[Federal Register Volume 68, Number 50 (Friday, March 14, 2003)]
[Proposed Rules]
[Pages 12309-12310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6162]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 68, No. 50 / Friday, March 14, 2003 / 
Proposed Rules  

[[Page 12309]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 770

RIN 0560-AG87


Revision of Indian Tribal Land Acquisition Program Loan 
Regulations

AGENCY: Farm Service Agency, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This rule proposes to clarify and revise the Indian Tribal 
Land Acquisition Program (ITLAP) regulations for borrowers who apply 
for a rental value write-down. The rule proposes to change the method 
for determining the rental value of security for purposes of a write-
down, adds a definition of ``rental value,'' clarifies other write-down 
eligibility provisions, and limits new loan eligibility for borrowers 
who have received a write-down in the past. These changes are intended 
to reduce the borrower's costs of applying for a rental value write-
down, and reduce the burden on Agency employees in processing requests.

DATES: Comments on the proposed rule must be received on or before May 
13, 2003, to be assured of consideration.

ADDRESSES: Mail comments on the proposed rule to: Veldon Hall, 
Director, Farm Loan Programs, Loan Servicing and Property Management 
Division, Farm Service Agency, USDA, 1400 Independence Avenue, SW., 
Stop 0523, Washington, DC 20250-0523, or hand deliver to Suite 500, 
1250 Maryland Avenue, SW., Washington, DC 20024 during normal business 
hours. All comments and supporting documents on this rule may be viewed 
by contacting the information contact listed below. All comments 
received, including names and addresses, will become a matter of public 
record.

FOR FURTHER INFORMATION CONTACT: Mel Thompson, Senior Loan Officer, 
Farm Service Agency; telephone: 202-720-7862; facsimile: 202-690-1196; 
e-mail: [email protected]. 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:

Executive Order 12866

    This rule has been determined under Executive Order 12866 to be not 
significant and was not reviewed by the Office of Management and 
Budget.

Regulatory Flexibility Act

    The Agency certifies that this rule will not have a significant 
economic effect on a substantial number of small entities, because it 
does not require additional actions by the borrower. The Agency, 
therefore, is not required to perform a Regulatory Flexibility Analysis 
as required by the Regulatory Flexibility Act, Pub. L. 96-534, as 
amended (5 U.S.C. 601). This rule does not impact small entities to a 
greater extent than large entities.

Environmental Evaluation

    The environmental impacts of this proposed rule have been 
considered in accordance with the provisions of the National 
Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., the 
regulations of the Council on Environmental Quality (40 CFR Parts 1500-
1508), and the FSA regulations for compliance with NEPA, 7 CFR parts 
799, and 1940, subpart G. FSA completed an environmental evaluation and 
concluded the rule requires no further environmental review. No 
extraordinary circumstances or other unforeseeable factors exist which 
would require preparation of an environmental assessment or 
environmental impact statement. A copy of the environmental evaluation 
is available for inspection and review upon request.

Executive Order 12988

    This rule has been reviewed in accordance with E.O. 12988, Civil 
Justice Reform. In accordance with that Executive Order: (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 requesting judicial review.

Executive Order 12372

    As stated in the Notice related to 7 CFR part 3015, subpart V (48 
FR 29115, June 24, 1983) the programs and activities within this rule 
do not require consultation with state and local officials under the 
scope of Executive Order 12372.

Unfunded Mandates

    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 expenditures of $100 million or more in any one year. 
This rule contains no Federal mandates, as defined by title II of the 
UMRA; therefore, this rule is not subject to sections 202 and 205 of 
the UMRA.

Executive Order 13132

    The policies contained in this rule do not have any substantial 
direct effect on states, on the relationship between the national 
government and the states, or on 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.

Paperwork Reduction Act

    The amendments to 7 CFR part 770 contained in this proposed rule 
require no revisions to the information collection requirements that 
were previously approved by OMB and assigned OMB control number 0560-
0198 under the provisions of 44 U.S.C. chapter 35, nor do they 
significantly affect the aggregate information collection burden of the 
Agency. Removing the requirement for an appraisal and replacing it with 
a market value rent study report, which is much smaller in scope, 
reduces the amount of information provided by the appraiser at the 
expense of the borrower. The number of estimated annual respondents and 
the time burden to provide a copy of the report is the same.

Federal Assistance Program

    The proposed changes affect the following program listed in the 
Catalog of Federal Domestic Assistance:

[[Page 12310]]

10.421--Indian Tribes and Tribal Corporation Loans.

Discussion of the Proposed Rule

    This proposed rule revises and clarifies the write-down servicing 
policies of the Farm Service Agency's Indian Tribal Land Acquisition 
Loan Program. The first proposed change is to clarify ``rental value''. 
Applicants and borrowers have misunderstood this term. Therefore, a 
definition is added in the proposed rule at Sec.  770.2(b). A second 
revision changes the current appraisal needed to apply for a rental 
value write-down. An appraisal provides a substantial amount of 
information at the borrower's expense that is not necessary for 
calculating rental value write-downs. The information FSA needs can be 
provided by a rental value market study report prepared by a certified 
general appraiser. This change will dramatically reduce the borrower's 
costs. Also, since it requires less work for the appraiser, it reduces 
the appraiser's delay in completing the report, thus reducing FSA's 
processing time.
    A third change is proposed in the eligibility requirements for both 
ITLAP land value and rental value write-downs. The eligibility 
requirements currently in the reamortization paragraph at Sec.  
770.10(a)(1) are being proposed for the write-down sections as well in 
Sec. Sec.  770.10(e)(3)(v) and (e)(4)(v). These standards would require 
borrowers to submit complete application forms and establish that the 
delinquency is beyond the borrowers' control which cannot be brought 
current within one year and borrowers cannot meet the annual loan 
payments. These eligibility requirements will help assure that write-
downs will be provided only to those financially distressed borrowers 
who are faced with circumstances outside their control. Several FSA 
loan servicing programs contain similar eligibility requirements. See 7 
CFR 1951.909(c).
    For rental value write-downs, the current rule at Sec.  
770.10(e)(4)(iv) prevents additional write-downs only when the specific 
ITLAP loan has received a rental value write-down previously and the 
specific loan has received a land value write-down within the last 5 
years. The proposed rule would modify this paragraph to preclude an 
additional rental value write-down when any loan has ever received a 
rental value write-down or any loan has received a land value write-
down within the last 5 years. The proposed revisions will limit FSA's 
losses when it provides rental value write-downs.
    Similarly, the proposed rule seeks to add an additional loan 
eligibility requirement to Sec.  770.3. Since write-downs are the 
consequence of a borrower's seriously deteriorating financial 
condition, the proposed rule adds a requirement for additional ITLAP 
loan eligibility requiring that borrowers must not have received an 
ITLAP rental value or land value write-down within the last five years. 
The additional eligibility requirement will enable FSA to make more 
creditworthy loans and decrease the possibility of further Agency 
losses.
    The proposed rule will result in better service and substantial 
monetary and time savings for borrowers who apply for a write-down 
based on rental value. In addition, it will increase the protection of 
the taxpayers from potential loss and reduce the agency official's 
burden in administering the servicing of the Indian Tribal Land 
Acquisition Program Loans.

List of Subjects in 7 CFR Part 770

    Agriculture, Credit, Indians, Rural areas, Loan Programs.

    Accordingly, for the reasons stated in the preamble, 7 CFR part 770 
is proposed to be amended as follows:

PART 770--INDIAN TRIBAL LAND ACQUISITION LOANS

    1. The authority citation for part 770 continues to read as 
follows:

    Authority: 5 U.S.C. 301, 25 U.S.C. 490.

    2. Amend Sec.  770.2 by adding an abbreviation in paragraph (a) and 
a definition in paragraph (b) to read as follows:


Sec.  770.2  Abbreviations and definitions.

    (a) Abbreviations.
* * * * *
    USPAP: Uniform Standards of Professional Appraisal Practice.
    (b) Definitions.
* * * * *
    Rental Value is the potential annual rental income of a parcel of 
real estate as determined by a market analysis of annual rental incomes 
of like real estate in the subject property area.
* * * * *
    3. Amend Sec.  770.3 by adding paragraph (h) to read as follows:


Sec.  770.3  Eligibility requirements.

* * * * *
    (h) Have not received a write-down as provided in Sec.  770.10(e) 
within the preceding 5 years.
    4. Amend Sec.  770.10 by adding paragraph (e)(3)(v), revising 
paragraphs (e)(4)(iii) and (e)(4)(iv) and adding paragraph (e)(4)(v) to 
read as follows:


Sec.  770.10  Servicing.

* * * * *
    (e) Debt Write-down.
* * * * *
    (3) Land Value Write-down.
* * * * *
    (v) The borrower must meet the eligibility requirements of 
paragraphs (a)(1)(ii), or (iii) of this section.
    (4) Rental Value Write-down.
* * * * *
    (iii) The borrower provides a current market value rent study 
report for the land for the preceding 5 years, which identifies the 
average rental value. The report must be prepared by a Certified 
General Appraiser and meet the requirements of USPAP.
    (iv) The borrower has not previously received a write-down under 
this paragraph on any loan and has not had a loan written down within 
the last 5 years under paragraph (e)(3) of this section.
    (v) The borrower must meet the eligibility requirements of 
paragraph (a) (1) (ii), or (iii) of this section.

    Signed in Washington, DC, on February 26, 2003.
James R. Little,
Administrator, Farm Service Agency.
[FR Doc. 03-6162 Filed 3-13-03; 8:45 am]
BILLING CODE 3410-05-P