[Federal Register Volume 62, Number 101 (Tuesday, May 27, 1997)]
[Rules and Regulations]
[Pages 28618-28619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13702]


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DEPARTMENT OF AGRICULTURE

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

7 CFR Parts 1910, 1941, 1943, 1945, and 1980

RIN 0560-AE87


Implementation of the Direct and Guaranteed Loan Making 
Provisions of the Federal Agricultural Improvement Act of 1996: 
Correction

AGENCY: Farm Service Agency, USDA.

ACTION: Interim rule, correction; and correcting amendments.

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SUMMARY: This document contains corrections to the interim regulations 
that were published Monday, March 3, 1997 (62 FR 9351-59). Technical 
corrections are also made to CFR sections not originally included in 
the interim rule. The regulations pertained to the loan making 
provisions of the Farm Service Agency (FSA) farm loan programs.

EFFECTIVE DATE: The corrections to the interim rule and the correcting 
amendments are effective May 27, 1997.

FOR FURTHER INFORMATION CONTACT: Steven R. Bazzell, Senior Loan 
Officer, Farm Service Agency. Telephone: 202-720-3889; facsimile: 202-
690-1117; or e-mail: [email protected]

SUPPLEMENTARY INFORMATION:

Background

    The interim final regulations, which are the subject of these 
corrections, implemented the direct and guaranteed FSA farm loan making 
provisions of the Federal Agricultural Improvement Act of 1996 (Act). 
The public comment period ended on May 2, 1997.

Need for Correction

    As published, the interim final regulations contain errors that 
either conflict with the Act, are misleading or are in need of 
clarification. Conflicts with the statutory language of the Act require 
some corrections not originally included in the interim rule published 
on March 3, 1997. Those corrections are as follows: (a) Section 1910.5 
of 7 CFR part 1910, subpart A, is corrected by incorporating a 
provision that renders an applicant ineligible for most types of FSA 
loan assistance when they have received debt forgiveness. (b) Section 
1943.13 of 7 CFR part 1943, subpart A, is corrected by removing 
references to the ``sale of acquired property'' and ``credit sales'' to 
socially disadvantaged applicants, since this is eliminated by the Act. 
(c) Section 1980.106 of 7 CFR part 1980, subpart B, is corrected by 
removing a reference to ``non-farm enterprises'' contained in the 
``farm'' definition because non-farm enterprises are no longer financed 
by the Agency under the Act.

List of Subjects

7 CFR Part 1910

    Application processing, Loan programs-agriculture.

7 CFR Part 1941 and 1943

    Applicant eligibility, Beginning farmers and ranchers, Loan 
programs-agriculture.

7 CFR Part 1945

    Disaster assistance, Loan programs-agriculture.

7 CFR Part 1980

    Beginning farmers and ranchers, Loan guarantees, Loan programs-
agriculture.

    Accordingly, 7 CFR chapter XVIII is corrected by making the 
following correcting amendments:

PART 1910--GENERAL

    1. The authority citation for part 1910 continues to read as 
follows:

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

Subpart A--Receiving and Processing Applications

    2. Section 1910.5 is amended by revising the introductory text of 
paragraph (c) as set forth below and removing paragraph (c)(6).


Sec. 1910.5  Evaluating applications.

* * * * *
    (c) When the applicant, including any members of an entity 
applicant, caused the Agency a loss by receiving debt forgiveness, they 
are ineligible for assistance in accordance with applicable program 
eligibility regulations. If the debt forgiveness is cured by repayment 
of the Agency's loss, the Agency may still consider the debt 
forgiveness in determining the applicant's creditworthiness. The 
following circumstances do not automatically indicate an unacceptable 
credit history:
* * * * *

PART 1941--OPERATING LOANS

    3. The authority citation for part 1941 continues to read as 
follows:

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

Subpart A--Operating Loan Policies, Procedures, and Authorizations

    4. Section 1941.12, paragraphs (a)(8), (a)(11), (b)(9) and (b)(12) 
are revised to read as follows:


Sec. 1941.12  Eligibility requirements.

* * * * *
    (a) * * *
    (8) Have not executed a promissory note for a direct OL loan in 
more than 6 different calendar years prior to the calendar year that 
the requested direct OL loan will close. This eligibility restriction 
applies to anyone who signs the promissory note. Youth loans are not 
counted as direct OL loans for the purpose of this paragraph.
* * * * *
    (11) Not be delinquent on any Federal debt. This restriction will 
not apply if the Federal delinquency is cured on or before the loan 
closing date.
    (b) * * *
    (9) Have no member of the business entity who has executed a 
promissory note for direct OL loans in more than 6 different calendar 
years prior to the calendar year that the requested direct OL loan will 
close. This eligibility restriction applies to anyone who signs the 
promissory note. Youth loans are not counted as direct OL loans for the 
purpose of this paragraph.
* * * * *
    (12) Not be delinquent on any Federal debt. This restriction will 
not apply if the Federal delinquency is cured on or before the loan 
closing date. This eligibility restriction applies to the entity and 
all of its members.
* * * * *


Sec. 1941.16  [Corrected]

    5. Section 1941.16(i)(2) is amended by removing the word ``owned'' 
and adding the word ``owed'' in its place.

Subpart B--Closing Loans Secured by Chattels


Sec. 1941.88  [Corrected]

    6. In Sec. 1941.88(c), the first sentence is amended by removing 
the word ``more'' and adding the word ``less'' in its place.

[[Page 28619]]

PART 1943--FARM OWNERSHIP, SOIL AND WATER AND RECREATION

    7. The authority citation for part 1943 continues to read as 
follows:

    Authority: 5 U.S.C. 301, and 7 U.S.C. 1989.

Subpart A--Direct Farm Ownership Loan Policies, Procedures and 
Authorizations


Sec. 1943.4  [Corrected]

    8. Section 1943.4(e) is amended by adding ``Except for OL loan 
purposes,'' at the beginning of the first sentence.
    9. Section 1943.12 (a)(11) and (b)(11) is revised to read as 
follows:


Sec. 1943.12  Farm ownership loan eligibility requirements.

* * * * *
    (a) * * *
    (11) Not be delinquent on any Federal debt. This restriction will 
not apply if the Federal delinquency is cured on or before the loan 
closing date.
    (b) * * *
    (11) Not be delinquent on any Federal debt. This restriction will 
not apply if the Federal delinquency is cured on or before the loan 
closing date. This eligibility restriction applies to the entity and 
all of its members.
* * * * *


Sec. 1943.13  [Corrected]

    10. Section 1943.13 is amended by:
    a. Removing from the introductory text of paragraph (a) and (b) the 
words ``and Acquired Property.''
    b. Removing paragraph (a)(2).
    c. Redesignating paragraphs (a)(3), (4) and (5) as paragraphs 
(a)(2), (3) and (4), respectively.
    d. Removing the phrase ``and credit sale'' and removing the word 
``programs'' and adding the word ``program'' in its place in paragraph 
(a)(1) and newly designated paragraph (a)(3).
    e. Removing the phrase ``and acquired farmland'' and removing the 
word ``programs'' and adding the word ``program'' in its place in 
paragraph (b)(1).


Sec. 1943.16  [Corrected]

    11. Section 1943.16, paragraph (b) is amended by adding a new 
sentence at the end of the paragraph to read, ``In the case of leased 
property, the borrower must have a lease to ensure use of the 
improvement over its useful life or to ensure that the borrower 
receives compensation for any remaining economic life upon termination 
of the lease.

PART 1945--EMERGENCY

    12. The authority citation for part 1945 continues to read as 
follows:

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

Subpart D--Emergency Loan Policies, Procedures, and Authorizations


Sec. 1945.167  [Corrected]

    13. Section 1945.167, paragraph (a) is amended by revising the last 
sentence to read, ``Chattel property must have been covered at the tax 
or cost depreciated value, whichever is less, when such insurance was 
readily available and the benefit of the coverage (the lesser of the 
property's tax or cost depreciated value) was greater than the cost of 
the insurance.''


Sec. 1945.175  [Corrected]

    14. Section 1945.175 is amended by adding the word ``not'' after 
the word ``chattels'' in the second to the last sentence of paragraph 
(c)(3), and by revising the last sentence to read, ``Chattels that the 
applicant did not own on the date set forth in paragraph (c)(2) of this 
section will be appraised at the present market value.''

PART 1980--GENERAL

    15. The authority citation for part 1980 continues to read as 
follows:

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

Subpart B--Farmer Program Loans


Sec. 1980.106  [Corrected]

    16. Section 1980.106 is corrected by removing the second sentence 
of the definition of a ``Farm.''
    17. Section 1980.174, paragraph (a) introductory text is revised to 
read as follows:


Sec. 1980.174  Percentage of guarantee.

* * * * *
    (a) The maximum percentage of guarantee is 90 percent, except in 
the following situations when lenders will be provided a 95 percent 
guarantee:''
* * * * *


Sec. 1980.175  [Corrected]

    18. Section 1980.175 is amended by:
    a. Revising the third and fourth sentences of paragraph (b) to 
read, ``Further, the applicant, and anyone who will execute the 
promissory note, cannot be delinquent on any federal debt. This 
restriction will not apply if the Federal delinquency is cured on or 
before the loan closing date.''
    b. Amending the first sentence of paragraph (c)(2)(ii) by adding 
after the word ``creditors'' the phrase ``or the lender.''
    c. Revising the first sentence of paragraph (d)(1) to read, ``No 
guaranteed OL loan shall be made to any applicant after the 15th year 
that an applicant, or any individual signing the promissory note, 
received direct or guaranteed OL loans.''


Sec. 1980.180  [Corrected]

    19. Section 1980.180 is amended by:
    a. Removing the last sentence of paragraph (a).
    b. Removing the word ``Agency'' and adding the word ``lender'' in 
its place in the last two sentences of paragraph (c)(1).
    c. Adding the phrase ``FO or OL'' after the word ``authorized'' in 
paragraph (c)(5).


Sec. 1980.190  [Corrected]

    20. Section 1980.190(e) is amended by removing the phrase ``but not 
more than 90 percent'' and adding the phrase, ``but not more than that 
allowed under applicable program regulations'' in its place.

    Signed at Washington, D.C., on May 16, 1997.
Richard O. Newman,
Acting Administrator, Farm Service Agency.
[FR Doc. 97-13702 Filed 5-23-97; 8:45 am]
BILLING CODE 3410-05-P