[Federal Register: December 8, 2008 (Volume 73, Number 236)]
[Rules and Regulations]
[Page 74343-74346]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de08-1]
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Rules and Regulations
Federal Register
________________________________________________________________________
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[[Page 74343]]
DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Parts 761, 762, 764, and 767
RIN 0560-AH82
Farm Loan Programs
AGENCY: Farm Service Agency, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule amends the Farm Service Agency (FSA) regulations for
direct and guaranteed Farm Operating loans and Farm Ownership loans,
and the lease and disposal of inventory property. This rule implements
changes required by the Food, Conservation, and Energy Act of 2008 (the
2008 Farm Bill). The maximum loan amount authorized for direct Farm
Ownership loans and direct Farm Operating loans is being increased. The
existing Beginning Farmer Downpayment Loan Program is being amended to
include socially disadvantaged farmers and to reduce the size of the
required down payment. Regulations governing lease and disposal of
FSA's real estate inventory, which currently give priority to beginning
farmers, are being amended to also give socially disadvantaged farmers
priority.
DATES: Effective Date: January 7, 2009.
FOR FURTHER INFORMATION CONTACT: James Radintz, Director, Loan Making
Division, Farm Loan Programs, Farm Service Agency, United States
Department of Agriculture, STOP 0522, 1400 Independence Avenue, SW.,
Washington, DC 20250-0522; telephone: 202-720-1632; e-mail:
jim.radintz@wdc.usda.gov. Persons with disabilities who require
alternative means for communication (Braille, large print, audio tape,
etc.) should contact the USDA Target Center at (202) 720-2600 (voice
and TDD).
SUPPLEMENTARY INFORMATION:
Background
FSA makes and services a variety of direct and guaranteed loans to
farmers who are temporarily unable to obtain private commercial credit.
FSA also provides direct loan customers with credit counseling and
supervision so they have a better chance for success. FSA loan
applicants are often beginning farmers and socially disadvantaged
farmers who do not qualify for conventional loans because of
insufficient net worth or established farmers who have suffered
financial setbacks due to natural disasters or economic downturns. FSA
loans are tailored to a customer's needs and may be used to buy
farmland and to finance agricultural production. All of the changes in
this rule are required by the 2008 Farm Bill (Pub. L. 110-246) enacted
June 18, 2008. This law repealed Public Law 110-234, dated May 22,
2008, that inadvertently omitted Title III (Trade) and reenacted those
provisions with the missing title.
This rule changes the defined term ``Beginning Farmer Downpayment
Loan'' in section 761.2, Abbreviations and definitions, to
``Downpayment Loan'' because these types of loans now will be available
to socially disadvantaged ``farmers'' as well. This change is required
by section 5004 of the 2008 Farm Bill. Corresponding reference changes
are made in parts 761, 762, and 764, including changes to the
definitions of ``Farm Ownership loan'' and ``Socially disadvantaged
applicant or farmer.''
The Farm Ownership (FO) loan program assists beginning and
established farmers to purchase farmland, to build or repair structures
or other fixtures, and to promote soil and water conservation. The
Operating Loan (OL) loan program assists producers with the purchase or
lease of items needed for a successful farm operation, such as
livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance,
or other operating expenses. Additionally, these loans can be used to
pay for minor improvements to buildings, costs associated with land and
water development, family subsistence, as well as to refinance debts
under certain conditions. This rule amends section 761.8, Loan
Limitations, to increase the maximum loan amount authorized for both
types of loans from $200,000 to $300,000. These changes are required by
sections 5003 and 5102 of the 2008 Farm Bill. Corresponding changes
have been made to the combination loan limits in paragraph (a)(4) to
change $200,000 to $300,000 and in paragraph (a)(6) to change $700,000
to $800,000. (Note: The limit for emergency loans of $500,000 remains
unchanged.)
This rule amends section 762.122 to correct a paragraph reference.
The current Beginning Farmer Downpayment Loan Program is used to
assist qualified beginning farmers finance the purchase of a family
farm. This rule modifies part 764 to expand this program to include
socially disadvantaged farmers and make other changes required by
section 5004 of the 2008 Farm Bill. To reflect the expansion of the
program, the name of the program is being changed from ``Beginning
Farmer Downpayment Loan Program'' to ``Downpayment Loan Program.''
This rule also reduces the minimum down payment that the applicant
must provide from ten percent to five percent by amending section
764.203, Limitations. In the current regulation, the lower of the
purchase price or the appraised value of the farm must not exceed
$250,000. This section currently provides that downpayment loans may
not exceed 40 percent of the purchase price or the appraised value of
the farm to be acquired and total financing provided by the Agency and
by all other creditors must not exceed 90 percent of the purchase price
or the appraised value of the farm. This rule amends section 764.203 in
accordance with the 2008 Farm Bill to specify that each downpayment
loan may not exceed 45 percent of the least of (1) the purchase price
of the farm, (2) the appraised value of the farm, or (3) $500,000.
Total financing provided by the Agency and all other creditors may not
exceed 95 percent.
This rule amends section 764.204, Rates and terms, to provide that
the interest rate for downpayment loans will be the regular direct FO
rate less 4 percent with a floor of 1.5 percent rather than the current
set rate of 4 percent. The maximum loan term also is being extended
from 15 to 20 years as required by the 2008 Farm Bill. Additionally,
this section is amended accordingly to provide that non-Agency
financing cannot have a balloon payment due within the first 20 years
of the loan, which is an extension from the current
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15 years to correspond with the change in loan term.
In accordance with section 5302 of the 2008 Farm Bill, this rule
amends several sections on leasing and disposing of inventory real
estate. Section 767.101 is revised to give socially disadvantaged
farmers all rights regarding lease eligibility, terms, and the option
to purchase currently only extended to beginning farmers. Sections
767.151 through 767.153 are revised to ensure that socially
disadvantaged farmers are granted rights to purchase inventory property
that currently apply to only beginning farmers, including the right to
purchase the property before it is offered to the general public and
the waiver of the 10 percent down payment. The current provision in the
regulation specifying that property becomes available only after the
rights of the previous owner have expired is not changing.
Notice and Comment
The notice and comment provisions of 5 U.S.C. 553 and the Statement
of Policy of the Secretary of Agriculture effective July 24, 1971 (36
FR 13804), relating to notices of proposed rulemaking and public
participation in rulemaking, provide that certain rules may go forward
without public notice and comment when they are in the public interest.
This regulation adopts changes mandated in the 2008 Farm Bill, sections
5003, 5004, 5102, and 5302. All these provisions are nondiscretionary
in nature and became effective when the 2008 Farm Bill became law.
Furthermore, these changes impose no additional paperwork burden.
Accordingly, this rule is published without requesting public comment
and will be effective 30 days from the date of publication in the
Federal Register.
Executive Order 12866
The Office of Management and Budget (OMB) designated this rule as
not significant under Executive Order 12866 and, therefore, OMB was not
required to review this final rule.
Regulatory Flexibility Act
This rule is not subject to the Regulatory Flexibility Act (5
U.S.C. 601-602), since FSA is not required to publish a notice of
proposed rulemaking for this rule.
Environmental Evaluation
The environmental aspects of this final rule have been considered
in a manner consistent with the provisions of the National
Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321-4347, the
regulations of the Council on Environmental Quality (40 CFR parts 1500-
1508) and the FSA regulations for compliance with NEPA (7 CFR part
1940, subpart G). The changes are non-discretionary, and, as such, no
new significant circumstances or information relevant to environmental
concerns have been established. In consideration of the previous
analysis documented in the 2003 Programmatic Environmental Assessment
(PEA) and the reasons outlined in the 2004 Finding of No Significant
Impact (FONSI), FSA has concluded that this final rule will not have a
significant impact on the quality of the human environment either
individually or cumulatively, and, therefore, is categorically excluded
and not subject to an environmental assessment or environmental impact
statement in accordance with 7 CFR 1940.310(e)(3). The Final PEA and a
copy of the FONSI are available at: http://www.fsa.usda.gov/FSA/
webapp?area=home&subject=ecrc&topic=enl-ea.
Executive Order 12372
This program is not subject to Executive Order 12372, which
requires consultation with State and local officials. See the notice
related to 7 CFR part 3015, subpart V, published in the Federal
Register on June 24, 1983 (48 FR 29115).
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988, Civil Justice Reform. All State and local laws and regulations
that are in conflict with this rule will be preempted. This rule is not
retroactive. It will not effect agreements entered into prior to the
effective date of the rule. Before any judicial action may be brought
regarding the provisions of this rule, the administrative appeal
provisions of 7 CFR parts 11 and 780 must be exhausted.
Executive Order 13132
The policies contained in this rule do not have any substantial
direct effect on states, the relationship between the national
government and the states, or the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on state and local
governments. Therefore, consultation with the states is not required.
Unfunded Mandates
This rule contains no Federal mandates under the regulatory
provisions of Title II of the Unfunded Mandates Reform Act of 1995
(URMA) (Pub. L. 104-4) for State, local, and tribal governments or the
private sector. In addition, FSA was not required to publish a notice
of proposed rulemaking for this rule. Therefore, this rule is not
subject to the requirements of sections 202 and 205 of UMRA.
Federal Assistance Programs
The changes in this rule affect the following FSA programs as
listed in the Catalog of Federal Domestic Assistance:
10.406--Farm Operating Loans.
10.407--Farm Ownership Loans.
Paperwork Reduction Act
The Agency's information collection requirements, currently
approved under OMB control numbers 0560-0234, 0560-0237, and 0560-0238,
are not affected by the final rule. The rule does not increase the
information collection burden.
E-Government Act Compliance
FSA is committed to complying with the E-Government Act, to promote
the use of the Internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
List of Subjects
7 CFR Part 761
Loan programs--Agriculture.
7 CFR Part 762
Agriculture, Credit, Loan programs--Agriculture.
7 CFR Part 764
Agriculture, Credit, Loan programs--Agriculture.
7 CFR Part 767
Agriculture, Credit, Loan programs--Agriculture.
0
For the reasons discussed above, this rule amends 7 CFR chapter VII,
Subchapter D--Special Programs, as follows:
PART 761--GENERAL PROGRAM ADMINISTRATION
0
1. The authority citation for part 761 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
0
2. Amend Sec. 761.2 paragraph (b) as follows:
0
a. Remove the definitions of ``Beginning Farmer Downpayment Loan'' and
``Socially disadvantaged applicant,''
0
b. Add definitions, in alphabetical order, for ``Downpayment Loan'' and
[[Page 74345]]
``Socially Disadvantaged Applicant or Farmer'' to read as set forth
below, and
0
c. In the definition of ``Farm Ownership loan'' remove the words
``Beginning Farmer.''
Sec. 761.2 Abbreviations and definitions.
* * * * *
(b) * * *
Downpayment Loan is a type of FO loan made to beginning farmers and
socially disadvantaged farmers to finance a portion of a real estate
purchase under part 764, subpart E of this chapter.
* * * * *
Socially Disadvantaged Applicant or Farmer is an individual or
entity who is a member of a socially disadvantaged group. For an
entity, the majority interest must be held by socially disadvantaged
individuals. For married couples, the socially disadvantaged individual
must have at least 50 percent ownership in the farm business and make
most of the management decisions, contribute a significant amount of
labor, and generally be recognized as the operator of the farm.
* * * * *
Sec. 761.8 [Amended]
0
3. Amend Sec. 761.8 as follows:
0
a. In paragraph (a)(1) remove the words ``Beginning Farmer,''
0
b. In paragraphs (a)(1)(i), (a)(2)(i), and (a)(4) remove the amount
``$200,000'' and add, in its place, the amount ``$300,000,'' and
0
c. In paragraph (a)(6) remove the amount ``$700,000'' and add, in its
place, the amount ``$800,000.''
0
4. Revise Sec. 761.210 paragraph (a) to read as follows:
Sec. 761.210 Transfer of funds.
* * * * *
(a) August 1 of each fiscal year, the Agency will use available
unsubsidized guaranteed OL loan funds to make approved direct FO loans
to beginning farmers and socially disadvantaged farmers under the
Downpayment loan program; and
* * * * *
PART 762--GUARANTEED FARM LOANS
0
5. The authority citation for part 762 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Sec. 762.121 [Amended]
0
6. Amend Sec. 762.121 paragraph (b)(1) by removing the words
``beginning farmer.''
Sec. 762.122 [Amended]
0
7. Amend Sec. 762.122 paragraph (b)(2) by removing the reference to
``(c)(1) of this section'' and add in its place a reference to ``(b)(1)
of this section.''
Sec. 762.124 [Amended]
0
8. Amend Sec. 762.124 paragraph (e)(3) by removing the words ``for
beginning farmers.''
0
9. Revise Sec. 762.130 paragraph (d)(4)(iii)(C) to read as follows:
Sec. 762.130 Loan approval and issuing the guarantee.
* * * * *
(d) * * *
(4) * * *
(iii) * * *
(C) Loans to farmers involved in the direct downpayment program.
* * * * *
PART 764--DIRECT LOAN MAKING
0
10. The authority citation for part 764 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Sec. 764.1 [Amended]
0
11. Amend Sec. 764.1 paragraph (b)(1) by removing the words
``Beginning Farmer.''
Sec. 764.103 [Amended]
0
12. Amend Sec. 764.103 paragraphs (c) and (e) by removing the words
``beginning farmer.''
Subpart E--Downpayment Loan Program
0
13. Revise Subpart E heading to read as shown above.
Sec. 764.201 [Amended]
0
14. Amend Sec. 764.201 as follows:
0
a. In the heading remove the words ``Beginning Farmer'' and
0
b. In the undesignated paragraph remove the words ``Beginning Farmer''
the first time they appear and add the words ``or socially
disadvantaged farmer'' at the end.
Sec. 764.202 [Amended]
0
15. Amend Sec. 764.202 paragraph (b) by adding the words ``or socially
disadvantaged farmer'' at the end.
0
16. Amend Sec. 764.203 as follows:
0
a. In paragraph (a)(2) remove the number ``10'' and add, in its place,
the number ``5,''
0
b. Revise paragraphs (b) and (c) to read as set forth below, and
0
c. Remove paragraph (d).
Sec. 764.203 Limitations.
* * * * *
(b) Downpayment loans will not exceed 45 percent of the lesser of:
(1) The purchase price,
(2) The appraised value of the farm to be acquired, or
(3) $500,000.
(c) Financing provided by the Agency and all other creditors must
not exceed 95 percent of the purchase price. Financing provided by
eligible lenders may be guaranteed by the Agency under part 762 of this
chapter.
0
17. Amend Sec. 764.204, as follows:
0
a. Revise paragraph (a) to read as set forth below,
0
b. In paragraph (b)(1) remove the words ``Beginning Farmer,'' and
0
c. In paragraphs (b)(1) and (2) remove the number ``15'' and add, in
its place, the number ``20.''
Sec. 764.204 Rates and terms.
(a) Rates. The interest rate for Downpayment loans will be the
regular direct FO rate minus 4 percent, but in no case less than 1.5
percent.
* * * * *
Sec. 764.205 [Amended]
0
18. Amend Sec. 764.205 introductory paragraph by removing the words
``Beginning Farmer.''
PART 767--INVENTORY PROPERTY MANAGEMENT
0
19. The authority citation for part 767 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Sec. 767.101 [Amended]
0
20. Amend Sec. 767.101 paragraphs (a)(2), (c)(2), (d)(3), and (g) by
adding the words ``or socially disadvantaged farmer'' immediately after
the words ``beginning farmer.''
Sec. 767.151 [Amended]
0
21. Amend Sec. 767.151 as follows:
0
a. In paragraphs (a), (b), and (d) add the words ``or socially
disadvantaged farmers'' immediately after ``beginning farmers'' and
0
b. In paragraph (c) add the words ``or socially disadvantaged farmer''
immediately after the words ``beginning farmer.''
Sec. 767.152 [Amended]
0
22. Amend Sec. 767.152 paragraph (a) by adding the words ``or socially
disadvantaged farmer'' immediately after the words ``beginning
farmer.''
Sec. 767.153 [Amended]
0
23. Amend Sec. 767.153 paragraph (b)(3) by removing the words ``non-
beginning farmer purchasers'' and adding, in their place, the words
``purchasers who are
[[Page 74346]]
not beginning farmers or socially disadvantaged farmers.''
Signed at Washington, DC, on December 2, 2008.
Glen L. Keppy,
Acting Administrator, Farm Service Agency.
[FR Doc. E8-28903 Filed 12-5-08; 8:45 am]
BILLING CODE 3410-05-P