[Federal Register Volume 86, Number 53 (Monday, March 22, 2021)]
[Rules and Regulations]
[Pages 15081-15083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05860]


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FARM CREDIT ADMINISTRATION

12 CFR Part 627

RIN 3052-AD46


Title IV Conservators and Receivers

AGENCY: Farm Credit Administration.

ACTION: Direct final rule.

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SUMMARY: The Farm Credit Administration (FCA, we, or our) issues this 
direct final rule to repeal certain regulations in part 627 that have 
been superseded by section 5412 of the Agricultural Improvement Act of 
2018 (2018 Farm Bill), which strengthens, clarifies, and updates the 
authorities of the Farm Credit System Insurance Corporation (FSCIC or 
Insurance Corporation) to act as a conservator or receiver of a Farm 
Credit System (FCS or System) institution.

DATES: If no significant adverse comment is received on or before April 
21, 2021, this regulation shall become effective no earlier than the 
expiration of 30 days after publication in the Federal Register during 
which either or both Houses of Congress are in session. Pursuant to 12 
U.S.C. 2252(c)(1), FCA will publish notification of the effective date 
in the Federal Register.

ADDRESSES: For accuracy and efficiency reasons, please submit comments 
by email or through FCA's website. We do not accept comments submitted 
by facsimiles (fax), as faxes are difficult for us to process and 
achieve compliance with section 508 of the Rehabilitation Act of 1973. 
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. Click inside the ``I want 
to. . .'' field near the top of the page; select ``comment on a pending 
regulation'' from the dropdown menu; and click ``Go.'' This takes you 
to an electronic public comment form.
     Mail: Kevin J. Kramp, Director, Office of Regulatory 
Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 
22102-5090.
    You may review copies of comments we receive on our website at 
http://www.fca.gov. Once you are on the website, click inside the ``I 
want to . . .'' field near the top of the page; select ``find comments 
on a pending regulation'' from the dropdown menu; and click ``Go.'' 
This will take you to the Comment Letters page where you can select the 
regulation for which you would like to read the 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. You may also review comments at our office in McLean, 
Virginia. Please call us at (703) 883-4056 or email us at [email protected] to make an appointment.

FOR FURTHER INFORMATION CONTACT: 
    Technical information: Ryan Leist, [email protected], Senior 
Accountant, or Jeremy R. Edelstein, [email protected], Associate 
Director, Finance and Capital Markets Team, Office of Regulatory 
Policy, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-
4414, TTY (703) 883-4056 or [email protected]; or
    Legal information: Richard Katz, [email protected], Senior Counsel, 
Office

[[Page 15082]]

of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, 
(703) 883-4020, TTY (703) 883-4056.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Objective
II. Background
III. Repeal of Regulations Superseded by Statutory Amendments
IV. Direct Final Rule
V. Regulatory Flexibility Act Analysis and Major Rule Conclusion

I. Objective

    The objective of this direct final rule is to repeal regulatory 
provisions in part 627 that have been superseded by section 5412 of the 
2018 Farm Bill.

II. Background

    On December 20, 2018, President Trump signed the 2018 Farm Bill 
into law.\1\ Section 5142 of the 2018 Farm Bill added a new section 
5.61C to the Farm Credit Act of 1971, as amended (Act).\2\ This new 
statutory provision strengthens, clarifies, and updates the powers and 
duties of FCSIC after FCA has appointed it as the conservator or 
receiver of a FCS institution.\3\ Additionally, section 5.61C of the 
Act enhances FCSIC's authority to handle claims by various parties 
against a System institution in conservatorship or receivership. 
FCSIC's new statutory conservatorship and receivership authorities are 
comparable to those of the Federal Deposit Insurance Corporation, 
National Credit Union Administration, and Federal Housing Finance 
Agency.\4\
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    \1\ Public Law 115-334, 132 Stat. 4490, (Dec. 20, 2018).
    \2\ Section 5.61C of the Act is codified at 12 U.S.C. 2277a-10c. 
The Act is available at www.fca.gov under ``Laws and regulations,'' 
and ``Statutes.''
    \3\ Section 4.12(b) of the Act requires FCA to appoint FCSIC as 
the conservator or receiver of an FCS bank, association, service 
corporation, or the Federal Farm Credit Banks Funding Corporation. 
Section 8.41(c)(1)(A) allows, but does not require, FCA to appoint 
FCSIC as the conservator or receiver of the Federal Agricultural 
Mortgage Corporation (Farmer Mac).
    \4\ See Conf. Report No. 115-1072, 115th Cong., 2nd Sess., (Dec. 
10, 2018) p. 648.
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    FCA is revising its regulations in part 627 so they are consistent 
with section 5412 of the 2018 Farm Bill. FCA is issuing this direct 
final rule that repeals several regulations in part 627 that are now 
inconsistent with provisions in section 5.61C of the Act pertaining to 
FCSIC's authority to administer conservatorships and receiverships of 
FCS institutions. FCA may address the following issues in subsequent 
rulemakings: (1) Voluntary liquidation of System institutions under 
section 4.12(a) of the Act; (2) FCA appointment of conservators and 
receivers pursuant to section 4.12(b) of the Act; and (3) chartering 
and dissolving bridge banks in accordance with section 5.61C(h) of the 
Act.

III. Repeal of Regulations Superseded by Statutory Amendments

    FCA is rescinding, in their entirety, nine (9) regulations in 
subpart B and one regulation in subpart C of part 627 pertaining to the 
receivership or conservatorship of System institutions. New section 
5.61C of the Act has strengthened, clarified, and updated FCSIC's 
conservatorship and receivership authorities, thereby superseding and 
rendering these ten (10) regulations obsolete. More specifically, this 
direct rule rescinds:
     12 CFR 627.2725 Powers and duties of the receiver--sets 
forth the powers and duties of the receiver of a System institution.
     12 CFR 627.2726 Treatment by the conservator or receiver 
of financial assets transferred in connection with a securitization or 
participation--defines beneficial interests, financial assets, 
participation, securitization, and special purpose entity. It describes 
the treatment of financial assets transferred in connection with a 
securitization or participation in a conservator or receiver.
     12 CFR 627.2730 Preservation of equity--provides that no 
capital stock, participation certificates, equity reserves, or other 
allocated equities of an institution in receivership will be issued, 
allocated, retired, sold, distributed, transferred, assigned, or 
applied against any indebtedness of the owners of such equities. This 
regulation confirms that borrower stock must be retired in accordance 
with section 4.9A of the Act.
     12 CFR 627.2740 Creditors' claims--describes the 
requirements to provide notice to creditors, the allowance and 
disallowance of claims, and the procedures for handling certain claims.
     12 CFR 627.2745 Priority of claims--associations--
describes the priority of claims for the distribution of the assets of 
an association in liquidation.
     12 CFR 627.2750 Priority of claims-banks--describes the 
priority of claims for the distribution of the assets of a bank in 
liquidation.
     12 CFR 627.2752 Priority of claims--other Farm Credit 
institutions--describes the priority of claims for the distribution of 
the assets of a System institution other than an association or bank.
     12 CFR 627.2755 Payment of claims--describes the payment 
of claims and if there are insufficient funds to pay any class of 
claims in full, distribution for that class of claims will be handled 
on a pro rata basis.
     12 CFR 627.2760 Inventory, audit, and reports--describes 
inventory, audit, and reporting requirements for the receiver upon 
possession, annually, and upon final liquidation.
     12 CFR 627.2780 Powers and duties of conservators--
describes the powers and duties of the conservator to conduct its 
operations for the benefit of the creditors and stockholders of the 
institution.
    As noted earlier, section 5412 of the 2018 Farm Bill, which added 
section 5.61C to the Act, enhanced, clarified, and updated FCSIC's 
powers to conduct conservatorships and receiverships of System 
institutions. More specifically, various provisions in section 
5.61C(b)(2) of the Act include authorization for FCSIC to: (1) Operate 
any System institution in conservatorship or receivership, (2) function 
as the institution's board of directors, officers, members, and 
stockholders, (3) use proceeds collected from the performance of 
contracts and sale of assets to pay valid claims, and (4) receive, 
determine, and settle claims, and set the priority of claims in 
accordance with the statute. Furthermore, sections 5.61C(b)(1), (b)(4), 
and (b)(10)(C) of the Act expressly authorize FCSIC to prescribe 
regulations regarding the conduct of conservatorships and 
receiverships, and the allowance, disallowance, and resolution of 
claims in receivership.
    Section 5.61C(b)(15)(B) of the Act states that FCSIC shall make an 
annual accounting or report about each conservatorship or receivership 
available to the FCA Board. Providing an annual accounting or report to 
FCA is currently required by Sec.  627.2760, which is among the 
regulations that we are rescinding. Pursuant to the Act, FCA is able to 
obtain necessary annual accounting or reports from FCSIC.
    This direct final rule is not rescinding subpart A, Sec. Sec.  
627.2720, 627.2735, or 627.2765 in subpart B, or Sec. Sec.  627.2770, 
627.2775, 627.2785, or 627.2790 in subpart C of part 627 because these 
regulations implement section 4.12(b) of the Act which authorizes FCA 
to appoint FCSIC as the receiver or conservator of System institutions. 
Similarly, we are not repealing subpart D of part 627 which governs our 
authority to supervise and regulate the voluntary liquidation of a 
System institution without a receiver. FCA may revise or update these 
regulations in a

[[Page 15083]]

subsequent rulemaking. We may also engage in a rulemaking that 
implements section 5.61C(h) of the Act, which governs the chartering, 
termination, and dissolution of System bridge banks that enable FCSIC 
to handle the resolution of one or more distressed FCS institutions.

IV. Direct Final Rule

    For the reasons discussed above, we are rescinding the above-
referenced sections of part 627 subparts B (Receivers and 
Receiverships) and C (Conservators and Conservatorships) by direct 
final rulemaking. The Administrative Conference of the United States 
recommends direct final rulemakings for Federal agencies to enact 
noncontroversial regulations on an expedited basis, without the usual 
notice and comment period.\5\ This process enables us to reduce the 
time and resources we need to develop, review, and publish a final rule 
while still affording the public an adequate opportunity to comment or 
object to the rule.
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    \5\ Recommendation 95-4, referencing the Administrative 
Procedure Act ``good cause'' exemption at 5 U.S.C. 553(b)(B), 
adopted June 15, 1995.
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    In a direct final rulemaking, we notify the public that the rule 
will become effective on a specified date unless we receive a 
significant adverse comment during the comment period. A significant 
adverse comment is one where the commenter explains why the rule would 
be inappropriate (including challenges to its underlying premise or 
approach), ineffective, or unacceptable without a change. In general, a 
significant adverse comment would raise an issue serious enough to 
warrant a substantive response from the FCA in a notice-and-comment 
proceeding.
    We believe that a direct final rulemaking is the appropriate method 
for rescinding above-referenced sections in subparts B and C of part 
627 that are superseded by the 2018 Farm Bill. We do not anticipate 
there will be significant adverse comments because this direct final 
rule implements recent statutory amendments governing FCSIC's numerous 
powers and duties as the conservator or receiver of System 
institutions. If, however, we receive a significant adverse comment 
during the comment period, we will publish in the Federal Register a 
notice of withdrawal of the relevant provisions of this rule that will 
also indicate how the agency plans to proceed. If we receive no 
significant adverse comments, we will publish notice of the effective 
date of the rule following the required congressional waiting period 
under section 5.17(c)(1) of the Act.

V. Regulatory Flexibility Act Analysis and Major Rule Conclusion

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), FCA hereby certifies that the direct final rule 
would not have a significant economic 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, Farm Credit System institutions are not ``small entities'' 
as defined in the Regulatory Flexibility Act.
    Under the provisions of the Congressional Review Act (5 U.S.C. 801 
et seq.), the Office of Management and Budget's Office of Information 
and Regulatory Affairs has determined that this direct final rule is 
not a ``major rule,'' as the term is defined at 5 U.S.C. 804(2).

List of Subjects in 12 CFR Part 627

    Agriculture, Banks, Banking, Claims, Rural areas.

    For the reasons stated in the preamble, part 627 of chapter VI, 
title 12 of the Code of Federal Regulations are amended as follows:

PART 627-- TITLE IV CONSERVATORS, RECEIVERS, AND VOLUNTARY 
LIQUIDATIONS

0
1. The authority citation for part 627 continues to read as follows:

    Authority:  Secs. 4.2, 5.9, 5.10, 5.17, 5.51, 5.58, 5.61 of the 
Farm Credit Act (12 U.S.C. 2183, 2243, 2244, 2252, 2277a, 2277a-7, 
2277a-10).


Sec. Sec.  627.2725, 627.2726, 627.2730, 627.2740, 627.2745, 627.2750, 
627.2752, 627.2755, 627.2760, and 627.2780   [Removed and Reserved]

0
2. Sections 627.2725, 627.2726, 627.2730, 627.2740, 627.2745, 627.2750, 
627.2752, 627.2755, 627.2760, and 627.2780 are removed and reserved.

    Dated: March 17, 2021.
Dale Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2021-05860 Filed 3-19-21; 8:45 am]
BILLING CODE 6705-01-P