[Federal Register Volume 68, Number 212 (Monday, November 3, 2003)]
[Rules and Regulations]
[Pages 62221-62225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-27589]


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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Parts 762 and 764

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

7 CFR Parts 1910, 1924, 1941, 1943 and 1955

RIN 0560-AG99


Technical Changes to Citizenship Requirements and Loan 
Eligibility Regulations

AGENCIES: Farm Service Agency, Rural Housing Service, Rural Business-
Cooperative Service, and Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule amends the Farm Service Agency's (FSA) regulations 
for direct and guaranteed loan making requirements by revising loan 
eligibility requirements to conform with provisions of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA). In addition, it amends the direct and guaranteed loan program 
regulations to implement statutory provisions of the Consolidated Farm 
and Rural Development Act (CONACT).

DATES: This rule is effective November 3, 2003.

FOR FURTHER INFORMATION CONTACT: Janet Downs, Senior Loan Officer, 
USDA, FSA, Farm Loan Programs, Loan Making Division, STOP 0522, 1400 
Independence Avenue, SW., Washington, DC 20250-0522; Telephone: (202) 
720-0599, 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: 

[[Page 62222]]

Notice and Comment

    This rule is not being published for public notice or to solicit 
comment from interested parties as a proposed rule. It implements 
precise statutory requirements of both the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996 (PRWORA) (8 U.S.C. 1611, 
1641) and the Consolidated Farm and Rural Development Act (CONACT) (7 
U.S.C. 1921 et.seq.), where the Agency has little or no leeway in terms 
of policy interpretation. Thus, the Agency is not required by 5 U.S.C. 
553 to publish a notice of proposed rulemaking for its interpretive 
policy. This rule is published as final and is effective immediately.

Executive Order 12866

    This final rule has been determined to be not significant under 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget (OMB).

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act, Public Law 96-
534, (5 U.S.C. 601), FSA has determined that this rule will not have a 
significant economic impact on a substantial number of small entities. 
FLP applicants and borrowers are predominantly family-size farmers and 
ranchers and, as defined by the U.S. Small Business Administration, 
approximately 98 percent of all farmers are classified as small 
businesses. The provisions in this rule will not impact a substantial 
number of small entities to a greater extent than large entities. The 
intent of this rule is to implement legislation and makes non-
substantive updates. Large entities are subject to these rules to the 
same extent as small entities. Therefore, a regulatory flexibility 
analysis was not performed.

Environmental Evaluation

    The environmental impacts of this final 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 that 
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 final rule has been reviewed in accordance with Executive 
Order 12988. This rule preempts State laws to the extent any laws are 
inconsistent with it, and its provisions are not retroactive. Before 
legal action may be brought concerning this rule, administrative 
remedies under 7 CFR part 11 must be exhausted.

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.

Unfunded Mandates

    The rule contains no Federal mandates, as defined by title II of 
the UMRA. Thus, this rule is not subject to the requirements of 
sections 202 and 205 of UMRA.

Paperwork Reduction Act

    The Agency's information collection requirements, currently 
approved under OMB control numbers 0560-0154, 0560-0155, 0560-0157, 
0560-0159, 0560-0162, 0560-0167, and 0560-0178, are not affected by 
this final rule.

Federal Assistance Programs

    The titles and numbers of the Federal assistance programs, as found 
in the Catalog of Federal Domestic Assistance, to which this final rule 
applies are:

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

Discussion of the Final Rule

Individual Citizenship Requirements

    To be eligible for FSA Farm Loan Programs (FLP) loans, FSA 
regulations provide that an applicant must be a citizen of the United 
States or an alien lawfully admitted to the United States for permanent 
residence under the Immigration and Nationality Act; indefinite 
parolees are not eligible for loans. This rule changes FLP direct and 
guaranteed loan eligibility provisions to require an applicant be a 
United States citizen, a United States non-citizen national, or a 
qualified alien under applicable Federal immigration laws. This 
revision is necessary to reflect changes made by section 401 of the 
PRWORA (8 U.S.C. 1611) prohibiting aliens who are not qualified aliens 
from receiving Federal public benefits such as Federal loans.

Entity Citizenship Requirements

    PRWORA requirements similarly are adopted for entity citizenship 
requirements for direct and guaranteed FLP loans. These regulations are 
amended to consistently require the majority interest of the entity to 
be held by members who are United States citizens, United States non-
citizen nationals, or qualified aliens under applicable Federal 
immigration laws. These changes implement CONACT program requirements 
that for an entity applicant to be eligible for a farm programs loan, 
individuals holding a majority interest of such entity must be citizens 
of the United States. See 7 U.S.C. 1922, 1941, and 1961.
    In addition, FSA regulations require that aliens must provide the 
appropriate forms from the Bureau of Citizenship and Immigration 
Services of the Department of Homeland Security (BCIS) to document 
their permanent residency. This rule updates these provisions to 
require that United States non-citizen nationals and qualified aliens 
must provide the appropriate documentation as to their immigration 
status, as required by the BCIS. This revision further implements 
section 401 of the PRWORA.

Prohibition to Finance Non-Farm Enterprises

    This rule amends FSA regulations to clarify that direct farm 
operating and farm ownership loan funds cannot be used to finance non-
farm enterprises. This rule adds limitations in 7 CFR 1941.17 and 
1943.17 and removes 7 CFR 1941.23(b)(3) accordingly.

Clarify Definition of Socially Disadvantaged

    Section 355 of the CONACT defines a ``socially disadvantaged 
group'' as a ``group whose members have been subjected to racial, 
ethnic, or gender prejudice because of their identity as members of a 
group without regard to their individual qualities.'' This rule amends 
FSA regulations 7 CFR 1943.4 and 1955.103 to clarify that the term 
``socially disadvantaged applicant'' refers to an applicant who is a 
member of a socially disadvantaged group.

Borrower Eligibility

    Section 373(b) of the CONACT, in part, allows FSA to make annual 
operating loans to borrowers who have had debt forgiveness and who are

[[Page 62223]]

current on payments under a confirmed reorganization plan under 
chapters 11, 12, or 13 of Title 11 of the United States Code. Section 
373(a) also prohibits direct operating loans to any borrower who is 
delinquent on any loan made or guaranteed under the CONACT. This 
prohibition partially overlaps with the Debt Collection Improvement Act 
(DCIA) provision, 31 U.S.C. 3720B, making persons owing a delinquent 
non-tax debt to the Federal Government ineligible for Federal financial 
assistance in the form of a loan (other than a disaster loan) or loan 
insurance or guarantee. The DCIA provision is implemented by 
regulations at 31 CFR part 285. This rule amends FSA farm operating 
loan eligibility regulation, 7 CFR 1941.12, to reflect these statutory 
requirements. Reference to annual production loans to delinquent 
borrowers in 7 CFR 1941.33 also is removed for consistency.

Miscellaneous

    This rule amends an incorrect reference in FSA regulation, 7 CFR 
1941.18, to allow equal, unequal, or balloon installment schedules on 
loans made for other than annual operating purposes. This rule also 
removes from 7 CFR part 1924, subpart B, the definition of 
``Financially viable operation'', as it is unnecessary. References to 
required borrower training for guaranteed loan borrowers are also 
removed as section 805 of the Agriculture, Rural Development, Food and 
Drug Administration, and Related Agencies Appropriations Act, 1999 
(Pub. L. 105-277, October 21, 1998) removed the borrower training 
requirement for guaranteed farm loans. This rule removes references to 
an obsolete form (FmHA 440-35) from 7 CFR part 1943, subpart A. This 
rule corrects a duplicate reference to Sec.  1910.4(i) by revising the 
second (i) reference to read ( j).

List of Subjects

7 CFR Part 762

    Agriculture, Loan programs--agriculture.

7 CFR Part 764

    Agriculture, Disaster assistance, Loan programs--agriculture.

7 CFR Part 1910

    Agriculture, Loan programs--agriculture.

7 CFR Part 1924

    Agriculture, Loan programs--agriculture.

7 CFR Part 1941

    Crops, Livestock, Loan programs--agriculture, Rural areas, Youth.

7 CFR Part 1943

    Crops, Loan programs--agriculture, Recreation, Water resources.

7 CFR Part 1955

    Agriculture, Loan programs--agriculture, Property management, 
Government property.

    Accordingly, 7 CFR Chapters VII and XVIII are amended as follows:

PART 762--GUARANTEED FARM LOANS

0
1. The authority citation for part 762 continues to read as follows:

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

0
2. Revise Sec.  762.120(d) to read as follows:

Sec.  762.120  Loan applicant eligibility.

* * * * *
    (d) Citizenship. (1) The applicant must be a citizen of the United 
States, a United States non-citizen national, or a qualified alien 
under applicable Federal immigration laws. For an entity applicant, the 
majority interest of the entity must be held by members who are United 
States citizens, United States non-citizen nationals, or qualified 
aliens under applicable Federal immigration laws.
    (2) United States non-citizen nationals and qualified aliens must 
provide the appropriate documentation as to their immigration status as 
required by the United States Department of Homeland Security, Bureau 
of Citizenship and Immigration Services.
* * * * *

PART 764--EMERGENCY FARM LOANS

0
3. The authority citation for part 764 continues to read as follows:

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


0
4. Revise Sec.  764.4(a)(2) to read as follows:


Sec.  764.4  Eligibility requirements.

    (a) * * *
    (2) Citizenship. (i) The applicant must be a citizen of the United 
States, a United States non-citizen national, or a qualified alien 
under applicable Federal immigration laws. For an entity applicant, the 
majority interest of the entity must be held by members who are United 
States citizens, United States non-citizen nationals, or qualified 
aliens under applicable Federal immigration laws.
    (ii) United States non-citizen nationals and qualified aliens must 
provide the appropriate documentation as to their immigration status as 
required by the United States Department of Homeland Security, Bureau 
of Citizenship and Immigration Services.
* * * * *

PART 1910--GENERAL

0
5. The authority citation for part 1910 continues to read as follows:

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

Subpart A--Receiving and Processing Applications


Sec.  1910.4  [Amended]

0
6. Amend Sec.  1910.4 by redesignating the second paragraph (i) as 
paragraph (j).

PART 1924--CONSTRUCTION AND REPAIR

0
7. The authority citation for part 1924 continues to read as follows:

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

Subpart B--Management Advice to Individual Borrowers and Applicants


Sec.  1924.54  [Amended]

0
8. In Sec.  1924.54 remove the definition of ``Financially viable 
operation''.

0
9. In Sec.  1924.74 revise the second sentence of paragraph (a)(2) to 
read as follows:


Sec.  1924.74  Borrower training program.

    (a) * * *
    (2) * * * Unless waived, this training requirement will be an 
eligibility requirement for all Agency direct loans. * * *
* * * * *

PART 1941--OPERATING LOANS

0
10. 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

0
11. Revise paragraphs (a)(1), (b)(5)(i), the last sentence of 
paragraphs (a)(8) and (b)(11), and the first sentence of paragraphs 
(a)(9) and (b)(12) of Sec.  1941.12, to read as follows:


Sec.  1941.12  Eligibility requirements.

    (a) * * *
    (1) Be a citizen of the United States, a United States non-citizen 
national, or a qualified alien under applicable

[[Page 62224]]

Federal immigration laws. United States non-citizen nationals and 
qualified aliens must provide the appropriate documentation as to their 
immigration status as required by the United States Department of 
Homeland Security, Bureau of Citizenship and Immigration Services.
* * * * *
    (8) * * * However, an applicant who received a write-down under 
section 353 of the CONACT, or who is current on payments under a 
confirmed reorganization plan under chapters 11, 12, or 13 of Title 11 
of the United States Code, may receive direct and guaranteed OL loans 
to pay annual farm and ranch operating expenses, including family 
subsistence, if the applicant meets all other eligibility requirements.
    (9) Not be delinquent on any non-tax Federal debt or FSA guaranteed 
debt. * * *
* * * * *
    (b) * * *
    (5) * * *
    (i) The majority interest of the entity must be held by members who 
are citizens of the United States, United States non-citizen nationals, 
or qualified aliens under applicable Federal immigration laws. United 
States non-citizen nationals and qualified aliens must provide the 
appropriate documentation as to their immigration status as required by 
the United States Department of Homeland Security, Bureau of 
Citizenship and Immigration Services.
* * * * *
    (11) * * * However, an applicant who received a write down under 
section 353 of the CONACT, or who is current on payments under a 
confirmed reorganization plan under chapters 11, 12, or 13 of Title 11 
of the United States Code, may receive direct and guaranteed OL loans 
to pay annual farm and ranch operating expenses, including family 
subsistence, if the applicant meets all other eligibility requirements.
    (12) Not be delinquent on any non-tax Federal debt or FSA 
guaranteed debt. * * *
* * * * *

0
12. Amend Sec.  1941.17 by adding paragraph (e) to read as follows:


Sec.  1941.17  Loan limitations.

* * * * *
    (e) If the purpose of the loan is to finance a nonfarm enterprise.
* * * * *


Sec.  1941.18  [Amended]

0
13. Amend the first sentence of Sec.  1941.18(b)(4) by changing the 
reference to paragraph ``(b)(2)'' to read paragraph ``(b)(3)''.


Sec.  1941.23  [Amended]

0
14. Amend Sec.  1941.23 by removing paragraph (b)(3) and redesignating 
paragraph (b)(4) as (b)(3).

0
15. Amend Sec.  1941.33 by removing the second sentence of paragraph 
(c)(2) and by revising paragraph (b)(1)(iii) to read as follows:


Sec.  1941.33  Loan approval or disapproval.

* * * * *
    (b) * * *
    (1) * * *
    (iii) The proposed loan is based on a feasible farm operating plan.
* * * * *

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

0
16. The authority citation for part 1943 continues to read as follows:

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

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

0
17. Amend paragraph Sec.  1943.4 by revising the definition of 
``Socially disadvantaged applicant'' to read as follows:


Sec.  1943.4  Definitions.

* * * * *
    Socially disadvantaged applicant (SDA). An applicant who is a 
member of a socially disadvantaged group whose members have been 
subjected to racial, ethnic, or gender prejudice because of their 
identity as a member of a group, without regard to their individual 
qualities. For entity SDA applicants, the majority interest in the 
entity must be held by socially disadvantaged individuals. The Agency 
has identified socially disadvantaged groups as Women, Blacks, American 
Indians, Alaskan Natives, Hispanics, Asians, and Pacific Islanders.
* * * * *

0
18. Amend Sec.  1943.12 by revising paragraphs (a)(1), (b)(4)(i), and 
the first sentence of paragraphs (a)(9) and (b)(11) to read as follows:


Sec.  1943.12  Farm ownership loan eligibility requirements.

* * * * *
    (a) * * *
    (1) Be a citizen of the United States, a United States non-citizen 
national, or a qualified alien under applicable Federal immigration 
laws. United States non-citizen nationals and qualified aliens must 
provide the appropriate documentation as to their immigration status as 
required by the United States Department of Homeland Security, Bureau 
of Citizenship and Immigration Services.
* * * * *
    (9) Not be delinquent on any non-tax Federal debt or FSA guaranteed 
debt.* * *
    (b) * * *
    (4) * * *
    (i) For an entity applicant, the majority interest of the entity 
must be held by members who are United States citizens, United States 
non-citizen nationals, or qualified aliens under applicable Federal 
immigration laws. United States non-citizen nationals and qualified 
aliens must provide the appropriate documentation as to their permanent 
immigration status as required by the United States Department of 
Homeland Security, Bureau of Citizenship and Immigration Services.
* * * * *
    (11) Not be delinquent on any non-tax Federal debt or FSA 
guaranteed debt.* * *
* * * * *

0
19. Amend Sec.  1943.17 paragraph (a)(2) by removing the words ``and 
nonfarm enterprise'' and by adding paragraph (c) to read as follows:


Sec.  1943.17  Loan limitations.

* * * * *
    (c) The purpose of the loan is to finance a nonfarm enterprise.

0
20. Amend Sec.  1943.34 by revising the section title, removing 
paragraph (c), and revising paragraphs (a) and (b) to read as follows:


Sec.  1943.34  Requesting title service.

    (a) Title clearance will be obtained as provided in subpart B of 
part 1927 of this chapter, when required by the Agency.
    (b) When the loan is approved, the applicant will arrange with the 
seller to take possession of the land that is being acquired.

PART 1955--PROPERTY MANAGEMENT

0
21. The authority citation for part 1955 continues to read as follows:

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

Subpart C--Disposal of Inventory Property

0
22. Amend Sec.  1955.103 by revising the definition of ``Socially 
disadvantaged applicant'' to read as follows:

[[Page 62225]]

Sec.  1955.103  Definitions.

* * * * *
    Socially disadvantaged applicant (SDA). An applicant who is a 
member of a socially disadvantaged group whose members have been 
subjected to racial, ethnic, or gender prejudice because of their 
identity as a member of a group, without regard to their individual 
qualities. For entity SDA applicants, the majority interest in the 
entity must be held by socially disadvantaged individuals. The Agency 
has identified socially disadvantaged groups as Women, Blacks, American 
Indians, Alaskan Natives, Hispanics, Asians, and Pacific Islanders.
* * * * *

    Dated: October 27, 2003.
J.B. Penn,
Under Secretary for Farm and Foreign Agricultural Services.
    Dated: October 28, 2003.
Thomas C. Dorr,
Under Secretary for Rural Development.
[FR Doc. 03-27589 Filed 10-31-03; 8:45 am]
BILLING CODE 3410-05-P