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15600 Federal Register / Vol. 72, No.

62 / Monday, April 2, 2007 / Rules and Regulations

III. Congressional Notification Advisor, Office of General Counsel, mandatory, i.e., that the final rule
As required by 5 U.S.C. 801, DOE will 202–408–2553, jenningst@fhfb.gov. You should require the Finance Board to
submit to Congress a report regarding can send mail to the Federal Housing seek additional names only from the
the issuance of today’s final rule. The Finance Board, 1625 Eye Street, NW., Banks and should preclude it from
report will state that it has been Washington, DC 20006. considering prospective directors from
determined that the rule is not a ‘‘major SUPPLEMENTARY INFORMATION: other sources. For the reasons noted
rule’’ as defined by 5 U.S.C. 801(2). below, the Finance Board has
I. Background and Legal Authority determined to retain the language of the
IV. Approval of the Office of the Section 7(a) of the Federal Home Loan interim rule.
Secretary Bank Act (Bank Act) (12 U.S.C. 1427(a)) In adopting section 7 of the Bank Act
The Secretary of Energy has approved authorizes the Finance Board to appoint (12 U.S.C. 1427), Congress vested the
the publication of this final rule. directors to the board of each Bank. power to appoint Bank directors solely
Section 7(f)(2) of the Bank Act (12 in the Finance Board. To revise the rule
List of Subjects in 10 CFR part 300 U.S.C. 1427(f)(2)) authorizes the Finance in the manner suggested would
Administrative practice and Board to fill any vacancy in an preclude the Finance Board from ever
procedure, Energy, Gases, Incorporation appointive directorship for the considering other sources for
by reference, Reporting and remainder of its unexpired term. The prospective appointive directors. Such a
recordkeeping requirements. Finance Board has determined that limitation likely would impair the
adopting procedures for the selection of Finance Board’s ability to carry out its
Issued in Washington, DC on March 27, appointive directors will enhance its statutory responsibility. As a practical
2007.
ability to identify and appoint well- matter, the Finance Board fully expects
Katharine A. Fredriksen, qualified individuals to serve as Bank that the Banks will make every effort to
Acting Assistant Secretary for Policy and directors. submit well-qualified nominees for the
International Affairs. Accordingly, on January 24, 2007 (72 appointive directorships, both in their
■ Accordingly, the interim final rule FR 3028) the Finance Board issued an initial submissions and in response to
amending part 300 of title 10, chapter II, interim final rule that amended 12 CFR any subsequent request from the
subchapter B of the Code of Federal 915.10 to adopt procedures under which Finance Board. In the event that a Bank
Regulations, that was published at 72 the board of directors of each Bank has does not do so, however, the Finance
FR 4411 on January 31, 2007, is adopted to submit to the Finance Board a list of Board believes that it must reserve the
as a final rule without change. individuals to be considered for right to consider nominees from other
[FR Doc. E7–6038 Filed 3–30–07; 8:45 am] appointment to the board of the Bank. sources in order to carry out its own
BILLING CODE 6450–01–P The list is to include information responsibilities.
regarding each individual’s eligibility A second issue raised by the comment
and qualifications to serve as an letters relates to the number of
FEDERAL HOUSING FINANCE BOARD appointive director, and the Finance nominees a Bank must submit for the
Board will use that information in number of directorships to be filled.
12 CFR Part 915 making its appointments to the boards. Section 915.10(a)(3) of the interim rule
The interim rule set an initial deadline requires each Bank to submit twice as
[No. 2007–04] of March 31, 2007, by which the Banks many nominees as there are appointive
RIN 3069–AB–33 are to provide a list of nominees to the directorships to be filled at the Bank.
Finance Board for the directorships that Three commenters suggested that the
Federal Home Loan Bank Appointive are currently vacant. rule be changed to require the
Directors At the time that it published the submission of only 1 nominee per
interim final rule, the Finance Board directorship to be filled. These
AGENCY: Federal Housing Finance commenters believed that the Banks are
requested comments from the public
Board. more likely to find well qualified
and established a 30-day comment
ACTION: Final rule. period, which expired on February 23, persons who are willing to serve if those
2007. persons have some reasonable
SUMMARY: The Federal Housing Finance
expectation of being chosen if they agree
Board (Finance Board) is issuing a final II. Analysis of the Public Comments to be nominated. These commenters
regulation that is substantially the same The Finance Board received 8 noted that the interim rule created a
as the interim final rule that established comment letters in response to the process in which half of all nominees
a process for the appointment of interim rule. Three letters were would be rejected, and contended that
directors to the Federal Home Loan submitted by Banks, 1 by a member of such a process would have a chilling
Banks (Bank or Banks), which was a Bank, 3 from trade associations, and effect on prospective nominees’
adopted on January 24, 2007. The final 1 from a community organization. All of willingness to go through the
rule makes two changes to the interim the comments were supportive of the nominations process.
rule, regarding the number of nominees rule, but also suggested certain revisions Another commenter urged the
to be submitted and the date by which to the rule. Finance Board to require at least twice
nominations must be submitted. Both One issue commenters raised relates as many nominees as there are
changes are being made in response to to section 915.10(b), which gives the directorships to be filled, particularly
comments received on the interim final Finance Board the discretion to request with respect to the community interest
rule. additional names from any Bank if the directorships. That commenter reasoned
DATES: Effective Date: The final rule is Finance Board does not fill all vacant that doing so would help to maintain
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effective April 2, 2007. appointive directorships from the names the independence of the community
FOR FURTHER INFORMATION CONTACT: Neil the Bank initially submits. Certain of the interest appointive directors by
R. Crowley, Acting General Counsel, comment letters objected to the lessening the degree of control that the
202–408–2990, crowleyn@fhfb.gov; or permissive nature of the provision, Banks would have over their selection.
Thomas P. Jennings, Senior Attorney contending that the provision should be Another commenter proposed that the

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Federal Register / Vol. 72, No. 62 / Monday, April 2, 2007 / Rules and Regulations 15601

Banks be allowed to designate the The Privacy Act of 1974 (Privacy Act) exist at each Bank than will exist for any
specific directorship for which each (5 U.S.C. 552a) governs the collection, future annual submissions, which have
nominee is being submitted, and that maintenance, use, and dissemination of an October 1st deadline. The Finance
the designation be binding on the personal information by federal Board has concluded that if any Bank
Finance Board. This commenter agencies. The Finance Board has issued believes that it will be better able to
reasoned that doing so would allow a a rule implementing the Privacy Act identify and submit well-qualified
Bank to nominate 2 persons with that governs how individuals can gain nominees if it is given additional time
specific skills for each directorship, access to information about themselves beyond the March 31st deadline, then it
which would allow the Bank to obtain that the Finance Board may possess. 12 should be able to do so. Accordingly,
the optimum skills it believes it needs CFR part 913. The Finance Board also the final rule allows a Bank to ask the
on its board of directors as a whole. has published ‘‘systems of records’’ Finance Board to extend the deadline,
The Finance Board has considered explaining the types of information the and authorizes the Director of the Office
each of the suggestions made with agency may possess and the uses of that of Supervision to approve such requests.
respect to the number of nominees to be information that are permitted under the The Finance Board expects that any
submitted by the Banks. As noted Privacy Act. Bank making such a request will
below, the Finance Board believes that One of the Finance Board’s Privacy indicate how much additional time it
there is merit to the contention that the Act systems of records covers the Form needs to identify prospective directors,
interim rule might have a chilling effect prospective appointive directors must will act expeditiously, and will
on the willingness of some qualified submit to the Finance Board. Under that complete the process by the extended
persons to agree to serve on the board system of records, the Form is used only deadline.
of a Bank. To address that concern, the by appropriate Finance Board staff to Number of nominees. In considering
Finance Board has decided to modify determine whether the nominees and the comments about the number of
the rule to require the Banks to submit current appointive directors meet the nominees a Bank must submit, the
up to 2 nominees for each directorship applicable eligibility requirements and Finance Board is mindful that the final
to be filled. As a result, a Bank with 4 possess the requisite skills and rule should not have the effect of
directorships to be filled would have to background to perform the job discouraging well-qualified persons
submit at least 4 nominees, but could effectively. Within this system of from seeking to be appointive directors
submit up to 8 nominees if it so chose. records, the Finance Board retains only of a Bank. As discussed in section II,
the Forms of individuals who are some commenters have asserted that the
Another area for which certain
appointed as a Bank director and only interim rule could have a chilling effect
commenters sought changes to the
for the duration of their respective term on the willingness of potential well
interim rule relates to the March 31,
of service as an appointive director. qualified nominees to go through the
2007 deadline for the submission of The Forms themselves not subject to process, and could place the Banks at a
nominees for the currently vacant production to the public under FOIA disadvantage when competing with
directorships. One commenter suggested because they are covered by the Privacy other financial institutions for directors.
that the deadline be extended to allow Act. However, the Finance Board has Generally speaking, candidates for
the Banks a range of time beyond March made limited biographical information public company directorships have a
31, 2007 in which to submit nominees about the newly appointed directors significant likelihood of being elected
to the Finance Board. The commenter publicly available, typically through a after they have been nominated by the
reasoned that some Banks may need press release issued after the company, whereas persons nominated
more time to identify the appropriate appointments have been made. See, e.g., by the Banks would have no more than
number of nominees, particularly if they Press Release FHFB 04–05 (Jan. 23, a 50 percent chance of being appointed
have to submit twice as many names as 2004) (available on the Finance Board’s by the Finance Board under the interim
there are directorships to be filled. As Web site: http://www.fhfb.gov/ rule. This disparity could discourage
discussed below, the Finance Board GetFile.aspx?FileID=3127). some well-qualified candidates from
believes that the process of vetting seeking appointment to the board of a
prospective directors may be improved III. Summary of the Final Rule
Bank, especially if they have
by allowing a Bank the opportunity to As noted above, the final rule differs opportunities for other corporate
request additional time to complete the in 2 respects from the interim rule. First, directorships. In light of these
process and the final rule would allow section 915.10(e) is being modified to comments, the Finance Board has
a Bank to do so. allow any Bank to request an extension decided that it could reduce any
An additional concern raised by the of time beyond March 31, 2007 in which potential chilling effect by revising the
comment letters related to the to submit its initial list of nominees for final rule to allow a Bank to submit up
confidentiality of the information the directorships that currently are to 2 nominees for each directorship to
prospective directors must provide on vacant. Second, section 915.10(a)(3) is be filled.
the Federal Home Loan Bank being modified to allow any Bank to In reaching this conclusion, the
Appointive Director Application Form submit up to twice as many nominees Finance Board also considered whether
(Form), which was published in the as there are appointive directorships to the revision could create any
Federal Register along with the interim be filled. unintended consequences, such as
final rule. These commenters expressed Extension of time. In considering the lessening the independence of the
concern that the Finance Board would date by which the Banks must submit appointive directors. One commenter
have to produce the Form, or the the lists of nominees for the existing suggested that persons who are
personal information it contains, in vacancies, the Finance Board is mindful nominated by the Bank are less likely to
response to a request under the Freedom that the interim rule created an entirely act independently of the persons who
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of Information Act (FOIA) (5 U.S.C. new process for the Banks and provided nominated them. Although there may be
552). For the reasons described below, only 2 months and 1 week for the Banks some such risk in a process where the
the Finance Board will not release such to submit the initial list of nominees. board of the Bank plays a role in
information in response to a FOIA The Finance Board also is mindful that selecting new directors, the Finance
request. a larger number of vacancies currently Board believes that any such risk is

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15602 Federal Register / Vol. 72, No. 62 / Monday, April 2, 2007 / Rules and Regulations

mitigated by the fact that the Finance Banks with well qualified individuals as (3) The number of nominees on any
Board retains the ultimate power to soon as it is practicable to do so. The list submitted by a Bank’s board of
appoint the directors to the boards of final rule achieves this goal while directors pursuant to paragraphs (a)(1)
the Banks. The Finance Board intends to providing additional flexibility to the or (2) of this section shall be at least
evaluate carefully all nominees and will Banks in fulfilling their obligation to equal to the number of appointive
appoint an individual only if it believes nominate well-qualified individuals for directorships to be filled but shall not
that the person will serve the best Finance Board consideration. exceed 2 times the number of such
interests of the Bank. Moreover, the directorships.
practice at other corporations, which V. Paperwork Reduction Act
(b) Finance Board selection. As
typically use the board or a nominating The final rule will have no provided by the Act, the Finance Board
committee to vet prospective directors, substantive effect on any collection of has the sole responsibility for
suggests that the risks are not as great as information covered by the Paperwork appointing individuals to the boards of
suggested by the comments. As is the Reduction Act of 1995. See 44 U.S.C. directors of the Banks. In exercising that
case for corporate directors generally, 3501 et seq. Therefore, the Finance responsibility, the Finance Board shall
the directors of a Bank owe fiduciary Board did not submit the proposed select from among the nominees on the
duties to the Bank and the Finance regulation to the Office of Management list submitted by the Bank pursuant to
Board expects directors will act and Budget for review. paragraph (a) of this section, provided,
consistently with those duties when however, that if the Finance Board does
submitting nominees. VI. Regulatory Flexibility Act
not fill all of the appointive
The Finance Board also recognizes The Finance Board adopted this directorships from the list initially
that allowing a Bank to submit only 1 procedural amendment in the form of an submitted by the Bank, it may require
nomination for each directorship has interim final rule and not as a proposed the Bank to submit a supplemental list
the potential to delay the appointment rule. Therefore, the provisions of the of nominees for its consideration.
process if the Finance Board declines to Regulatory Flexibility Act do not apply (c) Prospective applicants. Any
appoint 1 or more of the persons to this final rule. See 5 U.S.C. 601(2) individual who seeks to be appointed to
nominated by the Bank. The Finance and 603(a). the board of directors of a Bank may
Board believes that any such delay is submit to the Bank an executed
unlikely to cause a directorship to List of Subjects in 12 CFR Part 915
appointive director application form
become vacant, principally because the Banks, Banking, Conflict of interests, that demonstrates that the individual
Finance Board intends to act Elections, Ethical conduct, Federal both is eligible and has business,
expeditiously in considering the home loan banks, Financial disclosure, financial, housing, community and
nominations. Moreover, the October 1st Reporting and recordkeeping economic development, and/or
deadline for the annual submission of requirements. leadership experience. Any other
nominations is far enough in advance of
■ For the reasons stated in the preamble, interested party may recommend to the
the start of a new term of office that a
the Finance Board amends 12 CFR part Bank that it consider a particular
Bank should have sufficient time to
915 as follows: individual as a nominee for an
submit additional nominees if they are
appointive directorship, but the Bank
needed. With respect to the submissions PART 915—BANK DIRECTOR may not do so until the individual has
required for the currently vacant ELIGIBILITY, APPOINTMENT, AND
directorships, the Finance Board provided the Bank with an executed
ELECTIONS appointive director application form.
believes that allowing additional time to
submit the nominations should allow a ■ 1. The authority citation for part 915 The board of directors of the Bank may
Bank to conduct a search that results in continues to read as follows: consider any individual for inclusion on
well-qualified persons being nominated the list it submits to the Finance Board
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), provided it has determined that the
and notes that the final rule allows a 1426, 1427, and 1432.
Bank to submit more than 1 nominee individual is eligible and well-qualified
per directorship if it wishes to do so. ■ 2. Revise § 915.10 to read as follows: for an appointive directorship at the
Apart from the revisions noted above, Bank.
§ 915.10 Selection of appointive directors. (d) Term of office. The term of office
the final rule is identical to the interim
final rule. Thus, the final rule: (a) Bank responsibilities. (1) On or of each appointive directorship is 3
establishes a process for the Banks to before October 1st of each year, the years, except as adjusted pursuant to
submit a list of well-qualified nominees board of directors of each Bank shall section 7(d) of the Act (12 U.S.C.
for the Finance Board to consider in submit to the Finance Board a list of 1427(d)) to achieve a staggered board,
filling appointive directorships; allows eligible nominees who are well- and shall commence on January 1st. In
the Banks discretion in deciding qualified to fill the appointive the case of a discretionary appointive
whether to submit 1 or 2 names for each directorships that will expire on directorship that is terminated pursuant
directorship; requires each Bank to December 31st of that year, along with to § 915.3(b)(5), the term of office of the
submit a signed Finance Board Form for the original Finance Board-prescribed directorship shall end after the close of
each nominee; and authorizes the appointive director application form business on December 31st of that year.
Finance Board to require a Bank to executed by each individual on the list. (e) Appointive directorship vacancies
submit additional nominees if the initial (2) If an appointive directorship existing on January 1, 2007. For
nominees are not appointed. becomes vacant prior to the expiration appointive directorships that are vacant
of its term, the board of directors of the on January 1, 2007, the board of
IV. Effective Date Bank shall submit to the Finance Board directors of each Bank shall submit the
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The Finance Board for good cause a list of eligible nominees who are well- information required by paragraph (a) of
finds that the final rule should become qualified to fill that directorship, along this section on or before March 31,
effective on April 2, 2007. See 5 U.S.C. with each individual’s executed 2007, or such other date approved by
553(d)(3). It is in the public interest to appointive director application form, the Director of the Office of Supervision
fill appointive directorships at the promptly after the vacancy arises. upon the request of that Bank.

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Federal Register / Vol. 72, No. 62 / Monday, April 2, 2007 / Rules and Regulations 15603

Dated: March 27, 2007. • DOT Docket Web site: Go to commenters state that including the
By the Board of Directors of the Federal http://dms.dot.gov and follow the range of dates will help users to
Housing Finance Board. instructions for sending your comments determine if they need to investigate
Ronald A. Rosenfeld, electronically. further and will eliminate unnecessary
Chairman. • Government-wide rulemaking Web time and money spent to determine if a
[FR Doc. E7–5970 Filed 3–30–07; 8:45 am] site: Go to http://www.regulations.gov suspect cylinder assembly is installed
BILLING CODE 6725–01–P
and follow the instructions for sending on their engine.
your comments electronically. We agree. We changed the
• Mail: Docket Management Facility; applicability to provide a date range to
U.S. Department of Transportation, 400 help narrow the applicability. Also, we
DEPARTMENT OF TRANSPORTATION Seventh Street, SW., Nassif Building, clarified the SN range to narrow the
Federal Aviation Administration Room PL–401, Washington, DC 20590– applicability even further.
0001.
• Fax: (202) 493–2251. Minor Editorial Changes
14 CFR Part 39
• Hand Delivery: Room PL–401 on We included some minor editorial
[Docket No. FAA–2006–25948; Directorate the plaza level of the Nassif Building, changes in this AD to clarify some
Identifier 2006–NE–32–AD; Amendment 39– 400 Seventh Street, SW., Washington, nomenclature.
15005; AD 2007–04–19R1] DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays. Conclusion
RIN 2120–AA64
You may examine the comments on We have carefully reviewed the
Airworthiness Directives; Superior Air this AD in the AD docket on the Internet available data, including the comments
Parts, Inc. (SAP), Cylinder Assemblies at http://dms.dot.gov. received, and determined that air safety
Part Numbers Series: SA47000L, FOR FURTHER INFORMATION CONTACT: and the public interest require adopting
SA47000S, SA52000, SA55000, Jurgen Priester, Aerospace Engineer, the AD with the changes described
SL32000W, SL32000WH, SL32006W, Special Certification Office, FAA, previously. We have determined that
SL36000TW, SL36000W, and Rotorcraft Directorate, Southwest these changes will neither increase the
SL36006W Regional Headquarters, 2601 Meacham economic burden on any operator nor
Blvd., Fort Worth, Texas 76137; e-mail: increase the scope of the AD.
AGENCY: Federal Aviation
Jurgen.E. Priester@faa.gov; telephone
Administration (FAA), Department of FAA’s Determination and Requirements
(817) 222–5159; fax (817) 222–5785.
Transportation (DOT). of This AD
SUPPLEMENTARY INFORMATION: On
ACTION: Final rule; request for The unsafe condition described
February 13, 2007, the FAA issued AD
comments. previously is likely to exist or develop
2007–04–19, Amendment 39–14951 (72
SUMMARY: The FAA is revising an FR 8089, February 23, 2007). That AD on other TCM 470, 520, and 550; LE
existing airworthiness directive (AD) for requires removing from service certain 320, 360, and 540; AL 540, and SAP 360
certain SAP cylinder assemblies installed SAP cylinder assemblies, series reciprocating engines of the same
installed in Teledyne Continental listed in that AD by P/N and serial type design with certain SAP cylinder
Motors (TCM) 470, 520, and 550 series number (SN), no later than 150 hours assemblies that have a part number
reciprocating engines, Lycoming total time-in-service (TIS) to preclude listed in this AD. For that reason, we are
Engines (LE) 320, 360, and 540 series cylinder head fatigue failure and issuing this AD to prevent cylinder
reciprocating engines, Avco Lycoming separation at the head-to-barrel threaded separation which can lead to engine
(AL) 540 series reciprocating engines, interface. That AD was the result of nine failure, a possible engine compartment
and Superior Air Parts, Inc. (SAP) 360 separated SAP cylinder assemblies in fire, and damage to the airplane. This
series reciprocating engines. That AD TCM reciprocating engines and one in a AD requires removing from service
currently requires removing from LE reciprocating engine. That condition, installed SAP cylinder assemblies listed
service certain SAP part numbered if not corrected, could result in cylinder in this AD, no later than 150 hours total
(P/N) cylinder assemblies installed in separation that can lead to engine TIS to preclude cylinder head fatigue
TCM, LE, and AL reciprocating engines. failure, a possible engine compartment failure and separation at the head-to-
That AD also requires removing from fire, and damage to the airplane. barrel threaded interface.
service certain cylinder assemblies Actions Since We Issued AD 2007–04– FAA’s Determination for No Prior
installed as original equipment in SAP 19 Public Notice
reciprocating engines, or in certain Since we do not anticipate adverse
overhauled or repaired SAP Since we issued AD 2007–04–19, we
received comments that cause us to public interest in this action, a situation
reciprocating engines. exists that allows for immediate
This AD continues to require those better define and reduce the
applicability of this AD. adoption of this AD, and we have found
same actions. This AD results from
that notice and opportunity for further
comments from the Public on the Comments public comment before issuing this AD
existing AD. We are issuing this AD to
We provided the public the are unnecessary.
prevent cylinder separation that can
lead to engine failure, a possible engine opportunity to participate in the Comments Invited
compartment fire, and damage to the development of this AD. We have
considered the comments received. This AD is a final rule that involves
airplane. requirements affecting flight safety and
DATES: Effective May 7, 2007. Request To Provide a Range of Dates was not preceded by notice and an
That SAP Manufactured the Suspect
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We must receive any comments on opportunity for public comment;


this AD by June 1, 2007. Cylinders however, we invite you to send us any
ADDRESSES: Use one of the following A number of commenters ask us to written relevant data, views, or
addresses to comment on this proposed include the date range when SAP arguments regarding this AD. Send your
AD. manufactured the cylinders. The comments to an address listed under

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