[Federal Register Volume 61, Number 170 (Friday, August 30, 1996)]
[Proposed Rules]
[Pages 45907-45910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22160]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency

7 CFR Part 1951

RIN 0560-AE93


Handling Payments From the Farm Service Agency (FSA) to 
Delinquent FSA Farm Credit Program Borrowers

AGENCY: Farm Service Agency, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to revise regulations which establish the 
requirements for the use of administrative offset to collect delinquent 
debts due under programs formerly administered by the Farmers Home 
Administration. The proposed action will eliminate the existing 
provisions contained in the regulation and the Rural Housing Service, 
Rural Business-Cooperative Service, Rural Utilities Service and Farm 
Service

[[Page 45908]]

Agency (the Agencies) will instead adhere to the requirements in the 
existing United States Department of Agriculture administrative offset 
regulations. This revision will eliminate the requirement that a 
borrower's account must be accelerated prior to offset of payments to 
delinquent borrowers.

DATES: Comments on the proposed rule, or comments on alternatives to 
this proposal, must be received on or before September 16, 1996. The 
comment period was reduced to allow for publication of a final rule 
prior to the distribution of income supplementation and enhancement 
program payments by the Farm Service Agency in September 1996. Comments 
on the information collection requirements of this rule must be 
received on or before October 29, 1996 to be assured of consideration.

ADDRESSES: Send comments on the proposed rule to: Director, Farm Credit 
Programs Loan Servicing and Property Management Division (LSPMD), Farm 
Service Agency (FSA), U.S. Department of Agriculture (USDA), room 5449-
S, P.O. Box 2415, Stop 0523, Washington, D.C. 20013-2415. Comments on 
the information collection requirements of this proposed rule must be 
sent to the Office of Management and Budget (OMB) at the address listed 
in the Paperwork Reduction Act section of this preamble and to the 
Department address listed after the OMB address.

FOR FURTHER INFORMATION CONTACT: Phillip Elder, Senior Loan Officer, 
USDA, FSA, Farm Credit Programs Loan Servicing Division, P.O. Box 2415, 
Stop 0523, Washington, D.C. 20013-2415, telephone (202) 720-9053.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been reviewed under Executive Order 12866 has been 
determined to be a significant regulatory action, and has been reviewed 
by the Office of Management and Budget.

Executive Order 12372

    The programs to which this Executive Order may apply are listed in 
the Catalog of Federal Domestic Assistance under the following:

10.104  Emergency Loans
10.405  Farm Labor Housing Loans
10.406  Farm Operating Loans
10.407  Farm Ownership Loans
10.410  Low Income Housing Loans
10.411  Rural Housing Site Loans
10.414  Resource Conservation Development Loans
10.415  Rural Rental Housing Loans
10.416  Soil and Water Loans
10.417  Very Low-Income Housing repair Loans and Grants
10.418  Water and Waste Disposal Systems for Rural Communities
10.419  Watershed Protection and Flood Prevention Loans
10.420  Rural Self-Help Housing Loans
10.421  Indian Tribes and tribal Corporation Loans
10.422  Business and Industry Loans
10.423  Community Facility Loans
10.427  Rural rental Housing Assistance Grants
10.428  Economic Emergency Loans
10.433  Housing Preservation Grants
10.434  Nonprofit Organizations
10.435  Agricultural Loan Mediation Program

    Programs listed under numbers 10.404, 10.406, 10.407, 10.410, 
10.417, 10.421, 10.428, and 10.435 are not subject to the provisions of 
Executive Order 12372 which requires intergovernmental consultation 
with State and local officials. (7 CFR Part 3015, subpart V, 48 FR 
29115, June 24, 1983).
    Programs listed under the numbers 10.405, 10.411, 10.414, 10.415, 
10.416, 10.418, 10.419, 10.420, 10.422, 10.423, 10.427, 10.433, and 
10.434 are subject to and have met the provisions of Executive Order 
12372. (7 CFR 3015, subpart V, 48 FR 29112, June 24, 1983; 49 FR 22675, 
May 31, 1984; 50 FR 14088, April 10, 1985.)

Environmental Impact Statement

    It is the determination of the issuing agencies that this action is 
not a major Federal action significantly affecting the environment and, 
in accordance with the National Environmental Policy Act of 1969, 
Public Law 91-190, an Environmental Impact Statement is not required.

Executive Order 12778

    This proposed rule has been reviewed in accordance with Executive 
Order 12778, Civil Justice Reform. In accordance with this rule: (1) 
All State and local laws and regulations that are in conflict with this 
rule will be preempted; (2) no retroactive effect will be given to this 
rule: and (3) administrative proceedings in accordance with 7 CFR parts 
11 and 780 must be exhausted before bringing suit in court challenging 
action taken under this rule unless those regulations specifically 
allow bringing suit at an earlier time.

Regulatory Flexibility Act

    The issuing Agencies are not required by 5 U.S.C. 553, or any other 
provision of law, to publish a notice of proposed rulemaking to effect 
these administrative changes.

Paperwork Reduction Act

    The amendments to 7 CFR part 1951 set forth in this proposed rule 
involve a change in existing information collection requirements which 
were previously approved by OMB under the provisions of 44 U.S.C. 35 
and assigned OMB Control Number 0575-0119. The regulations containing 
the information collection approved under 0575-0119 are jointly owned 
by the Agencies issuing this rule as aresult of the recent 
reorganization of USDA. A review of 0575-0119 has resulted in a 
division of the information collection requirements currently approved 
and a request for approval of the revised collection has been submitted 
to OMB.
    OMB Control Number: 0560--New.
    Title: Offsets of Federal Payments to FmHA Borrowers.
    Type of Request: Revision of Currently Approved Information 
Collection.
    Abstract: 7 CFR part 1951, subpart C, requires that a borrower's 
account be accelerated and the borrower's appeal rights exhausted 
before offsetting any payments to be received by the borrower. The 
Department of Agriculture Reorganization Act combined the farm credit 
functions of FmHA and the former Agricultural Stabilization and 
Conservation Service (ASCS), into the Farm Service Agency (FSA). This 
results in FSA making payments generated from participation in the 
former ASCS programs to the same farmer or rancher that is delinquent 
on his debts to the Agency. Acceleration of a borrower's account is one 
of the last steps FSA takes before liquidating the account. This 
process may take years while the borrower continues to receive payments 
from FSA.
    This rule proposes to remove the existing administrative offset 
regulation which was used by the Agencies when they were a part of the 
former Farmers Home Administration (FmHA). The Department of 
Agriculture has an existing administrative offset regulation at 7 CFR 
part 3, subpart B and the administrative offset regulation of the 
former FmHA in 7 CFR part 1951, subpart C is redundant. The Department 
of Agriculture regulation complies with the requirements of 31 U.S.C. 
3716, as amended by the Debt Collection Improvement Act of 1996, ch. 10 
of Pub. L. 104-134 (April 26, 1996).
    One intended effect of using the existing Department of Agriculture 
administrative offset procedure is that the Department procedure does 
not contain the restrictive provision of the former FmHA offset 
regulation which

[[Page 45909]]

requires the debt to have been accelerated prior to using 
administrative offset. There is no statutory basis for delaying offset 
until after a loan has been accelerated and the Department 
administrative offset procedure will permit offset to be utilized for 
debts which are past due. The information collection requirements for 
this type of internal agency offset will decrease, due to the 
development of a shortened notification letter, streamlining of the 
offset appeal process, and the reduction of the number of notices and 
number of meetings offered. However, the easing of offset procedures 
will greatly increase the number of FSA borrowers that receive notices 
and accounts that are offset. For example, as of March 30, 1996, 1,588 
FSA borrowers were accelerated, whereas 27,180 borrowers were past due.
    Estimate of Burden: Public reporting burden for this information 
collection is estimated to average 2.35 hours per response.
    Respondents: FSA Farm Credit Programs borrowers that are over 30 
days past due.
    Estimated Number of Respondents: 13,000.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 30,500 hours.
    Estimated Annual Cost to the Public: $377,000.
    Comments regarding the following issues should be sent to the Desk 
Officer for Agriculture, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Washington, D.C. 20503 and to Phillip 
D. Elder, Senior Loan Officer, Loan Servicing Division, Farm Service 
Agency, USDA, P.O. Box 2415, Ag Box Code 0523, Washington, D.C. 20013-
2415; telephone (202) 720-9053: (a) whether the collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (b) the accuracy of the agency's estimate of burden including 
the validity of the methodology and assumptions used; (c) ways to 
enhance the quality, utility and clarity of the information to be 
collected; (d) ways to minimize the burden of the collection of 
information on those who are to respond, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology.
    Copies of the information collection may be obtained from Phillip 
Elder at the above address. All responses to this notice will be 
summarized and included in the request for OMB approval. All comments 
will also become a matter of public record.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, a comment to OMB is best assured of having its full effect 
if OMB receives it within 30 days of publication. This does not affect 
the deadline for the public to comment to the Department on the 
proposed regulations.

Unfunded Mandates

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments or the private sector. Under section 202 of the UMRA, 
agencies generally must prepare a written statement, including a cost 
benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures to State, local, and tribal 
governments, in the aggregate, or to the private sector, of $100 
million or more in any 1 year. When such a statement is needed for a 
rule, section 205 of the UMRA generally requires agencies to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, more cost effective or least burdensome alternative 
that achieves the objectives of the rule.
    The rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, and tribal 
governments or the private sector. Thus, today's rule is not subject to 
the requirements of sections 202 and 205 of the UMRA.

Discussion of Proposed Rule

    The proposed changes involve the credit programs formerly 
administered by FmHA. Under the authority of the Department of 
Agriculture Reorganization Act of 1994, Pub. L. 10-354 (October 10, 
1994), FmHA was abolished on October 20, 1994, and its functions were 
transferred to the Agencies.
    This rule proposes to remove the existing administrative offset 
regulation which was used by the Agencies when they were a part of the 
former FmHA. The Department of Agriculture has an existing 
administrative offset regulation at 7 CFR part 3, subpart B and the 
administrative offset regulation of the former FmHA in 7 CFR part 1951, 
subpart C is redundant. The Department of Agriculture regulation 
complies with the requirements of 31 U.S.C. 3716, as amended by the 
Debt Collection Improvement Act of 1996, chapter 10 of Pub. L. 104-134 
(April 26, 1996) and satisfies the administrative offset needs of the 
Agencies.
    Section 1951.103(b) of Title 7 of the Code of Federal Regulations, 
which is part of the existing administrative offset procedure which the 
Agencies are proposing to remove, requires a borrower's account to have 
been accelerated prior to the use of administrative offset to collect 
part of the past due debt. One of the intended effects of this proposed 
rule is to eliminate the acceleration prerequisite to the use of 
administrative offset. The Department of Agriculture administrative 
offset regulation does not impose such a prerequisite. There is no 
statutory requirement that a past due account must have been 
accelerated prior to offsetting a borrower's federal payments.
    Specifically, the acceleration prerequisite to administrative 
offset means that a FSA farm credit program borrower's account has to 
be accelerated and the borrower's appeal rights exhausted before FSA 
can offer any contract payments received by the borrower from programs 
of the former Agricultural Stabilization and Conservation Service 
(ASCS) (contract payments). Acceleration is one of the last steps FSA 
takes before liquidating a farm credit program borrower's account. This 
process may take years while the borrower continues to receive contract 
payments. After the reorganization of ASCS and FmHA into FSA, an 
acceleration prerequisite results in the incongruous situation of FSA 
having to make substantial contract payments to a farmer or rancher 
that is seriously delinquent on his or her farm program debts to FSA.
    FSA proposes to remove the acceleration barrier to administrative 
offset in order to enhance collection of delinquent debts thereby 
reducing losses. While FSA could have revised the existing 
administrative offset procedure in 7 CFR part 1951, subpart C, this 
would mean continuing a regulation which is redundant with the existing 
Department of Agriculture administrative offset regulation. Removing 
unnecessary regulations is a goal of the National Performance Review, 
so the Agencies have determined that the adoption of the Department of 
Agriculture administrative offset regulation will serve the dual 
purpose of eliminating redundancy and removing the acceleration 
prerequisite to administrative offset.

[[Page 45910]]

    While section 534 of the Housing Act of 1949 requires that 
regulations issued pursuant to title V of the Housing Act of 1949 
generally must be published for a 60-day comment period, this 
regulation is being proposed to implement 31 U.S.C. 3716, not the 
Housing Act of 1949. Therefore, the notice and comment provisions of 
section 534 are inappropriate to this regulation.

List of Subjects in 7 CFR Part 1951

    Accounting, Accounting Servicing, Credit, Loan Programs--
Agriculture, Loan Programs--Housing and community development, Low and 
moderate income housing loans--Servicing.

    Accordingly, 7 CFR part 1951 is proposed to be amended as follows:

PART 1951--GENERAL

    1. The authority citation for part 1951 is revised to read as 
follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

    2. The title of part 1951, subpart C is revised to read as follows:

Subpart C--Offsets of Federal Payments to Agency Borrowers

    3. Section 1951.102 is revised to read as follows:


Sec. 1951.102  Administrative offset.

    Action to effect administrative offset to recover delinquent claims 
may be taken in accordance with the procedures in 7 CFR part 3, subpart 
B.
    4. Sections 1951.103 through 1951.105 are removed and reserved.

    Signed in Washington, DC, on August 23, 1996.
Jill Long Thompson,
Under Secretary for Rural Development.
Eugene Moos,
Under Secretary for Farm and Foreign Agriculture Services.
[FR Doc. 96-22160 Filed 8-29-96; 8:45 am]
BILLING CODE 3410-05-P