[Federal Register: May 2, 2003 (Volume 68, Number 85)]
[Proposed Rules]
[Page 23425-23426]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02my03-18]
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FARM CREDIT ADMINISTRATION
12 CFR Part 613
RIN 3052-AC20
Eligibility and Scope of Financing
AGENCY: Farm Credit Administration.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: The Farm Credit Administration (FCA) is considering whether to
revise its regulations governing eligibility and scope of financing for
farmers, ranchers, and aquatic producers or harvesters who borrow from
Farm Credit System (FCS or System) institutions that operate under
titles I or II of the Farm Credit Act of 1971, as amended (Act). We are
also considering whether we should modify our regulatory definition of
``moderately priced'' rural housing. We invite your comments.
DATES: You may send us comments by July 31, 2003.
ADDRESSES: You may send comments by electronic mail to ``reg-
comm@fca.gov,'' through the Pending Regulations section of FCA's Web
site, ``www.fca.gov,'' or through the government-wide
``www.regulations.gov'' portal. You may also send comments to Robert E.
Donnelly, Acting Director, Regulation and Policy Division, Office of
Policy and Analysis, Farm Credit Administration, 1501 Farm Credit
Drive, McLean, Virginia 22102-5090 or by facsimile to (703) 734-5784.
You may review copies of all comments we receive at our office in
McLean, Virginia.
FOR FURTHER INFORMATION CONTACT:
Mark L. Johansen, Policy Analyst, Office of Policy and Analysis, Farm
Credit Administration, McLean, VA 22102-5090, (703) 883-4498, TTY (703)
883-4434,
or
Richard Katz, Senior Attorney, Office of General Counsel, Farm Credit
[[Page 23426]]
Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-
4020.
SUPPLEMENTARY INFORMATION:
I. Introduction
We received two petitions under 5 U.S.C. 553(e) to repeal Sec.
613.3005, which limits the amount of credit that FCS institutions that
operate under titles I or II of the Act can extend to eligible farmers,
ranchers, and aquatic producers or harvesters (collectively referred to
as ``farmers''). The petitioners state that the Act does not restrict
the System's authority to finance all the credit needs of any group of
eligible farmers and, therefore, Sec. 613.3005 should be eliminated as
having no basis in law. The petitioners also state that Sec. 613.3005
unnecessarily restricts the System's ability to serve creditworthy and
eligible farmers, particularly those who have significant off-farm
income, and young, beginning, and small farmers.
One petitioner also asked us to change the definition of
``moderately priced'' rural housing in Sec. 613.3030(a)(4). The
petitioner stated that this definition has not kept pace with the
evolving rural housing market and, therefore, is preventing FCS
institutions that operate under titles I and II from fully serving the
housing needs of eligible non-farm rural residents.
We have decided to start a rulemaking in response to these two
petitions. We reserve judgment on the appropriate legal interpretation
of the relevant provisions of the Act. Nevertheless, we believe it is
appropriate to review our regulations governing eligibility and scope
of financing for farmers and our definition of ``moderately priced''
rural housing. The goal of this rulemaking is to explore how our
regulations can become more responsive to the needs of all eligible and
creditworthy farmers and rural residents within the boundaries of the
Act.
II. Background
A. Farmers
Section 1.9 of the Act authorizes FCS mortgage lenders to extend
credit to ``bona fide farmers, ranchers, or producers or harvesters of
aquatic products.'' Section 1.11(a)(1) of the Act states that ``Loans
made by a Farm Credit [mortgage lender] to farmers, ranchers, and
producers or harvesters of aquatic products may be for any agricultural
or aquatic purpose and other credit needs of the applicant * * *.''
Similarly, section 2.4(a)(1) authorizes certain FCS associations to
``make, guarantee, or participate with other lenders in short- and
intermediate-term loans and other similar financial assistance to * * *
bona fide farmers and ranchers and the producers or harvesters of
aquatic products, for agricultural or aquatic purposes and other
requirements of such borrowers * * *.''
Under Sec. 613.3000(a)(1), a ``bona fide farmer or rancher'' is
``a person owning agricultural land or engaged in the production of
agricultural products * * *.'' The scope of financing regulation, Sec.
613.3005, which the petitioners asked us to repeal, states:
It is the objective of each bank and association, except for
banks for cooperatives, to provide full credit, to the extent of
creditworthiness, to the full-time bona fide farmer (one whose
primary business and vocation is farming, ranching, or producing or
harvesting aquatic products); and conservative credit to less than
full-time farmers for agricultural enterprises, and more restricted
credit for other credit requirements as needed to ensure a sound
credit package or to accommodate a borrower's needs as long as the
total credit results in being primarily an agricultural loan.
However, the part-time farmer who needs to seek off-farm employment
to supplement farm income or who desires to supplement off-farm
income by living in a rural area and is carrying on a valid
agricultural operation, shall have availability of credit for
mortgages, other agricultural purposes, and family needs in the
preferred position along with full-time farmers. Loans to farmers
shall be on an increasingly conservative basis as the emphasis moves
away from the full-time bona fide farmer to the point where
agricultural needs only will be financed for the applicant whose
business is essentially other than farming. Credit shall not be
extended where investment in agricultural assets for speculative
appreciation is a primary factor.
B. Non-Farm Rural Housing
Existing Sec. 613.3030(a)(4) establishes two methods that FCS
lenders may use to determine whether rural housing is ``moderately
priced.'' The first method derives from section 8.0(1)(B) of the Act,
which defines ``moderate priced'' for the purpose of secondary market
financing as dwellings (excluding the land) that do not exceed
$100,000, as adjusted for inflation. The second method authorizes FCS
banks and associations to determine whether housing in a particular
rural area is ``moderately priced'' by documenting data from a
credible, independent, and recognized national or regional source.
Housing values at or below the 75th percentile are deemed to be
moderately priced.
III. Questions
This rulemaking gives you the opportunity to tell us whether and
how we should change our eligibility and scope of financing regulations
for eligible farmers. We want to know if you think we should change the
eligibility criteria for farmers as defined in Sec. 613.3000. In
addition, we seek your input on whether we should repeal, retain, or
amend the scope of financing requirements in Sec. 613.3005. We are
particularly interested in your views on how we should regulate FCS
lending for farmers' other credit needs. Please respond to the
following questions.
1. Current Sec. 613.3000(a)(1) defines a bona fide farmer,
rancher, or aquatic producer as a person who either owns agricultural
land or is engaging in the production of agricultural products. Do you
think the FCA should retain or change this definition? If you favor
changing this definition, please offer specific recommendations.
2. What limits, if any, should FCA regulations place on lending for
farmers' other credit needs?
3. How should we regulate access to the other credit needs of
eligible farmers who derive most of their income from off-farm sources?
Do you favor retaining the current regulatory distinction between full-
time and part-time farmers? If not, what would be a better approach?
4. Should we change our definition of ``moderately priced'' rural
housing in Sec. 613.3030(a)(4)? If you favor changing the definition,
please offer specific recommendations.
The FCA welcomes other ideas or suggestions you may have about our
eligibility and scope of financing regulations for eligible farmers and
our regulations defining ``moderately priced'' rural housing.
The FCA also plans to conduct a public meeting on eligibility and
scope of financing for eligible farmers and our definition of
``moderately priced'' rural housing. We will publish a separate notice
in the Federal Register that will provide interested parties more
information about the public meeting.
Dated: April 29, 2003.
Jeanette C. Brinkley,
Secretary, Farm Credit Administration Board.
[FR Doc. 03-10898 Filed 5-1-03; 8:45 am]
BILLING CODE 6705-01-P