80 FR 15931 - Federal Agricultural Mortgage Corporation General Provisions; Federal Agricultural Mortgage Corporation Governance; Federal Agricultural Mortgage Corporation Risk Management; Federal Agricultural Mortgage Corporation Disclosure and Reporting; Farmer Mac Corporate Governance and Standards of Conduct
FARM CREDIT ADMINISTRATION Federal Register Volume 80, Issue 58 (March 26, 2015)
Federal Register Volume 80, Issue 58 (March 26, 2015)
| Page Range | 15931-15947 | |
| FR Document | 2015-06755 |
[Federal Register Volume 80, Number 58 (Thursday, March 26, 2015)] [Proposed Rules] [Pages 15931-15947] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-06755] ======================================================================= ----------------------------------------------------------------------- FARM CREDIT ADMINISTRATION 12 CFR Parts 650, 651, 653, and 655 RIN 3052-AC89 Federal Agricultural Mortgage Corporation General Provisions; Federal Agricultural Mortgage Corporation Governance; Federal Agricultural Mortgage Corporation Risk Management; Federal Agricultural Mortgage Corporation Disclosure and Reporting; Farmer Mac Corporate Governance and Standards of Conduct AGENCY: Farm Credit Administration. ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: The Farm Credit Administration (FCA, we, or our) is proposing new regulations, and clarifying and enhancing existing regulations, related to the Federal Agricultural Mortgage Corporation (Farmer Mac or Corporation) Board governance and standards of conduct, including director election procedures, conflict-of-interest, and risk governance. We also propose enhancements to existing disclosure and reporting requirements to remove repetitive reporting and allow for electronic filing of reports. In keeping with today's financial and economic environment, we believe it prudent and timely to undertake a review of our regulatory guidance on the identified areas. We also propose rules on the examination and enforcement authorities held by the [[Page 15932]] FCA Office of Secondary Market Oversight (OSMO) over Farmer Mac. DATES: You may send comments on or before June 24, 2015. ADDRESSES: We offer a variety of methods for you to submit your comments. For accuracy and efficiency reasons, commenters are encouraged to submit comments by email or through the FCA's Web site. As facsimiles (fax) are difficult for us to process and achieve compliance with section 508 of the Rehabilitation Act, we are no longer accepting comments submitted by fax. Regardless of the method you use, please do not submit your comments multiple times via different methods. You may submit comments by any of the following methods:Email: Send us an email at [email protected]. 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: Laurie A. Rea, Director, Office of Secondary Market Oversight, 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 on 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, including any supporting data provided, but for technical reasons we may omit items such as logos and special characters. Identifying information that 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: Joe Connor, Associate Director for Policy and Analysis, Office of Secondary Market Oversight, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4364, TTY (703) 883- 4056, or Laura McFarland, Senior Counsel, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4056. SUPPLEMENTARY INFORMATION: I. Objective The purpose of this proposed rule is to: Enhance risk governance at Farmer Mac to further its long- term safety and soundness and mission achievement; Clarify the roles of the board and voting stockholders in the Farmer Mac director nomination and election process; Enhance the usefulness, transparency, and consistency of conflict-of-interest reporting; Clarify conflict-of-interest prohibitions; Clarify the appropriate balance between a director's representational requirements and duties as director of Farmer Mac; and Remove repetitious disclosure and reporting requirements, given the dual reporting responsibilities of Farmer Mac to the FCA and the Securities and Exchange Commission (SEC). II. Background Farmer Mac is a stockholder-owned, federally chartered instrumentality that is an institution of the Farm Credit System (System) and a Government-sponsored enterprise (GSE). Farmer Mac was established and chartered by the Agricultural Credit Act of 1987 (1987 Act) \1\ to create a secondary market for agricultural real estate mortgage loans, rural housing mortgage loans, rural utility cooperative loans, and the guaranteed portions of USDA-guaranteed farm and rural development loans. Title VIII of the Farm Credit Act of 1971, as amended, (Act) governs Farmer Mac. --------------------------------------------------------------------------- \1\ Agricultural Credit Act of 1987 (Pub. L. 100-233, January 6, 1988). --------------------------------------------------------------------------- As a GSE, Farmer Mac has a public policy purpose embedded in its corporate mission. One aspect of this public policy mission includes financial services to customer-stakeholders (institutions that lend to farmers, ranchers, rural homeowners, and rural utility cooperatives) and the resulting flow-through benefits to rural borrowers. Another key aspect is the protection of taxpayer-stakeholders because the risk that Farmer Mac accepts in the course of business exposes both investors (debt and equity holders) and taxpayers to potential loss. The taxpayer's exposure arises in part from Farmer Mac's authority to issue debt to the Department of the Treasury to cover guarantee losses under certain adverse circumstances.\2\ Thus, an appropriately comprehensive approach to Board-level risk governance would acknowledge and consider all stakeholder groups. --------------------------------------------------------------------------- \2\ According to the 1987 Act, Farmer Mac, in certain circumstances, may borrow up to $1.5 billion from the U.S. Treasury to ensure timely payment of any guarantee obligations of the corporation. Pub. L. 100-233. --------------------------------------------------------------------------- Farmer Mac has two classes of voting common stock: Class A and Class B. Class A voting common stock is owned by banks, insurance companies, and other financial institutions. Class B voting common stock is owned by System institutions. In addition, Farmer Mac has nonvoting common stock (Class C), the ownership of which is not restricted and is a means for Farmer Mac to raise capital. Farmer Mac may also issue nonvoting preferred stock. The Farmer Mac Board of Directors is, by statute, composed of 15 directors from three defined representative groups: Class A stockholders, Class B stockholders, and the general public.\3\ Each of the three groups has five directors on the Board. Congress further specified that the Farmer Mac elected directors ``shall be elected by holders of common stock'' from Class A and Class B.\4\ The directors representing the general public are appointed by the President of the United States (appointed directors). The Act limits the terms of elected directors to 1 year, while appointed directors serve for an unlimited duration ``at the pleasure of the President'' of the United States of America.\5\ --------------------------------------------------------------------------- \3\ Section 8.2(b) of the Act (12 U.S.C. 2279aa-2(b)). \4\ Section 8.2(b)(2)(A) and (B) of the Act (12 U.S.C. 2279aa- 2(b)(2)(A) and (B)). \5\ Section 8.2(b)(6) of the Act (12 U.S.C. 2279aa-2(b)(6)). --------------------------------------------------------------------------- Although the Farmer Mac Board is representative in nature, Congress chose a corporate structure to govern the operations of Farmer Mac. Common law corporate principles affirm the fiduciary duty of directors to act in the best interests of Farmer Mac and all of its stockholders. However, this fiduciary duty to stockholders must be understood in the context of the duty of the directors to further the statutory purpose and public mission of Farmer Mac.\6\ --------------------------------------------------------------------------- \6\ Section 701 of the 1987 Act. --------------------------------------------------------------------------- A. Board Governance and Risk Management The essence of corporate governance is to facilitate an entity's proper accountability to all stakeholders and mitigate conflicts-of- interest. As part of this, it is essential that corporations practice sound risk management. Risk management includes the identification, assessment measurement, and controlling of risks that may arise from all aspects of business activities, pursuit of opportunities and the operating environment. In financial institutions, risk can be attributed to three broad [[Page 15933]] categories: Credit risk, market risk, and operational risk. Usually, it is the board of directors who approve the overall risk-appetite of a company and monitor internal controls. A strong board integrates risk management and corporate governance processes to steer the corporation towards policies supporting long-term sustainable growth and mission achievement, in a manner that promotes controlled risk-taking in achievement of long-term strategic objectives rather than, for example, for short-term increases in stock price performance. The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) \7\ established stronger reporting requirements and enhanced oversight for publicly held companies by increasing the responsibility and independence of corporate boards. The SEC issued, and continues to issue, regulations implementing the provisions of Sarbanes-Oxley. Self-regulatory organizations (SROs), the New York Stock Exchange (NYSE) in Farmer Mac's case, have also issued requirements designed to enhance the accountability and transparency of corporate business operations. Also, in response to the financial crisis of 2007-2008, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).\8\ Six of the Dodd-Frank Act provisions imposed new corporate governance requirements on public corporations.\9\ Most of these relate to executive compensation and shareholder proxy access. --------------------------------------------------------------------------- \7\ Pub. L. 107-204, July 30, 2002. \8\ Pub. L. 111-203, 124 Stat. 1376, (H.R. 4173), July 21, 2010. \9\ See Dodd-Frank Act, sections 951-955 of Subtitle E of Title IX, ``Investor Protections and Improvements to the Regulation of Securities,'' and sections 971-972. --------------------------------------------------------------------------- Farmer Mac, as a publicly traded company, is subject to many of the governance requirements of Sarbanes-Oxley, Dodd-Frank, and SEC disclosure regulations for publicly traded companies. However, with the recent events in the financial industry, increased sophistication in financial markets, and on-going scrutiny of GSE financial activities and related reporting practices, we believe it is prudent to update our current regulatory standards related to Farmer Mac's Board governance and reporting and disclosures in the interest of continuing the safety and soundness and public mission achievement of Farmer Mac. Portions of this proposed rule are related to some of the key governance provisions of Sarbanes-Oxley and Dodd-Frank, such as director independence and conflict-of-interest reporting, but we are not addressing executive compensation disclosures at this time as we believe those are being adequately addressed by SEC regulations implementing Dodd-Frank, to which Farmer Mac is subject under section 8.12 of the Act. B. Rulemaking Farmer Mac is regulated by FCA through the FCA Office of Secondary Market Oversight (OSMO). Congress charged us to issue regulations to ensure mission compliance and the safety and soundness of Farmer Mac. When issuing regulations for Farmer Mac, the Act requires FCA to consider: The purpose for which Farmer Mac was created; The practices are appropriate to the conduct of secondary markets in agricultural loans; and The reduced levels of risks associated with appropriately structured secondary market transactions.\10\ --------------------------------------------------------------------------- \10\ Section 8.11(a)(1) and (2) of the Act (12 U.S.C. 2279aa- 11). --------------------------------------------------------------------------- We issued an Advance Notice of Proposed Rulemaking (ANPRM) on February 25, 2014, to solicit opinions and suggestions from investors, stockholders, and other interested parties on ways to enhance our regulation of Farmer Mac's governance activities.\11\ The comment period for the ANPRM ended April 28, 2014. We received seven comment letters in response to the ANPRM, including letters from Farmer Mac, the Farm Credit Council (Council), System banks and associations, Zions National Bank (Zions), the National Rural Utilities Cooperative Financing Corporation (CFC), and the Weinberg Center for Corporate Governance at the University of Delaware (Weinberg Center). Commenters were divided on the need for additional regulatory guidance in the areas of corporate governance and standards of conduct. Farmer Mac, Zions, and CFC were generally opposed to modification to this section of the regulations. The Council and System banks and associations supported the overall initiative of improving regulatory provisions on Farmer Mac's Board governance. The Weinberg Center was generally supportive but voiced a cautionary note and strong opposition to an overly prescriptive approach toward the regulation of conflicts-of- interest and the recusal process, stating that good directors result from a sound elections process and thus are more than capable of managing those processes with an appropriate level of independent judgment and personal integrity. --------------------------------------------------------------------------- \11\ 79 FR 10426. --------------------------------------------------------------------------- Those opposing a rulemaking argued that FCA does not possess general rulemaking authority over Farmer Mac, with Farmer Mac specifically remarking that corporate governance is not a component of FCA's safety and soundness oversight. Zions commented that the current practices at Farmer Mac, combined with current regulations, already result in best practices being in place at Farmer Mac. Those favoring a rulemaking commented that it is appropriate and necessary for FCA to establish regulations making clear that Class A and Class B directors are duty bound to represent the interest of their respective Class and clarify that this duty is not a conflict-of-interest. Commenters affiliated with the System asked that any rulemaking safeguard against reducing the rights of Class A and Class B shareholders. The Weinberg Center comment letter emphasized the importance of crisis management plans to guide a corporation's response to adverse events, but discouraged overly prescriptive regulations. The Weinberg Center also noted that any required risk committee should be viewed as a supplemental oversight body and not a reassignment of risk management duties and authorities from other board committees. We last issued regulations on Farmer Mac Board governance and standards of conduct on March 1, 1994 (59 FR 9622). In that rulemaking, we implemented the requirements of section 514 of the Farm Credit Banks and Associations Safety and Soundness Act of 1992 (1992 Act) \12\ by requiring Farmer Mac to adopt a conflict-of-interest policy defining the types of relationships, transactions, or activities that might reasonably be expected to give rise to potential conflicts. Congress explained in the 1992 Act that disclosure of financial information and potential conflict-of-interest reporting by institution directors, officers, and employees--including Farmer Mac--helps ensure the financial viability of the System. This concept is also reflected in many of the provisions of Sarbanes-Oxley. --------------------------------------------------------------------------- \12\ Pub. L. 102-552, 106 Stat. 4131. --------------------------------------------------------------------------- We believe this proposed rulemaking clarifies existing board responsibilities and authorities while providing the Corporation Board with more tools to carry out its fiduciary and oversight responsibilities. This rule would set forth a minimum level of good governance practices that would assure stakeholders of the continuing safe and sound operation of the Corporation. Regulations necessarily place limits on [[Page 15934]] the Corporation's flexibility, but in exchange ensure appropriate business practices are consistently followed in all operating environments. Our intent in this rulemaking is to provide performance criteria in some areas while also setting safe and sound operational directions in others to provide for an effective safety and soundness framework. Finally, the proposed rule gives full consideration to our examination of the Corporation and the role examinations play in ensuring its safe and sound operations. Taken together, we believe the following proposed regulatory changes on Farmer Mac corporate governance would improve the effectiveness and transparency of its governance practices, as well as promote its continued safe and sound operations. In addition to substantive changes, we propose reorganizing our rules addressing Farmer Mac's operations by adding a new part 653 which is currently reserved, revising existing parts 650, 651, and 655, adding subparts to parts 650 and 651, and revising existing subparts in part 655. We also propose adding definition sections to all these parts. We propose no changes to part 652 or reserved part 654. III. Section-by-Section Analysis A. FCA Oversight and Rulemaking [Part 650] Existing part 650 contains general provisions, without subparts, on the supervision of Farmer Mac. We propose adding a new subpart A, entitled ``Regulation, examination and enforcement,'' to address the authorities of OSMO. We also propose moving existing Sec. Sec. 650.1 through 650.80 into a new subpart B, entitled ``Conservators, receivers, and liquidations.'' We then propose redesignating existing Sec. Sec. 650.1 and 650.5 on appointing and removing receivers or conservators as new Sec. Sec. 650.13 and 650.14 to make room for the provisions of new subpart A. We are proposing no other changes to these existing provisions. We propose adding a new Sec. 650.1 in subpart A for definitions of certain terms used in part 650. We propose adding definitions for the following terms: The Act; Business day; Corporation or Farmer Mac; FCA, OSMO, our, and we; NYSE and SEC; Securities Act; and Signed. We also propose a new Sec. 650.2 to provide clarity on the situation of Farmer Mac having FCA as its primary regulator, while also being subject to certain SEC regulatory requirements. The proposed Sec. 650.2 would identify FCA the ``primary regulator'' of Farmer Mac, possessing examination, enforcement, conservatorship, liquidation, and receivership authority over Farmer Mac. Section 8.11 of the Act specifies that FCA holds oversight, regulation, examination, and enforcement authority over Farmer Mac to ensure it operates in a safe and sound manner. Further, FCA has the authority to regulate how Farmer Mac performs its powers, functions, and duties in furtherance of its public policy purposes. The new Sec. 650.2 would also recognize that Farmer Mac, as a publicly traded company, follows the SEC disclosure regulations for publicly traded companies. We selected the term ``primary regulator'' to explain FCA's role as the safety and soundness regulator of Farmer Mac based on the recent adoption of the term in the financial industry after passage of the Dodd-Frank Act, where it is used to distinguish the different roles of federal regulators in the financial industry.\13\ --------------------------------------------------------------------------- \13\ Discussions surrounding passage of the Dodd-Frank Act recognized the long-standing situation where, although only one regulator is the primary regulator, financial institutions are required to comply with various federal financial laws and regulations issued and enforced by several banking regulators. --------------------------------------------------------------------------- We next propose a new Sec. 650.3 to incorporate into our regulations the supervision and enforcement authorities given us under the Act to provide reasonable assurance that, among other things, Farmer Mac is adequately capitalized and operating safely. Financial safety and soundness supervision involves monitoring, inspecting, and examining Farmer Mac to assess its condition and compliance with law and regulation. We believe identifying in our regulations the minimum authorities of OSMO to require corrective or remedial actions by Farmer Mac, as well as to take such enforcement action as deemed to be appropriate, will add clarity and facilitate the general supervision of Farmer Mac.\14\ --------------------------------------------------------------------------- \14\ These minimum supervisory authorities are designed to ensure that action is taken to avoid the emergence of problems that might entail serious risks to Farmer Mac. --------------------------------------------------------------------------- We are proposing new Sec. 650.4 to address our authority to access Farmer Mac records and personnel in the exercise of our examination and oversight authority. The FCA, acting through OSMO, examines and provides general supervision over the activities of Farmer Mac pursuant to section 8.11 of the Act. Section 5.17(a)(11) of the Act provides that FCA may ``Exercise such incidental powers as may be necessary or appropriate to fulfill its duties and carry out the purposes of this Act.'' Access to Farmer Mac's documents and personnel is incidental to the supervision and examination of Farmer Mac. We believe new Sec. 650.4 will clarify our expectations of the Corporation in providing us this access. Finally, we are proposing new Sec. Sec. 650.5 and 650.6, containing cross-citations to existing regulatory provisions regarding access to FCA Reports of Examination and Farmer Mac's obligation to make criminal referrals in certain circumstances. We believe these cross-cites will clarify the applicability of these provisions to Farmer Mac, and thereby facilitate compliance with them. B. Farmer Mac Corporate Governance [Part 651] Existing part 651 contains the corporate governance provisions for Farmer Mac, without subparts. We propose adding the following subparts: Subpart A, entitled ``General,'' to address general corporate governance matters; Subpart B, entitled ``Standards of Conduct,'' to contain the existing provisions of part 651; and Subpart C, entitled ``Board Governance,'' to address Board-level activities, including director elections, fiduciary duties, and Board committees. We then propose placing existing Sec. 651.1 into new subpart A and placing existing Sec. Sec. 651.2 through 651.4 into new subpart B, while also revising them. 1. General Corporate Governance [New Subpart A] a. Definitions [Existing Sec. 651.1] We propose placing the existing definitions of Sec. 651.1 in new subpart A, modifying certain existing terms and adding new terms to the section. We propose modifying the existing meaning of ``material'' and ``resolved'' to cover all conflicts, not just potential ones, and modifying the existing meaning of a ``potential conflict-of-interest'' to remove the list of imputed interests. We also propose adding to this part the definitions proposed for part 650 (listed in section III.A. of this preamble), except the terms in proposed Sec. 650.1(e), (h), and (i). We propose the following additional terms for part 651: Appointed director; Class A stockholders; Class B stockholders; Director elections; Elected director; and Reasonable person. [[Page 15935]] The above terms and their meanings, except ``reasonable person'', are based on sections 8.2 and 8.4 of the Act and the manner in which FCA has consistently applied them over the years. The proposed definition for the term ``reasonable person'' is based on use of the term in conflict-of-interest proceedings and substantially resembles the legal meaning of term. b. Indemnifications [New Sec. 651.2] We propose new Sec. 651.2 on indemnifications of directors, officers, and employees to address indemnifications that Farmer Mac may offer. The provision would recognize that the decision of whether to offer indemnification is a business decision of Farmer Mac and not required by law or regulation. However, new Sec. 651.2 would require Farmer Mac, in the interest of safety and soundness, to establish policies and procedures for offering indemnification insurance before any such indemnification occurs. As proposed, the required procedures would have to address: When and how indemnification is offered, safeguards to avoid over-indemnification, and reviews of any indemnification made. The policies and procedures may also address when indemnification payments will be made and how those payments will be calculated. For example, the policy might provide that Farmer Mac will give consideration to any other source of indemnification when calculating indemnification or prohibit indemnification when a director, officer, or employee is already covered by an indemnification policy separate from that offered by Farmer Mac. We proposed these provisions to set adequate controls over indemnification practices in order to prevent unintended consequences such as over-indemnification. Finally, the proposed Sec. 651.2 would require notice to OSMO before an indemnification payment is made. The notice would provide the opportunity for OSMO to evaluate, prior to payment, the impact of an indemnification payment to the safety and soundness of Farmer Mac. 2. Standards of Conduct [New Subpart B] a. Code of Conduct [New Sec. 651.21] We propose adding a new Sec. 651.21 in new subpart B to require a written code of conduct that establishes ethical benchmarks for the professional behavior of Farmer Mac directors, officers, employees, and agents. The proposed code of conduct would resemble existing Sec. 651.4(a)(1) and the ``Code of Business Conduct and Ethics'' currently maintained by Farmer Mac pursuant to section 406 of Sarbanes-Oxley, with the key difference being that the Code would set benchmarks for professional integrity, competence, and respect. The proposed provision would require a review of the Code every 3 years. b. Conflict-of-Interest Policy [Existing Sec. Sec. 651.2 and 651.3(b); New Sec. 651.22] We propose moving existing Sec. 651.2, which requires Farmer Mac to have a conflict-of-interest policy, to new subpart B and redesignating it as new Sec. 651.22. In addition, we propose changes and additions to the existing provision. Some of the proposed changes are organizational and grammatical changes, as well as intended to incorporate the proposed new terms from revised Sec. 651.1. Organizational changes mainly consist of consolidating like provisions with each other, such as moving existing Sec. 651.3(b), requiring release of the conflict-of-interest policy, to new Sec. 651.22(d). We propose the following substantive changes and additions for new Sec. 651.22: Requiring that the conflict-of-interest policy consider the required representational affiliations of elected directors.\15\ --------------------------------------------------------------------------- \15\ Under the Act, two-thirds of the Farmer Mac's directors are elected by entities who own the only two classes of voting stock. These entities also have a business relationship with Farmer Mac. In addition, elected directors must possess a representational relationship to the class of stockholders electing them and this relationship must be ``close'' at the time of election. Because the elected directors are from entities that have financial relationships of varying degrees with Farmer Mac, it presents difficulties in adopting the common corporate governance practices and policies (i.e., ``best practices''). --------------------------------------------------------------------------- Moving to new paragraph (b)(1) the list of imputed interests that are currently part of the existing definition of a ``potential conflict-of-interest'' (proposed to be removed from the definition). Revising the list of imputed interest in new paragraph (b)(1) by removing highly specific relationships such as ``spouse'' and ``child'' and replacing them with language to address all persons residing in the household or who are otherwise legal dependents. This change is premised on the ever-evolving understanding of what is considered a family as well as intended to address non-residential dependents whose activities and interests may create a conflict-of- interest for a director, officer, or employee. Adding as new paragraph (b)(1)(iv) an exception to the imputed interest list for relationships maintained solely because of the representational nature of elected directorships. Since this relationship is required by the Act, it should not be treated as a conflict-of-interest.\16\ Instead, we are proposing other provisions in new Sec. Sec. 651.21, 651.24 and 651.40 to address how directors are to handle this affiliation while also maintaining their duty of loyalty to the Corporation. --------------------------------------------------------------------------- \16\ Section 8.2(b)(2)(A) and (B) and (b)(5)(A) and (B) of the Act (12 U.S.C. 2279aa-2(b)). --------------------------------------------------------------------------- Adding as new paragraph (b)(4) a requirement that conflict-of-interest procedures address recusals when conflicts are identified. We believe this requirement is necessary to ensure a standard approach to recusals is used by the Corporation and to ensure directors, officers, and employees have notice of the expectation to recuse themselves when a conflict-of-interest exists. Adding as new paragraph (b)(5) a requirement that conflict-of-interest procedures define documentation and reporting requirements to ensure compliance with conflict-of-interest decisions. Removing the requirement for negative conflict-of-interest reports from directors, officers, and employees. This negative reporting is unnecessary as other proposed changes would require an annual filing from all directors, officers and employees, in which it may be reported that no conflicts exist. As a GSE, the Corporation has strategic objectives that are both commercially and public policy oriented. Conflicts-of-interest must be understood and interpreted not only in the context of the fiduciary responsibilities to the Corporation and its shareholders, but also in the context of the statutory duty to further the Congressional purposes the Corporation was chartered to achieve. We believe conflict-of- interest to be among the most potentially complex and nuanced areas of corporate governance. We intend the minimum specifications set forth in the proposed rule to facilitate the uniform disclosure, identification, and treatment of directors, officers, employees and agent holding employment, contractual business relationships, or other relationships and interests that may interfere with that person's ability to serve the interests of the Corporation before serving personal interests. c. Conflict-of-Interest Disclosure and Reporting [Existing Sec. Sec. 651.2(b) and (f) and 651.3; New Sec. 651.23] We propose moving existing Sec. 651.2, regarding conflict-of- interest reports, to new subpart B and redesignating it as new Sec. 651.23. In addition, we propose [[Page 15936]] changes to the existing provision. Some of the proposed changes are organizational and grammatical changes, as well as intended to incorporate the proposed new terms from revised Sec. 651.1. Organizational changes mainly consist of consolidating reporting and disclosure provisions currently located in both existing Sec. Sec. 651.2 and 651.3. Included in the organization proposal is to move existing Sec. 651.2(b), requiring annual conflict-of-interest reports, to new Sec. 651.23(a) and moving existing Sec. 651.2(f), requiring internal controls for conflict-of-interest disclosures, to new Sec. 651.23(e). We propose the following substantive changes and additions for new Sec. 651.23: Specifying that the sufficiency of a conflict-of-interest report is based on a ``reasonable person'' standard. Requiring in new paragraph (a) that conflict-of-interest reports be signed. While the signature element may have been implied in the past, we believe it is best to specify it as a requirement. Specifying in new paragraph (a)(1) that the transactions, relationships, and activities identified as creating real or potential conflicts are based on (1) the opinion of the person filing the report, (2) conflicts specifically identified in Farmer Mac's policies, and (3) conflicts identified in FCA regulation. We are proposing this specificity to ensure a common understanding of the basis used by persons completing conflict-of-interest reports. By specifying the sources used when determining if a transaction, relationship, or activity creates a conflict, it should be easier to identify omissions and remove doubts as to what needs to be reported. However, if doubt remains, we encourage every person completing a conflict-of-interest report to err on the side of inclusion, rather than omission. Requiring in new paragraph (b) that Farmer Mac review conflict-of-interest reports within 10 business days of receipt, and if a conflict is identified as material, to document its findings. We believe time is of the essence in identifying material conflicts in order to take necessary actions to minimize the impact of the conflict on the operations of Farmer Mac. We believe it is important that conflicts identified as ``material'' be clearly documented, as well as the rationale used to make the determination. It is essential that the basis for any ``materiality'' determination be supported by appropriate documentation to avoid misunderstandings and to minimize the potential for abuse of the process. Requiring in new paragraph (b)(2) that Farmer Mac notify a filer within 3 business days when a reported conflict has been identified as material and provide filers with an opportunity to respond to the materiality determination. We believe that material conflict determinations should be explained to those impacted by such determinations. We also believe it is necessary for the Corporation and the person with the conflict to hold discussions about the conflict. These discussions could add clarity to the process, help avoid mistaken ``materiality'' determination, and provide the opportunity for the person with the conflict to resolve it quickly. Requiring in new paragraph (c) that Farmer Mac document material conflicts-of-interest and the efforts made to address the conflicts. The requirement for documentation of conflicts is a good business practice, which we recognize Farmer Mac has already been employing. However, we believe a regulatory requirement is necessary to ensure the practice continues. Clarifying that the existing disclosure to shareholders and investors of unresolved material conflicts applies to those conflicts that remain unresolved as of the date of the annual report or proxy statement. The requirement does not include conflicts resolved during the reporting period beyond updating those previously reported as ``unresolved.'' Requiring in new paragraph (d)(3) that Farmer Mac notify OSMO of unresolved material conflicts-of-interest. As the safety and soundness regulatory, we need to remain informed of any conflicts that could potentially affect the on-going operations of Farmer Mac. For example, if a conflict remains unresolved for months and that person has been recused from performing their full duties, we would want to know what Farmer Mac has done to address the impact of that recusal. This is especially true if a director or senior officer holds the unresolved conflict. Limiting the existing requirement that reports of conflicts must be maintained for 6 years to only material conflicts. We believe this change will balance the recordkeeping burden with the value obtained from the longevity of the records. Material conflicts are the ones that will result in recusal actions and most likely to last or reappear. As such, they are more valuable to retain for historical reference. However, this provision would not prevent Farmer Mac from retaining all records for the 6-year period, if it so desires. Requiring in new paragraph (g) that Farmer Mac establish procedures for obtaining conflict-of-interest disclosures from agents of the Corporation. Agents of any corporation have a standing that differs from directors, officers, and employees. As such, we believe Farmer Mac should have procedures in place to provide reasonable assurance that their agents hold no material conflicts that could adversely affect the work those agents perform on behalf of Farmer Mac. As Farmer Mac's operations grow and its products and lines of business diversify, identification and prevention of potential conflicts become more challenging and make our enhanced regulatory focus on this topic timely and appropriate. d. Director, Officer, Employee, and Agent Responsibilities [Existing Sec. 651.4; New Sec. 651.24] We propose moving existing Sec. 651.4 to new subpart B and redesignating the section as new Sec. 651.24. This section addresses director, officer, employee, and agent responsibilities. We also propose replacing the contents of existing Sec. 651.4(a)(1) requiring directors, officers, employees, and agents to maintain a high standard of behavior with the earlier discussed code of conduct at new Sec. 651.21. We next propose removing existing Sec. 651.4(a)(2) and (b), which requires directors, officers, employees, and agents to comply with the Corporation's conflict-of-interest policy and provide the Corporation with any information the Corporation deems necessary or face penalties. We propose removing these provisions as they are unnecessary in light of other proposed changes contained in this rulemaking. For example, we have already proposed addressing our enforcement authorities in new Sec. 650.3 and conflicts-of-interest in new Sec. 651.22. Instead, we propose this section address the actions of directors, officers, employees, and agents in regards to the Corporation, its property, and its reputation. We propose under new Sec. 651.24 listing prohibitions on the conduct of directors, officers, employees, and agents. The proposed prohibitions are on making misleading or untrue statements of material facts regarding Farmer Mac, improper use of the official property and information of Farmer Mac, and disclosing confidential information related to Farmer Mac when not in the performance of official duties. We believe these prohibitions are necessary because, as a GSE and a publicly traded corporation, misinformation deliberately provided to outside parties could have a materially adverse impact on the safety and soundness of the Corporation. [[Page 15937]] 3. Board Governance [New Subpart C] a. Director Elections [New Sec. 651.30] It is common corporate practice to use a board committee, often the corporate governance committee, to name director-nominees and Farmer Mac follows this practice.\17\ In consideration of this, we are proposing regulations to ensure the director election process at Farmer Mac complies with the provisions of the Act and Congressional intent. In new Sec. 651.30, we propose a requirement that Farmer Mac have election policies and procedures in place and that Farmer Mac implement those policies and procedures in a fair and impartial manner. New Sec. 651.30 would set forth the minimum requirements for the director election policies and procedures, including allowing all equity holders to submit director-candidates for nomination consideration. The proposed provision would facilitate the establishment of nomination procedures that provide reasonable assurance of an inclusive and fair process as potential directors are considered for nomination. The provision should not be read as requiring the nomination of every candidate submitted by an equity holder.\18\ Any such candidate would go through the Corporation's nomination process the same as all other director-candidates. For example, if a director-candidate submitted by an equity holder is not eligible for election as a director of the Corporation, there would be no requirement for Farmer Mac to include the candidate as a nominee. --------------------------------------------------------------------------- \17\ Under this corporate practice, Farmer Mac uses its Governance Committee as its nominating committee, which identifies candidates for elected director positions. This six member committee is composed of two Class A elected directors, two Class B elected directors, and two appointed directors. \18\ The Dodd-Frank Act, at Sec. 971 of subtitle G, amended the Securities and Exchange Act of 1934 to allow shareholders of publicly traded companies to submit director-nominees for election to corporate boards. The provision was viewed as a step in strengthening corporate governance by providing an alternative to shareholder proxy fights while also avoiding director entrenchment through self-nomination. --------------------------------------------------------------------------- New Sec. 651.30 would also allow the board committee responsible for nominations to engage the services of third parties to evaluate the professional qualifications of candidates prior to nomination. We believe allowing the board committee used for nominations to engage third parties to vet candidates can aid in achieving timely and objective evaluation of director-candidates. Next, new Sec. 651.30(b)(3) would require the nomination of a director-candidate to include affirmative votes for nomination from a majority of those involved in the Corporation's nomination process who also represent the same class of stockholders as the candidate. Since the voting stockholders are only presented with one director-candidate per board vacancy--and Farmer Mac no longer allows floor nominations \19\--the nomination of director-candidates takes on higher importance, particularly given the statutory requirement that 10 of the 15 members of the Farmer Mac Board be elected by Class A and B stockholders. --------------------------------------------------------------------------- \19\ Farmer Mac is not required by law or existing regulation to have a nominating committee nor is it required to allow floor nominations. --------------------------------------------------------------------------- We are not proposing to require the use of nominating committees or floor nominations in this rulemaking. However, we believe requiring director-candidates to have majority support from those involved in the nomination process who share the candidate's affiliation with either Class A or Class B stockholders facilitates fulfillment of the statutory provision that both Class A and Class B stockholders determine who will represent them on the Corporation's Board. In situations where a ``majority'' would mathematically result in a fraction, we would expect the next whole number to be used (e.g., three representatives would mean a majority of two, four representatives would mean a majority of three). If there are only two representatives from a Class involved in the nomination process, then we would consider a majority to be one person. The proposed rule at new Sec. 651.30(c) would require Farmer Mac to document the representational affiliation of all elected directors at the time of nomination and election to the board and maintain this documentation until 3 years after the director's service on the board ends. Such recordkeeping would help ensure only those eligible to serve as directors representing Class A or Class B are nominated. We also believe a 3-year record of director affiliations could be of assistance when reviewing director-candidates up for re-election. We believe the statutory term ``representative'' means that elected directors must have an official affiliation with a Class A or Class B entity at the time of nomination and election in order to serve as director. We view this affiliation as one that is a substantial and visible connection to the class of stockholders. b. Director Removal [New Sec. 651.35] The proposed new Sec. 651.35 would require Farmer Mac to identify its director removal procedures in the Corporation's bylaws, which are available to shareholders. We believe shareholders are entitled to know how Farmer Mac determines when to require a director to resign (director removal) and how that removal action is achieved. It is important that shareholders understand Farmer Mac's actions in this area since nothing in the proposed provision would affect the ability of voting shareholders to exercise their rights in the election and governance of Farmer Mac's Board of Directors. To further emphasize this, the rule would prohibit Farmer Mac from initiating a director's removal in a manner that would adversely affect the rights of voting shareholders. The rule would also recognize that appointed directors serve at the pleasure of the President of the United States. We are also proposing language to explain what is considered a ``director removal'' action initiated by the Corporation. Publicly traded companies use contractual agreements with their directors to ensure certain behavior (e.g., confidentiality of company data, standards of conduct). Often, these contracts include a provision requiring a director to ``voluntarily'' resign if the company determines (and a court later affirms) that the director failed to act in accordance with the agreement. Corporate directors are required to sign these agreements in order to take office and objecting to the ``voluntarily'' resignation provision(s) may result in being denied a seat on the board. These types of contractual provisions are commonly referred to as mandatory resignations and are intended to avoid the cost and time required to pursue a forced removal action. We propose that all director resignations required or otherwise initiated by Farmer Mac be called ``director removals.'' We believe when a director must resign (or is deemed to have resigned) in response to a Farmer Mac bylaw, policy, or other governing document, that the resignation was initiated by the Corporation since Farmer Mac drafted the document at issue. Further, we believe that when Farmer Mac requires directors, director-nominees, and/or director-candidates to accede to a resignation provision in order to serve on the board of directors that, even if characterized as ``voluntary,'' it is more appropriately called a removal provision. The proposed rule would further require Farmer Mac to notify OSMO at least 14 days before seeking the removal of one of its directors. This advance notice is considered necessary to protect the safety and soundness of Farmer Mac. We view this level of advance reporting to be appropriate given the [[Page 15938]] potential for sudden changes in the board's membership to result in instability within the management and oversight of the Corporation or to raise concerns about the Corporation in the capital markets, or both. c. Director Fiduciary Duties and Independence [New Sec. 651.40] We are proposing a new Sec. 651.40 that requires Farmer Mac to have policies in place to provide reasonable assurance that its Board of directors maintains responsibility for and provides appropriate oversight of the risk management activities of Farmer Mac, the reports and disclosures issued by Farmer Mac, and shareholder communications. Also, new Sec. 651.40 would clarify the duty of directors to conduct the business of the Corporation in a manner that promotes the best interest of the Corporation and furthers its statutory mission. As a GSE, Farmer Mac should strive to ensure that its Board activities fulfill its public missions. Unlike corporations incorporated under State statutes of incorporation, statutorily chartered GSEs are not free to alter their purposes or powers, even when such alteration may be in the best interest of the investing stockholders. For GSEs, such changes can only be made by law. Thus, it is the responsibility of Farmer Mac directors to lead the Corporation in the manner that best effectuates the public policy it was designed to serve. Paragraphs (b) and (c) of the proposed provision would set forth key duties of the Farmer Mac Board, among which are the duty to act in good faith and for the best interest of Farmer Mac, as well as acting fairly and impartially without discriminating in favor of or against any investor, stockholder, or group of stockholders. The proposed provisions are intended to ensure that all directors, regardless of how they acquired their seats on the board of directors, understand that they are bound by their fiduciary duty to Farmer Mac and, as a result, act for the betterment of Farmer Mac overall and not any particular group of shareholders or investors. We believe these provisions are necessary to clarify that the required elected director affiliations should not be interpreted to mean an elected director serves solely to further the viewpoints of the electing class without regard to the impact on Farmer Mac and all its shareholders. Such an interpretation would be inconsistent with the established corporate common law principles of a director's fiduciary duties, as well as with Congressional intent. The fiduciary duties of directors are essential to good governance and necessary to the safe and sound operation of the Corporation. Thus, directors failing to fulfill this fiduciary duty could have a negative impact on the safety and soundness of Farmer Mac. The proposed provisions are another step in ensuring directors maintain their duty of loyalty to the Corporation, notwithstanding any required affiliation with a group of stockholders. However, they are not to be read as requiring elected directors to disregard the perspectives of those electing them to office. Instead, we believe elected directors should share these perspectives with the entire Board so that every director is informed of stockholder concerns and views, thus facilitating Board decisions and ensuring those decisions are being made in the best interests of the Corporation and all of its shareholders. In balance with the other requirements of new Sec. 651.40, and to help ensure the rule is not misapplied, proposed paragraph (d) would protect the ability of directors to be accountable to the shareholders that elected them. We recognize that fiduciary duties to shareholders must be understood in the context of the duty of the elected directors to possess a representational relationship with certain groups of shareholders. As such, the provision, as proposed, would specifically allow directors to comment on non-private and non-privileged corporate business, provided doing so will not violate any laws or regulations, particularly securities laws. The intent is to allow directors to converse with stockholders as a means of gathering information, gaining insights into stockholder wishes, and demonstrating accountability. The provision clarifies that this authority does not prevent Farmer Mac from protecting proprietary information. It is an established corporate governance principle that once elected to the board a director owes his or her fiduciary duties, including a duty of confidentiality, to the company and shareholders as a whole. As such, the proposed rule would clarify that Farmer Mac may take measures to ensure each director abides by policies defining and specifying the treatment of the Corporation's confidential information, including restricting directors from disclosing the Corporation's confidential information to the shareholders electing them to serve on the Corporation's board. We believe the proposed Sec. 651.40 strikes the appropriate balance between a director's representational duties required by the Act and his or her corporate fiduciary duties. d. Committees of the Board [New Sec. 651.50] We propose a new Sec. 651.50 on board committees in subpart C. The new Sec. 651.50 would address the relationship between the entire board and its committees, require certain committees, place membership requirements on the committees, and establish minimum operational requirements for board committees (e.g., charters, meeting minutes). The proposed committees would resemble those currently maintained by Farmer Mac, but with the key differences in committee composition. In paragraph (a) of new Sec. 651.50, we propose limiting the authority of the board to delegate its collective authority to develop and amend Farmer Mac bylaws to a committee of the board. This provision would not prevent board committees from making recommendations on the bylaws to the entire board. We also propose regulatory language holding the entire board accountable for committee actions. In directing the Corporation, the board of directors may rely on reports from board committees, but doing so does not relieve the board of final responsibility. In paragraph (b) of new Sec. 651.50, we propose that Farmer Mac have, at the minimum, committees to address risk management, audit, compensation, and corporate governance matters. We propose that there be separate committees dedicated to audit and risk management and that these committees not be tasked with other matters. Our reasoning in support of this proposal is that the oversight responsibilities of each of these two committees represent an aggregation of a very broad array of issues and detailed operational policies and procedures that cover essentially the entire breadth of the Corporation's operations--in addition to the associated ongoing monitoring of all of these. We believe a portfolio of responsibility any larger for either committee would be excessive and risk a severe dilution in a committee's effectiveness. In paragraph (c) of new Sec. 651.50, we propose that each board committee be established through a written charter. We further propose that committee charters specify the powers, responsibilities, and structure of each committee. We further propose that each committee have both elected and appointed directors and that among the elected directors there be ones with affiliations to both Class A and Class B stockholders. Similarly, we propose that no director may serve as a committee chair of more than one committee. Our [[Page 15939]] intent is to ensure that the Farmer Mac Board reasonably distributes responsibilities among individual members of the board. We believe that too great a concentration of responsibilities would detract from the board's overall effectiveness. In paragraph (d) of new Sec. 651.50, we propose requiring each board committee to have meeting minutes and to keep the minutes for 3 years. We propose that the minutes include the agenda for the meeting, attendance, a summary of pertinent discussions held during the meeting, and any resulting committee recommendations. In proposing this requirement, we are not seeking transcripts of meetings, but a record of matters addressed by the committee and who participated in the meeting in sufficient detail to allow the reader a reasonable understanding of the substance of the discussion. We propose no set meeting schedule for committees, but do propose a requirement that each committee meet with sufficient frequency to fulfill its duties. We believe these provisions would facilitate both the historical context of policies and procedures for future management teams and directors as well as facilitate the regulatory oversight of board activity. In proposing new Sec. 651.50, we intend no conflict with SEC regulations on the structure of board committees and welcome comments identifying any potential conflict that might exist between the proposed provision and SEC requirements. Where our proposal contains provisions on board committees that would be requirements, but which are optional under existing SEC rules, it was intentional as we believe the requirements facilitate the safe and sound operations of Farmer Mac. C. Risk Management [Part 653, No Subparts] We propose opening existing reserved part 653 to add risk management provisions for Farmer Mac, renaming the part, ``Federal Agricultural Mortgage Corporation Risk Management.'' We propose no subparts to part 653, but propose adding the following provisions: A new Sec. 653.1 to contain the definitions of certain terms used in part 653; A new Sec. 653.2 to address general board-level risk management matters; A new Sec. 653.3 to contain required risk management programs and activities; and A new Sec. 653.4 to contain requirements for internal controls. We discuss the proposed Sec. Sec. 653.1 through 653.4 below. 1. Definitions [New Sec. 653.1] We propose as new Sec. 653.1 definitions for the terms ``Corporation'', ``FCA'', and ``OSMO.'' We are proposing the same meaning as are proposed elsewhere in this rulemaking. We propose these definitions to ensure a common understanding of the terms as used in part 653. 2. General [New Sec. 653.2] We propose in new Sec. 653.2 to require the Farmer Mac Board approve the overall risk-appetite and tolerance of the Corporation. We believe that while management may design and implement the Corporation's internal controls, the Board remains ultimately responsible for how those controls affect the risk management of the Corporation. The Board's oversight of internal controls is a critical component of its responsibility for monitoring corporate activities and providing reasonable assurance that the controls will prevent excessive risk-taking or unsafe and unsound activities. 3. Risk Management [New Sec. 653.3] A comprehensive and integrated risk management program significantly enhances the coordination of risk decision-making as well as capital allocation among individual business units and allows the units to act within the context of the broader risk-taking activities and risk tolerance limits of the Corporation. Although the Corporation has recently expanded its risk management program to include a risk committee, we propose in new Sec. 653.3(a) to require Farmer Mac to have a risk management program addressing the Corporation's exposure to credit, market, liquidity, operations, and reputation risks. As proposed, the rule would require the risk management program to include: Periodic assessments of the Corporation's risk profile, with related adjustments to the Corporation's operations; Coordination with board-approved risk tolerance levels; Delineation of management's authority and independence in implementing the program; and Integration with Corporation goals, business objectives, and compensation. As referenced in the discussion of proposed Sec. 651.50 (preamble section III.C.3.d.), we are proposing in new Sec. 653.3(b) to require Farmer Mac to have a risk management committee. As proposed, the membership of the risk committee would include a risk management expert. Also, we are proposing that the risk committee be responsible for reviewing the design of the risk management program and receiving management reports on risk management issues, as well as monitoring the Corporation's risk management policies and procedures. We believe it is essential that the tone of Corporation's risk culture and its procedures for risk decision-making be set by the Board even when they are based on management's recommendations. Further, the Board plays a critical role in the ongoing oversight of, and cohesive implementation of, operational strategies and plans that conform to its established risk appetite and tolerance. We also propose in new Sec. 653.3(c) to require Farmer Mac to have a ``Risk Officer'' to implement the risk management program. We are proposing that the risk officer report directly to the chief executive officer and risk committee. We also propose that the risk officer be separated from other management functions to ensure s/he devotes full attention to Farmer Mac's risk management activities. Under new Sec. 653.3(c), the risk officer would have to have experience in risk management commensurate with Farmer Mac's operations. The risk officer also would be responsible for monitoring compliance with risk management policies; developing systems to identify and report risks; and making recommendations to adjust risk management behaviors. We believe a staff position that serves as coordinator of the consistent and collaborative implementation of corporate risk policies and objectives across business units is necessary. A risk officer could help coordinate, organize, prioritize and monitor risks on behalf of the CEO and Board risk committee. As financial institutions become larger and more complex, which Farmer Mac has since it was chartered by Congress in 1987, the need arises for a continuous, coordinated, and comprehensive oversight of the broad spectrum of current and prospective risks the entity faces. A key role of a risk officer is to prevent the emergence of isolated risk ``silos'' among the entity's business units and ensure a consistent and integrated monitoring of key sources of risks, such as strategic risks (including reputation and political risk), compliance risks, and reporting risks. We believe requiring a risk officer position at Farmer Mac plays a key role in ensuring that the Board and CEO are adequately informed regarding the Corporation's aggregate risk position--thus providing reasonable assurance of the achievement of corporate and [[Page 15940]] mission objectives. In addition, having a risk officer position is considered a best practice for financial institutions over $10 billion and is consistent with Basel's Pillar 2 on Risk Management and Risk Supervision. 4. Internal Controls [New Sec. 653.4] A sound system of comprehensive and integrated internal controls is vital to the operations of any organization and especially those whose business is taking financial risk. In the 26 years since Farmer Mac was chartered, business and operational environments have become significantly more complex and technology-driven. Systems of internal controls should dynamically respond to such changes in complexity--not just in business unit operations but also in compliance with increasingly complex laws, regulations, and industry standards. Thus, while FCA regulations on various aspects of Farmer Mac's operations (e.g., investments, liquidity, capital planning) include specific minimum control requirements related to those operations, we believe a Corporation-wide integrated system of internal controls is also appropriate. Accordingly, we propose in new Sec. 653.4 to require Farmer Mac to adopt internal controls for the proper treatment of and accountability for the programs, operations, and resources of Farmer Mac. The proposed provision would require an internal controls system that addresses: The effectiveness of corporate activities; security of corporate assets; accuracy and completeness of financial reports; separation of duties to avoid conflicts in responsibilities; transparent reports to the Farmer Mac board; and compliance with applicable laws, regulations, and corporate policies. The new Sec. 653.4 would also require Farmer Mac to have a system to correct weaknesses identified by the internal controls program. Finally, we are proposing an annual reporting requirement, where Farmer Mac would report to OSMO on the effectiveness of the internal controls program. D. Disclosure and Reporting [Part 655] Existing part 655 contains financial disclosure and reporting provisions for Farmer Mac in two subparts: Subpart A on annual reports and subpart B on securities reports. We propose organizational changes to this part as follows: Adding a new subpart A, entitled ``General'' to address the matters common to disclosures and reports; Renaming and redesignating the existing subpart A as new subpart B, to be called ``Reports of Condition of the Federal Agricultural Mortgage Corporation;'' Redesignating existing subpart B as new subpart C; Adding a new Sec. 655.1 to identify the definitions of certain terms used in part 655; Adding a new Sec. 655.2 to prohibit misleading, inaccurate, or incomplete disclosures; Moving existing Sec. 655.1 on annual reports, currently under existing subpart A, to new subpart B and redesignating it as Sec. 655.10; Adding a new Sec. 655.15 on the distribution of interim notices and proxies to new subpart B; Moving, renaming, and redesignating existing Sec. 655.50 on securities not registered under the Securities Act, currently under existing subpart B, as new Sec. 655.20 in new subpart C; and Adding a new Sec. 655.21 on communications with the U.S. Treasury, SEC, and NYSE. We also propose enhancements to existing disclosure and reporting requirements of part 655 to remove repetitious reporting and incorporate technology by allowing for electronic filing of reports with OSMO. These proposed enhancements are designed to reduce Farmer Mac's reporting responsibilities, while also improving the quality and timeliness of information provided to FCA. We are also proposing changes to remove repetitious disclosure and reporting requirements resulting from the dual reporting responsibilities of Farmer Mac to the FCA and the SEC. 1. Definitions [New Subpart A: New Sec. 655.1] We propose adding a new Sec. 655.1 for definitions of certain terms used in part 655. We are proposing the same definitions to this part as are proposed for part 650 (listed in section III.A. of this preamble). We are also proposing to add the same definition for ``person'' as is proposed for part 651. In addition, we propose definitions for the term ``material'' and ``report.'' While there is a definition for ``material'' in part 651, the one proposed for this part is different in that it focuses on the meaning of the term when considering financial reports, not conflicts-of-interest. We propose these definitions to ensure a common understanding of the terms as used in part 655. In addition, we propose changes to the existing provisions of part 655 to incorporate the proposed new terms. 2. Prohibitions [New Subpart A: New Sec. 655.2] We propose adding a new Sec. 655.2 to prohibit misleading, inaccurate, or incomplete disclosures. This prohibition is substantially similar to the one that currently exists in our regulations for the reports of System banks and associations. The provision would establish that no director, officer, employee or agent of Farmer Mac may mislead the FCA, Farmer Mac stockholders, or the general public by making misleading, inaccurate, or incomplete disclosures within the reports required under part 655. The provision would also clarify the authority of FCA to require a corrected report if we determine it contained any misleading, inaccurate, or incomplete disclosures. 3. Reports of Condition [New Subpart B: Existing Sec. 655.1; New Sec. Sec. 655.10 and 655.15] The Act requires Farmer Mac to register its equities with the SEC and be subject to SEC disclosure regulations issued under section 14 of the Securities and Exchange Act of 1934.\20\ Also, Farmer Mac's Class A and Class C stocks are publicly traded on the NYSE. Thus, Farmer Mac must comply with both FCA and SEC disclosure and reporting requirements. We are proposing changes to our reporting requirements for Farmer Mac to enable the reports filed by Farmer Mac with the SEC to also satisfy our requirements in that area, absent instructions from us to the contrary. We believe the proposed changes will facilitate the coordination of Farmer Mac's financial reporting responsibilities to both OSMO and the SEC as well as reduce or eliminate repetitious reporting. --------------------------------------------------------------------------- \20\ Section 8.12 of the Act (12 U.S.C. 2279aa-12). --------------------------------------------------------------------------- We propose revising existing Sec. 655.1 (proposed to be redesignated as Sec. 655.10) to cover all reports of conditions, not just annual reports. We are also proposing to require reports be signed and certified. The proposed certification components would be attesting that the signatory reviewed the report, the report was prepared in accordance with applicable laws and regulations, and the reported information is true, accurate, and complete to the best of the signatory's knowledge. Further, we are proposing that quarterly and annual reports be filed by Farmer Mac with OSMO and that those reports either be equivalent to those required by the SEC or according to our instructions. We are proposing the provision that reports be filed [[Page 15941]] according to our instructions to address the contingency of the SEC changing its reporting requirements in such a manner as to reduce the usefulness of the reports in safety and soundness matters. For the reasons already discussed, we are proposing changes to the existing report distribution requirements to reduce timeframes, require Web site posting of reports, and ensure reports distributed to shareholders and investors are the same as those filed with both the FCA and SEC. We are proposing to reduce the existing 120-day timeframe to distribute reports to a 90-day timeframe for distribution of reports to shareholder and a 5-day filing timeframe with OSMO. We believe the reduced timeframes are more reasonable given available technology and other advances in reporting systems. We further propose that if the report is the same as that filed with the SEC, it be filed with OSMO simultaneous with the SEC filing. We next propose changing the existing requirement to send us three paper copies of each report by reducing it to only one paper copy. We also propose allowing the use of electronic filing of reports with OSMO. We propose requiring Farmer Mac to post reports on its Web site within 3 business days of filing the report with OSMO. We propose that a report remain available on the Web site until the next report is posted. We further propose that if the report is the same as that filed with the SEC, an electronic link to the SEC reports database (EDGAR) would satisfy our regulatory requirement in this area. In making this proposal, we relied on technological advances, the existing availability of the information, and Farmer Mac's existing practice of posting reports on its Web site. Further, we are proposing a new Sec. 655.15 to require that Farmer Mac send OSMO one paper and one electronic copy of every notice, interim report, and proxy statement it files with the SEC. We believe it is essential that communications between Farmer Mac and OSMO, its primary regulator, include the communications Farmer Mac has with the SEC. The proposed provision would require Farmer Mac to make these disclosures within 1 business day of filing the notice, interim report, or proxy statement with the SEC. We believe this requirement is necessary to ensure we have timely notice of events outside our scheduled examination of these documents. Similar to the proposal to post reports on its Web site, we are proposing in Sec. 655.15(b) that Farmer Mac post on its Web site notices, interim reports, and proxy statements within 5 business days of filing them with the SEC. As proposed, this requirement could be satisfied with a link to EDGAR. We also propose that these documents remain on the Web site for 6 months, or until the next annual report, whichever is later. 4. Reports Related to Securities Activities [New Subpart C: Existing Sec. 655.50; New Sec. Sec. 655.20 and 655.21] We propose revising existing Sec. 655.50 by first breaking it into two sections: Sec. 655.20 on unregistered securities (currently Sec. 655.50(a)) and Sec. 655.21 on all other filings and communications with the U.S. Treasury, SEC, and NYSE (currently Sec. 655.50(b) and (c)). In new Sec. 655.20, we propose changing the manner of making special filings with OSMO by replacing the existing requirement to send us three paper copies to require one paper and one electronic copy. In new Sec. 655.21, we propose expanding the existing requirement to send us copies of ``substantive'' correspondence between Farmer Mac and the SEC or U.S. Treasury to include the NYSE. The proposal would also remove the limitation on the type of communication. Currently, the requirement covers correspondence relating to securities activities or regulatory compliance. We believe the Corporation should provide us all substantive communications it has with the U.S. Treasury, the SEC, and the NYSE as that communication may have a bearing on the safety and soundness of Farmer Mac. We also propose setting a 3-day timeframe for providing the information to us. Finally, new Sec. 655.21(c) would require Farmer Mac to notify us of exemptions from SEC filing requirements within 1 business day. The current rule requires this information to be sent to us ``promptly.'' In light of the proposed changes to reporting requirements, we believe it is necessary to have definitive and fast notice of any changes Farmer Mac seeks in SEC filing requirements. IV. Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), FCA hereby certifies the proposed rule will not have a significant economic impact on a substantial number of small entities. Farmer Mac has assets and annual income over the amounts that would qualify it as a small entity. Therefore, Farmer Mac is not considered a ``small entity'' as defined in the Regulatory Flexibility Act. List of Subjects 12 CFR Part 650 Agriculture, Banks, banking, Credit, Reporting and recordkeeping requirements, Rural areas. 12 CFR Part 651 Agriculture, Banks, banking, Conduct standards, Conflict of interests, Elections, Ethical conduct, Rural areas. 12 CFR Part 653 Agriculture, Banks, banking, Capital, Conduct standards, Credit, Finance, Rural areas. 12 CFR Part 655 Accounting, Agriculture, Banks, banking, Accounting and reporting requirements, Disclosure and reporting requirements, Financial disclosure, Rural areas. For the reasons stated in the preamble, parts 650, 651, 653, and 655 of chapter VI, title 12 of the Code of Federal Regulations are proposed to be amended as follows: PART 650--FEDERAL AGRICULTURAL MORTGAGE CORPORATION GENERAL PROVISIONS 0 1. The authority citation for part 650 is revised to read as follows: Authority: Secs. 4.12, 5.9, 5.17, 5.25, 8.11, 8.12, 8.31, 8.32, 8.33, 8.34, 8.35, 8.36, 8.37, 8.41 of the Farm Credit Act (12 U.S.C. 2183, 2243, 2252, 2261, 2279aa-11, 2279aa-12, 2279bb, 2279bb-1, 2279bb-2, 2279bb-3, 2279bb-4, 2279bb-5, 2279bb-6, 2279cc); sec. 514 of Pub. L. 102-552, 106 Stat. 4102; sec. 118 of Pub. L. 104-105, 110 Stat. 168. 0 2. Add subpart B, under the heading ``Conservators, Receivers, and Liquidations'' consisting of existing Sec. Sec. 650.1 through 650.80 as redesignated in the following table: ------------------------------------------------------------------------ Old section New section ------------------------------------------------------------------------ 650.1, no subpart......................... 650.13, subpart B. 650.5, no subpart......................... 650.14, subpart B. 650.10, no subpart........................ 650.10, subpart B. 650.15, no subpart........................ 650.15, subpart B. 650.20, no subpart........................ 650.20, subpart B. 650.25, no subpart........................ 650.25, subpart B. 650.30, no subpart........................ 650.30, subpart B. 650.35, no subpart........................ 650.35, subpart B. 650.40, no subpart........................ 650.40, subpart B. 650.45, no subpart........................ 650.45, subpart B. 650.50, no subpart........................ 650.50, subpart B. 650.55, no subpart........................ 650.55, subpart B. 650.60, no subpart........................ 650.60, subpart B. 650.65, no subpart........................ 650.65, subpart B. 650.70, no subpart........................ 650.70, subpart B. 650.75, no subpart........................ 650.75, subpart B. 650.80, no subpart........................ 650.80, subpart B. ------------------------------------------------------------------------ 0 3. Add subpart A to read as follows: [[Page 15942]] Subpart A--Regulation, Examination and Enforcement Sec. 650.1 Definitions. 650.2 Regulatory authority. 650.3 Supervision and enforcement. 650.4 Access to Corporation records and personnel. 650.5 Reports of examination. 650.6 Criminal referrals. Subpart A--Regulation, Examination and Enforcement Sec. 650.1 Definitions. The following definitions apply for the purpose of this part: Act or Authorizing statute means the Farm Credit Act of 1971, as amended. Business day means a day the Corporation is open for business, excluding the legal public holidays identified in 5 U.S.C. 6103(a). Corporation or Farmer Mac means the Federal Agricultural Mortgage Corporation and its affiliates. FCA means the Farm Credit Administration, an independent federal agency of the executive branch. NYSE means the New York Stock Exchange, a listing exchange. OSMO means the FCA Office of Secondary Market Oversight, which is responsible for the general supervision of the safe and sound exercise of the Corporation's powers, functions, and duties and compliance with laws and regulations. Our or we means the FCA or OSMO, as appropriate to the context of the provision employing the term. SEC means the Securities and Exchange Commission. Securities Act means the Securities Act of 1933 (15 U.S.C. 77a et seq.) or the Exchange Act of 1934 (15 U.S.C. 78a et seq.), or both, as appropriate to the context of the provision employing the term. Signed, when referring to paper form, means a manual signature, and, when referring to electronic form, means marked in a manner that authenticates each signer's identity. Sec. 650.2 Regulatory authority. (a) General. The Corporation is a for-profit Government-sponsored enterprise developed to provide a secondary market for agricultural and rural utility loans with public policy objectives included in its statutory charter. The Corporation is regulated by the FCA, operating through OSMO. The Corporation also lists securities on the NYSE, making it subject to certain SEC listing and disclosure requirements. (b) Primary regulator. The FCA, operating through OSMO, holds primary regulatory, examination, and enforcement authority over the Corporation. The FCA, operating through OSMO, is responsible for the general supervision of the safe and sound exercise of the Corporation's powers, functions, and duties and compliance with laws and regulations. (c) Other regulatory authorities. The Corporation is required by its authorizing statute to comply with certain SEC reporting requirements and must register offerings of Farmer Mac Guaranteed Securities under the Securities Act of 1933 and related regulations. The Corporation is also subject to most of the industry self-regulatory requirements of the NYSE. Sec. 650.3 Supervision and enforcement. The Act provides FCA, acting through OSMO, with enforcement authority to protect the financial safety and soundness of the Corporation and to ensure that the Corporation's powers, functions, and duties are exercised in a safe and sound manner. (a) General supervision. When we determine the Corporation has violated a law, rule, or regulation or is engaging in an unsafe or unsound condition or practice, we have enforcement authority that includes, but is not limited to, the following: (1) Issue an order to cease and desist; (2) Issue a temporary order to cease and desist; (3) Assess civil monetary penalties against the Corporation and its directors, officers, employees, and agents; and (4) Issue an order to suspend, remove, or prohibit directors and officers. (b) Financial safety and soundness of the Corporation. When we determine the Corporation is taking excessive risks that adversely impact capital, we have authority to address that risk. This includes, but is not limited to, requiring capital restoration plans, restricting dividend distributions, requiring changes in the Corporation's obligations and assets, requiring the acquisition of new capital and restricting those Corporation activities determined to create excessive risk to the Corporation. Sec. 650.4 Access to Corporation records and personnel. (a) The Corporation must make its records available promptly upon request by OSMO, at a location and in a form and manner acceptable to OSMO. (b) The Corporation must make directors, officers, employees and agents available to OSMO during the course of an examination or supervisory action when OSMO determines it necessary to facilitate an examination or supervisory action. Sec. 650.5 Reports of examination. The Corporation is subject to the provisions in 12 CFR part 602 regarding FCA Reports of Examination. Sec. 650.6 Criminal referrals. The rules at 12 CFR part 612, subpart B, regarding ``Referral of Known or Suspected Criminal Violations'' are applicable to the Corporation. 0 4. Revise part 651 to read as follows: PART 651--FEDERAL AGRICULTURAL MORTGAGE CORPORATION GOVERNANCE Subpart A--General Sec. 651.1 Definitions. 651.2 Indemnification. Subpart B--Standards of Conduct 651.21 Code of conduct. 651.22 Conflict-of-interest policy. 651.23 Conflict-of-interest disclosure and reporting. 651.24 Director, officer, employee, and agent responsibilities. Subpart C--Board Governance 651.30 Director elections. 651.35 Director removal. 651.40 Director fiduciary duties and independence. 651.50 Committees of the Corporation's board of directors. Authority: Secs. 4.12, 5.9, 5.17, 8.3, 8.11, 8.14, 8.31, 8.32, 8.33, 8.34, 8.35, 8.36, 8.37, 8.41 of the Farm Credit Act (12 U.S.C. 2183, 2243, 2252, 2279aa-3, 2279aa-11, 2279aa-14, 2279bb, 2279bb-1, 2279bb-2, 2279bb-3, 2279bb-4, 2279bb-5, 2279bb-6, 2279cc); sec. 514 of Pub. L. 102-552, 106 Stat. 4102; sec. 118 of Pub. L. 104-105, 110 Stat. 168. Subpart A--General Sec. 651.1 Definitions. The following definitions apply to this part: Act or Authorizing statute means the Farm Credit Act of 1971, as amended. Agent means any person (other than a director, officer, or employee of the Corporation) who represents the Corporation in contacts with third parties or who provides professional services such as legal, accounting, or appraisal services to the Corporation. Affiliate means any entity established under authority granted to the Corporation under section 8.3(c)(14) of the Act. Appointed director means a member of the Corporation board of directors who was appointed to the Corporation board by the President of the United States of America. Business day means a day the Corporation is open for business, excluding the legal public holidays identified in 5 U.S.C. 6103(a). [[Page 15943]] Class A stockholders means holders of common stock in the Corporation that are insurance companies, banks, or other financial institutions or entities. Class B stockholders means holders of common stock in the Corporation that are Farm Credit System institutions. Corporation means the Federal Agricultural Mortgage Corporation and its affiliates. Director elections mean the process of searching for director candidates, conducting director nominations, and voting for directors. Elected director means a member of the Corporation board of directors who was elected by either Class A or Class B stockholders. Employee means any salaried individual working part-time, full- time, or temporarily for the Corporation. Entity means a corporation, company, association, firm, joint venture, partnership (general or limited), society, joint stock company, trust (business or otherwise), fund, or other organization or institution. FCA means the Farm Credit Administration, an independent federal agency of the executive branch. Material means conflicting interests of sufficient magnitude or significance that a reasonable person with knowledge of the relevant facts would question the ability of the person having such interest to discharge official duties in an objective and impartial manner in furtherance of the interests and statutory purposes of the Corporation. Officer means the salaried president, vice presidents, secretary, treasurer, and general counsel, or other person, however designated, who holds a position of similar authority in the Corporation. OSMO means the FCA Office of Secondary Market Oversight, which is responsible for the general supervision of the safe and sound exercise of the Corporation's powers, functions, and duties and compliance with laws and regulations. Our or we means the FCA or OSMO, as appropriate to the context of the provision employing the term. Person means individual or entity. Potential conflict-of-interest means a director, officer, or employee of the Corporation has an interest in a transaction, relationship, or activity that might adversely affect, or appear to adversely affect, the ability of the person having such interest to perform his or her official duties on behalf of the Corporation in an objective and impartial manner in furtherance of the interest of the Corporation and its statutory purposes. Reasonable person means a person under similar circumstances exercising the average level of care, skill, and judgment in his or her conduct based on societal requirements for the protection of the general interest. Resolved means an actual or potential material conflict-of-interest that has been altered so that a reasonable person with knowledge of the relevant facts would conclude that the conflicting interest would not adversely affect the person's performance of official duties in an objective and impartial manner and in furtherance of the interests and statutory purposes of the Corporation. Signed, when referring to paper form, means a manual signature, and, when referring to electronic form, means marked in a manner that authenticates each signer's identity. Sec. 651.2 Indemnification. (a) General. The Corporation is not required to offer indemnification insurance. The Corporation must have policies and procedures in place before it may offer indemnification insurance to its directors, officers, or employees. (1) Indemnification policies and procedures must address how the board of directors approves or denies requests for indemnification from current and former directors, officers, and employees. The policies and procedures must include standards relating to indemnification, investigations by the board of directors, and reviews by independent counsel. (2) Indemnification policies and procedures must consider all sources of potential indemnification to protect the Corporation against over-indemnification of an individual director or officer. (b) Oversight. The Corporation must notify OSMO 10 business days before issuing any indemnification payment. Subpart B--Standards of Conduct Sec. 651.21 Code of conduct. (a) General. The Corporation must develop and administer a written code of conduct establishing the ethical benchmarks for professional integrity, competence, and respect. The code must be reasonably designed to assure the ability of board members, officers, employees, and agents of the Corporation to discharge their duties and responsibilities, on behalf of the Corporation, in an ethical and business-like manner. The code of conduct must be consistent with applicable laws and regulations. (b) Review. Not less often than once every 3 years, the Corporation must review the adequacy of its code of conduct for consistency with practices appropriate to the entity and compliance with laws and regulations and must make any appropriate revisions to such code. Sec. 651.22 Conflict-of-interest policy. (a) The Corporation must establish and administer a conflict-of- interest policy that will provide reasonable assurance that the directors, officers, employees, and agents of the Corporation discharge their official responsibilities in an objective, impartial, and business-like manner that furthers the lawful interests and statutory purpose of the Corporation. The conflict-of-interest policy must acknowledge and respect the representational affiliations required by the Act for elected directors. (b) The conflict-of-interest policy must: (1) Define the types of transactions, relationships, or activities that could reasonably be expected to give rise to potential conflicts of interest. For the purpose of determining whether a potential conflict-of-interest exists, the following interests shall be imputed to a person subject to this regulation as if they were that person's own interests: (i) Interests of any individual residing in that person's household; (ii) Interests of any individual identified as a legal dependent of that person; (iii) Interests of that person's general partner; (iv) Interests of an organization or entity that the person serves as officer, director, trustee, general partner or employee, unless the organization or entity is directly connected to the representational affiliations required by the Act for elected directors; and (v) Interests of a person, organization, or entity with which that person is negotiating for or has an arrangement concerning prospective employment. (2) Include guidelines for determining when a potential conflict is material (as that term is defined in this part); (3) Contain procedures for resolving or disclosing material conflicts of interest. (4) Address recusal from official actions on any matter in which a director, officer, employee, or agent is prohibited from participating based on a conflict-of-interest identified under this part; and (5) Define documentation and reporting requirements, consistent with this part, for demonstrating compliance with conflict-of-interest decisions. (c) The Corporation must notify directors, officers, employees, and agents of the conflict-of-interest policy [[Page 15944]] and any subsequent changes thereto and allow them a reasonable period of time to conform to the policy. (d) When requested, the Corporation must provide to any shareholder, investor, or potential investor, with a copy of its conflict-of-interest policy. The Corporation may charge a nominal fee to cover the costs of reproduction and handling. Sec. 651.23 Conflict-of-interest disclosure and reporting. (a) Annually, each director, officer, and employee must provide to the Corporation a written and signed conflict-of-interest report. The report must disclose information about financial interests, transactions, relationships, and activities sufficient enough for a reasonable person to make a conflict-of-interest determination. (1) The annual conflict-of-interest report must identify any transaction, relationship, or activity that, in the director, officer or employee's opinion, creates a real or potential material conflict- of-interest or that is: (i) Specifically named in the Corporation's policies on conflict- of-interest; or (ii) Addressed in regulation. (2) If potential or real conflicts arise between annual reporting periods, each director, officer, and employee must update his or her annual disclosure at the time(s) such conflict arises. (b) The Corporation must review the annual conflict-of-interest reports, and any subsequent reports, within 10 business days of receipt. (1) The Corporation must determine for each director, officer, and employee whether any real or potential material conflict-of-interest exists and document its findings. (2) If a real or potential conflict-of-interest is identified as material by the Corporation, the Corporation must, within 3 business days of identification, notify the director, officer, or employee of the material conflict-of-interest determination and must provide the director, officer, or employee a reasonable opportunity to respond. (c) The Corporation must document all resolved and unresolved material conflicts-of-interest. Until resolved, the Corporation must maintain on-going documentation that explains how unresolved conflicts are being handled. (d) The Corporation must disclose any unresolved material conflict- of-interest involving its directors, officers, and employees existing at the time to: (1) Shareholders through annual reports and proxy statements; (2) Investors and potential investors through disclosure documents supplied to them; and (3) The FCA, through procedures established by OSMO. (e) The Corporation must establish and maintain internal controls to ensure that conflict-of-interest reports are filed and reviewed as required and that conflicts are resolved or disclosed in accordance with this subpart. (f) The Corporation must maintain all reports of real or potential material conflicts-of-interest, including documentation of materiality determinations and resolutions, for a period of 6 years. (g) The Corporation must establish procedures for obtaining conflict-of-interest disclosures from agents of the Corporation. These disclosures must provide enough information for the Corporation to identify if the agent has material conflicts-of-interest with the Corporation. The procedures on agent conflicts-of-interest must satisfy the documentation and record retention requirements in paragraphs (c) and (f) of this section. Sec. 651.24 Director, officer, employee, and agent responsibilities. (a) No director, officer, employee, or agent of the Corporation may make any untrue or misleading statement of a material fact intended or having the effect of reducing public confidence in the Corporation. (b) No director, officer, employee, or agent of the Corporation may make improper use of official Corporation property or information. Improper use includes, but is not limited to, the purchase or retirement of any stock in advance of the public release of material non-public information concerning the Corporation. (c) Except in the performance of official duties, no director of the Corporation shall divulge or use any fact, information, or document that is acquired by virtue of serving on the board of the Corporation and not generally available to the public. Subpart C--Board Governance Sec. 651.30 Director elections. (a) The Corporation must have in effect at all times director election procedures and must administer those procedures in a fair and impartial manner. (b) The director election procedures must: (1) Provide that any holder of an equity interest in the Corporation may submit candidates for consideration as director- nominees to the Corporation's board of directors. (2) Allow the board committee used for director nominations to engage the services of third parties to evaluate the professional qualifications of potential nominees. (3) Require that during the director nomination process, a director-candidate must receive affirmative votes for nomination from a majority of those representing the same class of stockholders as the candidate. (c) The Corporation must ensure director elections acknowledge and respect the voting rights of Class A and Class B stockholders, as well as the elected director representational affiliations required by the Act. Elected director candidates must have a recognized affiliation or relationship with their respective class of voting stockholders at the time of nomination and election to the Corporation board of directors. The Corporation must maintain documentation supporting the affiliation or relationship of each elected director until 3 years after the director's service on the board ends. Sec. 651.35 Director removal. (a) The procedures that the Corporation relies upon to initiate director removals must be contained in the Corporation's bylaws. Director removals initiated by the Corporation include, but are not limited to, resignations requested by the Corporation, mandatory resignations based on contractual agreements with the Corporation, and resignations required in response to predetermined events or actions identified in the Corporation's governing documents. (b) Director removals initiated by the Corporation may not adversely affect the rights of voting shareholders. Appointed directors may only be removed as authorized by the President of the United States. (c) The Corporation must notify OSMO at least 14 days before any director removal is initiated by the Corporation. Sec. 651.40 Director fiduciary duties and independence. (a) General. The responsibilities of the Corporation's board of directors include having in place adequate policies and procedures to assure its oversight of: (1) The risk management and compensation programs of the Corporation, (2) The processes for providing accurate financial reporting and other disclosures, and (3) Communications with stockholders. (b) Responsibility. The board of directors of the Corporation is responsible for directing the conduct and affairs of the Corporation in [[Page 15945]] furtherance of the safe and sound operation of the Corporation and in compliance with all applicable laws and regulations. The board must remain reasonably informed of the condition, activities, and operations of the Corporation in order to fulfill its duties. (c) Duties. Each director of the Corporation must: (1) Carry out his or her duties as director in good faith, in a manner such director believes to be in the best interests of the Corporation, and with such care, including reasonable inquiry, as a reasonable person in a similar position would use under similar circumstances; (2) Administer the affairs of the Corporation fairly and impartially and without discrimination in favor of or against any investor, stockholder, or class of stockholders; and (3) Direct the operations of the Corporation in conformity with safety and soundness standards and the requirements set forth in the authorizing statute and in compliance with all applicable laws and regulations. (d) Independence. No director of the Corporation may be prohibited by confidentiality agreements or Corporation policies and procedures from publicly or privately commenting orally or in writing on non- private or non-privileged corporate business and related matters. This provision does not exempt directors from relevant laws and regulations, including securities laws, regarding such statements. This provision does not prohibit the Corporation from protecting proprietary, privileged, and non-public information. Sec. 651.50 Committees of the Corporation's board of directors. (a) General. No committee of the board of directors may be delegated the authority of the board of directors to amend Corporation bylaws. No committee of the board of directors shall relieve the board of directors or any board member of a responsibility imposed by law or regulation. (b) Required committees. The board of directors of the Corporation must have committees, however styled, that address risk management, audit, compensation, and corporate governance. Neither the risk management committee nor the audit committee may be combined with any other committees. This provision does not prevent the board of directors from establishing any other committees that it deems necessary or useful to carrying out its responsibilities. (c) Charter. Each committee must adopt, and the full board of directors of the Corporation must approve, a formal written charter that specifies the scope of a committee's powers and responsibilities, as well as the committee's structure, processes, and membership requirements. (1) Each board committee must have at least one elected director from each class of voting stock and one appointed director as members of the committee. (2) No director may serve as chairman of more than one board committee. (d) Frequency of meetings and records. Each committee of the board of directors must meet with sufficient frequency to carry out its obligations and duties under applicable laws, regulations, and its operating charter. Each committee of the board of directors must maintain minutes of its meetings. The minutes must record attendance, the agenda, a summary of the relevant discussions held by the committee during the meeting, and any resulting recommendations to the board. Such minutes must be retained for a minimum of 3 years and must be available to the entire board of directors and to OSMO. 0 5. Add part 653 to read as follows: PART 653--FEDERAL AGRICULTURAL MORTGAGE CORPORATION RISK MANAGEMENT Sec. 653.1 Definitions. 653.2 General. 653.3 Risk management. 653.4 Internal controls. Authority: Secs. 8.3, 8.4, 8.6, 8.8, and 8.10 of the Farm Credit Act (12 U.S.C. 2279aa-3, 2279aa-4, 2279aa-6, 2279aa-8, and 2279aa- 10). Sec. 653.1 Definitions. The following definitions apply for the purpose of this part: Corporation means the Federal Agricultural Mortgage Corporation and its affiliates. FCA means the Farm Credit Administration, an independent federal agency of the executive branch. OSMO means the FCA Office of Secondary Market Oversight, which is responsible for the general supervision of the safe and sound exercise of the Corporation's powers, functions, and duties and compliance with law and regulations. Sec. 653.2 General. The Corporation's board of directors must approve the overall risk- appetite and risk tolerance of the Corporation and monitor internal controls to ensure risk-taking activities are conducted in a safe and sound manner. Sec. 653.3 Risk management. (a) Risk management program. The Corporation's board of directors must have in effect at all times an enterprise-wide risk management program that, at a minimum, addresses the Corporation's exposure to credit, market, liquidity, business and operational risks and ensures that the Corporation's activities are exercised in a safe and sound manner. The risk management program must: (1) Periodically assess and document the Corporation's risk profile. (2) Align the Corporation's risk profile with the board-approved risk appetite and risk tolerance and the Corporation's operational planning strategies and objectives. (3) Address the Corporation's exposure to credit, market, liquidity, business and operational risks. (4) Specify management's authority and independence to carry out risk management responsibilities. (5) Integrate risk management and control objectives into management goals and compensation structures. (6) Comply with all applicable FCA regulations and policies. (b) Risk committee. The Corporation's board of directors must establish and maintain a board-level risk committee that is responsible for the oversight of the enterprise-wide risk management practices of the Corporation. (1) The risk committee must have at least one member with risk management expertise commensurate with the Corporation's capital structure, risk profile, complexity, activities, size, and other appropriate risk-related factors. (2) The responsibilities of the risk committee include, but are not limited to: (i) Overseeing and documenting the enterprise-wide risk management policies and practices of the Corporation; (ii) Reviewing and recommending an appropriate risk management program commensurate with the Corporation's capital structure, risk profile, complexity, activities, size, and other appropriate risk- related factors; and (iii) Receiving and reviewing regular reports from the Corporation's Risk Officer. (c) Risk officer (RO). The Corporation must have a RO to implement and maintain the enterprise-wide risk management practices of the Corporation. The RO must be independent from other management functions or units and must report directly to the chief executive officer and the risk committee. The RO must have risk management experience commensurate with the Corporation's [[Page 15946]] capital structure, risk profile, complexity, activities, and size. The responsibilities of the RO include, but are not limited to: (1) Identifying and monitoring compliance with risk limits, exposures, and controls; (2) Implementing risk management policies, procedures, and risk controls; (3) Developing appropriate processes and systems for identifying and reporting risks, including emerging risks; (4) Reporting risk management issues, emerging risks, and compliance concerns to the chief executive officer and the risk committee; and (5) Making recommendations to the chief executive officer and board risk committee on adjustments to risk management policies, procedures, and risk controls of the Corporation. Sec. 653.4 Internal controls. (a) The Corporation's board of directors must adopt an internal controls policy that provides adequate directions for, and identifies expectations in, establishing effective control over, and accountability for, operations, programs, and resources to ensure that the Corporation's powers, functions, and duties are exercised in a safe and sound manner and in compliance with all applicable laws and regulations. (b) The internal control system must address: (1) The efficiency and effectiveness of the Corporation activities; (2) Safeguarding the assets of the Corporation; (3) Evaluating the reliability, completeness, and timely reporting of financial and management information; (4) Compliance with applicable laws, regulations, regulatory directives, and the policies of the Corporation's board of directors and senior management; (5) The appropriate segregation of duties among the Corporation personnel so that personnel are not assigned conflicting responsibilities; and (6) The transparency of information provided to the Corporation's board of directors. (c) The Corporation is responsible for establishing and implementing an effective system to track internal control weaknesses and take action to correct detected weaknesses. As part of that program, the Corporation must establish and maintain a compliance program that is reasonably designed to assure that the Corporation complies with applicable laws, regulations, and internal controls. (d) The Corporation must annually report to OSMO on the effectiveness of the internal control system. 0 6. Revise part 655 to read as follows: PART 655--FEDERAL AGRICULTURAL MORTGAGE CORPORATION DISCLOSURE AND REPORTING REQUIREMENTS Subpart A--General Sec. 655.1 Definitions. 655.2 Prohibition against misleading, inaccurate, and incomplete reports and disclosures. Subpart B--Report of Condition of the Federal Agricultural Mortgage Corporation 655.10 Reports of condition. 655.15 Interim reports, notices, and proxy statements. Subpart C--Reports Relating to Securities Activities of the Federal Agricultural Mortgage Corporation 655.20 Securities not registered under the Securities Act. 655.21 Filings and communications with U.S. Treasury, the SEC and the NYSE. Authority: Secs. 5.9, 8.3, 8.11, and 8.12 of the Farm Credit Act (12 U.S.C. 2243, 2279aa-3, 2279aa-11, 2279aa-12). Subpart A--General Sec. 655.1 Definitions. The following definitions apply for the purpose of this part: Act or authorizing statute means the Farm Credit Act of 1971, as amended. Business day means a day the Corporation is open for business, excluding the legal public holidays identified in 5 U.S.C. 6103(a). Corporation means the Federal Agricultural Mortgage Corporation and its affiliates. FCA means the Farm Credit Administration, an independent federal agency of the executive branch. Material, when used to qualify a requirement to furnish information as to any subject, means the information required to those matters to which there is a substantial likelihood that a reasonable person would attach importance in making investor decisions or determining the financial condition of the Corporation. NYSE means the New York Stock Exchange, a listing exchange. OSMO means the FCA Office of Secondary Market Oversight, which regulates and examines the Federal Agricultural Mortgage Corporation for safety and soundness and compliance with law and regulations. Our or us means the FCA or OSMO, as appropriate to the context of the provision employing the term. Person means individual or entity. Report refers to the annual report, quarterly report, or notices, regardless of form, required by this part unless otherwise specified. SEC means the Securities and Exchange Commission. Securities Act means the Securities Act of 1933 (15 U.S.C. 77a et seq.) or the Exchange Act of 1934 (15 U.S.C. 78a et seq.), or both, as appropriate to the context of the provision employing the term. Signed, when referring to paper form, means a manual signature, and, when referring to electronic form, means marked in a manner that authenticates each signer's identity. Sec. 655.2 Prohibition against misleading, inaccurate, and incomplete reports and disclosures. The Corporation and any agent, employee, officer, or director of the Corporation may not make any report or disclosure to FCA, stockholders or the general public concerning any matter required to be disclosed by this part that is incomplete, inaccurate, or misleading. When any such person makes a report or disclosure that, in the judgment of FCA, is incomplete, inaccurate, or misleading, whether or not such report or disclosure is made in reports or disclosure statements required by this part, the FCA may require the Corporation to make such additional or corrective disclosure as is necessary to provide a full and fair disclosure. Subpart B--Reports of Condition of the Federal Agricultural Mortgage Corporation Sec. 655.10 Reports of condition. (a) General. The Corporation must prepare and publish quarterly and annual reports of its condition, including financial statements and related schedules, exhibits, and other documents that are part of the reports. The contents of each quarterly or annual report must be either equivalent in content to the quarterly and annual reports to shareholders required by the Securities Act or according to our instructions. (b) Signatures and certification. Each report issued under this part must be signed. The Corporation must designate the representatives who will sign each report. The name and position title of each person signing the report must be printed beneath his or her signature. Those components of the report containing financial information must be separately certified as financially accurate. The entire report must be certified by the signatories and the certification must, at a minimum, state that: (1) The signatories have reviewed the report, [[Page 15947]] (2) The report has been prepared in accordance with all applicable statutory or regulatory requirements, and (3) The information is true, accurate, and complete to the best of signatories' knowledge and belief. (c) Distribution. The Corporation must distribute the signed report of condition to all its shareholders within 90 days of its fiscal year- end. The Corporation must provide us one paper and one electronic copy of every signed report within 5 days of signing. If the report is the same as that filed with the SEC, the Corporation may instead provide the signed reports to us only in electronic form and simultaneous with filing the report with the SEC. (1) The Corporation must publish a copy of each report of condition on its Web site within 3 business days of filing the report with us. The report must remain on the Web site until the next report is posted. When the reports are the same as those filed with the SEC, electronic links to the SEC filings Web site, EDGAR, may be used in satisfaction of this requirement. (2) Upon receiving a request for an annual report of condition from a stockholder, investor, or the public, the Corporation must promptly provide the requester the most recent signed annual report issued in compliance with this section. Sec. 655.15 Interim reports, notices, and proxy statements. (a) The Corporation must provide to us one paper and one electronic copy of every interim report, notice, and proxy statement filed with the SEC within 1 business day of filing the item with the SEC, including all papers and documents that are a part of the report, notice, or statement. (b) The Corporation must publish a copy of each interim report, notice, and proxy statement on its Web site within 5 business days of filing the document(s) with the SEC. The interim report, notice, or proxy statement must remain on the Web site for 6 months or until the next annual report of condition is posted, whichever is later. Electronic links to the SEC filings Web site, EDGAR, may be used in satisfaction of this requirement. Subpart C--Reports Relating to Securities Activities of the Federal Agricultural Mortgage Corporation Sec. 655.20 Securities not registered under the Securities Act. The Corporation must make special filings with OSMO for securities either issued or guaranteed by the Corporation that are not registered under the Securities Act. These filings include, but are not limited to: (a) One paper and one electronic copy of any offering circular, private placement memorandum, or information statement prepared in connection with the securities offering at or before the time of the securities offering. (b) For securities backed by qualified loans as defined in section 8.0(9)(A) of the Act, one paper and one electronic copy of the following within 1 business day of the finalization of the transaction: (1) The private placement memoranda for securities sold to investors; and (2) The pooling and servicing agreement when the security is purchased by the Corporation as authorized by section 8.6(g) of the Act. (c) For securities backed by qualified loans as defined in section 8.0(9)(B) of the Act, the Corporation must provide summary information on such securities issued during each calendar quarter in the form prescribed by us. Such summary information must be provided with each report of condition and performance filed pursuant to Sec. 621.12, and at such other times as OSMO may require. Sec. 655.21 Filings and communications with the U.S. Treasury, the SEC, and NYSE. (a) The Corporation must send us one paper and one electronic copy of every filing made with U.S. Treasury, the SEC, or NYSE, including financial statements and related schedules, exhibits, and other documents that are a part of the filing. Such copies must be filed with us no later than 1 business day after any U.S. Treasury, SEC, or NYSE filing. If the filing is one addressed in subpart B of this part, no action under this paragraph is required. (b) The Corporation must send us, within 3 business days and according to instructions provided by us, copies of all substantive correspondence between the Corporation and the U.S. Treasury, the SEC, or NYSE. (c) The Corporation must notify us within 1 business day if it becomes exempt or claims exemption from any filing requirements of the Securities Act. Dated: March 19, 2015. Dale L. Aultman, Secretary, Farm Credit Administration Board. [FR Doc. 2015-06755 Filed 3-25-15; 8:45 am] BILLING CODE 6705-01-P
![Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 15931
I. Obtaining Information and of the Code of Federal Regulations version of the preliminary proposed rule
Submitting Comments (CFR), NUREG–2175, provides guidance language (77 FR 72997; December 7,
A. Obtaining Information on conducting technical analyses (i.e., 2012), ‘‘November 2012 Preliminary
performance assessment, inadvertent Rule Language for Proposed Revisions
Please refer to Docket ID NRC–2015– intruder assessment, assessment of the to Low-Level Waste Disposal
0003 when contacting the NRC about stability of a LLRW disposal site, Requirements (10 CFR part 61)’’
the availability of information for this defense-in-depth analyses, protective (ADAMS Accession No.
action. You may obtain publicly- assurance period analyses, and ML12311A444). Based on comments
available information related to this performance period analyses) to received, the NRC published in the
action by any of the following methods: demonstrate compliance with the Proposed Rules section of this issue of
• Federal rulemaking Web site: Go to performance objectives in the proposed the Federal Register a third version of
http://www.regulations.gov and search 10 CFR part 61, ‘‘Licensing the proposed rule language. Documents
for Docket ID NRC–2015–0003. Requirements for Land Disposal of related to the proposed rule, including
• NRC’s Agencywide Documents Radioactive Waste.’’ This guidance public comments, are available on the
Access and Management System should facilitate licensees’ Federal rulemaking Web site at http://
(ADAMS): You may obtain publicly- implementation of the proposed www.regulations.gov under Docket ID
available documents online in the amendments as well as assist regulatory NRC–2011–0012.
ADAMS Public Documents collection at authorities in reviewing the technical
http://www.nrc.gov/reading-rm/ Dated at Rockville, Maryland, this 5th day
analyses. This guidance applies to all of February 2015.
adams.html. To begin the search, select waste streams disposed of at a 10 CFR
‘‘ADAMS Public Documents’’ and then For the Nuclear Regulatory Commission.
part 61 LLRW disposal facility,
select ‘‘Begin Web-based ADAMS including large quantities of depleted Andrew Persinko,
Search.’’ For problems with ADAMS, uranium and blended waste. Deputy Director, Division of
please contact the NRC’s Public NUREG–2175 provides detailed Decommissioning, Uranium Recovery, and
Document Room (PDR) reference staff at guidance in new areas, such as the Waste Programs, Office of Nuclear Material
Safety and Safeguards.
1–800–397–4209, 301–415–4737, or by inadvertent intruder analysis, defense-
email to pdr.resource@nrc.gov. The [FR Doc. 2015–06536 Filed 3–25–15; 8:45 am]
in-depth analyses, and analyses for the
guidance for conducting technical three phases of the analysis timeframe BILLING CODE 7590–01–P
analyses for 10 CFR part 61, Draft (compliance period, protective
NUREG–2175, is available in ADAMS assurance period, and performance
under Accession No. ML15056A516. period). This guidance discusses the use FARM CREDIT ADMINISTRATION
• NRC’s PDR: You may examine and of a graded level of effort needed to risk-
purchase copies of public documents at inform the analyses for the compliance 12 CFR Parts 650, 651, 653, and 655
the NRC’s PDR, Room O1–F21, One period (1,000 years), the protective RIN 3052–AC89
White Flint North, 11555 Rockville assurance period (from 1,000 years to
Pike, Rockville, Maryland 20852. 10,000 years after disposal site closure), Federal Agricultural Mortgage
and also covers the performance period Corporation General Provisions;
B. Submitting Comments
analyses that should be performed for Federal Agricultural Mortgage
Please include Docket ID NRC–2015– analysis of long-lived waste beyond Corporation Governance; Federal
0003 in the subject line of your 10,000 years. Additional topics covered Agricultural Mortgage Corporation
comment submission. in this document include: (1) Risk Management; Federal Agricultural
The NRC cautions you not to include Demonstration that radiation doses are Mortgage Corporation Disclosure and
identifying or contact information that minimized to the extent reasonably Reporting; Farmer Mac Corporate
you do not want to be publicly achievable; (2) identification and Governance and Standards of Conduct
disclosed in your comment submission. screening of the features, events, and
The NRC will post all comment processes to develop scenarios for AGENCY: Farm Credit Administration.
submissions at http:// technical analyses; (3) use of the waste ACTION: Proposed rule.
www.regulations.gov as well as enter the classification tables or the results of the
comment submissions into ADAMS. technical analyses to develop site- SUMMARY: The Farm Credit
The NRC does not routinely edit specific waste acceptance criteria; and Administration (FCA, we, or our) is
comment submissions to remove (4) use of performance confirmation to proposing new regulations, and
identifying or contact information. evaluate and verify the accuracy of clarifying and enhancing existing
If you are requesting or aggregating information used to demonstrate regulations, related to the Federal
comments from other persons for compliance prior to site closure. Agricultural Mortgage Corporation
submission to the NRC, then you should (Farmer Mac or Corporation) Board
III. Proposed Rulemaking governance and standards of conduct,
inform those persons not to include
identifying or contact information that On May 3, 2011, the NRC published including director election procedures,
they do not want to be publicly preliminary proposed rule language (76 conflict-of-interest, and risk governance.
disclosed in their comment submission. FR 24831), ‘‘Part 61: Site Specific We also propose enhancements to
Your request should state that the NRC Analyses for Demonstrating Compliance existing disclosure and reporting
with Subpart C Performance Objectives’’ requirements to remove repetitive
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does not routinely edit comment
submissions to remove such information (ADAMS Accession No. ML111150205). reporting and allow for electronic filing
before making the comment As a result of additional direction from of reports. In keeping with today’s
submissions available to the public or the Commission in staff requirement financial and economic environment,
entering the comment into ADAMS. memoranda (SRM)–COMWDM–11– we believe it prudent and timely to
0002/COMGEA–11–0002, ‘‘Revisions to undertake a review of our regulatory
II. Discussion Part 61,’’ dated January 19, 2012 guidance on the identified areas. We
The guidance for conducting (ADAMS Accession No. ML120190360), also propose rules on the examination
technical analyses for part 61 of Title 10 the NRC staff published a second and enforcement authorities held by the
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![15934 Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules
the Corporation’s flexibility, but in regulator, while also being subject to incidental powers as may be necessary
exchange ensure appropriate business certain SEC regulatory requirements. or appropriate to fulfill its duties and
practices are consistently followed in all The proposed § 650.2 would identify carry out the purposes of this Act.’’
operating environments. Our intent in FCA the ‘‘primary regulator’’ of Farmer Access to Farmer Mac’s documents and
this rulemaking is to provide Mac, possessing examination, personnel is incidental to the
performance criteria in some areas enforcement, conservatorship, supervision and examination of Farmer
while also setting safe and sound liquidation, and receivership authority Mac. We believe new § 650.4 will clarify
operational directions in others to over Farmer Mac. Section 8.11 of the our expectations of the Corporation in
provide for an effective safety and Act specifies that FCA holds oversight, providing us this access.
soundness framework. Finally, the regulation, examination, and Finally, we are proposing new
proposed rule gives full consideration to enforcement authority over Farmer Mac §§ 650.5 and 650.6, containing cross-
our examination of the Corporation and to ensure it operates in a safe and sound citations to existing regulatory
the role examinations play in ensuring manner. Further, FCA has the authority provisions regarding access to FCA
its safe and sound operations. Taken to regulate how Farmer Mac performs its Reports of Examination and Farmer
together, we believe the following powers, functions, and duties in Mac’s obligation to make criminal
proposed regulatory changes on Farmer furtherance of its public policy referrals in certain circumstances. We
Mac corporate governance would purposes. The new § 650.2 would also believe these cross-cites will clarify the
improve the effectiveness and recognize that Farmer Mac, as a publicly applicability of these provisions to
transparency of its governance practices, traded company, follows the SEC Farmer Mac, and thereby facilitate
as well as promote its continued safe disclosure regulations for publicly compliance with them.
and sound operations. traded companies. We selected the term
‘‘primary regulator’’ to explain FCA’s B. Farmer Mac Corporate Governance
In addition to substantive changes, we
role as the safety and soundness [Part 651]
propose reorganizing our rules
addressing Farmer Mac’s operations by regulator of Farmer Mac based on the Existing part 651 contains the
adding a new part 653 which is recent adoption of the term in the corporate governance provisions for
currently reserved, revising existing financial industry after passage of the Farmer Mac, without subparts. We
parts 650, 651, and 655, adding subparts Dodd-Frank Act, where it is used to propose adding the following subparts:
to parts 650 and 651, and revising distinguish the different roles of federal • Subpart A, entitled ‘‘General,’’ to
existing subparts in part 655. We also regulators in the financial industry.13 address general corporate governance
propose adding definition sections to all We next propose a new § 650.3 to matters;
these parts. We propose no changes to incorporate into our regulations the • Subpart B, entitled ‘‘Standards of
part 652 or reserved part 654. supervision and enforcement authorities Conduct,’’ to contain the existing
given us under the Act to provide provisions of part 651; and
III. Section-by-Section Analysis reasonable assurance that, among other • Subpart C, entitled ‘‘Board
A. FCA Oversight and Rulemaking [Part things, Farmer Mac is adequately Governance,’’ to address Board-level
650] capitalized and operating safely. activities, including director elections,
Financial safety and soundness fiduciary duties, and Board committees.
Existing part 650 contains general supervision involves monitoring, We then propose placing existing
provisions, without subparts, on the inspecting, and examining Farmer Mac § 651.1 into new subpart A and placing
supervision of Farmer Mac. We propose to assess its condition and compliance existing §§ 651.2 through 651.4 into new
adding a new subpart A, entitled with law and regulation. We believe subpart B, while also revising them.
‘‘Regulation, examination and identifying in our regulations the
enforcement,’’ to address the authorities minimum authorities of OSMO to 1. General Corporate Governance [New
of OSMO. We also propose moving require corrective or remedial actions by Subpart A]
existing §§ 650.1 through 650.80 into a Farmer Mac, as well as to take such a. Definitions [Existing § 651.1]
new subpart B, entitled ‘‘Conservators, enforcement action as deemed to be
receivers, and liquidations.’’ We then appropriate, will add clarity and We propose placing the existing
propose redesignating existing §§ 650.1 facilitate the general supervision of definitions of § 651.1 in new subpart A,
and 650.5 on appointing and removing Farmer Mac.14 modifying certain existing terms and
receivers or conservators as new We are proposing new § 650.4 to adding new terms to the section. We
§§ 650.13 and 650.14 to make room for address our authority to access Farmer propose modifying the existing meaning
the provisions of new subpart A. We are Mac records and personnel in the of ‘‘material’’ and ‘‘resolved’’ to cover
proposing no other changes to these exercise of our examination and all conflicts, not just potential ones, and
existing provisions. oversight authority. The FCA, acting modifying the existing meaning of a
We propose adding a new § 650.1 in through OSMO, examines and provides ‘‘potential conflict-of-interest’’ to
subpart A for definitions of certain general supervision over the activities of remove the list of imputed interests. We
terms used in part 650. We propose Farmer Mac pursuant to section 8.11 of also propose adding to this part the
adding definitions for the following the Act. Section 5.17(a)(11) of the Act definitions proposed for part 650 (listed
terms: provides that FCA may ‘‘Exercise such in section III.A. of this preamble),
• The Act; except the terms in proposed § 650.1(e),
• Business day; (h), and (i).
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13 Discussions surrounding passage of the Dodd-
• Corporation or Farmer Mac; Frank Act recognized the long-standing situation We propose the following additional
where, although only one regulator is the primary
• FCA, OSMO, our, and we; regulator, financial institutions are required to
terms for part 651:
• NYSE and SEC; comply with various federal financial laws and • Appointed director;
• Securities Act; and regulations issued and enforced by several banking • Class A stockholders;
• Signed. regulators. • Class B stockholders;
• Director elections;
14 These minimum supervisory authorities are
We also propose a new § 650.2 to designed to ensure that action is taken to avoid the
provide clarity on the situation of emergence of problems that might entail serious • Elected director; and
Farmer Mac having FCA as its primary risks to Farmer Mac. • Reasonable person.
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![Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 15935
The above terms and their meanings, currently maintained by Farmer Mac because of the representational nature of
except ‘‘reasonable person’’, are based pursuant to section 406 of Sarbanes- elected directorships. Since this
on sections 8.2 and 8.4 of the Act and Oxley, with the key difference being relationship is required by the Act, it
the manner in which FCA has that the Code would set benchmarks for should not be treated as a conflict-of-
consistently applied them over the professional integrity, competence, and interest.16 Instead, we are proposing
years. The proposed definition for the respect. The proposed provision would other provisions in new §§ 651.21,
term ‘‘reasonable person’’ is based on require a review of the Code every 3 651.24 and 651.40 to address how
use of the term in conflict-of-interest years. directors are to handle this affiliation
proceedings and substantially resembles while also maintaining their duty of
b. Conflict-of-Interest Policy [Existing
the legal meaning of term. loyalty to the Corporation.
§§ 651.2 and 651.3(b); New § 651.22] • Adding as new paragraph (b)(4) a
b. Indemnifications [New § 651.2] We propose moving existing § 651.2, requirement that conflict-of-interest
We propose new § 651.2 on which requires Farmer Mac to have a procedures address recusals when
indemnifications of directors, officers, conflict-of-interest policy, to new conflicts are identified. We believe this
and employees to address subpart B and redesignating it as new requirement is necessary to ensure a
indemnifications that Farmer Mac may § 651.22. In addition, we propose standard approach to recusals is used by
offer. The provision would recognize changes and additions to the existing the Corporation and to ensure directors,
that the decision of whether to offer provision. Some of the proposed officers, and employees have notice of
indemnification is a business decision changes are organizational and the expectation to recuse themselves
of Farmer Mac and not required by law grammatical changes, as well as when a conflict-of-interest exists.
or regulation. However, new § 651.2 intended to incorporate the proposed • Adding as new paragraph (b)(5) a
would require Farmer Mac, in the new terms from revised § 651.1. requirement that conflict-of-interest
interest of safety and soundness, to Organizational changes mainly consist procedures define documentation and
establish policies and procedures for of consolidating like provisions with reporting requirements to ensure
offering indemnification insurance each other, such as moving existing compliance with conflict-of-interest
before any such indemnification occurs. § 651.3(b), requiring release of the decisions.
As proposed, the required procedures conflict-of-interest policy, to new • Removing the requirement for
would have to address: When and how § 651.22(d). negative conflict-of-interest reports from
indemnification is offered, safeguards to We propose the following substantive directors, officers, and employees. This
avoid over-indemnification, and reviews changes and additions for new § 651.22: negative reporting is unnecessary as
of any indemnification made. The • Requiring that the conflict-of- other proposed changes would require
policies and procedures may also interest policy consider the required an annual filing from all directors,
address when indemnification representational affiliations of elected officers and employees, in which it may
payments will be made and how those directors.15 be reported that no conflicts exist.
payments will be calculated. For • Moving to new paragraph (b)(1) the As a GSE, the Corporation has
example, the policy might provide that list of imputed interests that are strategic objectives that are both
Farmer Mac will give consideration to currently part of the existing definition commercially and public policy
any other source of indemnification of a ‘‘potential conflict-of-interest’’ oriented. Conflicts-of-interest must be
when calculating indemnification or (proposed to be removed from the understood and interpreted not only in
prohibit indemnification when a definition). the context of the fiduciary
director, officer, or employee is already • Revising the list of imputed interest responsibilities to the Corporation and
covered by an indemnification policy in new paragraph (b)(1) by removing its shareholders, but also in the context
separate from that offered by Farmer highly specific relationships such as of the statutory duty to further the
Mac. We proposed these provisions to ‘‘spouse’’ and ‘‘child’’ and replacing Congressional purposes the Corporation
set adequate controls over them with language to address all was chartered to achieve. We believe
indemnification practices in order to persons residing in the household or conflict-of-interest to be among the most
prevent unintended consequences such who are otherwise legal dependents. potentially complex and nuanced areas
as over-indemnification. Finally, the This change is premised on the ever- of corporate governance. We intend the
proposed § 651.2 would require notice evolving understanding of what is minimum specifications set forth in the
to OSMO before an indemnification considered a family as well as intended proposed rule to facilitate the uniform
payment is made. The notice would to address non-residential dependents disclosure, identification, and treatment
provide the opportunity for OSMO to whose activities and interests may of directors, officers, employees and
evaluate, prior to payment, the impact create a conflict-of-interest for a agent holding employment, contractual
of an indemnification payment to the director, officer, or employee. business relationships, or other
safety and soundness of Farmer Mac. • Adding as new paragraph (b)(1)(iv) relationships and interests that may
an exception to the imputed interest list interfere with that person’s ability to
2. Standards of Conduct [New Subpart for relationships maintained solely serve the interests of the Corporation
B] before serving personal interests.
15 Under the Act, two-thirds of the Farmer Mac’s
a. Code of Conduct [New § 651.21] c. Conflict-of-Interest Disclosure and
directors are elected by entities who own the only
We propose adding a new § 651.21 in Reporting [Existing §§ 651.2(b) and (f)
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two classes of voting stock. These entities also have
new subpart B to require a written code a business relationship with Farmer Mac. In and 651.3; New § 651.23]
addition, elected directors must possess a
of conduct that establishes ethical representational relationship to the class of We propose moving existing § 651.2,
benchmarks for the professional stockholders electing them and this relationship regarding conflict-of-interest reports, to
behavior of Farmer Mac directors, must be ‘‘close’’ at the time of election. Because the new subpart B and redesignating it as
officers, employees, and agents. The elected directors are from entities that have
financial relationships of varying degrees with new § 651.23. In addition, we propose
proposed code of conduct would Farmer Mac, it presents difficulties in adopting the
resemble existing § 651.4(a)(1) and the common corporate governance practices and 16 Section 8.2(b)(2)(A) and (B) and (b)(5)(A) and
‘‘Code of Business Conduct and Ethics’’ policies (i.e., ‘‘best practices’’). (B) of the Act (12 U.S.C. 2279aa–2(b)).
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![15936 Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules
changes to the existing provision. Some business days when a reported conflict from agents of the Corporation. Agents
of the proposed changes are has been identified as material and of any corporation have a standing that
organizational and grammatical provide filers with an opportunity to differs from directors, officers, and
changes, as well as intended to respond to the materiality employees. As such, we believe Farmer
incorporate the proposed new terms determination. We believe that material Mac should have procedures in place to
from revised § 651.1. Organizational conflict determinations should be provide reasonable assurance that their
changes mainly consist of consolidating explained to those impacted by such agents hold no material conflicts that
reporting and disclosure provisions determinations. We also believe it is could adversely affect the work those
currently located in both existing necessary for the Corporation and the agents perform on behalf of Farmer Mac.
§§ 651.2 and 651.3. Included in the person with the conflict to hold As Farmer Mac’s operations grow and
organization proposal is to move discussions about the conflict. These its products and lines of business
existing § 651.2(b), requiring annual discussions could add clarity to the diversify, identification and prevention
conflict-of-interest reports, to new process, help avoid mistaken of potential conflicts become more
§ 651.23(a) and moving existing ‘‘materiality’’ determination, and challenging and make our enhanced
§ 651.2(f), requiring internal controls for provide the opportunity for the person regulatory focus on this topic timely and
conflict-of-interest disclosures, to new with the conflict to resolve it quickly. appropriate.
§ 651.23(e). • Requiring in new paragraph (c) that
We propose the following substantive Farmer Mac document material d. Director, Officer, Employee, and
changes and additions for new § 651.23: conflicts-of-interest and the efforts made Agent Responsibilities [Existing § 651.4;
• Specifying that the sufficiency of a to address the conflicts. The New § 651.24]
conflict-of-interest report is based on a requirement for documentation of We propose moving existing § 651.4
‘‘reasonable person’’ standard. conflicts is a good business practice, to new subpart B and redesignating the
• Requiring in new paragraph (a) that which we recognize Farmer Mac has section as new § 651.24. This section
conflict-of-interest reports be signed. already been employing. However, we addresses director, officer, employee,
While the signature element may have believe a regulatory requirement is and agent responsibilities. We also
been implied in the past, we believe it necessary to ensure the practice propose replacing the contents of
is best to specify it as a requirement. continues.
• Specifying in new paragraph (a)(1) existing § 651.4(a)(1) requiring directors,
• Clarifying that the existing
that the transactions, relationships, and officers, employees, and agents to
disclosure to shareholders and investors
activities identified as creating real or maintain a high standard of behavior
of unresolved material conflicts applies
potential conflicts are based on (1) the with the earlier discussed code of
to those conflicts that remain
opinion of the person filing the report, conduct at new § 651.21. We next
unresolved as of the date of the annual
(2) conflicts specifically identified in propose removing existing § 651.4(a)(2)
report or proxy statement. The
Farmer Mac’s policies, and (3) conflicts and (b), which requires directors,
requirement does not include conflicts
identified in FCA regulation. We are officers, employees, and agents to
resolved during the reporting period
proposing this specificity to ensure a comply with the Corporation’s conflict-
beyond updating those previously
common understanding of the basis of-interest policy and provide the
reported as ‘‘unresolved.’’
used by persons completing conflict-of- • Requiring in new paragraph (d)(3) Corporation with any information the
interest reports. By specifying the that Farmer Mac notify OSMO of Corporation deems necessary or face
sources used when determining if a unresolved material conflicts-of-interest. penalties. We propose removing these
transaction, relationship, or activity As the safety and soundness regulatory, provisions as they are unnecessary in
creates a conflict, it should be easier to we need to remain informed of any light of other proposed changes
identify omissions and remove doubts conflicts that could potentially affect the contained in this rulemaking. For
as to what needs to be reported. on-going operations of Farmer Mac. For example, we have already proposed
However, if doubt remains, we example, if a conflict remains addressing our enforcement authorities
encourage every person completing a unresolved for months and that person in new § 650.3 and conflicts-of-interest
conflict-of-interest report to err on the has been recused from performing their in new § 651.22.
side of inclusion, rather than omission. full duties, we would want to know Instead, we propose this section
• Requiring in new paragraph (b) that what Farmer Mac has done to address address the actions of directors, officers,
Farmer Mac review conflict-of-interest the impact of that recusal. This is employees, and agents in regards to the
reports within 10 business days of especially true if a director or senior Corporation, its property, and its
receipt, and if a conflict is identified as officer holds the unresolved conflict. reputation. We propose under new
material, to document its findings. We • Limiting the existing requirement § 651.24 listing prohibitions on the
believe time is of the essence in that reports of conflicts must be conduct of directors, officers,
identifying material conflicts in order to maintained for 6 years to only material employees, and agents. The proposed
take necessary actions to minimize the conflicts. We believe this change will prohibitions are on making misleading
impact of the conflict on the operations balance the recordkeeping burden with or untrue statements of material facts
of Farmer Mac. We believe it is the value obtained from the longevity of regarding Farmer Mac, improper use of
important that conflicts identified as the records. Material conflicts are the the official property and information of
‘‘material’’ be clearly documented, as ones that will result in recusal actions Farmer Mac, and disclosing confidential
well as the rationale used to make the and most likely to last or reappear. As information related to Farmer Mac when
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determination. It is essential that the such, they are more valuable to retain not in the performance of official duties.
basis for any ‘‘materiality’’ for historical reference. However, this We believe these prohibitions are
determination be supported by provision would not prevent Farmer necessary because, as a GSE and a
appropriate documentation to avoid Mac from retaining all records for the 6- publicly traded corporation,
misunderstandings and to minimize the year period, if it so desires. misinformation deliberately provided to
potential for abuse of the process. • Requiring in new paragraph (g) that outside parties could have a materially
• Requiring in new paragraph (b)(2) Farmer Mac establish procedures for adverse impact on the safety and
that Farmer Mac notify a filer within 3 obtaining conflict-of-interest disclosures soundness of the Corporation.
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3. Board Governance [New Subpart C] for nomination from a majority of those available to shareholders. We believe
a. Director Elections [New § 651.30] involved in the Corporation’s shareholders are entitled to know how
nomination process who also represent Farmer Mac determines when to require
It is common corporate practice to use the same class of stockholders as the a director to resign (director removal)
a board committee, often the corporate candidate. Since the voting stockholders and how that removal action is
governance committee, to name are only presented with one director- achieved. It is important that
director-nominees and Farmer Mac candidate per board vacancy—and shareholders understand Farmer Mac’s
follows this practice.17 In consideration Farmer Mac no longer allows floor actions in this area since nothing in the
of this, we are proposing regulations to nominations 19—the nomination of proposed provision would affect the
ensure the director election process at director-candidates takes on higher ability of voting shareholders to exercise
Farmer Mac complies with the importance, particularly given the their rights in the election and
provisions of the Act and Congressional statutory requirement that 10 of the 15 governance of Farmer Mac’s Board of
intent. In new § 651.30, we propose a members of the Farmer Mac Board be Directors. To further emphasize this, the
requirement that Farmer Mac have elected by Class A and B stockholders. rule would prohibit Farmer Mac from
election policies and procedures in We are not proposing to require the initiating a director’s removal in a
place and that Farmer Mac implement use of nominating committees or floor manner that would adversely affect the
those policies and procedures in a fair nominations in this rulemaking. rights of voting shareholders. The rule
and impartial manner. New § 651.30 However, we believe requiring director- would also recognize that appointed
would set forth the minimum candidates to have majority support directors serve at the pleasure of the
requirements for the director election from those involved in the nomination President of the United States.
policies and procedures, including process who share the candidate’s We are also proposing language to
allowing all equity holders to submit affiliation with either Class A or Class explain what is considered a ‘‘director
director-candidates for nomination B stockholders facilitates fulfillment of removal’’ action initiated by the
consideration. The proposed provision the statutory provision that both Class A Corporation. Publicly traded companies
would facilitate the establishment of and Class B stockholders determine who use contractual agreements with their
nomination procedures that provide will represent them on the Corporation’s directors to ensure certain behavior
reasonable assurance of an inclusive Board. In situations where a ‘‘majority’’ (e.g., confidentiality of company data,
and fair process as potential directors standards of conduct). Often, these
would mathematically result in a
are considered for nomination. The contracts include a provision requiring
fraction, we would expect the next
provision should not be read as a director to ‘‘voluntarily’’ resign if the
whole number to be used (e.g., three
requiring the nomination of every company determines (and a court later
representatives would mean a majority
candidate submitted by an equity affirms) that the director failed to act in
of two, four representatives would mean
holder.18 Any such candidate would go accordance with the agreement.
a majority of three). If there are only two
through the Corporation’s nomination Corporate directors are required to sign
representatives from a Class involved in
process the same as all other director- these agreements in order to take office
the nomination process, then we would
candidates. For example, if a director- and objecting to the ‘‘voluntarily’’
consider a majority to be one person.
candidate submitted by an equity holder resignation provision(s) may result in
The proposed rule at new § 651.30(c)
is not eligible for election as a director being denied a seat on the board. These
would require Farmer Mac to document
of the Corporation, there would be no types of contractual provisions are
the representational affiliation of all
requirement for Farmer Mac to include commonly referred to as mandatory
elected directors at the time of
the candidate as a nominee. resignations and are intended to avoid
New § 651.30 would also allow the nomination and election to the board
and maintain this documentation until the cost and time required to pursue a
board committee responsible for forced removal action.
nominations to engage the services of 3 years after the director’s service on the
board ends. Such recordkeeping would We propose that all director
third parties to evaluate the professional resignations required or otherwise
qualifications of candidates prior to help ensure only those eligible to serve
as directors representing Class A or initiated by Farmer Mac be called
nomination. We believe allowing the ‘‘director removals.’’ We believe when a
board committee used for nominations Class B are nominated. We also believe
director must resign (or is deemed to
to engage third parties to vet candidates a 3-year record of director affiliations
have resigned) in response to a Farmer
can aid in achieving timely and could be of assistance when reviewing
Mac bylaw, policy, or other governing
objective evaluation of director- director-candidates up for re-election.
document, that the resignation was
candidates. We believe the statutory term
initiated by the Corporation since
Next, new § 651.30(b)(3) would ‘‘representative’’ means that elected
Farmer Mac drafted the document at
require the nomination of a director- directors must have an official
issue. Further, we believe that when
candidate to include affirmative votes affiliation with a Class A or Class B
Farmer Mac requires directors, director-
entity at the time of nomination and
nominees, and/or director-candidates to
17 Under this corporate practice, Farmer Mac uses election in order to serve as director. We
accede to a resignation provision in
its Governance Committee as its nominating view this affiliation as one that is a
order to serve on the board of directors
committee, which identifies candidates for elected substantial and visible connection to the that, even if characterized as
director positions. This six member committee is class of stockholders.
composed of two Class A elected directors, two ‘‘voluntary,’’ it is more appropriately
Class B elected directors, and two appointed called a removal provision.
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b. Director Removal [New § 651.35]
directors. The proposed rule would further
18 The Dodd-Frank Act, at § 971 of subtitle G, The proposed new § 651.35 would
require Farmer Mac to notify OSMO at
amended the Securities and Exchange Act of 1934 require Farmer Mac to identify its
to allow shareholders of publicly traded companies least 14 days before seeking the removal
director removal procedures in the
to submit director-nominees for election to of one of its directors. This advance
corporate boards. The provision was viewed as a Corporation’s bylaws, which are
notice is considered necessary to protect
step in strengthening corporate governance by
providing an alternative to shareholder proxy fights 19 Farmer Mac is not required by law or existing the safety and soundness of Farmer
while also avoiding director entrenchment through regulation to have a nominating committee nor is Mac. We view this level of advance
self-nomination. it required to allow floor nominations. reporting to be appropriate given the
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![15938 Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules
potential for sudden changes in the and sound operation of the Corporation. d. Committees of the Board [New
board’s membership to result in Thus, directors failing to fulfill this § 651.50]
instability within the management and fiduciary duty could have a negative We propose a new § 651.50 on board
oversight of the Corporation or to raise impact on the safety and soundness of committees in subpart C. The new
concerns about the Corporation in the Farmer Mac. § 651.50 would address the relationship
capital markets, or both. The proposed provisions are another between the entire board and its
c. Director Fiduciary Duties and step in ensuring directors maintain their committees, require certain committees,
Independence [New § 651.40] duty of loyalty to the Corporation, place membership requirements on the
notwithstanding any required affiliation committees, and establish minimum
We are proposing a new § 651.40 that with a group of stockholders. However,
requires Farmer Mac to have policies in operational requirements for board
they are not to be read as requiring committees (e.g., charters, meeting
place to provide reasonable assurance elected directors to disregard the
that its Board of directors maintains minutes). The proposed committees
perspectives of those electing them to would resemble those currently
responsibility for and provides office. Instead, we believe elected
appropriate oversight of the risk maintained by Farmer Mac, but with the
directors should share these key differences in committee
management activities of Farmer Mac, perspectives with the entire Board so
the reports and disclosures issued by composition.
that every director is informed of In paragraph (a) of new § 651.50, we
Farmer Mac, and shareholder stockholder concerns and views, thus
communications. Also, new § 651.40 propose limiting the authority of the
facilitating Board decisions and board to delegate its collective authority
would clarify the duty of directors to
ensuring those decisions are being made to develop and amend Farmer Mac
conduct the business of the Corporation
in the best interests of the Corporation bylaws to a committee of the board. This
in a manner that promotes the best
and all of its shareholders. provision would not prevent board
interest of the Corporation and furthers
its statutory mission. As a GSE, Farmer In balance with the other committees from making
Mac should strive to ensure that its requirements of new § 651.40, and to recommendations on the bylaws to the
Board activities fulfill its public help ensure the rule is not misapplied, entire board. We also propose regulatory
missions. Unlike corporations proposed paragraph (d) would protect language holding the entire board
incorporated under State statutes of the ability of directors to be accountable accountable for committee actions. In
incorporation, statutorily chartered to the shareholders that elected them. directing the Corporation, the board of
GSEs are not free to alter their purposes We recognize that fiduciary duties to directors may rely on reports from board
or powers, even when such alteration shareholders must be understood in the committees, but doing so does not
may be in the best interest of the context of the duty of the elected relieve the board of final responsibility.
investing stockholders. For GSEs, such directors to possess a representational In paragraph (b) of new § 651.50, we
changes can only be made by law. Thus, relationship with certain groups of propose that Farmer Mac have, at the
it is the responsibility of Farmer Mac shareholders. As such, the provision, as minimum, committees to address risk
directors to lead the Corporation in the proposed, would specifically allow management, audit, compensation, and
manner that best effectuates the public directors to comment on non-private corporate governance matters. We
policy it was designed to serve. and non-privileged corporate business, propose that there be separate
Paragraphs (b) and (c) of the proposed provided doing so will not violate any committees dedicated to audit and risk
provision would set forth key duties of laws or regulations, particularly management and that these committees
the Farmer Mac Board, among which are securities laws. The intent is to allow not be tasked with other matters. Our
the duty to act in good faith and for the directors to converse with stockholders reasoning in support of this proposal is
best interest of Farmer Mac, as well as as a means of gathering information, that the oversight responsibilities of
acting fairly and impartially without gaining insights into stockholder each of these two committees represent
discriminating in favor of or against any wishes, and demonstrating an aggregation of a very broad array of
investor, stockholder, or group of accountability. The provision clarifies issues and detailed operational policies
stockholders. The proposed provisions that this authority does not prevent and procedures that cover essentially
are intended to ensure that all directors, Farmer Mac from protecting proprietary the entire breadth of the Corporation’s
regardless of how they acquired their information. It is an established operations—in addition to the
seats on the board of directors, corporate governance principle that associated ongoing monitoring of all of
understand that they are bound by their once elected to the board a director these. We believe a portfolio of
fiduciary duty to Farmer Mac and, as a owes his or her fiduciary duties, responsibility any larger for either
result, act for the betterment of Farmer including a duty of confidentiality, to committee would be excessive and risk
Mac overall and not any particular the company and shareholders as a a severe dilution in a committee’s
group of shareholders or investors. We whole. As such, the proposed rule effectiveness.
believe these provisions are necessary to would clarify that Farmer Mac may take In paragraph (c) of new § 651.50, we
clarify that the required elected director measures to ensure each director abides propose that each board committee be
affiliations should not be interpreted to by policies defining and specifying the established through a written charter.
mean an elected director serves solely to treatment of the Corporation’s We further propose that committee
further the viewpoints of the electing confidential information, including charters specify the powers,
class without regard to the impact on restricting directors from disclosing the responsibilities, and structure of each
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Farmer Mac and all its shareholders. Corporation’s confidential information committee. We further propose that
Such an interpretation would be to the shareholders electing them to each committee have both elected and
inconsistent with the established serve on the Corporation’s board. We appointed directors and that among the
corporate common law principles of a believe the proposed § 651.40 strikes the elected directors there be ones with
director’s fiduciary duties, as well as appropriate balance between a director’s affiliations to both Class A and Class B
with Congressional intent. The fiduciary representational duties required by the stockholders. Similarly, we propose that
duties of directors are essential to good Act and his or her corporate fiduciary no director may serve as a committee
governance and necessary to the safe duties. chair of more than one committee. Our
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![Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 15939
intent is to ensure that the Farmer Mac We discuss the proposed §§ 653.1 proposing that the risk committee be
Board reasonably distributes through 653.4 below. responsible for reviewing the design of
responsibilities among individual the risk management program and
1. Definitions [New § 653.1]
members of the board. We believe that receiving management reports on risk
too great a concentration of We propose as new § 653.1 definitions management issues, as well as
responsibilities would detract from the for the terms ‘‘Corporation’’, ‘‘FCA’’, monitoring the Corporation’s risk
board’s overall effectiveness. and ‘‘OSMO.’’ We are proposing the management policies and procedures.
In paragraph (d) of new § 651.50, we same meaning as are proposed We believe it is essential that the tone
propose requiring each board committee elsewhere in this rulemaking. We of Corporation’s risk culture and its
to have meeting minutes and to keep the propose these definitions to ensure a procedures for risk decision-making be
minutes for 3 years. We propose that the common understanding of the terms as set by the Board even when they are
minutes include the agenda for the used in part 653. based on management’s
meeting, attendance, a summary of recommendations. Further, the Board
2. General [New § 653.2]
pertinent discussions held during the plays a critical role in the ongoing
meeting, and any resulting committee We propose in new § 653.2 to require oversight of, and cohesive
recommendations. In proposing this the Farmer Mac Board approve the implementation of, operational
requirement, we are not seeking overall risk-appetite and tolerance of the strategies and plans that conform to its
transcripts of meetings, but a record of Corporation. We believe that while established risk appetite and tolerance.
matters addressed by the committee and management may design and implement We also propose in new § 653.3(c) to
who participated in the meeting in the Corporation’s internal controls, the require Farmer Mac to have a ‘‘Risk
sufficient detail to allow the reader a Board remains ultimately responsible Officer’’ to implement the risk
reasonable understanding of the for how those controls affect the risk management program. We are proposing
substance of the discussion. We propose management of the Corporation. The that the risk officer report directly to the
no set meeting schedule for committees, Board’s oversight of internal controls is chief executive officer and risk
but do propose a requirement that each a critical component of its responsibility committee. We also propose that the
committee meet with sufficient for monitoring corporate activities and risk officer be separated from other
frequency to fulfill its duties. We providing reasonable assurance that the management functions to ensure s/he
believe these provisions would facilitate controls will prevent excessive risk- devotes full attention to Farmer Mac’s
both the historical context of policies taking or unsafe and unsound activities. risk management activities. Under new
and procedures for future management § 653.3(c), the risk officer would have to
3. Risk Management [New § 653.3]
teams and directors as well as facilitate have experience in risk management
A comprehensive and integrated risk commensurate with Farmer Mac’s
the regulatory oversight of board management program significantly
activity. operations. The risk officer also would
enhances the coordination of risk be responsible for monitoring
In proposing new § 651.50, we intend decision-making as well as capital compliance with risk management
no conflict with SEC regulations on the allocation among individual business policies; developing systems to identify
structure of board committees and units and allows the units to act within and report risks; and making
welcome comments identifying any the context of the broader risk-taking recommendations to adjust risk
potential conflict that might exist activities and risk tolerance limits of the management behaviors. We believe a
between the proposed provision and Corporation. Although the Corporation staff position that serves as coordinator
SEC requirements. Where our proposal has recently expanded its risk of the consistent and collaborative
contains provisions on board management program to include a risk implementation of corporate risk
committees that would be requirements, committee, we propose in new policies and objectives across business
but which are optional under existing § 653.3(a) to require Farmer Mac to have units is necessary. A risk officer could
SEC rules, it was intentional as we a risk management program addressing help coordinate, organize, prioritize and
believe the requirements facilitate the the Corporation’s exposure to credit, monitor risks on behalf of the CEO and
safe and sound operations of Farmer market, liquidity, operations, and Board risk committee.
Mac. reputation risks. As proposed, the rule As financial institutions become
C. Risk Management [Part 653, No would require the risk management larger and more complex, which Farmer
Subparts] program to include: Mac has since it was chartered by
• Periodic assessments of the Congress in 1987, the need arises for a
We propose opening existing reserved Corporation’s risk profile, with related continuous, coordinated, and
part 653 to add risk management adjustments to the Corporation’s comprehensive oversight of the broad
provisions for Farmer Mac, renaming operations; spectrum of current and prospective
the part, ‘‘Federal Agricultural Mortgage • Coordination with board-approved risks the entity faces. A key role of a risk
Corporation Risk Management.’’ We risk tolerance levels; officer is to prevent the emergence of
propose no subparts to part 653, but • Delineation of management’s isolated risk ‘‘silos’’ among the entity’s
propose adding the following authority and independence in business units and ensure a consistent
provisions: implementing the program; and and integrated monitoring of key
• A new § 653.1 to contain the • Integration with Corporation goals, sources of risks, such as strategic risks
definitions of certain terms used in part business objectives, and compensation. (including reputation and political risk),
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653; As referenced in the discussion of compliance risks, and reporting risks.
• A new § 653.2 to address general proposed § 651.50 (preamble section We believe requiring a risk officer
board-level risk management matters; III.C.3.d.), we are proposing in new position at Farmer Mac plays a key role
• A new § 653.3 to contain required § 653.3(b) to require Farmer Mac to have in ensuring that the Board and CEO are
risk management programs and a risk management committee. As adequately informed regarding the
activities; and proposed, the membership of the risk Corporation’s aggregate risk position—
• A new § 653.4 to contain committee would include a risk thus providing reasonable assurance of
requirements for internal controls. management expert. Also, we are the achievement of corporate and
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![15940 Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules
mission objectives. In addition, having a • Renaming and redesignating the 2. Prohibitions [New Subpart A: New
risk officer position is considered a best existing subpart A as new subpart B, to § 655.2]
practice for financial institutions over be called ‘‘Reports of Condition of the We propose adding a new § 655.2 to
$10 billion and is consistent with Federal Agricultural Mortgage prohibit misleading, inaccurate, or
Basel’s Pillar 2 on Risk Management and Corporation;’’ incomplete disclosures. This
Risk Supervision. • Redesignating existing subpart B as
prohibition is substantially similar to
new subpart C;
4. Internal Controls [New § 653.4] • Adding a new § 655.1 to identify the one that currently exists in our
the definitions of certain terms used in regulations for the reports of System
A sound system of comprehensive banks and associations. The provision
and integrated internal controls is vital part 655;
• Adding a new § 655.2 to prohibit would establish that no director, officer,
to the operations of any organization employee or agent of Farmer Mac may
and especially those whose business is misleading, inaccurate, or incomplete
disclosures; mislead the FCA, Farmer Mac
taking financial risk. In the 26 years stockholders, or the general public by
since Farmer Mac was chartered, • Moving existing § 655.1 on annual
reports, currently under existing subpart making misleading, inaccurate, or
business and operational environments incomplete disclosures within the
have become significantly more A, to new subpart B and redesignating
it as § 655.10; reports required under part 655. The
complex and technology-driven.
Systems of internal controls should • Adding a new § 655.15 on the provision would also clarify the
distribution of interim notices and authority of FCA to require a corrected
dynamically respond to such changes in report if we determine it contained any
complexity—not just in business unit proxies to new subpart B;
• Moving, renaming, and misleading, inaccurate, or incomplete
operations but also in compliance with disclosures.
redesignating existing § 655.50 on
increasingly complex laws, regulations,
securities not registered under the 3. Reports of Condition [New Subpart B:
and industry standards. Thus, while
Securities Act, currently under existing Existing § 655.1; New §§ 655.10 and
FCA regulations on various aspects of
subpart B, as new § 655.20 in new 655.15]
Farmer Mac’s operations (e.g.,
subpart C; and
investments, liquidity, capital planning) • Adding a new § 655.21 on The Act requires Farmer Mac to
include specific minimum control communications with the U.S. Treasury, register its equities with the SEC and be
requirements related to those SEC, and NYSE. subject to SEC disclosure regulations
operations, we believe a Corporation- We also propose enhancements to issued under section 14 of the Securities
wide integrated system of internal existing disclosure and reporting and Exchange Act of 1934.20 Also,
controls is also appropriate. requirements of part 655 to remove Farmer Mac’s Class A and Class C stocks
Accordingly, we propose in new § 653.4 repetitious reporting and incorporate are publicly traded on the NYSE. Thus,
to require Farmer Mac to adopt internal technology by allowing for electronic Farmer Mac must comply with both
controls for the proper treatment of and filing of reports with OSMO. These FCA and SEC disclosure and reporting
accountability for the programs, proposed enhancements are designed to requirements. We are proposing changes
operations, and resources of Farmer reduce Farmer Mac’s reporting to our reporting requirements for Farmer
Mac. responsibilities, while also improving Mac to enable the reports filed by
The proposed provision would the quality and timeliness of Farmer Mac with the SEC to also satisfy
require an internal controls system that information provided to FCA. We are our requirements in that area, absent
addresses: The effectiveness of also proposing changes to remove instructions from us to the contrary. We
corporate activities; security of repetitious disclosure and reporting believe the proposed changes will
corporate assets; accuracy and requirements resulting from the dual facilitate the coordination of Farmer
completeness of financial reports; reporting responsibilities of Farmer Mac Mac’s financial reporting
separation of duties to avoid conflicts in to the FCA and the SEC. responsibilities to both OSMO and the
responsibilities; transparent reports to SEC as well as reduce or eliminate
the Farmer Mac board; and compliance 1. Definitions [New Subpart A: New repetitious reporting.
with applicable laws, regulations, and § 655.1] We propose revising existing § 655.1
corporate policies. The new § 653.4 We propose adding a new § 655.1 for (proposed to be redesignated as
would also require Farmer Mac to have definitions of certain terms used in part § 655.10) to cover all reports of
a system to correct weaknesses 655. We are proposing the same conditions, not just annual reports. We
identified by the internal controls definitions to this part as are proposed are also proposing to require reports be
program. Finally, we are proposing an for part 650 (listed in section III.A. of signed and certified. The proposed
annual reporting requirement, where this preamble). We are also proposing to certification components would be
Farmer Mac would report to OSMO on add the same definition for ‘‘person’’ as attesting that the signatory reviewed the
the effectiveness of the internal controls is proposed for part 651. In addition, we report, the report was prepared in
program. propose definitions for the term accordance with applicable laws and
D. Disclosure and Reporting [Part 655] ‘‘material’’ and ‘‘report.’’ While there is regulations, and the reported
a definition for ‘‘material’’ in part 651, information is true, accurate, and
Existing part 655 contains financial the one proposed for this part is complete to the best of the signatory’s
disclosure and reporting provisions for different in that it focuses on the
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knowledge. Further, we are proposing
Farmer Mac in two subparts: Subpart A meaning of the term when considering that quarterly and annual reports be
on annual reports and subpart B on financial reports, not conflicts-of- filed by Farmer Mac with OSMO and
securities reports. We propose interest. We propose these definitions to that those reports either be equivalent to
organizational changes to this part as ensure a common understanding of the those required by the SEC or according
follows: terms as used in part 655. In addition, to our instructions. We are proposing
• Adding a new subpart A, entitled we propose changes to the existing the provision that reports be filed
‘‘General’’ to address the matters provisions of part 655 to incorporate the
common to disclosures and reports; proposed new terms. 20 Section 8.12 of the Act (12 U.S.C. 2279aa–12).
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![Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 15941
according to our instructions to address of filing them with the SEC. As List of Subjects
the contingency of the SEC changing its proposed, this requirement could be 12 CFR Part 650
reporting requirements in such a satisfied with a link to EDGAR. We also
manner as to reduce the usefulness of propose that these documents remain on Agriculture, Banks, banking, Credit,
the reports in safety and soundness the Web site for 6 months, or until the Reporting and recordkeeping
matters. next annual report, whichever is later. requirements, Rural areas.
For the reasons already discussed, we
are proposing changes to the existing 4. Reports Related to Securities 12 CFR Part 651
report distribution requirements to Activities [New Subpart C: Existing Agriculture, Banks, banking, Conduct
reduce timeframes, require Web site § 655.50; New §§ 655.20 and 655.21] standards, Conflict of interests,
posting of reports, and ensure reports Elections, Ethical conduct, Rural areas.
distributed to shareholders and We propose revising existing § 655.50
investors are the same as those filed by first breaking it into two sections: 12 CFR Part 653
with both the FCA and SEC. We are § 655.20 on unregistered securities Agriculture, Banks, banking, Capital,
proposing to reduce the existing 120- (currently § 655.50(a)) and § 655.21 on Conduct standards, Credit, Finance,
day timeframe to distribute reports to a all other filings and communications Rural areas.
90-day timeframe for distribution of with the U.S. Treasury, SEC, and NYSE
reports to shareholder and a 5-day filing (currently § 655.50(b) and (c)). In new 12 CFR Part 655
timeframe with OSMO. We believe the § 655.20, we propose changing the Accounting, Agriculture, Banks,
reduced timeframes are more reasonable manner of making special filings with banking, Accounting and reporting
given available technology and other OSMO by replacing the existing requirements, Disclosure and reporting
advances in reporting systems. We requirement to send us three paper requirements, Financial disclosure,
further propose that if the report is the copies to require one paper and one Rural areas.
same as that filed with the SEC, it be electronic copy. In new § 655.21, we
filed with OSMO simultaneous with the For the reasons stated in the
propose expanding the existing preamble, parts 650, 651, 653, and 655
SEC filing. We next propose changing
requirement to send us copies of of chapter VI, title 12 of the Code of
the existing requirement to send us
‘‘substantive’’ correspondence between Federal Regulations are proposed to be
three paper copies of each report by
reducing it to only one paper copy. We Farmer Mac and the SEC or U.S. amended as follows:
also propose allowing the use of Treasury to include the NYSE. The
electronic filing of reports with OSMO. proposal would also remove the PART 650—FEDERAL AGRICULTURAL
We propose requiring Farmer Mac to limitation on the type of MORTGAGE CORPORATION
post reports on its Web site within 3 communication. Currently, the GENERAL PROVISIONS
business days of filing the report with requirement covers correspondence
OSMO. We propose that a report remain relating to securities activities or ■ 1. The authority citation for part 650
available on the Web site until the next regulatory compliance. We believe the is revised to read as follows:
report is posted. We further propose that Corporation should provide us all Authority: Secs. 4.12, 5.9, 5.17, 5.25, 8.11,
if the report is the same as that filed substantive communications it has with 8.12, 8.31, 8.32, 8.33, 8.34, 8.35, 8.36, 8.37,
with the SEC, an electronic link to the the U.S. Treasury, the SEC, and the 8.41 of the Farm Credit Act (12 U.S.C. 2183,
SEC reports database (EDGAR) would 2243, 2252, 2261, 2279aa–11, 2279aa–12,
NYSE as that communication may have 2279bb, 2279bb–1, 2279bb–2, 2279bb–3,
satisfy our regulatory requirement in a bearing on the safety and soundness 2279bb–4, 2279bb–5, 2279bb–6, 2279cc); sec.
this area. In making this proposal, we of Farmer Mac. We also propose setting 514 of Pub. L. 102–552, 106 Stat. 4102; sec.
relied on technological advances, the a 3-day timeframe for providing the 118 of Pub. L. 104–105, 110 Stat. 168.
existing availability of the information, information to us. Finally, new
and Farmer Mac’s existing practice of ■ 2. Add subpart B, under the heading
§ 655.21(c) would require Farmer Mac to ‘‘Conservators, Receivers, and
posting reports on its Web site.
Further, we are proposing a new notify us of exemptions from SEC filing Liquidations’’ consisting of existing
§ 655.15 to require that Farmer Mac requirements within 1 business day. §§ 650.1 through 650.80 as redesignated
send OSMO one paper and one The current rule requires this in the following table:
electronic copy of every notice, interim information to be sent to us ‘‘promptly.’’
report, and proxy statement it files with In light of the proposed changes to Old section New section
the SEC. We believe it is essential that reporting requirements, we believe it is
650.1, no subpart ...... 650.13, subpart B.
communications between Farmer Mac necessary to have definitive and fast
650.5, no subpart ...... 650.14, subpart B.
and OSMO, its primary regulator, notice of any changes Farmer Mac seeks 650.10, no subpart .... 650.10, subpart B.
include the communications Farmer in SEC filing requirements. 650.15, no subpart .... 650.15, subpart B.
Mac has with the SEC. The proposed 650.20, no subpart .... 650.20, subpart B.
IV. Regulatory Flexibility Act 650.25, no subpart .... 650.25, subpart B.
provision would require Farmer Mac to
make these disclosures within 1 650.30, no subpart .... 650.30, subpart B.
Pursuant to section 605(b) of the
business day of filing the notice, interim 650.35, no subpart .... 650.35, subpart B.
Regulatory Flexibility Act (5 U.S.C. 601 650.40, no subpart .... 650.40, subpart B.
report, or proxy statement with the SEC. et seq.), FCA hereby certifies the 650.45, no subpart .... 650.45, subpart B.
We believe this requirement is
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proposed rule will not have a significant 650.50, no subpart .... 650.50, subpart B.
necessary to ensure we have timely economic impact on a substantial 650.55, no subpart .... 650.55, subpart B.
notice of events outside our scheduled number of small entities. Farmer Mac 650.60, no subpart .... 650.60, subpart B.
examination of these documents. 650.65, no subpart .... 650.65, subpart B.
has assets and annual income over the
Similar to the proposal to post reports 650.70, no subpart .... 650.70, subpart B.
on its Web site, we are proposing in amounts that would qualify it as a small 650.75, no subpart .... 650.75, subpart B.
§ 655.15(b) that Farmer Mac post on its entity. Therefore, Farmer Mac is not 650.80, no subpart .... 650.80, subpart B.
Web site notices, interim reports, and considered a ‘‘small entity’’ as defined
proxy statements within 5 business days in the Regulatory Flexibility Act. ■ 3. Add subpart A to read as follows:
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(2) The report has been prepared in Securities Act. These filings include, DEPARTMENT OF TRANSPORTATION
accordance with all applicable statutory but are not limited to:
or regulatory requirements, and Federal Aviation Administration
(a) One paper and one electronic copy
(3) The information is true, accurate, of any offering circular, private
and complete to the best of signatories’ 14 CFR Part 39
placement memorandum, or
knowledge and belief. [Docket No. FAA–2015–0249; Directorate
information statement prepared in
(c) Distribution. The Corporation must Identifier 2014–NM–174–AD]
connection with the securities offering
distribute the signed report of condition
to all its shareholders within 90 days of at or before the time of the securities RIN 2120–AA64
its fiscal year-end. The Corporation offering.
(b) For securities backed by qualified Airworthiness Directives; The Boeing
must provide us one paper and one
Company Airplanes
electronic copy of every signed report loans as defined in section 8.0(9)(A) of
within 5 days of signing. If the report is the Act, one paper and one electronic AGENCY: Federal Aviation
the same as that filed with the SEC, the copy of the following within 1 business Administration (FAA), DOT.
Corporation may instead provide the day of the finalization of the transaction: ACTION: Notice of proposed rulemaking
signed reports to us only in electronic (1) The private placement memoranda (NPRM).
form and simultaneous with filing the for securities sold to investors; and
report with the SEC. SUMMARY: We propose to supersede
(1) The Corporation must publish a (2) The pooling and servicing Airworthiness Directive (AD) 2012–18–
copy of each report of condition on its agreement when the security is 05, which applies to The Boeing
Web site within 3 business days of filing purchased by the Corporation as Company Model DC–9–10, DC–9–20,
the report with us. The report must authorized by section 8.6(g) of the Act. DC–9–30, DC–9–40, and DC–9–50 series
remain on the Web site until the next (c) For securities backed by qualified airplanes; and Model DC–9–81 (MD–
report is posted. When the reports are loans as defined in section 8.0(9)(B) of 81), DC–9–82 (MD–82), DC–9–83 (MD–
the same as those filed with the SEC, the Act, the Corporation must provide 83), DC–9–87 (MD–87), MD–88, and
electronic links to the SEC filings Web summary information on such securities MD–90–30 airplanes; equipped with a
site, EDGAR, may be used in satisfaction issued during each calendar quarter in center wing fuel tank and Boeing
of this requirement. original equipment manufacturer-
the form prescribed by us. Such
(2) Upon receiving a request for an installed auxiliary fuel tanks. AD 2012–
summary information must be provided
annual report of condition from a 18–05 currently requires adding design
with each report of condition and
stockholder, investor, or the public, the features to detect electrical faults and to
performance filed pursuant to § 621.12, detect a pump running in an empty fuel
Corporation must promptly provide the
requester the most recent signed annual and at such other times as OSMO may tank. Since we issued AD 2012–18–05,
report issued in compliance with this require. we have determined that it is necessary
section. § 655.21 Filings and communications with to clarify the actions for airplanes on
the U.S. Treasury, the SEC, and NYSE. which the auxiliary fuel tanks are
§ 655.15 Interim reports, notices, and removed. This proposed AD would
proxy statements. (a) The Corporation must send us one allow certain actions as optional
(a) The Corporation must provide to paper and one electronic copy of every methods of compliance. We are
us one paper and one electronic copy of filing made with U.S. Treasury, the SEC, proposing this AD to reduce the
every interim report, notice, and proxy or NYSE, including financial statements potential of ignition sources inside fuel
statement filed with the SEC within 1 and related schedules, exhibits, and tanks, which, in combination with
business day of filing the item with the other documents that are a part of the flammable fuel vapors, could result in
SEC, including all papers and filing. Such copies must be filed with us fuel tank explosions and consequent
documents that are a part of the report, no later than 1 business day after any loss of the airplane.
notice, or statement. U.S. Treasury, SEC, or NYSE filing. If DATES: We must receive comments on
(b) The Corporation must publish a the filing is one addressed in subpart B this proposed AD by May 11, 2015.
copy of each interim report, notice, and of this part, no action under this ADDRESSES: You may send comments,
proxy statement on its Web site within
paragraph is required. using the procedures found in 14 CFR
5 business days of filing the
document(s) with the SEC. The interim (b) The Corporation must send us, 11.43 and 11.45, by any of the following
report, notice, or proxy statement must within 3 business days and according to methods:
remain on the Web site for 6 months or instructions provided by us, copies of • Federal eRulemaking Portal: Go to
until the next annual report of condition all substantive correspondence between http://www.regulations.gov. Follow the
is posted, whichever is later. Electronic the Corporation and the U.S. Treasury, instructions for submitting comments.
links to the SEC filings Web site, the SEC, or NYSE. • Fax: 202–493–2251.
• Mail: U.S. Department of
EDGAR, may be used in satisfaction of (c) The Corporation must notify us Transportation, Docket Operations, M–
this requirement. within 1 business day if it becomes 30, West Building Ground Floor, Room
Subpart C—Reports Relating to exempt or claims exemption from any W12–140, 1200 New Jersey Avenue SE.,
filing requirements of the Securities Act. Washington, DC 20590.
mstockstill on DSK4VPTVN1PROD with PROPOSALS
Securities Activities of the Federal
Agricultural Mortgage Corporation Dated: March 19, 2015. • Hand Delivery: Deliver to Mail
address above between 9 a.m. and 5
Dale L. Aultman,
§ 655.20 Securities not registered under p.m., Monday through Friday, except
the Securities Act. Secretary, Farm Credit Administration Board. Federal holidays.
The Corporation must make special [FR Doc. 2015–06755 Filed 3–25–15; 8:45 am] For service information identified in
filings with OSMO for securities either BILLING CODE 6705–01–P this proposed AD, contact Boeing
issued or guaranteed by the Corporation Commercial Airplanes, Attention: Data
that are not registered under the & Services Management, 3855
VerDate Sep<11>2014 19:13 Mar 25, 2015 Jkt 235001 PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 E:\FR\FM\26MRP1.SGM 26MRP1](https://thefederalregister.org/doc/80_FR_15989/page/17.svg)
Document Created: 2015-12-18 11:46:17
Document Modified: 2015-12-18 11:46:17
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Proposed rule. | |
| Dates | You may send comments on or before June 24, 2015. | |
| Contact | Joe Connor, Associate Director for Policy and Analysis, Office of Secondary Market Oversight, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4364, TTY (703) 883- 4056, or Laura McFarland, Senior Counsel, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4056. | |
| FR Citation | 80 FR 15931 | |
| RIN Number | 3052-AC89 | |
| CFR Citation | 12
CFR
650 12 CFR 651 12 CFR 653 12 CFR 655 | |
| CFR Associated | Agriculture; Banks; Banking; Credit; Reporting and Recordkeeping Requirements; Rural Areas; Conduct Standards; Conflict of Interests; Elections; Ethical Conduct; Capital; Finance; Accounting; Accounting and Reporting Requirements; Disclosure and Reporting Requirements and Financial Disclosure |
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