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.

Rules and Regulations Federal Register

48755 

Vol. 82, No. 202 

Friday, October 20, 2017 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 996 

[Doc. No. AMS–SC–16–0102; SC16–996–3 

FR] 

Minimum Quality and Handling 

Standards for Domestic and Imported 

Peanuts Marketed in the United States; 

Change to the Quality and Handling 

Requirements 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This rule implements a 

recommendation from the Peanut 

Standards Board (Board) to revise the 

minimum quality and handling 

standards for domestic and imported 

peanuts marketed in the United States 

(Standards). The Board advises the 

Secretary of Agriculture regarding 

potential changes to the Standards and 

is comprised of producers and industry 

representatives. This action relaxes the 

allowance for damaged kernels in 

farmers stock peanuts when 

determining segregation. This change 

increases the allowance for damaged 

kernels under Segregation 1 from not 

more than 2.49 percent to not more than 

3.49 percent. The requirements for 

Segregation 2 are also adjusted to reflect 

this change. The Board recommended 

this change to align the incoming 

standards with recent changes to the 

outgoing quality standards and to help 

increase returns to producers. 

DATES: Effective February 1, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Steven W. Kauffman, Marketing 

Specialist, or Christian D. Nissen, 

Regional Director, Southeast Marketing 

Field Office, Marketing Order and 

Agreement Division, Specialty Crops 

Program, AMS, USDA; Telephone: (863) 

324–3775, Fax: (863) 291–8614, or 

Email: Steven.Kauffman@ams.usda.gov 

or Christian.Nissen@ams.usda.gov. 

ADDRESSES: Small businesses may 

request information on complying with 

this regulation by contacting Richard 

Lower, Marketing Order and Agreement 

Division, Specialty Crops Program, 

AMS, USDA, 1400 Independence 

Avenue SW., STOP 0237, Washington, 

DC 20250–0237; Telephone: (202) 720– 

2491, Fax: (202) 720–8938, or Email: 

Richard.Lower@ams.usda.gov. 

SUPPLEMENTARY INFORMATION: This final 

rule is issued pursuant to Public Law 

107–171, the Farm Security and Rural 

Investment Act of 2002 (Act). The 

minimum quality and handling 

standards for domestic and imported 

peanuts marketed in the United States 

(Standards) regulate the quality and 

handling of domestic and imported 

peanuts marketed in the United States. 

Executive Orders 12866, 13563 and 

13771 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. This action has 

been designated as a ‘‘non-significant 

regulatory action’’ under section 3(f) of 

Executive Order 12866. Accordingly, 

this rule is not subject to review by the 

Office of Management and Budget 

(OMB). Additionally, because this rule 

does not meet the definition of a 

significant regulatory action it does not 

trigger the requirements contained in 

Executive Order 13771. See OMB’s 

Memorandum titled ‘‘Interim Guidance 

Implementing Section 2 of the Executive 

Order of January 30, 2017 titled 

‘Reducing Regulation and Controlling 

Regulatory Costs’ ’’ (February 2, 2017). 

Executive Order 13175 

This action has been reviewed in 

accordance with the requirements of 

Executive Order 13175, Consultation 

and Coordination with Indian Tribal 

Governments. The review reveals that 

this regulation will not have substantial 

and direct effects on Tribal governments 

and would not have significant Tribal 

implications. 

Executive Order 12988 

This final rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. It is not intended to 

have retroactive effect and shall not 

abrogate nor nullify any other statute, 

whether State or Federal, dealing with 

the same subjects as this Act; but is 

intended that all such statutes shall 

remain in full force and effect except in 

so far as they are inconsistent herewith 

or repugnant hereto (7 U.S.C. 587). 

There are no administrative 

procedures which must be exhausted 

prior to any judicial challenge to the 

provisions of this rule. 

The Act requires that the Department 

of Agriculture (USDA) take several 

actions with regard to peanuts marketed 

in the United States. These include 

ensuring mandatory inspection of all 

peanuts marketed in the United States; 

developing and implementing peanut 

quality and handling requirements; 

establishing the Peanut Standards Board 

(Board) comprised of producers and 

industry representatives to advise USDA 

regarding the quality and handling 

requirements under the Standards; and 

modifying those quality and handling 

requirements when needed. USDA is 

required by the Act to consult with the 

Board prior to making any changes to 

the Standards. 

Pursuant to the Act, USDA has 

consulted with Board members in their 

review of the changes to the Standards 

included in this action. This final rule 

relaxes the allowance for damaged 

kernels in farmers stock peanuts when 

determining segregation. The Board 

recommended changing the allowance 

for damaged kernels under Segregation 

1 from not more than 2.49 percent to not 

more than 3.49 percent. The 

requirements for Segregation 2 are also 

adjusted to reflect this change. The 

Board believes these changes will align 

the incoming standards with recent 

revisions to the outgoing quality 

standards and increase returns to 

producers. These changes were 

recommended by the Board at its 

meeting on September 1, 2016. USDA 

proposed and requested public 

comment on the Board’s 

recommendation in the Federal Register 

on May 25, 2017 (82 FR 24082). 

The Standards establish minimum 

incoming and outgoing quality 


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48756 Federal Register / Vol. 82, No. 202 / Friday, October 20, 2017 / Rules and Regulations 

requirements for domestic and imported 

peanuts marketed in the United States. 

Section 996.8 defines incoming 

inspection as the sampling, inspection, 

and certification of farmers stock 

peanuts to determine segregation and 

grade quality. Section 996.13 of the 

Standards defines three levels of 

segregation for incoming farmers stock 

peanuts. Segregation 1 is currently 

defined as farmers stock peanuts with 

not more than 2.49 percent damaged 

kernels nor more than 1.00 percent 

concealed damage caused by rancidity, 

mold, or decay and which are free from 

visible Aspergillus flavus. Segregation 2 

is currently defined as farmers stock 

peanuts with more than 2.49 percent 

damaged kernels or more than 1.00 

percent concealed damage caused by 

rancidity, mold, or decay and which are 

free from visible Aspergillus flavus, and 

Segregation 3 is defined as farmers stock 

peanuts with visible Aspergillus flavus. 

Section 996.30 outlines the incoming 

quality standards, which specify that all 

farmers stock peanuts received by 

handlers shall be inspected and certified 

as to segregation and moisture content. 

Segregation 1 encompasses the 

majority of incoming farmers stock 

peanuts. Segregation 2 peanuts have 

historically constituted roughly one 

percent of the domestic crop. However, 

there has been a slight increase for the 

previous two years to 2.5 percent in 

2014 and 3 percent in 2015. The 

fluctuation in the percentage of 

Segregation 2 peanuts is likely the result 

of weather conditions around harvest 

time. 

A group of several entities 

representing peanut producers wrote a 

letter to the Board requesting that the 

Board review the allowance for 

damaged kernels for farmers stock 

peanuts. In their letter, the producer 

groups stated they believe the loan 

value for Segregation 2 peanuts under 

the Farm Service Agency’s marketing 

assistance loans program remains low. 

Even though changes in regulations and 

technology allow Segregation 2 peanuts 

to now be cleaned and resold at a higher 

market rate, there has been little change 

in the loan value for these peanuts. The 

letter further stated that should a farmer 

have his entire crop graded Segregation 

2, it could be economically devastating. 

Therefore, the letter requested an 

increase in the allowance for damaged 

kernels for Segregation 1 from 2.49 to 

3.49 percent, shifting more peanuts into 

the category of Segregation 1. 

The Board discussed this request at its 

September 1, 2016, meeting. In its 

discussion, the Board recognized the 

large difference between the loan rate 

for Segregation 1 and for Segregation 2 

peanuts. The Board agreed that many 

Segregation 2 peanut lots can be 

cleaned-up to meet the outgoing quality 

standards with minimal cost involved. 

This allows a significant portion of the 

Segregation 2 peanuts purchased to be 

utilized at a higher value after 

processing. 

There has been significant industry 

advancement in technology since the 

2002 Farm Bill established the 

Standards. Before 2002, Segregation 2 

peanuts had to be sent to a crusher and 

could not be reworked to meet the 

outgoing quality standards. In recent 

years, the improvements in technology 

have allowed the industry to utilize 

Segregation 2 peanuts and still meet 

outgoing quality standards. Further, 

recent changes to the outgoing quality 

standards relaxed the allowance for 

damaged kernels from 2.5 to 3.5 percent 

for kernels and for cleaned-inshell 

peanuts (81 FR 50283, published August 

31, 2016). This relaxation made 

additional peanuts available for sale for 

human consumption. This final rule 

makes a corresponding adjustment to 

the damage requirements for incoming 

peanuts. This action relaxes the 

allowance for damaged kernels under 

the definition for Segregation 1 peanuts 

from 2.49 to 3.49 percent, which will 

shift a small portion of peanuts from 

Segregation 2 into the Segregation 1 

category. 

The effect of this change on the 

overall quality of peanuts in the 

industry should be minimal. In 

considering this issue, the Board 

reviewed data from the National Center 

for Peanut Competitiveness. The data 

indicated that roughly one third of 

Segregation 2 farmers stock peanuts 

would be shifted into the Segregation 1 

category under the change. Since 

Segregation 2 historically composes 

approximately one percent of total 

farmers stock peanuts, this adjustment 

represents a very small shift in overall 

volume. Therefore, the change will have 

an insignificant impact on the 

composition of Segregation 1 peanuts. 

As the producer value of farmers 

stock peanuts is determined in part by 

the category of segregation, the 

segregation level determined during the 

incoming inspection impacts producer 

returns. If a producer experiences a shift 

in damage that moves their peanuts 

from Segregation 1 to Segregation 2, it 

can have a significant financial impact, 

especially for small producers. This 

change benefits the industry by moving 

more peanuts into the Segregation 1 

category. This should increase returns 

and help lower financial risk to 

producers by shifting more peanuts into 

the higher value Segregation 1 category. 

This change also requires increasing 

the Segregation 2 criteria from more 

than 2.49 percent to more than 3.49 

percent damaged kernels. The Board 

recommended these changes, in part, to 

align the incoming standards with the 

recent changes that were made to the 

outgoing quality standards earlier this 

year. Further, the Board believes the 

3.49 percent allowance for damaged 

kernels represents an acceptable level of 

damage while maintaining quality 

peanuts. 

Consequently, the Board 

recommended increasing the percent 

damaged kernel allowance under 

Segregation 1 from not more than 2.49 

percent to not more than 3.49 percent. 

The Board voted 13–2 in support of the 

changes. One of the two Board members 

voting against the changes was 

concerned that the decision was being 

made without enough data and was 

concerned about maintaining the quality 

of peanuts. Several Board members 

responded that this change was not a 

new issue for the industry. Further, this 

change has been well supported by 

producer groups prompting this action. 

These changes are consistent with the 

Standards and the Act. 

Final Regulatory Flexibility Analysis 

Pursuant to requirements set forth in 

the Regulatory Flexibility Act (RFA) (5 

U.S.C. 601–612), the Agricultural 

Marketing Service (AMS) has 

considered the economic impact of this 

action on small entities. Accordingly, 

AMS has prepared this final regulatory 

flexibility analysis. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

businesses subject to such actions in 

order that small businesses will not be 

unduly or disproportionately burdened. 

Small agricultural producers are 

defined by the Small Business 

Administration (SBA) as those having 

annual receipts of less than $750,000 

and small agricultural service firms, 

including handlers and importers, are 

defined as those having annual receipts 

of less than $7,500,000 (13 CFR 

121.201). 

There are approximately 7,500 peanut 

producers, 60 peanut handlers operating 

approximately 70 shelling plants, and 

25 importers subject to regulation under 

the peanut program. 

An approximation of the number of 

peanut farms that could be considered 

small agricultural businesses under the 

SBA definition can be obtained from the 

2012 Agricultural Census, which is the 

most recent information on the number 

of farms categorized by size. There were 

3,066 peanut farms with annual 

agricultural sales valued at less than 


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Federal Register / Vol. 82, No. 202 / Friday, October 20, 2017 / Rules and Regulations 48757 

$500,000 in 2012, representing 47 

percent of the total number of peanut 

farms in the U.S. (6,561). According to 

the National Agricultural Statistics 

Service (NASS), peanut production for 

the 2014 and 2015 crop years averaged 

5.7 billion pounds. The average value of 

production for the two-year period was 

$1.173 billion. The average producer 

price over the two-year period was 

$0.21 per pound. Dividing the two-year 

average production value of $1.173 

billion by the approximate number of 

peanut producers of 7,500 results in an 

average revenue per producer of 

approximately $156,000, well below the 

SBA threshold for small producers. 

Dividing the two-year average 

production value of $1.173 billion by 

the approximate number of peanut 

handlers of 60 results in an average 

revenue per handler of approximately 

$19,550,000. Using a normal 

distribution, the majority of handlers 

may be considered large entities. 

Further, according to the Foreign 

Agricultural Service’s Global 

Agricultural Trade System, the average 

annual value of peanuts imported into 

the United States for the 2014 and 2015 

seasons was approximately $67 million. 

By dividing the annual average value of 

imported peanuts by the number of 

importers, the majority of importers 

meet the SBA definition for small 

agricultural service firms. Consequently, 

the majority of producers and importers 

may be classified as small entities, but 

the majority of handlers may be 

considered large entities when using a 

normal distribution. 

This final rule relaxes the allowance 

for damaged kernels in farmers stock 

peanuts when determining segregation. 

This change increases the allowance for 

damaged kernels under Segregation 1 

from not more than 2.49 percent to not 

more than 3.49 percent. The Board 

believes this rule will align incoming 

farmers stock peanuts segregation with 

the outgoing quality standards and 

increase returns to producers. 

It is not anticipated that this action 

will impose additional costs on 

handlers, producers, or importers, 

regardless of size. Rather, these changes 

should help improve returns to peanut 

producers and help lower financial risk. 

This final rule is expected to benefit 

the industry. The effects of this rule are 

not expected to be disproportionately 

greater or less for small handlers, 

producers or importers than for larger 

entities. 

The USDA has considered 

alternatives to these changes. The Act 

requires USDA to consult with the 

Board on changes to the Standards. An 

alternative discussed was to increase the 

damaged kernel percentage up to 4.49 

percent for Segregation 1. However, the 

Board believes this alternative would 

relax the kernel damage too far. 

Therefore, this alternative was rejected. 

USDA has met with the Board, which 

is representative of the industry, and 

has included its recommendations in 

this rule. 

The Act specifies in section 

1604(c)(2)(A) that the Standards 

established pursuant to it may be 

implemented without regard to the 

Paperwork Reduction Act of 1995 (44 

U.S.C. Chapter 35). However, USDA has 

considered the reporting and 

recordkeeping burden on handlers and 

importers under this program. 

This final rule relaxes the allowance 

for damaged kernels in farmers stock 

peanuts when determining segregation 

under the Standards. Recordkeeping 

requirements will remain the same. 

Accordingly, this action will not impose 

any additional reporting or 

recordkeeping requirements on either 

small or large handlers or importers. 

As noted in the initial regulatory 

flexibility analysis, USDA has not 

identified any relevant Federal rules 

that duplicate, overlap or conflict with 

this rule. Further, the public comments 

received concerning the proposal did 

not address the initial regulatory 

flexibility analysis. 

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 Board’s meeting was widely 

publicized throughout the peanut 

industry and all interested persons were 

invited to attend and participate in 

Board deliberations on all issues. Like 

all Board meetings, the September 1, 

2016, meeting was a public meeting and 

all entities, both large and small, were 

able to express views on these issues. 

Section 1601 of the Act also provides 

that amendments to the Standards may 

be implemented without extending 

interested parties an opportunity to 

comment. However, due to the nature of 

the proposed changes, interested parties 

were provided with a 30-day comment 

period. 

A proposed rule concerning this 

action was published in the Federal 

Register on May 25, 2017 (82 FR 24082). 

Copies of the rule were mailed or sent 

via facsimile to all Board members. 

Finally, the rule was made available 

through the internet by USDA and the 

Office of the Federal Register. A 30-day 

comment period ending June 26, 2017, 

was provided to allow interested 

persons to respond to the proposal. 

Ten comments were received during 

the comment period in response to the 

proposal. The commenters included 

producers, a sheller, a producer 

association, a sheller association, two 

State farm bureaus, a State peanut 

board, a State commodity commission, 

and one anonymous individual. Nine of 

the comments received were in support 

of the proposed rule, and one comment 

was in opposition. 

All nine positive comments expressed 

support for finalizing the proposed rule 

as issued. Seven of these comments 

recognized the industry’s advancements 

in technology that allows for better 

sorting and cleaning of incoming 

farmers stock peanuts. Seven 

commenters stated this change would 

align farmers stock segregation damage 

under incoming standards with the 2016 

changes to the outgoing peanut quality 

standards. Six commenters suggested 

the one percent relaxation should allow 

farmers to improve returns and lower 

financial risk by shifting more peanuts 

into Segregation 1. One comment added 

that modern harvesting practices can 

cause slightly more damage to peanut 

kernels, but noted that this type of 

damage is cosmetic and has nothing to 

do with food safety or quality. Two of 

the comments asked for the changes to 

be implemented for the 2017 crop. 

Given industry and USDA 

adjustments that will need to occur to 

accommodate these changes, USDA 

believes that the changes should be 

effective well in advance of a given crop 

year. The 2017 crop is well underway. 

As such, USDA is setting February 2018 

as the most appropriate effective date to 

ensure an orderly transition to the 

revised standards for the next season. 

The one negative comment, received 

from an anonymous individual, 

questioned why the standards are being 

lowered to match our competitors. The 

commenter also noted this is likely an 

effort to receive more product from 

overseas. 

Few, if any, peanuts are imported as 

farmers stock. Consequently, this action 

would have no impact on imported 

peanuts. However, imported peanuts are 

subject to the same outgoing quality 

requirements as domestic peanuts under 

the Standards. This action makes no 

changes to the outgoing standards. 

While this change would not impact 

imported peanuts, it could result in 

additional domestic peanuts being 

available for human consumption. 

Accordingly, no changes will be made 

to the rule as proposed, based on the 

comments received. 


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48758 Federal Register / Vol. 82, No. 202 / Friday, October 20, 2017 / Rules and Regulations 

1 81 FR 48720, July 28, 2016. 

2See 12 CFR part 607. 

After consideration of all relevant 

matter presented, including the 

information and recommendation 

submitted by the Board and other 

available information, it is hereby found 

that this rule, as hereinafter set forth, 

will tend to effectuate the declared 

policy of the Act. 

List of Subjects in 7 CFR Part 996 

Food grades and standards, Marketing 

agreements, Peanuts, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, 7 CFR part 996 is amended as 

follows: 

PART 996—MINIMUM QUALITY AND 

HANDLING STANDARDS FOR 

DOMESTIC AND IMPORTED PEANUTS 

MARKETED IN THE UNITED STATES 

■ 1. The authority citation for 7 CFR 

part 996 continues to read as follows: 

Authority: 7 U.S.C. 7958. 

■ 2. Section 996.13 is amended by 

revising paragraphs (b) and (c) to read 

as follows: 

§ 996.13 Peanuts. 

* * * * * 

(b) Segregation 1. ‘‘Segregation 1 

peanuts’’ means farmers stock peanuts 

with not more than 3.49 percent 

damaged kernels nor more than 1.00 

percent concealed damage caused by 

rancidity, mold, or decay and which are 

free from visible Aspergillus flavus. 

(c) Segregation 2. ‘‘Segregation 2 

peanuts’’ means farmers stock peanuts 

with more than 3.49 percent damaged 

kernels or more than 1.00 percent 

concealed damage caused by rancidity, 

mold, or decay and which are free from 

visible Aspergillus flavus. 

* * * * * 

Dated: October 16, 2017. 

Bruce Summers, 

Acting Administrator, Agricultural Marketing 

Service. 

[FR Doc. 2017–22712 Filed 10–19–17; 8:45 am] 

BILLING CODE 3410–02–P 

FARM CREDIT ADMINISTRATION 

12 CFR Part 607 

RIN 3052–AD30 

Assessment and Apportionment of 

Administrative Expenses 

AGENCY: Farm Credit Administration. 

ACTION: Direct final rule. 

SUMMARY: The Farm Credit 

Administration (FCA or we) issues this 

direct final rule adopting technical 

amendments to eliminate language that 

is obsolete, confusing, and unnecessary 

to determine the annual assessment 

amount of Farm Credit System 

institutions. 

DATES: If no significant adverse 

comment is received on or before 

November 20, 2017, this regulation shall 

become effective no earlier than the 

expiration of 30 days after publication 

in the Federal Register during which 

either or both Houses of Congress are in 

session. We will publish notice of the 

effective date in the Federal Register. 

ADDRESSES: For accuracy and efficiency 

reasons, please submit comments by 

email or through the FCA’s Web site. 

We do not accept comments submitted 

by facsimile (fax), as faxes are difficult 

for us to process in compliance with 

section 508 of the Rehabilitation Act. 

Please do not submit your comment 

multiple times via different methods. 

You may submit comments by any of 

the following methods: 

• Email: Send us an email at regcomm@fca.gov. 

• FCA Web site: http://www.fca.gov. 

Select ‘‘Public Commenters,’’ then 

‘‘Public Comments,’’ and follow the 

directions for ‘‘Submitting a Comment.’’ 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Barry F. Mardock, Deputy 

Director, Office of Regulatory Policy, 

Farm Credit Administration, 1501 Farm 

Credit Drive, McLean, VA 22102–5090. 

You may review copies of all 

comments we receive at our office in 

McLean, Virginia, or from our Web site 

at http://www.fca.gov. Once you are in 

the Web site, select ‘‘Public 

Commenters,’’ then ‘‘Public 

Comments,’’ and follow the directions 

for ‘‘Reading Submitted Public 

Comments.’’ We will show your 

comments as submitted, but for 

technical reasons we may omit items 

such as logos and special characters. 

Identifying information you provide, 

such as phone numbers and addresses, 

will be publicly available. However, we 

will attempt to remove email addresses 

to help reduce Internet spam. 

FOR FURTHER INFORMATION CONTACT: 

Jeremy R. Edelstein, Senior Policy 

Analyst, Office of Regulatory Policy, 

Farm Credit Administration, McLean, 

VA 22102–5090, (703) 883–4497, TTY 

(703) 883–4056; or 

Jennifer A. Cohn, Senior Counsel, 

Office of General Counsel, Farm Credit 

Administration, McLean, VA 22102– 

5090, (303) 696–9737, TTY (703) 883– 

4056. 

SUPPLEMENTARY INFORMATION: 

I. Objective 

The objective of this direct final rule 

is to eliminate confusion in the 

definition of ‘‘average risk-adjusted 

asset base’’ in § 607.2(b), which is used 

to determine the annual assessment 

amount of System institutions, by: 

• Removing an obsolete and 

unnecessary reference to FCA’s call 

report schedule; and 

• Clarifying the effect of mergers and 

consolidations based on current 

accounting practices and deleting 

obsolete language relating to transfers of 

direct lending authority. 

II. Discussion 

Effective January 1, 2017, the FCA 

published the Tier 1/Tier 2 Framework; 

Final Rule (new capital rule).1 The new 

capital rule, in pertinent part, revised 

the risk-weights that determine the riskadjusted asset base (the denominator) of 

the permanent capital ratio that Farm 

Credit System (System) institutions 

must compute. The average riskadjusted asset base of a System bank, 

association, or designated other System 

entity is used to determine its annual 

assessment of funds to cover FCA’s 

expenses.2 Existing § 607.2(b) defines 

and specifies how to calculate ‘‘average 

risk-adjusted asset base’’ in four 

different ways, depending on when the 

institution was formed and how many 

quarters of risk-adjusted assets are 

available. All these variations, however, 

define ‘‘average risk-adjusted asset 

base’’ using the regulatory definition of 

‘‘risk-adjusted asset base’’ and with 

reference to risk-adjusted assets as 

reported on each quarterly Call Report 

Schedule RC–G. 

The FCA significantly revised and 

relabeled its call report schedules in 

connection with the new capital rule. 

An institution’s permanent capital ratio 

denominator—its average risk-adjusted 

asset base—is no longer reported in Call 

Report Schedule RC–G. Accordingly, 

FCA is revising the definition of 

‘‘average risk-adjusted asset base’’ in 

§ 607.2(b) to remove the references to 

Call Report Schedule RC–G. Because 

call report schedules are subject to 

change outside of the regulatory 

process, the revised definition does not 

refer to a call report schedule. Rather, 

revised § 607.2(b) defines ‘‘average riskadjusted asset base’’ with reference to 

the average daily risk-adjusted assets as 

of the last day of the quarter and 

without reference to the call report 

schedule. Because average daily riskadjusted assets can be determined under 

FCA’s regulations, the reference to the 


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