This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

24101

Vol. 65, No. 80

Tuesday, April 25, 2000

1Similar entity means a party that is ineligible for

a loan from a Farm Credit bank or association, but

has operations that are functionally similar to the

activities of eligible borrowers in that a majority of

its income is derived from, or a majority of its assets

are invested in, the conduct of activities that are

performed by eligible borrowers. See sections

3.1(11)(B)(ii) and 4.18A(a)(2) of the Act.

FARM CREDIT ADMINISTRATION

12 CFR Part 614

RIN 3052–AB87

Loan Policies and Operations;

Participations

AGENCY: Farm Credit Administration

(FCA).

ACTION: Final rule.

SUMMARY: This final rule deletes

requirements for a Farm Credit System

(Farm Credit or System) institution to

provide notice to or seek consent from

other System institutions when it buys

participation interests in loans

originated outside its chartered territory.

Repealing these notice and consent

requirements can help increase the flow

and availability of agricultural credit

and help diversify geographic and

industry concentrations in the loan

portfolios of Farm Credit banks and

associations. As a result of this rule, a

Farm Credit bank or association will no

longer need approval from other System

institutions when it buys participations

in loans from non-System lenders.

EFFECTIVE DATE: These regulations will

become effective 30 days after

publication in the Federal Register

during which either one or both houses

of Congress are in session. We will

publish a notice of the effective date in

the Federal Register.

FOR FURTHER INFORMATION CONTACT:

S. Robert Coleman, Senior Policy

Analyst, Office of Policy and

Analysis, Farm Credit Administration,

McLean, VA 22102–5090, (703) 883–

4498, TDD (703) 883–4444; or

Richard A. Katz, Senior Attorney, Office

of General Counsel, Farm Credit

Administration, McLean, VA 22102–

5090. (703) 883–4020, TDD (703) 883–

4444.

SUPPLEMENTARY INFORMATION:

I. Objective

Our objectives are to:

• Increase the flow and availability of

agricultural credit to farmers, ranchers,

and aquatic producers; • Diversify geographic and industry

concentrations in the loan portfolios of

Farm Credit banks and associations; and • Remove notice and consent

requirements for loan participations

purchased from non-System lenders.

II. Background

We repeal the notice and consent

requirements that apply to loan

participations between Farm Credit and

non-System lenders. As a result, a

System bank or association will no

longer need approval from other Farm

Credit institutions when it buys

participations in loans that non-System

lenders make outside of the purchaser’s

chartered territory. This final rule does not affect loan

participations between System

institutions. We have never required

consent for intra-System participations

because the originating lender’s consent

is implicit when it offers the

participation. On November 9, 1998, we published

a proposal to repeal several regulations

that restrict your institution’s authority

to make loans, buy loan participations,

and offer related services outside your

chartered territory. See 63 FR 60219.

On December 16, 1998, we extended the

comment period until May 10, 1999. See

63 FR 69229.

We received over 270 comment letters

on the proposed rule. No commenter

cited any statutory provision that

restricts the authority of System banks

and associations to participate in loans

outside of their chartered territory. Only

one comment letter mentioned the

statutory authorities of System

institutions to participate in loans. Separately, three System associations

asked us for permission to participate in

loans in the territory of other System

institutions without consent. These

institutions wanted to diversify credit

and concentration risks in their loan

portfolios and help farmers and

ranchers by increasing the liquidity of

non-System lenders.

III. Removing Notice and Consent

Requirements for Loan Participations

Removing the geographic restrictions

on loan participation authorities will

allow System lenders and non-System

lenders to work together at a time when

the agricultural economy is

experiencing significant stress.

Currently, farmers and ranchers are

suffering from weak commodity prices,

depressed export markets, drought, and

reduced production.

Our final rule will benefit farmers,

System institutions, and non-System

lenders such as commercial banks and

the finance arms of farm supply

businesses and equipment dealers.

Sound loan participation programs can

increase the availability of agricultural

credit to farmers and ranchers. System

banks and associations can increase the

liquidity of community banks and

independent finance companies by

purchasing participation interests in

loans that these lenders make to farmers

and ranchers. System institutions can

also diversify geographic and industry

concentrations in their loan portfolios

by buying participation interests in

sound credits made in a larger

geographic territory. Cooperation among

System and non-System lenders can

increase agricultural credit availability,

particularly during downturns in the

economic cycle, such as the one that

agriculture is currently experiencing.

Our former regulations restricted outof-territory loan participations for policy

reasons. Agriculture and financial

markets have changed dramatically over

the past 20 years. Commercial lenders

have consolidated and are subject to few

restrictions on their authority to lend to

farmers throughout the United States.

As a result, our former regulations are

outdated because the System cannot

effectively work with non-System

lenders to most efficiently deliver credit

to agriculture and rural America.

In recent years, we have eliminated

non-statutory restrictions that prevent

System institutions from leasing and

participating in similar entity 1 loans

outside of their territories. This rule

extends our policy to loan participations

purchased from non-System lenders.

This final rule creates a consistent

policy that allows System banks and

associations to participate in loans that

24102 Federal Register / Vol. 65, No. 80 / Tuesday, April 25, 2000 / Rules and Regulations

non-System institutions make to both

eligible borrowers and similar entities

that operate in the chartered territory of

other System institutions.

The final rule does not authorize

direct lender associations to exercise

lending authority outside their

chartered territory without consent.

Furthermore, buying out-of-territory

loan participation does not change the

chartered territory of any System

institution. In buying participations in

loans that non-System lenders originate,

a System institution is not lending

outside its chartered territory.

We believe buying out-of-territory

loan participations helps the System to

fulfill its mission to finance agriculture.

Our rule enables the System under

section 1.1(a) of the Farm Credit Act of

1971, as amended (Act) to improve ‘‘the

income and well-being of American

farmers and ranchers by furnishing

sound, adequate, and constructive credit

* * * to them * * *.’’ By eliminating

artificial territorial restrictions for loan

participations, we promote cooperation

among creditors, which will in turn

benefit farmers, ranchers, and rural

America.

We achieve these objectives by

exercising our statutory power to repeal

regulations that restrict the free flow of

credit to farmers and ranchers. The Act

specifically allows System banks and

associations to participate with

commercial lenders in the types of loans

that they can make. In granting this

broad authority, the Act places no

geographic restrictions on where System

banks and associations may buy

participations in loans.

List of Subjects in 12 CFR Part 614

Agriculture, Banks, banking, Flood

insurance, Foreign trade, Reporting and

recordkeeping requirements, Rural

areas.

For the reasons stated in the

preamble, part 614 of chapter VI, title 12

of the Code of Federal Regulations is

amended to read as follows:

PART 614—LOAN POLICIES AND

OPERATIONS

1. The authority citation for part 614

continues to read as follows:

Authority: 42 U.S.C. 4012a, 4104a, 4104b,

4106, and 4128; 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, 4.13, 4.13B, 4.14, 4.14A, 4.14C,

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,

2199, 2201, 2202, 2202a, 2202c, 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); sec. 413 of Pub. L. 100–

233, 101 Stat. 1568, 1639.

Subpart A—Lending Authorities

§ 614.4000 [Amended]

2. Amend § 614.000 as follows:

a. Remove paragraph (d)(2);

b. Remove the words ‘‘and paragraph

(d)(2) of this section’’ from paragraph

(d)(1);

c. Redesignate paragraphs (d)(1),

(d)(1)(i), and (d)(1)(ii) as paragraphs (d)

introductory text, (d)(1) and (d)(2),

respectively;

d. Remove the ‘‘:’’ at the end of newly

designated paragraph (d)(1) and add ‘‘;

and’’; and

e. Remove ‘‘; and’’ at the end of newly

designated paragraph (d)(2) and add ‘‘.’’.

§ 614.4010 [Amended]

3. Amend § 614.4010 as follows:

a. Remove paragraph (e)(2);

b. Remove the words ‘‘and paragraph

(d)(2) of this section’’ from paragraph

(e)(1);

c. Redesignate paragraphs (e)(1),

(e)(1)(i), and (e)(1)(ii) as paragraphs (e)

introductory text, (e)(1) and (e)(2),

respectively; and

d. Remove ‘‘; and’’ at the end of newly

designated paragraph (e)(2) and add ‘‘.’’.

§ 614.4030 [Amended]

4. Amend § 614.4030 as follows:

a. Remove paragraph (b)(2);

b. Remove the words ‘‘and paragraph

(b)(2) of this section’’ from paragraph

(b)(1); and

c. Redesignate paragraphs (b)(1),

(b)(1)(i), and (b)(1)(ii) as paragraphs (b)

introductory text, (b)(1) and (b)(2),

respectively; and

d. Remove the ‘‘:’’ at the end of newly

designated paragraph (b)(1) and add ‘‘;

and’’; and

e. Remove ‘‘; and’’ at the end of newly

designated paragraph (b)(2) and add ‘‘.’’.

§ 614.4040 [Amended]

5. Amend § 614.4040 as follows:

a. Remove paragraph (b)(2);

b. Remove the words ‘‘and paragraph

(b)(2) of this section’’ from paragraph

(b)(1); and

c. Redesignate paragraphs (b)(1),

(b)(1)(i), and (b)(1)(ii) as paragraphs (b)

introductory text, (b)(1) and (b)(2),

respectively.

§ 614.4050 [Amended]

6. Amend § 614.4050 as follows:

a. Remove paragraph (c)(2);

b. Remove the words ‘‘and paragraph

(c)(2) of this section’’ from paragraph

(c)(1); and

c. Redesignate paragraphs (c)(1),

(c)(1)(i), and (c)(1)(ii) as paragraphs (c)

introductory text, (c)(1) and (c)(2),

respectively.

Dated: April 14, 2000.

Vivian L. Portis,

Secretary, Farm Credit Administration Board.

[FR Doc. 00–9955 Filed 4–24–00; 8:45 am]

BILLING CODE 6705–01–M

EMERGENCY STEEL GUARANTEE

LOAN BOARD

13 CFR Part 400

RIN 3003–ZA00

Emergency Steel Guarantee Loan

Program; Conforming Changes

AGENCY: Emergency Steel Guarantee

Loan Board.

ACTION: Final rule.

SUMMARY: The Emergency Steel

Guarantee Loan Board (Board) is

amending the regulations governing the

Emergency Steel Guarantee Loan

Program (Program). These changes are

meant to conform the regulations and

the guarantee agreement that will be

used for the program. The intent of

these changes is to eliminate potential

ambiguities or unintended conflicts

between the language of the regulations

and that of the Guarantee agreement.

This rule also makes several technical

changes to merely conform the

regulations with the standard of care

adopted by the Board, to conform the

regulations to the form of the Guarantee

and form of Application for Guarantee

adopted by the Board, correct minor

typographical errors and add a mail stop

to the Board’s mailing address, or to

clarify the allocation of Lender

responsibilities, liabilities and

restrictions in circumstances where

more than one lender are parties to the

Guarantee.

DATES: This rule is effective April 25,

2000.

FOR FURTHER INFORMATION CONTACT: Jay

E. Dittus, Executive Director, Emergency

Steel Guarantee Loan Board, U.S.

Department of Commerce, Room H2500,

Washington, DC 20230, (202) 219–0584.

SUPPLEMENTARY INFORMATION: On

October 27, 1999, the Board published

a final rule codifying at chapter 4, title

13, Code of Federal Regulations (CFR),

regulations implementing the Program,

as established in chapter 1 of Public

Law 106–51, the Emergency Steel Loan

Guarantee Act of 1999 (64 FR 57932).