83 FR 42807 - Organization; Definitions; Eligibility Criteria for Outside Directors
FARM CREDIT ADMINISTRATION Federal Register Volume 83, Issue 165 (August 24, 2018)
Federal Register Volume 83, Issue 165 (August 24, 2018)
| Page Range | 42807-42810 | |
| FR Document | 2018-18312 |
[Federal Register Volume 83, Number 165 (Friday, August 24, 2018)] [Proposed Rules] [Pages 42807-42810] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-18312] ======================================================================= ----------------------------------------------------------------------- FARM CREDIT ADMINISTRATION 12 CFR Parts 611 and 619 RIN 3052-AC97 Organization; Definitions; Eligibility Criteria for Outside Directors AGENCY: Farm Credit Administration. ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: The Farm Credit Administration (FCA, we, or our) is proposing to amend its regulations affecting the governance of Farm Credit System (System) institutions. The proposed rule would modify the existing outside director eligibility criteria by expanding the list of persons who would be excluded from nomination for an outside director's seat to ensure the independence of outside directors. DATES: You may send comments on or before October 23, 2018. 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 website. As facsimiles (fax) are difficult for us to process and achieve compliance with section 508 of the Rehabilitation Act of 1973, as amended, we do not accept comments submitted by fax. Regardless of the method you use, please do not submit your comment multiple times via different methods. You may submit comments by any of the following methods:Email: Send us an email at [email protected]. FCA website: http://www.fca.gov. Select ``Public Commenters,'' then ``Public Comments,'' and follow the directions for ``Submitting a Comment.'' Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Mail: Barry F. Mardock, Deputy Director, Office of Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090. You may review copies of all comments we receive at our office in McLean, Virginia, or from our website at http://www.fca.gov. Once you are in the website, select ``Public Commenters,'' then ``Public Comments,'' and follow the directions for ``Reading Submitted Public Comments.'' We will show your comments as submitted, but for technical reasons we may omit items such as logos and special characters. Identifying information you provide, such as phone numbers and addresses, will be publicly available. However, we will attempt to remove email addresses to help reduce internet spam. FOR FURTHER INFORMATION CONTACT: Darius Hale, Senior Policy Analyst, Office of Regulatory Policy, (703) 883-4165, TTY (703) 883-4056, [email protected], or Nancy Tunis, Senior Counsel, Office of General Counsel, (703) 883- 4061, TTY (703) 883-4056, [email protected]. SUPPLEMENTARY INFORMATION: I. Objectives The objectives of this proposed rule are to: Amend the eligibility criteria for outside director in Sec. 611.220(a); Remove the definition of outside director in Sec. 619.9235; Strengthen the safety and soundness of System institutions; Strengthen the independence of System institution boards; and Incorporate many of the best corporate governance practices for System institutions. [[Page 42808]] II. Background The Farm Credit Act of 1971, as amended (Act),\1\ establishes that System banks and associations must elect a board of directors with such qualifications as may be required by the institution's bylaws. Additionally, the Act specifies that at least one member must be appointed by the stockholder-elected directors and that such member must not be a director, officer, employee, agent, or stockholder of a System institution.\2\ --------------------------------------------------------------------------- \1\ Pub. L. 92-181, 85 Stat. 583. \2\ Sections 1.4, 2.1, 2.11, 3.2, 3.21(b)(1)(C) and 7.12(c)(3)(A) of the Act. --------------------------------------------------------------------------- Outside directors are appointed by stockholder-elected directors to provide independent perspective and expertise in appropriate areas. Outside directors achieve this by broadening the board's collective knowledge, enhancing the board's independence, and improving the board's ability to carry out its fiduciary duties to the System institution, stockholders and investors. Current FCA regulations, however, do not specify how far removed from the statutory prohibited relationships the outside director candidate must be to adequately fulfill the intended independent role of an outside director. This proposed rule seeks to clarify the eligibility requirements of an outside director to achieve the independence intended by the statutory requirements. III. Section-by-Section Analysis of Proposed Regulatory Changes A. Definitions [New Sec. 611.220(a)] As a result of the proposed changes in eligibility criteria for outside directors in Sec. 611.220, discussed below, we are proposing to add a new definition section in Sec. 611.220 that would only apply to that section. The newly defined terms are meant to provide clarity on the meaning of the new outside director eligibility criteria. The proposed rule would add affiliated organizations to the definitions in Sec. 611.220. The new term affiliated organization is defined to mean an entity that is legally distinct from any System institution, but is organized and operated for the benefit of, and in support of, an institution and conducts activities that advance the mission of an institution. The proposed rule would add borrowers to the list of persons excluded from consideration for an outside director position under Sec. 611.220. Accordingly, the new term borrower is added to the definitions in Sec. 611.220 and is defined to mean an individual, sole proprietorship, partnership, joint venture, trust, corporation, or other business entity to which an institution has made a loan or a commitment to make a loan or purchased a loan or participation interest in a loan. The new term borrower would also include any person or entity to whom an institution has made a lease or a commitment to make a lease, or who guarantees repayment of a loan. The proposed rule would add controlling interest to the definitions in Sec. 611.220. The new term controlling interest is defined to mean an individual that, directly or indirectly, or acting through or in concert with one or more persons: (1) Owns 5 percent or more of the equity in an entity; (2) Owns, controls, or has the power to vote 5 percent or more of any class of voting securities of an entity; or (3) Has the power to exercise a controlling influence over the management of policies of such entity. The new term controlling interest is consistent with the definition of controlled entity found in Sec. 612.2130(c). The proposed rule would add the new term entity to the definitions in Sec. 611.220. The new term 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. This is consistent with the definition of entity found in Sec. 612.2130(e). The proposed rule would add the new term immediate family member to the definitions in Sec. 611.220. The new term immediate family member is defined to mean spouse, parent(s), sibling(s), children, mother(s)- and father(s)-in-law, brother(s)- and sister(s)-in-law, and son(s)- and daughter(s)-in-law. This is consistent with the definition of immediate family member found in Sec. 620.1(e). As a result of the proposed changes in eligibility criteria for an outside director in Sec. 611.220, we are proposing to delete the definition of outside director in Sec. 619.9235. The current definition in Sec. 619.9235 is not consistent with the changes proposed in Sec. 611.220, and it is unnecessary to duplicate the same language as is proposed in that section. Deleting Sec. 619.9235 will provide clarity in who may serve as an outside director and will avoid redundancy. B. Eligibility Criteria of Outside Directors [New Sec. 611.220(b)] We propose modifying the existing outside director eligibility criteria in Sec. 611.220(a) \3\ by expanding the list of persons who would be excluded from nomination for an outside director's seat. The proposed rule would add the following to the list of persons excluded from consideration for an outside director position: --------------------------------------------------------------------------- \3\ Due to the addition of a new Definitions paragraph in Sec. 611.220, we will re-designate the current Sec. 611.220(a) as Sec. 611.220(b) for Eligibility, Number, and Term. --------------------------------------------------------------------------- (1) Borrowers of the institution; (2) Immediate family members of any director, officer, employee, agent, stockholder or borrower of a System institution; and (3) Anyone who has a controlling interest in: (i) An entity that borrows from a System institution; or (ii) An affiliated organization of a System institution. The purpose of expanding those individuals ineligible to serve in the outside director's role is to further strengthen the independence perspective on each System institution's board. Congress' intent on establishing the outside director role was to ensure an independent voice was brought to the boards of System institutions. As such, outside directors are only permitted to serve on the board of directors of one System institution or affiliated organization at a time.\4\ --------------------------------------------------------------------------- \4\ An agricultural credit association and its wholly owned subsidiary associations are treated as a single entity for examination and regulatory purposes. Therefore, there is no conflict with a director sitting on the board of an ACA and its wholly owned subsidiary associations. --------------------------------------------------------------------------- To maintain that independent voice, current FCA regulations specify that a candidate for outside director should not be a stockholder of a System institution. However, the regulations do not specifically exclude a borrower from serving as an outside director. Borrowers may not necessarily be stockholders in a System institution. We believe that to be truly independent of a System institution when being vetted for an outside director's seat, all borrowers should be specifically excluded from consideration. This addition would capture those individuals who have signed a promissory note in a joint capacity (i.e., co-applicant, guarantor), but do not own System stock. To further ensure independence from System institutions, we propose excluding individuals from serving as an outside director if they have an immediate family member who is a director, officer, employee, agent, stockholder, or a borrower of a System institution. This would provide additional clarity to our existing rule as [[Page 42809]] to which individuals would be ineligible to serve as an outside director. We also propose that a person who has a controlling interest in an entity that borrows from a System institution or an affiliated organization of a System institution should not be eligible to serve as an outside director. Those persons who have a controlling stake in, or influence the decisions of, an entity should not be considered to serve as an outside director if that entity is a borrower of a System institution. A person who maintains a controlling interest in an entity who borrows from the System or in an affiliated organization does not have the independence meant to fill the outside director's role. The proposed rule would not limit employees of entity borrowers or affiliated organizations from consideration as an outside director. Instead, it aims to clarify that those persons who control or advance the financial or policy decisions of an entity, borrower, or affiliated organization must not be considered as an outside director because their controlling stake or position in the entity or affiliated organization could lessen their independence. We believe that expanding the list of those excluded from outside director consideration will further improve the board's ability to carry out its fiduciary responsibilities to the System institution and its stockholders and investors. We do not believe that including additional eligibility criteria would adversely affect the board's ability to select a qualified candidate for an outside director seat. IV. Compliance Date System institutions would be required to comply with the changes in the eligibility criteria of outside directors at the next appointment of an outside director candidate after the effective date of the final rule. We invite your specific comments on the compliance timeframe if this rule becomes a final rule. If a later compliance date is suggested, please provide a specific burden that would be alleviated with any later compliance date. V. Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), FCA hereby certifies that the proposed rule will not have a significant impact on a substantial number of small entities. Each of the banks in the Farm Credit System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. Therefore, System institutions are not ``small entities'' as defined in the Regulatory Flexibility Act. List of Subjects 12 CFR Part 611 Agriculture, Banks, banking, Conflict of interests, Crime, Investigations, Rural areas. 12 CFR Part 619 Agriculture, Banks, banking, Rural areas. For the reasons stated in the preamble, parts 611 and 619 of chapter VI, title 12 of the Code of Federal Regulations are proposed to be amended as follows: PART 611--ORGANIZATION 0 1. The authority citation for part 611 continues to read as follows: Authority: Secs. 1.2, 1.3, 1.4, 1.5, 1.12, 1.13, 2.0, 2.1, 2.2, 2.10, 2.11, 2.12, 3.0, 3.1, 3.2, 3.3, 3.7, 3.8, 3.9, 3.21, 4.3A, 4.12, 4.12A, 4.15, 4.20, 4.21, 4.25, 4.26, 4.27, 4.28A, 5.9, 5.17, 5.25, 7.0-7.13, 8.5(e) of the Farm Credit Act (12 U.S.C. 2002, 2011, 2012, 2013, 2020, 2021, 2071, 2072, 2073, 2091, 2092, 2093, 2121, 2122, 2123, 2124, 2128, 2129, 2130, 2142, 2154a, 2183, 2184, 2203, 2208, 2209, 2211, 2212, 2213, 2214, 2243, 2252, 2261, 2279a-2279f-1, 2279aa-5(e)); secs. 411 and 412 of Pub. L. 100-233, 101 Stat. 1568, 1638; sec. 414 of Pub. L. 100-399, 102 Stat. 989, 1004. 0 2. Section 611.220 is revised to read as follows: Sec. 611.220 Outside directors. (a) Definitions. For purposes of this section, the following definitions apply: (1) Affiliated organization means an entity that is legally distinct from any Farm Credit System institution, but is organized and operated for the benefit of, and in support of, an institution and conducts activities that advance the mission of an institution. (2) Borrower means an individual, sole proprietorship, partnership, joint venture, trust, corporation, or other business entity to which an institution has made a loan or a commitment to make a loan or purchased a loan or participation interest in a loan. The term borrower also includes any person or entity to whom an institution has made a lease or a commitment to make a lease, or who guarantees repayment of a loan. (3) Controlling interest means an individual that, directly or indirectly, or acting through or in concert with one or more persons: (i) Owns 5 percent or more of the equity in an entity; (ii) Owns, controls, or has the power to vote 5 percent or more of any class of voting securities of an entity; or (iii) Has the power to exercise a controlling influence over the management of policies of such entity. (4) 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. (5) Immediate family member means spouse, parent(s), sibling(s), children, mother(s)- and father(s)-in-law, brother(s)- and sister(s)- in-law, and son(s)- and daughter(s)-in-law. (b) Eligibility, number and term--(1) Eligibility. Eligibility to serve, and continue serving, as an outside director requires independence from affiliations with the Farm Credit System. Farm Credit banks and associations must make a reasonable effort to select outside directors possessing some or all of the desired director qualifications identified pursuant to Sec. 611.210(a). (i) No candidate for an outside director position may be a director, officer, employee, agent, stockholder, or borrower of an institution in the Farm Credit System or be an immediate family member of any of the above. An outside director candidate or an immediate family member of such candidate must not have a controlling interest in: (A) An entity that borrows from a System institution; or (B) An affiliated organization of a System institution. (ii) At any given time, an outside director is eligible to serve on the board of directors of only one Farm Credit System institution or affiliated organization. (2) Number. Stockholder-elected directors must constitute at least 60 percent of the members of each institution's board. (i) Each Farm Credit bank must have at least two outside directors. (ii) Associations with total assets exceeding $500 million as of January 1 of each year must have no fewer than two outside directors on the board. However, this requirement does not apply if it causes the percent of stockholder-elected directors to be less than 75 percent of the board. (iii) Associations with $500 million or less in total assets as of January 1 of each year must have at least one outside director. (3) Terms of office. Banks and associations may not establish a different term of office for outside directors than that established for stockholder-elected directors. (c) Removal. Each institution must establish and maintain procedures for removal of outside directors. When the [[Page 42810]] removal of an outside director is sought before the expiration of the outside director's term, the reason for removal must be documented. An institution's director removal procedures must allow for removal of an outside director by a majority vote of all voting stockholders voting, in person or by proxy, or by a two-thirds majority vote of the full board of directors. The outside director subject to the removal action is prohibited from voting in his or her own removal action. PART 619--DEFINITIONS 0 3. The authority citation for part 619 continues to read as follows: Authority: Secs. 1.4, 1.5, 1.7, 2.1, 2.2, 2.4, 2.11, 2.12, 3.1, 3.2, 3.21, 4.9, 5.9, 5.17, 5.19, 7.0, 7.1, 7.6, 7.8 and 7.12 of the Farm Credit Act (12 U.S.C. 2012, 2013, 2015, 2072, 2073, 2075, 2092, 2093, 2122, 2123, 2142, 2160, 2243, 2252, 2254, 2279a, 2279a-1, 2279b, 2279c-1, 2279f); sec. 514 of Pub. L. 102-552, 106 Stat. 4102. Sec. 619.9235 [Removed] 0 4. Remove Sec. 619.9235. Dated: August 21, 2018. Dale L. Aultman, Secretary, Farm Credit Administration Board. [FR Doc. 2018-18312 Filed 8-23-18; 8:45 am] BILLING CODE 6705-01-P
![Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Proposed Rules 42807
that the average grower price for the guide should be sent to Richard Lower the FCA’s website. As facsimiles (fax)
2018–19 season should be at the previously mentioned address in are difficult for us to process and
approximately $9.50 per 7/10-bushel the FOR FURTHER INFORMATION CONTACT achieve compliance with section 508 of
carton or equivalent of oranges and section. the Rehabilitation Act of 1973, as
grapefruit. Therefore, the estimated amended, we do not accept comments
assessment revenue for the 2018–19 List of Subjects in 7 CFR Part 906
submitted by fax. Regardless of the
crop year as a percentage of total grower Grapefruit, Marketing agreements, method you use, please do not submit
revenue would be about 0.1 percent. Oranges, Reporting and recordkeeping your comment multiple times via
This proposed rule would decrease requirements. different methods. You may submit
the assessment obligation imposed on For the reasons set forth in the comments by any of the following
handlers. Assessments are applied preamble, 7 CFR part 906 is proposed to methods:
uniformly on all handlers, and some of be amended as follows: • Email: Send us an email at reg-
the costs may be passed on to comm@fca.gov.
producers. However, decreasing the PART 906—ORANGES AND
assessment rate reduces the burden on GRAPEFRUIT GROWN IN LOWER RIO • FCA website: http://www.fca.gov.
handlers and may also reduce the GRANDE VALLEY IN TEXAS Select ‘‘Public Commenters,’’ then
burden on producers. ‘‘Public Comments,’’ and follow the
The Committee’s meeting was widely ■ 1. The authority citation for 7 CFR directions for ‘‘Submitting a Comment.’’
publicized throughout the Texas citrus part 906 continues to read as follows: • Federal eRulemaking Portal: http://
industry. All interested persons were Authority: 7 U.S.C. 601–674. www.regulations.gov. Follow the
invited to attend the meeting and instructions for submitting comments.
participate in Committee deliberations ■ 2. Section 906.235 is revised to read
as follows: • Mail: Barry F. Mardock, Deputy
on all issues. Like all Committee Director, Office of Regulatory Policy,
meetings, the May 23, 2018, meeting § 906.235 Assessment rate. Farm Credit Administration, 1501 Farm
was a public meeting, and all entities, Credit Drive, McLean, VA 22102–5090.
both large and small, were able to On and after August 1, 2018, an
express views on this issue. Finally, assessment rate of $0.01 per 7/10-bushel You may review copies of all comments
interested persons are invited to submit carton or equivalent is established for we receive at our office in McLean,
comments on this proposed rule, oranges and grapefruit grown in the Virginia, or from our website at http://
including the regulatory and Lower Rio Grande Valley in Texas. www.fca.gov. Once you are in the
information collection impacts of this Dated: August 21, 2018. website, select ‘‘Public Commenters,’’
action on small businesses. Bruce Summers, then ‘‘Public Comments,’’ and follow
In accordance with the Paperwork Administrator, Agricultural Marketing the directions for ‘‘Reading Submitted
Reduction Act of 1995 (44 U.S.C. Service. Public Comments.’’ We will show your
Chapter 35), the Order’s information [FR Doc. 2018–18363 Filed 8–23–18; 8:45 am] comments as submitted, but for
collection requirements have been BILLING CODE 3410–02–P
technical reasons we may omit items
previously approved by the OMB and such as logos and special characters.
assigned OMB No. 0581–0189, Fruit Identifying information you provide,
Crops. No changes in those such as phone numbers and addresses,
FARM CREDIT ADMINISTRATION will be publicly available. However, we
requirements would be necessary as a
result of this proposed rule. Should any 12 CFR Parts 611 and 619 will attempt to remove email addresses
changes become necessary, they would to help reduce internet spam.
be submitted to OMB for approval. RIN 3052–AC97
FOR FURTHER INFORMATION CONTACT:
This proposed rule would not impose
any additional reporting or Organization; Definitions; Eligibility Darius Hale, Senior Policy Analyst,
recordkeeping requirements on either Criteria for Outside Directors Office of Regulatory Policy, (703) 883–
small or large Texas orange and 4165, TTY (703) 883–4056, Haled@
AGENCY: Farm Credit Administration. fca.gov, or
grapefruit handlers. As with all Federal
ACTION: Proposed rule. Nancy Tunis, Senior Counsel, Office
marketing order programs, reports and
forms are periodically reviewed to SUMMARY: The Farm Credit of General Counsel, (703) 883–4061,
reduce information requirements and Administration (FCA, we, or our) is TTY (703) 883–4056, Tunisn@fca.gov.
duplication by industry and public proposing to amend its regulations SUPPLEMENTARY INFORMATION:
sector agencies. AMS is committed to affecting the governance of Farm Credit
complying with the E-Government Act, System (System) institutions. The I. Objectives
to promote the use of the internet and proposed rule would modify the The objectives of this proposed rule
other information technologies to existing outside director eligibility are to:
provide increased opportunities for criteria by expanding the list of persons
citizen access to Government • Amend the eligibility criteria for
who would be excluded from
information and services, and for other outside director in § 611.220(a);
nomination for an outside director’s seat
purposes. to ensure the independence of outside • Remove the definition of outside
USDA has not identified any relevant director in § 619.9235;
sradovich on DSK3GMQ082PROD with PROPOSALS
directors.
Federal rules that duplicate, overlap, or • Strengthen the safety and
conflict with this proposed rule. DATES: You may send comments on or
soundness of System institutions;
A small business guide on complying before October 23, 2018.
with fruit, vegetable, and specialty crop ADDRESSES: We offer a variety of
• Strengthen the independence of
marketing agreements and orders may methods for you to submit your System institution boards; and
be viewed at: http://www.ams.usda.gov/ comments. For accuracy and efficiency • Incorporate many of the best
rules-regulations/moa/small-businesses. reasons, commenters are encouraged to corporate governance practices for
Any questions about the compliance submit comments by email or through System institutions.
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II. Background venture, trust, corporation, or other § 611.220(a) 3 by expanding the list of
The Farm Credit Act of 1971, as business entity to which an institution persons who would be excluded from
amended (Act),1 establishes that System has made a loan or a commitment to nomination for an outside director’s
banks and associations must elect a make a loan or purchased a loan or seat. The proposed rule would add the
board of directors with such participation interest in a loan. The new following to the list of persons excluded
qualifications as may be required by the term borrower would also include any from consideration for an outside
institution’s bylaws. Additionally, the person or entity to whom an institution director position:
Act specifies that at least one member has made a lease or a commitment to (1) Borrowers of the institution;
must be appointed by the stockholder- make a lease, or who guarantees (2) Immediate family members of any
elected directors and that such member repayment of a loan. director, officer, employee, agent,
must not be a director, officer, The proposed rule would add stockholder or borrower of a System
employee, agent, or stockholder of a controlling interest to the definitions in institution; and
System institution.2 § 611.220. The new term controlling (3) Anyone who has a controlling
Outside directors are appointed by interest is defined to mean an individual interest in:
stockholder-elected directors to provide that, directly or indirectly, or acting (i) An entity that borrows from a
independent perspective and expertise through or in concert with one or more System institution; or
in appropriate areas. Outside directors persons: (ii) An affiliated organization of a
achieve this by broadening the board’s System institution.
(1) Owns 5 percent or more of the The purpose of expanding those
collective knowledge, enhancing the equity in an entity;
board’s independence, and improving individuals ineligible to serve in the
the board’s ability to carry out its (2) Owns, controls, or has the power outside director’s role is to further
fiduciary duties to the System to vote 5 percent or more of any class strengthen the independence
institution, stockholders and investors. of voting securities of an entity; or perspective on each System institution’s
Current FCA regulations, however, do (3) Has the power to exercise a board. Congress’ intent on establishing
not specify how far removed from the controlling influence over the the outside director role was to ensure
statutory prohibited relationships the management of policies of such entity. an independent voice was brought to
outside director candidate must be to The new term controlling interest is the boards of System institutions. As
adequately fulfill the intended consistent with the definition of such, outside directors are only
independent role of an outside director. controlled entity found in § 612.2130(c). permitted to serve on the board of
This proposed rule seeks to clarify the The proposed rule would add the new directors of one System institution or
eligibility requirements of an outside term entity to the definitions in affiliated organization at a time.4
director to achieve the independence § 611.220. The new term entity means a To maintain that independent voice,
intended by the statutory requirements. corporation, company, association, firm, current FCA regulations specify that a
joint venture, partnership (general or candidate for outside director should
III. Section-by-Section Analysis of limited), society, joint stock company, not be a stockholder of a System
Proposed Regulatory Changes trust (business or otherwise), fund, or institution. However, the regulations do
A. Definitions [New § 611.220(a)] other organization or institution. This is not specifically exclude a borrower from
consistent with the definition of entity serving as an outside director.
As a result of the proposed changes in Borrowers may not necessarily be
found in § 612.2130(e).
eligibility criteria for outside directors stockholders in a System institution. We
in § 611.220, discussed below, we are The proposed rule would add the new
believe that to be truly independent of
proposing to add a new definition term immediate family member to the
a System institution when being vetted
section in § 611.220 that would only definitions in § 611.220. The new term
for an outside director’s seat, all
apply to that section. The newly defined immediate family member is defined to
borrowers should be specifically
terms are meant to provide clarity on mean spouse, parent(s), sibling(s),
excluded from consideration. This
the meaning of the new outside director children, mother(s)- and father(s)-in-
addition would capture those
eligibility criteria. law, brother(s)- and sister(s)-in-law, and
individuals who have signed a
The proposed rule would add son(s)- and daughter(s)-in-law. This is
promissory note in a joint capacity (i.e.,
affiliated organizations to the consistent with the definition of
co-applicant, guarantor), but do not own
definitions in § 611.220. The new term immediate family member found in
System stock.
affiliated organization is defined to § 620.1(e).
To further ensure independence from
mean an entity that is legally distinct As a result of the proposed changes in System institutions, we propose
from any System institution, but is eligibility criteria for an outside director excluding individuals from serving as
organized and operated for the benefit in § 611.220, we are proposing to delete an outside director if they have an
of, and in support of, an institution and the definition of outside director in immediate family member who is a
conducts activities that advance the § 619.9235. The current definition in director, officer, employee, agent,
mission of an institution. § 619.9235 is not consistent with the stockholder, or a borrower of a System
The proposed rule would add changes proposed in § 611.220, and it is institution. This would provide
borrowers to the list of persons excluded unnecessary to duplicate the same additional clarity to our existing rule as
from consideration for an outside language as is proposed in that section.
sradovich on DSK3GMQ082PROD with PROPOSALS
director position under § 611.220. Deleting § 619.9235 will provide clarity 3 Due to the addition of a new Definitions
Accordingly, the new term borrower is in who may serve as an outside director paragraph in § 611.220, we will re-designate the
added to the definitions in § 611.220 and will avoid redundancy. current § 611.220(a) as § 611.220(b) for Eligibility,
and is defined to mean an individual, Number, and Term.
sole proprietorship, partnership, joint B. Eligibility Criteria of Outside 4 An agricultural credit association and its wholly
Directors [New § 611.220(b)] owned subsidiary associations are treated as a
single entity for examination and regulatory
1 Pub. L. 92–181, 85 Stat. 583. purposes. Therefore, there is no conflict with a
2 Sections 1.4, 2.1, 2.11, 3.2, 3.21(b)(1)(C) and
We propose modifying the existing director sitting on the board of an ACA and its
7.12(c)(3)(A) of the Act. outside director eligibility criteria in wholly owned subsidiary associations.
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removal of an outside director is sought DATES: We must receive comments on aspects of this NPRM. We will consider
before the expiration of the outside this proposed AD by October 9, 2018. all comments received by the closing
director’s term, the reason for removal ADDRESSES: You may send comments, date and may amend this NPRM
must be documented. An institution’s using the procedures found in 14 CFR because of those comments.
director removal procedures must allow 11.43 and 11.45, by any of the following We will post all comments we
for removal of an outside director by a methods: receive, without change, to http://
majority vote of all voting stockholders • Federal eRulemaking Portal: Go to www.regulations.gov, including any
voting, in person or by proxy, or by a http://www.regulations.gov. Follow the personal information you provide. We
two-thirds majority vote of the full instructions for submitting comments. will also post a report summarizing each
board of directors. The outside director • Fax: 202–493–2251. substantive verbal contact we receive
subject to the removal action is • Mail: U.S. Department of about this NPRM.
prohibited from voting in his or her own Transportation, Docket Operations, M–
removal action. 30, West Building Ground Floor, Room Discussion
W12–140, 1200 New Jersey Avenue SE, We have received a report indicating
PART 619—DEFINITIONS Washington, DC 20590. that cracked reinforcing straps
■ 3. The authority citation for part 619 • Hand Delivery: Deliver to Mail (doublers) were found on the ailerons of
continues to read as follows: address above between 9 a.m. and 5 Dassault Aviation airplanes equipped
p.m., Monday through Friday, except with blended winglets installed in
Authority: Secs. 1.4, 1.5, 1.7, 2.1, 2.2, 2.4, Federal holidays.
2.11, 2.12, 3.1, 3.2, 3.21, 4.9, 5.9, 5.17, 5.19, accordance with Supplemental Type
7.0, 7.1, 7.6, 7.8 and 7.12 of the Farm Credit
For service information identified in Certificate (STC) ST02188SE or STC
Act (12 U.S.C. 2012, 2013, 2015, 2072, 2073, this NPRM, contact Aviation Partners, ST02241SE. This condition is the result
2075, 2092, 2093, 2122, 2123, 2142, 2160, Inc., 7299 Perimeter Road South, of hydrogen embrittlement in the
2243, 2252, 2254, 2279a, 2279a–1, 2279b, Seattle, WA 98108–3812; phone: 206– reinforcing strap manufacturing process.
2279c–1, 2279f); sec. 514 of Pub. L. 102–552, 762–1171; email: mwilliams@ If not addressed, this condition could
106 Stat. 4102. winglets.com; internet: http:// lead to fatigue cracking of the ailerons
www.aviationpartners.com. You may and subsequent loss of control of the
§ 619.9235 [Removed]
view this service information at the airplane.
■ 4. Remove § 619.9235. FAA, Transport Standards Branch, 2200
Dated: August 21, 2018. South 216th St., Des Moines, WA. For Related Service Information Under 1
Dale L. Aultman, information on the availability of this CFR Part 51
Secretary, Farm Credit Administration Board. material at the FAA, call 206–231–3195. We reviewed Aviation Partners, Inc.,
[FR Doc. 2018–18312 Filed 8–23–18; 8:45 am] Examining the AD Docket Falcon Service Bulletin SBF9–17–001,
BILLING CODE 6705–01–P Revision B, dated December 20, 2017.
You may examine the AD docket on
This service information describes
the internet at http://
procedures for detailed inspections for
www.regulations.gov by searching for
DEPARTMENT OF TRANSPORTATION any signs of cracking of the external
and locating Docket No. FAA–2018–
upper and lower reinforcing straps on
0760; or in person at Docket Operations
Federal Aviation Administration the left-hand (LH) and right-hand (RH)
between 9 a.m. and 5 p.m., Monday
ailerons.
through Friday, except Federal holidays.
14 CFR Part 39 The AD docket contains this NPRM, the We also reviewed Aviation Partners,
regulatory evaluation, any comments Inc., Falcon Service Bulletin SBF9–17–
[Docket No. FAA–2018–0760; Product
received, and other information. The 002, Revision A, dated December 20,
Identifier 2018–NM–095–AD]
street address for Docket Operations 2017. This service information describes
RIN 2120–AA64 (phone: 800–647–5527) is in the procedures for replacing the external
ADDRESSES section. Comments will be upper and lower reinforcing straps on
Airworthiness Directives; Dassault available in the AD docket shortly after the LH and RH ailerons.
Aviation Airplanes receipt. This service information is reasonably
AGENCY: Federal Aviation FOR FURTHER INFORMATION CONTACT: available because the interested parties
Administration (FAA), DOT. Michael Bumbaugh, Aerospace have access to it through their normal
Engineer, Airframe Section, FAA, course of business or by the means
ACTION: Notice of proposed rulemaking
Seattle ACO Branch, 2200 South 216th identified in the ADDRESSES section.
(NPRM).
St., Des Moines, WA 98198; phone and FAA’s Determination
SUMMARY: We propose to adopt a new fax: 206–231–3522; email:
airworthiness directive (AD) for certain Michael.Bumbaugh@faa.gov. We are proposing this AD because we
Dassault Aviation Model MYSTERE– SUPPLEMENTARY INFORMATION: evaluated all the relevant information
FALCON 50, MYSTERE–FALCON 900, and determined the unsafe condition
and FALCON 900EX airplanes. This Comments Invited described previously is likely to exist or
proposed AD was prompted by reports We invite you to send any written develop in other products of the same
of cracked reinforcing straps (doublers) relevant data, views, or arguments about type design.
sradovich on DSK3GMQ082PROD with PROPOSALS
on the ailerons of airplanes equipped this proposal. Send your comments to Proposed AD Requirements
with blended winglets. This proposed an address listed under the ADDRESSES
AD would require repetitive detailed section. Include ‘‘Docket No. FAA– This proposed AD would require
inspections for cracking of the upper 2018–0760; Product Identifier 2018– accomplishing the actions specified in
and lower reinforcing straps on the NM–095–AD’’ at the beginning of your the service information described
ailerons, and replacement if necessary. comments. We specifically invite previously, except as discussed under
We are proposing this AD to address the comments on the overall regulatory, ‘‘Differences Between this Proposed AD
unsafe condition on these products. economic, environmental, and energy and the Service Information.’’
VerDate Sep<11>2014 22:05 Aug 23, 2018 Jkt 244001 PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 E:\FR\FM\24AUP1.SGM 24AUP1](https://thefederalregister.org/doc/83_FR_42972/page/4.svg)
Document Created: 2018-08-24 04:15:17
Document Modified: 2018-08-24 04:15:17
| 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 October 23, 2018. | |
| Contact | Darius Hale, Senior Policy Analyst, Office of Regulatory Policy, (703) 883-4165, TTY (703) 883-4056, [email protected], or | |
| FR Citation | 83 FR 42807 | |
| RIN Number | 3052-AC97 | |
| CFR Citation | 12
CFR
611 12 CFR 619 | |
| CFR Associated | Agriculture; Banks; Banking; Conflict of Interests; Crime; Investigations and Rural Areas |
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