21128 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations

1 Independent Bankers Association of America v.

Farm Credit Administration, 164 F.3d 661 (D.C. Cir.

1999).

composting, they must first be

fumigated in accordance with § 319.40–

7(f)(3), heat treated in accordance with

§ 319.40–7(c), or heat treated with

moisture reduction in accordance with

§ 319.40–7(d).

* * * * *

4. In § 319.40–7, paragraph (e) is

revised to read as follows.

§ 319.40–7 Treatments and safeguards.

* * * * *

(e) Surface pesticide treatments. All

United States Environmental Protection

Agency registered surface pesticide

treatments are authorized for regulated

articles imported in accordance with

this subpart, except that Pinus radiata

wood chips from Chile must be treated

in accordance with § 319.40–7(e)(2).

Surface pesticide treatments must be

conducted in accordance with label

directions approved by the United

States Environmental Protection

Agency. Under the following

circumstances, surface pesticide

treatments must also be conducted as

follows:

(1) Heat treated logs. When used on

heat treated logs, a surface pesticide

treatment must be first applied within

48 hours following heat treatment. The

surface pesticide treatment must be

repeated at least every 30 days during

storage of the regulated article, with the

final treatment occurring no more than

30 days prior to departure of the means

of conveyance that carries the regulated

articles to the United States.

(2) Pinus radiata wood chips from

Chile. When used on Pinus radiata

wood chips from Chile, a surface

pesticide consisting of the following

must be used: A mixture of a fungicide

containing 64.8percent of the active

ingredient didecyl dimethyl ammonium

chloride and 7.6 percent of the active

ingredient 3-iodo-2-propynl

butylcarbamate and an insecticide

containing 44.9percent of the active

ingredient chlorpyrifos

phosphorothioate. The wood chips must

be sprayed with the pesticide so that all

the chips are exposed to the chemical

on all sides. During the entire interval

between treatment and export, the wood

chips must be stored, handled, or

safeguarded in a manner that prevents

any infestation of the wood chips by

plant pests.

* * * * *

Done in Washington, DC, this 17th day of

April 2000.

Bobby R. Acord,

Acting Administrator, Animal and Plant

Health Inspection Service.

[FR Doc. 00–9937 Filed 4–19–00; 8:45 am]

BILLING CODE 3410–34–P

FARM CREDIT ADMINISTRATION

12 CFR Chapter VI

RIN 3052–AB97

Regulatory Burden

AGENCY: Farm Credit Administration

(FCA).

ACTION: Statement on regulatory burden.

SUMMARY: This is the second phase of

our recent initiative to reduce regulatory

burden on the Farm Credit System (FCS

or System). Many System institutions

responded to our August 1998 request

for comments by identifying regulations

that they considered burdensome. We

deleted several unnecessary or obsolete

regulations in the first phase of this

project. This document informs the

public of those regulations that we will

retain without amendment because they

either: Implement or interpret the Farm

Credit Act of 1971, as amended (Act); or

protect the safety and soundness of the

System. We also identify pending or

future actions that will respond to

remaining regulatory burden issues.

FOR FURTHER INFORMATION CONTACT:

Alan Markowitz, Senior Policy Analyst,

Office of Policy and Analysis, Farm

Credit Administration, McLean, VA

22102–5090, (703) 883–4479;

or

Richard A. Katz, Senior Attorney, or

Beth Salyer, Attorney-Advisor, Office

of General Counsel, Farm Credit

Administration, McLean, VA 22102–

5090, (703) 883–4020, TDD (703) 883–

4444.

SUPPLEMENTARY INFORMATION:

I. Background

On August 18, 1998, we published a

document in the Federal Register

inviting you to identify existing

regulations and policies that impose

unnecessary burdens on the FCS. See 63

FR 44176. On November 18, 1998, we

extended the comment period to

January 19, 1999. See 63 FR 64013. We

specifically asked you to focus on those

regulations and policies that are

ineffective, duplicate other

governmental requirements, or impose

burdens that are greater than the

benefits received. We took this action in

our continuing effort to improve the

regulatory environment so System

institutions can more effectively serve

farmers, ranchers, aquatic producers,

their cooperatives, and other rural

residents.

In the first phase of our effort to

reduce regulatory burden on the FCS,

we repealed or revised 16 regulations.

See 64 FR 43046, Aug. 9, 1999.

The purpose of this document is to

inform you of those regulations that we

will retain without amendment. In most

cases, these regulations are either

required by statute or are necessary to

ensure the safety and soundness of

System institutions. For these reasons,

the FCA will not make the suggested

changes to the following regulations:

§§ 613.3020; 613.3030; 613.3300;

614.4200(b)(1); 614.4335(c)(1)(i);

614.4359; and 614.4920. The next

section explains our reasons for

retaining these regulations.

II. Regulations that We Will Retain

Without Revision

A. Farm-related Businesses

Seven commenters asked us to amend

§ 613.3020 so the FCS can finance farmrelated businesses that supply only

goods to farmers and ranchers. Sections

1.11(c)(1) and 2.4(a)(3) of the Act limit

eligibility to businesses that furnish

farm-related services to farmers and

ranchers. Businesses that sell only farmrelated goods to agricultural producers

do not qualify for FCS financing under

these provisions of the Act. Therefore,

we cannot grant this request.

Two Farm Credit banks and one

association asked us to amend

§ 613.3020(b)(2) to allow businesses that

derive less than 50 percent of their

income from farm-related services to

obtain System financing for all of their

credit needs. The FCA updated this

regulation in 1997 to expand financing

opportunities for farm-related

businesses that offer both goods and

services. At that time, the FCA Board

determined that a 50-percent threshold

gave appropriate effect to the Act. See

62 FR 4429, Jan. 30, 1997. This standard

ensures that only businesses that

primarily provide farm-related services

receive full financing from System

lenders. The United States Court of

Appeals recently upheld the provisions

in § 613.3020(b) that limit System

financing to eligible businesses that

derive less than 50 percent of their

income from furnishing farm-related

services to farmers and ranchers.1 We

continue to believe that the current

regulation strikes the best balance for

securing the credit needs of farm-related

business within the limitations of the

Act.

B. Rural Housing

Many System institutions assert that

§ 613.3030 unnecessarily restricts the

System’s ability to finance housing for

rural residents who are not farmers,

Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations 21129

ranchers, or aquatic producers. Two

FCS banks, an association, and the Farm

Credit Council (Council) requested relief

from § 613.3030(a)(3), which allows

System lenders to finance non-farm

rural homes only in towns or villages

with populations not exceeding 2,500

inhabitants. Changing population

patterns since Congress set this limit

almost 30 years ago make it increasingly

difficult for the System to meet the

credit needs of homebuyers in rural

areas. Because this restriction is

statutory, however, we cannot grant the

commenters’ request.

Three Farm Credit banks and the

Council asked us to repeal

§ 613.3030(c). Under this provision, FCS

banks and associations can extend

credit to eligible rural homeowners only

for the purposes of buying, building,

remodeling, repairing or improving

rural homes, or refinancing the existing

indebtedness on such homes. The

commenters want us to remove this

restriction so eligible non-farm rural

homeowners can borrow against the

equity in their homes and use the loan

proceeds for any purpose. We

thoroughly addressed this issue when

we developed § 613.3030 during an

extensive rulemaking that ended in

1997. See 62 FR 4429, Jan. 30, 1997. We

are not inclined to change our policy at

this time.

C. Similar Entities

A Farm Credit bank requested

changes to § 613.3300, which governs

FCS participation in loans that nonSystem lenders make to similar entities.

Under sections 3.1(11)(B) and 4.18A of

the Act, similar entities are parties that

are ineligible to borrow directly from

System banks and associations but

derive most of their income from, or

have most of their assets invested in, the

same activities as eligible borrowers.

The bank wants us to revise the rule

so the FCS can make loans directly to

similar entities. We cannot grant this

request because sections 3.1(11)(B) and

4.18A of the Act do not authorize Farm

Credit banks and associations to lend

directly to similar entities. These

statutory provisions specify that System

institutions may only participate in

credits that non-System lenders extend

to similar entities. Further, sections

3.1(11)(B)(i)(bb) and 4.18A(b)(2) of the

Act limit System participation in similar

entity loans to less than 50 percent of

the principal.

D. First Lien Requirement

Three Farm Credit banks, one

association, and the Council asked us to

repeal a provision in § 614.4200(b)(1)

that requires Farm Credit banks, Federal

land credit associations, and

agricultural credit associations to secure

their long-term mortgage loans with a

first lien on the borrower’s real estate.

Section 1.7(a)(1) of the Act expressly

requires FCS long-term mortgage

lenders to take a first lien on the

borrower’s property in a rural area as

security for the loan. Thus, this

regulation cannot be repealed.

Additionally, failure to secure a longterm mortgage loan with a first lien on

the security property may be an unsafe

and unsound practice. However, longterm mortgage lenders may still take

additional collateral without a first lien,

as an abundance of caution.

E. Borrower Stock for Loan Sales Within

the FCS

Currently, § 614.4335(c)(1)(i) allows

borrowers whose loans are sold within

the FCS to decide whether to hold

voting stock in the association that

bought or sold their loans. Two Farm

Credit banks, two associations, and the

Council requested a revision that would

allow System institutions involved in

the transactions, rather than the

borrower, to make this choice. We

believe it is the right of a stockholder to

elect whether to hold stock in a selling

or purchasing FCS institution. This

shareholder right is a basic tenant of

FCS cooperative principles and this

provision ensures that farmers,

ranchers, and aquatic producers have

the right to participate in the affairs of

the FCS association of their choice

when their loans are sold within the

System.

F. Attribution Rules for Lending Limit

Calculations

Two Farm Credit banks, one

association, and the Council asked us to

revise the attribution rules for

calculating lending limits. These

commenters claim that the current

regulation, § 614.4359, is confusing. The

FCA is fully committed to the plain

language goals of the National

Performance Review. Therefore, we plan

to rewrite these regulations so they are

easier to understand and apply.

However, we do not plan to make

substantive changes to the attribution

rules at this time. We believe they

protect the safety and soundness of

System banks and associations by

limiting their exposure to risk from any

one borrower or a group of related

borrowers. Additionally, our existing

regulation is consistent with the

approach of other Federal bank

regulatory agencies.

G. Flood Insurance

Two Farm Credit banks asked us to

exempt certain farm and ranch

outbuildings and commercial

agribusiness firms from flood insurance

requirements. The National Flood

Insurance Reform Act of 1994 (1994

Reform Act) requires flood insurance for

all buildings that secure loans made by

the FCS, commercial banks, credit

unions, and savings associations if those

buildings are in areas that the Federal

Emergency Management Agency deems

to be in special flood hazard areas. The

1994 Reform Act offers no flexibility for

the FCA to make regulatory exclusions

for farm and ranch outbuildings, or

commercial agribusiness firms.

Furthermore, we joined with five other

Federal bank regulatory agencies to

ensure that the same flood insurance

rules apply to commercial banks,

savings associations, credit unions, and

the FCS. Therefore, we are unable to

repeal § 614.4920(b) because it is a

statutory requirement.

III. Future Efforts to Reduce

Unnecessary Regulatory Burdens on

FCS Institutions

We will address all remaining

regulatory burden issues that System

institutions raised during the comment

period in separate regulatory projects.

The comments indicate that some

System institutions may need guidance

about how some regulations mentioned

in Part II of this statement apply in

certain situations. We hope to clarify

these regulations in the future. When we

complete our efforts, the regulatory

burdens on the System will be reduced.

However, we will maintain those

regulations that are necessary to

implement the Act and are critical for

the safety and soundness of the System.

Our approach will enable the FCS to

continue to provide much needed credit

to America’s farmers, ranchers, aquatic

producers, their cooperatives and other

rural residents.

Dated: April 13, 2000.

Vivian Portis,

Secretary, Farm Credit Administration Board.

[FR Doc. 00–9850 Filed 4–19–00; 8:45 am]

BILLING CODE 6705–01–P

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 701

Organization and Operations of

Federal Credit Unions

AGENCY: National Credit Union

Administration (NCUA).