[Federal Register: February 6, 2003 (Volume 68, Number 25)]
[Rules and Regulations]
[Page 6061-6062]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06fe03-1]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
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[[Page 6061]]
FEDERAL RESERVE SYSTEM
12 CFR Part 272
[Docket No. R-1142]
Federal Open Market Committee; Amendment to Rules of Procedure
AGENCY: Federal Open Market Committee.
ACTION: Final rule.
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SUMMARY: The Federal Open Market Committee has amended its definition
of a quorum of the Committee. The amendment is designed to enhance the
Committee's ability to perform its functions in the event of a national
emergency.
DATES: The rule is effective February 6, 2003.
FOR FURTHER INFORMATION CONTACT: Kieran J. Fallon, Senior Counsel (202-
452-5270), Legal Division; Board of Governors of the Federal Reserve
System; or Normand R.V. Bernard, Deputy Secretary (202-452-3606),
Federal Open Market Committee, 20th Street and Constitution Avenue,
NW., Washington, DC 20551. Users of Telecommunication Device for Deaf
(TTD) only, call (202) 263-4869.
SUPPLEMENTARY INFORMATION: The Federal Open Market Committee
(Committee) is composed of (1) all of the members of Board of Governors
of the Federal Reserve System (Board), and (2) five representatives of
the Federal Reserve Banks elected in the manner provided in the Federal
Reserve Act (Act).\1\ Because the Board has an authorized membership of
seven Governors, the Committee has a maximum authorized strength of 12
members (7 Board members and 5 Federal Reserve Bank representatives).
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\1\ See 12 U.S.C. 263(a). Pursuant to the Act, the Federal
Reserve Banks also elect an alternate for each primary Federal
Reserve Bank representative on the Committee. Each alternate is
authorized to serve on the Committee in the absence of the relevant
primary representative. Each primary and alternate Federal Reserve
Bank representative on the Committee must be a President or First
Vice President of a Federal Reserve Bank. Id.
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The Act does not define a quorum of the Committee. Since the
current structure of the Committee was established in 1936, the
Committee itself has defined a quorum of the Committee to be seven
members, including alternates serving in place of a primary Federal
Reserve Bank representative.\2\
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\2\ See 12 CFR 272.3(c). From 1936 to 1973, the Committee's
quorum rule was reflected in the Committee's By-Laws. See Minutes of
the Committee's Meeting of March 18, 1936. In 1973, the Committee's
By-Laws were rescinded and the Committee's quorum rule was
incorporated into the Committee's Rules of Procedure. See 38 FR
2754, Jan. 30, 1973.
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The Committee's current quorum rule would prevent the Committee
from taking action, including adjusting the Committee's target for the
federal funds rate, if an act of war, terrorist attack or other
catastrophic event reduced the membership of the Committee to below
seven members (including alternates). In light of this possibility, the
Committee has amended its definition of a quorum of the Committee.
Under the Committee's amended rule, a quorum of the Committee will
continue to be seven members unless there are fewer than seven members
of the Committee in office, in which case a quorum of the Committee
will consist of the number of members in office. As under the current
rule, alternates serving in place of an absent primary Federal Reserve
Bank representative are considered members for purposes of determining
whether a quorum of the Committee is available.
The Committee believes that the revised quorum rule will enhance
the Committee's ability to fulfill its critical monetary policy
responsibilities in a national emergency. At the same time, the revised
rule should not alter the functioning of the Committee in normal
operating environments. As noted above, under the revised rule, a
quorum of the Committee would continue to be seven members whenever
seven or more members of the Committee are in office. The Committee
notes that the Securities and Exchange Commission (SEC) has revised its
quorum rule in a similar fashion to ensure that the SEC could continue
to function if the 5-member SEC ever had fewer than 3 commissioners in
office.\3\
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\3\ See 17 CFR 200.41; 60 FR 17201, Apr. 5, 1995. The enabling
statutes of the SEC, like those of the Committee, do not define a
quorum of the SEC. The SEC's revised quorum rule has been upheld by
two separate Federal courts. See Falcon Trading Group, Ltd. v. SEC,
102 F.3d 579 (D.C. Cir. 1996); SEC v. Feminella, 947 F. Supp. 722
(S.D.N.Y. 1996).
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The amended rule relates solely to the internal procedure of the
Committee. Accordingly, the public notice, public comment and delayed
effective date provisions of the Administrative Procedure Act do not
apply. See 5 U.S.C. 553(b) and (d). Because public notice and comment
is not required, the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
also does not apply to the amended rule.
List of Subjects
Administrative practice and procedure, Federal Open Market
Committee, Organization and functions (Government agencies).
For the reasons set out in the preamble, the Federal Open Market
Committee amends 12 CFR part 272 as follows:
PART 272--FEDERAL OPEN MARKET COMMITTEE--RULES OF PROCEDURE
1. The authority citation for part 272 continues to read as
follows:
Authority: 5 U.S.C. 552.
2. Section 272.3(c) is revised to read as follows:
Sec. 272.3 Meetings
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(c) Quorum. Seven members constitute a quorum of the Committee for
purposes of transacting business except that, if there are fewer than
seven members in office, then the number of members in office
constitute a quorum. For purposes of this paragraph (c), members of the
Committee include alternates acting in the absence of members. Less
than a quorum may adjourn a meeting of the Committee from time to time
until a quorum is in attendance.
* * * * *
[[Page 6062]]
By order of the Federal Open Market Committee, January 30, 2003.
Vincent R. Reinhart,
Secretary, Federal Open Market Committee.
[FR Doc. 03-2582 Filed 2-5-03; 8:45 am]
BILLING CODE 6210-01-P