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Federal Register / Vol. 86, No. 174 / Monday, September 13, 2021 / Rules and Regulations mistakenly relied upon the definition of institution alone, which does include service corporations, when reading this provision. To clarify this, we have revised the way this rule text is presented.
FCB of Texas commented on proposed language regarding notice to FCA of the joint employees, asking that it be clarified regarding the terms extraordinary situations and reasonable prior notice. FCB of Texas suggested removing the latter term, replacing it with a requirement for FCA
approval. CoBank also commented that reasonable prior notice was vague, asking for clarification or, in the alternative, removal of all restrictions on joint employment. FCB of Texas also observed this section of the proposed rule used the word officer when the word had been proposed for replacement with employee. The commenter suggested keeping the term and related definition of officer.
The final rule implements the suggestions of commenters regarding FCA involvement in joint employee arrangements. The rule explains that in extraordinary circumstances, FCA may approve a non-officer Farm Credit bank employee serving as an officer at a supervised institution when both institutions have board approval of the joint service and the division of the shared employees duties and compensation are identified in the board approval documents. To address the concern over the term reasonable prior notice, the final rule changes the requirement to send the approval documents to FCA at least 10 business days in advance of the joint employment beginning. Comments regarding use of the term officer have been addressed by the final rule retaining the definition of officer.
To incorporate changes made at the suggestion of commenters, the layout of paragraph b4 was revised. Now the opening sentence of the provision contains the blanket prohibition on serving at a supervised or supervising institution. Thereafter, subordinate paragraphs are used to identify the two exceptions:
Serving as a non-officer employee at a Farm Credit bank and association when expenses are appropriately divided; or Serving as an officer at a supervised association in extraordinary circumstances.
Paragraph b4ii also contains the language on obtaining FCA approval for the joint employment.

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6. Standards of Conduct Official.
612.2170
We proposed enhancing the role of the Standards of Conduct Official or SOCO by identifying the SOCO as the point of contact for advice, guidance, and reporting on matters related to conflicts of interests. We also proposed charging the SOCO with responsibility for training in this area and requiring the SOCO to have direct access to an institutions board of directors. We received 59 comment letters on the role of the SOCO, including comments from the Council and two FC banks. Most expressed support, some asked for modifications and ten commenters from one association remarked that the listed SOCO responsibilities were unreasonable and will make finding a SOCO difficult. Two other commenters asked us to keep the existing language of 612.2170, stating the current rule works well and the proposed rule does not improve on existing provisions.
Some commenters, including FCB of Texas, noted that this section is duplicative of other sections, asking us to consolidate like provisions.
6a. SOCO Authority. 612.2170a In conformance with changes made elsewhere in the rule on defining and appointing a SOCO, the final rule adds a new paragraph a on the authority of the SOCO to administer the program. In response to commenters requests, the final rule also consolidates provisions on the SOCO authority to carry out assigned responsibilities, clarifying that the SOCO must have access to directors, employees and agents to fulfill these duties as well as possess the resources and legal authority to do his or her job.
This preamble adds the clarification that legal authority is directed at the ability to receive confidential SOC program communications. This was added because of FCA regulations in 12 CFR
part 618, subpart G, regarding an institutions responsibilities to safeguard its files and records from unauthorized disclosure. Under the final rule, the institution board authorizes the SOCO to handle these confidential documents as a means of recognizing it is necessary for performing official duties of the institution as SOCO and therefore permitted under FCA regulation 618.8300.
We had proposed as part of the SOCO
definition a requirement for access to the institutions board of directors.
Further, the proposed duties of the SOCO included reporting to the institutions board of directors or designated board committee any
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instance of non-compliance with the System institutions standards of conduct rules or Code of Ethics. Based on comments made elsewhere, we consolidated that language to this section.
Three commenters, including one FC
bank, asked that only significant or material instances of non-compliance be reported by the SOCO to the board.
Another commenter asked for clarification that the board access did not replace supervisory reporting lines or other institution organizational structures. The final rule clarifies that the SOCO must have direct access to the board for purposes of discussing and reporting on matters related to standards of conduct or the Code of Ethics.
Information reported by the SOCO is determined by each institutions SOC
program policies and procedures.
6b. SOCO Implementation of Standards of Conduct Program.
612.2170b As proposed, the SOCO would provide guidance and information to directors and employees on conflicts, resolve reported conflicts, maintain appropriate documentation and report to the institutions board noncompliance with the SOC program.
A few commenters stated that the SOCO
should not be responsible for giving advice, especially not to agents, and eighteen commenters objected to language in the proposed rule preamble naming the SOCO the authority for giving advice. These commenters remarked that the SOCO can provide guidance and information, but not advice. Two commenters suggested consolidating the proposed language on the SOCO providing guidance with the paragraph on helping identify conflicts.
One remarked that nothing in this section requires the SOCO to identify conflicts of interest, only help others to do so. This commenter suggested the SOCO have responsibility for identifying and reporting conflicts.
In conformance with changes made elsewhere in the rule on SOC program elements and comments on how a SOCO duties are characterized, the final rule consolidates into paragraph b various provisions in proposed 612.2170 regarding SOC program administration, making some language modifications in response to comments.
The consolidation results in a list of key duties for the SOCO:
Providing guidance and aiding in the identification of conflicts required to be reported from proposed paragraph b;
Receiving conflicts of interest reports from proposed paragraph d;

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