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

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new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

71199 

Vol. 72, No. 241 

Monday, December 17, 2007 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 985 

[Docket Nos. AMS–FV–07–0134; FV08–985– 

1 IFR] 

Marketing Order Regulating the 

Handling of Spearmint Oil Produced in 

the Far West; Revision of the Salable 

Quantity and Allotment Percentage for 

Class 3 (Native) Spearmint Oil for the 

2007–2008 Marketing Year 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: This rule revises the quantity 

of Class 3 (Native) spearmint oil that 

handlers may purchase from, or handle 

for, producers during the 2007–2008 

marketing year. This rule increases the 

Native spearmint oil salable quantity 

from 1,162,336 pounds to 1,172,956 

pounds, and the allotment percentage 

from 48 percent to 53 percent. The 

marketing order regulates the handling 

of spearmint oil produced in the Far 

West and is administered locally by the 

Spearmint Oil Administrative 

Committee (Committee). The Committee 

recommended this rule for the purpose 

of avoiding extreme fluctuations in 

supplies and prices and to help 

maintain stability in the Far West 

spearmint oil market. 

DATES: Effective June 1, 2007, through 

May 31, 2008; comments received by 

February 15, 2008 will be considered 

prior to issuance of a final rule. 

ADDRESSES: Interested persons are 

invited to submit written comments 

concerning this rule. Comments must be 

sent to the Docket Clerk, Marketing 

Order Administration Branch, Fruit and 

Vegetable Programs, AMS, USDA, 1400 

Independence Avenue, SW., STOP 

0237, Washington, DC 20250–0237; Fax: 

(202) 720–8938; or Internet: http:// 

www.regulations.gov. All comments 

should reference the docket number and 

the date and page number of this issue 

of the Federal Register and will be 

made available for public inspection in 

the Office of the Docket Clerk during 

regular business hours, or can be viewed 

at: http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Susan M. Coleman, Marketing 

Specialist, or Gary D. Olson, Regional 

Manager, Northwest Marketing Field 

Office, Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA; Telephone: (503) 326– 

2724, Fax: (503) 326–7440, or E-mail: 

Sue.Coleman@usda.gov or 

GaryD.Olson@usda.gov. 

Small businesses may request 

information on complying with this 

regulation by contacting Jay Guerber, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

AMS, USDA, 1400 Independence 

Avenue, SW., STOP 0237, Washington, 

DC 20250–0237; Telephone: (202) 720– 

2491, Fax: (202) 720–8938, or E-mail: 

Jay.Guerber@usda.gov. 

SUPPLEMENTARY INFORMATION: This rule 

is issued under Marketing Order No. 

985 (7 CFR part 985), as amended, 

regulating the handling of spearmint oil 

produced in the Far West (Washington, 

Idaho, Oregon, and designated parts of 

Nevada and Utah), hereinafter referred 

to as the ‘‘order.’’ The order is effective 

under the Agricultural Marketing 

Agreement Act of 1937, as amended (7 

U.S.C. 601–674), hereinafter referred to 

as the ‘‘Act.’’ 

The Department of Agriculture 

(USDA) is issuing this rule in 

conformance with Executive Order 

12866. 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. Under the provisions of the 

marketing order now in effect, salable 

quantities and allotment percentages 

may be established for classes of 

spearmint oil produced in the Far West. 

This rule increases the quantity of 

Native spearmint oil produced in the 

Far West that may be purchased from or 

handled for producers by handlers 

during the 2007–2008 marketing year, 

which ends on May 31, 2008. This rule 

will not preempt any State or local laws, 

regulations, or policies, unless they 

present an irreconcilable conflict with 

this rule. 

The Act provides that administrative 

proceedings must be exhausted before 

parties may file suit in court. Under 

section 608c(15)(A) of the Act, any 

handler subject to an order may file 

with USDA a petition stating that the 

order, any provision of the order, or any 

obligation imposed in connection with 

the order is not in accordance with law 

and request a modification of the order 

or to be exempted therefrom. A handler 

is afforded the opportunity for a hearing 

on the petition. After the hearing USDA 

would rule on the petition. The Act 

provides that the district court of the 

United States in any district in which 

the handler is an inhabitant, or has his 

or her principal place of business, has 

jurisdiction to review USDA’s ruling on 

the petition, provided an action is filed 

not later than 20 days after the date of 

the entry of the ruling. 

The original salable quantity and 

allotment percentages for Scotch and 

Native spearmint oil for the 2007–2008 

marketing year were recommended by 

the Committee at its October 4, 2006, 

meeting. The Committee recommended 

salable quantities of 886,667 pounds 

and 1,062,336 pounds, and allotment 

percentages of 45 percent and 48 

percent, respectively, for Scotch and 

Native spearmint oil. A proposed rule 

was published in the Federal Register 

on January 22, 2007 (71 FR 2639). 

Comments on the proposed rule were 

solicited from interested persons until 

February 21, 2007. No comments were 

received. Subsequently, a final rule 

establishing the salable quantities and 

allotment percentages for Scotch and 

Native spearmint oil for the 2007–2008 

marketing year was published in the 

Federal Register on March 29, 2007 (72 

FR 14657). 

This rule revises the quantity of 

Native spearmint oil that handlers may 

purchase from, or handle for, producers 

during the 2007–2008 marketing year, 

which ends on May 31, 2008. Pursuant 

to authority contained in §§ 985.50, 

985.51, and 985.52 of the order, the 

Committee, with seven of its eight 

members present, met on October 17, 

2007, and unanimously recommended 

that the 2007–2008 Native spearmint oil 

allotment percentage be increased by 5 

percent. 

Thus, taking into consideration the 

following discussion on adjustments to 

the Native spearmint oil salable 

quantities, this rule increases the 2007– 


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71200 Federal Register / Vol. 72, No. 241 / Monday, December 17, 2007 / Rules and Regulations 

2008 marketing year salable quantities 

and allotment percentages for Native 

spearmint oil to 1,172,956 pounds and 

53 percent. 

The salable quantity is the total 

quantity of each class of oil that 

handlers may purchase from, or handle 

for, producers during the marketing 

year. The total salable quantity is 

divided by the total industry allotment 

base to determine an allotment 

percentage. Each producer is allotted a 

share of the salable quantity by applying 

the allotment percentage to the 

producer’s individual allotment base for 

the applicable class of spearmint oil. 

The total industry allotment base for 

Native spearmint oil for the 2007–2008 

marketing year was estimated by the 

Committee at the October 4, 2006, 

meeting at 2,213,200 pounds. This was 

later revised at the beginning of the 

2007–2008 marketing year to 2,213,124 

pounds to reflect a 2006–2007 

marketing year loss of 76 pounds of base 

due to non-production of some 

producers’ total annual allotments. 

When the revised total allotment base of 

2,213,124 pounds is applied to the 

originally established allotment 

percentage of 48 percent, the initially 

established 2007–2008 marketing year 

salable quantity of 1,062,336 pounds is 

effectively modified to 1,062,300. 

By increasing the salable quantity and 

allotment percentage, this rule makes an 

additional amount of Native spearmint 

oil available by releasing oil from the 

reserve pool. As of October 17, 2007, the 

reserve pool is estimated at 195,790 

pounds. When applied to each 

individual producer, the allotment 

percentage increase allows each 

producer to take up to an amount equal 

to their allotment base from their 

reserve for this respective class of oil. In 

addition, pursuant to §§ 985.56 and 

985.156, producers with excess oil are 

not able to transfer such excess oil to 

other producers to fill deficiencies in 

annual allotments after October 31 of 

each marketing year. 

The following table summarizes the 

Committee recommendations: 

Native Spearmint Oil Recommendation 

(A) Estimated 2007–2008 Allotment 

Base—2,213,200 pounds. This is the 

estimate on which the original 2007–

2008 Native spearmint oil salable 

quantity and allotment percentage was 

based. 

(B) Revised 2007–2008 Allotment 

Base—2,213,124 pounds. This is 76 

pounds less than the estimated 

allotment base of 2,213,200 pounds. 

This is less because some producers 

failed to produce all of their 2006–2007 

allotment. 

(C) Original 2007–2008 Allotment 

Percentage—48 percent. This was 

unanimously recommended by the 

Committee on October 4, 2006. 

(D) Original 2007–2008 Salable 

Quantity—1,062,336 pounds. This 

figure is 48 percent of the estimated 

2007–2008 allotment base of 2,213,200 

pounds. 

(E) Adjustment to the Original 2007–

2008 Salable Quantity—1,062,300 

pounds. This figure reflects the salable 

quantity initially available after the 

beginning of the 2006–2007 marketing 

year due to the 76 pound reduction in 

the industry allotment base to 2,213,124 

pounds. 

(F) First Revision to the 2007–2008 

Salable Quantity and Allotment 

Percentage: 

(1) Increase in Allotment Percentage—

5 percent. The Committee 

recommended a 5 percent increase at its 

October 17, 2007, meeting. 

(2) 2007–2008 Allotment Percentage—

53 percent. This figure is derived by 

adding the increase of 5 percent to the 

original 2007–2008 allotment 

percentage of 48 percent. 

(3) Calculated Revised 2007–2008 

Salable Quantity—1,172,956 pounds. 

This figure is 53 percent of the revised 

2007–2008 allotment base of 2,213,124 

pounds. 

(4) Computed Increase in the 2007–

2008 Salable Quantity—110,656 

pounds. This figure is 5 percent of the 

revised 2007–2008 allotment base of 

2,213,124 pounds. 

The 2007–2008 marketing year began 

on June 1, 2007, with an estimated 

carry-in of 83,417 pounds of salable oil. 

When the estimated carry-in is added to 

the revised 2007–2008 salable quantity 

of 1,062,300 pounds, a total estimated 

available supply for the 2007–2008 

marketing year of 1,145,717 pounds 

results. Of this amount, 990,076 pounds 

of oil has already been sold or 

committed for the 2007–2008 marketing 

year, which leaves 155,641 pounds 

available for sale. 

In making this recommendation, the 

Committee considered all available 

information on price, supply, and 

demand. The Committee also 

considered reports and other 

information from handlers and 

producers in attendance at the meeting 

and reports given by the Committee 

Manager from handlers and producers 

who were not in attendance. By 

increasing the 2007–2008 salable 

percentage by five percent, an estimated 

additional 110,656 pounds will be made 

available to the market. This amount 

combined with the 155,641 pounds 

currently available, will make a total of 

266,297 pounds available to the market 

and bring the total available supply for 

the year to 1,256,373 pounds. The 

handlers are estimating that the demand 

for 2007–2008 year will be 1,200,000 

pounds, which will leave 56,373 

pounds as a carry out at the end of the 

year. However, when the Committee 

made its original recommendation for 

the establishment of the Native 

spearmint oil salable quantity and 

allotment percentage for the 2007–2008 

marketing year, it had anticipated that 

the year would end with an ample 

available supply. Therefore, the 

industry may not be able to meet market 

demand without this increase. 

Based on its analysis of available 

information, USDA has determined that 

the salable quantity and allotment 

percentage for Native spearmint oil for 

the 2007–2008 marketing year should be 

increased to 1,172,956 pounds and 53 

percent, respectively. 

This rule relaxes the regulation of 

Native spearmint oil and will allow 

producers to meet market demand while 

improving producer returns. In 

conjunction with the issuance of this 

rule, the Committee’s revised marketing 

policy statement for the 2007–2008 

marketing year has been reviewed by 

USDA. The Committee’s marketing 

policy statement, a requirement 

whenever the Committee recommends 

implementing volume regulations or 

recommends revisions to existing 

volume regulations, meets the intent of 

§ 985.50 of the order. During its 

discussion of revising the 2007–2008 

salable quantities and allotment 

percentages, the Committee considered: 

(1) The estimated quantity of salable oil 

of each class held by producers and 

handlers; (2) the estimated demand for 

each class of oil; (3) prospective 

production of each class of oil; (4) total 

of allotment bases of each class of oil for 

the current marketing year and the 

estimated total of allotment bases of 

each class for the ensuing marketing 

year; (5) the quantity of reserve oil, by 

class, in storage; (6) producer prices of 

oil, including prices for each class of oil; 

and (7) general market conditions for 

each class of oil, including whether the 

estimated season average price to 

producers is likely to exceed parity. 

Conformity with USDA’s ‘‘Guidelines 

for Fruit, Vegetable, and Specialty Crop 

Marketing Orders’’ has also been 

reviewed and confirmed. 

The increase in the Native spearmint 

oil salable quantity and allotment 

percentage allows for anticipated market 

needs for this class of oil. In 

determining anticipated market needs, 

consideration by the Committee was 

given to historical sales, and changes 

and trends in production and demand. 


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Federal Register / Vol. 72, No. 241 / Monday, December 17, 2007 / Rules and Regulations 71201 

Initial Regulatory Flexibility Analysis 

Pursuant to requirements set forth in 

the Regulatory Flexibility Act (RFA), the 

Agricultural Marketing Service (AMS) 

has considered the economic impact of 

this action on small entities. 

Accordingly, AMS has prepared this 

initial regulatory flexibility analysis. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

business subject to such actions in order 

that small businesses will not be unduly 

or disproportionately burdened. 

Marketing orders issued pursuant to the 

Act, and the rules issued thereunder, are 

unique in that they are brought about 

through group action of essentially 

small entities acting on their own 

behalf. 

There are seven spearmint oil 

handlers subject to regulation under the 

order, and approximately 58 producers 

of Scotch spearmint oil and 

approximately 92 producers of Native 

spearmint oil in the regulated 

production area. Small agricultural 

service firms are defined by the Small 

Business Administration (SBA) (13 CFR 

121.201) as those having annual receipts 

of less than $6,500,000, and small 

agricultural producers are defined as 

those having annual receipts of less than 

$750,000. 

Based on the SBA’s definition of 

small entities, the Committee estimates 

that one of the seven handlers regulated 

by the order could be considered small 

entities. Most of the handlers are large 

corporations involved in the 

international trading of essential oils 

and the products of essential oils. In 

addition, the Committee estimates that 

19 of the 58 Scotch spearmint oil 

producers and 22 of the 92 Native 

spearmint oil producers could be 

classified as small entities under the 

SBA definition. Thus, a majority of 

handlers and producers of Far West 

spearmint oil may not be classified as 

small entities. 

The Far West spearmint oil industry 

is characterized by producers whose 

farming operations generally involve 

more than one commodity, and whose 

income from farming operations is not 

exclusively dependent on the 

production of spearmint oil. A typical 

spearmint oil-producing operation has 

enough acreage for rotation such that 

the total acreage required to produce the 

crop is about one-third spearmint and 

two-thirds rotational crops. Thus, the 

typical spearmint oil producer has to 

have considerably more acreage than is 

planted to spearmint during any given 

season. Crop rotation is an essential 

cultural practice in the production of 

spearmint oil for weed, insect, and 

disease control. To remain economically 

viable with the added costs associated 

with spearmint oil production, most 

spearmint oil-producing farms fall into 

the SBA category of large businesses. 

Small spearmint oil producers 

generally are not as extensively 

diversified as larger ones and as such 

are more at risk to market fluctuations. 

Such small producers generally need to 

market their entire annual crop and do 

not have the luxury of having other 

crops to cushion seasons with poor 

spearmint oil returns. Conversely, large 

diversified producers have the potential 

to endure one or more seasons of poor 

spearmint oil markets because income 

from alternate crops could support the 

operation for a period of time. Being 

reasonably assured of a stable price and 

market provides small producing 

entities with the ability to maintain 

proper cash flow and to meet annual 

expenses. Thus, the market and price 

stability provided by the order 

potentially benefit the small producer 

more than such provisions benefit large 

producers. Even though a majority of 

handlers and producers of spearmint oil 

may not be classified as small entities, 

the volume control feature of this order 

has small entity orientation. 

This rule further increases the 

quantity of Native spearmint oil that 

handlers may purchase from, or handle 

for, producers during the 2007–2008 

marketing year, which ends on May 31, 

2008. This rule increases the 2007–2008 

marketing year salable quantity and 

allotment percentage for Native 

spearmint oil to 1,172,956 and 53 

percent. 

An econometric model was used to 

assess the impact that volume control 

has on the prices producers receive for 

their commodity. Without volume 

control, spearmint oil markets would 

likely be over-supplied, resulting in low 

producer prices and a large volume of 

oil stored and carried over to the next 

crop year. The model estimates how 

much lower producer prices would 

likely be in the absence of volume 

controls. 

The recommended allotment 

percentages, upon which 2007–2008 

producer allotments are based, are 45 

percent for Scotch and 53 percent for 

Native (a 5 percentage point increase 

from the original allotment percentage 

of 48 percent). Without volume controls, 

producers would not be limited to these 

allotment levels, and could produce and 

sell additional spearmint oil. The 

econometric model estimated a $1.40 

decline in the season average producer 

price per pound of Far West spearmint 

oil (combining the two classes of 

spearmint oil) resulting from the higher 

quantities that would be produced and 

marketed if volume controls were not 

used. 

A previous price decline estimate of 

$1.45 per pound was based on the 

original 2007–2008 allotment 

percentages (45 percent for Scotch and 

48 percent for Native) published in the 

Federal Register on March 29, 2007 (72 

FR 14657). The revised estimate reflects 

the impact of the additional quantities 

that will be made available by this rule 

compared to the original allotment 

percentages. In actuality, this rule will 

make an amount lower than 110,656 

pounds of Native spearmint oil 

available, since not all producers have 

reserve pool oil. Loosening the volume 

control restriction resulted in the 

smaller price decline estimate of $1.40 

per pound. 

The use of volume controls allows the 

industry to fully supply spearmint oil 

markets while avoiding the negative 

consequences of over-supplying these 

markets. The use of volume controls is 

believed to have little or no effect on 

consumer prices of products containing 

spearmint oil and will not result in 

fewer retail sales of such products. 

Based on projections available at the 

meeting, the Committee considered 

alternatives to each of the increases. The 

Committee not only considered leaving 

the salable quantity and allotment 

percentage unchanged, but also looked 

at various increases. The Committee 

reached its recommendation to increase 

the salable quantity and allotment 

percentage for Native spearmint oil after 

careful consideration of all available 

information, and believes that the levels 

recommended will achieve the 

objectives sought. Without the increase, 

the Committee believes the industry 

would not be able to meet market needs. 

This rule will not impose any 

additional reporting or recordkeeping 

requirements on either small or large 

spearmint oil handlers. As with all 

Federal marketing order programs, 

reports and forms are periodically 

reviewed to reduce information 

requirements and duplication by 

industry and public sector agencies. In 

addition, USDA has not identified any 

relevant Federal rules that duplicate, 

overlap or conflict with this rule. 

The AMS is committed to complying 

with the E-Government Act, to promote 

the use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

The Committee’s meeting was widely 

publicized throughout the spearmint oil 

industry and all interested persons were 

invited to attend the meeting and 


ebenthall on PROD1PC69 with RULES
71202 Federal Register / Vol. 72, No. 241 / Monday, December 17, 2007 / Rules and Regulations 

participate in Committee deliberations. 

Like all Committee meetings, the 

October 17, 2007, meeting was a public 

meeting and all entities, both large and 

small, were able to express their views 

on this issue. Finally, interested persons 

are invited to submit information on the 

regulatory and informational impacts of 

this action on small businesses. 

A small business guide on complying 

with fruit, vegetable, and specialty crop 

marketing agreements and orders may 

be viewed at: http://www.ams.usda.gov/ 

fv/moab.html. Any questions about the 

compliance guide should be sent to Jay 

Guerber at the previously mentioned 

address in the FOR FURTHER INFORMATION

CONTACT section. 

This rule invites comments on a 

change to the salable quantity and 

allotment percentage for Native 

spearmint oil for the 2007–2008 

marketing year. Any comments received 

will be considered prior to finalization 

of this rule. 

After consideration of all relevant 

material presented, including the 

Committee’s recommendation, and 

other information, it is found that this 

interim final rule, as hereinafter set 

forth, will tend to effectuate the 

declared policy of the Act. 

Pursuant to 5 U.S.C. 553, it is also 

found and determined upon good cause 

that it is impracticable, unnecessary, 

and contrary to the public interest to 

give preliminary notice prior to putting 

this rule into effect and that good cause 

exists for not postponing the effective 

date of this rule until 30 days after 

publication in the Federal Register 

because: (1) This rule increases the 

quantity of Native spearmint oil that 

may be marketed during the marketing 

year, which ends on May 31, 2008; (2) 

the current quantity of Native spearmint 

oil may be inadequate to meet demand 

for the 2007–2008 marketing year, thus 

making the additional oil available as 

soon as is practicable will be beneficial 

to both handlers and producers; (3) the 

Committee recommended these changes 

at a public meeting and interested 

parties had an opportunity to provide 

input; and (4) this rule provides a 60- 

day comment period and any comments 

received will be considered prior to 

finalization of this rule. 

List of Subjects in 7 CFR Part 985 

Marketing agreements, Oils and fats, 

Reporting and recordkeeping 

requirements, Spearmint oil. 

■ For the reasons set forth in the 

preamble, 7 CFR part 985 is amended as 

follows: 

PART 985—MARKETING ORDER 

REGULATING THE HANDLING OF 

SPEARMINT OIL PRODUCED IN THE 

FAR WEST 

■ 1. The authority citation for 7 CFR 

part 985 continues to read as follows: 

Authority: 7 U.S.C. 601–674. 

■ 2. In § 985.226, paragraph (b) is 

revised to read as follows: 

Note: This section will not appear in the 

annual Code of Federal Regulations. 

§ 985.226 Salable quantities and allotment 

percentages—2007–2008 marketing year. 

* * * * * 

(b) Class 3 (Native) oil—a salable 

quantity of 1,172,956 pounds and an 

allotment percentage of 53 percent. 

Dated: December 12, 2007. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 07–6075 Filed 12–13–07; 12:42 pm] 

BILLING CODE 3410–02–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 201 

[Regulation A; Docket No. R–1304] 

Extensions of Credit by Federal 

Reserve Banks 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (Board) is 

amending its Regulation A, effective 

December 12, 2007, to allow the Board 

to authorize a temporary Term Auction 

Facility (TAF) under section 10B of the 

Federal Reserve Act. A TAF is a credit 

facility that allows a depository 

institution to obtain an advance from its 

local Federal Reserve Bank at an interest 

rate that is determined as the result of 

an auction. A TAF is expected to permit 

depository institutions to obtain credit 

on a secured basis from the Federal 

Reserve at rates that meet the market 

demand for credit of relatively short 

terms. The Board is also announcing the 

immediate authorization of a TAF, 

subject to the terms and conditions 

specified herein. 

DATES: The amendments to part 201 

(Regulation A) are effective December 

12, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Scott G. Alvarez, General Counsel (202/ 

452–3583); Heatherun Sophia Allison, 

Senior Counsel (202/452–3565); for 

users of Telecommunication Devices for 

the Deaf (TDD) only, contact 202/263–

4869. 

SUPPLEMENTARY INFORMATION: Section 

10B of the Federal Reserve Act (12 

U.S.C. 347b(a)) authorizes any Federal 

Reserve Bank, under rules and 

regulations prescribed by the Board, to 

make advances to depository 

institutions that have maturities of not 

more than four months and that are 

secured to the satisfaction of the Federal 

Reserve Bank. Under this authority, the 

Board has determined to amend 

Regulation A, effective immediately, to 

authorize a TAF, subject to such further 

terms and conditions as the Board may 

specify from time to time in connection 

with the TAF. The interest rate at which 

credit is extended under a TAF will be 

determined through an auction 

procedure. A TAF is expected to permit 

depository institutions to obtain credit 

on a secured basis from the Federal 

Reserve at rates that meet the market 

demand for credit of relatively short 

terms. 

Final Rule. The final rule provides 

that advances under a TAF will be made 

only to depository institutions that are 

in generally sound financial condition, 

are expected to remain in that condition 

during the term of the advance and are 

eligible to receive advances under 

section 10B of the Federal Reserve Act. 

The final rule also provides that credit 

extended under a TAF will be granted 

at the rate based on the auction. The 

final rule further provides that the terms 

and conditions applicable to a TAF will 

be specified by the Board from time to 

time in connection with the TAF. Those 

terms and conditions may include but 

are not limited to requirements 

governing the condition of participants, 

size and duration of the facility, 

minimum and maximum bid amounts, 

term of advance, use of proceeds, and 

schedule of auction dates. All 

institutions that seek credit under the 

TAF agree to be bound by the terms and 

conditions of the TAF as set out in the 

documents issued by the Board 

governing the TAF. The Board may 

appoint one or more Reserve Banks or 

others to conduct the auction. The 

amendment to Regulation A authorizing 

the TAF is being adopted in response to 

current market conditions as discussed 

below and is intended to be a temporary 

change. Consequently, the final rule 

provides that the TAF will end on such 

date as set by the Board. In the event the 

Board determines to adopt these 

changes to Regulation A on a permanent 

basis, the Board expects to seek public 

comment on the changes. 

Immediate Authorization of TAF. The 

Board has determined immediately to 


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