[Federal Register Volume 73, Number 236 (Monday, December 8, 2008)]
[Rules and Regulations]
[Pages 74343-74346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-28903]



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  Federal Register / Vol. 73, No. 236 / Monday, December 8, 2008 / 
Rules and Regulations  

[[Page 74343]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Parts 761, 762, 764, and 767

RIN 0560-AH82


Farm Loan Programs

AGENCY: Farm Service Agency, USDA.

ACTION: Final rule.

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

SUMMARY: This rule amends the Farm Service Agency (FSA) regulations for 
direct and guaranteed Farm Operating loans and Farm Ownership loans, 
and the lease and disposal of inventory property. This rule implements 
changes required by the Food, Conservation, and Energy Act of 2008 (the 
2008 Farm Bill). The maximum loan amount authorized for direct Farm 
Ownership loans and direct Farm Operating loans is being increased. The 
existing Beginning Farmer Downpayment Loan Program is being amended to 
include socially disadvantaged farmers and to reduce the size of the 
required down payment. Regulations governing lease and disposal of 
FSA's real estate inventory, which currently give priority to beginning 
farmers, are being amended to also give socially disadvantaged farmers 
priority.

DATES: Effective Date: January 7, 2009.

FOR FURTHER INFORMATION CONTACT: James Radintz, Director, Loan Making 
Division, Farm Loan Programs, Farm Service Agency, United States 
Department of Agriculture, STOP 0522, 1400 Independence Avenue, SW., 
Washington, DC 20250-0522; telephone: 202-720-1632; 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:

Background

    FSA makes and services a variety of direct and guaranteed loans to 
farmers who are temporarily unable to obtain private commercial credit. 
FSA also provides direct loan customers with credit counseling and 
supervision so they have a better chance for success. FSA loan 
applicants are often beginning farmers and socially disadvantaged 
farmers who do not qualify for conventional loans because of 
insufficient net worth or established farmers who have suffered 
financial setbacks due to natural disasters or economic downturns. FSA 
loans are tailored to a customer's needs and may be used to buy 
farmland and to finance agricultural production. All of the changes in 
this rule are required by the 2008 Farm Bill (Pub. L. 110-246) enacted 
June 18, 2008. This law repealed Public Law 110-234, dated May 22, 
2008, that inadvertently omitted Title III (Trade) and reenacted those 
provisions with the missing title.
    This rule changes the defined term ``Beginning Farmer Downpayment 
Loan'' in section 761.2, Abbreviations and definitions, to 
``Downpayment Loan'' because these types of loans now will be available 
to socially disadvantaged ``farmers'' as well. This change is required 
by section 5004 of the 2008 Farm Bill. Corresponding reference changes 
are made in parts 761, 762, and 764, including changes to the 
definitions of ``Farm Ownership loan'' and ``Socially disadvantaged 
applicant or farmer.''
    The Farm Ownership (FO) loan program assists beginning and 
established farmers to purchase farmland, to build or repair structures 
or other fixtures, and to promote soil and water conservation. The 
Operating Loan (OL) loan program assists producers with the purchase or 
lease of items needed for a successful farm operation, such as 
livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance, 
or other operating expenses. Additionally, these loans can be used to 
pay for minor improvements to buildings, costs associated with land and 
water development, family subsistence, as well as to refinance debts 
under certain conditions. This rule amends section 761.8, Loan 
Limitations, to increase the maximum loan amount authorized for both 
types of loans from $200,000 to $300,000. These changes are required by 
sections 5003 and 5102 of the 2008 Farm Bill. Corresponding changes 
have been made to the combination loan limits in paragraph (a)(4) to 
change $200,000 to $300,000 and in paragraph (a)(6) to change $700,000 
to $800,000. (Note: The limit for emergency loans of $500,000 remains 
unchanged.)
    This rule amends section 762.122 to correct a paragraph reference.
    The current Beginning Farmer Downpayment Loan Program is used to 
assist qualified beginning farmers finance the purchase of a family 
farm. This rule modifies part 764 to expand this program to include 
socially disadvantaged farmers and make other changes required by 
section 5004 of the 2008 Farm Bill. To reflect the expansion of the 
program, the name of the program is being changed from ``Beginning 
Farmer Downpayment Loan Program'' to ``Downpayment Loan Program.''
    This rule also reduces the minimum down payment that the applicant 
must provide from ten percent to five percent by amending section 
764.203, Limitations. In the current regulation, the lower of the 
purchase price or the appraised value of the farm must not exceed 
$250,000. This section currently provides that downpayment loans may 
not exceed 40 percent of the purchase price or the appraised value of 
the farm to be acquired and total financing provided by the Agency and 
by all other creditors must not exceed 90 percent of the purchase price 
or the appraised value of the farm. This rule amends section 764.203 in 
accordance with the 2008 Farm Bill to specify that each downpayment 
loan may not exceed 45 percent of the least of (1) the purchase price 
of the farm, (2) the appraised value of the farm, or (3) $500,000. 
Total financing provided by the Agency and all other creditors may not 
exceed 95 percent.
    This rule amends section 764.204, Rates and terms, to provide that 
the interest rate for downpayment loans will be the regular direct FO 
rate less 4 percent with a floor of 1.5 percent rather than the current 
set rate of 4 percent. The maximum loan term also is being extended 
from 15 to 20 years as required by the 2008 Farm Bill. Additionally, 
this section is amended accordingly to provide that non-Agency 
financing cannot have a balloon payment due within the first 20 years 
of the loan, which is an extension from the current

[[Page 74344]]

15 years to correspond with the change in loan term.
    In accordance with section 5302 of the 2008 Farm Bill, this rule 
amends several sections on leasing and disposing of inventory real 
estate. Section 767.101 is revised to give socially disadvantaged 
farmers all rights regarding lease eligibility, terms, and the option 
to purchase currently only extended to beginning farmers. Sections 
767.151 through 767.153 are revised to ensure that socially 
disadvantaged farmers are granted rights to purchase inventory property 
that currently apply to only beginning farmers, including the right to 
purchase the property before it is offered to the general public and 
the waiver of the 10 percent down payment. The current provision in the 
regulation specifying that property becomes available only after the 
rights of the previous owner have expired is not changing.

Notice and Comment

    The notice and comment provisions of 5 U.S.C. 553 and the Statement 
of Policy of the Secretary of Agriculture effective July 24, 1971 (36 
FR 13804), relating to notices of proposed rulemaking and public 
participation in rulemaking, provide that certain rules may go forward 
without public notice and comment when they are in the public interest. 
This regulation adopts changes mandated in the 2008 Farm Bill, sections 
5003, 5004, 5102, and 5302. All these provisions are nondiscretionary 
in nature and became effective when the 2008 Farm Bill became law. 
Furthermore, these changes impose no additional paperwork burden. 
Accordingly, this rule is published without requesting public comment 
and will be effective 30 days from the date of publication in the 
Federal Register.

Executive Order 12866

    The Office of Management and Budget (OMB) designated this rule as 
not significant under Executive Order 12866 and, therefore, OMB was not 
required to review this final rule.

Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act (5 
U.S.C. 601-602), since FSA is not required to publish a notice of 
proposed rulemaking for this rule.

Environmental Evaluation

    The environmental aspects of this final rule have been considered 
in a manner consistent with the provisions of the National 
Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321-4347, the 
regulations of the Council on Environmental Quality (40 CFR parts 1500-
1508) and the FSA regulations for compliance with NEPA (7 CFR part 
1940, subpart G). The changes are non-discretionary, and, as such, no 
new significant circumstances or information relevant to environmental 
concerns have been established. In consideration of the previous 
analysis documented in the 2003 Programmatic Environmental Assessment 
(PEA) and the reasons outlined in the 2004 Finding of No Significant 
Impact (FONSI), FSA has concluded that this final rule will not have a 
significant impact on the quality of the human environment either 
individually or cumulatively, and, therefore, is categorically excluded 
and not subject to an environmental assessment or environmental impact 
statement in accordance with 7 CFR 1940.310(e)(3). The Final PEA and a 
copy of the FONSI are available at: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ecrc&topic=enl-ea.

Executive Order 12372

    This program is not subject to Executive Order 12372, which 
requires consultation with State and local officials. See the notice 
related to 7 CFR part 3015, subpart V, published in the Federal 
Register on June 24, 1983 (48 FR 29115).

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. All State and local laws and regulations 
that are in conflict with this rule will be preempted. This rule is not 
retroactive. It will not effect agreements entered into prior to the 
effective date of the rule. Before any judicial action may be brought 
regarding the provisions of this rule, the administrative appeal 
provisions of 7 CFR parts 11 and 780 must be exhausted.

Executive Order 13132

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

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(URMA) (Pub. L. 104-4) for State, local, and tribal governments or the 
private sector. In addition, FSA was not required to publish a notice 
of proposed rulemaking for this rule. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of UMRA.

Federal Assistance Programs

    The changes in this rule affect the following FSA programs as 
listed in the Catalog of Federal Domestic Assistance:
    10.406--Farm Operating Loans.
    10.407--Farm Ownership Loans.

Paperwork Reduction Act

    The Agency's information collection requirements, currently 
approved under OMB control numbers 0560-0234, 0560-0237, and 0560-0238, 
are not affected by the final rule. The rule does not increase the 
information collection burden.

E-Government Act Compliance

    FSA is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.

List of Subjects

7 CFR Part 761

    Loan programs--Agriculture.

7 CFR Part 762

    Agriculture, Credit, Loan programs--Agriculture.

7 CFR Part 764

    Agriculture, Credit, Loan programs--Agriculture.

7 CFR Part 767

    Agriculture, Credit, Loan programs--Agriculture.


0
For the reasons discussed above, this rule amends 7 CFR chapter VII, 
Subchapter D--Special Programs, as follows:

PART 761--GENERAL PROGRAM ADMINISTRATION

0
1. The authority citation for part 761 continues to read as follows:

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


0
2. Amend Sec.  761.2 paragraph (b) as follows:
0
a. Remove the definitions of ``Beginning Farmer Downpayment Loan'' and 
``Socially disadvantaged applicant,''
0
b. Add definitions, in alphabetical order, for ``Downpayment Loan'' and

[[Page 74345]]

``Socially Disadvantaged Applicant or Farmer'' to read as set forth 
below, and
0
c. In the definition of ``Farm Ownership loan'' remove the words 
``Beginning Farmer.''


Sec.  761.2  Abbreviations and definitions.

* * * * *
    (b) * * *
    Downpayment Loan is a type of FO loan made to beginning farmers and 
socially disadvantaged farmers to finance a portion of a real estate 
purchase under part 764, subpart E of this chapter.
* * * * *
    Socially Disadvantaged Applicant or Farmer is an individual or 
entity who is a member of a socially disadvantaged group. For an 
entity, the majority interest must be held by socially disadvantaged 
individuals. For married couples, the socially disadvantaged individual 
must have at least 50 percent ownership in the farm business and make 
most of the management decisions, contribute a significant amount of 
labor, and generally be recognized as the operator of the farm.
* * * * *


Sec.  761.8  [Amended]

0
3. Amend Sec.  761.8 as follows:
0
a. In paragraph (a)(1) remove the words ``Beginning Farmer,''
0
b. In paragraphs (a)(1)(i), (a)(2)(i), and (a)(4) remove the amount 
``$200,000'' and add, in its place, the amount ``$300,000,'' and
0
c. In paragraph (a)(6) remove the amount ``$700,000'' and add, in its 
place, the amount ``$800,000.''

0
4. Revise Sec.  761.210 paragraph (a) to read as follows:


Sec.  761.210  Transfer of funds.

* * * * *
    (a) August 1 of each fiscal year, the Agency will use available 
unsubsidized guaranteed OL loan funds to make approved direct FO loans 
to beginning farmers and socially disadvantaged farmers under the 
Downpayment loan program; and
* * * * *

PART 762--GUARANTEED FARM LOANS

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

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


Sec.  762.121  [Amended]

0
6. Amend Sec.  762.121 paragraph (b)(1) by removing the words 
``beginning farmer.''


Sec.  762.122  [Amended]

0
7. Amend Sec.  762.122 paragraph (b)(2) by removing the reference to 
``(c)(1) of this section'' and add in its place a reference to ``(b)(1) 
of this section.''


Sec.  762.124  [Amended]

0
8. Amend Sec.  762.124 paragraph (e)(3) by removing the words ``for 
beginning farmers.''

0
9. Revise Sec.  762.130 paragraph (d)(4)(iii)(C) to read as follows:


Sec.  762.130  Loan approval and issuing the guarantee.

* * * * *
    (d) * * *
    (4) * * *
    (iii) * * *
    (C) Loans to farmers involved in the direct downpayment program.
* * * * *

PART 764--DIRECT LOAN MAKING

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

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


Sec.  764.1  [Amended]

0
11. Amend Sec.  764.1 paragraph (b)(1) by removing the words 
``Beginning Farmer.''


Sec.  764.103  [Amended]

0
12. Amend Sec.  764.103 paragraphs (c) and (e) by removing the words 
``beginning farmer.''

Subpart E--Downpayment Loan Program

0
13. Revise Subpart E heading to read as shown above.


Sec.  764.201  [Amended]

0
14. Amend Sec.  764.201 as follows:
0
a. In the heading remove the words ``Beginning Farmer'' and
0
b. In the undesignated paragraph remove the words ``Beginning Farmer'' 
the first time they appear and add the words ``or socially 
disadvantaged farmer'' at the end.


Sec.  764.202  [Amended]

0
15. Amend Sec.  764.202 paragraph (b) by adding the words ``or socially 
disadvantaged farmer'' at the end.

0
16. Amend Sec.  764.203 as follows:
0
a. In paragraph (a)(2) remove the number ``10'' and add, in its place, 
the number ``5,''
0
b. Revise paragraphs (b) and (c) to read as set forth below, and
0
c. Remove paragraph (d).


Sec.  764.203  Limitations.

* * * * *
    (b) Downpayment loans will not exceed 45 percent of the lesser of:
    (1) The purchase price,
    (2) The appraised value of the farm to be acquired, or
    (3) $500,000.
    (c) Financing provided by the Agency and all other creditors must 
not exceed 95 percent of the purchase price. Financing provided by 
eligible lenders may be guaranteed by the Agency under part 762 of this 
chapter.

0
17. Amend Sec.  764.204, as follows:
0
a. Revise paragraph (a) to read as set forth below,
0
b. In paragraph (b)(1) remove the words ``Beginning Farmer,'' and
0
c. In paragraphs (b)(1) and (2) remove the number ``15'' and add, in 
its place, the number ``20.''


Sec.  764.204  Rates and terms.

    (a) Rates. The interest rate for Downpayment loans will be the 
regular direct FO rate minus 4 percent, but in no case less than 1.5 
percent.
* * * * *


Sec.  764.205  [Amended]

0
18. Amend Sec.  764.205 introductory paragraph by removing the words 
``Beginning Farmer.''

PART 767--INVENTORY PROPERTY MANAGEMENT

0
19. The authority citation for part 767 continues to read as follows:

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


Sec.  767.101  [Amended]

0
20. Amend Sec.  767.101 paragraphs (a)(2), (c)(2), (d)(3), and (g) by 
adding the words ``or socially disadvantaged farmer'' immediately after 
the words ``beginning farmer.''


Sec.  767.151  [Amended]

0
21. Amend Sec.  767.151 as follows:
0
a. In paragraphs (a), (b), and (d) add the words ``or socially 
disadvantaged farmers'' immediately after ``beginning farmers'' and
0
b. In paragraph (c) add the words ``or socially disadvantaged farmer'' 
immediately after the words ``beginning farmer.''


Sec.  767.152  [Amended]

0
22. Amend Sec.  767.152 paragraph (a) by adding the words ``or socially 
disadvantaged farmer'' immediately after the words ``beginning 
farmer.''


Sec.  767.153  [Amended]

0
23. Amend Sec.  767.153 paragraph (b)(3) by removing the words ``non-
beginning farmer purchasers'' and adding, in their place, the words 
``purchasers who are

[[Page 74346]]

not beginning farmers or socially disadvantaged farmers.''

    Signed at Washington, DC, on December 2, 2008.
Glen L. Keppy,
Acting Administrator, Farm Service Agency.
[FR Doc. E8-28903 Filed 12-5-08; 8:45 am]
BILLING CODE 3410-05-P