[Federal Register Volume 64, Number 2 (Tuesday, January 5, 1999)]
[Rules and Regulations]
[Pages 392-394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-115]


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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 1951

RIN 0560-AF59


Disaster Set-Aside Program--Second Installment Set-Aside

AGENCY: Farm Service Agency, USDA.

ACTION: Interim rule.

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SUMMARY: The Farm Service Agency (FSA) is amending the disaster set-
aside program requirement to allow farm borrowers to set aside portions 
of payments that could not be made as scheduled due to a natural 
disaster as declared by the President or Secretary of Agriculture 
during 1998, or because of low commodity prices during 1998. 
Applications for set-aside due to 1998 low commodity prices must be 
received on or before August 31, 1999. Borrowers who have loans with 
set-aside payments as of the publication date of this regulation may 
set aside a second payment on the same loans if determined eligible 
based on criteria established by this rule. To receive consideration 
for a second set-aside due to a natural disaster, the borrower's 
request must be received within 8 months from the date of the disaster 
designation, in accordance with 7 CFR part 1945, subpart A. The impact 
of these provisions will allow the agency to serve farmers who have 
experienced losses due to a natural disaster or low commodity prices 
during 1998 in an efficient and timely manner while helping them stay 
in business.

EFFECTIVE DATE: The effective date for this rule is January 5, 1999. 
Comments on this rule and on the information collections must be 
submitted by March 8, 1999 to be assured consideration.

ADDRESSES: Submit written comments to Director, Farm Loan Programs, 
Loan Servicing and Property Management Division, United States 
Department of Agriculture, Farm Service Agency, STOP 0523, 1400 
Independence Avenue, SW, Washington, DC 20250-0523.

FOR FURTHER INFORMATION CONTACT:
David Spillman, Branch Chief, United States Department of Agriculture, 
Farm Service Agency, Farm Loan Programs, Loan Servicing and Property 
Management Division, 1400 Independence Avenue, SW, STOP 0523, 
Washington, D.C. 20250-0523; telephone (202) 720-0900; electronic mail: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

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

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
602), the undersigned has determined and certified by signature of this 
document that this rule will not have a significant economic impact on 
a substantial number of small entities. New provisions included in this 
rule will not impact a substantial number of small entities to a 
greater extent than large entities. Thus, large entities are subject to 
these rules to the same extent as small entities. Therefore, a 
regulatory flexibility analysis was not performed.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' The issuing agency has determined 
that this action does not affect the quality of human environment, and 
in accordance with the National Environmental Policy Act of 1969, Pub. 
L. 91-190, an Environmental Impact Statement is not required.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, 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.

Executive Order 12372

    For reasons set forth in the Notice to 7 CFR part 3015, subpart V 
(48 FR 29115, June 24, 1983), the programs within this rule are 
excluded from the scope of E.O. 12372, which requires intergovernmental 
consultation with State and local officials.

The Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 104-4, requires Federal agencies to assess the effects of their 
regulatory actions on State, local, and tribal governments or 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 requires FSA to 
prepare a written statement, including a cost benefit assessment, for 
proposed and final rules with ``Federal mandates'' that may result in 
such expenditures for State, local, or tribal governments, in the 
aggregate, or to the private sector. UMRA generally requires agencies 
to consider alternatives and adopt the more cost effective or least 
burdensome alternative that achieves the objectives of the rule.
    This rule contains no Federal mandates, as defined under Title II 
of the UMRA, for State, local, and tribal governments or the private 
sector. Thus, this rule is not subject to the requirements of sections 
202 and 205 of UMRA.

[[Page 393]]

Paperwork Reduction Act of 1995

    Approval of information collections requirements associated with 
this regulation expired on August 31, 1998. A notice of request for 
extension of currently approved information collections was published 
on May 5, 1998. FSA has submitted a request for emergency reinstatement 
of the information collections. Estimates for information collections 
have been modified from those published on May 5, 1998, to reflect an 
increase in requests which will be a result of the changes made by this 
rule. Therefore, the agency is again seeking public comments on the 
information collection estimates.

Abstract

    The FSA is authorized by the Consolidated Farm and Rural 
Development Act, as amended (7 U.S.C. 1921 et seq.), or other Acts, and 
the regulations promulgated thereunder, to solicit the information 
requested on this paperwork burden. The information requested is 
necessary for FSA to determine eligibility for credit or other 
financial assistance and service borrower's loans.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 31 minutes per response.
    Respondents: Individuals or households, businesses or other for 
profit and farms.
    Estimated number of respondents: 16,300.
    Estimated number of responses per respondent: 3.9.
    Estimated total annual burden on respondents: 33,399 hours.
    The Agency is soliciting comments on the burden of all of the above 
subparts regarding: (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. These comments should be sent to 
Desk Officer for Agriculture, Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, D.C. 20503 and to 
David Spillman, Branch Chief, USDA, FSA, Farm Loan Programs, Loan 
Servicing Division, 1400 Independence Avenue, SW., Stop 0523, 
Washington, DC 20250-0523. Copies of the information collections may be 
obtained from Mr. Spillman at the above address. All comments will 
become a matter of public record.

Federal Assistance Programs

    These changes affect the following FSA programs as listed in the 
Catalog of Federal Domestic Assistance.

10.404--Emergency Loans
10.406--Farm Operating Loans
10.407--Farm Ownership Loans

Discussion of the Interim Rule

    The Farm Service Agency (FSA) publishes this amendment to subpart T 
of part 1951 without prior notice and comment because of the emergency 
nature of the program and the eligibility requirements involved. 
Publication as a proposed rule for notice and comment is impractical 
and contrary to the public interest as discussed below.
    The Disaster Set-Aside (DSA) program was first made available to 
FSA Farm Loan Programs (FLP) borrowers beginning October 21, 1994, 
because of the heavy flooding in the Midwest and extreme drought in the 
South. Since that time approximately 15,000 borrowers have received DSA 
assistance. The overall success of the program can be attributed to the 
relatively small amount of paperwork required in applying for and 
processing DSA requests. DSA gives FLP borrowers a chance to recover 
from their losses without having to incur additional debt to pay 
creditors or liquidate essential assets. The cost to the Government is 
substantially less under this servicing program than any other, as no 
debt is written off, no appraisal costs are incurred as under subpart S 
of part 1951, and no liquidation costs are incurred.
    Many borrowers have received a previous writedown of debt under 
subpart S of part 1951, thereby making them ineligible for additional 
debt forgiveness and farm loans, in certain cases, under Sec. 373 of 
the Consolidated Farm and Rural Development Act. The expansion of the 
program to permit a second debt set-aside or a set-aside due to 1998 
declared disasters or low commodity prices, therefore, is needed 
immediately to prevent irreparable financial harm to those adversely 
affected, an estimated 11,424, farmers. While there is justification 
for the rule to become effective immediately after publication, FSA 
will accept public comments on the rule for 60 days for consideration 
when the rule is made final.
    7 CFR 1951.954, generally provides that each loan can only have one 
set-aside installment outstanding. A borrower could receive DSA again 
only if the existing set-aside installment were paid in full, or 
canceled through restructuring under subpart S of part 1951. This rule 
will allow borrowers who were affected by low commodity prices in 1998, 
or by a natural disaster in a county declared a major disaster by the 
President or Secretary during 1998, to have a second installment set 
aside without the first set-aside installment being paid in full or 
canceled. Borrowers who farmed in counties contiguous to the disaster 
area also may be eligible for the second installment set-aside.
    This rule will allow such borrowers to receive immediate financial 
relief from their FLP obligations in a more expedient manner than under 
subpart S of part 1951. When the borrower pays any portion of the set-
aside installments in the future, the payment will be applied to the 
oldest installment set-aside.
    Applications from borrowers affected by low commodity prices during 
1998 must be received by August 31, 1999. Borrowers affected by a 
natural disaster declared by the President or Secretary during 1998 
must apply within 8 months of the designation.

List of Subjects in 7 CFR Part 1951

    Accounting, Credit, Disaster assistance, Loan programs-agriculture, 
Loan programs-housing and community development, Low and moderate 
income housing.

    Accordingly, 7 CFR part 1951 is amended as follows:

PART 1951-SERVICING AND COLLECTIONS

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

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 31 U.S.C. 3716; 42 
U.S.C. 1480.

Subpart T--Disaster Set-Aside Program

    2. Section 1951.951 is amended by revising the second sentence to 
read as follows:


Sec. 1951.951  Purpose.

    * * * The DSA program is available to Farm Loan Program (FLP) 
borrowers, as defined in subpart S of this part, who suffered losses as 
a result of a natural disaster or low commodity prices in specified 
years. * * *

[[Page 394]]

    3. Section 1951.952 is amended by revising the first and second 
sentences to read as follows:


Sec. 1951.952  General.

    DSA is a program whereby borrowers who are current or not more than 
one installment behind on any and all FLP loans may be permitted to 
move the scheduled annual installment for each eligible FLP loan to the 
end of the loan term. The intent of this program is to relieve some of 
the borrower's immediate financial stress caused by the disaster or low 
commodity prices that occurred in specified years and avoid foreclosure 
by the Government. * * *
    4. Section 1951.953 is amended by revising paragraph (b) to read as 
follows:


Sec. 1951.953  Notification and request for DSA.

* * * * *
    (b) Deadline to apply. All FLP borrowers liable for the debt must 
request a DSA within 8 months from the date the disaster was 
designated, in accordance with 7 CFR part 1945, subpart A. Applications 
for set-aside or second installment set-aside due to low commodity 
prices in 1998 must be received on or before August 31, 1999.
* * * * *
    5. Section 1951.954 is amended by revising paragraphs (a)(1), 
(a)(5), (a)(7), (b)(2), (b)(4), and (b)(5) to read as follows:


Sec. 1951.954  Eligibility and loan limitation requirements.

    (a) * * *
    (1)(i) The borrower must have operated a farm or ranch in a county 
designated a disaster area as contained in 7 CFR part 1945, subpart A, 
or a county contiguous to such an area, and must have been a borrower 
and operated the farm or ranch at the time of the low commodity prices 
or disaster period.
    (ii) If the borrower is applying for a second installment to be set 
aside based on a declared disaster, the borrower must have operated in 
a county declared a major disaster by the President or the Secretary 
during 1998. Borrowers who farmed in a county contiguous to a county 
that was declared a disaster area also may be eligible for a second 
installment set-aside.
    (iii) All FLP borrowers may apply for an installment to be set 
aside based on low commodity prices during 1998. County location, or 
proximity to a disaster declared county is not a consideration when the 
DSA is justified by low commodity prices.
    (iv) A borrower cannot have more than two installments set aside on 
any loan.
* * * * *
    (5) As a direct result of the declared disaster or the 1998 low 
commodity prices, sufficient income was not available to pay all family 
living and operating expenses, debts to other creditors, and FSA. This 
determination will be based on the borrower's actual production, income 
and expense records for the disaster or affected year and any other 
records required by the servicing official. Compensation received for 
losses shall be considered as well as increased expenses incurred 
because of a disaster. Consideration will also be given to insufficient 
income for the next production and marketing period following the 
affected year if the borrower establishes that production will be 
reduced or expenses increased as a result of the disaster or the 1998 
low commodity prices.
* * * * *
    (7) The borrower's FLP loan has not been accelerated nor has the 
borrower's debt been restructured under subpart S of this part since 
the disaster or the low commodity prices occurred.
    (b) * * *
    (2)(i) Except as provided in paragraph (b)(2)(ii), only one unpaid 
installment for each FLP loan may be set-aside. If there is an 
installment remaining set-aside from a previous disaster, the loan is 
not eligible for another DSA.
    (ii) For disaster declarations during 1998, or low commodity prices 
in 1998, borrowers who already have one installment set aside from a 
previous disaster may set aside a second installment.
    (iii) If all set-asides are paid in full, or cancelled through 
restructuring under subpart S of this part, the set-aside will no 
longer exist and the loan may be considered for DSA.
* * * * *
    (4) The amount of set-aside shall be limited to the amount the 
borrower was unable to pay FSA from the production and marketing period 
in which the disaster or low commodity prices occurred. However, if the 
installment due immediately after the disaster was paid, but other 
creditors and expenses were not, the amount set-aside will be the 
lessor of the amount the borrower is unable to pay other creditors and 
expenses, rounded up to the nearest whole installment, or the next FLP 
installment due.
    (5) The installment that may be set-aside is limited to the first 
scheduled annual installment due immediately after the disaster or low 
commodity prices occurred, unless that installment is paid, then the 
next scheduled annual installment may be set-aside.
* * * * *
    Signed in Washington, DC, on December 30, 1998.
Dallas R. Smith,
Acting Under Secretary for Farm and Foreign Agricultural Services.
[FR Doc. 99-115 Filed 1-4-99; 8:45 am]
BILLING CODE 3410-05-M