuring under part 617 of 

this chapter. 

(e) The minimum redemption and 

revolvement period (holding period) for 

purchased and allocated equities starts 

on the common cooperative equity 

issuance date, as defined in § 628.2. 

■ 15. Amend § 628.22 by revising 

paragraph (a)(6) and adding paragraph 

(b) to read as follows: 

§ 628.22 Regulatory capital adjustments 

and deductions. 

* * * * * 

(a) * * * 

(6) The System institution’s allocated 

equity investment in another System 

institution or service corporation; and 

* * * * * 

(b) Regulatory adjustments to CET1 

capital. (1) Any accrual of a patronage 

or dividend payable or receivable 

recognized in the financial statements 

prior to a related board declaration or 

resolution must be reversed to or from 

unallocated retained earnings for 

purposes of calculating CET1 capital. 

(2) [Reserved] 

* * * * * 

■ 16. Amend § 628.32 by revising 

paragraph (l)(1) to read as follows: 

§ 628.32 General risk weights. 

* * * * * 

(l) * * * 

(1) A System institution must assign 

a 0-percent risk weight to cash owned 

and held in all offices of the System 

institution or in transit; to gold bullion 

held in the System institution’s own 

vaults or held in a depository 

institution’s vaults on an allocated 

basis, to the extent the gold bullion 

assets are offset by gold bullion 

liabilities; and to exposures that arise 

from the settlement of cash transactions 

(such as equities, fixed income, spot 

foreign exchange (FX), and spot 

commodities) with a central 

counterparty where there is no 

assumption of ongoing counterparty 

credit risk by the central counterparty 

after settlement of the trade. 

* * * * * 

■ 17. Amend § 628.43 by revising 

paragraphs (d)(1) and (2) to read as 

follows: 

§ 628.43 Simplified supervisory formula 

approach (SSFA) and the gross-up 

approach. 

* * * * * 

(d) * * * 

(1) The System institution must 

define the following parameters: 

KA = (1¥W) × KG + (0.5 × W) 

(2) Then the System institution must 

calculate KSSFA according to the 

following equation: 

Where: 

* * * * * 

■ 18. Amend § 628.52 by revising 

paragraph (c)(2)(ii) to read as follows: 

§ 628.52 Simple risk-weight approach 

(SRWA). 

* * * * * 

(c) * * * 

(2) * * * 

(ii) Under the variability-reduction 

method of measuring effectiveness: 

Where: 

Xt = At¥Bt; 

At = the value at time t of one exposure in 

a hedge pair; and 

Bt = the value at time t of the other exposure 

in a hedge pair. 

* * * * * 

■ 19. Amend § 628.63 by: 

■ a. Removing and reserving paragraph 

(b)(3); 

■ b. Revising paragraph (b)(4). 

The revision reads as follows: 

§ 628.63 Disclosures. 

* * * * * 

(b) * * * 

(4) A reconciliation of regulatory 

capital elements using month-end 

balances as they relate to its balance 

sheet in any applicable audited 

consolidated financial statements. The 

reconciliation must include a statement 

that compliance with the regulatory 

capital requirements outlined in subpart 

B of this part is determined using 

average daily balances for the most 

recent 3 months. 

* * * * * 


ER01OC21.002</GPH> ER01OC21.003</GPH> ER01OC21.004</GPH>
Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations 54361 

Dated: September 16, 2021. 

Dale Aultman, 

Secretary, Farm Credit Administration Board. 

[FR Doc. 2021–20433 Filed 9–30–21; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2021–0235; Airspace 

Docket No. 21–AGL–18] 

RIN 2120–AA66 

Revocation of Class E Airspace: Port 

Huron, MI 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule, withdrawal. 

SUMMARY: The FAA published the same 

final action twice, on September 1, 

2021, and again on September 9, 2021. 

The FAA is withdrawing the first 

publication. 

DATES: Effective October 1, 2021, FR 

Doc. 2021–18759, published at 86 FR 

48905 (September 1, 2021), is 

withdrawn. 

ADDRESSES: FAA Order JO 7400.11F, 

Airspace Designations and Reporting 

Points, and subsequent amendments can 

be viewed online at https://

www.faa.gov/air_traffic/publications/. 

For further information, you can contact 

the Rules and Regulations Group, 

Federal Aviation Administration, 800 

Independence Avenue SW, Washington, 

DC 20591; telephone: (202) 267–8783. 

The Order is also available for 

inspection at the National Archives and 

Records Administration (NARA). For 

information on the availability of FAA 

Order JO 7400.11F at NARA, email: 

fr.inspection@nara.gov or go to https:// 

www.archives.gov/federal-register/cfr/ 

ibr-locations.html. 

FOR FURTHER INFORMATION CONTACT: 

Rebecca Shelby, Federal Aviation 

Administration, Operations Support 

Group, Central Service Center, 10101 

Hillwood Parkway, Fort Worth, TX 

76177; telephone (817) 222–5857. 

SUPPLEMENTARY INFORMATION: 

History 

The FAA published FR Doc. 2021– 

18759 (86 FR 48905) on September 1, 

2021, with an effective date of October 

7, 2021. This docket did not allow 

sufficient time to accomplish charting, 

and the FAA re-published the same 

document as FR Doc. 2021–19275 (86 

FR 50453) on September 9, 2021, with 

a later effective date of December 2, 

2021, without withdrawing the first 

document. The FAA is withdrawing the 

first document. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

The Withdrawal 

■ Accordingly, pursuant to the authority 

delegated to me, the final rule published 

in the Federal Register on September 1, 

2021, (86 FR 48905) FR Doc. 2021– 

18759 is hereby withdrawn. 

Authority: 49 U.S.C. 106(f), 106(g); 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

Issued in Fort Worth, Texas, on September 

24, 2021. 

Martin A. Skinner, 

Manager, Operations Support Group, ATO 

Central Service Center. 

[FR Doc. 2021–21227 Filed 9–30–21; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2021–0159; Airspace 

Docket No. 21–ACE–6] 

RIN 2120–AA66 

Amendment of Class E Airspace; Scott 

City, KS 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule, withdrawal. 

SUMMARY: The FAA published the same 

final action twice, on August 31, 2021, 

and again on September 8, 2021. The 

FAA is withdrawing the first 

publication. 

DATES: Effective October 1, 2021, FR 

Doc. 2021–18708, published at 86 FR 

48496 (August 31, 2021), is withdrawn. 

ADDRESSES: FAA Order JO 7400.11F, 

Airspace Designations and Reporting 

Points, and subsequent amendments can 

be viewed online at https://

www.faa.gov/air_traffic/publications/. 

For further information, you can contact 

the Rules and Regulations Group, 

Federal Aviation Administration, 800 

Independence Avenue SW, Washington, 

DC 20591; telephone: (202) 267–8783. 

The Order is also available for 

inspection at the National Archives and 

Records Administration (NARA). For 

information on the availability of FAA 

Order JO 7400.11F at NARA, email: 

fr.inspection@nara.gov or go to https:// 

www.archives.gov/federal-register/cfr/ 

ibr-locations.html. 

FOR FURTHER INFORMATION CONTACT: 

Rebecca Shelby, Federal Aviation 

Administration, Operations Support 

Group, Central Service Center, 10101 

Hillwood Parkway, Fort Worth, TX 

76177; telephone (817) 222–5857. 

SUPPLEMENTARY INFORMATION: 

History 

The FAA published FR Doc. 2021– 

18708 (86 FR 48496) on August 31, 

2021, with an effective date of October 

7, 2021. This docket did not allow 

sufficient time to accomplish charting, 

and the FAA re-published the same 

document as FR Doc. 2021–19278 (86 

FR 50247) on September 8, 2021, with 

a later effective date of December 2, 

2021, without withdrawing the first 

document. The FAA is withdrawing the 

first document. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

The Withdrawal 

■ Accordingly, pursuant to the authority 

delegated to me, the final rule published 

in the Federal Register on August 31, 

2021, (86 FR 48496) FR Doc. 2021– 

18708 is hereby withdrawn. 

Authority: 49 U.S.C. 106(f), 106(g); 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

Issued in Fort Worth, Texas, on September 

24, 2021. 

Martin A. Skinner, 

Acting Manager, Operations Support Group, 

ATO Central Service Center. 

[FR Doc. 2021–21225 Filed 9–30–21; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2021–0277; Airspace 

Docket No. 21–AGL–19] 

RIN 2120–AA66 

Revocation of Class E Airspace: 

Standish, MI 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule, withdrawal. 

SUMMARY: The FAA published the same 

final action twice, on August 31, 2021, 

and again on September 8, 2021. The 

FAA is withdrawing the first 

publication.